ASSET PURCHASE AGREEMENT





              DATED AUGUST 31, 2006, AND EFFECTIVE AUGUST 28, 2006





                                BETWEEN AND AMONG



                         MID-POWER RESOURCE CORPORATION,



                                   AS SELLER,





                                       AND





                              MARION ENERGY, INC.,



                                    AS BUYER,



                                       AND



                             MARION ENERGY LIMITED,



                               AS PARENT OF BUYER





{PAGE}



                            ASSET PURCHASE AGREEMENT





         THIS ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of August

31, 2006, but effective as of August 28, 2006, is between and among MID-POWER

RESOURCE CORPORATION, a Nevada corporation ("Seller"); MARION ENERGY, INC., a

Texas corporation ("Buyer"); and MARION ENERGY LIMITED, an entity organized

under the laws of Australia ("Parent"). Hereinafter, Buyer and Parent are

sometimes collectively referred to as "Marion." Seller, Buyer and Parent are

each a "Party" and collectively the "Parties" as referred to herein.



         WHEREAS, Seller owns certain oil and gas properties and related assets

located in Carbon and Emery Counties, Utah, and known as the "Clear Creek

Project";



         WHEREAS, Buyer is a wholly-owned subsidiary of Parent;



         WHEREAS, Seller and Buyer have previously entered into that certain

Farmout and Exploration Agreement for the Clear Creek Natural Gas Unit, Carbon

and Emery County, Utah, dated effective February 22, 2005 (the "Farmout

Agreement"), wherein Seller granted Buyer the right to earn a seventy-five

percent working interest (75% WI) in leases within the Clear Creek Project upon

completion of certain earning conditions, including: (i) drilling obligations;

(ii) completion of a Capital Expenditure Program described therein; and (iii)

the issuance of options to purchase five million (5,000,000) ordinary shares of

Parent, at an exercise price of forty cents Australian (AU$0.40). Said options

were to be earned by Seller in two tranches. The parties to the Farmout

Agreement also created an Area of Mutual Interest covering lands in the general

vicinity of the Clear Creek Natural Gas Unit;



         WHEREAS, on May 9, 2006, Buyer was legally designated as the operator

of the Clear Creek Natural Gas Unit (the "Operator Change Date");



         WHEREAS, Seller and Buyer desire to terminate the Farmout Agreement as

between them, but keep the Farmout Agreement in place as to third parties that

were signatory to the Farmout Agreement. Upon completion of the asset purchase

contemplated hereunder, Buyer will assume Seller's position under the Farmout

Agreement with respect to said third parties; and



         WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase

from Seller, such oil and gas properties and related assets upon the terms and

subject to the conditions set forth herein, subject to a retained and reserved

real property interest of 12.5% of the net proceeds attributable to 100% of the

working interest based on an approximate 80% net revenue interest.



         NOW, THEREFORE, in consideration of the mutual covenants and agreements

hereinafter set forth, the Parties hereto agree as follows:



                                   ARTICLE I.

                                SALE AND PURCHASE



         Subject to the terms and conditions of this Agreement, Seller agrees to

sell and convey to Buyer, and Buyer agrees to purchase from Seller, effective as

of midnight, Mountain Daylight Time on May 9, 2006 (the "Effective Time"), the

following described assets and properties (collectively, the "Assets"). The

Closing shall take place at the offices of Buyer or such other location

designated by the Parties on August 31, 2006 (the "Closing Date").



         (a) Interests. The undivided interests specified in Exhibit A in, to or

under the Hydrocarbon Interests described therein and all other interests of

Seller in, to or under or derived from the Lands and related rights and



{PAGE}



property, reserving unto the Seller the Net Profits Interest as provided herein

(collectively, the "Subject Interests"). As used in this Agreement, the term

"Hydrocarbon Interests" shall mean (i) leases affecting, relating to or covering

any oil, gas and other hydrocarbons and the leasehold interests and estates in

the nature of working or operating interests under such leases, as well as

overriding royalties, net profits interests, production payments, carried

interests, rights of recoupment and other interests in, under or relating to

such leases, (ii) fee interests in oil, gas or other hydrocarbons, (iii) royalty

interests in oil, gas or other hydrocarbons, (iv) any other interest in oil, gas

or other hydrocarbons in place, (v) any economic or contractual rights, options

or interests in and to any of the foregoing, including, without limitation, any

farm-out or farm-in agreement affecting any interest or estate in oil, gas or

other hydrocarbons, and (vi) any and all rights and interests attributable or

allocable thereto by virtue of any pooling, unitization, communitization,

production sharing or similar agreement, order or declaration;



         (b) Lands. All right, title and interest of Seller in and to the lands

covered by or subject to the Hydrocarbon Interests (the "Lands");



         (c) Rights and Property. All right, title and interest of Seller in and

to or derived from the following insofar as the same are attributable to the

Subject Interests: (i) all rights with respect to the use and occupancy of the

surface of and the subsurface depths under the Lands, (ii) all agreements and

contracts, easements, rights-of-way, servitudes and other estates, (iii) all

real and personal property located upon the Lands or used in connection with the

exploration, development or operation of the Subject Interests, and (iv) any and

all lease files, title files, land files, division order files, marketing files,

well files, production records, seismic, geological, geophysical and engineering

data, and all other files, maps and data (in whatever form) arising out of or

relating to the Subject Interests or the ownership, use, maintenance or

operation of the other Assets (the "Records"); and



         (d) Hydrocarbons. All (i) oil, gas and other hydrocarbons produced from

or attributable to the Subject Interests with respect to all periods subsequent

to the Effective Time and (ii) proceeds from or of such oil, gas and other

hydrocarbons.



                                  ARTICLE II.

                            CONSIDERATION AND PAYMENT



         Section 2.1 Consideration. The consideration for the sale and

conveyance of the Assets to Buyer is as follows:



         (a) Cash. One million dollars US (US$1,000,000) in cash payable at

Closing (the "Cash Payment");



         (b) Ordinary Shares. Thirteen million one hundred thousand (13,100,000)

ordinary shares of Parent, a public company traded on the Australian Stock

Exchange to be issued by Parent to Seller at Closing (the "Share Payment");



         (c) Immediately Exercisable Options. Immediately exercisable options to

purchase five million (5,000,000) of Parent's ordinary shares at an exercise

price of forty cents Australian (AU$0.40) per share to be issued by Parent to

Seller at Closing pursuant to that certain option agreement attached hereto as

Exhibit B (the "Immediately Exercisable Options"); and



         (d) Reserve-Based Options. Options to purchase up to eight million

(8,000,000) of Parent's ordinary shares subject to certain vesting requirements

that are the subject of Article III (the "Reserve-Based Options").



                                       2

{PAGE}



The Cash Payment, Share Payment, Immediately Exercisable Options, and the

Reserve-Based Options together shall constitute the "Purchase Price." The

Immediately Exercisable Options and the Reserve-Based Options together are

sometimes referred to herein as the "Options." The Share Payment, the Options,

and the ordinary shares issuable upon the exercise of the Options are referred

to together as the "Securities."



         Section 2.2 Payment. At the Closing, Buyer shall wire transfer the Cash

Payment in immediately available funds to the account of Seller as it shall

separately direct or such other account specified by Seller to Buyer on or prior

to the second business day immediately preceding the Closing Date.



                                  ARTICLE III.

                              RESERVE-BASED OPTIONS



         Section 3.1 Definition of Reserves. For purposes of this Agreement, the

following definitions adopted by the Society of Petroleum Engineers will apply:



         Proved Reserves shall mean those quantities of oil, gas and associated

         hydrocarbons that, by analysis of geological and engineering data, can

         be estimated with reasonable certainty to be commercially recoverable,

         from a given date forward, from known reservoirs and under economic

         conditions, operating methods, and government regulations as of the

         date of the evaluation, by deterministic methods intended to express a

         high degree of confidence that the quantities will be recovered. Proved

         Reserves shall include both developed and undeveloped reserves.



         Probable Reserves shall mean those reserves that analysis of geological

         and engineering data suggests are more likely than not to be

         recoverable and may include (a) reserves anticipated to be proved by

         normal step-out drilling where sub-surface control is inadequate to

         classify these reserves as proved, (b) reserves in formations that

         appear to be productive based on well log characteristics but lack core

         data or definitive tests and that are not analogous to producing or

         Proved Reserves in the area, (c) incremental reserves attributable to

         infill drilling that could have been classified as proved if closer

         statutory spacing had been approved at the time of estimate, (d)

         reserves attributable to improved recovery methods that have been

         established by repeated commercially successful applications when (i) a

         project or pilot is planned but not in operation and (ii) rock, fluid,

         and reservoir characteristics appear favorable for commercial

         application, (e) reserves in an area of the formation that appears to

         be separated from the proved area by faulting and the geologic

         interpretation indicates the subject area is structurally higher than

         the proved area, (f) reserves attributable to a future workover,

         treatment, re-treatment, change of equipment, or other mechanical

         procedures, when such procedure has not been proved successful in wells

         that exhibit similar behavior in analogous reservoirs, and (g)

         incremental reserves in proved reservoirs where an alternative

         interpretation of performance or volumetric data indicates more

         reserves than can be classified as proved.



         Section 3.2 250 Bcf Hurdle. Parent will, at Closing, grant Seller

options to purchase two million (2,000,000) of Parent's ordinary shares pursuant

to that certain option agreement attached hereto as Exhibit C at an exercise

price of eighty cents Australian (AU$0.80) per share, which options shall become

exercisable in the event an Annual Reserve Report, as defined below, estimates

that the aggregate of all Proved and Probable Reserves of hydrocarbons in place,

in whatever form, attributable to Buyer's interests in any hydrocarbons below

the surface of the Lands, at any depth and whether acquired by Buyer pursuant to



                                       3

{PAGE}



this Agreement or otherwise, either before or after the date hereof, plus all

hydrocarbons produced and delivered for sale from the Hydrocarbon Interests

since the Effective Time, appropriately adjusted to avoid duplication, are equal

to or greater than two hundred fifty billion cubic feet (250 Bcf) (the "250 Bcf

Hurdle"). All such options granted when the 250 Bcf Hurdle is met shall expire

unless exercised within thirty-six (36) months from the date the 250 Bcf Hurdle

is met.



         Section 3.3 500 Bcf Hurdle. Parent will, at Closing, grant Seller

incremental options to purchase two million (2,000,000) of Parent's ordinary

shares pursuant to that certain option agreement attached hereto as Exhibit C at

an exercise price of eighty cents Australian (AU$0.80) per share, which options

shall become exercisable in the event an Annual Reserve Report estimates that

the aggregate of all Proved and Probable Reserves of hydrocarbons in place, in

whatever form, attributable to Buyer's interests in any hydrocarbons below the

surface of the Lands, at any depth and whether acquired by Buyer pursuant to

this Agreement or otherwise, either before or after the date hereof, plus all

hydrocarbons produced and delivered for sale from the Hydrocarbon Interests

since the Effective Time, appropriately adjusted to avoid duplication, are equal

to or greater than five hundred billion cubic feet (500 Bcf) (the "500 Bcf

Hurdle"). All such options granted when the 500 Bcf Hurdle is met shall expire

unless exercised within thirty-six (36) months from the date the 500 Bcf Hurdle

is met.



         Section 3.4 750 Bcf Hurdle. Parent will, at Closing, grant Seller

incremental options to purchase four million (4,000,000) of Parent's ordinary

shares pursuant to that certain option agreement attached hereto as Exhibit C at

an exercise price of eighty cents Australian (AU$0.80) per share, which options

shall become exercisable in the event an Annual Reserve Report, estimates that

the aggregate of all Proved and Probable Reserves of hydrocarbons in place, in

whatever form, attributable to Buyer's interests in any hydrocarbons below the

surface of the Lands, at any depth and whether acquired by Buyer pursuant to

this Agreement or otherwise, either before or after the date hereof, plus all

hydrocarbons produced and delivered for sale from the Hydrocarbon Interests

since the Effective Time, appropriately adjusted to avoid duplication, are equal

to or greater than seven hundred fifty billion cubic feet (750 Bcf) (the "750

Bcf Hurdle"). All such options granted when the 750 Bcf Hurdle is met shall

expire unless exercised within thirty-six (36) months from the date the 750 Bcf

Hurdle is met.



         Section 3.5 Change of Control. Following the Closing, upon a Change of

Control of Parent (as defined below) that occurs prior to any of the reserve

hurdles set forth above (the 250 Bcf Hurdle, the 500 Bcf Hurdle, or the 750 Bcf

Hurdle) being met, all of said reserve hurdles shall be deemed to have been met

and all of the options described above (an aggregate of 8,000,000 options) shall

be immediately vested and be immediately exercisable for a period of thirty-six

(36) months from the date of the event constituting a Change of Control. For

purposes of this Agreement, Change in Control shall mean (a) an acquisition of

any voting securities of the Buyer or Parent by any person, entity or group

acting in concert immediately after which such person, entity or group acting in

concert has beneficial ownership of 15% or more of the combined voting power of

the Buyer or Parent then outstanding voting securities without the approval of

the board; (b) a merger or consolidation that results in more than 50% of the

combined voting power of the Buyer's or Parent's then outstanding voting

securities of the Buyer or its successor or Parent or its successor changing

ownership (whether or not approved by the board); (c) the sale of all or

substantially all of the Buyer's or Parent's assets in a single transaction or

series of related transactions; (d) approval by the shareholders of the Buyer or

the Parent of a plan of complete liquidation of the Buyer or Parent; or (e) the

individuals constituting the board of Buyer or Parent as of the date of this

Agreement (the "Incumbent Board") cease for any reason to constitute at least

1/2 of the members of the board of Buyer or Parent; provided, however, that if

the election, or nomination for election by the Buyer's or Parent's

shareholders, of any new director was approved by a vote of the Incumbent Board,

such new director shall be considered a member of the Incumbent Board.



                                       4

{PAGE}



         Section 3.6 Annual Engineering Study. At Marion's expense, Marion shall

cause Ryder Scott Company or any other independent, qualified petroleum

engineering firm of national standing reasonably acceptable to Seller (the

"Engineering Firm") to prepare a written engineering report evaluating the

Proved Reserve and Probable Reserve quantities attributable to the Hydrocarbon

Interests on an annual basis until the 750 Bcf Hurdle is met or until December

31, 2016 (the "Annual Reserve Report") in accordance with the following:



                  (a) As soon as practicable after the end of each fiscal year

(the "Reserve Study Date"), but in any event by July 31 of the following year,

Marion shall deliver or cause to be delivered to the Engineering Firm and upon

request to the Seller all (i) geological, geophysical and engineering data,

including drilling logs, drillstem tests, pressure tests, delivery and

deliverability records, geological and engineering studies or other data

gathered prior to and as of the Reserve Study Date respecting the Clear Creek

Natural Gas Unit; (ii) records of all hydrocarbons delivered for sale from the

Hydrocarbon Interests for the fiscal year ending on the Reserve Study Date;

(iii) a copy of each report, study, evaluation, estimate or other writing

respecting the Hydrocarbon Interests prepared by or on behalf of Marion for

internal uses or for delivery to any governmental authority, potential funding

source, owner, investor or other third party; and (iv) such other information

under the care, custody, or control of Marion that the Engineering Firm or

Seller may reasonably request, to the extent that such other information can be

obtained by or on behalf of Marion without unreasonable effort or expense.



                  (b) As soon as practicable after the receipt of the

information required to be delivered by Marion pursuant to paragraph (b) of this

section, but in any event by September 30 of the year following the Reserve

Study Date, the Engineering Firm shall prepare and transmit to Marion and Seller

the Engineering Firm's estimate of the Proved and Probable Reserves attributable

to the Hydrocarbon Interests together with a calculation of the sum of such

Proved and Probable Reserves and all hydrocarbons produced and delivered for

sale from the Hydrocarbon Interests since the Effective Time, appropriately

adjusted to avoid duplication, all in accordance with the requirements of this

Agreement and, to the extent consistent with this Agreement, the standards of

the American Society of Petroleum Engineers. In the event that hydrocarbons

other than gas are present, such other hydrocarbons shall be converted at their

British Thermal Unit equivalent in accordance with standard engineering

practice, as shall be described in such report. The Engineering Firm's study and

estimate prepared in accordance with this paragraph is hereinafter referred to

as the "Preliminary Hurdle Calculation."



                  (c) Marion and Seller shall promptly review the Preliminary

Hurdle Calculation, and each shall advise the other of the respects, if any, in

which it disputes such calculation, setting forth with reasonable specificity

the particulars of such disagreement (the "Disagreement Notice"). If one such

Party does not provide the other Party with a Disagreement Notice within 20 days

after delivery of the Preliminary Reserve Calculation, the amount set forth

therein shall be deemed conclusively acceptable to such Party. If neither such

party delivers a Disagreement Notice, such Preliminary Hurdle Calculation shall

be deemed conclusive and determinative as to whether a specific hurdle has been

met. If either or both such Parties provide the other with a Disagreement Notice

within 20 days after delivery of the Preliminary Hurdle Calculation, the Parties

shall proceed with diligence and dispatch in accordance with the terms and

provisions of the alternative dispute resolution procedures set forth in

Schedule 12.2 attached hereto and fully incorporated herein.



                  (d) In the event Marion refuses to timely deliver to the

Engineering Firm the information required to be delivered pursuant to paragraph

(a) above and such failure continues for greater than 90 days after written

notice and demand for cure from Seller to Marion, then the next succeeding

hurdle shall be deemed to have been met and the Options to become exercisable on

meeting such hurdle shall automatically be immediately vested and become

exercisable.



                                       5

{PAGE}



                                   ARTICLE IV.

                              NET PROFITS INTEREST



         Upon assignment of the Assets by Seller to Buyer, Seller shall reserve

and retain as an interest in lands a Net Profits Interest equal to 12.5% of the

net revenue attributable to 100% of the working interest based on an approximate

80% net revenue interest in the rights of Buyer in the Clear Creek Unit, payable

pursuant to Exhibit D and Exhibit E attached hereto.



                                   ARTICLE V.

                         REPRESENTATIONS AND WARRANTIES



         Section 5.1 Representations and Warranties of Seller. To the best of

Seller's knowledge, Seller represents and warrants to Buyer as follows:



         (a) Organization and Qualification. Seller is a corporation duly

organized, validly existing and in good standing under the Laws of the State of

Nevada and has the requisite power to carry on its business as it is now being

conducted. Seller is duly qualified to do business, and is in good standing, in

each jurisdiction in which the Assets owned or leased by it makes such

qualification necessary.



         (b) Authority. Seller has all requisite power and authority to execute

and deliver this Agreement and to perform its obligations hereunder. The

execution, delivery, and performance of this Agreement and the transactions

contemplated hereby have been duly and validly authorized by all requisite

action on the part of Seller.



         (c) Consents. Except for (i) consents and approvals of assignments by

any governmental authority that are customarily obtained after Closing, and (ii)

the consents, approvals, authorizations, filings or notices expressly described

and set forth in Schedule 5.1(c), no consent, approval, authorization or permit

of, or filing with or notification to, any person or entity is required for or

in connection with the execution and delivery of this Agreement by Seller or for

or in connection with the consummation of the transactions and performance of

the terms and conditions contemplated hereby by Seller.



         (d) Actions. There are no actions, claims, suits, arbitrations,

inquiries, proceedings, investigations, condemnations or audits by or before any

court or other governmental authority pending against Seller or affecting the

Assets or, to the knowledge of Seller, threatened against Seller that relate to

the Assets or the transactions contemplated by this Agreement.



         (e) Compliance with Laws. The Seller and, as of the Operator Change

Date, the Assets were in compliance in all material respects with all statutes,

laws, ordinances, rules, regulations, orders, rulings, restrictions, writs,

injunctions and decrees (collectively, "Laws") in any way affecting or relating

to the Assets.



         (f) Environmental Matters. As of the Operator Change Date, the Seller

and the Assets were in compliance in all material respects with all

environmental Laws affecting or relating to the Assets, and there had been no

contamination in, on, under or from the Assets that requires any remediation

under any environmental Law.



         (g) Permits. As of the Operator Change Date, Seller had all licenses,

permits, certificates, orders, approvals and authorizations of any governmental

authority necessary to own, operate, use or maintain the Assets and all of such

permits were in full force and effect and all fees and charges relating thereto

had been paid.



                                       6

{PAGE}



         (h) Material Contracts. Set forth in Schedule 5.1(h) is a true and

correct description of each material contract, agreement, lease, or similar

arrangement that is included in the Assets or by which any of the Assets were

bound as of the Operator Change Date (the "Material Contracts"). Each of the

Material Contracts was in full force and effect and there were no material

violations or breaches thereof, or existing facts or circumstances that upon

notice or the passage of time or both would constitute a material violation or

breach thereof, by Seller or any affiliate of Seller or, to the knowledge of

Seller, by any other Party thereto.



         (i) Preferential Purchase Rights. None of the Assets is subject to any

preferential purchase or similar right that would become operative as a result

of the transactions contemplated by this Agreement.



         (j) Taxes. As of the Operator Change Date, Seller had paid all taxes on

or relating to the Assets, or any production or revenues attributable thereto,

which were then due and payable as required by Law prior to delinquency.



         (k) Gas Contracts. With respect to the gas sales contracts, gas product

purchase contracts, and gas processing and transportation contracts included in

the Assets, as of the Operator Change Date, none of such contracts warranted the

amount of the gas to be delivered.



         (l) Wells. As of the Operator Change Date, each of the wells included

in the Assets had been drilled and completed within the acreage limits permitted

by contract, pooling, or unit agreement and by Law, and all drilling and

completion of such wells and all related development and operations had been

conducted in compliance in all material respects with all Laws. As of the

Operator Change Date, no such well was subject to penalties on allowables after

the Effective Time because of any overproduction.



         (m) Well and Facility Status. There are no wells included in the Assets

that, as of the Operator Change Date, (i) Seller was obligated by Law or

contract to plug and abandon, or (ii) were subject to exceptions to a

requirement to plug and abandon issued by a governmental authority. Seller has

not installed any underground storage tanks or constructed any unlined pits in,

on or underlying any of the Assets and, to the knowledge of Seller, no

underground storage tanks or unlined pits have been installed or constructed by

anyone else in, on or underlying any of the Assets.



         (n) No Tax Partnership. The Assets are not subject to any tax

partnership agreement or provisions requiring a partnership income tax return to

be filed under Subchapter K of Chapter 1 of Subtitle A of the Internal Revenue

Code of 1986, as amended.



         (o) Proposed Operations or Expenditures. Other than as set forth in

Schedule 5.1(o), (i) Seller has not consented to, non-consented to, issued or

received any notice of a proposed drilling, completion, recompletion, deepening,

reworking, plugging back or plugging and abandonment with respect to the Assets

except for any such operations heretofore commenced for which Buyer has no

liability, and (ii) Seller has not issued or received any authorization for

expenditure with respect to the Assets for any period after the Effective Time,

except for delay rental or other lease payments that Seller has paid.



         (p) Royalties. As of the Operator Change Date, Seller had paid all

royalties, overriding royalties and other burdens on production due by the

Seller with respect to the Assets.



         (q) Title. As of the Operator Change Date, Seller has "Defensible

Title." As used in this Agreement, "Defensible Title" shall mean, respectively

as to the Subject Interest or Subject Interests related to a particular well,



                                       7

{PAGE}



well location, unit or other subdivision of property described in Exhibit A (a

"Property Subdivision"), record title to such Subject Interest or Subject

Interests related to such Property Subdivision that: (i) entitles Seller to

receive and retain, without suspension, reduction or termination, not less than

the applicable net revenue interest or net revenue interests specified for such

Property Subdivision in Exhibit A through plugging, abandonment and salvage of

such Property Subdivision; (ii) obligates Seller to bear the costs and expenses

attributable to the maintenance, development, and operation of such Property

Subdivision through plugging, abandonment and salvage of such Property

Subdivision in an amount not greater than the applicable working interest or

working interests specified for such Property Subdivision in Exhibit A; and

(iii) constitutes marketable record title under Utah Code Ann. ss. 57-9-1.

Defensible Title shall be subject to any exceptions identified in the

Acquisition Title Opinion dated August 12, 2002, identified as Exhibit A to the

Farmout Agreement, and shall not be diminished by any liens, security interests,

or other encumbrances created by, through, or under Marion after the date of the

Farmout Agreement.



         (r) Condition of Assets. As of the Operator Change Date, the machinery,

equipment, tangible personal property, fixtures and improvements included in the

Assets meet industry standards concerning reasonably good working order and

repair.



         (s) Hedging. None of the Assets is subject to or are bound by any

futures, hedge, swap, collar, put, call, option or other commodities contract or

agreement.



         (t) Brokerage Fees and Commissions. Neither Seller nor any affiliate of

Seller has incurred any obligation or entered into any agreement for any

investment banking, brokerage or finder's fee or commission in respect of the

transactions contemplated by this Agreement for which Buyer shall incur any

liability.



         Section 5.2 Representations and Warranties of Buyer. To the best of

Buyer's knowledge, Buyer represents and warrants to Seller as follows:



         (a) Organization and Qualification. Buyer is a corporation duly

organized, validly existing and in good standing under the Laws of the State of

Texas and has the requisite corporate power to carry on its business as it is

now being conducted. Buyer is duly qualified to do business and is in good

standing in each jurisdiction in which the Assets to be acquired by it makes

such qualification necessary.



         (b) Authority. Buyer has all requisite corporate power and authority to

execute and deliver this Agreement and to perform its obligations under this

Agreement. The execution, delivery, and performance of this Agreement and the

transactions contemplated hereby have been duly and validly authorized by all

requisite corporate action on the part of Buyer.



         (c) Actions. There are no actions pending against Buyer or, to the

knowledge of Buyer, threatened against Buyer that relate to the transactions

contemplated by this Agreement.



         (d) Brokerage Fees and Commissions. Neither Buyer nor any affiliate of

Buyer has incurred any obligation or entered into any agreement for any

investment banking, brokerage or finder's fee or commission in respect of the

transactions contemplated by this Agreement for which Seller shall incur any

liability.



         Section 5.3 Representations and Warranties of Parent. To the best of

Parent's knowledge, Parent represents and warrants to Seller as follows:



                                       8

{PAGE}



         (a) Subsidiaries. Parent owns, directly or indirectly, all of the

capital stock or other equity interests of Buyer free and clear of any liens,

and all the issued and outstanding shares of capital stock of Buyer are validly

issued and are fully paid, non-assessable, and free of preemptive and similar

rights to subscribe for or purchase securities. Parent has no other

subsidiaries.



         (b) Organization and Qualification. Parent and Buyer are each an entity

duly incorporated or otherwise organized, validly existing and in good standing

under the Laws of the jurisdiction of its incorporation or organization (as

applicable), with the requisite power and authority to own and use its

properties and assets and to carry on its business as currently conducted.

Neither the Parent nor Buyer is in violation or default of any of the provisions

of its respective certificate or articles of incorporation, bylaws or other

organizational or charter documents. Each of the Parent and the Buyer is duly

qualified to conduct business and is in good standing as a foreign corporation

or other entity in each jurisdiction in which the nature of the business

conducted or property owned by it makes such qualification necessary, except

where the failure to be so qualified or in good standing, as the case may be,

could not have or reasonably be expected to result in (i) a material adverse

effect on the legality, validity or enforceability of this Agreement or the

agreements for the Immediately Exercisable Options and the Reserve-Based Options

(together, the "Transaction Documents"), (ii) a material adverse effect on the

results of operations, assets, business, prospects or condition (financial or

otherwise) of the Parent and the Buyer, taken as a whole, or (iii) a material

adverse effect on the Parent's ability to perform in any material respect on a

timely basis its obligations under any Transaction Document (any of (i), (ii) or

(iii), a "Material Adverse Effect") and no proceeding has been instituted in any

such jurisdiction revoking, limiting, curtailing or seeking to revoke, limit or

curtail such power and authority or qualification.



         (c) Authority. Parent has the requisite corporate power and authority

to enter into and to consummate the transactions contemplated by each of the

Transaction Documents and otherwise to carry out its obligations hereunder and

thereunder. The execution and delivery of each of the Transaction Documents by

Parent and the consummation by it of the transactions contemplated hereby and

thereby have been duly authorized by all necessary action on the part of the

Parent and no further action is required by the Parent, its board of directors

or its stockholders in connection therewith. Each Transaction Document has been

(or upon delivery will have been) duly executed by the Parent and, when

delivered in accordance with the terms hereof and thereof, will constitute the

valid and binding obligation of the Parent enforceable against it in accordance

with its terms except (i) as limited by general equitable principles and

applicable bankruptcy, insolvency, reorganization, moratorium and other laws of

general application affecting enforcement of creditors' rights generally, (ii)

as limited by laws relating to the availability of specific performance,

injunctive relief or other equitable remedies and (iii) insofar as

indemnification and contribution provisions may be limited by applicable law.



         (d) No Conflicts. The execution, delivery and performance of the

Transaction Documents by Parent, the issuance and sale of the Securities and the

consummation by Parent of the other transactions contemplated hereby and thereby

do not and will not (i) conflict with or violate any provision of the Parent's

or Buyer's certificate or articles of incorporation, bylaws or other

organizational or charter documents, or (ii) conflict with, or constitute a

default (or an event that with notice or lapse of time or both would become a

default) under, result in the creation of any lien upon any of the properties or

assets of the Parent or Buyer, or give to others any rights of termination,

amendment, acceleration or cancellation (with or without notice, lapse of time

or both) of, any agreement, credit facility, debt or other instrument

(evidencing a Parent or Buyer debt or otherwise) or other understanding to which

Parent or Buyer is a party or by which any property or asset of the Parent or

Buyer is bound or affected, or (iii) conflict with or result in a violation of

any law, rule, regulation, order, judgment, injunction, decree or other

restriction of any court or governmental authority to which the Parent or Buyer



                                       9

{PAGE}



is subject (including federal and state securities laws and regulations), or by

which any property or asset of Parent or Buyer is bound or affected; except in

the case of each of clauses (ii) and (iii), such as could not have or reasonably

be expected to result in a Material Adverse Effect.



         (e) Actions. There is no action, suit, proceeding, inquiry, or

investigation before or by any court, public board, governmental agency or

authority, or self-regulatory organization or body pending or threatened against

or affecting Parent, Buyer, or any of their respective directors or officers in

their capacities as such, wherein an unfavorable decision, ruling or finding

would have a Material Adverse Effect or would adversely affect the transactions

contemplated by this Agreement or that would adversely affect the validity or

enforceability of, or the authority or ability of Parent to consummate the

transactions contemplated by this Agreement. Parent and Buyer are unaware of any

facts that could give rise to a claim or proceeding that, if asserted or

conducted with results unfavorable to Parent or Buyer, could have a Material

Adverse Effect.



         (f) Brokerage Fees and Commissions. Neither Parent nor Buyer has

incurred any obligation or entered into any agreement for any investment

banking, brokerage or finder's fee or commission in respect of the transactions

contemplated by this Agreement for which Seller shall incur any liability.



         (g) Issuance of the Securities. The Securities are duly authorized and,

when issued and paid for in accordance with the applicable Transaction

Documents, will be duly and validly issued, fully paid and nonassessable, free

and clear of all liens imposed by Parent. The ordinary shares to be issued upon

exercise of the Options, when issued in accordance with the terms of the

Transaction Documents, will be validly issued, fully paid and nonassessable,

free and clear of all liens imposed by Parent. Parent has reserved from its duly

authorized capital stock the maximum number of Ordinary Shares issuable pursuant

to this Agreement and the Options.



         (h) Capitalization.



                  (i) The authorized capital stock of Parent consists of

         192,414,201 fully paid issued ordinary shares. In addition, a total of

         88,141,201 listed and unlisted options to purchase ordinary shares were

         issued. Each of the outstanding shares of Parent is duly authorized,

         validly issued, and fully paid and nonassessable, and has not been

         issued in violation of (nor are any of the authorized shares of

         Parent's capital stock subject to) any preemptive or similar rights

         created by statute, Parent's charter documents, or any agreement to

         which Parent is a party or bound, and such outstanding shares owned by

         Parent are owned free and clear of all security interests, liens,

         claims, pledges, agreements, limitations on Parent's voting rights,

         charges or other encumbrances of any nature whatsoever.



                  (ii) Except as identified in section 5.3(h)(i) or as set forth

         in Schedule 5.3(h), there are no options, warrants, or other rights

         (including registration rights), agreements, arrangements, or

         commitments of any character to which Parent is a party relating to the

         issued or unissued capital stock of Parent or obligating Parent to

         grant, issue, or sell any shares of its capital stock. Except as set

         forth in Schedule 5.3(h), Parent has no obligations, contingent or

         otherwise, to (1) repurchase, redeem, or otherwise acquire any ordinary

         shares or other capital stock of Parent; or (2) provide material funds

         to, or make any material investment in (in the form of a loan, capital

         contribution, or otherwise), or provide any guarantee with respect to

         the obligations of any other person. Except as described in Schedule

         5.3(h), Parent does not directly or indirectly own, has not agreed to

         purchase or otherwise acquire, or does not hold any interest

         convertible into or exchangeable or exercisable for, 5% or more of the

         capital stock of any corporation, partnership, joint venture, or other

         business association or entity. Except as set forth in Schedule 5.3(h),

         there are no agreements, arrangements, or commitments of any character

         (contingent or otherwise) pursuant to which any person is or may be

         entitled to receive any payment based on Parent's revenues or earnings

         or calculated in accordance therewith. Except as set forth in Schedule



                                       10

{PAGE}



         5.3(h), there are no voting trusts, proxies, or other agreements or

         understanding to which Parent is a party or by which Parent is bound

         with respect to the voting of any shares of capital stock of Parent.



         (i) Required Filings and Consents. Except as set forth in Schedule

5.3(i), the execution and delivery of this Agreement by Parent does not, and

consummation of the transactions contemplated hereby will not, require Parent to

obtain any consent, license, permit, approval, waiver, authorization or order

of, or to make any filing with or notification to, any governmental or

regulatory authority, domestic or foreign, except when the failure to obtain

such consents, licenses, permits, approvals, waivers, authorizations or orders,

or to make such filings or notifications, would not, either individually or in

the aggregate, materially interfere with Parent's performance of its obligations

under this Agreement and would not have a Material Adverse Effect.



         (j) Reports and Financial Statements.



                  (i) Parent has furnished to Seller complete and accurate

         copies, as amended or supplemented, of (1) its annual report for the

         fiscal year ended June 30, 2005; (2) its interim financial report for

         the half-year ended December 31, 2005; and (3) its quarterly report for

         the quarter ended March 31, 2006, as filed with the Australian Stock

         Exchange ("ASX"), and all other reports filed by Parent with the ASX

         since June 30, 2005.



                  (ii) The audited consolidated financial statements of Parent

         included in Parent's annual report for the fiscal year ended June 30,

         2005 (1) comply as to form in all material respects with applicable

         accounting requirements, including the Accounting Standards, Urgent

         Issues Consensus Views, the Authoritative Pronouncements of the

         Australian Accounting Standard Board, and the Corporations Act 2001;

         (2) fairly present the consolidated financial condition, results of

         operations, and cash flows of Parent as of the respective date thereof

         and for the period referred to therein, and (3) are consistent with

         Parent's books and records.



         (k) Absence of Certain Changes or Events. Except as set forth in

Schedule 5.3(k), since the date of Parent's most recent balance sheet provided

in accordance with the description in section 5.3(j), there has not been any

material adverse change in the business, operations, properties, level of

Home        Intelligence        Services        Subscriptions        News        About Us

Contact Us       Terms of Use       Resend Documents       Shopping Cart

Copyright © 2008 The Consus Group LLC