Document:

renewal agreement

    
      

    

    Exhibit
      10.3

     

    

     

    FIRST
      AMENDMENT TO RENEWAL AGREEMENT

    

    THIS
      FIRST AMENDMENT TO RENEWAL AGREEMENT, dated as of July 13, 2005 (this “First
      Amendment”), between CNL RETIREMENT PROPERTIES, INC., a corporation organized
      under the laws of the State of Maryland (the “Company”), and CNL RETIREMENT
      CORP., a corporation organized under the laws of the State of Florida (the
      “Advisor”) (each of the Company and the Advisor sometimes hereinafter referred
      to as a “Party”, and collectively, as the “Parties”).

    

    W
      I T
      N E S S E T H

    

    WHEREAS,
      the Parties entered into that certain Advisory Agreement, dated as of
      May 3, 2004 (the “Advisory Agreement”); capitalized terms used herein and
      not otherwise defined herein shall have their respective meanings set forth
      in
      the Advisory Agreement;

    

    WHEREAS,
      the Parties entered into that certain Renewal Agreement, dated as of May 2,
      2005
      (the “Renewal Agreement”), which provided for the renewal of the Advisory
      Agreement for an additional one-year term commencing on May 3, 2005, and
      terminating at 12:00 a.m. midnight (Eastern time) on May 3, 2006 (unless sooner
      terminated by either or both Parties in accordance with the terms of the
      Advisory Agreement), subject to the terms and conditions set forth
      therein;

    

    WHEREAS,
      pursuant to the terms of the Renewal Agreement, the Parties agreed to negotiate
      in good faith with respect to whether a reduction in the percentage rate(s)
      of
      Total Proceeds to be used in Section 9(b) of the Advisory Agreement for
      determining Acquisition Fees payable to the Advisor under the Advisory Agreement
      should be effected; and

    

    WHEREAS,
      the Parties desire to amend the Renewal Agreement and the Advisory Agreement
      to
      reflect their agreement with respect to the percentage rate(s) of Total Proceeds
      to be used in Section 9(b) of the Advisory Agreement for determining Acquisition
      Fees payable to the Advisor under the Advisory Agreement. 

    

    NOW,
      THEREFORE, in consideration of the foregoing and of the mutual covenants and
      agreements contained herein, the Parties agree as follows:

    

    1.     Percentage
      Rate(s) of Total Proceeds for Acquisition Fees.
      The
      Advisory Agreement is hereby amended by deleting the reference to “4.0%” in (i)
      the definition of “Permanent Financing” in Section 1 and (ii) the first sentence
      of Section 9(b) and replacing it in each case with “3.0%.” This amendment of the
      Advisory Agreement shall be deemed effective as of May 3, 2005.

    

    2.     Certain
      Other
      Agreements.
      Paragraph 2 (Certain Other Agreements) of the Renewal Agreement is hereby
      deleted in its entirety. 

    

    3.     Effect
      on the Renewal Agreement and the Advisory Agreement.
      Except
      as specifically amended herein, each of the Renewal Agreement and the Advisory
      Agreement shall remain in full force and effect.

    

    4.     Severability.
      The
      provisions of this First Amendment are independent of and severable from each
      other, and no provision shall be affected or rendered invalid or unenforceable
      by virtue of the fact that for any reason any other or others of them may be
      invalid or unenforceable in whole or in part.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    5.     Construction.
      The
      provisions of this First Amendment shall be interpreted, construed and enforced
      in all respects in accordance with the laws of the State of Florida applicable
      to contracts to be made and performed entirely in said state.

    

    6.     Entire
      Agreement.
      This
      First Amendment, together with the Renewal Agreement and the Advisory Agreement,
      contain the entire agreement and understanding among the Parties with respect
      to
      the subject matter hereof and thereof, and supersedes all prior and
      contemporaneous agreements, understandings, inducements and conditions, express
      or implied, oral or written, of any nature whatsoever with respect to the
      subject matter hereof and thereof. The express terms hereof and thereof control
      and supersede any course of performance and/or usage of the trade inconsistent
      with any of the terms hereof or thereof. This First Amendment may not be
      modified or amended other than by an agreement in writing.

    

    7.     Titles
      Not to Affect Interpretation.
      The
      titles of paragraphs and subparagraphs contained in this First Amendment are
      for
      convenience only, and they neither form a part of this First Amendment nor
      are
      they to be used in the construction or interpretation hereof.

    

    8.     Execution
      in Counterparts.
      This
      First Amendment may be executed in any number of counterparts, each of which
      shall be deemed to be an original as against any party whose signature appears
      thereon, and all of which shall together constitute one and the same instrument.
      This First Amendment shall become binding when one or more counterparts hereof,
      individually or taken together, shall bear the signatures of all of the parties
      reflected hereon as the signatories.

    

    [Signature
      page follows]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, the Parties have executed this First Amendment as of the date
      and year first above written.

     

    
      	 	
              CNL
                RETIREMENT PROPERTIES, INC.

            
	 	 
	 	 
	 	
              By:

            	
              /s/
                Thomas J. Hutchison III

            
	 	
              Name:

            	
              Thomas
                J. Hutchison III

            
	 	
              Its:

            	
              CEO
                & President

            
	 	 
	 	 
	 	 
	 	
              CNL
                RETIREMENT CORP.

            
	 	 
	 	 
	 	
              By:

            	
              /s/
                James M. Seneff, Jr.

            
	 	
              Name:

            	
              James
                M. Seneff, Jr.

            
	 	
              Its:

            	
              Chairman
                of the BoardFiled by Automated Filing Services Inc. (604) 609-0244 - Austral Pacific Energy Ltd. - Exhibit 4.6

EXHIBIT 4.6 

GAS PRE-PAYMENT AND OPTION AGREEMENT 

 GAS PRE-PAYMENT AND OPTION AGREEMENT 

 Indo-Pacific Energy (NZ) Limited

 

Indo-Pacific Energy Ltd 

 

NGC New Zealand Limited 

 

	GAS PREPAYMENT AND OPTION AGREEMENT 	 

TABLE OF CONTENTS 

	 1	 DEFINITIONS	 1
	 1.1	 Defined terms	 1
	 1.2	 Construction	 2
	  	 	 
	 2	 PURPOSE	 2
	  	 	 
	3	 TERM	2
	  	 	 
	 4	 PREPAYMENT AND OPTION FEE	 2
	 4.1	 Payment of Fee	 2
	 4.2	 Condition of Payment	 3
	 4.3	 Joint Bank Account	 3
	 4.4	 NGC Entitlements upon Payment	 3
	 4.5	 Kahili Gas	 4
	  	 	 
	 5	 GAS OPTION	 4
	 5.1	 IPENZ to give notice	 4
	 5.2	 NGC Option	5
	 5.3	 NGC offer to purchase	 5
	 5.4	 Exclusive negotiation period	 5
	 5.5	 Sale to third parties if no agreement	 5
	 5.6	 Determination of unresolved terms	 5
	 5.7	 Position if Joint Sale Agreement	 6
	 5.8	 Effect of prepayment, conversion or enforcement	 6
	  	 	 
	 6	 PRICE GUIDELINES FOR GAS PURCHASES	 6
	  	 	 
	 7	 PREPAYMENT	 6
	  	 	 
	 8	 CONVERSION INTO EQUITY	 6
	  	 	 
	 9	 CHARGE OVER INTEREST IN KAHILI JV	 7
	 9.1	 Grant of security interest	 7
	 9.2	 IPENZ right to substitute security	 7
	  	 	 
	 10	 COVENANTS AND UNDERTAKINGS	 7
	 10.1	 Covenant to maximise Gas	 7
	 10.2	 Covenant as to title	 7
	  	 	 
	 11	 CHANGE IN CONTROL OF IPENZ AND SRH	8
	  	 	 
	 12	 IPE GUARANTEE	 8

 

	GAS PREPAYMENT AND OPTION AGREEMENT 	 

	 12.1	 Guarantee	 8
	 12.2	 Non-performance by IPENZ	 8
	 12.3	 Non-prejudice of guarantee	 8
	 12.4	 Guarantor to be principal obligor	 9
	 12.5	 Exercise of rights	 9
	 12.6	 Waiver of subrogation rights	 9
	 12.7	 No competition	 9
	 12.8	 IPENZ activities in New Zealand	 9
	  	 	 
	 13	 NGC MAY NOMINATE SUBSIDIARY OR RELATED
      COMPANY	 9
	  	 	 
	 14	 MISCELLANEOUS PROVISIONS	 10
	 14.1	 Representations and Warranties	 10
	 14.2	 Confidentiality	 10
	 14.3	 No Partnership	 10
	 14.4	 Amendments	 11
	 14.5	 Notices	 11
	 14.6	 No Assignment	 12
	 14.7	 Governing Law	 12
	 14.8	 Counterparts	 12

 

	GAS PREPAYMENT AND OPTION AGREEMENT 	1

	 	 
	Date:  	2003

PARTIES 

Indo-Pacific Energy (NZ) Limited (IPENZ) of Wellington, New Zealand 

Indo-Pacific Energy Ltd (IPE) of Canada 

NGC New Zealand Limited (NGC) of Wellington, New Zealand 

BACKGROUND 

	 A      	 IPENZ carries on business in New Zealand as an oil
        and gas exploration company and it, together with its related companies,
        have interests in various oil and gas exploration joint ventures and in
        petroleum exploration permits. 

	 
	 B      	 IPE currently owns all of the shares in IPENZ, through
        its wholly-owned subsidiary Source Rock Holdings Limited. 

	 
	 C      	 NGC carries on, amongst other businesses, business
        as a gas wholesaler and wishes to secure rights in relation to further
        gas. 

	 
	 D      	 The parties have agreed that NGC should provide IPENZ
        with cash funding in return for, amongst other things, an option over
        gas and related rights. 

THE PARTIES AGREE as follows: 

	 1      	 DEFINITIONS 

	 
	 1.1      	 Defined terms 

	 	 In this Agreement, the following capitalised terms
        have the following meanings: 

	 
	 	 Agreement means this Gas Prepayment and Option
        Agreement, as it may be amended from time to time; 

	 
	 	 Business Day means any day on which registered
        banks are open for business in Wellington, New Zealand; 

	 
	 	 Gas means all gas and liquids except for condensate
        and oil extracted from any on-shore or off-shore field in or around New
        Zealand; 

	 
	 	 Kahili JV means the joint venture existing in
        respect of PEP 38736 and established by a Joint Venture Operating Agreement
        dated 17 October 2002 between IPENZ, Millennium Oil & Gas Limited,
        Tap (New Zealand) Pty Limited and Claire Energy Pty Limited; 

 

	GAS PREPAYMENT AND OPTION AGREEMENT 	2

	 	 Option means the Option granted to NGC under clause
      5; 
	 
	 	 Parties means each of the parties to this Agreement
      and includes their respective successors and permitted assigns; 
	 
	 	 Prepayment and Option Fee means the fee of $2 million
      to be paid by NGC to IPENZ as provided for in clause 2; 
	 
	 	 SRH means Source Rock Holdings Limited, a wholly-owned
      subsidiary of IPE; 
	 
	 	 the SRH Group means the group of companies comprising
      SRH and its subsidiaries, including IPENZ. 
	 
	 1.2      	 Construction 
	 	 In the construction of this Agreement, unless the context requires
      otherwise: 
	 
	 	 (a)      	 references to clauses are to the clauses of this Agreement; 
	 
	 	 (b)      	 references to monetary amounts are to New Zealand dollars; 
	 
	 	 (c)      	 references to any New Zealand statute is to that statute as it may be
      amended or re-enacted; 
	 
	 	 (d)      	 the singular includes the plural and vice versa. 
	 
	 2      	 PURPOSE 
	 
	 	 The purpose of this Agreement is, broadly, to provide IPENZ
      with $2 million of up-front funding, and to provide NGC with an option
      over Gas and related rights to secure that option. 
	 
	 3      	 TERM 
	 
	 	 This Agreement shall remain in force for a term of 10 years
      from 31 March 2003, except clause 8, which shall remain in force until 30
      June 2013. 
	 
	 4      	 PREPAYMENT AND OPTION FEE 
	 
	 4.1      	 Payment of Fee 
	 	 Upon satisfaction of the condition specified in clause 4.2,
      NGC shall pay IPENZ, by deposit to the bank account described in clause
      4.3, the sum of $2 million (plus GST, if any). 

 

	GAS PREPAYMENT AND OPTION AGREEMENT 	3

	 4.2      	 Condition of Payment 
	 	 NGC’s above payment obligation is conditional upon IPENZ
      procuring the consents of the other Kahili JV parties to NGC’s security
      interest in the Kahili JV interest as described in clause 9.1 of this Agreement.
    
	 
	 4.3      	 Joint Bank Account 
	 	 Payment of the Prepayment and Option Fee (plus GST, if any)
      shall be deemed made by NGC depositing the same into a new bank account
      to be opened by NGC with Westpac in the joint names of IPENZ and NGC. The
      terms on which such bank account is to be opened and operated are as follows:
    
	 
	 	 (a)      	 the credit balance from time to time in the account is to be
      held on trust for the joint benefit of both IPENZ and NGC, and shall not
      be treated as IPENZ property; 
	 
	 	 (b)      	 IPENZ shall be entitled to the sole benefit of interest accruing
      on such credit balance from time to time; 
	 
	 	 (c)      	 the account may only be dealt with, and funds may only be disbursed
      from it, upon receipt by Westpac of a joint instruction signed by a previously
      notified representative of each of IPENZ and NGC; 
	 
	 	 (d)      	 the representative of each of IPENZ and NGC will give any such
      joint disbursement instruction provided the disbursement is: 
	 
	 	 	 (i)      	 for the sole purpose of funding IPENZ’s budgeted exploration and
      development activities, including administration to facilitate such activities,
      as previously advised to NGC; or 
	 
	 	 	 (ii)      	 on account of interest (to which IPENZ is entitled); 
	 
	 	 (e)      	 Westpac will be required to operate the bank account in accordance
      with a letter of instructions to be given to it by IPENZ and NGC reflecting
      the above terms; 
	 
	 	 (f)      	 nothing in this clause 4.3 or in the letter of instructions
      to Westpac shall prevent NGC from recovering any part of the Prepayment
      and Option Fee in accordance with any contractual entitlement to do so under
      this Agreement. 
	 
	 4.4      	 NGC Entitlements upon Payment 
	 	 In consideration for payment of the Prepayment and Option Fee:
    
	 
	 	 (a)      	 SRH and IPENZ grant NGC the exclusive first rights of negotiation
      to purchase from time to time any and all Gas to which the SRH Group may
    

 

	GAS PREPAYMENT AND OPTION AGREEMENT 	4

	 	 	 become entitled under all their New Zealand interests where several sale
      rights are permitted and, in circumstances where a joint sale agreement
      is sought by the relevant joint venture, IPENZ will promptly relay NGC’s
      offer to the other relevant joint venture parties and use its reasonable
      endeavours to have them accept such offer; 
	 
	 	(b) 	 IPENZ will apply the Prepayment and Option Fee in satisfaction of the
      first $2 million of payments for Gas to be made by NGC (without payment
      of any further GST) where NGC has purchased Gas pursuant to the Option,
      or where NGC purchases Kahili Gas as described in clause 4.5 of this
      Agreement, unless NGC has elected to convert the Prepayment and Option Fee
      into equity in IPENZ in terms of clause 8; 
	 
	 	(c)	 NGC shall have the right to convert the outstanding amount of the Prepayment
      and Option Fee into paid-up equity in IPENZ as described in clause 8;
      and 
	 
	 	(d) 	 for so long as any part of the Prepayment and Option Fee is outstanding,
      IPENZ’ subsidiary Millennium Oil & Gas Limited will grant NGC
      a registrable security interest over its interest in the Kahili JV as described
      in clause 9, 
	 
	 	 each on the further terms set out in the balance of this Agreement.
    
	 
	 4.5      	 Kahili Gas 
	 	 IPENZ and NGC recognise that the first right of negotiation
      under clause 4.4(a) of this Agreement does not apply to any Gas to
      which either IPENZ or Millennium Oil &Gas Limited may have entitlements
      to as joint venture parties to the Kahili JV in relation to PEP 38736. If
      NGC enters into any purchase agreement with the Kahili JV in relation to
      Gas under PEP 38736, the Prepayment and Option Fee will be applied to NGC’s
      payments for the IPENZ and Millennium Oil & Gas Limited share of that
      Gas in terms of clauses 4.4(b) and 7 of the Agreement. 
	 
	 5      	 GAS OPTION 
	 
	 5.1      	 IPENZ to give notice 
	 	 IPENZ shall from time to time (and at least 6 monthly) give
      NGC notice of all discoveries of Gas to which the SRH Group will or may
      have an entitlement and of all other quantities of Gas becoming available
      for sale by any member of the SRH Group. Such notice will include details
      of any economically recoverable Gas that becomes available for exploitation
      under all New Zealand permits in which any member of the SRH Group has an
      interest, whether by way of joint venture interest or otherwise. This notice
      will include information about amounts of Gas available, quality of the
      Gas and timing of availability. 

 

	GAS PREPAYMENT AND OPTION AGREEMENT 	5

	 5.2      	 NGC Option 
	 	 NGC shall then have the option to engage on the following basis
      with IPENZ, acting on behalf of the SRH Group: 
	 
	 	 (a)      	 NGC may negotiate with IPENZ as to the price and other terms for the
      sale and supply of the Gas; or 
	 
	 	 (b)      	 NGC may relinquish its option, giving IPENZ the right to sell the Gas
      to third parties. 
	 
	 5.3      	 NGC offer to purchase 
	 	 If NGC wishes to negotiate, it must within [                   
      ] put an offer to IPENZ including terms as to price, quantities, quality
      and term of supply. 
	 
	 5.4      	 Exclusive negotiation period 
	 	 IPENZ shall then negotiate exclusively with NGC for up to [                   
      ] (or such lesser period as they may agree) to agree on the price and other
      terms for the sale and purchase of Gas. If an agreement is reached, the
      SRH Group’s interest in any particular field shall be solely dedicated
      to NGC to the extent set out in that agreement. 
	 
	 5.5      	 Sale to third parties if no agreement 
	 	 If NGC and IPENZ cannot settle price and the above core commercial
      terms within the parameters specified in clause 6 and within the
      [                   
      ] negotiating period determined under clause 5.4, IPENZ shall then
      be entitled to sell the Gas to one or more unrelated bona fide third parties,
      provided that IPENZ may not supply gas to such third parties on terms more
      favourable to those third parties (including as to price) than those proposed
      by NGC for a period of [                   
      ] after negotiation has ceased, without first offering that Gas again to
      NGC on the same terms that have been agreed with a third party (notwithstanding
      that the Prepayment and Option Fee will always be deemed to be a prepayment
      to IPENZ for the first $2 million of Gas purchased by NGC from IPENZ
      on such terms). NGC shall have [                   
      ] in which to accept or decline such offer and, if it does not accept it,
      IPENZ shall be free to sell that Gas to the third party or parties on such
      better terms. NGC shall not act so as to prevent or restrict IPENZ from
      concluding any sale of the relevant Gas to such third party. Once the [                   
      ] period after negotiation referred to in this clause 5.5 has ended,
      IPENZ may sell that Gas to any third party and on such terms as it wishes.
    
	 
	 5.6      	 Determination of unresolved terms 
	 	 Where NGC and IPENZ agree terms as to price, quantities, quality
      and term of supply for the Gas, unresolved terms may be referred by either
      party to an independent expert or arbitrator for binding decision (to be
      identified and agreed upon prior to negotiations commencing and, in the
      absence of agreement, to be 

 

	GAS PREPAYMENT AND OPTION AGREEMENT 	6

	 	 nominated at either party’s request by the president
      for the time being of the New Zealand Law Society). 
	 
	 5.7      	 Position if Joint Sale Agreement 
	 	 Where a joint sale agreement is sought by the relevant joint
      venture, if IPENZ is the operator of the relevant venture then it shall
      act on the above basis as agent for the other joint venture parties, subject
      only to the terms of the relevant joint venture agreements (and if it is
      not the operator then it will nevertheless use reasonable endeavours to
      persuade the other joint venture parties to accept NGC’s offer). 
	 
	 5.8      	 Effect of prepayment, conversion or enforcement 
	 	 NGC’s exclusive first right to negotiate as described
      in this clause 5 shall not be affected by, and endures notwithstanding,
      any prepayment for Gas actually purchased pursuant to the Option, any conversion
      of the Prepayment and Option Fee into equity in IPENZ, any enforcement of
      NGC’s charge over the interest in the Kahili JV (each as described
      below) or the occurrence of any other event as between the parties. 
	 
	 6      	 PRICE GUIDELINES FOR GAS PURCHASES 
	 
	 	 Where NGC enters into negotiation with IPENZ in relation to
      any Gas, the price will be determined using the following guidelines: 
	 
	 	 6.1      	 the current wellhead market price for such quantities of Gas; 
	 
	 	 6.2      	 the quality of the Gas and the market for Gas at such quality; 
	 
	 	 6.3      	 whether NGC will take the Gas at the pipeline or at the wellhead, so
      that the overall price to NGC reflects NGC’s investment in new pipeline
      and other infrastructure and related assets for delivery of that Gas, if
      NGC is to ultimately own such assets via such agreement. 
	 
	 7      	 PREPAYMENT 
	 
	 	 The Prepayment and Option Fee shall be treated as a prepayment
      of the first $2 million in relation to any Gas purchased by NGC pursuant
      to the Option. 
	 
	 8      	 CONVERSION INTO EQUITY 
	 
	 	 If NGC has not been able to access Gas equal in total to the
      full amount of the Prepayment and Option Fee pursuant to its Option by 31
      March 2013, including because negotiations in terms of clause 5 have
      been unsuccessful, then IPENZ shall, at its option, refund the outstanding
      Prepayment and Option Fee plus interest at the then average bank bill rate,
      or, if not so elected by IPENZ, NGC 

 

	GAS PREPAYMENT AND OPTION AGREEMENT 	7

	 	 shall at its option be entitled to convert the outstanding Prepayment
      and Option Fee into paid-up equity in IPENZ at the lesser of agreed net
      asset value or time averaged market price at the time. If NGC does not so
      convert the Prepayment and Option Fee by 30 June 2013, any outstanding amount
      of it will be written off and NGC will cease to have any further rights
      of conversion. 
	 
	 9      	 CHARGE OVER INTEREST IN KAHILI JV 
	 
	 9.1      	 Grant of security interest 
	 	 For so long as NGC has been unable to access Gas to the full value of
      the Prepayment and Option Fee, so as to secure IPENZ performance under this
      Agreement IPENZ shall procure that its subsidiary Millennium Oil & Gas
      Limited grants NGC a security interest registrable under the Personal Property
      Securities Act 1999 over its interest in the Kahili JV. Such security interest
      will be substantially in the form annexed to this Agreement, subject only
      to approval by the other Kahili JV parties (other than IPENZ). IPENZ warrants
      that the agreement of the other Kahili JV parties to such charge has been
      obtained, subject only to documentation. IPENZ further warrants that Millennium
      Oil & Gas Limited has full power and authority to grant a valid security
      interest. 
	 
	 9.2      	 IPENZ right to substitute security 
	 	 IPENZ may, if it becomes impracticable for the charge over the interest
      in the Kahili JV to be granted or maintained, request that NGC consider
      accepting an equivalent substitute security over other joint venture interests
      or assets of a member of the SRH Group. NGC shall give due and prompt consideration
      to such request and shall not be entitled unreasonably to withhold its consent
      to such substitution. 
	 
	 10      	 COVENANTS AND UNDERTAKINGS 
	 
	 10.1      	 Covenant to maximise Gas 
	 	 IPENZ covenants to use its best endeavours (including as joint venture
      participant and as operator of a relevant field or permit) to maximise the
      amount of Gas that is recovered from any field in which any member of the
      SRH Group has an interest, within the limitations of also maximising production
      of other hydrocarbons (oil/condensate), and managing the reservoir according
      to good oilfield practice, and maximising economic return from the field,
      in accordance with its joint venture and statutory obligations. 
	 
	 10.2      	 Covenant as to title 
	 	 IPENZ covenants that it or another member of the SRH Group will have
      good title to all Gas that is delivered to NGC. 

 

	GAS PREPAYMENT AND OPTION AGREEMENT 	8

	 11      	 CHANGE IN CONTROL OF IPENZ AND SRH 
	 
	 	 For so long as NGC has been unable to access Gas to the full
      value of the Prepayment and Option Fee, the outstanding amount of the Prepayment
      and Option Fee will be refundable in full to NGC (without interest) in the
      event that there is any change in the effective control of IPENZ or SRH
      (whether through the equity ownership or not and whether affecting IPENZ,
      SRH or IPE) exceeding a 50% threshold. IPENZ undertakes promptly to notify
      NGC of any change in its or SRH’s equity ownership of greater than
      25% and of any change in the control of their respective Boards (other than
      as an immediate result of any public floating of IPENZ shares in 2003).
    
	 
	 12      	 IPE GUARANTEE 
	 
	 12.1      	 Guarantee 
	 	 In consideration of NGC agreeing to enter into this Agreement,
      IPE unconditionally and irrevocably guarantees to NGC the due and punctual
      observance and performance by IPENZ of all IPENZ’ covenants and obligations
      under this Agreement. 
	 
	 12.2      	 Non-performance by IPENZ 
	 	 If IPENZ fails punctually to observe or perform any covenant
      or obligation which it is required to observe or perform under this Agreement,
      IPE will forthwith perform that covenant or obligation or procure that such
      covenant or obligation is performed by IPENZ. 
	 
	 12.3      	 Non-prejudice of guarantee 
	 	 The liability of IPE under the guarantee in clause 12.1
      shall not be abrogated, prejudiced or affected by any of the following:
    
	 
	 	 (a)      	 the granting of time, credit or any indulgence or other concession to
      IPENZ by NGC, or any compromise, release, abandonment, waiver, relinquishment
      of any rights of NGC against IPENZ, or anything done or omitted or neglected
      to be done by NGC in the exercise of the authorities, powers and discretions
      vested in NGC by this Agreement; 
	 
	 	 (b)      	 the winding up, liquidation or insolvency of IPENZ; 
	 
	 	 (c)      	 any alteration, modification or variation of, or addition to this Agreement
      which has been approved in writing by IPE; 
	 
	 	 (d)      	 any partial or total change in the legal or beneficial ownership of IPENZ;
    
	 
	 	 (e)      	 any other dealing, matter or thing which, but for this clause 12.3,
      might operate to abrogate, prejudice or affect such guarantee (except any
    

 

	GAS PREPAYMENT AND OPTION AGREEMENT 	9

	 	 	alteration, modification or variation of, or addition to this Agreement
      which has not been approved in writing by IPE). 

	 12.4      	 Guarantor to be principal obligor 
	 	 Although as between IPE and IPENZ the liability of IPE to NGC may be
      that of a surety only, nevertheless as between IPE and NGC, the liability
      of IPE shall be deemed to be the liability of the principal obligor, and
      such liability shall not be affected or diminished by any of the matters
      mentioned in clause 12.3. 
	 
	 12.5      	 Exercise of rights 
	 	 NGC shall be entitled to exercise its rights against IPE under this section
      directly against IPE without first exercising its rights against IPENZ.
    
	 
	 12.6      	 Waiver of subrogation rights 
	 	 IPE hereby irrevocably waives as against NGC all rights of subrogation
      to the claims of NGC against IPENZ and all contractual, statutory or common
      law rights of contribution, reimbursement, indemnification, and similar
      rights against IPENZ which may arise in connection with, or as a result
      of, the guarantee in clause 12.1. 
	 
	 12.7      	 No competition 
	 	 Without limiting clause 12.6, in the event of the liquidation
      or statutory management of IPENZ or IPENZ entering into a composition with
      its creditors or like scheme or management or arrangement, IPE will not
      prove in such liquidation, statutory management, composition or arrangement
      in competition with NGC in relation to any moneys due owing by IPENZ to
      NGC under this Agreement. If IPE receives any moneys contrary to the intent
      of clause 12.6 or this clause 12.7, then such moneys shall
      be held in trust for NGC. 
	 
	 12.8      	 IPENZ activities in New Zealand 
	 	 IPE undertakes that it will only engage in New Zealand exploration and
      production activities through the SRH Group. 
	 
	 13      	 NGC MAY NOMINATE SUBSIDIARY OR RELATED COMPANY 
	 
	 	 NGC may at its option give IPENZ and IPE written notice that it intends
      to substitute a nominated wholly-owned subsidiary or a related company in
      its place as the NGC party under this Agreement. Such nomination shall be
      effective upon the giving of such notice and the NGC subsidiary or related
      company shall thereupon have all of NGC’s rights and obligations under
      this Agreement as if it had initially been specified as the party known
      as NGC. 

 

	GAS PREPAYMENT AND OPTION AGREEMENT 	10

	 14      	 MISCELLANEOUS PROVISIONS 
	 
	 14.1      	 Representations and Warranties 
	 	 Each Party (Warranting Party) hereby represents and
      warrants to each other Parties as follows: 
	 
	 	 (a)      	 the Warranting Party is a company properly incorporated and validly existing
      under the laws of New Zealand; 
	 
	 	 (b)      	 the Warranting Party has the legal right and full corporate power and
      authority to enter into, and to perform its obligations under, this Agreement
      and has obtained all necessary approvals and consents to enable it to do
      so; 
	 
	 	 (c)      	 this Agreement has been properly authorised and executed by the 
	 
	 	 	 Warranting Party and constitutes legal, valid and binding obligations
      of the Warranting Party enforceable against the Warranting Party in accordance
      with its terms by appropriate legal remedy; 
	 
	 	 (d)      	 the entry into and performance by the Warranting Party of this Agreement
      does not constitute a breach of any law, obligation (including any statutory,
      contractual or fiduciary obligation), or default under any agreement or
      undertaking, by which the Warranting Party is bound; and 
	 
	 	 (e)      	 no meeting has been convened or resolution proposed, or petition presented,
      and no order has been made, for the liquidation of the Warranting Party.
      No voluntary arrangement has been proposed or reached with any creditor
      of the Warranting Party. No receiver, receiver and manager, provisional
      liquidator, liquidator, administrator or other officer of the court has
      been appointed in relation to the Warranting Party. The Warranting Party
      is not is aware of any circumstances which could reasonably be expected
      to give rise to any such event. 
	 
	 14.2      	 Confidentiality 
	 	 Each Party shall keep this Agreement and its contents and any
      details about its operation strictly confidential and agrees not to make
      any public disclosure about them except to the extent required by law, court
      order or the rules of any applicable stock exchange. 
	 
	 14.3      	 No Partnership 
	 	 Nothing in this Agreement or in the relationship between the
      Parties is to be construed in any sense as creating any partnership between
      any two or more Parties to this Agreement. 

 

	GAS PREPAYMENT AND OPTION AGREEMENT 	11

	 14.4  	 Amendments  
	  	  	 
	  	 No amendment to this Agreement is to
      be effective unless it is in writing and signed by all the Parties. 
    
	  	 	 
	 14.5  	Notices
	 (a)  	 Each notice or other communication
      under this Agreement is to be in writing, is to be made by facsimile or
      hand delivery to the addressee at the facsimile number or address, and is
      to be marked for the attention of the person or office holder (if any),
      from time to time designated for the purpose by the addressee to the other
      parties.
	  	 	 
	 (b)  	 The initial designated addresses and
      contact details of the parties are as follows:  
	  	 	 
	  	 IPENZ and IPE  
	  	 	 
	  	 284 Karori Road  
	  	 Wellington  
	  	 	 
	  	 Facsimile No: 04 476 0120  
	  	 Attention: Company Secretary 
    
	  	 	 
	  	 NGC  
	  	 	 
	  	 The NGC Building  
	  	 44 The Terrace  
	  	 Wellington  
	  	 	 
	  	 Facsimile No: 04 462 8600  
	  	 Attention: Company Secretary 
    
	  	 	 
	 (c)  	 No communication is to be effective
      until received. A communication is to be deemed to be received by the addressee: 
    
	  	  	 
	  	 (i)  	 Facsimile  
	  	 	 
	  	  	 in the case of a facsimile, on the Business Day on which it
      is sent or, if sent after 5 pm (in the place of receipt) on a Business Day
      or, if sent on a non-Business Day, on the next Business Day after the date
      of sending; and
	  	 	 
	  	 (ii)  	 Personal delivery  
	  	 	 
	  	  	 in the case of personal delivery, when delivered.  

 

	GAS PREPAYMENT AND OPTION AGREEMENT 	12

	 14.6  	 No Assignment  
	  	 No Party may assign or transfer any of its rights
      or obligations under this Agreement, although NGC may transfer its rights
      to another wholly-owned member of the NGC group of companies if necessary
      pursuant to any internal corporate restructuring.
	  	 
	 14.7  	 Governing Law  
	  	 This Agreement shall be governed by and construed
      in accordance with New Zealand law and the Parties irrevocably and unconditionally
      submit to the non-exclusive jurisdiction of the courts of New Zealand.
	  	 
	 14.8  	 Counterparts  
	 (a)  	 This Agreement may be executed in any number
      of counterparts each of which is to be deemed an original, but all of which
      together are to constitute a single instrument.
	  	 
	 (b)  	 This Agreement may be executed on the basis of
      an exchange of facsimile copies and execution of this Agreement by such
      means is to be a valid and sufficient execution.

EXECUTED by the Parties on the date appearing at the top of page 1. 

Indo-Pacific Energy (NZ) Limited by:  

___________________________
 Director 

___________________________
 Director 

Indo-Pacific Energy Ltd by:  

___________________________
 Director 

___________________________

  Director

 

	GAS PREPAYMENT AND OPTION AGREEMENT 	13

NGC New Zealand Limited by: 

___________________________
 Director 

witnessed by 

___________________________ 

 Name: 

  Occupation: 

  City of Residence:

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