Document:

ASSET PURCHASE AND SALE AGREEMENT

 

This Asset Purchase
and Sale Agreement (this “Agreement”) is made and entered into effective March 14, 2013 (the “Effective
Date”) in Carson City, Nevada by and between DESERT DISCOVERIES, LLC, a Nevada domestic limited liability company, c/o
Rutledge Law Center Ltd., 320 North Carson Street, Carson City, Nevada 89701 (“Buyer”), and american
liberty petroleum Corp., a Nevada domestic corporation, 4900 California Ave, Tower B-210, Bakersfield, California 93309
(“Seller”). Buyer and Seller are the only parties to this Agreement and are at times referred to herein singly
as a “Party” and collectively as the “Parties”.

 

BACKGROUND

 

		A.	Buyer
                                                                                                        owns a certain right,
                                                                                                        title and interest in
                                                                                                        and to those oil and gas
                                                                                                        leases issued by the United
                                                                                                        States Department of the
                                                                                                        Interior’s Bureau
                                                                                                        of Land Management (“BLM”)
                                                                                                        and more specifically
                                                                                                        described in Exhibit
                                                                                                        A hereto (singly and
                                                                                                        collectively, the “Leases”)
                                                                                                        as well as an interest
                                                                                                        in any and all improvements,
                                                                                                        tenements, hereditaments
                                                                                                        (including rights of ingress
                                                                                                        and egress to, through,
                                                                                                        and over the Leases),
                                                                                                        and appurtenances thereunto
                                                                                                        belonging or in any way
                                                                                                        appertaining, if and as
                                                                                                        applicable (collectively,
                                                                                                        the “ITHA”),
                                                                                                        as well as any and all
                                                                                                        claims, deposits, prepayments,
                                                                                                        refunds, causes of action,
                                                                                                        rights of recovery, rights
                                                                                                        of set off, and rights
                                                                                                        of recoupment concerning
                                                                                                        the Leases (collectively,
                                                                                                        “Collection Rights”),
                                                                                                        any and all approvals,
                                                                                                        permits, licenses, orders,
                                                                                                        registrations, certificates,
                                                                                                        variances, and similar
                                                                                                        rights obtained from governments
                                                                                                        or governmental agencies
                                                                                                        regarding the Leases (collectively,
                                                                                                        “Consents”),
                                                                                                        and any and all personal
                                                                                                        property physically on
                                                                                                        and/or pertaining to the
                                                                                                        Leases, including geological
                                                                                                        reports and data prepared
                                                                                                        by the Seller’s
                                                                                                        consultants (the “Other
                                                                                                        Personal Property”).
                                                                                                        Collectively, the Leases,
                                                                                                        ITHA, Collection Rights,
                                                                                                        Consents and Other Personal
                                                                                                        Property are referred
                                                                                                        to herein as the “Acquired
                                                                                                        Assets”.

 

		B.	The
                                                                                                        Lease identified on Exhibit
                                                                                                        A as BLM Lease Serial
                                                                                                        No. NVN-59901, referred
                                                                                                        to herein as the “Cortez
                                                                                                        Lease”, is covered
                                                                                                        by that certain Operating
                                                                                                        Agreement (the “Cortez
                                                                                                        JOA”) dated
                                                                                                        as of August 2, 2011 among
                                                                                                        Independence Drilling,
                                                                                                        LLC, a Nevada limited
                                                                                                        liability company (the
                                                                                                        “Operator”),
                                                                                                        Buyer, Cortez Exploration,
                                                                                                        LLC, a Nevada limited
                                                                                                        liability company (“Cortez”),
                                                                                                        Punto De Luz, LLC, a Nevada
                                                                                                        limited liability company
                                                                                                        (“Punto”),
                                                                                                        Edward Traub, an individual
                                                                                                        (“Traub”),
                                                                                                        and Seller. The Leases
                                                                                                        identified on Exhibit
                                                                                                        A as BLM Lease Serial
                                                                                                        No. NVN-090504 and NVN-086972
                                                                                                        , referred to herein as
                                                                                                        the “Gabbs Leases”,
                                                                                                        are covered by that certain
                                                                                                        Operating Agreement (the
                                                                                                        “Gabbs JOA”)
                                                                                                        dated as the August 2,
                                                                                                        2011 among Independence
                                                                                                        Drilling, LLC, a Nevada
                                                                                                        limited liability company
                                                                                                        (the “Operator”),
                                                                                                        Buyer, Seller and Traub.

 

		C.	Seller
                                                                                                        wishes to assign the Leases
                                                                                                        to Buyer, and Buyer wishes
                                                                                                        to accept an assignment
                                                                                                        of the Leases from Seller,
                                                                                                        but reserving unto Seller,
                                                                                                        and excepting from said
                                                                                                        assignment, a two percent
                                                                                                        (2%) overriding royalty
                                                                                                        interest in and to each
                                                                                                        of the Leases, and subject
                                                                                                        to the other terms and
                                                                                                        conditions described in
                                                                                                        this Agreement.

 

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AGREEMENT

 

In consideration of this Agreement’s
covenants and undertakings, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
the Parties agree as follows:

 

1.           CONVEYANCE.
At Closing (as defined in Section 3 below), Seller will assign to Buyer all of Seller’s right, title and interest in
and to any and all of the Acquired Assets, but there shall be reserved unto Seller, and excepted from said assignment, a two percent
(2%) overriding royalty interest in and to each of the Leases (the “2% ORRI”). The forms of Assignment of Record
Title to Interest to the Leases to be executed by Seller and Buyer at closing is attached hereto as Exhibit B.

 

2.           AMENDMENTS
TO JOINT OPERATING AGREEMENTS. At Closing, the Cortez JOA
and Gabbs JOA will be amended as follows:

 

2.1          The
Gabbs JOA. At Closing, Seller and Buyer shall execute and deliver, and Buyer shall cause each of the other parties to the
Gabbs JOA to execute and deliver, an amendment to the Gabbs JOA in the form attached hereto as Exhibit C, by which,
amongst other things, (i) the Gabbs Leases will be removed from the JOA, and (ii) Seller shall be released of any obligations
under the JOA with respect to the Gabbs Leases. The JOA will remain in effect as to the remaining Leases listed on Exhibit A to
the Gabbs JOA.

 

2.2          The
Cortez JOA.At Closing, Seller and Buyer shall execute and deliver, and Buyer shall cause each of the other parties to
the Cortez JOA to execute and deliver, an amendment to the Cortez JOA in the form attached hereto as Exhibit D,
by which, amongst other things, (i) Exhibit A to the Cortez JOA will be amended to reflect (a) the assignment of Seller’s
working interest in the Cortez Lease to Buyer, (b) the 2% ORRI retained by Seller in the Cortez Lease, (ii) the withdrawal of
Seller from the Cortez JOA and the release of Seller of any and all obligations under the Cortez JOA, and (iii) the assumption
by Buyer of all of Seller’s obligations under the Cortez JOA.

 

3.           CLOSING.
The purchase and sale that is provided for herein shall occur
on the later of the Effective Date, or the date when the following have been satisfied (the “Closing”): 

 

3.1.          Seller
and Buyer shall execute and deliver to the other three (3) originals of the Assignment of Record Title to Interest to the Leases
in the forms attached hereto as Exhibit B (the “Assignment”), and three (3) originals of the
Bill of Sale and Assignment in the form attached hereto as Exhibit C (“the “Bill of Sale”).

 

3.2          Seller
and Buyer shall execute and deliver, and Buyer shall cause each of the other parties to the Gabbs JOA to execute and deliver,
an amendment to the Gabbs JOA in the form attached hereto as Exhibit D (the “Gabbs JOA Amendment”).

 

3.3          Seller
and Buyer shall execute and deliver, and Buyer shall cause each of the other parties to the Cortez JOA to execute and deliver,
an amendment to the Cortez JOA in the form attached hereto as Exhibit E (the “Cortez JOA Amendment”).

 

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3.4          Buyer
and Seller will execute an Introduction Facilitation Agreement in the form attached hereto as Exhibit F.

 

4.           Seller
representations and warranties. Seller
represents and warrants to and for the benefit of Buyer that each of the following will be true, correct and complete on and as
of Closing:

 

4.1          Authority.
Seller has the full legal right, power and authority to enter
into this Agreement and to consummate the transactions contemplated herein.

 

4.2          No
Breach; Binding Effect. Neither the execution, nor the delivery
of this Agreement nor the consummation of the transaction contemplated herein, conflicts with, or will result in a breach of,
any agreement to which the Seller is a party, or by which Seller is bound.

 

4.3          Litigation.
Seller is not a party to any litigation to which any of the
Leases are or might be subject.

 

4.4          Title
to the Leases. Except as set forth in the Gabbs JOA and Cortez
JOA or as other disclosed to Buyer, Seller has not taken any action that would cause a lien or other encumbrance to be created
on or against any of the Leases, and there are no outstanding options, warrants, rights or other agreements for the purchase or
acquisition of any of Seller’s interest in the Leases.

 

4.6          Third
Party Consents. Except for the consent of the other parties
to the JOA and the Cortez JOA, and any required filings with the BLM related to the assignment of the Leases, the execution, delivery
and performance of this Agreement by Seller does not require notice to, or the consent or approval of, any third party or governmental
agency.

 

Except as set forth
in the foregoing provisions of this Section 4, and notwithstanding anything to the contrary contained in the Assignment or otherwise
provided by law or in equity, Seller makes no express or implied warranties or representations concerning the Leases and all express
or implied warranties and representations concerning the Leases are expressly disclaimed in all respects.

 

5.           Buyer
representations and warranties. Buyer
represents and warrants to and for the benefit of Buyer that each of the following will be true, correct and complete on and as
of Closing:

 

5.1          BLM
Assignment Requirements. Buyer certifies as follows: (a) Buyer is a citizen of the United States; as association of such citizens;
a municipality; or a corporation or limited liability company organized under the laws of the United States or of any State or
territory thereof. For the assignment of NPR-A leases, assignee is a citizen, national, or resident alien of the United States
or associations of such citizens, nationals, resident aliens or private, public or municipal corporations; (b) Buyer is not considered
a minor under the laws of the State in which the lands covered by this assignment are located; (c) Buyer’s chargeable interests,
direct and indirect, in each public domain and acquired lands separately in the same State, do not exceed 246,080 acres in oil
and gas leases (of which up to 200,000 acres may be in oil and gas options), or 300,000 acres in leases in each leasing District
in Alaska of which up to 200,000 acres may be in options, if this is an oil and gas lease issued in accordance with the Minerals
Leasing Act of 1920, or 51,200 acres in any one State if this is a geothermal lease; (d) All parties holding an interest in the
assignment are otherwise in compliance with the regulations (43 CFR Group 3100 or 3200) and the authorizing Acts; (e) Buyer is
in compliance with reclamation requirements for all Federal oil and gas lease holdings as required by sec. 17(g) of the Mineral
Leasing Act; and (f) Buyer is not in violation of sec. 41 of the Mineral Leasing Act.

 

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5.2          Other
Party Approval. Buyer has obtained the consent and approval
by all parties to the Cortez JOA and Gabbs JOA to all of the terms and conditions to the Gabbs JOA Amendment and the Cortez JOA
Amendment.

 

6.          Indemnification.

 

6.1          Indemnification
and Payment of Damages by Seller. Seller shall indemnify,
defend and hold harmless Buyer from and against, and shall reimburse Buyer for, any loss, liability, claim, damage (including
incidental and consequential damages), expense (including costs of investigation and defense and reasonable attorneys’ fees,
consultants’ fees, and expert witness’ fees) or diminution of value, whether or not involving a third-party claim
(collectively, “Damages”), arising, directly or indirectly, from or in connection with any breach of any representation
or warranty made by Seller herein, and/or any breach by Seller of any covenant or obligation provided for herein, the Assignment,
the Gabbs JOA Amendment, and/or the Cortez JOA Amendment.

 

6.2          Indemnification
and Payment of Damages by Buyer. Buyer shall indemnify, defend
and hold harmless Seller from and against and will reimburse Seller for, and will pay to Seller the amount of, any Damages arising,
directly or indirectly, from or in connection with any breach of any representation or warranty made by Buyer herein, and/or any
breach by Buyer of any covenant or obligation provided for herein, the Assignment, the Gabbs JOA Amendment, and/or the Cortez
JOA Amendment.

 

7.           GENERAL
PROVISIONS

 

7.1          Miscellaneous.
The above recitals and the exhibits referenced in this Agreement are hereby incorporated herein by this reference as though
expressly set forth herein. When used in this Agreement, the terms defined herein when initially capitalized will have the meanings
ascribed to them. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which
shall collectively constitute one instrument. Facsimile, photocopied and scanned signatures bind the Parties and do not affect
this Agreement’s validity. Neither Party is an agent, partner, or joint venturer with the other Party for any purpose. The
Parties have no authority to assume or create any obligation for or on behalf of the other Party, whether express or implied.
This Agreement’s title, headings (and parenthetical references thereto) and terms used to refer to the Parties are for reference
only and do not define, limit, construe or describe this Agreement’s scope or extent. All decisions to be made by a Party
hereunder shall be at such Party’s sole and arbitrary discretion, except as otherwise expressly provided for herein. This
Agreement shall be construed fairly with no inference drawn against the drafting Party. Any provision herein that may reasonably
be interpreted as being intended by the Parties to survive this Agreement’s termination or expiration shall do so.

 

7.2          Governing
Law; Jurisdiction / Venue. This Agreement will be exclusively interpreted, construed and enforced in a state court in Carson
City, Nevada under Nevada law (without reference to its choice of law rules). Except as may otherwise be provided herein, no action
by any Party against another for breach hereof will be limited to breach of contract remedies. The
Parties hereby consent to such venue, governing law, and the jurisdiction of such court.

 

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7.3          Entire
Agreement. This Agreement sets forth the Parties’ entire agreement and understandings relating to the subject matter
herein and merges and supersedes all of the Parties’ prior agreements, writings and understandings. This Agreement (and
any waiver of any rights herefrom) shall not be amended or modified unless in a writing signed by the Parties.

 

7.4          Legal
Expenses. The prevailing Party in any legal action brought by one Party against another (and relating hereto) shall be entitled,
in addition to all other rights and remedies it may have, to reimbursement for its expenses, including court costs and reasonable
attorneys’ and expert witness fees and expenses.

 

7.5          Benefit.
This Agreement binds (and inures to the benefit of) the Parties, and the Parties’ respective heirs, assigns, successors,
and legal representatives, subject to any and all assignment restrictions set forth herein. Nevertheless, this Agreement is not
a third party beneficiary contract and is not for any third party’s benefit (and no third party shall have any claim or
right of action hereunder).

 

7.6          Severability
/ Waiver. If any term hereof is held by a court of competent jurisdiction to be invalid or unenforceable, then this Agreement,
including all of the remaining terms, shall remain in force and effect as if such invalid or unenforceable term was not included.
No delay, omission, or failure to exercise any right or remedy provided for herein shall be deemed to be a waiver thereof or an
acquiescence in the event giving rise to such remedy (but every such right or remedy may be exploited as the Party exercising
it deems expedient).

 

7.7          Assignment.
This Agreement (and/or the respective rights and obligations arising herefrom) shall not be assigned or transferred by either
Party, or to or by any third party (including by court order, operation of law, merger, statute, regulation, ordinance or otherwise)
without the other Party’s prior express written consent. Any attempt by a Party to assign this Agreement will be ineffective.

 

7.8          Further
Actions.The Seller hereby agrees that from time to time, if and when requested by the Buyer, the Seller shall execute
and deliver, or cause to be executed and delivered, such documents and instruments, and shall take, or cause to be taken, such
further actions as may be reasonably necessary to carry out the purpose and intent of this Agreement.

 

7.8          Notice.
Any notice given hereunder shall be in writing and effective upon confirmed delivery to the appropriate Party by personal
delivery, recognized overnight delivery service, or by registered or certified mail, return receipt requested, at/to the respective
Party’s address set forth at the beginning of this Agreement (or at/to such other address as a Party may provide by written
notice to the other Party from time to time).

 

7.9          Independent
Investigation. Each Party has: independently evaluated the desirability of entering
into this Agreement and is not relying on any representation, guarantee or statement not set forth herein; and has been afforded
the opportunity to seek legal counsel with regards to its rights and obligations and has consulted or refused such counsel, and
accordingly negotiated this Agreement.

 

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7.10          Execution.
Each Party has executed this Agreement by its duly authorized representative
and acknowledges that it understands and agrees to be bound by it.

 

	DESERT DISCOVERIES, LLC	 	AMERICAN LIBERTY PETROLEUM CORP.
	 	 	 
	By:	/s/ Patrick Fagen	 	/s/ Alvaro Vollmers
	 	High Sierra Exploration LLC,
    Manager	 	Alvaro Vollmers, President
	 	By:  Patrick
    A. Fagen, Manager	 	 

 

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Exhibit A

 

The Leases

 

		a.	BLM Lease Serial No. NVN086972

T: 12N, R: 35E, Meridian: MDM, State: NV, County: Nye

Sec. 1, Lots 1-4, S2N2, S2;

Sec. 2, Lots 1-4, S2N2, S2;

Sec. 3, Lots 1-4, S2N2, S2;

Sec. 4, Lots 1-4, S2N2, S2.

 

		b.	BLM
                                                                                                                                                       Lease
                                                                                                                                                       Serial
                                                                                                                                                       No.
                                                                                                                                                       NVN-59901

T: 12N, R: 34E, Meridian: MDM,
State: NV, County: Nye

Sec. 001: S2N2, S2;

Sec. 001: Lots 1-4;

Sec. 012: PROT All;

Sec. 013: PROT All;

Sec. 024: PROT All;

Sec. 025: PROT All;

Sec. 036: PROT All.

 

		c.	BLM
                                                                                       Lease Serial No. NVN-090504

T: 0130N, R: 0350E, Meridian:
MDM, State: NV, County: Nye

Sec. 013:  PROT All;

Sec. 016:  PROT NW;

Sec. 017:  PROT All;

Sec. 019:  PROT E2All.SECOND AMENDMENT
TO OPERATING AGREEMENT 

 

This Second
Amendment (this “Amendment”) to the Operating Agreement dated as of August 2, 2011 as amended by that First
Amendment to Operating Agreement dated April 3, 2011 (as it has been amended, the “Agreement”) is entered into
effective as of March 14, 2013 (“Effective Date”), by and between INDEPENDENCE DRILLING, LLC, a Nevada limited
liability company (“Independence”), DESERT DISCOVERIES, LLC, a Nevada limited liability company (“Desert
Discoveries”), EDWARD TRAUB, an individual (“Traub”), and AMERICAN LIBERTY PETROLEUM CORP, a Nevada
corporation (“ALP”). Independence, Desert Discoveries, Traub and ALP are at times referred to herein singly
as a “Party” and collectively as the “Parties”. 

 

BACKGROUND:

 

A.           The
Parties entered into the Agreement relating to, amongst other things, joint operations of BLM Lease Serial No. NVN085029, BLM
Lease Serial No. NVN084761, BLM Lease Serial No. NVN083825, BLM Lease Serial No. NVN084762, BLM Lease Serial No. NVN086972, and
BLM Lease NVN090504.

 

B.           ALP
has agreed to assign to Desert Discoveries all of ALP’s rights, titles and interests in and to BLM Lease Serial No. NVN086972
and BLM Lease NVN090504, but reserving unto ALP, and excepting from said assignment, a two percent (2%) overriding royalty
interest in and to said leases. 

 

C.           The
Parties have agreed to amend the Agreement to remove and exclude BLM Lease Serial No. NVN086972 and BLM Lease NVN090504 from the
Agreement.

 

D.           Except
as otherwise expressly defined in this Amendment, capitalized terms used herein shall have the same meaning as set forth in the
Agreement.

 

AGREEMENT

 

For good
and valuable consideration, including the mutual covenants and agreements contained herein, the receipt and sufficiency of which
are hereby acknowledged by the Parties, the Parties agree as follows: 

 

1.           Exhibit
A. Exhibit A of the Agreement is hereby amended to delete items 1.e, which references the acres leased under Bureau of Land
Management (“BLM”) Lease NVN086972, and item 1.f, which references the acres leased under BLM Lease NVN090504.

 

2.           Effect
of Amendment. Except as expressly amended hereby, all terms, covenants and provisions of the Agreement are and shall remain
in full force and effect, and all, for avoidance of doubt, all references therein to the “Agreement” shall henceforth
refer to the Agreement as amended by this Amendment. This Amendment is hereby deemed incorporated into, and made a part of, the
Agreement. 

 

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3.          Asset
Purchase Agreement.     This Second Amendment is executed in connection with an Asset Purchase and Sale
Agreement dated as of March 14, 2013 (the “APA”) executed by and between Desert Discoveries and ALP, whereby
among other things, ALP is assigning to Desert Discoveries all of ALP’s rights, titles and interests in and to BLM Lease
Serial No. NVN086972 and BLM Lease NVN090504, but reserving unto ALP, and excepting from said assignment, a two percent
(2%) overriding royalty interest in and to said leases. The execution of this Second Amendment is
a condition to closing under the APA. By executing this Second Amendment, Desert Discoveries, Independence and Traub consent to
the transfer of ALP’s interest in the above-described leases to Desert Discoveries, as well as the above-described reservation
of overriding royalty interests, and waive any rights of first refusal or similar rights to purchase or acquire said interests.

 

4.          Release.
 The Parties confirm that all obligations have been satisfied under the Agreement with respect to the Leases. Each of the Parties
hereby release, discharge and covenant not to sue or file any charges or claims against any of the other Parties, their respective
legal representatives, successor and assigns under any common or statutory local, state, or federal law, for any type of claim,
demand or action whatsoever arising out of or connected with the Agreement, the Leases, or any transactions connected with the
Agreement or the Leases, including but not limited to any Party’s obligations for its proportionate share of the costs of
developing and operating the Contract Area under Article VI, Paragraph A of the Agreement; provided, however, that none of the
Parties release any claims against any other Party for fraud. The Parties agree not to amend the indemnification provisions that
are set forth in the Agreement, except as required by applicable law or with the prior written consent of all of the Parties.

 

5.          Binding
Effect. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors
and assigns.

 

6.          Applicable
Law. THIS AMENDMENT, AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE SUBSTANTIVE LAWS OF THE STATE OF NEVADA, WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAW PRINCIPLES THEREOF.

 

7.          Descriptive
Headings; Language Interpretation. The descriptive headings of this Amendment are inserted for convenience only and do not
constitute a part of this Amendment. In the interpretation of this Amendment, unless the context otherwise requires, (a) words
importing the singular shall be deemed to import the plural and vice versa, (b) words denoting gender shall include all genders,
and (c) references to parties, articles, sections, schedules, paragraphs and exhibits shall mean the parties, articles, sections,
schedules, paragraphs and exhibits of and to this Amendment.

 

8.          Integration.
This Amendment, the APA and the documents referred to herein contain the entire understanding of the parties with respect to the
subject matter hereof. There are no restrictions, agreements, promises, representations, warranties, covenants or undertakings
with respect to the subject matter hereof other than those expressly set forth or referred to herein. This Amendment supersedes
all prior agreements and understandings between the parties with respect to the subject matter hereof.

 

9.          Counterparts.
This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument, and it shall not be necessary in making proof of this Amendment to produce or account
for more than one such counterpart.

 

(Signature Page Follows)

 

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The undersigned have executed this Amendment
as of the Effective Date.

 

	INDEPENDENCE DRILLING, LLC	 	DESERT DISCOVERIES, LLC
	 	 	 	 	 
	By:	/s/ Patrick Fagen	 	By:	/s/ Patrick Fagen
	Name:	  Patrick Fagen	 	Name:	 Patrick Fagen
	Title:	  Manager	 	Title: Manager, High Sierra Exploration,
	 	 	 	LLC, Manager of Desert Discovery, LLC
	 	 	 	 	 
	EDWARD TRAUB	 	AMERICAN LIBERTY PETROLEUM CORP.
	 	 	 	 	 
	/s/ Edward Traub	 	By:	/s/ Alvaro Vollmers
	 	 	 	Name:	Alvaro Vollmers
	 	 	 	Title:	President

 

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