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<SEC-DOCUMENT>0001144204-05-016462.txt : 20050519
<SEC-HEADER>0001144204-05-016462.hdr.sgml : 20050519
<ACCEPTANCE-DATETIME>20050519165149
ACCESSION NUMBER:		0001144204-05-016462
CONFORMED SUBMISSION TYPE:	10KSB
PUBLIC DOCUMENT COUNT:		9
CONFORMED PERIOD OF REPORT:	20041231
FILED AS OF DATE:		20050519
DATE AS OF CHANGE:		20050519

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			MULTI TECH INTERNATIONAL CORP
		CENTRAL INDEX KEY:			0001083743
		STANDARD INDUSTRIAL CLASSIFICATION:	BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836]
		IRS NUMBER:				860931332
		STATE OF INCORPORATION:			NV
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10KSB
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-25909
		FILM NUMBER:		05845477

	BUSINESS ADDRESS:	
		STREET 1:		9974 HUNTINGTON PARK DRIVE
		CITY:			STRONGSVILLE
		STATE:			OH
		ZIP:			44136
		BUSINESS PHONE:		440 759-7470

	MAIL ADDRESS:	
		STREET 1:		9974 HUNTINGTON PARK DRIVE
		CITY:			STRONGSVILLE
		STATE:			OH
		ZIP:			44319

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	BUCKTV COM INC
		DATE OF NAME CHANGE:	20000515

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	OLERAMMA INC
		DATE OF NAME CHANGE:	19990428
</SEC-HEADER>
<DOCUMENT>
<TYPE>10KSB
<SEQUENCE>1
<FILENAME>v018751_10ksb.txt
<TEXT>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10-KSB
                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


For the fiscal year ended December 31, 2004                     Commission File
                                                                Number 0-25909

      AUSTRALIAN FOREST INDUSTRIES (f/k/a Multi-Tech International, Corp.)
                 (Name of small business issuer in its charter)

             Nevada                                          86-0931332
(State or other jurisdiction of                   (I.R.S. Employer incorporation
        or organization)                                 Identification No.)

                  4/95 Salmon Street, Port Melbourne, Victoria
                                 Australia, 3207
               (Address of principal executive offices) (Zip Code)

                  Issuer's telephone number: 011 61 3 8645 4340

         Securities registered under Section 12(b) of the Exchange Act:

                                                    Name of Each Exchange
Title of Each Class                                  on Which Registered
      NONE                                                   NONE

         Securities registered under Section 12(g) of the Exchange Act:

                         Common Stock, $0.001 par value
                                (Title of Class)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. YES |X|  NO |_|

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. |_|

The aggregate market value of the voting common stock held by non-affiliates of
the registrant as of May 13, 2005 was approximately $601,020 based on 400,680
shares of common stock. The number of shares of Common Stock of the registrant
outstanding on May 13, 2005 was 257,400,680.
<PAGE>

                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

HISTORY

Australian Forest Industries f/k/a Multi-Tech International, Corp., hereinafter
referred to as "the Company", "we' or "us", was originally organized by the
filing of Articles of Incorporation with the Secretary of State of the State of
Nevada on September 21, 1998 under the name Oleramma, Inc. The Articles of
Incorporation authorized the issuance of one hundred five million (105,000,000)
shares, consisting of one hundred million (100,000,000) shares of Common Stock
at par value of $0.001 per share and five million (5,000,000) shares of
Preferred Stock at par value of $0.001.

On April 28, 1999, the Company changed its name to BuckTV,Com, Inc. on the basis
that the Company would market consumer products through an InteractiveWeb site.
The Company again changed its name in November 2002 to Multi-Tech International,
Corp.

On September 1, 2004, we entered into a Share Exchange Agreement with Timbermans
Group Pty Ltd, an Australian corporation and its wholly-owned subsidiary at the
time Integrated Forest Products Pty Ltd, an Australian corporation as well
("Share Exchange Agreement" and "Share Exchange", respectively). Pursuant to
such Share Exchange Agreement, we:

      o     completed a 200-1 reverse stock split of our common stock

      o     increased our authorized number of shares from 100,000,000 to
            300,000,000

      o     changed our name from Multi-Tech International, Inc. to Australian
            Forest Industries

      o     appointed Messrs. Michael Timms, Norman Backman, Colin Baird, Antony
            Esplin and Roger Timms to the board of directors

      o     issued 257,000,000 shares of our common stock as a result of the
            Share Exchange Agreement

Thus, upon completion of the Share Exchange, Integrated Forest Products Pty Ltd
("IFP") became a wholly-owned subsidiary of the Company and the Company's symbol
on the OTC-BB was changed from "MLTI" to "AUFI".

GENERAL

The majority of the issued and outstanding ordinary shares in the capital of the
Company are held by Timbermans Group Pty Ltd, a leading supplier of softwood
timber products in Australia. The shareholders of Timbermans Group are the same
individuals who comprise our board of directors.

IFP owns a minority interest in Radiata Forest Services Pty Ltd which is a
company owned jointly by a number of timber companies in the Canberra region.
Radiata purchases logs on behalf of its shareholders and distributes them among
those shareholders.

The timber industry in Australia experienced a strong demand from internal
growth in residential and commercial construction along the Eastern coast of
Australia. Additionally, export demand from China and elsewhere in Asia for
lumber and other wood products continued to be very strong in recent years and
management expects that this trend will continue in the foreseeable future.

The facilities of the Company are located in Australia. The business of the
Company consists of a pine sawmilling and timber facility at Canberra, which has
a capacity to process 165,000 cubic meters of sawn timber. This sawmill produced
120,000 cubic meters of log in the Fiscal Year 2004. The Company is currently in
the process of arranging the financing for the construction of a second sawmill.
With this second sawmill, the Company intends to exploit the log resource
generated by our contract with Timbermans Group Pty Ltd which grants us the
right to the Bombala Agreement described below.


                                       1
<PAGE>

In April 2003, Timbermans Group Pty Ltd entered into an agreement with the
government of New South Wales which granted Timbermans the 20 year wood supply
rights to timber from the Bombala forest, equal to approximately 300,000 cubic
meters of wood ("Bombala Agreement"). This Agreement was assigned to the Company
at that time with the full knowledge of the New South Wales government.
Management believes that this is the last significant undeveloped pine forest in
Eastern Australia. The Bombala Agreement provides, inter alia, that the log
purchase price review mechanism is linked to the sawn timber actual price
achieved for the products produced at the new sawmill to be built at Bombala,
the market price for structural radiata pine timber, the ABS producer price
index for softwood in Sydney and input costs such as wages and fuel. This
mechanism is expected to adequately protect the Company from any decreasing
market prices and in part from increased costs during the term of the Bombala
Agreement. With the signing of the Bombala Agreement, the Company has insured
its supply for at least 20 years and is renewable at the Company's option. With
this asset the Company believes it has secured a major asset.

The Company's core markets are Australia and Southern Asia. The Company's
revenues are generated solely in its core markets.

Recent events

The proposed new sawmill at Bombala is planned to begin construction in the 3rd
quarter of 2005 after the approvals of the government of New South Wales and
local council have been obtained.

The new mill operation will be situated on approximately 300 acres of land on
the Monaro Highway, just south of Bombala. Management believes that the new mill
will be a state of the art mill. It will be constructed by industry experts,
including Acora Reneco Group, and will utilize state of the art machinery and
technology.

The mill is expected to comprise sawing machines from the USA, Canada, Europe
and Australia, and to have proven production capabilities, as well as safety,
environmental and efficiency capabilities.

The total mill and ancillary investment are expected to be approximately $30
million (US). Most of the timber from the new mill will be transported in green
form to the Integrated Forest Products plant at Canberra, for drying and
dressing processing. The balance will be sold in green form.

The new mill is expected to initially process 300,000 cubic meters per year of
log, although designed to cut in excess of 400,000 cubic meters per year, under
the Bombala Agreement.

Furthermore, negotiations are at an advanced stage for the sale of all mill
residues of sawdust, bark and waste wood chips.

The new sawmill at Bombala is expected to put the Company in a position to
produce at a lower cost relative to its current cost level, and in compliance
with all applicable safety standard. In addition, it is expected to provide
acces to the Company to a large and high quality log supply, to Acora Reneco
Group as leading Australian timber technology, mill and equipment suppliers, low
cost production from expanding Integrated Forest Products and will allow the
Company to concentrate on structural timber. Finally, the new sawmill is
expected to create competitive economics of scale and to generate profits from
the future integration of the Company's operations in Canberra and Bombala.

The Company recently purchased a new timber treatment facility for its
operations in Canberra that was commissioned in early 2005. With its new timber
treatment facility, management expects that it will be able to offer treated
pine framing to the market as from March 2005. With the new facility, the
Company expects to be able to meet an increased demand for treated timber as a
result of changing rules and regulations for the construction of new homes that
require the use of such timber for framing to be termite resistant.

Furthermore, Integrated Forest Products recently commissioned a new sawlog line
which is expected to lift the log intake rate of its facility in Canberra to
over 160,000 cubic meters per year, thereby increasing its sawing capacity by
38%, provide a recovery increase, a higher sawing accuracy, greater operator
safety and a better timber finish.


                                       2
<PAGE>

Strategy

The Company's strategy is to maximize shareholder value, primarily by realizing
economics of scale and profits, initially through the securing of access to
additional log supplies from private forests, the installation of a new log
sawing line at Integrated Forest Products to improve its efficiency, and the
continuation of the meeting of milestones laid down in the Bombala Agreement.
The medium term strategy of the Company is to build a new green sawmill in
Bombala, and to expand its drying and planing facilities for the intake of green
sawn timber from the facilities then operated at Bombala. The long term strategy
of the Company is to combine its wood chip production facilities, and to export
wood chips with its strategic partner the State Forest of New South Wales,
utilizing both the Company's and the State Forest of New South Wales' supply,
or, alternatively, to establish a fibre board factory at Bombala utilizing its
available wood chips. Other options are also being investigated.

Employees

At the end of December 2004, we employed 121 full time equivalents. Employees
play a crucial role in the success of our business. We encourage our employees
to take initiative to further enhance our efficiency in timber production. In
order to assist our employees, we constantly seek to train and educate them,
either on an individual basis (product knowledge and quality control) or on a
more collective basis (office automation and management skills). We have never
experienced a work stoppage resulting from labor problems.

Our employees are members of the CFMEU which is one of the largest unions in
Australia. As a result, each non-executive employee is a party to a collective
bargaining agreement known as an Enterprise Bargaining Agreement which
determines the terms of employment of each non-executive employee. Management
believes that its relations with such union are impeccable and the risk of work
stoppages is extremely unlikely.

Competition

The Australian wood products market is a competitive market and could become
more competitive in the future. Our competitors are diverse and offer products
similar to our products. Some of our competitors have access to significantly
greater financial, marketing and other resources than us. Increased competition
may result in price reductions for our products, reduced revenues and gross
margins and loss of market share. We are committed to executing our strategy as
set out above, inter alia, by focusing on our ability to source capital
equipment at very competitive prices and effectively manage facilities as a
result of management's extensive consulting experience.

At the time many sawmills in Australia are facing limitations on log supply as
older forests are becoming less productive and a series of significant forest
fires over the past five years have diminished the availability of high quality
logs.

We believe that we have certain competitive advantages our (i) ability to
construct efficient low cost mills, as a result of our strategic alliance with
Acora Reneco Group, (ii) access to log resources through the Bombala Agreement,
(iii) excess drying and dressing capacity in the Canberra processing facilities,
(iv) low cost operating and management techniques, and (v) operations management
system, which we believe to be superior to the systems of our competitors.

Finally, unlike most of our competitors, we believe that we have the ability for
low cost incremental expansion of our Canberra and future Bombala facilities,
mainly because of our spare processing capacity, subject to the availability of
logs - the supply of which we believe to have secured through our Bombala
Agreement, our log merchandising facility at Bombala for greater fibre recovery
from whole log, and the availablity of in-house process control and selective
hi-tech equipment.

It is our belief that, if we get the new facility in operation in 2006, we can
record operating performance equal or better than that shown by the large
capital forestry companies including the high growth ones.


                                       3
<PAGE>

ITEM 2. DESCRIPTION OF PROPERTY

Our main facility is located in Australia which consists of pine sawmilling and
timber facility at Canberra, which has a capacity to products 165,000 cubic
meters of log. We are currently in the process of arranging the financing for
the construction of a second in the Bombala region to further exploit the log
resources generated by the Bombala Agreement.

ITEM 3. LEGAL PROCEEDINGS

We are not a party to any material pending legal proceedings or government
actions, including any bankruptcy, receivership, or similar proceedings.
Management of the Company does not believe that there are any proceedings to
which any director, officer, or affiliate of the Company, any owner of record of
the beneficially or more than five percent of the common stock of the Company,
or any associate of any such director, officer, affiliate of the Company, or
security holder is a party adverse to the Company or has a material interest
adverse to the Company.


                                       4
<PAGE>

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.



                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

(a) The Company's Common Stock is traded on the OTC-Bulletin Board under the
symbol AUFI. The following sets forth the range of the closing bid prices for
the Company's Common Stock for the period January 1, 2003 through May 16, 2005.
Such prices represent inter-dealer quotations, do not represent actual
transactions, and do not include retail mark-ups, mark-downs or commissions.
Such prices were determined from information provided by a majority of the
market makers for the Company's Common Stock.

- ----------------------------------------------------------------------------
                                       High Close           Low Close
- ----------------------------------------------------------------------------

- ----------------------------------------------------------------------------
2003

- ----------------------------------------------------------------------------
First Quarter                             0.40                 0.20
- ----------------------------------------------------------------------------
Second Quarter                            0.12                 0.05
- ----------------------------------------------------------------------------
Third Quarter                             0.02                 0.02
- ----------------------------------------------------------------------------
Fourth Quarter                           0.015                0.015
- ----------------------------------------------------------------------------

- ----------------------------------------------------------------------------
2004

- ----------------------------------------------------------------------------
First Quarter                            0.015                0.015
- ----------------------------------------------------------------------------
Second Quarter                           0.015                0.015
- ----------------------------------------------------------------------------
Third Quarter                            0.015                0.015
- ----------------------------------------------------------------------------
Fourth Quarter                            2.50                 0.60
- ----------------------------------------------------------------------------

- ----------------------------------------------------------------------------
2005

- ----------------------------------------------------------------------------
First Quarter                             1.51                 1.50
- ----------------------------------------------------------------------------
Second Quarter (through May
16, 2005)                                 1.50                 1.50
- ----------------------------------------------------------------------------

(b) The approximate number of holders of the Common Stock of the Company as of
May 16, 2005 was 900.

(c) No cash dividends were declared by the Company during the fiscal year ended
December 31, 2004. While the payment of dividends rests within the discretion of
the Board of Directors, it is not anticipated that cash dividends will be paid
in the foreseeable future, as the Company intends to retain earnings, if any,
for use in the development of its business. The payment of dividends is
contingent upon the Company's future earnings, if any, the Company's financial
condition and its capital requirements, general business conditions and other
factors.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS


                                       5
<PAGE>

It should be noted that this Management's Discussion and Analysis of Financial
Condition and Results of Operations may contain "forward-looking statements."
The terms "believe," "anticipate," "intend," "goal," "expect," and similar
expressions may identify forward-looking statements. These forward-looking
statements represent the Company's current expectations or beliefs concerning
future events. The matters covered by these statements are subject to certain
risks and uncertainties that could cause actual results to differ materially
from those set forth in the forward-looking statements, including the Company's
dependence on weather-related factors, introduction and customer acceptance of
new products, the impact of competition and price erosion, as well as supply and
manufacturing restraints and other risks and uncertainties. The foregoing list
should not be construed as exhaustive, and the Company disclaims any obligation
subsequently to revise any forward-looking statements to reflect events or
circumstances after the date of such statements, or to reflect the occurrence of
anticipated or unanticipated events. In light of the significant uncertainties
inherent in the forward-looking information included herein, the inclusion of
such information should not be regarded as a representation that the strategy,
objectives or other plans of the Company will be achieved. The Company wishes to
caution readers not to place undue reliance on any such forward-looking
statements, which speak only as of the date made.

RESULTS OF OPERATIONS

We are currently in the second year of operations and have generated significant
revenues to date. Our activities from inception to date, were related to: our
formation; preparation of our business model; arranging and planning financing
and the acquiring all rights, title and interest to our timber rights located in
the Canberra region; and the implementation and construction of our first
sawmill also in the Canberra region.

Operating costs for the period from inception to December 31, 2003 aggregated
$12,764,139. This includes costs incurred in procuring our rights under the
Bombala Agreement and operating expenses for our Canberra sawmill. We incurred
an operating loss of $60,162 and a total net loss of $56,569 or $.0002 per
share.

Operating costs for the twelve-month period ended December 31, 2004 aggregated
$14,531,990. This includes an increase in costs of goods sold of $2,443,463
which were a result of general costs associated with the growth of our business
and management fees to our executive officers of $556,771 which were not paid in
the prior fiscal year. As a result of the above we realized a loss of $868,406
for the twelve-month period ended December 31, 2004 or $.003 per share.

LIQUIDITY AND CAPITAL RESOURCES

On December 31, 2003 and 2004 we had current assets of $3,446,184 and
$3,734,404, respectively.

Net cash used in operating activities for the period from inception to December
31, 2003 was $747,887. Net cash used in operating activities for the period from
inception to December 31, 2004 was $(56,542). The decrease in net cash was a
result of an increase in payments to suppliers and employees of $4,979,980 which
was a consequence of our growing business and the addition of a significant
number of employees.

In the twelve months ending December 31, 2004, the Company experienced an
increase in net proceeds from borrowings/capitalized leases of $4,968,800 and
during that same period an increase in loans to related parties of $1,350,201,
thus resulting in net cash provided by financing activities of $1,808,526.

The Company is presently completing a second sawmill in Canberra which is
anticipated to be operational in the third quarter of 2005 and which will be
used primarily for processing the logs resulting from the Bombala Agreement.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Company's discussion and analysis of its financial condition and results of
operations are based upon its financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States.
The preparation of these financial statements requires the Company to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosure of contingent assets and
liabilities. On an on-going basis, the Company evaluates its estimates,
including those related to bad debts, income taxes and contingencies and
litigation. The Company bases its estimates on historical experience and on
various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions.


                                       6
<PAGE>

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Recent Accounting Pronouncements Affecting The Company:

In December 2004, the FASB issued SFAS No. 123 (revised 2004), or SFAS 123R,
"Share-Based Payment." This statement replaces SFAS 123, "Accounting for
Stock-Based Compensation" and supersedes Accounting Principles Board's Opinion
No. 25 (ABP 25), "Accounting for Stock Issued to Employees." SFAS 123R will
require us to measure the cost our employee stock-based compensation awards
granted after the effective date based on the grant date fair value of those
awards and to record that cost as compensation expense over the period during
which the employee is required to perform services in exchange for the award
(generally over the vesting period of the award). SFAS 123R addresses all forms
of share-based payments awards, including shares issued under employee stock
purchase plans, stock option, restricted stock and stock appreciation rights. In
addition, we will be required to record compensation expense (as previous awards
continue to vest) for the unvested portion of previously granted awards that
remain outstanding at the date of adoption. SFAS 123R is effective for fiscal
periods beginning after June 15, 2005. Therefore, we are required to implement
the standard no later than our third fiscal quarter which begins on July 1,
2005. SFAS 123R permits public companies to adopt its requirements using the
following methods: (1) a "modified prospective" method in which compensation
cost is recognized beginning with the effective date (a) based on the
requirements of SFAS 123R for all share-based payments granted after the
effective date and (b) based on the requirements of SFAS 123 for all awards
granted to employees prior to the effective date of SFAS 123R that remain
unvested on the effective date; or (2) a "modified retrospective" method which
includes the requirements of the modified prospective method described above,
but also permits entities to restate their financial statements based on the
amounts previously recognized under SFAS 123 for purposes of pro forma
disclosures for either (a) all prior periods presented or (b) prior interim
periods of the year of adoption.


                                       7
<PAGE>

                          AUSTRALIAN FOREST INDUSTRIES
                    (Formerly Multi-Tech International Corp.)

                          AUDITED FINANCIAL STATEMENTS

                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

CONTENTS
- --------------------------------------------------------------------------------

Report of Independent Registered Public Accounting Firm               Page   F-1

Consolidated Balance Sheets                                                  F-2

Consolidated Statements of Operations                                        F-3

Consolidated Statements of Cash Flows                                        F-4

Consolidated Statement of Stockholders' Equity                               F-5

Notes to Consolidated Financial Statements                                   F-6


                                       8
<PAGE>

                              MEYLER & COMPANY, LLC
                          CERTIFIED PUBLIC ACCOUNTANTS
                                  ONE ARIN PARK
                                 1715 HIGHWAY 35
                              MIDDLETOWN, NJ 07748

             Report of Independent Registered Public Accounting Firm

To the Board of Directors
Australian Forest Industries
Melbourne, Australia

We have audited the accompanying balance sheets of Australian Forest Industries
(formerly Multi-Tech International Corp.) as of December 31, 2004 and 2003 and
the related statements of operations, stockholders' equity, and cash flows for
each of the two years in the period ended December 31, 2004. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Australian Forest Industries as
of December 31, 2004 and 2003, and the results of its operations and its cash
flows for each of the two years in the period ended December 31, 2004, in
conformity with U.S. generally accepted accounting principles.


                                                       /s/ Meyler & Company, LLC


Middletown, NJ
May 1, 2005


                                      F-1
<PAGE>

                          AUSTRALIAN FOREST INDUSTRIES
                    (Formerly Multi-Tech International Corp.)

                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS

<TABLE>
<CAPTION>
                                                                                       December 31,
                                                                               ----------------------------
                                                                                   2004            2003
                                                                               ------------    ------------
<S>                                                                            <C>             <C>
CURRENT ASSETS
   Cash                                                                                        $    459,927
   Accounts receivable                                                         $  1,611,756       1,873,003
   Inventory                                                                      1,983,039       1,030,799
   Prepaid expenses and other                                                       141,609          82,455
                                                                               ------------    ------------
          Total Current Assets                                                    3,736,404       3,446,184
PROPERTY, PLANT AND EQUIPMENT, net of accumulated
   depreciation of $2,721,972 and  $2,036,081 in 2004 and 2003, respectively      9,712,015       7,000,911

OTHER ASSETS
   Receivable from related party                                                    500,496
   Long-term timber supply contract, net of amortization of $36,943                 849,705
                                                                               ------------    ------------

                                                                               $ 14,798,620    $ 10,447,095
                                                                               ============    ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
   Bank overdraft                                                              $    421,097
   Accounts payable                                                               3,154,429    $  1,762,425
   Current portion of capitalized lease obligations                                 731,217         351,308
   Accrued payroll, related taxes and benefits                                      542,414         539,460
                                                                               ------------    ------------
          Total Current Liabilities                                               4,849,157       2,653,193
CAPITALIZED LEASE OBLIGATIONS                                                     2,797,975           5,628

STOCKHOLDERS' EQUITY
   Preferred stock, par value $0.001, 5,000,000 shares
     authorized, none issued and outstanding
   Common stock, par value $0.001, 300,000,000 shares
     authorized, 257,400,680 issued and outstanding                                 257,400
   Common stock , no par value, 6,649,705 shares
      authorized,  5,319,764 issued and outstanding                                               9,813,217
   Additional paid-in capital                                                     9,810,817
   Comprehensive income                                                              42,210          65,590
   Accumulated deficit                                                           (2,958,939)     (2,090,533)
                                                                               ------------    ------------
          Total Stockholders' Equity                                              7,151,488       7,788,274
                                                                               ------------    ------------

          Total Liabilities and Stockholders' Equity                           $ 14,798,620    $ 10,447,095
                                                                               ============    ============
</TABLE>

                 See accompanying notes to financial statements.


                                      F-2
<PAGE>

                          AUSTRALIAN FOREST INDUSTRIES
                    (Formerly Multi-Tech International Corp.)

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                        For the Year Ended
                                                           December 31,
                                                 ------------------------------
                                                     2004              2003
                                                 ------------      ------------

REVENUE - SALES                                  $ 12,990,558      $ 12,703,977

COSTS AND EXPENSES
   Cost of goods sold                              11,685,458         9,241,995
   Selling, general and administrative              1,130,163         2,472,810
   Management fees                                    556,700
   Stock based compensation                           255,000
   Interest expense                                   217,251           529,034
   Depreciation and amortization                      687,418           520,300
                                                 ------------      ------------
          Total Costs and Expenses                 14,531,990        12,764,139
                                                 ------------      ------------

OPERATING LOSS                                     (1,541,432)          (60,162)

NON-OPERATING INCOME
   Other income                                       443,041             3,793
   Interest income                                      1,328
   Gain on disposal of assets                         228,657
                                                 ------------      ------------
          Total Non-Operating Income                  673,026             3,793
                                                 ------------      ------------

NET LOSS                                         $   (868,406)     $    (56,369)
                                                 ============      ============

                 See accompanying notes to financial statements.


                                      F-3
<PAGE>

                          AUSTRALIAN FOREST INDUSTRIES
                    (Formerly Multi-Tech International Corp.)

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                      For the Year Ended
                                                                         December 31,
                                                                ----------------------------
                                                                    2004            2003
                                                                ------------    ------------
<S>                                                             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Receipts from customers                                      $ 15,342,971    $ 13,385,860
   Payments to suppliers and employees                           (17,737,064)    (12,757,084)
   Interest received                                                   1,403          10,265
   Interest paid                                                    (301,555)
   Other income                                                    2,420,067         108,846
   Net GST paid                                                      217,636
                                                                ------------    ------------
          Net Cash (Used in) Provided by Operating Activities        (56,542)        747,887
                                                                ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES
   Payment for property, plant, and equipment                     (4,049,749)        (49,408)
   Proceeds from sale of property, plant, and equipment            1,667,148          21,876
                                                                ------------    ------------
          Net Cash Used in Investing Activities                   (2,382,601)        (27,532)

CASH FLOWS FROM FINANCING ACTIVITIES
   Net proceeds from borrowings/capitalized leases                 3,158,727      (1,810,073)
   Repayment of borrowings/capitalized leases                                        522,115
   Long-term timber supply contract                                 (849,705)
   Loans to related parties                                         (500,496)
                                                                ------------    ------------

          Net Cash Provided by (Used In) Financing Activities      1,808,526      (1,287,958)
                                                                ------------    ------------

NET DECREASE IN CASH                                                (630,617)       (567,603)
EFFECT OF EXCHANGE RATES ON CASH                                    (250,407)        253,706
CASH AT BEGINNING OF YEAR                                            459,927         773,824
                                                                ------------    ------------
CASH AT END OF YEAR                                             $   (421,097)   $    459,927
                                                                ============    ============

RECONCILIATION OF NET LOSS TO NET CASH (USED IN)
   PROVIDED BY OPERATING ACTIVITIES
   Net loss from operations                                     $   (868,406)   $    (56,369)
   Adjustments to reconcile net loss to net cash provided by
     operating activities:
     Depreciation                                                    687,418         520,300
     Stock based compensation                                        255,000
     Changes to provisions for employee benefits                     (17,493)         49,959
     Changes to other provisions                                                      31,073
     Non-cash charges on related party loans                                         563,268
     Changes in assets and liabilities:
       Decrease (increase) in other assets                           (56,028)         25,294
       Decrease (increase) in inventory                           (1,015,050)        380,450
       Decrease (increase) in receivables                            332,236        (231,157)
       Increase (decrease) in payables                               625,781        (534,931)
                                                                ------------    ------------
          Net Cash (Used in) Provided by Operating Activities   $    (56,542)   $    747,887
                                                                ============    ============

NON-CASH FINANCING AND INVESTING ACTIVITIES
   They were no material non-cash financing and investing activities during the
   years ended December 31, 2004 and 2003 except as noted in the cash flow
   statement in respect to borrowings for capitalized lease arrangements.
</TABLE>

                 See accompanying notes to financial statements.


                                      F-4
<PAGE>

                          AUSTRALIAN FOREST INDUSTRIES
                    (Formerly Multi-Tech International Corp.)

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                                                        Accumulated
                             Preferred Stock        Common Stock          Additional                       Other          Total
                             ---------------  ------------------------     Paid-In       Accumulated    Comprehensive  Stockholders'
                             Shares   Amount     Shares       Amount       Capital         Deficit      Income (loss)     Equity
                             -------------------------------------------------------------------------------------------------------
<S>                          <C>      <C>     <C>          <C>             <C>          <C>               <C>           <C>
Balance, December 31, 2002                      5,319,764    $9,813,217                 $(2,034,164)                    $7,779,053
Net loss for the year ended
   December 31, 2003                                                                        (56,369)                       (56,369)
Adjustments from exchange
   rate changes                                                                                           $65,590           65,590
                             -----    ------  -----------  ------------  ------------   ------------      -------       ----------
Balance, December 31, 2003
   and prior to Reverse Merger                  5,319,764     9,813,217                  (2,090,533)       65,590        7,788,274
Reverse Merger (Note 1)
   Exchange of Integrated
     Forest Products Pty Ltd
     shares for Australian
     Forest Industries                         (5,319,764)   (9,813,217) $  9,813,217
   Shareholders equity of
     Australian Forest
     Industries at date of
     merger                                       400,680           400    11,257,463   (11,257,863)
   Reverse Merger capitalization                                          (11,257,863)   11,257,863
   Issuance of shares at date of
    merger                                    240,000,000       240,000      (240,000)
   Issuance of shares for
     consulting agreement                      17,000,000        17,000       238,000                                      255,000
Adjustment from exchange
   rate changes                                                                                           (23,380)         (23,380)
Net loss for the year ended
   December 31, 2004                                                                       (868,406)                      (868,406)
                             -----    ------  -----------  ------------  ------------   ------------      -------       ----------

Balance, December 31, 2004                    257,400,680  $    257,400  $  9,810,817   $(2,958,939)      $42,210       $7,151,488
                             =====    ======  ===========  ============  ============   ============      =======       ==========
</TABLE>

                 See accompanying notes to financial statements.


                                      F-5
<PAGE>

                          AUSTRALIAN FOREST INDUSTRIES
                    (Formerly Multi-Tech International Corp.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 2004

NOTE A -   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      Nature of Business

      Australian Forest Industries ("the Company"), through its wholly owned
      subsidiary Integrated Forest Products Pty Ltd ("Integrated"), operates a
      saw mill in Australia which cuts pine timber into building products to
      supply the commercial and residential industry along the eastern coast of
      Australia.

      Reverse Merger

      On September 1, 2004, Integrated, owned by the Timbermans Group Pty Ltd
      ("Timbermans"), entered into a share exchange agreement with the Company
      and issued 240,000,000 shares of its common stock to acquire Integrated.
      In connection with the share exchange agreement, Integrated became a
      wholly owned subsidiary of the Company and Integrated's officers and
      directors became the officers and directors of the Company. Prior to the
      merger, the Company was a non-operating "shell" corporation. Pursuant to
      Securities and Exchange Commission rules, the merger of a private
      operating company (Integrated) into a non-operating public shell
      corporation with nominal net assets is considered a capital transaction.
      Accordingly, for accounting purposes, the merger has been treated as an
      acquisition of the Company by Integrated and a recapitalization of the
      Company. The historical financial statements for the years ended December
      31, 2004 and 2003 are those of Integrated. Since the merger is a
      recapitalization and not a business combination, pro forma information is
      not presented.

      Foreign Currency Translation

      For 2004, the Company considered the Australian dollar to be its
      functional currency. Assets and liabilities were translated into US
      dollars at the year-end exchange rates. Statement of operations amounts
      were translated using the average rate during the year. Gains and losses
      resulting from translating foreign currency financial statements were
      accumulated in other comprehensive income, a separate component of
      stockholders' equity.

      Cash Equivalents

      For purposes of reporting cash flows, cash equivalents include investment
      instruments purchased with a maturity of three months or less. There were
      no cash equivalents in 2004 or 2003.

      Use of Estimates

      The preparation of financial statements in conformity with generally
      accepted accounting principles requires management to make estimates and
      assumptions that affect the reported amounts of assets and liabilities and
      disclosure of contingent assets and liabilities at the date of the
      financial statements and reported amounts of revenues and expenses during
      the reporting period. Actual results could differ from those estimates.

      Inventories

      Inventories are stated at the lower of cost or market value. Cost is
      determined using the first-in, first-out (FIFO) method.


                                      F-6
<PAGE>

                          AUSTRALIAN FOREST INDUSTRIES
                    (Formerly Multi-Tech International Corp.)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                December 31, 2004

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

      Equipment and Depreciation

      Equipment is stated at cost and is depreciated using the straight line
      method over the estimated useful lives of the respective assets. Routine
      maintenance, repairs and replacement costs are expensed as incurred and
      improvements that extend the useful life of the assets are capitalized.
      When equipment is sold or otherwise disposed of, the cost and related
      accumulated depreciation are eliminated from the accounts and any
      resulting gain or loss is recognized in operations.

      Net Loss Per Common Share

      The Company computes per share amounts in accordance with Statement of
      Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share".
      SFAS No. 128 requires presentation of basic and diluted EPS. Basic EPS is
      computed by dividing the income (loss) available to Common Stockholders by
      the weighted-average number of common shares outstanding for the period.
      Diluted EPS is based on the weighted-average number of shares of Common
      Stock and Common Stock equivalents outstanding during the periods.

      Consolidated Financial Statements

      The consolidated financial statements include the Company and its wholly
      owned subsidiaries. All significant intercompany transactions and balances
      have been eliminated in consolidation.

      Comprehensive Income (Loss)

      SFAS No. 130 establishes standards for the reporting and disclosure of
      comprehensive income and its components to be presented in association
      with a company's financial statements. Comprehensive income is defined as
      the change in a business enterprise's equity during a period arising from
      transactions, events or circumstances relating to non-owner sources, such
      as foreign currency translation adjustments and unrealized gains or losses
      on available-for-sale securities. It includes all changes in equity during
      a period except those resulting from investments by or distributions to
      owners. Comprehensive income is accumulated in accumulated other
      comprehensive income (loss), a separate component of stockholders' equity.

      Business Combinations and Goodwill

      SFAS No. 123, "Accounting for Stock-Based Compensation" prescribes
      accounting and reporting standards for all stock-based compensation plans,
      including employee stock options, restricted stock, employee stock
      purchase plans and stock appreciation rights. SFAS No. 123 requires
      employee compensation expense to be recorded (1) using the fair value
      method or (2) using the intrinsic value method as prescribed by accounting
      Principles Board Opinion No. 25, "Accounting for Stock Issued to
      Employees" ("APB25") and related interpretations with pro forma disclosure
      of what net income and earnings per share would have been if the Company
      adopted the fair value method. The Company accounts for employee stock
      based compensation in accordance with the provisions of APB 25. For
      non-employee options and warrants, the company uses the fair value method
      as prescribed in SFAS 123.


                                      F-7
<PAGE>

                          AUSTRALIAN FOREST INDUSTRIES
                    (Formerly Multi-Tech International Corp.)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                December 31, 2004

NOTE  A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

      Business Combinations and Goodwill (Continued)

      In July 2001, the FASB issued SFAS NO. 142, "Goodwill and Other Intangible
      Assets", which the Company adopted during 2003. SFAS No. 142 requires,
      among other things, the discontinuance of goodwill amortization. In
      addition, the standard includes provisions for the reclassification of
      certain existing recognized intangibles as goodwill, reassessment of the
      useful lives of existing recognized intangibles, reclassification of
      certain intangibles out of previously reported goodwill and the
      identification of reporting units for purposes of assessing potential
      future impairment of goodwill.

      In August 2001, the FASB issued SFAS No. 144, "Accounting for the
      Impairment or Disposal of Long-Lived Assets". SFAS No. 144 changes the
      accounting for long-lived assets to be held and used by eliminating the
      requirement to allocate goodwill to long-lived assets to be tested for
      impairment, by providing a probability weighted cash flow estimation
      approach to deal with situations in which alternative courses of action to
      recover the carrying amount of possible future cash flows and by
      establishing a primary-asset approach to determine the cash flow
      estimation period for a group of assets and liabilities that represents
      the unit of accounting for long-lived assets to be held and used. SFAS No.
      144 changes the accounting for long-lived assets to be disposed of other
      than by sale by requiring that the depreciable life of a long-lived asset
      to be abandoned be revised to reflect a shortened useful life and by
      requiring the impairment loss to be recognized at the date a long-lived
      asset is exchanged for a similar productive asset or distributed to owners
      in a spin-off if the carrying amount of the asset exceeds its fair value.
      SFAS No 144 changes the accounting for long-lived assets to be disposed of
      by sale by requiring that discontinued operations no longer be recognized
      at a net realizable value basis (but at the lower of carrying amount or
      fair value less costs to sell), by eliminating the recognition of future
      operating losses of discontinued components before they occur, and by
      broadening the presentation of discontinued operations in the income
      statement to include a component of an entity rather than a segment of a
      business. A component of an entity comprises operations and cash flows
      that can be clearly distinguished operationally, and for financial
      reporting purposes, from the rest of the entity.

      Revenue Recognition

      The Company's policy is to recognize revenue at the time products are
      shipped from its facilities.

NOTE B - INVENTORY

      Inventory consists of the following at December 31,

                                                   2004            2003
                                                ----------      ----------
      Raw materials and supplies                $   53,298      $  159,504
      Work in progress                             456,694         179,505
      Finished goods                             1,473,047         691,790
                                                ----------      ----------

                                                $1,938,039      $1,030,799
                                                ==========      ==========


                                      F-8
<PAGE>

                          AUSTRALIAN FOREST INDUSTRIES
                    (Formerly Multi-Tech International Corp.)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                December 31, 2004

NOTE C - EQUIPMENT

      Equipment is comprised of the following at December 31,

                                           Useful
                                            Life         2004          2003
                                        -----------  -----------   -----------
      Land                                           $   932,400   $   932,400
      Buildings                              40        1,343,034     1,343,034
      Plant and equipment                    40        9,607,919     6,403,631
      Capital works in progress                          395,134       327,169
      Motor vehicles                          5          155,500        30,758
                                                     -----------   -----------
                                                      12,433,987     9,036,992
      Less: accumulated depreciation                   2,721,972     2,036,081
                                                     -----------   -----------

                                                     $ 9,712,015   $ 7,000,911
                                                     ===========   ===========

NOTE D - RELATED PARTY TRANSACTIONS

      Receivable From Related Party

      At December 31, 2004, the Company advanced $500,496 to the Timbermans
      Group which is currently the controlling shareholders. The advance is
      unsecured and has no specific repayment date. Subsequent to December 31,
      2004, the Timbermans Group loaned the Company $1,000.000.

      Long-Term Log Supply Contract

      In November 2003, the Timbermans Group entered into a 20 year long-term
      log supply contract with the New South Wales State Government. To obtain
      the contract, the Timbermans Group paid $886,648. In February 2004, it
      assigned the contract to the Company's wholly owned subsidiary in
      Australia - Integrated Forest Products Pty, Ltd. The contract is being
      amortized over 20 years.

      The Company has an informal management fee agreement with the Timbermans
      Group for business and consulting management. There is no written
      agreement. During the year ended December 31, 2004, the management fee
      paid to the Timbermans Group was $556,700.

NOTE E - SHORT TERM BORROWING

      The Company has an overdraft facility with the National Bank of Australia
      in the amount of $780,000 at the Australian base rate plus 1.80% annually.
      The amount of the overdraft at December 31, 2004 was $421,097.

      Additionally, the Company has a facility to acquire equipment under
      capitalized leases aggregating $1,666,080. See Note F, Capitalized Lease
      Obligations.

      The Company, in connection with the Long Term Timber Supply Contract, has
      placed a bank guarantee in the amount of $780,000 with the New South Wales
      Government to insure a steady supply of timber.

      All of the credit facilities are secured by a first ranking mortgage
      debenture over all the assets and undertakings of Integrated, a first
      ranking mortgage over the land and buildings at Morwell, Canberra, a fixed
      charge over all the Company's receivables, a term deposit letter of
      set-off over Integrated for


                                      F-9
<PAGE>

                          AUSTRALIAN FOREST INDUSTRIES
                    (Formerly Multi-Tech International Corp.)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                December 31, 2004

NOTE E - SHORT TERM BORROWING (CONTINUED)

      $1,000,000, a master lease agreement with Directors Guarantee and
      Indemnity for $1,666,080, and a $1,560,000 guarantee and indemnity from
      the Directors of Integrated.

      To the extent that the Timbermans Group advances funds to Integrated, the
      Timbermans Group loan facility with the National Bank of Australia has a
      letter of subordination up to $1,800,000.

NOTE F - CAPITAL LEASE OBLIGATIONS

      The Company has obtained various pieces of equipment under capital leases
      expiring through 2009. The assets and liabilities under these capital
      leases ($1,666,080 with the National Bank of Australia) are recorded at
      the lower of the present values of the minimum lease payments or the fair
      values of the assets. The assets are included in property and equipment
      and are being depreciated over their estimated useful lives.

      As of December 31, 2004, minimum future lease payments under these capital
      leases are:

                                                  For the
                                                Years Ending
                                                 December 31,       Amount
                                                 ------------     ----------
                                                    2005          $  954,473
                                                    2006             946,228
                                                    2007             946,228
                                                    2008             946,228
                                                    2009             343,819
                                                                  ----------
              Total minimum lease payments                        $4,136,976
                                                                  ==========

                                                          December 31,
                                                    ------------------------
                                                       2004          2003
                                                    ----------    ----------
      Total minimum lease payments                  $4,136,976    $  374,782
      Less: amounts representing interest              607,784        17,846
             Net minimum lease payments              3,529,192       356,936
      Less: current portion                            731,217       351,308
                                                    ----------    ----------
      Long-term portion                             $2,797,975    $    5,628
                                                    ==========    ==========

NOTE G - INCOME TAXES

      The Company has adopted Financial Accounting Statement SFAS No. 109,
      Accounting for Income Taxes. Under this method, the Company recognizes a
      deferred tax liability or asset for temporary differences between the tax
      basis of an asset or liability and the related amount reported on the
      financial statements. The principal types of differences, which are
      measured at current tax rates, are net operating loss carry forwards. At
      December 31, 2004, these differences resulted in a deferred tax asset of
      approximately $887,700. SFAS No. 109 requires the establishment of a
      valuation allowance to reflect the likelihood of realization of deferred
      tax assets. Since realization is not assured, the Company has recorded a
      valuation allowance for the entire deferred tax asset, and the
      accompanying financial statements do not reflect any net asset for
      deferred taxes at December 31, 2004.


                                      F-10
<PAGE>

                          AUSTRALIAN FOREST INDUSTRIES
                    (Formerly Multi-Tech International Corp.)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                December 31, 2004

NOTE G -  INCOME TAXES (CONTINUED)

      The Company's net operating loss carry forwards amounted to approximately
      $2,958,000 at December 31, 2004, which have unlimited expiration.

NOTE H - STOCKHOLDERS' EQUITY

      In connection with the Reverse Merger on September 1, 2004, the company
      issued 17,000,000 shares to a consultant. The shares were valued at $0.015
      per share which was the average trading price for the third quarter.


                                      F-11
<PAGE>

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Through the September 30, 2004 reporting period, our accountants were Michael
Johnson & Co., LLC. In January 2005, we changed accountants to Meyler & Company
LLC, independent certified public accountants. At no time has there been any
disagreement with such accountants regarding any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure.

ITEM 8A. DISCLOSURE CONTROLS AND PROCEDURES

(a) Disclosure Controls and Procedures.

As of the end of the period covering this Form 10-KSB, we evaluated the
effectiveness of the design and operation of our "disclosure controls and
procedures". The Company's President conducted this evaluation by himself.

(i) Definition of Disclosure Controls and Procedures.

Disclosure controls and procedures are controls and other procedures that are
designed with the objective of ensuring that information required to be
disclosed in our periodic reports filed under the Exchange Act, such as this
report, is recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms. As defined by the SEC, such disclosure
controls and procedures are also designed with the objective of ensuring that
such information is accumulated and communicated to our management, including
the President and Chief Financial Officer, in such a manner as to allow timely
disclosure decisions.

(ii) Limitations on the Effectiveness of Disclosure Controls and Procedures and
Internal Controls.

The Company recognizes that a system of disclosure controls and procedures (as
well as a system of internal controls), no matter how well conceived and
operated, cannot provide absolute assurance that the objectives of the system
are met. Further, the design of such a system must reflect the fact that there
are resource constraints, and the benefits of controls must be considered
relative to their costs. Because of the inherent limitations in all control
systems, no evaluation of controls can provide absolute assurance that all
control issues have been detected. These inherent limitations include the
realities that judgments in decision-making can be faulty, and that breakdowns
can occur because of simple error or mistake. Additionally, controls can be
circumvented in a number of ways. Because of the inherent limitations in a
cost-effective control system, system failures may occur and not be detected.
However, our officers and directors believe that our system of disclosure
controls and procedures provides reasonable assurance of achieving their
objectives.

(iii) Conclusions with Respect to Our Evaluation of Disclosure Controls and
Procedures.

Our officers and directors have concluded, based on the evaluation of these
controls and procedures, that our disclosure controls and procedures are
effective in timely alerting them to material information relating to the
Company required to be included in our periodic SEC filings.

(b) Changes in Internal Controls.

There have been no changes in our internal controls over financial reporting
during the last fiscal quarter of 2004 that has materially affected or is
reasonably likely to affect the Company's internal control over financial
reporting.

ITEM 8B. OTHER INFORMATION

Not applicable.


                                       9
<PAGE>

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT

                             OFFICERS AND DIRECTORS

We have 5 executive officers who also serve as our board of directors. Our
directors are elected at each annual meeting of shareholders. The following
individuals are all of our executive officers and directors:

     Name               Age     Positions and Offices With The Company
     ----               ---     --------------------------------------
     Michael Timms      54      Chief Executive Officer; President; Chairman
                                of the Board

     Norman Backman     56      Chief Operating Officer; Director

     Colin Baird        46      Chief Financial Officer; Director

     Tony Esplin        42      Executive Vice President - Marketing; Director

     Roger Timms        49      Executive Vice President - Engineering; Director

The following is a biographical summary of the directors and officers of the
Company:

Michael Timms

Mr. Michael Bruce Timms was born at 30 May 1950 in Bega, New South Wales,
Australia. He has spent over thirty years in the sawmilling industry. He has
been involved with design and construction of over seven greenfield sawmill
facilities and scores of equipment upgrades across Australia and Canada in both
the Hardwood and Softwood sectors, through his engineering business, Acora
Reneco Group Pty Ltd. Among other responsibilities he works as Chief Executive
Officer and President of the Company and is Chairman of the Board.

Norman Backman

Mr. Norman William Backman was born at 20 September 1948 in Melbourne,
Australia. He has over thirty years of experience in the sawmilling industry. He
has worked for a long period with Amcor and Brown & Dureau as Mill Manager at
the Morwell facility. At Integrated Forest Industries Pty Ltd he will work as
Director of Operations. Mr. Backman has access to a team of industry experienced
individuals possessing relevant and highly refined sawmill information
technology systems technology and cost accounting experience.

Colin Baird

Mr. Colin Baird was born at 22 June 1958 in Melbourne, Australia. He is a
qualified accountant who has operated his own practice, Colib Pty Ltd since
1987. He has been involved in the timber industry through his association with
some of his clients since 1983. At present his practice has in excess of 500
clients. Mr. Baird is Director of Finance of the Company.

Tony Esplin

Mr. Tony Esplin was born at 23 August 1962 in Melbourne, Australia. He has had
twelve years of experience in the sawmill industry covering fabrication of
sawmill equipment, project management of new sawmills through his own business,
Acora Reneco Group Pty Ltd. Over the last four years he has been involved in the
on site management of Integrated Forest Products, covering all aspects of
sawmill administration, including log procurement and product marketing. He
works as Director of Marketing & Log Procurement for the Company.


                                       10
<PAGE>

Roger Timms

Mr. Roger Kenneth Timms was born 24 April 1956 in Bega, New South Wales,
Australia. He has spent over twenty-five years in the sawmilling industry. He is
currently involved in the design, supply and installation of sawmill equipment
in Australia and part owns a company, Acora Reneco Group Pty Ltd, which performs
these functions. He is the Company's Director of Engineering.

Director Positions in Other Public Companies

No director holds any directorship in a company with a class of securities
registered pursuant to Section 12 of the Securities Exchange Act of 1934 or
subject to the requirements of Section 15(d) of such Act. No director holds any
directorship in a company registered as an investment company under the
Investment Company Act of 1940. However, with the exception of Norman Backman,
the remaining directors have other business interest and work for the Company on
a part-time basis at the present time.

Code of Conduct

The Company does not have an Audit or Strategy committee. Neither does the
Company have a standing nominating committee or any committee performing a
similar function. For the above reasons, the Company has not adopted a code of
ethics.

                      COMPLIANCE WITH SECTION 16(a) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Securities Exchange Act of 1934 requires executive officers
and directors who beneficially own more than ten percent (10%) of the Company's
Common Stock to file initial reports of ownership and reports of changes of
ownership with the Securities and Exchange Commission. Executive officers,
directors and greater than ten percent (10%) beneficial owners are required by
Commission regulations to furnish the Company with copies of all Section 16(a)
forms they file.

The information required to be compliant with Section 16(a) is found herein.
However, at the present time the required individuals have not filed the
appropriate Section 16(a) forms although it has been represented to the Company
that such are being prepared and will be filed shortly after the filing of this
annual report.


                                       11
<PAGE>

ITEM 10. EXECUTIVE COMPENSATION

The table below sets forth all annual and long-term compensation paid by the
Company through the latest practicable date to the Chief Executive Officer of
the Company and to all executive officers of the Company who received total
annual salary and bonus in excess of $100,000 for services rendered in all
capacities to the Company and its subsidiaries during the fiscal year ended
December 31, 2004 only as the Company did not have operations in 2003.

The following table sets forth information concerning all remuneration paid by
the Company as of December 31, 2004 to the Company's Directors and Executive
Officers:

Summary Compensation Table

<TABLE>
<CAPTION>
                                                                              Long-Term
                                                                             Compensation
                                                                                Awards
                                                                             ------------
                                                                                         Securities
                                                                                         Underlying
                                                                                         Options (#)    All Other
Name and Principal Position                         Year          Salary         Bonus     /SARS       Compensation
- ---------------------------                         ----          ------         -----     -----       ------------
<S>                                                 <C>         <C>              <C>     <C>                    <C>
Michael Timms -
Chairman of the Board; CEO and President            2004        $ 56,000         0                                0

Coin Baird - Chief Financial Officer
   and Director                                     2004          28,000         0                                0

Tony Esplin - Executive Vice President
   - Marketing; Director                            2004          56,000         0                                0

Norman Backman - Chief Operating
   Officer; Director                                2004         140,000         0                                0

Roger Timms - Executive Vice President
   - Marketing; Director                            2004          20,000         0                                0
</TABLE>

Directors' Compensation

Other than minimal expenses incurred for traveling to Canberra which were
reimbursed by the Company, during the fiscal year ended December 31, 2004 our
Directors did not received a fee for serving in that capacity.

Employment Contracts

There are no employment agreements with the executive officers at this time.


                                       12
<PAGE>

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Security Ownership of Certain Beneficial Owners

The following table sets forth information regarding the beneficial ownership of
the shares of the Common Stock (the only class of shares previously issued by
the Company) at May 16, 2005, by (i) each person known by the Company to be the
beneficial owner of more than five percent (5%) of the Company's outstanding
shares of Common Stock, (ii) each director of the Company, (iii) the executive
officers of the Company, and (iv) by all directors and executive officers of the
Company as a group. Other than the Timbermans Group Pty Ltd, each person named
in the table, has sole voting and investment power with respect to all shares
shown as beneficially owned by such person and can be contacted at the address
of the Company.

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Title of Class            Name of Beneficial Owner          Shares of Common Stock              Percent of Class
- ----------------------------------------------------------------------------------------------------------------------
<S>                       <C>                                                 <C>                              <C>
Common                    Timbermans Group Pty Ltd(1)                         140,000,000                      54.47%

- ----------------------------------------------------------------------------------------------------------------------
Common                    Jeffrey Reade                                        17,000,000                       6.61%

- ----------------------------------------------------------------------------------------------------------------------
Common                    Norman Backman(2)                                    20,000,000                       7.78%

- ----------------------------------------------------------------------------------------------------------------------
Common                    Colin Baird(3)                                       20,000,000                       7.78%

- ----------------------------------------------------------------------------------------------------------------------
Common                    Tony Esplin(4)                                       20,000,000                       7.78%

- ----------------------------------------------------------------------------------------------------------------------
Common                    Michael Timms(5)                                     20,000,000                       7.78%

- ----------------------------------------------------------------------------------------------------------------------
Common                    Roger Timms(6)                                       20,000,000                       7.78%
- ----------------------------------------------------------------------------------------------------------------------

Directors and Officers
as a group                                                                    240,000,000                      93.39%
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Timbermans Group Pty Ltd is an Australian corporation with 5 shareholders
who are the same individuals as our officers and directors. For the purposes of
aggregating the securities ownership of officers and directors, we have included
those shares held by Timbermans Group.

(2) Mr. Backman maintains his shares in a holding company organized under the
laws of the Cayman Islands of which he has sole beneficial control.

(3) Mr. Baird maintains his shares in a holding company organized under the laws
of the Cayman Islands of which he has sole beneficial control.

(4) Mr. Esplin maintains his shares in a holding company organized under the
laws of the Cayman Islands of which he has sole beneficial control.

(5) Mr. Michael Timms maintains his shares in a holding company organized under
the laws of the Cayman Islands of which he has sole beneficial control.

(6) Mr. Roger Timms maintains his shares in a holding company organized under
the laws of the Cayman Islands of which he has sole beneficial control.


                                       13
<PAGE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS

Timbermans Group Pty Ltd owns the majority of the shares of common stock of the
Company and its shareholders are the same individuals as our officers and
directors. Three of the directors of our Company also own 100% of Acora Reneco
Group which is the largest Australian manufacturer and designer of original
sawmilling equipment as well as an agent for sales and distribution for
sawmilling equipment manufactured by other companies. The Company presently has
an agreement in place pursuant to which Acora supplies the Company's sawmill
equipment needs. All transactions between Acora and the Company are at arms
length terms.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits.

Exhibit
Number   Exhibit Description

10.1     Enterprise Bargaining Agreement

10.2     ARG Agreement

10.3     Bombala Timber Supply Agreement

10.4     Radiata Pine Log Sale Agreement

31.1     Certification of Chief Executive Officer pursuant to Section 302 of the
         Sarbanes-Oxley Act of 2002

31.2     Certification of Chief Financial Officer pursuant to Section 302 of the
         Sarbanes-Oxley Act of 2002

32.1     Certification of Chief Executive Officer pursuant to Section 906 of the
         Sarbanes-Oxley Act of 2002

32.2     Certification of the Chief Financial Officer pursuant to Section 906 of
         the Sarbanes-Oxley Act of 2002

(b) Reports on Form 8-K.

None.


                                       14
<PAGE>

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

For the Company's fiscal year ended December 31, 2004, the cost for professional
services rendered for the audit of our financial statements and the review of
the Form 10-KSB aggregated $15,000.

All Other Fees

The Company did not incur any other fees related to services rendered by our
principal accountant for the fiscal year ended December 31, 2004.


                                   SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.

AUSTRALIAN FOREST INDUSTRIES


/s/ Michael Timms
- -----------------
Name: Michael Timms
Title: Chief Executive Officer, President and Chairman
Date: May 18, 2005


/s/ Colin Baird
- ---------------
Name: Colin Baird
Title: Chief Financial Officer and Director
Date: May 18, 2005


/s/ Roger Timms
- ---------------
Name: Roger Timms
Title: Executive Vice President and Director
Date: May 18, 2005


                                       15
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>v018751_ex10-1.txt
<TEXT>
1. TITLE

The title of this Agreement is the Integrated Forest Products Pty Ltd
Canberra/C.F.M.E.U. Agreement 2004 - 2005.

2. ARRANGEMENT

1 Title
2 Arrangement
3 Application and Parties Bound
4 Relationship to Parent Award
5 Period of Operation
6 Objectives
7 Definitions
8 Consultative Mechanisms and Procedures in the Workplace
9 Introduction of Major Change in the Workplace
10 Procedures for the Avoidance of Industrial Disputes
11 Employment Categories
12 Outsourcing
13 Utilisation of Skills, Competence and Training
14 Equal Employment Opportunity
15 Anti-Discrimination
16 Workplace Harassment
17 Redundancy
18 Termination of Employment
19 Abandonment of Employment
20 Emergency Provisions
21 Time and Wage Records
22 Hot Work Arrangements
23 Skill Based Grade Structure
24 Wages
25 Hours of Work
26 Breaks
27 Shift Work
28 Annual Leave
29 Personal/Carers Leave
30 Public Holidays
31 Blood Donors
32 Jury Service
33 Union Training Leave
34 Training and Skill Development
35 Literacy and Numeracy
36 Accident Pay
37 Toxic Substances
38 Amenities
39 Clothing, Equipment and Tools
40 First Aid
41 Right of Entry
42 Union Delegates
43 Signatures

<PAGE>

3. APPLICATION AND PARTIES BOUND

This Agreement shall apply at:

Integrated Forest Products Pty Ltd, Tralee Street, Hume, ACT, 2607

and shall be binding upon:

      o     Integrated  Forest Products Pty Ltd, Tralee Street,  Hume, ACT, 2607
            in  respect  of all  employees  and  all  new  employees,  including
            clerical/office employees,  maintenance employees,  electricians and
            fitters, employed at the site listed above and working in activities
            covered by the Timber and Allied  Industries  Award 1999,  and other
            activities covered by this Agreement, and;

      o     The  Construction,  Forestry,  Mining and Energy  Union -  Forestry,
            Furnishing,   Building  Products  and  Manufacturing  Division,  NSW
            Divisional  Branch,  its officers and members employed at Integrated
            Forest Products Pty Ltd, Tralee Street,  Hume, ACT, 2607 and working
            in activities,  including  clerical/office  work,  maintenance work,
            electrical work and fitter work and activities covered by the Timber
            and Allied  Industries  Award 1999 and other  activities  covered by
            this Agreement, and;

      o     All  employees  and new  employees  employed  at  Integrated  Forest
            Products Pty Ltd,  Tralee  Street,  Hume,  ACT,  2607 and working in
            activities,   including   clerical/office  work,  maintenance  work,
            electrical work and fitter work and activities covered by the Timber
            and Allied  Industries  Award 1999 and other  activities  covered by
            this Agreement.  The terms and conditions of this Agreement shall be
            a condition of employment  and  explained to all existing  employees
            and all new employees prior to commencement.

4 RELATIONSHIP TO PARENT AWARD

The Integrated Forest Products Pty Ltd  Canberra/C.F.M.E.U.  Agreement 2004-2005
shall  be read  and  interpreted  in  conjunction  with the  Timber  and  Allied
Industries Award 1999, including all subsequent  variations,  which is agreed to
incorporate  the provisions of that Award as it was formally known as the Forest
and Building Products,  Manufacturing and Merchandising (General) Award 1996, as
it existed at 30 June 1998,  where such provisions are not contained  within the
Timber  and  Allied  Industries  Award  1999.   Provided  that  where  there  is
inconsistency  between  the  before  mentioned  Awards,  the  Integrated  Forest
Products Pty Ltd Canberra/C.F.M.E.U.  Agreement 2004-2005 shall take precedence,
except where the overall benefits of the Awards, for a particular case, are more
advantages to the employee in which case the Award shall apply.

<PAGE>

5 PERIOD OF OPERATION

This Agreement shall operate from the date of certification  and shall remain in
force until 31 March 2006.

This Agreement  shall be  re-negotiated  no later than three months prior to the
ending of this Agreement.

This  Agreement  shall remain in force until such time as it is  superseded by a
new agreement.

6 OBJECTIVES

The aim of this  Agreement  is to promote  through  consultation,  real gains on
productivity  and/or  efficiency  and/or  flexibility  in  the  work  place.  It
facilitates continued progress on Award restructuring and training initiatives.

The parties recognise that work place reform is necessary to improve Australia's
economic  performance  generally  and that of the  Forest  and  Forest  Products
particularly.

The parties agree that the provisions for reform set out in the Agreement should
result in the  unlocking  of  significant  mid and  long-term  productivity  and
efficiency benefits at the enterprise level.

The  parties  also  recognise  the  necessity  of  adopting a  consultative  and
participative approach to work place reform in order to achieve a genuine change
in the industrial culture at all levels within the industry.

The parties' objective is to achieve real sustainable improvements by way of;

a]  Simultaneous  improvements  of all the work place  issues  such as  quality,
technology,  work  organisation,  management  practices,  product  delivery  and
education/training through continuous learning.

b] Reduction of lost time through  injury by the promotion of a safer and better
working environment.

c] The  establishment of closer links with customers and suppliers to ensure all
aspects of the service chain are focused on customer needs and improved customer
satisfaction through appropriate training.

7. DEFINITIONS

7.1 In this Agreement, unless contrary, intention appears.

7.1.1 "Employer" means Integrated Forest Products Pty Ltd.

<PAGE>

7.1.2 " Union"  means  the  Construction,  Forestry,  Mining  and  Energy  Union
- -Forestry,   Furnishing,  Building  Products  and  Manufacturing  Division,  NSW
Divisional Branch.

7.1.3 "Leading hand" means an employee who, while working, has charge or control
of any adult person or persons not being  apprentices and who has been appointed
by the employer to take such charge or control.

7.1.4  "Actual  rate of pay" is defined as the total  amount an  employee  would
normally  receive for performing 38 hours of ordinary  work.  Provided that such
rate shall expressly exclude  overtime,  penalty rates,  disability  allowances,
shift  allowance,  special rates,  fares and  travelling  time allowance and any
other ancillary payments of a like nature. Provided further that this definition
shall not include  production  bonuses and other  methods of payment by results,
which by  virtue of their  basis of  calculation  already  produce  the  results
intended by this clause.

8. CONSULTATIVE MECHANISMS AND PROCEDURES IN THE WORKPLACE

8.1 It is agreed  between  management  and  employees to establish an Enterprise
Consultative  Committee  (hereinafter known as the ECC) , in line with the terms
outlined in the Timber and Allied  Industries  Award 1999 clauses 12,  12.1,12.2
(hereinafter known as the Award).

The development of effective  participation/consultative  practices is important
in the  process  of  award  restructuring  and can lead to  advantages  for both
employers  and  employees.   To  ensure  that  workplace  reform  through  Award
restructuring continues consultative  mechanisms/practices  shall be established
within each  enterprise.  This workplace  consultation is to be fostered through
the ECC.

8.2 Role/Relevant Issues

The role of the ECC is to consider all issues relevant to the enterprise,  which
affects employees and management,  and to determine through consultation between
employee and management representatives how these issues should be dealt with.

The ECC will not deal with:

      o     Matters  that  should be dealt with by the  Occupational  Health and
            Safety Committee.
      o     Industrial relations issues.

All parties  will  provide all  information  to the ECC that it needs to operate
effectively.  Reasons for  non-disclosure  of confidential  information shall be
explained.

Employee  representatives will consult with, and report back to all employees on
issues  dealt with by the ECC and take to ECC meetings the views gained from the
members.

<PAGE>

8.3 Aims

The aims of the ECC are to improve:

      o     Productivity  within the enterprise where productivity is considered
            within a broad framework.
      o     The quality of working life for workers.
      o     Skills of workers through  training,  which will result in access to
            more rewarding and satisfying jobs.

8.4 Functions, Methods, Decisions and Implementations

To be agreed by the ECC as  required  to fulfill  the ECC aims (per 8.3  above).
This  is  to  be   achieved   in  the  manner   outlined   in  the  Award  by  a
consensus-negotiated process.

8.4.1  The   form,   structure   and   method   of   implementing   consultative
mechanisms/practices  shall be determined at the  enterprise  level by agreement
between the employer, employees and the union.

8.4.2 The  process  of  consultative  practices  is a  mechanism  through  which
employees  can be involved in and  positively  contribute  towards  management's
decision-making  process.   Decisions  are  encouraged  to  be  reached  through
consultative   mechanisms/   practices,   however,   managerial  prerogative  is
acknowledged.

8.4.3 In enterprises where agreed  participative/consultative  mechanisms are in
place the  parties  may vary the  application  of  designated  Award  conditions
referred to in the Award providing  two-thirds of those affected employees agree
to such change.

8.4.4  Agreements  reached on the application of more flexible  designated Award
conditions shall be approved by the employees affected and the ECC.

8.4.5 The union  reserves  the right to advise its members on award issues under
discussion.

8.5 Structure

The ECC Canberra will have six members, three management and three employees.

The committee shall elect a Chairperson as organiser and coordinator.

The ECC members may nominate proxies in advance.

Employees  shall elect two  representatives  and the union shall  appoint  their
on-site union delegate as third employee representative.

<PAGE>

The union  representative  shall  cease to be on the ECC if they resign as union
delegate. All employee representatives shall cease to be on the ECC if they take
up management positions.

Employee  representatives may be removed from the committee if their performance
has been judged unsatisfactory, the union office has been consulted and a ballot
of employees has been held which endorses this course of action.

Management shall control the appointment and removal of their representatives.

Representatives shall be elected annually.

ECC jobs will be rotated quarterly and workload shall be shared equitably.

8.6 Meetings and Decision Making

Will be arranged by the ECC both regularly and as required (normally monthly.

A quorum shall be at least two management and two employee representatives.

An agenda shall be prepared by ECC member input and finalised and  distributed a
week before the meeting to all ECC  members  and to employee  notice  boards and
lunchrooms. New matters may be raised at meetings as the majority see fit.

Minutes will be taken by an agreed upon committee  member and distributed to all
ECC members and to employee notice boards and lunchrooms.  All ECC members shall
agree upon all minutes before they are issued.

The ECC  shall be run  on-site  with the  right to  consult  the  union or upper
management as ECC members see fit.

The ECC will  discuss  issues  and  make  decisions.  Decisions  will be made by
consensus. Where consensus cannot be reached the dispute settling procedure will
apply.

The ECC should evaluate its operations from time to time in order to improve its
effectiveness.

8.7 Facilities

Non-management  members of the ECC involved in the  consultative  mechanism will
have reasonable  accessibilities in the conduct of their role as a member of the
ECC.

o     A lockable filing cabinet
o     Typing services
o     Photocopying
o     Telephone
o     Office accommodation
o     Meeting room
o     Facsimile service where available, and
o     Transport where needed

<PAGE>

Where the  facilities  set out above do not exist at the  enterprise,  agreement
shall be reached  between  the parties  for the  exemption  of any or all of the
facilities  being  provided  for such  period  that may be  agreed  between  the
parties.

The parties  shall not  unreasonably  withhold any such  agreement and will have
regard to the nature and size of the enterprise.

ECC representatives  must be provided with paid time during normal working hours
to prepare for consult with and report back to members on ECC issues.

The ECC will determine by consensus the timing of these consultations and report
backs with will be arranged for every ECC meeting.

8.8 Discrimination

No  person  shall  be  discriminated  against  in any way as a  result  of their
involvement in ECC activities.

8.9 Observers

Observers and advisers may be invited to attend ECC meetings by agreement of the
Committee.

NOTE -  Accredited  union  and  management  officials  have the  right to attend
meetings.

8.10 Training

ECC  members  will be  entitled  to  training to help them carry out their role.
Training will be carried out during normal working hours and  participants  will
be paid at their usual rate for that time.  This training  shall be conducted as
per clause 13 of the Award.

8.11 Dispute Settlement Procedure

If the committee is unable to reach a decision on a matter it may be referred to
the union and senior  management for resolution.  If no resolution is achievable
normal industrial  relations procedures apply. Refer to clause 10 Procedures for
the Avoidance of Industrial Disputes.

8.12 An Environment Agreement

An  environment  agreement  will be developed  to provide a means of  addressing
environmental issues which arise in or impact the workplace. This agreement will
be discussed and approved by the ECC.

<PAGE>

9 INTRODUCTION OF MAJOR CHANGE IN THE WORKPLACE

9.1 Employees duty to notify

9.1.1 Where the employer has made a definite decision to introduce major changes
in production program, organisation,  structure or technology that are likely to
have  significant  effects on employees,  the employer will notify the employees
who may be affected by the proposed changes and their union.

9.1.2 "Significant effects" include termination of employment,  major changes in
the composition,  operation or size of the employer's workforce or in the skills
required,   the   elimination   or   diminution  of   opportunities,   promotion
opportunities  or job  tenure,  the  alteration  of hours of work,  the need for
retraining  or  transfer  of  employees  to  other  work  or  locations  and the
restructuring  of jobs.  Provided that where the Agreement  makes  provision for
alteration of any of the matters referred to herein an alteration will be deemed
not to have significant effect.

9.2 Employer's duty to discuss change

9.2.1 The  employer  will discuss with  affected  employees  and their union the
introduction  of the changes  referred to in clause 9.1, the effects the changes
are likely to have on  employees,  measures  to avert or  mitigate  the  adverse
effects of such  changes on  employees  and will give  prompt  consideration  to
matters raised by the employees and/or their union in relation to the changes.

9.2.2 The  discussions  will commence as early as  practicable  after a definite
decision has been made by the employer to make the changes referred to in clause
9.1.

9.2.3 For the purposes of such discussion,  the employer will provide in writing
to the employees  concerned and their union, all relevant  information about the
changes including the nature of the changes proposed and the expected effects of
the  chances  on  employees  and any other  matters  likely to affect  employees
provided that the employer is not required to disclose confidential  information
the disclosure of which would be inimical to the employer's interests.

10 PROCEDURES FOR AVOIDANCE OF INDUSTRIAL DISPUTES

Any issue that  arises  between  the  parties  whether in relation to any matter
covered by this Agreement  including a breach or failure to implement any matter
covered by this Agreement or any matter covered by the appropriate Award will be
dealt with in the following manner:

10.1 A  dispute  that  affects  one or  more  employees  but  not a  significant
proportion  of  the  worksite  will  be  raised  by  an  individual  or a  union
representative or other employee  representative to the immediate supervisor for
resolution.  If resolution of the issue does not result the parties will involve
higher levels of management and higher levels of union representation (including
the site union committee) or other  representation  where  established until the
dispute is resolved or the  dispute is  referred  to the  Australian  Industrial
Relations Commission and dealt with as per clause 10.5.

<PAGE>

10.2 A dispute  affecting  a  significant  proportion  of the  employees  in the
worksite will in the first instance be raised at the site ECC for resolution. If
this  will  or  does  result  in a  delay  special  meetings  of  the  ECC  or a
subcommittee  that is  representative  of the ECC  will be held to  resolve  the
issue.  A dispute  is not  resolved  until a full time union  official  or other
employee representative has examined the proposed resolution.

10.3 A dispute effecting a proposed  reduction in employment  numbers,  wages or
conditions of employees  covered by this  Agreement will be raised by contacting
the relevant state branch of the union (where the dispute involves employees who
are members of the union) and  establishing  a process to resolve the dispute by
involving full time union officials and/or other employee representatives,  site
union delegates, employees and relevant management representatives.

10.4 No employee will lose any income as a result of being  involved in attempts
to resolve disputes under this clause and this Agreement.

10.5 If the dispute is not resolved in accordance  through the above  procedures
one or both of the parties may refer the  dispute to the  Australian  Industrial
Relations  Commission for  conciliation in order to resolve the dispute.  If the
dispute is not resolved by conciliation and in the view of the Commission cannot
be resolved by conciliation  the parties agree to have the dispute dealt with by
arbitration by the Australian  Industrial Relations Commission and such decision
will be accepted.

10.6  Without  prejudice to either party and except where a bona fide health and
safety issue is involved  work shall  continue and the status quo will remain as
existed either prior to the dispute or any changes made that caused the dispute,
while  matters  in  dispute  are  being  dealt  with in  accordance  with  these
procedures.  Any unnecessary delays as a result of management's  approach in the
resolution of a dispute may lead to industrial  action being taken by members of
the union in order to encourage a positive response from management.  Management
will not take any legal  action in  response  to such  action  taken  under this
clause.

11 EMPLOYMENT CATEGORIES

11.1 Probationary Employment

Employment during the first six weeks will be from day to day at the weekly rate
prescribed  except  in the case of  re-engagement  within  one  month  after the
termination  of a  previous  service  of the  employee  with the  employer.  Any
extension of the probation  period for any individual  person will only occur by
agreement between the parties.

<PAGE>

11.2 Full Time

All full time employees are employed on a weekly basis.

11.3 Casual Employment

11.3.1 A casual employee shall be paid per hour one  thirty-eighth  of the award
rate applicable for the work performed plus a loading of 20 percent.

11.3.2 The number of casual employees shall not exceed a ratio of one to ten (or
part  thereof) of the total number of full time  employees  employed  under this
agreement.

11.3.3  Notwithstanding  the  prescribed  number  of casual  employees  fixed in
accordance with clause 11.3.2.

11.3.2 Hereof,  additional casual employees may be employed to cover the absence
of full  time  employee  during a period  of long  service  leave,  sickness  or
accident.

11.3.4  A  casual  employee  who is  engaged  in  excess  of 30  hours  per week
continuously  for a three month  period shall be deemed to be a full time weekly
employee and shall be entitled to long service  leave  entitlements  as from the
commencement of the casual employment date.

11.3.5 A casual  employee  who works in excess of the  ordinary  hours fixed for
weekly  employees  on any day  shall be paid at the  appropriate  overtime  rate
provided  in this  agreement  on the casual  employees  actual rate of pay (i.e.
including casual loading).

11.3.6 A casual  employee  engaged  for a part of any day shall be entitled to a
minimum of four hours pay per day  whether  the casual  employee  is required to
work for four hours or not.

11.3.7 Casual  employees  shall be engaged in accordance with clause 15.4 of the
Award.

11.3.8  Casual  employees  shall not continue in  employment  in  preference  to
full-time  weekly paid employees as a result of  retrenchments or redundancy for
any reason other than as agreed by the ECC.

11.3.9 A casual  employee may apply for a full time  position  with the employer
should a vacancy  occur and  subject  to the casual  being  able to perform  the
duties required or undertake training to acquire the skills required to fill the
vacant position in a period  acceptable to the employer then the casual employee
shall have preference of employment for the vacant position.

<PAGE>

11.4 Part Time employment

11.4.1  Except where  agreement is reached in accordance  with the  facilitative
provisions  of the Award part time  employment  will not be offered  without the
prior agreement of the ECC.

11.4.2 The agreed weekly and daily ordinary hours of work once  determined  will
not be altered without the written consent of the employee.

11.4.3 Except where agreement is reached in the ECC a part time employee will be
employed for not less than 16 hours or in excess of 32 hours per week.

11.4.4. A part time employee will be paid for each hour worked one thirty-eighth
of the weekly wage prescribed by the Skill Based Structure of this Agreement for
the grade of work performed.

11.4.5 A part time  employee  who works in  excess of the daily  hours  fixed in
accordance  with clause 25 of this Agreement will be paid overtime in accordance
with clause 31 of the Award.

11.5 Leave Provisions

11.5.1 A part  time  employee  is  entitled  to annual  leave and sick  leave in
accordance with this Agreement in proportion to ordinary hours worked.

11.5.2  Where the normal  paid hours  fall on a public  holiday  and work is not
performed by the employee, such employee will not lose pay for the day.

11.5.3 Where a part time employee  would  normally work on either or both of the
two working days  following the death of a close relative which would entitle an
employee on weekly hiring to bereavement  leave in accordance  with clause 29 of
this Agreement,  the employee is entitled to be absent on personal/carers  leave
on either or both of those two working  days  without loss of pay for the day or
days concerned.

Subject to clause 11.5 all  provisions  of this  Agreement  will apply to a part
time employee.

11.6 Apprentices

The  regulations of the  Vocational  Education and Training Act 2003 will apply.
Apprentices will be paid the following percentages of the weekly rate prescribed
for Level 5 of the skill based grade structure expressed in the Award.

<PAGE>

Year of Apprenticeship

1             50%
2             60%
3             75%
4             90%

11.7 Subject to the  possession of an  appropriate  license or  certificate  and
competency an employee eighteen years of age or over can operate a chainsaw.

11.8 Trainees

Entry  level  trainees  may be employed  on terms and  conditions  agreed by the
employer,  employees and union  consistent  with  provisions  of the  Vocational
Education and Training Act 2003.

12. OUTSOURCING

Outsourcing of work currently done by the site will not be introduced without in
the  first  instance  consulting  and  reaching  agreement  with the ECC.  These
discussions  will  occur  at  least 2 months  prior  to any  discussions  with a
potential outsourcing.

The employer will not vary any existing  outsourcing  arrangements without prior
agreement  with  the  ECC.  The  employer  will  supply  a  list  of  outsourced
operations.

13 UTILISATION OF SKILLS, COMPETENCE AND TRAINING

13.1 The  employer may direct an employee to carry out such duties as are within
the limits of the employee's skill,  competence and training consistent with the
classification  structure of this  Agreement  provided  that such duties are not
designed to promote deskilling.

13.2 The  employer  may direct an employee to carry out such duties and use such
tools and  equipment  as may be required  provided  that the  employee  has been
properly trained in the use of such tools and equipment.

13.3  Cross-skilling  between  maintenance  and production  functions will occur
provided that  employees  required to perform any given task are fully  trained,
competent and able to comply with all regulatory and safety  requirements  (e.g.
limited electrical licenses for electrical isolations).

13.4 Any direction issued by the employer pursuant to clauses 13.1 and 13.2 will
be consistent with the employer's responsibilities to provide a safe and healthy
working environment.

13.5 The parties agree to observe the requirements of Quality Accreditation.

<PAGE>

13.6 A continuous  improvement  programme  (`CIP') will be  established in which
employees will  participate in CIP teams jointly with  management.  The employer
will provide appropriate training.

14 EQUAL EMPLOYMENT OPPORTUNITY

The  employer is an equal  opportunity  employer  and has a policy  statement as
required by  legislation.  The ECC will review  existing equal  opportunity  and
affirmative  action  provisions during the life of this Agreement with a view to
breaking down any existing barriers and to ensure that individuals have the same
rights and  opportunities  to  training,  job access and  advancement.  Disabled
people will continue to be employed provided their employment is consistent with
safety and productivity objectives.

15 ANTI-DISCRIMINATION

15.1 It is the  intention of the  respondents  to this  Agreement to achieve the
principal  object in Section 3 of Part I of the Workplace  Relations Act 1996 by
helping to prevent and eliminate  discrimination  on the basis of race,  colour,
sex, sexual  preference,  age,  physical or mental  disability,  marital status,
family  responsibilities,   pregnancy,  religion,  political  opinion,  national
extraction or social origin.

15.2 Accordingly,  in fulfilling their obligations under the disputes  avoidance
and settling  clause,  the respondents  must make every endeavour to ensure that
neither the Award  provisions  nor their  operation  are directly or  indirectly
discriminatory in their effects.

15.3 Nothing in this clause is to be taken to affect;

15.3.1 any different  treatment (or treatment having different effects) which is
specifically exempted under the Commonwealth anti-discrimination legislation,

15.3.3 an employee,  employer or registered  organisation,  pursuing  matters of
discrimination in any state or federal jurisdiction, including by application to
the Human Rights and Equal Opportunity Commission.

16 WORKPLACE HARASSMENT

In line  with  legislative  requirements  the  employer  will  ensure  that  all
employees work in an environment,  which is free from harassment of any kind. To
ensure this occurs,  a policy and procedures  statement will be developed by the
ECC including a grievance procedure to handle all complaints of harassment.

The  employer  will  ensure  that  all  employees  are  aware  of the need for a
harassment free workplace.

1. Joint responsibility of the parties to stop workplace harassment.

<PAGE>

17. REDUNDANCY

17.1 Application and Definition

This clause applies in the case of:

17.1.1 a general downturn in activities brought about by a decline in demand for
the employer's products or unavailability of resource or materials.

17.1.2   restructuring  of  the  business,   reorganisation   of  work  systems,
introduction of technology or machinery which impacts on staffing levels.

17.1.3 Permanent closure of the plant or part thereof.

17.2 Consultation and Selection Process

17.2.1 In  determining  the employees to be retrenched the employer will consult
with the ECC and the union.  The selection  criteria will be primarily  based on
the following:

17.2.1 (a) skills required to ensure the efficient operation of the enterprise.

17.2.1 (b) voluntary retrenchments.

17.2.2 All parties will adhere to the requirements of the Worker's  Compensation
Act 1951 as amended in relation to employees suffering work related incapacities
and disabilities.

17.2.3 This clause does not apply to casual employees.

17.3 Period of Notice

17.3.1  The  employer  will  consult  with the  employees  and the  union at the
earliest opportunity should the circumstances provided for in clauses 17.1.1 and
17.1.2 arise.

17.3.2 The employer  will give a minimum of four (4) weeks formal  notice or pay
in lieu of notice to affected employees.

17.3.3 The  employer  will not,  within the period of twelve (12) weeks prior to
any  retrenchments,  transfer  an employee  into a position,  which is to become
redundant.

17.4 Employees Under Notice

17.4.1 The employer  will  provide an itemised  statement of all payments due to
each employee who is under notice of redundancy.

17.4.2 An employee who has been given notice of retrenchment may elect to resign
prior to the  effective  date of the  employee's  retrenchment  notice.  In such
cases, any payments arising under this clause will be calculated to the date the
resignation takes effect.

<PAGE>

17.4.3  Should an employee  under  notice die,  prior to the  nominated  date of
termination,  all benefits of this Agreement to which such employee was entitled
shall be paid directly to the employee's  legal dependent or if the employee had
no legal dependents, benefits will be paid to the estate of the employee.

17.5 Assistance

17.5.1 The employer  will make every  endeavour  to assist an employee,  who has
been made  redundant,  to find  suitable  employment.  From the time an employee
receives notice of retrenchment and up to the date of termination,  a reasonable
amount of time off work will be granted to the employee without deduction of pay
to attend employment interviews.

17.5.2  The  employer  will  give to the  employee,  no  later  than  the day of
termination,   a  written  certificate  of  service  indicating  the  period  of
employment,  the reason for  termination,  and if requested by the  employee,  a
written reference.

17.6 Alternative Position

17.6.1  Where the  employer,  on  account  of  redundancy,  offers  an  employee
employment at a lower rate of pay, or work that is of a significantly  different
capacity or character and the employee  declines the offer,  the  termination of
employment  will be deemed to have been made by the employer and the employee is
entitled to the benefits provided by this clause.

17.6.2 Where an employee accepts an alternative position of different character,
a one (1) month trial period will be observed to determine  the  suitability  of
the new  position  and the employee  will not be denied the  provisions  of this
clause should the position be unsuitable.

17.7 Re-Employment

17.7.1 Employees who are retrenched may apply for any subsequent vacancies which
may arise and will  receive  priority  of  consideration  for  re-engagement  in
positions  for  which  they  have the  appropriate  skill  level,  provided  the
retrenched employee applies for a vacant position within,  twelve (12) months of
their retrenchment date.

17.8 Long Service Leave

Entitlement  to long service leave or payment in lieu thereof will be determined
in accordance with the Long Service Leave Act 1976 (ACT) with the exception that
the  qualifying  period for pro-rata  entitlements  will be after five (5) years
service.

<PAGE>

17.9 Sick Leave

All outstanding sick leave  entitlements  accrued to an employee will be paid on
termination.

17.10 Superannuation

Superannuation  benefits  will  not be  limited  or  offset  against  redundancy
payments provided in this clause.

17.11 Retrenchment Pay

17.11.1  Employees who are retrenched  will be paid three (3) weeks pay for each
year of  service or part  thereof to a maximum of fifty two (52) weeks pay.  For
example with 5.3 years of service an employee would receive a payment equivalent
to 5.3 x 3 weeks pay.  Provided that the minimum payment for an employee with up
to and including one (1) year of service will be three (3) weeks pay.

17.11.2  The rate of pay on which these  entitlements  will be based will be the
employee's ordinary time weekly rate (38 hours).

17.12 This clause does not apply when industrial action occurs.

18. TERMINATION OF EMEPLOYMENT

Subject  to the  provisions  of  clause  19 of  the  Agreement  `Abandonment  of
employment'  and  clause  18 of the  Award  -  `Stand  down of  employees';  the
following provisions relating to termination shall apply:

18.1 Notice of termination by the employer

18.1.1 In order to terminate the employment of an employee the employer shall
give to the employee the following notice:

Period of continuous service                                      Period of
                                                                  notice

Up to 1 year                                                      1 week
More than 1 year and up to the completion of 3                    2 weeks
years
More than 3 years and up to the completion of 5                   3 weeks
years
More than 5 years                                                 4 weeks

18.1.2 In  addition to the notice in clause  18.1.1  hereof,  employees  over 45
years of age at the time of the  giving  of the  notice  with not less  than two
years continuous service, shall be entitled to an additional week's notice.

18.1.3  Payment in lieu of the notice  prescribed in clause 18.1.1 and/or 18.1.2
hereof shall be made if the  appropriate  notice  period is not given.  Provided
that employment may be terminated by part of the period of notice  specified and
part payment in lieu thereof.

<PAGE>

18.1.4 In calculating any payment in lieu of notice, the wages an employee would
have  received in respect of the ordinary  time the  employee  would have worked
during the period of notice had employment not been terminated shall be used.

18.1.5  The  period  of  notice  in this  clause  shall not apply in the case of
dismissal for conduct that justifies instant dismissal,  including  malingering,
inefficiency  or  neglect  of  duty,  or  in  the  case  of  casual   employees,
pieceworkers,  special workers,  support staff, apprentices or employees engaged
for a specific period of time or for a specific task or tasks.

18.1.6  For  the  purposes  of this  clause,  continuity  of  service  shall  be
calculated in the manner prescribed by clause 28 of this Agreement.

18.2 Notice of termination by employee

18.2.1 The notice of  termination  required to be given by an employee  shall be
the same as that required of the  employer,  save and except that there shall be
no additional notice based on the age of the employee concerned.

18.2.2 If any employee  fails to give notice,  the employer shall have the right
to  withhold  moneys  due to the  employee  with a maximum  amount  equal to the
ordinary time rate of pay for the period of notice.

18.3 Time Off During Notice Period

Where the employer has given  notice of  termination  to an employee an employee
will be allowed up to one day's time off without  loss of pay for the purpose of
seeking  other  employment.  The  time  off  must be  taken  at  times  that are
convenient to the employee after consultation with the employer.

18.4 Statement of Employment

The employer  will upon receipt of a request from an employee  whose  employment
has been terminated  provide to the employee a written statement  specifying the
period of employment and the  classification of or the type of work performed by
the employee.

18.5 Unfair Dismissals

Termination  of  employment  by the  employer  must  not  be  harsh,  unjust  or
unreasonable.

For  the  purposes  of this  clause,  termination  of  employment  will  include
termination with or without notice.

Without limiting the above,  except where a distinction  exclusion or preference
is based on the inherent  requirements of a particular position,  termination on
the  ground of race,  colour,  sex,  marital  status,  family  responsibilities,
pregnancy,  religion,  political opinion,  national extraction and social origin
will constitute a harsh, unjust or unreasonable termination of employment.

<PAGE>

18.6 Disputes Settlement Procedures - Unfair Dismissal

18.6.1 Subject to the provisions of sections 170CE, 170CK, 170CL or 170CM of the
Workplace  Relations  Act 1996,  any dispute or claim  arising under clause 18.5
hereof should be dealt with in the following manner:

18.6.2 As soon as is  practicable  after the  dispute  or claim has  arisen  the
employee  concerned  will  take  the  matter  up with the  immediate  supervisor
affording the opportunity to remedy the cause of the dispute or claim.

18.6.3 Where any such attempt at settlement has failed,  or where the dispute or
claim is of such a nature that a direct discussion  between the employee and the
immediate  supervisor  would be  inappropriate,  the employee will notify a duly
authorised  representative of the union or other employee representative who, if
the  representative  considers  that there is some  substance  in the dispute or
claim,  must  forthwith  take the matter up with the employer or the  employer's
representative.

18.6.4 If the  matter is not  settled  it will be  submitted  to the  Australian
Industrial  Relations  Commission  to endeavour to resolve the issue between the
parties by  conciliation.  Subject to the provisions of the Workplace  Relations
Act  1996  the  Commission  may if  necessary  arbitrate  this  matter  and such
decisions will be accepted subject to the parties' normal rights of appeal.

18.6.5  Without  prejudice to either party,  work should  continue in accordance
with the Award while the  matters in dispute are being dealt with in  accordance
with this clause.

18.7 Summary Dismissal

The employer has the right to dismiss any  employee  without  notice for conduct
that  justifies  instant  dismissal  including  gross  misconduct,  malingering,
inefficiency  or  neglect of duty and in such cases the wages will be paid up to
the time of dismissal only.

Clarification  for gross  misconduct  would  include  but not be  limited to the
following:

GROSS MISCONDUCT

      o     Physical Abuse

In the event of, each  instance  will be decided on a case by case.  In general,
both parties will be immediately  dismissed,  but taken into account will be the
instigator and cause.

      o     Workplace Harassment - including personal threats

<PAGE>

      o     Horseplay creating unsafe conditions

      o     Wilful damage to equipment or property - (employer or personal)

      o     Theft from employer or workmates

      o     Defecating/urinating in inappropriate places

      o     Industrial sabotage

      o     Attending for work under the influence of drugs or alcohol

      o     Consuming alcohol on the premises

      o     Indecent exposure

Clarification  for  inefficiency and neglect would include but not be limited to
the following:

INEFFICIENCY AND NEGLECT

      o     Poor workmanship conducted by an appropriately trained and competent
            person causing loss of production and re-work

      o     Causing   excessive   damage  to  equipment  and  property   through
            carelessness

      o     Sleeping during working hours

      o     Leaving the workplace unauthorised

      o     Leaving the workstation unattended while still operating, to perform
            a non-work related function

      o     Failing  to follow  company  policy  and  procedure  causing  unsafe
            conditions,  injury  to self or  others or  substandard  product  or
            excessive downtime/damage

      o     Failing  to  follow   supervisor's   instructions,   provided   that
            instructions are not unsafe

      o     Failing to follow safety rules

      o     Lying about  sickness or death,  whether it is self or other person,
            as an excuse for inability to attend for work

<PAGE>

19 ABANDONMENT OF EMPLOYMENT

Notwithstanding anything elsewhere contained in this clause.

19.1 The  absence of an employee  from work for a  continuous  period  exceeding
three working days without the consent of the employer and  notification  to the
employer  shall be prima facie  evidence  that the  employee has  abandoned  the
employment.

19.2 Provided that if within a period of fourteen days from the last  attendance
at work or the date of the last  absence in respect  of which  notification  has
been given or consent has been  granted an employee has not  established  to the
satisfaction  of the employer  that the  employee was absent for the  reasonable
cause, the employee shall be deemed to have abandoned the employment.

19.3  Termination of employment by  abandonment  in accordance  with this clause
shall operate as from the date of the last  attendance at work or the last day's
absence in respect of which  consent was granted or the date of the last absence
in respect of which  notification  was given to the  employer  whichever  is the
later.

20 EMERGENCY PROVISIONS

20.1 Despite other provisions of this Agreement,  the following will apply where
the  employer  is  subjected  to   restrictions,   rationing  or  the  emergency
disconnection  of those  services  in  accordance  with  orders  or  regulations
approved by the lawful authority.

20.1.1 if by reason of such restriction or rationing or emergency  disconnection
the  employer is unable  usefully to employ an employee for the whole or part of
any day or shift,  the  employer  may  deduct  from the  wages of that  employee
payment  for any part of the day or  shift  such  employee  cannot  be  usefully
employed, provided that:

20.1.1.1 if the  employer  requires  the  employee to attend for work but is not
able to employ that  employee  usefully the employee will be entitled to be paid
for two hours work.

20.1.1.2 where an employee commences work he/she will be entitled to be paid for
four hours work.

20.1.1.3 this clause does not apply to apprentices.

20.1.2 The employer may require any day worker to perform their  ordinary  hours
of work (or any such ordinary hours of work) at any time on any day other than a
Sunday on the basis of  thirty-eight  hours per week. The following rates of pay
shall apply for such work.

20.1.2.1  for work  performed  on Mondays to Fridays from 6.30 a.m. to 6.00 p.m.
and on Saturdays from 7 a.m. to noon payment shall be at ordinary time.

<PAGE>

20.1.2.2 for work performed between noon and midnight on Saturdays payment shall
be at ordinary rates plus 25 per cent.

20.1.2.3 for work  performed  at all other times other than on a Sunday  payment
shall be at ordinary rates plus 15 per cent.

Provided that when an employee is required to commence work between the hours of
9.30 p.m. and 6.00 a.m. the amount he/she shall receive will be not less than 50
per cent more than the  amount  he/she  would  receive if paid at  ordinary  day
rates.

20.1.3 The employer may require any shift worker to perform  their hours of work
at any time other than on a Sunday on the basis of thirty-eight hours per week.

The following rates of pay shall apply for such work.

20.1.3.1 for day or shift work - ordinary time.

20.1.3.2  for work  performed  between noon and midnight on Saturdays - ordinary
rates plus 25 per cent.

20.1.3.3 for  afternoon  shifts - ordinary  rates plus 15 per cent and for night
shift - 30 per cent.

Provided that when a shift worker is required to commence work between the hours
of 9.30 p.m. and 6.00 a.m. the amount the employee will receive will not be less
than 50 per cent more than the amount  he/she would  receive if paid at ordinary
rates.

20.1.3.4  Nothing in this  clause  will  operate  to reduce  the shift  premiums
payable to  employees  who were shift  workers  working on  afternoon  and night
shifts only at the date of such  interference  as aforesaid  and who continue to
work on such shifts.

20.1.4 The  employer  may alter the time at which meal breaks are usually  taken
and/or the  duration of them,  in order to avoid or mitigate the effects of such
interference, without being liable to pay penalty rates for work done during the
normal meal breaks  provided that the  commencing  time of any meal break is not
made more than one hour  earlier or later than usual and that a meal break of at
least  twenty  minutes is allowed  and  provided  also that the  employer  does,
whenever it is  practicable,  consult with the parties  before acting under this
clause.

20.2 Despite anything elsewhere  contained in this Agreement,  the provisions of
this clause will apply in the case of the employer using  auxiliary  power plant
for the purpose of providing employment for employees whilst such restriction or
rationing or emergency disconnection is in force and who:

20.2.1 is unable  usefully  to  employ an  employee  for the whole of any day or
shift by reason of a breakdown in such plant  through no fault of the  employer,
or

<PAGE>

20.2.2 because of the inability of the auxiliary  power plant to meet the normal
demands for power:

20.2.2.1  finds it necessary to require any employee to perform  their  ordinary
hours of work (or any of such ordinary hours of work) outside the hours normally
worked by such employee, or

20.2.2.2  finds it  necessary to alter the time at which meal breaks are usually
taken and/or the duration of them.

20.3 Leave is  reserved  to the parties to apply in this matter upon two days in
writing.

21. TIME AND WAGES RECORD

21.1 Duty to Maintain

The  employer  will keep a time  and/or  wage  book or sheets or cards  with the
entries  typed or  perforated or recorded in ink showing the names of employees,
the daily number of hours worked by each  employee and the rate of pay and wages
payable  and  paid to each  employee.  A  permanent  record  of each  employee's
classification will be similarly kept.

21.2 Inspection

The Federal Secretary or Secretary of a State Branch of the union or any officer
thereof  authorised  in  writing  by one of them  will be, on  production  of an
authority to the employer, the local manager or the person who purports to be in
charge,  be allowed at all reasonable times to inspect such time book, sheets or
cards and to make a copy of them. Such time books,  sheets or cards for the last
preceding six years will be kept  available for this  purpose;  however  records
more than two years old may be kept at an alternative location provided they are
produced for inspection  within 48 hours of a notice  requiring their inspection
being given by a duly authorised union official.

21.3 Authorisation

The Federal  Secretary  or Secretary of a State Branch of the union or any other
officer  thereof  authorised in writing by one of them will, on production of an
authority to the employer, the local manager or the person who purports to be in
charge,  be allowed at all reasonable times to inspect any part of an employer's
works where it is suspected  that a breach of this  Agreement has occurred or is
occurring but such inspection will be carried out in the company of the employer
or someone on the  employer's  behalf.  The employer  will provide the necessary
facilities for the  investigation of the supposed breach including access to the
time book,  sheets or cards  referred  to herein.  The union  officers  will not
interfere  with or the work and duties of the employees  more than is absolutely
necessary for the proper investigation of the breach or supposed breach.

<PAGE>

22. HOT & COLD WORK ARRANGEMENTS

The parties to this  Agreement  recognize  that working in severely hot and cold
conditions  is a  recognized  health  hazard that can lead to serious  injury or
death in the workplace or following  work as a result of exposure to severe heat
or cold during work hours. As such it is the employer's  responsibility  to take
reasonable steps to ensure that workers are not unduly exposed to these hazards.
It is agreed by the parties that the union Safety  Organiser  will meet with the
site O.H.S  committee  to outline  steps  required to ensure that no employee is
placed at risk due to climactic conditions.

23. SKILL BASED GRADE STRUCTURE

The parties support the existing skill based grade structure.

24. WAGE INCREASES

The pay  increase of 4% will be paid on the first full pay period to commence on
or after 28.3.05.

                             CURRENT          CURRENT          PLUS       PLUS
WAGE                         WEEKLY           HOURLY           4%         4%
RATE                         WAGE             RATE             WEEKLY     HOURLY
CODE      WAGENAME           (2003-2004)      (2003-2004)      WAGE       RATE

001       Level 1            525.05           13.81            546.05     14.37
002       Level 2            545.74           14.36            567.57     14.94
003       Level 3            573.94           15.10            596.90     15.71
004       Level 4            599.95           15.70            623.95     16.42
005       Level 5            639.14           16.82            664.71     17.49
006       Level 6            665.11           17.50            691.71     18.20
013       Level I Casual     613.15           16.14            637.68     16.78
014       Level 2 Casual     637.36           16.77            662.85     17.44
015       Level 3 Casual     670.40           17.64            697.22     18.35
016       Level 4 Casual     700.79           18.44            728.82     19.18
017       Level 5 Casual     746.61           19.65            776.47     20.43
018       Level 6 Casual     776.56           20.44            807.62
21.25

All work and  expense  related  allowances  will  increase  by 4% per year as of
28.3.05.

<PAGE>

25. HOURS OF WORK

25.1 Methods of working 38-hour week

25.1.1 The 38-hour week maybe implemented by one of the following methods:

25.1.1.1 by employees working less than eight ordinary hours each day, or

25.1.1.2 by  employees  working less than eight  ordinary  hours on one day each
week, or

25.1.1.3 by  employees  working less than eight  ordinary  hours on one day each
fortnight, or

25.1.1.4  by fixing  one  weekday  on which all  employees  will be off during a
particular four week work cycle, or

25.1.1.5  by  fostering  employees  off on  various  days of the  week  during a
particular four-week work cycle so that each employee in the section has one day
off during that cycle.

25.2 Method to be determined by agreement

25.2.1  The  method  of  implementation  to be  applied  will be  determined  by
agreement between the employer and the majority of employees in the workplace.

25.2.2 Should agreement not be reached then:

      o     the matter will be referred to the ECC, and

      o     where the matter is not  resolved  the matter  will be referred to a
            member  of  the  Australian   Industrial  Relations  Commission  for
            resolution.

25.3 Notice of Rostered Days off

In cases  where due to the  arrangement  of their  ordinary  working  hours,  an
employee in accordance  with clauses  30.1.1 (c) and 30.1.1 (d) is entitled to a
day off during the work cycle, such employee shall be advised by the employer at
least four weeks in advance of the day to be taken off by written  notice posted
by the employer on the notice  board.  The rostered day off cycle will  coincide
where possible with the building industry's RDO calendar.

25.4 Substitute days

25.4.1 The employer,  with the agreement of the majority of employees concerned,
may  substitute  the day an employee or employees  concerned  are to take off in
accordance with clauses 25.1.1.3 and  25.1.1.4(for  another day in the case of a
breakdown  in  machinery  or  failure or  shortage  of  electric  power or other
situation of emergency that could arise.

<PAGE>

25.4.2 An individual  employee with the agreement of the employer may substitute
the day the employee is to take off for another day.

25.5 Work on rostered day off

25.5.1  Unless  a  rostered  day  off is  substituted  for  another  day  off in
accordance with clauses 25.4.1, or

25.4.2 work  performed on the rostered day off will be paid in  accordance  with
clause 31 `Overtime' of the Award.

25.6 Rostered Days Off

25.6.1 Notwithstanding  provisions elsewhere in this Agreement, the employer and
the majority of employees  may agree to establish a system of rostered  days off
(`RDO')to provide that:

25.6.1.1  An  employee  may elect  with the  consent of the  employer  to take a
rostered day off at any time.

25.6.1.2  An  employee  may elect,  with the  consent of the  employer,  to take
rostered days off in part day amounts.

25.6.1.3 An employee may elect, with the consent of the employer, to accrue some
or all rostered  days off for the purpose of creating a bank to be drawn upon by
the employee at times  mutually  agreed by the employer or subject to reasonable
notice by the employee or the employer.

25.6.1.4 clause 25.6.1 may apply subject to the employer  informing the union of
its intention to introduce an enterprise system of RDO flexibility and providing
a reasonable opportunity for the union to participate in negotiations.

25.6.1.5 Once a decision has been taken to introduce an enterprise system of RDO
flexibility,  in accordance  with this clause,  its terms must be set out in the
time and  wages  records  kept  pursuant  to  regulations  131 A to 131 R of the
Workplace Relations Regulations 1996.

25.6.1.6 The employer  will record RDO  arrangements  in the time and wages book
each time this provision in used.

26. BREAKS

26.1 A half hour  break  will be  allowed  for a lunch  break  provided  than an
employee is not required to work more than five  ordinary  hours without a break
for a meal.

26.2 Except as provided in clause 26.3, all work done during an employee's lunch
break will be paid at double time rates of pay.  For work  performed  thereafter
until a lunch break is allowed time and one half rates shall be paid.

<PAGE>

26.3 An employee's  lunch break,  once fixed will only be altered (except in the
case of a breakdown or emergency) by mutual  agreement or by at least seven days
notice of the intended change given to the parties concerned.

26.4  Continuous  Shift  workers  will be allowed a crib time of 20 minutes  per
shift  without  loss of pay to be taken at an agreed  upon time and so as not to
disrupt the work process.

26.5 A fifteen (15) minute paid tea break will apply to all day work employees.

The time of taking  this break will be flexible in  recognition  of  operational
needs.

27. SHIFT WORK

27.1 Definitions

"Afternoon shift" means any shift finishing after 6 p.m. and at or before 1 a.m.

"Night shift" means any shift finishing after midnight and at or before 8 a.m.

"Continuous shift" workers are shift workers rostered to work regularly over the
seven days of the week.

27.2  Payments to shift  workers at  commencement  and  conclusion of summertime
period

Notwithstanding anything contained elsewhere in this Award, in any area where by
reason of the  legislation  of the state summer time is  prescribed  as being in
advance of the standard time of the state, the length of any shift:

27.2.1 commencing before the time prescribed by the relevant legislation for the
commencement of a summer time period, and

27.2.2  commencing on or before the time prescribed by such  legislation for the
termination  of a  summer  time  period  is  deemed  to be the  number  of hours
represented  by the  difference  between  the time  recorded by the clock at the
beginning  of the shift and the time so  recorded  at the end of the shift,  the
time of the  clock in each  case to be set to the  time  fixed  pursuant  to the
relevant state legislation.

In this clause the  expressions  'standard time' and 'summer time' will bear the
same meanings as are prescribed by the relevant State legislation.

27.3 Payment for Shift Work

27.3.1  Shift  workers on afternoon or night shift will be paid 15 per cent more
than  the  employee's  ordinary  rate  of pay  per  shift.  Work  may be done on
non-rotating  afternoon or night shifts if such shifts are worked for at least 4
consecutive shifts.

<PAGE>

27.3.2 Provided that the allowance for such  non-rotating  afternoon shifts will
be 15 per cent more than the  employees  ordinary  rate of pay per shift and the
allowance  for  non-rotating  night  shift  will be 30 per  cent  more  than the
employees ordinary rate of pay in lieu of the above shift allowances.

27.3.3 A shift  allowance of 15 per cent will be paid to  maintenance  employees
who work shifts which commence at midday and finish at or after 6.00 p.m.

27.4 Shift Work on Saturdays, Sundays or Public Holidays

27.4.1  Continuous Shift workers for all work performed in accordance with their
roster on a  Saturday  will be paid at the rate of time and a half for the first
two hours and double rate thereafter.  Work on a Sunday will be paid at the rate
of double time, and for rostered work on a public  holiday  prescribed by clause
30 - Public Holidays will be paid at the rate of double time and a half.

27.4.2 Where the first shift of the week commences not later than 8 a.m. Monday,
any  ordinary  time  worked on night  shift up to 8 a.m.  on a Saturday  will be
regarded as ordinary  time.  Where a Sunday or holiday  occurs  during any shift
roster, that shift the major portion of which is worked on the Sunday or holiday
will be regarded as a Sunday or holiday shift and paid for at the rate of double
time for the Sunday and double time and a half for the holiday.

27.4.3 In the case of a continuous  shift worker,  where a public holidays falls
on all  employee's  rostered day off, the employee will receive for that holiday
one day's pay in addition to the weekly wage.

27.4.4  Shift  workers  recognise  their  obligations  to continue it work until
relieved,  provided that they are not required to work more than two consecutive
shifts  provided that  employees  working on a twelve hour shift roster will not
work more than sixteen  consecutive hours. The employer will avoid double shifts
as far as possible by using every endeavour to arrange relief workers.

27.5 Arrangement of Shifts

27.5.1 After reasonable notice employees may be required to work shift work.

27.5.2 A shift  roster  will be drawn up and will  provide  for the  rotation of
shifts except as prescribed by clauses 27.3.1 and 27.3.2.

27.5.3 Shift rosters will specify the commencing and finishing times of ordinary
working hours of the respective shifts.

28. ANNUAL LEAVE

28.1 Annual Leave Entitlement - General

28.1.1 A period of 28  consecutive  days leave will be  allowed  annually  to an
employee after 12 months continuous service.

<PAGE>

28.1.2  Annual leave is exclusive of public  holidays as prescribed in clause 30
of this Agreement.

28.1.3 If after two weeks  continuous  service an  employee  other than a casual
employee leaves  employment or is terminated by the employer,  the employee will
be paid 2.925  hours at the  ordinary  rate of wage for each  completed  week of
continuous service.

28.1.4 After the  completion  of the first 12 months  employment an employee who
leaves their  employment or whose  employment  is terminated  will be paid 2.925
hours at the ordinary rate of wage for each  completed week of five working days
for which leave has not been granted under this clause.

28.1.5 The ordinary  rate of wage  referred to in this clause means the ordinary
time rate of pay fixed by the terms of this Agreement excluding any amounts paid
in respect of shift work, overtime or other penalty rates except where otherwise
indicated.

28.2 Annual Leave Entitlement - Continuous shift workers

28.2.1 In addition to the leave  prescribed  by clause 28.1.1  continuous  shift
workers will be allowed seven consecutive days leave including non working days.

28.2.2 Where an employee with 12 months  continuous  service is engaged for part
of the 12 monthly  period as a continuous  shift worker he/she shall be entitled
to have the period of 28  consecutive  days leave  prescribed  in clause  28.1.1
increased by half a day for each month the employee is continuously engaged as a
continuous shift worker.

28.3 Payment for annual leave

28.3.1 Each employee other than a continuous  shift worker before going on leave
will be paid for the  period of leave at the  employee's  ordinary  rate of wage
plus 17-1/2 per cent of that amount.

28.3.2 Each  continuous  shift work employee  before going on leave will be paid
for the period of leave for the ordinary time the employee would have worked had
he/she not been on leave plus the appropriate shift allowances.

28.4 Taking of Leave

28.4.1 Broken Leave

The  leave  will be given and  taken in a  continuous  period or in two or three
separate periods of which one period will be at least one fortnight.

Provided  that where annual  leave is given in two parts,  the first part of off
the leave will be given within a period not  exceeding  six months from the date
the right to annual leave accrued, and after not less than one month's notice to
the  employee.  The second part of the leave shall be given  within a period not
exceeding  five  months  from the last day of the first  part of the leave (or a
longer  period  agreed upon by the employer and the employee and notified by the
employer to the  Secretary  of the State  Branch of the union when the  employee
concerned  is a member of the union) and after not less than one month's  notice
to the  employee.  Provided  however,  that the second part of the leave will be
given  within a period not  exceeding 9 months from the date the right to annual
leave accrued.

<PAGE>

The month's notice to the employee required by this clause may be dispensed with
by agreement  between the employer and the majority of employees  concerned  and
endorsed by the ECC.

Provided  further that except  where an employee  makes  application  for annual
leave,  no employee  will be given  annual  leave  during a period in respect of
which the employee is entitled to be paid workers' compensation.

28.4.2  Notwithstanding  any other  provisions of this  Agreement,  where annual
leave is not taken at mill close downs,  but leave is taken on a rostered basis,
then such rostering, will be through the 12 months of the year.

Provided  that  leave  will be taken  within  12 months  of it  failing  due and
employees  will be given at least three months  notice of the taking of rostered
leave.

28.4.3 By agreement between the employer, employee or group of employees, annual
leave may be taken on a rostered basis,  close down basis or part  rostered/part
close down basis in three separate periods.

28.4.4  Any  unpaid  leave  hours are to be made up during  overtime  periods at
normal  hourly rates until 38 hours normal is reached then  overtime  rates will
apply.

28.5 Leave taken as a single day

28.5.1 Notwithstanding  provisions elsewhere in this Agreement, the employer and
the majority of  employees  may agree to establish a system of single day annual
leave absences provided that:

28.5.1.1 An employee may elect, with the consent of the employer, to take annual
leave in single day  periods or part of a single  day not  exceeding  a total of
five days in any calendar year at a time or times agreed between them.

28.5.1.2  Access to annual leave,  in accordance with clause 28.5.1 is exclusive
of any shutdown period provided for elsewhere under this Agreement.

28.5.1.3 An employee and employer may agree to defer payment of the annual leave
loading in respect of single day absences  until at least 5  consecutive  annual
leave days are taken.

<PAGE>

28.5.1.4 clause 28.5.1 may apply subject to the employer  informing the union of
its intention to introduce an enterprise  system of annual leave flexibility and
providing a reasonable opportunity for the union to participate in negotiations.

28.5.1.5  Once a decision has been taken to introduce  an  enterprise  system of
single day annual leave in  accordance  with this clause,  its terms must be set
out in the and wage records kept pursuant to  regulations  131 A to 131 R of the
Workplace Relations Regulations.

28.5.1.6 The employer will record these short term annual leave  arrangements in
the time and wages book.

28.6 Close Down

28.6.1 The  employer  may close down the plant or a section or sections  thereof
wholly or partly  for the  purpose of  allowing  leave to all or the bulk of the
employees in the plant or section or sections  concerned in accordance  with the
following provisions.

28.6.1.1 In  accordance  with clause 8 of this  Agreement  the employer  may, by
giving not less than three months  notice (or an agreed lesser period of notice)
of the  intention to do so, either close down for one period or for two separate
periods  (hereinafter  referred to as the first or second  close down)  provided
that in lieu of a second close down the employer may grant any leave due and not
taken at the first close down within a period not exceeding  five months,  or an
agreed longer period and after not less than one month's notice to the employee.
Provided  however,  that the  second  part of the leave  will be given  within a
period not exceeding 9 months from the date the right to annual leave accrued.

28.6.1.2 Each employee  affected will be credited with 2.925 hours in respect of
each week of five working days  completed in respect of  continuous  service for
which leave has not already  been given  during the 12 months  ending on the day
immediately preceding the re-opening of the plant after each first close down.

28.6.1.3  Except to the extent  that an  employee  has  accrued  leave under the
provisions  of clause  28.1 at the date of the close down the  employee  will be
stood off without pay during the period of any close down.

28.6.1.4 Any employee who at the date of the first close down has  qualified for
four  full  weeks  leave  and  has  also  completed  a  further  week or more of
continuous  service will also be paid 2.925 hours leave for each  completed week
of five working days of continuous  service plus 17 1/2 per cent since the close
of his last 12-monthly qualifying period.

28.6.1.5 The next  12-monthly  qualifying  period for each employee  affected by
such  close  downs will  commence  from the day on which the plant or section or
sections  concerned is re-opened  for work after the first close down.  Provided
that all time during which an employee is stood off without pay for the purposes
of that  subclause  will be deemed to be time of service in the next  12-monthly
qualifying period.

<PAGE>

28.6.1.6 If in the first year of service with an employer an employee is allowed
proportionate  annual leave under this  subclause and  subsequently  within such
year leaves  employment or their  employment is terminated by the employer,  the
employee will be entitled to the benefit of clause 28.1.3  subject to adjustment
for any proportionate leave which he may have been allowed as aforesaid.

28.7 Calculation of continuous service

28.7.1 For the purposes of this clause service will be continuous despite:

28.7.1.1 any  interruption  or  termination of the employment by the employer if
such  interruption  or  termination  has been made merely with the  intention of
avoiding obligations hereunder in respect of leave of absence, or

28.7.1.2 any absence from work on account of personal sickness or accident or on
account of leave lawfully granted by the employer, or

28.7.1.3  any absence  with  reasonable  cause proof  whereof  shall be upon the
employee.

28.7.2 In cases of personal  sickness or  accident or absences  with  reasonable
cause the employee to become  entitled to the benefit of this clause will inform
the employer in writing, if practicable,  within 48 hours of the commencement of
such absence of the inability to attend for duty, and as far as practicable  the
nature of the  illness,  injury  or cause,  and the  estimated  duration  of the
absence.  A  notification  given by an employee  pursuant to clause 29.4 of this
Agreement will be accepted as notification under this sub-clause.

28.7.3 Any absence from work by reason of any cause not being a cause  specified
in this  clause  will not be deemed to break the  continuity  of service for the
purposes  of this  clause  unless  the  employer  during  the  absence or within
fourteen days of the termination of the absence notifies the employee in writing
that such absence will be regarded as having broken the continuity of service.

28.7.4 In cases of individual  absenteeism  such notice will be given in writing
to the employee concerned,  but in cases of concerted or collective  absenteeism
notice may be given to  employees  by the  posting up of a  notification  in the
plant,  in the manner in which  general  notifications  to employees are usually
made in that plant and by posting to the union whose  members have  participated
in such concerted or collective  absenteeism,  a copy of such  notification  not
later than the day it is posted up in the plant.

28.7.5 A notice to an  individual  employee may be given by delivering it to the
employee  personally or by posting it to the last recorded address in which case
it will be deemed to have reached the employee in due course by post.

28.7.6 In  calculating  the  qualifying  period of  continuous  service any such
absence as aforesaid will not be taken into account except:

28.7.6.1 28 days or less in the case of sickness or accident.

<PAGE>

28.7.6.2 Annual leave or long service leave granted to the employee.

29. PERSONAL OR CARERS LEAVE

For the  purposes of this clause  "employee"  includes a part-time  employee but
does not include an employee engaged as a casual.

29.1 Amount of Paid Personal or Carers Leave

An  employee  is entitled  to the  following  amount of paid  personal or carers
leave:

29.1.1 56 hours in the first year of  service  (40 hours sick leave and 16 hours
bereavement leave on each occasion)

29.1.2 80 hours from the  commencement  of the second and each following year of
service (64 hours sick leave plus 16 hours bereavement leave on each occasion)

29.2 Immediate Family or Household

The  entitlement to use  bereavement  leave and carer's leave in accordance with
this clause is subject to:

29.2.1 the person being either

29.2.1.1 a member of the employee's immediate family: or

29.2.1.2 a member of the employee's household

29.2.2 the term "immediate family" includes:

29.2.2.1.  spouse  or de facto  spouse  of the  employee.  A de facto  spouse in
relation to a person means a person of the  opposite sex to the first  mentioned
person who lives with the first mentioned  person as the husband or wife of that
person on a bona fide domestic basis although not legally married to that person
and

29.2.2.2.  child or an adult child  (Including an adopted child. A step child or
an ex nuptial child) parent, grandparent,  grandchild or sibling of the employee
or spouse of the employee.

29.3 Personal Sick Leave

29.3.1 Entitlement and Accumulation

29.3.1.1 The  employee is not entitled  during the first 12 months of any period
of service to leave in excess of 40 hours of working  time nor in any year after
completion  of such 12 months  service to leave in excess of 64 hours of working
time. Sick leave will  accumulate  from year to year of continuous  service with
the employer except as provided in clause 28.7 of this Agreement.

<PAGE>

29.3.1.2  Leave taken by an employee  under clause  29.3.1 is deducted  from the
amount of personal or caress leave available within clause 29.1.

29.3.1.3 An employee is  entitled  to use  accumulated  sick leave for  personal
sickness if the employee has already used:

(i) the current  year's sick leave  component  of the  personal/  carer's  leave
entitlement as personal sick leave, or

(ii) the current year's aggregated personal/carer's leave entitlement.

29.3.1.4 The employee is not entitled to paid leave in excess of 10 hours during
the first  three  months of  employment  with the  employer,  a further 10 hours
during the second three months of such  employment  and an  additional  20 hours
between the seventh and twelfth months of service.  Provided that should his/her
employment  continue  beyond six months the employee  will be paid for the leave
for which they would  otherwise  have been  entitled  to be paid  except for the
limitations  prescribed by this clause and for which payment has not  previously
been made

29.3.1.5 On the employee's  anniversary date of starting work, 64 hours (8 days)
sick  leave is accrued  for use over the  following  12  months.  For every year
worked, the employee receives another 64 hours (8 days) sick leave.

29.3.1.6  In the  event of an  employee  dying,  the  employer  will pay to such
deceased  employee's estate the monetary value of all sick leave standing to the
employees credit.

29.3.1.7  Where an employee  retires  because of age or  incapacity,  or his/her
services  terminate  after ten years  continuous  service for any reason  except
misconduct  the  monetary  value  of  any  unused  sick  leave  standing  to the
employee's credit will be paid.

29.3.1.8  For the  purpose of this clause the rate of pay for sick leave will be
the ordinary time rate of pay fixed by the terms of this Agreement.

29.4 Notification and Proof of Sickness

29.4.1 Day shift  employees  must  notify a manager no later than one and a half
(1.5) hours after commencement of shift. Afternoon shift employees must notify a
manager one (1) hour before shift starts.  The abandonment of employment  clause
then takes effect if they do not notify within time period.

29.4.2 One day off requires a phone call and may require a statutory declaration
or a doctor's  certificate.  More than one day off will require a phone call and
will require a statutory declaration or a doctor's certificate.

29.4.3 Should an employee use up all their  available  sick leave any additional
time off work will be  unpaid.  The  employee  is still  required  to notify the
employer  before  the  start or as soon as  practicable  after  the start of the
working day that they are sick. If the employee provides a doctor's  certificate
the time off will be deemed unpaid sick leave.  If the employee does not provide
a doctor's certificate the time off will be deemed unauthorised absence.

<PAGE>

29.4.3.1 It is the employee's  responsibility to submit an application for sick/
annual leave forms prior to the commencement of the following pay week, with the
exception of leave taken on the last day of the pay week, where the employee has
until  8.30  am on the  first  day of the  following  pay  week  to  submit  the
application  for leave  forms.  If the  payroll  officer  does not  receive  the
appropriate  application  for  leave  form by the time  pay  details  are  being
calculated  and  processed,  payment will not be given until the  following  pay
period.

29.4.4 Unsatisfactory Attendance

Unsatisfactory attendance is where an employee exceeds one of the following:

29.4.4.1 More than 8 days sick leave taken.

29.4.4.2 More than 4 unpaid sick leave days taken, or

29.4.4.3 More than 2 unauthorised absences.

The employer is entitled to issue  warnings as outlined in the agreed  format to
any employee who has an unsatisfactory attendance record.

29.5 Methods of payment

The  following  methods  of taking  accrued  sick  leave are  available  to each
employee.

29.5.1 Pay out at anniversary of service all sick leave credits in excess of 104
hours, or

29.5.2 Unlimited  accrual and pay out on termination of all credits in excess of
104 hours where the employee has less than 10 years  service,  or pay out of all
credits where the employee has in excess of 10 years service, or

29.5.3 Pay at  anniversary  of service  all sick leave  credits in excess of 104
hours into the employee's superannuation fund.

29.5.4 Payment will be made at the  employee's  ordinary rate of pay at the time
of taking accrued sick leave.

29.5.5  Sick  leave paid by one of the  methods  prescribed  by clauses  29.5.1,
29.5.2 or 29.5.3 is in lieu of any accrual.

29.6 Where a business is transmitted from the employer to another, an employee's
service  with the  transmitter  shall for the  purpose of sick leave  payment be
taken as service with the  transmittee  provided that the employee's  employment
with the transmitter is continued with the transmittee.

<PAGE>

29.6.1 the continuity of the employment of the worker will be deemed not to have
been broken by reason of such transmission.

29.6.2 the period of employment,  which the worker has had with the  transmitter
or any prior transmitter, will be deemed to be employment of the worker with the
transmittee.

29.7  Notwithstanding  an employee  suffering injury through an accident arising
out of and in the course of employment  (not being an injury in respect of which
the employee is entitled to workers'  compensation)  which in the opinion of the
employer or the representative at the place of work,  necessitates attendance by
the employee during working hours at a doctor,  chemist or trained nurse or at a
hospital will not suffer any  deduction  from pay for the time on the day of the
accident and will be reimbursed by the employer all expenses reasonably incurred
in connection with such attendance but in no case will such reimbursement exceed
$10.30.

29.8 Bereavement Compassionate Leave

29.8.1 An employee is entitled to two days paid leave on each occasion that if a
member of the employee's immediate family or household in Australia dies.

29.8.2  Proof of death must be provided to the  satisfaction  of the employer if
requested.

29.8.3 This clause has no operation  while the periods of  entitlement  to leave
under it coincides with any other period of leave.

29.8.4 Death Outside Australia - Funeral/Service Overseas

The provisions of this sub-clause  shall apply upon the death outside  Australia
of a member of the employee's  immediate family or household upon the production
of  satisfactory  evidence of the death and  evidence of the  employee's  travel
outside of Australia to attend the deceased's funeral/service.

29.8.5 Death Outside Australia - Service Locally

Where any member of the  employee's  immediate  family or household dies outside
Australia  and a weekly  employee  with three  month's  service  does not travel
outside  Australia to attend the funeral service such employee shall be entitled
to leave not  exceeding  the  number  of hours  worked  by the  employee  on one
ordinary  day's  work for the  purpose  of  attending  a local  service  for the
deceased.  Evidence  of the  death and the  service  shall be  furnished  by the
employee to the satisfaction of the employer.

29.8.6 Carers Leave

29.8.6.1  An  employee  with  responsibilities  in relation to a member of their
immediate  family or  household  who needs their care and support is entitled to
use up to 5 days per annum of their personal/carers leave entitlement to provide
care and support for such persons when they are ill. Leave may be taken for part
of a single day.

<PAGE>

29.8.6.2  The  entitlement  to use  personal/carer's  leave  is  subject  to the
employee being responsible for the care of the person concerned.

29.8.6.3 The employee must, if required by the employer, establish by production
of a medical  certificate  or statutory  declaration,  the illness of the person
concerned and that the illness is such as to require care by another.

29.8.6.4 In normal  circumstances  an employee must not take carer's leave under
this clause where another person has taken leave to care for the same person.

29.8.6.5 The employee must, where practicable, give the employer notice prior to
the absence of their intention to take leave,  the name of the person  requiring
care and their  relationship to the employee,  the reasons for taking such leave
and the estimated  length of absence.  If it is not practicable for the employee
to give prior  notice of  absence,  the  employee  must  notify the  employer by
telephone of such absence at the first opportunity on the day of absence.

29.8.6.6  Each day or part of a day of carer's  leave taken in  accordance  with
clause  29.8.6.1 is to be  deducted  from the amount of  personal/carer's  leave
provided in clause 29.1 of this clause up to a maximum of 5 days per annum.

29.8.6.7 An employee  is entitled to use  accumulated  sick leave as paid carers
leave if the  employee  has  used  the  current  year's  personal/carers,  leave
entitlement.  An exception to this is where an employee has already taken 5 days
carer's leave in the current year.

29.8 Unpaid Carers Leave

An employee may elect,  with the consent of the  employer,  to take unpaid leave
for the purpose of providing care to a family or household member who is ill.

29.9 Grievance Process

Clause 10 - Procedures  for Avoidance of Industrial  Disputes of this  Agreement
applies to a dispute about the effect or operation of his clause.

30. PUBLIC HOLIDAYS

30.1 All  weekly  employees  will be  entitled  to be absent  from work  without
deduction of pay on the following holidays:

30.1.1 New Years Day,  Australia  Day,  Union  Picnic day,  Canberra  Day,  Good
Friday, Easter Saturday, Easter Monday, Anzac Day, Queen's Birthday, Labour Day,
Christmas Day and Boxing Day

30.1.2  When  Christmas  Day is a Saturday or a Sunday a holiday in lieu will be
observed on 27 December.

<PAGE>

30.1.3  When  Boxing  Day is a Saturday  or a Sunday,  a holiday in lieu will be
observed on 28 December.

30.1.4 When New Year's Day or Australia  Day is a Saturday or a Sunday a holiday
in lieu will be observed on the next Monday

30.2 Where public holidays are declared or prescribed by the state, territory or
locality,  on days  other than  those set out in clause  30.1.1  those days will
constitute additional public holidays for the purpose of this Agreement.

Changing public holidays by agreement

30.3 In  accordance  with clause 10 -  Facilitative  Provisions of the Award the
employer and  employees or a group of employees at a site or work area may agree
to substitute another day for any day prescribed in clause 30.1

Rostered day off/Programmed day off or accumulated time off falling on a holiday

30.4 In the case of an employee  whose  ordinary  hours of work are  arranged in
such a manner as to entitle the employee to a rostered day off the weekday to be
taken off will not coincide with a holiday fixed in accordance with this clause.
Provided  that, in the event that a holiday is prescribed  after an employee has
been  given or gives  notice  of a  weekday  off and the  holiday  falls on such
weekday the employer will allow the employee to take up an  alternative  weekday
off in lieu of the holiday.

Termination within 14 Days of a Holiday

30.5 In the case of an employee  with at least  three  months  service  with the
employer,  whose services are terminated by the employer through no fault of the
employee  within  fourteen  days prior to a holiday or, in the case of an annual
leave closedown within fourteen days after resumption of work, the employee will
be paid for any such holiday the amount the employee would have received had the
employee not been terminated.

Full-time employees working non-standard hours

30.6 This  subclause  applies to full-time  workers who do not regularly  work a
five day Monday to Friday week.

30.6.1 When a prescribed holiday falls upon a day when the employee would not be
working in any event the employee will receive:

30.6.1.1 A day's paid leave to be taken on another day or added to annual  leave
(to be mutually agreed between the employer and employee) or

30.6.1.2 An additional day's wage

30.6.2  If an  employee  is  rostered  to  work  on the  public  holiday  or its
substitute day (except Christmas Day) the employee is entitled to;

<PAGE>

30.6.2.1  If not  required  to work on the public  holiday,  the  employee  will
receive the payment the employee  would  ordinarily  receive for that day and is
not entitled to a substitute day off.

30.6.2.2 If required to work on the public  holiday the  employee is entitled to
receive the normal rates of pay for working that day and the substitute day as a
holiday  (if the  substitute  day is a  non-working  day for  the  employee  the
employee would receive the compensation provided by clause 30.6.2.1).

30.6.2.3 If the  employee is required to work on the  substituted  day they will
receive the rates of pay for working on a public holiday.

30.6.3 If an  employee  is rostered  and  required  to work a both the  `actual'
public  holiday  and its  substituted  day (this would only occur if the holiday
were to fall on a Saturday or a Sunday) the employee is entitled to:

30.6.3.1 A day's paid leave to be taken on another day or added to annual  leave
(to be mutually agreed between the employer and employee) or

30.6.3.2  Payment at public holiday rates for the day's work for the substituted
day and payment at normal  rates for  Saturday  or Sunday for the actual  public
holiday.

Christmas Day Loading

30.7 If  employees  are  rostered  to work on a  Saturday  or Sunday  which is a
Christmas  day and are required to work,  the  employee  will receive the normal
Saturday or Sunday rate plus a loading of one half of a normal day's wages for a
full day's work and be entitled to a substitute day

Non-casual part-time Employees

30.8 Where the normal  roster of a part-time  employee  includes a day that is a
public  holiday the  employees  will  receive  the normal pay he/she  would have
received  on that day and enjoy the holiday or receive  the  appropriate  public
holiday rate for working whatever hours they work during it.

30.8.1 For  part-time  employees  whose  normal  roster  includes a Saturday  or
Sunday,  which would be a prescribed  holiday,  but for the  substitution  of an
alternative day the following will apply:

30.8.1.1 The employee will be granted leave with pay on the `actual day' without
substitution, or

30.8.1.2  The employee  works on the `actual  day' at normal  Saturday or Sunday
rates (if the Saturday or Sunday is Christmas  Day,  the  Christmas  Day loading
will apply) and is allowed to take  another day with pay which may or may not be
the prescribed substitute day, as a holiday, or

<PAGE>

30.8.1.3 The employee works the `actual day' at normal  Saturday or Sunday rates
(if the  Saturday or Sunday is  Christmas  Day the  Christmas  Day loading  will
apply)  and  receives  in  addition,  payment  at  ordinary-time  rates  for  an
additional day of equal length (with no substitution of an alternative day).

30.8.2 If any of these benefits applies the employee who works on the prescribed
substitute day will be paid at ordinary time rates.

30.9.3 Any  circumstances  for part-time  workers not covered by this  subclause
should be the subject of negotiations  between the parties concerned,  using the
principles of this clause to resolve the issues.

Payment for casual employees working on public holidays

30.9 A casual  employee who works on the day  prescribed  as the public  holiday
will be paid the appropriate  public holiday pay as described  elsewhere in this
Agreement.  The  employee  should  receive  the  ordinary  casual  rate plus the
applicable  penalty.  That  is,  the  causal  loading  of 20 per  cent  and  the
prescribed  holiday rate for non-casual workers of 2.5 times ordinary rates. The
casual will be paid 2.7 times the ordinary time rate for non-casual workers.

Absences before or after public holidays

30.10 Where an employee  is absent  from  employment  on the working day after a
public holiday or group of public holidays to which the employee is entitled and
such  absence  is  without  reasonable  cause,  proof  whereof  will be upon the
employee,  the  employee  is not  entitled  to payment  for the  public  holiday
immediately succeeding or immediately preceding the absence as the case may be.

30.11 Employees will, when required to do so, work during weekends and on any of
the public holidays specified in clause 30.1 provided that the employer will not
require  more  than a  reasonable  amount of  overtime  of any  employee  during
weekends.

31. BLOOD DONORS

A weekly  employee  who,  with the  consent  of the  employer  is absent  during
ordinary  working  hours for the purpose of  donating  blood will not suffer any
deduction of pay up to a maximum of two hours on each  occasion and subject to a
maximum  of four  separate  absences  each  calendar  year.  Provided  that such
employee  will arrange as far as  practicable  for the absence to be as close as
possible to the beginning or ending of the employee's ordinary working hours.

Provided  further the  employee  will notify the employer as soon as possible of
the time and date upon which the  employee  is  requesting  to be absent for the
purpose of donating blood.

Proof of the attendance of the employee at a recognised place for the purpose of
donating  blood and the  duration of such  attendance  will be  furnished to the
satisfaction of the employer.

<PAGE>

32. JURY SERVICE

A weekly employee  required to attend for jury service during  ordinary  working
hours will be  reimbursed  by the  employer  an amount  equal to the  difference
between that amount paid in respect of attendance  for such jury service and the
amount of wage the employee  would have received in respect of the ordinary time
the employee would have worked had the employee not been on jury service.

An employee  will notify the employer as soon as possible of the date upon which
the employee is required to attend for jury  service.  Further the employee will
give the employer proof of such attendance,  the duration of such attendance and
the amount received in respect of such jury service.

33. UNION TRAINING LEAVE

A weekly  employee  nominated by the union will be allowed leave without loss of
pay to attend union training courses subject to the following conditions:

33.1 An accredited union representative  shall, upon application in writing from
the  union,  be  granted  up to five  days  leave  with pay each  calendar  year
non-cumulative to attend union training. Not all union representatives are to be
absent for  training  at the same  time.  A maximum  of four  employees  will be
granted union training leave each calendar year.

33.2 The application for leave must contain the following details:

33.2.1 The period of time for which leave is sought

33.2.2 The  description  and content of the course (if available) to be attended
and where the course is to be conducted

33.3.1 the  granting of leave will be subject to the union  giving not less than
six weeks  notice in writing of any lesser  period  agreed by the  employer  and
union.

33.3.2 An employee  who has  completed  six months with the  employer (or lesser
period of service as may be agreed upon by the  employer  and the union) will be
eligible for such leave.

33.4 The time of taking leave will be arranged to minimise any adverse effect on
the employers operations.

33.5 The  employer  is not liable for  additional  expenses  associated  with an
employee's  attendance  at a course  other  than the  payment of  ordinary  time
earnings for the absence. For the purposes of this clause ordinary time earnings
are defined as the  relevant  skill  grade rate plus  shiftwork  loadings  where
applicable

33.6 Leave rights  granted in accordance  with this clause will not result in an
additional  payment  or  alternative  time off to the  extent  that  the  course
attended  coincides with an employee's day off in the 19-day month work cycle or
with any other confessional leave.

<PAGE>

33.7 Leave of absence granted pursuant to this clause will count as services for
all purposes.

34. TRAINING AND SKILLS DEVELOPMENT

34.1 The  parties to this  Agreement  recognise  that in order to  increase  the
efficiency,  productivity and international  competitiveness of the enterprise a
greater commitment to training and skilled development is required.  Accordingly
they commit to:

34.1.1 Developing a more highly skilled and flexible workforce

34.1.2  Providing   suitable   employees  with  career   opportunities   through
appropriate training to acquire additional skill and

34.1.3 Removing barriers to the utilisation of skills acquired

34.1.4 Developing skills in teamwork and continuous improvement

34.2 Following consultation through the ECC the employer will develop a training
programme, consistent with:

34.2.1 The current and future skill needs of the enterprise

34.2.2 The size, structure and nature of the operations of the enterprise

34.2.3 The need to develop  vocational  skills  relevant to the  enterprise  and
consistent  with  the  National  Forest  Industry  Competency   Standards  where
applicable through courses conducted by accredited educational  institutions and
providers

34.3 The ECC will ensure that the following is implemented:

34.3.1  Formulation of a training programme and availability of training courses
and career opportunities to employees

34.3.2  Dissemination of information on the training  programme and availability
of training courses and career opportunities to employees

34.3.3   The   recommending   of   individual   employees   for   training   and
reclassification

34.3.4   Monitoring  and  advising   management  and  employees-on  the  ongoing
effectiveness of the training

34.3.5 Each area will develop training plans in conjunction with the ECC

<PAGE>

34.3.6  Training  may be  conducted  either  on or  off  the  job  and as far as
practicable  during paid  working  hours.  The  employer  will not  unreasonably
withhold paid training leave

34.3.7  Employees who participate in work and grade structure  related  training
will be paid in  accordance  with clause 25 Hours of Work of this  Agreement and
clause 31 Overtime of the Award

34.3.8 Each employee will receive no less than one week of direct  training each
year

34.4 Training Costs

34.4.1 Any costs  associated  with  standard  fees for  prescribed  courses  and
prescribed  text books  (excluding  those text books which are  available in the
employer's  technical  library)  incurred in connection  with the undertaking of
training will be  reimbursed by the employer upon the  production of evidence of
such  expenditure  provided that  reimbursement  will also be on an annual basis
subject to the presentation of reports of satisfactory progress.

34.4.2 Travel costs incurred by an employee  undertaking  training in accordance
with this clause which exceed those normally  incurred in travelling to and from
work will be reimbursed by the employer.

35. LITERACY AND NUMERACY

The  success of the  enterprise  and  opportunities  for  employees  is directly
related to improvement of English language literacy and numeracy.

In  conjunction  with the ECC  management  will implement a program of workforce
literacy and numeracy.

36. ACCIDENT PAY - A.C.T.

36.1 An employer will pay and a weekly employee is entitled to receive  accident
pay in accordance with this clause.

36.2  "Accident  Pay" means a weekly  payment of an amount being the  difference
between the weekly amount of  compensation  paid to an employee  pursuant to the
Workers  Compensation  Act 1951  (ACT) and the  weekly  Award rate to which such
employee is entitled in the classification  under which the employee is employed
at the date of injury or where the  incapacity  is for a lesser  period than one
week, the difference  between the amount of compensation and the said Award rate
for that period.

36.3 An employer must pay an employee  accident pay where the employee  receives
an injury for which  compensation  is  payable  by or on behalf of the  employer
pursuant to the provision of the said Act.

36.4 An  employer  will  pay,  or cause  to be paid,  accident  pay  during  the
incapacity  of the  employee  within  the  meaning  of the said Act  until  such
incapacity  ceases or until the expiration of a period of 39 weeks from the date
of the injury, whichever event shall first occur.

<PAGE>

36.5 The  termination  of the  employee's  employment  for any reason during the
period of any  incapacity  does not affect the  liability of the employer to pay
accident pay as herein before provided.

36.6 An employee is not entitled to any payment  under this clause in respect of
any period of paid  annual  leave or long  service  leave or for any paid public
holiday.

36.7 In the event that an employee  receives a lump sum in  redemption or weekly
payment  under the said Act the liability of the employer to pay accident pay as
herein provided ceases from the date of such redemption.

36.8 Where the employee recovers damages from the employer or from a third party
in respect of the said  injury  independently  of the said Act the  employee  is
liable to repay to the  employer  the amount of accident  pay which the employer
has paid under this  clause and the  employee  is not  entitled  to any  further
accident pay in respect of that injury.

36.9 This  clause  does not apply to any injury  occurring  during the first two
weeks of the employment  unless such  incapacity  continue  beyond the first two
weeks in which case accident pay applies only to that period of incapacity after
the first two weeks.

36.10 Accident pay does not apply in respect of any injury during the first five
normal working days of incapacity.

37. TOXIC SUBSTANCES

37.1  Employees  who  are  required  to  work  on  duties  of  employment  which
necessitate  the  handling  of timber  treated  with  toxic  substances  will be
informed by the  employer of the nature of the toxicity of such  substances  and
the necessary precautions and safeguards to be observed in their use.

37.2 The  employer  will  provide  employees  with a  printed  copy of the heath
regulations that are appropriate to the toxic substances, which are utilised.

38. AMENITIES

38.1 Except as otherwise  provided by state law  employers  will provide free of
charge to the employees:

38.1.1 At each workplace  where living  accommodation  is not provided and where
ten or more employees are engaged,  suitable dining accommodation  wherein there
will be a radiator or other suitable heater.

38.1.2 Suitable lockers and suitable clothes hanging facilities.

<PAGE>

38.1.3 Where practicable, boiling water at meal times.

38.1.4 At each workplace  reasonable and sufficient  conveniences  to enable the
employees to wash themselves.

38.1.5 At each workplace at some convenient place, suitable cool drinking water.

38.1.6 At each  workplace  where a female or females  are  employed,  a restroom
suitably furnished (including suitable couch).

38.2 Provided that the provisions of clauses 38.1.1 and 38.1.2 of this clause do
not for such period or periods as may be agreed apply if the employer  proves to
the satisfaction of the ECC or failing that the Australian  Industrial Relations
Commission,  that the employer is unable by reason of lack of space, shortage of
material or labour or any other  difficulties to provide dining,  accommodation,
lockers or clothes  hanging  facilities  as  aforesaid.  In cases  where  dining
accommodation,  lockers or  clothes  hanging  facilities  are not  provided  the
Australian  Industrial  Relations  Commission  may extend the time for providing
such dining  accommodation or lockers as aforesaid.  Provided further,  however,
that where employees do not desire dining  accommodation an employer will not be
compelled to provide such accommodation.

39. CLOTHING, EQUIPMENT AND TOOLS

39.1  Compensation  to the extent of the damage  sustained will be made where in
the  course of  performing  normal  duties at work,  the work  clothing,  tools,
spectacles,  hearing  aids and  dentures  are  damaged or  destroyed  by fire or
corrosive substance.  Provided that the employer's liability in respect of tools
is limited to such tools of trade as are ordinarily required for the performance
of the employee's duties. Provided further that this clause does not apply to an
employee who is entitled to compensation  under any workers  compensation or any
other Act in respect of damage to clothing or tools,  spectacles,  hearing  aids
and dentures.

39.2 Supply of clothing

39.2.1 If an  employee is required  to work in the rain,  the  employee  will be
provided with oilskins or other suitable waterproof clothing and upon request by
the employee with suitable wet weather footwear.

39.2.2  All  employees  while  working  under  overhead  cranes  will  wear head
protective  helmets  of a  type  mutually  approved  by  the  employer  and  the
appropriate state branch of the union.

Such head  protective  helmets will be supplied by the employer to each employee
so engaged.

39.2.3 The employer  may deduct from the pay of any  employee to whom  oilskins,
aprons,  overalls,  waterproof clothing,  wet weather footwear,  head protective
helmets or  protective  gloves have been supplied with the cost of such articles
as are not returned in good order and condition, fair wear and tear excepted, on
demand being made by the employer.

<PAGE>

39.2.4 An employee  required to handle  poles or timber  whilst  still wet after
impregnation  or  immunisation  shall be supplied by the employer  with suitable
protective clothing.

39.2.5 An employee  who is required to handle  materials  whilst  still wet with
glue from a glue  spreading  machine will be supplied with  suitable  gloves and
apron.

39.2.6 An employee who is required to prime paint  timber or timber  articles by
any method or handle  same  whilst  still wet with paint will be  supplied  with
suitable protective clothing.

39.2.7.1 An employee who takes  timber by hand from a conveyor or sorting  table
or a docker  person who takes  timber by hand  "green off saw" will be  supplied
with a protective apron.

39.2.7.2.  Sawyers,  and A and B grade wood  machinists  will be supplied with a
protective apron upon request of the employee.

39.2.8 Upon request by a saw sharpener, saw doctor or saw doctor apprentice, the
employer will supply such employees with two pairs of overalls per annum free of
charge.

39.2.9 Supply of safety footwear

The employer will provide free of charge one pair of safety  boots/shoes to each
employee and thereafter on a replacement  basis.  New employees will be supplied
safety footwear at the commencement of employment.  The wearing of such supplied
footwear will be a condition of  employment  except in relation to employees who
are unable to wear such  footwear for medical  reasons and who produce a medical
certificate  of that fact.  Any person who leaves the  employment  within  three
months of such issue will be charged half the cost of the footwear so provided.

The employer will not be required to supply safety footwear to employees to whom
a weekly  allowance  or a lump amount is paid by the  employer to cover the full
cost of safety footwear supplied by the employee.

The terms of this clause will not apply to employees in circumstances  where the
employer and an employee and the State Branch of the union agree that the nature
of work  performed  by the  employee  does not  warrant  the  wearing  of safety
footwear.

39.2.10 Case hardened glasses

The employer will reimburse an employee who requires  prescription  lenses to be
case  hardened  the  amount  necessary  to have  the  prescription  lenses  case
hardened.

<PAGE>

39.2.11 Protective gloves

Where an employee is  performing  manual  tasks such as the  handling of timber,
metal,  cable or other  materials,  which would warrant the supply of protective
gloves such employees will be supplied gloves by the employer. Protective gloves
will not be supplied in circumstance where it would be hazardous if they were to
be worn nor will they be supplied in  circumstances  where the employer deems it
inappropriate.

39.3 Supply of Tools

Employees  and other  millwrights  will be provided by the employer with all the
necessary tools, implements,  measuring instruments and plant. The employee will
replace or pay for any tools etc so provided which are lost, wilfully damaged or
destroyed through the employee's negligence.

40. FIRST AID

40.1 First Aid Outfit

The employer  will supply and  maintain a first aid outfit at each  workplace as
prescribed by the ACT First Aid in the Workplace Code of Practice 1994.

40.2 First Aid Employee

Where the employer has appointed an employee who holds a certificate  as a first
aid attendant the allowance  prescribed by clause 27.8 of the Award will be paid
to such  employee  for each week in which  three days or more have been  worked.
That amount will be payable in  addition to any amounts  paid for annual  leave,
sick leave, and public holidays provided that this allowance will not subject to
any premium or penalty additions.

Provided  that  nothing  in this  sub-clause  will be taken as  meaning  that an
employer will be required to make such an appointment.

40.3 Special transport of injured

In the event of an injury to an employee requiring medical attention that cannot
be provided by the employer or on the employers  premises the employer  will, as
soon as is reasonably possible,  supply free of charge such means to convey such
an employee to the nearest  hospital or doctor at which or by whom the  employee
is to be treated.

41. RIGHT OF ENTRY

41.1  On   production   of  an  authority  to  the  employer  or  the  employers
representative  a duly accredited  union  representative  will have the right to
visit and  inspect any job at any time when work is being  carried  on,  whether
during or outside ordinary working hours, to interview employees covered by this
Agreement  provided that the  representative  does not unduly interfere with the
work in progress.

<PAGE>

Entry of a duly accredited union representative will be subject to the following
conditions:

41.1.1 That the representative  complies with all safety  requirements whilst on
the premises.

41.1.2 That if the employer alleges that an accredited union  representative  is
unduly interfering with the performance of work or is committing a breach of the
previous condition the employer may refuse the right of entry but the union will
have the right to bring the refusal before the Australian  Industrial  Relations
Commission and the Commission may deal with the matter.

41.2 Any unreasonable delay in allowing a duly accredited  representative of the
union entry into the premises is a breach of the Agreement.

41.3 A representative  of the union will be a duly accredited  representative if
holding a permit issued by the Australian Industrial Relations Commission.

42. UNION DELEGATES

42.1 An accredited  union  delegate will have the right to discuss  work-related
matters of concern of any  employee  or to convey  information  relating  to the
workplace  to  employees  provided  that the  union  delegate  does  not  unduly
interfere  with the work in progress and the  supervisor of the shift or section
is given prior notice of the union delegate's intention.

42.2 The union  delegate  will have access to a  telephone  to contact the union
office or to progress enquires on behalf of an employee on work related matters.
The union  delegate will be provided with a suitable  cupboard and facilities to
enable the union delegate to keep records,  union circulars and documentation to
efficiently carry out their responsibilities.

42.3 The union  delegate  will have the right to place  notices on notice boards
within the  enterprise.  Such notices or matters of interest  will be within the
policy of and authorised by the union.

42.4 With the  agreement of the employer the union  delegate will have the right
to have a guest  speaker  authorised  by the state  branch  of the union  attend
meetings within the enterprise for the purpose of discussing  issues relating to
this agreement and to the workplace.

42.5 The employer  will not dismiss or injure a union  delegate in employment or
alter the employee's  position to the employee's  prejudice because the employee
is a union delegate.

42.6 The employer will supply the union  delegate with a copy of this  Agreement
and with all subsequent variations.

<PAGE>

43. SIGNATURES

The following employees and union and employer representatives sign this
Agreement on behalf of the employees and the employer on this
       day of                  2005.

Employee Representative                         Employer Representative
CFMEU                                           Integrated Forest Products

Employee Representative
CFMEU

Craig Smith
Divisional Branch Secretary                     Manager
CFMEU- Forestry, Furnishing, Building           Integrated Forest
Products and Manufacturing Division             Products Pty Ltd
NSW Divisional Branch
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>3
<FILENAME>v018751_ex10-2.txt
<TEXT>
                     AGREEMENT FOR THE SALE AND PURCHASE OF
                    TIMBER SAWMILLING EQUIPMENT AND SERVICES

Agreement

This  agreement  is dated the  twentieth  day of May,  2004 and is entered  into
between:

Integrated  Forest Products Pty Ltd (ABN 520 83521 966 ) a company  incorporated
in Australia with offices situated at Suite 4, 95 Salmon Street, Port Melbourne,
Victoria 3207, Australia

and

Acora  Reneco  Group  Pty Ltd (ABN 680 89944  561 ) a  company  incorporated  in
Australia with its main  manufacturing  facility situated at 12 Government Road,
Eden, New South Wales 2551, Australia.

and will  apply for an initial  period of five years (5 years)  from the date of
this agreement and will continue  thereafter unless terminated by the issuing by
either  party to the other of twelve  months (12 months)  written  notice of the
intention to terminate.

Introduction

Integrated  Forest  Products  (hereafter  referred  to as  Integrated)  owns and
operates a timber sawmill in Canberra,  Australian Capital Territory and has the
rights to forest licenses in the Bombala region, New South Wales,  Australia and
proposes to build a log sorting and green sawmill in that region.

Acora Reneco Group  (hereafter  referred to as ARG) is a leading  Australian saw
milling equipment designer, manufacturer and supplier.

Agreement

It is agreed  between The  Parties  that ARG will offer  priority  access to and
delivery  of  its  technology,  design  expertise,  equipment  and  services  to
Integrated  for work that is required by  Integrated  in the area of saw milling
plant and  equipment  design and supply and/or  procurement  and any other items
mutually agreed between The Parties.

It is further  agreed  between The Parties that ARG will supply these items at a
rate that equates to its normal  selling  price for these  products and services
less a  discount  of 10% for its goods and  services  that are  manufactured  or
directly supplied by ARG and at a 10% discount to its normal margin for imported
goods and services.


                                       1
<PAGE>

It is further  agreed  between The Parties  that in exchange  for this  priority
access and special  pricing,  Integrated will offer all of its work in this area
to ARG exclusively.

It is further  agreed  between The  Parties  that the log sorting and green mill
line  designed by ARG for  Integrated's  new  Bombala  operation,  as  generally
detailed in the attached  layout drawing  BOMBALA  SAWMILL - Proposed Layout Feb
2004 will be supplied  to  Integrated  by ARG for a fixed price of  A$35,080,000
(Thirty Five Million and Eighty  Thousand  Australian  Dollars) plus  escalation
from 01 July 2004 equal to the rate of  increase  in the  Australian  All Groups
Consumer Price Index (CPI) as published periodically by The Australian Bureau of
Statistics,  Canberra.  Payment  terms  for this  project  will be ARG's  normal
commercial  terms. An alternative plan known between the parties as the "IFP CSG
Upgrade  Proposal" will be supplied for A$24,840,000  (Twenty Four Million Eight
Hundred and Forty Thousand Australian Dollars) plus escalation from 01 July 2004
equal  to the rate of  increase  in the  aforementioned  Australian  All  Groups
Consumer Price Index (CPI), if Integrated chooses this option.

It is further  agreed  between The Parties that this  agreement was entered into
following substantial discussions between Integrated and ARG in relation to this
Agreement that have created an  understanding  by The Parties of the obligations
and rights of each party under this Agreement and that the principals of the two
companies  (who  are  signatories  below)  are  fundamental  in the body of this
agreement.  Thus the  ongoing  details  of this  Agreement  may change by mutual
agreement  from time to time,  but the changes  will at all times be  compatible
with the spirit of this  Agreement  and the  proposed  association  between  the
companies detailed herein.

In acknowledgement of this agreement it is hereby signed on behalf of:

Integrated Forest Products Pty Ltd

                                       Director      Name:
- --------------------------------------                    ----------------------

Date:
     ---------------------------------

Witness:

Witness names and address:

- --------------------------------------

- --------------------------------------

- --------------------------------------


                                       2
<PAGE>

                                       Director      Name:
- --------------------------------------                    ----------------------

Date:
     ---------------------------------

Witness:

Witness names and address:

- --------------------------------------

- --------------------------------------

- --------------------------------------

Acora Reneco Group Pty Ltd


                                       Director      Name:
- --------------------------------------                    ----------------------


Date:
     ---------------------------------


Witness:

Witness names and address:

- --------------------------------------

- --------------------------------------

- --------------------------------------


                                       Director      Name:
- --------------------------------------                    ----------------------


Date:
     ---------------------------------

Witness:

Witness names and address:

- --------------------------------------

- --------------------------------------

                                       3
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>4
<FILENAME>v018751_ex10-3.txt
<TEXT>
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;

<PAGE>

         `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;

<PAGE>

         (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;

<PAGE>

         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:

<PAGE>

                  (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.

<PAGE>

                  (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.

<PAGE>

         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.

<PAGE>

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:

<PAGE>

         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.

<PAGE>

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.

<PAGE>

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

<PAGE>

         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

<PAGE>

         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

<PAGE>

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:

<PAGE>

         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.

<PAGE>

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.

<PAGE>

         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

<PAGE>

         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').

<PAGE>

         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.

<PAGE>

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.

<PAGE>

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.

<PAGE>

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.

<PAGE>

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

<PAGE>

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.

<PAGE>

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

<PAGE>

<TABLE>
<CAPTION>

                                TABLE OF CONTENTS

<C>                                                                                               <C>
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.
</TABLE>

<PAGE>

                                   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.

<PAGE>

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.

<PAGE>

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.

<PAGE>

                                   SCHEDULE 2

                              MAP OF AREA OF SUPPLY

<PAGE>

                                   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.

<PAGE>

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.

<PAGE>

    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.

<PAGE>

                                   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).

<PAGE>

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;

<PAGE>

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.

<PAGE>

Part 3                    :         Indicators and Weightings

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
      Column 1                    Column 2                       Column 3                 Column 4
- ----------------------------------------------------------------------------------------------------------
     Cost Item                   Indicator                    Indicator Rate            Weighting at
                                                                                     Commencement Date
- ----------------------------------------------------------------------------------------------------------
<S>                     <C>                              <C>                                 <C>
   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
- ----------------------------------------------------------------------------------------------------------
</TABLE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>5
<FILENAME>v018751_ex10-4.txt
<TEXT>

                        RADIATA FORESTRY SERVICES LIMITED
                                 ACN 106 099 941
                                     ("RFS")

                                       AND

                     INTEGRATED FOREST PRODUCTS PTY LIMITED
                                 ACN 52083521966
                                  ("Purchaser")

- --------------------------------------------------------------------------------

                                  PINE LOG SALE
                                    AGREEMENT

- --------------------------------------------------------------------------------
<PAGE>

THIS AGREEMENT is made the             day of

BETWEEN:

RADIATA FORESTRY SERVICES LIMITED 142 Gladstone Street, Fyshwick, 2609, ("RFS")

AND:

THE PARTY NOTED IN ITEM 1 OF THE FIRST SCHEDULE ("Purchaser")

RECITAL:


WHEREAS:

A.    RFS sells Logs produced from plantations in the Australian Capital
      Territory, the State of New South Wales.

B.    The Purchaser operates the Plant.

C.    The Purchaser has agreed to purchase and RFS has agreed to supply Logs on
      the terms set out in this Agreement.

NOW THIS AGREEMENT WITNESSES AS FOLLOWS:

1.    Interpretation

1.1.  In this Agreement, unless the context otherwise requires:

      "Agreement" means this Agreement and the Schedules to it.

      "Annual Volume" means the annual volume of logs specified in Item 2 of the
      First Schedule.

      "Delivered Price Review" means the price review mechanism in the Fourth
      Schedule.

      "Log" means Pinus radiata in Log form as specified in the Second Schedule
      or such other species that the parties may from time to time agree on.

      "Timber Delivery Docket" means the sequentially numbered document issued
      by RFS to the Purchaser that identifies the contractor and logging area
      where the logs have been sourced and the weight and grade of logs and the
      date that the logs are delivered to the Plant.

<PAGE>
                                       3


      "Public Weighbridge Docket" means the document issued at a public
      weighbridge within the meaning of the Trade Measurement Act 1991 of the
      Australian Capital Territory and the ....... Act of NSW that specifies the
      weight of each load of Logs.

      "Mill Door Price" means specified price plus GST.

      "Month" means a calendar month except that, for the purposes of
      calculating the Monthly Volume in Clause 6, the Month of December in any
      Year and Month of January in the next succeeding Year shall be counted
      together as one Month.

      "Monthly Volume" has the meaning given in Clause 6.1.

      "Person" includes a body corporate or politic as well as an individual.

      "Plant" means the timber processing plant operated by the Purchaser and
      located at the address set out in the First Schedule.

      "Purchasers Representative" means the person or persons appointed in
      writing by the Purchaser for the purposes of clause 4 of the Agreement.

      "Schedule" means a schedule to this Agreement.

      "Specified Prices" means the price or prices specified in Third Schedule
      or calculated in accordance with the Forth Schedule and is exclusive of
      GST.

      "Term" means the Term of this Agreement set out in Item 4 of the First
      Schedule

      "Termination Date" means the date set out in Item 5 of the First Schedule

      "Year" means the period of 12 Months beginning on the first day of July.

1.2.  In this Agreement, unless the context otherwise requires, words importing
      the singular shall include the plural.

2.    Purchase and Sale of Logs

2.1.  The Purchaser shall during the Term endeavour to buy and RFS shall
      endeavour to sell the Annual Volume of Logs at the Specified Prices.

2.2.  RFS shall deliver the Logs to the Plant at its own cost and expense during
      the hours and on the days set out in the First Schedule and at the Monthly
      Volume determined under Clause 6. The parties may by agreement vary the
      hours and days for delivery.

3.    Term

3.1.  The Agreement shall commence on the date it bears and shall continue in
      force for the Term unless terminated earlier as set out in clause 14. The
      Term may be extended as contemplated in Clause 9.

4.    Specifications

<PAGE>
                                       4


4.1.  The Logs delivered to the Plant by RFS shall comply with the
      specifications set out in the Second Schedule. Should the Purchasers
      representative or RFS believe that a Log does not meet the specifications
      either party may institute the rejection procedures set out in the Second
      Schedule. If the rejection procedures are not instituted the Log is deemed
      to be accepted.

4.2.  Upon each delivery of a load of Logs to the Plant RFS shall deliver or
      cause to be delivered to the Purchaser a Timber Delivery Docket in
      duplicate showing the weight of the Logs contained in that load. Where the
      load is for fixed length Logs the Timber Delivery Docket shall also show
      the number of Logs in the load.

4.3.  The Purchasers representative (who shall be present at the Plant at the
      delivery times set out in the First Schedule) shall sign the duplicate of
      the Timber Delivery Docket and return it to RFS's haulage operator.

4.4.  The Purchaser may by written notice to RFS request the delivery of Logs of
      a specified length and diameter and RFS shall endeavour to comply with
      that request provided that to do so is consistent with good forest
      management.

5.    Purchase Price and Payment Terms

5.1.  The Purchaser shall pay for the Logs purchased within forty five (30) days
      of the date of the RFS's invoice.

5.2.  RFS will invoice on a 30 day cycle.

5.3.  No reasonable dispute in relation to an invoice shall affect the
      obligation of the Purchaser to pay the invoiced amount as required by
      clause 5.1.

5.4.  If the Purchaser shall fail to pay the invoiced amount by the due date RFS
      may, in addition to any other rights or remedies it has:

      (a)   charge the Purchaser interest at the rate set out in Item 9 of the
            First Schedule; and

      (b)   suspend all further deliveries of Logs to the Purchaser until all
            overdue accounts and interest thereon have been paid.

6.    Monthly Volume and Stumpage

6.1.  The Monthly Volume shall be nine per centum (9%) of the Annual Volume of
      Logs. The Purchaser may vary the Monthly Volume to a maximum of eleven per
      centum (11%) or to a minimum of seven per centum (7%) provided that it
      gives written or verbal notice to RFS specifying the variation by the
      fifteenth (15th) day of the Month preceding the Month whose Monthly Volume
      is to be varied. Subject to clause 6.6 any variation shall have no effect
      to the extent that it may cause the Annual Volume of Logs to be exceeded
      unless agreed in writing by RFS.

6.2.  At the time of giving the notice under clause 6.1 the Purchaser shall also
      give a written or verbal estimate of the Monthly Volume to be purchased in
      the two Months following the Month whose rate is to be increased or
      decreased under clause 6.1.

<PAGE>
                                       5


6.3.  The Purchaser may with the consent in writing of RFS increase the Monthly
      Volume above eleven per centum (11%).

6.4.  The Purchaser shall give written or verbal notice to RFS by the fifteenth
      (15th) day of the preceding Month if it expects that it will be unable to
      purchase a minimum of seven per centum (7%) of the Annual Volume of Logs
      in any Month.

6.5.  Where in any Year the parties agree that the Purchaser will purchase or
      RFS will supply less than the full Annual Volume, RFS or the Purchaser may
      require that the shortfall in volume be carried over to the following Year
      or Years whereupon the Annual Volume for the following Year or Years will
      be adjusted. Any decision by RFS or the Purchaser to carry over or deny
      the carry over of unused volume shall not be subject to the dispute
      resolution process set out in clause 11.

6.6.  If the parties agree in writing to bring forward Log volume from the next
      Year RFS or the Purchaser may require that volume brought forward under
      this clause be deducted from the Annual Volume for that next Year. Any
      such decision by RFS or the Purchaser shall not be subject to the dispute
      resolution process set out in clause 11.

7.    Suspension of Agreement

7.1.  Where a party is reasonably prevented from fulfilling its obligations,
      that is to say for RFS to make Logs available or for the Purchaser to
      purchase Logs, under this Agreement, by reason of the causes set out in
      subclauses (a) to (e) then either party may invoke the provisions of
      clause 7.2.

      (a)   damage or destruction of forests or any part thereof due to tempest,
            fire, flood, disease or other cause;

      (b)   a strike or lockout (including action in the nature of a strike or
            lockout) provided that the lockout was not caused by the Purchaser;

      (c)   damage to or major breakdown of the Purchaser's Plant;

      (d)   war or other catastrophe; or

      (e)   any other cause beyond the reasonable control of the Purchaser or of
            RFS.

7.2.  To the extent that a party is reasonably prevented from fulfilling its
      obligations under this Agreement and for so long as the cause or causes
      shall last those obligations shall:

      (a)   be suspended or;

      (b)   be continued, subject to such modification of the Terms of the
            Agreement as the parties agree in writing.

<PAGE>
                                       6


8.    Variation in the Specified Prices

8.1.  The Specified Prices shall on the first day of July each Year (commencing
      on the first day of July 2005) be varied in accordance with the process
      outlined in the Specified Price Review Mechanism in the Fourth Schedule.

      (a)   At any time during the Term either party may by not less than thirty
            (30) days notice in writing to the other party request a meeting to
            conduct a review of the current Specified Prices.

      (b)   The party requesting the meeting shall set out its proposed
            Specified Prices and shall set out changes (since the last review or
            the date of the Agreement if there was no earlier review) in
            relevant costs (including RFS's cost of harvesting and delivering
            Logs, and the Purchaser's costs of milling, processing and marketing
            its timber products and the sale prices of the Purchaser's timber
            products) that it has taken into account in calculating the proposed
            Specified Prices.

      (c)   The party requesting the meeting shall also deliver with the notice
            relevant data in verifiable form that it has used in establishing
            the changes in costs and prices together with any other data that is
            relevant to a review of the Specified Prices. The other party may
            deliver any relevant data in verifiable form to the party requesting
            the meeting provided it is delivered prior to the meeting.

      (d)   In the calculation of the proposed Specified Prices it is relevant
            to take into account changes in industry wide costs and prices of
            those activities and products set out in (b).

8.2.  Upon new Specified Prices being agreed to under either the annual review
      or by application of one party, the parties shall sign a memorandum
      setting out the new Specified Prices.

8.3.  All new Specified Prices shall take effect from the first day of the month
      immediately following that review or such date as otherwise agreed to, and
      payments already made (if any) shall be adjusted to take account of the
      new Specified Prices and implementation date, and the Schedule shall be
      read as referring to those new Specified Prices and date.

9.    Extension of the Agreement

      At any time during the extension review period set out in the First
      Schedule either party may give notice in writing to the other party that
      it desires the Agreement to be extended for such further period and on
      such terms and conditions (including changes in the Schedule) specified in
      the notice. The notice shall operate as an irrevocable offer capable of
      written acceptance for 3 Months after its receipt. The party receiving the
      notice has three (3) Months from the date of receiving the notice to
      accept the request for an extension by service of a written acceptance
      whereupon the Term and the Termination Date shall be extended for the
      period and the terms and conditions of this Agreement shall be varied in
      accordance with the notice as from the date of service of the acceptance.
      If the request for an extension is not accepted in writing within three
      (3) Months the request for an extension will lapse.

<PAGE>
                                       7


10.   Variation of the Annual Volume of Logs

      The parties acknowledge that because of many factors they may wish to vary
      the Annual Volume of Logs and such variation shall be by mutual agreement
      only and a failure to agree shall not be a dispute as contemplated in
      clause 11.

11.   Dispute Resolution

11.1. Unless a party to this Agreement has complied with sub-clauses 11.2 to
      11.4, that party may not commence court proceedings or arbitration
      relating to any dispute arising from this Agreement except where that
      party seeks urgent interlocutory relief in which case that party need not
      comply with this clause before seeking such relief.

11.2. Either party to this Agreement claiming that a dispute with the other has
      arisen under this Agreement shall give written notice to that other party
      designating as its representative in negotiations relating to the dispute
      the person with authority to settle the dispute and the other party shall
      not later than seven (7) days thereafter give notice in writing to the
      other designating as its representative in negotiations relating to the
      dispute a Person with similar authority.

11.3. The designated Persons shall within ten days of the last designation
      required by sub-clause 11.2 seek to resolve the dispute.

11.4. If the dispute is not resolved within the period specified in clause 11.3
      (or within such further period as the designated Persons may agree is
      appropriate) the parties shall within a further 10 days (or within such
      further period as the designated Persons may agree is appropriate) seek to
      agree on a process for resolving the dispute (through means other than
      litigation or arbitration) including:

      (a)   the procedure and timetable for any exchange of documents and other
            information relating to the dispute;

      (b)   procedural rules and a timetable for the conduct of the selected
            mode of proceedings;

      (c)   a procedure for selection and compensation of any neutral Person who
            may be employed by the parties; and

      (d)   whether the parties should seek the assistance of a dispute
            resolution organisation.

11.5. The parties acknowledge that the purpose of any exchange of information or
      documents or the making of any offer of settlement pursuant to this clause
      is to settle the dispute between them. Neither party may use any
      information or documents obtained through the dispute resolution process
      by this clause for any other purpose other than an attempt to settle the
      dispute between them.

11.6. After the expiration of the time established by or agreed under sub clause
      11.4 for agreement on a dispute resolution process, either party may in
      writing terminate the dispute resolution process provided in this clause
      and may then refer the dispute to arbitration or commence court
      proceedings relating to the dispute.

<PAGE>
                                       8


12.   RFS Default

      In the event of RFS committing an act or omission constituting a material
      breach of any obligation required on its part to be performed or observed
      under the Agreement and failing to take action to remedy such default
      within 28 days of delivery of a notice from the Purchaser requiring RFS to
      remedy the breach the Purchaser shall be entitled by notice in writing to
      terminate the Agreement forthwith but without prejudice to any right of
      action or remedy which shall have accrued or which shall accrue thereafter
      in favour of either party.

13.   Purchaser Default

      In the event of the Purchaser:

      (a)   being a company, if it

            (i)   goes into liquidation, otherwise than for the purpose of
                  reconstruction or amalgamation, or

            (ii)  has a receiver, receiver and manager, administrator or
                  provisional liquidator appointed to it or any of its assets,
                  or

            (iii) is subject to any petition presented or proceedings taken or
                  instituted in any Court (which the Purchaser does not oppose)
                  for the compulsory winding up of the Purchaser, or

            (iv)  passes a resolution for winding up; or

            (v)   is subject to the supervision of the Court either voluntarily
                  or otherwise howsoever; or

            (vi)  enters any arrangement or composition for the benefit of
                  creditors or any class of them;

      (b)   suffering any execution against an asset of the Purchaser; or

      (c)   committing any act or omission constituting a material breach of any
            obligation required on its part to be performed or observed under
            the Agreement and failing to take action to remedy such default
            within 28 days of delivery of a notice from RFS requiring the
            Purchaser to remedy the breach;

      THEN RFS shall be entitled by notice in writing to terminate the Agreement
      forthwith but without prejudice to any right of action to remedy which
      shall have accrued or which shall accrue thereafter in favour of either
      party.

14.   Notices

14.1. Any notice to be served on a party under this Agreement may be served by
      delivering it, posting it by prepaid post or transmitting it by facsimile
      to the relevant address specified in the First Schedule.

14.2. Any notice served in accordance with subclause 14.1 shall be deemed to be
      received;

      (a)   in the case of delivery by hand - on the day of delivery.

<PAGE>
                                       9


      (b)   In the case of posting - three days after the date of posting
            whether or not the notice is returned, or

      (c)   In the case of facsimile transmission - upon receipt by the
            transmitting machine of confirmation from the receiving machine that
            the message has been received.

15.   General

15.1. If a provision of this Agreement is void or voidable by either party or
      unenforceable or illegal that provision shall be severed from this
      Agreement and the remainder of this Agreement has full force and effect.

15.2. No amendment to this Agreement shall be effective unless and until
      embodied in writing and signed by each of the parties.

15.3. Failure or neglect by the Purchaser or RFS to enforce at any time any of
      the provisions hereof shall not be construed as nor shall be deemed to be
      a waiver by either the Purchaser or RFS of their rights hereunder nor in
      any way affect the validity of the whole or any part of this Agreement.

15.4. Neither RFS nor the Purchaser shall assign or purport to assign or
      otherwise transfer any of its rights or obligations under this Agreement
      without the prior written consent of the other party, which consent shall
      not be unreasonably withheld. RFS shall be entitled to consider the public
      interest in deciding whether to withhold its consent.

15.5. This Agreement shall be governed by and construed in accordance with the
      laws of the State of New South Wales. The parties submit to the exclusive
      jurisdiction of the Courts of that State in respect of any matters arising
      out of this Agreement.

15.6. Each provision of the Agreement, and each part thereof shall, unless the
      context otherwise necessarily requires it, be read and construed as a
      separate and severable provision, or as a separate and severable part
      thereof, so that if any provision, or part thereof, is void or otherwise
      unenforceable for any reason, then that provision, or part thereof, as the
      case may be, shall be severed and the remainder shall be read and
      construed as if the severable provision of part thereof, had never
      existed.

15.7. The Purchaser and RFS shall in carrying out the Agreement and operating
      the Plant comply with the provisions of the relevant Statues, Regulations
      and By-Laws, and the requirements of any Commonwealth, State, Territory or
      local authority.

<PAGE>
                                       10


EXECUTION

In witness whereof the Parties have hereunto set their hands and seals the day
and the Year first herein before written

EXECUTED by RADIATA
FORESTRY SERVICES LIMITED
ACN 106 099 941
In accordance with Section 127 of The
Corporations Act:

Director                                                    *Director/Secretary


Print Full Name                                             Print Full Name


EXECUTION BY PURCHASER

EXECUTED by INTEGRATED
FOREST PRODUCTS
PTY LIMITED ACN 52083521966
In accordance with Section 127 of The
Corporations Act:

Director                                                    *Director/Secretary


Print Full Name                                             Print Full Name

<PAGE>
                                       11


      FIRST SCHEDULE

1.    PURCHASER

      Name: Integrated Forest Products PTY LTD
      ABN 52083521966
      Address: P.O. Box 120 Mawson ACT 2607

2.    ANNUAL VOLUME OF LOGS

      44,000 cubic metres of sawlogs

3.    PLANT - ADDRESS

      Tralee Street Hume ACT 2620

4.    TERM

      The period commencing on the date of this Agreement and ending on the
      Termination Date

5.    TERMINATION DATE

      30/06/2008

6.    EXTENSION REVIEW PERIOD

      The period between 1st day of July 2007 and the 31st day of December 2007.

7.    DELIVERY OF THE LOGS

      Delivery hours are Monday to Friday between 6.30am and 5.30pm excluding
      public holidays and Rostered Days Off.

8.    ADDRESSES FOR NOTICES

      (a)   Notices for RFS

            Radiata Forestry Services Limited
            142-144 Gladstone Street
            Fyshwick, ACT

            Facsimile: 6280 8044
            Attention: Jim Adams

      (b)   Notice for the Purchaser

            Address: P.O. Box 120 Mawson ACT 2607

            Facsimile: 02 62852654
            Attention: IFP Wood Supply Manager

<PAGE>
                                       12


9.    INTEREST RATE ON OVERDUE ACCOUNTS

      The interest rate payable is two per centum per annum above the highest
      interest rate charged by the Commonwealth Bank of Australian on overdraft
      accounts under one hundred thousand dollars ($100,000.00) on the first day
      that the invoiced amount is overdue

<PAGE>
                                       13


                                 SECOND SCHEDULE

1.    LOG SPECIFICATIONS

(a)   Length

      (i)   Nominal lengths:- 3.95m,4.25m, 4.55m, 4.85m, 5.15m, 5.45m, 5.75m &
            6.05m

      (ii)  RFS will use reasonable endeavours to produce logs to the following
            length mix:

                  -     6.08-6.15, 5.78-5.85 and 5.48-5.55 target lengths
                        minimum 60% by log volume

                  -     4.88-4.95 and 5.18-5.35 target lengths maximum 35% by
                        log volume

                  -     3.98-4.05, 4.28-4.35 and 4.58-4.65 target lengths
                        maximum 5% by log volume.

      (iii) RFS will use reasonable endeavours to produce logs to the following
            diameter mix:

                  -     SEDUB 20-30cm maximum 25% by log volume

                  -     SEDUB 30-40cm minimum 50% by log volume

                  -     SEDUB 44-55cm maximum 25% by log volume.

      (iv)  Where a log exceeds a nominal length the log will be deemed to be
            that nominal length.

      (v)   All logs will be square cut at both ends with no significant fibre
            pull, falling splits or shatter.

(b)   Diameter

      (i)   Minimum small end diameter under bark is 20cm

      (ii)  Maximum large end diameter under bark in all cases shall be 58cm

(c)   Knots

      (i)   All knots will be flush trimmed and measured across the smallest
            diameter

      (ii)  Allowable Knot Size - Sawlog

      Single Green Knot Diameter < the lesser of 30% Mean diam of log OR 10cm

      Single Dead Knot Diameter < the lesser of 25% Mean diam of log OR 10cm

<PAGE>
                                       14


      Green Knot Diameter in Whorl < the lesser of 20% Mean diam of log OR 8cm

      Dead Knot Diameter in Whorl < the lesser of 15% Mean diam of log OR 6cm

(d)   Sweep

      (i)   Sweep will be allowed in one plane only and in one direction. Sweep
            should be uniform over the whole length of the log. Sweep will be
            measured as the deviation of the log from a straight edge over the
            length of the log.

      (ii)  The allowable sweep is:

            Sawlog <25% of Mean diam of log

      (iii) The maximum allowable sweep is 10cm

(e)   Other Defects

      (i)   Bluestain infection is limited to no more than 10% of either end of
            the log

      (ii)  There shall be no sudden changes in diameter

      (iii) There shall be no scaring or dead or burnt sides of a size greater
            than the maximum knot size

      (iv)  End splitting is not acceptable

      (v)   Double heart is not acceptable

      (vi)  Foreign objects, insect damage, rot and shatter are not permitted.
            Shatter is defined as the breakage of fibre within the log.

2.    LOG REJECTION PROCEDURES

(a)   If the Purchaser believes that any load of logs contains logs that do not
      meet the specifications the Purchaser may bring this to the attention of
      RFS, who will inspect the load before it is unloaded and then: -

      (i)   If RFS accepts that the load contains an unacceptable number of logs
            that do not meet the specification the load will be returned to the
            forest.

      (ii)  If the RFS believes that the load contains a smaller number of logs
            that do not meet the specifications the load will be unloaded and
            the Purchaser will accept any logs that meet specifications, but any
            logs that do not meet the specifications will be returned to the
            forest at RFS's cost.

<PAGE>
                                       15


      (iii) Any logs that can be modified to meet specifications may be modified
            by RFS.

      (iv)  The Purchaser will be given full credit for any logs or parts of
            logs that are returned to the forest.

      (v)   RFS and the Purchaser may agree to the downgrading of any load or
            part of a load to a lower class of log if they agree that an
            unacceptable number of the logs do not meet specifications.

(b)   The Purchaser may also bring to the attention of RFS any individual log
      that fails to meet specification and if the Purchaser can identify the
      source of the log and the contractor who delivered the log then:-

      (i)   RFS may instruct the contractor to return the log to the forest or
            to modify the log to meet specification and part of the log may be
            returned to the forest.

      (ii)  The Purchaser will be given full credit for any logs or parts of
            logs that are returned to the forest.

(c)   The Purchaser may refer any decision of RFS on log quality to the dispute
      resolution procedure in clause 14 and the Purchaser will retain any log
      referred for dispute resolution until the dispute is resolved.

<PAGE>
                                       16


      THIRD SCHEDULE

1.    SPECIFIED PRICE


$63.00 per tonne

<PAGE>
                                       17


      FOURTH SCHEDULE

                        Specified Price Review Mechanism

Part 1: Definitions and interpretation

In this schedule unless the context indicates to the contrary:

Estimated Market Price of a product is the average of the monthly wholesale
price received by the Purchaser net to mill of freight for MGP 10 (excluding any
future direct sales of MGP 10 to wall and truss manufacturers) over a 3 month
period prior to the annual review.

Harvest and Haulage Cost means the base cost for harvesting and hauling logs to
the Purchaser over a 3 month period prior to the annual review.

Purchaser's Wages Cost means the average dollar cost per employee (this excludes
salaried and administration staff) over a 3 month period prior to the annual
review.

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
Delivered Price is being conducted;

Indicator means an indicator of a cost item more particularly being an 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 an 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;

Part 2: Methodology

The following describes the method of varying the Specified Prices:

      1.    Ascertain the level of each indicator in column 2 of Part 2,
            expressed as dollars and cents, percentage or as an index (as the
            case may be) current at the time of the review (the current
            indicator rate). The current indicator rate will be the base
            indicator rate for the next review.

      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 indicator weighting
            specific in column 2 to that percentage change.

      3.    Calculate the weighted movement across all the indicators by
            applying the methodology below:

            a.    Multiply the movement in each indicator (see clause 2) by the
                  weighting in column 4 of Part 3.

            b.    The sum of the products of each calculation referred to in
                  clause 3(a) is the weighted movement across all indicators.

      4.    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 3 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.

<PAGE>
                                       18


Part 3: Indicators and Weightings

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Column 1                    Column 2                           Column 3              Column 4
- ---------------------------------------------------------------------------------------------------------
Cost Item                   Indicator                          Indicator rate        Weighting
- ---------------------------------------------------------------------------------------------------------
<S>                         <C>                                <C>                   <C>
Item 1 - Timber  Product -  The  movement  in the  Purchasers                        25%
MGP 10                      wholesale  price  (net to mill of
                            freight)   for  MGP10   over  the
                            previous three months.
- ---------------------------------------------------------------------------------------------------------
Item  2:   Harvesting  and  The  movement  in the  contracted  $                     25%
Haulage costs               base  harvesting   costs  to  RFS
                            over the previous 3 months
- ---------------------------------------------------------------------------------------------------------
                            The   movement   in  the  haulage  cents/km              25%
                            costs over the  previous 3 months
                            shown as cents per kilometer
- ---------------------------------------------------------------------------------------------------------
Item  3:  The   Purchasers  The   movement   in   the  $  per                        25%
wages costs for  employees  employee   for  wages   over  the
working  in the  log  yard  previous three months.
and  sawmill  sections  of
the    plant     (excludes
salaried               and
administration staff)
- ---------------------------------------------------------------------------------------------------------
Total                                                                                100%
- ---------------------------------------------------------------------------------------------------------
</TABLE>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>6
<FILENAME>v018751_ex31-1.txt
<TEXT>

EXHIBIT 31.1

                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER
                       PURSUANT TO 18 U.S.C. SECTION 1350,
                      AS ADOPTED PURSUANT TO SECTION 302 OF
                         THE SARBANES-OXLEY ACT OF 2002

I, Michael Timms, certify that:

1. I have reviewed this quarterly report on Form 10-KSB of Australian Forest
Industries;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. I am responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and have:

      a) designed such disclosure controls and procedures to ensure that
      material information relating to the registrant, including its
      consolidated subsidiaries, is made known to us by others within those
      entities, particularly during the period in which this quarterly report is
      being prepared;

      b) evaluated the effectiveness of the registrant's disclosure controls and
      procedures as of a date within 90 days prior to the filing date of this
      quarterly report (the "Evaluation Date"); and

      c) presented in this quarterly report my conclusions about the
      effectiveness of the disclosure controls and procedures based on our
      evaluation as of the Evaluation Date;

5. I have disclosed, based on our most recent evaluation, to the registrant's
auditors and the audit committee of registrant's board of directors (or persons
performing the equivalent functions):

      a) all significant deficiencies in the design or operation of internal
      controls which could adversely affect the registrant's ability to record,
      process, summarize and report financial data and have identified for the
      registrant's auditors any material weaknesses in internal controls; and

      b) any fraud, whether or not material, that involves management or other
      employees who have a significant role in the registrant's internal
      controls; and

6. I have indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of my most recent
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.


Date: May 18, 2005


/s/ Michael Timms
- -----------------
Name: Michael Timms
Title: Chief Executive Officer, President and Chairman
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>7
<FILENAME>v018751_ex31-2.txt
<TEXT>

EXHIBIT 31.2

                    CERTIFICATION OF CHIEF FINANCIAL OFFICER
                       PURSUANT TO 18 U.S.C. SECTION 1350,
                      AS ADOPTED PURSUANT TO SECTION 302 OF
                         THE SARBANES-OXLEY ACT OF 2002

I, Colin Baird, certify that:

1. I have reviewed this quarterly report on Form 10-KSB of Australian Forest
Industries;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. I am responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and have:

      a) designed such disclosure controls and procedures to ensure that
      material information relating to the registrant, including its
      consolidated subsidiaries, is made known to us by others within those
      entities, particularly during the period in which this quarterly report is
      being prepared;

      b) evaluated the effectiveness of the registrant's disclosure controls and
      procedures as of a date within 90 days prior to the filing date of this
      quarterly report (the "Evaluation Date"); and

      c) presented in this quarterly report my conclusions about the
      effectiveness of the disclosure controls and procedures based on our
      evaluation as of the Evaluation Date;

5. I have disclosed, based on our most recent evaluation, to the registrant's
auditors and the audit committee of registrant's board of directors (or persons
performing the equivalent functions):

      a) all significant deficiencies in the design or operation of internal
      controls which could adversely affect the registrant's ability to record,
      process, summarize and report financial data and have identified for the
      registrant's auditors any material weaknesses in internal controls; and

      b) any fraud, whether or not material, that involves management or other
      employees who have a significant role in the registrant's internal
      controls; and

6. I have indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of my most recent
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.


Date: May 18, 2005


/s/ Colin Baird
- ---------------
Name: Colin Baird
Title: Chief Financial Officer

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.1
<SEQUENCE>8
<FILENAME>v018751_ex32-1.txt
<TEXT>

EXHIBIT 32.1

Certification Pursuant to 18 U.S.C. Section 1350 As Adopted Pursuant to Section
                     906 of the Sarbanes-Oxley Act of 2002


I, Michael Timms, President of Australian Forest Industries (the "Company"),
certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.
Section 1350, that:

(1) the Annual Report on Form 10-KSB of the Company for the quarter ended
December 31, 2004 (the "Report") fully complies with the requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.


Date: May 18, 2005


/s/ Michael Timms
- -----------------
Michael Timms
Chief Executive Officer and President

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.2
<SEQUENCE>9
<FILENAME>v018751_ex32-2.txt
<TEXT>
EXHIBIT 32.2

Certification Pursuant to 18 U.S.C. Section 1350 As Adopted Pursuant to Section
                     906 of the Sarbanes-Oxley Act of 2002


I, Colin Baird, Chief Financial Officer of Australian Forest Industries (the
"Company"), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
18 U.S.C. Section 1350, that:

(1) the Annual Report on Form 10-KSB of the Company for the quarter ended
December 31, 2004 (the "Report") fully complies with the requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.


Date: May 18, 2005


/s/ Colin Baird
- ---------------
Colin Baird
Chief Financial Officer

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
