Ann: General Security Agreement, page-443

It may a little confusing to picture the whole situation so lets a real estate deal analogy. Because everyone understands real estate right? Let's pretend You are TSO & I'm the Vendor.

• I own am empty 5,000m2 block of Land in the Sydney CBD and You believe that if you invested time/money to develop a concept design that we could build a 20 storey commercial office tower and generate huge profits from rental returns when the tower is built (subject to the completion of a feasibility study).
• So we do a deal. Because you are raising all the money and expending all the effort to prove this up, that once you've completed the feasibility you'll own 80% of the asset. I don't really want anything to do with the construction and operation of the tower, so we will negotiate a fair value sale based on the financials in the feasibility so you can purchase the remaining 20% and have full ownership of the development (assume 30% of the NPV in the FS = $10 Mil). However, if i change my mind and want still want some ownership of the development after the feasibility study is completed, I will need to contribute 20% of all cost moving forward such as the Construction & Fitout cost. We enter into a purchase option agreement to define the terms.
• It turns out that our block of land is infact suited to build a 60 storey tower and not 20 storey tower. We never thought this was possible! Wow!. A few other developers such as Mirvac, Lendlease, Stocklands have now expressed their interest on purchasing our development site.
• Dispite the early interest from Mirvac, Lendlease & Stocklands, for now, you are still keen on progressing with the development yourself and ultimately securing finance to build, own and operate the commercial office tower.
• Whilst there is a current purchase option agreement in place between you and I, I believe that the amount of money i could make from selling the block of land to those developers after the feasibility study is completed would make me alot more money then what you would be able to pay me for the remaining 20% ownership of the land after the feasibility.
• I really want to sell the asset to the developers, because I'm going to be better off and make more money, however, I need to convince you to sell the block of land because you currently own 70% of the land and have total control over what to do.
• I'm willing to terminate the original purchase option agreement, we don't have to negotiate a sale of my remaining 20%, I'm also willing to reduce my ownership down to 15%, however, only if you agree to sell the asset to one of those developers.
• Whilst not formal, we now have an underlying agreement that you will agree to sell our 85% ownership of the project. If you reneg on this deal & decide to proceed with building the office tower yourself which is estimated to cost $200 Million+, by law, i must contribute 15% of the cost at $30 Million, or else I will have my ownership in the asset reduced down to nothing. I won't be able to or want to raise that kind of money. So, if the existing purchase option agreement is terminated, i'm exposed to some major risk here.
• So I'm holding you to our underlying agreement that you'll honor it and agree to sell the asset.
• We therefore terminate the original purchase option agreement.
• It is all up to you now to complete the 60 Storey office tower design, complete a feasibility and get approvals from the local councils to develop it in order to unlock it's full development value potential.
• Goodluck Guardian Angel.