Exhibit 10.01


 


EXECUTION COPY


 


INVESTMENT AGREEMENT


 


THIS AGREEMENT is made as of the 2nd day of
September, 2010,


 


BETWEEN:


 


2245393 ONTARIO INC.,
a corporation existing under the laws of the Province of Ontario


(“Investor”)


 


- and -


 


AMERICAN LITHIUM MINERALS, INC., a corporation existing
under the laws of the State of Nevada

(the “Company”).


 


RECITALS


 


A.                                   Investor and the Company have agreed that
Investor will make an investment in the Company in the form of a secured
convertible grid promissory note and warrants, all in accordance with the terms
and conditions set out herein.


 


B.                                     The Parties wish to document their respective
rights and obligations in connection with the investment by Investor in the
Company.


 


NOW THEREFORE in consideration of the
mutual covenants and agreements contained in this Agreement and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:


 


ARTICLE 1

DEFINITIONS AND PRINCIPLES OF INTERPRETATION


 


1.1                               Definitions


 


Whenever used in this Agreement, the following
terms shall have the meanings set out below:


 


“Affiliate”
and “Affiliated” means, with
respect to any Person, any Person Controlled by, Controlling, or under common
Control with, such Person;


 


“Agreement”
means this investment agreement, including all schedules, and all amendments or
restatements as permitted, and references to “Article”
or “Section” mean the specified Article or
Section of this Agreement;


 


“Board”
means the Board of Directors of the Company;


 


“Business Day”
means any day, other than a Saturday or Sunday, on which the main branch of the
Royal Bank of Canada in Toronto, Ontario is open for commercial banking
business during normal banking hours;


 

















 


“Closing Date”
means September 2, 2010 or such other date as the Parties may agree;


 


“Closing Time”
means 11:00 a.m.  (Toronto time)
on the Closing Date or such other time as the Parties may agree;


 


“Collateral Documents”
means the Note, the Warrants, the General Security Agreement, the Deeds of Trust,
and any other agreement, instrument or document entered into in connection with
the transactions contemplated by this Agreement;


 


“Common Share”
means a common share in the capital stock of the Company with a par value of
US$0.001 per Common Share;


 


“Company Disclosure Letter” means the disclosure
letter executed by the Company and delivered to Investor prior to the execution
of this Agreement;


 


“Company Material
Adverse Effect” means any change, effect, event, occurrence or state
of facts that is, or would reasonably be expected to be, material and adverse
to the assets, liabilities (including any contingent liabilities that may arise
through outstanding, pending or threatened litigation or otherwise), business,
projects, operations, capitalization, financial condition (including cash
resources) or prospects of the Company;


 


“Company Public Documents”
means all forms, reports, schedules, statements and other documents filed by
the Company since January 1, 2008, with all Governmental Entities;


 


“Control”
means:


 


(a)                                  in relation to a
corporation, the beneficial ownership at the relevant time of shares of such
corporation carrying more than 50% of the voting rights ordinarily exercisable
at meetings of shareholders of the corporation where such voting rights are
sufficient to elect a majority of the directors of the corporation or, with
respect to a corporation without share capital, the sole control of such
corporation;


 


(b)                                 in relation to a Person
that is a partnership, limited liability company or joint venture, the
beneficial ownership at the relevant time of more than 50% of the ownership
interests of the partnership, limited liability company or joint venture in
circumstances where it can reasonably be expected that the Person can direct
the affairs of the partnership, limited liability company or joint venture; and


 


(c)                                  in relation to a trust, the
beneficial ownership at the relevant time of more than 50% of the property
settled under the trust;


 


and the words “Controlled
by”, “Controlling” and
similar words have corresponding meanings; the Person who Controls a Controlled
Entity shall be deemed to Control a corporation, partnership, limited liability
company, joint venture or trust which is Controlled by the Controlled Entity,
and so on;


 


“Current Market Price”
means US$0.54;


 


2

















 


“Deeds of Trust”
has the meaning given in Section 4.27;


 


“Environmental Laws”
means all applicable laws relating to the protection of human health and safety
or the environment, or relating to hazardous or toxic substances or wastes,
pollutants or contaminants;


 


“Environmental Permits”
means authorizations prescribed by Environmental Laws;


 


“GAAP” means
United States generally accepted accounting principles;


 


“General Security Agreement”
means the general security agreement granted by the Company in favour of
Investor in accordance with this Agreement and dated as of the Closing Date;


 


“Governmental Entity”
means: (a) any multinational, federal, provincial, territorial, state, regional,
municipal, local or other government, governmental or public department,
central bank, court, tribunal, arbitral body, commission, board, bureau, agency
or entity, domestic or foreign; (b) any stock exchange; (c) any
subdivision, agent, commission, board or authority of any of the foregoing; or (d) any
quasi-governmental or private body, including any tribunal, commission,
regulatory agency or self-regulatory organization, exercising any regulatory,
expropriation or taxing authority under or for the account of any of the
foregoing;


 


“Holdback Date”
means the second Business Day following satisfaction or waiver of the
conditions listed in Section 5.1;


 


“laws” means
applicable laws, statutes, by-laws, rules, regulations, orders, ordinances,
protocols, codes, guidelines, treaties, policies, notices, directions, decrees,
judgments, awards or requirements, in each case of any Governmental Entity;


 


“Material Contract”
means a contract, licence, lease, agreement, obligation, undertaking,
arrangement, document, commitment, entitlement or engagement to which the
Company is a party or by which it is bound or under which it has, or will have,
any liability or contingent liability (in each case, whether written or oral,
express or implied): (a) involving payments to or by such Person in excess
of US$50,000 annually or US$100,000 in aggregate over the term of the contract;
(b) involving rights or obligations that may reasonably extend beyond
three years and which does not terminate or cannot be terminated without penalty
on less than three months’ notice; (c) which provide any rights to one or
more third parties with respect to any of the Company’s Property or Mineral
Rights; (d) which is outside the ordinary course of business;
(e) which  contain covenants that:
(i) in any way purport to restrict the business activity of the Company or
any of its affiliates; or (ii) limit the freedom of the Company or any of
its affiliates to engage in any line of business or to compete with any Person;
(f) which, if terminated without the consent of the Person, in the case of
the Company, would result in a Company Material Adverse Effect; (g) is
with a Governmental Entity; or (h) is a contract pursuant to which the
Company or one of its Subsidiaries provides any indemnification to any other
Person. For greater certainty, with respect to the Company, includes the
Material Contracts listed in Schedule 4.24 of the Company
Disclosure Letter;


 


“Mineral Interests” has the meaning given in the
General Security Agreement;


 


3

















 


“Mineral Rights”
has the meaning given in Section 4.13(a);


 


“Net Proceeds”
has the meaning given in Section 6.3;


 


“Note”
means the secured convertible grid promissory note issued by the Company to
Investor in accordance with this Agreement and dated as of the Closing Date;


 


“Note Shares”
means the Common Shares issuable on conversion of the Note;


 


“Parties”
means Investor and the Company collectively, and “Party” means any one of them;


 


“Person”
means any individual, sole proprietorship, partnership, firm, entity,
unincorporated association, unincorporated syndicate, unincorporated
organization, trust, body corporate, limited liability company, unlimited
liability company, government, government regulatory authority, governmental
department, agency, commission, board, tribunal, dispute settlement panel or
body, bureau, court and, where the context requires, any of the foregoing when
they are acting as trustee, executor, administrator or other legal
representative;


 


“Project” means
the Borate Hills Project in Nevada, comprised of the North Borate Hills
property and the South Borate Hills property;


 


“Property” has
the meaning given in Section 4.13(a);


 


“Securities Laws”  means the U.S. Securities Act, the Securities Act (Ontario), together with all other applicable
state, federal and provincial securities laws, rules and regulations and
published policies thereunder, as now in effect and as they may be promulgated
or amended from time to time;


 


“Shares”
means the Common Shares and includes any additional Common Shares that may be
created, but unless otherwise provided herein does not include Common Shares
for which other securities may be exercised or exchanged or into which other
securities may be converted unless and until such rights have been exercised
and such Common Shares issued;


 


“Taxes” means: (a) any and all taxes, imposts,
levies, withholdings, duties, fees, premiums, assessments and other charges of
any kind, however denominated and instalments in respect thereof, including any
interest, penalties, fines or other additions that have been, are or will
become payable in respect thereof, imposed by any Governmental Entity,
including for greater certainty all income or profits taxes, payroll and
employee withholding taxes, employment taxes, unemployment insurance,
disability taxes, social insurance taxes, sales and use taxes, ad valorem
taxes, excise taxes, goods and services taxes, harmonized sales taxes,
franchise taxes, gross receipts taxes, capital taxes, business license taxes,
alternative minimum taxes, estimated taxes, abandoned or unclaimed (escheat)
taxes, occupation taxes, real and personal property taxes, stamp taxes,
environmental taxes, transfer taxes, severance taxes, workers’ compensation,
government pension plan premiums or contributions and other governmental
charges, and other obligations of the same or of a similar nature to any of the
foregoing, which a Party or any of its subsidiaries is required to pay,
withhold or collect, together with any interest, penalties or other additions
to tax that may become payable in respect of such taxes, and any interest in
respect of such interest, penalties and additions whether disputed or not; and (b) any
liability for the 


 


4

















 


payment of any amount described in paragraph (a) of
this definition as a result of being a member of an affiliated, consolidated,
combined or unitary group for any period, as a result of any Tax sharing or Tax
allocation agreement, arrangement or understanding, or as a result of being
liable for another person’s Taxes as a transferee or successor, by contract or
otherwise;


 


“Tax Returns” includes all returns, reports,
declarations, elections, notices, filings, forms, statements and other
documents (whether in tangible, electronic or other form) and including any
amendments, schedules, attachments, supplements, appendices and exhibits
thereto, made, prepared, filed or required by a Governmental Entity to be made,
prepared or filed by law in respect of Taxes;


 


“UCC” has the
meaning given in the General Security Agreement;


 


“US$” means
United States dollars;


 


“U.S. Exchange Act”
means the United States Securities Exchange Act of 1934, as amended;


 


“U.S. Securities Act”
means the United States Securities Act of 1933, as amended;


 


“Warrants” means
the warrants to purchase Common Shares issued by the Company to Investor
pursuant to this Agreement; and


 


“Warrant Shares”
means the Common Shares issuable on exercise of the Warrants.


 


1.2                               Certain Rules of
Interpretation


 


In this Agreement:


 


(a)                                  Consent — Whenever a provision of
this Agreement requires an approval or consent and the approval or consent is
not delivered within the applicable time limit, then, unless otherwise
specified, the Party whose consent or approval is required shall be
conclusively deemed to have withheld its approval or consent.


 


(b)                                 Headings — Headings of Articles and
Sections are inserted for convenience of reference only and do not affect the
construction or interpretation of this Agreement.


 


(c)                                  Including — Where the word “including”
or “includes” is used in this Agreement, it means “including (or includes)
without limitation”.


 


(d)                                 No Strict
Construction — The language used in this Agreement is the language chosen by the
Parties to express their mutual intent, and no rule of strict construction
shall be applied against any Party.


 


(e)                                  Number and
Gender —
Unless the context otherwise requires, words importing the singular include the
plural and vice versa and words
importing gender include all genders.


 


5

















 


(f)                                    Severability — If, in any jurisdiction,
any provision of this Agreement or its application to any Party or circumstance
is restricted, prohibited or unenforceable, such provision shall, as to such
jurisdiction, be ineffective only to the extent of such restriction,
prohibition or unenforceability without invalidating the remaining provisions
of this Agreement and without affecting the validity or enforceability of such
provision in any other jurisdiction or without affecting its application to
other Parties or circumstances.


 


(g)                                 Statutory
References — A reference to a statute includes all regulations and rules made
pursuant to the statute and, unless otherwise specified, the provisions of any
statute, regulation or rule which amends, supplements or supersedes any
such statute, regulation or rule.


 


(h)                                 Time — Time is of the essence
in the performance of the Parties’ respective obligations.


 


(i)                                     Time
Periods —
Unless otherwise specified, time periods within or following which any payment
is to be made or act is to be done, shall be calculated by excluding the day on
which the period commences and including the day on which the period ends and
by extending the period to the next Business Day following if the last day of
the period is not a Business Day.


 


1.3                               Knowledge


 


Any reference to the knowledge of any Party means
to the best of the knowledge, information and belief of the Party after
reviewing all relevant records and making due inquiries regarding the relevant
matter of all relevant directors, officers and employees of such Party and, in
the case of the knowledge of the Company, the management of the Company, and
without limitation, includes Hugh Aird, Chief Executive Officer, Judy Baker,
Property Development, Production and Acquisitions, and Chris Hobbs, Chief
Financial Officer.


 


1.4                               Entire
Agreement


 


This Agreement, and the agreements and other
documents required to be delivered pursuant to this Agreement, constitute the
entire agreement between the Parties and set out all the covenants, promises,
warranties, representations, conditions and agreements between the Parties in
connection with the subject matter of this Agreement and supersede all prior
agreements, understandings, negotiations and discussions, whether oral or
written, pre-contractual or otherwise. There are no covenants, promises,
warranties, representations, conditions or other agreements, whether oral or
written, pre-contractual or otherwise, express, implied or collateral, whether
statutory or otherwise, between the Parties in connection with the subject
matter of this Agreement except as specifically set forth in this Agreement and
any document required to be delivered pursuant to this Agreement.


 


6

















 


ARTICLE 2

PURCHASE OF NOTE AND WARRANTS


 


2.1                               Closing


 


(a)                                  Subject to the terms and
conditions hereof, Investor hereby agrees to purchase from the Company,
and the Company hereby agrees to sell to Investor on the Closing Date, a Note
in the aggregate principal amount of US$750,000.00 (the “Principal
Amount”), for an aggregate purchase price equal to US$750,000.00
(the “Aggregate Price”).


 


(b)                                 On the Closing Date, Investor
shall advance to the Company the amount of US$500,000.00 (the “Initial Advance”) and the Company shall deliver the Note to
the Investor, with the grid attached to such Note evidencing the advance by
Investor and the borrowing by the Company under the Note of an amount equal to
the Initial Advance.


 


(c)                                  Subject to the terms and
conditions of this Agreement, on the Holdback Date, Investor shall advance
to the Company the amount of US$250,000.00 (the “Holdback
Amount”) and, in connection with such payment, if any, Investor
shall make a notation on the grid attached to such Note evidencing the advance
by Investor and the borrowing by the Company under the Note of an amount equal
to the Holdback Amount.


 


2.2                               Payment of
Aggregate Price


 


The Initial Advance and the Holdback Amount
shall be paid by Investor in cash or by wire transfer of immediately available
funds to the following bank account of the Company:


 


American Lithium Minerals Inc.


Bank: Wachovia Bank


	
  Address:

  	
  1525 WT Harris Blvd

  
	
   

  	
  Charlotte N.C.

  
	
   

  	
  28262

  



Account#: 2000041563782


ABA #: 063000021


 


2.3                               Warrants


 


On the Closing Date, in consideration for the
purchase by Investor of the Note, the Company shall issue to and in favour of
Investor Warrants to purchase that number of Common Shares obtained by dividing
the Aggregate Price by the Current Market Price.  Such Warrant shall be exercisable into Common
Shares at an exercise price equal to the Current Market Price per Common Share
(the “Warrant”). The Warrant shall be
exercisable until 5:00 p.m. on September 2, 2011.


 


2.4                               Conversion
or Exchange


 


The Note shall be convertible in accordance
with its terms into Note Shares.


 


7

















 


2.5                               Conditions
to Exchange


 


If any conversion referred to in Section 2.4
shall be subject to any approvals required under applicable laws or the rules of
an applicable stock exchange or the rules of an applicable takeover code,
the Company shall use its best efforts to obtain such approvals.


 


ARTICLE 3

REPRESENTATION AND WARRANTIES OF INVESTOR


 


Investor represents and warrants to and in favour
of the Company and acknowledges that the Company is relying on such
representations and warranties in connection with the Agreement and the
transactions contemplated therein.


 


3.1                               Organization
and Qualification


 


Investor is a corporation validly existing under
the laws of the Province of Ontario.


 


3.2                               Authority
Relative to this Agreement


 


Investor has the requisite corporate power and
authority to enter into this Agreement and to perform its obligations
hereunder. The execution and delivery of this Agreement by Investor, and the
performance of its obligations hereunder, have been duly authorized.  This Agreement has been duly executed and
delivered by Investor and constitutes a legal, valid and binding obligation of
Investor, enforceable by the Company against Investor in accordance with its
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency and other applicable laws affecting the enforcement of creditors’
rights generally and subject to the qualification that equitable remedies may
be granted only in the discretion of a court of competent jurisdiction.


 


3.3                               No
Conflict; Required Filings and Consent


 


The execution and delivery of and performance by
Investor of this Agreement do not and will not (or would not with the giving of
notice, the lapse of time or the happening of any other event of condition)
result in a breach or violation of or a conflict with, or allow any other
person to exercise any rights under any of the terms or provisions of Investor’s
articles or by-laws.


 


3.4                               Prospectus
Exemption Under Canadian Securities Laws


 


Investor is an “accredited investor” within the
meaning of National Instrument 45-106 of the Canadian Securities
Administrators.


 


3.5                               U.S.
Securities Act Compliance


 


Investor is an “accredited investor” within the
meaning of Regulation D under the U.S. Securities Act.  Investor represents and warrants that it has
the sophistication to evaluate an investment in the Company without the benefit
of a registration statement under the U.S. Securities Act, that it has had the
opportunity to obtain all information about the Company necessary to make an
informed investment decision and that it is able to bear the full loss of its
investment in the Company.  Investor
acknowledges that the securities being acquired by it pursuant to this 


 


8

















 


Agreement, including the Note, the Warrant, the
Note Shares and the Warrant Shares, have not been registered under the
Securities Act and shall bear legends evidencing restrictions on transfer under
the Securities Act until such time as the holder thereof provides an opinion of
counsel to the Company to the effect that such legend is no longer required.


 


ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF THE COMPANY


 


Except as disclosed in the Company Disclosure
Letter (which shall make reference to the applicable section, subsection,
paragraph or subparagraph below in respect of which such qualification is being
made), the Company hereby represents and warrants to Investor as set forth
below, and acknowledges that Investor is relying upon these representations and
warranties in connection with the entering into of this Agreement and the
consummation of the transactions contemplated herein.


 


4.1                               Organization
and Qualification


 


The Company is duly incorporated and validly
existing under Chapter 78 of the Nevada Revised Statutes  and
has full corporate power and authority to own its assets and conduct its
business as now owned and conducted. The Company is duly qualified to carry on
business and is in good standing in each jurisdiction in which the character of
its properties or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified will not, individually
or in the aggregate, have a Company Material Adverse Effect. True and complete
copies of the constating documents of the Company have been delivered or made
available to Investor, and the Company has not taken any action to amend or
supersede such documents.


 


4.2                               Authority
Relative to this Agreement


 


The Company has the requisite corporate power
and authority to enter into this Agreement and to perform its obligations
hereunder. The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated by this Agreement,
including the issuance of the Note, the Warrants, the Note Shares and the
Warrant Shares, have been duly authorized by the Board and no other corporate
proceedings on the part of the Company are necessary to authorize this
Agreement. This Agreement has been duly executed and delivered by the Company
and constitutes and the Note and Warrants when issued, will constitute valid
and binding obligations of the Company, enforceable by Investor against the
Company in accordance with their terms, except as the enforcement thereof may
be limited by bankruptcy, insolvency and other applicable laws affecting the
enforcement of creditors’ rights generally and subject to the qualification
that equitable remedies may be granted only in the discretion of a court of
competent jurisdiction.


 


4.3                               No
Conflict; Required Filings and Consent


 


The execution and delivery by the Company of
this Agreement and the performance by it of its obligations hereunder and the
completion of the transactions contemplated by this Agreement will not violate,
conflict with or result in a breach of any provision of the constating
documents of the Company, and except as would not, individually or in the
aggregate, have or reasonably be expected to have a Company Material Adverse
Effect, will not: (a) violate, conflict with or result 


 


9

















 


in a breach of: (i) any agreement,
contract, indenture, deed of trust, mortgage, bond, instrument, authorization,
licence or permit to which the Company is a party or by which the Company is
bound; or (ii) any law to which the Company is subject or by which the
Company is bound; (b) give rise to any right of termination, or the
acceleration of any indebtedness, under any such agreement, contract, indenture,
authorization, deed of trust, mortgage, bond, instrument, licence or permit; or
(c) give rise to any rights of first refusal or rights of first offer,
trigger any change in control or influence provisions or any restriction or
limitation under any such agreement, contract, indenture, authorization, deed
of trust, mortgage, bond, instrument, licence or permit, or result in the
imposition of any encumbrance, charge or lien upon any of the Company’s assets.
No authorization, consent or approval of, or filing with, any Governmental
Entity or any court or other authority is necessary on the part of the Company
for the consummation by the Company of its obligations in connection with the
transactions contemplated by this Agreement or for the completion of the transactions
contemplated by this Agreement not to cause or result in any loss of any rights
or assets or any interest therein held by the Company in any material
properties, except for such authorizations, consents, approvals and filings as
to which the failure to obtain or make would not, individually or in the
aggregate, prevent or materially delay consummation of the transactions
contemplated by this Agreement.


 


4.4                               Subsidiaries


 


The Company does not have Subsidiaries or any
interests in any Person, including any rights to acquire any equity interest in
any Person.


 


4.5                               Compliance
with Laws


 


(a)                                  The operations of the
Company have been and are now conducted in compliance with all laws of each
jurisdiction, the laws of which have been and are now applicable to the
operations of the Company and the Company has not received any notice of any
alleged violation of any such laws.


 


(b)                                 The Company is not conflict
with, or in default (including cross defaults) under or in violation of:
(a) its articles or by-laws or equivalent organizational documents; or
(b) any agreement or understanding to which it or by which any of its
properties or assets is bound or affected, except for failures which,
individually or in the aggregate, would not have a Company Material Adverse
Effect.


 


4.6                               Company
Authorizations


 


The Company has obtained all authorizations
necessary for the ownership, operation, development, maintenance, or use of the
material assets of the Company or otherwise in connection with the material
business or operations of the Company as they are currently being conducted and
such authorizations are in full force and effect.  The Company has fully complied with and is in
compliance with all authorizations, except, in each case, for such
non-compliance which, individually or in the aggregate, would not have a
Company Material Adverse Effect.  There
is no action, investigation or proceeding pending or, to the knowledge of the
Company, threatened regarding any of the authorizations.  The Company has not received any notice, whether
written or oral, of revocation or non-renewal of any such authorizations, or of
any intention of any Person to revoke or refuse to renew any of such
authorizations, except in each 


 


10

















 


case, for revocations or non-renewals which,
individually or in the aggregate, would not have a Company Material Adverse
Effect and, to the knowledge of the Company, all such authorizations continue
to be effective in order for the Company to continue to conduct its businesses
as they are currently being conducted. 
No Person other than the Company owns or has any proprietary, financial
or other interest (direct or indirect) in any of the authorizations.


 


4.7                               Capitalization
and Listing


 


(a)                                  The authorized share
capital of the Company consists of 75,000,000 Company Shares. As at the date of
this Agreement there are: (i) 54,590,740 Company Shares validly issued and
outstanding as fully paid and non-assessable shares of the Company;
(ii) outstanding options providing for the issuance of 6,700,000 Common
Shares upon the exercise thereof; and (iii) outstanding warrants providing
for the issuance of 2,361,111 Common Shares upon the exercise thereof. Except
for the options and warrants referred to in this Section 4.7(a),
(x) there are no options, warrants, conversion privileges, calls or other
rights, shareholder rights plans, agreements, arrangements, commitments, or
obligations of the Company to issue or sell any shares of the Company or
securities or obligations of any kind convertible into, exchangeable or
exercisable for or otherwise carrying the right or obligation to acquire any
shares of the Company, and there are no outstanding stock appreciation rights,
phantom equity or similar rights, agreements, arrangements or commitments of
the Company based upon the book value, income or any other attribute of the
Company, and (y) no Person is entitled to any pre-emptive or other similar
right granted by the Company or any of its Subsidiaries. The Company Shares are
listed on the Over-the-Counter Bulletin Board, and are not listed or quoted on
any market other than the Over-the-Counter Bulletin Board.


 


(b)                                 The Company has reserved
for issuance the maximum number of Note Shares and Warrant Shares issuable
pursuant to the Note and the Warrant, respectively, and shall at all times
ensure that a sufficient number of Common Shares are, and shall continue to be,
authorized and reserved for issuance to enable the Company to satisfy its
obligations pursuant to the Note and the Warrant. The Note Shares and Warrant
Shares will, when issued in accordance with the terms of the Note and the
Warrant, respectively, be duly authorized, validly issued, fully paid and
non-assessable and are not and will not be subject to or issued in violation
of, any pre-emptive rights.


 


(c)                                  There are no outstanding
contractual obligations of the Company to repurchase, redeem or otherwise
acquire any Common Shares.


 


(d)                                 No order ceasing or
suspending trading in securities of the Company nor prohibiting the sale of
such securities has been issued and is outstanding against the Company or its
directors, officers or promoters.


 


11
















 


4.8                               Shareholder
and Similar Agreements


 


The Company is not party to any shareholder,
pooling, voting trust or other similar agreement relating to the issued and
outstanding shares in the capital of the Company.


 


4.9                               U.S.
Securities Law Matters


 


The Company has not engaged in any “general
solicitation” or “general advertising” that would render the exemption from the
registration requirements of the U.S. Securities Act afforded by Section 4(2) thereof
or Regulation D promulgated thereunder unavailable in connection with the
offers and sales of securities contemplated by this Agreement.  The Company has also not undertaken any other
offerings of securities which would be subject to integration with the offers
and sales contemplated by this Agreement so as to render such exemptions
unavailable in connection with such offers and sales.


 


4.10                        Reports


 


The Company has filed with all applicable
Governmental Entities true and complete copies of the Company Public Documents
that the Company is required to file therewith. The Company Public Documents at
the time filed: (a) did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances under
which they were made, not misleading, and (b) complied in all material
respects with the requirements of applicable Securities Laws.


 


4.11                        Financial
Statements


 


(a)                                  The audited consolidated
financial statements for the Company as at and for each of the fiscal years
ended on September 30, 2009, September 30, 2008, and September 30,
2007 including the notes thereto and the report by the Company’s auditors
thereon and the interim consolidated financial statements for the Company for
the periods ended December 31, 2009, March 31, 2010 and June 30,
2010 including the notes thereto have been, and all financial statements of the
Company which are publicly disseminated by the Company in respect of any
subsequent periods prior to the Closing Date will be, prepared in accordance
with GAAP applied on a basis consistent with prior periods and all applicable
laws and present fairly, in all material respects, the assets, liabilities
(whether accrued, absolute, contingent or otherwise), consolidated financial
position and results of operations of the Company as of the respective dates
thereof and its results of operations and cash flows for the respective periods
covered thereby (except as may be indicated expressly in the notes thereto).
Such financial statements reflect appropriate and adequate reserves in
accordance with GAAP in respect of contingent liabilities of the Company, if
any, of the Company on a consolidated basis. 
There are no outstanding loans made by the Company to any executive
officer or director of the Company.


 


(b)                                 The management of the
Company has established and maintained a system of disclosure controls and
procedures designed to provide reasonable assurance that information required
to be disclosed by the Company in its annual filings, interim 


 


12

















 


filings or other reports filed or submitted by it
under the applicable laws imposed by Governmental Entities is recorded,
processed, summarized and reported within the time periods specified in such laws
imposed by such Governmental Entities. Such disclosure controls and procedures
include controls and procedures designed to ensure that information required to
be disclosed by the Company in its annual filings, interim filings or other
reports filed or submitted under the applicable laws imposed by Governmental
Entities is accumulated and communicated to the Company’s management, including
its chief executive officers and chief financial officers (or persons
performing similar functions), as appropriate to allow timely decisions
regarding required disclosure.


 


(c)                                  The Company maintains
internal control over financial reporting. 
Such internal control over financial reporting is effective in providing
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
GAAP and includes policies and procedures that: (i) pertain to the
maintenance of records that in reasonable detail accurately and fairly reflect
the transactions and dispositions of the assets of the Company;
(ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with
GAAP, and that receipts and expenditures of the Company are being made only
with authorizations of management and directors of the Company; and
(iii) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of the assets of the
Company that could have a material effect on its financial statements.  To the knowledge of the Company, prior to the
date of this Agreement: (x) there are no significant deficiencies in the
design or operation of, or material weaknesses in, the internal controls over
financial reporting of the Company that are reasonably likely to adversely
affect the ability of Investor to record, process, summarize and report
financial information; and (y) there is no fraud, whether or not material,
that involves management or other employees who have a significant role in the
internal control over financial reporting of the Company.


 


(d)                                 Since September 30,
2009, neither the Company nor, to the Company’s knowledge, any director,
officer, employee, auditor, accountant or representative of the Company has
received or otherwise had or obtained knowledge of any complaint, allegation,
assertion, or claim, whether written or oral, regarding the accounting or
auditing practices, procedures, methodologies or methods of the Company or its
internal accounting controls, including any complaint, allegation, assertion,
or claim that the Company has engaged in questionable accounting or auditing
practices, which has not been resolved to the satisfaction of the audit
committee of the Board.


 


4.12                        Undisclosed
Liabilities


 


Except as disclosed in Schedule 4.12
of the Company Disclosure Letter, the Company does not have any liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise,
except for: (a) liabilities and obligations that are specifically
disclosed on the audited balance sheet of the Company as of September 30,
2009 (for the purposes of this Section 4.12, the 


 


13

















 


“Company Balance Sheet”)
or in the notes thereto; or (b) liabilities and obligations incurred in
the ordinary course of business consistent with past practice since September 30,
2009, that are not and would not, individually or in the aggregate with all
other liabilities and obligations of the Company (other than those disclosed on
the Company Balance Sheet), reasonably be expected to have a Company Material
Adverse Effect, or have a Company Material Adverse Effect, or, as a consequence
of the consummation of the transactions contemplated by this Agreement, have a
Company Material Adverse Effect.  Without
limiting the foregoing, the Company Balance Sheet reflects reasonable reserves
in accordance with GAAP for contingent liabilities relating to pending
litigation and other contingent obligations of the Company except as disclosed
in the Company Disclosure Letter.


 


4.13                        Interest
in Properties and Mineral Rights


 


(a)                                  All of the Company’s
directly and indirectly owned real properties (collectively, and where
material, the “Property”) and all
of the Company’s mineral interests and rights (including any material claims,
concessions, exploration licences, exploitation licences, prospecting permits,
mining leases and mining rights, in each case, either existing under contract,
by operation of law or otherwise) (collectively, and where material, the “Mineral Rights”), are set out in Schedule 4.13(a) of
the Company Disclosure Letter. Other than the Properties and the Mineral Rights
set out in Schedule 4.13(a) of the Company Disclosure Letter,
the Company does not own or have any interest in any real property or any
mineral interests and rights.


 


(b)                                 Except as disclosed on Schedule 4.13(b) of
the Company Disclosure Letter, the Company is the sole legal and beneficial
owner of all right, title and interest in and to the Property and the Mineral
Rights, free and clear of any encumbrances.


 


(c)                                  All of the Mineral Rights
have been properly located and recorded in compliance with applicable law and
are comprised of valid and subsisting mineral claims.


 


(d)                                 The Property and the
Mineral Rights are in good standing under applicable law and, to the knowledge
of the Company, all work required to be performed and filed in respect thereof
has been performed and filed, all Taxes, rentals, fees, expenditures and other
payments in respect thereof have been paid or incurred and all filings in
respect thereof have been made.


 


(e)                                  There is no adverse claim
against or challenge to the title to or ownership of the Property or any of the
Mineral Rights.


 


(f)                                    The Company has the
exclusive right to deal with the Property and all of the Mineral Rights.


 


(g)                                 Except as disclosed in Schedule 4.13(g) of
the Company Disclosure Letter, no person other than the Company has any
interest in the Property or any of the Mineral Rights or the production or
profits therefrom or any royalty in respect thereof or any right to acquire any
such interest.


 


14

















 


(h)                                 There are no back-in
rights, earn-in rights, rights of first refusal or similar provisions or rights
which would affect the Company’s interest in the Property or any of the Mineral
Rights.


 


(i)                                     There are no material
restrictions on the ability of the Company to use, transfer or exploit the
Property or any of the Mineral Rights, except pursuant to the applicable law.


 


(j)                                     The Company has not
received any notice, whether written or oral, from any Governmental Entity of
any revocation or intention to revoke any interest of the Company in any of the
Property or any of the Mineral Rights.


 


(k)                                  The Company has all surface
rights, including fee simple estates, leases, easements, rights of way and
permits or licences operations from landowners or Governmental Entities
permitting the use of land by the Company, and mineral interests that are
required to exploit the development potential of the Property and the Mineral
Rights as contemplated in the Company Public Documents filed on or before the
date hereof and no third party or group holds any such rights that would be
required by the Company to develop the Property or any of the Mineral Rights as
contemplated in the Company Public Documents filed on or before the date
hereof.


 


(l)                                     All mines located in or on
the lands of the Company or lands pooled or unitized therewith, which have been
abandoned by the Company, have been abandoned in accordance with good mining
practices and in compliance with all applicable laws, and all future
abandonment, remediation and reclamation obligations known to the Company as of
the date hereof have been accurately set forth in the Company Public Documents
without omission of information necessary to make the disclosure not misleading


 


4.14                        Operational
Matters


 


Except as would not, individually or in the
aggregate, be reasonably expected to result in a Company Material Adverse
Effect:


 


(a)                                  all rentals, royalties, overriding
royalty interests, production payments, net profits, interest burdens, payments
and obligations due and payable, or performable, as the case may be, on or
prior to the date hereof under, with respect to, or on account of, any direct
or indirect assets of the Company have been: (i) duly paid; (ii) duly
performed; or (iii) provided for prior for the date hereof; and


 


(b)                                 all costs, expenses, and
liabilities payable on or prior to the date hereof under the terms of any
contracts to which the Company is directly or indirectly bound have been
properly and timely paid, except for such expenses that are being currently
paid prior to delinquency in the ordinary course of business.


 


15

















 


4.15                        Employment
Matters


 


(a)                                  Other than as disclosed in Schedule 4.15
of the Company Disclosure Letter, the Company has not entered into any written
or oral agreement or understanding providing for severance or termination
payments to any director, officer or employee in connection with the
termination of their position or their employment as a direct result of a
change in control of the Company.


 


(b)                                 The Company is not
(i) a party to any collective bargaining agreement, or (ii) subject
to any application for certification or, to the knowledge of the Company,
threatened or apparent union-organizing campaigns for employees not covered
under a collective bargaining agreement.


 


(c)                                  The Company is not subject
to any claim for wrongful dismissal, constructive dismissal or any other tort
claim, actual or, to the knowledge of the Company, threatened, or any
litigation actual, or to the knowledge of the Company, threatened, relating to
employment or termination of employment of employees or independent
contractors, except for such claims or litigation which individually or in the
aggregate would not be reasonably to be expected to have a Company Material
Adverse Effect. To the knowledge of the Company, no labour strike, lock-out,
slowdown or work stoppage is pending or threatened against or directly
affecting the Company.


 


(d)                                 The Company has operated in
accordance with all applicable laws with respect to employment and labour,
including employment and labour standards, occupational health and safety,
employment equity, pay equity, workers’ compensation, human rights, labour
relations and privacy and there are no current, pending, or to the knowledge of
the Company, threatened proceedings before any board or tribunal with respect
to any of the areas listed herein, except where the failure to so operate would
not have a Company Material Adverse Effect.


 


4.16                        Absence of
Certain Changes or Events


 


Since September 30, 2009:


 


(a)                                  the Company has conducted
its business in the ordinary course of business and consistent with past
practice;


 


(b)                                 no liability or obligation
of any nature (whether absolute, accrued, contingent or otherwise) which has
had or is reasonably likely to have a Company Material Adverse Effect has been
incurred;


 


(c)                                  there has not been any
event, circumstance or occurrence which has had or is reasonably likely to give
rise to a Company Material Adverse Effect;


 


(d)                                 there has not been any
change in the accounting practices used by the Company;


 


16

















 


(e)                                  except for ordinary course
adjustments to non-executive employees, there has not been any increase in the
salary, bonus, or other remuneration payable to any non-executive employees of
any of the Company;


 


(f)                                    there has not been any
redemption, repurchase or other acquisition of Common Shares by the Company, or
any declaration, setting aside or payment of any dividend or other distribution
(whether in cash, shares or property) with respect to the Common Shares;


 


(g)                                 there has not been a
material change in the level of accounts receivable or payable, inventories or
employees, other than those changes in the ordinary course of business
consistent with past practice;


 


(h)                                 except for the Material
Contracts listed on Schedule 4.24 of the Company Disclosure Letter which
have been entered into or amended since September 30, 2009, there has not
been any entering into, or an amendment of, any Material Contract other than in
the ordinary course of business consistent with past practice;


 


(i)                                     there has not been any
satisfaction or settlement of any claims or liabilities that were not reflected
in the Company’s audited financial statements, other than the settlement of
claims or liabilities incurred in the ordinary course of business consistent
with past practice; and


 


(j)                                     except for ordinary course
adjustments, there has not been any increase in the salary, bonus, or other
remuneration payable to any officers or senior or executive officers of the
Company.


 


4.17                        Litigation


 


Except as disclosed in Schedule 4.17
of the Company Disclosure Letter, there is no claim, action, proceeding or
investigation pending or, to the knowledge of the Company, threatened against
or relating to the Company, the business of the Company or affecting any of
their properties, assets, before or by any Governmental Entity which, if
adversely determined, would have, or reasonably could be expected to have, a
Company Material Adverse Effect or prevent or materially delay the consummation
of the transactions contemplated by this Agreement, nor to knowledge of the
Company are there any events or circumstances which could reasonably be
expected to give rise to any such claim, action, proceeding or investigation.
The Company is not subject to any outstanding order, writ, injunction or decree
which has had or is reasonably likely to have a Company Material Adverse Effect
or which would prevent or materially delay consummation of the transactions
contemplated by this Agreement.


 


4.18                        Taxes


 


(a)                                  Except as disclosed in Schedule
4.18, the Company has duly and in a timely manner made or prepared all Tax
Returns required to be made or prepared by it, and duly and in a timely manner
filed all Tax Returns required to be filed by it with the appropriate
Governmental Entity, such Tax Returns were complete and 


 


17

















 


correct in all material respects and the Company
has paid all Taxes, including instalments on account of Taxes for the current
year required by applicable law, which are due and payable by it whether or not
assessed by the appropriate Governmental Entity and the Company has provided
adequate accruals in accordance with GAAP in the most recently published
financial statements of the Company for any Taxes of the Company for the period
covered by such financial statements that have not been paid whether or not
shown as being due on any Tax Returns. Since such publication date, no material
liability in respect of Taxes not reflected in such statements or otherwise
provided for has been assessed, proposed to be assessed, incurred or accrued,
other than in the ordinary course of business.


 


(b)                                 The Company has duly and
timely withheld all Taxes and other amounts required by law to be withheld by
it (including Taxes and other amounts required to be withheld by it in respect
of any amount paid or credited or deemed to be paid or credited by it to or for
the benefit of any Person) and has duly and timely remitted to the appropriate
Governmental Entity such Taxes or other amounts required by law to be remitted
by it.


 


(c)                                  The Company has duly and
timely collected all amounts on account of any sales, use or transfer Taxes,
including goods and services, harmonized sales, provincial and territorial
taxes and state and local taxes, required by law to be collected by it and has
duly and timely remitted to the appropriate Governmental Entity such amounts
required by law to be remitted by it.


 


(d)                                 The Company has not made,
prepared and/or filed any elections, designations or similar filings relating
to Taxes or entered into any agreement or other arrangement in respect of Taxes
or Tax Returns that has effect for any period ending after the Effective Date.


 


(e)                                  There are no proceedings,
investigations, audits or claims now pending or threatened against the Company
in respect of any Taxes and there are no matters under discussion, audit or
appeal with any Governmental Entity relating to Taxes.


 


4.19                        Books and
Records


 


The corporate records and minute books of the
Company have been maintained in accordance with all applicable laws, and the
minute books of the Company are complete and accurate in all material
respects.  The corporate minute books for
the Company contain minutes of all meetings and resolutions of the directors
and securityholders held.  The financial
books and records and accounts of the Company in all material respects:
(a) have been maintained in accordance with good business practices and in
accordance with GAAP and with the accounting principles generally accepted in
the country of domicile of each such entity, on a basis consistent with prior
years; and (b) are stated in reasonable detail and accurately and fairly
reflect the transactions and dispositions of assets of the Company.


 


18

















 


4.20                        Insurance


 


(a)                                  The Company has in place
reasonable and prudent insurance policies appropriate for its size, nature and
stage of development. All premiums payable prior to the date hereof under such
policies of insurance have been paid and the Company has not failed to make a
claim thereunder on a timely basis.


 


(b)                                 Each of such policies and
other forms of insurance is in full force and effect on the date hereof and
shall (or comparable replacement or substitutions therefore shall) be kept in
full force and effect by the Company through the Effective Date. No written (or
to the knowledge of the Company other) notice of cancellation or termination
has been received by the Company with respect to any such policy.


 


4.21                        Non-Arm’s
Length Transactions


 


Except as disclosed in the Company’s Annual
Report on Form 10-K for the year ended September 30, 2009, as
amended, there are no current contracts, commitments, agreements, arrangements
or other transactions (including relating to indebtedness by the Company)
between the Company on the one hand, and any (a) officer or director of
the Company, (b) any holder of record or, to the knowledge of the Company,
beneficial owner of five percent or more of the voting securities of the
Company, or (c) any affiliate or associate of any officer, director or
beneficial owner, on the other hand.


 


4.22                        Environmental


 


Except for any matters that, individually or in
the aggregate, would not have or would not reasonably be expected to have a
Company Material Adverse Effect:


 


(a)                                  all facilities and
operations of the Company have been conducted, and are now, in compliance with
all Environmental Laws;


 


(b)                                 the Company is in
possession of, and in compliance with, all Environmental Permits that are
required to own, lease and operate the Property and Mineral Rights and to
conduct its business as it is currently being conducted;


 


(c)                                  no environmental,
reclamation or closure obligation, demand, notice, work order or other
liabilities presently exist with respect to any portion of any currently or
formerly owned, leased, used or otherwise controlled property, interests and
rights or relating to the operations and business of the Company and, to the
knowledge of the Company, there is no basis for any such obligations, demands,
notices, work orders or liabilities to arise in the future as a result of any
activity in respect of such property, interests, rights, operations and
business;


 


(d)                                 the Company is not subject
to any proceeding, application, order or directive which relates to
environmental, health or safety matters, and which may require any material
work, repairs, construction or expenditures;


 


(e)                                  to the knowledge of the
Company, there are no changes in the status, terms or conditions of any
Environmental Permits held by the Company or any renewal, 


 


19

















 


modification, revocation, reassurance, alteration,
transfer or amendment of any such environmental approvals, consents, waivers,
permits, orders and exemptions, or any review by, or approval of, any
Governmental Entity of such environmental approvals, consents, waivers,
permits, orders and exemptions that are required in connection with the
execution or delivery of this Agreement, the consummation of the transactions
contemplated herein or the continuation of the business of the Company
following the Effective Date;


 


(f)                                    the Company has made
available to Investor all material audits, assessments, investigation reports,
studies, plans, regulatory correspondence and similar information with respect
to environmental matters; and


 


(g)                                 to the knowledge of the
Company, the Company is not subject to any past or present fact, condition or
circumstance that could reasonably be expected to result in liability under any
Environmental Laws that would individually or in the aggregate, constitute a
Company Material Adverse Effect.


 


4.23                        Restrictions
on Business Activities


 


There is no agreement, judgement, injunction,
order or decree binding upon the Company that has or could reasonably be
expected to have the effect of prohibiting, restricting or materially impairing
any business practice of the Company, any acquisition of property by the
Company or the conduct of business by the Company as currently conducted
(including following the transaction contemplated by this Agreement) other than
such agreements, judgements, injunctions, orders or decrees which would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.


 


4.24                        Material
Contracts


 


Schedule 4.24 of the Company Disclosure Letter sets forth all
Material Contracts of the Company.  The
Company has performed in all material respects all respective obligations
required to be performed by them to date under the Material Contracts.  The Company is not in breach or default under
any Material Contract to which it is a party or bound, nor does the Company
have knowledge of any condition that with the passage of time or the giving of
notice or both would result in such a breach or default, except in each case
where any such breaches or defaults would not, individually or in the
aggregate, reasonably be expected to result in, or result in, a Company
Material Adverse Effect. The Company does not know of, or has not received
written notice of, any breach or default under (nor, to the knowledge of the
Company, does there exist any condition which with the passage of time or the
giving of notice or both would result in such a breach or default under) any
such Material Contract by any other party thereto except where any such
violation or default would not, individually or in the aggregate, reasonably be
expected to result in, or result in, a Company Material Adverse Effect.  Prior to the date hereof, the Company has
made available to Investor true and complete copies of all of the Material
Contracts of the Company.  All Material
Contracts are legal, valid, binding and in full force and effect and are
enforceable by the Company in accordance with their respective terms (subject
to bankruptcy, insolvency and other applicable laws affecting creditors’ rights
generally, and to general principles of equity) and are the product of fair and
arms’ length negotiations between the parties thereto.


 


20
















 


4.25                        Relationships
with Customers, Suppliers, Distributors and Sales Representatives


 


The Company has not received any written (or to
the knowledge of the Company other) notice that any customer, supplier,
distributor or sales representative intends to cancel, terminate or otherwise
modify or not renew its relationship with the Company, and, to the knowledge of
the Company, no such action has been threatened, which, in either case,
individually or in the aggregate, would reasonably be expected to have a Company
Material Adverse Effect.


 


4.26                        No
Expropriation


 


No property or asset of the Company (including
any Property or Mineral Rights) has been taken or expropriated by any
Governmental Entity nor has any notice or proceeding in respect thereof been
given or commenced nor, to the knowledge of the Company, is there any intent or
proposal to give any such notice or to commence any such proceeding.


 


4.27                        Perfection
of Security Interest


 


Upon recording of the deeds of trust referenced in Section 6.4
(the “Deeds of Trust”) in applicable
recording offices (the “Recording Offices”)
and the proper indexing thereof, the Deeds of Trust will create valid first
priority mortgage liens in favour of Investor on all of the Mineral Claims. The
recording and proper indexing of the Deeds of Trust in the Recording Offices
are the only filing or recording necessary to give constructive notice to
subsequent purchasers and mortgagees of the Mineral Claims of the liens created
by the Deeds of Trust.


 


ARTICLE 5

CONDITIONS PRECEDENT FOR RELEASE OF HOLDBACK AMOUNT


 


5.1                               Investor’s
Conditions Precedent for Release of Holdback Amount


 


Investor’s obligation to advance the Holdback
Amount on the Holdback Date shall be subject to the satisfaction of the
following conditions:


 


(a)                                  at and as of the Holdback
Date, all of the representations and warranties of the Company made in or
pursuant to this Agreement: (a) that are qualified by a reference to
Company Material Adverse Effect or materiality shall be true and correct in all
respects; and (b) that are not qualified by a reference to Company
Material Adverse Effect or materiality shall be true and correct in all
material respects, and Investor shall have received a certificate of the
Company, signed by a senior officer (without personal liability), certifying
the foregoing after due inquiry;


 


(b)                                 the Company shall have
observed and performed its obligations in the Agreement in all material
respects to the extent that such obligations were to have been observed or
performed by the Company at or prior to the Holdback Date (without giving
effect to, applying or taking into consideration any materiality qualification
already contained in such obligation) and Investor shall have received a
certificate of the Company, signed by a senior officer (without personal
liability), certifying the foregoing after due inquiry; and


 


21

















 


(c)                                  the covenants and
obligations of the Company contained in Sections 6.4(b) and 6.4(c) shall
have been fully satisfied.


 


If any of the foregoing conditions in this Section 5.1
has not been fulfilled by September 17, 2010, Investor shall not be
required to advance any further funds, including the Holdback Amount, to the
Company and may exercise any and all rights and remedies available to it,
including rights to recover damages for the breach of any representation,
warranty, covenant or condition contained in this Agreement and the Collateral
Documents.


ARTICLE 6

COVENANTS


 


6.1                               Actions to
Satisfy Conditions Precedent to Release of Holdback Amount


 


The Company shall take reasonable commercial
efforts to ensure satisfaction of each of the conditions set forth in Article 5.


 


6.2                               Consents,
Approvals and Authorizations


 


The Company covenants that it shall prepare,
file and diligently pursue all necessary consents, approvals and authorizations
of any Person and make such necessary filings, as are required to be obtained
under applicable law with respect to this Agreement and the transactions
contemplated hereby. The Company shall keep Investor informed regarding the
status of such approvals, and Investor, its representatives and counsel shall
have the right to participate in any discussions with any other applicable
regulatory authority and to provide input into any applications for approval and
related correspondence which input will be incorporated by the Company, acting
reasonably. On the date all such consents, approvals and authorizations have
been obtained by the Company and all such filings have been made by the
Company, the Company shall notify Investor of same.


 


6.3                               Use of
Proceeds


 


The Company acknowledges and agrees that the
funds representing the Aggregate Price are to be used exclusively for general
corporate purposes and the Company shall not declare or pay any dividend or
repurchase or seek to repurchase any of the Company’s securities.


 


6.4                               Post-Closing
Deliveries


 


(a)                                  On or before September 3,
2010, the Company shall deliver to Investor originally executed copies
of the Note and the Warrant.


 


(b)                                 On or before September 9,
2010, the Company shall deliver to Investor:


 


(i)                                     one or more opinions from
counsel to the Company as to, among other things, existence, capacity,
authorization, valid issuance and enforceability of the Note and the Warrant,
the enforceability of this Agreement, that the Agreement, the Note and the
Warrant do not conflict with the Company’s constating documents, resolutions,
any contract to which it is a party or applicable law, no additional consents
are required to perfect the security interest and the valid authorization for
the issuance of the Note Shares and 


 


22

















 


Warrant
Shares, in form and substance acceptable to Investor, acting reasonably; and


 


(ii)                                  an opinion from counsel to
the Company dated not later than September 9, 2010 as to, among other
things, the valid creation and perfection of the security interest granted
under the General Security Agreement.


 


(c)                                  On or before September 17,
2010, the Company shall:


 


(i)                                     deliver to Investor
searches of all financing statements, statements of amendment, notices of
federal tax liens, severance tax liens, producers lien or pending litigation at
the secretary of state level and the relevant county level; and


 


(ii)                                  with respect to the Mineral
Interests,


 


(A)                              have prepared, executed,
delivered and registered mortgages or deeds of trust, in form and substance
reasonably satisfactory to Investor to create and perfect the security interest
granted to Investor in such Mineral Interests;


 


(B)                                have prepared and filed all
necessary UCC filings necessary to perfect the security interest in the
as-extracted collateral related thereto,


 


(C)                                have made all applicable
water filings and all other filings and registrations that are customarily made
to perfect the security interest in such Mineral Interests;


 


(D)                               have entered into a deposit
account control agreement with Wachovia Bank and Investor with respect to
account numbers 2000041563782 and 2000041563630 with Wachovia; and


 


(E)                                 deliver to Investor an
opinion from counsel to the Company dated not later than September 17,
2010 as to, among other things, the valid creation and perfection of the
security interests referenced in this Section 6.5(c)(ii).


 


6.5                               Information
Rights and Reporting Obligations


 


(a)                                  The Company shall keep
Investor reasonably informed about the Company’s efforts with respect to the
exploration, evaluation and future development of the Project including,
without limitation, any feasibility or pre-feasibility study, work programme
and/or budget for the Project and shall, at Investor’s request, provide copies
of all technical and financial information and each such feasibility study,
work programme and/or budget and supporting documents for same and other
relevant documents relating to the Project. Investor shall have the right from
time to time on reasonable notice to visit the Project and also have 


 


23

















 


the
right to consult with key personnel of the Company from time to time, in each
case at Investor’s cost. Without limiting the foregoing:


 


(i)                                     the Company shall deliver
to Investor, (A) within 90 days of each financial year end of the Company,
one copy of its annual report on Form 10-K and (B) within 60 days of
each financial quarter of the Company, one copy of its quarterly report on Form 10-Q;


 


(ii)                                  prior to the end of each
financial year end of the Company, the Company shall deliver to Investor a copy
of the Company’s business plan for the following fiscal year;


 


(iii)                               the Company shall provide
such other financial and business information as Investor may reasonably
request from time to time; and


 


(iv)                              at Investor’s request,
representatives of Investor may conduct one or more site visits at the Project,
which visit will provide an update with respect to, among other things:


 


(A)                              project drilling results
and scope of the relevant feasibility studies;


 


(B)                                the status of required
permits for drilling and plan to procure permits (including environmental,
explosives, water rights and access, land use, construction/operating) to
implement project development/construction/ operation;


 


(C)                                project power consumption,
access to local grid and alternatives; and


 


(D)                               any other project related
technical, environmental, government and public relations information and
updates.


 


ARTICLE 7

INDEMNIFICATION


7.1                               General
Indemnification


 


(a)                                  The Company shall indemnify
and save harmless Investor, its directors, officers, agents, employees and
shareholders (collectively referred to as the “Purchaser
Indemnified Parties”) from and against all claims, whether or not
arising due to third party claims, which may be made or brought against the
Purchaser Indemnified Parties, or which they may suffer or incur, directly or
indirectly, as a result of or in connection with or relating to:


 


(i)                                     any non-fulfilment or
breach of any covenant or agreement on the part of the Company contained in
this Agreement or in any certificate or other document furnished by or on
behalf of the Company pursuant to this Agreement; and


 


24

















 


(ii)                                  any misrepresentation or
any incorrectness in or breach of any representation or warranty of the Company
contained in this Agreement or in any certificate or other document furnished
by or on behalf of the Company pursuant to this Agreement, disregarding any
knowledge, materiality or other qualification contained in any such
representation or warranty.


 


7.2                               Indemnification
Procedure


 


(a)                                  Promptly after receipt by
an indemnified party under Section 7.1 of notice of the commencement of
any action, such indemnified party shall, if a claim in respect thereof is to
be made against any indemnifying party under Section 7.1, notify the
indemnifying party of the commencement thereof; provided, however, that failure
to so notify the indemnifying party shall not affect an indemnifying party’s
obligations hereunder, except to the extent that the indemnifying party is
materially prejudiced by such failure. 
The indemnifying party shall be entitled to appoint counsel of the
indemnifying party’s choice at the indemnifying party’s expense to represent
the indemnified party in any action for which indemnification is sought (in
which case the indemnifying party shall not thereafter be responsible for the
fees and expenses of any separate counsel retained by the indemnified party or
parties except as set forth below); provided, however, that such counsel shall
be reasonably satisfactory to the indemnified party.  Notwithstanding the indemnifying party’s
election to appoint counsel to represent the indemnified party in an action,
the indemnified party shall have the right to employ separate counsel
(including local counsel), and the indemnifying party shall bear the reasonable
fees, costs and expenses of such separate counsel if (i) the use of
counsel chosen by the indemnifying party to represent the indemnified party
would present such counsel with a conflict of interest, (ii) the actual or
potential defendants in, or targets of, any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defences available to it
and/or other indemnified parties which are different from or additional to
those available to the indemnifying party, (iii) the indemnifying party
shall not have employed counsel reasonably satisfactory to the indemnified
party to represent the indemnified party within a reasonable time after notice
of the institution of such action, or (iv) the indemnifying party shall
authorize the indemnified party to employ separate counsel at the expense of
the indemnifying party.


 


(b)                                 No indemnifying party
shall, without the prior express written consent of the indemnified party,
consent to any judgment or effect any settlement of any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such action, suit or proceeding.


 


25

















 


ARTICLE 8

GENERAL


8.1                               Assignment


 


This Agreement shall not be assignable by the
Company without the prior written consent of Investor. Investor may assign this
Agreement in whole or in part to any Affiliate or other assignee of the Note
without the prior written consent of the Company, but shall notify the Company
in advance of any such assignment, and provided that such assignee agrees to be
bound by this Agreement.


 


8.2                               Survival


 


Each Party hereto acknowledges that the
representations, warranties and agreements made by it herein are made with the
intention that they may be relied upon by the other Parties. The Parties
further agree that the representations, warranties and agreements shall survive
the transactions contemplated by this Agreement and shall continue in full
force and effect notwithstanding any subsequent disposition by Investor of any
Common Shares or any termination of this Agreement. This Agreement shall be
binding upon and shall enure to the benefit of the Parties hereto, their
respective successors, assigns and legal representatives.


 


8.3                               Currency


 


All references to dollars in this Agreement are
references to U.S. dollars.


 


8.4                               Further
Assurances


 


Each of the Parties shall promptly do, make,
execute, deliver, or cause to be done, made, executed or delivered, all such
further acts, documents and things as the other Parties may reasonably require
from time to time for the purpose of giving effect to this Agreement and shall
use reasonable efforts and take all such steps as may be reasonably within its
power to implement to their full extent the provisions of this Agreement.


 


8.5                               Governing
Law


 


This Agreement shall be governed by and construed
in accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein.


 


8.6                               Public
Notices/Press Releases


 


(a)                                  All public notices to third
parties and all other publicity concerning the transactions contemplated by
this Agreement shall be jointly planned by the Parties and no Party shall act
unilaterally in this regard without the prior written approval of the other
Party, such approval not to be unreasonably withheld, except where disclosure
is required by law or by the applicable regulations or policies of any
regulatory agency of competent jurisdiction or any stock exchange in
circumstances where prior consultation with the other Parties is not
practicable.


 


26

















 


(b)                                 The Company covenants that
it shall not make, and shall cause not to be made by any of its Affiliates, any
press releases, public announcements or other public or third party disclosures
naming Investor or its parent company or any other Affiliates of Investor, or
otherwise in respect of the group of companies to which Investor belongs, or
describing this Agreement or any other agreement between Investor and the
Company without the prior written consent of Investor. This obligation will
continue in full force and effect following completion of the transactions
contemplated by this Agreement.


 


8.7                               Notices


 


All notices, requests, demands and other
communications under this Agreement (in this Section referred to as “Notice”) shall be deemed to have been duly
given and made if in writing and if served by personal delivery upon the Party
for whom it is intended or delivered, or if sent by facsimile transmission or E-mail, upon confirmation that such
transmission has been properly effected, to the Person at the address set forth
below, or such other address as may be designated in writing hereafter, in the
same manner, by such Person. The date of receipt of any such notice or other
communication if delivered personally shall be deemed to be the date of delivery
thereof, or if sent by facsimile transmission or E-mail, the date of such
transmission if sent on a business day, failing which it shall be deemed to
have been received on the next business day.


 


(a)                                  in the case of a Notice to
the Company at:


 


American Lithium Minerals, Inc.

2850 W. Horizon Ridge Parkway, Suite 200

Henderson, NV  89052


 


	
  Attention:

  	
  Hugh Aird

  
	
  Fax:

  	
  (702) 430-4507

  
	
  E-mail:

  	
  haird@americanlithium.com

  



 


(b)                                 in the case of a Notice to
Investor at:


 


2245393 Ontario Inc. 

c/o Osler, Hoskin & Harcourt LLP

Suite 6100, 1 First Canadian Place

Toronto, ON  M5X 1B8


 


	
  Attention:

  	
  Emmanuel Pressman

  
	
  Fax:

  	
  (416) 862-6666

  
	
  E-mail:

  	
  epressman@osler.com

  



 


8.8                               Counterparts


 


This Agreement may be signed by facsimile or by
E-mailed scanned copy and in counterparts and each such counterpart shall
constitute an original document and such counterparts, taken together, shall
constitute one and the same instrument.


 


[Remainder
of this page intentionally left blank]


 


27

















 


IN WITNESS WHEREOF the Parties hereto have
executed this Agreement as of the date first above written.


 


	
   

  	
  2245393
  ONTARIO INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  AMERICAN LITHIUM
  MINERALS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title: