SECURITIES PURCHASE AGREEMENT

between

LI3 ENERGY, INC.

and

POSCO CANADA LTD.

Dated as of August 24, 2011

 
 

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

   
Page
     
ARTICLE I.
DEFINITIONS
1
     
1.1
Definitions
1
     
ARTICLE II.
PURCHASE AND SALE
6
     
2.1
Initial Closing
6
2.2
Second Closing
7
     
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
7
     
3.1
Representations and Warranties of the Company
7
3.2
Representations and Warranties of the Purchaser
20
     
ARTICLE IV.
CONDITIONS TO CLOSING
22
     
4.1
Conditions to the Initial Closing
22
4.2
Conditions to the Second Closing
24
     
ARTICLE V.
COVENANTS OF THE COMPANY AND THE PURCHASER
25
     
5.1
Existence and Compliance
25
5.2
Licenses and Permits
26
5.3
Compliance with Laws
26
     
ARTICLE VI.
OTHER AGREEMENTS OF THE PARTIES
26
     
6.1
Transfer Restrictions
26
6.2
Furnishing of Information; Public Information
28
6.3
Integration
29
6.4
Securities Laws Disclosure; Publicity
29
6.5
Shareholder Rights Plan
29
6.6
Use of Proceeds
29
6.7
Purchase of Brine
30
6.8
Brine Testing Facility
30
6.9
Indemnification
30
6.10
Reservation of Common Stock
31
6.11
Listing of Common Stock
31
6.12
Lock-Up
32
6.13
Independent Activities
32

 
 
 

--------------------------------------------------------------------------------

 

6.14
Certain Transactions and Confidentiality
32
6.15
Acknowledgments
33
6.16
Subsequent Equity Sales
33
     
ARTICLE VII.
MISCELLANEOUS
33
     
7.1
Termination
33
7.2
Fees and Expenses
33
7.3
Entire Agreement
33
7.4
Notices
34
7.5
Amendments; Waivers
34
7.6
Headings
34
7.7
Successors and Assigns
34
7.8
No Third-Party Beneficiaries
34
7.9
Governing Law
35
7.10
Survival
35
7.11
Execution
35
7.12
Severability
35
7.13
Rescission and Withdrawal Right
35
7.14
Replacement of Securities
36
7.15
Remedies
36
7.16
Payment Set Aside
36
7.17
Liquidated Damages
36
7.18
Saturdays, Sundays, Holidays, etc
36
7.19
Construction
37
7.20
WAIVER OF JURY TRIAL
37
     
Exhibit A
Investor’s Rights Agreement
39
Exhibit B
Legal Opinion of Company Counsel
40
Exhibit C
Employment Agreement
41
Exhibit D
Form of Warrant
42
Exhibit E
Milestones
43
Exhibit F
Li3 Exploration NI 43-101 Scope of Work 2011 Work Program
44

 
 
 

--------------------------------------------------------------------------------

 

SECURITIES PURCHASE AGREEMENT
 
This Securities Purchase Agreement (this “Agreement”) is dated as of August 24,
2011, between Li3 Energy, Inc., a Nevada corporation (the “Company”), and POSCO
Canada Ltd., a corporation duly organized and existing under the laws of the
Province of British Columbia (the “Purchaser”).
 
WHEREAS, the Company is an exploration company engaged in the exploration of
lithium, potassium and other minerals in Chile and other South American
countries;
 
WHEREAS, the Purchaser is an affiliate of POSCO, a corporation duly organized
and existing under the laws of the Republic of Korea;
 
WHEREAS, the Company desires to issue and sell to the Purchaser, and the
Purchaser desires to purchase from the Company, securities of the Company as
more fully described in this Agreement.
 
NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchaser agree
as follows:
 
ARTICLE I.
DEFINITIONS
 
1.1           Definitions.  In addition to the terms defined elsewhere in this
Agreement, for all purposes of this Agreement, the following terms have the
meanings set forth in this Section 1.1:
 
“Acquiring Person” shall have the meaning ascribed to such term in Section 6.5.
 
“Action” shall have the meaning ascribed to such term in Section 3.1(j).
 
“Affiliate” means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
Person, as such terms are used in and construed under Rule 405 under the
Securities Act.
 
“BHCA” shall have the meaning ascribed to such term in Section 3.1(mm).
 
“Board of Directors” means the board of directors of the Company.
 
“Business Day” means any day other than a Saturday, Sunday or a day that banks
in the United States of America, Canada or the Republic of Korea are required by
law or other governmental action to be closed.
 
“Closing” means the Initial Closing or the Second Closing, as the context
requires.
 
 
1

--------------------------------------------------------------------------------

 
 
“Closing Date” means the date of the Initial Closing Date or the Second Closing,
as the context requires.
 
“Commission” means the United States Securities and Exchange Commission.
 
“Common Stock” means the common stock of the Company, par value $0.001 per
share, and any other class of securities into which such securities may
hereafter be reclassified or changed.
 
“Common Stock Equivalents” means any securities of the Company or the
Subsidiaries which would entitle the holder thereof to acquire at any time
Common Stock, including, without limitation, any debt, preferred stock, right,
option, warrant or other instrument that is at any time convertible into or
exercisable or exchangeable for, or otherwise entitles the holder thereof to
receive, Common Stock.
 
“Company Counsel” means Gottbetter & Partners, LLP, with offices located at 488
Madison Avenue, 12th Floor, New York, NY 10022.
 
“complete” shall mean with respect to any statement, that there is no omission
of any material fact necessary in order to make such statement, in light of the
circumstances under which such statement was made, not misleading.
 
“Disclosure Schedules” shall have the meaning ascribed to such term in
Section 3.1.
 
 “Effective Date” means the earliest of the date that (a) the initial
Registration Statement has been declared effective by the Commission, (b) all of
the Registrable Securities have been sold pursuant to Rule 144 or may be sold
pursuant to Rule 144 without the requirement for the Company to be in compliance
with the current public information required under Rule 144 and without volume
or manner-of-sale restrictions or (c) following the one year anniversary of the
Closing Date provided that a holder of Registrable Securities is not an
Affiliate of the Company, all of the Registrable Securities may be sold pursuant
to an exemption from registration under Section 4(1) of the Securities Act
without volume or manner-of-sale restrictions and Company counsel has delivered
to such holders a standing written unqualified opinion that resales may then be
made by such holders of the Registrable Securities pursuant to such exemption
which opinion shall be in form and substance reasonably acceptable to such
holders.
 
“Environmental Law” means any federal, state, provincial, local or foreign law,
statute, code or ordinance, principle of common law, rule or regulation, as well
as any permit, order, decree, judgment or injunction issued, promulgated,
approved or entered thereunder, relating to pollution or the protection, cleanup
or restoration of the environment or natural resources, or to the public health
or safety, or otherwise governing the generation, use, handling, collection,
treatment, storage, transportation, recovery, recycling, discharge or disposal
of hazardous materials.
 
“Evaluation Date” shall have the meaning ascribed to such term in Section
3.1(s).
 
 
2

--------------------------------------------------------------------------------

 
 
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

“FCPA” means the Foreign Corrupt Practices Act of the United States (15 U.S.C.
§§ 78dd-1, et seq.), as amended.
 
“Federal Reserve” shall have the meaning ascribed to such term in Section
3.1(mm).
 
“GAAP” shall have the meaning ascribed to such term in Section 3.1(h).
 
“Indebtedness” shall have the meaning ascribed to such term in Section 3.1(bb).
 
“Initial Closing” means the closing of the purchase and sale of 38,095,300 Units
pursuant to Section 2.1.
 
“Initial Subscription Amount” means $8,000,013.
 
“Intellectual Property Rights” shall have the meaning ascribed to such term in
Section 3.1(p).
 
“Investor Director” means the Purchaser’s nominee appointed by the Board of
Directors pursuant to the terms of the Investor’s Rights Agreement.
 
“Investor’s Rights Agreement” means the Investor’s Rights Agreement, dated as of
the Initial Closing Date, between the Company and the Purchaser, in the form of
Exhibit A attached hereto.
 
“Legend Removal Back-Up” shall have the meaning ascribed to such term in Section
6.1(c).
 
“Legend Removal Date” shall have the meaning ascribed to such term in Section
1.1(c).
 
“Liens” means a lien, charge pledge, security interest or encumbrance and, with
respect to securities, a lien, charge pledge, security interest, encumbrance,
any right of first refusal or preemptive right.
 
“Lock-Up Period” shall have the meaning ascribed to such term in Section 6.12.
 
“Material Adverse Effect” shall have the meaning assigned to such term in
Section 3.1(b).
 
“Money Laundering Laws” shall have the meaning ascribed to such term in Section
3.1(nn).
 
“NI43-101 Report” shall have the meaning ascribed to such term in Section
4.2(b)(ii).
 
 
3

--------------------------------------------------------------------------------

 
 
“OFAC” shall have the meaning ascribed to such term in Section 3.1 (kk).
 
“On-Site Testing Facility” shall have the meaning ascribed to such term in
Section 6.8.
 
“Payee” shall have the meaning ascribed to such term in Section 7.16.
 
“Payor” shall have the meaning ascribed to such term in Section 7.16.
 
“Per Share Purchase Price” equals $0.21, subject to adjustment for reverse and
forward stock splits, stock dividends, stock combinations and other similar
transactions of the Common Stock that occur after the date of this Agreement.
 
“Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.
 
“Public Information Failure” shall have the meaning ascribed to such term in
Section 6.2(b).
 
“Public Information Failure Payments” shall have the meaning ascribed to such
term in Section 6.2(b).
 
“Purchaser Party” shall have the meaning ascribed to such term in Section 6.9.
 
“Required Approvals” shall have the meaning ascribed to such term in Section
3.1(e).
 
“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended or interpreted from time to time, or
any similar rule or regulation hereafter adopted by the Commission having
substantially the same purpose and effect as such Rule.
 
“Sanctions” shall have the meaning ascribed to such term in Section 3.1(kk).
 
“SEC Reports” shall have the meaning ascribed to such term in Section 3.1(h).
 
“Second Closing” means the closing of the purchase and sale of 47,619,000 Units
pursuant to Section 2.2.
 
“Second Closing Shares” shall have the meaning ascribed to such term in
Section 2.2.
 
“Second Subscription Amount” means $9,999,990.
 
“Securities” means the Shares, the Warrants and the Warrant Shares.
 
“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
 
 
4

--------------------------------------------------------------------------------

 
 
“Shares” means the shares of Common Stock issued or issuable to each Purchaser
pursuant to this Agreement.
 
“Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO
under the Exchange Act (but shall not be deemed to include the location and/or
reservation of borrowable shares of Common Stock). 
 
“Subsidiary” means any subsidiary of the Company as set forth on Schedule 3.1(a)
and shall, where applicable, also include any direct or indirect subsidiary of
the Company formed or acquired after the date hereof.
 
“Trading Day” means a day on which a principal Trading Market is open for
trading.
 
“Trading Market” means any of the following markets or exchanges on which the
Common Stock is listed or quoted for trading on the date in question: the NYSE
AMEX, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global
Select Market, the New York Stock Exchange or the OTC Bulletin Board (or any
successors to any of the foregoing).
 
“Transaction Documents” means this Agreement, the Investor’s Rights Agreement
and the Warrants, all exhibits and schedules thereto and hereto and any other
documents or agreements executed in connection with the transactions
contemplated hereunder.
 
“Transfer Agent” means Continental Stock Transfer & Trust Company, the current
transfer agent of the Company, with a mailing address of 17 Battery Pl., 8th
Fl., New York, NY 10004 and a facsimile number of (212) 616-7616, and any
successor transfer agent of the Company.
 
“Unit” means the combination of one share of Common Stock and a Warrant to
purchase one share of Common Stock.
 
“VWAP” means, for any date, the price determined by the first of the following
clauses that applies: (a) if the Common Stock is then listed or quoted on a
Trading Market, the daily volume weighted average price of the Common Stock for
such date (or the nearest preceding date) on the Trading Market on which the
Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a
Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City
time)), (b)  if the Common Stock is not then listed or quoted for trading on the
OTC Bulletin Board and if prices for the Common Stock are then reported in the
“Pink Sheets” published by Pink OTC Markets, Inc. (or a similar organization or
agency succeeding to its functions of reporting prices), the most recent bid
price per share of the Common Stock so reported, or (c) in all other cases, the
fair market value of a share of Common Stock as determined in good faith by the
Board of Directors.
 
 
5

--------------------------------------------------------------------------------

 
 
“Warrant” means, collectively, the Common Stock purchase warrants delivered to
the Purchaser at the Closing in accordance with Sections 2.1 and 2.2 hereof,
substantially in the form of Exhibit D attached hereto.
 
“Warrant Shares” means the shares of Common Stock issuable upon exercise of the
Warrants.
 
ARTICLE II.
PURCHASE AND SALE
 
2.1           Initial Closing.  Upon satisfaction or waiver of the covenants and
conditions set forth in Section 4.1, the closing of the sale and purchase of
38,095,300 Units (the “Initial Closing”) shall occur at the offices of the
Purchaser located at 650 W Georgia Street Suite 2350, Vancouver, British
Columbia, Canada V6B 4N9 or such other location as the parties shall mutually
agree.  On the date of the Initial Closing, upon the terms and subject to the
conditions set forth herein, the Company shall issue, sell, convey, assign,
transfer and deliver to the Purchaser 38,095,300 Units, free and clear of all
Liens, except for any Liens that may arise as a result of Purchaser’s ownership
thereof. Subject to the terms and conditions of this Agreement, in consideration
of the aforesaid issuance, sale, conveyance, assignment, transfer and delivery
to the Purchaser of 38,095,300 Units, the Purchaser shall pay to the Company the
Initial Subscription Amount.
 
(a)           Company Deliverables.  On or prior to the date of the Initial
Closing, the Company shall deliver or cause to be delivered to the Purchaser the
following:
 
(i)         a legal opinion of Company Counsel substantially in the form of
Exhibit B attached hereto;
 
(ii)        a copy of the irrevocable instructions to the Transfer Agent
instructing the Transfer Agent to deliver, on an expedited basis, a certificate
evidencing 38,095,300 Shares, registered in the name of the Purchaser;
 
(iii)       a Warrant registered in the name of the Purchaser to purchase up to
38,095,300 Shares, exercisable until the third (3rd) anniversary of the Initial
Closing, at an exercise price equal to $0.40 per share, subject to adjustments
as provided therein; and
 
(iv)       the Investor’s Rights Agreement duly executed by the Company.
 
(b)           Purchaser Deliverables.  On or prior to the date of the Initial
Closing, the Purchaser shall deliver or cause to be delivered to the Company the
following:
 
(i)          the Investor’s Rights Agreement duly executed by the Purchaser;
 
(ii)         the Secretary’s Certificate duly executed by the Secretary of the
Purchaser;

 
6

--------------------------------------------------------------------------------

 
 
(iii)        the Initial Subscription Amount by wire transfer to the account
specified by the Company; and
 
(iv)        the Employment Agreement between the Company and Luis Saenz in the
form of Exhibit C.
 
2.2           Second Closing.  Upon satisfaction or waiver of the covenants and
conditions set forth in Section 4.2, the closing of the sale and purchase of
47,619,000 Units (the “Second Closing”) shall occur at the offices of the
Purchaser located at 650 W Georgia Street Suite 2350, Vancouver, British
Columbia, Canada V6B 4N9 or such other location as the parties shall mutually
agree.  On the date of the Second Closing, upon the terms and subject to the
conditions set forth herein, the Company shall issue, sell, convey, assign,
transfer and deliver to the Purchaser 47,619,000 Units (the “Second Closing
Shares”), free and clear of all Liens except for any Liens that may arise as a
result of Purchaser’s ownership thereof.  Subject to the terms and conditions of
this Agreement, in consideration of the aforesaid issuance, sale, conveyance,
assignment, transfer and delivery to the Purchaser of 47,619,000 Units, the
Purchaser shall pay to the Company the Second Subscription Amount.
 
(a)           Company Deliverables.  On or prior to the date of the Second
Closing, if any, the Company shall deliver or cause to be delivered to the
Purchaser the following:
 
(i)           a copy of the irrevocable instructions to the Transfer Agent
instructing the Transfer Agent to deliver, on an expedited basis, a certificate
evidencing 47,619,000 Shares, registered in the name of the Purchaser; and
 
(ii)          a Warrant registered in the name of the Purchaser to purchase up
to 47,619,000 Shares, exercisable until the three (3) year anniversary of the
Second Closing, at an exercise price equal to $0.40 per share, subject to
adjustments as provided therein.
 
(b)           Purchaser Deliverable.  On or prior to the date of the Second
Closing, if any, the Purchaser shall deliver or cause to be delivered to the
Company:
 
(i)           the Second Subscription Amount by wire transfer to the account
specified by the Company.
 
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
 
3.1           Representations and Warranties of the Company.  Except as set
forth in the Disclosure Schedules attached hereto (collectively, the “Disclosure
Schedules”), which Disclosure Schedules shall be deemed a part hereof and shall
qualify any representation or warranty otherwise made herein to the extent of
the disclosure contained in the corresponding section of the Disclosure
Schedules, the Company hereby represents and warrants to the Purchaser that the
following are true and complete as of the date of this Agreement, will be true
and complete as of the Initial Closing and, except for Sections 3.1 (a), (g),
(i), (k), (m), (w), (x), (z), and (ff), will be true and complete as of the
Second Closing as though made on such date (in each case, unless made as of a
specified date, in which case it shall be true and complete as of the date
specified):

 
7

--------------------------------------------------------------------------------

 
 
(a)           Subsidiaries.  All of the direct and indirect subsidiaries of the
Company are set forth on Schedule 3.1(a).  The Company owns, directly or
indirectly, all of the capital stock or other equity interests of each
Subsidiary free and clear of any Liens, and all of the issued and outstanding
shares of capital stock of each Subsidiary are validly issued and are fully
paid, non-assessable and free of preemptive and similar rights to subscribe for
or purchase securities.
 
(b)           Organization and Qualification.  The Company and each of the
Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, with the requisite power and authority to own and
use its properties and assets and to carry on its business as currently
conducted.  Neither the Company nor any Subsidiary is in violation nor default
of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents.  Each of the
Company and the Subsidiaries is duly qualified to conduct business and is in
good standing as a foreign corporation or other entity in each jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not reasonably be expected to result in: (i)
a material adverse effect on the legality, validity or enforceability of any
Transaction Document, (ii) a material adverse effect on the results of
operations, assets, business, prospects or condition (financial or otherwise) of
the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse
effect on the Company’s ability to perform in any material respect on a timely
basis its obligations under any Transaction Document (any of (i), (ii) or (iii),
a “Material Adverse Effect”) and no Action has been instituted in any such
jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or
curtail such power and authority or qualification.
 
(c)           Authorization; Enforcement.  The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement and each of the other Transaction Documents and
otherwise to carry out its obligations hereunder and thereunder.  The execution
and delivery of each of this Agreement and the other Transaction Documents by
the Company and the consummation by it of the transactions contemplated hereby
and thereby have been duly authorized by all necessary action on the part of the
Company and no further action is required by the Company, the Board of Directors
or the Company’s stockholders in connection herewith or therewith other than in
connection with the Required Approvals.  This Agreement and each other
Transaction Document to which it is a party has been (or upon delivery will have
been) duly executed by the Company and, when delivered in accordance with the
terms hereof and thereof (and assuming due execution and delivery by Purchaser),
will constitute the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except: (i) as limited by
general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.

 
8

--------------------------------------------------------------------------------

 
 
(d)           No Conflicts.  The execution, delivery and performance by the
Company of this Agreement and the other Transaction Documents to which it is a
party, the issuance and sale of the Securities and the consummation by it of the
transactions contemplated hereby and thereby do not and will not: (i) conflict
with or violate any provision of the Company’s or any Subsidiary’s certificate
or articles of incorporation, bylaws or other organizational or charter
documents, (ii) conflict with, or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, result in the
creation of any Lien upon any of the properties or assets of the Company or any
Subsidiary, require any consent, approval or notice under, or give to others any
rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company or Subsidiary debt or otherwise), commitment,
agreement, obligation, understanding, arrangement or restriction of any kind to
which the Company or any Subsidiary is a party or by which any property or asset
of the Company or any Subsidiary is bound or affected, or (iii) subject to the
Required Approvals, conflict with or result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other restriction of any
court or governmental authority to which the Company or a Subsidiary is subject
(including federal and state securities laws and regulations), or by which any
property or asset of the Company or a Subsidiary is bound or affected; except in
the case of each of clauses (ii) and (iii), such as could not reasonably be
expected to result in a Material Adverse Effect.
 
(e)           Filings, Consents and Approvals.  The Company is not required to
obtain any consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal, state, local
or other governmental authority or other Person in connection with the
execution, delivery and performance by the Company of the Transaction Documents,
other than: (i) the filings required pursuant to Section 6.4 of this Agreement,
(ii) the filing with the Commission pursuant to the Investor’s Rights Agreement,
(iii) the notice and/or application(s), if any, to each applicable Trading
Market for the issuance and sale of the Securities and the listing or
qualification of the Shares and Warrant Shares for trading or quotation thereon
in the time and manner required thereby and (iv) the filing of Form D with the
Commission and such filings as are required to be made under applicable state
securities laws (collectively, the “Required Approvals”).
 
(f)           Issuance of the Securities.  The Securities are duly authorized
and, when issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free
and clear of all Liens imposed by the Company other than restrictions on
transfer provided for in the Transaction Documents or pursuant to applicable
law.  The Warrant Shares, when issued in accordance with the terms of the
Transaction Documents, will be validly issued, fully paid and nonassessable,
free and clear of all Liens imposed by the Company other than restrictions on
transfer provided for in the Transaction Documents or pursuant to applicable
laws.  The Company has reserved from its duly authorized capital stock the
maximum number of shares of Common Stock issuable pursuant to this Agreement and
the Warrants.

 
9

--------------------------------------------------------------------------------

 
 
(g)           Capitalization.  The capitalization of the Company is as set forth
on Schedule 3.1(g), which Schedule 3.1(g) shall also include the number of
shares of Common Stock owned beneficially, and of record, by each executive
officer or director of the Company and by each “beneficial owner” (within the
meaning of Rule 13d-3 under the Exchange Act) of five percent (5%) or more of
the outstanding Common Stock, as of the date hereof. The Company has not issued
any capital stock since its most recently filed periodic report under the
Exchange Act, other than as indicated in the SEC Reports or in Schedule 3.1(g)
and pursuant to the exercise of awards under the Company’s equity compensation
plans, the issuance of shares of Common Stock to employees pursuant to the
Company’s employee stock purchase plans and pursuant to the conversion and/or
exercise of Common Stock Equivalents outstanding as of the date hereof.  Other
than as indicated in Schedule 3.1(g), no Person has any right of first refusal,
preemptive right, right of participation, or any similar right to participate in
the transactions contemplated by the Transaction Documents.  Except as a result
of the purchase and sale of the Securities and as set forth in Schedule 3.1(g),
there are no outstanding options, warrants, scrip rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exercisable or exchangeable for, or giving any
Person any right to subscribe for or acquire any shares of Common Stock, or
contracts, commitments, understandings or arrangements by which the Company or
any Subsidiary is or may become bound to issue additional shares of Common Stock
or Common Stock Equivalents.  Other than as set forth in Schedule 3.1(g), with
respect to securities outstanding as of the date hereof, the issuance and sale
of the Securities will not obligate the Company to issue shares of Common Stock
or other securities to any Person (other than the Purchaser) and will not result
in a right of any holder of Company securities to adjust the exercise,
conversion, exchange or reset price under any of such securities. All of the
outstanding shares of capital stock of the Company are duly authorized, validly
issued, fully paid and nonassessable, have been issued in compliance with all
federal and state securities laws, and none of such outstanding shares was
issued in violation of any preemptive rights or similar rights to subscribe for
or purchase securities.  No further approval or authorization of any
stockholder, the Board of Directors or others is required for the issuance and
sale of the Securities.  Except as set forth in the SEC Reports, there are no
stockholders agreements, voting agreements or other similar agreements with
respect to the Company’s capital stock to which the Company is a party or, to
the knowledge of the Company, between or among any of the Company’s
stockholders.

 
10

--------------------------------------------------------------------------------

 
 
(h)          SEC Reports; Financial Statements.  The Company has filed all
reports, schedules, forms, statements and other documents required to be filed
by the Company under the Securities Act and the Exchange Act, including pursuant
to Section 13(a) or 15(d) thereof (the foregoing materials, including the
exhibits thereto and documents incorporated by reference therein, being
collectively referred to herein as the “SEC Reports”) for the two years
preceding the date hereof (or such shorter period as the Company was required by
law or regulation to file such material) and, other than a report that is
required solely pursuant to Item 2.05, or 4.02(a) of Form 8-K, has filed such
SEC Reports on a timely basis or has received a valid extension of such time of
filing and has filed any such SEC Reports prior to the expiration of any such
extension.  As of their respective dates, the SEC Reports complied in all
material respects with the requirements of the Securities Act and the Exchange
Act, as applicable, and none of the SEC Reports, when filed, 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.  The
Company is an issuer subject to Rule 144(i) under the Securities Act and has
filed current “Form 10 information” with the Commission reflecting its status as
an entity that is no longer an issuer described in Rule 144(i)(l)(i). The
financial statements of the Company included in the SEC Reports comply in all
material respects with applicable accounting requirements and the rules and
regulations of the Commission with respect thereto as in effect at the time of
filing.  Such financial statements have been prepared in accordance with United
States generally accepted accounting principles applied on a consistent basis
during the periods involved (“GAAP”), except as may be otherwise specified in
such financial statements or the notes thereto and except that unaudited
financial statements may not contain all footnotes required by GAAP, and fairly
present in all material respects the financial position of the Company and its
consolidated Subsidiaries as at the dates thereof and the results of operations
and cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit adjustments.
 
(i)           Material Changes; Undisclosed Events, Liabilities or
Developments.  Since the date of the latest audited financial statements
included within the SEC Reports, except as specifically disclosed in a
subsequent SEC Report filed prior to the date hereof: (i) there has been no
event, occurrence or development that has had or that could reasonably be
expected to result in a Material Adverse Effect, (ii) the Company has not
incurred any liabilities (contingent or otherwise) other than (A) trade payables
and accrued expenses incurred in the ordinary course of business consistent with
past practice, (B) liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP or disclosed in filings made with the
Commission and (C) derivative liabilities arising from the Transaction Documents
and the transactions contemplated hereby, (iii) the Company has not altered its
method of accounting, (iv) the Company has not declared or made any dividend or
distribution of cash or other property to its stockholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock and (v) the Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company equity compensation
plans.  The Company does not have pending before the Commission any request for
confidential treatment of information.  Except for the issuance of the
Securities contemplated by this Agreement or as set forth on Schedule 3.1(i), no
event, liability, fact, circumstance, occurrence or development has occurred or
exists, or is reasonably expected to occur or exist, with respect to the Company
or its Subsidiaries or their respective businesses, properties, operations,
assets or financial condition, that is required to be disclosed by the Company
under applicable securities laws at the time this representation is made or
deemed made has not been publicly disclosed at least 1 Trading Day prior to the
date that this representation is made or deemed made.

 
11

--------------------------------------------------------------------------------

 
 
(j)           Litigation.  There is no claim, action, suit, inquiry, notice of
violation, proceeding, arbitration, appeal, criminal prosecution, audit,
injunction, preliminary injunction, or investigation pending or, to the
knowledge of the Company, threatened against or affecting the Company, any
Subsidiary or any of their respective properties before or by any court,
arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an “Action”) which (i)
adversely affects or challenges the legality, validity or enforceability of any
of the Transaction Documents or the Securities or (ii) could, if there were an
unfavorable decision, reasonably be expected to result in a Material Adverse
Effect.  Neither the Company nor any Subsidiary, nor any director or officer
thereof, is or has been the subject of any Action involving a claim of violation
of or liability under federal or state securities laws or a claim of breach of
fiduciary duty.  There has not been, and to the knowledge of the Company, there
is not pending or contemplated, any investigation by the Commission involving
the Company or any current or former director or officer of the Company.  The
Commission has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company or any
Subsidiary under the Exchange Act or the Securities Act.
 
(k)           Labor Relations.  No labor dispute exists or, to the knowledge of
the Company, is imminent with respect to any of the employees of the Company,
which could reasonably be expected to result in a Material Adverse Effect.  None
of the Company’s or its Subsidiaries’ employees is a member of a union that
relates to such employee’s relationship with the Company or such Subsidiary, and
neither the Company nor any of its Subsidiaries is a party to a collective
bargaining agreement, and the Company and its Subsidiaries believe that their
relationships with their employees are good.  To the knowledge of the Company,
no executive officer of the Company or any Subsidiary is, or is now expected to
be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement or
non-competition agreement, or any other contract or agreement or any restrictive
covenant in favor of any third party, and the continued employment of each such
executive officer does not subject the Company or any of its Subsidiaries to any
liability with respect to any of the foregoing matters.  The Company and its
Subsidiaries are in compliance with all U.S. federal, state, local and foreign
laws and regulations relating to employment and employment practices, terms and
conditions of employment and wages and hours, except where the failure to be in
compliance could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.
 
(l)           Compliance.  Neither the Company nor any Subsidiary: (i) is in
default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by
the Company or any Subsidiary under), nor has the Company or any Subsidiary
received notice of a claim that it is in default under or that it is in
violation of, any indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in
violation of any judgment, decree, or order of any court, arbitrator or other
governmental authority or (iii) is or has been in violation of any statute,
rule, ordinance or regulation of any governmental authority, including without
limitation all foreign, federal, state and local laws relating to taxes,
environmental protection, occupational health and safety, product quality and
safety and employment and labor matters, except in each case as could not
reasonably be expected to result in a Material Adverse Effect.

 
12

--------------------------------------------------------------------------------

 
 
(m)            Regulatory Permits.
 
(i)           Schedule 3.1(m) contains a true and complete list of all
regulatory permits and licenses that are necessary for the Company and its
Subsidiaries to conduct the respective businesses as presently conducted and
described in the latest SEC Reports and as presently proposed to be conducted
and, with respect to each of its present business domiciles, to own and operate
its assets and properties.  The Company and its Subsidiaries have obtained all
permits and licenses necessary for the Company and its Subsidiaries to conduct
the respective businesses as presently conducted and described in the latest SEC
Reports.  Prior to the execution of this Agreement, the Company has delivered to
Purchaser true and complete copies of all such permits and licenses or the
supporting documents thereof.  The Company is not aware of any facts or
circumstances which would prohibit the Company and its Subsidiaries from
obtaining the permits and licenses necessary for the Company and its
Subsidiaries to engage in proposed activities relating to the exploration and
exploitation of lithium from brines.
 
(ii)           Each permit and license listed in Schedule 3.1(m) relating to
businesses as presently conducted is valid, binding and in full force and
effect.
 
(iii)           None of the Company or its Subsidiaries is or has at any time
been, or has received any notice in writing that it is or has at any time been,
in default (or with the giving of notice or lapse of time or both, would be in
default) under any permit and license listed in Schedule 3.1(m).
 
(n)           Title to Assets.  The Company and the Subsidiaries have good and
marketable title in fee simple to all real property owned by them and good and
marketable title in all personal property owned by them that is material to the
business of the Company and the Subsidiaries, in each case free and clear of all
Liens, except for (i) Liens as do not materially affect the value of such
property and do not materially interfere with the use made and proposed to be
made of such property by the Company and the Subsidiaries and (ii) Liens for the
payment of federal, state or other taxes, for which appropriate reserves have
been made therefor in accordance with GAAP and the payment of which is neither
delinquent nor subject to penalties.  Any real property and facilities held
under lease by the Company and the Subsidiaries are held by them under valid,
subsisting and enforceable leases with which the Company and the Subsidiaries
are in compliance.
 
(o)           Environmental.  Except as disclosed in the SEC Reports, neither
the Company nor any of its Subsidiaries have liabilities under any Environmental
Law, nor, to the knowledge of the Company, do any facts or circumstances exist
that are reasonably likely to give rise to any such liability, affecting any of
the properties owned or leased by the Company or any of its Subsidiaries that
could reasonably be expected to have a Material Adverse Effect.  Neither the
Company nor any of its Subsidiaries has violated any Environmental Law
applicable to it now or previously in effect, other than such violations or
infringements that could not reasonably be expected to have a Material Adverse
Effect.

 
13

--------------------------------------------------------------------------------

 
 
(p)           Intellectual Property.  The Company and the Subsidiaries have, or
have rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, trade secrets, inventions, copyrights,
licenses and other intellectual property rights and similar rights as described
in the SEC Reports as necessary or required for use in connection with their
respective businesses and which the failure to so have could have a Material
Adverse Effect (collectively, the “Intellectual Property Rights”).  None of, and
neither the Company nor any Subsidiary has received a notice (written or
otherwise) that any of, the Intellectual Property Rights has expired, terminated
or been abandoned, or is expected to expire or terminate or be abandoned, within
two (2) years from the date of this Agreement.  Neither the Company nor any
Subsidiary has received, since the date of the latest audited financial
statements included within the SEC Reports, a written notice of a claim or
otherwise has any knowledge that the Intellectual Property Rights violate or
infringe upon the rights of any Person, except as could not reasonably be
expected to have a Material Adverse Effect.  To the knowledge of the Company,
all such Intellectual Property Rights are enforceable and there is no existing
infringement by another Person of any of the Intellectual Property Rights.  The
Company and its Subsidiaries have taken reasonable security measures to protect
the secrecy, confidentiality and value of all of their intellectual properties,
except where failure to do so could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
 
(q)           Insurance.  The Company and the Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which the
Company and the Subsidiaries are engaged, including, but not limited to,
directors and officers insurance coverage.  Neither the Company nor any
Subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business without a significant increase in cost.
 
(r)           Transactions with Affiliates and Employees.  Except as set forth
in the SEC Reports, none of the officers or directors of the Company or any
Subsidiary and, to the knowledge of the Company, none of the employees of the
Company or any Subsidiary is presently a party to any transaction with the
Company or any Subsidiary (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, providing for the borrowing of money from or lending of
money to or otherwise requiring payments to or from any officer, director or
such employee or, to the knowledge of the Company, any entity in which any
officer, director, or any such employee has a substantial interest or is an
officer, director, trustee, stockholder, member or partner, in each case in
excess of $120,000 other than for: (i) payment of salary or consulting fees for
services rendered; (ii) reimbursement for expenses incurred on behalf of the
Company; (iii) other employee benefits, including equity compensation agreements
under any equity compensation plan of the Company; and (iv) transactions, such
as the purchase of securities of the Company, made on identical terms as
non-affiliates.

 
14

--------------------------------------------------------------------------------

 
 
(s)           Sarbanes-Oxley; Internal Accounting Controls.  The Company and the
Subsidiaries are in compliance with any and all applicable requirements of the
Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and
all applicable rules and regulations promulgated by the Commission thereunder
that are effective as of the date hereof and as of the Closing Date.  Except as
disclosed in its SEC Reports, the Company and the Subsidiaries maintain a system
of internal accounting controls sufficient to provide reasonable assurance that:
(i) transactions are executed in accordance with management’s general or
specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management’s general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The
Company and the Subsidiaries have established disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and
the Subsidiaries and designed such disclosure controls and procedures to ensure
that information required to be disclosed by the Company in the reports it files
or submits under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Commission’s rules and
forms.  The Company’s certifying officers have evaluated the effectiveness of
the disclosure controls and procedures of the Company and the Subsidiaries as of
the end of the period covered by the most recently filed periodic report under
the Exchange Act (such date, the “Evaluation Date”).  The Company presented in
its most recently filed periodic report under the Exchange Act the conclusions
of the certifying officers about the effectiveness of the disclosure controls
and procedures based on their evaluations as of the Evaluation Date.  Since the
Evaluation Date, there have been no changes in the internal control over
financial reporting (as such term is defined in the Exchange Act) of the Company
and its Subsidiaries that have materially affected, or are reasonably likely to
materially affect, the internal control over financial reporting of the Company
or its Subsidiaries.
 
(t)           Certain Fees.  No brokerage or finder’s fees or commissions are or
will be payable by the Company or  any Subsidiary to any broker, financial
advisor or consultant, finder, placement agent, investment banker, bank or other
Person with respect to the transactions contemplated by the Transaction
Documents.
 
(u)           Private Placement. Assuming the accuracy of the Purchaser’s
representations and warranties set forth in Section 3.2, no registration under
the Securities Act is required for the offer and sale of the Securities by the
Company to the Purchaser as contemplated hereby. The issuance and sale of the
Securities hereunder does not contravene the rules and regulations of the
Trading Market.

 
15

--------------------------------------------------------------------------------

 
 
(v)           Investment Company. The Company is not, and is not an Affiliate
of, and immediately after receipt of payment for the Securities, will not be or
be an Affiliate of, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended; provided that Purchaser is not and is not an
Affiliate of an “investment company.”  The Company shall conduct its business in
a manner so that it will not become an “investment company” subject to
registration under the Investment Company Act of 1940, as amended.
 
(w)           Registration Rights.  Other than the Purchaser and other than as
disclosed on Schedule 3.1(w), no Person has any right to cause the Company to
effect the registration under the Securities Act of any securities of the
Company or any Subsidiary.
 
(x)           Listing and Maintenance Requirements.  The Company has not, in the
12 months preceding the date hereof, received notice from any Trading Market on
which the Common Stock is or has been listed or quoted to the effect that the
Company is not in compliance with the listing or maintenance requirements of
such Trading Market.  The Company is, and has no reason to believe that it will
not in the foreseeable future continue to be, in compliance with all such
listing and maintenance requirements.
 
(y)           Application of Takeover Protections.  The Company and the Board of
Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company’s certificate of incorporation (or
similar charter documents) or the laws of its state of incorporation that is or
could become applicable to the Purchaser as a result of the Purchaser and the
Company fulfilling their obligations or exercising their rights under the
Transaction Documents, including without limitation as a result of the Company’s
issuance of the Securities and the Purchaser’s ownership of the Securities.
 
(z)           Disclosure.  All of the disclosure furnished by or on behalf of
the Company to the Purchaser regarding the Company and its Subsidiaries, their
respective businesses and the transactions contemplated hereby, including the
SEC Reports and the Disclosure Schedules to this Agreement, is true and complete
and, taken as a whole, does not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading. The press releases disseminated by the Company during the twelve
months preceding the date of this Agreement taken as a whole do not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made and when made, not misleading.
 
(aa)           No Integrated Offering. Assuming the accuracy of the Purchaser’s
representations and warranties set forth in Section 3.2, neither the Company,
nor any of its Affiliates, nor any Person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would cause this
offering of the Securities to be integrated with prior offerings by the Company
for purposes of (i) the Securities Act which would require the registration of
any such securities under the Securities Act, or (ii) any applicable shareholder
approval provisions of any Trading Market on which any of the securities of the
Company are listed or designated.

 
16

--------------------------------------------------------------------------------

 
 
(bb)           Solvency.  Based on the consolidated financial condition of the
Company as of the Closing Date, after giving effect to the receipt by the
Company of the proceeds from the sale of the Securities hereunder: (i) the fair
saleable value of the Company’s assets exceeds the amount that will be required
to be paid on or in respect of the Company’s existing debts and other
liabilities (including known contingent liabilities) as they mature, (ii) the
Company’s assets do not constitute unreasonably small capital to carry on its
business as now conducted and as proposed to be conducted including its capital
needs taking into account the particular capital requirements of the business
conducted by the Company, consolidated and projected capital requirements and
capital availability thereof, and (iii) the current cash flow of the Company,
together with the proceeds the Company would receive, were it to liquidate all
of its assets, after taking into account all anticipated uses of the cash, would
be sufficient to pay all amounts on or in respect of its liabilities when such
amounts are required to be paid.  The Company does not intend to incur debts
beyond its ability to pay such debts as they mature (taking into account the
timing and amounts of cash to be payable on or in respect of its debt).  The
Company has no knowledge of any facts or circumstances which lead it to believe
that it will file for reorganization or liquidation under the bankruptcy or
reorganization laws of any jurisdiction within one year from the Closing
Date.  Schedule 3.1(bb) sets forth as of the date hereof all outstanding secured
and unsecured Indebtedness of the Company or any Subsidiary or for which the
Company or any Subsidiary has commitments.  For the purposes of this Agreement,
“Indebtedness” means (x) any liabilities for borrowed money or amounts owed in
excess of $40,000 (other than trade accounts payable incurred in the ordinary
course of business), (y) all guaranties, endorsements and other contingent
obligations in respect of indebtedness of others, whether or not the same are or
should be reflected in the Company’s consolidated balance sheet (or the notes
thereto), except guaranties by endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of business; and
(z) the present value of any lease payments in excess of $50,000 due under
leases required to be capitalized in accordance with GAAP.  Neither the Company
nor any Subsidiary is in default with respect to any Indebtedness.
 
(cc)           Tax Status.  Except for matters that would not, individually or
in the aggregate, reasonably be expected to result in a Material Adverse Effect,
the Company and its Subsidiaries each (i) has made or filed all United States
federal, state and local income and all foreign income and franchise tax
returns, reports and declarations required by any jurisdiction to which it is
subject, (ii) has paid all taxes and other governmental assessments and charges
that are material in amount, shown or determined to be due on such returns,
reports and declarations and (iii) has set aside on its books provision
reasonably adequate for the payment of all material taxes for periods subsequent
to the periods to which such returns, reports or declarations apply.  There are
no unpaid taxes in any material amount claimed by the taxing authority of any
jurisdiction to be due from the Company or any Subsidiary, and the officers of
the Company or of any Subsidiary know of no basis for any such claim.

 
17

--------------------------------------------------------------------------------

 
 
(dd)           No General Solicitation.  Neither the Company nor any person
acting on behalf of the Company has offered or sold any of the Securities by any
form of general solicitation or general advertising.  The Company has offered
the Securities for sale only to the Purchaser and certain Affiliates of the
Purchaser.
 
(ee)           Foreign Corrupt Practices.  Neither the Company nor any
Subsidiary, to the knowledge of the Company or any Subsidiary, any agent or
other person acting on behalf of the Company or any Subsidiary, has: (i)
directly or indirectly, used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses related to foreign or domestic
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to any foreign or domestic political
parties or campaigns from corporate funds, (iii) failed to disclose fully any
contribution made by the Company or any Subsidiary (or made by any person acting
on its behalf of which the Company is aware) which is in violation of law or
(iv) violated in any material respect any provision of FCPA.
 
(ff)             Accountants.  The Company’s independent accounting firm is set
forth on Schedule 3.1(ff) of the Disclosure Schedules.  Such accounting firm is
a registered public accounting firm as required by the Exchange Act.
 
(gg)           No Disagreements with Accountants and Lawyers.  There are no
disagreements of any kind presently existing, or reasonably anticipated by the
Company to arise, between the Company and the accountants and lawyers formerly
or presently employed by the Company and the Company is current with respect to
any fees owed to its accountants and lawyers which could affect the Company’s
ability to perform any of its obligations under any of the Transaction
Documents.
 
(hh)           Acknowledgment Regarding Purchaser’s Purchase of Securities.  The
Company acknowledges and agrees that the Purchaser is acting solely in the
capacity of an arm’s length purchaser with respect to the Transaction Documents
and the transactions contemplated thereby. The Company further acknowledges that
the Purchaser is not acting as a financial advisor or fiduciary of the Company
(or in any similar capacity) with respect to the Transaction Documents and the
transactions contemplated thereby and any advice given by the Purchaser or any
of their respective representatives or agents in connection with the Transaction
Documents and the transactions contemplated thereby is merely incidental to the
Purchaser’s purchase of the Securities.  The Company further represents to the
Purchaser that the Company’s decision to enter into this Agreement and the other
Transaction Documents has been based solely on independent evaluation made by
the Company and its representatives.
 
(ii)            Regulation M Compliance.  The Company has not, and to its
knowledge no one acting on its behalf has, (i) taken, directly or indirectly,
any action designed to cause or to result in the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
any of the Securities, (ii) sold, bid for, purchased, or paid any compensation
for soliciting purchases of, any of the Securities, or (iii) paid or agreed to
pay to any Person any compensation for soliciting another to purchase any other
securities of the Company, other than, in the case of clause (iii), compensation
paid to placement agents and finders in connection with the placement of such
securities and/or the issuance of such securities in exchange for securities of
other entities, property or other assets.

 
18

--------------------------------------------------------------------------------

 
 
(jj)            Equity Compensation Plans. Each award granted by the Company
under the Company’s equity compensation plan was granted (i) in accordance with
the terms of the Company’s equity compensation plan and (ii) with an exercise
price (if applicable) at least equal to the fair market value of the Common
Stock on the date such award would be considered granted under GAAP and
applicable law. No award granted under the Company’s stock option plan has been
backdated.  The Company has not knowingly granted, and there is no and has been
no Company policy or practice to knowingly grant, equity compensation awards
prior to, or otherwise knowingly coordinate the grant of such awards with, the
release or other public announcement of material information regarding the
Company or its Subsidiaries or their financial results or prospects.
 
(kk)          Office of Foreign Assets Control.  None of the Company, its
Subsidiaries, any director, officer, or employee nor, to the best of the
knowledge and belief of the Company (after due and careful enquiry), any agent,
representative, affiliate or other person acting on behalf of the Company is an
individual or entity that is, or is owned or “controlled by an individual or
entity that is: (A) the subject of any sanction administered or enforced by the
Office of Foreign Assets Control of the U.S. Department of the Treasury (“OFAC”)
or sanctions administered by the United Nations Security Council, the European
Union, Her Majesty’s Treasury, or any other relevant sanctions authority
(collectively, “Sanctions”) or (B) located, organized or resident in a country
or territory that is the subject of Sanctions (including, without limitation,
Burma/Myanmar, Cuba, Iran, North Korea and Sudan but only with respect to those
portions of Sudan and transactions with or in Sudan for which a specific license
is required under Sanctions) and (C) none of the Company, any of its
Subsidiaries, directors or officers of, or to the best of the Company’s
knowledge after due inquiry, any agent, employee, affiliate of, or any other
person acting on behalf of, the Company or any of its Subsidiaries, has or is
engaged in any activities which would result in a violation of any provision of
any Sanctions.
 
(ll)            U.S. Real Property Holding Corporation.  The Company is not and
has never been a U.S. real property holding corporation within the meaning of
Section 897 of the Internal Revenue Code of 1986, as amended, and the Company
shall so certify upon Purchaser’s request.
 
(mm)        Bank Holding Company Act.  Neither the Company nor any of its
Subsidiaries or Affiliates is subject to the Bank Holding Company Act of 1956,
as amended (the “BHCA”) and to regulation by the Board of Governors of the
Federal Reserve System (the “Federal Reserve”).  Neither the Company nor any of
its Subsidiaries or Affiliates owns or controls, directly or indirectly, five
percent (5%) or more of the outstanding shares of any class of voting securities
or twenty-five percent (25%) or more of the total equity of a bank or any entity
that is subject to the BHCA and to regulation by the Federal Reserve.  Neither
the Company nor any of its Subsidiaries or Affiliates exercises a controlling
influence over the management or policies of a bank or any entity that is
subject to the BHCA and to regulation by the Federal Reserve.

 
19

--------------------------------------------------------------------------------

 
 
(nn)           Money Laundering.  The operations of the Company and its
Subsidiaries are and have been conducted at all times in compliance with
applicable financial record-keeping and reporting requirements of the Currency
and Foreign Transactions Reporting Act of 1970, as amended, applicable money
laundering statutes and applicable rules and regulations thereunder
(collectively, the “Money Laundering Laws”), and no action, suit or proceeding
by or before any court or governmental agency, authority or body or any
arbitrator involving the Company or any Subsidiary with respect to the Money
Laundering Laws is pending or, to the knowledge of the Company or any
Subsidiary, threatened.
 
(oo)           Reporting Issuer: The Company is not a reporting issuer in the
Province of British Columbia.
 
The Purchaser acknowledges and agrees that the representations contained in
Section 3.1 shall not modify, amend or affect the Company’s right to rely on the
Purchaser’s representations and warranties contained in this Agreement or any
representations and warranties contained in any other Transaction Document or
any other document or instrument executed and/or delivered in connection with
this Agreement or the consummation of the transactions contemplated hereby.
 
3.2           Representations and Warranties of the Purchaser.  The Purchaser
hereby represents and warrants to the Company that the following are true and
complete as of the date of this Agreement, and will be true and complete as of
the Initial Closing and the Second Closing as though made on such date (in each
case, unless made as of a specified date, in which case it shall be true and
complete as of the date specified):
 
(a)           Organization; Authority.  The Purchaser is an entity duly
incorporated, validly existing and in good standing under the laws of the
Province of British Columbia with full right, corporate power and authority to
enter into and to consummate the transactions contemplated by the Transaction
Documents and otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of the Transaction Documents and performance by the
Purchaser of the transactions contemplated by the Transaction Documents have
been duly authorized by all necessary corporate action on the part of the
Purchaser.  Each Transaction Document to which it is a party has been duly
executed by the Purchaser, and when delivered by the Purchaser in accordance
with the terms hereof and thereof (and assuming due execution and delivery by
the Company), will constitute the valid and legally binding obligation of the
Purchaser, enforceable against it in accordance with its terms, except: (i) as
limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally; (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies; and (iii) insofar as indemnification and contribution provisions may
be limited by applicable law.

 
20

--------------------------------------------------------------------------------

 
 
(b)       Own Account.  The Purchaser understands that the Securities are
“restricted securities” and have not been registered under the Securities Act or
any applicable state securities law and is acquiring the Securities as principal
for its own account and not with a view to or for distributing or reselling such
Securities or any part thereof or interest therein in violation of the
Securities Act or any other applicable securities law, has no present intention
of distributing any of such Securities in violation of the Securities Act or any
other applicable securities law and has no direct or indirect arrangement or
understandings with any other persons to distribute or regarding the
distribution of such Securities in violation of the Securities Act or any other
applicable securities law (this representation and warranty not limiting the
Purchaser’s right to sell the Securities pursuant to the Registration Statement
or otherwise in compliance with applicable U.S. federal, state and foreign
securities laws).
 
(c)       General Solicitation.  The Purchaser is not purchasing the Securities
as a result of any advertisement, article, notice or other communication
regarding the Securities published in any newspaper, magazine or similar media
or broadcast over television or radio or presented at any seminar or any other
general solicitation or general advertisement.
 
(d)      Anti-Terrorism.  The Purchaser represents that neither it nor, to its
knowledge, any person or entity controlling, controlled by or under common
control with it, nor any person having a beneficial interest in it, nor any
person on whose behalf the Purchaser is acting: (i) is a person listed in the
Annex to Executive Order No. 13224 (2001) issued by the President of the United
States (Executive Order Blocking Property and Prohibiting Transactions with
Persons Who Commit, Threaten to Commit, or Support Terrorism); (ii) is named on
the List of Specially Designated Nationals and Blocked Persons maintained by the
U.S. Office of Foreign Assets Control; (iii) is a non-U.S. shell bank or is
providing banking services indirectly to a non-U.S. shell bank; (iv) is a senior
non-U.S. political figure or an immediate family member or close associate of
such figure; or (v) is otherwise prohibited from investing in the Company
pursuant to applicable U.S. anti-money laundering, anti-terrorist and asset
control laws, regulations, rules or orders.  Purchaser is not a financial
institution that is subject to the USA Patriot Act.
 
(e)      Status of Offeree.  At the time Purchaser was offered the Securities,
it was, and as of the date hereof it is, and on the Closing Date and any dates
on which it exercises any Warrants, it will be either:  (i) an “accredited
investor” as defined in Rule 501 under the Securities Act or (ii) a “qualified
institutional buyer” as defined in Rule 144A(a) under the Securities
Act.  Purchaser is not required to be registered as a broker-dealer under
Section 15 of the Exchange Act.  Purchaser’s Affiliate, POSCO, is and has been
at all relevant times either:  (i) an “accredited investor” as defined in Rule
501 under the Securities Act or (ii) a “qualified institutional buyer” as
defined in Rule 144A(a) under the Securities Act.
 
(f)      Experience of Purchaser.  Purchaser, either alone or together with its
representatives, has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and risks of
the prospective investment in the Securities, and has so evaluated the merits
and risks of such investment.  Purchaser is able to bear the economic risk of an
investment in the Securities and, at the present time, is able to afford an
entire loss of such investment.  Purchaser understands that an active public
market for the Company’s Common Stock may not exist or continue to
exist.  Purchaser, its advisers, if any, and designated representatives, if any,
have received and reviewed information about the Company and have had an
opportunity to discuss the Company’s business, management and financial affairs
with its management.

 
21

--------------------------------------------------------------------------------

 
 
(g)      Speculative Nature of Investment.  Purchaser or its duly authorized
representative realizes that because of the inherently speculative nature of
businesses of the kind conducted and contemplated by the Company, the Company’s
financial results may be expected to fluctuate from month to month and from
period to period and will, generally, involve a high degree of financial and
market risk that could result in substantial or, at times, even total losses for
investors in securities of the Company.
 
(h)           Regulation S.  Purchaser is not a “U.S. Person” as that term is
defined in Rule 902 of Regulation S under the Securities Act and either (A)
Purchaser executed all Transaction Documents outside of the United States or (B)
a professional fiduciary resident in the United States executed such Transaction
Documents on behalf of the Purchaser.  Purchaser agrees to resell the Securities
only in accordance with the provisions of Regulation S, or pursuant to another
available exemption from the registration requirements of the Securities Act,
and further agrees not to engage in hedging transactions with regard to such
securities unless in compliance with the Securities Act.
 
The Company acknowledges and agrees that, except where explicitly relied upon,
the representations contained in Section 3.2 shall not modify, amend or affect
the Purchaser’s right to rely on the Company’s representations and warranties
contained in this Agreement or any representations and warranties contained in
any other Transaction Document or any other document or instrument executed
and/or delivered in connection with this Agreement or the consummation of the
transactions contemplated hereby.
 
ARTICLE IV.
CONDITIONS TO CLOSING
 
4.1           Conditions to the Initial Closing.
 
(a)      The obligations of the Company hereunder in connection with the Initial
Closing are subject to the following conditions being met:
 
(i)           the representations and warranties made in Section 3.2 of the
Agreement qualified as to materiality are true and complete as of the date of
the Initial Closing Date and the representations and warranties made in Section
3.2 of the Agreement not so qualified are true and complete in all material
respects as of the Initial Closing Date;
 
(ii)           all obligations, covenants and agreements of the Purchaser
required to be performed at or prior to the date of the Initial Closing shall
have been performed; and

 
22

--------------------------------------------------------------------------------

 
 
(iii)           the delivery by the Purchaser of the items set forth in Section
2.1(b) of this Agreement.
 
(b)           The obligations of the Purchaser hereunder in connection with the
Initial Closing are subject to the following conditions being met:
 
(i)           the representations and warranties made in Section 3.1 of the
Agreement qualified as to materiality are true and complete as of the date of
the Initial Closing Date and the representations and warranties made in Section
3.1 of the Agreement not so qualified are true and complete in all material
respects as of the Initial Closing Date;
 
(ii)           all obligations, covenants and agreements of the Company required
to be performed at or prior to the date of the Initial Closing shall have been
performed;
 
(iii)           the delivery by the Company of the items set forth in Section
2.1(a) of this Agreement;
 
(iv)           there shall have been no Material Adverse Effect with respect to
the Company since the date hereof;
 
(v)           all consents of any Person necessary to the consummation of the
transactions contemplated by this Agreement and the other Transaction Documents,
including consents from parties to loans, contracts, leases or other agreements
and consents from governmental agencies, whether federal, state or local shall
have been obtained, and a copy of each such consent shall have been provided to
Purchaser at or prior to the date of the Initial Closing; provided, however,
that Purchaser hereby agrees that no consent is required from:
 
 
(A)
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”);

 
 
(B)
Centurion Private Equity, LLC; and

 
 
(C)
the “Purchasers” under Securities Purchase Agreements between the Company and
such Purchasers with respect to the Company’s offering of Units of its
securities for $0.27 per Unit, with each “Unit” consisting of (x) one share of
Common Stock and (y) a warrant to purchase one-half of a share of Common Stock
at an exercise price of $0.40 per whole share.

 
 
23

--------------------------------------------------------------------------------

 
 
(vi)           from the date hereof to the date of the Initial Closing, trading
in the Common Stock shall not have been suspended or ceased by the Commission, a
Canadian securities regulatory authority or the Company’s principal Trading
Market, and, at any time prior to the Initial Closing Date, trading in
securities generally as reported by Bloomberg L.P. shall not have been suspended
or limited, or minimum prices shall not have been established on securities
whose trades are reported by such service, or on any Trading Market, nor shall a
banking moratorium have been declared either by the United States or New York
State authorities nor shall there have occurred any material outbreak or
escalation of hostilities or other national or international calamity of such
magnitude in its effect on, or any material adverse change in, any financial
market which, in each case, in the reasonable judgment of the Purchaser, makes
it impracticable or inadvisable to purchase the Securities at the Initial
Closing.
 
4.2           Conditions to the Second Closing.
 
(a)      The obligations of the Company hereunder in connection with the Second
Closing are subject to the following conditions being met:
 
(i)           the representations and warranties made in Section 3.2 of the
Agreement qualified as to materiality are true and complete as of the date of
the Second Closing Date and the representations and warranties made in Section
3.2 of the Agreement not so qualified are true and complete in all material
respects as of the Second Closing Date;
 
(ii)           all obligations, covenants and agreements of the Purchaser
required to be performed at or prior to the date of the Second Closing shall
have been performed; and
 
(iii)           the delivery by the Purchaser of the item set forth in Section
2.2(b) of this Agreement.
 
(b)           The obligations of the Purchaser hereunder in connection with the
Second Closing are subject to the following conditions being met:
 
(i)           the representations and warranties made in Section 3.1 of the
Agreement, exclusive of Sections 3.1(a), (g), (i), (k), (m), (w), (x), (z), and
(ff), qualified as to materiality are true and complete as of the date of the
Second Closing Date and the representations and warranties made in Section 3.1
of the Agreement, exclusive of Sections 3.1(a), (g), (i), (k), (m), (w), (x),
(z), and (ff), not so qualified are true and complete in all material respects
as of the Second Closing Date;
 
(ii)           Company’s delivery to the Purchaser of an updated Measured and
Indicated Resource Report prepared in compliance with the National Instrument
43-101 (“NI43-101 Report”) that contains, at a minimum, the information set out
in Exhibit E;

 
24

--------------------------------------------------------------------------------

 
 
(iii)          the completion of the work program described in Exhibit F
attached hereto, as reasonably determined by and certified by the Board of
Directors;
 
(iv)          all permits and approvals necessary, as determined by the Board of
Directors, for building and operating a brine test facility on the Company’s
Maricunga property having been obtained by the Company;
 
(v)           all obligations, covenants and agreements of the Company required
to be performed at or prior to the Second Closing Date shall have been
performed;
 
(vi)          the delivery by the Company of the items set forth in Section
2.2(a) of this Agreement;
 
(vii)         on the date of the Second Closing, trading in the Common Stock
shall not have been suspended or ceased by the Commission, a Canadian securities
regulatory authority or the Company’s principal Trading Market, and, at any time
prior to the Second Closing Date, trading in securities generally as reported by
Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall
not have been established on securities whose trades are reported by such
service, or on any Trading Market, nor shall a banking moratorium have been
declared either by the United States or New York State authorities nor shall
there have occurred any material outbreak or escalation of hostilities or other
national or international calamity of such magnitude in its effect on, or any
material adverse change in, any financial market which, in each case, in the
reasonable judgment of the Purchaser, makes it impracticable or inadvisable to
purchase the Securities at the Second Closing;
 
(viii)        there shall have been no Material Adverse Effect with respect to
the Company from the Initial Closing to the Second Closing;
 
(ix)           no labor dispute exists or, to the knowledge of the Company, is
imminent with respect to any of the employees of the Company, which could
reasonably be expected to result in a Material Adverse Effect; and
 
(x)            the Company and its Subsidiaries have obtained all permits and
licenses necessary for the Company and its Subsidiaries to conduct the
respective businesses as presently conducted and described in the latest SEC
Reports.
 
ARTICLE V.
COVENANTS OF THE COMPANY AND THE PURCHASER
 
5.1           Existence and Compliance.  The Company agrees that it will and
will cause its Subsidiaries to, from the date hereof until the Second Closing
or, if no Second Closing has then occurred, until nine months after the Initial
Closing.
 
(a)           carry on its business in the ordinary course in substantially the
same manner in which it previously has been conducted and, to the extent
consistent with such business, use its commercially reasonable efforts to
preserve intact its present business organization and to preserve its
relationships with its suppliers, government authorities and other parties it
has business dealings with;

 
25

--------------------------------------------------------------------------------

 
 
(b)          timely file (subject to valid extensions of such time to file
pursuant to the Exchange Act) with the Commission all reports required to be
filed pursuant to the Exchange Act and shall not terminate its status as an
issuer required by the Exchange Act to file reports thereunder even if the
Exchange Act or the rules or regulations thereunder would permit such
termination;
 
(c)          maintain its books of account and records in its usual, regular and
ordinary manner.
 
5.2           Licenses and Permits.  The Company shall use best efforts to take
all actions necessary, proper and advisable (subject to any applicable laws) to
obtain permits, licenses, governmental and regulatory authorizations necessary
for the Company to consummate the transactions contemplated by the Transaction
Documents and to conduct its business as currently conducted and proposed to be
conducted.
 
5.3           Compliance with Laws.  For so long as the Purchaser holds any
Common Stock of the Company, the Company shall and shall cause its Subsidiaries
to use commercially reasonable efforts to ensure that the Subsidiaries shall be
in compliance with all laws of the jurisdiction in which it holds mining
projects and shall ensure that all permits and licenses necessary for the
Company and its Subsidiaries to conduct their respective businesses as conducted
and as proposed to be conducted from time to time and to own and operate its
assets and properties from time to time (initially, those set forth in Schedule
3.1(m)) are and will remain in full force and effect.
 
ARTICLE VI.
OTHER AGREEMENTS OF THE PARTIES
 
6.1           Transfer Restrictions.
 
(a)           The Securities may only be disposed of in compliance with state
and federal securities laws.  In connection with any transfer of Securities
other than pursuant to an effective registration statement the Company may
require the transferor thereof to provide to the Company an opinion of counsel
selected by the transferor and reasonably acceptable to the Company, the form
and substance of which opinion shall be reasonably satisfactory to the Company,
to the effect that such transfer does not require registration of such
transferred Securities under the Securities Act.  Purchaser may only transfer
its rights under this Agreement and the Investor’s Rights Agreement to Permitted
Assignee, and only after such Permitted Assignee shall agree in writing to be
bound by the terms of this Agreement and the Investor’s Rights Agreement.
 
(b)           The Purchaser agrees to the imprinting, so long as is required by
this Section 6.1, of a legend on any of the Securities substantially in the
following form:

 
26

--------------------------------------------------------------------------------

 
 
THIS SECURITY HAS NOT 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 MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A
FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a)
UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.
 
(c)           Purchaser may demand the above legend be removed from certificates
evidencing the Shares and Warrant Shares (i) while a registration statement
covering the resale of such security is effective under the Securities Act, (ii)
following any sale of such Shares or Warrant Shares pursuant to Rule 144, (iii)
if such Shares or Warrant Shares are eligible for sale under Rule 144, without
volume or manner-of-sale restrictions and will remain so eligible regardless of
future circumstances (including, without limitation, any the requirement for the
Company to be in compliance with the current public information requirements of
Rule 144.  The Company shall cause its counsel to issue a legal opinion to the
Transfer Agent promptly after the Effective Date if required by the Transfer
Agent to effect the removal of the legend hereunder.  If all or any portion of a
Warrant is exercised at a time when there is an effective registration statement
to cover the resale of the Warrant Shares, or if such Shares or Warrant Shares
may be sold under Rule 144 without volume or manner-of-sale restrictions and
will remain so eligible, regardless of future circumstances, then such Warrant
Shares shall be issued free of the Securities Act legend. The Company agrees
that following Purchaser’s demand for removal of the Securities Act legend in
accordance with this Section 6.1(c), it will, provided that the Purchaser has
provided all customary information and documents (collectively, the “Legend
Removal Back-Up”) reasonably requested by such counsel to comply with the
applicable terms of the Securities Act and/or Rule 144 (as the case may be), no
later than three Trading Days following the later of (i) delivery by the
Purchaser to the Company or the Transfer Agent of a certificate representing
Shares or Warrant Shares, as the case may be, issued with a restrictive legend
and (ii) the date of delivery to the Company or its opining counsel of the
Legend Removal Back-Up (such third Trading Day, the “Legend Removal Date”),
deliver or cause to be delivered to the Purchaser a certificate representing
such shares that is free of the Securities Act legend.  The Company may not make
any notation on its records or give instructions to the Transfer Agent that
enlarge the restrictions on transfer set forth in this Agreement unless the
holder may be deemed an “affiliate” of the Company within the meaning of Rule
144.  Certificates for Securities subject to legend removal hereunder shall be
transmitted by the Transfer Agent to the Purchaser by crediting the account of
the Purchaser’s prime broker with the Depository Trust Company System as
directed by the Purchaser.

 
27

--------------------------------------------------------------------------------

 

(d)           In addition to the Purchaser’s other available remedies, the
Company shall pay to the Purchaser, in cash, as partial liquidated damages and
not as a penalty, for each $2,000 of Shares or Warrant Shares (based on the VWAP
of the Common Stock on the date such Securities are submitted to the Transfer
Agent) delivered for removal of the restrictive legend and subject to Section
6.1(c), $10 per Trading Day for each Trading Day after the Legend Removal Date
until such certificate is delivered without a legend. Nothing herein shall limit
the Purchaser’s right to pursue actual damages for the Company’s failure to
deliver certificates representing any Securities as required by the Transaction
Documents, and the Purchaser shall have the right to pursue all remedies
available to it at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief.
 
(e)           The Purchaser agrees with the Company that the Purchaser will sell
any Securities pursuant to either the registration requirements of the
Securities Act, including any applicable prospectus delivery requirements, or an
exemption therefrom, and that if Securities are sold pursuant to a Registration
Statement, they will be sold in compliance with the plan of distribution set
forth therein, and acknowledges that the removal of the restrictive legend from
certificates representing Securities as set forth in this Section 6.1 is
predicated upon the Company’s reliance upon this understanding.
 
6.2           Furnishing of Information; Public Information.
 
(a)           Until the earliest of the time that (i) the Purchaser does not own
Securities or (ii) the Warrants have expired, the Company covenants to maintain
the registration of the Common Stock under Section 12(b) or 12(g) of the
Exchange Act and to timely file (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to the Exchange Act even if the Company
is not then subject to the reporting requirements of the Exchange Act.
 
(b)           At any time during the period commencing from the six (6) month
anniversary of the date hereof and ending at such time that all of the
Securities may be sold without the requirement for the Company to be in
compliance with Rule 144(c)(1) and otherwise without restriction or limitation
pursuant to Rule 144, if the Company shall fail for any reason to satisfy the
current public information requirement under Rule 144(c) (a “Public Information
Failure”) then, in addition to the Purchaser’s other available remedies, the
Company shall pay to the Purchaser, in cash, as partial liquidated damages and
not as a penalty, by reason of any such delay in or reduction of its ability to
sell the Securities, an amount in cash equal to one percent (1.0%) of the
aggregate Initial Subscription Amount or the Second Subscription Amount, as
applicable, of the Purchaser’s Securities on the day of a Public Information
Failure and on every thirtieth (30th) day (pro rated for periods totaling less
than thirty days) thereafter until the earlier of (a) the date such Public
Information Failure is cured and (b) such time that such public information is
no longer required  for the Purchaser to transfer the Shares and Warrant Shares
pursuant to Rule 144.  The payments to which the Purchaser shall be entitled
pursuant to this Section 6.2(b) are referred to herein as “Public Information
Failure Payments.”  Public Information Failure Payments shall be paid on the
earlier of (i) the last day of the calendar month during which such Public
Information Failure Payments are incurred and (ii) the third (3rd) Business Day
after the event or failure giving rise to the Public Information
Failure Payments is cured.  In the event the Company fails to make Public
Information Failure Payments in a timely manner, such Public Information
Failure Payments shall bear interest at the rate of 1.0% per month (prorated for
partial months) until paid in full. Nothing herein shall limit the Purchaser’s
right to pursue actual damages for the Public Information Failure, and the
Purchaser shall have the right to pursue all remedies available to it at law or
in equity including, without limitation, a decree of specific performance and/or
injunctive relief.

 
28

--------------------------------------------------------------------------------

 
 
6.3           Integration.  The Company shall not sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that would be integrated with the
offer or sale of the Securities in a manner that would require the registration
under the Securities Act of the sale of the Securities or that would be
integrated with the offer or sale of the Securities for purposes of the rules
and regulations of any Trading Market such that it would require shareholder
approval prior to the closing of such other transaction unless shareholder
approval is obtained before the closing of such subsequent transaction.
 
6.4           Securities Laws Disclosure; Publicity.  The Company and the
Purchaser shall consult with each other in issuing any press releases with
respect to the transactions contemplated hereby, and neither the Company nor the
Purchaser shall issue any such press release nor otherwise make any such public
statement without the prior consent of the Company, with respect to any press
release of the Purchaser, or without the prior consent of  the Purchaser, with
respect to any press release of the Company, which consent shall not
unreasonably be withheld or delayed, except if such disclosure is required by
law, in which case the disclosing party shall promptly provide the other party
with prior notice of such public statement or communication.
 
6.5           Shareholder Rights Plan.  No claim will be made or enforced by the
Company or, with the consent of the Company, any other Person, that the
Purchaser is an “Acquiring Person” under any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or similar anti-takeover plan or arrangement in effect or hereafter adopted by
the Company, or that the Purchaser could be deemed to trigger the provisions of
any such plan or arrangement, by virtue of receiving Securities under the
Transaction Documents or under any other agreement between the Company and the
Purchaser.
 
6.6           Use of Proceeds.  The Company shall only use the net proceeds from
the issuance and sale of the Securities hereunder for developmental activities
on the Maricunga property and shall not use such proceeds: (a)  for the
satisfaction of any portion of the Company’s debt (other than payment of trade
payables in the ordinary course of the Company’s business and prior practices),
(b) for the redemption of any Common Stock or Common Stock Equivalents, (c) for
the settlement of any outstanding litigation, (d) in violation of FCPA or OFAC
regulations or (e) for the development of the Company’s projects other than the
Maricunga project.  Without limiting the generality of the foregoing, the
Company shall use the net proceeds from the Initial Closing in accordance with
the budget and schedule set forth on Schedule 6.6 attached hereto.  Prior to the
Second Closing, the Company and the Purchaser shall negotiate in good faith to
agree on a budget and schedule, in accordance with which the Company shall use
the net proceeds from the Second Closing.

 
29

--------------------------------------------------------------------------------

 
 
6.7           Purchase of Brine.  The Purchaser shall have the right to purchase
from the Company, and the Company shall sell to the Purchaser, brine from the
Company’s Maricunga property in such volume as the Purchaser may require for
tests to be performed at its brine testing facility in the Korea, on terms and
conditions to be agreed by the parties in good faith.  The Purchaser shall
provide to the Company a summary of the results of the tests performed using the
Company’s brine.
 
6.8           Brine Testing Facility.  Upon the Initial Closing, the parties
shall discuss and evaluate the development, financing and construction of a
brine testing facility (“On-Site Testing Facility”) at a location on Maricunga
property to be mutually agreed by the parties.  In the event the Purchaser shall
construct or commission the construction of an On-Site Testing Facility, the
Company shall (a) supply the On-Site Testing Facility with brine and other
materials and utilities as may be requested by the Purchaser on terms and
conditions to be agreed by the parties in good faith and (b) assist the
Purchaser in obtaining any rights, licenses and permits required to build and
operate the On-Site Testing Facility.
 
6.9           Indemnification.  Subject to the provisions of this Section 6.9,
the Company will indemnify and hold the Purchaser and its directors, officers,
shareholders, members, partners, employees and agents (and any other Persons
with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title), each Person who
controls the Purchaser (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding a
lack of such title or any other title) of such controlling persons (each, a
“Purchaser Party”) harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and
costs of investigation that the Purchaser Party may suffer or incur as a result
of or relating to (a) any breach of any of the representations, warranties,
covenants or agreements made by the Company in this Agreement or in the other
Transaction Documents or (b) any action instituted against the Purchaser Parties
in any capacity, or any of them or their respective Affiliates, by any
stockholder of the Company who is not a Purchaser Party or an Affiliate of a
Purchaser Party, with respect to any of the transactions contemplated by the
Transaction Documents (unless such action is based upon a breach of Purchaser’s
representations, warranties or covenants under the Transaction Documents or any
agreements or understandings any Purchaser Party may have with any such
stockholder or any violations by a Purchaser Party of state or federal
securities laws or any conduct by a Purchaser Party which constitutes fraud,
gross negligence, willful misconduct or malfeasance).  If any action shall be
brought against a Purchaser Party in respect of which indemnity may be sought
pursuant to this Agreement, such Purchaser Party shall promptly notify the
Company in writing, and the Company shall have the right to assume the defense
thereof with counsel of its own choosing reasonably acceptable to the Purchaser
Party.  The Purchaser Party shall have the right to employ separate counsel in
any such action and participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of the Purchaser Party except
to the extent that (i) the employment thereof has been specifically authorized
by the Company in writing, (ii) the Company has failed after a reasonable period
of time to assume such defense and to employ counsel or (iii) in such action
there is, in the written opinion of counsel reasonably acceptable to the
Company, a material conflict on any material issue between the position of the
Company and the position of the Purchaser Party, in which case the Company shall
be responsible for the reasonable fees and expenses of no more than one such
separate counsel.  The Company will not be liable to any Purchaser Party under
this Agreement (y) for any settlement by any Purchaser Party effected without
the Company’s prior written consent, which shall not be unreasonably withheld or
delayed; or (z) to the extent, but only to the extent that a loss, claim, damage
or liability is attributable to a breach of any of the representations,
warranties, covenants or agreements made by Purchaser in this Agreement or in
the other Transaction Documents.  The indemnification required by this Section
6.9 shall be made by periodic payments of the amount thereof during the course
of the investigation or defense, as and when bills are received or are incurred.
The indemnity agreements contained herein shall be in addition to any cause of
action or similar right of any Purchaser Party against the Company or others and
any liabilities the Company may be subject to pursuant to law.

 
30

--------------------------------------------------------------------------------

 
 
6.10           Reservation of Common Stock.  As of the date hereof, the Company
has reserved and the Company shall continue to reserve and keep available at all
times, free of preemptive rights, a sufficient number of shares of Common Stock
for the purpose of enabling the Company to issue Shares pursuant to this
Agreement and Warrant Shares pursuant to any exercise of the Warrants.
 
6.11           Listing of Common Stock.  The Company hereby agrees to use best
efforts to maintain the listing or quotation of the Common Stock on the Trading
Market on which it is currently listed. The Company shall not apply to have its
Common Stock traded on any other Trading Market until the Second Closing shall
have been consummated.  The Company shall use reasonable efforts to apply to
have its Common Stock traded on the Toronto Stock Exchange within 12 months
after the Second Closing, and Purchaser shall provide such documents and
information as may be required in connection with such application.  The Company
further agrees, if the Company applies to have the Common Stock traded on any
other Trading Market, including the Toronto Stock Exchange, it will then include
in such application all of the Shares and Warrant Shares, and will take such
other action as is necessary to cause all of the Shares and Warrant Shares to be
listed or quoted on such other Trading Market as promptly as possible.  The
Company will then take all action reasonably necessary to continue the listing
or quotation and trading of its Common Stock on a Trading Market and will comply
in all respects with the Company’s reporting, filing and other obligations under
the bylaws or rules of the Trading Market.
 
 
31

--------------------------------------------------------------------------------

 
 
6.12           Lock-Up.  The Purchaser hereby agrees that during the Lock-Up
Period, the Purchaser will not offer, sell, contract to sell, pledge or
otherwise dispose of, directly or indirectly, any shares of Securities or
securities convertible into or exchangeable or exercisable for any shares of
Securities, without the prior written consent of the Company.  The “Lock-Up
Period” with respect to any Securities shall mean the period starting on the
date hereof and ending upon the earliest of (i) the date that is 9 (nine) months
after the issuance of such Securities, (ii) November 20, 2012, (iii) a tender
offer having been placed for the Common Stock of the Company that is intended to
take control of the management of the Company, (iv) Mr. Luis Saenz Rocha selling
any Common Stock owned by him or notifying the Company of his resignation from
his position as the Chief Executive Officer of the Company, (v) any petition for
bankruptcy, reorganization or arrangement pursuant to federal bankruptcy law, or
any similar federal or state law, having been filed by or against, consented to,
or acquiesced by the Company or if any proceeding for the dissolution or
liquidation of the Company having been instituted, (vi) the Company having taken
any action set forth in Section 8.2 of the Investor’s Rights Agreement without
the approval of Purchaser or the Investor Director and (vii) the shareholders of
the Company having failed to appoint as a member of the Board of Directors the
Purchaser’s nominee at any meeting (or in any action by written consent in lieu
of a meeting) held for the election of directors at any time that Purchaser is
entitled to nominate a member of the Board of Directors pursuant to the
Investor’s Rights Agreement and after which meeting (or action) there is no
Investor Director.
 
The following legend shall be affixed to any certificate representing the
Securities until the Lock-Up Period with respect to such securities has
terminated:
 
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO CONTRACTUAL RESTRICTIONS ON
TRANSFER (THE “LOCK-UP”) PURSUANT TO A SECURITIES PURCHASE AGREEMENT, DATED AS
OF AUGUST __, 2011, COPIES OF WHICH ARE ON FILE WITH AND AVAILABLE FROM THE
SECRETARY OF THE COMPANY.  THE LOCK-UP WILL EXPIRE ON NOVEMBER 20, 2010, OR
SOONER, UNDER CERTAIN CIRCUMSTANCES.
 
6.13           Independent Activities.  Insofar as permitted by Applicable Law,
neither this Agreement nor any activity undertaken pursuant hereto shall prevent
the Investor or Investor Director, or any of their Affiliates, from engaging in
whatever activities the Investor or Investor Director, or any of their
Affiliates, chooses and any such activities may be undertaken without having or
incurring any obligation to offer any interest in such activities to the
Company, and as a material part of the consideration for the execution of this
Agreement by the Investor, the Company hereby  waives, relinquishes, and
renounces any such right or claim of participation.  In furtherance and not in
limitation of the foregoing, the Investor and Investor Director, and all of
their Affiliates, shall not have any obligation to bring to the attention of the
Company any business or investment opportunity of which such Investor or
Investor Director, or any of their Affiliates, becomes aware or has knowledge,
even if such opportunity is of a character that, if presented to the Company,
could be undertaken by the Company.  None of Investor, Investor Director or any
of their Affiliates shall be obligated to recommend or take any action with
respect to any matter or business opportunity that prefers the interests of the
Company over the interests of the Investor or Investor Director, or any of their
Affiliates,  and the Company hereby waives the duty of loyalty of the Investor
and Investor Director and all of their Affiliates
 
6.14           Certain Transactions and Confidentiality.  Purchaser acknowledges
that it may be in possession of material non-public information regarding the
Company from time to time while it holds Securities, and Purchaser represents
that it is aware of securities law prohibitions on trading on the basis of such
material non-public information.  Without limiting the foregoing, the Purchaser
represents and covenants that neither it, nor any Affiliate acting on its behalf
or pursuant to any understanding with it has since becoming aware of the
Offering, nor will, execute any purchases or sales, including Short Sales, of
any of the Company’s securities during the period commencing with the execution
of this Agreement and ending two (2) Trading Days after such time that the
transactions contemplated by this Agreement are first publicly announced
pursuant to the initial press release as described in Section 6.4.
 
 
32

--------------------------------------------------------------------------------

 
 
6.15           Acknowledgments.  The Company acknowledges that the issuance of
the Securities will result in substantial dilution of the outstanding shares of
Common Stock.  Each of Purchaser and the Company further acknowledges that its
obligations under the Transaction Documents, including, without limitation,
Purchaser’s obligation to pay the Second Subscription Amount and the Company’s
obligations to issue the Shares and Warrant Shares, in each case pursuant to the
terms of the Transaction Documents, are (except as otherwise provided herein)
unconditional and absolute and not subject to any right of set off,
counterclaim, delay or reduction, regardless of the effect of claim the
obligated party may have against the other and regardless of the dilutive effect
that such issuance may have on the ownership of the other stockholders of the
Company.
 
6.16           Subsequent Equity Sales.  From the date hereof until earlier of
(i) 12 months after Second Closing or (ii) 9 months after the Initial Closing,
if the Second Closing shall not have occurred by such date, neither the Company
nor any Subsidiary shall issue, enter into any agreement to issue or announce
the issuance or proposed issuance of any shares of Common Stock or Common Stock
Equivalents for an effective per share purchase price less than the Per Share
Purchase Price.
ARTICLE VII.
MISCELLANEOUS
 
7.1           Termination.  This Agreement may be terminated by either the
Company or the Purchaser by written notice to the other, if the Initial Closing
has not been consummated on or before October 1, 2011; provided, however, that
such termination will not prejudice the right of any party hereunder to sue for
any breach by any other party (or parties).
 
7.2           Fees and Expenses.  Except as expressly set forth in the
Transaction Documents to the contrary, each party shall pay the fees and
expenses of its advisers, counsel, accountants and other experts, if any, and
all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement.  The Company
shall pay all Transfer Agent fees, stamp taxes and other taxes and duties levied
in connection with the delivery of any Securities to the Purchaser.
 
7.3           Entire Agreement.  The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and thereof and supersede all prior
agreements and understandings, oral or written, with respect to such matters,
which the parties acknowledge have been merged into such documents, exhibits and
schedules.
 
 
33

--------------------------------------------------------------------------------

 
 
7.4           Notices.  Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of: (a) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number set forth on the signature pages attached hereto at or prior to
5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after
the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number set forth on the signature pages attached
hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City
time) on any Trading Day, (c) the second (2nd) Trading Day following the date of
mailing, if sent by U.S. nationally recognized overnight courier service or (d)
upon actual receipt by the party to whom such notice is required to be
given.  The address for such notices and communications shall initially be as
set forth on the signature pages attached hereto and may be revised by the
addressee party upon written notice thereof to the other party delivered in
accordance with this Section 7.4.
 
7.5           Amendments; Waivers.  No provision of this Agreement may be
waived, modified, supplemented or amended except in a written instrument signed,
in the case of an amendment, by the Company and the Purchaser or, in the case of
a waiver, by the party against whom enforcement of any such waived provision is
sought.  No waiver of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing waiver in the
future or a waiver of any subsequent default or a waiver of any other provision,
condition or requirement hereof, nor shall any delay or omission of any party to
exercise any right hereunder in any manner impair the exercise of any such
right.
 
7.6           Headings.  The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
 
7.7           Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted
assigns.  The Company may not assign this Agreement or any rights or obligations
hereunder without the prior written consent of the Purchaser (other than by
merger).  The Purchaser may assign any or all of its rights under this Agreement
to any Affiliate of the Purchaser to whom the Purchaser assigns or transfers any
Securities, provided that such transferee demonstrates to the Company’s
satisfaction its ability to perform Purchaser’s obligations hereunder or
furnishes the Company with the guaranty of POSCO (and any successor to
substantially all of POSCO’s assets) of such performance and agrees in writing
to be bound, with respect to the transferred Securities, by the provisions of
the Transaction Documents that apply to the “Purchaser.”  Any Affiliate meeting
the requirements of the immediately preceding sentence is referred to in this
Agreement as a “Permitted Assignee.”
 
7.8           No Third-Party Beneficiaries.  This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.
 
 
34

--------------------------------------------------------------------------------

 
 
7.9           Governing Law.  All questions concerning the construction,
validity, enforcement and interpretation of the Transaction Documents shall be
governed by and construed and enforced in accordance with the internal laws of
the State of New York, without regard to the principles of conflicts of law
thereof. Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement and any other Transaction Documents (whether brought against a
party hereto or its respective affiliates, directors, officers, shareholders,
partners, members, employees or agents) shall be commenced exclusively in the
state and federal courts sitting in the City of New York. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of New York, Borough of Manhattan for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper or is an inconvenient venue for such
proceeding.  Each party hereby irrevocably waives personal service of process
and consents to process being served in any such suit, action or proceeding by
mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof.  Nothing contained herein
shall be deemed to limit in any way any right to serve process in any other
manner permitted by law.  If either party shall commence an action or proceeding
to enforce any provisions of the Transaction Documents, then the prevailing
party in such action, suit or proceeding shall be reimbursed by the other party
for its reasonable attorneys’ fees and other costs and expenses incurred with
the investigation, preparation and prosecution of such action or proceeding.
 
7.10           Survival.  The representations and warranties contained herein
shall survive the Closing and the delivery of the Securities.
 
7.11           Execution.  This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to each other party, it being understood that the
parties need not sign the same counterpart.  In the event that any signature is
delivered by facsimile transmission or by e-mail delivery of a “.pdf” format
data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile or “.pdf” signature page were an original
thereof.
 
7.12           Severability.  If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their commercially reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
 
7.13           Rescission and Withdrawal Right.  Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) any of
the other Transaction Documents, whenever the Purchaser exercises a right,
election, demand or option under a Transaction Document and the Company does not
timely perform its related obligations within the periods therein provided, then
the Purchaser may rescind or withdraw, in its sole discretion from time to time
upon written notice to the Company, any relevant notice, demand or election in
whole or in part without prejudice to its future actions and rights; provided,
however, that in the case of a rescission of an exercise of a Warrant, the
Purchaser shall be required to return any shares of Common Stock subject to any
such rescinded exercise notice concurrently with the return to the Purchaser of
the aggregate exercise price paid to the Company for such shares and the
restoration of the Purchaser’s right to acquire such shares pursuant to the
Purchaser’s Warrant (including, issuance of a replacement warrant certificate
evidencing such restored right).
 
 
35

--------------------------------------------------------------------------------

 
 
7.14           Replacement of Securities.  If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof (in the case of mutilation), or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction and
provision of indemnity reasonably satisfactory o the Company (which may include
a customary bond).
 
7.15           Remedies.  The remedies provided herein are cumulative and not
exclusive of any other remedies provided by law. In the event of a breach by the
Company or by the Purchaser of any of their respective obligations under this
Agreement, the Purchaser or the Company, as the case may be, in addition to
being entitled to exercise all rights granted by law and under this Agreement,
including recovery of damages, shall be entitled to specific performance of its
rights under this Agreement.  The Company and the Purchaser agree that monetary
damages would not provide adequate compensation for any losses incurred by
reason of a breach by it of any of the provisions of this Agreement and hereby
further agrees that, in the event of any action for specific performance in
respect of such breach, it shall not assert or shall waive the defense that a
remedy at law would be adequate.
 
7.16           Payment Set Aside.  To the extent that the Purchaser or the
Company (in such capacity, the “Payor”) makes a payment or payments to the other
(in such capacity, the “Payee”) pursuant to any Transaction Document or the
Purchaser enforces or exercises its rights thereunder, and such payment or
payments or the proceeds of such enforcement or exercise or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside,
recovered from, disgorged by or are required to be refunded, repaid or otherwise
restored to the Payor, a trustee, receiver or any other Person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.
 
7.17           Liquidated Damages.  The Company’s obligations to pay any partial
liquidated damages or other amounts owing under the Transaction Documents is a
continuing obligation of the Company and shall not terminate until all unpaid
partial liquidated damages and other amounts have been paid notwithstanding the
fact that the instrument or security pursuant to which such partial liquidated
damages or other amounts are due and payable shall have been canceled.
 
7.18           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.
 
 
36

--------------------------------------------------------------------------------

 
 
7.19           Construction.  The parties agree that each of them and/or their
respective counsel have reviewed and had an opportunity to revise the
Transaction Documents and, therefore, the normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation of the Transaction Documents or any
amendments thereto. In addition, each and every reference to share prices and
shares of Common Stock in any Transaction Document shall be subject to
adjustment for reverse and forward stock splits, stock dividends, stock
combinations and other similar transactions of the Common Stock that occur after
the date of this Agreement.
 
7.20           WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY
JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH
KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW,
HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER
TRIAL BY JURY.
 
(Signature Pages Follow)

 
37

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

LI3 ENERGY, INC.
 
Address for Notice:
       
By:
/s/ Luis Saenz
 
Av. Pardo y Aliaga 699
Name:  
Luis Saenz
 
Office 802
Title:
CEO
 
San Isidro, Lima, Peru
         
Tel.:
011.511.212.1880
With a copy to (which shall not constitute notice):
 
Fax:   
011.511.421.1649
     
Gottbetter & Partners, LLP
   
488 Madison Avenue
   
12th Floor
   
New York, NY 10022
         
Tel.:
212.400.6900
   
Fax:
212.400.6901
   

POSCO CANADA LTD.
 
Address for Notice:
     
By:
/s/ Yong Keun Kim
 
POSCO CANADA LTD.
Name:  
Yong Keun Kim
 
650 W Georgia St Suite 2350,
Title:
President
 
Vancouver BC,
   
V6B 4N9
   
Canada
With a copy to (which shall not constitute notice):
         
Orrick, Herrington & Sutcliffe
   
43rd Floor, Gloucester Tower
   
The Landmark
   
15 Queen’s Road
   
Central, Hong Kong
         
Tel.:
+852.2218.9100
   
Fax:   
+852.2218.9200
   

 
 
38

--------------------------------------------------------------------------------

 

Exhibit A

Investor’s Rights Agreement

See attached.

 
39

--------------------------------------------------------------------------------

 

Exhibit B

Legal Opinion of Company Counsel

See attached.

 
40

--------------------------------------------------------------------------------

 

Exhibit C

Employment Agreement

See attached.

 
41

--------------------------------------------------------------------------------

 

Exhibit D

Form of Warrant

See attached.

 
42

--------------------------------------------------------------------------------

 

Exhibit E

Milestones

The Company’s updated NI43-101 Report shall contain at least the following
information and conclusions:

 
-
The economic viability of the Maricunga project is such that proceeding to the
Feasibility Study phase for the project is warranted.

 
-
The Measured and Indicated Resources of lithium carbonate at the Maricunga
project is sufficient for the production of 15,000 tons lithium carbonate per
year for at least 20 years.

 
43

--------------------------------------------------------------------------------