CENTRAL PETROLEUM LIMITED — Capital/Financing Update 2007

Nov 19, 2007

ASX ANNOUNCEMENT RELEASED to the ASX DATE: 201107

TO: Manager, Company Announcements ASX Limited CONTACT: John Heugh +61 8 9474 1444

Central Petroleum Limited :

• enters into Bond Subscription Agreement to raise up to $80,000,000 in $1,000,000 tranches to assist in exploration and possible development

• announces General Meeting Date of 21 December for Shareholders to consider the Bond Subscription Agreement

• announces Annual General Meeting Date of 21 December

Central Petroleum Limited (ASX Ticker “CTP”-the Company) is pleased to announce that it has today entered into a Bond Subscription Agreement with D.B. Zwirn Mauritius Trading No. 3 Limited (DBZ) (Agreement).

The Agreement provides the framework for the Company to raise up to $80,000,000 by issuing convertible zero coupon bonds over a maximum time frame of up to five years, in $1,000,000 tranches. The Company proposes to use the funds raised to fund its exploration program, possible development and infrastructure and possibly the purchase of a drilling rig.

DBZ is wholly-owned by D.B. Zwirn Special Opportunities Fund, L.P., a Delaware limited partnership managed by D.B. Zwirn & Co., L.P. (DBZ & Co.), a global alternative investments manager and merchant capital provider.

The capital raising requires shareholder approval. A detailed summary of the Agreement is contained in the Notice of Meeting sent to shareholders and is appended together with the terms and conditions of the Bonds.

John Heugh, Managing Director of the Company said today “Central is pressing on with the formalisation of farmout agreements with several partners in addition to the previously announced farmout agreement with He Nuclear Limited but the Bond Subscription Agreement with DBZ, subject to Shareholder approval, ushers in a new era of potential funding for the Company as it gears up to explore the biggest acreage package of operated ground in Australia” He went on to say “ the terms of the proposed facility may enable the Company to raise meaningful capital on a rolling basis on terms considered to be quite favourable compared with the traditional capital raising avenue of placements ”

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John Heugh, Managing Director, Central Petroleum Limited

Notice of General Meeting

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NOTICE OF GENERAL MEETING

A General Meeting of Central Petroleum Limited (the Company ) will be held at its registered office, Level 4 South Shore Centre, 85 South Perth Esplanade, South Perth, Western Australia on Friday the 21[st] of December 2007 immediately after the closure of the Company's annual general meeting which commences at 10.30 a.m. Western Standard Time, for the purpose of transacting the business below.

The Explanatory Statement and the Proxy Form accompanying this Notice are incorporated in and comprise part of this Notice.

BUSINESS

1. Issue of Securities under a Bond Subscription Agreement

Resolution 1

To consider and if thought fit to pass, with or without amendment, one of the following as an ordinary resolution:

Option A: [if the Company receives before the date of the meeting a waiver of ASX Listing Rule 7.3.2 to permit Bond issues over the next 15 months]

"That approval is given for the issue of up to 8,000 Bonds having an issue price of $10,000 each, to D.B. Zwirn Mauritius Trading No. 3 Limited or otherwise as permitted under the Agreement, by the Company as described in the Explanatory Statement for the purposes of Listing Rule 7.1 and all other purposes."

Option B: [if the Company does not receive before the date of the meeting a waiver of ASX Listing Rule 7.3.2 to permit Bond issues over the next 15 months]

"That approval is given for the issue of up to 2,000 Bonds having an issue price of $10,000 each, to D.B. Zwirn Mauritius Trading No. 3 Limited or otherwise as permitted under the Agreement, by the Company as described in the Explanatory Statement for the purposes of Listing Rule 7.1 and all other purposes."

Voting Exclusion Statement

For the purposes of ASX Listing Rules 7.1 and 7.3.8 and all other purposes, the Company will disregard any votes cast on the Resolution by:

• D.B. Zwirn Mauritius Trading No. 3 Limited

• MPS Staff Super Fund Pty Ltd

• any other person who might obtain a benefit from the Resolution, except a benefit solely in the capacity of a holder of ordinary shares

• an associate of any of the above.

However, the Company need not disregard a vote if:

• (a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or

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(b) it is cast by a person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

2. Issue of Shares to MPS Staff Super Fund Pty Ltd

Resolution 2

To consider and if thought fit to pass, with or without amendment, the following as a special resolution:

"That for the purposes of Listing Rule 7.1, section 260B of the Corporations Act, and all other purposes, approval is given for the issue of the Loan Shares (as defined in the Explanatory Statement) to MPS Staff Super Fund Pty Ltd at the discounted price set out in the Explanatory Statement (which may constitute financial assistance as explained in the Explanatory Statement)."

Voting Exclusion Statement

For	the purposes of ASX Listing Rules 7.1 and 7.3.8, section 260B(1)(a) of the
Corporations Act, and all other purposes, no votes may be cast on the Resolution by:
•	D.B. Zwirn Mauritius Trading No. 3 Limited
•	MPS Staff Super Fund Pty Ltd
•	any other person who might obtain a benefit from the Resolution, except a
	benefit solely in the capacity of a holder of ordinary shares
•	an associate of any of the above.
Any such votes would be disregarded by the Company. However, the Company need
not	disregard a vote if:
	(a) it is cast by a person as proxy for a person who is entitled to vote, in
	accordance with the directions on the proxy form; or
	(b) it is cast by a person chairing the meeting as proxy for a person who is
	entitled to vote, in accordance with a direction on the proxy form to vote
	as the proxy decides.

BY ORDER OF THE BOARD

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Marco A Di Silvio Company Secretary Perth, Western Australia Date: 20 November 2007

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Notes on proxies

• (a) The Company has determined that, for the purposes of this General Meeting, all shares in the Company will be taken to be held by the person who held shares as registered shareholders at 7:00 pm on Wednesday, 19 December 2007 ( Effective Time ).

• (b) All holders of shares in the Company as at the Effective Time are entitled to attend and vote at this General Meeting and may appoint a proxy to attend this General Meeting and vote in that member’s stead.

• (c) A proxy need not be a member of the Company.

• (d) The proxy form sent with this Notice should be used for this General Meeting.

• (e) Each Shareholder who is entitled to cast 2 or more votes at this General Meeting, may appoint 2 persons to act as proxies and may specify the proportion or number of votes that each proxy is entitled to exercise. If a Shareholder does not specify the proportion or number of that Shareholder’s votes each proxy may exercise, then each proxy will be entitled to exercise half of the votes. An additional proxy form will be supplied by the Company on request.

• (f) In the case of an individual, a proxy must be under the hand of the individual or his or her attorney duly authorised in writing and, in the case of a corporation, a proxy must be executed by the corporation under common seal, pursuant to Section 127 of the Corporations Act or under the hand of its duly authorised officer or attorney.

• (g) Any member may by power of attorney appoint an attorney to act on his or her behalf and such power of attorney or certified copy thereof must be received by the Company as specified in paragraph (i).

• (h) Any corporation which is a member of the Company may appoint a representative to attend and vote for that corporation at the General Meeting. Appointments of representatives by corporations must be received by the Company as specified in paragraph (i) or handed in at the General Meeting when registering as a company representative.

• (i) Proxies and powers of attorney granted by Shareholders must be received by the Company by 10:30 am on Wednesday, 19 December 2007 at:

• (i) The registered office of the Company – Level 4 South Shore Centre, 85 South Perth Esplanade, South Perth, Western Australia; or

• (ii) By facsimile at the registered office of the Company – facsimile number +61 8 9474 1555.

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EXPLANATORY STATEMENT

THIS EXPLANATORY STATEMENT accompanies and forms part of the Notice of Meeting convening the General Meeting of Shareholders of Central Petroleum Limited ABN 72 083 254 308 (the Company ) held at its registered office, Level 4 South Shore Centre, 85 South Perth Esplanade, South Perth, Western Australia on Friday the 21[st] of December 2007 immediately after the closure of the Company's annual general meeting which commences at 10.30 a.m. Western Standard Time.

This Explanatory Statement is to provide Shareholders with explanatory notes and information relevant to the meeting and its business. This Explanatory Statement should be read in conjunction with the accompanying Notice.

Explanatory Notes

Resolution 1: Issue of Securities under a Bond Subscription Agreement

Details and background

The Company has entered into the Bond Subscription Agreement with D.B. Zwirn Mauritius Trading No.3 Limited (the Subscriber ) under which the Company proposes to issue to the Subscriber a series of zero coupon convertible bonds in tranches of $1,000,000 up to a maximum value of $80,000,000 ( Bonds ) over a timeframe of up to five years (the Agreement ). The Agreement is (to date) unique in Australia, and the Company considers that it provides the framework for an effective and efficient means of raising capital for the purpose of funding the Company's exploration activities (discussed in more detail below).

The Company has considered a number of more traditional methods of raising funds before progressing with negotiations with DBZ in relation to the Agreement. Many of these are not traditionally available to exploration companies. The options considered include debt facilities (including discussions with a number of financial institutions), share placements, and issuing various kinds of convertible notes. Due to limitations arising from the nature of the Company's activities and its current circumstances, CTP believes that the amount of funds which could be raised using these methods, and the relative cost of obtaining the funds, is not attractive for the scale of capital raising proposed.

Raising capital in the amounts contemplated under the Agreement through traditional notes or placements would require considerable management time and costs in the form of discounted issue prices, advisory fees, interest payments and commission structures. The Company's research indicates that for exploration companies, raising funds by way of placements commonly include an issue price discounted to market by up to 20%. Other fees, such as sponsorship or underwriting, may range up to an additional 6%, while the Bonds will involve the payment of a commission of 4.5% of the value of all Bonds issued.

Accordingly, the Company considers that the Agreement will provide a more suitable access to funds than the traditional methods explored. In addition to avoiding some of the costs detailed above, it would allow the company a significant level of flexibility, including the ability to access funds over an accelerated timeframe (within approvals from security holders), to limit the debt position of the Company, and to decline to issue further Bonds under the Agreement if desired. We note that under the Agreement the Subscriber and the Company both may elect at the relevant time not to take up or to issue any Bonds.

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The Company's exploration expenditure

The Company has 27 permits either granted or in application. The cost of the Company's remaining contingent obligations in submitted exploration programmes (subject to all permits being granted) is approximately $125 million over the next 5 years. With the aid of current and anticipated joint venture partners, the Company seeks to accelerate the submitted programme to allow for up to 7 conventional wells, 3 Coal Bed Methane wells and a c.1,200 line km. seismic programme during 2008. This 2008 programme could cost up to approximately $43 million in total, plus various administration costs. The Company will, at present, be required to bear more than 90% of this expenditure. Depending on results, a similar programme could be anticipated each year going forward but with expenditure accelerating significantly upon exploration success. Current and anticipated joint venture partners may fund in excess of 80% of such expenditure but their contribution can not be absolutely relied upon.

An inventory of the Company's exploration permits and the status of expenditure commitments is set out in Part 1 of Schedule 2.

The Company may suffer increased overall costs, or may be forced to forfeit exploration permits, if it does not comply with approved work programmes set by regulatory authorities under petroleum legislation.

It is hoped that successful discoveries will offset some exploration costs.

Proposed purchase of a drilling rig

CTP’s capital budget includes a proposal to purchase an oil drilling rig at a cost of some $30 million, including $10 million of working capital. The proposal will be subject to a feasibility study. The Company has engaged IP Services (Australasia) Pty Ltd to conduct the study. The Company anticipates that the study may show considerable economic benefit in terms of rig availability and reduced cost over a large number of proposed wells.

Subject to the outcome of the feasibility study, the Company considers that the following factors contribute towards the desirability of purchasing a drilling rig:

• Should the purchase of the drill rig not proceed, the cash flow savings would likely to be absorbed over several years by higher well costs.

• There is generally a shortage of appropriate drilling rigs in Australia and most of the drilling rigs available are based upon relatively old technology. This type of technology requires mobilisation of 40 to 80 trailer loads of equipment from site to site, thereby requiring additional transport costs. Mobilisation costs of a drilling rig from the Cooper Basin (where most rigs are currently active to central Australia) is estimated to currently cost between $1,000,000 to $2,000,000, with demobilisation costs to return the rig to the Cooper Basin in the same range. Saving these costs (or a proportion of them) would be of substantial benefit.

• The type of drilling rig contemplated by the Company is known as the “super single” type of rig. It is a heavier duty version than any currently available to be contracted in Australia. This model would be capable of drilling to 4,800m and, with the use of an intermediate casing string, running 7” production casing to the same depth. Such a rig type would take a total of approximately 25 trailer loads of equipment including camp and ancillaries and would be capable of rigging up or rigging down in less than a day by using automated hydraulic erection capabilities.

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Extent of approval sought

The Agreement anticipates operation over a period of up to five years.

The Company wishes to have the advantage of having access to adequate funding to achieve its exploration goals over Australia’s largest exploration portfolio. Therefore, the Company is seeking approval to draw down up to the full $80 million maximum under the Agreement (over 15 months, in the case of Resolution 1 Option A) or up to $20 million (over three months in the case of Resolution 1 Option B).

The Subscriber

The Subscriber is wholly-owned by D.B. Zwirn Special Opportunities Fund, L.P., a Delaware limited partnership managed by D.B. Zwirn & Co., L.P. ( DBZ & Co. ), a global alternative investments manager and merchant capital provider with over US$5 billion worth of assets under management. DBZ & Co., L.P., together with its affiliates, have offices in New York City, Houston, Stamford, Beverly Hills, San Francisco, London, Frankfurt, Milan, New Delhi, Hong Kong, Melbourne, Mexico City, Shanghai, Singapore, Seoul, Taipei and Tokyo.

None of the shareholders of the Subscriber is related to or associated with any of the Directors of substantial Shareholders of the Company.

Highlights of the Agreement

The highlights of the Agreement are summarised below.

The initial issue

The Agreement provides for the issue of Bonds in tranches of $1,000,000 (each aTranche). An initial Tranche will be issued so long as the conditions are met.

Conditions for the initial issue

The initial issue of Bonds under the Agreement is subject to a number of conditions precedent, including: 1. Shareholder approval; 2. minimum closing and 10 day volume weighted average trading prices of at least $0.15; 3. a prospectus for the shares issued on conversion having been issued and lodged with ASIC; 4. the Subscriber being satisfied with a disclosure letter against the warranties given by the Company; 5. there being no breach or material adverse change; 6. there being no injunction against the issue, no market disruption, no adverse change in legislation and the Company not being suspended 7. the Share Lending Agreement being executed and delivered by the Share Lender, no breach of it having occurred and it remaining in effect

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Subsequent issues	Either party may request that a subsequent Tranche of $1,000,000 worth of Bonds be issued. Provided the other party accepts and all conditions are met, subsequent Tranches up to a cumulative amount of $80,000,000 may be issued over a five year period. The Subscriber is not obliged to accept a request by the Company to issue a further Tranche of Bonds. For subsequent issues: 1. only a single Tranche can be issued at a time (unless otherwise agreed); 2. minimum closing and 10 day volume weighted average trading prices of at least $0.15 are required; 3. the immediately preceding Tranche of Bonds must have been fully converted into Shares (unless otherwise agreed); 4. any necessary Shareholder approval of the issue must have been obtained; 5. a request may not be made if upon issue the Subscriber and its Associates will have an interest in more than 15% of the capital of the Company, or if the Subscriber hold more than 10% of the capital of the Company. This has the effect of imposing a cap on the interest in Shares the Subscriber can obtain through the Agreement. At this stage, the Company has not agreed any circumstances in which more than a single Tranche of Bonds could be issued, or where a Tranche could be issued before all the Bonds in the previous Tranche had been converted.
Conditions for subsequent issues	In addition to similar conditions as apply for the initial issue, all necessary approvals and consents must continue to be in place, and there must have been no event of default by the Company.
Warranties and undertakings	The Company has provided warranties with respect to, among other things, the legal, business and financial condition of the Company and its subsidiaries. The Company has given various undertakings including not to issue any Convertible Securities other than the Bonds during the term of the Agreement.

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Exclusivity	The Company must ensure that neither it nor its affiliates and representatives solicit, discuss, negotiate with any person other than the Subscribers in relation to a Competing Proposal. There are also restrictions on the Company issuing other Convertible Securities.
Termination for a period of inactivity	After the Initial Completion Date, if no request for Conversion of or subscription for any Bond occurs within 45 Trading Days after the previous conversion of or subscription for a Bond (whichever is the later), either the Subscriber or the Company may terminate the Agreement. There are no fees or payments that have to be made if either party exercises this right.

Commission

A consultant of the Company, Harford Vantage, has facilitated the Company in entering into the Agreement. The Company has agreed to pay Harford Vantage a success fee of 4.5% upon each Tranche of Bonds being issued.

Approvals required

Under ASX Listing Rule 7.1, the Company must not issue or agree to issue equity securities (which includes convertible securities and shares) without Shareholder approval if the issue, when aggregated with the securities issued by the Company without approval (and which were not subject to an exemption) during the previous 12 months, would exceed 15% of the issued shares in the Company.

Resolution 1 approves the issue of Bonds pursuant to the Agreement for the purposes of Listing Rule 7.1, and for all other purposes. If Resolution 1 is passed, the issue of Shares on conversion of the Bonds will be permitted without further approval (Listing Rule 7.2).

Share Lending Agreement

The Subscriber proposes to enter into a Share Lending Agreement with MPS Staff Super Fund Pty Ltd (the Share Lender ) whereby the Share Lender will lend shares to a market value of $500,000 to the Subscriber until all the Bonds have been fully converted or the Agreement is terminated, whichever is the later. The Company intends to issue these Shares to the Share Lender for the purposes of this transaction, which is the subject of Resolution 2 and is discussed in more detail below.

Time limit for approval

Under Listing Rule 7.3.2, the Company must issue securities approved by Shareholders for the purposes of Listing Rule 7.1 within three months of the date of the approval.

The Company intends to continue to issue Bonds for up to five years, subject to Shareholder approval under Listing Rule 7.3.2. Accordingly, the Company intends to refresh the approval of Shareholders every three months (or less frequently if a waiver of this requirement is obtained from the ASX). The Company has applied for such a waiver in relation to future approvals. The outcome of the waiver, and the timing of the response, is not yet known. The outcome of that application, if it is determined before that General Meeting, will determine whether Resolution 1 Option A is proposed at the meeting or whether Resolution 1 Option B is proposed.

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Entitlement offer

The issue of Shares on conversion of Bonds will have a dilutionary effect on Shareholders. To address this, at least in part, the Company intends to offer its Shareholders the opportunity to participate in a pro rata entitlement offer, or offers from time to time, of at least an equal number of Shares as are issued on conversion of the Bonds during each approval period. The Company has not yet decided when the entitlement issue(s) will occur, or the ratio which will apply, but any offer or offers relevant to a particular approval period shall be made within the relevant approval period or by 90 days past the end of the relevant approval period. The Company will take into account the ongoing liquidity requirements of the Company, and its forecast expenditure commitments over a specified period, when deciding when the entitlement offer(s) will occur. The issue price for an entitlement offer of this nature will be the same as the most recent conversion price for the conversion of Bonds into Shares at the time of such offer.

The price and number of Shares to be offered under an entitlement issue of this nature will only be made after a number of Tranches of Bonds have been converted. The Company has not yet decided when this will occur.

An entitlement offer may result in an adjustment to the number of Shares issued on conversion of the Bonds. See item 4.1 in Schedule 4.

If the Company makes an entitlement offer, the funds will be applied to grow the Company via the Company's exploration or development program or to acquire infrastructure or equipment to facilitate the Company obtaining cash flow from any discoveries.

Further information required under the Listing Rules

Listing Rule 7.3 requires that the Shareholders must be provided with the following information before approving the issue of securities.

(a) Maximum number of securities to be issued

The maximum number of Bonds that may be issued in the periods mentioned in (b) is Bonds to the value of:

• (i) if Resolution 1 Option A applies: 8,000 Bonds having an issue price of $10,000 each;

• (ii) if Resolution 1 Option B applies: 2,000 Bonds having an issue price of $10,000 each.

The maximum number of Shares that may be issued on the conversion of the

maximum number of Bonds that may be issued in the periods mentioned in (b) is:

• (i) if Resolution 1 Option A applies: 533,333,333 Shares;

• (ii) if Resolution 1 Option B applies: 133,333,333 Shares,

(assuming that no events occur which could give rise to an adjustment to the Minimum Conversion Price (please see Schedule 3 for more detail).

if Resolution 1 Option B applies, or if the maximum amount of Bonds under Resolution 1 Option A are not issued, then further Bonds may be issued under the Agreement if Shareholders refresh their approval in the future.

(b) Last date for the issue of the securities

The Bonds mentioned in (a) may be issued at any time:

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• (i) if Resolution 1 Option A applies: until 20 March 2009, or such shorter time as permitted by the ASX.

• (ii) if Resolution 1 Option B applies: until 20 March 2008.

Further Bonds will only be issued in the future if subsequent approval is given by Shareholders.

(c) Issue price of the securities

Each Bond has an issue price of $10,000.

The issue price of Shares that may be issued on conversion of the Bonds is explained in Schedule 3.

(d) Names of the allottees

Under the Agreement the Bonds will be issued to:

• the Subscriber;

• Affiliates of the Subscriber; or

• the funds and other investment vehicles and private accounts directly or indirectly managed and/or advised by DB Zwirn & Co., L.P., or its Affiliates.

(e)

Terms of the securities

The terms of the Bonds are summarised in Schedule 3.

The highlights of the terms of the Bonds are as follows.

Type	Unquoted bonds convertible into ordinary shares of the Company
Denomination	$10,000
Status	Direct, unsubordinated, unconditional and unsecured
Interest rate	Zero, except for default interest and interest on early redemption of the Bonds by the Company, both at a rate of 6% (please see Schedule 3 for more detail)
Maturity and redemption	The Bonds mature and must be redeemed by the Company five years after the date of issue of the Bond. The Bondholder has the option to require redemption at any time after one year from the date of issue. The Company may exercise a right of early redemption after one year, but must pay interest at a rate of 6% if it does so.
Conversion Price	The lower of: • 125% of the average of the closing prices per Share for the 25 business days immediately prior to the date the Bond is issued; or • 90% of the average of the closing prices per Share in any five consecutive business days during the 25 business days immediately preceding the conversion date,

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	but subject to a minimum conversion price of $0.15 and subject to adjustment in accordance with the Conditions (please see Schedule 3 for more detail)
Conversion Ratio	Face Value divided by Conversion Price
Conversion period	The conversion right may be exercised by the holder from immediately after the date of issue until the day before the maturity date. The conversion right may be extended in cases of default by the Company.
Warranties and Undertakings	The Company gives various warranties and undertakings.
Events of Default	Events of Default apply. Please refer to Schedules 3 and 4.
Anti-dilution protection	Dilutive events may give rise to an adjustment to the Conversion Price. Please refer to Schedule 3.

(f) Intended use of the funds raised

The Company is an oil and gas exploration company which aims to become a prominent producer of petroleum and value added petroleum products in a central Australian energy hub. The Company has a number of active exploration projects located in central Australia. The conditions of the various mining exploration tenements held by the Company include requirements for minimum expenditure on exploration activities.

The funds raised will be applied towards funding the Company's exploration program, and for working capital. In particular, the Company intends to:

• Drill up to ten (10) onshore exploration wells in 2008, including (3) three Coal Bed Methane wells (at a total estimated cost of up to $35,000,000);

• Undertake up to 1,200 line km of seismic acquisition, processing and mapping to support and underpin the above exploration program (at a total estimated cost of up to $8,000,000);

• Perform a full feasibility study in relation to the prospective purchase of an onshore drilling rig for use in the Company’s ongoing exploration program (at a total estimated cost of $250,000 - $500,000); and

• If approved following the completion of the feasibility study, purchase an onshore drilling rig (at a cost of approximately $25,000,000 to $30,000,000 inclusive of working capital related to the purchase).

In Part 2 of Schedule 2 we set out some more particular information about the drilling and seismic exploration activities planned in relation to certain permits, and the estimated costs.

This is a statement of the Company's present intentions with respect to the funds raised, and is subject to change. The precise use of the funds raised may change because of the following factors:

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• The Company's ability to secure adequate drilling resources to undertake drilling activities in a tight market;

• Weather conditions in the Northern Territory affecting remote drill sites;

• Tenure, security and access rights to remote drill site locations;

• Securing stable joint venture partners with an ability to fund an ongoing exploration program beyond the immediate future.

The Company will tailor the expenditure according to the availability of personnel to conduct the intended activities, market conditions and the results of its ongoing exploration activities.

Further information about the Company's anticipated expenditure has been set out above and in Schedule 2. The information about expenditure programs relates to the Company's plans for the 2008 year.

(g) Dates of allotment

The allotment of the Bonds will occur progressively.

Comparative information

By way of further information for the benefit of the Shareholders, the following comparative information is presented.

The pro forma capital structure of the Company as at 15 months after the date of Shareholder approval of Resolution 1 Option A and at 3 months after the date of Shareholder approval of Resolution 1 Option B is summarised in the table below. This table is a pro forma example of the maximum possible issue of securities arising out of the approval of Resolutions 1 and 2 (subject to the assumptions stated below). The actual capital structure of the Company will vary depending on the number of Bonds actually issued. The table assumes:

• (a) the issue of 2,500,000 Shares in accordance with Resolution 2 below (assuming that the closing market price quoted by the ASX on the date immediately prior to the date of the Loan Shares is $0.20);

• (b) during the fifteen month period after approval of Resolution 1 Option A:

• (i) the issue of 8,000 Bonds; and

• (ii) the issue of 526,666,667 Shares at the Minimum Conversion Price ($0.15) on conversion of 7,900 Bonds.

• (c) during the three month period after approval of Resolution 1 Option B:

• (i) the issue of 2,000 Bonds; and

• (ii) the issue of 126,666,667 Shares at the Minimum Conversion Price ($0.15) on conversion of 1,900 Bonds.

Security	Currently on Issue	Pro Forma – Resolution 1 Option A	Pro Forma – Resolution 1 Option B
Shares quoted on the ASX	166,633,639	695,800,306	295,800,306
Shares not quoted on the ASX	10,789,864	10,789,864	10,789,864
Options quoted on the ASX (30 Jun 2010)	95,961,760	95,961,760	95,961,760

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Security	Currently on Issue	Pro Forma – Resolution 1 Option A	Pro Forma – Resolution 1 Option B
Options not quoted on the ASX (31 Jan 2010)	300,000	300,000	300,000
Options not quoted on the ASX (31 May 2010)	21,250,000	21,250,000	21,250,000
Options not quoted on the ASX (20 February 2011)	8,000,000	8,000,000	8,000,000
Options not quoted on the ASX (30 November 2010)	3,450,000	3,450,000	3,450,000
Bonds	Nil	100 (total face value $1,000,000)	100 (total face value $1,000,000)

Company Flexibility

The company is not under any obligation to issue Bonds under the Agreement. Therefore the board has the discretion to issue bonds at such times and in such number as it believes to be in the interests of the Company.

Indicative timetable

If Shareholders approve Resolution 1, it is expected that the initial Tranche of Bonds to the value of $1,000,000 will be issued by 31 January 2008. This is an indication only and may change.

Recommendation of the Board

The Directors recommend that Shareholders vote in favour of Resolution 1 (Option A or Option B, as applicable).

Resolution 2: Issue of Shares to the Share Lender

Details

The Subscriber has informed the Company that it requires the ability to borrow Shares to the market value of $500,000 at the time that the initial Tranche of Bonds are issued (the Loan Shares ). This is proposed to occur by way of a Share Lending Agreement between the Subscriber and the Share Lender. The Company proposes to issue the Loan Shares to the Share Lender at a 50% discount to the volume weighted average price for the Shares quoted by the ASX over the 25 Trading Days up to and including the day Shareholders approve the issue, at the time of issuing the initial Tranche of Bonds. The purpose of the issue is to facilitate the Loan Shares being lent to the Subscriber in accordance with the terms of the Share Lending Agreement.

Reason for Discount

The Share Lender may be bound by the Share Lending Agreement for up to five years. For this reason the Company considers the proposed discount on the issue price of the Loan Shares to be reasonable.

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Financial Assistance under the Corporations Act

The Board considers that the issue of Loan Shares to the Share Lender at a discount may constitute giving financial assistance for the acquisition of Shares by DBZ. The Share Lending Agreement will allow DBZ to access those Shares in accordance with its terms.

If the Company issues a dividend and the Share Lender holds the Loan Shares at the time, the Share Lender will obtain a greater yield on its investment than Shareholders who paid a higher price for their Shares.

No material prejudice

The execution of the Share Lending Agreement by the Share Lender is a condition to the Agreement (please refer to the commentary on Resolution 1 above).

The Board considers that giving the financial assistance by issuing the Loan Shares at a discount does not materially prejudice the interests of the Company or its shareholders, or the Company's ability to pay its creditors.

The issue of the Loan Shares can not have an adverse effect on creditors because the issue does not diminish the financial resources of the Company or involve the Company giving any form of guarantee or security over its assets.

In the context of the transaction as a whole, the Board considers that the issue of the Loan Shares is in the best interests of the Company and its Shareholders. The Share Lending Agreement forms a necessary part of the commercial transaction which will allow the Company to raise capital through the issue of the Bonds. For the reasons explained above, the Board considers that this transaction is commercially beneficial, and has recommended that Shareholders vote in favour of it.

Further information required under the Listing Rules

Listing Rule 7.3 requires that the Shareholders must be provided with the following information before approving the issue of securities.

(a) Maximum number of securities to be issued

The maximum number of Loan Shares is to be calculated in accordance with the following formula:

==> picture [110 x 21] intentionally omitted <==

Where:

B = the number of Loan Shares

CP = the closing market price quoted by the ASX on the date immediately prior to the date of the Loan Shares

(b) Last date for the issue of the securities

The Loan Shares will be issued no later than three months after the date of approval of Resolution 2.

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(c) Issue price of the securities

The Loan Shares will be issued at a discount of 50% to a market price, as calculated in accordance with the following formula:

VWAP

IP = 2

Where:

IP = the issue price of the Loan Shares

VWAP = the volume weighted average price for the Shares quoted by the ASX over the 25 Trading Days up to and including the day Shareholders approve the issue of the Loan Shares

(d) Names of the allottee

The allottee will be MPS Staff Super Fund Pty Ltd (ACN 113 730 555).

(e) Terms of the securities

The Loan Shares will be ordinary fully paid shares in the capital of the Company and will rank equally with the existing Shares in all respects.

(f) Intended use of the funds raised

The Company intends to use the funds raised for working capital.

(g) Dates of allotment

The date of allotment will be the same as the date of issue.

Recommendation of the Board

The Directors recommend that Shareholders vote in favour of Resolution 2.

17

Schedule 1 Definitions

AASB means the Australian Accounting Standards Board.

Affiliate means with respect to any entity or person, all entities which are controlling, controlled by or under common control with such entity or person (including any investment vehicle of such entity or person).

Agreement means the Bond Subscription Agreement between the Company and the Subscriber dated on or about 20 November 2007.

Application Form has the meaning given in the Agreement.

ASIC means the Australian Securities and Investments Commission.

ASX means ASX Limited.

Board means the Board of Directors of the Company.

Bond means each bond of a principal amount of $10,000 comprised within a Tranche.

Bond Certificate means the certificate evidencing ownership of the Bonds.

Bondholder means, in relation to any Bond, the person whose name is registered on the register of bondholders as holder of such Bond.

Business Day has the meaning ascribed to it in the Listing Rules.

Capital Distribution has the meaning given in the Conditions. It includes:

• (a) any distribution of assets in specie by the Company for any financial period whenever paid or made and however described (and for these purposes a distribution of assets in specie includes without limitation an issue of Shares or other securities credited as fully or partly paid (other than Shares credited as fully paid by way of capitalisation of reserves)); and

• (b) any cash dividend or distribution of any kind by the Company for any financial period (whenever paid and however described).

However, a cash dividend is not included to the extent that it does not, on a per Share basis, when taken together with the aggregate of any other cash dividends previously made or paid in respect of the same financial year, exceed the greater of:

• (i) three (3) per cent. of the Average Closing Price of one (1) Share during the Relevant Period;

• (ii) thirty five (35) per cent. of the Company's consolidated net profits attributable to Shareholders after deducting minority interests and tax on a per Share basis for the financial year in relation to which such cash dividend is made; and

• (iii) A$0.005 per Share.

For a full definition please refer to the Conditions which have been announced to the ASX by the Company.

Change of Control has the meaning given in the Agreement.

Company means Central Petroleum Limited (ABN 72 083 254 308).

Competing Proposal means any initial, further or continuing approach, expression of interest, offer or proposal to or by or on behalf of any person other than the Subscriber involving a

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transaction which involves the issuance of bonds, debentures or other debt securities with features substantially similar to the Bonds to be issued under this Agreement.

Conditions means the terms and conditions of the Bonds.

Constitution means the Constitution of the Company

Conversion means the conversion of the Bonds held by the Bondholders into Shares in accordance with the terms of the Agreement and subject to the Conditions.

Conversion Date means the Stock Exchange Trading Day immediately following the date the Bondholder delivers a conversion notice, the certificate(s) for the Bonds, and the Application Form required for conversion. The Conversion Date must fall at a time when the Conversion Right is exercisable under the Conditions.

Conversion Price means the price at which Shares will be issued on the Conversion of a Bond determined in accordance with the Conditions.

Conversion Right means the right of a Bondholder to convert any Bond into Shares in accordance with the Conditions.

Convertible Securities has the meaning given in the Agreement.

Corporations Act means Corporations Act 2001 (Cth).

Corporations Regulations means the Corporations Regulations 2001 (Cth).

Current Market Price has the meaning given in the Conditions. Generally, it means, in respect of a Share at a particular time on a particular date, the average of the Closing Prices quoted by the ASX for one (1) Share (being a Share carrying full entitlement to dividend) for the 20 consecutive Trading Days ending on the Trading Day immediately preceding that date. There are other provisions that apply if at any time during the said 20 Trading Day period the Shares have been quoted ex-dividend and during some other part of that period the Shares were quoted cum-dividend. For a full definition please refer to the Conditions which have been announced to the ASX by the Company.

DBZ & Co. means D.B. Zwirn & Co., L.P.

DBZ Persons means the funds and other investment vehicles and private accounts directly or indirectly managed or advised by DBZ & Co. or its Affiliates.

Default Cure Amount means the amount equal to the product of X and Y where:

• X = the number of Shares that are required to be delivered by the Company to satisfy the Conversion Right in relation to such converting Bondholder

• Minus

the number of Shares that are actually delivered by the Company pursuant to such Bondholders' Conversion Notice; and

• Y = the Closing Price of the Shares as quoted by the ASX on the Conversion Date on the Conversion Date;

provided that if such Bondholder has received any payment under the Bonds pursuant to Condition 8, the amount of such payment will be deducted from the Default Cure Amount.

Director means a Director of the Company.

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Dollars or $ means Australian dollars.

Event of Default has the meaning given in the Agreement.

Fair Market Value means, with respect to any assets, securities, options, warrants or other rights on any date, the fair market value of that asset, security, option, warrant or other right as determined in good faith by a leading investment bank of international repute, selected by the Company and approved in writing by the Bondholders, acting as expert; provided that

• (i) the fair market value of a cash Dividend paid or to be paid per Share will be the amount of such cash Dividend per Share determined as at the date of announcement of such Dividend; and

• (ii) where options, warrants or other rights are publicly traded in a market of adequate liquidity (as determined by such investment bank) the fair market value of such options, warrants or other rights will equal the arithmetic mean of the daily closing prices of such options, warrants or other rights during the period of five (5) trading days on the relevant market commencing on the first such trading day such options, warrants or other rights are publicly traded.

Fixed Conversion Price means 125% of the average of the closing prices quoted by the ASX for one Share (being a Share carrying full entitlement to dividend) for the 25 consecutive Trading Days ending on the Trading Day immediately preceding the date of issue of the Bond.

General Meeting means the general meeting notified to the Shareholders by the Notice.

Harford Vantage means Harford Vantage Limited, a company incorporated in Singapore. Initial Completion Date has the meaning given in the Agreement.

Listing Rules means the Listing Rules from time to time of the ASX.

Loan Shares means the number of Shares calculated in accordance with the following formula:

$500,000 B = CP

Where:

B = the number of Loan Shares

CP = the closing market price quoted by the ASX on the date immediately prior to the date of issue of the Loan Shares

Managing Director has the meaning given in the Constitution.

Maturity Date means, in respect of any Bond, the date falling five (5) years after the date of issue of such Bond.

Minimum Conversion Price means A$0.15 as adjusted from time to time in accordance with the Conditions.

Reconstruction Terms means the those of the Conditions that are summarised in Schedule 4.

Relevant Event has the meaning given in the Conditions.

Notice means the notice of general meeting incorporating this Explanatory Statement.

Share means an ordinary fully paid share in the capital of the Company.

Share Lender means MPS Staff Super Fund Pty Ltd (ACN 113 730 555).

Shareholders means the shareholders of the Company.

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Stock Exchange Trading Day means any Trading Day as defined in the Listing Rules.

Subscriber means D.B. Zwirn Mauritius Trading No.3 Limited.

Trading Day means a Trading Day (as defined in the Listing Rules), provided that if no closing price is reported in respect of the Shares by the ASX or the ASX suspends or halts trading in Shares for one or more consecutive Trading Days such day or days will be disregarded in any relevant calculation and will be deemed not to have existed when ascertaining any period of Trading Days.

Tranche means a tranche of Bonds with an aggregate face value of $1,000,000 proposed to be issued in accordance with the Agreement.

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Schedule 2 Exploration Program Information

Part 1 Permits

Permit	Status	Graticular	Area in km2	Basin	Company	Remaining
		Blocks	(rounded to		Interest	Expenditure
			nearest 1,000)		(%)	Commitment
						($)
PELA 77	Application	75	6,000	Pedirka (Eringa Trough)	100	4,040,000
EPA 92	Application	200	16,000	Wiso (Lander Trough)	100	3,605,000
EP82	Granted	162	13,000	Amadeus	100	3,750,000
EP 93	Granted	117	9,000	Pedirka (Madigan Trough)	100	5,715,000
EP 105	Granted	185	15,000	Amadeus/Pedirka	100	2,440,000
EP 106	Granted	61	5,000	Amadeus/Pedirka	100	2,160,000
EP 107	Granted	92	7,000	Amadeus/Pedirka	100	3,200,000
EPA 111	Application	141	11,000	Amadeus	100	1,900,000
EP 112	Granted	200	16,000	Amadeus	100	1,900,000
EP 115	Granted	168	13,000	Amadeus	100	2,900,000
EPA 118	Granted	29	2,000	Amadeus	100	1,900,000
EPA 120	Application	12	1,000	Amadeus	100	1,300,000
EPA 124	Application	189	15,000	Amadeus	100	2,500,000
EP 125	Granted	125	10,000	Amadeus	100	2,500,000
EPA 129	Application	149	12,000	Wiso (Lander Trough)	100	8,200,000
EPA 130	Application	200	16,000	Pedirka	100	8,200,000
EPA 131	Application	29	2,000	Pedirka	100	8,200,000
EPA 132	Application	120	10,000	Georgina	100	5,600,000
EPA 133	Application	161	13,000	Amadeus	100	5,200,000
EPA 137	Application	108	8,000	Amadeus	100	6,400,000
EPA 147	Application	17	1,000	Amadeus	100	5,025,000
SPA 7-04/5	Application	375	30,000	Amadeus	100	400,000
ATP909	Application	34	3,000	Georgina	100	10,050,000
ATP911	Application	55	4,000	Georgina	100	9,950,000
ATP912	Application	93	7,000	Georgina	100	9,950,000
*South Range	Application	65	5,000	Amadeus	100	2,550,000
*ToddRiver	Application	41	3,000	Amadeus	100	5,025,000
			253,000			124,560,000

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Schedule 2 Exploration Program Information

Part 2 Planned Exploration Activities

Permit	Seismic 2D (km)	Exploration Drilling 2008	Estimated Cost ($M)	2007 Expenditure ($M)
EP 82	200	2	10.5	1.0
EP 93	200	1	6.0	0.5
EP 97	125	1	5.5	0.1
EP 105, 107, 93	0	3	3.0	0.1
EP 112	325	1	7.0	0.2
EP 115	250	1	6.0	0.2
EP 118	100	0	0.5	0.1
EP 125	0	1	4.5	1.8
TOTAL	1,200	10	43.0	4.0

As discussed above, these projections are subject to ongoing review and various contingencies. For more information refer to the explanatory statement for resolution one, in the paragraph entitled '(f) Intended use of the funds raised', under 'Further information required under the Listing Rules'.

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Schedule 3 Terms of the Bonds

The Bonds will not be quoted on the ASX. The following is a summary of the terms of the Bonds.

If you would like to view a full copy of the terms of the Bonds, please refer to the ASX announcement made by the Company on 20 November 2007. You can obtain a copy on the internet by going to http://www.asx.com.au/asx/statistics/announcementSearch.do and searching the ASX code 'CTP'.

1. Status

The Bonds constitute direct, unsubordinated, unconditional and unsecured obligations of the Company and will at all times rank pari passu and without any preference or priority amongst themselves. The payment obligations of the Company under the Bonds will, save for such exceptions as may be provided by mandatory provisions of applicable law and, at all times rank at least equally with all of its other present and future direct, unsubordinated, unconditional and unsecured obligations, other than subordinated obligations and priorities created by law.

2. Form and Denomination

The Bonds are issued in registered form in multiples of $10,000 and the Bond Certificates are serially numbered.

3. Transferability

The Bonds may not be transferred to any third parties that are not DBZ Persons unless otherwise agreed by the Company in writing.

4. Conversion

• (a) ( Conversion Right ) The Bonds may be converted, at the option of the Bondholder, at any time on and after the date of issue of such Bonds up to the close of business on the date of immediately preceding the Maturity Date.

• (b) ( Minimum Conversion Amount ) The minimum aggregate principle amount to be converted in any single conversion of Bonds is $250,000 (unless the Company otherwise agrees).

• (c) ( Conversion Price ) The conversion price will be (subject to the adjustments described below) the lower of:

• (i) 125% of the average of the closing prices quoted by the ASX for one Share (being a Share carrying full entitlement to dividend) for the 25 consecutive Trading Days ending on the Trading Day immediately preceding the date of issue of this Bond ( Fixed Conversion Price ); and

• (ii) 90% of the lowest average of the closing prices quoted by the ASX for one Share (being a Share carrying full entitlement to dividend) for any five-consecutive Trading Day period in the 25 consecutive Trading Days immediately preceding the Conversion Date (as defined below)

but subject to a Minimum Conversion Price of $0.15.

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The Conversion Price and the Fixed Conversion Price are subject to adjustment in certain circumstances, as described below.

• (d) ( Number of Shares issued on Conversion ) The number of Shares to be issued on conversion of a Bond will be determined by dividing the principal amount of the Bonds to be converted by the Conversion Price in effect at the Conversion Date (defined below) If more than one Bond held by the same Bondholder is converted at any one time by the same Bondholder, the number of Shares to be issued upon such conversion will be calculated on the basis of the aggregate principal amount of the Bonds to be converted.

The Conversion Date is the Stock Exchange Trading Day immediately following the date the Bondholder delivers a conversion notice, the certificate(s) for the Bonds, and the Application Form required for conversion. The Conversion Date must fall at a time when the Conversion Right is exercisable under the Conditions.

5. Adjustments to the Fixed Conversion Price

The Bondholders are protected from dilution by a number of formulae which apply to adjust the Fixed Conversion Price (and the Minimum Conversion Price) if dilutive or similar events occur (the Reconstruction Terms ). The Company has reviewed these formulae and has concluded that they are fair and reasonable.

Events which, under the Reconstruction Terms, may trigger an adjustment to the Fixed Conversion Price and the Minimum Conversion Price are:

• (a) a consolidation, subdivision or reclassification of Shares;

• (b) the capitalisation of profits or reserves (in certain circumstances only);

• (c) capital distributions;

• (d) rights issues of shares or options over shares, or other securities;

• (e) issues at less than the Current Market Price;

• (f) modifications of existing rights of conversion which would lead to conversion rights at less than the Current Market Price; and

• (g) other arrangements for issues to Shareholders generally by the Company or its subsidiaries.

These events, and any other requirements for adjustments to the Fixed Conversion Price that are not addressed in the Conditions, are subject to (at the Company's option and at its expense) the opinion of a leading investment bank acting as expert that the formulae are fair and reasonable.

A detailed summary of the Reconstruction Terms is set out in Schedule 4.

6. Undertakings

The Company undertakes that for so long as a Bond remains outstanding or until the Agreement is terminated, it will:

• (a) make available the Shares to be issued on Conversion;

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• (b) use its best endeavours to maintain its listing on the ASX and the quotation of the Shares, and ensure that trading in the Shares on the ASX is not halted or suspended;

• (c) maintain a prospectus validly lodged with ASIC;

• (d) pay the expenses of the issue and quotation of the Shares to be issued on conversion of the Bonds;

• (e) not to issue securities by way of capitalisation of reserves if it may give rise to an adjustment to the Fixed Conversion Price (subject to exceptions);

• (f) not to modify the rights attaching to Shares or issue preference shares (subject to exceptions);

• (g) not to extend the rights attaching to securities of the Company or its subsidiaries to be granted rights to subscribe for Shares at less than the Current Market Price unless this will trigger an adjustment to the Fixed Conversion Price (subject to exceptions);

• (h) give the Bondholders notice of certain issues at less than the Current Market Price and a certificate in relation to potential adjustments to the Fixed Conversion Price;

• (i) give notice of any offers made by third parties to all Shareholders to acquire all or a majority of the capital of the Company, and if the offer is recommended, and if lawful, use its best endeavours to ensure the offer is extended to Bondholders (and to shares issued on conversion during the period);

• (j) not close its register unless required by law or regulation;

• (k) make its best endeavours to seek certain consents in the case of merger;

• (l) comply with laws and the Conditions;

• (m) not issue, and ensure that its subsidiaries do not issue, Convertible Securities;

• (n) avoid insolvency and liquidation.

7. Default interest

Default interest at a rate of 6% will be payable on any amount the Company fails to pay by the due date under the Conditions.

8. Redemption

• (a) ( Maturity Date ) Unless previously redeemed, converted or transferred and cancelled, the Company will redeem each Bond at 100% of its principal amount on the date falling five (5) years after the date of issue of such Bond. The Company may not redeem the Bonds at its option prior to that date.

• (b) ( Put Option ) The Company must, at the option of the Bondholder, redeem all or some of the Bondholder's Bonds at any time after the date falling one (1) year from the date of issue of such Bonds as may be notified by that Bondholder, at the principal amount of the Bonds.

• (c) ( Other Put Options ) The Bondholder may require the Company to redeem the whole (but not part) of the Bondholder's Bonds if:

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• (i) there is a Relevant Event relating to a Change of Control of the Company; or

• (ii) the Company ceases to be admitted to the official list of the ASX.

• (d) ( Redemption for taxation reasons ) The Company may redeem all (but not some only) of the Bonds if there is a change of law in Australia that relates to tax, the effect of which the Company can not avoid by taking reasonable measures. In this instance interest at a rate of 6% from the date of issue will be payable

• (e) ( Issuers Put Right ) The Company may redeem all (but not some only) of the Bonds at any time after one year from the date of issue, at their principal amount plus interest accrued at the rate of six (6) per cent per annum from the date of issue of such Bonds up till the date of redemption.

• (f) ( Redemption for Event of Default ) The Company must redeem the Bonds upon receipt of a default notice relating to an Event of Default.

9. Events of Default

The Bonds will become immediately due and payable at the principal plus accrued interest if any of the following Events of Default have occurred:

• (a) any principal sum is not paid within five days of the due date;

• (b) there is a failure to deliver Shares within five days of the date for delivery;

• (c) there is non-compliance with the Conditions of the Agreement which is incapable of remedy or is not remedied within 30 days;

• (d) any warranty or representation becomes incorrect or untrue;

• (e) any necessary Australian regulatory approvals are withdrawn, suspended, not obtained, modified or restricted in an unacceptable way;

• (f) the Company or a subsidiary is insolvent or an event comparable to insolvency occurs;

• (g) there is a material cross default by the Company or a subsidiary;

• (h) there is legal process against the Company or a subsidiary that adversely affects its ability to comply with the Conditions or the Agreement;

• (i) there is an order for winding up the Company or a subsidiary, material to the group taken as a whole (subject to exceptions for reconstructions or changes which have no adverse effect);

• (j) a mortgagee, chargee or similar takes control of the Company or its subsidiaries (or a material part of their assets) and is not discharged in 30 days;

• (k) a material security over the assets of the Company or its subsidiaries becomes enforceable;

• (l) proceedings are instituted by or against the Company or a subsidiary which affect the Company's ability to perform the Agreement or the Conditions;

• (m) trading in the Shares on the ASX is halted or suspended for ten consecutive Trading Days;

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• (n) the Shares are delisted from the ASX;

• (o) the Company or a subsidiary ceases or threatens to cease carrying on its business;

• (p) there is a material change or development in international monetary, financial, political or economic conditions which is likely to materially prejudice the Company and its subsidiaries;

• (q) all or a material part of the assets of the company or its subsidiaries are seized, compulsorily acquired, expropriated or nationalised.

A Default Cure Amount may also be payable upon event of default.

10. Limitations on Merger

The Company will not merge with, or transfer all or substantially all of its assets to a third party, unless:

• (a) the merged entity assumes the Agreement;

• (b) the merger will not give rise to an Event of Default and no Event of Default will subsist immediately after it; and

• (c) the Bondholders are indemnified from adverse tax consequences.

11. Governing Law

The Bonds are governed by the laws of Western Australia.

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Schedule 4 Reconstruction Terms

The Fixed Conversion Price and the Minimum Conversion Price will be subject to adjustment if the following events occur.

1. A Consolidation, Subdivision or Reclassification of Shares

If the Company consolidates, subdivides or reclassifies its Shares, and that causes a change in the number of Shares, then the Fixed Conversion Price and the Minimum Conversion Price will be adjusted in accordance with the formula below.

In summary, the change in the Fixed Conversion Price / Minimum Conversion Price will mean that the number of Shares issued on conversion of a Bond will change in a way that is proportionate to the change in the issued share capital of the Company.

OCP x NSB

NCP =

NSA

where:

NCP: is the new Fixed Conversion Price / Minimum Conversion Price (as applicable); OCP: is the old Fixed Conversion Price / Minimum Conversion Price (as applicable); NSB: is the aggregate number of Shares immediately before the change; and NSA: is the aggregate number of Shares immediately after the change.

The adjustment will be effective on the date the change takes effect.

2. Capitalisation of Profits or Reserves

2.1 Shares issued by way of capitalisation of profits or reserves

An adjustment will apply if the Company issues any fully paid Shares to existing Shareholders by way of capitalisation of profits or reserves. This includes Shares paid up out of distributable profits or reserves, but does not include Shares that are issued in lieu of (in whole or part) a specifically declared cash dividend (the Relevant Cash Dividend ), if the Shareholders concerned would or could otherwise have received (a Scrip Dividend ) and which would not have constituted a Capital Distribution (as defined in the Conditions). Please see 2.2 below in relation to Scrip Dividends. The adjustment to the Fixed Conversion Price and the Minimum Conversion Price will be in accordance with the formula below.

In summary, the change in the Fixed Conversion Price / Minimum Conversion Price will mean that the number of Shares issued on conversion of a Bond will increase in a way that is proportionate to the increase in the issued share capital of the Company.

OCP x NSB NCP = NSA

where:

NCP: is the new Fixed Conversion Price / Minimum Conversion Price ; OCP: is the old Fixed Conversion Price / Minimum Conversion Price;

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NSB: is the aggregate number of Shares immediately before the change; and NSA: is the number of Shares immediately after the change.

2.2 Scrip Dividend

If the Company issues Shares by way of a Scrip Dividend, and the value of those Shares (using the Current Market Price) is greater than 105.0% of the amount of the Relevant Cash Dividend (or the relevant part of the cash dividend that would not have constituted a Capital Distribution), then an adjustment will apply. The formula that applies is set out below.

In summary, if the effective issue price of Shares issued by way of a Scrip Dividend is less than the Current Market Price, the change in the Fixed Conversion Price / Minimum Conversion Price will take into account both the number of Scrip Dividend Shares issued at a discount, and the amount of the discount.

The Fixed Conversion Price / Minimum Conversion Price will be adjusted by multiplying the Fixed Conversion Price in accordance with the following formula:

OCP x NSB + NSLD (RCD/CMP) NCP = NSA + NSLD

where:

NCP: is the new Fixed Conversion Price / Minimum Conversion Price;

OCP: is the old Fixed Conversion Price / Minimum Conversion Price;

NSB: is the aggregate number of Shares immediately before the change;

NSLD: is the aggregate number of Shares issued by way of the Scrip Dividend;

RCD: is the Relevant Cash Dividend or the relevant part of it;

CMP: is the Current Market Price of the Shares issued by way of Scrip Dividend in lieu of the whole, or the relevant part, of the Relevant Cash Dividend; and

NSA: is the number of Shares immediately after the change.

As an alternative, the Company may suggest an alternative adjustment and request that a leading investment bank of international repute (acting as an expert) certify to the Bondholders that the alternative is fair and reasonable. The Bondholders must approve the identity of the investment bank.

The adjustment will be effective on the date of issue of the Shares or, if a record date is fixed for the issue, immediately after the record date.

3. Capital Distributions

If the Company makes any Capital Distribution to the Shareholders the Fixed Conversion Price and the Minimum Conversion Price will be adjusted in accordance with the formula below. This does not apply where the Fixed Conversion Price / Minimum Conversion Price will be adjusted due to the Condition governing Scrip Dividends, which is explained in item 2.2 above.

In summary, the Fixed Conversion Price / Minimum Conversion Price will be reduced in a way that is proportionate to the per Share value of the Capital Distribution. This will

30

mean that the number of Shares issued on conversion of a Bond will increase in a way that is proportionate to the decrease in the capital retained by the Company.

NCP = OCP x [(CMP-FMV)/CMP]

where: NCP: is the new Fixed Conversion Price / Minimum Conversion Price; OCP: is the old Fixed Conversion Price / Minimum Conversion Price; CMP: is the Current Market Price of one (1) Share on the last Trading Day preceding the date on which the Capital Distribution is publicly announced; and FMV: is the Fair Market Value, on the date of the announcement, of the portion of the Capital Distribution attributable to one (1) Share.

The adjustment will be effective on the date that the Capital Distribution is made.

If the Capital Distribution is a cash dividend, then the only amount which will be counted as a Capital Distribution (to determine the Fair Market Value for the formula) will be the amount that exceeds (on a per Share basis, when taken together with the aggregate of any other cash dividends previously made or paid in respect of the same financial year) the greater of

• (i) three (3) per cent of the Average Closing Price of one (1) Share during the Relevant Period;

• (ii) thirty five (35) per cent. of the Company's consolidated net profits attributable to Shareholders after deducting minority interests and tax on a per Share basis for the financial year in relation to which the cash dividend is made; and

• (iii) A$0.005 per Share.

4. Rights / Entitlement Issues

4.1 Rights / entitlement issues of Shares or options over Shares

If the Company makes a rights or entitlement offer to all Shareholders (or a class of them), for the acquisition of options, warrants or other rights to subscribe for or purchase any Shares, at a price that is less than 95.0% of the Current Market Price per Share (calculated on the last Trading Day preceding the date of the announcement), then an adjustment will apply to the Fixed Conversion Price / Minimum Conversion Price in accordance with the formula below.

In summary, the Fixed Conversion Price / Minimum Conversion Price will be reduced in a way that is proportionate to the difference between the number of Shares or other securities issued at a discount under the entitlement issue, and the number of Shares that would have been issued for the same consideration at full Current Market Price.

NCP = OCP x	NSB + NSLI
	NSB + NSI

where:

NCP: is the new Fixed Conversion Price / Minimum Conversion Price;

OCP: is the old Fixed Conversion Price / Minimum Conversion Price;

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• NSB: is the aggregate number of Shares immediately before the change;

NSLI: is the number of Shares which the aggregate amount (if any) payable for the Shares issued by way of rights or for the options or warrants or other rights issued by way of rights would have obtained had they been purchased at the Current Market Price per Share at the time of the alteration; and

NSI: is the aggregate number of Shares issued or comprised in the issue or grant.

The adjustment will be effective on the date of issue of the Shares or issue or grant of the options, warrants or other rights.

4.2 Rights issues of other securities

If the Company makes a rights or entitlement offer of other securities (not covered in the Condition described in 4.1 above) to Shareholders or a class of them, the Fixed Conversion Price and the Minimum Conversion Price will be adjusted in accordance with the formula below.

In summary, the Fixed Conversion Price / Minimum Conversion Price will be reduced in a way that is proportionate to the difference between the Current Market Price of the Shares and the Fair Market Value attributable to the rights or entitlement offer attributable to one Share. The greater the Fair Market Value of the right or entitlement, the more the Fixed Conversion Price / Minimum Conversion Price will be reduced.

NCP = OCP x [(CMP-FMV)/CMP]

where:

NCP: is the new Fixed Conversion Price / Minimum Conversion Price;

OCP: is the old Fixed Conversion Price / Minimum Conversion Price; CMP: is the Current Market Price of one (1) Share on the last Trading Day preceding the date on which the issue or grant is publicly announced; and

FMV: is the Fair Market Value, on the date of the announcement, of the portion of the rights attributable to one (1) Share.

The adjustment will be effective on the date of issue of the securities or grant of the rights, options or warrants.

5. Issues at Less than Current Market Price

5.1 Issues of Shares and options at less than Current Market Price

If the Company issues any Shares options, warrants or other rights to subscribe for or purchase Shares at a consideration per Share which is less than 95.0% of the Current Market Price on the last Trading Day before the date of announcement of the terms of the issue, the Fixed Conversion Price and the Minimum Conversion Price will be adjusted in accordance with the formula below.

In summary, the Fixed Conversion Price / Minimum Conversion Price will be reduced in a way that takes into account:

• (i) the difference between the Current Market Price for Shares and the actual price payable for Shares under the terms of the issue; and

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• (ii) the number of Shares that the reduced price applies to.

This Condition does not include:

• (a) issues that are covered by the adjustment for rights / entitlement issues of Shares or options over Shares as described in 4.1 above; or

• (b) Shares issued on the exercise of Conversion Rights or on the exercise of any other rights of conversion into, or exchange or subscription for, Shares.

NCP = OCP x [(NSB + NS(CMP))/NSA]

where: NCP: is the new Fixed Conversion Price/ Minimum Conversion Price; OCP: is the old Fixed Conversion Price/ Minimum Conversion Price; NSB: is the aggregate number of Shares immediately before the alteration; NS (CMP): is the number of Shares which the aggregate consideration receivable for the issue of the additional Shares or the grant of the options, warrants or other rights to subscribe for or purchase any Shares would have obtained had the additional Shares or options or warrants or other rights been purchased at the Current Market Price per Share at the time of the alteration; and

NSA: is the aggregate number of Shares immediately after the alteration.

The adjustment will be effective on the date of issue of the additional Shares / the grant of the options, warrants or other rights.

5.2

Issues of other securities at less than Current Market Price

An adjustment will apply to the issue by:

• (a) the Company;

• (b) any subsidiary; or

• (c) someone else at the direction of the Company,

of any securities (other than the Bonds) which carry rights of conversion into, or exchange or subscription for, Shares to be issued by the Company at a consideration per Share which is less than 95.0% of the Current Market Price on the last Trading Day before the date of announcement of the terms of issue of the securities.

This Condition does not apply to:

• (d) an issue of securities arising from a conversion or exchange of other securities in accordance with the terms applicable where the securities themselves fall within the relevant Condition; or

• (e) an issue covered by the Conditions described in paragraphs 4 or 5.1 above.

The Fixed Conversion Price / Minimum Conversion Price will be adjusted in accordance with the formula below.

In summary, the Fixed Conversion Price / Minimum Conversion Price will be reduced in a way that takes into account:

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• (i) the difference between the Current Market Price for Shares and the actual price payable for Shares on conversion / exercise under the terms of the issue; and

(ii) the number of Shares that the reduced price applies to.

NCP = OCP x [NSB + NS[CMP])/(NSB + NS [ICP])]

where:

NCP: is the new Fixed Conversion Price / Minimum Conversion Price; OCP: is the old Fixed Conversion Price / Minimum Conversion Price; NSB: is the aggregate number of Shares immediately before the change; NS[CMP]: is the number of Shares which the aggregate consideration receivable by the Company for the Shares to be issued on conversion or exchange or on exercise of the right of subscription attached to the securities would have obtained had the conversion or exchange or exercise of the right of subscription been effected at the Current Market Price per Share at the time of the alteration; and

NS[ICP]: is the maximum number of Shares to be issued had the conversion or exchange of the securities or on the exercise of the rights of subscription attached thereto been effected at the initial conversion or exchange or subscription price or rate.

The adjustment will be effective on the date of issue of the securities.

6. Modifications of Rights of Conversion

There will be an adjustment if there is any modification of the rights of conversion attaching to convertible securities that is not in accordance with their terms, and that results in the consideration per Share payable on conversion is less than 95.0% of the Current Market Price on the last Trading Day preceding the date of announcement of the proposals for modification.

If this occurs, the Fixed Conversion Price / Minimum Conversion Price will be adjusted in accordance with the formula below.

In summary, the adjustment will cause a reduction in the Fixed Conversion Price / Minimum Conversion Price that is proportionate to the difference between the number of Shares that would be issued on conversion if they were issued at the Current Market Price and the number of Shares that will be issued on conversion having regard to the modified rights.

NCP = OCP x [(NSB+NS[CMP])/(NSB+NS[FMV])]

where:

NCP: is the new Fixed Conversion Price / Minimum Conversion Price; OCP: is the old Fixed Conversion Price / Minimum Conversion Price; NSB: is the aggregate number of Shares immediately before the change; NS[CMP]: is the number of Shares which the aggregate consideration (if any) receivable by the Company for the Shares to be issued, or otherwise made available, on conversion or exchange or on exercise of the right of

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subscription attached to the securities (in each case so modified) would have obtained had the conversion or exchange or exercise (as modified) been effected at the Current Market Price per Share at the time of the change; and

• NS[FMV]: is the maximum number of Shares to be issued, or otherwise made available, on conversion or exchange of the securities at the modified conversion price or rate.

If there has been any previous adjustment in relation to the same securities, a leading investment bank of international repute may report on the adjustment it considers appropriate for the previous adjustment, and that will be taken into account.

The adjustment will be effective on the date of modification of the rights of conversion.

7. Other Offers

If the Company or any subsidiary enters into arrangements for the issue, sale or distribution of any securities, pursuant to which the Shareholders generally are entitled to participate in an acquisition of securities, the Fixed Conversion Price and the Minimum Conversion Price will be adjusted in accordance with the formula below.

In summary, the adjustment will result in a change to the Fixed Conversion Price / Minimum Conversion Price that is proportionate to the Fair Market Value of the rights acquired by Shareholders on a per Share basis.

NCP = OCP x [(CMP-FMV)/CMP]

where: NCP: is the new Fixed Conversion Price / Minimum Conversion Price; OCP: is the old Fixed Conversion Price / Minimum Conversion Price;

CMP: is the Current Market Price of one (1) Share on the last Trading Day preceding the date on which the issue is publicly announced; and

FMV: is the Fair Market Value, on the date of the announcement, of the portion of the rights attributable to one (1) Share.

The adjustment will be effective on the date of issue of the securities.

8. Other Events

If the Company considers that:

• (a) an adjustment to the Fixed Conversion Price and the Minimum Conversion Price should be made that is not provided for; or

• (b) an adjustment provided for in the Reconstruction Terms is inappropriate or incorrect,

then it shall request that a leading investment bank of international repute (acting as an expert) determine as soon as practicable:

• what adjustment (if any) to the Fixed Conversion Price/ Minimum Conversion Price is fair and reasonable; and

35

• the date on which the adjustment should take effect.

The adjustment will be made in accordance with the determination.

The Company must bear the cost of the determination, and the determination must be made by an investment Bank that the Bondholder has approved.

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PROXY FORM

GENERAL MEETING 21[st] December 2007

The Directors Central Petroleum Limited PO Box 197 South Perth Western Australia 6951

I/We ................................................................................................................................

of .....................................................................................................................................

being a member(s) of Central Petroleum Limited hereby appoint

......................................................................................................................................... of ..................................................................................................................................... or failing him ....................................................................................................................

of .....................................................................................................................................

or if no person is named, the Chairman of the meeting as my/our proxy to vote for me/us and on my/our behalf at the GENERAL MEETING of the members of the Company to be held on the 21[st] December 2007 and at any adjournment thereof in the manner indicated below or in the absence of indication as he thinks fit or abstain from voting.

The Chair intends to vote all undirected proxies in favour of all resolutions.

If the Chair of the meeting is appointed as your proxy, or may be appointed by default and you do not wish to direct your proxy how to vote as your proxy in respect of a resolution, please place a mark in the box.

• By marking this box, you acknowledge that the Chair of the meeting may exercise your proxy even if he has an interest in the outcome of the resolution/s and that votes cast by the Chair of the meeting for those resolutions other than as proxy holder will be disregarded because of that interest.

• If you do not mark this box, and you have not directed your proxy how to vote, the Chair will not cast your votes on the resolution and your votes will not be counted in calculating the required majority if a poll is called on the resolution.

1A. To issue Bonds to the Subscriber

1B. To issue Bonds to the Subscriber

1. To issue Shares to MPS Staff Super Fund Pty Ltd

For Against Abstain For Against Abstain For Against Abstain

If two proxies are being appointed, the proportion of voting rights this proxy is appointed to represent is: ...................

Dated this ................................ day of ......................................2007

Signature of member ..............................................................................................

37

Notice of Annual General Meeting

38

NOTICE OF ANNUAL GENERAL MEETING

The Annual General Meeting of Central Petroleum Limited (the Company ) will be held at its registered office, Level 4 South Shore Centre, 85 South Perth Esplanade, South Perth, Western Australia on Friday the 21[st] of December 2007 at 10.30 a.m. Western Standard Time, for the purpose of transacting the business below.

The Explanatory Statement and the Proxy Form accompanying this Notice are incorporated in and comprise part of this Notice.

BUSINESS

1. Annual Report for year ended 30 June 2007

To receive the Annual Report of the Company for the period ended 30 June 2007 which includes the Financial Report of the Company, the Directors’ Report, the Remuneration Report and the Report of the Auditor, Stantons International. During the consideration of these items Shareholders are invited to ask questions or make comments on:

• the Financial Report of the Company for the period ended 30 June 2007;

• the Directors’ Report in relation to that period; and

• the Report of the Auditor on the Financial Report.

A representative of the Company's Auditor is anticipated to be in attendance to respond to any questions raised of the Auditor or on the Auditor's Report in the terms of s 250T of the Corporations Act.

2. Re-election of Richard W Faull as a Director

To consider and if thought fit to pass, with or without amendment, the following as an ordinary resolution:

Resolution 1

"THAT Mr Richard W Faull, who will retire as a Director by rotation in accordance with Article 13.2 of the Constitution, who is eligible for re-election as a Director in accordance with that article, and who offers himself for re election, be re elected as a Director with immediate effect."

3. Re-election of William J Dunmore as a Director

To consider and if thought fit to pass, with or without amendment, the following as an ordinary resolution:

Resolution 2

"THAT Mr William J Dunmore, who will retire as a Director by rotation in accordance with Article 13.2 of the Constitution, who is eligible for re-election as a Director in accordance with that article, and who offers himself for re election, be re elected as a Director with immediate effect."

4.

Issue of Options to Directors

To consider and if thought fit to pass, respectively as separate and independent ordinary resolutions, with or without amendment, each of the following:

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Resolution 3

"THAT for the purposes of ASX Listing Rule 10.11 and section 208 of the Corporations Act 2001 (Cth), and for all other purposes, the meeting approves and authorises the Directors to grant to Mr John P Heugh, the managing director of the Company, 5,000,000 options to acquire fully paid ordinary shares of the Company, which:

• (a) will have staged escalating conversion prices which will be calculated on the basis set out in the Explanatory Statement accompanying this Notice;

• (b) may be exercised at any time up until 48 months after the date of issue; and

• (c) are to be issued on the terms and conditions particularised in the Explanatory Statement accompanying this Notice."

Voting Exclusion Statement

For the purposes of ASX Listing Rule 10.13.6 and Section 224 of the Corporations Act 2001 (Cth), and all other purposes, the Company will disregard any votes cast on the Resolution by John P Heugh and any of his associates. However, the Company need not disregard a vote if:

• (a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or

• (b) it is cast by a person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

Resolution 4

• "THAT for the purposes of ASX Listing Rule 10.11 and section 208 of the Corporations Act 2001 (Cth), and for all other purposes, the meeting approves and authorises the Directors to grant to Dr Henry J Askin, a director of the Company, 2,000,000 options to acquire fully paid ordinary shares of the Company, which:

• (a) will have staged escalating conversion prices which will be calculated on the basis set out in the Explanatory Statement accompanying this Notice;

• (b) may be exercised at any time up until 48 months after the date of issue; and (c) are to be issued on the terms and conditions particularised in the Explanatory Statement accompanying this Notice."

Voting Exclusion Statement

For the purposes of ASX Listing Rule 10.13.6 and Section 224 of the Corporations Act 2001 (Cth), and all other purposes, the Company will disregard any votes cast on the Resolution by Dr Henry J Askin and any of his associates. However, the Company need not disregard a vote if:

• (a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or

• (b) it is cast by a person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

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Resolution 5

"THAT for the purposes of ASX Listing Rule 10.11 and section 208 of the Corporations Act 2001 (Cth), and for all other purposes, the meeting approves and authorises the Directors to grant to Mr Richard W Faull, a director of the Company, 2,000,000 options to acquire fully paid ordinary shares of the Company, which:

• (a) will have staged escalating conversion prices which will be calculated on the basis set out in the Explanatory Statement accompanying this Notice;

• (b) may be exercised at any time up until 48 months after the date of issue; and

• (c) are to be issued on the terms and conditions particularised in the Explanatory Statement accompanying this Notice."

Voting Exclusion Statement

For the purposes of ASX Listing Rule 10.13.6 and Section 224 of the Corporations Act 2001 (Cth), and all other purposes, the Company will disregard any votes cast on the Resolution by Richard W Faull and any of his associates. However, the Company need not disregard a vote if:

• (a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or

• (b) it is cast by a person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

Resolution 6

"THAT for the purposes of ASX Listing Rule 10.11 and section 208 of the Corporations Act 2001 (Cth), and for all other purposes, the meeting approves and authorises the Directors to grant to Mr William J Dunmore, a director of the Company, 2,000,000 options to acquire fully paid ordinary shares of the Company, which:

• (a) will have staged escalating conversion prices which will be calculated on the basis set out in the Explanatory Statement accompanying this Notice;

• (b) may be exercised at any time up until 48 months after the date of issue; and

• (c) are to be issued on the terms and conditions particularised in the Explanatory Statement accompanying this Notice."

Voting Exclusion Statement

For the purposes of ASX Listing Rule 10.13.6 and Section 224 of the Corporations Act 2001 (Cth), and all other purposes, the Company will disregard any votes cast on the Resolution by William J Dunmore and any of his associates. However, the Company need not disregard a vote if:

(a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or (b) it is cast by a person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

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5. Adoption of Remuneration Report

To consider and, if thought fit, to pass the following as an ordinary resolution:

Resolution 7

"THAT the Remuneration Report for the year ended 30 June 2007 be adopted."

The Remuneration Report is set out on pages 14 and 15 of the 2007 Annual Report. Please note that the vote on this resolution is advisory only, and does not bind the Directors or the Company.

6. Other Business

In compliance with section 250S(1) of the Corporations Act 2001 (Cth) the members are invited to ask questions about or make comments on the management of the Company and to raise any other business which may lawfully be brought before the meeting.

BY ORDER OF THE BOARD

==> picture [101 x 45] intentionally omitted <==

Marco A Di Silvio Company Secretary Perth, Western Australia Date: 20 November 2007

Notes on proxies

• (a) The Company has determined that, for the purposes of this Annual General Meeting, all shares in the Company shall be taken to be held by the person who held shares as registered shareholders at 7:00 pm on Wednesday, 19 December 2007 ( Effective Time ).

• (b) All holders of shares in the Company as at the Effective Time are entitled to attend and vote at this Annual General Meeting and may appoint a proxy to attend this Annual General Meeting and vote in that member’s stead.

• (c) A proxy need not be a member of the Company.

• (d) The proxy form sent with this Notice should be used for this Annual General Meeting.

• (e) Each Shareholder who is entitled to cast 2 or more votes at this Annual General Meeting, may appoint 2 persons to act as proxies and may specify the proportion or number of votes that each proxy is entitled to exercise. If a Shareholder does not specify the proportion or number of that Shareholder’s votes each proxy may exercise, then each proxy will be entitled to exercise half of the votes. An additional proxy form will be supplied by the Company on request.

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• (f) In the case of an individual, a proxy must be under the hand of the individual or his or her attorney duly authorised in writing and, in the case of a corporation, a proxy must be executed by the corporation under common seal, pursuant to Section 127 of the Corporations Act or under the hand of its duly authorised officer or attorney.

• (g) Any member may by power of attorney appoint an attorney to act on his or her behalf and such power of attorney or certified copy thereof must be received by the Company as specified in paragraph (i).

• (h) Any corporation which is a member of the Company may appoint a representative to attend and vote for that corporation at the Annual General Meeting. Appointments of representatives by corporations must be received by the Company as specified in paragraph (i) or handed in at the Annual General Meeting when registering as a company representative.

• (i) Proxies and powers of attorney granted by Shareholders must be received by the Company by 10:30 am on Wednesday, 19 November 2007 at:

• (i) The registered office of the Company – Level 4 South Shore Centre, 85 South Perth Esplanade, South Perth, Western Australia; or

• (ii) By facsimile at the registered office of the Company – facsimile number +61 8 9474 1555.

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EXPLANATORY STATEMENT

THIS EXPLANATORY STATEMENT accompanies and forms part of the Notice of Meeting convening the Annual General Meeting ( AGM ) of Shareholders of Central Petroleum Limited ABN 72 083 254 308 (the Company ) at the Registered Office, Level 4 South Shore Centre, 85 South Perth Esplanade, South Perth, Western Australia on Friday the 21[st] of December 2007 at 10.30 a.m. Western Standard Time.

This Explanatory Statement is to provide Shareholders with explanatory notes and information relevant to the meeting and its business. This Explanatory Statement should be read in conjunction with the accompanying Notice.

Explanatory Notes

Resolution 1: Re-election of Mr Richard W Faull as a Director

It is a requirement under Article 13.2 of the Constitution that at the Annual General Meeting in every year one third of the Directors retire from office. The Directors to retire are those who have been longest in office since their last election (not including the Managing Director, who is exempted from this requirement under Article 17.4 of the Constitution). Accordingly, Mr Richard W Faull will retire at the end of the Annual General Meeting in accordance with this requirement and offers himself for re-election.

Information about Mr Richard W Faull is set out below:

Richard W Faull Bcom CPA, age 62

Position: Non-Executive Director

Term of Office: First appointed on 2 July 1998

Independent: No, Mr Faull was employed in an executive capacity until 25 September 2007

Current External Directorships: Director and Company Secretary of Fleurieu Mines NL and Barranco Resources NL.

Skills, Experience and Expertise: Mr Faull has over 25 years experience as a director, executive and company secretary in mining and petroleum exploration companies in Australia. Mr Faull has a degree in Commerce from the University of Western Australia and is a member of CPA Australia. Mr Faull was a founding Director of the Company and served as Finance Director and Company Secretary from 1998 until September 2007.

Recommendation of Board

The Board recommends that Shareholders vote in favour of the resolution re-electing Mr Richard W Faull.

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Resolution 2: Re-election of Mr William J Dunmore as a Director

It is a requirement under Article 13.2 of the Constitution that at the Annual General Meeting in every year one third of the Directors retire from office. The Directors to retire are those who have been longest in office since their last election (not including the Managing Director, who is exempted from this requirement under Article 17.4 of the Constitution). Accordingly, Mr William J Dunmore will retire at the end of the Annual General Meeting in accordance with this requirement and offers himself for re-election.

Information about Mr William J Dunmore is set out below:

Mr William J Dunmore BSc MSc, age 57

Position: Non-Executive Director

Term of Office: First appointed on 8 April 2005

Independent: Yes

Current External Directorships: Nil

Skills, Experience and Expertise: Mr Dunmore is an experienced reservoir and production engineer with significant transaction, analysis and financial modelling experience gained by consultancies and employment with a number of banks, financial institutions and petroleum companies including HBOS, Rothschilds, Gaffney Cline and Associates, BHP Petroleum, Schlumberger, Hardman, Mobil, Lasmo, Petrobas, CSX, Total, Nippon Oil, Powergen, Mosobacher, Unocal and Svenska Petroleum. He has over 30 years of direct relevant experience internationally.

Recommendation of Board

The Board recommends that Shareholders vote in favour of the resolution re-electing Mr William J Dunmore.

Resolutions 3, 4, 5, and 6: Issue of Options to Directors

Details

The effect and purpose of Resolutions 3, 4, 5 and 6 is to authorise the grant to Directors of a total of 11,000,000 options to acquire fully paid ordinary shares of the Company for the consideration calculated in accordance with Tables A and B, exercisable after the exercise dates shown in Table B and within 48 months of issue.

On 15 October 2007, the Board resolved to issue the options described in this Notice, to each of Mr John Heugh, Dr Henry Askin, Mr Richard Faull and Mr William Dunmore, all subject to receiving the approval of Shareholders.

Tables A and B below show what types of options will be issued, how the exercise prices for each type of option will be calculated, and when they may be exercised.

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Table A: Types of Options to be Issued

Name of Participating Director	Number of Class 'A' Options	Number of Class 'B' Options	Number of Class 'C' Options	Number of Class 'D' Options	Number of Class 'E' Options	Total
Mr John Heugh	1,000,000	1,000,000	1,000,000	1,000,000	1,000,000	5,000,000
Dr Henry Askin	400,000	400,000	400,000	400,000	400,000	2,000,000
Mr Richard Faull	400,000	400,000	400,000	400,000	400,000	2,000,000
Mr William Dunmore	400,000	400,000	400,000	400,000	400,000	2,000,000

Table B: Exercise Price, Exercise Date and Expiry Date

Class of Option	Exercise Price	Exercise Date on or after	Expiry Date on or before
Class 'A' Options	The Benchmark Price, which is the price calculated as 50% above the trade weighted average share trading price during the 5 business days immediately preceding the grant date of ‘A’ Options.	Date of issue	48 months from date of issue
Class 'B' Options	15% greater than ‘A’ Options	Date of issue	48 months from date of issue
Class 'C' Options	15% greater than ‘B’ Options	Date of issue	48 months from date of issue
Class 'D' Options	15% greater than ‘C’ Options	Date of issue	48 months from date of issue
Class 'E' Options	15% greater than ‘D’ Options	Date of issue	48 months from date of issue

Approvals Required

Chapter 2E of the Corporations Act regulates the provision of financial benefits to related parties by a public company. In particular, section 208 of the Corporations Act prohibits a public company giving a financial benefit to a related party of the company without shareholder approval, unless sanctioned by an exception to that section (which exceptions either do not apply or are not sought to be relied upon by the Company in the present circumstances). A director of a company is a related party for the purposes of the Corporations Act .

As each of Mr John Heugh, Dr Henry Askin, Mr Richard Faull and Mr William Dunmore is a director of the Company, the grant of the Options may be prohibited by Section 208 of the Corporations Act as providing a financial benefit to a related party.

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Pursuant to section 208 of the Corporations Act , a public company is permitted to give a financial benefit to a related party of that company if:

• (a) it obtains the approval of its members in the way set out in sections 217 to 227 of the Corporations Act; and

• (b) it gives the benefit within 15 months after the approval.

Further, ASX Listing Rule 10.11 requires that a listed company obtain shareholder approval by ordinary resolution prior to the issue of securities (including an option) to a related party. If approval is given under ASX Listing Rule 10.11, approval is not required under ASX Listing Rule 7.1 (refer to ASX Listing Rule 7.2 Exception 14).

Accordingly, approval for the issue of the Options to Mr John Heugh, Dr Henry Askin, Mr Richard Faull and Mr William Dunmore is required pursuant to Listing Rule 10.11 and s 208 of the Corporations Act .

Further information

Corporations Act

Section 219 of the Corporations Act specifies matters which must be addressed in an explanatory statement for the purposes of a notice convening a meeting to obtain the approval of the Shareholders for the issuing of the Options to each of Mr John Heugh, Dr Henry Askin, Mr Richard Faull and Mr William Dunmore. For the purposes of section 219 of the Corporations Act , the following information is therefore set out:

• (a) Re lated parties to whom the proposed resolution would permit financial benefits to be given:

• Mr John P Heugh (Resolution 3)

• Dr Henry J Askin (Resolution 4)

• Mr Richard W Faull (Resolution 5)

• Mr William J Dunmore (Resolution 6)

• (b) Nature of the financial benefits:

The financial benefits provided to the relevant Directors under Resolutions 3, 4, 5, and 6 are options issued by the Company which will entitle each of the relevant Directors to acquire fully paid ordinary shares in the Company exercisable within 48 months of the date of issue for the relevant exercise price explained in Table B, irrespective of the then current market value or share price of the Company's ordinary shares. The Directors, at their absolute discretion, may or may not exercise the Options to so acquire further ordinary shares.

The Directors will not be required to make any payment for the issue of the Options pursuant to the proposed Resolutions.

The Company has obtained independent advice from Asean Corporate Services Pty Ltd about the value of the Options, and has determined the fair value of the Options as set out below. The Binomial option pricing model has been applied. The Company has taken into account, as at 12 October 2007

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(the assumed date of issue used for the purposes of this valuation), the following variables and assumptions:

• (i) ( exercise price ) for the purpose of the valuation, the exercise price has been calculated assuming an issue date of 12 October 2007, and using the closing price of the shares on that date, $0.25, as the underlying value. This gave rise to a Benchmark Price of $0.375, and therefore the following exercise prices:

Class 'A' Options	Class 'B' Options	Class 'C' Options	Class 'D' Options	Class 'E' Options
$0.375	$0.431	$0.496	$0.57	$0.656

The actual exercise price will be determined by the formula set out in Schedule 2 which will be applied immediately before the Options are issued.

• (ii) ( expected life of the instrument ) the Options will expire, should they not previously be exercised, no later than 48 months after they are issued. It has been assumed that the Options will not be exercised earlier than the expiry dates set out in Table B;

• (iii) ( current price of the underlying share ) the share price at the valuation date (12 October 2007) is $0.25, based on the last sale of shares on ASX as at 12 October 2007;

• (iv) ( expected volatility ) price volatility of the shares of the Company is approximately 75%;

• (v) ( expected dividends ) there are no dividends presently expected to be paid in respect of the underlying shares; and

• (vi) ( the risk-free interest rate for the expected life of the instrument ) the risk free rate is the Commonwealth Government securities rate with a maturity date approximating that of the expiration period of the Options as at 12 October 2007, which is equal to 6.25%.

The date of 12 October 2007 was selected for the purposes of the valuation so that this information could be provided to Shareholders in advance of the actual issue date. The price of the actual Options will be determined according to the formula set out in Schedule 2 applied immediately before the issue of the Options.

On this basis, the implied values of the Options are as follows:

Value of 'A' Options	Value of 'B' Options	Value of 'C' Options	Value of 'D' Options	Value of 'E' Options
$0.097	$0.085	$0.069	$0.050	$0.031

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Accordingly, the cumulative value of the Options to be issued to each director is as follows:

Name of Participating Director	Total Value of Options ($)
Mr John Heugh	332,000
Dr Henry Askin	132,800
Mr Richard Faull	132,800
Mr William Dunmore	132,800
TOTAL	730,400

By way of information the highest and lowest market price of listed ordinary shares of the Company during the 12 months immediately preceding 12 October 2007 is set out below:

	12 Month High	12 Month Low	Last Market Sale Price as at 12 October 2007
Ordinary Share Price	$0.26	$0.10	$0.25

(c) Directors' recommendations to members and reasons

The Directors' recommendation to members and their reasons for that recommendation with respect to Resolutions 3, 4, 5 and 6 are as follows:

• (i) Recommendation of Board

• Recommend vote in favour of each of the Resolutions it being noted that:

• John P Heugh abstained from voting on Resolution 3 due to his conflict of interest as the intended recipient of the relevant Options, and all other Directors voted in favour.

• Dr Henry J Askin abstained from voting on Resolution 4 due to his conflict of interest as the intended recipient of the relevant Options, and all other Directors voted in favour.

• Richard W Faull abstained from voting on Resolution 5 due to his conflict of interest as the intended recipient of the relevant Options, and all other Directors voted in favour.

• William J Dunmore abstained from voting on Resolution 6 due to his conflict of interest as the intended recipient of the relevant Options, and all other Directors voted in favour.

• (ii) Reasons for Directors’ Recommendations:

Each of the Directors making the recommendations considers that Resolutions 3, 4, 5 and 6 are in the best interests of the Company as

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recognition of each of the relevant Directors' continued contribution to the Company’s progress to date and to further incentivise their ongoing performance and commitment to the Company.

In addition, as the current market for suitably qualified senior personnel is increasingly competitive in the oil and gas industry, the Company seeks to secure the services of the Directors through this important period of growth for the Company

Shareholders should be aware, however, that:

• the passing of Resolution 3 will result in John P Heugh becoming entitled to 5,000,000 new options in the Company;

• the passing of Resolution 4 will result in Dr Henry J Askin becoming entitled to 2,000,000 new options in the Company;

• the passing of Resolution 5 will result in Richard W Faull becoming entitled to 2,000,000 new options in the Company; and

• the passing of Resolution 6 will result in William J Dunmore becoming entitled to 2,000,000 new options in the Company; and

• the passing of one or more of Resolutions 3, 4, 5 and 6 will result in, on any exercise of the Options in due course, a dilution in the percentage shareholding of the Company's shareholders and the benefit of an enhancement of the Company’s capital base by reason of the receipt by the Company of the consideration or exercise price payable.

The number of shares in the Company on issue as at 12 October 2007 was 175,923,503. Subject to the issue of shares pursuant to the exercise of the proposed new Options and assuming no other securities have been issued in the meantime, the aggregate number of shares in the Company would be 186,925,503. The proposed new Options, on exercise in full, represent 11,000,000 shares or 5.88% of that fully diluted capital base.

Ultimately, approval of each of the Resolutions by Shareholders is entirely a decision for each Shareholder to be made by exercising his or her own judgment. Shareholders are encouraged to seek such expert advice on the matter as they consider appropriate.

(d) Directors’ interests in the outcome of Resolutions 3, 4, 5 and 6:

If Resolution 3 for the issue of Options to Mr John P Heugh is passed, he will become entitled to the relevant Options the subject of that resolution together with the option rights and entitlements associated with being a proprietor of those Options.

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If Resolution 4 for the issue of Options to Dr Henry J Askin is passed, he will become entitled to the relevant Options the subject of that resolution together with the option rights and entitlements associated with being a proprietor of those Options.

If Resolution 5 for the issue of Options to Mr Richard W Faull is passed, he will become entitled to the relevant Options the subject of that resolution together with the option rights and entitlements associated with being a proprietor of those Options.

If Resolution 6 for the issue of options to Mr William J Dunmore is passed, he will become entitled to the relevant Options the subject of that resolution together with the option rights and entitlements associated with being a proprietor of those Options.

The total anticipated remuneration of the proposed Participating Directors for the 2007/2008 financial year (including remuneration by way of superannuation and payment to consultant companies of which the Participating Director is a director, but excluding the Options) is as follows:

Participating Director	Total remuneration
Mr John Heugh, Managing Director	$316,100
Dr Henry Askin, Non-Executive Chairman	$76,300
Mr Richard Faull, Non Executive Director	$54,500
Mr William Dunmore, Non Executive Director	$25,000

The Directors are also entitled to reimbursement of all reasonable travelling, accommodation and other expenses incurred in executing their duties as Directors, in accordance with Article 13.8 of the Constitution.

• (e) Other information known to the Company:

Other than as provided for in this Explanatory Statement, there is no other information known to the Company or any of its Directors that is reasonably required by Shareholders in order to decide whether or not it is in the Company’s best interests to pass Resolutions 3, 4, 5 and 6.

ASX Listing Rules

ASX Listing Rule 10.13 sets out a number of matters which must be included in a notice of meeting proposing an approval under ASX Listing Rule 10.11.

For the purposes of ASX Listing Rule 10.13, the following further information is provided in relation to Resolutions 3, 4, 5 and 6:

• (a) ( name of person and maximum number of securities to be issued ) See Table A above.

• (b) ( issue date ) it is proposed that the Options will be issued by no later than 30 December 2007. The Options are exercisable at the absolute discretion of each of John P Heugh, Dr Henry J Askin, Richard W Faull and William J

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Dunmore, during the period which they may validly be exercised as shown in Table B, and on the terms described in Schedule 2 to this Notice.

• (c) ( terms of the securities ) Appendix 1 of this Explanatory Statement sets out the key terms in respect of the Options.

The shares which will be issued upon exercise of the Options will be fully paid ordinary shares and will be on the same terms as the currently issued fully paid ordinary shares in the Company.

• (d) ( the issue price of the Options ) The relevant Directors will not be required to make any payment for the issue of the Options pursuant to the proposed Resolution, although the relevant Director will be required to pay the exercise price per option (calculated in accordance with Table B) if exercised in due course. A dollar value of the financial benefit of the Options to the relevant Directors, as valued under the Black-Scholes option pricing model, together with the Binomial methodology, is set out above.

• (e) ( use or intended use of the funds raised ) there are no funds raised in connection with the issue of the Options to the relevant Directors under Resolutions 3, 4, 5 and 6 as the Options are to be issued without payment of cash consideration. The proceeds from a future exercise of the Options, however, is likely to be applied towards meeting working capital requirements of the Company relevant at, or about the time of, the exercise of the Options at the discretion of the Board.

Comparative information

By way of further information for the benefit of the Shareholders, the following comparative information is presented.

Set out below is a table of the existing shares and Options of the Company held by John P Heugh, Dr Henry J Askin, Richard W Faull and William J Dunmore and, for comparison, the Options to be issued pursuant to the proposed Resolutions.

Name of Participating Director	Total Securities Held Directly or Indirectly	Total Securities Held Directly or Indirectly	Proposed Options under Resolutions 3, 4, 5 and 6	Total % Holding on a Fully Diluted Basis*
	Shares	Options#
Mr John P Heugh	5,265,001	5,132,500	5,000,000	8.51%
Dr Henry J Askin	1,000,000	900,000	2,000,000	1.96%
Mr Richard W Faull	1,400,001	1,700,000	2,000,000	2.87%
Mr WilliamJDunmore	600,000	600,000	2,000,000	1.80%

* Assumes the Options are granted, and all options held by Mr John P Heugh, Dr Henry J Askin, Mr Richard W Faull, and Mr William J Dunmore (but no other options in the company) are exercised and no further securities are issued by the Company.

These include options issued to Mr John P Heugh and Mr Richard W Faull as remuneration and also include options purchased on market.

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The pro forma capital structure of the Company is summarised in the table below. The table assumes the issue of the 11,000,000 Options is passed under Resolutions 3, 4, 5 and 6 (but unexercised).

No of Shares	Contributed Equity
166,633,639	Quoted Ordinary Fully Paid Shares
10,789,864	Unquoted Ordinary Fully Paid Shares*
No of Existing Options
95,961,760	Exercisable on or before 30 June 2010 $0.25
300,000	Exercisable on or before 31 January 2010 $0.25
21,250,000	Exercisable on or before 31 May 2010 $0.20
8,000,000	Exercisable on or before 20 February 2011 $0.25
3,450,000	Exercisable on or before 30 November 2010 $0.30
No of New Options
11,000,000	Exercisable in accordance with Table B

* These shares are restricted securities

Resolution 7: Adoption of Remuneration Report

The Remuneration Report for the financial year ended 30 June 2007 is set out on pages 14 and 15 of the 2007 Annual Report.

The Remuneration Report sets out the Company's remuneration arrangements for all Directors.

Section 250R(2) of the Corporations Act requires a resolution that the Remuneration Report be adopted be put to the vote at this Annual General Meeting. In the terms of section 250R(3) of the Corporations Act, the vote on the resolution is advisory only and does not bind the Directors or the Company.

Section 250SA of the Corporations Act requires that a reasonable opportunity be allowed to Shareholders at the meeting to ask questions about, or make comments on, the Remuneration Report.

Recommendation of Board

The Directors recommend that Shareholders vote in favour of the resolution to adopt the Remuneration Report.

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Schedule 1 Definitions

AASB means the Australian Accounting Standards Board.

Annual General Meeting means the annual general meeting notified to the Shareholders by the Notice.

ASIC means Australian Securities and Investments Commission.

ASX means ASX Limited.

Board means the Board of Directors of the Company.

Business Day has the meaning ascribed to it in the Listing Rules.

Company means Central Petroleum Limited (ABN 72 083 254 308).

Constitution means the Constitution of the Company

Corporations Act means Corporations Act 2001 (Cth).

Corporations Regulations means the Corporations Regulations 2001 (Cth).

Director means a Director of the Company.

Listing Rules means the Listing Rules from time to time of the ASX.

Managing Director has the meaning given in the Constitution.

Notice means the notice of annual general meeting incorporating this Explanatory Statement.

Options means the options proposed to be issued to Directors pursuant to Resolution 3, 4, 5 and 6, and includes Class 'A', Class 'B', Class 'C', Class 'D' and Class 'E' options.

Share means an ordinary fully paid share in the capital of the Company.

Shareholders means the shareholders of the Company.

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Schedule 2 Summary of Terms and Conditions of the Options

A summary of the key terms of the proposed Options is as follows.

1. Definitions

The definitions used in the Notice of Meeting relating to the Annual General Meeting of the Central Petroleum Limited to be held on 21 December 2007 apply.

The following additional definitions apply:

Benchmark Price means the price calculated as 50% above the trade weighted average share trading price during the 5 business days immediately preceding the grant date of Class ‘A’ Options.

Option Class means either Class 'A', Class 'B', Class 'C', Class 'D' or Class 'E'.

Option Exercise Price means the exercise price set out in item 4, as adjusted in accordance with these Option terms.

2. Entitlement

Each Option entitles the holder to subscribe for one Share upon exercise of the Option, as adjusted in accordance with these Option terms.

3. Table to Calculate the Exercise Price, Exercise Date and Expiry Date

Class of Option (column 1)	Exercise Price (EP) (column 2)	Exercise Date on or after (column 3)	Expiry Date on or before (column 4)
1.Class 'A' Options	EP = The Benchmark Price	Date of issue	48 months from date of issue
2.Class 'B' Options	EP = 1.15 x The Benchmark Price (theClass B Price)	Date of issue	48 months from date of issue
3.Class 'C' Options	EP = 1.15 x The Class B Price (the Class C Price)	Date of issue	48 months from date of issue
4.Class 'D' Options	EP = 1.15 x The Class C Price (the Class D Price)	Date of issue	48 months from date of issue
5.Class 'E' Options	EP = 1.15 x The Class D Price (the Class E Price)	Date of issue	48 months from date of issue

4. Exercise Price

• (a) Each Class A Option is exercisable at the Benchmark Price.

• (b) Each Class B Option is exercisable at the Class B Price.

• (c) Each Class C Option is exercisable at the Class C Price.

• (d) Each Class D Option is exercisable at the Class D Price.

• (e) Each Class E Option is exercisable at the Class E Price.

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5. Exercise Period

The Options are exercisable at any time:

• (a) on or subsequent to the Exercise Date shown in column 3 in item 3 opposite the relevant Option Class; and

• (b) on or prior to the Expiry Date shown in column 4 in item 3 opposite the relevant Option Class.

6. Notice of Exercise

The Options may be exercised by delivering to the Company Secretary:

• (a) the certificate for the Options, or, if the certificate has been lost, a declaration to that effect in the usual form has been made;

• (b) an exercise notice in writing, signed by the Director, and otherwise in the form reasonably required by the Company; and

• (c) payment of the amount equal to the Option Exercise Price multiplied by the number of options which are being exercised.

Any notice of exercise of an Option received by the Company will be deemed to be a notice of the exercise of that Option as at the date of receipt.

7. Issue of Shares

After an Option is validly exercised as described in item 6, as soon as possible the Company must (subject to the Listing Rules) issue and allot the Shares in respect of which the Option is exercised, including any adjustments arising (described in item 14). The Company must apply for the Shares issued on conversion of any Options to be quoted in accordance with the Listing Rules.

8. Shares issued on exercise

Shares issued on exercise of the Options rank equally with the ordinary shares of the Company.

9.

Secondary Trading

• (a) The Company may, in its absolute discretion:

• (i) Issue a notice under section 708A of the Corporations Act within 5 business days of the issue of the Shares pursuant to item 7, in accordance with the requirements of the Corporations Act; or

• (ii) if the Company does not issue the a notice under item 9(a)(i), the Director to whom the Shares have been issued is prohibited from selling, transferring or granting, issuing or transferring interests in, or options over the Shares for a period of twelve months from their date of issue.

• (b) If item 9(a)(ii) applies, that Director must comply with its requirements and must take any action reasonably required by the Company in relation to those requirements.

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10. Quotation of Shares on exercise

Application will be made by the Company to ASX for official quotation of the Shares issued:

• (a) if item 9(a)(i) applies, upon the exercise of the Options; and

• (b) if item 9(a)(ii) applies after the expiration of twelve months from the date of issue.

11. Lapsing of Options

If the Director ceases to be any of an employee or director, or to render services to, the Company ( Ceasing ), the Options will lapse at the time after Ceasing that the Board determines.

12. Participation in new issues

Holders of Options are not entitled to participate in new issues of capital offered to Shareholders during the currency of the Options. However, the Company will ensure that for the purposes of determining entitlements to any such issue, the record date will be at least ten business days after the issue is announced. This will give holders of Options the opportunity to exercise their Options prior to the date for determining entitlements to participate in any such issue.

13. Adjustment for rights issue

If the Company makes an issue of Shares pro rata to existing Shareholders (other than an issue in lieu of in satisfaction of dividends or by way of dividend reinvestment) the Exercise Price of an Option will be reduced according to the formula specified in the Listing Rules.

14. Adjustment for bonus issues of Shares

If the Company makes a bonus issue of Shares or other securities to existing Shareholders (other than an issue in lieu or in satisfaction, of dividends or by way of dividend reinvestment):

• (a) the number of Shares which must be issued on the exercise of an Option will be increased by the number of Shares which the Option holder would have received if the Option holder had exercised the Option before the record date for the bonus issue; and

• (b) no change will be made to the Exercise Price.

15. Adjustments for reorganisation

If there is any reconstruction of the issued share capital of the Company, the rights of the holders of Options will be varied to comply with any Listing Rules which apply to the reconstruction at the time of the reconstruction.

16. Quotation of Options

No application for quotation of the Options will be made by the Company.

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17. Options non-transferable

The Options are non-transferable.

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PROXIES PROXY FORM

ANNUAL GENERAL MEETING 21[st] December 2007

The Directors Central Petroleum Limited PO Box 197 South Perth Western Australia 6951

I/We ................................................................................................................................ of .....................................................................................................................................

being a member(s) of Central Petroleum Limited hereby appoint

......................................................................................................................................... of ..................................................................................................................................... or failing him .................................................................................................................... of .....................................................................................................................................

or if no person is named, the Chairman of the meeting as my/our proxy to vote for me/us and on my/our behalf at the ANNUAL GENERAL MEETING of the members of the Company to be held on the 21[st] December 2007 and at any adjournment thereof in the manner indicated below or in the absence of indication as he thinks fit or abstain from voting.

The Chair intends to vote all undirected proxies in favour of all resolutions.

If the Chair of the meeting is appointed as your proxy, or may be appointed by default and you do not wish to direct your proxy how to vote as your proxy in respect of a resolution, please place a mark in the box.

• By marking this box, you acknowledge that the Chair of the meeting may exercise your proxy even if he has an interest in the outcome of the resolution/s and that votes cast by the Chair of the meeting for those resolutions other than as proxy holder will be disregarded because of that interest.

• If you do not mark this box, and you have not directed your proxy how to vote, the Chair will not cast your votes on the resolution and your votes will not be counted in calculating the required majority if a poll is called on the resolution.

1. To re-elect Mr RW Faull

2. To re-elect Mr WJ Dunmore

1. To issue Options to Mr JP Heugh

2. To issue Options to Dr HJ Askin

3. To issue Options to Mr RW Faull

For Against Abstain For Against Abstain For Against Abstain For Against Abstain For Against Abstain

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1. To issue Options to Mr WJ Dunmore

2. Adoption of remuneration Report

For Against Abstain For Against Abstain

If two proxies are being appointed, the proportion of voting rights this proxy is appointed to represent is ...................

Dated this ................................ day of ......................................2007

Signature of member ..............................................................................................

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Terms of the Bonds

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Terms and Conditions of the Bonds

The following other than the words in italics is the text of the terms and conditions of the Bonds which will appear on the reverse of each of the definitive certificates evidencing the Bonds:

The issue of A$1,000,000 in aggregate principal amount of redeemable zero coupon convertible bonds (the Bonds ), which term shall include, unless the context requires otherwise, any further Bonds issued in accordance with Condition 15 and consolidated and forming a single series therewith), of Central Petroleum Limited (the Issuer ) is pursuant to a Bond Subscription Agreement dated [ � ] 2007 (as the same may from time to time be amended, modified or supplemented) (the Agreement ) between the Issuer and D.B. Zwirn Mauritius Trading No. 3 Limited (the Subscriber ), and was authorised by a resolution of the Board of Directors of the Issuer passed on [●] 2007. The statements in these terms and conditions (these Conditions ) include summaries of, and are subject to, the detailed provisions of the Agreement. Unless otherwise defined, terms used in these Conditions have the meaning specified in the Agreement. Copies of the Agreement are available for inspection at the registered office of the Issuer being at the date hereof at Suite 3, Level 4 South Shore Centre, 85 The Esplanade, South Perth, Western Australia, 6151. The Bondholders are entitled to the benefit of the Agreement and are bound by, and are deemed to have notice of, all the provisions of the Agreement applicable to them.

1. Status

The Bonds constitute direct, unsubordinated, unconditional and unsecured obligations of the Issuer and shall at all times rank pari passu and without any preference or priority among themselves. The payment obligations of the Issuer under the Bonds shall, save for such exceptions as may be provided by mandatory provisions of applicable law and, at all times rank at least equally with all of its other present and future direct, unsubordinated, unconditional and unsecured obligations, other than subordinated obligations and priorities created by law.

2. Form, denomination and title

2.1 Form and denomination

The Bonds are issued in registered form in the denomination of A$10,000 each or integral multiples thereof. A bond certificate (each a Certificate ) will be issued to each Bondholder in respect of its registered holding of Bonds. Each Bond and each Certificate will be numbered serially with an identifying number which will be recorded on the relevant Certificate and in the register of Bondholders which the Issuer will procure to be kept by the share registrar of the Issuer (the Registrar ).

2.2 Title

Title to the Bonds passes only by transfer and registration in the register of Bondholders as described in Condition 3. The holder of any Bond will (except as otherwise required by law or ordered by a court of competent jurisdiction) be treated as its absolute owner for all purposes (whether or not it is overdue and regardless of any notice of ownership, trust or any interest in it or any writing on, or the theft or loss of, the Certificate issued in respect of it) and no person will be liable for so treating the holder. In these Conditions, ' Bondholder ' and (in relation to a Bond) ' holder ' means the person in whose name a Bond is registered in the Register.

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3. Transfers of Bonds; Issue of Certificates

3.1 Register

The Issuer will cause to be kept at the specified office of the Registrar a register on which shall be entered the names and addresses of the holders of the Bonds and the particulars of the Bonds held by them and of all transfers of the Bonds (the Register ).

3.2 Transfer Restrictions

Unless otherwise agreed in writing with the Issuer, a Bond may not be assigned to any third party other than persons who are DBZ Persons who are able to make the representation and Warranties set out in Schedule 10 to the Agreement. Any assignee will be bound by the terms of this Bond as if a party to it.

3.3 Transfers

Subject to Conditions 3.2 and 3.6, a Bond may be transferred or exchanged by delivery of the Certificate issued in respect of that Bond, with the form of transfer on the back duly completed and signed by the holder or his attorney duly authorised in writing (a copy of such authorisation to be attached to the form of transfer), to the specified office of the Registrar. No transfer of title to a Bond will be valid unless and until entered on the Register.

3.4

Delivery of New Certificates

• 3.4.1 Each new Certificate to be issued upon a transfer or exchange of Bonds will, within seven Business Days of receipt by the Registrar of the form of transfer duly completed and signed, be made available for collection at the specified office of the Registrar or, if so requested in the form of transfer, be mailed by registered mail at the risk of the holder entitled to the Bonds (but free of charge to the holder) to the address specified in the form of transfer. The form of transfer is available at the specified office of the Registrar.

• 3.4.2 Where only part of a principal amount of the Bonds (being that of one or more Bonds) in respect of which a Certificate is issued is to be transferred, exchanged or converted, a new Certificate in respect of the Bonds not so transferred, exchanged or converted will, within seven Business Days of delivery of the original Certificate to the Registrar, be made available for collection at the specified office of the Registrar or, if so requested in the form of transfer, be mailed by registered mail at the risk of the holder of the Bonds not so transferred, exchanged or converted (but free of charge to the holder) to the address of such holder appearing on the Register.

3.5

Formalities free of charge

Registration of a transfer of Bonds will be effected without charge by or on behalf of the Issuer, but upon (i) payment (or the giving of such indemnity as the Issuer may require) in respect of any tax or other governmental charges which may be imposed in relation to such transfer; and (ii) the Issuer being satisfied that the regulations concerning transfer of Bonds have been complied with.

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3.6 Closed periods

No Bondholder may require the transfer of a Bond to be registered (i) during the period of 15 days ending on (and including) the date for redemption pursuant to Condition 6.1; (ii) after a Conversion Notice and Application Form (both as defined in Condition 4.2) have been delivered with respect to a Bond; (iii) after a Put Option Notice (as defined in Condition 6.4) has been deposited in respect of such a Bond; (iv) after a Relevant Event Put Exercise Notice (as defined in Condition 6.5) has been deposited in respect of such a Bond; or (v) after a Purchase Notice (as defined in Condition 6.6) has been deposited in respect of such a Bond, each such period being a ' Closed Period '.

3.7 Regulations

All transfers of Bonds and entries on the Register will be made subject to the detailed regulations concerning transfer of Bonds as set out in Conditions 3.1 to 3.6 above. The regulations may be changed by the Issuer, with the prior written approval of the Bondholders whose approval shall not be unreasonably withheld. A copy of the current regulations will be mailed (free of charge) by the Registrar to any Bondholder upon request.

4. Conversion

4.1 Conversion Right

• 4.1.1 Conversion Period: Subject as hereinafter provided, Bondholders have the right to convert their Bonds into Shares at any time during the Conversion Period referred to below.

The right of a Bondholder to convert any Bond into Shares is called the ' Conversion Right '. Subject to and upon compliance with the provisions of this Condition, the Conversion Right attaching to any Bond may be exercised, at the option of the holder thereof, at any time on and after the date of issue of such Bond up to the close of business on the date immediately preceding the Maturity Date (as defined in Condition 6.1) (but, except as provided in Condition 4.1.5, in no event thereafter) ( the Conversion Period ).

Notwithstanding the foregoing, if the Conversion Date in respect of a Bond would otherwise fall during a period in which the register of members of the Issuer is closed generally or for the purpose of establishing entitlement to any dividend, distribution or other rights attaching to the Shares ( a Book Closure Period ), such Conversion Date shall be postponed to the first Stock Exchange Trading Day (as defined in Condition 4.2) after the expiry of such Book Closure Period. Any exercise of a Conversion Right shall be deemed to be ineffective and, subject to Condition 4.1.5, shall be deemed to have expired if, as a result of any postponement pursuant to this paragraph, the Conversion Date would fall on a day after expiry of the Conversion Period or, in the case of the exercise of such rights as aforesaid, after the relevant redemption date. The Issuer undertakes to ensure that the Book Closure Period is as short a period as is reasonably practicable, having regard to applicable Australian law.

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The number of Shares to be issued on conversion of a Bond will be determined by dividing the principal amount of the Bond to be converted by the Conversion Price in effect at the Conversion Date (both as hereinafter defined). A Conversion Right may only be exercised in respect of one or more Bonds, subject to the minimum conversion amount set out in Condition 4.1.2. If more than one Bond held by the same holder is converted at any one time by the same holder, the number of Shares to be issued upon such conversion will be calculated on the basis of the aggregate principal amount of the Bonds to be converted.

• 4.1.2 Minimum Conversion Amount: Unless otherwise agreed by the Issuer, the minimum aggregate principal amount of bonds to be converted in any single conversion of Bonds shall be A$250,000. The Issuer may reject any Conversion Notice (as defined in Condition 4.2) which relates to a request for Conversion of Bonds of an aggregate principal amount of less than A$250,000.

• 4.1.3 Fractions of Shares: Fractions of Shares will not be issued on conversion and no cash adjustments will be made in respect thereof. Notwithstanding the foregoing, in the event of a consolidation or reclassification of Shares by operation of law or otherwise occurring after the date of the Agreement which reduces the number of Shares outstanding, the Issuer will upon conversion of Bonds pay in cash (in Australian Dollars by means of an Australian Dollar cheque drawn on a bank in Australia) a sum equal to such portion of the principal amount of the Bond or Bonds evidenced by the Certificate deposited in connection with the exercise of Conversion Rights, aggregated as provided in Condition 4.1.1, as corresponds to any fraction of a Share not issued if such sum exceeds A$10.

• 4.1.4 Conversion Price: The price at which Shares will be issued upon conversion of a Bond, as adjusted from time to time ( the Conversion Price ) will initially be equal to the lower of:

• 4.1.4.1 125 per cent of the average of the closing prices quoted by the ASX for one (1) Share (being a Share carrying full entitlement to dividend) for the twenty five (25) consecutive Trading Days ending on the Trading Day immediately preceding the date of issue of this Bond ( Fixed Conversion Price ); and

• 4.1.4.2 90 per cent of the lowest average of the closing prices quoted by the ASX for one (1) Share (being a Share carrying full entitlement to dividend) for any five-consecutive Trading Day period in the twenty five (25) consecutive Trading Days immediately preceding the Conversion Date (as defined in Conditions 4.2.1.2, 4.2.1.3 or 4.2.1.5 as the case may be),

but will be subject to adjustment in the manner provided in Condition 4.3, Provided that if either Conditions 4.1.4.1 or 4.1.4.2 above are less than A$0.150 (as adjusted from time to time in accordance with Condition 4.7) ( the Minimum Conversion Price ), the initial Conversion Price shall be the Minimum Conversion Price.

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• 4.1.5 Revival or survival after Default: Notwithstanding the provisions of Condition 4.1.1, if (a) the Issuer shall default in making payment in full in respect of any Bond which shall have been called for redemption on the date fixed for redemption thereof, (b) any Bond has become due and payable prior to the Maturity Date (as defined in Condition 6.1) by reason of the occurrence of any of the events referred to in Condition 8, (c) any Bond is not redeemed on the Put Option Date (as defined in Condition 6.4) or (d) any Bond is not redeemed on the Maturity Date in accordance with Condition 6.1, the Conversion Right attaching to such Bond will revive or will continue to be exercisable up to, and including, the close of business on the date upon which the full amount of the moneys payable in respect of such Bond has been duly received by the Bondholders and notice of such receipt has been duly given to the Issuer and, notwithstanding the provisions of Condition 4.1.1, any Bond in respect of which the Certificate, Application Form and Conversion Notice are deposited for conversion prior to such date shall be converted on the relevant Conversion Date (as defined in Condition 4.2.1.5) notwithstanding that the full amount of the moneys payable in respect of such Bond shall have been received by the Bondholder before such Conversion Date or that the Conversion Period may have expired before such Conversion Date.

• 4.1.6 Meaning of 'Shares': As used in these Conditions, the expression ' Shares ' means ordinary shares of the Issuer (which include ordinary shares of the Issuer listed on the ASX) or shares of any class or classes resulting from any subdivision, consolidation or re-classification of those shares, which as between themselves have no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation or dissolution of the Issuer.

• 4.2 Conversion procedure

• 4.2.1 Conversion notice:

  • 4.2.1.1 To exercise the Conversion Right attaching to any Bond, the holder thereof must complete, execute and deposit at his own expense to the Issuer:

    • 4.2.1.1.1 a notice of conversion (a Conversion Notice ) substantially in the form attached as Appendix A hereto;

    • 4.2.1.1.2 the application form attached to the current Offering Document issued by the Issuer in accordance with the Agreement ( Application Form ), for the number of Shares to be issued in accordance with the Conversion Notice; and

    • 4.2.1.1.3 the relevant Certificate.

  • 4.2.1.2 If, after a Bondholder exercises its Conversion Right in accordance with Condition 4.2.1.1, the Issuer gives the Bondholder notice in accordance with Clause 4.1.8.1 of the Agreement that it will lodge a supplementary or replacement disclosure document with ASIC:

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• (a) the Issuer must provide the Bondholder with the supplementary or replacement disclosure document as lodged with ASIC together with the new Application Form as soon as reasonably practicable, and in any event within three (3) Business Days after the Issuer gives the Bondholder notice in accordance with Clause 4.1.8.1;

(b) the Bondholder must either:

  - (i) revoke the Conversion Notice at any time up to one (1) Business Day after receiving the supplementary or replacement disclosure document by notice in writing to the Issuer; or

  - (ii) complete the new Application Form relating to that supplementary or replacement disclosure document and promptly return it to the Issuer within one (1) Business Day of receiving the supplementary or replacement disclosure document; and

• (c) if the Bondholder returns the Application Form to the Issuer under Condition 4.2.1.2(b)(ii), then the Conversion Date in respect of the conversion for the purpose of calculating the Conversion Price under Condition 4.1.4.2 will be the date the Issuer receives the new Application Form.

• 4.2.1.3 If a Bondholder exercises the Conversion Right during the period after the Issuer is obliged to issue a notice under Clause 4.1.8.1 of the Agreement, and before the Issuer has lodged a supplementary or replacement disclosure document with ASIC in accordance with Clause 4.1.8.2:

• (a) the Issuer must provide the Bondholder with the supplementary or replacement disclosure document as lodged with ASIC together with the new Application Form as soon as reasonably practicable, and in any event within three (3) Business Days after the Issuer gives the Bondholder notice in accordance with Clause 4.1.8.1;

• (b) the Bondholder must complete the new Application Form relating to that supplementary or replacement disclosure document and promptly return it to the Issuer within one (1) Business Day of receiving the supplementary or replacement disclosure document ; and

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• (c) the Conversion Date in respect of the conversion for the purpose of calculating the Conversion Price under Condition 4.1.4.2 will be the date that the Issuer receives the new Application Form in accordance with Condition 4.2.1.3(b).

• 4.2.1.4 The Issuer agrees that where the Bondholder is not located in Western Australia, the Conversion Notice, the Application Form and the Certificate will be effective if sent by facsimile or e-mail to the Issuer together with a copy of the Certificate, with the originals of the Conversion Notice and Certificate to follow by courier. Any notice sent by facsimile is deemed served at the time indicated on the transmission report produced by the sender's facsimile indicating that the facsimile was sent in its entirety to the addressee's facsimile. Any notice sent by electronic mail is deemed served at the time the sender receives an e-mail confirming receipt.

If the Issuer or the holder receives any communication via electronic mail from the other, the recipient must send a return email acknowledging receipt as soon as practicable and:

• (a) if the electronic mail is received before 3:30 pm in the time zone of the recipient on a Business Day, on the same Business Day; and

• (b) if the electronic mail was received after 3:30 pm in the time zone of the recipient on a Business Day, by no later than 10:30 am on the next Business Day.

• 4.2.1.5 The conversion date in respect of a Bond ( the Conversion Date ) must fall at a time when the Conversion Right attaching to that Bond is expressed in these Conditions to be exercisable (subject to the provisions of Condition 4.1.5) and will be deemed to be the Stock Exchange Trading Day (as defined below) immediately following the date of the surrender of the Certificate in respect of such Bond and delivery of the Conversion Notice, Application Form and, if applicable, any payment to be made or indemnity given under these Conditions in connection with the exercise of such Conversion Right. A Conversion Notice once delivered shall be irrevocable and may not be withdrawn unless the Issuer consents to such withdrawal. ' Stock Exchange Trading Day' means any Trading Day as defined in the Listing Rules.

4.2.2 Registration:

• 4.2.2.1 The Conversion Deadline will be:

• (a) if Condition 4.2.1.2 applies, one (1) Business Day after the new Application Form is received by the Issuer under Condition 4.2.1.2(b)(ii);

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• (b) if Condition 4.2.1.3 applies, five (5) Business Days from the date of the Bondholder delivering the documents referred to in Condition 4.2.1.1; or

• (c) in any other case, three (3) Business Days from the date of the Bondholder delivering the documents referred to in Condition 4.2.1.1.

• 4.2.2.1 As soon as practicable, and in any before the Conversion Deadline, the Issuer will, in the case of Bonds converted on exercise of the Conversion Right and in respect of which a duly completed Conversion Notice and Application Form has been delivered and the relevant Certificate and amounts payable by the relevant Bondholder deposited or paid, as required by Conditions set out in 4.2.1, procure that the relevant number of Shares are allotted to and registered in the name of the relevant Bondholder or in accordance with the instructions contained in the Conversion Notice (subject to applicable exchange control or other laws or regulations) and that a holding statement is delivered to the relevant Bondholder or in accordance with such instructions.

• 4.2.2.2 If the Conversion Date in relation to any Bond shall be after the record date for any issue, distribution, grant, offer or other event as gives rise to the adjustment of the Conversion Price pursuant to Condition 4.3, but before the relevant adjustment becomes effective under the relevant Condition, upon the relevant adjustment becoming effective the Issuer shall procure the issue to the converting Bondholder (or in accordance with the instructions contained in the Conversion Notice (subject to applicable exchange control or other laws or other regulations), such additional number of Shares as, together with the Shares issued or to be issued on conversion of the relevant Bond, is equal to the number of Shares which would have been required to be issued on conversion of such Bond if the relevant adjustment to the Conversion Price had been made and became effective immediately after the relevant record date.

• 4.2.2.3 The person or persons designated in the Conversion Notice will become the holder of record of the number of Shares issuable upon conversion with effect from the date it is or they are registered as such in the Issuer's register of members or subregister (the Registration Date ). The Shares issued upon conversion of the Bonds will in all respects rank pari passu with the Shares in issue on the relevant Registration Date. Save as set out in these Conditions, a holder of Shares issued on conversion of Bonds shall not be entitled to any rights the record date for which precedes the relevant Registration Date.

• 4.2.2.4 If the record date for the payment of any dividend or other distribution in respect of the Shares is on or after the Conversion Date in respect of any Bond, but before the Registration Date (disregarding any retroactive adjustment

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of the Conversion Price referred to in this Condition 4.2.2 prior to the time such retroactive adjustment shall have become effective), the Issuer will pay to the converting Bondholder or his designee an amount (the Equivalent Amount ) in Australian Dollars equal to the Fair Market Value (as defined in Condition 4.4.6) of any such dividend or other distribution to which he would have been entitled had he on that record date been such a shareholder of record and will make the payment at the same time as it makes payment of the dividend or other distribution, or as soon as practicable thereafter, but, in any event, not later than seven days thereafter. The Equivalent Amount shall be paid by means of an Australian Dollar cheque drawn on a bank in Australia and sent to the address specified in the relevant Conversion Notice.

• 4.2.3 Public Announcement : The Issuer shall release a public announcement notifying the ASX and its investors of any Conversion not later than one (1) Business Day after the relevant number of Shares are allotted to and registered in the name of the relevant Bondholder or in accordance with the instructions contained in the Conversion Notice.

4.3 Adjustments to Fixed Conversion Price

The Fixed Conversion Price will be subject to adjustment in the following events:

• 4.3.1 Consolidation, Subdivision or Reclassification: If and whenever there shall be an alteration to the number of the Shares as a result of consolidation, subdivision or reclassification, the Fixed Conversion Price shall be adjusted in accordance with the following formula:

NCP = OCP x NSB

NSA

where:

NCP: is the new Fixed Conversion Price;

OCP: is the old Fixed Conversion Price;

• NSB: is the aggregate number of Shares immediately before such alteration; and

• NSA: is the aggregate number of Shares immediately after such alteration.

Such adjustment shall become effective on the date the alteration takes effect.

4.3.2 Capitalisation of profits or reserves:

• 4.3.2.1 If and whenever the Issuer shall issue any Shares credited as fully paid to the holders of the Shares (the Shareholders ) by way of capitalisation of profits or reserves including Shares paid up out of distributable profits or reserves, save where

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Shares are issued in lieu of the whole or any part of a specifically declared cash dividend (the Relevant Cash Dividend ), being a dividend which the Shareholders concerned would or could otherwise have received ( a Scrip Dividend ) and which would not have constituted a Capital Distribution (as defined in Condition 4.4.2), the Fixed Conversion Price shall be adjusted in accordance with the following formula:

NCP = OCP x NSB NSA

where:

NCP: is the new Fixed Conversion Price;

• OCP: is the old Fixed Conversion Price;

• NSB: is the aggregate number of Shares immediately before such alteration; and

• NSA: is the number of Shares immediately after such alteration.

4.3.2.2 In the case of an issue of Shares by way of a Scrip Dividend where the Current Market Price of such Shares exceeds 105.0 per cent of the amount of the Relevant Cash Dividend or the relevant part thereof and which would not have constituted a Capital Distribution, the Fixed Conversion Price shall be adjusted by multiplying the Fixed Conversion Price in accordance with the following formula:

NCP = OCP x NSB + NSLD ( RCD / CMP ) NSB + NSLD

where:

NCP: is the new Fixed Conversion Price; OCP: is the old Fixed Conversion Price;

NSB: is the aggregate number of Shares immediately before such alteration;

NSLD: is the aggregate number of Shares issued by way of such Scrip Dividend;

• RCD: is the Relevant Cash Dividend or the relevant part thereof; and

CMP: is the Current Market Price of the Shares issued by way of Scrip Dividend in lieu of the whole, or the relevant part, of the Relevant Cash Dividend.

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OR by making such other adjustment as a leading investment bank of international repute (acting as an expert), selected by the Issuer and approved in writing by the Bondholders, shall certify to the Bondholders is fair and reasonable.

Such adjustment shall become effective on the date of issue of such Shares or, if a record date is fixed for such issue, immediately after such record date.

• 4.3.3 Capital Distribution: If and whenever the Issuer shall pay or make any Capital Distribution (as defined in Condition 4.4.2) to the Shareholders (except where the Fixed Conversion Price falls to be adjusted under Condition 4.3.2.2 above), the Fixed Conversion Price shall be adjusted in accordance with the following formula:

NCP = OCP x [[(CMP-FMV)] /CMP]

where:

• NCP: is the new Fixed Conversion Price;

• OCP: is the old Fixed Conversion Price;

• CMP: is the Current Market Price of one (1) Share on the last Trading Day preceding the date on which the Capital Distribution is publicly announced; and

• FMV: is the Fair Market Value, on the date of such announcement, of the portion of the Capital Distribution attributable to one (1) Share.

Such adjustment shall become effective on the date that such Capital Distribution is made.

When the Capital Distribution is by means of distribution of a cash dividend, only such portion of cash dividend or distribution which exceeds the amounts referred to in Condition 4.4.2.1 (the excess portion ) shall be regarded as Capital Distribution and only the excess portion shall be taken into account in the determination of the Fair Market Value of the portion of the Capital Distribution attributable to one (1) Share.

• 4.3.4 Rights Issues of Shares or Options over Shares: If and whenever the Issuer shall issue Shares to all or substantially all Shareholders as a class by way of rights, or issue or grant to all or substantially all Shareholders as a class, by way of rights, options, warrants or other rights to subscribe for or purchase any Shares, in each case at less than 95.0 per cent. of the Current Market Price (as defined below) per Share on the last Trading Day preceding the date of the announcement of the terms of such issue or grant, the Fixed Conversion Price shall be adjusted in accordance with the following formula:

==> picture [141 x 27] intentionally omitted <==

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where:

NCP: is the new Fixed Conversion Price;

OCP: is the old Fixed Conversion Price;

NSB: is the aggregate number of Shares immediately before such alteration;

NSLI: is the number of Shares which the aggregate amount (if any) payable for the Shares issued by way of rights or for the options or warrants or other rights issued by way of rights would have obtained had such Shares or options or warrants or other rights issued by way of rights been purchased at the Current Market Price per Share at the time of such alteration;

NSI: is the aggregate number of Shares issued or, as the case may be, comprised in the issue or grant.

Such adjustment shall become effective on the date of issue of such Shares or issue or grant of such options, warrants or other rights (as the case may be).

4.3.5 Rights Issues of Other Securities: If and whenever the Issuer shall issue any securities (other than Shares or options, warrants or other rights to subscribe for or purchase Shares) to all or substantially all Shareholders as a class, by way of rights, or grant to all or substantially all Shareholders as a class, by way of rights, any options, warrants or other rights to subscribe for, or purchase, any securities (other than Shares or options, warrants or other rights to subscribe or purchase Shares), the Fixed Conversion Price shall be adjusted in accordance with the following formula:

NCP = OCP x [[(CMP-FMV)] /CMP]

where:

NCP: is the new Fixed Conversion Price;

• OCP: is the old Fixed Conversion Price;

• CMP: is the Current Market Price of one (1) Share on the last Trading Day preceding the date on which such issue or grant is publicly announced; and

FMV: is the Fair Market Value, on the date of such announcement, of the portion of the rights attributable to one (1) Share.

Such adjustment shall become effective on the date of issue of the securities or grant of such rights, options or warrants (as the case may be).

• 4.3.6 Issues at less than Current Market Price: If and whenever the Issuer shall issue (otherwise than as mentioned in Condition 4.3.4) any Shares (other than Shares issued on the exercise of Conversion Rights or on the exercise of any other rights of conversion into, or exchange or

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subscription for, Shares) or issue or grant (otherwise as mentioned in Condition 4.3.4) options, warrants or other rights to subscribe for or purchase Shares in each case at a consideration per Share which is less than 95.0 per cent of the Current Market Price on the last Trading Day preceding the date of announcement of the terms of such issue, the Fixed Conversion Price shall be adjusted in accordance with the following formula:

NCP = OCP x [[(NSB + NS(CMP))] /NSA]

where:

• NCP: is the new Fixed Conversion Price;

• OCP: is the old Fixed Conversion Price;

• NSB: is the aggregate number of Shares immediately before such alteration;

• NS (CMP): is the number of Shares which the aggregate consideration receivable (as determined under Condition 4.3.11) for the issue of such additional Shares or the grant of such options, warrants or other rights to subscribe for or purchase any Shares would have obtained had such additional Shares or options or warrants or other rights been purchased at the Current Market Price per Share at the time of such alteration; and

NSA: is the aggregate number of Shares immediately after such alteration.

References to additional Shares in the above formula shall, in the case of an issue by the Issuer of options, warrants or other rights to subscribe or purchase Shares, mean such Shares to be issued, or otherwise made available, assuming that such options, warrants or other rights are exercised in full at the initial exercise price (if applicable) on the date of issue of such options, warrants or other rights.

Such adjustment shall become effective on the date of issue of such additional Shares or, as the case may be, the grant of such options, warrants or other rights.

• 4.3.7 Other Issues at less than Current Market Price: Save in the case of an issue of securities arising from a conversion or exchange of other securities in accordance with the terms applicable to such securities themselves falling within the provisions of this Condition 4.3.7, the issue by the Issuer or any Subsidiary (otherwise than as mentioned in Conditions 4.3.4, 4.3.5 or 4.3.6 above) or (at the direction or request of or pursuant to any arrangements with the Issuer or any Subsidiary) any other company, person or entity of any securities (other than the Bonds) which by their terms of issue carry rights of conversion into, or exchange or subscription for, Shares to be issued by the Issuer upon conversion, exchange or subscription at a consideration per Share which is less than 95.0 per cent of the Current Market Price on the last Trading Day

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preceding the date of announcement of the terms of issue of such securities.

In such an event, the Fixed Conversion Price shall be adjusted in accordance with the following formula:

NCP = OCP x [[NSB + NS[CMP])] /(NSB + NS [ICP])]

where:

• NCP: is the new Fixed Conversion Price;

• OCP: is the old Fixed Conversion Price;

NSB: is the aggregate number of Shares immediately before such alteration;

• NS[CMP]: is the number of Shares which the aggregate consideration receivable (as determined under Condition 4.3.11) by the Issuer for the Shares to be issued on conversion or exchange or on exercise of the right of subscription attached to such securities would have obtained had such conversion or exchange or exercise of the right of subscription been effected at the Current Market Price per Share at the time of such alteration; and

• NS[ICP]: is the maximum number of Shares to be issued had such conversion or exchange of such securities or on the exercise of such rights of subscription attached thereto been effected at the initial conversion or exchange or subscription price or rate.

Such adjustment shall become effective on the date of issue of such securities.

• 4.3.8 Modification of Rights of Conversion etc: Any modification of the rights of conversion, exchange or subscription attaching to any such securities as are mentioned in Condition 4.3.7 (other than in accordance with the terms applicable to such securities) so that the consideration per Share (for the number of Shares available on conversion, exchange or subscription following the modification) is less than 95.0 per cent of the Current Market Price on the last Trading Day preceding the date of announcement of the proposals for such modification.

In such an event, the Fixed Conversion Price shall be adjusted in accordance with the following formula:

NCP = OCP x [[(NSB+NS[CMP])] /(NSB+NS[FMV])]

where:

NCP: is the new Fixed Conversion Price; OCP: is the old Fixed Conversion Price;

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NSB: is the aggregate number of Shares immediately before such alteration;

NS[CMP]: is the number of Shares which the aggregate consideration (if any) receivable (as determined under Condition 4.3.11) by the Issuer for the Shares to be issued, or otherwise made available, on conversion or exchange or on exercise of the right of subscription attached to the securities (in each case so modified) would have obtained had such conversion or exchange or exercise (in each case so modified) been effected at the Current Market Price per Share at the time of such alteration; and

• NS[FMV]: is the maximum number of Shares to be issued, or otherwise made available, on conversion or exchange of such securities or on the exercise of such rights of subscription attached thereto at the modified conversion, exchange or subscription price or rate, but giving credit in such manner as a leading investment bank of international repute selected by the Issuer and approved in writing by the Bondholders (acting as an expert) considers appropriate (if at all) for any previous adjustment under this Condition 4.3.8 or Condition 4.3.7.

Such adjustment shall become effective on the date of modification of the rights of conversion, exchange or subscription attaching to such securities.

• 4.3.9 Other Offers to Shareholders: The issue, sale or distribution by or on behalf of the Issuer or any Subsidiary or (at the direction or request of or pursuant to any arrangements with the Issuer or any Subsidiary) any other company, person or entity of any securities in connection with an offer by or on behalf of the Issuer or any Subsidiary or such other company, person or entity pursuant to which offer the Shareholders generally (meaning for these purposes the holders of at least sixty (60) per cent. of the Shares outstanding at the time such offer is made) are entitled to participate in arrangements whereby such securities may be acquired by them (except where the Fixed Conversion Price falls to be adjusted under Conditions 4.3.4, 4.3.5, 4.3.6 or 4.3.7).

In such an event, the Fixed Conversion Price shall be adjusted in accordance with the following formula:

NCP = OCP x [[CMP-FMV)] /CMP]

where:

NCP: is the new Fixed Conversion Price;

OCP: is the old Fixed Conversion Price;

CMP: is the Current Market Price of one (1) Share on the last Trading Day preceding the date on which such issue is publicly announced; and

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FMV: is the Fair Market Value, on the date of such announcement, of the portion of the rights attributable to one (1) Share.

Such adjustment shall become effective on the date of issue of the securities.

• 4.3.10 Other Events: If the Issuer determines that an adjustment should be made to the Fixed Conversion Price as a result of one or more events or circumstances not referred to in this Condition 4.3, or the Issuer determines that an adjustment made pursuant to this Condition 4.3 is inappropriate or incorrect, the Issuer shall at its own expense request a leading investment bank of international repute (acting as an expert), selected by the Issuer and approved in writing by the Bondholders, to determine as soon as practicable what adjustment (if any) to the Fixed Conversion Price is fair and reasonable to take account thereof, if the adjustment would result in a reduction in the Fixed Conversion Price, and the date on which such adjustment should take effect or if an adjustment is inappropriate and should not be made and upon such determination such adjustment shall be made and shall take effect in accordance with such determination or such adjustment shall not be made (as the case may be) PROVIDED THAT where the circumstances giving rise to any adjustment pursuant to this Condition 4.3 have already resulted or will result in an adjustment to the Fixed Conversion Price or where the circumstances giving rise to any adjustment arise by virtue of circumstances which have already given rise or will give rise to an adjustment to the Fixed Conversion Price, such modification (if any) shall be made to the operation of the provisions of this Condition 4.3 as may be advised by a leading investment bank of international repute (acting as an expert), selected by the Issuer and approved in writing by the Bondholder, to be in their opinion appropriate to give the intended result.

• 4.3.11 Calculation of Consideration Receivable: For the purpose of any calculation of the consideration receivable pursuant to Conditions 4.3.6, 4.3.7 and 4.3.8:

• (i) Issue of Shares for Cash : the aggregate consideration receivable in respect of Shares issued for cash shall be the amount of such cash, provided that in no case shall any deduction be made for any commission or any expenses paid or incurred by the Issuer for any underwriting of the issue or otherwise in connection therewith.

• (ii) Issue of Shares for Consideration in whole or in part other than Cash : the aggregate consideration other than cash shall be decreased to be the fair value thereof as determined by a leading investment bank of international repute (acting as an expert), selected by the Issuer and approved in writing by the Bondholders, or if pursuant to the laws of Western Australia such determination is to be made by application to a court of competent jurisdiction, as determined by such court or an appraiser appointed by such court, irrespective of the accounting treatment thereof.

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• (iii) Issue of Shares on Conversion or Exercise of Securities : (1) the aggregate consideration receivable in respect of the Shares to be issued on the conversion or exchange of any securities shall be deemed to be the consideration received or receivable by the Issuer for any such securities, and (2) the aggregate consideration receivable in respect of the Shares to be issued on the exercise of rights of subscription attached to any securities shall be deemed to be that part (which may be the whole) of the consideration received or receivable by the Issuer for such securities which is attributed by the Issuer to such rights of subscription or, if no part of such consideration is so attributed or the Bondholders so require by written notice to the Issuer, the Fair Market Value (as defined in Condition 4.4.6 of such rights of subscription as at the date of the announcement of the terms of issue of such securities, plus in the case of each of (1) and (2) above, the additional consideration (if any) to be received by the Issuer upon (and assuming) the conversion or exchange of such securities, or on the exercise of such rights of subscription (the consideration in all such cases to be determined subject to the proviso in Condition (i), and (3) the consideration per Share receivable by the Issuer on the conversion or exchange of, or on the exercise of such rights of subscription attached to, such securities shall be the aggregate consideration referred to in (1) or (2) above (as the case may be) converted into Australian Dollars if such consideration is expressed in a currency other than Australian Dollars at such rate of exchange as may be determined in good faith by a leading investment bank of international repute (acting as an expert), selected by the Issuer and approved in writing by the Bondholders, to be the spot rate prevailing at the close of business on the date of announcement of the terms of issue of such securities, divided by the number of Shares to be issued on such conversion or exchange or exercise at the initial conversion, exchange or subscription price or rate.

4.4 For the purposes of these Conditions:

• 4.4.1 Average Closing Price means the arithmetic average of the closing market price quoted by the ASX for each Trading Day during the Relevant Period.

• 4.4.2 Capital Distribution means: (i) any distribution of assets in specie by the Issuer for any financial period whenever paid or made and however described (and for these purposes a distribution of assets in specie includes without limitation an issue of Shares or other securities credited as fully or partly paid (other than Shares credited as fully paid by way of capitalisation of reserves) and (ii) any cash dividend or distribution of any kind by the Issuer for any financial period (whenever paid and however described) unless:

• 4.4.2.1 (and to the extent that) in the case of a cash dividend, it does not, on a per Share basis, when taken together with the aggregate of any other cash dividends previously made or paid in respect of the same financial year exceed the greater of (i) three (3) per cent. of the Average Closing Price of one (1) Share during the Relevant Period, (ii) thirty five (35) per

78

cent. of the Issuer's consolidated net profits attributable to Shareholders after deducting minority interests and tax on a per Share basis for the financial year in relation to which such cash dividend is made and (iii) A$0.005 per Share;

4.4.2.2

• (and to the extent that) in the case of a distribution in specie only, it does not, when taken together with the aggregate of the Fair Market Value of any other Dividends previously made or paid in respect of all periods ending after 30 June 2007, exceed the aggregate of the consolidated net profits for such periods (less the aggregate of any consolidated net losses) attributable to Shareholders for all periods ending after 30 June 2007, after deducting minority interests and preference dividends (if any) but (1) deducting any amounts in respect of any asset previously credited to the Issuer's reserves (in respect of any period or date up to and including 30 June 2007) pursuant to any revaluation of such asset, where amounts arising on the disposal of such asset have contributed to such profits and (2) deducting any exceptional and extraordinary items (and for the avoidance of doubt after excluding any amount arising as a result of any reduction in share capital or capital redemption reserve), but including any profit transferred from any reserve, in each case calculated by reference to the audited consolidated profit and loss accounts for such periods of the Issuer and its Subsidiaries; or

• 4.4.2.3 it comprises a purchase or redemption of Shares by or on behalf of the Issuer (or a purchase of Shares by or on behalf of a Subsidiary of the Issuer) where the weighted average price (before expenses) on any one day in respect of such purchases does not exceed the average closing market price of the Shares as quoted by the ASX, by more than 5.0 per cent. either (1) for the five (5) Trading Days on which transactions in the Shares were recorded preceding the day of the purchase, or (2) where an announcement has been made of the intention to purchase Shares at some future date at a specified price, on the Trading Day immediately preceding the date of such announcement (excluding, for the avoidance of doubt, general authority for such purchases given by a Shareholders' meeting of the Issuer, or any notice convening such meeting) and, if in the case of either (1) or (2), the relevant day is not a Trading Day, the immediately preceding Trading Day.

In making any such calculation under this Condition 4.4.2, such adjustments (if any) shall be made as a leading investment bank of international repute (acting as an expert), selected by the Issuer and approved in writing by the Bondholders, may consider appropriate to reflect (1) any consolidation or subdivision of the Shares, (2) issues of Shares by way of capitalisation of profits or reserves, or any like or similar event or (3) the modification of any rights to Dividends (as defined in Condition 4.4.5) of Shares.

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• 4.4.3 Closing Price for the Shares for any Trading Day shall be the average official closing market price quoted by the ASX for the last 10 Trading Days before such Trading Day.

• 4.4.4 Current Market Price means, in respect of a Share at a particular time on a particular date, the average of the Closing Prices quoted by the ASX for one (1) Share (being a Share carrying full entitlement to dividend) for the twenty (20) consecutive Trading Days ending on the Trading Day immediately preceding such date; provided that if at any time during the said twenty (20) Trading Day period the Shares shall have been quoted ex-dividend and during some other part of that period the Shares shall have been quoted cum-dividend then:

• 4.4.4.1 if the Shares to be issued in such circumstances do not rank for the dividend in question, the quotations on the dates on which the Shares shall have been quoted cum-dividend shall for the purpose of this definition be deemed to be the Fair Market Value thereof reduced by an amount equal to the amount of that dividend per Share; or

• 4.4.4.2 if the Shares to be issued in such circumstances rank for the dividend in question, the quotations on the dates on which the Shares shall have been quoted ex-dividend shall for the purpose of this definition be deemed to be the amount thereof increased by such similar amount;

and provided further that if the Shares on each of the said twenty (20) Trading Days have been quoted cum-dividend in respect of a dividend which has been declared or announced but the Shares to be issued do not rank for that dividend, the quotations on each of such dates shall for the purpose of this definition be deemed to be the amount thereof reduced by an amount equal to the Fair Market Value of that dividend per Share;

and provided further that:

• 4.4.4.3 if such Closing Prices are not available on each of the twenty (20) Trading Days during the relevant period, then the arithmetic average of such Closing Prices which are available in the relevant period shall be used (subject to a minimum of two such Closing Prices); and

• 4.4.4.4 if only one or no such Closing Price is available in the relevant period, then the Current Market Price shall be determined in good faith by a leading investment bank of international repute (acting as an expert) appointed by the Issuer and approved by the Bondholders in writing.

• 4.4.5 Dividend means any dividend or distribution, whether of cash, assets or other property, and whenever paid or made and however described (and for these purposes a distribution of assets includes, without limitation, an issue of Shares or other securities credited as fully or partly paid up) provided that:

• 4.4.5.1 where a cash Dividend is announced which is to be, or may at the election of a holder or holders of Shares be, satisfied

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by the issue or delivery of Shares or other property or assets, then the Dividend in question shall be treated as a Dividend of (a) the cash Dividend so announced or (b) the Current Market Price on the date of announcement of such Dividend of such Shares or the Fair Market Value of other property or assets to be issued or delivered in satisfaction of such Dividend (or which would be issued if all holders of Shares elected therefor, regardless of whether any such election is made) if the Current Market Price of such Shares or the Fair Market Value of other property or assets is greater than the cash Dividend so announced;

• 4.4.5.2 any issue of Shares falling within Condition 4.3.2 shall be disregarded.

• 4.4.6 Fair Market Value means, with respect to any assets, securities, options, warrants or other rights on any date, the fair market value of that asset, security, option, warrant or other right as determined in good faith by a leading investment bank of international repute, selected by the Issuer and approved in writing by the Bondholders, acting as expert; provided that (i) the fair market value of a cash Dividend paid or to be paid per Share shall be the amount of such cash Dividend per Share determined as at the date of announcement of such Dividend; and (ii) where options, warrants or other rights are publicly traded in a market of adequate liquidity (as determined by such investment bank) the fair market value of such options, warrants or other rights shall equal the arithmetic mean of the daily closing prices of such options, warrants or other rights during the period of five (5) trading days on the relevant market commencing on the first such trading day such options, warrants or other rights are publicly traded.

• 4.4.7 Relevant Period means the period beginning on the 30th Trading Day prior to the record day for the first dividend or distribution, and ending on the Trading Day immediately preceding the record date for the latest dividend or distribution, which when aggregated with any intervening dividends or distributions, causes an adjustment to the Fixed Conversion Price to be made pursuant to Condition 4.3.

• 4.4.8 Trading Day means a Trading Day as defined in the Listing Rules, provided that, if no Closing Price is reported in respect of the Shares by the ASX or the ASX suspends or halts trading in the Shares for one (1) or more consecutive Trading Days, such day or days will be disregarded in any relevant calculation and shall be deemed not to have existed when ascertaining any period of Trading Days.

• 4.4.9 On any adjustment, the relevant Fixed Conversion Price, if not an integral multiple of one (1) Australian cent, shall be rounded down to the nearest one (1) Australian cent. No adjustment shall be made to the Fixed Conversion Price where such adjustment (rounded down if applicable) would be less than one (1) per cent. of the Fixed Conversion Price then in effect. Any adjustment not required to be made, and any amount by which the Fixed Conversion Price has not been rounded down, shall be carried forward and taken into account in any subsequent adjustment. Notice of any adjustment shall be given to Bondholders in accordance with Condition 16 as soon as practicable after the determination thereof.

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• 4.4.10 The Fixed Conversion Price may not be reduced so that, on conversion of Bonds, Shares would be issued in a manner and at a value not permitted by applicable law.

• 4.4.11 Where more than one event which gives or may give rise to an adjustment to the Fixed Conversion Price occurs within such a short period of time that in the opinion of a leading investment bank of international repute (acting as an expert), selected by the Issuer and approved in writing by the Bondholders, the foregoing provisions would need to be operated subject to some modification in order to give the intended result, such modification shall be made to the operation of the foregoing provisions as may be advised by a leading investment bank of international repute (acting as an expert), selected by the Issuer and approved in writing by the Bondholders, to be in their opinion appropriate in order to give such intended result.

• 4.4.12 No adjustment shall be made to the Fixed Conversion Price where there is an issue of Employee Securities that does not exceed the Employee Securities Cap or has otherwise been approved by Bondholders.

• 4.4.13 No adjustment involving an increase in the Fixed Conversion Price will be made, except in the case of a consolidation of the Shares as referred to in Condition 4.3.1 or to correct an error.

• 4.4.14 If the Issuer fails to select a leading investment bank when required for the purposes of Condition 4.3, the Bondholders may select such a bank.

• 4.5 Undertakings

• 4.5.1 Save as disclosed in the Disclosure Letter issued prior to or on the date of issue of this Bond and save with the prior written approval of the Bondholder, the Issuer hereby irrevocably undertakes that, so long as any Bond remains outstanding or until the Agreement is terminated (whichever is later), it shall:

  • 4.5.1.1 Availability of Shares: make available, free from preemptive or other similar rights, such number of Shares as would be required to be issued on conversion of all the Bonds from time to time remaining outstanding and to satisfy in full all other rights of conversion into or exchange or subscription for Shares and will ensure that all Shares delivered on conversion of Bonds will be duly and validly issued as fully-paid provided always that the Issuer shall not be prohibited from purchasing its Shares to the extent permitted by applicable law;

  • 4.5.1.2 Listing : use its best endeavours to maintain admission to the official list of the ASX;

  • 4.5.1.3 Quotation of Shares: use its best endeavours to (i) maintain the official quotation by the ASX of all the issued Shares for the time being, and (ii) obtain an official quotation by ASX of all the Shares issued on exercise of the Conversion Rights on the relevant Conversion Date;

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4.5.1.4 No Suspension or De-listing: use its best endeavours to ensure that trading in the Shares on the ASX is not halted or suspended, and if trading in the Shares on the ASX is halted or suspended despite such best endeavours or is required by law, to ensure that the period of such trading halt or suspension (as the case may be) does not exceed 10 consecutive Trading Days;

4.5.1.5 Lodge Offering Document: ensure that, an Offering Document is lodged with the Australian Securities and Investments Commission prior to the lapse of the validity period of any Offering Document then lodged with the Australian Securities and Investments Commission, such that there shall at all times during which any Bonds are outstanding be a valid Offering Document lodged with the Australian Securities and Investments Commission with respect to the Shares;

4.5.1.6 Expenses: pay the expenses of the issue of, and all expenses of obtaining quotation for, Shares arising on conversion of the Bonds;

4.5.1.7 Limited Issue of Shares: not issue or pay up any securities, by way of capitalisation of profits or reserves if, in any such case, it gives rise to (or would give rise to) an adjustment of the Fixed Conversion Price, provided that the Issuer may issue or pay up any security by way of capitalisation of profits or reserves (i) by the issue of fully-paid Shares to the Shareholders and other persons entitled to them or (ii) by the issue of Shares paid up in full out of profits or reserves in accordance with applicable law and issued in lieu of a cash dividend, subject in each case to the provisions of Condition 4.3;

• 4.5.1.8 Limited Modification of Rights: not modify the rights attaching to the Shares with respect to voting, dividends or liquidation nor issue any other class of share capital carrying any rights which are more favourable than the rights attaching to Shares but so that nothing in this Condition 4.5.1.8 shall prevent (i) the issue of Employee Securities (provided that they do not exceed the Employee Securities Cap, or are otherwise approved by the Bondholder) (ii) a consolidation or subdivision of the Shares, (iii) the issue of Permitted Securities; or (iv) a modification to the rights attaching to the Shares which is not, in the opinion of two (2) leading investment banks of international repute, selected by the Issuer and approved by the Bondholders, prejudicial to the interests of the Bondholders, (iv) a modification of rights attaching to the Shares where prior thereto the Issuer shall have instructed a firm of accountants or a leading investment bank of international repute (acting as expert) in each case selected by it and approved in writing by the Bondholders to determine what (if any) adjustments should be made to the Fixed Conversion Price as being fair and reasonable to take account thereof and, if so, the new Fixed

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Conversion Price as a result thereof and the basis upon which such adjustment is to be made and, in any such case, the date on which such adjustment shall take effect (and so that such adjustment shall be made and shall take effect accordingly);

• 4.5.1.9 Limited Grant of Rights: procure that no securities (whether issued by the Issuer or any of the other Group Companies) issued without rights to convert into or exchange or subscribe for Shares shall subsequently be granted such rights at a consideration per Share which is less than the Current Market Price per Share at close of business on the Trading Day last preceding the date of the announcement of the proposed inclusion of such rights unless the same gives rise (or would, if the adjustment would be one (1) per cent or more of the Fixed Conversion Price then in effect, give rise)(except where such an adjustment is exempted under these Conditions) to an adjustment of the Fixed Conversion Price. For the avoidance of doubt, nothing in this Condition 4.5.1.9 shall prevent (i) the issue of any Employee Securities which do not exceed the Employee Securities Cap or are approved by the Bondholder; or (ii) any other issue of Permitted Securities ;

• 4.5.1.10 Notice: simultaneously with the announcement of the terms of any issue pursuant to Condition 4.3.6 or 4.3.7 and the announcement of any proposed modification pursuant to Condition 4.3.8 give notice to the Bondholders in accordance with Condition 16 (such notice to be signed by an authorised officer of the Issuer) advising them of the date on which the relevant adjustment of the Fixed Conversion Price is likely to become effective and of the effect of exercising their rights of conversion before then;

• 4.5.1.11 Director's Certificate: if an event happens as a result of which the Fixed Conversion Price may be adjusted pursuant to these Conditions, subject to Condition 4.4.11, as soon as practicable send the Bondholders a certificate signed by any Director or other duly authorised officer of the Issuer, setting out particulars of the event, whether an adjustment to the Fixed Conversion Price falls to be made and, if so, the adjusted Fixed Conversion Price and the date on which such adjustment takes effect, whether an amount falls to be carried forward pursuant to Condition 4.4.9 and if so the amount to be carried forward and in any case setting out such other information as the Bondholders may reasonably require;

• 4.5.1.12 Extend Offer: if an offer is made to all (or as nearly as may be practicable all) Shareholders, other than the offeror or any associate or associates of the offeror, to acquire all or a majority of the issued ordinary share capital of the Issuer, or if any person proposes a scheme with regard to such acquisition, and if such offer comes to the knowledge of the Issuer, give notice of such offer or scheme to the

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Bondholders at the same time as any notice thereof is sent to the Shareholders (or as soon as practicable thereafter) stating that details concerning such offer or scheme may be obtained from the Issuer and, where such an offer or scheme has been recommended by the Board of Directors of the Issuer or where such an offer has become or been declared unconditional in all respects, use its best endeavours (to the extent permitted under applicable law) to procure that a like offer or scheme is extended to the Bondholders and the holders of any Shares issued during the period of the offer or scheme arising out of the Conversion Rights;

• 4.5.1.13 No Reduction of Issued Share Capital: not reduce its issued share capital or any uncalled liability in respect thereof, except pursuant to the terms of issue of the relevant share capital, or by means of a purchase or redemption of the share capital which is permitted under Australian law;

• 4.5.1.14 Closing of Register: unless so required by applicable law or regulation or in order to establish a dividend, distribution or other rights attaching to the Shares, not close its register of members or take any other action which prevents the transfer of its Shares generally and ensure that the Bonds may be converted legally and the Shares issued on conversion may (subject to any limitation imposed by law) be transferred (as between transferor and transferee although not as against the Issuer) at all times while the register is closed or such other action is effective, nor take any action which prevents the conversion of the Bonds or the issue of Shares in respect of such conversion;

• 4.5.1.15 Consents: if it is a party to any transaction referred to in Condition 9 in which the Issuer is not the continuing entity, use its reasonable best efforts to obtain all consents which may be necessary or appropriate under the laws of Australia to enable the continuing entity to give effect to the Conversion Right;

• 4.5.1.16 Compliance with Laws and Conditions:

• (a) perform and comply with all rules, regulations and requirements imposed by the ASX in order to maintain its listing on the ASX;

• (b) comply with all applicable laws and regulations of Australia and rules and regulations of the ASX, and will procure that each of the Group Companies complies with all applicable laws and regulations, to the extent that any non-compliance may have a Material Adverse Effect; and

• (c) perform the Conditions which shall be binding on the Issuer and the relevant Bondholders;

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• 4.5.1.17 Maintain Listing and No Trading Halt or Suspension : use its best endeavours to:

• (a) maintain the listing of the Shares and the validity of the Listing Approval for the New Shares on the ASX; and

• (b) ensure that trading in the Shares on the ASX is not halted or suspended, provided that if trading in the Shares on the ASX is halted or suspended despite such best endeavours, to ensure that the period of such trading halt or suspension (as the case may be) does not exceed ten (10) consecutive Trading Days;

• 4.5.1.18 Convertibles: procure that none of the Group Companies shall allot, or grant any Convertible Securities or agree to allot or grant any Convertible Securities;

• 4.5.1.19 No Liquidation: procure that none of the Group Companies shall (a) resolve that it be wound up, (b) have any liquidator, provisional liquidator, judicial manager or provisional judicial manager or other similar officer appointed with respect to that Group Company, (c) have an order by a court of competent jurisdiction for the winding up of any Group Company, (d) enter into any composition for the benefits of its creditors generally and (e) have a receiver or a receiver and manager appointed in relation to the whole, or a substantial part, of the property of any Group Company.

4.6 Notice of change in Conversion Price

The Issuer must give notice to the ASX and the Bondholders in accordance with Condition 16 and the Listing Rules of any change in the Conversion Price. Any such notice relating to a change in the Conversion Price shall set forth the event giving rise to the adjustment, the Conversion Price prior to such adjustment, the adjusted Conversion Price and the effective date of such adjustment.

4.7 Adjustment to the Minimum Conversion Price

If the Fixed Conversion Price is adjusted pursuant to any of the provisions under Condition 4.3, the Minimum Conversion Price shall be correspondingly adjusted so as to ensure that the economic value of the Bonds and the rights under this Agreement to the Bondholders shall be the same after such adjustment to the Fixed Conversion Price as it was immediately prior to such adjustment. The adjustment to the Minimum Conversion Price shall take effect at the same time as the date on which the corresponding adjustment to the Fixed Conversion Price takes effect. The provisions of Condition 4.3 shall apply mutatis mutandis to any adjustment to the Minimum Conversion Price.

5. Payments

5.1 Principal Amount

Payment of the principal amount due in respect of any Bond will be made by transfer to the registered account of the Bondholder or by Australian Dollar cheque

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drawn on a bank in Australia mailed to the registered address of the Bondholder if it does not have a registered account. Payment of principal will only be made after surrender of the relevant Certificate at the specified office of the Registrar.

5.2

Registered accounts

For the purposes of this Condition, a Bondholder's registered account means the bank account maintained by or on behalf of it with a bank, details of which appear on the Register at the close of business on the second Business Day before the due date for payment, and a Bondholder's registered address means its address appearing on the Register at that time.

5.3 Fiscal laws

All payments are subject in all cases to any applicable laws and regulations in the place of payment, but without prejudice to the provisions of Condition 7. No commissions or expenses shall be charged to the Bondholders in respect of such payments.

5.4 Payment initiation

Where payment is to be made by transfer to a registered account, payment instructions (for value on the due date or, if that is not a Business Day, for value on the first following day which is a Business Day) will be initiated and, where payment is to be made by cheque, the cheque will be mailed (at the risk and, if mailed at the request of the holder otherwise than by ordinary mail, expense of the holder) on the due date for payment (or, if it is not a Business Day, the immediately following Business Day) or, in the case of a payment of principal, if later, on the Business Day on which the relevant Certificate is surrendered at the specified office of the Registrar.

5.5 Default interest and delay in payment

If the Issuer fails to pay any sum in respect of the Bonds when the same becomes due and payable under these Conditions, interest shall accrue on the overdue sum at the rate of 6 per cent per annum from the due date. Such default interest shall accrue on the basis of the actual number of days elapsed and a 365-day year.

Bondholders will not be entitled to any interest or other payment for any delay in receiving the amount due within five (5) Business Days after the due date if the due date is not a Business Day, if the Bondholder is late in surrendering its Certificate (if required to do so) or if a cheque mailed in accordance with this Condition arrives after the due date for payment.

5.6 Partial Payment

If an amount which is due on the Bonds is not paid in full, the Registrar will annotate the Register with a record of the amount (if any) in fact paid.

6. Redemption, Purchase and Cancellation

6.1 Maturity

Unless previously redeemed, converted or purchased and cancelled as provided herein, the Issuer will redeem each Bond at 100 per cent. of its principal amount on the date falling five (5) years after the date of issue of such Bond (the Maturity

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Date ). The Issuer may not redeem the Bonds at its option prior to that date (but without prejudice to Condition 6).

6.2 Maturity Notice and Announcement

The Issuer shall, at least one (1) month before the Maturity Date, send a notice of expiry to each Bondholder, and shall make an announcement of such expiry as may be required under any applicable laws, regulations or rules of the ASX.

6.3 Redemption for taxation reasons

• 6.3.1 At any time the Issuer may, having given not less than thirty (30) nor more than sixty (60) days' notice to the Bondholders (which notice shall be irrevocable), redeem all, and not some only, of the Bonds at their principal amount plus interest accrued at the rate of six (6) per cent per annum from the date of issue of such Bonds up till the date of expiry of the aforesaid notice, if (i) the Issuer has or will become obliged to pay additional amounts as referred to in Condition 7 as a result of any change in, or amendment to, the laws or regulations of Australia or any political subdivision or any authority thereof or therein having power to tax, or any change in the general application or official interpretation of such laws or regulations, which change or amendment becomes effective on or after the date of the Agreement, and (ii) such obligation cannot be avoided by the Issuer taking reasonable measures available to it. Prior to the publication of any notice of redemption pursuant to this paragraph, the Issuer shall deliver to the Bondholders (a) a certificate signed by two (2) directors of the Issuer stating that the obligation referred to in (i) above cannot be avoided by the Issuer (taking reasonable measures available to it) and (b) an opinion of independent legal or tax advisors of recognised international standing to the effect that such change or amendment has occurred (irrespective of whether such amendment or change is then effective) and the Bondholders shall be entitled to accept such certificate and opinion as sufficient evidence thereof in which event it shall be conclusive and binding on the Bondholders.

• 6.3.2 Upon the expiry of any such notice, the Issuer will be bound to redeem the Bonds at their principal amount plus interest accrued at the rate of six (6) per cent per annum from the date of issue of such Bonds up till the date of expiry of the aforesaid notice.

6.4

Redemption at the option of the Bondholders

The Issuer will, at the option of the holder of any Bond, redeem all or some of that holder's Bonds at any time after the date falling one (1) year from the date of issue of such Bonds as may be notified by that holder (the Put Option Date ), at the principal amount of the Bonds. To exercise such right, the holder of the relevant Bond must complete, sign and deposit at the specified office of the Registrar a duly completed and signed notice (the Put Option Notice ) together with the Certificate evidencing the Bonds to be redeemed not later than five (5) days prior to the Put Option Date.

The Put Option Notice must specify (a) the number of Bonds to be redeemed; and (b) the relevant Put Option Date.

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A Put Option Notice, once delivered, shall be irrevocable and may not be withdrawn unless the Issuer consents to such withdrawal, and the Issuer shall redeem the Bonds the subject of a Put Option Notice delivered as aforesaid on the Put Option Date.

• 6.5 Redemption in the event of Change of Control

• 6.5.1 Following the occurrence of a Relevant Event (as defined in Condition 6.5.4.5), the holder of each Bond will have the right, at such holder's option, to require the Issuer to redeem in whole but not in part such holder's Bonds on the Relevant Event Put Date (as defined below) at their principal amount. To exercise such right, the holder of the relevant Bond must complete, sign and deposit at the specified office of the Registrar a duly completed and signed notice of redemption, in the form for the time being current, obtainable from the specified office of the Registrar ( Relevant Event Put Exercise Notice ) together with the Certificate evidencing the Bonds to be redeemed by not later than thirty (30) days following a Relevant Event, or, if later, thirty (30) days following the date upon which notice thereof is given to Bondholders by the Issuer in accordance with Condition 16. The Relevant Event Put Date shall be the 14th day after the expiry of such period of 30 days as referred to above.

• 6.5.2 A Relevant Event Put Exercise Notice, once delivered, shall be irrevocable and the Issuer shall redeem the Bonds which form the subject of the Relevant Event Put Exercise Notices delivered as aforesaid on the Relevant Event Put Date.

• 6.5.3 Not later than seven days after becoming aware of a Relevant Event, the Issuer shall procure that notice regarding the Relevant Event shall be delivered to Bondholders (in accordance with Condition 16) and , if required by the Listing Rules, the ASX stating:

  • 6.5.3.1 the Relevant Event Put Date;

  • 6.5.3.2 the date of such Relevant Event and, briefly, the events causing such Relevant Event;

  • 6.5.3.3 the date by which the Relevant Event Put Exercise Notice must be given;

  • 6.5.3.4 the redemption amount and the method by which such amount will be paid;

  • 6.5.3.5 briefly, the Conversion Right and the then current Conversion Price;

  • 6.5.3.6 the procedures that Bondholders must follow and the requirements that Bondholders must satisfy in order to exercise the Relevant Event redemption right or Conversion Right; and

  • 6.5.3.7 that a Relevant Event Put Exercise Notice, once validly given, may not be withdrawn.

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• 6.5.4 For the purposes of this Condition 6:

• 6.5.4.1 Control means the control of more than fifty (50) per cent. of the voting rights of the issued share capital of the Issuer or the legally enforceable right to appoint or remove all or the majority of the members of the Issuer's Board of Directors or other governing body, whether obtained directly or indirectly, and whether obtained by ownership of share capital, the possession of voting rights, contract or otherwise;

• 6.5.4.2 a Change of Control occurs when:

  • 6.5.4.2.1 any person or persons acting together acquires Control of the Issuer if such person or persons does not or do not have, and would not be deemed to have, Control of the Issuer on the date of the Agreement (the person or persons acting together who does or do have such Control as at such date is called the ' Controlling Shareholder' );

  • 6.5.4.2.2 the Issuer consolidates with or merges into or sells or transfers all or substantially all of the Issuer's assets to any other person, unless the consolidation, merger, sale or transfer will not result in another person or persons (other than the Controlling Shareholder) acquiring Control over the Issuer or the successor entity; or

  • 6.5.4.2.3 one or more other persons (other than the Controlling Shareholder) acquires the legal or beneficial ownership of all or substantially all of the Issuer's total issued and outstanding Capital Stock;

• 6.5.4.3 Capital Stock means, with respect to any person, any and all shares, ownership interests, participation or other equivalents (however designated), including all ordinary shares and all preferred shares which carry voting rights, of such person;

• 6.5.4.4 a ' person' includes any individual, company, corporation, firm, partnership, joint venture, undertaking, association, organisation, trust, state or agency of a state (in each case whether or not being a separate legal entity) but does not include the Issuer's Board of Directors or any other governing board and does not include the Issuer's whollyowned direct or indirect Subsidiaries; and

• 6.5.4.5 Relevant Event occurs when there has been a Change of Control of the Issuer.

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6.6 Delisting Put Right

• 6.6.1 In the event the Issuer ceases to be admitted to the official list of the ASX or the Shares cease to be quoted by the ASX ( a Delisting ) each Bondholder shall have the right (the Delisting Put Right ), at such Bondholder's option, to require the Issuer to redeem all (but not less than all) of such Bondholder's Bonds on the 20th Business Day after notice referred to under Condition 6.5.2 below has been given to Bondholders regarding the Delisting or, if such notice is not given, the 20th Business Day after the Delisting (the Delisting Put Date ) at their principal amount (the Delisting Put Price ).

• 6.6.2 Promptly after becoming aware of a Delisting, the Issuer shall procure that notice regarding the Delisting Put Right shall be given to Bondholders (in accordance with Condition 16) and the ASX stating:

• 6.6.2.1 the Delisting Put Date;

• 6.6.2.2 the date of such Delisting and, briefly, the events causing such Delisting;

• 6.6.2.3 the date by which the Purchase Notice (as defined below) must be given;

• 6.6.2.4 the Delisting Put Price and the method by which such amount will be paid;

• 6.6.2.5 briefly, the Conversion Right and the then current Conversion Price;

• 6.6.2.6 the procedures that Bondholders must follow and the requirements that Bondholders must satisfy in order to exercise the Delisting Put Right or Conversion Right; and

• 6.6.2.7 that a Purchase Notice, once validly given, may not be withdrawn.

• 6.6.3 To exercise its rights to require the Issuer to purchase its Bonds, the Bondholder must deliver a written irrevocable notice of the exercise of such right ( a Purchase Notice ), to the Registrar on any Business Day prior to the close of business at the location of the Registrar on such day and which day is not less than ten (10) Business Days prior to the Delisting Put Date.

• 6.6.4 A Purchase Notice, once delivered, shall be irrevocable and the Issuer shall redeem the Bonds which are the subject of the Purchase Notices delivered as aforesaid on the Delisting Put Date.

6.7 Redemption following exercise of a put option

Upon the exercise of any option specified in Condition 6.3, 6.4 or 6.5, payment of the applicable redemption amount shall be conditional upon delivery of the Bondholder's Certificate (together with any necessary endorsements) to the Registrar on any Business Day together with the delivery of any other document(s) required by these Conditions, and will be made promptly following the later of the date set for redemption and the time of delivery of such Certificate. If the Issuer

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holds on the Put Date (as defined below) money sufficient to pay the applicable redemption monies of Bonds for which notices have been delivered in accordance with the provisions hereof upon exercise of such right and pays such redemption monies to the relevant Bondholders, then, whether or not such Certificate is delivered to the Registrar, on and after such Put Date, (i) such Bond will cease to be outstanding; (ii) such Bond will be deemed paid; and (iii) all other rights of the Bondholder shall terminate (other than the right to receive the applicable redemption monies). ' Put Date ' shall mean the Relevant Event Put Date, the Put Option Date or the Delisting Put Date, as applicable.

6.8 Cancellation

All Bonds which are redeemed or converted by the Issuer will forthwith be cancelled. Certificates in respect of all Bonds cancelled will be forwarded to or to the order of the Registrar and such Bonds may not be reissued or resold.

6.9 Redemption upon Event of Default

The Issuer shall redeem the Bonds by paying the applicable Redemption Amount to the Bondholders forthwith upon its receipt of a default notice issued by the Bondholders pursuant to Condition 8 below.

6.10 Issuer's Put Right

• 6.10.1 At any time after the date falling one (1) year from the date of issue of the Bonds the Issuer may, having given not less than twenty (20) nor more than thirty (30) days' notice to the Bondholders (which notice shall be irrevocable), redeem all, and not some only, of the Bonds at their principal amount plus interest accrued at the rate of six (6) per cent per annum from the date of issue of such Bonds up till the date of expiry of the aforesaid notice.

• 6.10.2 Upon the expiry of a notice given under Condition 6.10.1, the Issuer will be bound to redeem the Bonds at their principal amount plus interest accrued at the rate of six (6) per cent per annum from the date of issue of such Bonds up till the date of expiry of the notice.

6.11 Cancellation

All Bonds which are redeemed or converted in accordance with these Conditions will be cancelled forthwith upon such redemption or conversion (as the case may be), whether or not the Certificates representing such Bonds have been delivered to the Issuer pursuant to such redemption or conversion (as the case may be). Certificates in respect of all Bonds cancelled will be forwarded to or to the order of the Registrar and such Bonds may not be reissued or resold.

6.12 Redemption notices

All notices to Bondholders given by or on behalf of the Issuer pursuant to this Condition will be given in accordance with Condition 16, and specify the Conversion Price as at the date of the relevant notice, the Closing Price of the Shares (as quoted on the ASX) as at the latest practicable date prior to the publication of the notice, the date for redemption, the manner in which redemption will be effected and the aggregate principal amount of the Bonds outstanding as at the latest practicable date prior to the publication of the notice.

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1. Taxation

2. 7.1 All payments of principal and interest made by the Issuer will be made free from any restriction or Condition and be made without deduction or withholding for or on account of any present or future taxes, duties, imposts, assessments or governmental charges, deductions or withholdings, of whatever nature imposed, assessed, levied or collected by or on behalf of any Government Authority ( Taxes ) unless deduction or withholding such Taxes is compelled by law. In such event, the Issuer will pay such additional amounts as will result in the receipt by the Bondholders of the net amounts after such deduction or withholding equal to the amounts which would otherwise have been receivable by them had no such deduction or withholding been required except that no such additional amount shall be payable in respect of any Bond:

   • 7.1.1 to a holder (or to a third party on behalf of a holder) who is subject to such Taxes in respect of such Bond by reason of his having some connection with Australia otherwise than merely by holding the Bond or by the receipt of amounts in respect of the Bond or where the withholding or deduction could be avoided by the holder making a declaration of nonresidence or other similar claim for exemption to the appropriate Government Authority which such holder is legally capable and competent of making but fails to do so; or

   • 7.1.2 (in the case of a payment of principal) if the Certificate in respect of such Bond is surrendered more than 30 days after the relevant date except to the extent that the holder would have been entitled to such additional amount on surrendering the relevant Certificate for payment on the last day of such period of 30 days.

3. 7.2 For the purposes of Condition 7.1, ' relevant date ' means the date on which such payment first becomes due.

4. 7.3 References in these Conditions to principal and interest shall be deemed also to refer to any additional amounts which may be payable under this Condition or any undertaking or covenant given in addition thereto or in substitution therefor pursuant to the Agreement.

5. Events of default

6. 8.1 Holder(s) of Bonds may give notice to the Issuer that the Bonds are, and they shall accordingly thereby become, immediately due and repayable at their principal amount (subject as provided below and without prejudice to the right of Bondholders to exercise the Conversion Right in respect of their Bonds in accordance with Condition 4) if any of the following events has occurred:

   • 8.1.1 a default is made by the Issuer in the payment of any principal due in respect of the Bonds within five (5) Business Days after the same shall become due and payable in accordance with these Conditions;

   • 8.1.2 failure by the Issuer to issue and deliver the Shares within five (5) Business Days after such Shares are required to be issued and delivered following conversion of a Bond;

   • 8.1.3 the Issuer does not perform or comply with one or more of its other obligations or undertakings in these Conditions or under the Agreement

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which default is (in the opinion of the Bondholder) incapable of remedy or if, in the opinion of the Bondholders capable of remedy, is not, in the opinion of the Bondholders, remedied within thirty (30) days after written notice of such default shall have been given to the Issuer by the Bondholder;

• 8.1.4 any representation or warranty made or given by the Issuer in the Agreement or these Conditions or any certificate or statement delivered or made thereunder is now or becomes, on or prior to the Conversion Date in respect of the last of the relevant Bonds, incorrect or untrue, or ceases to be correct or true, in any respect considered by the Bondholder to be material;

• 8.1.5 any necessary Australian approvals and consents (including any governmental, regulatory or corporate approvals and consents) for the issue redemption or conversion of the Bonds being revoked or withdrawn or any Australian governmental or regulatory consent or approval granted or required in connection with the transactions contemplated under the Agreement or these Conditions expires, is not obtained or is suspended, terminated, revoked or withdrawn (in whole or in part), modified, restricted or otherwise fails to remain in full force and effect in any way unacceptable to the Bondholder;

• 8.1.6 if there shall have come to the notice of the Subscriber any event of default set out in Condition 8.1;

• 8.1.7 the Issuer or any Subsidiary is (or is, or would be, deemed by law or a court to be) insolvent or bankrupt or unable to pay its debts when they fall due, stops, suspends or threatens to stop or suspend, payment of all or a material part of (or of a particular type of) its debts when they fall due, proposes or makes any agreement for the deferral, rescheduling or other readjustment of all of (or all of a particular type of) its debts (or of any material part which it will otherwise be unable to pay when due), proposes or makes a general assignment or an arrangement or composition with or for the benefit of the relevant creditors in respect of any of such debts or a moratorium is agreed or declared in respect of or affecting all or any material part of (or of a particular type of) the debts of the Issuer or any of its material Subsidiaries or if any such event occurs in relation to a Subsidiary, and such event adversely affects the ability of the Issuer to perform or observe its obligations under the Bonds or the Agreement;

• 8.1.8 (i) any other present or future indebtedness of the Issuer or any of its the other Group Companies for or in respect of moneys borrowed or raised becomes (or becomes capable of being declared) due and payable prior to their stated maturity by reason of any actual or potential default, event of default or the like (howsoever described) or such event that with the passage of time or the giving of notice would constitute an event of default, or (ii) any such indebtedness is not paid when due or, as the case may be, within any applicable grace period, or (iii) the Issuer or any of the other Group Companies fails to pay when due (after the expiration of any applicable grace period) any amount payable by it under any present or future guarantee for, or indemnity in respect of, any moneys borrowed or raised, provided that the aggregate amount of the relevant indebtedness, guarantees and indemnities in respect of which one or more

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of the events mentioned above in this Condition 8.1.8 have occurred equals or exceeds A$1,000,000 or its equivalent (as reasonably determined on the basis of the middle spot rate for the relevant currency against the Australian Dollar as quoted by any leading bank selected by the Issuer on the day on which such indebtedness becomes due and payable or is not paid or any such amount becomes due and payable or is not paid under any such guarantee or indemnity);

• 8.1.9 a distress, attachment, execution or other legal process is levied, enforced or sued out on or against any part of the property, assets or revenues of the Issuer or any of its Subsidiaries, which adversely affects the ability of the Issuer to perform or observe any of its obligations under the Bonds or the Agreement, and is not discharged or stayed within thirty (30) days;

• 8.1.10 an order is made or an effective resolution passed for the winding-up or dissolution, judicial management or administration of the Issuer or any of its material Subsidiaries, or the Issuer or any of its material Subsidiaries ceases or threatens to cease to carry on all or substantially all of its business or operations, which cessation or threat is material to the Issuer and its Subsidiaries as a whole, except for the purpose of and followed by a reconstruction, amalgamation, reorganisation, merger or consolidation (i) not involving insolvency or (ii) which does not adversely affect the ability of the Issuer to perform or observe its obligations under the Bonds or the Agreement;

• 8.1.11 a mortgagee, chargee or other encumbrancer takes possession of, exercises rights under any security in relation to, or a receiver, receiver and manager, administrator, liquidator, provisional liquidator or officer of the Court is appointed in relation to, the whole or any substantial part of the property, assets or revenues of the Issuer or any of its material Subsidiaries (as the case may be) and is not discharged within thirty (30) days;

• 8.1.12 any material present or future security on or over the assets of the Issuer or any of the other Group Companies in favour of any person becomes enforceable, and any step (including the taking of possession or the appointment of a receiver, manager or similar officer) is taken to enforce that security;

• 8.1.13 the Issuer or any of the other Group Companies shall transfer or otherwise dispose of all or substantially all of its assets to any person, firm or corporation, otherwise than in the case of a reconstruction whether by way of scheme of arrangement or otherwise for which the prior approval of the Bondholders has been obtained;

• 8.1.14 it is or becomes unlawful for the Issuer to perform or comply with any one or more of its obligations under any of the Bonds or the Agreement;

• 8.1.15 any legal, administrative, arbitration or mediation proceedings, suits or actions of any kind whatsoever (whether criminal or civil) shall be instituted by or against the Issuer or any of the other Group Companies which, in the opinion of the Bondholders, will affect the ability of the Issuer or such other Group Companies to repay the amounts payable to the Bondholders, or otherwise affect the ability of the Issuer or any of the

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Group Companies to perform their respective obligations under the Agreement or these Conditions;

• 8.1.16 trading in the Shares on the ASX is halted or suspended for a period exceeding ten (10) consecutive Trading Days;

• 8.1.17

  • the Shares are de-listed from the ASX;

• 8.1.18 the Issuer or any of the other material Group Companies shall cease or threaten to cease to carry on its business, whether voluntarily or involuntarily;

• 8.1.19 there shall occur or threaten to occur a Material Adverse Change or any material change or development involving a prospective material change, in national or international monetary, financial, political or economic Conditions (including any disruption to trading generally, or trading in any securities of the Issuer on any stock exchange or in any over-thecounter market) or currency exchange rates or foreign exchange controls which would in the Bondholders' view be likely to prejudice materially the assets, business, legal position, financial Condition, liabilities or prospects of the Company or the Group or results of operations of the Company or the Group;

• 8.1.20 all or a material part of the assets of the Issuer or any of its principal Subsidiaries are seized, compulsorily acquired, expropriated or nationalised; and

• 8.1.21 any event occurs which under the laws of any relevant jurisdiction has an analogous effect to any of the events referred to in any of the foregoing paragraphs.

• 8.2 A Bondholder may exercise its Conversion Right by depositing a Conversion Notice and Application Form with the Registrar during the period from and including the date of a default notice with respect to an event specified in Condition 8.1 (at which time the Issuer will notify the Bondholders of the number of Shares per Bond to be delivered upon conversion, assuming all the then outstanding Bonds are converted) to and including the 30th Business Day after such default notice. The Conversion Date shall be the Business Day immediately following the date of the Conversion Notice.

If any converting Bondholder deposits a Conversion Notice and Application Form pursuant to this Condition 8 on the Business Day prior to, or during, a Closed Period, the Bondholder's Conversion Right shall continue until the Business Day following the last day of the Closed Period, which shall be deemed the Conversion Date, for the purposes of such Bondholder's exercise of its Conversion Right pursuant to this Condition 8.

If the Conversion Right attached to any Bond is exercised pursuant to this Condition 8, the Issuer will deliver Shares (which number will be disclosed to such Bondholder as soon as practicable after the Conversion Notice and Application Form are given) in accordance with the Conditions, except that the Issuer shall have one (1) Business Day before it is required to register the converting Bondholder (or its designee) in its register of members as the owner of the number of Shares to be delivered pursuant to this Condition and an additional one (1)

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Business Day from such registration date to make payment in accordance with the following paragraph.

If the Conversion Right attached to any Bond is exercised pursuant to this Condition 8, the Issuer shall, at the request of the converting Bondholder, pay to such Bondholder an amount in Australian Dollars (the Default Cure Amount ), equal to the product of (x) (i) the number of Shares that are required to be delivered by the Issuer to satisfy the Conversion Right in relation to such converting Bondholder minus (ii) the number of Shares that are actually delivered by the Issuer pursuant to such Bondholders' Conversion Notice and (y) the Share Price (as defined below) on the Conversion Date; provided that if such Bondholder has received any payment under the Bonds pursuant to this Condition 8, the amount of such payment shall be deducted from the Default Cure Amount.

The ' Share Price ' means the Closing Price of the Shares as quoted by the ASX on the Conversion Date or, if no reported sales of Shares take place on such date, the average of the reported closing bid and offered prices, in either case as reported by the ASX or other applicable securities exchange on which the Shares are listed for such day as furnished by a reputable and independent broker-dealer selected from time to time by the Bondholder at the expense of the Issuer for such purpose.

9.

Consolidation, amalgamation or merger

The Issuer will not consolidate with, merge or amalgamate into or transfer all or substantially all of its assets to any person (the consummation of any such event, a ' Merger '), unless:

• 9.1 the entity formed by such Merger or the person that acquired such properties and assets shall expressly assume, by a supplemental agreement, all obligations of the Issuer under the Agreement and the performance of every covenant and agreement applicable to it contained therein;

• 9.2 immediately after giving effect to any such Merger, no Event of Default shall have occurred or be continuing or would result therefrom; and

• 9.3 the entity formed by such Merger, or the person that acquired such properties and assets, shall expressly agree, among other things, to indemnify each holder of a Bond against any Tax payable by withholding or deduction thereafter imposed on such holder solely as a consequence of such Merger with respect to the payment of principal, premium and interest on the Bonds.

10. Proscription

Claims in respect of amounts due in respect of the Bonds will become proscribed unless made within ten (10) years (in the case of principal) and five (5) years (in the case of interest) from the relevant date (as defined in Condition 7) in respect thereof.

11. Enforcement

At any time after the Bonds have become due and repayable after the declaration of an Event of Default, any of the Bondholders may, at its discretion and without further notice, take such proceedings against the Issuer as it may think fit to enforce repayment of the Bonds held by such Bondholders and to enforce the provisions of the Agreement.

12.

Modification, Waiver and Substitution

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• 12.1 None of the following shall be carried out without the express consent of all the Bondholders:

• 12.1.1 any modification, abrogation, variation or compromise of, or arrangement in respect of, the rights of the Bondholders against the Issuer whether or not such rights arise under these Conditions;

• 12.1.2 any exchange or substitution for the Bonds of, or the conversion of the Bonds into, shares, bonds or other obligations or securities of the Issuer or any other entity (other than as a result of the exercise of any Conversion Right);

• 12.1.3 any modification of these Conditions or the Bonds;

• 12.1.4 the substitution of any entity for the Issuer (or any previous substitute) as principal debtor under these Conditions.

13. Certificates/Reports

Any certificate or report of any expert or other person called for by or provided to the Bondholders (whether or not addressed to the Bondholders) in accordance with or for the purposes of these Conditions or the Agreement may be relied upon by the Bondholders as sufficient evidence of the facts therein (and shall, in absence of manifest error, be conclusive and binding on all parties) notwithstanding that such certificate or report or engagement letter or other document entered into by the Bondholders or the Issuer in connection therewith contains a monetary or other limit on the liability of the relevant expert or person in respect thereof.

14.

Replacement of Certificates

If any Certificate is mutilated, defaced, destroyed, stolen or lost, it may be replaced at the specified office of the Registrar upon payment by the claimant of such costs as may be incurred in connection therewith and on such terms as to evidence and indemnity as the Issuer and such Registrar may reasonably require. Mutilated or defaced Certificates must be surrendered before replacements will be issued.

15. Further issues

Save as contemplated under the Agreement, the Issuer may not, without the consent of the Bondholders, create and issue further bonds having the same terms and conditions as the Bonds in all respects and so that such further issue shall be consolidated and form a single series with the Bonds.

16. Notices

All notices to Bondholders shall be validly given if mailed to them at their respective addresses in the Register maintained by the Registrar.

17. Agents

The name of the Registrar and its specified offices is set out below:

Specified Offices: Computershare Investor Services Pty Limited Facsimile No: (61) 8 9323 2033

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Attention: Wendy McAuley Email Address: Wendy.McAuley@Computershare.com.au Telephone: (61) 8 9323 2000

The Issuer reserves the right, at any time to vary or terminate the appointment of the Registrar and to appoint a replacement Registrar. The Issuer will at all times maintain a Registrar in Australia. Notice of any such termination or appointment, of any changes in the specified office of the Registrar and of any change in the identity of the Registrar will be given promptly by the Issuer to the Bondholders in accordance with Condition 16 and in any event not less than forty five (45) days' notice will be given.

18. Indemnification

The Bondholders may rely on any certificate prepared by the directors of the Issuer and accompanied by a certificate or report prepared by an internationally recognised firm of accountants pursuant to the Conditions, whether or not addressed to the Bondholders and whether or not the internationally recognised firm of accountants' liability in respect thereof is limited by a monetary cap or otherwise limited or excluded and shall be obliged to so do where the certificate or report is delivered pursuant to the obligation of the Issuer to procure such delivery under the Conditions and any such certificate or report shall be conclusive and binding on the Issuer and the Bondholders.

19. Governing law

The Bonds are governed by, and shall be construed in accordance with, the laws of Western Australia. In relation to any claim, legal action or proceeding arising out of or in connection with the Bonds, each of the Bondholders and the Issuer hereby irrevocably submits to the non-exclusive jurisdiction of the courts of Western Australia.

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Appendix A

Conversion Notice

Date:

Board of directors CENTRAL PETROLEUM LIMITED Suite 3 Level 4 South Shore Centre 85 Esplanade South Perth Western Australia 6151

Dear Sirs

RE: CONVERSION NOTICE

1. I/We refer to the Bond Subscription Agreement dated [ � ] 2007 (as the same may from time to time be amended, supplemented or modified) (the Subscription Agreement ) between Central Petroleum Limited and D.B. Zwirn Mauritius Trading No. 3 Limited (the Subscriber ). Terms defined in the Subscription Agreement shall have the same meaning when used herein.

2. I/We being the registered holder of the Bonds represented by the attached Bond Certificate(s) specified below hereby exercise our Conversion Rights in respect of all of such Bonds in accordance with the TERMS AND CONDITIONS OF THE BONDS set out in the Bond Certificate.

3. 2.1 Particulars of Bonds

Bond Certificate Number(s)

Aggregate Principal Amount of Bonds

Conversion Price

==> picture [182 x 22] intentionally omitted <==

• 2.2 Particulars of New Shares

Number of New Shares to be allotted in connection with this Conversion

1. I/We accept all the fully paid ordinary shares in the capital of the Issuer to be issued to us in accordance with the Subscription Agreement and the Terms and Conditions of the Bonds. We desire all of such Shares to be registered in the name of [ � ]. .

2. In submitting this notice and in exercising its Conversion Right, I/we agree to repeat all the same representations and warranties made in the Agreement (including in Schedule 10 of the Agreement).

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Yours faithfully

..................................................................................

Name: ...................................................................... Title: ........................................................................

For and on behalf of [Bondholder]

enc

To be completed by the Issuer

We acknowledge receipt of this Conversion Notice. The Conversion Date in respect of the above Bonds is ..................................................................

..................................................................................

Name: ...................................................................... Title: ........................................................................

We repeat all the same representations and warranties made in the Agreement (including in Schedule 9 of the Agreement) as at the Conversion Date.

For and on behalf of

Central Petroleum Limited

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