Lithium Exploration Group, Inc. - Exhibit 10.5 - Filed by newsfilecorp.com






GUARANTY AND PLEDGE AGREEMENT 

                         GUARANTY
AND PLEDGE AGREEMENT (this “Agreement”), dated as of June 29, 2011,
among Lithium Exploration Group, Inc., a Nevada corporation (the
“Company”), Alexander Walsh (the “Pledgor”), and Hagen Investments
Ltd., a limited liability company formed under the laws of [ ] (the
“Pledgee”). 

W I T N E S S
E T H: 

                         WHEREAS,
the Company and the Pledgee are parties to that certain Securities Purchase
Agreement, of even date herewith (the “Purchase Agreement”), pursuant to
which the Company has or will issue 12% senior convertible debentures in the
aggregate principal amount of $1,500,000. 

                         WHEREAS,
as a material inducement to the Pledgee to enter into the Purchase Agreement,
the Pledgee has required and the Pledgor has agreed (i) to unconditionally
guarantee the timely and full satisfaction of all obligations of the Company,
whether matured or unmatured, now or hereafter existing or created and becoming
due and payable (the “Obligations”) to the Pledgee, their successors,
endorsees, transferees or assigns under the Transaction Documents (as defined in
the Purchase Agreement) and under those certain Debentures in the aggregate
amount of $1,500,000, to the extent of the Collateral (as defined in Section 5
hereof), and (ii) to grant to the Pledgee, their successors, endorsees,
transferees or assigns a security interest in the number of shares of Common
Stock owned by the Pledgor as set forth below the Pledgor’s signature on the
signature page hereto (collectively, the “Shares”), as collateral
security for Obligations. Terms used and not defined herein shall have the
meaning ascribed to them in the Purchase Agreement. 

                         NOW,
THEREFORE, in consideration of the foregoing recitals, and the mutual covenants
contained herein, the parties hereby agree as follows: 

                         1.        
 Guaranty. To the extent of the Collateral, the Pledgor hereby
absolutely, unconditionally and irrevocably guarantees to the Pledgee, their
successors, endorsees, transferees and assigns the due and punctual performance
and payment of the Obligations owing to the Pledgee, their successors,
endorsees, transferees or assigns when due, all at the time and place and in the
amount and manner prescribed in, and otherwise in accordance with, the
Transaction Documents, regardless of any defense or set-off counterclaim which
the Company or any other person may have or assert, and regardless of whether or
not the Pledgee or anyone on behalf of the Pledgee shall have instituted any
suit, action or proceeding or exhausted its remedies or taken any steps to
enforce any rights against the Company or any other person to compel any such
performance or observance or to collect all or part of any such amount, either
pursuant to the provisions of the Transaction Documents or at law or in equity,
and regardless of any other condition or contingency. The Pledgor shall have no
obligation whatsoever to the Pledgee beyond the Collateral pledged for the
Obligations set forth herein. 




                         2.         
Waiver of Demand. The Pledgor hereby unconditionally: (i) waives any
requirement that the Pledgee, in the event of a breach in any material respect
by the Company of any of its representations or warranties in the Transaction
Documents, first make demand upon, or seek to enforce remedies against, the
Company or any other person before demanding payment of enforcement hereunder;
(ii) covenants that this Agreement will not be discharged except by complete
performance of all the Obligations to the extent of the Collateral; (iii) agrees
that this Agreement shall remain in full force and effect without regard to, and
shall not be affected or impaired, without limitation, by, any invalidity,
irregularity or unenforceability in whole or in part of the Transaction
Documents or any limitation on the liability of the Company thereunder, or any
limitation on the method or terms of payment thereunder which may now or
hereafter be caused or imposed in any manner whatsoever; and (iv) waives
diligence, presentment and protest with respect to, and notice of default in the
performance or payment of any Obligation by the Company under or in connection
with the Transaction Documents. 

                         3.          
Release. The obligations, covenants, agreements and duties of the Pledgor
hereunder shall not be released, affected or impaired by any assignment or
transfer, in whole or in part, of the Transaction Documents or any Obligation,
although made without notice to or the consent of the Pledgor, or any waiver by
the Pledgee, or by any other person, of the performance or observance by the
Company or the Pledgor of any of the agreements, covenants, terms or conditions
contained in the Transaction Documents, or any indulgence in or the extension of
the time or renewal thereof, or the modification or amendment (whether material
or otherwise), or the voluntary or involuntary liquidation, sale or other
disposition of all or any portion of the stock or assets of the Company or the
Pledgor, or any receivership, insolvency, bankruptcy, reorganization, or other
similar proceedings, affecting the Company or the Pledgor or any assets of the
Company or the Pledgor, or the release of any proper from any security for any
Obligation, or the impairment of any such property or security, or the release
or discharge of the Company or the Pledgor from the performance or observance of
any agreement, covenant, term or condition contained in or arising out of the
Transaction Documents by operation of law, or the merger or consolidation of the
Company, or any other cause, whether similar or dissimilar to the foregoing.


                         4.        
   Subrogation. 

                                        (a)      Unless
and until complete performance of all the Obligations to the extent of the
Collateral, the Pledgor shall not be entitled to exercise any right of
subrogation to any of the rights of the Pledgee against the Company or any
collateral security or guaranty held by the Pledgee for the payment or
performance of the Obligations, nor shall the Pledgor seek any reimbursement
from the Company in respect of payments made by the Pledgor hereunder. 

                                        (b)      In
the extent that the Pledgor shall become obligated to perform or pay any sums
hereunder, or in the event that for any reason the Company is now or shall
hereafter become indebted to the Pledgor, the amount of such sum shall at all
times be subordinate as to lien, time of payment and in all other respects, to
the amounts owing to the Pledgee under the Transaction Documents and the Pledgor
shall not enforce or receive payment thereof until all Obligations due to the
Pledgee under the Transaction have been performed or paid. Nothing herein
contained is intended or shall be construed to give to the Pledgor any right
of subrogation in or under the Transaction Documents, or any
right to participate in any way therein, or in any right, title or interest in
the assets of the Pledgee. 

2 




                         5.       
     Security. As collateral security for the
punctual payment and performance, when due, by the Company of all the
Obligations, the Pledgor hereby pledges with, hypothecates, transfers and
assigns to the Pledgee all of the Shares and all proceeds, shares and other
securities received, receivable or otherwise distributed in respect of or in
exchange for the Shares, including, without limitation, any shares and other
securities into which such Shares may be convertible or exchangeable
(collectively, the “Additional Collateral” and together with the Shares,
the “Collateral”). Simultaneously herewith, the Pledgor shall deliver to
the Pledgee the certificate(s) representing the Shares, stamped with a bank
medallion guarantee, along with a stock transfer power duly executed in blank by
the Pledgor, to be held by the Pledgee as security. Any Collateral received by
the Pledgor on or after the date hereof shall be immediately delivered to the
Pledgee together with any executed stock powers or other transfer documents
requested by the Pledgee, which request may be made at any time prior to the
date when the Obligations shall have been paid and otherwise satisfied in full.


                         6.       
    Voting Power, Dividends, Etc. and other Agreements.


                                        (a)      Unless
and until an Event of Default (as set forth in Section 7 hereof) has occurred,
the Pledgor shall be entitled to: 

     (i)       
 Exercise all voting and/or consensual powers pertaining to the Collateral,
or any part thereof, for all purposes; 

     (ii)       
Receive and retain dividends paid with respect to the Collateral; and 

     (iii)     
Receive the benefits of any income tax deductions available to the Pledgor as a
shareholder of the Company. 

                                        (b)     
The Pledgor agrees that it will not sell, assign, transfer, pledge, hypothecate,
encumber or otherwise dispose of the Collateral. 

                                        (c)      The
Pledgor and the Company jointly and severally agree to pay all costs including
all reasonable attorneys’ fees and disbursements incurred by the Pledgee in
enforcing this Agreement in accordance with its terms. 

                         7.        
    Default and Remedies. 

                                        (a)     
For the purposes of this Agreement, “Event of Default” shall mean: 

     (i)        
default in or under any of the Obligations after the expiration, without cure,
of any applicable cure period; 

     (ii)       
a breach in any material respect by the Company of any of its representations or
warranties in the Transaction Documents; or 

3 




                         (iii)      a
breach in any material respect by the Pledgor of any of its representations or
warranties in this Agreement. 

                                        (b)     
the Pledgee shall have the following rights upon any Event of Default: 

                         (i)        
the rights and remedies provided by the Uniform Commercial Code as adopted by
the State of New York (the “UCC”) (as said law may at any time be
amended); 

                         (ii)       
the right to receive and retain all dividends, payments and other distributions
of any kind upon any or all of the Collateral; 

                         (iii)      the
right to cause any or all of the Collateral to be transferred to its own name or
to the name of its designee and have such transfer recorded in any place or
places deemed appropriate by the Pledgee; and 

                         (iv)      the
right to sell, at a public or private sale, the Collateral or any part thereof
for cash, upon credit or for future delivery, and at such price or prices in
accordance with the UCC (as such law may be amended from time to time). Upon any
such sale the Pledgee shall have the right to deliver, assign and transfer to
the purchaser thereof the Collateral so sold. The Pledgee shall give the Pledgor
not less than ten (10) days’ written notice of its intention to make any such
sale. Any such sale, shall be held at such time or times during ordinary
business hours and at such place or places as the Pledgee may fix in the notice
of such sale. The Pledgee may adjourn or cancel any sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for the
sale, and such sale may be made at any time or place to which the same may be so
adjourned. In case of any sale of all or any part of the Collateral upon terms
calling for payments in the future, any Collateral so sold may be retained by
the Pledgee until the selling price is paid by the purchaser thereof, but the
Pledgee shall incur no liability in the case of the failure of such purchaser to
take up and pay for the Collateral so sold and, in the case of such failure,
such Collateral may again be sold upon like notice. The Pledgee, however,
instead of exercising the power of sale herein conferred upon them, may proceed
by a suit or suits at law or in equity to foreclose the security interest and
sell the Collateral, or any portion thereof, under a judgment or decree of a
court or courts of competent jurisdiction, the Pledgor having been given due
notice of all such action. The Pledgee shall incur no liability as a result of a
sale of the Collateral or any part thereof. All proceeds of any such sale, after
deducting the reasonable expenses and reasonable attorneys’ fees incurred in
connection with such sale, shall be applied in reduction of the Obligations, and
the remainder, if any, shall be paid to the Pledgor. 

                              8.       
    Application of Proceeds; Release. The proceeds of any
sale or enforcement of or against all or any part of the Collateral, and any
other cash or collateral at the time held by the Pledgee hereunder, shall be
applied by the Pledgee first to the payment of the reasonable costs of any such
sale or enforcement, then to reimburse the Pledgee for any damages, costs or expenses incurred by the Pledgee as a result
of an Event of Default, then to the payment of the principal amount or stated
valued (as applicable) of, and interest or dividends (as applicable) and any
other payments due in respect of, the Obligations. The remainder, if any, shall
be paid to the Pledgor. As used in this Agreement, “proceeds” shall mean
cash, securities and other property realized in respect of, and distributions in
kind of, the Collateral, including any thereof received under any
reorganization, liquidation or adjustment of debt of any issuer of securities
included in the Collateral. 

4 




                         9.        
   Representations and Warranties. 

                                        (a)      The
Pledgor hereby represents and warrants to the Pledgee that: 

     (i)   
   the Pledgor has full power and authority and legal right to
pledge the Collateral to the Pledgee pursuant to this Agreement and this
Agreement constitutes a legal, valid and binding obligation of the Pledgor,
enforceable in accordance with its terms. 

     (ii)      the
execution, delivery and performance of this Agreement and other instruments
contemplated herein will not violate any provision of any order or decree of any
court or governmental instrumentality or of any mortgage, indenture, contract or
other agreement to which the Pledgor is a party or by which the Pledgor and the
Collateral may be bound, and will not result in the creation or imposition of
any lien, charge or encumbrance on, or security interest in, any of the
Pledgor’s properties pursuant to the provisions of such mortgage, indenture,
contract or other agreement. 

     (iii)     the
Pledgor is the sole record and beneficial owner of all of the Shares; and 

     (iv)     the
Pledgor owns the Collateral free and clear of all Liens. 

                                        (b)     
The Company represents and warrants to the Pledgee that: 

     (i)    
   it has no knowledge that any of the representations or
warranties of the Pledgor herein are incorrect or false in any material respect;


     (ii)      
all of the Shares were validly issued, fully paid and non-assessable; and 

     (iii)     
the Pledgor is the record holder of the Shares. 

                              10.      
No Waiver; No Election of Remedies. No failure on the part of the Pledgee
to exercise, and no delay in exercising, any right, power or remedy hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise by
the Pledgee of any right, power or remedy preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. The remedies herein
provided are cumulative and are not exclusive of any remedies provided by law.
In addition, the exercise of any right or remedy of the Pledgee at law or equity or under this Agreement or any of the documents shall
not be deemed to be an election of Pledgee’s rights or remedies under such
documents or at law or equity. 

5 




                              11.     
Termination. This Agreement shall terminate on the date on which all
Obligations have been performed, satisfied, paid or discharged in full. 

                              12.     
Further Assurances. The parties hereto agree that, from time to time upon
the written request of any party hereto, they will execute and deliver such
further documents and do such other acts and things as such party may reasonably
request in order fully to effect the purposes of this Agreement. The Pledgee
acknowledge that they are aware that Pledgor shall have no obligations
whatsoever to the Pledgee beyond the Collateral pledged for the Obligations set
forth herein, and no request for further assurance may or shall increase such
Obligations. 

                              13.      Miscellaneous.


                                        (a)     
Modification. This Agreement contains the entire understanding between
the parties with respect to the subject matter hereof and specifically
incorporates all prior oral and written agreements relating to the subject
matter hereof. No portion or provision of this Agreement may be changed,
modified, amended, waived, supplemented, discharged, canceled or terminated
orally or by any course of dealing, or in any manner other than by an agreement
in writing, signed by the party to be charged. 

                                        (b)     
Notice. 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 (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section prior to 6:30 p.m. (New York City
time) on a Business Day (as defined in the Purchase Agreement), (ii) the
Business Day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Agreement later than 6:30 p.m. (New York City time) on any date and earlier than
11:59 p.m. (New York City time) on such date, (iii) the Business Day following
the date of mailing, if sent by nationally recognized overnight courier
services, or (iv) upon actual receipt by the party to whom such notice is
required to be given. The address for such notices and communications shall be
as follows: 

	 	If to the Company: 	Lithium Exploration Group, Inc. 
	 	  	3200 N. Hayden Road, Suite 300 
	 	  	Scottsdale, AZ 85251 
	 	  	Facsimile No.: (480) 641-4794 
	 	  	Attn: Chief Executive Officer 
	 	  	  
	 	  	  
	 	With copies to: 	William L. Macdonald 
	 	  	Macdonald Tuskey 
	 	  	400-570 Granville St. 
	 	  	Vancouver, BC V6C 3P1 
	 	  	Facsimile No.: (604) 681 4760



6 





	 	If to the Pledgor: 	Alexander Walsh 
	 	  	Lithium Exploration Group, Inc.
    
	 	  	3200 N. Hayden Road, Suite 300
  
	 	  	Scottsdale, AZ 85251 
	 	  	Facsimile No.: (480) 641-4794
  
	 	  	  
	 	  	  
	 	If to the Pledgee: 	Hagen Investments Ltd. 
	 	  	Hibernian House 
	 	  	Leeward Highway 
	 	  	Providenciales 
	 	  	Turks and Caicos Islands, BWI
  
	 	  	Facsimile No.: (649) 946-4955
  
	 	  	Attn: Hugh O’Neill 
	 	  	  
	 	With copies to: 	Sichenzia Ross Friedman Ference
      LLP 
	 	  	61 Broadway 
	 	  	New York, NY 10006 
	 	  	Facsimile No.: (212) 930-9725
  
	 	  	Attn: Thomas A. Rose, Esq.
  


                                        (c)      Invalidity.
If any part of this Agreement is contrary to, prohibited by, or deemed invalid
under applicable laws or regulations, such provision shall be inapplicable and
deemed omitted to the extent so contrary, prohibited or invalid, but the
remainder hereof shall not be invalidated thereby and shall be given effect so
far as possible. 

                                        (d)      Benefit
of Agreement. This Agreement shall be binding upon and inure to the parties
hereto and their respective successors and assigns. 

                                        (e)      Mutual
Agreement. This Agreement embodies the arm’s length negotiation and mutual
agreement between the parties hereto and shall not be construed against either
party as having been drafted by it. 

                                        (f)      New
York Law to Govern. This Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York without
regard to the principals of conflicts of law thereof. 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, 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 or that
such suit, action or proceeding is improper. 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 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 manner permitted by law. 

7 




[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 

8 




                    IN
WITNESS WHEREOF, the parties hereto have caused this Guaranty and Pledge
Agreement to be duly executed by their respective authorized persons as of the
date first indicated above. 

LITHIUM EXPLORATION GROUP, INC.



By:
____________________________________
      
Name: 
       Title: 

Pledgee: 

HAGEN INVESTMENTS LTD. 

 

By:
____________________________________
      
Name: 
       Title: 

 

Pledgor: 


_______________________________________
Alexander Walsh


Number of Shares subject to this
pledge:

_______________________________________ 

9