Novation Deed

 

Liberty Petroleum Corporation

and

Discovery Energy Corp. (Formerly

Santos Resource Corp.)

 

In respect of

Option to Purchase and Sale and Purchase Agreement

Dated

January 31, 2012

  

 

 

  

Table of contents

 

Clause     Page 1 Definitions and interpretation 1   1.1 Definitions 1   1.2
Interpretation 5 2 Novation of Novated Agreement and agreement to sell and
purchase 5   2.1 Novation of Novated Agreement 5   2.2 Agreement to sell and
purchase 6 3 Conditions 6   3.1 Conditions precedent 6   3.2 Responsibility 6 4
Payment of the Purchase Price 6   4.1 Payment of the Purchase Price 6   4.2
Close of Escrow and release of balance of Purchase Price 7   4.3 Termination 7 5
Rights and Obligations prior to the Completion Date 7   5-1 Purchaser’s
Qualification prior to Completion 7   5.2 Seller’s nomination of the Purchaser 8
  5.3 Conduct prior to Completion 8   5.4 Confidential Information 9   5.5
Factors relevant to pre-Completion obligations 9 6 Completion 9   6.1 Time and
place of Completion 9   6.2 Seller’s Completion obligations 9   6.3 Payment and
delivery on Completion 9   6.4 Registration prior to Completion 7 Sale and
Purchase of the License Interest 10   7.1 Acquisition of the License Interest by
the Purchaser 10   7.2 The Purchaser may farm out 10   7.3 Royalty Interest 10  
7.4 Reversion of License Interest to Seller 10 8 Seller’s Warranties 11   8.1
Seller’s Warranties 11   8.2 Ability to claim 11   8.3 Limitation on Claims 12  
8.4 Management of third party Claims 12 9 Exclusion of other warranties 13   9.1
Other warranties excluded 13   9.2 Remedies for breach of Seller’s Warranties or
Claims 14   9.3 Recovered amounts 14 10 Confidentiality 14   10.1
Confidentiality before Completion 14   10.2 Public announcements 15 11
Purchaser’s Warranties 15 12 Indemnity and breach 15

 

 

 

 

  12.1 Seller’s indemnity 15   12.2 Seller’s remedies 15   12.3 Notice of breach
16   12.4 Limitation on claims 16   12.5 Purchaser’s indemnity 16 13 Taxation 16
  13.1 GST 16   13.2 Recognition of income and expenses 17 14 Costs and expenses
17   14.1 Stamp duty and registration fees 17   14.2 Costs and expenses 17 15
Merger 17 16 Assignment 18 17 Further assurances 18 18 Entire agreement 18 19
Waiver 18 20 Notices 18 21 Governing law and jurisdiction 19 22 Counterparts 19
      Schedule 1 - Seller’s Warranties 21   Schedule 2 - Disclosures 23    
Schedule 3 – Purchaser’s Warranties 24     Annexure A - Royalty Grant Deed 24  
  Annexure B – Six-Month Promissory Note 25     Annexure C – Nine-month
Promissory Note 25     Annexure D – Escrow Agreement 25   Annexure E – Common
Stock Leakage Agreement 25     Annexure F – Bidding Document 25

  

 

 

 

Discovery Energy/Liberty - Novation Deed - Sale and Purchase Agreement -
Confidential dated 15 May 2012  

  

This deed is made on May 15, 2012 between the following parties:

 

1.Liberty Petroleum Corporation ARBN 086 194 443, of Suite 540, 10851 North
Black Canyon Highway, Phoenix, Arizona, 85029 USA (Seller), and

 

2.Discovery Energy Corp. (formerly Santos Resource Corp.), as the designate of
Keith Spickelmier of Suite 1700, One Riverway Drive, Houston, Texas, 77056 USA
(Purchaser).

 

Recitals

 

A.The Seller is the successful applicant for Petroleum Exploration License (PEL)
512 in the State of South Australia (designated as CO2009-A).

 

B.The Parties entered into a Letter of Intent dated September 12, 2011, as
amended by i) First Amendment to Letter Agreement effective November 4, 2011 and
ii) Second Amendment to Letter Agreement effective November 15, 2011 and as
amended and restated in the First Amended and Restated Document dated December
1, 2011 and further amended in the Santos PEL 512 Purchase Price Advance
agreement dated December 28, 2011 (the “LOI”), in respect of the matters herein
agreed.

 

C.The LOI provides (inter alia) as follows:

 

a)The payment of $150,000 deposit paid by the Purchaser to the Seller upon
signing and extending the LOI (the “Option”).

 

b)The payment of $200,000 as an advance against the Purchase Price paid by the
Purchaser to the Seller pursuant to an agreement executed by the parties on
December 28, 2011.

 

c)That a definitive agreement would be signed on or prior to January 31, 2012,
and

 

d)That the Purchaser will pay good and valuable consideration to the Seller,
including the grant to the Seller of a royalty interest in petroleum produced
and sold from the License.

 

D.The Parties entered into the Option to Purchase and Sale and Purchase
Agreement dated January 31, 2012 (the “Novated Agreement”) to create a formal
and binding agreement between them as to the matters contemplated in the LOI.

 

E.The Parties have agreed to change the method by which the Purchaser will
acquire the License Interest from the Seller and in order to effect that change
the Parties have agreed to replace the Novated Agreement and enter into this
Deed in full substitution of the Novated Agreement.

 

The Parties covenant as follows:

 

 

 

1Definitions and interpretation

 

1.1Definitions

 

In this Deed, including the recitals and Schedules, the following definitions
apply unless the context requires otherwise:

 

Affiliate of a specified person means another person that directly, or
indirectly through one or more intermediaries, controls or is controlled by, or
under common control with the specified person.

  

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Discovery Energy/Liberty - Novation Deed - Sale and Purchase Agreement -
Confidential dated 15 May 2012  

 

Bidding Document means the document submitted by the Seller to the Minister as
Application No. CO2009-A, a copy of which is attached as Annexure G to this
Deed;

 

Business Day means a day on which banks are open for general banking business in
Houston, Texas;

 

Claim means, in relation to any person, a claim, action, proceeding, judgment,
damage, loss, cost, expense or liability incurred by or to or made or recovered
by or against the person, however arising and whether present, unascertained,
immediate, future or contingent;

 

Common Stock Leakage Agreement means the investor contract, the form of which is
attached as Annexure E, entered into between the Public Company and the Seller
or its designees, as a condition precedent for the issuance of the Public
Company common stock under this Deed;

 

Completion means completion by the parties of the sale and purchase evidenced by
this Deed;

 

Completion Date means that date, after the satisfaction of the conditions
precedent in clause 3.1, and receipt by the Escrow Agent of all items pursuant
to Clauses 4.1 and

4.2 hereof, that the Escrow Agent closes the escrow and releases the Licensed
Interest

and ancillary documents to the Purchaser, and the Purchase Price to the Seller,
or such other date as the Seller and the Purchaser may agree;

 

Corporations Law means the Texas Business Organizations Code;

 

Data Room means the offices of Robert Kamon located in Cisco, Texas to which the
Purchaser has had access to information and materials relating to the License
Interest;

 

Data Room Documentation means all documentation contained in the Data Room or
listed in the data room index provided to the Purchaser or its representatives
and answers to any questions supplied by Seller, and includes supplementary data
and information provided to the Purchaser or its representatives up to and
including the date of this Deed;

 

Disclosures means an item of information, communication or disclosure contained
in the categories of information referred to in Schedule 2;

 

Disclosure Material means all written or electronic information and data
prepared by Seller, its Affiliates or any of its representatives in connection
with the transactions contemplated by this Deed:

 

(a)contained in the Data Room; or

 

(b)provided to the Purchaser, its Affiliates, representatives, advisers or
employees by Seller up to the Effective Date;

 

Dollar ($) means the currency of the United States of America;

 

Effective Date means January 31, 2012;

 

End Date means December 31, 2012 unless extended by further written agreement
between the parties;

 

Escrow Agent mean Purchaser’s attorney, Randall W. Heinrich, Attorney At Law at
Gillis, Paris & Heinrich, PLLC, 8 Greenway Plaza, Suite 818 Houston, Texas
77046, acting as the Escrow Agent for this transaction;

  

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Discovery Energy/Liberty - Novation Deed - Sale and Purchase Agreement -
Confidential dated 15 May 2012  

 

Escrow Agreement means the documented arrangement with the Escrow Agent, the
form of which is set out in Annexure D hereto;

 

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

 

GST means any tax or government impost in the nature of a tax on the supply of
goods and services, real property or any other thing imposed by the Commonwealth
of Australia;

 

Interest Rate means the rate per annum determined by Seller (and agreed by the
Purchaser) to be the arithmetic mean during the applicable interest period of
one month term London Interbank Offer Rates (LIBOR rates) for US$ as published
on the first Business Day of each month by the Financial Times of London and
referred to as the Interbank Fixing Rate, plus an additional 3% per annum;

 

License means the Petroleum Exploration License (PEL) 512 to be granted to the
Seller or to the Purchaser or the Purchaser’s nominee under the Petroleum
Legislation in South Australia in satisfaction of Seller’s application No.
CO2009A for PEL

512 or any other license granted under the Petroleum Legislation in place or as
a result of

PEL 512;

 

License Interest means all legal and beneficial interests in, and title to, the
License;

 

Minister means the Minister of the Government of the State of South Australia
responsible under and for the Petroleum Legislation;

 

NASD: OTCBB means the Over The Counter Bulletin Board Market;

 

Native Title Act Deed means the deed under section 31 of the Native Title Act
1993 (SA) to be entered into by the Seller or the Purchaser or the Purchaser’s
nominee with the Minister and the Native Title Claimant;

 

Novated Agreement means the Option to Purchase and Sale and Purchase Agreement
dated January 31, 2012 between the Seller and the Purchaser;

 

Operator means the Purchaser;

 

Option means the exclusive option for the Purchaser to buy the License Interest
from Seller, as granted by the Seller to the Purchaser under the terms of the
LOI and the Novated Agreement, but as now varied under the terms of this Deed;

 

Option Assignment means the agreement dated January 10, 2012 entered into by the
Purchaser and Keith Spickelmier under which Keith Spickelmier assigned the LOI
to the Purchaser and under which the Purchaser accepted such assignment and
assumed all of Keith Spickelmier’s obligations and liabilities under the LOI;

 

Parent Entity has the meaning given to that term in the Corporations Law;

 

Petroleum has the meaning given to that term under the Petroleum Legislation;

 

Petroleum Legislation means the Petroleum and Geothermal Energy Act 2000 (SA) as
well as all regulations, administrative directions and determinations made under
that Act;

  

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Discovery Energy/Liberty - Novation Deed - Sale and Purchase Agreement -
Confidential dated 15 May 2012  

 

Promissory Notes means the two documents of indebtedness being delivered by the
Purchaser to the Seller the forms of which are attached as Annexures B and C to
this Deed;

 

Public Company means the Purchaser, a company listed with the United States
Securities Exchange Commission whose common stock is traded on the NASD:OTCBB
under the symbol DENR ;

 

Purchase Price means $1,550,000, payable in cash and promissory notes, and
twelve million (12,000,000) shares of Public Company common stock payable as set
out in Clause 4 below;

 

Purchaser’s Warranties means the representations and warranties set out in
Schedule 3;

 

Qualification means the process referred to in clause 3.1(a) whereby the
Purchaser and/or its nominee is approved by the Minister as being the applicant
for the License in place of the Seller;

 

Royalty Grant Deed means the document whereby the Purchaser grants and assigns
the Royalty Interest to the Seller as part consideration for the purchase of the
License Interest, substantially in the form set out in Annexure A to this Deed;

 

Royalty Interest means an interest in the Wellhead Value of all Petroleum sold
from the

License, as more particularly described in the Royalty Grant Deed;

 

Security Interest means:

 

(a)any interest or power:

 

(1)reserved in or over any interest in the License including, without
limitation, any retention of title; or

 

(2)created or otherwise arising in or over any interest in the License under a
bill of sale, mortgage, charge, lien, pledge, trust or power,

 

by way of security for the payment of debt or any other monetary obligation or
the performance of any other obligation and whether existing or agreed to be
granted or created but does not include any claim, royalties or interest under
the Petroleum Legislation; and

 

(b)any production payment, royalty, override, net profit interest or other
contractual obligation in respect of the License;

 

Seller’s Warranties means the representations and warranties of the Seller set
out in

Schedule 1;

 

Subsidiary Entity has the meaning given to that term in the Corporations Law;

 

Tax includes any income tax, land tax, sales tax, payroll tax, fringe benefits
tax, group tax, profit tax, property tax, customs duties, excise duties,
franking deficits tax, stamp duty, petroleum resource rent tax, resource super
profits tax, GST, value added tax, bank accounts debits tax, financial
institutions duty or any other taxes or duties which have been or are assessed
or imposed by any Government Agency or statutory body (including fines,
additional tax, interest or penalties);

 

Wellhead Value has the meaning given to that term in the Royalty Grant Deed;

 

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Discovery Energy/Liberty - Novation Deed - Sale and Purchase Agreement -
Confidential dated 15 May 2012  

 

1.2Interpretation

 

Headings are for convenience only and do not affect interpretation. The
following rules apply unless the context requires otherwise:

 

(a)The singular includes the plural and conversely.

 

(b)A gender includes all genders.

 

(c)If a word or phrase is defined, its other grammatical forms have a
corresponding meaning.

 

(d)A reference to a person, corporation, trust, partnership, unincorporated body
or other entity includes any of them.

 

(e)A reference to a clause, Annexure or Schedule is a reference to a clause or
annexure of or a schedule to this Deed.

 

(f)A reference to an agreement or document (including, without limitation, a
reference to this Deed) is to the agreement or document as amended, varied,
supplemented, novated or replaced except to the extent prohibited by this Deed
or that other agreement or document.

 

(g)A reference to a party to this Deed or another agreement or document includes
the party’s successors and permitted substitutes or assigns (and, where
applicable, the party’s legal personal representatives).

 

(h)A reference to legislation or to a provision of legislation includes a
modification or re- enactment of it, a legislative provision substituted for it
and a regulation or statutory instrument issued under it.

 

(i)A reference to writing includes a facsimile transmission and any means of
reproducing words in a tangible and permanently visible form.

 

(j)A reference to title, authority, license or permit issued under the Petroleum
Legislation or any other statute includes a renewal, extension, re-issuance or
variation of that instrument and includes any other instrument issued or granted
in substitution for, or pursuant or ancillary to that instrument, and any other
instrument conferring the same or similar rights previously the subject of that
title, authority, licence or permit.

  

 

 

2Novation of Novated Agreement and agreement to sell and purchase

 

2.1Novation of Novated Agreement

 

The Parties hereby agree to replace the Novated Agreement in its entirety with
this Deed, so that they enter into this Deed in complete substitution of and for
the Novated Agreement and covenant to undertake their respective obligations
under this Deed in place of their respective obligations under the Novated
Agreement.

  

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Discovery Energy/Liberty - Novation Deed - Sale and Purchase Agreement -
Confidential dated 15 May 2012  

 

2.2Agreement to sell and purchase

 

Subject to satisfaction of the terms of this Deed, as between the parties, and
the satisfaction

of the condition precedent in clause 3.1(d), title to and property in the
License Interest will be treated as having passed to the Purchaser with effect
as of and from the Completion Date.

  

 

 

3Conditions

 

3.1Conditions precedent

 

The obligations of the parties in respect of Completion do not become binding
unless and until:

 

(a)the Purchaser receives written confirmation from the Minister that the
Purchaser and/or its nominee has qualified to be the applicant for the License
in the place of the Seller (“Qualification”);

 

(b)the Purchaser receives written confirmation from the Minister that the
Minister accepts the nomination of the Purchaser and/or the Purchaser’s nominee
as the applicant for and grantee of the License in the place of the Seller;

 

(c)the Purchaser or its nominee enters into the Native Title Act Deed; and

 

(d)the Minister grants and issues the License to the Purchaser or its nominee.

 

3.2Responsibility

 

(a)The conditions precedent in clause 3.1 are for the benefit of both parties
and cannot be unilaterally waived.

 

(b)Each party will use its reasonable endeavors to obtain satisfaction of the
conditions precedent referred to in clause 3.1.

 

 

  

4Payment of the Purchase Price

 

4.1Payment of the Purchase Price

 

Subject to the satisfaction of the conditions precedent under clause 3.1, the
Purchaser agrees to pay or grant or cause to be paid or granted the Purchase
Price to the Seller as follows:

 

(a)The Seller hereby acknowledges receipt from Purchaser of and accords a
Purchase Price credit for cash deposits totaling $150,000.

 

(b)The Seller hereby also acknowledges receipt from the Purchaser of a Purchase
Price advance cash payment of $200,000.

 

(c)The Seller hereby also acknowledges receipt from the Purchaser of an
additional cash payment of the sum of $200,000 within 20 Business Days following
the Effective Date in accordance with clause 4.1(c) of the Novated Agreement.

 

(d)Upon satisfaction of the conditions precedent in clause 3.1 (a) and (b)
above, the Purchaser must deposit with the Escrow Agent the following:

  

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Discovery Energy/Liberty - Novation Deed - Sale and Purchase Agreement -
Confidential dated 15 May 2012  

 

(1)certified funds in the amount of $250,000;

 

(2)an executed Promissory Note in the principal sum of $500,000 bearing interest
at the Interest Rate, payable 6 months following the Completion Date;

 

(3)an executed Promissory Note in the principal sum of $250,000.00 bearing
interest at the Interest Rate, payable 9 months following the Completion Date;
and

 

(4)shares of the Public Company common stock totaling 12,000,000 shares and the
accompanying Common Stock Leakage Agreement .

 

4.2Close of Escrow and release of balance of Purchase Price

 

The Escrow Agent shall hold all such materials and funds under the terms of the
Escrow Agreement. Upon receipt of all of the matters, as set out in clause 4.1
above, and upon satisfaction of the condition precedent in clause 3.1(d) above,
the Escrow Agent will release all such matters, documents and funds to the
relevant parties to complete the sale and purchase of the License Interest by
the Purchaser.

 

4.3Termination

 

If, for any reason whatsoever:

 

(a)the conditions precedent in clause 3.1 (a), (b) and (c) above are not
satisfied on or before the End Date, and the Purchaser delivers notice to the
Seller in writing that it wishes to terminate this Deed for that reason; or

 

(b)the condition precedent in clause 3.1(d) is not satisfied on or before the
End Date, and the Purchaser gives notice to the Seller in writing that it wishes
to terminate this Deed for that reason,

 

then, in either of the above circumstances, (i) the Escrow Agent will forthwith
release the funds deposited under clause 4.1(d), t h e Promissory Notes, a n d t
h e shares and share assignments to the Purchaser, and (ii) within 30 Business
Days, Seller must repay to the Purchaser the funds paid or credited to it under
clauses 4.1(a), 4.1(b) and 4.1(c) above.

 

 

 

5Rights and obligations prior to the Completion Date

 

5.1Purchaser’s Qualification prior to Completion

 

(a)Prior to Completion, the Purchaser must submit an application to the Minister
for Qualification as the applicant for the License in place of the Seller.

 

(b)Each party must co-operate with the other and do all things reasonably
necessary to obtain Qualification in accordance with this clause 5.1.

 

(c)Without limiting the generality of paragraph (b):

 

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Discovery Energy/Liberty - Novation Deed - Sale and Purchase Agreement -
Confidential dated 15 May 2012  

 

(1)each party must make all necessary and appropriate applications and supply
all necessary and appropriate information for the purpose of enabling
Qualification to be obtained;

 

(2)no party may withdraw or procure the withdrawal of any application made or
information supplied under paragraph (c)(1);

 

(3)no party may take any action that would or would be likely to prevent or
hinder Qualification; and

 

(4)each party must supply to the others copies of all applications made and all
information supplied for the purpose of obtaining Qualification.

 

(d)Upon Qualification, the parties shall, as between themselves, treat the
condition precedent in clause 3.1(a) as being fully satisfied.

 

(e)The Purchaser must, upon receiving confirmation of its or its nominee’s
Qualification as the applicant for the License, promptly give the Seller Notice
of Qualification and provide the Seller with a copy of the evidence of such
Qualification.

 

5.2Seller’s nomination of the Purchaser

 

Forthwith and in any event within 5 days after the Seller receives the
Purchaser’s Notice of Qualification under clause 5.1(e), the Seller must notify
the Minister in writing that the Seller nominates the Purchaser or the
Purchaser’s nominee as the applicant for and grantee of the License in place of
the Seller.

 

5.3Conduct prior to Completion

 

The Seller is responsible for the administration of the License Interest until
the date that the Purchaser receives confirmation that the condition precedent
in clause 3.1( b) has been satisfied. Prior to that date, except as expressly
disclosed in this Deed or consented to by the Purchaser, the Seller must inform
and consult with the Purchaser on all material matters relating to the License
Interest. In particular, but without prejudice to the generality of the
foregoing:

 

(a)the Seller must not create any Security Interest over any of the License
Interest or dispose of any of its interest in any of the License Interest; and

 

(b)the Seller must provide to the Purchaser copies of all material notices
received by it from the Minister or any other party in respect of the License
Interest.

 

After that date and prior to the Completion Date, each party must use its best
endeavors to cooperate with the other party in the administration of the License
Interest and not unreasonably withhold or delay any consent, which may be
required under this clause 5.3. A party will be taken to have given its consent
for the purposes of this clause 5.3, if that party does not, within a period of
time that is reasonable in the context of the matter to which the consent
relates, notify the other party that it refuses its consent. In this clause 5.3,
a reasonable period of time means within 96 hours after a party is notified of a
proposed action.

 

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Discovery Energy/Liberty - Novation Deed - Sale and Purchase Agreement -
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5.4Confidential Information

 

Any information obtained by the Purchaser by reason of clause 5.3 is deemed to
be “Confidential Information” and after the Effective Date is subject to the
terms of clause 9.

 

5.5Factors relevant to pre-Completion obligations

 

In complying with their respective obligations under clause 5.3, each party is
not required to do or allow to be done anything, which would, in the other
party’s reasonable opinion:

 

(a)unreasonably disrupt or adversely impact the License Interest;

 

(b)breach any obligations (including obligations of confidentiality) that a
party owes to any third party or under any law or regulations; or

 

(c)materially prejudice the likelihood of Completion occurring.

 

 

 

6Completion

 

6.1Time and place of Completion

 

Completion of the sale and purchase of the License Interest will take place on
the Completion Date at the offices of the Seller at Suite 540, 10851 North Black
Canyon Highway, Phoenix, Arizona, USA or at any other place as the Seller and
the Purchaser may agree in writing. T h e parties may alternatively elect to
effect Completion by execution of counterpart signatures remotely.

 

6.2Seller’s Completion obligations

 

On the Completion Date, the Seller must deliver to the Purchaser:

 

(a)any document reasonably required by the Purchaser to vest full possession and
benefit of the License and the License Interest in the Purchaser;

 

(b)the originals of all instruments, title documents, contract documents and
other records relating to the License; and

 

(c)a copy of the Royalty Grant Deed executed by Seller.

 

6.3Payment and delivery on Completion

 

On the Completion Date and subject to the timely and proper performance by the
Seller of the obligations on its part to be performed under clause 6.2, the
Purchaser must:

 

(a)pay to the Seller the balance of the Purchase Price in cash and stock value
in accordance with clause 4.1; and

 

(b)a copy of the Royalty Grant Deed executed by the Purchaser.

 

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7Sale and Purchase of the License Interest

 

7.1Acquisition of the License Interest by the Purchaser

 

(a)The Purchaser will be entitled to acquire the License Interest from the
Seller by:

 

(i)paying the Purchase Price to the Seller;

 

(ii)committing to the guaranteed work program and the total guaranteed
expenditure subject to which the License has been or will be granted as set out
in the Bidding Document without variation or extension, unless application for
such variation or extension is approved prior in writing by the Seller or unless
the Purchaser has reasonable excuse for such variation or extension due to a
force majeure circumstance (the “Guaranteed Work Program”); and

 

(iii)granting the Royalty Interest to the Seller by execution of the Royalty
Grant Deed; and

 

(b)subject to Completion, the Purchaser agrees to assume all of the obligations
and liabilities arising in relation to the License including all work and
expenditure obligations in respect of the Guaranteed Work Program on and from
the Completion Date.

 

7.2The Purchaser may farm out

 

The Purchaser may assign, in whole or in part, to one or more parties, any of
its rights under this Deed to enable it to satisfy the License commitments or
any other obligation under this Deed or otherwise provided that any such
assignee assumes the assigned part of the Purchaser’s obligations and
liabilities under this Deed, and the Seller agrees to do all acts, matters or
things required by the Purchaser to give effect to the acquisition of such an
interest by a third party.

 

7.3Royalty Interest

 

Subject to Completion, the Purchaser is deemed to have granted to the Seller the
Royalty Interest pursuant to the Royalty Grant Deed. The Royalty Interest will
be enduring and will continue until the whole of the License has been
relinquished or terminated. The Royalty Interest will apply in the event the
License is relinquished and then a new license is granted to the Purchaser
during a one-year period. To the extent that the Purchaser wishes to assign,
sell or otherwise dispose of its interest in the License to a third party the
Purchaser must ensure that that third party purchaser takes its interest subject
to the Royalty Interest.

 

7.4Reversion of License Interest to the Seller

 

If the Purchaser fails in any material way to perform the Guaranteed Work
Program and the Purchaser has failed to obtain a variation of the Guaranteed
Work Program from the Minister or the relevant Government Agency to:

 

(a)a waiver of the breach; or

 

(b)an extension of time to rectify such breach,

  

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Discovery Energy/Liberty - Novation Deed - Sale and Purchase Agreement -
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then the Seller is entitled to request that the Purchaser transfers the License
Interest back to the Seller. Prior to exercising such right of reversion, the
Seller agrees to issue a Notice to the Purchaser requesting that the Purchaser
remedies the default within 90 days after the date of the Notice. If the
Purchaser fails to remedy the default within this period, the Seller may
exercise its right of reversion by further Notice to the Purchaser. Forthwith
upon receiving such Notice the Purchaser agrees to execute and deliver a
transfer of the License Interest to the Seller and execute and deliver such
other documents reasonably required by the Seller to vest full possession and
benefit of the License Interest in the Seller. In such event, the Purchaser also
agrees to indemnify the Seller against and hold the Seller harmless from all
claims arising in respect of works performed by the Purchaser prior to the date
of such reversion. Any variation to the Guaranteed Work Program that reduces the
aggregate investment commitment or extends the initial term beyond six months
requires consent from the Seller, which cannot be unreasonably withheld.

 

 

 

8Seller’s Warranties

 

8.1Seller’s Warranties

 

The Seller represents and warrants to the Purchaser that as at the date of this
Deed, and as at Completion (unless otherwise stipulated), each of the statements
made in Schedule 1 is accurate.

 

8.2Ability to claim

 

Except with respect to obligations under clause 10, the Seller will not be
liable to the Purchaser for any Claim under the Seller’s Warranties, for any
breach of this Deed or otherwise:

 

(a) unless the Purchaser has given Notice to the Seller setting out full details
of the Claim (including without limitation, reasonable details of the fact,
circumstance or event giving rise to the Claim, the nature of the Claim and, to
the extent that it is able to do so, the Purchaser’s calculation of the loss
suffered by it) as soon as reasonably practicable after the Purchaser becomes
aware of the fact, matter or circumstance on which the Claim is based, and in
any event within 12 months after Completion;

 

(b)if the amount finally adjudicated or agreed against the Seller in respect of
that Claim is less than $10,000;

 

(c)if the aggregate amount of Claims made is less than $10,000;

 

(d)to the extent that the Claim is based on any fact, matter or circumstance:

 

(1)contained in the Disclosures;

 

(2)contained in this Deed; or

 

(3)which is or was within the actual knowledge of the Purchaser;

 

(e)if the Claim arises or is increased directly as a result of any act or
omission of or on behalf of the Seller in the ordinary course of business (and
subject to the Seller complying with its obligations under clause 5.1) and where
the Purchaser has consented to that act or omission under clause 5.1;

 

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(f)if compensation in respect of the Claim is recoverable by the Purchaser under
or out of the proceeds of any insurance (or insurance that existed at Completion
that the Purchaser has failed to maintain) or the Purchaser has rights of
recovery against a third party and recovery is made;

 

(g)to the extent that the Claim relates to any liabilities that is part of the
Disclosures;

 

(h)to the extent that the Claim has arisen as a result of or in connection with
any act or omission by the Purchaser, any Affiliate of the Purchaser or any
person acting, or purporting to act on behalf of the Purchaser or any Affiliate
of the Purchaser after Completion; or

 

(i)to the extent that the subject of the Claim has been or is made good or is
otherwise compensated for without cost to the Purchaser or any Affiliate of the
Purchaser.

 

8.3Limitation on Claims

 

With respect to obligations under clause 8.2:

 

(a)the maximum aggregate amount the Purchaser may recover from the Seller in
relation to this Deed is an amount equal to $4,050,000; and

 

(b)in no circumstances will the Seller be liable to the Purchaser for any
indirect loss, economic loss, loss of profits or consequential loss or damage
whatsoever, however arising.

 

8.4Management of third party Claims

 

(a)If a claim by a third party against the Purchaser (actual or threatened) may
potentially give rise to a Claim by the Purchaser against the Seller for a
breach of one of the Seller’s Warranties but not otherwise, the Purchaser must
notify the Seller in writing of such claim as soon as reasonably practicable.

 

(b)Within 20 Business Days after receiving a Notice from the Purchaser under
paragraph (a) above, the Seller may consult with the Purchaser to ascertain what
steps, if any, are reasonable and appropriate to resolve the third party claim.

 

(c)If the Seller wishes to make an offer for or agree to settlement of any third
party claim on behalf of the Purchaser, the Seller must first consult with the
Purchaser. If the Purchaser opposes the course of action, Seller cannot proceed
with it and the liability of the Seller with respect to the third party claim is
limited to the amount or amounts that would have been payable by the Seller
under the terms of the proposed offer and settlement proposal.

 

(d)If the Seller does not wish to dispute (or to continue to dispute) the third
party claim on behalf of the Purchaser, the Purchaser must first consult with
the Seller before making any offer for or agreeing to any settlement of such a
claim.

 

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Discovery Energy/Liberty - Novation Deed - Sale and Purchase Agreement -
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(e)Subject to paragraph (f), any breach of this clause 8.4 which materially
compromises the Seller’s ability to dispute or conduct or direct the conduct of
any dispute, proceeding, objection, or appeal will result in the Seller being
relieved from any liability whatsoever to the Purchaser with respect to the
Claim for breach of the Seller’s Warranties.

 

(f)Nothing in this clause 8.4 requires the Purchaser to do anything that would
have a material adverse effect on the Purchaser’s existing business.

 

 

  

9Exclusion of other warranties

 

9.1Other warranties excluded

 

(a)For the avoidance of doubt and without limiting paragraphs (b), (c) and (d)
below, the Purchaser acknowledges that the Seller makes no warranties or
representations (express or implied) in relation to the License Interest, the
Disclosures or Disclosure Materials, except the Seller’s Warranties. In
particular, and without limiting in any way the generality of the foregoing, the
Purchaser expressly acknowledges that Seller gives no warranty and no
representation is made by the Seller in relation to:

 

(i)any geological, geophysical, engineering, economic, fiscal or other
interpretations, opinions, forecasts or evaluations by Seller, Affiliates of the
Seller or any other person;

 

(ii)future matters, including future or forecast costs, revenue or profits;

 

(iii)reserves or life of fields;

 

(iv)markets; or

 

(v)the accuracy, reliability or completeness of any information or material
provided to the Purchaser in connection with the License Interest or the
transaction contemplated by this Deed.

 

(b )In consideration of the Seller entering into this Deed, the Purchaser
represents and warrants to the Seller as at the date of this Deed, and as at
Completion, that the Purchaser has relied on its own investigations in relation
to the License Interest and has not relied on any statement (written or oral) or
other conduct by or on behalf of the Seller relating to those things except the
Seller’s Warranties and, in particular, the Purchaser acknowledges that it:

 

(i)has had, whether directly or indirectly, access to the Data Room containing
information about the License Interest; and

 

(ii)has had been afforded the opportunity to make requests for further
information relevant to the License Interest and such information has been
supplied,

 

and that this information and access has been granted by the Seller to enable
the Purchaser to make its own investigations and form its own views and to rely
on those investigations and views in entering into this Deed, which
investigations and views it has relied upon.

 

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Discovery Energy/Liberty - Novation Deed - Sale and Purchase Agreement -
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(c)The Purchaser agrees that to the extent that it has actual or constructive
knowledge of the subject matter of the Seller’s Warranties, any breach of the
Seller’s Warranties will not be enforceable against the Seller to the extent it
is shown that the Purchaser knew of inaccuracy, error or omission at the date of
this Deed.

 

(d)To the extent permitted by law, the Purchaser irrevocably waives any right it
may have to bring an action in respect of any contravention of Arizona Revised
Statutes Title 10, the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, any other federal securities laws, any state
blue sky laws, or other legislation whatsoever in respect of any statement,
representation, conduct or omission by or on behalf of the Seller, its Related
Entities or any Affiliates which is not expressly contained in this Deed.

 

(e)Subject to any law whatsoever to the contrary and except as provided in the
Seller’s Warranties, all terms, conditions, warranties and statements, whether
express, implied, written, oral, collateral, statutory or otherwise are excluded
and the Seller disclaims all liability in relation to these to the maximum
extent permitted by law.

 

9.2Remedies for breach of Seller’s Warranties or Claims

 

Except in circumstances where breach of any of the Seller’s Warranties will or
may result in the Purchaser not receiving full possession and benefit to the
License, free of Security Interests, the Purchaser acknowledges that the sole
remedy for a breach of any of the Seller’s Warranties or for any other claim in
respect of the subject matter of this Deed whatsoever is damages and it shall
not be entitled to defer Completion or rescind or terminate this Deed.

 

9.3Recovered amounts

 

If after the Seller has made a payment to the Purchaser pursuant to a Claim
under the Seller’s Warranties, the Purchaser receives a payment or benefit in
relation to the fact, matter or circumstances to which the Claim relates, the
Purchaser must repay to the Seller the amount received from the Seller or if
less, the payment or benefit received by the Purchaser. Any such amounts repaid
to the Seller pursuant to this clause will be deemed to increase the Purchase
Price payable by the Purchaser under this Deed.

 

 

 

10Confidentiality

 

 

10.1Confidentiality before Completion

 

Until a public announcement is made after Completion in accordance with clause
10.2, each party must keep confidential any information about the existence and
terms of the Novated Agreement and this Deed and any draft of the Novated
Agreement and this Deed, or any information obtained under this Deed or prior to
entering into this Deed, and must not disclose any such information to any
person except:

 

(a)any Affiliate of the party that has a clear need to use that information;

 

(b)any director, officer, employee, financier or adviser of the party, or of an
associated entity of the party, who has a clear need to use that information;

 

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Discovery Energy/Liberty - Novation Deed - Sale and Purchase Agreement -
Confidential dated 15 May 2012  

 

(c)pursuant to any applicable law, or to any regulatory body or Government
Agency, or pursuant to the rules of any stock exchange; or

 

(d)to the extent necessary to obtain any consent or approval contemplated by
this Deed or the financing of the transaction contemplated herein.

 

10.2Public announcements

 

(a)No party will make any public announcement or statement concerning this Deed
or Completion without the prior approval of the other party (such approval not
to be unreasonably withheld). The parties must in good faith agree at or before
Completion the form or forms of press announcements or public statements that
they will each make.

 

(b)Paragraph (a) above does not apply to any disclosure which is required
pursuant to any applicable law, or to any regulatory body or Government Agency,
or pursuant to the rules of any stock exchange, in which event the disclosing
party must seek the other party’s approval of the content of the disclosure and
give the other party at least 48 hours prior Notice of the required disclosure.
The parties will use all reasonable endeavors to agree the terms of the
disclosure. Consent of the other party will not be unreasonably withheld.

 

(c)Seller hereby acknowledges that the Purchaser will be required to file a
Current Report on Form 8-K with the United States Securities Exchange Commission
shortly after the execution of this Deed that will report on the same.

 

 

 

11Purchaser’s Warranties

 

The Purchaser represents and warrants to the Seller that, as at the date of this
Deed and as at Completion, each of the Purchaser’s Warranties is accurate.

  

 

 

12Indemnity and breach

  

12.1Seller’s indemnity

 

The Purchaser must indemnify and keep indemnified the Seller against any Claim
suffered or incurred by t h e Seller, which arises from (and any costs, charges
or expenses incurred by the Seller in connection with) any breach of, or default
under this Deed by the Purchaser.

  

12.2Seller’s remedies

 

Subject to clause 12.3, if the Purchaser fails to comply with any term of this
Deed, without limiting the remedies available to t h e Seller, the Seller may do
any or all of the following:

 

(a)terminate this Deed;

 

(b)sue the Purchaser for breach; or

 

(c)without further Notice to the Purchaser, retain the Purchase Price or resell
the License Interest by any means t h e Seller determines and claim and recover
from the Purchaser any amount by which the proceeds of such sale (less all
incidental expenses) is less than the Purchase Price.

 

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Discovery Energy/Liberty - Novation Deed - Sale and Purchase Agreement -
Confidential dated 15 May 2012  

 

12.3Notice of breach

 

The Seller will not take any action described in clause 12.2 unless t h e Seller
has first given Notice to the Purchaser setting out full details of the default
requesting that the Purchaser remedies the default with 30 days after the date
of the Notice and the Purchaser fails to remedy the default within that period.

 

12.4Limitation on claims

 

With respect to obligations under clause 12.1:

 

(a)the maximum aggregate amount the Seller may recover from the Purchaser in
relation to this Deed is an amount equal to the Purchase Price; and

 

(b)in no circumstances will the Purchaser be liable to Seller for any indirect
loss, economic loss, loss of profits or consequential loss or damage whatsoever,
however arising.

 

12.5Purchaser’s indemnity

 

Subject to the limitations in clauses 8 and 9, the Seller must indemnify, and
keep indemnified, the Purchaser against any Claim suffered or incurred by the
Purchaser which arises from (and any costs, charges or expenses incurred by the
Purchaser in connection with) any breach of, or default under, this Deed by the
Seller.

 

13Taxation

 

13.1GST

 

The Seller and the Purchaser agree that the supply of the License Interest by
the Seller to the Purchaser is the supply of a going concern and is for
consideration, provided however that if for any reason GST is deemed applicable
to the Purchase Price by any body competent to do so the Purchaser shall be
liable for the payment of such GST.

 

In all cases, the following principles apply when determining the amount payable
(the “Payment") for anything supplied pursuant to this Deed:

 

(a)If GST is payable in relation to the supply the amount payable will be the
consideration specified in this Deed plus GST (if any).

 

(b)If the Payment is determined by reference to any liability or cost incurred
by a party (the Payee), the relevant amount is the actual amount incurred by the
Payee less the amount of any GST input tax credit the Payee is entitled to claim
in respect of that liability.

 

(c)If the Payment is a reimbursement or indemnification of a loss determined by
reference to revenue earned less costs incurred, the revenue will be the revenue
earned net of GST and the costs will be determined in accordance with paragraph
(b) above.

 

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Discovery Energy/Liberty - Novation Deed - Sale and Purchase Agreement -
Confidential dated 15 May 2012  

 

13.2Recognition of income and expenses

 

TheSeller and Purchaser agree that:

 

(a)the Seller will recognize the income and expenditures attributable to the
License Interest for Tax (excluding Petroleum Resource Rent Tax) purposes for
the period up to and including the Completion Date; and

 

(b)the Purchaser will recognize the income and expenditures attributable to the
License Interest after the Completion Date for Tax (excluding Petroleum Resource
Rent Tax) purposes.

 

The Seller and the Purchaser agree to file all Tax (excluding Petroleum Resource
Rent Tax) returns on this basis.

 

 

 

14Costs and expenses

 

14.1Stamp duty and registration fees

 

(a)The Purchaser must pay:

 

(1)any stamp duty; and

 

(2)all registration fees under the Petroleum Legislation,

 

in respect of the execution, delivery and performance of this Deed, or any other
agreement or document entered into or signed in order to effect the transactions
contemplated by this Deed, except the Royalty Grant Deed which is the Seller’s
responsibility.

 

(b)The Purchaser agrees to proceed diligently and expeditiously to submit all
documents associated with the sale and purchase evidenced by this Deed required
to be submitted for stamping for an assessment of stamp duty and will keep the
Seller apprised of progress in that regard.

 

14.2Costs and expenses

 

Subject to clause 14.1, each party must pay its own costs and expenses in
respect of the negotiation, preparation, execution and delivery of this Deed and
of any other agreement or document entered into or signed in order to effect the
transactions contemplated by this Deed.

 

 

 

15Merger

 

The rights and obligations of the parties will not merge on the completion of
any transaction contemplated by this Deed. They will survive the execution and
delivery of any assignment or other document entered into for the purpose of
implementing any such transaction.

 

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Discovery Energy/Liberty - Novation Deed - Sale and Purchase Agreement -
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16Assignment

 

The rights and obligations of the Purchaser under this Deed may be assigned,
encumbered or otherwise disposed of, with the prior written consent of the
Seller, which cannot be unreasonably withheld.

 

 

 

17Further assurances

 

Each party agrees to do all such things and execute all such deeds, instruments,
transfers or other documents as may be necessary or desirable to give full
effect to the provisions of this Deed and the transactions contemplated by it.

 

 

  

18Entire agreement

 

This Deed contains the entire agreement between the parties with respect to its
subject matter and supersedes all prior agreements and understandings between
the parties in connection with it.

 

 

 

19Waiver

 

No failure to exercise or any delay in exercising any right, power or remedy by
a party operates as a waiver. A single or partial exercise of any right, power
or remedy does not preclude any other or further exercise of that or any other
right, power or remedy. A waiver is not valid or binding on the party granting
that waiver unless made in writing.

 

 

 

20Notices

 

Any notice, demand, consent or other communication (a “Notice") given or made
under this Deed:

 

(a)must be in writing and signed by a person duly authorized by the sender;

 

(b)must, if communicated by posting or faxing, be acknowledged by electronic
mail sent on the day that such faxing or posting occurs;

 

(c)must be delivered to the intended recipient by prepaid post (or, if posted to
an address in another country, by registered airmail) or by hand or fax to the
address or fax number below or the address or fax number last notified by the
intended recipient to the sender:

 

(1)Liberty Petroleum Corporation:

 

Suite 540, 10851 North Black Canyon Highway

Phoenix, Arizona, 85029 USA

Attention:       Mr. Lane Franks

Fax No:          +1 602 864-6690

Email:            lane@libertypetroleumcorporation.com

 

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Discovery Energy/Liberty - Novation Deed - Sale and Purchase Agreement -
Confidential dated 15 May 2012  

 

(2)Discovery Energy Corp.:

 

Suite 1700, One Riverway Drive,

Houston, Texas, 77056 USA

Attention:        Mr. Michael Dahlke

Fax No:           +1 713 622-1937

Email:             mdd@discoveryenergy.com

 

(d)will be taken to be duly given or made:

 

(1)in the case of delivery in person, when delivered;

 

(2)in the case of delivery by post 2 Business Days after the date of posting (if
posted to an address in the same country) or 7 Business Days after the date of
posting (if posted to an address in another country);

 

(3)in the case of fax, on receipt by the sender of a transmission control report
from the dispatching machine showing the relevant number of pages and the
correct destination fax machine number and indicating that the transmission had
been made without error,

 

but if the result is that a Notice would be taken to be given or made on a day
which is not a Business Day in the place to which the Notice is sent or is later
than 4.00pm (local time) it will be taken to have been duly given or made at the
commencement of business on the next Business Day in that place.

 

21Governing law and jurisdiction

 

THE LAW OF THE STATE OF TEXAS GOVERNS THIS DEED AND EACH PARTY SUBMITS TO THE N
O N- EXCLUSIVE JURISDICTION OF THE COURTS OF THAT STATE AND THOSE COURTS
EMPOWERED TO HEAR APPEALS THEREFROM IN CONNECTION WITH ALL MATTERS CONCERNING
THIS DEED.

 

 

 

22Counterparts

 

This Deed may be executed in any number of counterparts. All counterparts will
be taken to constitute one instrument. Any signature page of a counterpart may
be detached without impairing the legal effect of the signature thereon and
attached to another counterpart identical in form but having attached to it one
or more additional signature pages executed by the other party.

  

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Discovery Energy/Liberty - Novation Deed - Sale and Purchase Agreement -
Confidential dated 15 May 2012  

 

Executed by the parties as a deed:

 

By

Liberty Petroleum Corporation

 

Witness   Authorized signatory       /s/ Trudy Conner   /s/ Lane Franks Trudy
Conner   Lane Franks, President 10851 N. BLACK CANYON HWY,
SUITE 540
PHOENIX, AZ 85029      Name and address (please print)   Name (please print)

 

By

Discovery Energy Corp.

 

Witness   Authorized signatory       /s/ Glen Harris   /s/ Keith McKenzie Glen
Harris   Keith McKenzie, CEO Name and address (please print)   Name (please
print)

 

Page | 20

 

 

Discovery Energy/Liberty - Novation Deed - Sale and Purchase Agreement -
Confidential dated 15 May 2012  

 

Schedule 1 - Seller’s Warranties

 

1Corporate standing of Seller

 

1.1The Seller is duly incorporated and validly exists under the law of its place
of incorporation.

 

1.2The Seller has full corporate power and authority to own and sell the License
Interest.

 

1.3The Seller is solvent and no receiver has been appointed over any part of the
Seller’s License Interest and no such appointment has been threatened.

 

1.4The Seller is not in liquidation or under official management and no
proceedings have been brought or threatened for the purpose of winding-up the
Seller or placing it under official management.

 

2Due authorization

 

2.1The execution and delivery of this Deed has been properly authorized by all
necessary corporate action of the Seller.

 

2.2The Seller has full corporate power and lawful authority to execute and
deliver this Deed and to consummate and perform or cause to be performed its
obligations under this Deed.

 

2.3This Deed constitutes a legal, valid and binding obligation of the Seller
enforceable in accordance with its terms by appropriate legal remedy.

 

2.4This Deed and Completion does not conflict with or result in a breach of or
default under any provision of the constitution of the Seller or any material
term or provision of any agreement or deed or any writ, order or injunction,
judgment law, rule or regulation to which it is a party or is subject or by
which it is bound.

 

3License Interest

 

3.1The Seller has good title to the License Interest and would have had in the
License upon receiving full and proper Ministerial grant of the License.

 

3.2The Seller has legal and beneficial ownership of the License Interest and
would have had in the License upon receiving full and proper Ministerial grant
of the License and the Seller’s legal and beneficial ownership of the License
Interest is and will be free and clear of all Security Interests.

 

4Material breach

 

To the best of the knowledge of the Seller, the Seller has received no notice of
any material breach in relation to any of its obligations under the License or
Petroleum Legislation.

 

5Absence of litigation

 

5.1To the best of the knowledge of the Seller:

 

(a)there is no subsisting litigation between the Seller and any other person
affecting the License or the License Interest; and

 

(b)as at the date of this Deed, there are no disputes, claims or demands between
the Seller and any other person which are likely to give rise to litigation
affecting the License or the License Interest.

 

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Discovery Energy/Liberty - Novation Deed - Sale and Purchase Agreement -
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5.2To the best of the knowledge of the Seller, there is no unsatisfied judgment,
order, arbitral award or decision of any court, tribunal or arbitrator against
the Seller affecting the License or the License Interest.

 

5.3To the best of the knowledge of Seller, there is no suit, action or other
proceeding pending or threatened before any Government Agency or body of
competent jurisdiction seeking to enjoin or restrain the consummation of the
transactions contemplated by this Deed.

 

6Accuracy of information

 

The information located in the Data Room was prepared in good faith and made
available to the Purchaser for the purpose of assisting it in making an
assessment of the value of the License Interest and Seller has deliberately not:

 

(a)omitted anything material from the Data Room or other Disclosure Material; or

 

(b)included anything materially misleading in the Data Room or other Disclosure
Material.

 

7Environmental

 

To the best of the knowledge of the Seller, as at the date of this Deed, the
Seller has not received any Notice of any civil, criminal or administrative
action, or other proceeding or suit, under any law relating to the environment
applicable to the License which is current, pending or threatened.

 

8.Securities Law Matters

 

The Seller (i) acknowledges that it has received recent filings by Purchaser
with the U.S. Securities and Exchange Commission regarding the business, plans,
financial condition, properties, operations and prospects of Purchaser, and that
it believes that it has been and will be given full access to all material
information concerning the financial condition, properties, operations and
prospects of Purchaser, and has had an opportunity to ask such questions of, and
to receive such information from, Purchaser as it has desired and to obtain any
additional information necessary to verify the accuracy of the information and
data received; (ii) has such knowledge, skill and experience in business,
financial and investment matters so that it is capable of evaluating the merits
and risks of an acquisition of shares of Purchaser’s Common Stock; (iii) has
reviewed its financial condition and commitments and that, based on such review,
the Seller is satisfied that it (a) has adequate means of providing for
contingencies, (b) has no present or contemplated future need to dispose of all
or any of the shares of Purchaser’s Common Stock to be received to satisfy
existing or contemplated undertakings, needs or indebtedness, (c) is capable of
bearing the economic risk of the ownership of such shares for the indefinite
future, and (d) has assets or sources of income which, taken together, are more
than sufficient so that the Seller could bear the loss of the entire value of
the shares of Purchaser’s Common Stock to be received; (iv) is acquiring such
shares solely for its own beneficial account, for investment purposes, and not
with a view to, or for resale in connection with, any distribution of such
shares; (v) understands that the shares of Purchaser’s Common Stock to be
received have not been registered under the Securities Act of 1933 or any state
securities laws and therefore such shares are “restricted” under such laws; and
(vi) has not offered or sold any portion of the shares of Purchaser’s Common
Stock to be received and has no present intention of reselling or otherwise
disposing of any portion of such shares either currently or after the passage of
a fixed or determinable period of time or upon the occurrence or non-occurrence
of any predetermined event or circumstance.

 

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Discovery Energy/Liberty - Novation Deed - Sale and Purchase Agreement -
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Schedule 2 – Disclosures

 

1The Data Room Documentation.

 

2All information publicly available (by searches at public registers or
otherwise).

 

3All other information and data provided or communicated to the Purchaser in
writing, its Related Entities, representatives, advisers or employees by the
Seller, its Related Entities, representatives, advisers or employees or any
other person, before the date of this Deed.

 

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Santos/Liberty - Option to Purchase and Sale and Purchase Agreement –
Confidential dated 31 January

2012

 

 

Schedule 3 – Purchaser’s Warranties

 

1The Purchaser

 

1.1The Purchaser is duly incorporated and validly exists under the law of its
place of incorporation.

 

1.2The Purchaser is not insolvent and no receiver has been appointed and no
controller has any right over any part of its assets and no such appointment has
been threatened.

 

1.3The Purchaser is not in liquidation or official management and no proceedings
have been brought or threatened for the purpose of winding- up the Purchaser or
placing it under official management.

 

2Due authorization of Purchaser

 

2.1The execution and delivery of this Deed has been properly authorized by all
necessary corporate action of the Purchaser.

 

2.2The Purchaser has full corporate power and lawful authority to execute and
deliver this Deed and to consummate and perform or cause to be performed its
obligations under this Deed.

 

2.3This Deed constitutes a legal, valid and binding obligation of the Purchaser
enforceable in accordance with its terms by appropriate legal remedy.

 

2.4This Deed and Completion does not conflict with or result in a breach of or
default under any provision of the constitution of the Purchaser or any material
term or provision of any agreement or deed or the writ, order or injunction,
judgment, law, rule or regulation to which it is a party or is subject or by
which it is bound.

 

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Santos/Liberty - Option to Purchase and Sale and Purchase Agreement –
Confidential dated 31 January

2012 

 

 

Annexure A - Royalty Grant Deed

 

Annexure B – Six-Month Promissory Note

 

Annexure C – Nine-month Promissory Note

 

Annexure D – Escrow Agreement

 

Annexure E – Common Stock Leakage Agreement

 

Annexure F - Bidding Document

 

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