Prospectus - Fonterra

15In addition, the Trustee has a statutory duty pursuant to the Securities Act and the Securities Regulations toexercise reasonable diligence to:• ascertain whether or not there has been any breach of the terms of the Trust Documents or of the terms andconditions of any offer of the Bonds and to do all it is empowered to do to cause any such breach of thoseterms to be remedied (except where the Trustee is satisfied that the breach will not materially prejudice theinterests of the Holders); and• ascertain whether or not the assets of Fonterra that are or may be available, whether by way of security orotherwise, are sufficient or likely to be sufficient to discharge the amounts of the Bonds as they become due.The Trustee receives the benefit of a general indemnity from Fonterra for any expenses, losses or liabilities itreasonably sustains or incurs while acting as Trustee unless the claim arises out of a wilful default, grossnegligence or wilful breach of trust or where the Trustee has failed to show the degree of care and diligencerequired of it having regard to the powers, authorities and discretions conferred on it under the Trust Documents.The Trustee has absolute discretion as to the exercise of its powers in relation to the Bonds. Under the TrustDocuments, the Trustee may, amongst other things, in relation to the Bonds:• refrain from exercising any power until directed by an Extraordinary Resolution of Holders or the affectedclass of Holders;• decline to act or exercise any power, take any action or comply with any request or direction (including anydirection by an Extraordinary Resolution of Holders) unless it has first been indemnified to its satisfactionagainst all expenses, losses and liabilities it may reasonably sustain or incur by so doing;• represent and act on behalf of Holders in any matter concerning them generally;• in its discretion, invest any moneys held in its capacity as Trustee, in the name of the Trustee or its nominee,in any investment, with power to vary, deal with or dispose of such investment, and all income (less anycommissions properly payable to the Trustee) arising from all such investments will belong to the person inrespect of whom such moneys are held by the Trustee;• in the performance of its duties, act on, or decline to act on, any communication or document reasonablybelieved to be genuine and correct, any Holders’ resolution believed to have been properly passed at ameeting of Holders, certificates signed by or on behalf of Fonterra, and the advice or opinion of professionaladvisers; or• require Fonterra to report to Holders on certain matters, convene meetings of Holders or otherwise seekdirections from a court of New Zealand.ReportingFonterra covenants to supply to the Trustee annual and half-yearly consolidated financial statements for theFonterra Group and an annual report as to the financial condition of Fonterra and its Subsidiaries and as tocompliance with the Trust Documents.This includes a requirement that a Director and the chief executive officer or the chief financial officer of Fonterra,provide a report to the Trustee, following the end of each financial year and each financial half-year, as to variousmatters relating to Fonterra and the Bonds, including details of any matter that has arisen relating to Fonterrawhich would materially and adversely affect the ability of Fonterra to perform its obligations under the TrustDocuments and the Bonds or which adversely affects the interests of Holders, compliance by Fonterra with theprovisions of the Trust Documents and details of all Bonds that have been repaid on maturity in the immediatelypreceding financial year.Events of DefaultUpon the occurrence of any of the Events of Default set out in the Trust Documents, the Trustee may, andimmediately upon being directed to do so by an Extraordinary Resolution of Holders must, declare the Bonds tobe immediately due and payable. However, none of the events listed in the definition of Event of Default in theTrust Documents will constitute an Event of Default, and the Bonds will not become immediately due and payable,unless the Event of Default is continuing unremedied and the Trustee has given a notice to Fonterra declaring theBonds to be immediately due and payable.The Supplemental Trust Deed provides that if the Bonds are declared due and payable prior to their Maturity Datepursuant to clause 13.1 of the Master Trust Deed, interest will be payable at the Interest Rate from the mostrecent Interest Payment Date to and excluding the date of repayment.The Events of Default are listed in the Trust Documents. In summary, the Events of Default include the followingevents:• a failure to make any payment of interest on, or repayment of the Principal Amount in respect of, the Bondswithin 10 Business Days of the due date;