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LOAN AND OPTION AGREEMENT
 
This LOAN AND OPTION AGREEMENT (this “Agreement”) is made as of December 15,
2010 (the “Effective Date”), by and between Bekem Metals, Inc., a Utah
corporation (the “Company”), and Techgroup Finance Limited, an International
Business Company incorporated under the laws of the British Virgin Islands (the
“Lender”).
 
Recitals
 
A.           The Company, together with its affiliated entities listed on
Schedule I (the “Affiliated Entities”), is involved in the business (the
“Business”) of mining as more fully described in the SEC Reports (as that term
is defined below).  The Lender intends to provide funds to the Business in the
form of loans to the Company pursuant to the terms and conditions of this
Agreement;
 
B.           In consideration for making such loans, the Company will grant to
the Lender, subject to the terms and conditions of this Agreement, an option to
purchase shares of Common Stock of the Company; and
 
C.           The Company and the Lender further desire to obligate themselves as
set forth in this Agreement and to make the representations and warranties set
forth below, respectively, in connection with the transactions contemplated
hereby.
 
Accordingly, in consideration of the promises and the representations,
warranties and covenants herein, the parties agree as follows:
 
1. Loan.
 
(a) Loan Amount.  Subject to the terms and conditions of this Agreement, the
Lender agrees to lend (the “Loan”) to the Company a total aggregate amount of
$500,000.00 (Five Hundred Thousand United States Dollars).
 
(b) Principal and Interest.  Interest on the principal balance of the Loan shall
accrue at the rate of 15% per annum, compounded annually, commencing on the date
hereof.  If not sooner settled as provided below, the entire balance of
principal and all accrued interest shall be due and payable on May 31, 2011 (the
“Maturity Date”); provided, however, that the Maturity Date may be extended at
the discretion of the Lender.  The Loan may not be prepaid by the
Company.  Notwithstanding the provisions of this Section 1, upon the occurrence
of an Event of Default (as that term is defined in Section 7 below), then,
interest on the principal balance of the Loan shall automatically be increased
to 20% per annum, or such lesser amount as is allowed by law.
 
(c) Pledge Agreement.  Any obligations of the Company contemplated by this
Agreement shall be secured pursuant to the pledge agreement substantially in the
form attached as Exhibit A hereto (the “Pledge Agreement” and together with this
Agreement and any documents or instruments executed and delivered in connection
with any of the foregoing, the “Transaction Documents”).  Upon an Event of
Default, Lender shall have the right to exercise the remedies referenced therein
and in any other Transaction Document.
 

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2. Option to Purchase Shares of Common Stock.
 
(a) Option to Purchase Shares of Common Stock.  Subject to obtaining the
consents set forth in Section 10 below, at any time prior to the Maturity Date,
the Lender may, at its option (the “Option”), and pursuant to written
instructions provided to the Company, acquire the number of shares of common
stock (the “Common Stock”) of the Company equal to (x) the entire outstanding
principal balance of the Loan plus(y) the amount of any accrued interest due
under this Loan, as of the date of exercise of the Option, divided by (z) the
Exercise Price (as defined below), in exchange for the cancellation of such
outstanding obligations of the Company to the Lender.  If the Company does not
have sufficient shares of authorized common stock to issue common stock for the
accrued interest, then within three months after the Lender exercises the
Option, the Company will take such actions as are necessary to increase its
authorized shares of common stock and issue such additional shares of common
stock as are necessary to allow the Lender to obtain common stock for the
accrued interest due to the Lender pursuant to the terms of this Agreement
(including interest accrued after the Lender exercise the Option until such time
as the Company satisfies its obligations hereunder).  If the Company is unable
to issue shares of its common stock for the accrued interest, it will pay the
amount of the accrued interest in cash to the Lender.  Notwithstanding anything
to the contrary herein, the Company agrees that it will maintain enough
authorized shares of common stock to issue common stock to the Lender in
exchange for the cancellation of the entire outstanding principal balance of the
Loan.
 
(b) Issuance of Certificate; Fractional Interests. After the exercise of the
Option, and at the Lender’s request, the Company will, as promptly as possible
and at its expense, issue and deliver to the Lender, a certificate or
certificates for the number of shares issuable as a result of the exercise of
the Option and, if applicable, a check made payable to the Lender for any cash
amounts payable as provided in this Agreement.  No fractional interests of
equity securities will be issued.  In lieu of any fractional interests to which
the Lender would otherwise be entitled, the Company will pay to the Lender in
cash the amount of the unexercised principal and accrued interest that would
otherwise be issued into such fractional interest.
 
(c) Exercise Price.  The “Exercise Price” shall be equal to $0.0029.  The
Exercise Price shall be adjusted pursuant to this Section 2(c).
 
(i) Subdivisions, Combinations and Other Issuances:  If the Company shall at any
time prior to the Maturity Date subdivide its common stock, by split-up or
otherwise, or combine its common stock or issue additional common stock as a
dividend, then the Exercise Price in effect prior to such event shall be
proportionately decreased or increased, as appropriate.  Any adjustment under
this Section 2(c) shall become effective at the close of business on the date
the subdivision or combination becomes effective, or as of the record date of
such dividend, or in the event that no record date is fixed, upon the making of
such dividend;
 
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(ii) Reclassification, Reorganization, Consolidation, Merger and Other
Changes:  In case of any reclassification, capital reorganization or change in
the common stock of the Company (other than as a result of a subdivision,
combination, or equity dividend provided for in Section 2(c)(i) above), or
consolidation or merger of the Company with or into another company, or the sale
of all or substantially all of its assets to another company shall be effected
in such a way that holders of the Company’s common stock shall be entitled to
receive equity interests, securities or assets with respect to or in exchange
for such common stock, then, as a condition of such reclassification,
reorganization, change, consolidation, merger or sale, lawful provision shall be
made, and duly executed documents evidencing the same from the Company or its
successor shall be delivered to the Lender, so that the Lender shall have the
right at any time prior to the Maturity Date to receive upon exercise of the
Option, the kind and amount of equity interest and other securities and property
receivable in connection with such reclassification, reorganization, change,
consolidation, merger or sale that a holder of common stock would be entitled to
receive in such reclassification, reorganization, change, consolidation, merger
or sale.  In any such case, appropriate provisions shall be made with respect to
the rights and interest of the Lender so that the provisions hereof shall
thereafter be applicable with respect to any equity interests or other
securities and property deliverable upon exercise including adjustment of the
Exercise Price.  Moreover, the Company shall not effect any such consolidation,
merger or sale unless prior to the consummation thereof the successor company
(if other than the Company) resulting from such consolidation or merger or the
company purchasing such assets shall assume by written instrument executed and
mailed to the Lender at the last address of the Lender appearing on the books of
the Company the obligations of the Company under this Agreement;
 
(iii) Issuance of Additional Securities:  If and whenever the Company shall
(a) issue or sell any of its common stock for a consideration per security less
than the Exercise Price in effect immediately prior to the time of such issuance
or sale, (b) issue or sell any warrants, options or other rights to acquire
common stock at a purchase price less than the Exercise Price in effect
immediately prior to the time of such issuance or sale or (c) issue or sell any
other securities that are convertible into common stock for a purchase or
exchange price less than the Exercise Price in effect immediately prior to the
time of such issuance or sale, then, upon such issuance or sale, the Exercise
Price shall be reduced to the price at which such common stock is being issued
or sold by the Company or the price at which such other securities are
exercisable or convertible into the Company’s common stock, and the number of
shares of common stock issuable upon exercise of the Option shall be
proportionately increased so that the aggregate purchase price payable for the
total number of shares of common stock issuable upon exercise of the Option (as
adjusted) shall remain the same as it was upon the date of this Agreement;
 
(iv) Minimum Adjustment:  Notwithstanding anything herein to the contrary, no
adjustment under this Section 2(c) need be made to the Exercise Price unless
such adjustment would require an increase or decrease of at least one percent of
the Exercise Price then in effect.  Any lesser adjustment shall be carried
forward and shall be made at the time of and together with the next subsequent
adjustment, which, together with any adjustment or adjustments so carried
forward, shall amount to an increase or decrease of at least one percent of such
Exercise Price; and
 
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(v) Notice of Adjustment:  When any adjustment is required to be made to the
Exercise Price, the Company shall promptly notify the Lender of such adjustment
in writing setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.
 
3. Closing Matters.
 
(a) Closing.  The Closing shall take place concurrently with the execution of
this Agreement at the offices of the Company or at such other time and place as
the Company and the Lender shall agree (which time is referred to herein as the
“Closing”).
 
(b) Delivery and Payment.  At the Closing, the Lender shall deliver to the
Company (pursuant to wire transfer instructions furnished by the Company) the
principal amount of the Loan.
 
4. Representations and Warranties of the Company.  As of the date of the
Closing, the Company hereby makes the following representations and warranties
to the Lender, qualified by any specific disclosures made by the Company in any
schedules attached hereto referencing the particular subsection of this
Section 4 (the “Disclosure Schedule”).  The disclosures in any section or
subsection of the Disclosure Schedule shall qualify each of the other sections
and subsections in this Section 4 only to the extent it is readily apparent from
a reading of the disclosure that such disclosure is applicable to such other
sections and subsections; provided that no disclosures in the Disclosure
Schedule shall be deemed to qualify Section 4(n) unless referenced in
Section 4(n) of the Disclosure Schedule.
 
(a) Organization and Qualification.  The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Utah.  The Company and the Affiliated Entities have all licenses, permits and
authorizations necessary to own its properties and to operate the Business and
are duly qualified to do business as foreign entities and in good standing in
each state or country, if any, in which failure to qualify would have a Material
Adverse Effect.  The Company has provided the Lender with true and correct
copies of its Articles of Incorporation, as amended (the “Articles”) and its
Bylaws, as amended (the “Bylaws”).  The Company is not in violation of the
Articles or Bylaws.  For purposes of this Agreement, “Material Adverse Effect”
means a material adverse effect on (i) the financial condition, business,
operating results, operations, business prospects or property of the Company or
the Business or (ii) the ability of the Company to perform its obligations under
any of the Transactions Documents.  In no event shall the Company’s use of the
proceeds of the Loan in substantially the manner set forth in Section 6(l) of
this Agreement be deemed have a Material Adverse Effect.
 
(b) Company Power.  The Company has the requisite power and authority to
execute, deliver and, subject to obtaining the required regulatory approvals in
the Republic of Kazakhstan relating to issuing the Common Stock, carry out the
Transaction Documents and all other instruments, documents and agreements
contemplated or required by the provisions of any of the Transaction Documents
to be executed, delivered or carried out by the Company hereunder.  The Company
has all requisite power and authority under the laws of its jurisdiction of
incorporation to own and operate its properties and to carry on its businesses
as now conducted and as presently proposed to be conducted.
 
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(c) SEC Reports, Financial Statements.  The Company has filed all reports,
schedules, forms, statements and other documents required to be filed by it with
the Securities and Exchange Commission (“SEC”) pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as amended (“Exchange Act”)
(all of the foregoing filed prior to the date hereof and all exhibits included
therein and financial statements, notes and schedules thereto and documents
incorporated by reference therein being hereinafter referred to as the “SEC
Reports”). The Company has delivered to the Lender or their respective
representatives true, correct and complete copies of each of the SEC Reports not
available on the EDGAR system. As of their respective dates, the SEC Reports
complied in all material respects with the requirements of the Exchange Act and
the rules and regulations of the SEC promulgated thereunder applicable to the
SEC Report, and none of the SEC Reports, at the time they were filed with the
SEC, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. As of their respective dates, the financial statements of
the Company included in the SEC Reports (“Financial Statements”) complied as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto as in effect as
of the time of filing. Such financial statements have been prepared in
accordance with generally accepted accounting principles, consistently applied,
during the periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto, or (ii) in the case of unaudited
interim statements, to the extent they may exclude footnotes or may be condensed
or summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments which will not be
material, either individually or in the aggregate). No other information
provided by or on behalf of the Company to the Lender which is not included in
the SEC Reports contains any untrue statement of a material fact or omits to
state any material fact necessary in order to make the statements therein not
misleading, in light of the circumstance under which they are or were made.
 
(d) Subsidiaries.  Except for the Affiliated Entities, the Company does not own
or hold any rights to acquire any shares of stock, membership interest or any
security or interest in any other Person.  For purposes of this Agreement,
“Person” shall mean any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof or any
other entity.
 
(e) Authorization, Governmental Approvals.  The execution and delivery of this
Agreement, the execution and delivery of the other Transaction Documents and all
other instruments, documents and agreements contemplated or required by the
provisions hereof or thereof to be executed and delivered by the Company and the
consummation by the Company of the transactions herein and therein contemplated
to be consummated by the Company have each been duly authorized by all necessary
action on the part of the Company.  With the exception of required regulatory
approvals in the Republic of Kazakhstan in order to issue shares of the Common
Stock upon the exercise of the Option, no other
 
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 consent, approval, qualification, order or authorization of, or filing with,
any local, state or federal governmental authority is required on the part of
the Company in connection with the Company’s valid execution, delivery or
performance of this Agreement or the other Transaction Documents or the issuance
of the Common Stock other than any notices of sale required to be filed with the
Securities and Exchange Commission pursuant to the Securities Act of 1933, as
amended (the “Securities Act”), or such post-closing filings as may be required
under applicable state securities laws.
 
(f) Valid Issuance.  The Common Stock to be issued pursuant to the Transaction
Documents has been duly and validly reserved for issuance, and upon issuance
will be duly and validly issued, fully paid and nonassessable, and will be free
of restrictions on transfer or Liens other than the restrictions on transfer or
Liens under the applicable state and federal securities laws and pursuant to the
Bylaws.  For purposes of this Agreement, “Lien” means any mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), preference, priority or other security interest of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement or lease in the nature thereof, any financing or similar
statement or notice filed under the Uniform Commercial Code or any other similar
recording or notice statute, and any lease having substantially the same effect
as any of the foregoing).
 
(g) Conflict with Other Instruments.  Neither the execution and delivery by the
Company of the Transaction Documents or the other instruments, documents and
agreements contemplated or required hereby or thereby, nor the consummation of
the transactions herein or therein contemplated to be consummated by the
Company, nor compliance by the Company with the terms, conditions and provisions
hereof or thereof, shall conflict with or result in a breach of, with or without
the giving of notice or the lapse of time, or both, any of the terms, conditions
or provisions of the Articles or the Bylaws, or (subject to obtaining the
required regulatory approvals in the Republic of Kazakhstan for the issuance of
the Common Stock pursuant to the exercise of the Option) any law or any
regulation, order, writ, injunction or decree of any court or governmental
instrumentality or any agreement or instrument to which the Company is a party
or by which it or any of its respective properties is bound or constitute a
default thereunder or result in the creation or imposition of any Lien.
 
(h) Validity and Binding Effect.  The Transaction Documents which the Company is
required to execute and all other instruments and agreements contemplated hereby
or thereby to which the Company is a party have been duly and validly executed
and delivered by the Company and constitute legal, valid and binding obligations
of the Company, and all such obligations of the Company are enforceable in
accordance with their respective terms.
 
(i) Capitalization.  The authorized capital stock of the Company at the Closing
shall be as follows:  300,000,000 shares of common stock authorized and
124,980,296 shares of common stock outstanding, and 20,000,000 shares of
preferred stock authorized and no shares of preferred stock outstanding.  All of
the outstanding shares of the Company are validly issued, fully paid and are
owned of record as set forth on Schedule 4(i).  Except as stated in the first
sentence of this Section 4(i) or as set forth on Schedule 4(i), there are not
outstanding any shares of stock, equity securities, rights or options
convertible or exchangeable into or exercisable for any of the Company’s stock,
equity interest appreciation rights or phantom equity, nor is the Company under
any obligation (contingent or otherwise) to redeem or otherwise acquire any
stock or any other securities, rights or options to acquire
 
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 such stock, equity interest appreciation rights or phantom equity.  There are
no statutory or contractual member preemptive rights with respect to any shares
of stock of the Company.  The Company has not violated and will not violate any
applicable federal or state securities laws in connection with the offer, sale
or issuance of the Option or of the Common Stock to be issued upon exercise of
the Option, and based upon the representations of Lender contained herein, there
exists a valid exemption for such issuances, offers, or sales from the
registration requirements of the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder, (the “Securities Act”) or any
applicable state securities laws.  The Company is not a party to any, and there
are no, agreements between the Company’s stockholders (or any one or more of
them) with respect to the voting or transfer of the Company’s stock or with
respect to any other aspect of the Company’s affairs.
 
(j) Brokerage.  There are no claims for brokerage commissions, finders’ fees or
similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement binding upon the Company.  The
Company shall pay, and hold the Lender harmless against, any liability, loss or
expense (including reasonable attorneys’ fees and out-of-pocket expenses)
arising in connection with any such claim.
 
(k) Litigation.  Except as set forth on Schedule 4(k), there are no actions,
suits or proceedings pending or, to the knowledge of the Company, threatened
(including any investigations) against or affecting the Company, the Affiliated
Entities or the Business or the assets relating thereto, before any court or
governmental department, agency or instrumentality, domestic or foreign.  The
foregoing includes, without limitation, any action, suit, proceeding, or
investigation pending or currently threatened involving the prior employment of
any employees, their use in connection of any information or techniques
allegedly proprietary to any of their former employers, their obligations under
any agreements with prior employers, or negotiations by the Company with
potential backers of, or investors in, the Company or the Business.  The Company
and the Affiliated Entities are not a party to or, to the knowledge of the
Company, named in or subject to any order, writ, injunction, or decree of any
court, governmental agency, or instrumentality.  There is no action, suit,
proceeding or investigation by the Company or the Affiliated Entities currently
pending or that the Company or the Affiliated Entities currently intends to
initiate.
 
(l) Employee Benefit Plans.  The Company does not have any Employee Benefit
Plans as defined in the Employee Retirement Income Security Act of 1974.
 
(m) Compliance with Laws; Certain Operations.  The Company and the Affiliated
Entities, and their respective officers, managers, agents and employees,
substantially complied with all applicable laws and regulations of foreign,
federal, state and local governments and all agencies thereof which affect the
Company, any Affiliated Entity or the Business in any material respect or to
which the Company, any Affiliated Entity or the Business may otherwise be
subject, and no claims have been filed, or to the Company’s knowledge
threatened, against the Company or an Affiliated Entity alleging a violation of,
or liability or responsibility under, any such law or regulation which have not
been heretofore
 
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 settled.  In particular, but without limiting the generality of the foregoing,
and to the Company’s knowledge, the Company and the Affiliated Entities have
obtained and substantially complied with all health, safety and other
governmental permits necessary for the Company, any Affiliated Entity or the
Business, and neither the Company nor an Affiliated Entity has violated or
received a notice or charge asserting any violation of, or liability or
responsibility under, any local, state or federal acts (including rules and
regulations thereunder) regulating, otherwise affecting or relating to, employee
or public health and safety or employment discrimination.
 
(n) Indebtedness.  Schedule 4(n) sets forth, as of the date hereof, all
Indebtedness of the Company and the Affiliated Entities, the amount owed on such
Indebtedness and the Persons to whom such Indebtedness is owed. For purposes of
this Agreement, “Indebtedness” means (i) any indebtedness for borrowed money or
issued in substitution for or exchange of indebtedness for borrowed money, (ii)
any indebtedness evidenced by any note, bond, debenture or other debt security,
(iii) any indebtedness for the deferred purchase price of property or services
with respect to which the Company or any of the Affiliated Entities is liable,
contingently or otherwise, as obligor or otherwise (other than trade payables
and other current liabilities incurred in the ordinary course of business which
are not more than sixty (60) days past due), (iv) any commitment by which the
Company or an Affiliated Entity assures a creditor against loss (including
contingent reimbursement obligations with respect to letters of credit), (v) any
indebtedness guaranteed in any manner by the Company or an Affiliated Entity
(including guarantees in the form of an agreement to repurchase or reimburse),
(vi) any obligations under capitalized leases with respect to which the Company
or an Affiliated Entity is liable, contingently or otherwise, as obligor,
guarantor or otherwise, or with respect to which obligations the Company or an
Affiliated Entity assures a creditor against loss, (vii) any indebtedness
secured by a Lien on the Company’s or an Affiliated Entity’s assets, (viii) any
cash or book overdrafts, (ix) any distributions payable or loans/advances
payable to an affiliate of the Company or an Affiliated Entity, (x) any
liability arising from factored, discounted, or sold receivables that remain
unpaid by the customer, (xi) any indebtedness related to export finance loans,
(xii) any obligations for checks, drafts and similar bank instruments, if not
taken into account when calculating cash and cash equivalents, and (xiii) any
accrued interest on any of the foregoing.  For the avoidance of doubt, solely
for purposes of this Agreement, and notwithstanding anything to the contrary
herein, all obligations of the Company or an Affiliated Entity to any
governmental entity in respect of overpayments, cost report settlements, and
similar obligations shall be treated as Indebtedness and not as a current
liability.
 
(o) Absence of Undisclosed Liabilities.  Except as reflected or expressly
reserved against in the Financial Statements or set forth herein, there are no
obligations or liabilities related to the Company or the Business (whether
accrued, known to the Company, whether due or to become due and regardless of
when asserted) as of the date hereof, arising out of transactions entered into
on or prior to the date hereof, or any action or inaction on or prior to the
date hereof, or any state of facts existing on or prior to the hereof,
including, without limitation, any deferred compensation obligations to any
current or former employees, leased employees, consultants or directors.
 
(p) Assets.  Except as set forth in the SEC Reports or on Schedule 4(p), neither
the Company nor any Affiliated Entity owns, or has previously owned, any real
property.  The Company and the Affiliated Entities have good and indefeasible
title to, or have a valid leasehold interest in, or have a valid license to use,
the real property, tangible properties and assets used by them, or acquired
thereafter (except for properties and assets disposed of in the ordinary course
of business), free and clear of all Liens, except for Liens
 
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 permitted hereby.  The Company’s and the Affiliated Entities’ tangible assets
are in good operating condition, ordinary wear and tear excepted, and are fit
for use in the ordinary course of the Business.  The Company and the Affiliated
Entities own, or have a valid leasehold interest in, or have a valid license to
use, all real property, tangible assets necessary for the conduct of the
Business.
 
(q) Tax Matters.  To the Company’s knowledge, all required returns, reports,
information statements or other documents (including, without limitation,
elections, declarations, disclosures, schedules, estimates, information,
attachments, and amended returns) provided to or filed or required to be
provided to or filed with any taxing authority relating to the Company, each
Affiliated Entity and the Business (“Tax Returns”) have been filed.  All such
Tax Returns are true, complete and accurate in all material respects.  All
sales, use, income, payroll, excise and other Taxes owed and all Taxes withheld
from amounts owing to any employee, creditor, customer or third party relating
to the Company, any Affiliated Entity and the Business have been paid; no
statute of limitations with respect to Taxes relating to the Company, any
Affiliated Entity and  Business has been waived and no extension of time with
respect to Tax assessment or deficiency relating to the Company, any Affiliated
Entity and the Business has been agreed to; and there are no pending actions,
suits, proceedings, claims, investigations or federal or state Tax audits being
conducted with respect to the Company, any Affiliated Entity and the Business
and there are no material unresolved questions or claims concerning Tax
liability relating to the Company, any Affiliated Entity and the
Business.  There are no Liens for any Tax on any assets relating to the Company,
any Affiliated Entity and the Business, except for Taxes not yet due and
payable.  After the Closing, the Company will not be bound by nor have any
obligation under any Tax sharing or Tax indemnity agreement or similar contract
or arrangement.  For purposes of this Agreement, “Tax” or “Taxes” means all
federal, foreign, state, county, local or other taxes, charges, fees, levies or
other assessments of any nature whatsoever, including, without limitation, any
federal income, alternative minimum tax, gross receipts, excise, real or
personal property, sales, value-added, escheat, withholding, social security,
payroll, employment, severance, stamp, documentary, gains, environmental,
retirement, unemployment, occupation, use, ad valorem, service, net worth,
franchise, transfer and recording taxes, imposed by any federal, state, local or
foreign taxing authority, and shall include all interest, penalties and
additions imposed with respect to such amounts whether disputed or not.
 
(r) Absence of Material Adverse Change.  Since September 30, 2010, there has
been no material adverse change in the operations, properties, financial
condition, operating results or business prospects of the Business.
 
(s) Absence of Certain Developments.  Since September 30, 2010, neither the
Company nor an Affiliated Entity has:
 
(i) borrowed any amount or incurred or become subject to any liabilities, except
current liabilities incurred in the ordinary course of business and liabilities
under contract or agreements entered into in the ordinary course of business;
 
(ii) discharged or satisfied any Lien or paid any liabilities, other than
current liabilities paid in the ordinary course of business;
 
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(iii) declared or made any payment or distribution of cash or other property to
its members with respect to its stock, or purchased or redeemed any stock;
 
(iv) mortgaged, pledged or subjected to any Lien any of its material assets,
except Liens for current property Taxes not yet due and payable;
 
(v) sold, assigned or transferred any of its assets, except in the ordinary
course of business, or canceled without fair consideration any debts or claims
owing to or held by it;
 
(vi) sold, assigned, transferred, abandoned or permitted to lapse any licenses
or permits or any portion thereof, or any Proprietary Rights (as defined in
Section 4(u) below) or other intangible assets, or (except as necessary to
conduct its ongoing operations) disclosed any proprietary confidential
information to any Person;
 
(vii) made or granted any bonus or any wage or salary increase to any current
employee (except in the ordinary course of business consistent with past
practices for any such Persons who are not officers) or any former employee or
retiree or group of employees, former employee, leased employee, director or
consultant;
 
(viii) made any capital expenditures or commitments therefor that aggregate in
excess of $25,000;
 
(ix) made any loans or advances to any Persons or become subject to any
contingent obligations;
 
(x) suffered any material extraordinary losses or waived any rights of material
value, whether or not in the ordinary course of business or consistent with past
practice;
 
(xi) entered into any other material transaction including any employment or
consulting agreement;
 
(xii) received notice that there has been a loss of, or material order
cancellation by, any customer of the Company;
 
(xiii) agreed to any change to a material contract arrangement by which the
Company or its assets is bound or subject;
 
(xiv) suffered any damage, destruction or loss, whether or not covered by
insurance that has had a Material Adverse Effect;
 
(xv) suffered any other event or condition of any character that has had a
Material Adverse Effect or, to the knowledge of the Company, would reasonably be
expected to have a Material Adverse Effect;
 
(xvi) changed its accounting principles or practices or the method of recording
transactions involving accounts receivable and inventory;
 
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(xvii) terminated or defaulted under any contract, agreement or arrangement
which termination or default, to the knowledge of the Company, would reasonably
be expected to have a Material Adverse Effect; or
 
(xviii) agreed, committed, arranged or entered into any written understanding to
do anything set forth in this Section 4(s).
 
(t) Material Contracts.
 
(i) As of the date hereof, except as identified on Schedule 4(t) or as set forth
in the SEC Reports, neither the Company nor an Affiliated Entity is a party to
or bound by any of the following contracts, agreements or arrangements (written
or oral) relating to the Business (collectively, the “Material Contracts”):
 
(1) any mortgages, indentures, guarantees, loans or credit agreements, security
agreements or other contracts, agreements or arrangements relating to the
borrowing of money or extension of credit to or by the Company, other than
accounts receivables and payables in the ordinary course of business and travel
and similar advances to employees in the ordinary course of business consistent
with past practice;
 
(2) any joint venture, partnership, limited liability company or other similar
contract, agreement or arrangement relating to the formation, creation,
operation, management or control of any partnership or joint venture;
 
(3) any agreements relating to mergers, consolidations, recapitalizations,
reorganizations or similar transactions, or any acquisitions or dispositions
material to the Company, currently contemplated by the Company or that provide
any ongoing material liabilities for payment of money, retention of liabilities,
assets sold, indemnification or otherwise;
 
(4) non-competition, non-solicitation or exclusive dealing agreements or other
contracts, agreements or arrangements that restrict or limit or purport to
restrict or limit in any respect the ability of the Company or any Affiliated
Entity to solicit customers, potential employees or the manner or location in
which the Business may be conducted; or
 
(5) any contract, agreement or plan any of the benefits of which will be
increased by the consummation of the transactions contemplated hereby or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement.
 
(ii)           For purposes of this Agreement, “Material Contract” shall include
any contract filed by the Company in the SEC Reports.  Each of the Material
Contracts is in full force and effect and is the legal, valid and binding
obligation of the Company, and to the knowledge of the Company, the other party
thereto.  Neither the Company, nor to the knowledge of the Company, any other
party to a Material Contract, is in breach or violation of, or in default under,
any Material Contract to which it is a party.
 
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(u) Proprietary Rights.  The Company and the Affiliated Entities have sufficient
title and ownership of or licenses to all patents, trademarks, service marks,
trade names, domain names, copyrights, trade secrets, information, proprietary
rights and processes necessary for the Business without any violation or
infringement of, or other conflict with, the rights of others.  Schedule 4(u)
contains a complete list of patents and pending patent applications and
registrations and applications for trademarks, copyrights and domain names of,
or exclusively licensed to, the Company or an Affiliated Entity.  There are no
outstanding options, licenses, agreements, claims, Liens or shared ownership of
interests of any kind relating to anything referred to on Schedule 4(u) that is
to any extent owned by or exclusively licensed to the Company or an Affiliated
Entity, nor is the Company or an Affiliated Entity bound by or a party to any
options, licenses or agreements of any kind with respect to the patents,
trademarks, service marks, trade names, domain names, copyrights, trade secrets,
licenses, information, proprietary rights and/or processes of any other person
or entity, except, in either case, for standard end-user, object code,
internal-use software license and support/maintenance agreements.  Except as set
forth on Schedule 4(u), neither the Company nor an Affiliated Entity has
received any communications alleging that the Company or an Affiliated Entity
has violated or, by conducting the Business as proposed, would violate any of
the patents, trademarks, service marks, domain names, trade names, copyrights or
trade secrets or other proprietary rights of any other person or entity and the
Company and the Affiliated Entities are not aware of any potential basis for
such an allegation or of any reason to believe that such an allegation may be
forthcoming.  Neither the Company nor an Affiliated Entity is aware that any of
their respective employees is obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would
interfere with the use of his or her best efforts to promote the interests of
the Company or that would conflict with the Business. Neither the execution nor
delivery of this Agreement or the other Transaction Documents, nor the carrying
on of the Business by the employees of the Company, nor the conduct of the
Business as proposed, will, to the Company’s knowledge, conflict with or result
in a breach of the terms, conditions or provisions of, or constitute a default
under, any contract, covenant or instrument under which any of such employees is
now obligated. The Company does not believe it is or will be necessary to
utilize any inventions of any of its employees (or people it currently intends
to hire) made prior to or outside the scope of their employment by the Company.
 
(v) Insurance.  The Company and the Affiliated Entities have in full force and
effect all fire, casualty and liability insurance policies customary and
reasonably necessary for the Business.
 
(w) Registration Rights.  No holder of any debt or equity securities of the
Company, whether now or hereafter authorized, including, without limitation, any
instrument convertible into or exchangeable for securities (“Securities”) has
any right to require the registration thereof (or of Securities receivable upon
the exercise or conversion thereof) under the Securities Act or the right to
include such Security (or any Security receivable upon the exercise or
conversion thereof) in a registration statement filed by the Company under the
Securities Act.
 
(x) Related Party Transactions.
 
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(i) No employee, officer or manager of the Company, no affiliate of any
employee, officer or manager of the Company, and no member of the immediate
family of any employee, officer or manager of the Company is indebted to the
Company.
 
(ii) The Company is not indebted, and is not committed to make loans or extend
or guarantee credit, to any employee, officer or manager of the Company, or any
affiliate of any employee, officer or manager of the Company, or any member of
the immediate family of any employee, officer or manager of the Company.
 
(iii) Except as set forth on Schedule 4(x)(iii) or as set forth in the SEC
Reports, no affiliate of the Company, officer or manager and no member of the
immediate family of any affiliate of the Company, officer or manager is
interested, directly or indirectly, in any material contract, agreement or
arrangement with the Company except for employment agreements entered into in
the ordinary course of business and approved by the Board of Directors of the
Company.  To the Company’s knowledge, except as set forth on Schedule 4(x)(iii),
no employee and no member of the immediate family of any employee is interested,
directly or indirectly, in any material contract, agreement or arrangement with
the Company.
 
(y) Not an “Investment Company.”  The Company is not, and following completion
of the transactions contemplated hereby will not be, an “investment company,” as
such term is defined in the Investment Company Act of 1940, as amended.
 
(z) Foreign Corrupt Practices Act.  None of the Company nor any Affiliated
Entity, nor any of their respective directors, managers, members, officers or
employees have made, directly or indirectly, any payment or promise to pay, or
gift or promise to give or authorized such a promise or gift, of any money or
anything of value, directly or indirectly, to (a) any foreign official (as such
term is defined in the U.S. Foreign Corrupt Practices Act (the “FCPA”)) for the
purpose of influencing any official act or decision of such official or inducing
him or her to use his or her influence to affect any act or decision of a
governmental authority or (b) any foreign political party or official thereof or
candidate for foreign political office for the purpose of influencing any
official act or decision of such party, official or candidate or inducing such
party, official or candidate to use his, her or its influence to affect any act
or decision of a foreign governmental authority, in the case of both (a) and (b)
above in order to assist the Company or any of its affiliates to obtain or
retain business for, or direct business to the Company or any of its affiliates,
as applicable. None of the Company nor any Affiliated Entity, nor any of their
respective directors, managers, members, officers or employees has made any
bribe, rebate, payoff, influence payment, kickback or other unlawful payment of
funds or received or retained any funds in violation of any law, rule or
regulation.
 
(aa) Compliance with Office of Foreign Assets Control.
 
(i) None of the Company, the Affiliated Entities nor any of their respective
directors, managers, members, officers or employees is an OFAC Sanctioned Person
(as defined below). The Company, the Affiliated Entities and their respective
directors, managers, members, officers or employees are in compliance with, and
have not previously violated, the USA Patriot Act of 2001, as amended through
the date of this Agreement, to the extent applicable to the Company or the
Affiliated Entities and all other applicable anti-money laundering laws and
regulations.  None of (i) the Loan, (ii) the issuance of the Common Stock upon
exercise of the Option, (iii) the
 
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execution, delivery and performance of this Agreement or any of the Transaction
Documents or (iv) the consummation of any transaction contemplated hereby or
thereby, or the fulfillment of the terms hereof or thereof, will result in a
violation by anyone, including, without limitation, the Lender, of any of the
OFAC Sanctions (as defined below) or of any anti-money laundering laws of the
United States or any other applicable jurisdiction.
 
(ii) For the purposes of this Section 4(aa):
 
(1) “OFAC Sanctions” means any sanctions program administered by the Office of
Foreign Assets Control of the U.S. Department of the Treasury (“OFAC”) under
authority delegated to the Secretary of the Treasury (the “Secretary”) by the
President of the United States or provided to the Secretary by statute, and any
order or license issued by, or under authority delegated by, the President or
provided to the Secretary by statute in connection with a sanctions program thus
administered by OFAC. For ease of reference, and not by way of limitation, OFAC
Sanctions programs are described on OFAC’s website at www.treas.gov/ofac.
 
(2) “OFAC Sanctioned Person” means any government, country, corporation or other
entity, group or individual with whom or which the OFAC Sanctions prohibit a
U.S. Person from engaging in transactions, and includes without limitation any
individual or corporation or other entity that appears on the current OFAC list
of Specially Designated Nationals and Blocked Persons (the “SDN List”). For ease
of reference, and not by way of limitation, OFAC Sanctioned Persons other than
governments and countries can be found on the SDN List on OFAC’s website at
www.treas.gov/offices/enforcement/ofac/sdn.
 
(3) “U.S. Person” means any U.S. citizen, permanent resident alien, entity
organized under the laws of the United States (including foreign branches), or
any person (individual or entity) in the United States, and, with respect to the
Cuban Assets Control Regulations, also includes any corporation or other entity
that is owned or controlled by one of the foregoing, without regard to where it
is organized or doing business.
 
(bb) SEC Deregistration.  The Company has no contractual or other restrictions
that will prevent it from terminating the registration of its common stock under
the Exchange Act or suspending its reporting obligations under the Exchange
Act.  In addition, the Company is eligible to file a Form 15 with the SEC to
terminate the registration of its common stock under the Exchange Act and it can
affirmatively make the statements required to be made on such Form 15 to
terminate the registration of its common stock under the Exchange Act.
 
(cc) Employees; Employee Contribution.  To the knowledge of the Company, there
is no strike, labor dispute or union organization activities pending or
threatened between the Company, the Affiliated Entities and their respective
employees.  The Company and the Affiliated Entities have complied in all
material respects with all applicable equal opportunity, minimum wage,
immigration and other laws related to employment and termination of
employment.  To the knowledge of the Company, no employee of the Company or an
 
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 Affiliated Entity is or will be in violation of any judgment, decree, or order,
or any term of any employment contract, patent disclosure agreement, or other
contract or agreement relating to the relationship of any such employee with the
Company or such Affiliated Entity, or any other party because of the nature of
the Business or the use by the employee of his or her best efforts with respect
to the Business.  Neither the Company nor any Affiliated Entity is a party to or
bound by any currently effective employment contract deferred compensation
agreement, bonus plan, incentive plan, profit sharing plan, retirement
agreement, or other employee compensation agreement.  The Company is not aware
that any officer, manager or key employee, or that any group of key employees
intend to terminate their employment with the Company or an Affiliated Entity,
nor does the Company have a present intention to terminate the employment of any
of the foregoing.  The employment of each officer, manager or employee of the
Company or an Affiliated Company is terminable at the will of the Company or
such Affiliated Entity.
 
(dd) Ownership Percentage Post Exercise.  Assuming that the Lender exercises the
Option for the full amount of the principal outstanding under the Loan pursuant
to the terms of this Agreement, the Lender will own not less than 57% of the
Company’s total issued and outstanding capital stock, regardless of the number
of shares of capital stock purchased from any shareholders of the Company.
 
5. Representations and Warranties of the Lender. The Lender hereby represents
and warrants to the Company that:
 
(a) Organization and Qualification.  The Lender is an International Business
Company duly organized, validly existing and in good standing under the laws of
British Virgin Islands.  The Lender has all licenses, permits and authorizations
necessary to own its properties and to carry on its businesses as now being
conducted and as presently proposed to be conducted and is duly qualified to do
business as a foreign entity and in good standing in each state or country, if
any, in which failure to qualify would have a Material Adverse Effect.
 
(b) Company Power.  The Lender has the requisite power and authority to execute,
deliver and carry out the Transaction Documents and all other instruments,
documents and agreements contemplated or required by the provisions of any of
the Transaction Documents to be executed, delivered or carried out by the Lender
hereunder.  The Lender has all requisite power and authority under the laws of
its jurisdiction of incorporation to own and operate its properties and to carry
on its businesses as now conducted and as presently proposed to be conducted.
 
(c) Securities Law Matters.
 
(i) The Lender is acquiring and will hold the Option and the Common Stock
issuable upon exercise of the Option for investment for its account only and not
with a view to, or for resale in connection with, any “distribution” thereof
within the meaning of the Securities Act.
 
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(ii) The Lender understands that the Option and the Common Stock issuable upon
exercise of the Option have not been registered under the Securities Act by
reason of a specific exemption therefrom and that the Option and the Common
Stock  issuable upon exercise of the Option must be held indefinitely, unless it
is subsequently registered under the Securities Act or the Lender obtains an
opinion of counsel, in form and substance satisfactory to the Company and its
counsel, that such registration is not required nor anticipated.  The Lender
further acknowledges and understands that the Company is under no obligation to
register the Option or the Common Stock issuable upon exercise of the Option,
and does not expect to do so at any time in the foreseeable future.
 
(iii) The Lender is aware that any investment in the Company is a speculative
investment that has limited liquidity and is subject to the risk of complete
loss.  The Lender is able, without impairing its financial condition, to hold
the Option or the Common Stock issuable upon exercise of the Option for an
indefinite period and to suffer a complete loss of its investment.  The Lender
understands that its investment involves a high degree of risk.  The Lender is
an “accredited investor” as such term is defined in Regulation D promulgated
under the Securities Act.

(iv) Lender will not sell, transfer or otherwise dispose of the Option or the
Common Stock issuable upon exercise of the Option in violation of the Securities
Act, the Exchange Act, or the rules promulgated thereunder, including Rule 144
under the Securities Act.  Lender agrees that it will not dispose of the Option
or the Common Stock issuable upon exercise of the Option unless and until it has
complied with all requirements of this Agreement.

6. Covenants of the Company.  The Company covenants and agrees that, except to
the extent the Lender may otherwise agree in writing:
 
(a) Compliance.  The Company will comply with and observe all of its obligations
arising under the Transaction Documents.
 
(b) Exercise of Option.  In connection with any exercise of the Option, the
Company will ensure that all Common Stock will be duly and validly issued, fully
paid and nonassessable, and, assuming the accuracy of the representations and
warranties of the Lender herein, be issued in compliance with all applicable
federal and state securities laws.  In addition, the Company will ensure that it
has enough available authorized shares of common stock to allow the Lender to
exercise the Option as set forth in Section 2 of this Agreement.
 
(c) Maintenance of Existence.  Neither the Company nor any Affiliated Entity
will merge or consolidate or enter into any analogous reorganization or
transaction with any entity or liquidate, wind up or dissolve itself (or suffer
any liquidation or dissolution).  In addition, neither the Company nor any
Affiliated Entity will issue any securities.
 
(d) Disposition of Assets.  Neither the Company nor any Affiliated Entity, will,
directly or indirectly, sell, assign, lease, convey, transfer or otherwise
dispose of (whether in one transaction or a series of transactions) any property
(including accounts and notes receivable, with or without recourse) or enter
into any agreement to do any of the foregoing, except dispositions of accounts
receivables, inventory, or used, worn-out or surplus equipment, all in the
ordinary course of business.
 
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(e) Restricted Payments.  Neither the Company nor any Affiliated Entity will
make any Restricted Payments, except that any Affiliated Entity may pay
dividends to the Company.  For purposes of this Agreement, “Restricted Payments”
means all payments, dividends or other distributions of any nature (cash, equity
interests, assets or otherwise, but not including distributions in the form of
additional shares of common stock) made by the Company or any Affiliated Entity
to any of its equity interest holders with respect to or on account of its, his
or her equity interests and any purchase or redemption of any equity interests
of any equity interest holder of the Company or any Affiliated Entity.
 
(f) Additional Liens and Security Interests.  Within 30 days of any request by
the Lender and subject to any applicable laws, (i) with respect to any
Affiliated Entity for which such matters have not occurred on or prior to the
Closing, 65% of the equity interests of such Affiliated Entity shall be pledged
to the Lender as security for the Company’s obligations to the Lender and (ii)
the Company or the applicable Affiliated Entity shall, at the Company’s cost and
expense, execute and deliver to the Lender such documents and instruments
reasonably deemed necessary by the Lender to effectuate the matters specified in
subclause (i) as specified in such request (which documents may include
documents and opinions prepared by applicable foreign counsel).
 
(g) Inspection.  The Company shall permit the Lender, at the Lender’s expense,
to visit and inspect the Company’s and each Affiliated Entity’s properties, to
examine its books of account and records and to discuss the Company’s and each
Affiliated Entity’s affairs, finances and accounts with its officers, all at
such reasonable times as may be requested by the Lender.
 
(h) Usurping Business Opportunities and Competing with the Business.  The
Company shall not pursue any business opportunity directly or indirectly related
to the Business outside of the Company or the Affiliated Entities or compete
directly or indirectly with the Business or the Company.
 
(i) Indebtedness.  Neither the Company nor any Affiliated Entity will incur,
create, issue, assume or suffer to exist any Indebtedness, except (i) the
Company’s Indebtedness to the Lenders under the Transaction Documents, and (ii)
the existing Indebtedness described in Schedule 4(n).
 
(j) Liens.  Neither the Company nor any Affiliated Entity will create, incur,
assume or suffer to exist any Lien except (a) Liens granted to the Lender and
(b) Liens existing on the date of this Agreement and disclosed on Schedule
4(n).  For purposes of this Agreement, “Lien” shall mean any voluntary security
interest, mortgage, pledge, lien, charge, encumbrance, title retention agreement
or analogous instrument or device (including the interest of the lessors under
capitalized leases), in, of or on any assets or properties of the entity
referred to.
 
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(k) Investments.  Neither the Company nor any Affiliated Entity will acquire for
value, make, have or hold any Investments, except: (i) Investments existing on
the date of this Agreement and disclosed to the Lender, (ii) Investments in
Affiliated Entities existing on the date of this Agreement or made with the
proceeds of the Loan and (iii) cash, cash equivalents and readily marketable
investments in accordance with the Company’s existing treasury management
practices.  For purposes of this Agreement, “Investment” means the acquisition,
purchase, or holding of any equity interests or other security, any loan,
advance, contribution to capital, extension of credit (except for trade and
customer accounts receivable for inventory sold or services rendered in the
ordinary course of business), any acquisitions of property (other than property
acquired in the ordinary course of business) and any purchase or commitment or
option to purchase equity interests, securities or other debt of or any interest
in another entity or any integral part of any business or the assets comprising
such business or part thereof and the formation of, or entry into, any
partnership as a limited or general partner or the entry into any joint venture.
 
(l) Use of Proceeds.  The proceeds of the Loan should be used as
follows:  approximately $300,000 should be advanced by the Company to Kyzyl Kain
Mamyt LLP, Kazakhstan for operational and subsoil use purposes and the remaining
approximately $200,000 shall be retained by the Company for operational
purposes, including satisfaction of outstanding obligations, and subsoil use
purposes.
 
(m) Deregistration.  The Company will use its best efforts to promptly, and in
any event, within 120 days after the date hereof, terminate the registration of
its common stock under the Exchange Act and suspend its reporting obligations
under the Exchange Act.
 
(n) Right of First Refusal.  Notwithstanding anything herein to the contrary,
the Lender will have the right to purchase any securities offered by the Company
to any party pursuant to such terms as the Company is offering such
securities.  If the Lender decides to purchase such securities, subject to
compliance with applicable federal and state securities laws, rules and
regulations, the Company will sell such securities only to the Lender or its
affiliates.  The Lender will have the rights described in this Section 6(n) as
long as the Lender or its affiliates own (or have the right to acquire, whether
subject to the Option or otherwise)) a majority of the shares of common stock of
the Company.
 
7. Event of Default.  Each of the following events shall be considered an “Event
of Default”:
 
(a) Failure to Pay.  The Company’s failure to pay (i) when due, whether at
stated maturity, upon acceleration or otherwise, any principal or interest
payment under this Agreement or (ii) any other payment required under the terms
of this Agreement or any other Transaction Document on the date due;
 
(b) Breaches of Covenants or Agreements.  If the Company fails to observe or
perform any covenant, obligation, condition or agreement contained in this
Agreement or the other Transaction Documents, and if such default or Event of
Default can be cured, such default or Event of Default is not cured within 15
days after the earlier of (i) the Company’s receipt of written notice from the
Lender of such default or Event of Default, or (ii) the date the Company was
required to give notice thereof to the Lender of such default or Event of
Default.
 
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(c) Representations and Warranties.  If any representation or warranty made by
the Company to the Lender in this Agreement and the other Transaction Documents
shall be false, incorrect, incomplete or misleading in any material respect when
made or furnished;
 
(d) Failure to Pay; Voluntary Bankruptcy; Insolvency Proceedings.  If the
Company or any other entity obligated to the Lender in connection with this
Agreement (each, an “Obligor”) (i) fails to pay any of its material debts
generally as they become due, and such failure continues for 15 days after the
earlier of (A) the Company’s receipt of written notice from the Lender of such
failure, or (B) the date the Company was required to give notice thereof to the
Lender; (ii) applies for or consents to the appointment of a receiver, trustee,
liquidator or custodian of itself or of a substantial part of its property;
(iii) makes a general assignment for the benefit of its or any of its creditors;
(iv) is dissolved or liquidated in full or in part; or (v) commences a voluntary
case or other proceeding seeking liquidation, reorganization or other relief
with respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or consents to any relief or to the
appointment of or taking possession of its property by any official in an
involuntary case or other proceeding commenced against it;
 
(e) Involuntary Bankruptcy.  If any involuntary petition is filed under any
bankruptcy or similar law or rule against any Obligor and such petition is not
dismissed or discharged within 60 days of filing, or a receiver, trustee,
liquidator, assignee, custodian, sequestrator or other similar official is
appointed to take possession of any of the assets or properties of any Obligor;
 
(f) Default on Other Financial Obligations.  If any default occurs under any
agreement involving the borrowing of money or the advance of credit to which the
Company is or may be a party, whether as the obligor or a guarantor, if such
default consists of the failure to pay any indebtedness in an aggregate
principal amount greater than $100,000 when due or indebtedness of the Company
in an aggregate principal amount greater than $100,000 is accelerated because of
a default with respect to such indebtedness, and such default continues for 15
days after the earlier of (i) the Company’s receipt of written notice from the
Lender of such default or Event of Default, or (ii) the date the Company was
required to give notice thereof to the Lender;
 
(g) Material Adverse Effect.  If one or more conditions exist or events occur
that, in the reasonable determination of the Lender, result in a material
adverse effect on (i) the business, assets, operations, prospects or financial
or other condition of the Company, (ii) the ability of the Company to pay or
perform its obligations in accordance with the terms of this Agreement and the
other Transaction Documents and to avoid an Event of Default, or an event which,
with the giving of notice or the passage of time or both, would constitute an
Event of Default, under any Transaction Document, or (iii) the rights and
remedies of the Lender under this Agreement, the other Transaction Documents or
any related document, instrument or agreement; or
 
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(h) Default Under Other Transaction Documents.  Any default or Event of Default
shall occur under any other Transaction Document, and if such default or Event
of Default can be cured, such default or Event of Default is not cured within 15
days after the earlier of (i) the Company’s receipt of written notice from the
Lender of such default or Event of Default, or (ii) the date the Company was
required to give notice thereof to the Lender;
 
(i) Use of Proceeds.  In no event shall the Company’s use of the proceeds of the
Loan in substantially the manner set forth in Section 6(l) of this Agreement be
deemed to have a Material Adverse Effect as set forth in Section 7 of this
Agreement or to otherwise constitute a Default or an Event of Default under this
Agreement or any other Transaction Document.
 
8. Notice to the Lender.  The Company shall provide to the Lender:
 
(a) Promptly upon any officer of the Company becoming aware of any Event of
Default or of any event that, with the passage of time or the giving of notice,
could become an Event of Default, a notice describing the nature thereof and
what action the Company proposes to take with respect thereto;
 
(b) Promptly upon any officer of the Company becoming aware of (i) the
commencement of any action, suit, investigation, proceeding or arbitration
before any court or arbitrator or any governmental department, board, agency or
other instrumentality affecting the Company or any Obligor or any property of
such entity, or to which such entity is a party, which was not disclosed in this
Agreement or the Schedules thereto; or (ii) any material adverse development
which occurs in any litigation, arbitration or governmental investigation or
proceeding previously disclosed by the Company, a notice from the Company
describing the nature and status thereof and what action the Company proposes to
take with respect thereto, which was not disclosed in this Agreement or the
Schedules thereto; and
 
(c) From time to time, such other information regarding the business, operation
and financial condition of the Company, the Obligors or the Affiliated Entities
as the Lender may reasonably request.
 
9. Remedies.  Upon the occurrence of an Event of Default, at the option and upon
the declaration of the Lender, all amounts owing under this Agreement shall,
without presentment, demand, protest, or notice of any kind, all of which are
hereby expressly waived, be forthwith due and payable, and the Lender may,
immediately and without expiration of any period of grace, enforce payment of
all amounts due and owing under this Agreement and the Transaction Documents and
exercise any and all other remedies granted to it at law, by contract, in equity
or otherwise.
 
10. Conditions to Exercising the Option.  The Company and the Lender covenant
and agree that the Lender will not exercise the Option to acquire the Common
Stock until the following conditions have been satisfied.  The Company will use
its best efforts to promptly obtain the consents or waivers described in Section
10(a) and 10(b) below:
 
(a) Waiver of Pre-Emptive Rights.  The Company will obtain from the Ministry of
Industry and New Technologies of the Republic of Kazakhstan State’s waiver of
the pre-emptive right over the issuance and transfer of the Common Stock in
accordance with Clause 2 of Article 12 of the Subsoil Law of the Republic of
Kazakhstan of June 24, 2010.
 
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(b) Ministry of Industry and New Technologies Consent to Transfer.  The Company
will obtain from the Ministry of Industry and New Technologies of the Republic
of Kazakhstan consent to the issuance and transfer of the Common Stock in
accordance with Article 36 of the Subsoil Law of the Republic of Kazakhstan of
June 24, 2010.
 
(c) Agency for the Protection of Competition Consent to Transfer.  The Lender
will obtain from the Agency for the Protection of Competition of Kazakhstan
consent to the issuance and transfer of the Common Stock in accordance with
Article 50 of the Competition Law of the Republic of Kazakhstan of December 25,
2008.
 
11. Indemnification.  The Company hereby agrees to defend, protect, indemnify
and hold harmless the Lender and its affiliates and the directors, officers,
employees, attorneys and agents of the Lender and its affiliates (each of the
foregoing being an “Indemnitee” and all of the foregoing being collectively the
“Indemnitees”) from and against any and all claims, actions, damages,
liabilities, judgments, costs and expenses (including all reasonable fees and
disbursements of counsel which may be incurred in the investigation or defense
of any matter) imposed upon, incurred by or asserted against any Indemnitee,
whether direct, indirect or consequential and whether based on any federal,
state, local or foreign laws or regulations (including securities laws,
environmental laws, commercial laws and regulations), under common law or on
equitable cause, or on contract or otherwise:
 
(a)             by reason of, relating to or in connection with the execution,
delivery, performance or enforcement of any Transaction Document, any
commitments relating thereto, or any transaction contemplated by any Transaction
Document; or
 
(b)              by reason of, relating to or in connection with any credit
extended or used under the Transaction Documents or any act done or omitted by
any entity, or the exercise of any rights or remedies thereunder, including the
acquisition of any collateral by the Lender by way of foreclosure of the lien
thereon, deed or bill of sale in lieu of such foreclosure or otherwise;
 
provided, however, that the Company shall not be liable to any Indemnitee for
any portion of such claims, damages, liabilities and expenses resulting from
such Indemnitee’s gross negligence or willful misconduct.  In the event this
indemnity is unenforceable as a matter of law as to a particular matter or
consequence referred to herein, it shall be enforceable to the full extent
permitted by law.
 
This indemnification applies, without limitation, to any act, omission, event or
circumstance existing or occurring on or prior to the date of payment in full of
the Company’s obligations of the Transaction Documents.  The indemnities and
obligations of the Company contained in this Section shall survive the payment
in full of the Company’s other Obligations under the Transaction Documents.
 
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12. Miscellaneous.
 
(a) Entire Agreement.  This Agreement and the Transaction Documents, constitute
the entire understanding and agreement between the parties with regard to the
specific subject matter hereof.
 
(b) Further Assurances.  Each party to this Agreement agrees to perform any
further acts and execute and deliver any documents that may be reasonably
necessary to carry out the provisions of this Agreement and the Transaction
Documents.
 
(c) Successors and Assigns.  Except as otherwise provided herein, the terms and
conditions of this Agreement and the other Transaction Documents shall inure to
the benefit of and be binding upon the respective successors and assigns of the
parties, except that the Company may not assign its rights or obligations
hereunder without the prior written consent of the Lender.  Subject to
compliance with US securities laws and the terms and conditions of this
Agreement and the Transaction Documents, the Lender may assign or grant
participation in its rights and obligations hereunder and under the Transaction
Documents without the consent of the Company.  Lender shall deliver notice of an
assignment or grant of participation in its rights and obligations hereunder and
under the Transaction Documents to the Company no later than the date of such
assignment or grant.
 
(d) Governing Law and Construction.  THE VALIDITY, CONSTRUCTION AND
ENFORCEABILITY OF THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF UTAH.
 
(e) Consent to Jurisdiction.  THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS
SHALL BE ENFORCED IN ANY FEDERAL COURT OR UTAH STATE COURT SITTING IN SALT LAKE
CITY, UTAH.  THE PARTIES HERETO EACH CONSENT TO THE JURISDICTION AND VENUE OF
ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT
CONVENIENT.  IN THE EVENT ANY PARTY HERETO COMMENCES ANY ACTION IN ANOTHER
JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR
INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT, THE OTHER PARTY(IES)
SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND
VENUES ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER
APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.
 
(f) Waiver of Jury Trial.  EACH OF THE PARTIES IRREVOCABLY WAIVES ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT, THE TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.
 
(g) Counterparts.  This Agreement may be executed by facsimile or PDF and in two
or more counterparts, each of which shall be deemed an original, but all of
which, when taken together, shall constitute one and the same instrument.
 
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(h) Notices.  All notices, requests, demands, claims and other communications
hereunder shall be in writing.  Any notice, request, demand, claim or other
communication hereunder shall be deemed duly given if (and then two business
days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient, as set
forth below:
 
Bekem Metals, Inc.
Sankibai Batyr Ave., 14D
Aktobe City, 030000
Republic of Kazakhstan
 
with a copy to (which copy shall not constitute notice):
 
[                       ]
 
Techgroup Finance Limited
1 Floor
269 Furmanov Street
Almaty 050059
Republic of Kazakhstan
Attention: Mr. Alexey Fominykh
Fax No.: +7 727 264 2774
E-mail:  afservices@ftml.net
 
with a copy to (which copy shall not constitute notice):
 
Dorsey & Whitney LLP
Columbia Center
701 Fifth Avenue, Suite 6100
Seattle, WA 98104-7043
Attention: Christopher Barry

 
Either party may send any notice, request, demand, claim or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
facsimile, ordinary mail or electronic mail), but no such notice, request,
demand, claim or other communication shall be deemed to have been duly given
unless and until it actually is received by the intended recipient or receipt is
confirmed electronically or by return mail.  Either party may change the address
to which notices, requests, demands, claims and other communications hereunder
are to be delivered by giving the other party notice in any manner herein set
forth.
 
(i) Expenses; Attorneys’ Fees.  The Company agrees to pay or reimburse the
Lender upon demand for all reasonable out of pocket expenses paid or incurred by
the Lender, including filing and recording costs and fees, charges and
disbursements of outside counsel to the Lender and/or the allocated costs of
in-house counsel incurred from time to time, in connection with the negotiation,
preparation, approval, review, execution, delivery, administration, amendment,
modification, interpretation, collection and enforcement of this Agreement and
the other Transaction Documents. The obligations of the Company under this
Section shall survive any termination of this Agreement.
 
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(j) Amendments and Waivers.  Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively) only with the
written consent of the Company and the Lender.
 
(k) Remedies.  No failure on the part of the Lender to exercise and no delay in
exercising any power or right hereunder or under any other Transaction Document
shall operate as a waiver thereof; nor shall any single or partial exercise of
any power or right preclude any other or further exercise thereof or the
exercise of any other power or right.  The remedies herein and in the other
Transaction Documents provided are cumulative and not exclusive of any remedies
provided by law.
 
(l) Reliance.  The representations, warranties, covenants and agreement made by
the parties herein or in the other Transaction Documents and in the certificates
or other instruments prepared or delivered in connection with or pursuant to
this Agreement or any other Transaction Document shall be deemed to have been
relied upon by the parties hereto and shall survive the making of the loan by
the Lender hereunder, any exercise by the Lender of the Option to acquire Common
Stock and any subsequent transaction by the Lender in the Common Stock.
 
(m) No Fiduciary Relationship.  The Company hereby acknowledges that (a) it has
been advised by counsel in the negotiation, execution and delivery of this
Agreement and the other Transaction Documents, (b) the Lender has no fiduciary
relationship to the Company by virtue of the transactions contemplated by this
Agreement, the relationship being solely that of debtor and creditor, and (c) no
joint venture exists between the Company and the Lender.
 
(n) Severability.  If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision or provisions shall be
excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provision or provisions were so excluded and shall be
enforceable in accordance with its terms.
 
(o) Incorporation of Recitals and Exhibits.  The above Recitals and all Exhibits
identified in or attached to this Agreement are deemed to be incorporated herein
by reference and made a part hereof.
 
(p) Certain Tax Matters.
 
(i) Any and all payments by the Company hereunder or under the other Transaction
Documents shall be made free and clear of and without deduction for any and all
present or future taxes, levies, imposts, deductions, charges of withholdings,
and all liabilities with respect thereto, excluding, in the Lender, taxes
imposed on its overall net income and franchise taxes imposed on it in lieu of
net income taxes (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities in respect of payments hereunder being
hereinafter referred to in this Section as “Taxes”).
 
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(ii) The Company agrees to pay any present or future stamp or documentary taxes
or any other excise or property taxes, charges or similar levies that arise from
any payment made hereunder or under the other Transaction Documents or from the
execution, delivery or registration of, performing under, or otherwise with
respect to, this Agreement or the other Transaction Documents (hereinafter
referred to as “Other Taxes”).
 
(iii) The Company shall indemnify the Lender for the full amount of Taxes or
Other Taxes imposed on or paid by the Lender and any penalties, interest and
expenses with respect thereto. Payments on this indemnification shall be made
within 30 days from the date the Lender makes written demand therefor.
 
(iv) Within 30 days after the date of any payment of Taxes, the Borrower shall
furnish to the Lender, at its address referred to on the signature page hereof a
certified copy of a receipt evidencing payment thereof
 
(v) If the Company shall be required by law or regulation to make any deduction,
withholding or backup withholding of any taxes, levies, imposts, duties, fees,
liabilities or similar charges of the United States of America, any possession
or territory of the United States of America (including the Commonwealth of
Puerto Rico) or any area subject to the jurisdiction of the United States of
America (“U.S. Taxes”) from any payments to Lender pursuant to any Transaction
Document payable to the Lender then or thereafter outstanding, the Company shall
make such withholdings or deductions and pay the full amount withheld or
deducted to the relevant taxation authority or other authority in accordance
with applicable law.
 
 [Signature page follows]
 
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IN WITNESS WHEREOF, the parties have executed this Loan and Option Agreement as
of the date first above written.
 
The Company:

BEKEM METALS, INC.

By:  /s/ Serik
Bazarbayev                                                                
Name:  Serik Bazarbayev
Its: CEO, President

The Lender:

TECHGROUP FINANCE LIMITED

By:  /s/ Rinar
Rakhimov                                                                
Name: Rinar Rakhimov
Its:  Attorney-in-fact

[Signature Page to Loan and Option Agreement]
 
4843-1088-1799\16
 
 

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Schedule I
 
Affiliated Entities
 
Kazakh Metals, Inc., a BVI international business company
 
Kyzyl Kain Mamyt LLP, a Kazakhstan limited liability partnership
 
 
 
 

 

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