EXHIBIT 10.6

THIS CREDIT AGREEMENT is made as of May 2, 2011, between

LW NATURAL RESOURCES OPPORTUNITIES FUND, LTD.

a corporation incorporated under the laws of the Cayman Islands (“Lender 1”),

HAMPTON CORP.

a corporation incorporated under the laws of Cayman Islands (“Lender 2”),

LW LATIN AMERICA SHORT DURATION FUND, LTD

a corporation incorporated under the laws of Curacao, (“Lender 3”), and

Li3 ENERGY, INC.

a corporation incorporated under the laws of the State of Nevada, USA (the
“Borrower”).

WHEREAS, the Borrower is in the principal business of discovery and development
of lithium and potassium brine and nitrate and iodine deposits in Chile,
Argentina and Peru;

WHEREAS, Lenders have offered a Line of Credit to Borrower for an amount of
U.S.$1,677,438.27 (One Million Six Hundred Seventy-seven Thousand Four Hundred
Thirty-eight and 27/100 Dollars of the United States of America) as working
capital and for general corporate needs;

WHEREAS, the Borrower has requested that the Lenders enter into this Agreement
with the Borrower to provide the Borrower with credit in the Principal Amount at
Maturity of U.S.$1,677,438.27 (One Million Six Hundred Seventy-seven Thousand
Four Hundred Thirty-eight and 27/100 Dollars of the United States of America);
and

WHEREAS, the Lenders have agreed to provide the Borrower with credit in the
Principal Amount at Maturity of U.S.$1,677,438.27 (One Million Six Hundred
Seventy-seven Thousand Four Hundred Thirty-eight and 27/100 Dollars of the
United States of America) for such purposes;

NOW, THEREFORE, it is agreed as follows:

ARTICLE ONE
DEFINITIONS

Section 1.01   Defined Terms:  In this Agreement and in the preamble hereto,
unless something in the subject matter or context is inconsistent therewith
capitalized terms shall have the following meaning:

 
(a)
“Affiliate” of a Person means any Person controlling, controlled by or under
common control with such Person;

 
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(b)
“Aggregate Outstanding” means in respect of the Credit, at any time, the sum
expressed in U.S. Dollars of the aggregate Issue Price plus Accrued Original
Issue Discount of the Borrowing outstanding at such time;

 
(c)
“Agreement”, “hereof”, “herein”, “hereto”, “hereunder” or similar expressions
mean this Agreement and the Exhibits and Schedules hereto, as amended,
supplemented, restated or replaced from time to time;

 
(d)
“Applicable Law” means in respect of any Person all provisions of constitutions,
statutes, rules, regulations and orders of governmental bodies or regulatory
agencies governing such Person;

 
(e)
“Best Knowledge” means, of an applicable Person, to the best of that Person’s
knowledge, information and belief after having made independent enquiry;

 
(f)
“Borrowing” means the utilization of the Credit by the Borrower to be evidenced
by the Notes, with respect to the disbursements to be made by Lender 1, Lender 2
and Lender 3;

 
 
(g)
“Business Day” means any day of the year other than Saturday, Sunday, a
statutory holiday or other day on which financial institutions are authorized or
required by law to close in New York, NY, USA;

 
(h)
“Closing Date” means the date on which all conditions precedent set forth in
Section 5.01 are satisfied or waived by each Lender;

 
(i)
“Common Stock” means the Common Stock of the Borrower, par value $0.001 per
share.

 
(j)
“Credit” means the credit as set out in Section 3.01 hereof, available to the
Borrower upon and subject to the terms and conditions contained in this
Agreement and as limited or reduced in accordance with the provisions of this
Agreement;

 
(k)
“Default” means any of the events specified in Section 8.01 hereof, whether or
not any requirement for the giving of notice, the lapse of time, or both, or any
other condition subsequent to such event, has been satisfied;

 
(l)
“Event of Default” has the meaning assigned to that term in Section 8.01 hereof;

 
(m)
“Facility” means the U.S.$1,677,438.27 (One Million Six Hundred Seventy-seven
Thousand Four Hundred Thirty-eight and 27/100 Dollars of the United States of
America) credit facility established pursuant to Section 3.01 by the Lenders in
favor of the Borrower;

 
(n)
“Generally Accepted Accounting Principles” or “GAAP” means United States
generally accepted accounting principles, consistently applied throughout the
term of this Agreement.

 
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(o)
“Issue Price” of a Note means, in connection with the original issuance of such
Note, the initial issue price at which the Security is sold as set forth in
Section 3.01 below and on the face of the Note;

 
(p)
“Lender” means each of Lender 1, Lender 2 and Lender 3.

 
(q)
“Lien” means any mortgage, charge, pledge, lien, privilege, security interest,
hypothecation, cessation and transfer, an assignment or sub-lease of real
property by way of security transfer to a guarantee trust having the function,
purpose or effect of securing, or of providing a source or reserve for payment,
of an obligation, or other encumbrance upon or with respect to any property of
any kind of any Person, real or personal, moveable or immoveable, now owned or
hereafter acquired;

 
(r)
“Maturity Date” means, with respect to the Borrowing to be evidenced by the
Notes, the dates established on the Notes, or if such day is not a Business Day,
the immediately preceding Business Day;

 
(s)
“Notes” means the promissory notes to be issued by Borrower to Lenders to
document the Credit in the form set forth in Exhibit “A“ hereto.

 
(t)
“Official Body” means any government or political subdivision or any agency,
authority, bureau, central bank, commission, department or instrumentality of
either, or any court, tribunal, grand jury or arbitrator, whether foreign or
domestic;

 
(u)
“Person” means an individual, partnership, corporation, business trust, joint
stock company, trust, unincorporated association, joint venture, a nation,
government, state, municipality or other political subdivision thereof, an
entity exercising executive, legislative, judicial, regulatory or administration
functions of, or pertaining to, government or other entity of whatever nature;

 
(v)
"Principal Amount at Maturity" of a Note means the amount set forth in Section
3.01 below and on the face of the Note.

 
(w)
“Principal Payment Date” means each of the dates contained in Section 3.01
hereof.

 
(x)
“Provisional Reserve” shall have the meaning given in Section 3.06 hereof;

 
(y)
“U.S. Dollars” and the symbol “U.S.$” each mean currency of the United States of
America which at the time of payment is legal tender for the payment of public
and private debts in the United States of America;

Section 1.02   Headings and Table of Contents:  The headings of the Articles,
Sections and Table of Contents are inserted for convenience of reference and
shall not affect the construction or interpretation of this Agreement.

Section 1.03   Preamble Part of Agreement:  The preamble to this Agreement shall
form part of this Agreement.

 
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Section 1.04    Accounting Terms:  Each accounting term used in this Agreement,
unless otherwise defined herein, has the meaning assigned to it under Generally
Accepted Accounting Principles.

ARTICLE TWO
REPRESENTATIONS AND WARRANTIES

Section 2.01    Borrower’s Representations and Warranties:  The Borrower
represents and warrants to the Lenders:

(a)     Incorporation:  The Borrower is duly organized and validly existing
under the laws of jurisdiction of its formation, is in all material respects in
compliance with the laws of those jurisdictions in which it carries on business
in which the failure to be so in compliance would have a material adverse effect
on the Borrower and has the full corporate power and authority to own its
property, to lease the property leased by it and to carry on its business as now
conducted;

(b)    Due Authorization:  the entering into, delivery and the performance by
the Borrower of this Agreement and the Notes and all agreements provided for or
contemplated hereby to which the Borrower is a part (i) are within its powers
and have been duly authorized by all necessary corporate action on its part;
(ii) do not conflict with or result in the violation of the terms of its charter
or by-laws or any law, regulation, franchise, license, ordinance, decree, writ,
injunction, order, statute, rule, regulation or judgment, or of any agreement or
other document to which it is a party, having application to it or by which it
may be bound as of the date hereof; and (iii) will not result in or require the
imposition of any Lien on any of its properties by any Person;

(c)     Other Agreements:  the Borrower is not in violation in the performance
or observance of any terms or provisions of any note, agreement, mortgage,
license or document evidencing any indebtedness by which it is bound, which
would allow or cause the termination, acceleration of maturity of, or
foreclosure on collateral pursuant to or securing, any note, agreement,
mortgage, license or document evidencing any indebtedness and is not otherwise
in violation of any material provision of any such note, agreement, mortgage,
license or document, or in violation of any judgment, decree, writ, injunction,
order, statute, rule or regulation to which it is a party or by which it may be
bound as of the date of this Agreement;

(d)    Licensing Approvals, etc.: the Borrower has all the governmental
licenses, authorizations, consents, registrations, and approvals necessary to
enter into and perform its obligations under this Agreement, and the Notes and
all agreements provided for or contemplated thereby as well as those necessary
and material to permit it to own its property and assets and to operate its
business;

(e)     Validity:  this Agreement and the Notes constitute legal, valid and
binding obligations of the Borrower enforceable against each of them in
accordance with their respective terms, except as the enforceability thereof may
be limited by applicable bankruptcy, insolvency, reorganization or other similar
laws affecting creditors’ rights generally and by general equitable principles
(regardless of whether the issue of enforceability is considered in a proceeding
in equity or at law). Except as expressly provided for in this Agreement or in
Schedule 2.01(e) attached hereto, no other consent, waiver or authorization of,
or filing with, any person (including, without limitation, any creditors or
shareholders of the Borrower or any Official Body) is required to be obtained by
the Borrower in connection with the execution and delivery of, and the
performance, validity or enforceability of this Agreement or the Notes;

 
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(f)     Litigation:  there is no litigation, suit or proceeding or threatened
before any Official Body of any jurisdiction which could have a material adverse
effect on the ability of the Borrower to perform this Agreement, the Notes and
all agreements provided for or contemplated hereby or which could have a
material adverse effect on the financial condition, assets or operations of the
Borrower or could have a material adverse effect on the ability of the Borrower
to own its property and assets and operate its business in the United States of
America or in any other jurisdiction;

(g)    Default:  no event has occurred and is continuing which, alone or with
the giving of notice, or the passage of time, or both, would constitute an Event
of Default hereunder;

(h)    Disclosure:  No representation or warranty made by the Borrower in this
Agreement or in any other documentation furnished to the Lenders from time to
time in connection herewith contains or will contain any untrue statement of a
material fact or omits or will omit to state any material fact necessary to make
the statement herein or therein, in light of the circumstances under which they
are made and in the date they were made, not misleading.  There is no fact known
to the Borrower on the date of this Agreement which materially adversely
affects, or which has any reasonable likelihood of materially adversely
affecting, the business, operations, property or condition (financial or
otherwise) of the Borrower that has not been disclosed to Lenders;

Section 2.02  Survival of Representations and Warranties: The representations
and warranties made in this Agreement shall survive the execution of this
Agreement and all other agreements provided for or contemplated hereby.

ARTICLE THREE
THE CREDIT

Section 3.01  The Credit:  Subject always to the limitations and terms and
conditions contained herein, each Lender agrees to lend to the Borrower on the
Closing Date the amounts set forth below by disbursing to the Borrower the Issue
Price of the Lender’s Note as set forth below, provided that the maximum amount
of Aggregate Outstanding available pursuant to the Credit at any one time
extended by this Agreement is U.S.$1,677,438.27 (One Million Six Hundred
Seventy-seven Thousand Four Hundred Thirty-eight and 27/100 Dollars of the
United States of America) Principal Amount at Maturity:

 
(a)
Lender 1:
U.S.$750,000.00 Issue Price;

U.S.$838,719.14 Principal Amount at Maturity
 
 
(b)
Lender 2:
U.S.$175,000.00 Issue Price;

U.S.$195,701.14 Principal Amount at Maturity
 
 
(c)
Lender 3:
U.S.$575,000.00 Issue Price;

U.S$643,018.00 Principal Amount at Maturity.

 
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On the Closing date, each Lender shall deliver to the Borrower the Issue Price
of the Lender’s Note, by wire transfer of immediately available funds, to the
Borrowers account as follows:

Bank:
 
Citibank, N.A.
330 Madison Ave.
New York, NY  10017
     
ABA Routing #:
 
021000089
     
Swift Code:
 
CITIUS33
     
Account Name:
 
Gottbetter & Partners, LLP Attorney Trust
488 Madison Ave., 12th floor
New York, NY  10022
Phone:  (212) 400-6900
     
Account #:
 
9951660945
     
Reference:
 
“Li3 Energy, Inc. Zero-Coupon Note – [insert Lender’s name]”
     
Contact:
  
Terence X. Beggins; telephone: (212) 400-6900;
e-mail: txb@gottbetter.com

The Borrowing shall be subject to the terms of this Agreement and the Notes,
each one evidencing the repayment terms applicable to the Borrowing and
according to the amounts disbursed by each of the Lenders.  The Principal
Payment Date of each Note shall be February 2, 2012.

Section 3.02  Repayment under the Facility:  The Borrower shall repay such
portion of the Borrowing under this Agreement and the Notes on the Principal
Payment Date as provided in the schedules for each respective Lender, the amount
payable by the Borrower on each such Principal Payment Date being the sum of all
amounts in all schedules for each respective Lender that pursuant to such
schedules are payable on such Principal Payment Date.

In addition, if the Borrower shall raise capital by the issuance of any of its
securities (whether debt, equity or securities convertible into equity
securities) after the Closing Date, the net proceeds (after offering expenses)
of any such offering shall be applied first to prepay the Issue Price of and
Accrued Original Issue Discount on the Borrowing until no amount payable by the
Borrower hereunder or under the Notes remains outstanding.

In addition, the Facility can be prepaid in whole or from time to time in part,
provided, however, that the Borrower shall give the Lenders at least three (3)
Business Days’ prior written notice of (x) its intent to prepay the Loans, and
(y) the amount of such prepayment of the Facility.  Any voluntary prepayment
shall be in the percent amount of the Principal Amount at Maturity of each Note
set forth below:

 
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Percent of Principal
 
Date of Prepayment
 
Amount at Maturity
         
Within three months after the Closing Date
    92.81749 %
More than three but less than six months after the Closing Date
    96.34183 %
More than six months after the Closing Date
    100.00 %

All partial prepayments will be allocated ratably to the Lenders based on the
Issue Price of each Lender’s Borrowing.

Section 3.03  Evidence of Indebtedness:  The obligation of the Borrower for
payment of the Issue Price of and Accrued Original Issue Discount on the
Borrowing shall be evidenced by the Notes duly executed and delivered by the
Borrower, in the form of the Notes contained in Exhibit “A” of this Agreement.

Section 3.04  Payments Free and Clear:  All payments to be made by the Borrower
pursuant to this Agreement are to be made without set-off, compensation or
counterclaim and without deduction of any kind and for same day value.

Section 3.05  Return of Notes:  Upon payment in full of each Note and subsequent
receipt by the corresponding Lender of a written request of the Borrower to that
effect, such Lender shall, within the next following 10 (ten) Business Days
return such Note to Borrower the Notes marked “PAID-IN-FULL” and a written
document issued by Lenders in which it declares that the Borrower’s obligations
under this Agreement have been totally fulfilled.

Section 3.06  Warrants:  On the Closing Date, the Borrower shall issue to each
Lender a warrant, substantially in the form of Exhibit “B” hereto (a “Warrant”),
representing the right to purchase one share of Common Stock for each U.S.
Dollar of Issue Price of such Lender’s Note, exercisable from issuance until
five years after the Closing Date, at an exercise price of U.S.$0.50 per share.

ARTICLE FOUR
ORIGINAL ISSUE DISCOUNT

Section 4.01   Original Issue Discount: No interest shall accrue on the
outstanding balance of the Borrowing. Original Issue Discount will accrue as
specified below.

"Original Issue Discount" of a Note means the amount that accrues in respect of
such Note daily at a rate of 15.0% per annum on the Issue Price thereof
beginning on the Closing Date.  Original Issue Discount will be calculated on a
monthly bond equivalent basis, using a 360-day year comprised of twelve 30-day
months.

"Accrued Original Issue Discount" of any Note at any time represents the accrued
portion of Original Issue Discount.

 
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ARTICLE FIVE
CONDITIONS PRECEDENT

Section 5.01  Conditions Precedent to the Establishment of the Credit:  The
obligation of each Lender to advance funds pursuant to this Agreement is subject
to the conditions precedent that such Lender shall receive on or before the
Closing Date, all of the following, each in full force and effect on the Closing
Date I and in form and substance satisfactory to such Lender:

(a)
Originals of this Agreement executed by the Borrower;

(b)
Copy of the resolutions of the Borrower’s Board of Directors, certified by an
officer of the Borrower, evidencing the authority of each officer of the
Borrower executing this Agreement to bind the Borrower under this Agreement and
the Notes, whether severally or jointly with the other officers who shall have
executed this Agreement on behalf of the Borrower;

(c)
Copies, certified by an officer of the Borrower, of the Borrower’s charter and
by-laws as in effect on Closing Date I;

(d)
A Note in the form of Exhibit “A” shall have been executed and delivered to such
Lender in the face amount specified in Section 3.01;

(e)
No Default or Event of Default has occurred and is continuing on the date the
Borrowing I is requested or made or will occur as a result of the Borrowing I;

(f)
The terms and conditions of this Agreement upon which the Borrower may obtain
the Borrowing I have been fulfilled; and

(g)
That all representations made by the Borrower continue to be true on the Closing
Date I.

ARTICLE SIX
COVENANTS

Section 6.01   Covenants of the Borrower: The Borrower covenants and agrees with
the Lenders that so long as any amounts are outstanding under this Agreement:

(a)     Payments:  it will duly and punctually pay all sums of money due and
payable by it under the terms of this Agreement and the Notes at the times and
places and in the manner provided herein and therein;

(b)     Conduct of Business:  it will conduct its business in a proper,
efficient and business-like manner and in material compliance with Applicable
Laws and from time to time will promptly provide the Lenders with all reasonable
information requested by the Lenders concerning its business, property and
financial condition;

(c)     Change of Business:  it will not directly or indirectly change the basic
nature of its business;

 
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(d)    Inspection:  it will, at any reasonable time and from time, upon prior
written notice, and subject to Section 13.02, permit a representative of the
Lenders (who need not be an employee of the Lenders) to inspect any property of
the Borrower and to examine and review the books, accounts and records of the
Borrower, provided, however, that such inspection, examination or review does
not unreasonably interfere with the operations of the Borrower, and provided
further that such representative of the Lenders shall have executed with
Borrower a confidentiality agreement in terms of the form attached hereto as
Exhibit “C” hereto, pursuant to which such representative shall agree to
maintain as confidential such information of the Borrower and not to disclose
such information to any person other than the Lenders and their respective
consultants, agents, counsels and employees, subject to customary exceptions to
obligations of confidentiality. Lender 3 shall only have the right of inspection
set forth in this subsection (d) as of Closing II;

(e)     Consents, Licenses, etc.:  it will obtain and maintain as and when
required all material consents, licenses and permits which may be necessary for
it to operate its business;

(f)     Material Changes:  it will promptly advise the Lenders of any material
change in its business, assets or financial condition or any material litigation
that has or might reasonably be expected to have a material adverse effect on
its ability to perform its obligations under this Agreement;

(g)    Notices of Default:  it will promptly give notice to the Lenders of each
Default or Event of Default and each other event that has or might reasonably be
expected to have a material adverse effect on its ability to perform its
obligations under this Agreement;

(h)    Corporate Status and Qualification; Compliance with Laws:  it will
preserve and maintain its corporate existence and its right to do business in
each jurisdiction in which the failure to do so would have a material adverse
effect on its business, financial condition, property or assets, and diligently
preserve and at all times renew or cause to be preserved and renewed all the
rights, powers, privileges, franchises and goodwill owned by it and will at all
times comply with all Applicable Laws;

(i)      Pay Taxes:  it will from time to time pay or cause to be paid all
taxes, rates, levies, assessments, government fees or dues lawfully levied,
assessed or imposed upon or in respect of it as and when the same shall become
due and payable except where the validity or amount thereof is being contested
in good faith and by appropriate proceedings and exhibit to the Lenders, when
required, the receipts and vouchers establishing such payment, and duly observe
and conform to all valid requirements of any Official Body relative to its
property or rights, and all covenants, terms and conditions upon or under which
any such property or rights are held; and
 
(j)      Senior or Pari Passu Indebtedness.  The Borrower will not incur,
create, assume, guaranty or permit to exist any indebtedness that ranks senior
in priority to, or pari passu with, the obligations under the Notes and this
Agreement, except for (i) indebtedness existing on the date hereof and set forth
in Schedule 6.01(j) attached hereto and only to the extent that such
indebtedness ranks senior in priority to or pari passu with the obligations
under this Note and the Purchase Agreement on the Closing Date, (ii) purchase
money obligations for equipment, goods or services to be employed in the
Borrower’s business; (iii) ordinary course trade payables and payables to
consultants and advisors and (iv) indebtedness created as a result of a
subsequent financing if the gross proceeds to the Borrower of such financing are
equal to or greater than the aggregate Issue Price of and Accrued Original
Interest Discount the Notes and the Notes are repaid in full upon the closing of
such financing.

 
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(k)     Liens.  The Borrower will not Create, incur, assume or permit to exist
any Lien on any property or assets (including stock or other securities of the
Borrower) now owned or hereafter acquired by it or on any income or revenues or
rights in respect of any thereof, except:

(i)      Liens on property or assets of the Borrower existing on the date hereof
and set forth in Schedule 6.01(k) attached hereto, provided that such Liens
shall secure only those obligations which they secure on the date hereof;

(ii)    any Lien existing on any property or asset prior to the acquisition
thereof by the Borrower, provided that

A.         such Lien is not created in contemplation of or in connection with
such acquisition, and

B.         such Lien does not apply to any other property or assets of the
Borrower;

(iii)    Liens for taxes, assessments and governmental charges;

(iv)   carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s,
landlord’s or other like Liens arising in the ordinary course of business and
securing obligations that are not due and payable;

(v)    pledges and deposits made in the ordinary course of business in
compliance, with workmen’s compensation, unemployment insurance and other social
security laws or regulations;

(vi)   deposits to secure the performance of bids, trade contracts (other than
for indebtedness), leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary course of business;

(vii)  zoning restrictions, easements, licenses, covenants, conditions,
rights-of-way, restrictions on use of real property and other similar
encumbrances incurred in the ordinary course of business and minor
irregularities of title that, in the aggregate, are not substantial in amount
and do not materially detract from the value of the property subject thereto or
interfere with the ordinary conduct of the business of the Borrower;

(viii) purchase money security interests in real property, improvements thereto
or equipment hereafter acquired (or, in the case of improvements, constructed)
by the Borrower, provided that

 
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A.         such security interests secure indebtedness permitted by this Note,

B.         such security interests are incurred, and the indebtedness secured
thereby is created, within 90 days after such acquisition (or construction),

C.         the indebtedness secured thereby does not exceed 85% of the lesser of
the cost or the fair market value of such real property, improvements or
equipment at the time of such acquisition (or construction) and

D.         such security interests do not apply to any other property or assets
of the Borrower;

(ix)    Liens arising out of judgments or awards (other than any judgment that
constitutes an Event of Default hereunder) in respect of which the Borrower
shall in good faith be prosecuting an appeal or proceedings for review and in
respect of which it shall have secured a subsisting stay of execution pending
such appeal or proceedings for review, provided the Borrower shall have set
aside on its books adequate reserves with respect to such judgment or award; and

(x)    deposits, Liens or pledges to secure payments of workmen’s compensation
and other payments, public liability, unemployment and other insurance, old-age
pensions or other social security obligations, or the performance of bids,
tenders, leases, contracts (other than contracts for the payment of money),
public or statutory obligations, surety, stay or appeal bonds, or other similar
obligations arising in the ordinary course of business.
 
(l)      Dividends and Distributions. The Borrower shall not declare or pay,
directly or indirectly, any dividend or make any other distribution (by
reduction of capital or otherwise), whether in cash, property, securities or a
combination thereof, with respect to any shares of its capital stock or directly
or indirectly redeem, purchase, retire or otherwise acquire for value any shares
of any class of its capital stock or set aside any amount for any such purpose.

ARTICLE SEVEN
CONVERSION

Section 7.01   Optional Conversion.  Each Lender shall be entitled, at its sole
option, at any time and from time to time, and until such Lender’s Note is fully
paid, to convert all or any part of the outstanding Issue Price of the Note,
plus Accrued Original Issue Discount thereon to the date of conversion, into
shares (each, a “Conversion Share”) of Common Stock of the Borrower, at a
price  of U.S.$0.40 per share (subject to adjustment as provided below, the
“Conversion Price”).  No fraction of shares or scrip representing fractions of
shares will be issued on conversion.  Upon any conversion of the entire
outstanding Issue Price of and Accrued Original Issue Discount on any Note, the
number of shares issuable shall be rounded to the nearest whole share, and any
partial conversions of a Note may only be made for integral numbers of
shares.  To convert a Note, the holder thereof shall deliver written notice
thereof, substantially in the form of Exhibit “A” to the Note, with appropriate
insertions (the “Conversion Notice”), to the Borrower at its address as set
forth herein.  The date upon which the conversion shall be effective (the
“Conversion Date”) shall be deemed to be the date set forth in the Conversion
Notice.  The Borrower’s calculation of the applicable Conversion Price shall be
conclusive, absent manifest error.

 
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Section 7.02  Reservation of Common Stock.  The Borrower shall reserve and keep
available out of its authorized but unissued shares of Common Stock, solely for
the purpose of conversion of the Notes, that number of shares of Common Stock
equal to the the aggregate number of shares of Common Stock into which the Notes
are convertible based upon the then applicable Conversion Price.

Section 7.03  Adjustment of Conversion Price upon Subdivision or Combination of
Common Stock.  If the Borrower at any time after the Closing Date subdivides (by
any stock split, stock dividend, recapitalization or otherwise) one or more
classes of its outstanding shares of Common Stock into a greater number of
shares, the Conversion Price in effect immediately prior to such subdivision
will be proportionately reduced.  If the Borrower at any time after the the
Closing Date combines (by combination, reverse stock split or otherwise) one or
more classes of its outstanding shares of Common Stock into a smaller number of
shares, the Conversion Price in effect immediately prior to such combination
will be proportionately increased.  Any adjustment under this Section  shall
become effective at the close of business on the date the subdivision or
combination becomes effective.

ARTICLE EIGHT
EVENTS OF DEFAULT AND REMEDIES

Section 8.01   Events of Default:  Each of the following events shall constitute
an Event of Default under the Credit provided in this Agreement:

(a)     if the Borrower defaults in the payment of any Issue Price of or Accrued
Original Issue Discount on the Facility when due, unless Borrower cures within
thirty (30) calendar days after such breach;

(b)     if any representation or warranty made by the Borrower in this Agreement
or in any certificate, financial statement or other document or instrument
furnished to the Lenders pursuant to this Agreement is incorrect in any material
respect when made or deemed to have been made and such misrepresentation is not
cured within thirty (30) days from the moment the Lenders notify Borrower of
such situation;

(c)     the breach by the Borrower of any covenant in this Agreement to be
performed on its part, provided such breach has not been canceled or cured
within thirty (30) days from the date the Borrower becomes aware of such breach;

(d)     if this Agreement or the Notes shall at any time after its respective
execution and delivery and for any reason, cease to be in full force and effect;

 
12

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(e)     the presentation by the Borrower or any Person acting on behalf of the
Borrower of a composition or arrangement or similar plan or scheme relating to
the Borrower or any Person acting on behalf of the Borrower for an order that
the Borrower be adjudged insolvent, in bankrupt or for an order appointing a
receiver (whether interim or not), manager, receiver-manager, liquidator,
trustee or other similar officer of the Borrower over all or a material portion
of its assets, the making of a proposal by the Borrower for the general benefit
of creditors or any similar action, all under any Applicable Law respecting
insolvency or the granting of relief to debtors, or the taking of any action by
the Borrower  in furtherance of any of the aforesaid purposes;

(f)      the pronouncement of an order or decree by an Official Body of
competent jurisdiction adjudging the Borrower to be insolvent or bankrupt, or
appointing a receiver, manager, receiver-manager, liquidator, trustee or similar
officer of the Borrower of all or a material portion of its assets, or
appointing an interim receiver of the Borrower of all or a material portion of
its assets; unless such order decree or appointment is being contested in good
faith by such person;

(g)     the appointment, other than by an order or decree by an Official Body of
a receiver (whether interim or not), manager, receiver-manager, liquidator,
trustee or similar officer of the Borrower of all or a material portion of its
assets; unless such order decree or appointment is being contested in good faith
by such person;

(h)     the bringing of proceedings by any Person for an order that the Borrower
be adjudged insolvent, or bankrupt or for an order appointing a receiver
(whether interim or not), manager, receiver-manager, liquidator, trustee or
other similar officer of the Borrower or of all or a material portion of its
assets, which is not being actively or validly contested in good faith by such
person within one hundred (100) days and which is not dismissed or stayed within
one hundred and eighty (180) days after institution;

(i)      if one or more judgments are rendered against the Borrower involving in
the aggregate at any one time outstanding liability of U.S.$1,000,000.00 (or the
equivalent thereof in any other currency) or more, this if they are not
contested diligently and in good faith by appropriate proceedings, which are not
paid or fully covered by insurance and if, within thirty (30) days after entry
thereof, such judgment has not been vacated, discharged in full or otherwise
satisfied or execution thereof stayed pending appeal, or if, within ninety  (90)
days after the expiration of such stay, such judgments shall not have been
vacated, discharged in full or otherwise satisfied.

Section 8.02  Acceleration and Termination of Rights:  To the extent permitted
and in the manner prescribed by law, if an Event of Default shall occur and be
continuing, the Lenders may, by written notice to the Borrower (i) declare all
amounts of any nature payable under this Agreement, including but without
limitation Issue Price and Accrued Original Interest Discount amounts
outstanding under the Credit, whereupon all such amounts shall become and be
forthwith due and payable, without additional presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by the
Borrower, and (ii) without limitation, proceed by any other action, suit, remedy
or proceeding authorized or permitted by this Agreement, the agreements,
documents and instruments contemplated herein or by law or by equity.

 
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Section 8.03  Remedies Cumulative:  It is expressly understood and agreed that
the rights and remedies of the Lenders under this Agreement are cumulative and
are in addition to and not in substitution for any rights or remedies provided
by law and a single or partial exercise by the Lenders of any right or remedy
for a default or breach of any term, covenant, condition or agreement herein
contained shall not be deemed to be a waiver of or to alter, affect, or
prejudice any other right or remedy or other rights or remedies to which the
Lenders may be lawfully entitled for the same default or breach, and any waiver
by the Lenders of the strict observance, performance or compliance with any
term, covenant, condition or agreement herein contained, and any indulgence
granted by the Lenders shall be deemed not to be a waiver of any subsequent
default.

Section 8.04  No Set-Off:  The Lenders are not authorized to set-off nor to
apply any deposits and any other indebtedness at any time owing by the Lenders
to or for the credit of the account of the Borrower, against and on account of
the debts and liabilities of the Borrower, respectively as the case may be, due
and payable to the Lenders under this Agreement.

ARTICLE NINE
EXPENSES, TAXES AND INCREASED COSTS

Section 9.01  Expenses and Indemnity:  All statements, reports, certificates,
opinions, appraisals and other documents or information required to be furnished
to the Lenders by the Borrower under this Agreement shall be supplied without
cost to the Lenders. The Borrower shall pay to the Lenders on demand all
necessary and reasonable out of pocket documented costs, including all
reasonable and documented legal and consultants’ fees and other expenses
incurred by the Lenders in the documentation preparation, negotiation and
execution of this Agreement and any other agreement contemplated by this
Agreement.

The Borrower agree to indemnify the Lenders and their respective officers,
directors, employees and agents (for whom in respect of this indemnity the
Lenders are the respective agent and trustee) and agree to save each of them
harmless from and against any loss or expense which any of them sustains or
incurs as a consequence of (i) any representation or warranty made herein by the
Borrower which was materially incorrect at the time it was made or deemed to
have been made; (ii) a default by the Borrower in the payment of any sum due
hereunder; (iii) any other default by the Borrower hereunder; and (iv) any fees,
cash, expenses, costs, liabilities or obligations arising out of any proceedings
brought against any Lender due to its entering into this Agreement or
undertaking its obligations under this Agreement or the use of proceeds by the
Borrower unless any such loss or expense shall not be attributable to acts or
omissions of the Borrower.

Section 9.02 Increased Costs:  If after the date hereof, any Applicable Law or
the adoption of any Applicable Law, or any change therein or any change in the
interpretation or administration thereof by any Official Body charged with the
interpretation or administration thereof or compliance by the Lenders with any
request or directive (whether or not having the force of law) of any such
Official Body:

 
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(a)     shall subject any Lender to any tax, duty or other charge, or shall
cause the withdrawal or termination of any previously available exemption from
any tax, duty or other charge, with respect to the Credit, or shall change the
basis of taxation of payments to such Lender including the Issue Price of or
Accrued Original Issue Discount on any of the Borrowing or any fees payable
hereunder or any other amounts due under this Agreement (except for changes in
the rate of taxes (including franchise or receipts taxes) measured by or imposed
on the overall net income, capital, or receipts of such Lender imposed by the
jurisdiction (or any political subdivision thereof) under the laws of which the
Lender (i) is organized, (ii) has its principal place of business, or (iii) is,
through an office or other fixed place of business, deemed to be doing business
or maintaining a permanent establishment under any applicable income tax
treaty  or a jurisdiction in which such Lender is subject to taxation without
regard to this Agreement and the documentation entered into pursuant thereto and
except for changes in any such jurisdiction in the method of calculation of net
income for income tax purposes where any such change is applicable to
corporations generally regardless of whether they are lenders (such excluded
taxes being "Excluded Taxes")); or

(b)    shall impose, modify or deem applicable any reserve, deemed reserve,
special deposit or similar requirement against assets of, deposits with or for
the account or credit extended or committed to be extended by any Lender or
shall impose on such Lender any other condition affecting its obligation to
permit any of the Borrowing affecting outstanding amounts under any of the
Borrowing including, without limitation, the amount of capital required or
expected to be maintained by such Lender as a result of entering into this
Agreement or in respect of the outstanding amounts under any of the Borrowing;
and the net result of any of the foregoing is to increase the cost to such
Lender of maintaining the Credit, making or maintaining the Borrowing, or to
reduce the amount of any sum received or receivable by the Lenders or the rate
of return on such Lender’s capital or assets as a consequence of its commitments
or obligations under this Agreement or with respect hereto, by an amount deemed
by such Lender to be material, then within thirty (30) days after each demand by
such Lender claiming compensation, setting forth the additional amount or
amounts to be paid to it hereunder and the basis thereof, the Borrower agrees to
pay promptly to such Lender such additional amount or amounts incurred prior to
such demand as will compensate such Lenders for such increased costs or
deductions. The Lenders will promptly notify the Borrower of any event of which
the Lenders have knowledge, occurring after the date hereof, which will entitle
any Lender to compensation pursuant to this Section 9.02 and will designate a
branch or account, as the case may be, or take such other commercially
reasonable actions if such designation or actions will avoid the need for or
reduce the amount of, such compensation and will not, in the reasonable judgment
of the affected Lender, be otherwise disadvantageous to such Lender.

A certificate of a Lender claiming compensation under this Section 9.02 setting
forth the additional amount or amounts (which additional amounts may be
calculated by such Lender on the basis of reasonable estimates or averaging
methods) to be paid to it hereunder and the particulars of the calculation of
the additional amount or amounts payable by the Borrower shall be conclusive in
the absence of manifest error. If a Lender demands compensation under this
Section 9.02, the Borrower may at any time, upon at least 4 (four) Business
Days’ prior notice to the Lenders, which notice shall be irrevocable, prepay in
full, without penalty, but subject to Section 4.01, the then outstanding Issue
Price of and Accrued Original Issue Discount on the Borrowing to the Lenders and
all such compensation to the date of repayment.

 
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Section 9.03   Tax Indemnity:

(a)     Borrower shall be responsible for any and all withholding taxes,
deductions, levies, imposts, exchange fees, notary fees, value added taxes,
stamp taxes, and other costs and expenses associated with this Agreement and the
Notes other than, in the case of each Lender, Excluded Taxes.  All payments to
the Lenders shall be made free and clear of any withholding taxes, deductions,
levies or imposts other than Excluded Taxes.  If Borrower is required to deduct
or withhold any taxes, deductions, levies or imposts other than Excluded Taxes,
the payment shall be increased by an amount necessary so that after making all
required withholdings or deductions (including withholdings or deductions on the
increased amount paid pursuant to this sentence), the Lender shall receive the
amount it would have received had no withholding or deduction existed or been
made.

(b)    The Borrower shall file all required returns related to the withholding
taxes referred to above associated with this Agreement and the Notes, and will
furnish copies to the Lenders.

Section 9.04  Interest on Certain Overdue Amounts:  If the Borrower fails to pay
on the due date any amount payable hereunder (other than Issue Price, Accrued
Original Issue Discount which is payable as otherwise provided in this
Agreement), the Borrower shall, on demand, from time to time by the Lenders, pay
interest (to the extent permitted by Applicable Law) on such overdue amount to
the Lenders from such due date up to the date of actual payment, both before and
after demand, default or judgment, at the rate of interest per annum applicable
to such Borrowing to which such amount relates or if no Borrowing is involved
then at a rate of interest per annum equal to 15.50% (Fifteen and one-half
percent) to the extent not otherwise provided herein.

ARTICLE TEN
NOTICE

Section 10.01 Address for Notice: Notice to be given hereunder shall, save as
otherwise specifically provided, be in writing and sent by internationally
recognized private courier service with acknowledgment of receipt, to the party
or parties for whom it is intended and shall not be deemed received until actual
receipt thereof by such party or parties.

The mailing address for the Lenders shall be:

Lenders:

Lender 1

LW NATURAL RESOURCES OPPORTUNITIES FUND, LTD.
c/o LW Securities, S.A.,
Torre De las Americas, Punta Pacífica, Of. 2903 C
Panama - Panama

 
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Lender 2

HAMPTON CORP.
Via Madonna Delle Grazie 14
Firenze, 50135 Italy
Tlf: + 39 055 604 561
Attention: Carlos Zalles

Lender 3

LW LATIN AMERICA SHORT DURATION FUND, LTD
1111 Brickell Av, Suite 1117
Miami FL, 33131
Tlf: +1 305 913 7117
Attention: Javier Llanos

The mailing address for operational purposes for the Borrower shall be:

The Borrower:

Li3 Energy, Inc.
Avenida Pardo y Aliaga 699, Oficina 802
San Isidro, Lima, PERU
Attention: Luis Saenz, Chief Executive Officer
Fax: +511-421-1649

With a copy to:
Gottbetter & Partners, LLP
488 Madison Avenue, 12th floor
New York, NY  10022
Attention: Adam S. Gottbetter
Fax: +1-212-400-6901

ARTICLE ELEVEN
GOVERNING LAW AND JUDGMENT CURRENCY

Section 11.01 Governing Law:  The parties agree that this Agreement shall be
conclusively deemed to be a contract made under, and shall for all purposes be
governed by and construed in accordance with, the laws of the State of New York
and of the United States of America applicable therein without reference to the
conflicts of laws rules thereof and the parties agree that any legal suit,
action or proceeding arising out of or relating to this Agreement may be
instituted in the courts of such state and the parties hereto accept and
irrevocably submit to the jurisdiction of such courts and acknowledge their
competence and agree to be bound by any judgment thereof, hereby waiving any
jurisdiction they could be entitled to by virtue of their domicile or otherwise.

Section 11.02 Judgment Currency:  For the purpose of obtaining judgment in any
court, the applicable currency shall be U.S. Dollars.

 
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Section 11.03 Usurious Rate:  Lenders and Borrower intend to contract in strict
compliance with applicable usury law from time to time in effect. In furtherance
thereof Lenders and Borrower stipulate and agree that none of the terms and
provisions contained in the Agreement shall ever be construed to create a
contract to pay, for the use, forbearance or detention of money, interest in
excess of the maximum amount of interest permitted to be charged by Applicable
Law from time to time in effect. Neither Borrower nor any present or future
guarantors, endorsers, or other Persons hereafter becoming liable for payment of
any obligation of Borrower hereunder shall ever be liable for unearned interest
thereon or shall ever be required to pay interest thereon in excess of the
maximum amount that may be lawfully charged under Applicable Law from time to
time in effect, and the provisions of this section shall control over all other
provisions of the Agreement or the Notes which may be in conflict or apparent
conflict herewith.

Lenders expressly disavow any intention to charge or collect excessive unearned
interest or finance charges in the event the maturity of any obligation of
Borrower hereunder is accelerated. If (a) the maturity of any obligation of
Borrower hereunder is accelerated for any reason, (b) any obligation of Borrower
hereunder is prepaid and as a result any amounts held to constitute interest are
determined to be in excess of the legal maximum, or (c) Lenders or any other
holder of any or all of the obligations of Borrower hereunder shall otherwise
collect moneys which are determined to constitute interest which would otherwise
increase the interest on any or all of the obligations of Borrower hereunder to
an amount in excess of that permitted to be charged by Applicable Law then in
effect, then all sums determined to constitute interest in excess of such legal
limit shall, without penalty, be promptly applied to reduce the then outstanding
Issue Price of the obligations of Borrower hereunder or, at Borrower's option,
promptly returned to Borrower or the other payor thereof upon such
determination.

ARTICLE TWELVE
SUCCESSORS AND ASSIGNS

Section 12.01 Successors and Assigns:  This Agreement shall be binding upon and
inure to the benefit of the Lenders and the Borrower and their respective
permitted successors and assigns, except that (a) the Borrower shall not assign
any rights or obligations with respect to this Agreement or any of the
agreements contemplated hereby without the prior written consent of the Lenders
(b) a Lender may assign (in an amount equal to at least U.S.$100,000 (or the
remaining balance thereof, if less)) all or any of its outstanding Borrowings
and remaining commitments to lend hereunder (x) to an Affiliate of the Lender or
(y) with the prior written consent of the Borrower (such consent not to be
unreasonably withheld), to a commercial bank, other financial institution,
mutual fund or “Accredited Investor” (as such term is defined in Regulation D
under the U.S. Securities Act of 1933, as amended) that is not an Affiliate of
the Lender.

ARTICLE THIRTEEN
MISCELLANEOUS

Section 13.01 Performance of Borrower Obligations by the Lenders:  If the
Borrower shall fail to promptly perform any of its obligations under this
Agreement, the Lenders may, at any time thereafter, perform the same without
thereby waiving the default and any reasonable expense or liability incurred by
the Lenders shall be reimbursed by the Borrower.

 
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Section 13.02 Confidentiality; Sharing of Information: All information exchanged
among the parties hereto shall be kept strictly confidential.  The Borrower
authorizes each Lender, its affiliates, consultants, agents, employees,
auditors, legal counsel and any other Person retained by it to share with each
other any agreement contemplated hereby and any information possessed by any of
them relating to the Borrower. Subject to disclosure to the Persons described
above and until the Lenders take steps to enforce all the rights hereunder, each
Lender agrees to cause any employee, auditor, legal counsel, assignee or agent
of such Lender, by agreement, to keep secret any information obtained from any
inspection by any representative of the Lenders of the books, accounts and
records of the Borrower, in the understanding that for any and all disclosure by
any Lender, its consultants, agents, employees, auditors, legal counsel and any
other Person retained by it, its Affiliates of confidential information of the
Borrower, the Lender who violates the obligations set forth in this Section
13.02 shall be liable for any and all loss and damages that said violation may
cause to the Borrower.

Section 13.03  Severability:  Any provision of this Agreement which is or
becomes prohibited or unenforceable in the relevant jurisdiction shall not
invalidate or impair the remaining provisions hereof which shall be deemed
severable from such prohibited or unenforceable provision and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

Section 13.04 Amendment, Supplement or Waiver:  No amendment, supplement, waiver
or consent provided for by any provision of this Agreement or any other
agreement or instrument contemplated by this Agreement, shall in any event be
effective unless the same shall be in writing and executed by all of the parties
hereto.

Section 13.05 Waiver of Immunities:  To the extent that the Borrower or the
Lenders have or hereafter may acquire any immunity from jurisdiction of any
court or from any legal process (whether through service or notice, attachment
prior to judgment, attachment in aid of execution, execution or otherwise) with
respect to itself or its property, such Person hereby irrevocably waives such
immunity in respect of its obligations under this Agreement or any agreements or
instruments contemplated by this Agreement.

Section 13.06  Term of Agreement:  This Agreement shall remain in full force and
effect until the final payment in full to the Lenders of all amounts payable
hereunder.

Section 13.07 Entire Agreement:  This Agreement constitutes the entire agreement
among the parties hereto and cancels and supersedes any prior agreements,
undertakings, declarations or representations, written or verbal, in respect
thereof.

Section 13.08 Counterparts:  This Agreement may be executed in any number of
counterparts and all such counterparts taken together shall be deemed to
constitute one and the same instrument and shall be effective on the date when
each of the parties hereto has signed a copy hereof and shall have delivered the
same to the Lenders.

Section 13.09 Good Faith and Fair Dealing:  The parties hereto agree to exercise
good faith and fair dealing with each other with respect to this Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of this _____ day of
_______________, 2011.

 
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“Lenders”

Lender 1
 
Lender 2
 
LW NATURAL RESOURCES
 
HAMPTON CORP.
 
OPPORTUNITIES FUND, LTD.
             
By:
/s/ Carlos A. Zalles  
By:
/s/ Carlos A. Zalles  
Name: Carlos A. Zalles
 
Name: Carlos A. Zalles
 
Title: Director
 
Title: Attorney-in-Fact
         
Lender 3
     
LW LATIN AMERICA SHORT DURATION
     
FUND, LTD
             
By:
/s/ Alfredo Gonzalez & /s/ Jose Javier Horos      
Name: Alfredo Gonzalez & Jose Javier Horos
     
Title: Attorneys-in-Fact
     

“Borrower”
LI3 ENERGY, INC.

 
By:
  /s/ Luis Saenz    
Name:
 
Luis Saenz
 
Title:
 
Chief Executive Officer

 
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Schedule 2.01(e)

Consents

The Investment Agreement (the “Investment Agreement”) between the Borrower and
Centurion Private Equity, LLC (the “Investor”), dated as of December 2, 2010,
provides that, subject to certain exceptions, the Investor shall have a right of
first refusal with respect to any private capital raising transactions involving
Borrower’s equity securities that closes after the date of the Investment
Agreement and prior to the 61st day following the termination date
thereof.  Investor’s right of first refusal must either expire unexercised be or
waived in order to consummate the transactions contemplated by the Agreement.

As of August 3, 2010, the Borrower entered into a Stock Purchase Agreement (the
“Alfredo SPA”) with  Pacific Road Capital A Pty. Limited, as trustee for Pacific
Road Resources Fund A (“Fund A”), Pacific Road Capital B Pty. Limited, as
trustee for Pacific Road Resources Fund B (“Fund B”), and Pacific Road Capital
Management G.P. Limited, as General Partner of Pacific Road Resources Fund L.P.
(“PR Partnership” and, together with Fund A and Fund B, the “Alfredo Sellers”),
pursuant to which the Borrower acquired all of the outstanding share capital of
Alfredo Holdings, Ltd. (“Alfredo”).   The Alfredo SPA provides the Alfredo
Sellers with preemptive rights in certain future financing transactions by the
Borrower, provided that the Alfredo Sellers still own at least 50% of the
Purchase Price Shares (as defined in the Alfredo SPA).  Such preemptive rights
are subject to customary exceptions, and generally give the Alfredo Sellers the
right to purchase up to 25% of the securities that Borrower sells in any
offering to which they apply.  The Alfredo Sellers’ preemptive rights must
either expire unexercised be or waived in order to consummate the transactions
contemplated by the Agreement.

The Securities Purchase Agreements between the Borrower and each investor (the
“PPO Investors”) in its private placement offering (the “2011 PPO”) at $0.27 per
Unit of “Units” consisting of (i) one share of common stock and (ii) a warrant
to purchase one-half of one share of common stock at an exercise price of $0.40
per whole share, provides the PPO Investors with a right of first refusal
applicable to the transactions contemplated by the Agreement.  The PPO
Investors’ right of first refusal must either expire unexercised or be waived in
order to consummate the transactions contemplated by the Agreement.

Within four business days of execution and delivery of the Agreement, Borrower
must file with the U.S. Securities and Exchange Commission a Current Report on
Form 8-K announcing the material terms transactions contemplated thereby.

Borrower agreed to certain amendments to the Alfredo SPA pursuant to an Amending
Agreement (the “Amending Agreement”), dated as of March 30, 2011, among Borrower
and the Alfredo Sellers, which was executed and delivered on April 4,
2011.  Among other things, pursuant to the Amending Agreement, the Alfredo
Sellers have entered into subscription agreements with Borrower for $2,000,000
in the 2011 PPO, the closing of which is conditioned on Borrower raising in the
2011 PPO the additional funds required to complete, and completing, the purchase
of Borrower’s prospective interest in the Maricunga Project (free and clear of
all liens and encumbrances) by May 1, 2011.  However, if Borrower uses the
proceeds of the Loan to fund the purchase of the Maricunga Project, as it plans
to (and, even if an extension to the May 1 deadline were obtained), then the
conditions to the Alfredo Sellers’ $2,000,000 investment in the 2011 PPO would
not be satisfied.

 
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Schedule 6.01(j)

Other Indebtedness

Nevada expenses  (100K GeoXplor, $57,000 Claim Maint fees, $32,600 NV state
taxes)
  $ 189,600  
Loan Payable - Milestone ($45K + Interest)
    51,754  
Loan Payable - Milestone ($50K + Interest)
    60,994       $ 302,348  

 
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Schedule 6.01(k)

Other Liens

None

 
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EXHIBIT A

FORM OF NOTE

THIS SECURITY WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR U.S. FEDERAL INCOME
TAX PURPOSES.  THE HOLDER OF THIS SECURITY MAY CONTACT LUIS SAENZ, LI3 ENERGY,
INC., AVENIDA PARDO Y ALIAGA 699, OFICINA 802, SAN ISIDRO, LIMA, PERU, FOR
INFORMATION REGARDING THE ISSUE PRICE, AMOUNT OF ORIGINAL ISSUE DISCOUNT, ISSUE
DATE, YIELD TO MATURITY, COMPARABLE YIELD AND PROJECTED PAYMENT SCHEDULE OF THIS
SECURITY.

THIS SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS
SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.  NEITHER THIS SECURITY,
THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT (A) TO THE
COMPANY, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 OF REGULATION
S UNDER THE SECURITIES ACT, (C) IN COMPLIANCE WITH RULE 144 OR 144A THEREUNDER,
IF AVAILABLE, AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, (D)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, OR (E) IN A TRANSACTION THAT
DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE
SECURITIES LAWS, AND THE HOLDER HAS, PRIOR TO SUCH SALE, FURNISHED TO THE
COMPANY AN OPINION OF COUNSEL OR OTHER EVIDENCE OF EXEMPTION, IN EITHER CASE
REASONABLY SATISFACTORY TO THE COMPANY.  HEDGING TRANSACTIONS INVOLVING THESE
SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U.S. SECURITIES
ACT.
LI3 ENERGY, INC.

Zero-Coupon Convertible Note due February 2, 2012

Issue Date:  May 2, 2011
Issue Price:  U.S.$XXXXXXX
Principal Amount at Maturity:  U.S.$ XXXXXXX
Original Issue Discount: U.S.$ XXXXXXX

LI3 ENERGY, INC., a Nevada corporation (the “Borrower”), promises to pay
to__________________________, or its permitted registered assigns, the Principal
Amount at Maturity of XXXXXXXXXXXXXXXXXXXXXXXX UNITED STATES DOLLARS
(U.S.$ XXXXXXX) on February 2, 2012.

The Borrower issued this Note under a Credit Agreement dated as of May 2, 2011
(the “Credit Agreement”), between the Company and the Lenders party
thereto.  The terms of this Note include those stated in the Credit
Agreement.  Capitalized terms used herein and not defined herein have the
meanings ascribed thereto in the Credit Agreement.  This Note is subject to all
such terms, and Note holders are referred to the Credit Agreement for a
statement of those terms.

This Note shall not bear interest except as specified in the Credit
Agreement.  Original Issue Discount will accrue as specified in the Credit
Agreement.  This Note is convertible into the Borrower’s Common Stock as
specified in the Credit Agreement.  This Note may, and in some circumstances
must, be prepaid as specified in the Credit Agreement.

Dated:

 
LI3 ENERGY, INC.
     
By:
       
  Name:
   
    Title:

 
 

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EXHIBIT B

FORM OF WARRANT

Warrant Certificate No. XXXXXX 
 
NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.  THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.

COMMON STOCK PURCHASE WARRANT

LI3 ENERGY, INC.
 
Warrant Shares: XXXXXXXX
Date: XXXXXXX, 2011

 
THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value
received, _____________ or its assigns (the “Holder”) is entitled, upon the
terms and subject to the limitations on exercise and the conditions hereinafter
set forth, at any time on or after the date hereof (the “Initial Exercise Date”)
and on or prior to the close of business on XXXXXXXX, 2016 (the “Termination
Date”) but not thereafter, to subscribe for and purchase from Li3 Energy, Inc.,
a Nevada corporation (the “Company”), up to XXXXXXX shares (as subject to
adjustment hereunder, the “Warrant Shares”) of Common Stock.  The purchase price
of one share of Common Stock under this Warrant shall be equal to the Exercise
Price, as defined in Section 2(b).
 
Section 1.          Definitions.  Capitalized terms used and not otherwise
defined herein shall have the meanings set forth in that certain Credit
Agreement (the “Credit Agreement”), dated May 2, 2011, among the Company and the
Lenders signatory thereto.
 

 
 

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Section 2.          Exercise.
 
a)         Exercise of Warrant.  Exercise of the purchase rights represented by
this Warrant may be made, in whole or in part, at any time or times on or after
the Initial Exercise Date and on or before the Termination Date by delivery to
the Company (or such other office or agency of the Company as it may designate
by notice in writing to the registered Holder at the address of the Holder
appearing on the books of the Company) of a duly executed facsimile copy of the
Notice of Exercise form annexed hereto. Within three (3) Trading Days following
the date of exercise as aforesaid, the Holder shall deliver the aggregate
Exercise Price for the shares specified in the applicable Notice of Exercise by
wire transfer or cashier’s check drawn on a United States bank. Notwithstanding
anything herein to the contrary, the Holder shall not be required to physically
surrender this Warrant to the Company until the Holder has purchased all of the
Warrant Shares available hereunder and the Warrant has been exercised in full,
in which case, the Holder shall surrender this Warrant to the Company for
cancellation within three (3) Trading Days of the date the final Notice of
Exercise is delivered to the Company. Partial exercises of this Warrant
resulting in purchases of a portion of the total number of Warrant Shares
available hereunder shall have the effect of lowering the outstanding number of
Warrant Shares purchasable hereunder in an amount equal to the applicable number
of Warrant Shares purchased.  The Holder and the Company shall maintain records
showing the number of Warrant Shares purchased and the date of such purchases.
The Company shall deliver any objection to any Notice of Exercise Form within
one (1) Business Day of receipt of such notice.  The Holder and any assignee, by
acceptance of this Warrant, acknowledge and agree that, by reason of the
provisions of this paragraph, following the purchase of a portion of the Warrant
Shares hereunder, the number of Warrant Shares available for purchase hereunder
at any given time may be less than the amount stated on the face hereof.
 
b)         Exercise Price.  The exercise price per share of the Common Stock
under this Warrant shall be $0.50, subject to adjustment hereunder (the
“Exercise Price”).
 
 
c)
Mechanics of Exercise.

 
 
i.
Delivery of Certificates Upon Exercise.  Certificates for shares purchased
hereunder shall be transmitted by the Transfer Agent to the Holder by crediting
the account of the Holder’s prime broker with The Depository Trust Company
through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is
then a participant in such system and either (A) there is an effective
registration statement permitting the issuance of the Warrant Shares to or
resale of the Warrant Shares by the Holder or (B) the shares are eligible for
resale by the Holder without volume or manner-of-sale limitations pursuant to
Rule 144, and otherwise by physical delivery to the address specified by the
Holder in the Notice of Exercise by the date that is three (3) Trading Days
after the latest of (A) the delivery to the Company of the Notice of Exercise,
(B) surrender of this Warrant (if required), and (C) payment of the aggregate
Exercise Price as set forth above  (such date, the “Warrant Share Delivery
Date”).   The Warrant Shares shall be deemed to have been issued, and Holder or
any other person so designated to be named therein shall be deemed to have
become a holder of record of such shares for all purposes, as of the date the
Warrant has been exercised, with payment to the Company of the Exercise Price
and all taxes required to be paid by the Holder, if any, pursuant to Section
2(d)(vi) prior to the issuance of such shares, having been paid.  If the Company
fails for any reason to deliver to the Holder certificates evidencing the
Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery
Date, the Company shall pay to the Holder, in cash, as liquidated damages and
not as a penalty, for each $1,000 of Warrant Shares subject to such exercise
(based on the VWAP of the Common Stock on the date of the applicable Notice of
Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the fifth
Trading Day after such liquidated damages begin to accrue) for each Trading Day
after such Warrant Share Delivery Date until such certificates are delivered or
Holder rescinds such exercise.

 
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ii.
Delivery of New Warrants Upon Exercise.  If this Warrant shall have been
exercised in part, the Company shall, at the request of a Holder and upon
surrender of this Warrant certificate, at the time of delivery of the
certificate or certificates representing Warrant Shares, deliver to the Holder a
new Warrant evidencing the rights of the Holder to purchase the unpurchased
Warrant Shares called for by this Warrant, which new Warrant shall in all other
respects be identical with this Warrant.

 
 
iii.
Rescission Rights.  If the Company fails to cause the Transfer Agent to transmit
to the Holder a certificate or the certificates representing the Warrant Shares
pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder
will have the right to rescind such exercise.

 
 
iv.
Compensation for Buy-In on Failure to Timely Deliver Certificates Upon
Exercise.  In addition to any other rights available to the Holder, if the
Company fails to cause the Transfer Agent to transmit to the Holder a
certificate or the certificates representing the Warrant Shares pursuant to an
exercise on or before the Warrant Share Delivery Date, and if after such date
the Holder is required by its broker to purchase (in an open market transaction
or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of
Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant
Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”),
then the Company shall (A) pay in cash to the Holder the amount, if any, by
which (x) the Holder’s total purchase price (including brokerage commissions, if
any) for the shares of Common Stock so purchased exceeds (y) the amount obtained
by multiplying (1) the number of Warrant Shares that the Company was required to
deliver to the Holder in connection with the exercise at issue times (2) the
price at which the sell order giving rise to such purchase obligation was
executed, and (B) at the option of the Holder, either reinstate the portion of
the Warrant and equivalent number of Warrant Shares for which such exercise was
not honored (in which case such exercise shall be deemed rescinded) or deliver
to the Holder the number of shares of Common Stock that would have been issued
had the Company timely complied with its exercise and delivery obligations
hereunder.  For example, if the Holder purchases Common Stock having a total
purchase price of $11,000 to cover a Buy-In with respect to an attempted
exercise of shares of Common Stock with an aggregate sale price giving rise to
such purchase obligation of $10,000, under clause (A) of the immediately
preceding sentence the Company shall be required to pay the Holder $1,000. The
Holder shall provide the Company written notice indicating the amounts payable
to the Holder in respect of the Buy-In and, upon request of the Company,
evidence of the amount of such loss.  Nothing herein shall limit a Holder’s
right to pursue any other remedies available to it hereunder, at law or in
equity including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to timely deliver
certificates representing shares of Common Stock upon exercise of the Warrant as
required pursuant to the terms hereof.

 
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v.
No Fractional Shares or Scrip.  No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant.  As to any
fraction of a share which the Holder would otherwise be entitled to purchase
upon such exercise, the Company shall, at its election, either pay a cash
adjustment in respect of such final fraction in an amount equal to such fraction
multiplied by the Exercise Price or round up to the next whole share.

 
 
vi.
Charges, Taxes and Expenses.  Issuance of certificates for Warrant Shares shall
be made without charge to the Holder for any issue or transfer tax or other
incidental expense in respect of the issuance of such certificate, all of which
taxes and expenses shall be paid by the Company, and such certificates shall be
issued in the name of the Holder or in such name or names as may be directed by
the Holder; provided, however, that in the event certificates for Warrant Shares
are to be issued in a name other than the name of the Holder, this Warrant when
surrendered for exercise shall be accompanied by the Assignment Form attached
hereto duly executed by the Holder and the Company may require, as a condition
thereto, the payment of a sum sufficient to reimburse it for any transfer tax
incidental thereto.

 
 
vii.
Closing of Books.  The Company will not close its stockholder books or records
in any manner which prevents the timely exercise of this Warrant, pursuant to
the terms hereof.

 
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e)           Holder’s Exercise Limitations.  The Company shall not effect any
exercise of this Warrant, and a Holder shall not have the right to exercise any
portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that
after giving effect to such issuance after exercise as set forth on the
applicable Notice of Exercise, the Holder (together with the Holder’s
Affiliates, and any other Persons acting as a group together with the Holder or
any of the Holder’s Affiliates), would beneficially own in excess of the
Beneficial Ownership Limitation (as defined below).  For purposes of the
foregoing sentence, the number of shares of Common Stock beneficially owned by
the Holder and its Affiliates shall include the number of shares of Common Stock
issuable upon exercise of this Warrant with respect to which such determination
is being made, but shall exclude the number of shares of Common Stock which
would be issuable upon (i) exercise of the remaining, nonexercised portion of
this Warrant beneficially owned by the Holder or any of its Affiliates and (ii)
exercise or conversion of the unexercised or nonconverted portion of any other
securities of the Company (including, without limitation, any other  Common
Stock Equivalents) subject to a limitation on conversion or exercise analogous
to the limitation contained herein beneficially owned by the Holder or any of
its Affiliates.  Except as set forth in the preceding sentence, for purposes of
this Section 2(e), beneficial ownership shall be calculated in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder, it being acknowledged by the Holder that the Company is not
representing to the Holder that such calculation is in compliance with Section
13(d) of the Exchange Act and the Holder is solely responsible for any schedules
required to be filed in accordance therewith.   To the extent that the
limitation contained in this Section 2(e) applies, the determination of whether
this Warrant is exercisable (in relation to other securities owned by the Holder
together with any Affiliates) and of which portion of this Warrant is
exercisable shall be in the sole discretion of the Holder, and the submission of
a Notice of Exercise shall be deemed to be the Holder’s determination of whether
this Warrant is exercisable (in relation to other securities owned by the Holder
together with any Affiliates) and of which portion of this Warrant is
exercisable, in each case subject to the Beneficial Ownership Limitation, and
the Company shall have no obligation to verify or confirm the accuracy of such
determination.   In addition, a determination as to any group status as
contemplated above shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder.  For purposes
of this Section 2(e), in determining the number of outstanding shares of Common
Stock, a Holder may rely on the number of outstanding shares of Common Stock as
reflected in (A) the Company’s most recent periodic or annual report filed with
the Commission, as the case may be, (B) a more recent public announcement by the
Company or (C) a more recent written notice by the Company or the Transfer Agent
setting forth the number of shares of Common Stock outstanding.  Upon the
written or oral request of a Holder, the Company shall within two Trading Days
confirm orally and in writing to the Holder the number of shares of Common Stock
then outstanding.  In any case, the number of outstanding shares of Common Stock
shall be determined after giving effect to the conversion or exercise of
securities of the Company, including this Warrant, by the Holder or its
Affiliates since the date as of which such number of outstanding shares of
Common Stock was reported.  The “Beneficial Ownership Limitation” shall be 4.99%
of the number of shares of the Common Stock outstanding immediately after giving
effect to the issuance of shares of Common Stock issuable upon exercise of this
Warrant.  The Holder, upon not less than 61 days’ prior notice to the Company,
may increase or decrease the Beneficial Ownership Limitation provisions of this
Section 2(e), provided that the Beneficial Ownership Limitation in no event
exceeds 9.99% of the number of shares of the Common Stock outstanding
immediately after giving effect to the issuance of shares of Common Stock upon
exercise of this Warrant held by the Holder and the provisions of this Section
2(e) shall continue to apply.  Any such increase or decrease will not be
effective until the 61st day after such notice is delivered to the Company.  The
provisions of this paragraph shall be construed and implemented in a manner
otherwise than in strict conformity with the terms of this Section 2(e) to
correct this paragraph (or any portion hereof) which may be defective or
inconsistent with the intended Beneficial Ownership Limitation herein contained
or to make changes or supplements necessary or desirable to properly give effect
to such limitation. The limitations contained in this paragraph shall apply to a
successor holder of this Warrant.

 
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Section 3.            Certain Adjustments.
 
a)      Stock Dividends and Splits. If the Company, at any time while this
Warrant is outstanding: (i) pays a stock dividend or otherwise makes a
distribution or distributions on shares of its Common Stock or any other equity
or equity equivalent securities payable in shares of Common Stock (which, for
avoidance of doubt, shall not include any shares of Common Stock issued by the
Company upon exercise of this Warrant), (ii) subdivides outstanding shares of
Common Stock into a larger number of shares, (iii) combines (including by way of
reverse stock split) outstanding shares of Common Stock into a smaller number of
shares or (iv) issues by reclassification of shares of the Common Stock any
shares of capital stock of the Company, then in each case the Exercise Price
shall be multiplied by a fraction of which the numerator shall be the number of
shares of Common Stock (excluding treasury shares, if any) outstanding
immediately before such event and of which the denominator shall be the number
of shares of Common Stock outstanding immediately after such event, and the
number of shares issuable upon exercise of this Warrant shall be proportionately
adjusted such that the aggregate Exercise Price of this Warrant shall remain
unchanged.  Any adjustment made pursuant to this Section 3(a) shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision,
combination or re-classification.
 
b)      Subsequent Equity Sales. If the Company or any Subsidiary thereof, as
applicable, at any time while this Warrant is outstanding, shall sell or grant
any option to purchase, or sell or grant any right to reprice, or otherwise
dispose of or issue (or announce any offer, sale, grant or any option to
purchase or other disposition) any Common Stock or Common Stock Equivalents, at
an effective price per share less than the Exercise Price then in effect (such
lower price, the “Base Share Price” and such issuances collectively, a “Dilutive
Issuance”) (it being understood and agreed that if the holder of the Common
Stock or Common Stock Equivalents so issued shall at any time, whether by
operation of purchase price adjustments, reset provisions, floating conversion,
exercise or exchange prices or otherwise, or due to warrants, options or rights
per share which are issued in connection with such issuance, be entitled to
receive shares of Common Stock at an effective price per share that is less than
the Exercise Price, such issuance shall be deemed to have occurred for less than
the Exercise Price on such date of the Dilutive Issuance at such effective
price), then  simultaneously with the consummation of each Dilutive Issuance the
Exercise Price shall be reduced and only reduced by multiplying the Exercise
Price by a fraction, the numerator of which is the number of shares of Common
Stock issued and outstanding immediately prior to the Dilutive Issuance plus the
number of shares of Common Stock which the offering price for such Dilutive
Issuance would purchase at the then Exercise Price, and the denominator of which
shall be the sum of the number of shares of Common Stock issued and outstanding
immediately prior to the Dilutive Issuance plus the number of shares of Common
Stock so issued or issuable in connection with the Dilutive Issuance; provided,
that the Exercise Price shall not be reduced below $0.25 (subject to adjustment
for stock splits, reverse splits and similar capital adjustments).  Such
adjustment shall be made whenever such Common Stock or Common Stock Equivalents
are issued.  Notwithstanding the foregoing, no adjustments shall be made, paid
or issued under this Section 3(b) in respect of an Exempt Issuance.  The Company
shall promptly notify the Holder, in writing, following the issuance or deemed
issuance of any Common Stock or Common Stock Equivalents subject to this Section
3(b), indicating therein the applicable issuance price, or applicable reset
price, exchange price, conversion price and other pricing terms (such notice,
the “Dilutive Issuance Notice”).  For purposes of clarification, whether or not
the Company provides a Dilutive Issuance Notice pursuant to this Section 3(b),
upon the occurrence of any Dilutive Issuance, the Holder is entitled to receive
a number of Warrant Shares based upon the Base Share Price regardless of whether
the Holder accurately refers to the Base Share Price in the Notice of Exercise.
If the Company enters into a Variable Rate Transaction, despite the prohibition
thereon in the Credit Agreement, the Company shall be deemed to have issued
Common Stock or Common Stock Equivalents at the lowest possible conversion or
exercise price at which such securities may be converted or exercised. For
clarity, no adjustment of the number of Warrant Shares shall be made upon any
adjustment of the Exercise Price pursuant to this Section 3(b).

 
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c)      Subsequent Rights Offerings.  In addition to any adjustments pursuant to
Section 3(a) above, if at any time the Company grants, issues or sells any
Common Stock Equivalents or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of shares of Common
Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon
the terms applicable to such Purchase Rights, the aggregate Purchase Rights
which the Holder could have acquired if the Holder had held the number of shares
of Common Stock acquirable upon complete exercise of this Warrant (without
regard to any limitations on exercise hereof, including without limitation, the
Beneficial Ownership Limitation) immediately before the date on which a record
is taken for the grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of shares of Common
Stock are to be determined for the grant, issue or sale of such Purchase Rights
(provided, however, to the extent that the Holder’s right to participate in any
such Purchase Right would result in the Holder exceeding the Beneficial
Ownership Limitation, then the Holder shall not be entitled to participate in
such Purchase Right to such extent (or beneficial ownership of such shares of
Common Stock as a result of such Purchase Right to such extent) and such
Purchase Right to such extent shall be held in abeyance for the Holder until
such time, if ever, as its right thereto would not result in the Holder
exceeding the Beneficial Ownership Limitation).
 
d)      Pro Rata Distributions.  If the Company, at any time while this Warrant
is outstanding, shall distribute to all holders of Common Stock (and not to the
Holder) evidences of its indebtedness or assets (including cash and cash
dividends) or rights or warrants to subscribe for or purchase any security, then
in each such case the Exercise Price shall be adjusted by multiplying the
Exercise Price in effect immediately prior to the record date fixed for
determination of stockholders entitled to receive such distribution by a
fraction of which the denominator shall be the VWAP determined as of the record
date mentioned above, and of which the numerator shall be such VWAP on such
record date less the then per share fair market value at such record date of the
portion of such assets or evidence of indebtedness or rights or warrants so
distributed applicable to one outstanding share of the Common Stock as
determined by the Board of Directors in good faith.  In either case the
adjustments shall be described in a statement provided to the Holder of the
portion of assets or evidences of indebtedness so distributed or such
subscription rights applicable to one share of Common Stock.  Such adjustment
shall be made whenever any such distribution is made and shall become effective
immediately after the record date mentioned above.

 
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e)      Fundamental Transaction. If, at any time while this Warrant is
outstanding, (i) the Company, directly or indirectly, in one or more related
transactions effects any merger or consolidation of the Company with or into
another Person, (ii) the Company, directly or indirectly, effects any sale,
lease, license, assignment, transfer, conveyance or other disposition of all or
substantially all of its assets in one or a series of related transactions,
(iii) any, direct or indirect, purchase offer, tender offer or exchange offer
(whether by the Company or another Person) is completed pursuant to which
holders of Common Stock are permitted to sell, tender or exchange their shares
for other securities, cash or property and has been accepted by the holders of
50% or more of the outstanding Common Stock, (iv) the Company, directly or
indirectly, in one or more related transactions effects any reclassification,
reorganization or recapitalization of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively converted into or
exchanged for other securities, cash or property, or (v) the Company, directly
or indirectly, in one or more related transactions consummates a stock or share
Credit Agreement or other business combination (including, without limitation, a
reorganization, recapitalization, spin-off or scheme of arrangement) with
another Person or group of Persons whereby such other Person or group acquires
more than 50% of the outstanding shares of Common Stock (not including any
shares of Common Stock held by the other Person or other Persons making or party
to, or associated or affiliated with the other Persons making or party to, such
stock or share Credit Agreement or other business combination) (each a
“Fundamental Transaction”), then, upon any subsequent exercise of this Warrant,
the Holder shall have the right to receive, for each Warrant Share that would
have been issuable upon such exercise immediately prior to the occurrence of
such Fundamental Transaction, at the option of the Holder (without regard to any
limitation in Section 2(e) on the exercise of this Warrant), the number of
shares of Common Stock of the successor or acquiring corporation or of the
Company, if it is the surviving corporation, and any additional consideration
(the “Alternate Consideration”) receivable as a result of such Fundamental
Transaction by a holder of the number of shares of Common Stock for which this
Warrant is exercisable immediately prior to such Fundamental Transaction
(without regard to any limitation in Section 2(e) on the exercise of this
Warrant).  For purposes of any such exercise, the determination of the Exercise
Price shall be appropriately adjusted to apply to such Alternate Consideration
based on the amount of Alternate Consideration issuable in respect of one share
of Common Stock in such Fundamental Transaction, and the Company shall apportion
the Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration.  If holders of Common Stock are given any choice as to the
securities, cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate Consideration it
receives upon any exercise of this Warrant following such Fundamental
Transaction.  Notwithstanding anything to the contrary, in the event of a
Fundamental Transaction that is (1) an all cash transaction, (2) a “Rule 13e-3
transaction” as defined in Rule 13e-3 under the Exchange Act, or (3) a
Fundamental Transaction involving a person or entity not traded on a national
securities exchange, the Company or any Successor Entity (as defined below)
shall, at the Holder’s option, exercisable at any time concurrently with, or
within 30 days after, the consummation of the Fundamental Transaction, purchase
this Warrant from the Holder by paying to the Holder an amount of cash equal to
the Black Scholes Value of the remaining unexercised portion of this Warrant on
the date of the consummation of such Fundamental Transaction.  “Black Scholes
Value” means the value of this Warrant based on the Black and Scholes Option
Pricing Model obtained from the “OV” function on Bloomberg, L.P. (“Bloomberg”)
determined as of the day of consummation of the applicable Fundamental
Transaction for pricing purposes and reflecting (A) a risk-free interest rate
corresponding to the U.S. Treasury rate for a period equal to the time between
the date of the public announcement of the applicable Fundamental Transaction
and the Termination Date, (B) an expected volatility equal to the greater of
100% and the 100 day volatility obtained from the HVT function on Bloomberg as
of the Trading Day immediately following the public announcement of the
applicable Fundamental Transaction, (C) the underlying price per share used in
such calculation shall be the sum of the price per share being offered in cash,
if any, plus the value of any non-cash consideration, if any, being offered in
such Fundamental Transaction and (D) a remaining option time equal to the time
between the date of the public announcement of the applicable Fundamental
Transaction and the Termination Date.  The Company shall cause any successor
entity in a Fundamental Transaction in which the Company is not the survivor
(the “Successor Entity”) to assume in writing all of the obligations of the
Company under this Warrant and the other Transaction Documents in accordance
with the provisions of this Section 3(e) pursuant to written agreements in form
and substance reasonably satisfactory to the Holder and approved by the Holder
(without unreasonable delay) prior to such Fundamental Transaction and shall, at
the option of the Holder, deliver to the Holder in exchange for this Warrant a
security of the Successor Entity evidenced by a written instrument substantially
similar in form and substance to this Warrant which is exercisable for a
corresponding number of shares of capital stock of such Successor Entity (or its
parent entity) equivalent to the shares of Common Stock acquirable and
receivable upon exercise of this Warrant (without regard to any limitations on
the exercise of this Warrant) prior to such Fundamental Transaction, and with an
exercise price which applies the exercise price hereunder to such shares of
capital stock (but taking into account the relative value of the shares of
Common Stock pursuant to such Fundamental Transaction and the value of such
shares of capital stock, such number of shares of capital stock and such
exercise price being for the purpose of protecting the economic value of this
Warrant immediately prior to the consummation of such Fundamental Transaction),
and which is reasonably satisfactory in form and substance to the Holder. Upon
the occurrence of any such Fundamental Transaction, the Successor Entity shall
succeed to, and be substituted for (so that from and after the date of such
Fundamental Transaction, the provisions of this Warrant and the other
Transaction Documents referring to the “Company” shall refer instead to the
Successor Entity), and may exercise every right and power of the Company and
shall assume all of the obligations of the Company under this Warrant and the
other Transaction Documents with the same effect as if such Successor Entity had
been named as the Company herein.

 
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f)      Calculations. All calculations under this Section 3 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be. For purposes
of this Section 3, the number of shares of Common Stock deemed to be issued and
outstanding as of a given date shall be the sum of the number of shares of
Common Stock (excluding treasury shares, if any) issued and outstanding.

 
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g)      Notice to Holder.
 
i.   Adjustment to Exercise Price. Whenever the Exercise Price is adjusted
pursuant to any provision of this Section 3, the Company shall promptly mail to
the Holder a notice setting forth the Exercise Price after such adjustment and
any resulting adjustment to the number of Warrant Shares and setting forth a
brief statement of the facts requiring such adjustment.
 
ii.   Notice to Allow Exercise by Holder. If (A) the Company shall declare a
dividend (or any other distribution in whatever form) on the Common Stock, (B)
the Company shall declare a special nonrecurring cash dividend on or a
redemption of the Common Stock, (C) the Company shall authorize the granting to
all holders of the Common Stock rights or warrants to subscribe for or purchase
any shares of capital stock of any class or of any rights, (D) the approval of
any stockholders of the Company shall be required in connection with any
reclassification of the Common Stock, any consolidation or merger to which the
Company is a party, any sale or transfer of all or substantially all of the
assets of the Company, or any compulsory share exchange whereby the Common Stock
is converted into other securities, cash or property, or (E) the Company shall
authorize the voluntary or involuntary dissolution, liquidation or winding up of
the affairs of the Company, then, in each case, the Company shall cause to be
mailed to the Holder at its last address as it shall appear upon the Warrant
Register of the Company, at least ten (10) Trading Days, or such longer period
as may be required by law, prior to the applicable record or effective date
hereinafter specified, a notice stating (x) the date on which a record is to be
taken for the purpose of such dividend, distribution, redemption, rights or
warrants, or if a record is not to be taken, the date as of which the holders of
the Common Stock of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date on which
such reclassification, consolidation, merger, sale, transfer or share exchange
is expected to become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be entitled to
exchange their shares of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer or
share exchange; provided that the failure to mail such notice or any defect
therein or in the mailing thereof shall not affect the validity of the corporate
action required to be specified in such notice.  To the extent that any notice
provided hereunder constitutes, or contains, material, non-public information
regarding the Company or any of the Subsidiaries, the Company shall
simultaneously file such notice with the Commission pursuant to a Current Report
on Form 8-K.  The Holder shall remain entitled to exercise this Warrant during
the period commencing on the date of such notice to the effective date of the
event triggering such notice  except as may otherwise be expressly set forth
herein.

 
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Section 4.             Transfer of Warrant.
 
a)      Transferability.  Subject to compliance with any applicable securities
laws and the conditions set forth in Section 4(d) hereof, this Warrant and all
rights hereunder (including, without limitation, any registration rights) are
transferable, in whole or in part, upon surrender of this Warrant at the
principal office of the Company or its designated agent, together with a written
assignment of this Warrant substantially in the form attached hereto duly
executed by the Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer.  Upon such surrender
and, if required, such payment, the Company shall execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees, as applicable, and
in the denomination or denominations specified in such instrument of assignment,
and shall issue to the assignor a new Warrant evidencing the portion of this
Warrant not so assigned, and this Warrant shall promptly be cancelled.  The
Warrant, if properly assigned in accordance herewith, may be exercised by a new
holder for the purchase of Warrant Shares without having a new Warrant issued.
 
b)      New Warrants. This Warrant may be divided or combined with other
Warrants upon presentation hereof at the aforesaid office of the Company,
together with a written notice specifying the names and denominations in which
new Warrants are to be issued, signed by the Holder or its agent or
attorney.  Subject to compliance with Section 4(a), as to any transfer which may
be involved in such division or combination, the Company shall execute and
deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be
divided or combined in accordance with such notice. All Warrants issued on
transfers or exchanges shall be dated the Initial Exercise Date and shall be
identical with this Warrant except as to the number of Warrant Shares issuable
pursuant thereto.
 
c)      Warrant Register. The Company shall register this Warrant, upon records
to be maintained by the Company for that purpose (the “Warrant Register”), in
the name of the record Holder hereof from time to time.  The Company may deem
and treat the registered Holder of this Warrant as the absolute owner hereof for
the purpose of any exercise hereof or any distribution to the Holder, and for
all other purposes, absent actual notice to the contrary.
 
d)      Transfer Restrictions. This Warrant may not be transferred at any time
without (i) registration under the Securities Act or (ii) an exemption from such
registration and a written opinion of legal counsel addressed to the Company
that the proposed transfer of the Warrant may be effected without registration
under the Securities Act, which opinion will be in form and from counsel
reasonably satisfactory to the Company. Notwithstanding any provision to the
contrary in this Section 4, the Holder may transfer, with or without
consideration, this Warrant or any of the Warrant Shares (or a portion thereof)
to the Holder’s Affiliates (as such term is defined under Rule 144 of the
Securities Act) without obtaining the opinion from counsel that may be required
by Section 4(c)(ii), provided, that the Holder delivers to the Company and its
counsel certification, documentation, and other assurances reasonably required
by the Company’s counsel to enable the Company’s counsel to render an opinion to
the Company’s Transfer Agent that such transfer does not violate applicable
securities laws.

 
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e)      Representation by the Holder.  The Holder, by the acceptance hereof,
represents and warrants that it is acquiring this Warrant and, upon any exercise
hereof, will acquire the Warrant Shares issuable upon such exercise, for its own
account and not with a view to or for distributing or reselling such Warrant
Shares or any part thereof in violation of the Securities Act or any applicable
state securities law, except pursuant to sales registered or exempted under the
Securities Act
 
Section 5.            Miscellaneous.
 
a)      No Rights as Stockholder Until Exercise.  This Warrant does not entitle
the Holder to any voting rights, dividends or other rights as a stockholder of
the Company prior to the exercise hereof as set forth in Section 2(d)(i).
 
b)      Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants
that upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant or any stock
certificate relating to the Warrant Shares, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it (which, in
the case of the Warrant, shall not include the posting of any bond), and upon
surrender and cancellation of such Warrant or stock certificate, if mutilated,
the Company will make and deliver a new Warrant or stock certificate of like
tenor and dated as of such cancellation, in lieu of such Warrant or stock
certificate.
 
c)      Saturdays, Sundays, Holidays, etc.  If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein
shall not be a Business Day, then, such action may be taken or such right may be
exercised on the next succeeding Business Day.
 
d)      Authorized Shares.  The Company covenants that, during the period the
Warrant is outstanding, it will reserve from its authorized and unissued Common
Stock a sufficient number of shares to provide for the issuance of the Warrant
Shares upon the exercise of any purchase rights under this Warrant.  The Company
further covenants that its issuance of this Warrant shall constitute full
authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for the Warrant
Shares upon the exercise of the purchase rights under this Warrant.  The Company
will take all such reasonable action as may be necessary to assure that such
Warrant Shares may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of the Trading Market upon
which the Common Stock may be listed.  The Company covenants that all Warrant
Shares which may be issued upon the exercise of the purchase rights represented
by this Warrant will, upon exercise of the purchase rights represented by this
Warrant and payment for such Warrant Shares in accordance herewith, be duly
authorized, validly issued, fully paid and nonassessable and free from all
taxes, liens and charges created by the Company in respect of the issue thereof
(other than taxes in respect of any transfer occurring contemporaneously with
such issue).

 
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Except and to the extent as waived or consented to by the Holder, the Company
shall not by any action, including, without limitation, amending its certificate
of incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such actions as may be
necessary or appropriate to protect the rights of Holder as set forth in this
Warrant against impairment.  Without limiting the generality of the foregoing,
the Company will (i) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to such increase in
par value, (ii) take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable
Warrant Shares upon the exercise of this Warrant and (iii) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof, as may be,
necessary to enable the Company to perform its obligations under this Warrant.
 
Before taking any action which would result in an adjustment in the number of
Warrant Shares for which this Warrant is exercisable or in the Exercise Price,
the Company shall obtain all such authorizations or exemptions thereof, or
consents thereto, as may be necessary from any public regulatory body or bodies
having jurisdiction thereof.
 
e)      Jurisdiction. All questions concerning the construction, validity,
enforcement and interpretation of this Warrant shall be determined in accordance
with the provisions of the Credit Agreement.
 
f)      Restrictions.  The Holder acknowledges that the Warrant Shares acquired
upon the exercise of this Warrant, if not registered, will have restrictions
upon resale imposed by state and federal securities laws.
 
g)      Nonwaiver and Expenses.  No course of dealing or any delay or failure to
exercise any right hereunder on the part of Holder shall operate as a waiver of
such right or otherwise prejudice the Holder’s rights, powers or remedies,
notwithstanding the fact that all rights hereunder terminate on the Termination
Date.  If the Company willfully and knowingly fails to comply with any provision
of this Warrant, which results in any material damages to the Holder, the
Company shall pay to the Holder such amounts as shall be sufficient to cover any
costs and expenses including, but not limited to, reasonable attorneys’ fees,
including those of appellate proceedings, incurred by the Holder in collecting
any amounts due pursuant hereto or in otherwise enforcing any of its rights,
powers or remedies hereunder.
 
h)      Notices.  Any notice, request or other document required or permitted to
be given or delivered to the Holder by the Company shall be delivered in
accordance with the notice provisions of the Credit Agreement.
 
i)      Limitation of Liability.  No provision hereof, in the absence of any
affirmative action by the Holder to exercise this Warrant to purchase Warrant
Shares, and no enumeration herein of the rights or privileges of the Holder,
shall give rise to any liability of the Holder for the purchase price of any
Common Stock or as a stockholder of the Company, whether such liability is
asserted by the Company or by creditors of the Company.

 
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j)      Remedies.  The Holder, in addition to being entitled to exercise all
rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Warrant.  The Company agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Warrant and hereby agrees to
waive and not to assert the defense in any action for specific performance that
a remedy at law would be adequate.
 
k)      Successors and Assigns.  Subject to applicable securities laws, this
Warrant and the rights and obligations evidenced hereby shall inure to the
benefit of and be binding upon the successors and permitted assigns of the
Company and the successors and permitted assigns of Holder.  The provisions of
this Warrant are intended to be for the benefit of any Holder from time to time
of this Warrant and shall be enforceable by the Holder or holder of Warrant
Shares.
 
l)      Amendment.  This Warrant may be modified or amended or the provisions
hereof waived with the written consent of the Company and the Holder.
 
m)      Severability.  Wherever possible, each provision of this Warrant shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Warrant shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provisions
or the remaining provisions of this Warrant.
 
n)      Headings.  The headings used in this Warrant are for the convenience of
reference only and shall not, for any purpose, be deemed a part of this Warrant.

********************
 
(Signature Page Follows)

 
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
officer thereunto duly authorized as of the date first above indicated.

 
LI3 ENERGY, INC.
     
By:
 
   
Name: Luis F. Saenz
 
Title: Chief Executive Officer

 
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NOTICE OF EXERCISE

TO:       LI3 ENERGY, INC.

(1)  The undersigned hereby elects to purchase ________ Warrant Shares of the
Company pursuant to the terms of the attached Warrant (only if exercised in
full), and tenders herewith payment of the exercise price in full, together with
all applicable transfer taxes, if any.
 
(2)  Payment shall take the form of lawful money of the United States.
 
(3)  Please issue a certificate or certificates representing said Warrant Shares
in the name of the undersigned or in such other name as is specified below:
 
_______________________________

The Warrant Shares shall be delivered to the following DWAC Account Number or by
physical delivery of a certificate to:

_______________________________

_______________________________

_______________________________

(4)  Accredited Investor.  The undersigned is an “accredited investor” as
defined in Regulation D promulgated under the Securities Act of 1933, as
amended.

[SIGNATURE OF HOLDER]

Name of Investing Entity:
_______________________________________________________________________________
Signature of Authorized Signatory of Investing Entity:
_________________________________________________________
Name of Authorized Signatory:
___________________________________________________________________________
Title of Authorized Signatory:
____________________________________________________________________________
Date:
_______________________________________________________________________________________________

 
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ASSIGNMENT FORM

(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)

FOR VALUE RECEIVED, [____] all of or [_______] shares of the foregoing Warrant
and all rights evidenced thereby are hereby assigned to

_______________________________________________ whose address is

_______________________________________________________________.

_______________________________________________________________

Date:  ______________, _______

Holder’s Signature:             _____________________________

Holder’s Address:               _____________________________

_____________________________

Signature Guaranteed:  ___________________________________________

NOTE:  The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company.  Officers
of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.

 
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EXHIBIT C—FORM OF CONFIDENTIALITY AGREEMENT
 
CONFIDENTIALITY AGREEMENT, entered into as of the date written below, between
LI3 ENERGY, INC., a Nevada corporation (the “Company”) and the person or entity
named below (the “Receiving Party”).

In connection with the Receiving Party’s evaluation of investing in, and/or
arranging, and/or advising the Company with respect to, a possible financing
transaction by the Company (the “Financing”), the Company is willing, in
accordance with the terms and conditions of this Agreement, to disclose to the
Receiving Party and/or its Affiliates (as defined below) certain Confidential
Information (as defined below).  The Receiving Party agrees that it (i) will
transmit Confidential Information only to its affiliates and its and their
directors, officers, agents, employees and professional advisors (collectively,
“Affiliates”) who need to know such information for the purpose of evaluating
and participating in the potential Financing, and who shall be advised by
Receiving Party of this agreement and agree with Receiving Party to be bound by
the provisions hereof, (ii) will, and will cause its Affiliates to, keep
confidential, and not, except as hereinafter provided, without the prior written
consent of the Company, disclose in any manner whatsoever the Confidential
Information, in whole or in part, and (iii) will not, and will cause its
Affiliates not to, use the Confidential Information in any way detrimental to
the Company or for any purpose other than in connection with evaluating and
participating in the potential Financing.
 
“Confidential Information” means (a) all information and documentation relating
to the Financing and (b) all confidential or proprietary written, recorded or
oral information or data (including without limitation research, developmental,
engineering, manufacturing, technical, marketing, sales, financial, operating,
performance, cost, business and process information or data, know-how, and
computer programming and other software and software techniques) concerning or
provided by the Company, its employees, its consultants, its affiliates, its
subsidiaries, its clients, its customers, or its joint venturers or its
prospective clients, customers or joint venturers (each a “Source”) or relating
to the business of the Company (whether such confidentiality or proprietary
status is indicated orally or in writing or in a context in which the Company or
any other Source reasonably communicated, or the Receiving Party should
reasonably have understood, that the information should be treated as
confidential, whether or not the specific words “confidential” or “proprietary”
are used).
 
In the event that Receiving Party is required by law or governmental regulation
or stock exchange rule to disclose any Confidential Information, Receiving Party
will provide the Company with prompt notice of such request so that the Company
may seek an appropriate protective order and/or waive compliance with the
provisions of this Agreement, and will reasonably cooperate with the Company in
protecting the confidential or proprietary nature of the information which must
be so disclosed.  If, in the absence of a protective order or the receipt of a
waiver hereunder, Receiving Party is nonetheless, in the written opinion of its
counsel, compelled to disclose any Confidential Information to any governmental
agency or tribunal or exchange or else stand liable for contempt or suffer other
censure or penalty, Receiving Party may disclose such limited information to
such agency or tribunal or exchange, provided that Receiving Party shall
exercise its reasonable commercial efforts to obtain assurance from the
recipient that confidential treatment will be accorded such information.
 
“Confidential Information” does not include information which (i) becomes or has
been generally available to the public other than as a result of a disclosure by
Receiving Party or its Affiliates, (ii) was available to Receiving Party or its
Affiliates on a non-confidential basis prior to its disclosure to Receiving
Party by the Company or its Affiliates, or (iii) becomes available to Receiving
Party or its Affiliates on a non-confidential basis from a source other than the
Company or its Affiliates; provided, however, that such source is not, to
Receiving Party’s knowledge after due inquiry, bound by a confidentiality
agreement with the Company or its Affiliates.
 
Receiving Party hereby acknowledges that it is aware (and that its Affiliates
who are furnished Confidential Information have been advised) that the United
States securities laws prohibit any person who has material nonpublic
information about a company from purchasing or selling securities of such
company.
 
Except as may otherwise be agreed hereafter in writing, we do not make any
representation or warranty as to the accuracy or completeness of the
Confidential Information.  Neither the Company nor its Affiliates shall have any
liability to Receiving Party or any of its Affiliates resulting from the use of
the Confidential Information by Receiving Party or such Affiliates.  Nothing
herein shall give Receiving Party or its Affiliates any rights, title, license
or interest whatsoever in or to the Confidential Information, which shall remain
at all times the property of the Company, and the Company may demand the return
thereof at any time upon giving written notice to the Receiving Party.  No
failure or delay by the Company in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any right, power or privilege hereunder.
 
This agreement shall terminate with respect to subsequent disclosures on the
first anniversary of the date below; provided, however, that the obligations of
Receiving Party hereunder with respect to Confidential Information already
disclosed shall continue for two (2) years from the date of original disclosure.
This agreement shall be governed and construed in accordance with the laws of
the State of New York without giving effect to the principles of conflict of
laws thereof. This agreement supersedes all previous communications between the
parties with respect to the subject matter hereof and may not be amended or
modified except in a writing signed by the parties hereto.  Receiving Party
acknowledges and agrees that the Company will be irreparably harmed by any
disclosure or use of the Confidential Information in violation of the terms
hereof and that in the event of any breach of the provisions of this agreement,
the Company shall be entitled to equitable relief, including in the form of
injunctions and orders for specific performance, in addition to all other
remedies available to the Company at law or in equity.

IN WITNESS WHEREOF, the parties hereto or their duly authorized legal
representatives have caused this Agreement to be executed, in counterparts
(which may be by exchange of facsimile or scanned copies), as of the date
written below.

LI3 ENERGY, INC.
 
Receiving Party:   Dated as of _______________, 20____  (fill in)
             
If an individual:
 
If an entity:
By:
           
Name:   Luis Saenz
         
Title:     Chief Executive Officer
 
Sign:
   
Print Name of Entity:
     
Print Name:
           
By (sign):
           
Print Name:
 
  
 
  
 
Print Title:

 
 

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