Document:

psanz.htm

    

     

    AGREEMENT
FOR SALE AND PURCHASE OF ASSETS

     

     

    between

     

     

    SWIFT
ENERGY NEW ZEALAND LIMITED

     

     

    and

     

     

    SWIFT
ENERGY NEW ZEALAND HOLDINGS LIMITED

     

     

    and

     

     

    SOUTHERN
PETROLEUM (NEW ZEALAND)

     

     

    EXPLORATION
LIMITED

     

     

    and

     

     

    ORIGIN
ENERGY RESOURCES NZ (SPV1) LIMITED

     

     

    and

     

     

    ORIGIN
ENERGY RESOURCES NZ (SPV2) LIMITED

     

     

    and

     

     

    ORIGIN
ENERGY LIMITED

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

      TABLE OF
CONTENTS

      

      
        	
                1.

              	
                DEFINITIONS

              	
                2

              
	
                2.

              	
                INTERPRETATIONS

              	
                7

              
	
                3.

              	
                SALE
      AND PURCHASE

              	
                g

              
	
                4.

              	
                CONDITIONS

              	
                12

              
	
                5.

              	
                PERIOD
      BEFORE COMPLETION

              	
                14

              
	
                6.

              	
                BUYER
      GUARANTOR

              	
                17

              
	
                7.

              	
                COMPLETION

              	
                18

              
	
                8.

              	
                INDEMNITIES

              	
                21

              
	
                9.

              	
                WARRANTIES

              	
                25

              
	
                10.

              	
                RISK
      AND PROPERTY

              	
                28

              
	
                11.

              	
                COSTS,
      EXPENSES AND DELAYED PAYMENT

              	
                25

              
	
                12.

              	
                TAX

              	
                30

              
	
                13.

              	
                CONFIDENTIALITY
      AND ANNOUNCEMENTS

              	
                33

              
	
                14.

              	
                GENERAL

              	
                36

              

      

       

      SCHEDULE
1 - (1) Permits

             (2)          Commercial
Contracts

             (3)          Farmins
and Joint Venture Operating Agreement

             (4)          Bellblock
Land &Building

             (5)          Office
Leases

             (6)          Wells

             (7)          Land

              (8)          Facilities
and Pipelines

      SCHEDULE
2 - Warranties of the Buyers

      SCHEDULE
3 - Warranties of the Sellers

      SCHEDULE
4 - Procedures for Independent Accountant Determination

      SCHEDULE
5 - Allocation of Purchase Price

      SCHEDULE
6 - Form of Preferential Purchase Right Notice Letter

      SCHEDULE
7 - Existing Employees

      SCHEDULE
2 -Warranties of the Buyers

      SCHEDULE
3 -Warranties of the Sellers

      SCHEDULE
4 -Procedures for Independent Accountant Determination

      SCHEDULE
5 -Allocation of Purchase Price

      SCHEDULE
6 -Form of Preferential Purchase Right Notice Letter

      SCHEDULE
7 -Existing Employees

      SCHEDULE8-
Expatriate Employees

      SCHEDULE9-
Royalty and Call Option Deeds

      
        
           

        

        
           

          
            

          

        

        
           

        

      

    THIS AGREEMENT is made on the
19th day of December 2007

    
 

    
      
        	
                BETWEEN

              	
                SWIFT ENERGY NEW ZEALAND
      LIMITED at Wellington ("SENZ")

              
	
                AND

              	
                SWIFT ENERGY NEW ZEALAND
      HOLDINGS LIMITED at Wellington ("SENZ Holdings")

              
	
                AND

              	
                SOUTHERN PETROLEUM (NEW
      ZEALAND) EXPLORATION LIMITED at Wellington
    ("Southern")

              
	
                AND

              	
                ORIGIN ENERGY RESOURCES NZ
      (SPV1) LIMITED ("Origin SPV1")

              
	
                AND

              	
                ORIGIN ENERGY RESOURCES NZ
      (SPV2) LIMITED ("Origin SPV2")

              
	
                AND

              	
                ORIGIN ENERGY LIMITED
      (the "Buyer
Guarantor")

              

      

    

     

    WHEREAS:

     

     

    
      	
              A.

            	
              SENZ
      Holdings is an Affiliate of SENZ and Southern and SENZ, SENZ Holdings and
      Southern are together known as the
Sellers.

            

    

     

    
      	
              B.

            	
              The
      Sellers own the Sale Assets.

            

    

     

     

    
      	
              C.

            	
              Southern
      and SENZ Holdings are party to an Agreement for Sale and Purchase of
      Assets dated 24 August 2007, pursuant to which Southern has agreed to
      transfer the majority of its interests in the Sale Assets to SENZ
      Holdings. Southern is a party to this Agreement to effect the transfer to
      the Buyers of interests in any Sale Assets which remain or are likely to
      remain held by Southern immediately prior to Completion under this
      Agreement.

            

    

     

     

    
      	
              D.

            	
              The
      Sellers agree to sell and assign and the Buyers agree to buy and take an
      assignment of the Sale Assets on the terms and conditions set out in this
      Agreement.

            

    

     

     

    
      	
              E.

            	
              The
      Buyer Guarantor agrees to guarantee the performance of Buyers' obligations
      under this Agreement and in respect of Buyers' liabilities and obligations
      arising in respect of the Sale Assets being
  acquired.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    THE
PARTIES AGREE

     

    1.             DEFINITIONS

     

    
      	
               
      

            	
              1.1

            	
              Unless
      the context otherwise requires and subject to Clauses 1.2 and 2, any word
      or expression defined in the Petroleum Legislation has the same meaning
      herein.

            

    

     

    
      	
               
      

            	
              1.2

            	
              Unless
      otherwise required by the context or subject matter, subject to Clause
      2:

            

    

     

     

    "Abandonment Costs" means all
costs, charges, expenses, liabilities, Taxes and obligations whatsoever
associated with the abandonment of all production facilities and pipelines
included with the Sale Assets to standards required by the Petroleum Legislation
consistent with best international industry practice, including without
limitation plugging and abandoning wells, removing plant, equipment and
infrastructure and restoring and rehabilitating land and dealing with any
environmental or other claims and liabilities, regardless of when such costs,
charges, expenses, liabilities, Taxes and obligations are incurred;

     

    "Affiliate" means any entity
that, directly or indirectly, through one or more intermediaries, controls or is
controlled by or is under common control with the entity specified. For the
purposes of this definition, the term "control" means ownership of
fifty percent (50%) or more of voting rights (stock or otherwise) or ownership
interest or the power to direct or cause the direction of the management and
policies of the entity in question;

     

    "Agreed Rate" means the
average 30 day rate of interest quoted on the page captioned BKBM of the Reuters
screen at 11:00am (New Zealand time) on the first Business Day of each month or
part month for which interest is to be calculated, as an average of those daily
rates for the relevant period;

     

    "Agreement" means this
agreement;

     

    "Approval" has the meaning set
out in Clause 4.1.1;

     

    "Bank Account" means a bank
account to be nominated by the Sellers and notified to the Buyers in writing
prior to Completion;

     

    "Bank Guarantee" means an
on-demand bank guarantee in favour of the Sellers in the amount of $8,030,000,
in a form acceptable to the Sellers acting reasonably;

     

    "Bellblock Land & Building" means the land and
building described in Schedule 1;

     

    "Business Day" means a day
other than a Saturday or Sunday on which trading banks are open for general
banking business in Wellington, New Zealand;

     

    "Buyers" means Origin Energy
Resources NZ (SPV1) Limited and Origin Energy Resources NZ (SPV2) Limited and
"Buyer" means either one of them;

     

    "Commercial Contracts" means
the commercial contracts described in Schedule 1;

     

    "Completion" means completion
of the sale and purchase of the Sale Assets under Clause 7;

     

    "Completion Date" means the
later of.

     

    
      	
               
      

            	
              (a)

            	
              the
      day falling five (5) Business Days after the Sellers advise the Buyers
      that the conditions in Clause 4.1 are satisfied;
  or

            

    

     

    
      	
               
      

            	
              (b)

            	
              such
      other date as the Parties may mutually agree in
  writing;

            

    

     

    "Confidentiality Agreement"
means the agreement dated 29 August 2007 between the Sellers and the
Buyers in respect of the confidentiality of information provided by or on behalf
of the Sellers to the Buyers for the purpose of the Buyers evaluating the Sale
Assets;

     

    "Data Room" means the on-line
virtual data room providing a FTP site and each and all locations hosted by
Scotia Waterous in Wellington New Zealand, Houston, Texas, United States and in
other cities of the world accessed by the Buyers or any of their advisers or
representatives, or such other place as information was provided or questions
answered by or on behalf of the Sellers, as part of the Buyers' due diligence
investigations on the Sale Assets;

     

    "Deed of Assignment" means the
instrument or instruments of transfer of the Sellers' interests in the Sale
Assets that are required to be submitted to the Minister for consent under the
Petroleum Legislation;

     

     

    "Disclosure
Materials" means:

     

     

    
      	
               
      

            	
              (a)

            	
              this
      Agreement;

            

    

     

    
      
        	
                 
      

              	
                (b)

              	
                all
      information and data provided in the Data Room;
  and

              

      

    

     

    
      	
               
      

            	
              (c)

            	
              all
      other information and data in connection with the transaction contemplated
      by this Agreement provided or communicated in writing to the
      Buyers;

            

    

     

    "Documents" means any
transfer, deed of assignment, assumption, covenant, novation or other agreement
required to effect the assignment and transfer of any part of the Sale Assets to
the Buyers;

     

    "Effective Date" means 12.01
am on 1 December 2007;

     

    "Existing Employees" means the
New Zealand employees of the Sellers listed in Schedule 7;

     

    "Expatriate Employees" means
the employees of the Sellers listed in
Schedule    8;

     

    "Encumbrance" means any
overriding royalty interest, carried interest, net profit interest, mortgage,
charge, pledge, bill of sale, lien (other than arising in the ordinary course of
business), Preferential Right, production payment or agreement for the sale of
production or forward sale of production or other material adverse contractual
liability or obligation attached to the Sale Assets, including but not limited
to any agreement to grant or create any of the above;

     

    "Environmental Claims" means,
subject to clause 10.5, all liabilities, obligations, costs, damages, fines,
penalties, actions, judgements, suits, demands, proceedings, disbursements,
claims and expenses whatsoever arising directly or indirectly as a result
of.

     

    
      	
               
      

            	
              (a)

            	
              the
      use of any land associated with the Sale
Assets;

            

    

     

     

    
      	
               
      

            	
              (b)

            	
              any
      remediation, restoration or amelioration activities being taken or
      required in respect of land or waters associated with the Sale Assets, as
      a result of any pollution or contamination caused by the Buyers (or caused
      prior to the Effective Date and disclosed in the Disclosure
      Materials);

            

    

     

     

    
      	
               
      

            	
              (c)

            	
              any
      remediation, restoration or amelioration activities being taken or
      required in respect of any other property as a result of any pollution or
      contamination on, or which emanated from, any land or waters associated
      with the Sale Assets where such pollution or contamination was caused by
      the Buyers (or caused prior to the Effective Date and disclosed in the
      Disclosure Materials); and

            

    

     

     

    
      	
               
      

            	
              (d)

            	
              a
      claim of any description whatsoever made by a third party which arises
      directly or indirectly as a result of any pollution or contamination on,
      or which emanated from, any land or waters associated with the Sale Assets
      where such pollution or contamination was caused by the Buyers (or caused
      prior to the Effective Date and disclosed in the Disclosure
      Materials);

            

    

     

     

    "Facilities and Pipelines"
means the TAWN Gathering Pipelines, the Waihapa Production Station, the
TAWN Oil Pipeline, the TAW Gas Pipeline, the Rimu/Kauri Gathering Pipelines and
the Rimu Production Station, all as described in Schedule 1;

     

     

    "Farmins" means the farmins
described in Schedule
1;

     

     

    "Fixed Assets" means the
assets identified in the document in the Data Room entitled "2007 Fixed Asset
Register";

     

     

    "Governmental Agency" means
any government or governmental, semi-governmental, administrative, fiscal or
judicial body, department, commission, authority, tribunal, agency or
entity;

     

     

    "GST" means goods and services
tax imposed pursuant to the Goods and Services Tax Act 1985 (the "GST Act") and
includes any tax levied in substitution for such tax;

     

     

    "Independent Accountant" means
the chartered accountant referred to in Schedule 4;

     

     

    "Information" means
commercial, legal and contractual material relating to the Sale Assets as well
as geological, geophysical or technical information within the custody or
control of the Sellers being information that relates to the presence, absence,
extent or production of hydrocarbon deposits in the area of the Permits and
which has been obtained from the exploration and prospecting for or production
of Petroleum within the area of the Permits; including, without limitation, the
books, records, seismic and interpretative data, notes, drawings, maps and other
information (in various media) related to the Permits;

     

     

    "Joint Ventures" means the
joint ventures formed and existing pursuant to the respective Joint Venture
Operating Agreements;

     

     

    "Joint Venture Operating Agreements"
means the Joint Operating Agreements described in Schedule
1;

     

    "Land" means those real
property rights and titles (including without limitation leases, easements and
lease agreements) held by the Sellers or its Affiliates listed in parts 4, 5, 6
and 7 of Schedule 1 and includes the Facilities and Pipelines and the consents
described in Schedule 1, which are to be transferred to the Buyers pursuant to
this Agreement;

     

    "Minister" means the Minister
of Energy or any other Minister for the time being exercising the powers
conferred on the Minister of Energy by the Petroleum Act 1937 or the Crown
Minerals Act 1991;

     

    "New Zealand Terms and Conditions of
Employment" means the terms of employment disclosed by the Sellers to the
Buyers during the due diligence process and without limiting the above, includes
the Standard Terms of Employment and the Swift Energy New Zealand Ltd Collective
Employment Agreement Waihapa Production Station;

     

    "Office Leases" means the
leases of the Sellers' offices in Wellington and New Plymouth detailed in
Schedule 1 and which Origin SPV2 has undertaken to take responsibility for from
the date on which Completion occurs;

     

    "Participating Interest" means
the Sellers' undivided interest in and derived from or related to the Permits,
the Land, the Joint Venture Operating Agreements, the Farmins, the Petroleum
Inventory and the Wells and Equipment. Without limiting the foregoing, the
Sellers' interest includes the Sellers' rights, titles and interests (together
with any corresponding liabilities and obligations) in respect of the
Land;

     

    "Party" means a party to this
Agreement;

     

    "Permits" mean those permits
and licences (including interests therein) described in Schedule 1;

     

    "Petroleum" has the meaning
assigned to it in the Crown Minerals Act 1991;

     

    "Petroleum Inventory" means all
Petroleum attributable to the Permits produced but not yet sold at and as
of the Effective Date;

     

     

    "Petroleum Legislation" means
the Petroleum Act 1937 and the Crown Minerals Act 1991 as well as all
regulations, administrative directions, programmes and determinations made under
either or both of those Acts;

     

     

    "Preferential Right" means a
preferential right to purchase any Participating Interest arising out of any
agreement covering such Participating Interest;

     

     

    "Purchase Price" means the
cash consideration of $80,300,000, subject to adjustment in accordance with
Clause 3.2, any other adjustment pursuant to this Agreement, and any adjustment
under the Royalty and Call Option Deeds to the purchase price payable for the
Permits;

     

     

    "Repatriation Costs" means the
costs of repatriating an Expatriate Employee from his or her current work
location to his or her home country upon expiration of the Expatriate Employee's
current term of engagement;

     

     

    "Rimu/Kauri Gathering Pipelines"
has the meaning assigned to it in Schedule 1;

     

                                       
"Rimu Production Station" has the meaning assigned to it in Schedule
1;

     

     

    "Royalty and Call Option Deeds"
means the documents in the form annexed in Schedule 9 of this Agreement,
executed by the parties thereto;

     

     

    "Sale Assets" means the
Sellers' interest in the Permits, the Commercial Contracts, the Land, the Joint
Venture Operating Agreements, Participating Interests, the Farmins, the Wells
and Equipment, the Petroleum Inventory, the Fixed Assets, the Facilities and
Pipelines and, to the extent not comprised in the foregoing, the
Information;

     

     

    "Sellers" means SENZ, SENZ
Holdings and Southern;

     

     

    "Sellers' Payments" means any
retention payments, discretionary bonus other than a bonus related to
performance, and any other payments of a similar nature;

     

     

    "Southern ASPA" means the
Agreement for Sale and Purchase of Assets dated 24 August 2007 between Southern
and SENZ Holdings; "TAW Gas Pipeline" has the meaning assigned to it in Schedule
1;

     

     

    "TAWN Gathering Pipelines" has
the meaning assigned to it in Schedule 1;

     

     

    "TAWN Oil Pipeline" has the
meaning assigned to it in Schedule 1;

     

     

    "Tax Act" means the Income Tax
Act 2004;

     

     

    "Tax " means any direct or
indirect tax or duty whatsoever, including but not limited to income tax, GST,
government royalties, fringe benefits tax, payroll tax, Energy Resources Levy
(if applicable) and customs and excise duties;

     

    "Waihapa Production Station"
has the meaning assigned to it in Schedule 1;

     

    "Wells and Equipment" means
the wells listed in Schedule 1 and those items of equipment, wellhead equipment,
fixtures (including, without limitation, field separators and liquid
extractors), pipes, casing and tubing, pipeline equipment and facilities,
fixtures, and fittings used in connection with the operations conducted on and
from the area of the Permits; and

     

    "Willful Misconduct" means any
intentional act or omission done or omitted with deliberate and reckless
disregard for reasonably foreseeable and harmful consequences, but not including
any error of judgement, mistake, act or omission, whether negligent or not, by a
Party or any Affiliate of a Party or any director, officer, employee or agent of
a Party or an Affiliate of a Party.

     

     

    2.            INTERPRETATIONS

     

    In this
Agreement, unless the context otherwise requires:

    
      
        	
                 
      

              	
                (a)

              	
                headings
      are for convenience only and do not affect the interpretation of this
      Agreement;

              

      

    

     

    
      	
               
      

            	
              (b)

            	
              words
      importing the singular include the plural and vice
  versa;

            

    

     

    
      	
               
      

            	
              (c)

            	
              words
      importing a gender include any
gender;

            

    

     

    
      	
               
      

            	
              (d)

            	
              other
      parts of speech and grammatical forms of a word or phrase defined in this
      Agreement have a corresponding
meaning;

            

    

     

    
      	
               
      

            	
              (e)

            	
              a
      reference to a Clause or Schedule is a reference to a clause of or
      schedule to this Agreement;

            

    

     

    
      	
               
      

            	
              (f)

            	
              a
      reference to this Agreement includes the Recitals and
      Schedules;

            

    

     

    
      	
               
      

            	
              (g)

            	
              a
      reference to any law, statute, regulation, proclamation, ordinance or
      by-law includes all statutes, regulations, proclamations, ordinances or
      by-laws amending, consolidating or replacing them, and a reference to a
      law or statute includes all regulations, proclamations, programmes,
      ordinances and by-laws issued under that law or
  statute;

            

    

     

    
      	
               
      

            	
              (h)

            	
              a
      reference to a document or Permit includes any agreement in writing, or
      any certificate, notice, instrument or other document of any kind and any
      amendment or supplement to or replacement or novation of
    them;

            

    

     

    
      	
               
      

            	
              (i)

            	
              a
      reference to a party to a document includes that party's successors and
      permitted assigns; where the day on or by which any thing is to be done is
      not a Business Day, that thing must be done on the next succeeding
      Business Day;

            

    

     

    
      	
               
      

            	
              (k)

            	
              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; and

            

    

     

    
      	
               
      

            	
              (I)

            	
              all
      references to "$" or "Dollars" are references to United States dollars
      unless otherwise specified.

            

    

     

    3.            SALE
AND PURCHASE

     

    3.1             Sale
and Purchase

     

     

    
      	
               
      

            	
              3.1.1

            	
              On
      the Completion Date, but effective as of the Effective Date, the Sellers
      agree to sell and assign the Sale Assets to the Buyers and the Buyers
      agree to buy and take an assignment of the Sale Assets free of any
      Encumbrances, except for those Encumbrances disclosed in the Permits,
      under the Petroleum Legislation or otherwise in the Disclosure Materials
      on the terms and conditions contained in this
  Agreement.

            

    

     

     

    
      	
               
      

            	
              3.1.2

            	
              The
      Sellers and the Buyers agree and acknowledge
  that:

            

    

     

     

    
      	
               
      

            	
              (a)

            	
              Origin
      SPV1 is the buyer of those Sale Assets described as Area 1, Area 3 or Area
      4 assets in Schedule 5;

            

    

     

     

    
      	
               
      

            	
              (b)

            	
              Origin
      SPV2 is the buyer of the remainder of the Sale Assets, including any Sale
      Assets not specifically described and not exclusively employed in the
      operation or management of the Area 1, Area 3 or Area 4
      assets.

            

    

     

     

    3.2             Purchase
Price

     

     

    The
Buyers shall pay to the Sellers the Purchase Price (other than any amount
payable under the Royalty and Call Option Deeds), after adjustment in accordance
with this Clause 3.2, in the manner and at the time as provided for in this
Agreement. The Purchase Price shall be subject to adjustment as
follows:

     

     

    
      	
               
      

            	
              3.2.1

            	
              The
      Purchase Price shall be adjusted upwards
by:

            

    

     

     

    
      	
               
      

            	
              (a)

            	
              the
      value of all Petroleum Inventory. The value of the Petroleum Inventory
      will be the sales price receivable for the Petroleum Inventory after
      deduction of all Taxes (excluding income tax), levies and expenses of
      transportation and sale;

            

    

     

     

    
      	
               
      

            	
              (b)

            	
              the
      amount of all verifiable expenditures in accordance with generally
      accepted accounting principles attributable to the operation of the Sale
      Assets in the period from the Effective Date until the date on which
      Completion occurs paid by the Sellers or any Affiliate of the
      Sellers:

            

    

     

     

    
      	
               
      

            	
              (i)

            	
              not
      being expenditures contemplated within the operations overhead rate set
      out in Clause 3.2.1(c); and

            

    

    
      	
               
      

            	
              (ii)

            	
              not
      otherwise recoverable by the Sellers under this
  Agreement;

            

    

     

     

    
      	
               
      

            	
              (c)

            	
              an
      operations overhead rate of $800,000 per month for the Sale Assets reduced
      proportionately for partial months for the period between the Effective
      Date and the date on which Completion occurs;
  and

            

    

     

     

    
      	
               
      

            	
              (d)

            	
              an
      amount for stores and inventory of $7,500,000 and any other amount agreed
      upon by the Sellers and the Buyers for example: consumables inventory,
      with the valuation methodology to be agreed by the
  parties.

            

    

     

     

    
      	
               
      

            	
              3.2.2

            	
              The
      Purchase Price shall be adjusted downwards
by:

            

    

     

     

    
      	
               
      

            	
              (a)

            	
              the
      amount of the gross revenues (GST inclusive) attributable to the Sale
      Assets in the period from the Effective Date until the date on which
      Completion occurs and not otherwise payable to the
  Buyers;

            

    

     

     

    
      	
               
      

            	
              (b)

            	
              an
      amount equal to all unpaid Taxes (excluding income tax and GST)
      attributable to the Sale Assets based upon or measured by the ownership of
      each Permit or the production of Petroleum or the receipt of proceeds
      there from accruing to the Permits prior to the Effective Date;
      and

            

    

     

     

    
      	
               
      

            	
              (c)

            	
              any
      other amount agreed upon by the Sellers and the
  Buyers.

            

    

     

     

    
      	
               
      

            	
              3.2.3

            	
              The
      Sellers must, no later than five (5) Business Days prior to the Completion
      Date, provide the Buyers with a written statement giving the final amount
      of the adjustments referred to in clauses 3.2.1 and 3.2.2 ("Completion
      Adjustments") and the Parties must use their reasonable endeavours to
      agree upon the Completion Adjustments. In the event the Parties cannot
      agree upon the Completion Adjustments by Completion, the Buyers must pay
      the unadjusted Purchase Price to the Sellers at Completion together with
      amounts stated in Clauses 3.2.1 (c) and (d) and the Parties will include
      the disputed items as part of the Post-Completion Adjustments referred to
      in clause 7.9.

            

    

     

     

    3.3             Security

     

     

    
      	
               
      

            	
              3.3.1

            	
              The
      Buyers must concurrently with the execution of this Agreement provide the
      Sellers with the Bank Guarantee.

            

    

     

     

    
      	
               
      

            	
              3.3.2

            	
               If all the
      conditions precedent to the obligations of the Buyers set forth in Clause
      4 have been met and the transactions contemplated by this Agreement are
      not consummated on or before the Completion Date because of the failure of
      the Buyers to perform any of their material obligations hereunder or the
      breach of any representation by the Buyers, then in such event, the
      Sellers shall have the option to terminate this Agreement, in which case
      the Sellers are entitled to call on the Bank Guarantee as liquidated
      damages on account of the Buyers' failure to perform their obligations
      under this Agreement or the Buyers' breach of any representation under
      this Agreement, which remedy shall be the sole and exclusive remedy
      available to the Sellers for the Buyers' failure to perform or breach. The
      Buyers and the Sellers acknowledge and agree
  that:

            

    

     

     

    
      	
               
      

            	
              (a)

            	
              the
      Sellers' actual damages upon the event of such a termination are difficult
      to ascertain with any certainty;

            

    

     

     

    
      	
               
      

            	
              (b)

            	
              the
      amount of the Bank Guarantee is a reasonable estimate of such actual
      damages; and

            

    

     

    
      	
               
      

            	
              (c)

            	
              such
      liquidated damages do not constitute a
penalty.

            

    

     

     

    
      	
               
      

            	
              3.3.3

            	
              If
      this Agreement is terminated by the mutual written agreement of the Buyers
      and the Sellers, or if Completion does not occur on or before the
      Completion Date, for any reason other than as set forth in Clause 4, then
      the Sellers are not entitled to call on the Bank Guarantee and the Sellers
      and the Buyers must immediately procure the cancellation of the Bank
      Guarantee. The Buyers and the Sellers shall thereupon have the rights and
      obligations set forth elsewhere in this
  Agreement.

            

    

     

     

    
      	
               
      

            	
              3.3.4

            	
              If
      the transactions contemplated by this Agreement are consummated, the
      Sellers are rot entitled to call on the Bank Guarantee and the Sellers and
      the Buyers must immediately procure the cancellation of the Bank
      Guarantee.

            

    

     

     

    3.4             Payment

     

     

    The
Purchase Price (other than any amount payable under the Royalty and Call
Option
Deeds) and Interest shall be paid as follows:

     

     

    
      	
               
      

            	
              3.4.1

            	
              by
      payment by the Buyers to the Sellers of the Purchase Price (other than any
      amount payable under the Royalty and Call Option Deeds) on or before
      Completion by means of electronic transfer or transfers of immediately
      available funds to the Bank Account;
and

            

    

     

     

    
      	
               
      

            	
              3.4.2

            	
              by
      payment by the Buyers to the Sellers of the interest calculated at the
      Agreed Rate on a daily basis on the Purchase Price for the period from the
      date of this Agreement until the date on which Completion occurs on or
      before Completion by means of electronic transfer or transfers of
      immediately available funds to the Bank
Account.

            

    

     

     

    3.5             Preferential
Rights

     

     

    
      	
               
      

            	
              3.5.1

            	
              The
      Sellers shall use Buyers allocation of the Purchase Price (other than any
      amount payable under the Royalty and Call Option Deeds � which will be
      allocated to the relevant Permit) set forth in Schedule 5 to provide any
      required Preferential Right to purchase notifications in connection with
      the transactions contemplated hereby, using a Preference Purchase Right
      Notice Letter substantially in the form attached as Schedule
      6.

            

    

     

     

    
      	
               
      

            	
              3.5.2

            	
              If,
      as of the Completion Date:

            

    

     

     

    
      	
               
      

            	
              (a)

            	
              a
      holder of a Preferential Right has notified the Sellers that it elects to
      exercise its Preferential Right with respect to the Sale Assets to which
      its Preferential Right applies (in accordance with the agreement in which
      the Preferential Right arises, as determined by the Sellers);
      or

            

    

     

    

     

    
      	
               
      

            	
              (b)

            	
              the
      time for exercising such Preferential Right has not expired, then the Sale
      Assets covered by that Preferential Right will not be sold to the Party
      originally executing this Agreement as a "Buyer" (subject to the remaining
      provisions in this Clause), and the Purchase Price will be reduced by the
      value allocated to such Sale Assets in Schedule 5 The Buyers remain
      obligated to purchase the remainder of the Sale Assets not affected by an
      exercised Preferential Right or a Preferential Right for which the time to
      exercise has expired prior to
Completion.

            

    

     

    

     

    
      	
               
      

            	
              3.5.3

            	
              After
      Completion, if for any reason the purchase and sale of the Sale Assets
      covered by the Preferential Right is not or cannot be consummated with the
      holder of the Preferential Right that exercised its Referential Right or
      if the time for exercising the Preferential Right expires without exercise
      by any holder of the Preferential Right, the Sellers may so notify the
      Buyers and within ten (10) Business Days after the Buyers' receipt of such
      notice or after such expiration, the Sellers shall sell, assign and convey
      to the Buyers and the Buyers shall purchase and accept from the Sellers
      such Sale Assets pursuant to the terms of this Agreement and for the value
      allocated to such Sale Assets in Schedule 5 (except the Completion Date
      with respect to such Sale Assets will be the date of assignment of such
      Sale Assets from the Sellers to the
Buyers).

            

    

     

     

    
      	
               
      

            	
              3.5.4

            	
              Any
      Preferential Right must be exercised subject to all the terms and conditions
      of this Agreement.

            

    

     

     

    3.6             Existing
Employees

     

     

    
      	
               
      

            	
              3.6.1

            	
              The
      Buyers will, or will procure that Origin Energy Resources NZ Limited, an
      Affiliate of the Buyers will, within a reasonable time of executing this
      Agreement, make to each Existing Employee a written offer in consultation
      with the Sellers, which offer will remain open for 10 days, offering to
      employ each Existing Employee with effect on and from the date on which
      Completion occurs or any other such date agreed between the Buyers and
      Sellers for specific Existing Employees, on terms and conditions of
      employment which are no less favourable on an overall basis (including
      recognition of prior service) to the Existing Employee's New Zealand Terms
      and Conditions of Employment immediately preceding the Completion Date. In
      assessing whether the offer is no less favourable on an overall basis, the
      assessment will exclude any Sellers'
Payments.

            

    

     

     

    
      	
               
      

            	
              3.6.2

            	
              The
      Sellers retain full responsibility for the payment of any performance
      bonuses that relate to the period prior to the Completion Date and
      Sellers' Payments, which are paid or payable to the Existing
      Employees.

            

    

     

     

    
      	
               
      

            	
              3.6.3

            	
              The
      Sellers will assume liability for the Repatriation Costs arising from the
      repatriation of the Expatriate Employees to and from their home
      country.

            

    

     

     

    4.            CONDITIONS

     

     

    4.1             Conditions
Precedent to Completion

     

     

    The
respective obligations of the Sellers to sell and the Buyers to purchase the
Sale Assets pursuant to this Agreement are subject to and conditional upon all
the following occurring at or prior to Completion:

     

     

    
      	
               
      

            	
              4.1.1

            	
              the
      transfers and other dealings evidenced by this Agreement, and recorded in
      the Deed of Assignment submitted to the Minister in accordance with Clause
      4.4, being consented to by the Minister as required under the Petroleum
      Legislation;

            

    

     

     

    
      	
               
      

            	
              4.1.2

            	
              each
      of the dealings evidenced and recorded in the Royalty and Call Option
      Deeds submitted to the Minister in accordance with Clause 4.4, being
      consented to by the Minister as required under the Petroleum
      Legislation;

            

    

     

     

    
      	
               
      

            	
              4.1.3

            	
              for
      Sale Assets to be transferred by SENZ Holdings, the transfers and other
      dealings evidenced by the Southern ASPA, and required to be submitted to
      the Minister in accordance with the Petroleum Legislation being consented
      to by the Minister

            

    

     

     

    
      	
               
      

            	
              4.1.4

            	
              or
      Sale Assets to be transferred by SENZ Holdings, any and all other
      transfers, consents, acknowledgements, notices and registrations
      required to validly effect the transfer of all of Southern's interests in
      those assets being obtained or given and established to the reasonable
      satisfaction of the Buyers;

            

    

     

     

    
      	
               
      

            	
              4.1.5

            	
              execution
      of all Documents required under Clause 7.2 by the relevant
      Buyer;

            

    

     

     

    
      	
               
      

            	
              4.1.6

            	
              receipt
      of required waivers, consents or approvals under the Joint Venture
      Operating Agreements, the Farmins, the Commercial Contracts and, where
      applicable, from landowners with respect to the
  Land;

            

    

     

     

    
      	
               
      

            	
              4.1.7

            	
              the
      transactions evidenced by this Agreement being approved under and in
      accordance with the provisions of the Overseas Investment Act
      2005;

            

    

     

     

    
      	
               
      

            	
              4.1.8

            	
              the
      relevant Seller shall register with Land Information New Zealand a caveat
      in respect of its registrable interest in CT 329480 (Taranaki
      Registry);

            

    

     

     

    
      	
               
      

            	
              4.1.9

            	
              the
      Parties' representations and warranties given in this Agreement are true
      and correct in all material respects with the same force and effect as
      though such representations and warranties had been made or given on and
      as of Completion;

            

    

     

    
      	
               
      

            	
              4.1.10

            	the Parties' shall
      have complied in all material respects with all material obligations,
      covenants and conditions in this Agreement to be performed or complied
      with.

       

       

    

    4.2             Responsibility

     

     

    The
conditions set out in Clause 4.1 are for the benefit of the Sellers and the
Buyers and cannot be unilaterally waived. The Buyers must use all reasonable
endeavours to fulfill the conditions in Clauses 4.1.2, 4.1.5 and 4.1.7 in a
timely manner and the Sellers must provide all reasonable assistance. The
Sellers must use all reasonable endeavours to fulfill the conditions in Clauses
4.1.1, 4.1.3, 4.1.4 and 4.1.6 in a timely manner and the Buyers must provide all
reasonable assistance.

     

     

    4.3             Termination

     

     

    
      	
               
      

            	
              4.3.1

            	
              The
      Party obliged to seek satisfaction of a condition contained in Clause 4.1
      must keep the other Party regularly informed on the progress of the
      satisfaction of that condition and within 2 Business Days of satisfaction
      of that condition give notice to the other Party of that fact. If a Party
      is unable to satisfy a condition contained in Clause 4.1, it shall
      immediately notify the other Party.

            

    

     

     

    
      	
               
      

            	
              4.3.2

            	
               If Completion does
      not occur within 120 days after the date of this Agreement or such later
      time as the Parties may agree in writing, the Sellers or fie Buyers may
      terminate this Agreement by written notice to the others and no Party will
      be under any further liability to the others, except in respect of any
      antecedent breaches of this
Agreement.

            

    

     

     

    4.4             Approval
by Minister

     

     

    As soon
as practicable after the date hereof (but in any event not later than 14
Business Days after the date hereof), the Sellers shall apply for approval by
means of the submission to the Minister in accordance with the requirements of
the
Petroleum Legislation ("Approval") of:

     

    
      	
               
      

            	
              4.4.1

            	
              a
      Deed of Assignment executed by both the Buyers and the
      Sellers;

            

    

     

     

    
      	
               
      

            	
              4.4.2

            	
              the
      Royalty and Call Option Deeds executed by the relevant Buyers and Sellers;
      and

            

    

     

     

    
      	
               
      

            	
              4.4.3

            	
              any
      other necessary documentation and information, and will use all reasonable
      endeavours to obtain such Approval.

            

    

     

     

    5.            PERIOD
BEFORE COMPLETION

     

     

    5.1             Carrying
on of Business

     

     

    The
Sellers shall between the date of this Agreement and Completion:

     

     

    
      	
               
      

            	
              5.1.1

            	
              hold
      and administer the Sale Assets with due regard to the interests of the
      Buyers under this Agreement;

            

    

     

     

    
      	
               
      

            	
              5.1.2

            	
              conduct
      their affairs in respect of the Sale Assets in a prudent, businesslike and
      usual manner in accordance with all laws and
  regulations;

            

    

     

     

    
      	
               
      

            	
              5.1.3

            	
              duly
      and punctually perform, or cause to be performed, the obligations
      of:

            

    

     

     

    (a)            the
holder of the Permits;

     

    (b)            the
holder of the Sale Assets; and

     

    (c)            each
of the Commercial Contracts;

     

     

    
      	
               
      

            	
              5.1.4

            	
              use
      their best endeavours to do all things necessary on their part to maintain
      in effect and good standing the
Permits;

            

    

     

     

    
      	
               
      

            	
              5.1.5

            	
              use
      their best endeavours to do all things necessary to maintain the Sale
      Assets;

            

    

     

     

    
      	
               
      

            	
              5.1.6

            	
              consult
      with the Buyers regarding the exercise of any voting entitlements under
      any of the Joint Venture Operating Agreements and exercise such voting
      entitlements in respect of the Sale Assets in accordance with the
      reasonable directions of the
Buyers;

            

    

     

     

    
      	
               
      

            	
              5.1.7

            	
              other
      than in emergency situations where the Sellers reasonably believe that
      such action is necessary, punctually inform and consult with the Buyers
      and obtain the prior written consent of the Buyers on all matters relating
      to the operation of the Sale Assets involving expenditure or liability in
      excess of $40,000 and, regardless of the level of expenditure or
      liability, the Sellers must obtain the Buyers' written consent before
      they:

            

    

     

    
      	
               
      

            	
              (a)

            	
              approve
      any new work programme and budget of operations (including any authorities
      for expenditure);

            

      	
               
      

            	
              (b)

            	
              approve
      any drilling operations which are not at the date of this Agreement
      approved or identified in an approved work programme and budget (including
      any authority for expenditure);

            

    

     

    
      	
               
      

            	
              (c)

            	
              enter
      into any new agreement or vary any existing agreement in relation to or
      affecting any Sale Asset;

            

    

     

    
      	
               
      

            	
              (d)

            	
              give
      notice of, or otherwise institute, any sole risk
  operation;

            

    

     

    
      	
               
      

            	
              (e)

            	
              farm-out
      any Sale Asset; or

            

    

     

    
      	
               
      

            	
              (f)

            	
              (f)
      surrender or relinquish any part of the Sale Assets (subject to any
      requirement pursuant to the Petroleum
  Legislation);

            

    

     

     

    
      	
               
      

            	
              5.1.8

            	
              not
      dispose of any Sale Assets other than disposals of Petroleum, or
      receivables in the ordinary course of business, without first obtaining
      the Buyers' written consent;

            

    

     

     

    
      	
               
      

            	
              5.1.9

            	
              not
      create or cause any Affiliate to create any Encumbrance over any of the
      Sale Assets without first obtaining the Buyers' written
      consent;

            

    

     

     

    
      	
               
      

            	
              5.1.10

            	
              provide
      to the Buyers copies of all significant Information in respect of the Sale
      Assets during that time, including any geological, geophysical or
      engineering, or other interpretations, forecasts or evaluations of such
      Information;

            

    

     

     

    
      	
               
      

            	
              5.1.11

            	
              not
      seek any variations to the conditions of any Permit without first
      obtaining the Buyers' written consent;

            

    

     

     

    
      	
               
      

            	
              5.1.12

            	
              ensure
      that no action is taken or omitted to be taken by the Sellers or any
      Affiliate of the Sellers which may materially adversely affect the rights
      or obligations attaching to the Sale
Assets;

            

    

     

     

    
      	
               
      

            	
              5.1.13

            	
              pay
      all rental, gas, water, electricity and telephone charges and other
      outgoings in respect of the Offices Leases;
and

            

    

     

     

    
      	
               
      

            	
              5.1.14

            	
              subject
      to interference with the Sellers' performance of their obligations under
      clause 5.1.1 through 5.1.5 inclusive, the Sellers shall provide services
      to the Buyers to assist the Buyers with the transition of the Sale Assets
      to the Buyers' control under a mutually agreed transition activities work
      plan.

            

    

     

     

    5.2             Breach
of Obligation

     

     

    
      	
               
      

            	
              5.2.1

            	
              If
      the Sellers breach any of their obligations under Clause 5.1 and such
      breach is capable of remedy, the Buyers may terminate this Agreement if
      the Sellers fail to remedy the breach within 10 Business Days after the
      written notice from the Buyers of such breach is received by the
      Sellers.

            

    

     

     

    
      	
               
      

            	
              5.2.2

            	
              if
      the Sellers breach any of their obligations under Clause 5.1 and such
      breach is not capable of remedy, the Buyers may immediately terminate this
      Agreement by giving written notice to the
  Sellers.

            

    

     

     

    
      	
               
      

            	
              5.3

            	
              Access
      to Information

            

    

     

     

    In
addition to its obligations under Clause 5.1, between the date of this Agreement
and the date on which Completion occurs the Sellers will, subject to any
confidentiality restrictions contained in the Commercial Contracts, the Joint
Venture Operating Agreements, the Farmins and subject to Clause 13, give the
Buyers reasonable access to the Information during normal working hours and
allow the Buyers to make copies thereof, at the Buyers' cost. In exercising its
rights under this Clause 5.3, the Buyers will not interfere with the business or
operations of the Sellers.

     

     

    5.4             Pre-Completion
Date

     

     

    The
Parties shall co-operate to obtain, by the Completion Date, the execution of all
required waivers, consents or approvals from parties to the Commercial
Contracts, the Joint Venture Operating Agreements, the Farmins and the Offices
Leases and from landowners with respect to the Land.

     

     

    6.            BUYER
GUARANTOR

     

     

    6.1             Guarantee

     

     

    In
consideration of the Sellers entering into this Agreement and each of the
Documents at the request of the Buyer Guarantor, the Buyer
Guarantor:

     

     

    
      	
               
      

            	
              6.1.1

            	
              unconditionally
      and irrevocably guarantees to the Sellers on demand, the due and punctual
      performance by the Buyers of all their obligations under this Agreement;
      and

            

    

     

     

    
      	
               
      

            	
              6.1.2

            	
              separately
      indemnifies the Sellers against any claim, action, damages, loss, expense,
      liability or obligation which may be incurred or sustained by the Sellers
      in connection with any default or delay by the Buyers in the due and
      punctual performance of any of their obligations under this
      Agreement.

            

    

     

     

    6.2             Liability
unaffected by other events

     

     

    The
liability of the Buyer Guarantor under this Clause 6 is not affected by any act,
omission or thing which, but for this provision, might in any way operate to
release or otherwise exonerate or discharge the Buyer Guarantor from any of its
obligations including without limitation, the entry into any of the Documents in
a form not approved by the Buyer Guarantor, the grant to the Buyers or any other
person of any time, waiver or other indulgence, or the discharge or release of
the Buyers or any other person from any obligation.

     

     

    6.3             Continuing
guarantee and indemnity

     

     

    The
guarantee and indemnity constituted by this Clause 6:

     

     

    
      	
               
      

            	
              6.3.1

            	
              extends
      to cover the Buyers' obligations under this Agreement as may be amended,
      varied or replaced, whether with or without the consent of the Buyer
      Guarantor; and

            

    

     

     

    
      	
               
      

            	
              6.3.2

            	
              is
      a continuing guarantee and indemnity and, despite Completion, re transfer
      of the Sale Assets to the Sellers, transfer of any part or all of the Sale
      Assets or termination of this Agreement, remains in full force and effect
      for so long as the Buyers or any successor or permitted assigness of a
      Buyer have any actual or contingent liability or obligation to the Sellers
      or its Affiliates, successors or assigns under this
    Agreement.

            

    

     

     

    6.4             Warranties
by Buyer Guarantor

     

     

    
      	
               
      

            	
              6.4.1

            	
              The
      Buyer Guarantor makes the warranties set forth in Schedule 2 (as if each
      reference therein to a Buyer were to the Buyer Guarantor) in favour of the
      Sellers as at the date of this Agreement and as at the date on which
      Completion occurs;

            

    

     

     

    
      	
               
      

            	
              6.4.2

            	
              The
      Buyer Guarantor notes the acknowledgements of the Buyers contained in
      Clause 9.3 and confirms that such acknowledgements apply equally to the
      Buyer Guarantor.

            

    

     

     

    7.             COMPLETION

     

    7.1             Place
and Date of Completion

     

     

    Subject
to the satisfaction of the conditions set out in Clause 4.1, Completion shall
take place at 1300 hours on the Completion Date at the offices of SENZ in
Wellington, New Zealand, or at such other place as the Parties may agree, at
such other time as may be agreed by the Parties.

     

     

    7.2             The
Sellers' Obligations at Completion

     

     

    At
Completion, the Sellers shall deliver to the Buyers:

     

     

    
      	
               
      

            	
              (a)

            	
              instruments
      of transfer of the Sellers' interests in the Permits in a form
      satisfactory to the Buyers;

            

    

     

     

    
      	
               
      

            	
              (b)

            	
              deeds
      of assignment and assumption in respect of each of the Commercial
      Contracts, the Joint Venture Operating Agreements and the Farmins and each
      of the contracts entered into by the Sellers prior to Completion which are
      approved by the Buyers pursuant to Clause 5.1, in a form satisfactory to
      the Buyers, executed by all parties thereto other than the relevant
      Buyer;

            

    

     

     

    
      	
               
      

            	
              (c)

            	
              transfers
      or assignments of interests in the Land in a form satisfactory to the
      Buyers executed by all parties thereto other than the relevant
      Buyer;

            

    

     

     

    
      	
               
      

            	
              (d)

            	
              the
      Royalty and Call Option Deeds executed by all parties
    thereto;

            

    

     

     

    
      	
               
      

            	
              (e)

            	
              all
      deeds and documents of title (if held by the Sellers) relating to the Sale
      Assets;

            

    

     

     

    
      	
               
      

            	
              (f)

            	
              copies
      of all waivers, consents and approvals required under the Joint Operating
      Agreements, the Farmins and the Commercial
  Contracts;

            

    

     

     

    
      	
               
      

            	
              (g)

            	
              evidence
      satisfactory to the Buyers of the release of all Encumbrances over the
      Sale Assets, except for those Encumbrances disclosed in the Permits, under
      the Petroleum Legislation or otherwise in the Disclosure Materials;
      and

            

    

     

     

    
      	
               
      

            	
              (h)

            	
              any
      other document or thing reasonably required by the Buyers to give full
      effect to this Agreement provided the Buyers give the Sellers reasonable
      prior notice of the document or
thing.

            

    

     

     

    7.3             The
Buyers' Obligations at Completion

     

     

    On or
before Completion the Buyers must:

     

     

    
      	
               
      

            	
              7.3.1

            	
              pay
      to the Sellers the Purchase Price (other than any amount payable under the
      Royalty and Call Option Deeds) and interest by means of electronic
      transfer or transfers of immediately available funds to the Bank
      Account;

            

    

     

     

    
      	
               
      

            	
              7.3.2

            	
              execute
      and deliver to the Sellers an executed counterpart of each of the relevant
      Documents slivered pursuant to Clause
7.2;

            

    

     

     

    
      	
               
      

            	
              7.3.3

            	
              deliver
      to the Sellers the relevant documents recording the assignment of the
      Sellers' interests in the Office Leases to Origin SPV2;
  and

            

    

     

     

    
      	
               
      

            	
              7.3.4

            	
              deliver
      to the Sellers verifiable evidence in writing that the Ministry of
      Economic Development has accepted Origin SPV2's monetary deposit or bond
      in the amount of NZ$250,000 for each of the four Petroleum Mining Licences
      38138, 38139, 38140 and 38141 as security for compliance with the
      conditions of the said licences, such that the cash deposit of
      NZ$1,000,000 paid by the Sellers is available for immediate
      release.

            

    

     

     

    7.4             Compliance

     

     

    
      	
               
      

            	
              7.4.1

            	
              Neither
      the Sellers nor the Buyers shall be obliged to proceed to Completion
      unless the other Party has complied with all of its obligations under this
      Clause 7 provided that the exercise of any right not to proceed to
      Completion shall not prejudice the right of either the Sellers or the
      Buyers, as the case may be, to pursue any remedy for failure by the other
      Party to comply with its obligations under this Clause
  7.

            

    

     

     

    
      	
               
      

            	
              7.4.2

            	
              In
      the event that either Party does not, or is unable to, comply with any of
      its obligations under Clause 7, the other Party
  may:

            

    

     

     

    
      	
               
      

            	
              (a)

            	
              waive
      the benefit of the relevant obligation and elect to proceed to Completion;
      or

            

    

     

     

    
      	
               
      

            	
              (b)

            	
              exercise
      its right in Clause 7.4.1 not to proceed to
  Completion.

            

    

     

     

    7.5             Allocation

     

     

    The
Purchase Price (other than any amount payable under the Royalty and Call Option
Deeds - which will be allocated to the relevant Permit) shall be allocated among
the Sale Assets in proportion to the amounts as set out in Schedule
5.

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

                   
7.6         Alternative Basis for
Completion

     

     

    If,
within 120 days after the date of this Agreement, all of the documentation
specified in Clause 7.2 to be delivered at Completion has not been executed by
all of the parties thereto (other than the Buyers and the Sellers), then the
Parties shall confer to discuss whether or not Completion can or should proceed
in accordance with this Clause 7 and, if the Parties agree on an alternative
basis for Completion, then Completion shall proceed as modified by that
agreement.

     

     

    7.7             Post
Completion

     

     

    At and
from Completion, the Buyers are:

     

     

    
      	
               
      

            	
              7.7.1

            	
              entitled
      to title, possession and control of the Sale Assets;
  and

            

    

     

     

    
      	
               
      

            	
              7.7.2

            	
              liable
      for all costs, charges, expenses, liabilities and obligations (excluding
      Taxes) in respect of the Sale Assets which accrue or relate to any period
      commencing on or after the Effective Date and for those accruing or
      relating to any period prior to the Effective Date that relate to the
      physical condition of the Sale Assets, liabilities disclosed in the
      Disclosure Materials, Abandonment Costs and Environmental Claims except as
      may directly result from the Willful Misconduct or negligence of the
      Sellers during the period from the Effective Date to the date on which
      Completion occurs.

            

    

     

     

    7.8             Other
Documents

     

     

    Within 30
days of Completion, the Sellers will cause to be delivered to the Buyers at
their address specified in or as otherwise notified pursuant to Clause
14.1:

     

     

    
      	
               
      

            	
              7.8.1

            	
              copies
      of all technical and other data, books, records, accounts, contracts,
      maps, notes, drawings and other written information constituting the
      Information which has been provided in the Disclosure Materials (other
      than that referred to in paragraph (c) of the definition of Disclosure
      Materials); and

            

    

     

     

    
      	
               
      

            	
              7.8.2

            	
              copies
      of and any other documents which have been provided in the Disclosure
      Materials (other than those referred to in paragraph (c) of the definition
      of Disclosure Materials) that evidence the Sellers' title to or interest
      in the Sale Assets.

            

    

     

     

    7.9             Post-Completion
Adjustment:

     

     

    Within 60
days after Completion, the Sellers will prepare, in accordance with generally
accepted accounting principles and deliver to the Buyers a statement (the "Adjustment Statement")
setting out such adjustments to the Purchase Price made in accordance
with Clause 3.2 that were not finally determined (including disputed items
pursuant to clause 3.2.3) as of Completion and showing the calculation of such
adjustments. The Parties will use all reasonable endeavours to reach agreement
as to any amounts payable (or refundable) by one Party to the other, in respect
of the written statement of "Completion Adjustments" referred to in clause 3.2.3
and the "Adjustment Statement" referred to in this clause 7.9, within 20
Business Days of delivery of the Adjustment Statement by the Sellers to the
Buyers. If the Sellers and the Buyers are unable to reach
agreement upon any adjustments to the Purchase Price within 20 Business Days of
delivery of the Adjustment Statement by the Sellers to the Buyers, the matter
shall be referred to the Independent Accountant for determination in accordance
with Schedule 4 and the decision of such Independent Accountant shall be final
and binding upon the Parties. The costs and expenses of the Independent
Accountant in making such a determination shall be borne equally by the
Parties.

     

     

    8.            INDEMNITIES

     

     

    8.1             Liabilities
after Completion

     

     

    
      	
               
      

            	
              8.1.1

            	
              Subject
      to Clause 9.1, the Sellers shall be liable for all costs, charges,
      expenses, liabilities and obligations in respect of the Sale Assets which
      accrue or relate to any period before the Effective Date excluding those
      relating to the physical condition of the Sale Assets, liabilities
      disclosed in the Disclosure Materials, Abandonment Costs and Environmental
      Claims. The Sellers shall reimburse and indemnify the Buyers against any
      such costs, charges, expenses, liabilities and obligation which are paid
      by the Buyers in respect of such period, except to the extent an
      adjustment has been paid or allowed under this
  Agreement.

            

    

     

     

    
      	
               
      

            	
              8.1.2

            	
              Subject
      to Clause 9.2, in respect of the Sale Assets, the Buyers shall protect,
      defend, indemnify, and hold the Sellers harmless from and against all
      Abandonment Costs and Environmental Claims (regardless of the date or
      dates on which such claims were lodged) and shall assume any and all
      losses and third party claims directly or indirectly relating to, arising
      out of, or connected with, the ownership or operation of the Sale Assets
      or any part thereof.

            

    

     

     

    
      	
               
      

            	
              8.1.3

            	
              Subject
      to Clause 10.2, the Buyers shall be liable for all costs, charges,
      expenses, liabilities and obligations (excluding Taxes) in respect of the
      Sale Assets which accrue or relate to any period commencing on or after
      the Effective Date and for those accruing or relating to any period prior
      to the Effective Date that relate to the physical condition of the Sale
      Assets, liabilities disclosed in the Disclosure Materials, Abandonment
      Costs and Environmental Claims. The Buyers agree to reimburse and
      indemnify the Sellers against any such costs, charges, expenses,
      liabilities and obligations that are paid or incurred by the Sellers
      except to the extent an adjustment has been paid or allowed under this
      Agreement. The Buyers will, however, not be liable for any such costs,
      charges, expenses, liabilities and obligations which accrue or result from
      the Sellers' Willful Misconduct prior to the Effective
    Date.

            

    

     

     

    
      	
               
      

            	
              8.1.4

            	
              For
      the purposes of Clauses 8.1.1 and 8.1.3, costs, charges, expenses,
      liabilities and obligations will be considered to accrue or relate to the
      period in which they fall due, regardless of any prior approval or
      commitment.

            

    

     

     

    8.2             Sellers'
Indemnity

     

     

    Subject
only to the limitations in Clauses 8 and 9, the Sellers indemnify the Buyers
against any and all claims, actions, damages, losses, Tax, liability,
obligation
or expenses suffered or incurred in respect of any breach of warranties given by
them under Clause 9.1.

     

     

    8.3             Buyers'
Indemnity

     

     

    Subject
only to the limitations in Clause 9, the Buyers indemnify the Sellers against
any and all claims, actions, damages, losses, Tax, liability, obligation or
expenses suffered or incurred in respect of any breach of warranties given by
them under Clause 9.2.

     

     

    8.4             Consequential
Loss

     

     

    Notwithstanding
any other provision of this Agreement to the contrary, no Party will be liable
to the other for any loss of profit, loss of business opportunity or goodwill,
any claims for indirect, special or punitive damages, third party claims or any
indirect or consequential loss or damage whether arising in contract or tort
(including negligence or breach of any statutory duty) howsoever arising in
respect of any circumstances under or in relation to this Agreement or the Sale
Assets.

     

     

    8.5             Limitation
on Claims

     

     

    
      	
               
      

            	
              8.5.1

            	
              The
      right of the Buyers to claim for and seek indemnity in respect of any
      claim, action, damage, loss, expense, Tax, liability, or obligation
      whatsoever (each a "claim") (whether
      relating to a breach of the Sellers' warranties in Schedule 3 or
      otherwise) is limited as follows:

            

    

     

     

    
      	
               
      

            	
              (a)

            	
              the
      Buyers must give written notice to the Sellers of the specific claim in
      question with reasonable details of the relevant claim, including, if
      possible, the Buyers' estimate of the amount of the claim, on or before 12
      months after the date on which Completion
  occurs;

            

    

     

    
      	
               
      

            	
              (b)

            	
              the
      Buyers may only bring a claim for indemnity for an event or circumstances
      or series of events a circumstances if the aggregate amount claimed
      exceeds $1,000,000 (GST exclusive), in which case the Buyers may claim the
      whole amount and not just the amount in excess of $1,000,000 (GST
      exclusive);

            

    

     

    
      	
               
      

            	
              (c)

            	
              the
      maximum aggregate amount that the Buyers may recover in total from the
      Sellers in relation to one or more claims for indemnity is the amount of
      the Purchase Price less the aggregate amount of any claims previously paid
      under or in relation to this Agreement;
and

            

    

     

    
      	
               
      

            	
              (d)

            	
              where
      a claim relates to a breach of the Sellers' warranties, the quantum of any
      liability the Sellers have to the Buyers under or in relation to this
      Agreement will be determined solely by reference to the effect on the
      value of the Sale Assets which results from the facts, matters or
      circumstances on which the claim is based not being as
      warranted.

            

    

     

    
      	
               
      

            	
              8.5.2

            	
              A
      breach of the Sellers' warranties shall not give rise to any other or
      separate cause of action for damages or other relief from misrepresentation
      or breach of representation or warranty or
    otherwise.

            

    

     

     

    
      	
               
      

            	
              8.5.3

            	
              No claim may
      be made by the Buyers to the extent that the relevant event would
      not have arisen but for:

            

    

     

     

    
      	
               
      

            	
              (e)

            	
              a
      breach of the law or contract, or commission of a tort by the
      Buyers;

            

    

     

    
      	
               
      

            	
              (f)

            	
              any
      obligation or commitment entered into by the Buyers after
      Completion;

            

    

     

    
      	
               
      

            	
              (g)

            	
              the
      Buyers admitting liability without the prior written consent of the
      Seller; or

            

    

     

    
      	
               
      

            	
              (h)

            	
              a
      change in the law occurring after the date on which Completion
      occurs.

            

    

     

    
      	
               
      

            	
              8.5.4

            	
              The
      Buyers or the Sellers shall not recover more than
  once

            

    

     

     

    
      	
               
      

            	
              in
      respect of any one matter giving rise to a
  claim.

            

    

     

     

    
      	
               
      

            	
              8.5.5

            	
              In
      assessing any damages recoverable for any claim there is to be deducted
      any savings by, or net benefit to, the Party making the claim or any
      current or former Affiliate of the Party making the
  claim.

            

    

     

     

    
      	
               
      

            	
              8.5.6

            	
              If
      either the Sellers or the Buyers make any payment as a result of a claim
      (the "Payment") and the Buyers or the Sellers receive any benefit
      otherwise than from the Sellers or the Buyers which would not have been
      received but for the circumstance giving rise to the claim in relation to
      which the Sellers' or the Buyers' Payment was made, the Buyers or the
      Sellers will, once such benefit has been received, immediately pay to the
      Sellers or the Buyers as the case may be, an amount equal to the lesser of
      the Sellers' or the Buyers' Payment and the amount of such
      benefit.

            

    

     

     

    8.6             Notice
of circumstances

     

     

    Either
the Buyers or the Sellers shall give notice to the other Party as soon as
reasonably practicable after it or they become aware of circumstances that could
reasonably be expected to form the basis of a claim under this Agreement,
regardless of value.

     

     

    8.7             Conduct
of Claims

     

     

    If either
the Buyers or the Sellers receive a claim which may give rise to a claim against
the Sellers or Buyers under this Agreement, the Buyers or Sellers, as the case
may be, must within 10 Business Days of receipt notify the other Party of the
claim giving full details so far as practicable and, if the Sellers or the
Buyers, as the case may be, agree to indemnify the other Party to that other
Party's reasonable satisfaction against all and any costs, charges and expenses
which may be incurred or for which it may become liable, the Buyers or the
Sellers shall take such action as the Sellers or the Buyers, as the case may be,
reasonably instruct to avoid, dispute, resist, appeal against, compromise or
defend any such claim and as applicable any adjudication in respect of
it.

     

                  
8.8         Continuing Indemnities
and Survival of Indemnities

     

     

    
      	
               
      

            	
              8.8.1

            	
              Subject
      to Clause 8.5, each indemnity of the Sellers or the Buyers contained in
      this Agreement is a continuing obligation of the Sellers or the Buyers
      despite:

            

    

     

     

    (a)             any
settlement of account; or

     

     

    
      	
               
      

            	
              (b)

            	
              the
      occurrence of any other thing, and remains in full force and effect until
      all money owing, contingently or otherwise, under any indemnity has been
      paid.

            

    

     

     

    
      	
               
      

            	
              8.8.2

            	
              Subject
      to Clause 8.5 each indemnity of the Sellers or the Buyers contained in
      this Agreement is an additional, separate and independent obligation of
      the Sellers or the Buyers and no one indemnity limits the generality of
      any other indemnity.

            

    

     

     

    
      	
               
      

            	
              8.8.3

            	
              Each
      Party acknowledges that it must take such steps to mitigate any loss the
      subject of any indemnity in its favour as it would be obliged to take, if
      the loss in question gave rise to a claim for damages, rather than a right
      of indemnity.

            

    

     

     

    8.9             Input
Tax Credits

     

     

    Any
indemnities given by a Party under this Agreement exclude any liability to
indemnify the other Party to the extent of any GST input tax credits which may
be claimed by the other Party in respect of the claim.

     

     

    9.             WARRANTIES

     

    9.1             Sellers

     

     

    The
Sellers make the warranties set forth in Schedule 3 in favour of the Buyers as
at the date of this Agreement and as at Completion. If between the date of this
Agreement and Completion any of the warranties made or given by the Sellers
become inaccurate, the Sellers shall notify the Buyers accordingly. If the
inaccuracy in the warranty made by the Seller cannot be remedied by Completion
in such a way as not to have a material adverse effect on the interests of the
Buyers under this Agreement, the Buyers may, by giving notice to the Sellers,
terminate this Agreement whereupon all rights and obligations of the Parties
shall cease to have effect immediately upon such termination, and no Party shall
have any further liabilities or obligations to the other. For the purposes of
this Clause 9.1, a material adverse effect on the interests of the Buyers will
arise if the inaccuracy gives rise, or is likely to give rise, after Completion,
to a legal impediment to, or legal prohibition on, the continued operation of
the Sale Assets, or which prevents the Buyers from operating the Sale Assets in
a manner which is substantially consistent with how those Sale Assets were
operated by the Sellers as at the date of this Agreement.

     

     

    9.2             Buyers

     

     

    The
Buyers make the warranties set forth in Schedule 2 in favour of the Sellers as
at the date of this Agreement and as at Completion. If the Buyers reasonably
believe that they will not be able to provide any of the warranties set forth in
Schedule 2 which they are required to provide on the date on which Completion
occurs, they shall promptly notify the Sellers of such anticipated
inability.

     

                       
9.3          No Warranty
Unless Expressly Included

     

     

    
      	
               
      

            	
              9.3.1

            	
              Save
      as and only to the extent set forth in Clause 9.1, the Sellers make no
      representations or warranties in respect of any matter or thing and
      disclaim all liability and responsibility for any representation,
      warranty, statement, opinion, information or advice made or communicated
      (orally or in writing (including, without restriction, electronically)) to
      any person including the Buyers, their Affiliates or any officer,
      stockholder, director, employee, agent, consultant, counsel or adviser of
      the Buyers or their Affiliates (including, without limiting the generality
      of the foregoing, any representation, warranty, statement, opinion,
      information or advice made and communicated to the Buyers by any officer,
      stockholder, director, employee, agent, consultant, counsel or adviser of
      the Sellers) and the Buyers acknowledge and affirm that they have not
      relied upon any such representation, warranty, statement, opinion,
      information or advice in entering into or carrying out the transactions
      contemplated by this Agreement.

            

    

     

     

    
      	
               
      

            	
              9.3.2

            	
              The
      Buyers acknowledge and affirm that they have made their own independent
      investigation, analysis and evaluation of the geological, geophysical and
      engineering interpretations, economic valuations, physical condition of
      equipment and assets, assessment of tax matters, legal and contractual
      rights, obligations and liabilities and prospects for the Sale Assets and
      acknowledge and affirm, that in making the decision to enter into this
      agreement and purchase the Sale Assets, they have relied to that extent
      upon its independent investigation and those of their representatives,
      including professional, legal, tax, financial, business and other
      advisers.

            

    

     

     

    
      	
               
      

            	
              9.3.3

            	
              Any
      breach of warranty made by the Sellers shall not be enforceable against
      the Sellers to the extent that it is shown that the inaccuracy, error or
      omission underlying the alleged breach was known by the Buyers at the time
      the Buyers entered into this
Agreement.

            

    

     

     

    
      	
               
      

            	
              9.3.4

            	
              The
      warranties and any liabilities of the Sellers are subject to the matters
      contained or referred to in the Disclosure Materials. Any breach of
      warranty will not be enforceable against the Sellers to the extent that it
      is shown that the inaccuracy, error
      or omission underlying the alleged breach was identified in the Disclosure
      Materials.

            

    

     

     

    
      	
               
      

            	
              9.3.5

            	
              The
      Buyers acknowledge that they have had the opportunity to examine the
      Disclosure Materials, seek independent advice in relation to the Sale
      Assets, to conduct a due diligence exercise in relation to the Sale Assets
      and to obtain information in respect of those matters that the Buyers
      consider relevant, and that a buyer would reasonably consider relevant, to
      entering into this Agreement and that it has knowledge and experience in
      international and New Zealand oil and gas exploration, development,
      production, transportation, storage, marketing and in financial and other
      business matters and is therefore capable of evaluating the merits and
      risks associated with entering into this
  Agreement.

            

    

     

     

    
      	
               
      

            	
              9.3.6

            	
              Without
      prejudice to any other provision of this Agreement, the Sellers make no
      representations or warranties as
to:

            

    

     

     

    
      	
               
      

            	
              (a)

            	
              the
      amounts of reserves attributable to and the field life of
    the

            

    

     

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              Sale
      Assets or the availability of
Petroleum;

            

    

     

     

    
      	
               
      

            	
              (b)

            	
              any
      geological, geophysical, engineering, economic, fiscal or other
      interpretations, forecasts or
evaluations;

            

    

     

     

    
      	
               
      

            	
              (c)

            	
              the
      physical condition of any equipment, material, fixtures, fittings, wells
      or other items included in the Sale
Assets;

            

    

     

     

    
      	
               
      

            	
              (d)

            	
              the
      extent of the liabilities and obligations and rights and benefits under
      the Permits, the Commercial Contracts, the Joint Venture Operating
      Agreements, the Farmins and the Land
  arrangements;

            

    

     

     

    
      	
               
      

            	
              (e)

            	
              future
      matters, including future or forecast costs (including but not limited to,
      Abandonment Costs), revenues, profits, or environmental remediation or
      rehabilitation costs; or

            

    

     

     

    
      	
               
      

            	
              (f)

            	
              terms
      or availability of markets for Petroleum, pipeline access, transportation,
      storage or wharfage rights whether through the Sellers, Affiliates of the
      Sellers or otherwise, in so far as they relate to any of the Sale Assets
      or any interest of the Sellers in the
Land.

            

    

     

     

    9.4            Knowledge

     

     

    Where any
warranty is qualified by any reference to the knowledge or awareness or belief
of the Sellers, this shall mean the knowledge or awareness of the directors of
either of the Sellers or its Affiliates, and there shall be implied in that
warranty or representation a warranty that such individual has made reasonable
enquiries within the professional organisation of the Sellers and the Sellers'
Affiliates concerning the subject matter of that knowledge, awareness or
belief.

     

     

    9.5            Duration

     

     

    
      	
               
      

            	
              9.5.1

            	
              The
      warranties given by the Buyers and set forth in Schedule 2 shall survive
      the date by
      which Completion occurs for a period of 12 months and then
      terminate.

            

    

     

     

    
      	
               
      

            	
              9.5.2

            	
              The
      warranties given by the Sellers and set forth in Schedule 3 shall survive
      the date on which Completion occurs for a period of 12 months and then
      terminate.

            

    

     

     

    9.6             Matters
to be Taken into Account

     

     

    Each of
the Sellers' warranties is given subject to:

     

     

    
      	
               
      

            	
              9.6.1

            	
              anything
      done, or omitted to be done, either under any provision of this Agreement
      or after the date of this Agreement at the request of, or with the
      approval of the Buyers;

            

    

     

     

    
      	
               
      

            	
              9.6.2

            	
              any
      matter to tie extent that it was taken into account in calculating the
      amount of any allowance, provision or reserve, or was noted in, any
      financial statements included in the Disclosure
  Materials.

            

    

     

     

    10.            RISK
AND PROPERTY

     

     

    10.1            Sellers

     

     

    The
Sellers retain all risk of whatever nature connected with the ownership and
operation of the Sale Assets, the liability for which arises prior to the
Effective Date, except in relation to the physical condition or location of the
Sale Assets, Environmental Claims, (regardless of the date or dates on which the
claims were lodged), liabilities disclosed in the Disclosure Materials and
Abandonment Costs.

     

     

    10.2             Buyers

     

     

    Subject
to the Sellers' warranties, the Buyers assume all risk of whatsoever nature
connected with the Sale Assets on and from the Effective Date except for
liability which arises as a result of the Willful Misconduct of the Sellers
prior to the date on which Completion occurs. The Buyers are solely responsible
for all risks in respect of the physical condition of the Sale Assets,
Environmental Claims, liabilities disclosed in the Disclosure Materials and all
Abandonment Costs regardless of when such liability, claim, cost or risk
arose.

     

     

    10.3             Property

     

     

    On
Completion, property in the Sale Assets passes to the Buyers on and from the
date on which Completion occurs as of the Effective Date.

     

     

    10.4             Exclusion

     

     

    Clauses
10.1 and 10.2 do not apply to Taxes, the allocation of risk in respect of which
is covered by Clause 12.2.

     

     

    10.5             Environmental
Claims

     

     

    
      	
               
      

            	
              10.5.1

            	
              If
      within 12 months of the Effective
Date:

            

    

     

     

    
      	
               
      

            	
              (a)

            	
              the
      Buyers are required by law to prepare an environmental management plan and
      that environmental management plan discloses any negative environmental
      impact as a result of a breach by the Sellers of any environmental law;
      and

            

    

     

     

    
      	
               
      

            	
              (b)

            	
              the
      Buyers are required by law to report such negative environmental impacts
      to the relevant Ministry, the Sellers shall be obligated to satisfy the
      requests from the relevant Ministry to address the
  breach.

            

    

     

     

    
      	
               
      

            	
              10.5.2

            	
              If
      within 12 months of the Effective Date the Buyers or the Sellers receive a
      third party environmental claim against the Buyers or the Sellers arising
      directly from a breach by the Sellers of any environmental law, the
      Sellers shall be obligated to respond to that third party
      claim.

            

    

     

     

    
      	
               
      

            	
              10.5.3

            	
              Notwithstanding
      any other provision in this Agreement, after a period of 12 months from
      the Effective Date, the Buyers shall have no claim whatsoever against the
      Sellers arising directly or indirectly as a result
  of:

            

    

     

     

    
      
        	
                 
      

              	
                (a)

              	
                the
      use of any land associated with the Sale
Assets;

              

      

       

       

    

     

    
      	
               
      

            	
              (b)

            	
              any
      remediation, restoration or amelioration activities being taken or
      required in respect of land or waters associated with the Sale Assets, as
      a result of any pollution or contamination (no matter when or by whom such
      pollution or contamination was
caused);

            

    

     

     

    
      	
               
      

            	
              (c)

            	
              any
      remediation, restoration or amelioration activities being taken or
      required in respect of any other property as a result of any pollution or
      contamination on, or which emanated from, any land or waters associated
      with the Sale Assets (no matter when or by whom such pollution or
      contamination was caused); and

            

    

     

     

    
      	
               
      

            	
              (d)

            	
              a
      claim of any description whatsoever made by a third party which arises
      directly or indirectly as a result of any pollution or contamination on,
      or which emanated from, any land or waters associated with the Sale Assets
      (no matter when or by whom such pollution or contamination was
      caused);

            

    

     

     

    11.            COSTS,
EXPENSES AND DELAYED PAYMENT

     

     

    11.1             Costs
and Expenses

     

     

    Each
Party shall pay its own costs and expenses in respect of the negotiation,
preparation, execution, delivery and registration of this Agreement, the
Documents or other agreements or instruments entered into or signed in order to
effect the transactions contemplated by this Agreement.

     

     

    11.2             Late
Interest

     

     

    Without
prejudice to any other rights under this Agreement, if any amount payable under
this Agreement is not paid when due, the defaulting Party shall pay interest on
a daily basis on such amount from the due date of payment (after as well as
before judgement) until and including the date of payment at a rate equal to six
percent (6%) per annum over the Agreed Rate.

     

     

    12.            TAX

     

     

    12.1             Income

     

     

    
      	
               
      

            	
              12.1.1

            	
              The
      Sellers will report for Tax Purposes (including meeting the Tax payment
      and Tax filing obligations in respect of) the income and expenditures
      attributable to the Sale Assets prior to the date on which Completion
      occurs. The Buyers will report for Tax purposes the income and
      expenditures attributable to the Sale Assets on and from the date on which
      Completion occurs.

            

    

     

     

    
      	
               
      

            	
              12.1.2

            	
              The
      Purchase Price does not include any capitalised interest and the Parties
      agree that the Purchase Price is the "lowest price" for the purposes of
      valuing the property in accordance with section EW 32(3) of the Tax
      Act.

            

    

     

     

    
      	
               
      

            	
              12.1.3

            	
              The
      Parties agree that they will compute their taxable income for the relevant
      period on the basis that the Purchase Price includes no capitalised
      interest and they will file their tax returns
  accordingly.

            

    

     

     

    12.2            Indemnity

     

     

    
      	
               
      

            	
              12.2.1

            	
              Notwithstanding
      clauses 7.7.2 and 8.1.3, should any liability for Taxes (excluding income
      tax) which arises from the operation of the Sale Assets on or after the
      Effective Date accrue to the Sellers, the Buyers will indemnify the
      Sellers in respect of such liability, by way of adjustment to the Purchase
      Price to the extent that an adjustment is not otherwise made in accordance
      with Clause 3.2.

            

    

     

     

    
      	
               
      

            	
              12.2.2

            	
              The
      Sellers will indemnify the Buyers by way of adjustment of the Purchase
      Price to the extent that an adjustment is not otherwise made in accordance
      with Clause 3.2, for Taxes (excluding income tax) accruing to the Buyers
      after the Effective Date from the operation of the Sale Assets which
      wholly or partly (in which case the liability of the Sellers is limited to
      that part) relates to any period ending before the Effective Date and any
      part period to the Effective Date.

            

    

     

     

    12.3            GST

     

     

    
      	
               
      

            	
              12.3.1

            	
              In
      this clause all italicised and emboldened terms, have the same meaning as
      in the GST Act.

            

    

     

     

    
      	
               
      

            	
              12.3.2

            	
              In
      addition:

            

    

     

     

    
      	
               
      

            	
              (a)

            	
              Agreement Price means
      the consideration
      to be provided under this Agreement for the Supply (other than
      under this clause);

            

    

     

    
      	
               
      

            	
              (b)

            	
              GST Date means the
      25th
      day of the month following the month in which Completion
      occurs;

            

    

     

    
      	
               
      

            	
              (c)

            	
              Recipient means the
      party that receives the Supply from the
  Supplier;

            

    

     

    
      	
               
      

            	
              (d)

            	
              Supplier means the party
      that provides the Supply to the Recipient and includes the representative
      member of the GST
      Group if the Supplier is a member of a GST Group;

            

    

     

    
      	
               
      

            	
              (e)

            	
              Supply
      means any supply
      to the Recipient by the Supplier pursuant to this Agreement.
      However, if the GST Act treats part of a supply
      as a separate supply
      for the purpose of determining whether GST is payable on that part
      of the supply
      or for the purpose of determining the tax period to which that part
      of the supply
      will be attributable, such part of the supply
      will be treated as a separate supply
      for the purpose of this
clause.

            

    

     

     

    
      	
               
      

            	
              12.3.3

            	
              Notwithstanding
      any other provision in this Agreement, if the Supplier is or becomes
      liable to pay GST under section 8 of the GST Act in connection with any
      Supply, the Recipient must pay to the Supplier, in addition to the
      Agreement Price, an additional amount equal to the amount of that
      GST

            

    

     

     

    
      	
               
      

            	
              12.3.4

            	
              The
      Recipient shall pay to the Supplier the GST payable under clause 12.3.3 by
      the Recipient transferring to the Supplier on or before the GST Date its
      entitlement to receive from Inland Revenue a refund in respect of the GST
      chargeable in respect of the
Supply.

            

    

     

     

    
      	
               
      

            	
              12.3.5

            	
              The
      Supplier shall issue a tax invoice
      to the Recipient on
Completion.

            

    

     

     

    
      	
               
      

            	
              12.3.6

            	
              The
      Supplier and the Recipient will use their best endeavours in cooperation
      with Inland Revenue to confirm the Supplier's obligation to pay GST in
      respect of the Supply will be satisfied by way of Inland Revenue applying
      the resulting refund due and payable to the Recipient against the
      Supplier's obligation to pay the
GST.

            

    

     

     

    
      	
               
      

            	
              12.3.7

            	
              If
      confirmation of the transfer is not obtained from Inland Revenue on or
      before the GST Date, the Recipient shall immediately pay the GST in
      respect of the Supply to the Supplier in
cash.

            

    

     

     

    
      	
               
      

            	
              12.3.8

            	
              To
      the extent that the above transfer does not fully satisfy the Supplier's
      liability to pay the GST in respect of the Supply, the Recipient shall pay
      the difference in cash to the Supplier on or before the GST
      Date.

            

    

     

     

    
      	
               
      

            	
              12.3.9

            	
              Notwithstanding
      anything to the contrary in this Agreement, the Recipient may at any time
      elect to pay the GST in respect of the Supply to the Supplier in cash on
      or before the GST Date. The Recipient will give notice of any such
      election to the Supplier within 2 business days of making such an
      election.

            

    

     

     

    
      	
               
      

            	
              12.3.10

            	
              If
      the GST payable in relation to a Supply varies from the additional amount
      paid or payable by the Recipient under clause 12.3.3 the parties agree
      that:

            

    

     

     

    
      	
               
      

            	
              (a)

            	
              in
      the case of an increase of GST, that the Supplier shall issue a debit note
      to the Recipient in relation to that Supply within 14 days of
      becoming aware of the adjustment and the Recipient shall pay the
      additional GST to the Supplier within 14 days of receiving the debit
      note;

            

    

     

     

    
      	
               
      

            	
              (b)

            	
              in
      the case of a decrease in GST, that the Supplier shall issue a credit note
      to the Recipient in relation to that Supply within 14 days of
      becoming aware of the adjustment and the Supplier shall refund the
      relevant GST amount to the Recipient within 14 days of issuing the credit
      note.

            

    

     

     

    Any
payment, credit or refund under this clause 12.3.10 is deemed to be a payment,
credit or refund of the additional amount payable under clause
12.3.3

     

     

    12.4            Refunds

     

     

    
      	
               
      

            	
              12.4.1

            	
              The
      Buyers acknowledge that any refunds of Taxes (excluding income tax)
      received by the Buyers relating to operation of the Sale Assets before the
      Effective Date are for the benefit of the Sellers and agrees to reimburse
      these refunds to the Sellers forthwith upon receipt by the
      Buyers.

            

    

     

     

    
      	
               
      

            	
              12.4.2

            	
              The
      Sellers acknowledge that any refunds of Taxes (excluding income tax)
      received by the Sellers relating to operation of the Sale Assets on and
      from the Effective Date are for the benefit of the Buyers and agree to
      reimburse these refunds to the Buyers forthwith upon receipt by the
      Sellers.

            

    

     

     

    13.             CONFIDENTIALITY
AND ANNOUNCEMENTS

     

     

    13.1            Agreed
Announcements

     

     

    Subject
to Clause 13.2, no Party shall, without the written consent of the other Party,
issue or make any public announcement or statement regarding this
Agreement.

     

     

    13.2            Legal
Requirements

     

     

    
      	
               
      

            	
              13.2.1

            	
              If
      a Party is required to issue or make an announcement or statement in
      respect of this Agreement in order to comply
  with:

            

    

     

     

    
      	
               
      

            	
              (a)

            	
              applicable
      law; or

            

    

     

     

    
      	
               
      

            	
              (b)

            	
              the
      requirements of any recognised stock exchange on which the securities of a
      Party or any of its Affiliates are
listed;

            

    

     

     

    then the
Parties shall agree on the form and substance of such announcement or statement
and a copy of the same shall be furnished to the other Party prior to
publication or release. Each Party agrees to use its reasonable endeavours to
approve the form and substance of a required announcement or statement as soon
as possible so that Parties are able to comply with statutory and stock exchange
requirements.

     

     

    
      	
               
      

            	
              13.2.2

            	
              If
      a Party is required to issue or make an announcement or statement as
      contemplated by sub-clause (a) and, despite using its best endeavours, has
      been unable to agree the form and substance of the announcement or
      statement with the other Party prior to the latest time by which such
      announcement or statement must be made, the Party required to do so may
      then issue or make the announcement or statement provided
      that:

            

    

     

     

    
      	
               
      

            	
              (a)

            	
              the
      other Party is first notified and furnished with a copy of the
      announcement or statement; and

            

    

     

     

    
      	
               
      

            	
              (b)

            	
              to
      the maximum extent possible, the announcement or statement minimises the
      disclosure relating to this
Agreement.

            

    

     

     

    13.3             Parties
to Keep Confidential

     

     

    Subject
to Clauses 13.1 and 13.2, the Parties agree that the Information and all
information and documents which have been disclosed or provided to them or any
person acting on their behalf in accordance with this Agreement or in the course
of communications or negotiations in connection with the evaluation or sale of
the Sale Assets; including, without limitation, this Agreement and all documents
and information disclosed pursuant to the Confidentiality Agreement (which
information and documents are, for the purposes of this Clause 13, deemed to be
included in the definition of Information) as the case may require must be kept
strictly confidential, must not be sold, traded, published or otherwise
disclosed to anyone in any manner whatsoever, or photocopied or reproduced in
any way without either the Sellers' or Buyers' prior written consent, as the
case may require, except as provided in Clauses 13.4 and 13.5.

     

     

    13.4             Permitted
Disclosure

     

     

    The
Buyers may disclose the Information without the Sellers' prior written consent
only to the extent such Information:

     

     

    
      	
               
      

            	
              13.4.1

            	
              was
      already known to the Buyers as of the date of disclosure under the
      Confidentiality Agreement or this
Agreement;

            

    

     

     

    
      	
               
      

            	
              13.4.2

            	
              is
      already in the possession of the public or becomes available to the public
      other than through the act or omission of the Buyers or any Affiliate or
      any of their directors, employees, agents or
  advisers;

            

    

     

     

    
      	
               
      

            	
              13.4.3

            	
              is
      required to be disclosed under applicable law, by order of a court of
      competent jurisdiction or by a governmental order, decree, regulation or
      rule, including, without limitation, any regulation or rule of any
      regulatory agency, securities commission or stock exchange on which the
      securities of the Buyers or any Affiliate, are
  quoted;

            

    

     

     

    
      	
               
      

            	
              13.4.4

            	
              is
      acquired independently from a third party whom the Buyers reasonably
      believed was under no obligation of confidentiality related thereto;
      or

            

    

     

     

    
      	
               
      

            	
              13.4.5

            	
              is
      strictly Information as defined in Clause 1.2 provided Completion has
      occurred and, to the extent applicable, the Buyers continue to observe
      their obligations under this Clause
13.

            

    

     

     

    13.5             Advisers

     

     

    The
Buyers are entitled to disclose the Information without the Sellers' prior
written consent to such of the following persons who have a clear need to know
in order to give effect to the provisions of this Agreement provided that the
disclosure is limited to the extent strictly required by each such
person:

    

     

     

    
      	
               
      

            	
              13.5.1

            	
              employees,
      officers and directors of the
Buyers;

            

    

     

     

    
      	
               
      

            	
              13.5.2

            	
              employees,
      officers and directors of an
Affiliate;

            

    

     

     

    
      	
               
      

            	
              13.5.3

            	
              any
      professional adviser or auditor;

            

    

     

     

    
      	
               
      

            	
              13.5.4

            	
              any
      bank financing the Buyers' acquisition of the Sale
  Assets.

            

    

     

     

    Prior to
making any such disclosure under sub-clause 13.5.3 or 13.5.4, however, the
Buyers shall obtain an undertaking of strict confidentiality from each person to
whom disclosure of the Information is to be made expressly conferring the right
to enforce such undertaking directly on the Sellers.

     

     

    13.6            Responsibility
for Third Parties

     

     

    The
Buyers are responsible for ensuring that all persons to whom the Information was
disclosed under the Confidentiality Agreement or is disclosed under this
Agreement will keep such information confidential and will not disclose or
divulge the same to any unauthorised persons and the Buyers indemnify the
Sellers and their Affiliates against any and all damages, losses or expenses
suffered or incurred as a result of unauthorised disclosure by such
persons.

     

     

    13.7            Responsibility
for Affiliate

     

     

    When a
Buyer discloses the Information to employees, officers and directors of a
Affiliate the Buyer is responsible for the adherence of such employees, officers
and directors of the Affiliate to the terms of this Agreement and the Buyer
indemnifies the Sellers and their Affiliates against any and all damages, losses
or expenses suffered or incurred as a result of unauthorised disclosure by such
persons.

     

     

    13.8            Termination

     

     

    If this
Agreement is terminated or the Sale Assets are transferred or re-transferred to
the Sellers, the Buyers shall cease using the Information and the Sellers may
demand the return thereof upon giving written notice to the Buyers. Upon receipt
of such notice, the Buyers shall as soon as practicable and within a period not
exceeding 30 days from the date of receipt of such notice:

     

     

    
      	
               
      

            	
              13.8.1

            	
              retrieve
      all Information disseminated b persons and other third parties pursuant to
      Clause 13.5;

            

    

     

     

    
      	
               
      

            	
              13.8.2

            	
              return
      to the Sellers all of the Information
disclosed;

            

    

     

     

    
      	
               
      

            	
              13.8.3

            	
              destroy
      or return, as directed by the Sellers, to the Sellers all copies and
      reproductions of the Information made by the Buyers and any persons and
      other third parties pursuant to Clause 13.5;
and

            

    

     

     

    
      	
               
      

            	
              13.8.4

            	
              purge
      all computer data banks of the
Information

            

    

     

     

    13.9            Survival
of Clause 13

     

    The
provisions of this Clause 13 will survive any termination of this Agreement for
a period of 7 years from the date of such termination.

     

     

    14.            GENERAL

     

    14.1            Notices

     

     

    Any
notice or other communication, including, but not limited to, any request,
demand, consent or approval, to or by a Party:

     

     

    
      	
               
      

            	
              14.1.1

            	
              must
      be legible and addressed as shown
below:

            

    

     

     

    (a)             if
to the Sellers:

     

     

    Swift
Energy New Zealand Limited C/o Swift Energy Company

    16825
Northchase Drive

    Suite
400

    Houston

    Texas
77060

    USA

     

     

    For:
James P. Mitchell

     

    Facsimile:
+001 281 874 2726

     

    With a
copy to:

     

    Rabin
Rabindran

     

    Suite
912

    Ascott
Metropolis

    1
Courthouse Lane Auckland

    New
Zealand

     

    Facsimile:
+64 9 309 1892

     

     

    
      	
               
      

            	
              (b)

            	
              if
      to the Buyers:

            

    

     

    The
Directors

    Origin
Energy Resources NZ (SPV2) Limited

    Level 3
Energy House

    32
Molesworth Street

    New
Plymouth 4310

    New
Zealand

     

     

    Facsimile:
+64 6 769 9809

     

    With a
copy to:

     

     

    Level 45,
Australia Square

     

    264-278
George Street

     

    Sydney
NSW 2000

    Australia

     

    Attention:
Bill Hundy

     

     

     Facsimile:
+61 2 9252 1566

     

     

    or as
specified to the sender by any Party by notice;

     

     

    
      	
               
      

            	
              (c)

            	
              must
      be signed by a Director or duly authorised
  signatory;

            

    

     

     

    
      	
               
      

            	
              (d)

            	
              is
      regarded as being given by the sender and received by the
      addressee:

            

    

     

     

    
      	
               
      

            	
              (i)

            	
              if by delivery in
      person - a notice delivered personally or by courier is deemed to
      have been received by the Party to which it is addressed at the time and
      on the date that the notice is handed to an authorised officer,
      representative or employee of the Party to which it is
      addressed.

            

    

     

     

    
      	
               
      

            	
              (ii)

            	
              If by post - a
      notice sent by registered mail, in the absence of proof to the contrary,
      is deemed to have been received by the Party to which it is sent at the
      time when the letter is shown by the return receipt to have been delivered
      to that Party's address;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              If by facsimile
      transmission - subject to paragraph (e), in the absence of proof to
      the contrary, on the date of despatch if the recipients acknowledgement of
      receipt appears on the sender's copy of the notice or on the activity
      record printout of the sender's machine, or the activity record printout
      of the sender's machine shows a successful transmission to the recipient's
      facsimile machine on the date indicated on the printout, but if the time
      of :despatch is after 4:00pm in the place to which the facsimile is sent,
      it is deemed to have been received at the commencement of business on the
      next business day in the place to which it is
  sent;

            

    

     

     

    
      	
               
      

            	
              (e)

            	
              for
      the purposes of this Clause, if the date of deemed receipt is a Saturday
      or Sunday or a public or bank holiday in the place of receipt, the notice
      is deemed to have been received at the commencement of the next Business
      Day in that place; and

            

    

     

     

    
      	
               
      

            	
              (f)

            	
              in
      the case of indecipherable facsimiles which are identifiable as having
      been sent by a Party, are deemed not to have been received by the
      addressee if the addressee notifies the sender within twenty-four (24)
      hours after receipt that the facsimile has been received in that form and
      despatches a copy of the facsimile received to the
  sender.

            

    

     

     

    14.2            Governing
Law and Jurisdiction

     

     

    
      	
               
      

            	
              14.2.1

            	
              This
      Agreement is governed by the laws in force from time to time in New
      Zealand.

            

    

     

     

    
      	
               
      

            	
              14.2.2

            	
               Each
      Party irrevocably submits to the non-exclusive jurisdiction of the courts
      of New Zealand.

            

    

     

     

    14.3             Arbitration

     

     

    
      	
               
      

            	
              14.3.1

            	
              If
      a dispute arises between the Parties out of or in connection with any
      matter set out in this Agreement (including any dispute as to its
      existence or validity) ("Dispute") which is not
      a matter to be resolved by the Independent Accountant, any Party may give
      written notice to the others stating the subject matter and details of the
      Dispute and requiring that the Dispute be referred to arbitration. The
      arbitrator shall be appointed by the Parties, or failing agreement within
      ten Business Days after, and exclusive of, the date of service of the
      written notice shall be appointed at the request either Party by the
      president for the time being of the Arbitrators' and Mediators' Institute
      of New Zealand Inc or his or her nominee. The arbitration shall be
      conducted as soon as possible, at Wellington, in accordance with the
      provisions of the Arbitration Act 1996 and under the AMINZ
      Rules.

            

    

     

     

    
      	
               
      

            	
              14.3.2

            	
              The
      award of the arbitrator shall be an award with reasons, which reasons
      shall form part of the award. The award of the arbitrator shall be final
      and binding on the Parties and, to the extent that it is lawful to do so,
      the Parties waive any right of appeal or
review.

            

    

     

     

    
      	
               
      

            	
              14.3.3

            	
              The
      Parties shall bear their own costs and an equal share (as between the
      Buyers and the Sellers) of the costs of the award in relation to the
      arbitration, unless the arbitrator determines that a Party shall bear some
      proportion of, or all of, the costs of any other Party because of
      impropriety, lack of co-operation or unreasonable conduct by that
      Party.

            

    

     

     

    14.4            Waivers

     

     

    No
failure to exercise and no delay in exercising any right, power or remedy under
this Agreement will operate as a waiver nor will any single or partial exercise
of any right, power or remedy preclude any other or further exercise of that or
any other right, power or remedy.

     

     

    14.5            Variation

     

     

    A
variation of any term of this Agreement must be in writing and signed by each
Party.

     

     

    14.6            Assignment

     

     

    No Party
may assign its rights under this Agreement prior to Completion and settlement of
all Accounts herein. This Agreement binds each Party and its
successors.

     

     

    14.7            Entire
Agreement

     

     

    This
Agreement and the Confidentiality Agreement embodies the entire agreement
between the Parties with respect to the subject matter of this Agreement and the
Parties acknowledge that these two agreements supersede and cancel any prior
agreement, arrangement or understanding, whether formal or informal, or whether
express or implied with respect to the subject matter or any provision of this
Agreement.

     

     

    14.8            Further
Assurances

     

     

    After
Completion and on an on-going basis:

     

     

    
      	
               
      

            	
              14.8.1

            	
              the
      Buyers shall execute and deliver or use reasonable efforts to cause to be
      executed and delivered any other instruments of conveyance and take any
      other actions as the Sellers reasonably request to more effectively put
      the Sellers in possession of any property that was not intended to be (i)
      a Sale Asset or (ii) conveyed or was conveyed in error (including
      reassignment from the Buyers to the Sellers of any Sale Assets that were
      conveyed in violation of valid Preferential Rights or material consents to
      assignment); and

            

    

     

     

    
      	
               
      

            	
              14.8.2

            	
              the
      Sellers shall execute and deliver or use reasonable efforts to cause to be
      executed and delivered any other instruments of conveyance and take any
      other actions as the Buyers reasonably request to more effectively put the
      Buyers in possession of the Sale Assets conveyed or to have been conveyed
      in accordance with the terms of this
Agreement.

            

    

     

     

    14.9            Time

     

     

    Time is
of the essence of this Agreement.

     

     

    THE
PARTIES HAVE EXECUTED THIS AGREEMENT:

     

    
      	
              SIGNED by SWIFT ENERGY
      NEW

              ZEALAND LIMITED
      by:

               

               

              R.A.
      Cunningham

            	 
      	
               

               

               

               

              /s/
      R.A. Cunningham

            
	
              Full
      name of Director

               

               

              James
      P. Mitchell

            	 
      	
              Signature
      of director

               

               

              /s/
      James P. Mitchell

            
	
              Full
      name of Director

            	 
      	
              Signature
      of director

            

    

     

    

    
      	
              SIGNED by SWIFT ENERGY
      NEW

              ZEALAND HOLDING LIMITED
      by:

               

               

               

              R.A.
      Cunningham

            	 
      	
               

               

               

               

              /s/
      R.A. Cunningham

            
	
              Full
      name of Director

               

               

              James
      P. Mitchell

            	 
      	
              Signature
      of director

               

               

              /s/
      James P. Mitchell

            
	
              Full
      name of Director

            	 
      	
              Signature
      of director

            

    

     

    

    
      	
              SIGNED by SOUTHERN PETROLEUM (NEW
      ZEALAND) EXPLORATION by:

               

               

               

              Steven
      B. Yakle

            	 
      	
               

               

               

               

              /s/
      Steven B. Yakle

            
	
              Full
      name of Director

               

               

              James
      P. Mitchell

            	 
      	
              Signature
      of director

               

               

              /s/
      James P. Mitchell

            
	
              Full
      name of Director

            	 
      	
              Signature
      of director

            

    

     

    

    
      	
              SIGNED by ORIGIN ENERGY RESOURCES (SP1)
      LIMITED by:

               

               

               

              Grant
      A. King

            	 
      	
               

               

               

               

              /s/
      Grant A. King

            
	
              Full
      name of Director

               

               

              Christopher
      JT Bush

            	 
      	
              Signature
      of director

               

               

              /s/
      Christopher JT Bush

            
	
              Full
      name of Director

            	 
      	
              Signature
      of director

            
	
              SIGNED by ORIGIN
      ENERGY  LIMITED by:

               

               

              Grant
      A. King

            	 
      	
               

               

               

               

              /s/
      Grant A. King

            
	
              Full
      name of Director

               

               

              William
      M. Hundy

            	 
      	
              Signature
      of director

               

               

              /s/
      William M. Hundy

            
	
              Full
      name of Director

            	 
      	
              Signature
      of directorex-10j.htm

    
      

      

    

     

    

    FIRST
AMENDMENT TO THE

    FRONTIER
FINANCIAL CORPORATION

    2006
STOCK INCENTIVE PLAN

    

    

    THIS
FIRST AMENDMENT to the Frontier Financial Corporation 2006 Stock Incentive Plan
(the “Plan”) is entered into this 12th day of December, 2007, to be effective as
indicated.

    

    RECITALS

    

    
      	
              A.  

            	
              Section
      17.1 of the Plan authorizes the Board at any time to amend the
      Plan.

            

    

    

    
      	
              B.  

            	
              The
      Board has authorized the amendment of the Plan to revise Section 12.2 to
      provide for the acceleration of vesting of Options, Stock Appreciation
      Rights and Stock Grants upon a Sales
Event.

            

    

    

    

    AMENDMENT

    

    Section
12.2 is amended to read as follows, effective December 12, 2007:

    

    
      	
              12.2

            	
              Effect
      of Sale, Merger or Exchange.

            

    

    

    
      	
              12.2.1

            	
              Vesting of Options, Stock
      Appreciation Rights and Stock Grants.  Subject to Section
      12.2.2, upon the completion of a “Sales Event” (as defined below) any
      outstanding Options, Stock Appreciation Rights or Stock Grants shall
      become vested and, in the case of Options and Stock Appreciation Rights,
      exercisable.  In lieu of exercise, in the complete discretion of
      the Administrator and/or the Board, the Company may (a) cash out some or
      all of the unexercised vested Options or Stock Appreciation Rights by
      paying each affected Optionee or Holder an amount equal to the Fair Market
      Value of a Share of Common Stock (as determined for purposes of the Sales
      Event), multiplied by the number of Shares of Common Stock available under
      the Optionee’s Option or Holder’s Stock Appreciation Right, reduced by the
      aggregate Exercise Price or Base Value associated with that portion of the
      Option or Stock Appreciation Right, or (b) take some other action which in
      its sole discretion the Administrator and/or the Board deems to be
      appropriate under the circumstances.  Provided, Optionees and/or
      Holders shall not be disadvantaged by any such action.  For
      purposes of this Plan, a “Sales Event” will include the consummation of
      (i) a complete liquidation of the Company, (ii) a sale of substantially
      all of the Company’s assets, (iii) a sale of the Company’s Common Stock
      after which voting control of the Company is held by persons who were not
      shareholders of the Company prior to the sale, or (iv) a merger,
      consolidation, reorganization or other similar event that shifts voting
      control of the Company (or any successor entity) to persons who were not
      shareholders of the Company prior to the
  transaction.

            

    

    

    
      	
              12.2.2

            	
              Conversion Of Stock for Stock
      Exchange.  If pursuant to a Sales Event the shareholders
      of the Company receive securities of another entity (“Exchange
      Securities”) in exchange for their Shares of Common Stock, then the
      Company and the entity issuing the Exchange Securities may (at their
      discretion) provide that any unexercised Options or Stock Appreciation
      Rights (or any combination) under this Plan will be converted into stock
      appreciation rights or options to purchase Exchange
      Securities.  The number of shares and exercise price of stock
      appreciation rights or options for Exchange Securities will be determined
      by adjusting the number of shares and Exercise Price of the unexercised
      Options or Stock Appreciation Rights (as applicable) in the same
      proportion as used for determining the number of shares of Exchange
      Securities that the shareholders of Common Stock receive in the
      transaction.  Other than the potential changes to the Exercise
      Price, Base Value and number of shares of the outstanding Stock
      Appreciation Rights or Options, all of the terms and conditions relating
      to the converted Options or Stock Appreciation Rights under this Plan
      shall apply to options for the Exchange Securities, unless otherwise
      determined by the Administrator.

            

    

    

    
      
        
          
             

          

           

        

        
           

          
            

          

        

        
           

        

      

    

    

    

    
      	
              12.2.3

            	
              No Restriction on Ability to
      Accomplish Corporate Changes.  This Plan and Awards
      granted hereunder will not in any way limit the right or power of the
      Company, or its shareholders, to make or authorize any or all adjustments
      in connection with recapitalizations, reorganizations or other changes in
      the Company’s structure or its business, or any merger or consolidation of
      the Company, or any issuance of stock or of options, warrants or rights to
      purchase stock or bonds, debentures, preferred or prior preference shares
      whose rights are superior to or affect the Common Stock or rights of
      holders thereof or which are convertible into or exchangeable for Common
      Stock, the dissolution or liquidation of the Company, or any sale or
      transfer of all or any part of its assets or business, or any corporate
      act or proceeding, whether of a similar character or
      otherwise.

            

    

    

    
      	
              12.2.4

            	
              Termination of Options and
      Stock Appreciation Rights.  Notwithstanding any
      expiration date stated in the Award Agreement, upon the completion of a
      “Sales Event” (as defined above), any unexercised Options or Stock
      Appreciation Rights which are not converted pursuant to Section 12.2.2
      shall expire.  Optionees and Holders shall be provided a
      reasonable period following notice of the Sales Event to exercise Options
      or Stock Appreciation Rights.

            

    

    

    

    

    Dated
this 12th day of
December, 2007.

    

    FRONTIER
FINANCIAL CORPORATION

    

    

    

    By /s/
John J. Dickson

    Its
President and CEO

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