Document:

Exhibit 10.21 

    STOCK
PURCHASE AGREEMENT

     

    dated as
of  August 3, 2010

     

    between

     

    Li3 Energy, Inc.,

     

    Pacific Road Capital A Pty. Limited,
as trustee for Pacific Road Resources Fund A,

     

    Pacific Road Capital B Pty. Limited,
as trustee for Pacific Road Resources Fund B

     

    and

     

    Pacific Road Capital Management G.P.
Limited, as General Partner of Pacific Road Resources Fund
L.P.

     

    relating
to the purchase and sale

     

    of

     

    100% of
the issued share capital

     

    of

     

    Alfredo
Holdings, Ltd.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    Table
of Contents

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                
                                                                  
                                                                    
                                                                      
                                                                        
                                                                          
                                                                            
                                                                              
                                                                                
                                                                                  
                                                                                    
                                                                                      
                                                                                        
                                                                                          
                                                                                            
                                                                                              
                                                                                                
                                                                                                  
                                                                                                    
                                                                                                      	
                                                                                                              Article I. DEFINITIONS

                                                                                                            	
                                                                                                              4

                                                                                                            
	 
      	
                                                                                                              1.1

                                                                                                            	
                                                                                                              Definitions

                                                                                                            	
                                                                                                              4

                                                                                                            
	 
      	
                                                                                                              1.2

                                                                                                            	
                                                                                                              Other Defined Terms

                                                                                                            	
                                                                                                              7

                                                                                                            
	
                                                                                                              Article II. PURCHASE AND
    SALE

                                                                                                            	
                                                                                                              9

                                                                                                            
	 
      	
                                                                                                              2.1

                                                                                                            	
                                                                                                              Purchase and Sale of the Acquired
      Shares

                                                                                                            	
                                                                                                              9

                                                                                                            
	 
      	
                                                                                                              2.2

                                                                                                            	
                                                                                                              Closing Date

                                                                                                            	
                                                                                                              10

                                                                                                            
	 
      	
                                                                                                              2.3

                                                                                                            	
                                                                                                              Transactions to be Effected at the
      Closing

                                                                                                            	
                                                                                                              10

                                                                                                            
	
                                                                                                              Article III. REPRESENTATIONS AND WARRANTIES OF
      SELLERS

                                                                                                            	
                                                                                                              11

                                                                                                            
	 
      	
                                                                                                              3.1

                                                                                                            	
                                                                                                              Organization and Good
    Standing

                                                                                                            	
                                                                                                              11

                                                                                                            
	 
      	
                                                                                                              3.2

                                                                                                            	
                                                                                                              Capitalization

                                                                                                            	
                                                                                                              11

                                                                                                            
	 
      	
                                                                                                              3.3

                                                                                                            	
                                                                                                              Subsidiary of the Acquired
      Company

                                                                                                            	
                                                                                                              12

                                                                                                            
	 
      	
                                                                                                              3.4

                                                                                                            	
                                                                                                              Authority and
Enforceability

                                                                                                            	
                                                                                                              13

                                                                                                            
	 
      	
                                                                                                              3.5

                                                                                                            	
                                                                                                              No Conflicts;
Authorizations

                                                                                                            	
                                                                                                              13

                                                                                                            
	 
      	
                                                                                                              3.6

                                                                                                            	
                                                                                                              Financial Statements

                                                                                                            	
                                                                                                              14

                                                                                                            
	 
      	
                                                                                                              3.7

                                                                                                            	
                                                                                                              No Undisclosed Liabilities

                                                                                                            	
                                                                                                              14

                                                                                                            
	 
      	
                                                                                                              3.8

                                                                                                            	
                                                                                                              Status of PRMC’s
      business

                                                                                                            	
                                                                                                              14

                                                                                                            
	 
      	
                                                                                                              3.9

                                                                                                            	
                                                                                                              Taxes

                                                                                                            	
                                                                                                              14

                                                                                                            
	 
      	
                                                                                                              3.10

                                                                                                            	
                                                                                                              Compliance with Law

                                                                                                            	
                                                                                                              15

                                                                                                            
	 
      	
                                                                                                              3.11

                                                                                                            	
                                                                                                              Authorizations

                                                                                                            	
                                                                                                              15

                                                                                                            
	 
      	
                                                                                                              3.12

                                                                                                            	
                                                                                                              Real Property

                                                                                                            	
                                                                                                              16

                                                                                                            
	 
      	
                                                                                                              3.13

                                                                                                            	
                                                                                                              Intellectual Property

                                                                                                            	
                                                                                                              16

                                                                                                            
	 
      	
                                                                                                              3.14

                                                                                                            	
                                                                                                              Absence of Certain Changes or
      Events

                                                                                                            	
                                                                                                              16

                                                                                                            
	 
      	
                                                                                                              3.15

                                                                                                            	
                                                                                                              Contracts

                                                                                                            	
                                                                                                              18

                                                                                                            
	 
      	
                                                                                                              3.16

                                                                                                            	
                                                                                                              Litigation

                                                                                                            	
                                                                                                              18

                                                                                                            
	 
      	
                                                                                                              3.17

                                                                                                            	
                                                                                                              Employees and Benefit Plans

                                                                                                            	
                                                                                                              19

                                                                                                            
	 
      	
                                                                                                              3.18

                                                                                                            	
                                                                                                              Environmental

                                                                                                            	
                                                                                                              19

                                                                                                            
	 
      	
                                                                                                              3.19

                                                                                                            	
                                                                                                              Insurance

                                                                                                            	
                                                                                                              20

                                                                                                            
	 
      	
                                                                                                              3.20

                                                                                                            	
                                                                                                              Books and Records

                                                                                                            	
                                                                                                              20

                                                                                                            
	 
      	
                                                                                                              3.21

                                                                                                            	
                                                                                                              Brokers or Finders

                                                                                                            	
                                                                                                              21

                                                                                                            
	 
      	
                                                                                                              3.22

                                                                                                            	
                                                                                                              Bank Accounts

                                                                                                            	
                                                                                                              21

                                                                                                            
	 
      	
                                                                                                              3.23

                                                                                                            	
                                                                                                              Powers of Attorney

                                                                                                            	
                                                                                                              21

                                                                                                            
	 
      	
                                                                                                              3.24

                                                                                                            	
                                                                                                              Support Services

                                                                                                            	
                                                                                                              21

                                                                                                            
	 
      	
                                                                                                              3.25

                                                                                                            	
                                                                                                              Mining Matters

                                                                                                            	
                                                                                                              21

                                                                                                            
	 
      	
                                                                                                              3.26

                                                                                                            	
                                                                                                              Representations Relating to Sellers’ Acquisition
      of the Purchase Price Shares

                                                                                                            	
                                                                                                              22

                                                                                                            
	 
      	
                                                                                                              3.27

                                                                                                            	
                                                                                                              No Corrupt Practices

                                                                                                            	
                                                                                                              24

                                                                                                            
	
                                                                                                              Article IV. REPRESENTATIONS AND WARRANTIES OF
      BUYER

                                                                                                            	
                                                                                                              25

                                                                                                            
	 
      	
                                                                                                              4.1

                                                                                                            	
                                                                                                              Organization and Good
    Standing

                                                                                                            	
                                                                                                              25

                                                                                                            
	 
      	
                                                                                                              4.2

                                                                                                            	
                                                                                                              Capitalization

                                                                                                            	
                                                                                                              25

                                                                                                            
	 
      	
                                                                                                              4.3

                                                                                                            	
                                                                                                              Subsidiaries of the Buyer

                                                                                                            	
                                                                                                              26

                                                                                                            
	 
      	
                                                                                                              4.4

                                                                                                            	
                                                                                                              Authority and
Enforceability

                                                                                                            	
                                                                                                              26

                                                                                                            
	 
      	
                                                                                                              4.5

                                                                                                            	
                                                                                                              No Conflicts;
Authorizations

                                                                                                            	
                                                                                                              27

                                                                                                            
	 
      	
                                                                                                              4.6

                                                                                                            	
                                                                                                              Financial Statements

                                                                                                            	
                                                                                                              27

                                                                                                            
	 
      	
                                                                                                              4.7

                                                                                                            	
                                                                                                              No Undisclosed Liabilities

                                                                                                            	
                                                                                                              27

                                                                                                            
	 
      	
                                                                                                              4.8

                                                                                                            	
                                                                                                              Absence of Certain Changes or
      Events

                                                                                                            	
                                                                                                              28

                                                                                                            
	 
      	
                                                                                                              4.9

                                                                                                            	
                                                                                                              Litigation

                                                                                                            	
                                                                                                              28

                                                                                                            
	 
      	
                                                                                                              4.10

                                                                                                            	
                                                                                                              Brokers or
      Finders

                                                                                                            	
                                                                                                              29

                                                                                                            
	 
      	
                                                                                                              4.11

                                                                                                            	
                                                                                                              Exchange Act Filings

                                                                                                            	
                                                                                                              29

                                                                                                            
	 
      	
                                                                                                              4.12

                                                                                                            	
                                                                                                              Investment Company Act

                                                                                                            	
                                                                                                              29

                                                                                                            
	 
      	
                                                                                                              4.13

                                                                                                            	
                                                                                                              Internal Controls

                                                                                                            	
                                                                                                              29

                                                                                                            
	 
      	
                                                                                                              4.14

                                                                                                            	
                                                                                                              Sarbanes-Oxley

                                                                                                            	
                                                                                                              29

                                                                                                            
	 
      	
                                                                                                              4.15

                                                                                                            	
                                                                                                              No Corrupt Practices

                                                                                                            	
                                                                                                              29

                                                                                                            

                                                                                                    

                                                                                                  

                                                                                                

                                                                                              

                                                                                            

                                                                                          

                                                                                        

                                                                                      

                                                                                    

                                                                                  

                                                                                

                                                                              

                                                                            

                                                                          

                                                                        

                                                                      

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                
                                                                  
                                                                    
                                                                      
                                                                        
                                                                          
                                                                            
                                                                              
                                                                                
                                                                                  
                                                                                    
                                                                                      
                                                                                        
                                                                                          
                                                                                            
                                                                                              
                                                                                                
                                                                                                  
                                                                                                    
                                                                                                      
                                                                                                        
                                                                                                          
                                                                                                            
                                                                                                              
                                                                                                                	
                                                                                                                        Article V. COVENANTS OF
    SELLERS

                                                                                                                      	
                                                                                                                        30

                                                                                                                      
	 
      	
                                                                                                                        5.1

                                                                                                                      	
                                                                                                                        Access to Samples

                                                                                                                      	
                                                                                                                        30

                                                                                                                      
	 
      	
                                                                                                                        5.2

                                                                                                                      	
                                                                                                                        Confidentiality

                                                                                                                      	
                                                                                                                        30

                                                                                                                      
	 
      	
                                                                                                                        5.3

                                                                                                                      	
                                                                                                                        Notification of Certain
    Matters

                                                                                                                      	
                                                                                                                        31

                                                                                                                      
	 
      	
                                                                                                                        5.4

                                                                                                                      	
                                                                                                                        Lock-Up; No Shorting

                                                                                                                      	
                                                                                                                        31

                                                                                                                      
	
                                                                                                                        Article VI. COVENANTS OF
    BUYER

                                                                                                                      	
                                                                                                                        31

                                                                                                                      
	 
      	
                                                                                                                        6.1

                                                                                                                      	
                                                                                                                        Preemptive Rights

                                                                                                                      	
                                                                                                                        31

                                                                                                                      
	 
      	
                                                                                                                        6.2

                                                                                                                      	
                                                                                                                        Seller Nominee to Board of
      Directors

                                                                                                                      	
                                                                                                                        32

                                                                                                                      
	 
      	
                                                                                                                        6.3

                                                                                                                      	
                                                                                                                        Rule 144 Information

                                                                                                                      	
                                                                                                                        32

                                                                                                                      
	 
      	
                                                                                                                        6.4.

                                                                                                                      	
                                                                                                                        Sellers’ Options to
      Invest

                                                                                                                      	
                                                                                                                        33

                                                                                                                      
	
                                                                                                                        Article VII. COVENANTS OF BUYER AND
      SELLER

                                                                                                                      	
                                                                                                                        33

                                                                                                                      
	 
      	
                                                                                                                        7.1

                                                                                                                      	
                                                                                                                        Public Announcements

                                                                                                                      	
                                                                                                                        33

                                                                                                                      
	 
      	
                                                                                                                        7.2

                                                                                                                      	
                                                                                                                        Tax Matters

                                                                                                                      	
                                                                                                                        33

                                                                                                                      
	 
      	
                                                                                                                        7.3

                                                                                                                      	
                                                                                                                        Cooperation in Filing Tax
      Returns

                                                                                                                      	
                                                                                                                        33

                                                                                                                      
	 
      	
                                                                                                                        7.4

                                                                                                                      	
                                                                                                                        Use of Certain Names

                                                                                                                      	
                                                                                                                        34

                                                                                                                      
	 
      	
                                                                                                                        7.5

                                                                                                                      	
                                                                                                                        Further Assurances

                                                                                                                      	
                                                                                                                        34

                                                                                                                      
	
                                                                                                                        Article VIII. DELIVERABLES

                                                                                                                      	
                                                                                                                        34

                                                                                                                      
	 
      	
                                                                                                                        8.1

                                                                                                                      	
                                                                                                                        Deliveries by
      Buyer

                                                                                                                      	
                                                                                                                        34

                                                                                                                      
	 
      	
                                                                                                                        8.2

                                                                                                                      	
                                                                                                                        Deliveries by Sellers

                                                                                                                      	
                                                                                                                        34

                                                                                                                      
	
                                                                                                                        Article IX. AVAILABLE
    REMEDIES

                                                                                                                      	
                                                                                                                        35

                                                                                                                      
	
                                                                                                                        Article X. INDEMNIFICATION

                                                                                                                      	
                                                                                                                        35

                                                                                                                      
	 
      	
                                                                                                                        10.1

                                                                                                                      	
                                                                                                                        Survival

                                                                                                                      	
                                                                                                                        35

                                                                                                                      
	 
      	
                                                                                                                        10.2

                                                                                                                      	
                                                                                                                        Indemnification by Sellers

                                                                                                                      	
                                                                                                                        36

                                                                                                                      
	 
      	
                                                                                                                        10.3

                                                                                                                      	
                                                                                                                        Indemnification by Buyer

                                                                                                                      	
                                                                                                                        36

                                                                                                                      
	 
      	
                                                                                                                        10.4

                                                                                                                      	
                                                                                                                        Indemnification Procedures for Third Party
      Claims

                                                                                                                      	
                                                                                                                        37

                                                                                                                      
	 
      	
                                                                                                                        10.5

                                                                                                                      	
                                                                                                                        Indemnification Procedures for Non-Third Party
      Claims

                                                                                                                      	
                                                                                                                        39

                                                                                                                      
	 
      	
                                                                                                                        10.6

                                                                                                                      	
                                                                                                                        Maximum Liability

                                                                                                                      	
                                                                                                                        40

                                                                                                                      
	 
      	
                                                                                                                        10.7

                                                                                                                      	
                                                                                                                        Exclusion of consequential
      liability

                                                                                                                      	
                                                                                                                        40

                                                                                                                      
	 
      	
                                                                                                                        10.8

                                                                                                                      	
                                                                                                                        Environmental Actions

                                                                                                                      	
                                                                                                                        40

                                                                                                                      
	 
      	
                                                                                                                        10.9

                                                                                                                      	
                                                                                                                        Effect of Investigation;
    Waiver

                                                                                                                      	
                                                                                                                        40

                                                                                                                      
	
                                                                                                                        Article XI. MISCELLANEOUS

                                                                                                                      	
                                                                                                                        41

                                                                                                                      
	 
      	
                                                                                                                        11.1

                                                                                                                      	
                                                                                                                        Notices

                                                                                                                      	
                                                                                                                        41

                                                                                                                      
	 
      	
                                                                                                                        11.2

                                                                                                                      	
                                                                                                                        Amendments and Waivers

                                                                                                                      	
                                                                                                                        42

                                                                                                                      
	 
      	
                                                                                                                        11.3

                                                                                                                      	
                                                                                                                        Expenses

                                                                                                                      	
                                                                                                                        43

                                                                                                                      
	 
      	
                                                                                                                        11.4

                                                                                                                      	
                                                                                                                        Successors and Permitted
      Assigns

                                                                                                                      	
                                                                                                                        43

                                                                                                                      
	 
      	
                                                                                                                        11.5

                                                                                                                      	
                                                                                                                        Governing Law

                                                                                                                      	
                                                                                                                        43

                                                                                                                      
	 
      	
                                                                                                                        11.6

                                                                                                                      	
                                                                                                                        Consent to Jurisdiction

                                                                                                                      	
                                                                                                                        43

                                                                                                                      
	 
      	
                                                                                                                        11.7

                                                                                                                      	
                                                                                                                        Counterparts

                                                                                                                      	
                                                                                                                        43

                                                                                                                      
	 
      	
                                                                                                                        11.8

                                                                                                                      	
                                                                                                                        Third Party Beneficiaries

                                                                                                                      	
                                                                                                                        43

                                                                                                                      
	 
      	
                                                                                                                        11.9

                                                                                                                      	
                                                                                                                        Entire Agreement

                                                                                                                      	
                                                                                                                        43

                                                                                                                      
	 
      	
                                                                                                                        11.10

                                                                                                                      	
                                                                                                                        Captions

                                                                                                                      	
                                                                                                                        44

                                                                                                                      
	 
      	
                                                                                                                        11.11

                                                                                                                      	
                                                                                                                        Severability

                                                                                                                      	
                                                                                                                        44

                                                                                                                      
	 
      	
                                                                                                                        11.12

                                                                                                                      	
                                                                                                                        Interpretation

                                                                                                                      	
                                                                                                                        44

                                                                                                                      

                                                                                                              

                                                                                                            

                                                                                                          

                                                                                                        

                                                                                                      

                                                                                                    

                                                                                                  

                                                                                                

                                                                                              

                                                                                            

                                                                                          

                                                                                        

                                                                                      

                                                                                    

                                                                                  

                                                                                

                                                                              

                                                                            

                                                                          

                                                                        

                                                                      

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    Sellers
Disclosure Schedules

     

    Buyer
Disclosure Schedule

     

    Exhibits

     

    Exhibit A - CD with
disclosed Due Diligence documents

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    STOCK
PURCHASE AGREEMENT

     

    STOCK
PURCHASE AGREEMENT, dated as of August 3, 2010 (the “Agreement”), between Li3
Energy, Inc., a Nevada corporation (“Buyer”), and Pacific Road
Capital A Pty. Limited, as trustee for Pacific Road Resources Fund A, a trust
governed by the laws of Australia (“Fund A”), Pacific Road Capital
B Pty. Limited, as trustee for Pacific Road Resources Fund B, a trust governed
by the laws of Australia (“Fund
B”), and Pacific Road Capital Management G.P. Limited, as General Partner
of Pacific Road Resources Fund L.P., limited partnership formed and registered
under the laws of  England and Wales (“PR Partnership” and, together
with Fund A and Fund B, “Sellers”).

     

    WHEREAS,
Sellers are the record and beneficial owners of all of the issued and
outstanding share capital (the “Acquired Shares”), of Alfredo
Holdings, Ltd., an exempted limited company incorporated under the laws of the
Cayman Islands (the “Acquired
Company”), which owns eight hundred seventy-three thousand, eight hundred
sixty-three (873,863) of the issued share capital of Pacific Road Mining Chile,
SA, a Chilean corporation (“PRMC”). The remaining 2 shares
of the issued share capital of PRMC (“PRMC Minority Shareholding”)
are owned one each by Carlos Alberto Reyes Comandari; and Alejandra Pérez
Rossi.

     

    WHEREAS,
Sellers desire to sell the Acquired Shares to Buyer, and Buyer desires to
purchase the Acquired Shares from Sellers and the PRMC Minority Shareholding,
upon the terms and subject to the conditions set forth in this
Agreement.

     

    NOW,
THEREFORE, in consideration of the foregoing premises and the respective
representations and warranties, covenants and agreements contained herein, the
parties hereto agree as follows:

     

    ARTICLE
I.  DEFINITIONS

     

    1.1           Definitions.
When used
in this Agreement, the following terms shall have the meanings assigned to them
in this Section 1.1, or in the applicable Section of this Agreement to which
reference is made in this Section 1.1.

     

    “Affiliate” means, with respect
to any specified Person, any other Person directly or indirectly controlling,
controlled by or under common control with such specified
Person.

     

    “Alfredo Property” means
collectively all the mining concessions specified in Article 1 of the Option to
Purchase Agreement.

     

    “Authorization” means any
authorization, approval, consent, certificate, license, permit or franchise of
or from any Governmental Entity or pursuant to any applicable Law.

     

    “Business Day” means a day
other than a Saturday, Sunday or other day on which banks located in Santiago, Chile are authorized or
required by Law to close.

     

    “Buyer Company” means Buyer,
and each of Buyer’s domestic and foreign Subsidiaries, and “Buyer Companies” means,
collectively, Buyer and all such Subsidiaries.

     

    “Capital Stock” means (a) in
the case of a corporation, its shares of capital stock, (b) in the case of an
exempted limited company incorporated under the laws of the Cayman Islands, its
share capital, (c) in the case of a partnership or limited liability company,
its partnership or membership interests or units (whether general or limited),
and (d) any other interest that confers on a Person the right to receive a share
of the profits and losses, or distribution of assets, of the issuing
entity.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    “Charter Documents” means, with
respect to any entity, the certificate of incorporation, the articles of
incorporation, by-laws, articles of organization, memorandum and articles of
association, limited liability company agreement, partnership agreement,
formation agreement, joint venture agreement or other similar organizational
documents of such entity (in each case, as amended).

     

    “Claim” means any (i) Lien
arising in connection with community property laws, claim, preferential purchase
right, option, right of first refusal, indenture, production payment,
restriction, burden, right of purchase or right of a vendor under any title
retention or conditional sale agreement, or (ii) arrangement, contract,
commitment, understanding or obligation of any nature whatsoever which serves to
restrict or impair the value of a property or security.

     

    “Contract” means any agreement,
contract, license, lease, commitment, arrangement or understanding, written or
oral, including any sales order or purchase order.

     

    “Due Diligence” means the
enquiries and investigations into the Acquired Company, PRMC, the Alfredo
Property and its assets and rights carried out by the Buyer.

     

    “Equity Securities” means (a)
shares of Capital Stock, and (b) options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights or other Contracts that,
directly or indirectly, could require the issuer thereof to issue, sell or
otherwise cause to become outstanding shares of Capital Stock.

     

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

     

    “Final Determination” means a
decision, judgment, decree or other order by any court of competent
jurisdiction, which decision, judgment, decree or other order has become final
after all allowable appeals by either party to the action have been exhausted or
the time for filing such appeals has expired and is not subject to further
review or modification.

     

    “GAAP US” means United States
generally accepted accounting principles.

     

    “Governmental Entity” means any
government, governmental, semi-governmental, administrative, fiscal, municipal
or judicial body, including any department, commission, board, agency, bureau,
subdivision, instrumentality, official or other regulatory, administrative or
judicial authority thereof.

     

    “Indebtedness” means any of the
following: (a) any indebtedness for borrowed money, (b) any obligations
evidenced by bonds, debentures, notes or other similar instruments, (c) any
obligations to pay the deferred purchase price of property or services, except
trade accounts payable and other current Liabilities arising in the ordinary
course of business, (d) any obligations as lessee under capitalized leases, (e)
any indebtedness created or arising under any conditional sale or other title
retention agreement with respect to acquired property, (f) any obligations,
contingent or otherwise, under acceptance credit, letters of credit or similar
facilities, and (g) any guaranty of any of the foregoing.

     

    “Indemnitee” means any Person
that is seeking indemnification from an Indemnitor pursuant to the provisions of
this Agreement.

     

    “Indemnitor” means any party
hereto from which any Indemnitee is seeking indemnification pursuant to the
provisions of this Agreement.

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    “Knowledge” of a Person or any
similar phrase means, with respect to any fact or matter, the actual knowledge
of the directors and  executive officers of the Person or its
Subsidiaries, together with such knowledge that such directors, executive
officers could be expected to discover after due investigation concerning the
existence of the fact or matter in question.

     

    “Law” means any statute, law
(including common law), constitution, treaty, ordinance, code, order, decree,
judgment, rule, regulation and any other binding requirement or determination of
any Governmental Entity.

     

    “Lien” means, with respect to
any property or asset, any mortgage, lien, pledge, charge, security interest,
adverse claim or other encumbrance in respect of such property or
asset.

     

    “Losses” means all losses,
damages, claims (including third party claims), charges, interest, penalties,
Taxes, costs and expenses (including reasonable legal, consultant, accounting
and other professional fees, costs of sampling, testing, investigation, removal,
treatment and remediation of contamination and fees and costs incurred in
enforcing rights under Article X), but excluding consequential liability
pursuant to the terms in Section 10.7.

     

    “Material Adverse Effect” on a
Person means a material adverse effect on the condition (financial or
otherwise), operations or results of operations of that Person and its
Subsidiaries taken as a whole.

     

    “Mines” means excavations in
the soil and sub-soil from which ores or other Minerals are removed, excluding
any such removal for exploration works or evaluation purposes.

     

    “Minerals” means any metallic
or non-metallic substance, existing within the boundaries of the Mining
Concessions.

     

    “Mineral Interest” or “Mining Concession” mean any
mining exploration concessions (Concesiones de Exploracion), mining claims
(Pertenencias), whether fully granted or still under procedure (pedimentos or
manifestaciones) pursuant to Chilean mining law, which is part of the Alfredo
Property.

     

    “Mineral Leases” means.
agreements between a property owner and another party who is allowed to explore
for and extract Minerals that are found on the Mining Concessions for a stated
time in exchange for periodic payments to the landowner.

     

    “Option to Purchase Agreement”
means that certain Option to Purchase Agreement, dated as of June 6, 2008, by
and between Sociedad Contractual Minera La Fortaleza, and PRMC, as amended as of
April 17, 2009 and assigned as of  October 24 2008, a copy of which is
attached in the Seller Disclosure Schedule.

     

    “Order” means any award,
injunction, judgment, decree, order, ruling, subpoena or verdict or other
decision issued, promulgated or entered by or with any Governmental Entity of
competent jurisdiction.

     

    “Permitted Liens” means (a)
Liens for current real or personal property taxes not yet due and payable, (b)
workers’, carriers’ and mechanics’ or other like liens incurred in the ordinary
course of business with respect to which payment is not due and that do not
impair the conduct of the businesses of the Acquired Company or  its
Subsidiary or the present use of the affected property and (c) liens that are
immaterial in character, amount, and extent and which do not detract from the
value or interfere with the present or proposed use of the properties they
affect.

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    “Person” means an individual, a
corporation, a partnership, a limited liability company, a trust, an
unincorporated association, a Governmental Entity or any agency, instrumentality
or political subdivision of a Governmental Entity, or any other entity or
body.

     

    “Pre-Closing Environmental
Liabilities” means Liabilities based upon or arising out of a breach of
Environmental Laws in connection with PRMC’s activities in the Alfredo Property
at any time from the date of the Option to Purchase Agreement until
Closing.

     

    “SEC” means the United States
Securities and Exchange Commission.

     

    “Securities Act” means the
United States Securities Act of 1933, as amended and the rules and regulations
promulgated thereunder.

     

    “Seller Company” means each
Seller and each of the Acquired Company and PRMC, and “Seller Companies” means,
collectively, Sellers, the Acquired Company and PRMC.

     

    “Subsidiary” or “Subsidiaries” means, with
respect to any party, any Person, of which (a) such party or any other
Subsidiary of such party is a general partner (excluding partnerships, the
general partnership interests of which held by such party or any Subsidiary of
such party do not have a majority of the voting interest in such partnership),
or (b) at least a majority of the securities or other interests having by their
terms ordinary voting power to elect a majority of the board of directors or
others performing similar functions with respect to such Person is directly or
indirectly owned or controlled by such party and/or by any one or more of its
Subsidiaries.

     

    “Tax” or “Taxes” means any and all
federal, state, local, or foreign net or gross income, gross receipts, net
proceeds, sales, use, ad valorem, value added, franchise, withholding, payroll,
employment, excise, property, deed, stamp, alternative or add-on minimum,
profits,  transaction, license, lease, service, service use,
occupation, severance, energy, unemployment, social security, workers’
compensation, capital, premium, and other taxes, assessments, customs, duties,
fees, levies or other governmental charges of any nature whatever, whether
disputed or not, together with any interest, penalties, additions to tax, or
additional amounts with respect thereto.

     

    “Tax Returns” means any return,
declaration, report, claim for refund, or information return or statement
relating to Taxes, including any schedule or attachment thereto, and including
any amendment thereof.

     

    “Taxing Authority” means any
Governmental Entity having jurisdiction with respect to any Tax.

     

    “Trading Day” with respect to
any security, means any day on which the principal securities exchange or
electronic quotation service on which such security is traded or quoted is
open.

     

    “Transaction Documents” means
this Agreement and all other agreements, instruments, schedules and other
documents entered into or to be entered into or furnished or to be
furnished  pursuant hereto, or in connection with the execution or
performance of this Agreement.

     

    “Transfer Taxes” means sales,
use, transfer, real property transfer, recording, documentary, stamp,
registration and stock transfer taxes and fees.

     

    “$” means United States
dollars.

     

    1.2           Other Defined Terms.
The
following terms have the meanings assigned to such terms in the Sections of the
Agreement set forth below:

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    
      
        
          	
                  Acquired
      Balance Sheet

                	 
      	
                  3.6

                
	
                  Acquired
      Balance Sheet Date

                	 
      	
                  3.6

                
	
                  Acquired
      Company

                	 
      	
                  Recital

                
	
                  Acquired
      Financial Statements

                	 
      	
                  3.6

                
	
                  Acquired
      Shares

                	 
      	
                  Recital

                
	
                  Acquired
      Subsidiary Shares

                	 
      	
                  3.3(b)

                
	
                  Acquisition

                	 
      	
                  2.1

                
	
                  Action

                	 
      	
                  3.16(a)

                
	
                  Agreement

                	 
      	
                  Preamble

                
	
                  Alfredo
      Mine

                	 
      	
                  2.1(b)

                
	
                  Applicable
      Survival Period

                	 
      	
                  10.1(c)

                
	
                  Buyer

                	 
      	
                  Preamble

                
	
                  Buyer
      Annual Financial Statements

                	 
      	
                  4.6

                
	
                  Buyer
      Balance Sheet

                	 
      	
                  4.6

                
	
                  Buyer
      Balance Sheet Date

                	 
      	
                  4.6

                
	
                  Buyer
      Common Stock

                	 
      	
                  2.1(a)

                
	
                  Buyer
      Disclosure Schedule

                	 
      	
                  Preamble
      to Article IV

                
	
                  Buyer
      Financial Statements

                	 
      	
                  4.6

                
	
                  Buyer
      Indemnitees

                	 
      	
                  10.2(a)

                
	
                  Buyer
      Interim Balance Sheet

                	 
      	
                  4.6

                
	
                  Buyer
      Interim Balance Sheet Date

                	 
      	
                  4.6

                
	
                  Buyer
      Interim Financial Statements

                	 
      	
                  4.6

                
	
                  Buyer
      SEC Report

                	 
      	
                  4.12

                
	
                  Buyer
      Warranty Losses

                	 
      	
                  10.2(b)

                
	
                  Closing

                	 
      	
                  2.2

                
	
                  Closing
      Date

                	 
      	
                  2.2

                
	
                  Consents

                	 
      	
                  3.5(a)

                
	
                  Contingent
      Consideration

                	 
      	
                  2.1(b)

                
	
                  Contingent
      Milestone

                	 
      	
                  2.1(b)

                
	
                  Environment

                	 
      	
                  3.18(a)(i)

                
	
                  Environmental
      Action

                	 
      	
                  3.18(a)(ii)

                
	
                  Environmental
      Laws

                	 
      	
                  3.18(a)(iii)

                
	
                  Environmental
      Permits

                	 
      	
                  3.18(a)(iv)

                
	
                  Equity
      Payment Option

                	 
      	
                  2.1(c)

                
	
                  Hazardous
      Substances

                	 
      	
                  3.18(a)(v)

                
	
                  Intellectual
      Property

                	 
      	
                  3.13(a)

                
	
                  Liabilities

                	 
      	
                  3.6

                
	
                  Material
      Contract

                	 
      	
                  3.15(b)

                
	
                  Maximum
      Liability Amount

                	 
      	
                  10.6
      (a)

                
	
                  Milestone
      Notice

                	 
      	
                  2.1(c)

                
	
                  Minor
      Contracts

                	 
      	
                  3.15(e)

                
	
                  Moving
      Average Price

                	 
      	
                  2.1(a)

                
	
                  Notice
      of Claim

                	 
      	
                  10.4(a)

                
	
                  PPO
      Price

                	 
      	
                  2.1(a)

                
	
                  PRMC

                	 
      	
                  Recitals

                
	
                  PRMC
      Payable

                	 
      	
                  3.14(xviii)

                
	
                  PRMC
      Minority Shareholding

                	 
      	
                  Recitals

                

        

      

    

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    

    
      
        
          	
                  Purchase
      Price Shares

                	 
      	
                  2.1(a)

                
	
                  Release

                	 
      	
                  3.18(a)(vi)

                
	
                  Seller
      Disclosure Schedule

                	 
      	
                  Preamble
      to Article III

                
	
                  Seller
      Indemnitees

                	 
      	
                  10.3(a)

                
	
                  Seller
      Warranty Losses

                	 
      	
                  10.3(b)

                
	
                  Third
      Party Claim

                	 
      	
                  10.4(a)

                
	
                  Third
      Party Defense

                	 
      	
                  10.4(b)

                
	
                  Traspaso
      de Acciones

                	 
      	
                  2.3(b)

                

        

      

    

     

    ARTICLE
II.  PURCHASE AND SALE

     

    2.1           Purchase and Sale of the
Acquired Shares. Upon the
terms and subject to the conditions of this Agreement, at the Closing, the
Sellers shall sell to Buyer, and Buyer shall purchase from the Sellers, all of
the Acquired Shares free and clear of all Liens.  The aggregate
consideration to be provided by Buyer to the Sellers for the Acquired Shares
(The purchase and sale of the Acquired Shares is referred to in this Agreement
as the “Acquisition”)
is:

     

    (a)          A
number of newly issued shares (the “Purchase Price Shares”) of the
common stock, par value $0.001 per share, of the Buyer (“Buyer Common Stock”), equal to
the quotient of $2,500,000 divided by the lesser of (i) Moving Average Price (as
defined below) as of the Closing, and (ii) the price per share of Buyer Common
Stock received by Buyer in any private placement of Buyer Common Stock completed
by Buyer after April 20, 2010 and prior to the Closing (such lesser price, the
“PPO
Price”).  As used in this Agreement, the “Moving Average Price,” as of
any date, means the average of the last sale price (or, if there are no sales on
such date, the closing bid price) for the Buyer Common Stock on the thirty (30)
Trading Days immediately preceding such date.  The Purchase Price
Shares shall be delivered as provided in Section 2.3; and

     

    (b)          If
and when the following milestones (“Contingent Milestones”) are
achieved with respect to a mine to recover iodine or nitrate from the Alfredo
Property (the “Alfredo
Mine”), Buyer shall pay to Sellers the following additional amounts in
cash (the “Contingent
Consideration”):

     

    
      	
               
      

            	
              (i)

            	
              $1,000,000
      upon board resolution of Buyer to commence final engineering and design of
      the Alfredo Mine;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              a
      further $2,000,000 upon board resolution of Buyer to commence construction
      of the Alfredo Mine; and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              a
      further $2,500,000 upon commencement of commercial production from the
      Alfredo Mine. For these purposes commercial production means the
      production from the Alfredo Property at a rate of 75% of design capacity
      for 3 months.

            

    

     

    (c)          Within
fifteen (15) Business Days of the occurrence of any Contingent Milestone, Buyer
shall give each Seller notice thereof (a “Milestone
Notice”).  Each Seller shall have the right (the “Equity Payment Option”) to
elect to receive any payment of Contingent Consideration in shares of Buyer
Common Stock, valued for such purpose at the greater of (i) the PPO Price and
(ii) the Moving Average Price as of the date of payment.  Each Seller
may exercise its Equity Payment Option with respect to the Contingent
Consideration arising out of any Contingent Milestone by delivering notice of
such Seller’s exercise of the Equity Payment Option to Buyer within five (5)
Business Days of receiving the Milestone Notice related to such Contingent
Milestone.  Buyer shall pay the Contingent Consideration with respect
to any Contingent Milestone to the Sellers within thirty (30) Business Days of
the occurrence of such Contingent Milestone. Sellers shall have the right, on
reasonable written request to Buyer, to inspect the Alfredo Property from time
to time in order to assess the progress made toward completion of the Contingent
Milestones, provided such inspections do not adversely affect the normal
operation of the Alfredo Property.

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    (d)          Buyer
shall deliver to each Seller such portion of the Purchase Price Shares or
Contingent Consideration, as the case may be, as is set forth for such Seller in
Schedule 2.1(d) hereto. Buyer shall deliver a portion of the Purchase Price
Shares not to exceed 20% to such other Person designated by a Seller, provided
that such Person agrees to the transfer restrictions set forth in Section 5.4
(in this specific case the Lock-up Period shall be of 6 months and not 18 months
as provided in such Section 5.4) and makes customary investor qualification
representations in a written document in a form reasonably acceptable to Sellers
and Buyer. Schedule 2.1(d) sets forth the allocation of the Purchase Price
Shares considering the Persons hereby designated by Sellers.

     

    (e)          Sellers
acknowledge and agree that Buyer is under no obligation to seek the achievement
of any Contingent Milestone, to cause PRMC to exercise any rights under the
Option to Purchase Agreement, or otherwise to seek to explore and/or develop the
Alfredo Property or any other Mine or Mineral Interests.

     

    (f)           If,
at any time within the period ending on the third anniversary following the
Closing Date, the Buyer sells, transfers or otherwise disposes, directly or
indirectly, of all or substantially all of the Acquired Shares, the shares of
PRMC or the Alfredo Property to any other Person, then prior to such sale,
transfer or disposition, the acquiring party must first expressly acknowledge to
the Sellers and the Buyer in writing that it is bound by the Buyer’s obligations
in Section 2.1(b) above, in form satisfactory to the Sellers. In such case (i)
the transferee will satisfy the payment obligations in cash and the Equity
Payment Option shall not apply and (ii) Buyer will cease to be liable to Sellers
for any subsequent Contingent Consideration.

     

    2.2           Closing Date.
The
signing and closing of the Acquisition (the “Closing”) take place
concurrently at the offices of Baker & McKenzie, in Santiago, Chile, at
10:00 a.m. on  August 3, 2010. The date upon which the Closing and the
signing simultaneously occur is herein referred to as the “Closing Date.”

     

    2.3           Transactions to be Effected
at the Closing.

     

    (a)          At
the Closing, Buyer shall deliver to Sellers (i) certificates representing the
Purchase Price Shares, and (ii) all other documents, instruments or certificates
required to be delivered by Buyer, acting reasonably, at or prior to the Closing
pursuant to this Agreement.

     

    (b)          At
the Closing, Sellers shall deliver to Buyer or procure the delivery to the Buyer
of (or if Buyer so elects, to a Subsidiary of the Buyer):  (i)
executed instruments of transfer; (ii) a resolution of the board of directors of
the Acquired Company noting and approving the transfer of the Acquired Shares
from Sellers to the Buyer; (iii)  all other documents and instruments
necessary to vest in Buyer (or its Subsidiary) all of Sellers’ right, title and
interest in and to the Acquired Shares, free and clear of all Liens; (iii) copy
of the members register of the Acquired Company evidencing the transfer of the
Acquired Shares; (iv) duly executed transfer documents (“Traspaso de Acciones”) of PRMC
Minority Shareholding to the Affiliate of the Buyer designated by Buyer;
(v)  the shareholders’ registry of PRMC evidencing the transfer
of  PRMC Minority Shareholding to the Affiliate designated by Buyer;
(vi) original share certificates of PRMC Minority Shareholding in the name of
Carlos Alberto Reyes Comandari and Alejandra Pérez Rossi duly cancelled and
newly issued shares certificate of  PRMC  in the name of the
Affiliate designated by Buyer; and (vii) all other documents, instruments or
certificates required to be delivered by Sellers at or prior to the Closing
pursuant to this Agreement. Documents indicated in letters (iv), (v) and (vi)
may be delivered by Seller to Buyer’s counsel in Chile, Baker & McKenzie
Santiago,  who shall acknowledge receipt of those
documents.

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    ARTICLE III.  REPRESENTATIONS AND WARRANTIES OF SELLERS

     

    Sellers represent and warrant to Buyer that each statement contained in this Article III is true and correct as of the date
hereof, except as set forth in the in the disclosure schedule dated and
delivered as of the date hereof by Sellers to Buyer (the “Seller Disclosure Schedule”),
which is attached to this Agreement and is designated therein as being the
Seller Disclosure Schedule. The Seller Disclosure Schedule shall be arranged in
sections corresponding to each Section of this Article III.  Each
exception to a representation and warranty set forth in the Seller Disclosure
Schedule shall qualify the specific representation and warranty which is
referenced in the applicable section of the Seller Disclosure Schedule, and no
other representation or warranty.

     

    3.1           Organization and Good
Standing.

     

    (a)           The
Acquired Company is an exempted limited company duly incorporated, validly
existing and in good standing under the Laws of the Cayman Islands, Fund A and
Fund B are trusts duly organized, validly existing and in good standing under
the Laws of Australia; and PR Partnership is an limited partnership duly formed
and registered, validly existing and in good standing under the Laws of England
and Wales.  Each of the Sellers and the Acquired Company has all
requisite power to own and to carry on its business as currently conducted, and
the Acquired Company is duly qualified to do business and is in good standing
in  Cayman Islands.

     

    (b)           Neither
the Acquired Company nor any Seller is in default under its Charter Documents.
The Charter Documents of the Acquired Company in the forms attached to the
Seller Disclosure Schedule are the Charter Documents of the Acquired Company as
in effect on the date of this Agreement.

     

    3.2           Capitalization.

     

    (a)           The
authorized Capital Stock of the Acquired Company consists of five million
(5,000,000) shares with a par value of $0.01 per share. All of the Acquired
Shares are duly authorized, validly issued, fully paid and nonassessable and are
owned of record and beneficially by Sellers  free and clear of all
Liens.  Upon transfer of the Acquired Shares to Buyer in accordance
with the terms of Article II.  , and upon the directors of the
Acquired Company approving and registering the transfers and the Buyer being
entered into the Acquired Company’s register of members as the registered owner
of the Acquired Shares, Buyer will receive valid title to the Acquired Shares,
free and clear of all Liens.

     

    (b)           All
of the Acquired Shares were issued in compliance with applicable Laws. None of
the Acquired Shares was issued in violation of any Contract to which any Seller
or the Acquired Company is a party or is subject to, or in violation of, any
preemptive or similar rights of any Person.

     

    (c)           Other
than the Acquired Shares, the Acquired Company does not have outstanding any
Equity Securities or any other securities. The Acquired Company is not a party
or subject to any Contract obligating the Acquired Company to issue any Equity
Securities or any other securities and, to Seller’s Knowledge, there is no
circumstance or condition that may give rise to a claim by any Person that such
Person is entitled to acquire any securities of the Acquired Company. The
Acquired Company does not have outstanding any bonds, debentures, notes or other
obligations the holders of which have the right to vote (or convertible into, or
exercisable or exchangeable for, securities having the right to vote) on any
matter.

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    (d)           The
Acquired Company does not have outstanding or authorized any stock appreciation,
phantom stock, profit participation, or similar rights.

     

    (e)           Neither
Seller nor the Acquired Company is a party or subject to any stockholder
agreement, voting agreement, voting trust or any other similar arrangement which
has the effect of restricting or limiting the transfer, voting or other rights
associated with the Acquired Shares.

     

    (f)           There
are no obligations, contingent or otherwise, of the Acquired Company to provide
corporate funding (in the form of a loan or capital contribution) to any
Person.

     

    (g)           No
share certificates have been issued by the Acquired Company or are existing in
respect of the Acquired Shares.

     

    3.3          Subsidiary of the Acquired
Company.

     

    (a)           PRMC
is validly existing and in good standing under the Laws of the jurisdiction of
its formation, has all requisite power to carry on its business as currently
conducted, and is duly qualified to do business and is in good standing in each
jurisdiction in which it conducts any business so as to require such
qualification.

     

    (b)           PRMC
is  the only Subsidiary of the Acquired Company. The Seller Disclosure
Schedule sets forth  the formation documents, the authorized and
outstanding Capital Stock of such Subsidiary and the owner(s) of record of such
outstanding Capital Stock. The outstanding shares of Capital Stock of the
Subsidiary of the Acquired Company (collectively, the “Acquired Subsidiary Shares”) are duly
authorized, validly issued, fully paid and nonassessable, and are owned by the
Acquired Company or another Subsidiary or nominee of the Acquired Company free
and clear of all Liens.

     

    (c)           All
of the Acquired Subsidiary Shares were issued in compliance with applicable
Laws. None of the Acquired Subsidiary Shares was issued in violation of any
Contract to which any Seller, the Acquired Company or  its Subsidiary
is a party or is subject.

     

    (d)           Other
than the Acquired Subsidiary Shares set forth in the Seller Disclosure Schedule,
the Subsidiary of the Acquired Company does not have outstanding any Equity
Securities or any other securities. The Subsidiary of the Acquired Company is
not a party and it is not subject to any Contract obligating such Subsidiary to
issue any Equity Securities or any other securities and, to Seller’s Knowledge,
there is no circumstance or condition that may give rise to a claim by any
Person that such Person is entitled to acquire any securities of the Subsidiary
of the Acquired Company. No Subsidiary of the Acquired Company has outstanding
any bonds, debentures, notes or other obligations the holders of which have the
right to vote (or convertible into, or exercisable or exchangeable for,
securities having the right to vote) on any matter.

     

    (e)           No
Subsidiary of the Acquired Company has outstanding or authorized any stock
appreciation, phantom stock, profit participation, or similar
rights.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (f)           Other
than PRMC,  the Acquired Company does not directly or indirectly own
any Equity Securities or other securities in any Person.
Likewise.  PRMC does not directly or indirectly own any Equity
Securities or other securities in any Person

     

    (g)           None
of Seller, the Acquired Company or the Subsidiary of the Acquired Company is a
party or subject to any stockholder agreement, voting agreement, voting trust or
any other similar arrangement which has the effect of restricting or limiting
the transfer, voting or other rights associated with the Acquired Subsidiary
Shares.

     

    (h)           There
are no obligations, contingent or otherwise, of the Subsidiary of the Acquired
Company to provide corporate funding (in the form of a loan or capital
contribution) to any Person.

     

    3.4          Authority and
Enforceability. Such
Seller has the requisite power and authority to enter into this Agreement and to
consummate the Acquisition. The execution and delivery of this Agreement and the
consummation of the Acquisition have been duly authorized by all necessary
corporate action on the part of such Seller. This Agreement has been duly
executed and delivered by or on behalf of such Seller and, assuming due
authorization, execution and delivery by Buyer, constitutes the valid and
binding obligation of such Seller, enforceable against it in accordance with its
terms, except as such enforceability may be limited by (a) bankruptcy,
insolvency, reorganization, moratorium or other similar Laws affecting or
relating to creditors’ rights generally, and (b) the availability of injunctive
relief and other equitable remedies.

     

    3.5          No Conflicts;
Authorizations.

     

    (a)           The
execution and delivery of this Agreement by or on behalf of the Sellers do not,
and the performance by Sellers of their obligations hereunder and the
consummation by Sellers of the transactions contemplated hereby (in each case,
with or without the giving of notice or lapse of time, or both) will not,
directly or indirectly, (i) violate the provisions of any of the Charter
Documents of any Seller, the Acquired Company or its Subsidiary, (ii) violate or
constitute a default, an event of default or an event creating rights of
acceleration, termination, cancellation, imposition of additional obligations or
loss of rights, or require a consent to assignment, under any Contract (A) to
which any Seller, the Acquired Company or its Subsidiary is a party, (B) of
which any Seller, the Acquired Company or its Subsidiary is a beneficiary or (C)
by which any Seller, the Acquired Company or its Subsidiary or any of their
respective assets is bound, (iii) to Sellers’ Knowledge, violate or conflict
with any Law, Authorization or Order applicable to any Seller, the Acquired
Company or its Subsidiary, or give any Governmental Entity or other Person the
right to challenge any of the transactions contemplated by this Agreement or to
exercise any remedy, obtain any relief under or revoke or otherwise modify any
rights held under, any such Law, Authorization or Order, or (iv) to Sellers’
Knowledge, result in the creation of any Liens upon any of the assets owned or
used by any Seller, the Acquired Company or its Subsidiary.  Section
3.5(a) of the Seller Disclosure Schedule sets forth all consents, waivers,
assignments and other approvals and actions that are required in connection with
the transactions contemplated by this Agreement under any Contract to which the
Acquired Company or its Subsidiary is a party (collectively, “Consents”) in order to
preserve all rights of, and benefits to, the Acquired Company and its Subsidiary
thereunder.

     

    (b)           No
Authorization or Order of, registration, declaration or filing with, or notice
to, any Governmental Entity or other Person is required by or with respect to
any Seller, the Acquired Company or its Subsidiary in connection with the
execution and delivery of this Agreement and the consummation of the
Acquisition.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    3.6          Financial Statements.
True and
complete copies of (a) the financial statements of the Acquired Company from
inception until July 15, 2010 and the related balance sheet, statement of income
and statement of changes in equity; (b) the financial statements of PRMC as at
December 31 in each of the years 2008 and 2009 and the related statements of
income and retained earnings for the years then ended; and (c) the financial
statements consisting of the balance sheet of the PRMC as at June 30, 2010, and
the related statements of income and retained earnings for the six-month period
then ended. The financial statements referred to in (a), (b) and (c) above
collectively referred to as the “Acquired Financial
Statements”, all of which are included in the Seller Disclosure Schedule.
The Acquired Financial Statements are true, complete and correct and have been
prepared in accordance with generally accepted accounting principles in the
jurisdiction of their respective place of incorporation  applied on a
consistent basis throughout the periods involved, subject, in the case of
interim financial statements, to normal and recurring year-end adjustments (the
effect of which will not be materially adverse) and the absence of notes (that,
if presented, would not differ materially from those presented in the annual
financial statements). The Acquired Financial Statements are based on the books
and records of the Acquired Company and its Subsidiary, and fairly present the
financial condition of the Acquired Company and its Subsidiary as of the
respective dates they were prepared and the results of the operations of the
Acquired Company and its Subsidiary for the periods indicated. The balance
sheets of the Acquired Company as of July 15, 2010 and its Subsidiary as of June
30, 2010 are referred to herein as the “Acquired Balance Sheet” and
June 30, 2010 is referred to as the “Acquired Balance Sheet
Date”.  Each of the Acquired Company and its Subsidiary
maintains a standard system of accounting established and administered in
accordance with generally accepted accounting principles in the jurisdiction of
their respective place of incorporation. 

     

    3.7          No Undisclosed
Liabilities. To the
Seller’s Knowledge the Acquired Company and its Subsidiary have no liabilities,
obligations or commitments of any nature whatsoever, asserted or unasserted,
known or unknown, absolute or contingent, accrued or unaccrued, matured or
unmatured or otherwise (“Liabilities”), except (a)
those which are reflected or reserved against in the Acquired Balance Sheet as
of the Acquired Balance Sheet Date, (b) those which have been incurred in the
ordinary course of business and consistent with past practice since the Acquired
Balance Sheet Date and which are not, individually or in the aggregate, material
in amount; and (c) the PRMC Payable

     

    3.8          Status of PRMC’s
business. PRMC has
not started the operation and exploitation of the Alfredo
Property.   The Acquired Company and PRMC do not have customers,
inventories or account receivables (other than VAT receivables).

     

    3.9          Taxes.

     

    (a)           All
Tax Returns required to have been filed by or with respect to the
Acquired  Company and its Subsidiary have been duly and timely filed,
and each such Tax Return correctly and completely reflects liability for Taxes
and all other information required to be reported thereon. All Taxes owed by the
Acquired Company and its Subsidiary (whether or not shown on any Tax Return)
have been timely paid. The Acquired Company and its Subsidiary have adequately
provided for, in their books of account and related records, liability for all
unpaid Taxes, being current Taxes not yet due and payable.

     

    (b)           Other
than as specified in Seller’s Disclosure Schedule, there is no action or audit
currently proposed, threatened or pending against, or with respect to, the
Acquired Company or its Subsidiary in respect of any Taxes.  The
Acquired Company and its Subsidiary are not the beneficiary of any extension of
time within which to file any Tax Return, nor have any of the Acquired Company
or its Subsidiary made (or had made on their behalf) any requests for such
extensions. No claim has ever been made by an authority in a jurisdiction where
any of the Acquired Company or its Subsidiary do not file Tax Returns that any
of them is or may be subject to taxation by that jurisdiction or that any of
them must file Tax Returns. There are no Liens on any of the stock or assets of
the Acquired Company or its Subsidiary with respect to Taxes.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    (c)           The
Sellers, the Acquired Company and its Subsidiary have withheld and timely paid
all Taxes required to have been withheld and paid and have complied with all
information reporting and backup withholding requirements, including maintenance
of required records with respect thereto.

     

    (d)           There
is no dispute or claim concerning any liability for Taxes with respect to the
Acquired Company and its Subsidiary for which notice has been provided, or which
is asserted or threatened, or which is otherwise known to Seller or any other
Seller Company. No issues have been raised in any Taxes examination with respect
to any Seller Company which, by application of similar principles, could be
expected to result in liability for Taxes for the Acquired Company or its
Subsidiary. The Seller Disclosure Schedule lists all federal, state, local, and
foreign income Tax Returns filed with respect to the Acquired Company and its
Subsidiary for taxable periods ended on or after December 31, 2008.

     

    (e)           The
tax losses of the Acquired Company and its Subsidiary have been incurred in
accordance with the Law, including those related to the tax enquiry identified
in the Sellers’ Disclosure Schedule. The Acquired Company and its Subsidiary
maintain all appropriate supporting accounting books and commercial
documentation evidencing such losses, which losses may be supported and
justified with any Tax Authority.

     

    (f)           No
Tax will be payable by PRMC or the Acquired Company as a result of activities
performed within tax periods starting before the Closing Date which Tax Returns
are filed on or after the Closing Date.

     

    3.10        Compliance with
Law.

     

    (a)           From
their incorporation date and until the Closing Date, each of the Acquired
Company and its Subsidiary has complied in all material respects with each, and
is not in material violation of any, applicable Law to which the Acquired
Company or any such Subsidiary or its respective business, operations, assets or
properties is or has been subject.

     

    (b)           No
event has occurred and to Sellers’ Knowledge no circumstances exist that (with
or without the passage of time or the giving of notice) may result in a
violation of, conflict with or failure on the part of the Acquired Company or
its Subsidiary to comply with, any Law. Neither the Acquired Company nor its
Subsidiary has received notice regarding any violation of, conflict with, or
failure to comply with, any Law.

     

    3.11        Authorizations.

     

    (a)           Each
of the Acquired Company and its Subsidiary owns, holds or lawfully uses in the
operation of its business all Authorizations which are necessary for it to
conduct its business as currently conducted or for the ownership and use of the
assets owned or used by the Acquired Company or any such Subsidiary in the
conduct of its business free and clear of all Liens. Such Authorizations are
valid and in full force and effect and none of such Authorizations will be
terminated or impaired or become terminable as a result of the transactions
contemplated by this Agreement

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    (b)           No
event has occurred and to Sellers’ Knowledge no circumstances exist that (with
or without the passage of time or the giving of notice) may result in a
violation of, conflict with, failure on the part of the Acquired Company
or  its Subsidiary to comply with the terms of, or the revocation,
withdrawal, termination, cancellation, suspension or modification of any
Authorization. Neither the Acquired Company nor its Subsidiary has received
notice regarding any violation of, conflict with, failure to comply with the
terms of, or any revocation, withdrawal, termination, cancellation, suspension
or modification of, any Authorization. Neither the Acquired Company nor its
Subsidiary is in default, nor has the Acquired Company or its Subsidiary
received notice of any claim of default, with respect to any
Authorization.

     

    3.12        Real Property.
The
Acquired Company and PRMC do not own, lease or otherwise have any interest in
any Real Property or Personal Property.

     

    3.13        Intellectual
Property. 

     

    (a)           As
used in this Agreement, “Intellectual Property” means:
(i) inventions (whether or not patentable), trade secrets, technical data,
databases, customer lists, designs, tools, methods, processes, technology,
ideas, know-how, source code, product road maps and other proprietary
information and materials; (ii) trademarks and service marks (whether or not
registered), trade names, logos, trade dress and other proprietary indicia and
all goodwill associated therewith; (iii) documentation, advertising copy,
marketing materials, web-sites, specifications, mask works, drawings, graphics,
databases, recordings and other works of authorship, whether or not protected by
copyright; (iv) computer programs, including any and all software
implementations of algorithms, models and methodologies, whether in source code
or object code, design documents, flow-charts, user manuals and training
materials relating thereto and any translations thereof; and (v) all forms of
legal rights and protections that may be obtained for, or may pertain to, the
Intellectual Property set forth in clauses (i) through (iv) in any country of
the world, including all letters patent, patent applications, provisional
patents, design patents, PCT filings, invention disclosures and other rights to
inventions or designs , all registered and unregistered copyrights in both
published and unpublished works , all trademarks, service marks and other
proprietary indicia (whether or not registered) , trade secret rights, mask
works, moral rights or other literary property or authors rights, and all
applications, registrations, issuances, divisions, continuations, renewals,
reissuances and extensions of the foregoing.

     

    (b)           Neither
the Acquired Company nor PRMC owns any right, title or interest in or to any
Intellectual Property other than the names “Pacific Road,” “Pacific Road Mining”
and “Pacific Road Mining Chile” (the “Pacific Road Marks”).

     

    3.14        Absence of Certain Changes
or Events. From the
Acquired Balance Sheet Date (in the case of PRMC) and from July 15, 2010 (in the
case of the Acquired Company) to the Closing Date:

     

    
      	
               
      

            	
              (i)

            	
              there
      has not been any material adverse change in the condition (financial or
      otherwise), operations, prospects or results of operations of the Acquired
      Company and its Subsidiary taken as a
whole;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              neither
      the Acquired Company nor  its Subsidiary has amended or changed
      its Charter Documents;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              neither
      the Acquired Company nor its Subsidiary has declared, set aside or paid
      any dividend or other distribution (whether in cash, stock or property)
      with respect to any Equity Security or any other
  security;

            

    

     

    
      	
               
      

            	
              (iv)

            	
              neither
      the Acquired Company nor its Subsidiary has split, combined or
      reclassified any Equity Security or other security, or issued, or
      authorized for issuance, any Equity Security or other
      security;

            

    

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (v)

            	
              neither
      the Acquired Company nor its Subsidiary has altered any term of any
      outstanding Equity Security or other
security;

            

    

     

    
      	
               
      

            	
              (vi)

            	
              neither
      the Acquired Company nor its Subsidiary has hired any employee or
      otherwise incurred in any material labor or social security
      liability;

            

    

     

    
      	
               
      

            	
              (vii)

            	
              the
      Acquired Company nor its Subsidiary has sold, leased, transferred or
      assigned any property or  material assets of the Acquired
      Company or any such Subsidiary;

            

    

     

    
      	
               
      

            	
              (viii)

            	
              neither
      the Acquired Company nor its Subsidiary has incurred, assumed or
      guaranteed
any  Indebtedness;

            

    

     

    
      	
               
      

            	
              (ix)

            	
              neither
      the Acquired Company nor its Subsidiary has created or assumed any Lien on
      the Alfredo Property or has created or assumed any material Lien on any
      other asset;

            

    

     

    
      	
               
      

            	
              (x)

            	
              neither
      the Acquired Company nor its Subsidiary has made any loan, advance or
      capital contribution to, or investment in, any Person other than travel
      loans, payments or advances in the ordinary course of business consistent
      with past practice;

            

    

     

    
      	
               
      

            	
              (xi)

            	
              neither
      the Acquired Company nor its Subsidiary has entered into any Contract in
      amounts exceeding $25,000; (i) the Option to Purchase Agreement has not
      been modified, and (ii) no rights thereunder have been waived or
      accelerated;

            

    

     

    
      	
               
      

            	
              (xii)

            	
              there
      has not been any material violation of or conflict with any Law to which
      the business, operations, assets or properties of the Acquired Company or
      its Subsidiary are subject;

            

    

     

    
      	
               
      

            	
              (xiii)

            	
              none
      of Sellers, the Acquired Company or the Subsidiary of the Acquired Company
      has agreed or entered into any arrangement to take any action which, if
      taken prior to the date hereof, would have made any representation or
      warranty set forth in this Article III.  untrue or
      incorrect;

            

    

     

    
      	
               
      

            	
              (xiv)

            	
              To
      the Sellers’ Knowledge there has not been any material damage, destruction
      or loss with respect to the property and assets of the Acquired Company or
      its Subsidiary;

            

    

     

    
      	
               
      

            	
              (xv)

            	
              none
      of the Acquired Company or its Subsidiary has made any change in
      accounting practices;

            

    

     

    
      	
               
      

            	
              (xvi)

            	
              none
      of the Acquired Company or its Subsidiary has made any Tax election,
      changed its method of Tax accounting or settled any claim for Taxes;
      or

            

    

     

    
      	
               
      

            	
              (xvii)

            	
              none
      of Sellers, the Acquired Company or  its Subsidiary has agreed,
      whether in writing or otherwise, to do any of the
    foregoing.

            

    

     

    
      	
               
      

            	
              (xviii)

            	
              Pursuant
      to the Letter of Intent executed by Sellers and Buyer on April 20 2010,
      Buyer had to make a payment in the amount of $90,000 to the Sellers, which
      the latter instructed the Buyer to deliver directly to PRMC. PRMC recorded
      the $90,000 as an account payable to Sellers (the “PRMC
      Payable”).

            

    

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    3.15        Contracts.

     

    (a)           The
Seller Disclosure Schedule contains a complete and accurate list of each
Contract or series of related Contracts to which the Acquired Company
or  its Subsidiary is a party or is subject, or by which any of their
respective assets are bound:

     

    (b)           Other
than the Letter of Intent executed by Sellers and Buyer on April 20 2010, the
Option to Purchase Agreement is the only material contract entered into by the
Acquired Company or PRMC (the “Material Contract”), which is
in full force and effect and valid and enforceable in accordance with its
terms.

     

    (c)           Neither
the Acquired Company nor its Subsidiary is, and to each Seller’s Knowledge, no
other party thereto is, in default in the performance, observance or fulfillment
of any obligation, covenant, condition or other term contained in the Material
Contract, and neither the Acquired Company nor its Subsidiary has given or
received notice to or from any Person relating to any such alleged or potential
default that has not been cured. To Sellers’ Knowledge, no event has occurred
which with or without the giving of notice or lapse of time, or both, may
conflict with or result in a violation or breach of, or give any Person the
right to exercise any remedy under or accelerate the maturity or performance of,
or cancel, terminate or modify, the Material Contract.

     

    (d)           Sellers
have delivered accurate and complete copies of each Contract listed in the
Seller Disclosure Schedule to Buyer.

     

    (e)           All
Contracts other than Material Contracts to which the Acquired Company
or  its Subsidiary is a party or is subject, or by which any of their
respective assets are bound (collectively, the “Minor Contracts”), are in all
material respects valid and enforceable in accordance with their terms. Neither
the Acquired Company nor  its Subsidiary is in default in the
performance, observance or fulfillment of any obligation, covenant or condition
contained therein, and no event has occurred which with or without the giving of
notice or lapse of time, or both, would constitute a default thereunder by the
Acquired Company or  its Subsidiary, except in either case where such
default individually or in the aggregate would not reasonably be expected to
have a Material Adverse Effect on the Acquired Company.

     

    (f)           The
Option to Purchase Agreement grants to PRMC an exclusive, irrevocable and
unconditional (except for the payment of the corresponding option fees) right to
purchase the Alfredo Property. PRMC has paid to Sociedad Contractual Minera la
Fortaleza all the option fees due in consideration for the option to purchase
the Alfredo Property up to the Closing Date.  Each of the current and
former parties to the Option Purchase Agreement took all necessary corporate
actions and exercised all powers and/or actions necessary to authorize the
execution, delivery and performance by it of the Option to Purchase Agreement,
including each of its amendments and assignments.

     

    3.16        Litigation.

     

    (a)           There
is no action, suit or proceeding, claim, arbitration, litigation or
investigation (each, an “Action”) (i) pending or, to
any Seller’s Knowledge, threatened against or affecting the Acquired Company
or  its Subsidiary, or (ii) that challenges or seeks to prevent,
enjoin or otherwise delay the transactions contemplated by this Agreement. No
event has occurred or circumstances exist that may give rise or serve as a basis
for any such Action. There is no Action against any current or, to any Seller’s
Knowledge, former director or employee of the Acquired Company or its Subsidiary
with respect to which the Acquired Company or any such Subsidiary has or is
reasonably likely to have an indemnification obligation.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    (b)           There
is no unsatisfied judgment, penalty or award against or affecting the Acquired
Company or  its Subsidiary or any of their respective properties or
assets.  To Seller’s Knowledge there is no Order to which the Acquired
Company or its Subsidiary or any of their respective properties or assets are
subject.

     

    3.17        Employees and Benefit
Plans. Neither
the Acquired Company nor PRMC have any employees, labor or social security
liability or pension or benefit plan.

     

    3.18        Environmental.

     

    (a)           As
used in this Agreement, the following words and terms have the following
definitions:

     

    
      	
               
      

            	
              (i)

            	
              “Environment” the global
      system made up of natural and artificial elements, whose physical,
      chemical and biological nature, along with their cultural interactions,
      are in constant change by all human or natural actions, which govern and
      condition the existence and further development of life and each one of
      its forms.

            

    

     

    
      	
               
      

            	
              (ii)

            	
              “Environmental Action”
      means any claim, proceeding or other Action brought or threatened under
      any Environmental Law or otherwise asserting that the Acquired Company or
      a Subsidiary of the Acquired Company has incurred any Pre-Closing
      Environmental Liability.

            

    

     

    
      	
               
      

            	
              (iii)

            	
              “Environmental Laws”
      means any and all applicable Laws and Authorizations issued, promulgated
      or entered into by any Chilean Governmental Entity relating to the
      Environment, human health, worker health and safety, preservation or
      reclamation of natural resources, or to the management, handling, use,
      generation, treatment, storage, transportation, disposal, manufacture,
      distribution, formulation, packaging, labeling, Release or threatened
      Release of or exposure to Hazardous Substances, whether now existing or
      subsequently amended or enacted.,

            

    

     

    
      	
               
      

            	
              (iv)

            	
              “Environmental Permits”
      means any Authorization under Environmental Law, and includes any and all
      Orders issued or entered into by a Governmental Entity under Environmental
      Law.

            

    

     

    
      	
               
      

            	
              (v)

            	
              “Hazardous Substances”
      means all explosive materials, radioactive materials, hazardous materials,
      toxic materials, wastes, chemicals, petroleum, petroleum by-products and
      petroleum products (including crude oil or any fraction thereof), asbestos
      and asbestos containing materials, and all other materials, chemicals and
      substances that are regulated by, form the basis of liability or are
      defined as hazardous, extremely hazardous, toxic or words of similar
      import, under any Environmental
Law.

            

    

     

    
      	
               
      

            	
              (vi)

            	
              “Release” means any
      spilling, leaking, pumping, pouring, emitting, emptying, discharging,
      injecting, escaping, leaching, dumping, or disposing of Hazardous
      Substances into the Environment.

            

    

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    (b)           Each
of the Acquired Company and its Subsidiary has been, and is currently, in
compliance with all Environmental Laws. None of Seller, the Acquired Company
or  its Subsidiary has received notice alleging that the Acquired
Company or  its Subsidiary is not in such compliance with
Environmental Laws.

     

    (c)           There
are no past, pending or, to any Seller’s Knowledge, threatened Environmental
Actions against or affecting the Acquired Company its Subsidiary or the Mining
Concessions, and no Seller is aware of any facts or circumstances which could be
expected to form the basis for any Environmental Action against the Acquired
Company or any such Subsidiary.

     

    (d)           Neither
the Acquired Company nor its Subsidiary has entered into or agreed to any Order,
and to Sellers Knowledge neither the Acquired Company nor its Subsidiary is
subject to any Order, relating to compliance with any Environmental Law or to
investigation or cleanup of a Hazardous Substance under any Environmental
Law.

     

    (e)           No
Lien has been attached to, or asserted against, the assets, the Mining
Concessions, the or rights of the Acquired Company or  its Subsidiary
pursuant to any Environmental Law, and, to Sellers’ Knowledge, no such Lien has
been threatened. To Sellers’ Knowledge, there are no facts, circumstances or
other conditions that could be expected to give rise to any Liens on or
affecting any Mining Concession

     

    (f)           To
Sellers Knowledge, there has been no treatment, storage, disposal or Release of
any Hazardous Substance at, from, into, on or under any Mining
Concession.

     

    (g)           Neither
the Acquired Company nor its Subsidiary has received information requests from
the Comisión Nacional del
Medio Ambiente,  Ministerio del Medio Ambiente or Superintendencia del Medio
Ambiente in Chile.

     

    (h)           To
Sellers Knowledge, there is no asbestos containing material or lead based paint
containing materials in, at, on, under or within the Mining
Concessions.

     

    (i)           Neither
the Acquired Company nor its Subsidiary has transported or arranged for the
treatment, storage, handling, disposal, or transportation of any Hazardous
Material to any off-site location which is an Environmental Clean-up
Site.

     

    3.19        Insurance.
There are
no insurance policy which covers the Acquired Company or its Subsidiary or their
respective businesses, properties, assets or directors.

     

    3.20        Books and Records.
The
minute books (containing the records of the meetings, or written consents in
lieu of such meetings, of the shareholders, the board of directors and any
committees of the board of directors), the register of members of the Acquired
Company and its Subsidiary are correct and complete, and have been maintained in
accordance with the applicable Law and sound business practices. The minute
books of the Acquired Company and its Subsidiary contain accurate and complete
records of all meetings, or actions taken by written consent, of the
shareholders, the board of directors and any committees of the board of
directors, of the Acquired Company and its Subsidiary, and no meeting, or action
by written consent in lieu of such meeting, of any such shareholder, board of
directors or committee of such board of directors, has been held for which
minutes or written resolutions have not been prepared and not contained in the
minute books. At the Closing, all of the books and records of the Acquired
Company and its Subsidiary (including corporate, accounting and financial
records) will be in the possession of the Acquired Company.  At the
Closing, Sellers will deliver, or cause to be delivered, to Buyer or its
designee all of the minute books and other books and records of the Acquired
Company and its Subsidiary, subject to any restrictions under applicable
Law.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    3.21        Brokers or Finders.
No
broker, finder or investment banker is entitled to any brokerage, finder’s or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of any Seller or the
Acquired Company or its Subsidiary, other than the finder fee in the amount of
$200,000 worth of Purchase Price Shares  payable to Rodman and Renshaw
LLC, which fee will be exclusively borne by Sellers

     

    3.22        Bank Accounts.
PRMC
maintains the bank account No 049-03384-00 at Banco de Chile.  Neither
PRMC or the Acquired Company has any other account, lock box or safe deposit
box.

     

    3.23        Powers of Attorney.
As of the
Closing Date the powers of attorney executed by or on behalf of the Acquired
Company or its Subsidiary in favor of any Person will be cancelled.

     

    3.24        Support Services.
Sellers
provide no support or other services to the Acquired Company and its
Subsidiary

     

    3.25        Mining Matters.
Without
limiting the generality of any of the
foregoing representations and warranties:

     

    (a)           Seller
Disclosure Schedule contains a list of all the Mining
Concessions.   Other than the Alfredo Property, PRMC does not
have any option to purchase or ownership interest in any mining
concession.

     

    (b)           None
of the Seller Company, their Affiliates, directors or executives own any mining
concession  within a distance of 5 (five) kilometers from the
boundaries of the Alfredo Property;

     

    (c)           There
are no Mines in the Alfredo Property and to the Seller’s Knowledge, PRMC has
conducted all exploration and evaluation activities  in all material
respects, in accordance with generally accepted mining practices and applicable
Laws;

     

    (d)           The
Sellers do not own or lease  any item of operating equipment required
in connection with the operation of its Mineral Interests;

     

    (e)           PRMC
will have good and defensible title to the Alfredo Property upon exercising its
right to purchase under the Option to Purchase Agreement (provided that the
parties to the Option to Purchase Agreement comply with their obligation
thereunder in accordance with its terms and Chilean Law) free and clear of any
Liens except for the Liens arising from the Option to Purchase
Agreement;

     

    (f)           There
are no Mineral Leases and other Contracts pursuant to which the Acquired Company
or its Subsidiary leases or otherwise acquires or obtains operating rights
affecting any Mining Concession or real property;

     

    (g)           There
are no royalties, overriding royalties and other burdens on production in
connection with the Alfredo Property other than those stated in the Option to
Purchase Agreement. All expenses relating to the ownership of the Mineral
Interests have been timely and properly paid or are pending payment and are
within the payment terms set forth in the contracts concerning the Mineral
Interest;

     

    (h)           To
Sellers’ Knowledge none of the Mineral Interests is subject to any preferential
purchase, consent or similar right (other than the Option to Purchase Agreement)
which would become operative as a result of the transactions contemplated by
this Agreement;

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    (i)           To
Sellers’ Knowledge no Person other than the Acquired Company or a Subsidiary of
the Acquired Company has any right (whether preferential, subordinated,
previous  or subsequent) that may limit, conflict with or otherwise
affect the Mineral Interest, except as provided for in the Option to Purchase
Agreement;

     

    (j)           The
Acquired Company or its Subsidiary has all necessary  rights and
interests relating to the Mineral Interests granting the Acquired Company or its
Subsidiary, as applicable, the right and ability to explore for Minerals, ore
and metals as currently conducted;

     

    (k)           To
Sellers’ Knowledge the Mineral Interests: (A) have been properly granted and
issued by the appropriate Governmental Body; (B) are clear of all Liens (except
for those provided in the Option to Purchase Agreement) and are not the subject
of any unsatisfied penalties or unresolved disputes; (C) are not subject to the
rights or claims of any third party; (D) do not overlap any third-party claim
such as may entitle such third party to explore or mine any substance likely to
be granted under a mining concession on the same property; and

     

    (l)           To
Sellers’ Knowledge all terms of, and all requirements in connection with the
Mineral Interests have been met, including the timely payment of all annual fees
and compliance with all environmental obligations and all works performed by
PRMC.

     

    3.26        Representations Relating to
Sellers’ Acquisition of the Purchase Price Shares.

     

    (a)           Each
Seller is acquiring the Purchase Price Shares for investment for its own account
and not with the view to, or for resale in connection with, any distribution
thereof in violation of US Federal, applicable state securities laws or the
Lock-Up provision under this Agreement  Each Seller understands and
acknowledges that the Purchase Price Shares have not been registered under the
Securities Act or any state or foreign securities laws, by reason of a specific
exemption from the registration provisions of the Securities Act and applicable
state and foreign securities laws, which depends upon, among other things, the
bona fide nature of the investment intent as expressed herein.  Each
Seller further represents that it does not have any contract, undertaking,
agreement or arrangement with any Person to sell, transfer or grant
participation to any third person with respect to any of the Purchase Price
Shares.

     

    (b)           Each
Seller understands that an active public market for Buyer Common Stock may not
now exist and that there may never be an active public market for the Purchase
Price Shares acquired under this Agreement.

     

    (c)           Each
Seller either (i) is an “accredited investor” as defined in Rule 501 of
Regulation D as promulgated by the Securities and Exchange Commission under the
Securities Act or (ii) is not a “U.S. Person” as defined in Regulation S as
promulgated by the Securities and Exchange Commission under the Securities Act,
and, in each case, shall submit to Buyer such further assurances of such status
as may be reasonably requested by Buyer.

     

    (d)           Each
Seller, if a non-U.S. Person, agrees that it is acquiring the Shares in an
offshore transaction pursuant to Regulation S and hereby represents to Buyer as
follows:

     

    
      	
               
      

            	
              (i)

            	
              Such
      Seller is outside the United States when receiving and executing this
      Agreement;

            

    

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (ii)

            	
              Such
      Seller has not acquired the Shares as a result of, and will not itself
      engage in, any “directed selling efforts” (as defined in Regulation S) in
      the United States in respect of the Shares which would include any
      activities undertaken for the purpose of, or that could reasonably be
      expected to have the effect of, conditioning the market in the United
      States for the resale of the Shares; provided, however, that such Seller
      may sell or otherwise dispose of the Shares pursuant to registration of
      the Shares under the Securities Act and any applicable state and
      provincial securities laws or under an exemption from such registration
      requirements and as otherwise provided
herein;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              Such
      Seller understands and agrees that offers and sales of any of the Shares
      prior to the expiration of a period of six (6) months after the Closing
      Date (the “Distribution Compliance Period”), shall only be made in
      compliance with the safe harbor provisions set forth in Regulation S,
      pursuant to the registration provisions of the Securities Act or an
      exemption therefrom, and that all offers and sales after the Distribution
      Compliance Period shall be made only in compliance with the safe harbor
      provisions set forth in Regulation S and the registration provisions of
      the Securities Act or an exemption therefrom, and in each case only in
      accordance with all applicable securities laws;
  and

            

    

     

    
      	
               
      

            	
              (iv)

            	
              Such
      Seller understands and agrees not to engage in any hedging transactions
      involving the Shares prior to the end of the Distribution Compliance
      Period unless such transactions are in compliance with the Securities
      Act.

            

    

     

    
      	
               
      

            	
              (v)

            	
              Such
      Seller hereby represents that it has satisfied itself as to the full
      observance of the laws of its jurisdiction in connection with any
      invitation to subscribe for the Shares or any use of this Subscription
      Agreement, including: (a) any applicable legal requirements incumbent upon
      such Seller within its jurisdiction for the purchase of the Shares; (b)
      any foreign exchange restrictions applicable to such purchase; (c) any
      governmental or other consents that such Seller may need to obtain; and
      (d) the income tax and other tax consequences, if any, that may be
      relevant to the purchase, holding, redemption, sale or transfer of the
      Shares. Such Seller’s subscription and payment for, and its continued
      beneficial ownership of the Shares, will not violate any applicable
      securities or other Laws of such Seller’s
  jurisdiction.

            

    

     

    (e)           Each
Seller represents that neither it nor, to its knowledge, any Person or entity
controlling, controlled by or under common control with it, nor any Person
having a beneficial interest in it, nor any Person on whose behalf such Seller
is acting: (i) is a Person listed in the Annex to Executive Order No. 13224
(2001) issued by the President of the United States (Executive Order Blocking
Property and Prohibiting Transactions with Persons Who Commit, Threaten to
Commit, or Support Terrorism); (ii) is named on the List of Specially Designated
Nationals and Blocked Persons maintained by the U.S. Office of Foreign Assets
Control; (iii) is a non-U.S. shell bank or is providing banking services
indirectly to a non-U.S. shell bank; (iv) is a senior non-U.S. political figure
or an immediate family member or close associate of such figure; or (v) is
otherwise prohibited from investing in Buyer pursuant to applicable U.S.
anti-money laundering, anti-terrorist and asset control laws, regulations, rules
or orders (categories (i) through (v), each a “Prohibited
Seller”).  Each Seller agrees to provide Buyer, promptly upon request,
all information that is reasonably necessary or appropriate to comply with
applicable U.S. anti-money laundering, anti-terrorist and asset control laws,
regulations, rules and orders.  Each Seller consents to the disclosure
to U.S. regulators and law enforcement authorities by Buyer and its affiliates
and agents of such information about such Seller as is reasonably necessary or
appropriate to comply with applicable U.S. anti-money-laundering, anti-terrorist
and asset control laws, regulations, rules and orders.  Each Seller
acknowledges that if, following its investment in Buyer, Buyer reasonably
believes that such Seller is a Prohibited Seller or is otherwise engaged in
suspicious activity or refuses to promptly provide information that Buyer
requests, Buyer has the right or may be obligated to prohibit additional
investments, and take any other actions required by Law. 

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    (f)           Each
Seller or its duly authorized representative realizes that because of the
inherently speculative nature of business activities and investments of the kind
contemplated by Buyer, Buyer’s financial position and results of operations may
be expected to fluctuate from period to period and will, generally, involve a
high degree of financial and market risk that can result in substantial or, at
times, even total loss of the value of the Purchase Price Shares.

     

    (g)           Each
Seller acknowledges and agrees that Buyer was, at one time, a “shell company” as
defined in Rule 12b-2 under the Exchange Act.  Pursuant to Rule 144(i)
under the Securities Act, securities issued by a current or former shell company
(such as the Purchase Price Shares) that otherwise meet the holding period and
other requirements of Rule 144 nevertheless cannot be sold in reliance on Rule
144 until one year after the date on which such company filed current “Form 10
information” (as defined in Rule 144(i)) with the SEC reflecting that it ceased
being a shell company (and that, in the Company’s case, such Form 10 Information
was filed on May 14, 2010), and provided that at the time of a proposed sale
pursuant to Rule 144, the issuer is subject to the reporting requirements of
section 13 or 15(d) of the Exchange Act and has filed all reports and other
materials required to be filed by section 13 or 15(d) of the Exchange Act, as
applicable, during the preceding 12 months (or for such shorter period that the
issuer was required to file such reports and materials), other than Form 8-K
reports.  As a result, the restrictive legends on certificates for the
Purchase Price Shares set forth below cannot be removed except in connection
with an actual sale meeting the foregoing requirements.

     

    3.27        No Corrupt
Practices.

     

    (a)           None
of Sellers, the Acquired Company nor  its Subsidiary, nor any officer,
director, employee, or agent of any of them, nor any stockholder, member,
partner or other stakeholder of any of them acting on their behalf, has made any
offer, payment, promise to pay, or authorization of the payment of any money, or
offer, gift, promise to give, or authorization of the giving of anything of
value to:

     

    
      	
               
      

            	
              (i)

            	
              any
      Government Official for purposes of (A) (1) influencing any act or
      decision of such Government Official in his official capacity, (2)
      inducing such Government Official to do or omit to do any act in violation
      of the lawful duty of such official, or (3) securing any improper
      advantage; or (B) inducing such Government Official to use his influence
      with a foreign government or instrumentality thereof to affect or
      influence any act or decision of such government or instrumentality, in
      each case in order to assist any Seller, the Acquired Company
      or  its Subsidiary in obtaining or retaining business for or
      with, or directing business to, any Person;
or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              any
      foreign political party or official thereof or any candidate for foreign
      political office for purposes of (A) (1) influencing any act or decision
      of such party, official, or candidate in its or his official capacity, (2)
      inducing such party, official, or candidate to do or omit to do an act in
      violation of the lawful duty of such party, official, or candidate, or (3)
      securing any improper advantage; or (B) inducing such party, official, or
      candidate to use its or his influence with a foreign government or
      instrumentality thereof to affect or influence any act or decision of such
      government or instrumentality. in each case in order to assist any Seller,
      the Acquired Company or  its Subsidiary in obtaining or
      retaining business for or with, or directing business to, any Person;
      or

            

    

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (iii)

            	
              any
      Person, while knowing that all or a portion of such money or thing of
      value will be offered, given, or promised, directly or indirectly, to any
      Government Official, to any foreign political party or official thereof,
      or to any candidate for foreign political office, for purposes of (A) (1)
      influencing any act or decision of such Government Official, political
      party, party official, or candidate in his or its official capacity, (2)
      inducing such Government Official, political party, party official, or
      candidate to do or omit to do any act in violation of the lawful duty of
      such Government Official, political party, party official, or candidate,
      or (3) securing any improper advantage; or (B) inducing such Government
      Official, political party, party official, or candidate to use his or its
      influence with a foreign government or instrumentality thereof to affect
      or influence any act or decision of such government or instrumentality, in
      each case in order to assist any Seller, the Acquired Company
      or  its Subsidiary in obtaining or retaining business for or
      with, or directing business to, any
Person.

            

    

     

    (b)           The
representations in Section 3.27(a) shall not apply to any facilitating or
expediting payment to a Government Official, political party, or party official
the purpose of which is to expedite or to secure the performance of a routine
governmental action by a Government Official, political party, or party
official.

     

    ARTICLE IV.  REPRESENTATIONS AND WARRANTIES OF
BUYER

     

    Buyer
represents and warrants to Sellers that each statement contained in this Article
IV.   is true and correct as of the date hereof, except as set
forth in the in the disclosure schedule dated and delivered as of the date
hereof by Buyer to Sellers (the “Buyer Disclosure Schedule”),
which is attached to this Agreement and is designated therein as being the Buyer
Disclosure Schedule. The Buyer Disclosure Schedule shall be arranged in sections
corresponding to each Section of this Article IV.  . Each exception to
a representation and warranty set forth in the Buyer Disclosure Schedule shall
qualify the specific representation and warranty which is referenced in the
applicable section of the Buyer Disclosure Schedule, and no other representation
or warranty.

     

    4.1          Organization and Good
Standing. 

     

    (a)           The
Buyer is a corporation duly organized, validly existing and in good standing
under the Laws of the jurisdiction of its incorporation, has all requisite power
to own, lease and operate its properties and to carry on its business as
currently conducted and as proposed to be conducted, and is duly qualified to do
business and is in good standing as a foreign corporation in each jurisdiction
in which it owns or leases property or conducts any business so as to require
such qualification.

     

    (b)           The
Buyer is not in default under its Charter Documents. The Charter Documents of
the Buyer in the forms attached to the Buyer Disclosure Schedule are the Charter
Documents of the Buyer as in effect on the date of this Agreement.

     

    4.2          Capitalization.  

     

    (a)           The
authorized Capital Stock of the Buyer consists of 290,000,000 shares of Buyer
Common Stock and 10,000,000 shares of preferred stock, par value $0.001 per
share. As of July 28 2010, 76,625,095 shares of Buyer Common Stock are issued
and outstanding, and no shares of preferred stock are issued or
outstanding.  All of the outstanding shares of Buyer Common Stock were
duly authorized, validly issued and fully paid and are
nonassessable.

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    (b)           The
Purchase Price Shares are duly authorized, and upon transfer of the Purchase
Price Shares to Sellers in accordance with the terms of Article II.  ,
will be validly issued, fully paid and nonassessable.  The Purchase
Price Shares will be issued in compliance with applicable Laws. The Purchase
Price Shares will not be issued in violation of any Contract to which Buyer is a
party or is subject or in violation of any preemptive or similar rights of any
Person.

     

    (c)           Other
than the shares of Buyer Common Stock referred to in Section 4.2(a) and as set
forth in the Buyer Disclosure Schedule, the Buyer does not have outstanding any
Equity Securities or any other securities. Other than as set forth in the Buyer
Disclosure Schedule, the Buyer is not a party or subject to any Contract
obligating the Buyer to issue any Equity Securities or any other securities, and
there is no circumstance or condition that may give rise to a claim by any
Person that such Person is entitled to acquire any securities of the Buyer. The
Buyer does not have outstanding any bonds, debentures, notes or other
obligations the holders of which have the right to vote (or convertible into, or
exercisable or exchangeable for, securities having the right to vote) on any
matter.

     

    (d)           The
Buyer does not have outstanding or authorized any stock option, stock
appreciation, phantom stock, profit participation, or similar rights (other than
those that constitute Excluded Securities).

     

    (e)           Other
than as set forth in this Agreement or any other Transaction Document, the Buyer
is not a party or subject to any stockholder agreement, voting agreement, voting
trust or any other similar arrangement which has the effect of restricting or
limiting the transfer, voting or other rights associated with the Buyer Common
Stock.

     

    (f)           Other
than as set forth in the Buyer Disclosure Schedule, there are no obligations,
contingent or otherwise, of the Buyer to provide funds to or make any investment
(in the form of a loan, capital contribution or otherwise) in any
Person.

     

    4.3          Subsidiaries of the
Buyer.

     

    (a)           Each
Subsidiary of the Buyer is validly existing and in good standing under the Laws
of the jurisdiction of its formation, has all requisite power to own, lease and
operate its properties and to carry on its business as currently conducted and
as proposed to be conducted, and is duly qualified to do business and is in good
standing in each jurisdiction in which it owns or leases property or conducts
any business so as to require such qualification.

     

    (b)           The
outstanding shares of Capital Stock of each Subsidiary of the Buyer are duly
authorized, validly issued, fully paid and nonassessable, and are owned by the
Buyer or another Subsidiary of the Buyer free and clear of all
Liens.

     

    (c)           Other
than as set forth in the Buyer Disclosure Schedule, no Subsidiary of the Buyer
has outstanding any Equity Securities or any other securities not held by the
Buyer or another Subsidiary of the Buyer.

     

    4.4          Authority and
Enforceability. Buyer has
the requisite power and authority to enter into this Agreement and to consummate
the Acquisition. The execution and delivery of this Agreement and the
consummation of the Acquisition have been duly authorized by all necessary
corporate action on the part of Buyer. This Agreement has been duly executed and
delivered by Buyer and, assuming due authorization, execution and delivery by
the Sellers, constitutes the valid and binding obligation of Buyer, enforceable
against it in accordance with its terms, except as such enforceability may be
limited by (a) bankruptcy, insolvency, reorganization, moratorium or other
similar Laws affecting or relating to creditors’ rights generally, and (b) the
availability of injunctive relief and other equitable remedies.

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    4.5          No Conflicts;
Authorizations. 

     

    (a)           The
execution and delivery of this Agreement by Buyer do not, and the performance by
Buyer of its obligations hereunder and the consummation by Buyer of the
transactions contemplated hereby (in each case, with or without the giving of
notice or lapse of time, or both) will not, directly or indirectly, (i) violate
the provisions of any of the Charter Documents of the Buyer or any of its
Subsidiaries, (ii) violate or constitute a default, an event of default or an
event creating rights of acceleration, termination, cancellation, imposition of
additional obligations or loss of rights, or require a consent to assignment,
under any Contract (A) to which the Buyer or any of its Subsidiaries is a party,
(B) of which the Buyer or any of its Subsidiaries is a beneficiary or (C) by
which the Buyer or any of its Subsidiaries or any of their respective assets is
bound, (iii) violate or conflict with any Law, Authorization or Order applicable
to Buyer or any of its Subsidiaries, or give any Governmental Entity or other
Person the right to challenge any of the transactions contemplated by this
Agreement or to exercise any remedy, obtain any relief under or revoke or
otherwise modify any rights held under, any such Law, Authorization or Order, or
(iv) result in the creation of any Liens upon any of the assets owned or used by
the Buyer or any of its Subsidiaries.

     

    (b)           No
Authorization or Order of, registration, declaration or filing with, or notice
to, any Governmental Entity or other Person is required by or with respect to
the Buyer or any of its Subsidiaries in connection with the execution and
delivery of this Agreement and the consummation of the Acquisition and the
issuance of the Purchase Price Shares.

     

    4.6          Financial Statements.
True and
complete copies of the Buyer’s audited consolidated financial statements
consisting of the consolidated balance sheet of the Buyer and its Subsidiaries
as at June 30 in each of the years 2008 and 2009 and the related statements of
income and retained earnings, stockholders’ equity and cash flow, for the years
then ended (the “Buyer
Annual Financial
Statements”), and unaudited consolidated financial statements consisting
of the balance sheet of the Buyer and its Subsidiaries as at March 31, 2010, and
the related statements of income and retained earnings, stockholders’ equity and
cash flow for the nine-month period then ended (the “Buyer Interim Financial Statements”
and together with the Buyer Annual Financial Statements, the “Buyer Financial Statements”), are
included in the Buyer Disclosure Schedule. The Buyer Financial Statements have
been prepared in accordance with GAAP US applied on a consistent basis
throughout the periods involved, subject, in the case of the Buyer Interim
Financial Statements, to normal and recurring year-end adjustments (the effect
of which will not be materially adverse) and the absence of notes (that, if
presented, would not differ materially from those presented in the Buyer Annual
Financial Statements). The Buyer Financial Statements are based on the books and
records of the Buyer and its Subsidiaries, and fairly present the financial
condition of the Buyer and its Subsidiaries as of the respective dates they were
prepared and the results of the operations of the Buyer and its Subsidiaries for
the periods indicated. The consolidated balance sheet of the Buyer and its
Subsidiaries as of June 30, 2009, is referred to herein as the “Buyer Balance Sheet” and the date
thereof as the “Buyer
Balance Sheet Date” and
the consolidated balance sheet of the Buyer and its Subsidiaries as of March 31,
2010, is referred to herein as the “Buyer Interim Balance Sheet” and the
date thereof as the “Buyer Interim Balance Sheet Date.”
Each of the Buyer and its Subsidiaries maintains a standard system of accounting
established and administered in accordance with GAAP US.

     

    4.7          No Undisclosed
Liabilities. The Buyer
and its Subsidiaries have no Liabilities, except (a) those which are adequately
reflected or reserved against in the Buyer Balance Sheet as of the Buyer Balance
Sheet Date, and (b) those which have been incurred in the ordinary course of
business and consistent with past practice since the Buyer Balance Sheet Date
and which are not, individually or in the aggregate, material in
amount.

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    4.8          Absence of Certain Changes
or Events. Since the
Buyer Balance Sheet Date to the Closing Date:

     

    (a)           there
has not been any material adverse change in the condition (financial or
otherwise), operations, prospects or results of operations of the Buyer and its
Subsidiaries taken as a whole;

     

    (b)           neither
the Buyer nor any of its Subsidiaries has amended or changed its Charter
Documents;

     

    (c)           neither
the Buyer nor any of its Subsidiaries has declared, set aside or paid any
dividend or other distribution (whether in cash, stock or property) with respect
to any Equity Security or any other security;

     

    (d)           neither
the Buyer nor any of its Subsidiaries has split, combined or reclassified any
Equity Security or other security, or issued, or authorized for issuance, any
Equity Security or other security;

     

    (e)           neither
the Buyer nor any of its Subsidiaries has altered any term of any outstanding
Equity Security or other security;

     

    (f)           neither
the Buyer nor any of its Subsidiaries has incurred, assumed or guaranteed any
Indebtedness;

     

    (g)           neither
the Buyer nor any of its Subsidiaries has made any loan, advance or capital
contribution to, or investment in, any Person other than travel loans or
advances in the ordinary course of business consistent with past
practice;

     

    (h)           none
of the Buyer or the Subsidiaries of the Buyer has agreed or entered into any
arrangement to take any action which, if taken prior to the date hereof, would
have made any representation or warranty set forth in this Article
IV.   untrue or incorrect;

     

    (i)           there
has not been any material damage, destruction or loss with respect to the
property and assets of the Buyer or any of its Subsidiaries, whether or not
covered by insurance; or

     

    (j)           none
of the Buyer or any of its Subsidiaries has agreed, whether in writing or
otherwise, to do any of the foregoing.

     

    4.9          Litigation.

     

    (a)           There
is no Action, (i) pending or, to Buyer’s Knowledge, threatened against or
affecting the Buyer or any of its Subsidiaries, or (ii) that challenges or seeks
to prevent, enjoin or otherwise delay the transactions contemplated by this
Agreement.  No event has occurred or circumstances exist that may give
rise or serve as a basis for any such Action. There is no Action against any
current or, to Buyer’s Knowledge, former director or employee of the Buyer or
any of its Subsidiaries with respect to which the Buyer or any such Subsidiary
has or is reasonably likely to have an indemnification obligation.

     

    (b)           There
is no unsatisfied judgment, penalty or award against or affecting the Buyer or
any of its Subsidiaries or any of their respective properties or
assets.  To Buyer’s Knowledge there is no Order to which the Buyer or
any of its Subsidiaries or any of their respective properties or assets are
subject.

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

    4.10       Brokers or
Finders.  No broker, finder or investment banker is entitled to
any brokerage, finder’s or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Buyer or any of its Subsidiaries.

     

    4.11       Exchange Act
Filings.  Each document filed or required to be filed by the
Buyer pursuant to the Exchange Act (each “Buyer SEC Report”) complied and will
comply when so filed in all material respects with the Exchange Act and do not
and will not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading.

     

    4.12       Investment Company
Act.  The Buyer is not required to register as an “investment
company” as such term is defined in the Investment Company Act of 1940, as
amended.

     

    4.13       Internal
Controls.  Except as disclosed in the Buyer SEC Reports, the
Buyer and each of its Subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management’s general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP US and to maintain asset accountability;
(iii) access to assets is only permitted in accordance with management’s general
or specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.  Except as set forth in the
Buyer SEC Reports, management has not identified any weaknesses in internal
controls over financial reporting, and since the date of the Buyer Financial
Statements, there has been no change in the Buyer’s internal control over
financial reporting that has materially affected or is likely to materially
adversely affect, the Buyer’s internal control over financial
reporting.

     

    4.14       Sarbanes-Oxley.  The
Buyer is in compliance in all material respects with the applicable provisions
of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in
connection therewith that are effective as of the date hereof.

     

    4.15       No Corrupt
Practices.  Neither the Buyer, nor any officer, director,
employee, or agent of any of them, nor any stockholder, member, partner or other
stakeholder of any of them acting on their behalf, has made any offer, payment,
promise to pay, or authorization of the payment of any money, or offer, gift,
promise to give, or authorization of the giving of anything of value
to:

     

    (a)           any
Government Official for purposes of (A) (1) influencing any act or decision of
such Government Official in his official capacity, (2) inducing such Government
Official to do or omit to do any act in violation of the lawful duty of such
official, or (3) securing any improper advantage; or (B) inducing such
Government Official to use his influence with a foreign government or
instrumentality thereof to affect or influence any act or decision of such
government or instrumentality, in each case in order to assist Buyer in
obtaining or retaining business for or with, or directing business to, any
Person; or

     

    (b)           any
foreign political party or official thereof or any candidate for foreign
political office for purposes of (A) (1) influencing any act or decision of such
party, official, or candidate in its or his official capacity, (2) inducing such
party, official, or candidate to do or omit to do an act in violation of the
lawful duty of such party, official, or candidate, or (3) securing any improper
advantage; or (B) inducing such party, official, or candidate to use its or his
influence with a foreign government or instrumentality thereof to affect or
influence any act or decision of such government or instrumentality. in each
case in order to assist Buyer in obtaining or retaining business for or with, or
directing business to, any Person; or

    
      
         

      

      
        29

        
          

        

      

      
         

      

    

    (c)           any
Person, while knowing that all or a portion of such money or thing of value will
be offered, given, or promised, directly or indirectly, to any Government
Official, to any foreign political party or official thereof, or to any
candidate for foreign political office, for purposes of (A) (1) influencing any
act or decision of such Government Official, political party, party official, or
candidate in his or its official capacity, (2) inducing such Government
Official, political party, party official, or candidate to do or omit to do any
act in violation of the lawful duty of such Government Official, political
party, party official, or candidate, or (3) securing any improper advantage; or
(B) inducing such Government Official, political party, party official, or
candidate to use his or its influence with a foreign government or
instrumentality thereof to affect or influence any act or decision of such
government or instrumentality, in each case in order to assist Buyer in
obtaining or retaining business for or with, or directing business to, any
Person.

     

    (d)           The
representations in this Section 4.15 shall not apply to any facilitating or
expediting payment to a Government Official, political party, or party official
the purpose of which is to expedite or to secure the performance of a routine
governmental action by a Government Official, political party, or party
official.

     

    ARTICLE V.  COVENANTS OF SELLERS

     

    5.1         Access to
Samples.  Upon Closing, Sellers shall collaborate with Buyer in
order to facilitate the taking of possession by PRMC of the mineral samples
collected.

     

    5.2         Confidentiality.

     

    (a)           During
the period commencing on the  Closing Date and ending on the
expiration of 18 months after such Closing Date, each Seller will, and will
cause its Affiliates to, hold, and will use its reasonable best efforts to cause
its and their respective Representatives to hold, in confidence any and all
information, whether written or oral, concerning the Acquired Company and its
Subsidiary, except to the extent that such Seller can show that such information
(a) is in the public domain or becomes a part of the public domain after the
Closing through no fault of any Seller or any of their Affiliates or
(b)   such Seller or any of its Affiliates independently obtains,
other than through a breach of this Agreement, knowledge of the confidential
information after the Closing; or (c) if a Seller or any of its Affiliates or
Representatives is compelled to disclose any such information by  Law,
court order, court proceedings or the rules or policies of any stock exchange or
government or regulatory authority having jurisdiction in the matter, such
Seller shall promptly notify Buyer in writing and shall disclose only that
portion of such information which is legally required and  shall
exercise its reasonable best efforts to obtain an appropriate protective order
or other reasonable assurance that confidential treatment will be accorded such
information. The Buyer acknowledges, however, that Sellers disclosed certain
information of the Acquired Company and PRMC, pursuant to the confidentiality
agreements listed in the Seller Disclosure Schedule, prior to the Closing Date,
in order for the recipient of such information to consider the potential
purchase of the Acquired Shares, which information may be of a confidential
nature and that this Section 5.2(a) (“Confidentiality”) does not apply to any
such disclosure and to disclosures made in accordance with Section
7.1.

     

    (b)           Each
Seller will retain any of its books and records that relate to the Acquired
Company and/or its Subsidiary in accordance with Seller’s record retention
policies as presently in effect. During the period commencing on the Closing
Date and ending on the expiration of 18 months after such Closing Date, Sellers
shall not dispose of or permit the disposal of any such books and records not
required to be retained under such policies without first giving 60 days’ prior
written notice to Buyer offering to surrender the same to Buyer at Buyer’s
expense. Following the expiration of such 18 month period, Sellers may dispose
of any and all of such books and records.

    
      
         

      

      
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    5.3         Notification of Certain
Matters.  Each Seller shall give prompt notice to Buyer of (i)
any fact, event or circumstance known to it that individually or taken together
with all other facts, events and circumstances known to it, has had or is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on the Acquired Company, or that would cause or constitute a breach of
any of its representations, warranties, covenants or agreements contained
herein, (ii) any notice or other communication from any third party alleging
that the consent of such third party is or may be required in connection with
the Acquisition, (ìii) any notice or other communication from any Governmental
Entity in connection with the Acquisition, or (iv) any Actions commenced
relating to Seller, the Acquired Company or  its Subsidiary known to
it that, if pending on the date of this Agreement, would have been required to
have been disclosed pursuant to Section 3.16; provided however, that (A) the
delivery of any notice pursuant to this Section 5.3 shall not limit or otherwise
affect any remedies available to Buyer or prevent or cure any
misrepresentations, breach of warranty or breach of covenant, and (B) disclosure
by a Seller shall not be deemed to amend or supplement the Seller Disclosure
Schedule or constitute an exception to any representation or
warranty.

     

    5.4         Lock-Up; No
Shorting.

     

    (a)          
Each Seller covenants and agrees, except as provided below, not to (i) offer,
sell, contract to sell, grant any option to purchase, hypothecate, pledge or
otherwise dispose of or (ii) transfer title to any of the Purchase Price Shares
(the “Locked-up
Securities”), during the period commencing on the Closing Date and ending
on the expiration of 18 months after the Closing Date (the “Lock-up Period”), without the
prior written consent of Buyer.  Notwithstanding the foregoing, each
Seller shall be permitted from time to time during the Lock-up Period, without
the prior written consent of Buyer, to participate in any transaction in which
holders of Buyer Common Stock participate or have the opportunity to participate
pro rata, including, without limitation, a merger, consolidation or binding
share exchange involving Buyer, a disposition of Buyer Common Stock in
connection with the exercise of any rights, warrants or other securities
distributed to the Company’s stockholders, or a tender or exchange offer for
Buyer Common Stock.

     

    (b)           Each
Seller covenants and agrees that, for a period commencing on the date hereof and
terminating eighteen months after the Closing Date, such Seller will not (and
will cause its Subsidiaries not to), directly or indirectly, effect or agree to
effect any short sale (as defined in Rule 200 under Regulation SHO of the
Exchange Act), whether or not against the box, establish any “put equivalent
position” (as defined in Rule 16a-1(h) under the Exchange Act) with respect to
Buyer Common Stock, borrow or pre-borrow any shares of Buyer Common Stock, or
grant any other right (including, without limitation, any put or call option)
with respect to Buyer Common Stock or with respect to any security that
includes, relates to or derives any significant part of its value from Buyer
Common Stock or otherwise seek to hedge its position in Buyer Common
Stock.

     

    ARTICLE
VI.  COVENANTS OF BUYER

     

    6.1         Preemptive
Rights.  Except as provided below, Sellers shall have
preemptive rights as described in this Section 6.1 with respect to any
offering by Buyer of any of its Equity Securities other than Excluded Securities
(as defined below) for consideration consisting solely of cash that closes prior
to the earliest of (a) such time that Sellers, in the aggregate, have disposed
of more than 50% of the Purchase Price Shares, (b) the fourth anniversary of the
Closing and (c) the occurrence of the Contingent Milestone referred to in
Section 2.1(b)(i) (any such offering, a “Covered Offering ”)

    
      
         

      

      
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    (a)           Buyer
shall give Sellers at least 15 days prior notice (the “Preemption Notice”) of any
Covered Offering.   Sellers in aggregate  may
collectively elect, by providing a joint irrevocable notice thereof to Buyer
within ten days of the date of the Preemption Notice, to purchase up to 25% of
the Equity Securities of Buyer that are sold in the Covered Offering on the same
terms and conditions as the other investors in the Covered Offering, except that
any Seller’s investment in a Covered Offering shall be on a non-brokered private
placement basis or otherwise not subject to any commissions or discounts payable
by Buyer to any placement agents or finders. Sellers will indicate in the
Preemption Notice the allocation to each Seller of the aggregate number of
shares contained in such Preemption Notice.

     

    (b)           “Excluded Securities”
means:  (a) securities issued to employees, officers, directors, or
consultants of Buyer or its subsidiaries pursuant to any stock or option plan
duly adopted for such purpose by a majority of the non-employee members of the
Board of Directors of Buyer or a majority of the members of a committee of
non-employee directors; (b) securities issued upon the exercise or exchange of
or conversion of any securities (i) issued and outstanding on the date of this
Agreement, (ii) constituting Excluded Securities or (iii) the issuance of which
was itself subject to Sellers’ preemptive rights hereunder; (c) securities
issued in connection with bona fide strategic transactions entered into by
Buyer, whether by merger, consolidation, joint venture, acquisition, sale or
purchase of assets, sale, purchase or exchange of stock or otherwise, in each
case approved by a majority of the directors of Buyer where such directors have
determined, in good faith, that such transaction is not primarily for the
purpose of raising capital; or (d) securities issued to service providers (such
as investor relations firms) or lessors in consideration for bona fide services
provided to Buyer in each case that are approved by Buyer’s board of directors;
(e) securities issued or issuable pursuant to stock dividends, stock splits or
similar transactions; or (f) securities issued pursuant to Buyer’s ongoing
private placement offering, the initial closing of which occurred on June 9,
2010.

     

    (c)           The
preemptive rights provided for in this Section 6.1 may be assigned by the
Sellers to any fund managed by a Seller, Pacific Road Capital Management Pty
Limited or an Affiliate of any of them, which assignee fund shall then have all
of the rights of a Seller under this Section 6.1.

     

    6.2         Seller Nominee to Board of
Directors.  Provided that Sellers hold, in the aggregate, at
least 10% of the issued and outstanding Buyer Common Stock at Sellers request,
at the first regular or special meeting of the stockholders of Buyer
called  after the Closing Date for the purpose of filling positions on
the Board of Directors of Buyer, or in any written consent executed in lieu of
such a meeting of stockholders, Buyer shall nominate and recommend for approval
a number of Sellers’ designees (“Seller Candidates”) for
election to Buyer’s Board of Directors equal to the greater of (a) one, and (b)
the product, rounded down to the next full integer, of (i) the number of
directors constituting the full Board of Directors, multiplied by (ii) the
quotient of the number of shares of Buyer Common Stock then held in the
aggregate by Sellers divided by the number of shares of Buyer Common Stock then
outstanding.  Sellers acknowledge that nomination does not guarantee
election and that each Seller Candidate shall be subject to election,
re-election and removal by Buyer’s stockholders and may also be subject to
acceptance by any exchange on which Buyer’s Common Stock is traded. Moreover,
Seller Candidates shall be subject to any qualification requirements applicable
generally to the members of Buyer’s Board of Directors. The right of the Sellers
under this Section 6.3 that Buyer nominate and recommend for approval the Seller
Candidates shall also apply to each successive meeting or written consent for
the purpose of filling positions on the Board of Directors of the Buyer,
provided that at the time of such successive meeting or consent the Sellers
hold, in the aggregate, at least 10% of the issued and outstanding Buyer Common
Stock.

     

    6.3         Rule 144
Information.  With a view to making available the benefits of
certain rules and regulations of the SEC which may permit the sale of restricted
securities to the public without registration, the Buyer agrees to (i) make and
keep public information available, as those terms are understood and defined in
Rule 144 under the Securities Act at all times; (ii) file with the SEC in a
timely manner all reports and other documents  required of the Buyer
under the Exchange Act; and (iii) furnish to the Seller upon request, a written
statement as to compliance with the reporting requirements of Rule 144 and of
the Exchange Act.

    
      
         

      

      
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    6.4.  Sellers’ Options to
Invest.  (a)  Sellers shall have the right (the
“Initial Option”), exercisable by irrevocable written notice delivered to Buyer
within sixty (60) days of the Closing, to subscribe for Units (as defined below)
having an aggregate purchase price of not less than  $2,500,000 and up
to but not more than $10,000,000, at a price of $25,000 per
Unit.  Each “Unit” consists of (i) 100,000 shares of Buyer Common
Stock; and (ii) warrants to purchase 100,000 shares of Buyer Common Stock at an
exercise price of $0.50 per share until five years after the final closing date
of Buyer’s current private placement offering.  As used in this
Agreement, “Remainder Option Amount” shall mean the difference between
$10,000,000 and the aggregate purchase price of Units purchased by Sellers
pursuant to the Initial Option.

     

    (b)          Buyer
shall promptly deliver notice to Sellers of completion of a 43-101 Inferred
Resource on the Alfredo Property (the “Milestone Notice”).  Commencing
upon Buyer’s completion of a 43-101 Inferred Resource on the Alfredo Property
and on at least one lithium property in Argentina, Sellers shall have the right
(the “Milestone Option” and, together with the Initial Option, the “Seller
Options”), exercisable by irrevocable written notice (the “Milestone Exercise
Notice”) delivered to Buyer within forty-five (45) days of Buyer’s delivery of
the Milestone Notice and copies of the 43-101 Inferred Resource for each such
property together with supporting technical analysis and data, to subscribe for
shares of Buyer Common Stock having an aggregate purchase price of at least
$2,500,000 if the Initial Option was not exercised and, in any event not less
than $1,000,000 up to  a maximum of the Remainder Option Amount, at a
price per share equal to the greater of (i) the PPO Price and (ii) the thirty
day volume-weighted average price of the Buyer Common Stock on its principal
market ending with the trading day immediately preceding the date the Milestone
Exercise Notice is delivered to Buyer.

     

    (c)           Sellers
acknowledge that, although this Agreement does not create any contractual
restrictions on transfer with respect to such securities, any securities
purchased pursuant to the Seller Options (or upon exercise of warrants purchased
pursuant to the Seller Options) will constitute “restricted securities” within
the meaning of Rule 144, and the transferability of such securities will be
restricted to the extent provided by applicable law.

     

    ARTICLE
VII.  COVENANTS OF BUYER AND SELLER

     

    7.1         Public
Announcements.  Buyer or Sellers may make press releases or
other public announcements with respect to the transactions contemplated by this
Agreement, whether voluntarily or as it believes are required pursuant to any
listing agreement with any national securities exchange or stock market or
applicable securities Laws, in which case the party which intends or is required
to make the release or announcement shall allow the other party reasonable time
to comment on such release or announcement in advance of such issuance; provided, further, that each of
the parties may make internal announcements to their respective employees that
are consistent with the parties’ prior public disclosures regarding the
Acquisition and may provide a description of this Agreement on their website
after providing the Buyer reasonable time to comment on such website
information.

     

    7.2         Tax
Matters.

     

    7.3         Cooperation in Filing Tax
Returns.  Buyer and each Seller shall, and shall each cause its
Subsidiaries and Affiliates to, provide to the other such cooperation and
information, as and to the extent reasonably requested, in connection with the
filing of any Tax Return, amended Tax Return or claim for refund, determining
liability for Taxes or a right to refund of Taxes, or in conducting any audit,
litigation or other proceeding with respect to Taxes. Such cooperation and
information shall include providing copies of all relevant portions of relevant
Tax Returns reporting income or loss, together with relevant accompanying
schedules and relevant work papers, relevant documents relating to rulings and
other determinations by Taxing Authorities, and relevant records concerning the
ownership and Tax basis of property, which any such party may
possess.  Each party will retain all Tax Returns, schedules, work
papers, and all material records and other documents relating to Tax matters
during an eighteen (18) month period as from the Closing
Date.
 

    
      
         

      

      
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    7.4         Use of Certain
Names.  Within 90 days following the Closing, Buyer shall cause
PRMC to change its name in order to eliminate the use of any Names (as defined
below) therein.  In no event shall Buyer, the Acquired Company or
their respective Subsidiaries use any Names after the Closing in any manner or
for any purpose different from the use of such Names by the Acquired Company and
its Subsidiary, as the case may be, during the 180-day period preceding the
Closing Date. “Names” means the “Pacific Road Marks” or any name, logo or
trademark that includes “Pacific Road,” any variation and derivatives thereof
and any other logos or trademarks of Sellers or their Affiliates after the
Closing.

     

    7.5         Further
Assurances.  Subject to the terms of this Agreement, each
Seller and Buyer shall execute such documents and other instruments and take
such further actions as may be reasonably required to carry out the provisions
hereof  or consummate the Acquisition.

     

    ARTICLE
VIII.  DELIVERABLES

     

    8.1         Deliveries by
Buyer.  On or prior to the Closing Date, Buyer has delivered to
the Sellers, in form and substance satisfactory to the Sellers, the
following:

     

    (a)           A
notice informing the PPO Price and the indications of how it was
calculated.

     

    (b)           Facsimile
copies of the certificates representing the Purchase Price Shares issued in
accordance with Schedule 2.1 (d), originals to be delivered by Buyer to Seller
within 15 calendar days from the Closing Date.

     

    (c)           A
letter addressed to the Sellers confirming that the Buyer has completed, to its
satisfaction, the Due Diligence with respect to the Acquired Company and it’s
Subsidiary. Sellers
shall not be exempt from liability if Buyer or
its advisors should have known from their review of documents contained in Exhibit A or
the transaction that any of
the covenants, representations or warranties contained in this agreement were
not accurate or complete.  Sellers shall be liable for Losses whether
or not Buyer had reason to know of the corresponding Liabilities, as a result of
the Due Diligence.

     

    (d)           A
letter addressed to the Sellers confirming that Buyer, to the maximum extent
permitted by applicable Law, will ensure that the Acquired Company and its
Subsidiary do not take any action or proceeding or make any claim or demand
against the retiring directors and/or the retiring general manager in respect of
any act or omission on the part of such director or general manager before the
Closing Date, other than any matter arising from willful misconduct or fraud of
that director or general manager. The Buyer acknowledges that this letter is for
the benefit of the retiring directors and retiring general manager, and is held
in trust for them by the Sellers.

     

    8.2         Deliveries by
Sellers.  On or prior to the Closing Date, each of the Sellers,
as applicable, has delivered to Buyer, in form and substance satisfactory to
Buyer, the following: 

     

    (a)           Executed
instruments of transfer , a resolution of the board of directors of the Acquired
Company noting and approving the transfer of the Acquired Shares from Sellers to
the Buyer and copy of the members register of the Acquired Company evidencing
the transfer of the Acquired Shares to Buyer.

     

    (b)           Duly
executed transfer documents (“Traspasos de Acciones”) of PRMC Minority
Shareholding to the Affiliate of the Buyer designated by Buyer.

    
      
         

      

      
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    (c)           Original
share certificates of PRMC Minority Shareholding in the name of Carlos Alberto
Reyes Comandari and Alejandra Pérez Rossi duly cancelled and newly issued shares
certificate of PRMC in the name of the Affiliate designated by
Buyer.

     

    (d)           The
shareholders’ registry of PRMC evidencing the transfer of PRMC Minority
Shareholding to the Affiliate designated by Buyer, board minute book of PRMC,
and any other applicable corporate book.

     

    (e)           Duly
signed resignations, effective as of the Closing date, of all the retiring
directors.

     

    (f)           Duly
signed resignation of the retiring general manager.

     

    (g)           Resolution
passed by the board of directors of the Subsidiary acknowledging the resignation
of the retiring directors of the Subsidiary and appointing the incoming
directors designated by Buyer, and revoking all of the outstanding powers of
attorney issued by the Subsidiary at any time prior to Closing and granting new
powers of attorney pursuant to the structure designated by Buyer.

     

    (h)           Copy
of a written agreement executed on behalf of Rodman & Renshaw LLC,
confirming that Rodman & Renshaw LLC will look only to Sellers for payment
of its finder’s fee and shall not seek any compensation from Buyer, the Acquired
Company or any of its Subsidiaries.

     

    (i)           Duly
signed assignment agreement of the PRMC Payable from Sellers to the Acquired
Company.

     

    ARTICLE IX.  AVAILABLE
REMEDIES

     

    Any party
shall be entitled to proceed for specific performance and  shall have
the right to recover damages sustained by such party as a result of any breach
by the other party of any representation, warranty, covenant or agreement
contained in this Agreement or negligent or willful misrepresentation (subject
to the terms, conditions and limitations set forth in Article X). 

     

    Accordingly,
Buyer and the Sellers hereby irrevocably waive the right to terminate this
Agreement and/or any agreement or document delivered and executed to carry out
the provisions hereof or consummate the Acquisition.

     

    ARTICLE
X.  INDEMNIFICATION

     

    10.1       Survival.

     

    (a)           All
representations and warranties contained in this Agreement, or in any Schedule,
certificate or other document delivered pursuant to this Agreement, shall
survive the Closing for a period of 18 months.

     

    (b)           The
covenants and agreements which by their terms do not contemplate performance
after the Closing Date and the ones that contemplate performance after the
Closing Date shall survive the Closing for a period of 18
months.

    
      
         

      

      
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    (c)           The
period for which a representation or warranty, covenant or agreement survives
the Closing is referred to herein as the “Applicable Survival Period.”
In the event a Notice of Claim for indemnification under Section 10.2 or 10.3 is
given within the Applicable Survival Period, the representation or warranty,
covenant or agreement that is the subject of such indemnification claim (whether
or not formal legal action shall have been commenced based upon such claim)
shall survive with respect to such claim until such claim is finally resolved,
provided, however, that a non Third Party Claim will not be enforceable against
Sellers or Buyer, as applicable, and is to be taken for all purposes to have
been withdrawn unless any legal proceedings in connection with such claim are
commenced within 6 months after the Notice of Claim. The Indemnitor shall
indemnify the Indemnitee for all Losses (subject to the limitations set forth
herein, if applicable) that the Indemnitee may incur in respect of such claim,
regardless of when incurred.

     

    10.2       Indemnification by
Sellers.

     

    (a)           Each
Seller shall indemnify and defend Buyer and its Affiliates (including, following
the Closing, the Acquired Company and its Subsidiary) and their respective
stockholders, members, managers, officers, directors, employees, agents,
successors and assigns  (the “Buyer Indemnitees”) against,
and shall hold them harmless from, any and all Losses resulting from, arising
out of, or incurred by any Buyer Indemnitee in connection with, or otherwise
with respect to:

     

    
      	
               
      

            	
              (i)

            	
              the
      failure of any representation and warranty  by any Seller
      contained in this Agreement, the Seller Disclosure Schedule, or any
      certificate or other document furnished  to Buyer in connection
      with the transactions contemplated by this Agreement, to be true and
      correct in all respects as of the date of this
  Agreement;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              any
      breach of any covenant or agreement of any Seller contained in this
      Agreement, the Seller Disclosure Schedule, or any certificate or other
      document furnished to Buyer in connection with the transactions
      contemplated by this Agreement;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              any
      fees, expenses or other payments incurred or owed by any Seller, the
      Acquired Company or  its Subsidiary to any agent, broker,
      investment banker or other firm or person retained or employed by it in
      connection with the transactions contemplated by this
      Agreement.

            

    

     

    (b)           Sellers
shall not be liable for any Loss or Losses pursuant to Section 10.2(a)(i)
(“Buyer Warranty
Losses”)  unless and until the  aggregate amount of
all  Buyer Warranty Losses incurred by the Buyer Indemnitees exceeds
$100,000, in which event Seller shall be liable for such Buyer Warranty Losses
from the first dollar; provided that nothing
contained in this Section 10.2(b) shall be deemed to limit or restrict in any
manner any rights or remedies which Buyer has, or might have, at Law, in equity
or otherwise, based on fraud or a willful misrepresentation or willful breach of
warranty hereunder. 

     

    (c)           The
indemnification provisions contained in this Agreement reflect the contractual
agreement of Buyer and Sellers regarding risk allocation with respect to Losses
and other matters.  By agreeing to these provisions, none of Sellers,
the Acquired Company nor its Subsidiary are acknowledging any wrongdoing or
liability with respect to any matter, and these provisions shall not act as a
waiver or otherwise limit any defenses that may be available to any Seller, the
Acquired Company or its Subsidiary with respect to any Third Party
Claims.

     

    10.3       Indemnification by
Buyer.

     

    (a)           Buyer
shall indemnify and defend each Seller and its Affiliates  (the “Seller Indemnitees”) against,
and shall hold them harmless from, any and all Losses resulting from, arising
out of, or incurred by any Seller Indemnitee in connection with, or otherwise
with respect to:

    
      
         

      

      
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              (i)

            	
              the
      failure of any representation and warranty  by Buyer contained
      in this Agreement, the Buyer Disclosure Schedule, or any certificate or
      other document furnished  to Sellers in connection with the
      transactions contemplated by this Agreement, to be true and correct in all
      respects as of the date of this Agreement;
and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              any
      breach of any covenant or agreement of Buyer contained in this Agreement
      or any other document furnished  to Sellers in connection with
      the transactions contemplated by this
Agreement.

            

    

     

    (b)           Buyer
shall not be liable for any Loss or Losses pursuant to Section 10.3(a)(i)
(“Seller Warranty
Losses”) (i) unless and until the aggregate  amount of all
Seller Warranty Losses incurred by the Seller Indemnitees exceeds $100,000, in
which event Buyer shall be liable for all Seller Warranty Losses from the first
dollar provided
that nothing contained in this Section 10.3(b) shall be deemed to limit
or restrict in any manner any rights or remedies which Sellers have, or might
have, at Law, in equity or otherwise, based on fraud or willful
misrepresentations or willful breach of warranty hereunder.

     

    (c)           The
indemnification provisions contained in this Agreement reflect the contractual
agreement of Buyer and Sellers regarding risk allocation with respect to Losses
and other matters.  By agreeing to these provisions, neither Buyer nor
its Subsidiaries are acknowledging any wrongdoing or liability with respect to
any matter, and these provisions shall not act as a waiver or otherwise limit
any defenses that may be available to Buyer or its Subsidiaries with respect to
any Third Party Claims.

     

    10.4       Indemnification Procedures
for Third Party Claims.

     

    (a)           In
the event that an Indemnitee receives notice of the assertion of any claim or
the commencement of any Action by a third party in respect of which indemnity
may be sought under the provisions of this Article X.   (“Third Party Claim”), the
Indemnitee shall promptly notify the Indemnitor in writing (“Notice of Claim”) of such
Third Party Claim. Failure or delay in notifying the Indemnitor will not relieve
the Indemnitor of any liability it may have to the Indemnitee, except and only
to the extent that such failure or delay causes actual harm to the Indemnitor
with respect to such Third Party Claim. The Notice of Claim shall set forth the
amount, if known, or, if not known, an estimate of the foreseeable maximum
amount of claimed Losses (which estimate shall not be conclusive of the final
amount of such Losses) and a description of the basis for such Third Party
Claim.

     

    (b)           Subject
to the further provisions of this Section 10.4, the Indemnitor will have 10 days
(or less if the nature of the Third Party Claim requires) from the date on which
the Indemnitor received the Notice of Claim to notify the Indemnitee that the
Indemnitor will assume the defense or prosecution of such Third Party Claim and
any litigation resulting therefrom with counsel of its choice (reasonably
satisfactory to the Indemnitee) and at its sole cost and expense (a “Third Party Defense”). If the
Indemnitor assumes the Third Party Defense in accordance with the preceding
sentence, the Indemnitor shall be conclusively deemed to have acknowledged that
the Third Party Claim is within the scope of its indemnity obligation hereunder
and shall hold the Indemnitee harmless from and against the full amount of any
Losses resulting therefrom (subject to the terms and conditions of this
Agreement). Any Indemnitee shall have the right to employ separate counsel in
any such Third Party Defense and to participate therein, but the fees and
expenses of such counsel shall not be at the expense of the Indemnitor unless
(A) the Indemnitor shall have failed, within the time after having been notified
by the Indemnitee of the existence of the Third Party Claim as provided in the
first sentence of this paragraph (b), to assume the defense of such Third Party
Claim, (B) the employment of such counsel has been specifically authorized in
writing by the Indemnitor, or (C) under applicable standards of professional
conduct, a conflict on any significant issue exists between the Indemnitee and
the Indemnitor in respect of the Third Party Claim.

    
      
         

      

      
        37

        
          

        

      

      
         

      

    

    (c)           The
Indemnitor will not be entitled to assume the Third Party Defense
if:

     

    
      	
               
      

            	
              (i)

            	
              the
      Third Party Claim seeks, in addition to or in lieu of monetary damages,
      any injunctive or other equitable
relief;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the
      Third Party Claim relates to or arises in connection with any criminal
      proceeding, action, indictment, allegation or
    investigation;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              the
      Third Party Claim relates to or arises in connection with any
      Environmental Action;

            

    

     

    
      	
               
      

            	
              (iv)

            	
              the
      Third Party Claim involves a material customer or supplier of the Acquired
      Company or  its
Subsidiary;

            

    

     

    
      	
               
      

            	
              (v)

            	
              the
      Indemnitee reasonably believes an adverse determination with respect to
      the Third Party Claim would be detrimental to or injure the Indemnitee’s
      reputation or future business
prospects;

            

    

     

    
      	
               
      

            	
              (vi)

            	
              the
      Indemnitor has failed or is failing to vigorously prosecute or defend such
      Third Party Claim;

            

    

     

    
      	
               
      

            	
              (vii)

            	
              the
      Indemnitor fails to provide reasonable assurance to the Indemnitee of its
      financial capacity to prosecute the Third Party Defense and provide
      indemnification in accordance with the provisions of this Agreement;
      or

            

    

     

    
      	
               
      

            	
              (viii)

            	
              the
      Third Party Claim would give rise to Losses which are more than the amount
      indemnifiable by the Indemnitor pursuant to this Article
  X.

            

    

     

    (d)           If
by reason of the Third Party Claim a Lien, attachment, garnishment or execution
is placed upon any of the property or assets of the Indemnitee, the Indemnitor,
if it desires to exercise its right to assume such Third Party Defense, must
furnish a satisfactory indemnity bond to obtain the prompt release of such Lien,
attachment, garnishment or execution.

     

    (e)           If
the Indemnitor assumes a Third Party Defense, it will take all steps necessary
in the defense, prosecution, or settlement of such claim or litigation and will
hold all Indemnitees harmless from and against all Losses caused by or arising
out of such Third Party Claim, subject to the terms and conditions of this
Agreement. The Indemnitor will not consent to the entry of any judgment or enter
into any settlement except with the written consent of the Indemnitee; provided that the consent of
the Indemnitee shall not be required if all of the following conditions are met:
(i) the terms of the judgment or proposed settlement include as an unconditional
term thereof the giving to the Indemnitees by the third party of a release of
the Indemnitees from all liability in respect of such Third Party Claim, (ii)
there is no finding or admission of (A) any violation of Law by the Indemnitees
(or any Affiliate thereof), (B) any violation of the rights of any Person and
(C) no effect on any other Action or claims of a similar nature that may be made
against the Indemnitees (or any Affiliate thereof), and (iii) the sole form of
relief is monetary damages which are paid in full by the Indemnitor. The
Indemnitor shall conduct the defense of the Third Party Claim actively and
diligently, and the Indemnitee will provide reasonable cooperation in the
defense of the Third Party Claim. So long as the Indemnitor is reasonably
conducting the Third Party Defense in good faith, the Indemnitee will not
consent to the entry of any judgment or enter into any settlement with respect
to the Third Party Claim without the prior written consent of the Indemnitor
(not to be unreasonably withheld or delayed). Notwithstanding the foregoing, the
Indemnitee shall have the right to pay or settle any such Third Party Claim,
provided that in such event it
shall waive any right to indemnity therefor by the Indemnitor for such claim
unless the Indemnitor shall have consented to such payment or settlement (such
consent not to be unreasonably withheld or delayed). If the Indemnitor is not
reasonably conducting the Third Party Defense in good faith, the Indemnitee
shall have the right to consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the prior written
consent of the Indemnitor and the Indemnitor shall reimburse the Indemnitee
promptly for all Losses incurred in connection with such judgment or settlement,
subject to the terms and conditions of this Agreement.

    
      
         

      

      
        38

        
          

        

      

      
         

      

    

    (f)           In
the event that (i) an Indemnitee gives Notice of Claim to the Indemnitor and the
Indemnitor fails or elects not to assume a Third Party Defense which the
Indemnitor had the right to assume under this Section 10.4 or (ii) the
Indemnitor is not entitled to assume the Third Party Defense pursuant to this
Section 10.4, the Indemnitee shall have the right, with counsel of its choice,
to defend, conduct and control the Third Party Defense, at the sole cost and
expense of the Indemnitor (unless the subject matter of the Notice of Claim is
not eligible for indemnification hereunder, in which case the Indemnitor shall
not be responsible for such costs and expenses). In each case, the Indemnitee
shall conduct the Third Party Defense actively and diligently, and the
Indemnitor will provide reasonable cooperation in the Third Party Defense. The
Indemnitee shall have the right to consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim on such terms as it
may deem appropriate; provided, however, that the
amount of any settlement made or entry of any judgment consented to by the
Indemnitee without the consent of the Indemnitor shall not be determinative of
the validity of the claim, except with the consent of the Indemnitor (not to be
unreasonably withheld or delayed). Notwithstanding Section 11.6 hereof, in
connection with any Third Party Claim, the Indemnitor hereby consents to the
nonexclusive jurisdiction of any court in which an Action in respect of a
Third-Party Claim is brought against any Indemnitee for purposes of any claim
that the Indemnitee may have under this Article X.   with respect to
such Action or the matters alleged therein and agrees that process may be served
on the Indemnitor with respect to such a claim anywhere in the world. If the
Indemnitor does not elect to assume a Third Party Defense which it has the right
to assume hereunder, the Indemnitee shall have no obligation to do
so.

     

    (g)           Each
party to this Agreement shall use its commercially reasonable efforts to
cooperate and to cause its employees to cooperate with and assist the Indemnitee
or the Indemnitor, as the case may be, in connection with any Third Party
Defense, including attending conferences, discovery proceedings, hearings,
trials and appeals and furnishing records, information and testimony, as may
reasonably be requested; provided that
each party shall use its best efforts, in respect of any Third Party Claim of
which it has assumed the defense, to preserve the confidentiality of all
confidential information and the attorney-client and work-product
privileges.

     

    10.5       Indemnification Procedures
for Non-Third Party Claims.  In the event of a claim that does
not involve a Third Party Claim being asserted against it, the Indemnitee shall
send a Notice of Claim to the Indemnitor. The Notice of Claim shall set forth
the amount, if known, or, if not known, an estimate of the foreseeable maximum
amount of claimed Losses (which estimate shall not be conclusive of the final
amount of such Losses) and a description of the basis for such claim. The
Indemnitor will have 30 days from receipt of such Notice of Claim to dispute the
claim and will reasonably cooperate and assist the Indemnitee in determining the
validity of the claim for indemnity.

    
      
         

      

      
        39

        
          

        

      

      
         

      

    

    10.6       Maximum
Liability.

     

    (a)           The
Sellers’ total liability for any and all Losses however caused, in contract,
tort (including negligence), under any statute or otherwise from or relating in
any way to this Agreement or its subject matter is limited in aggregate for any
and all claims eligible for indemnification hereunder to  the lesser
of  (the “Maximum Liability
Amount”): (i) $2 million and (ii)  the Purchase Price Shares
delivered directly to Sellers pursuant to section 2.1(d) valued at the date of
such indemnification payment (as determined using the methodology described in
section 2.1(a)). In lieu of paying cash to satisfy its indemnification
obligations under this Agreement, Sellers, at their option, may satisfy and
extinguish such obligations in whole or in part by surrender of Purchase Price
Shares to the Buyer (based on the value thereof on the date of surrender
determined in accordance with the methodology described in Section 2.1(a)). In
all cases, such share value shall be subject to equitable adjustment in the
event of any stock split, stock dividend, reverse stock split or similar event
affecting the Buyer Common Stock during the period of calculation and,
thereafter, until delivery of the Buyer Common Stock in payment of
indemnification obligations pursuant to this Section 10.6  In any
event, by surrendering to Buyer all of the Purchase Price Shares (that were
delivered to Sellers (this is, excluding the Purchase Price Shares that were
delivered to other Persons designated by Sellers pursuant to section 2.(d) of
this Agreement)), Sellers’ total liability shall be fully
extinguished.

     

    (b)           The
Buyer’s total liability for any and all Losses however caused, in contract, tort
(including negligence), under any statute or otherwise from or relating in any
way to this Agreement or its subject matter is limited in aggregate for any and
all claims eligible for indemnification hereunder to the Maximum Liability
Amount.

     

    10.7       Exclusion of consequential
liability.  Sellers and Buyer exclude all liability for
indirect and consequential loss or damage (including for loss of profit (whether
direct, indirect, anticipated or otherwise), loss of expected savings,
opportunity costs, loss of business (including loss or reduction of goodwill),
damage to reputation and loss or corruption of data regardless of whether any or
all of these things are considered to be indirect or consequential losses or
damage) in contract, tort (including negligence), under any statute or otherwise
arising from or related in any way to this Agreement or its subject
matter.

     

    10.8       Environmental
Actions.  Buyer shall have the right (a) to defend, conduct and
control, with counsel of its choice, any Environmental Action, and (b) to
compromise or settle any Environmental Action. In the event that any Buyer
Indemnitee is required or deems it necessary to perform any Remedial Work in
connection with an Environmental Action, or to avoid the initiation of an
Environmental Action, whether or not formal proceedings have been initiated
or threatened with
respect thereto, the Buyer Indemnitees shall have the right to commence and
thereafter prosecute to completion, all such Remedial Work, and shall be
indemnified by Sellers with respect to any and all Losses incurred in connection
therewith. “Remedial Work” means any response action, removal action, remedial
action, closure, corrective action, regulatory permitting, monitoring program,
risk assessment, deed restriction, sampling program, investigation or other
activity required, allowed by or consistent with Environmental Law to clean up,
remove, remediate, treat, abate or otherwise address any Hazardous Substance
which existed and was caused by PRCM prior to the date of this
Agreement.

     

    10.9       Effect of Investigation;
Waiver.

     

    (a)           An
Indemnitee’s right to indemnification or other remedies based upon the
representations and warranties and covenants and agreements of the Indemnitor
will not be affected by any investigation or knowledge of the Indemnitee or any
waiver by the Indemnitee of any condition based on the accuracy of any
representation or warranty, or compliance with any covenant or agreement. Such
representations and warranties and covenants and agreements shall not be
affected or deemed waived by reason of the fact that the Indemnitee knew or
should have known that any representation or warranty might be inaccurate or
that the Indemnitor failed to comply with any agreement or covenant. Any
investigation by such party shall be for its own protection only and shall not
affect or impair any right or remedy hereunder.

    
      
         

      

      
        40

        
          

        

      

      
         

      

    

    (b)           Each
Seller acknowledges and agrees that, upon and following the Closing, neither the
Acquired Company nor  its Subsidiary shall have any liability or
obligation to indemnify, save or hold harmless or otherwise pay, reimburse or
make any Seller whole for or on account of any indemnification or other claims
made by any Buyer Indemnitee hereunder. Sellers shall have no right of
contribution against the Acquired Company or  its Subsidiary with
respect to any such indemnification or other claim.

     

    ARTICLE XI.  MISCELLANEOUS

     

    11.1       Notices.  Any
notice, request, demand, waiver, consent, approval or other communication which
is required or permitted hereunder shall be in writing and shall be deemed given
(a) on the date established by the sender as having been delivered personally,
(b) on the date delivered by a private courier as established by the sender by
evidence obtained from the courier, (c) on the date sent by facsimile, with
confirmation of transmission, if sent during normal business hours of the
recipient, if not, then on the next business day, or (d) on the fifth day after
the date mailed, by certified or registered mail, return receipt requested,
postage prepaid. Such communications, to be valid, must be addressed as
follows:

     

    
      
        	
                If
      to Buyer, to:

                  
      

                Li3
      Energy, Inc.

                Av.
      Pardo y Aliaga 699 Of. 802

                San
      Isidro, Lima

                PERU

                Attention:  Luis
      Saenz, President & CEO

                Facsimile:  +
      5114211649

                Telephone:  +
      511 (212) 1880

                luis.saenz@li3energy.com

              	
                  

              	
                With
      a required copy to:

                  
      

                Gottbetter
      & Partners, LLP

                488
      Madison Avenue, 12th Floor

                New
      York, New York  10022

                USA

                Attention:  Adam
      S. Gottbetter

                Facsimile:  212-400-6901

                Telephone:  212-400-6900

                asg@gottbetter.com

              

      

    

    
      
         

      

      
        41

        
          

        

      

      
         

      

    

     

    
      
        
          
            	
                    If
      to Fund A, to:

                       
      

                    Pacific
      Road Resources Fund A.

                    Level
      23

                    1
      Alfred Street

                    Sydney
      NSW 2000, Australia

                    Attn:  Greg
      Dick

                    Facsimile:   +612
      9241 2255

                    Telephone:   +612
      9241 100

                     greg.dick@pacroad.com.au

                  	 
      	
                    With
      a required copy to:

                      
      

                    Urrutia
      y Compañia Abogados Limitada

                     Av.
      Isidora Goyenechea 3250, 9th floor, Las Condes

                    Santiago,
      Chile

                    Attn:  Carlos
      Alberto Reyes

                    Facsimile:
      56-2-3351842

                    careyes@urrutia.cl

                  
	 	 	 
	
                    If
      to Fund B, to:

                       
      

                    Pacific
      Road Resources Fund B.

                    Level
      23

                    1
      Alfred Street

                    Sydney
      NSW 2000, Australia

                    Attn:  Greg
      Dick

                    Facsimile:  +612
      9241 2255

                      
      

                    Telephone:  +612
      9241 100

                      
      

                    greg.dick@pacroad.com.au

                  	 
      	
                    With
      a required copy to:

                       
      

                    Urrutia
      y Compañia Abogados Limitada

                     Av.
      Isidora Goyenechea 3250, 9th floor, Las Condes

                    Santiago,
      Chile

                    Attn:  Carlos
      Alberto Reyes

                    Facsimile:
      56-2-3351842

                    careyes@urrutia.cl

                  
	 	 	 
	
                    If
      to PR Partnership, to:

                      
      

                    Pacific
      Road Resources Fund L.P.

                    89
      Nexus Way

                    Camana
      Bay

                    Grand
      Cayman KY1-9007

                    Cayman
      Islands

                    Attn:  Evan
      Burtton

                    Facsimile:  +1
      345 945 6265

                    Telephone:   +1
      345 945 6264

                    Evan.burtton@ogier.com

                  	
                      

                  	
                    With
      a required copy to:

                         
      

                    Urrutia
      y Compañia Abogados Limitada

                     Av.
      Isidora Goyenechea 3250, 9th floor, Las Condes

                    Santiago,
      Chile

                    Attn:  Carlos
      Alberto Reyes

                    Facsimile:
      56-2-3351842

                    careyes@urrutia.cl

                  

          

        

      

    

     

    or to
such other address or to the attention of such Person or Persons as the
recipient party has specified by prior written notice to the sending party (or
in the case of counsel, to such other readily ascertainable business address as
such counsel may hereafter maintain). If more than one method for sending notice
as set forth above is used, the earliest notice date established as set forth
above shall control.

     

    11.2       Amendments and
Waivers.

     

    (a)           Any
provision of this Agreement may be amended or waived if, and only if, such
amendment or waiver is in writing and is signed, in the case of an amendment, by
each party to this Agreement, or in the case of a waiver, by the party against
whom the waiver is to be effective.

     

    (b)           No
failure or delay by any party in exercising any right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege.

    
      
         

      

      
        42

        
          

        

      

      
         

      

    

    (c)           To
the maximum extent permitted by Law, (i) no waiver that may be given by a party
shall be applicable except in the specific instance for which it was given and
(ii) no notice to or demand on one party shall be deemed to be a waiver of any
obligation of such party or the right of the party giving such notice or demand
to take further action without notice or demand.

     

    11.3       Expenses.  Each
party shall bear its own costs and expenses in connection with this Agreement
and the transactions contemplated by this Agreement, including all legal,
accounting, financial advisory, consulting and all other fees and expenses of
third parties, whether or not the Acquisition is consummated.

     

    11.4       Successors and Permitted
Assigns.  This Agreement may not be assigned by either party
hereto without the prior written consent of the other party. Subject to the
foregoing, all of the terms and provisions of this Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns.

     

    11.5       Governing
Law.  This Agreement and the Exhibits and Schedules hereto
shall be governed by and interpreted and enforced in accordance with the Laws of
the Republic of Chile , without giving effect to any choice of Law or conflict
of Laws rules or provisions  that would cause the application of the
Laws of any jurisdiction other than the Laws of the Republic of
Chile.

     

    11.6       Consent to
Jurisdiction.  Any difficulty or controversy arising among the
parties to the Agreement with respect to the application, interpretation,
duration, validity or execution of the Agreement or for any other reason, shall
be submitted to arbitration pursuant to the Rules of Arbitration Procedure of
the Santiago Arbitration and Mediation Center in effect at the time of its
initiation. The parties confer an irrevocable special power of attorney upon the
Santiago Chamber of Commerce so that it may, at the written request of any of
the parties, appoint an arbitrator from among the members of the arbitration
corps of the Santiago Arbitration and Mediation Center, who will be empowered to
act as arbitrator-at-law with regard to the substance of the dispute and as ex
aequo et bono with regard to the procedure. There shall be no remedy against the
arbitrator's resolutions. The arbitrator is especially empowered to resolve any
matter relating to his/her competence and/or jurisdiction.

     

    11.7       Counterparts.  This
Agreement may be executed in counterparts, and any party hereto may execute any
such counterpart, each of which when executed and delivered shall be deemed to
be an original and all of which counterparts taken together shall constitute but
one and the same instrument. This Agreement shall become effective when each
party hereto shall have received a counterpart hereof signed by the other
parties hereto. The parties agree that the delivery of this Agreement may be
effected by means of an exchange of facsimile signatures with original copies to
follow by mail or courier service.

     

    11.8       Third Party
Beneficiaries.  No provision of this Agreement is intended to
confer upon any Person other than the parties hereto any rights or remedies
hereunder; except that in the case of Section 8.1(d) hereof, the retiring
directors, the retiring general manager and the other Indemnitees are intended
third party beneficiaries of such sections and shall have the right to enforce
such sections in their own names.

     

    11.9       Entire
Agreement.  This Agreement and the documents, instruments and
other agreements specifically referred to herein or delivered pursuant hereto
set forth the entire understanding of the parties hereto with respect to the
Acquisition. All Schedules referred to herein are intended to be and hereby are
specifically made a part of this Agreement. Any and all previous agreements and
understandings between or among the parties regarding the subject matter hereof,
whether written or oral, are superseded by this Agreement, except for the
Confidentiality Agreement which shall continue in full force and effect in
accordance with its terms.

    
      
         

      

      
        43

        
          

        

      

      
         

      

    

    11.10    
Captions.  All
captions contained in this Agreement are for convenience of reference only, do
not form a part of this Agreement and shall not affect in any way the meaning or
interpretation of this Agreement.

     

    11.11    
Severability.  Any
provision of this Agreement which is invalid or unenforceable in any
jurisdiction shall be ineffective to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable the remaining
provisions hereof, and any such invalidity or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

     

    11.12    
Interpretation.

     

    (a)           The
meaning assigned to each term defined herein shall be equally applicable to both
the singular and the plural forms of such term and vice versa, and words
denoting either gender shall include both genders as the context requires. Where
a word or phrase is defined herein, each of its other grammatical forms shall
have a corresponding meaning.

     

    (b)           The
terms “hereof,” “herein” and “herewith” and words of similar import shall,
unless otherwise stated, be construed to refer to this Agreement as a whole and
not to any particular provision of this Agreement.

     

    (c)           When
a reference is made in this Agreement to an Article, Section, paragraph, Exhibit
or Schedule, such reference is to an Article, Section, paragraph, Exhibit or
Schedule to this Agreement unless otherwise specified.

     

    (d)           The
words “include,” “includes,” and “including,” when used in this Agreement, shall
be deemed to be followed by the words “without limitation,” unless otherwise
specified.

     

    (e)           A
reference to any party to this Agreement or any other agreement or document
shall include such party’s predecessors, successors and permitted
assigns.

     

    (f)           Reference
to any Law means such Law as amended, modified, codified, replaced or reenacted,
and all rules and regulations promulgated thereunder.

     

    (g)           The
parties have participated jointly in the negotiation and drafting of this
Agreement. Any rule of construction or interpretation otherwise requiring this
Agreement to be construed or interpreted against any party by virtue of the
authorship of this Agreement shall not apply to the construction and
interpretation hereof.

     

    (h)           All
accounting terms used and not defined herein shall have the respective meanings
given to them under corresponding GAAP US.

     

    [Signature
page follows immediately]
 

    
      
         

      

      
        44

        
          

        

      

      
         

      

    

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

     

    
      
        	 	
                Li3
      ENERGY, INC.

              
	 	 
      	 
      
	 	
                By:

              	
                /s/ Luis Saenz

              
	 	 
      	
                Name:
      Luis Saenz

              
	 	 
      	
                Title:  President
      & CEO

              
	 	 
      	 
      
	 	
                PACIFIC ROAD CAPITAL A PTY
      LIMITED, as

                trustee for PACIFIC ROAD
      RESOURCES FUND A,

                a
      trust governed by the laws of Australia

              
	 	 
      	 
      
	 	
                By:

              	
                /s/ P. R. Espie

              
	 	 
      	
                Name:  P.
      R. Espie

              
	 	 
      	
                Title:  Director

              
	 	 
      	 
      
	 	
                By:

              	
                /s/ Gregory Andrew Dick

              
	 	 
      	
                Name:  Gregory
      Andrew Dick

              
	 	 
      	
                Title:  Director

              
	 	 
      	 
      
	 	
                PACIFIC ROAD CAPITAL B PTY
      LIMITED,

                as trustee for PACIFIC ROAD
      RESOURCES FUND B,

                a
      trust governed by the laws of Australia

              
	 	 
      	 
      
	 	
                By:

              	
                /s/ Louis I. Rozman

              
	 	 
      	
                Name:  Louis
      I. Rozman

              
	 	 
      	
                Title:  Director

              
	 	 
      	 
      
	 	
                By:

              	
                /s/ Gregory Andrew Dick

              
	 	 
      	
                Name:  Gregory
      Andrew Dick

              
	 	 
      	
                Title:  Secretary

              
	 	 
      	 
      
	 	
                PACIFIC ROAD CAPITAL
      MANAGEMENT  G.P.

                LIMITED as General Partner of
      PACIFIC ROAD

                RESOURCES FUND L.P., an
      English Limited

                Partnership

              
	 	 
      	 
      
	 	
                By:

              	
                /s/ Evan Burtton

              
	 	 
      	
                Name:  Evan
      Burtton

              
	 	 
      	
                Title:  Director

              

      

    

     

 

    	45

    	 

    

Schedule 2.1(d)

(Sellers’ respective portions)

 

	Seller	 	Portion	 
	Pacific Road Capital A Pty. Limited, as trustee for Pacific Road Resources Fund A	 	 	9.93	%
	Pacific Road Capital B Pty. Limited, as trustee for Pacific Road Resources Fund B	 	 	9.93	%
	Pacific Road Capital Management G.P. Limited, as General Partner of Pacific Road Resources Fund L.P.	 	 	80.14	%

 

(Allocation of Purchase Price Shares)

 

	Seller	 	Number of 
 Purchase Price
 Shares	 
	Pacific Road Capital A Pty. Limited, as trustee for Pacific Road Resources Fund A	 	 	873,840	 
	Pacific Road Capital B Pty. Limited, as trustee for Pacific Road Resources Fund B	 	 	873,840	 
	Pacific Road Capital Management G.P. Limited, as General Partner of Pacific Road Resources Fund L.P.	 	 	7,052,320	 
	Rodman & Renshaw LLC	 	 	800,000	 
	Mr. Bob Brennan	 	 	160,000	 
	Mr. Don Bruce	 	 	240,000	 

 

    	 

    	 

    

 

SELLERS DISCLOSURE SCHEDULES

 

The following document constitutes the
Sellers Disclosure Schedule referenced in the Stock Purchase Agreement, dated [    ], by and among Li3 Energy,
Inc., Pacific Road Capital A Pty. Limited, as trustee for Pacific Road Resources Fund A, Pacific Road Capital B Pty.
Limited, as trustee for Pacific Road Resources Fund B and Pacific Road Capital Management G.P. Limited, as General Partner
of Pacific Road Resources Fund L.P. This Sellers Disclosure Schedule sets forth the disclosures required by the Agreement and,
where applicable, sets forth the exceptions to the representations and warranties of Sellers contained in the Agreement. Capitalized
terms not otherwise defined herein shall have the meanings given to them in the Agreement.

 

This Seller Disclosure Schedule is arranged
in sections corresponding to each Section of the Agreement. Each exception to a representation and warranty set forth in this Seller
Disclosure Schedule shall only qualify the specific representation and warranty which is referenced in the applicable section of
the Seller Disclosure Schedule, and no other representation or warranty. The exceptions to the representations and warranties should
be specific and expressly stated and under no circumstance may be implied or construed based upon the content of any document referenced
herein.

 

 This Sellers Disclosure Schedule
and the information and disclosures contained herein are intended only to qualify and limit the representations and warranties
of Sellers contained in the corresponding section of the Agreement and shall not be deemed to expand in any way the scope or effect
of any such representations and warranties. For greater certainty, to the extent that any inaccuracy or omission in any such representation
or warranty is disclosed in this Sellers Disclosure Schedule, such representation or warranty will be deemed to be qualified by
such disclosure, and neither Buyer nor any Buyer Indemnitees shall be entitled to make any claim pursuant to ARTICLE X of the Agreement
or otherwise for such inaccuracy or omission in such representation or warranty.

 

Section 1.1 Definitions:

 

“Option to Purchase Agreement”:
Copy of the Option to Purchase Agreement with all amendments thereto is contained in the CD “Alfredo Due Diligence Documents”
under number 7.1.

 

Section 2.1(d): Sellers hereby designate
the following Persons to receive a portion of the Purchase Price Shares:

 

Rodman and Renshaw LLC: 800,000 Purchase
Price Shares.

 

Mr. Bob Brennan: 160,000 Purchase Price
Shares.

 

Mr. Donald Bruce: 240,000 Purchase Price
Shares.

 

Total Purchase Price Shares received by
third parties amount to 1,200,000 Purchase Price Shares, comprising twelve percent (12%) of the Purchase Price Shares.

 

    	 

    	 

    

 

Section 3.1(a): An exempted company
incorporated under the laws of the Cayman Islands may no trade in the Cayman Islands with any person, firm or corporation except
in furtherance of the business of the exempted company carried on outside the Cayman Islands.

 

Section 3.1(b): Copies of the Charter
Documents of the Acquired Company as in effect on the date hereof are contained in the CD “Alfredo Due Diligence Documents”
under number 2.

 

Section 3.3(b): PRMC is the only
Subsidiary of the Acquired Company. Copies of the formation documents of PRMC are contained in the CD “Alfredo Due Diligence
Documents” under number 2.

 

The Capital Stock of PRMC is comprised
of 5,000,000 common shares, of which 873,865 common shares are currently subscribed and fully paid by shareholders as follows:

 

Alfredo Holdings, Ltd. 873,863 shares

Carlos Alberto Reyes Comandari: 1 share

M. Alejandra Pérez Rossi: 1 share

 

Section 3.5(a): Consents:

 

None.

 

Section 3.6: Acquired Financial
Statements:

 

True and complete copies of the Acquired
Financial Statements are contained in the CD “Alfredo Due Diligence Documents” under numbers 1.3 and 6.1, which consist
of:

 

(a) the financial statements of the Acquired
Company from inception until July 15, 2010 and the related balance sheet, statement of income and statement of changes in equity;

(b) the financial statements of PRMC as
at December 31 in each of the years 2008 and 2009 and the related statements of income and retained earnings for the years then
ended; and

(c) the financial statements consisting
of the balance sheet of PRMC as at June 30, 2010, and the related statements of income and retained earnings for the six month
period then ended.

 

Section 3.6, 3.7, 3.9 (b)

 

On June 2010, the SII notified PRMC of
the initiation of a tax inquiry in connection with certain alleged inconsistencies between the 2010 Tax Return filed by PRMC and
the information which is in possession of the SII. The official number assigned to this tax inquiry is 110215769. A copy of the
notification served by the SII in contained in the CD “Alfredo Due Diligence Documents” under number 5.4. As of the
date of this Sellers Disclosure Schedule, the referred tax enquiry is still ongoing. The overall liability arising from or in connection
with this disclosure made in connection with sections 3.6, 3.7 and 3.9 (b) will not exceed seventy thousand United States dollars
($70,000).

 

    	 

    	 

    

 

Section 3.9 (d)

 

No Tax Returns have been filed with respect
to the Acquired Company.

 

The following Tax Returns have been filed
with respect to PRMC:

 

	Year 2008	 	Year 2009	 	Year 2010
	 	 	 	 	 
	 	 	F-22 AT 2009	 	F-22 AT 2010
	 	 	 	 	 
	F-29 October 2008	 	F-29 January 2009	 	F-29 January 2010
	F-29 November 2008	 	F-29 February 2009	 	F-29 February 2010
	F-29 December 2008	 	F-29 March 2009	 	F-29 March 2010
	 	 	F-29 April 2009	 	F-29 April 2010
	 	 	F-29 May 2009	 	F-29 May 2010
	 	 	F-29 June 2009	 	F-29 June 2010
	 	 	F-29 July 2009	 	 
	 	 	F-29 August 2009	 	 
	 	 	F-29 September 2009	 	 
	 	 	F-29 October 2009	 	 
	 	 	F-29 November 2009	 	 
	 	 	F-29 December 2009	 	 

 

Copies of these documents are contained
in the CD “Alfredo Due Diligence Documents” under numbers 6.2. and 6.4.

 

Section 3.15(a) and (d): Contracts:

  

		·	Public deed dated June 6, 2008, Option
to Purchase Agreement of mining concessions between Sociedad Contractual Minera La Fortaleza and Pacific Road Resources Fund A,
Pacific Road Resources Fund B y Pacific Road Holdings NV (OPA) Rep. N° 9.570-2008.

		·	Option to Purchase Agreement, English
version signed, dated June 6, 2008.

		·	Public deed dated Oct 24, 2008, containing
assignment of OPA to Pacific Road Mining Chile S.A., Rep. N° 19.423-2008.

		·	Public deed containing first amendment
to the OPA dated Apr 17, 2009, Rep. N° 6.601-2009

		·	“First Amendment to the Option to
Purchase Agreement”, English version signed, dated Apr 17, 2009.

 

    	 

    	 

    

 

		·	Service contract between HSB Sondajes
S.A. and Pacific Road Resources Fund A, dated August 6, 2008.

		·	Service contract between AMEC International
Chile S.A. and Pacific Road Mining Chile S.A., dated February 20, 2009.

		·	Services Agreement between Alfredo Holdings
Ltd. and Ogier Fiduciary Services (Cayman) Ltd. dated June 25, 2009.

		·	Secretary Services Agreement between Alfredo
Holdings Ltd. and Ogier Fiduciary Services (Cayman) Ltd. dated June 25, 2009.

		·	“Share Subscription and Payment
Agreement” Pacific Road Resources Fund A and Pacific Road Mining Chile S.A. dated Sept. 25, 2008

		·	“Share Purchase Agreement”
Pacific Road Resources Fund A and Alfredo Holdings, Ltd. dated Sept. 25, 2008

		·	“Share Subscription and Payment
Agreement” Pacific Road Resources Fund B and Pacific Road Mining Chile S.A. dated Sept. 25 2008

		·	“Share Purchase Agreement”
Pacific Road Resources Fund B and Alfredo Holdings, Ltd. dated Sept. 25, 2008

		·	“Share Subscription and Payment
Agreement” Pacific Road Holdings NV and Pacific Road Mining Chile S.A. dated Sept. 25, 2008

		·	“Share Purchase Agreement”
Pacific Road Holdings NV and Alfredo Holdings, Ltd. dated Sept. 25, 2008

		·	“Share Subscription and Payment
Agreement” Alfredo Holdings, Ltd and Pacific Road Mining Chile S.A. dated Oct. 8, 2008

		·	“Share Subscription and Payment
Agreement” Alfredo Holdings, Ltd and Pacific Road Mining Chile S.A. dated Oct. 17, 2008

		·	“Share Subscription and Payment
Agreement” Alfredo Holdings, Ltd and Pacific Road Mining Chile S.A. dated Oct. 22, 2008

		·	“Share Subscription and Payment
Agreement” Alfredo Holdings, Ltd and Pacific Road Mining Chile S.A. dated Apr. 8, 2009

		·	“Share Subscription and Payment
Agreement” Alfredo Holdings, Ltd and Pacific Road Mining Chile S.A. dated Apr. 17, 2009

		·	Purchase Order 1, dated July 25, 2008.

		·	Purchase Order 2, dated August 4, 2008.

 

    	 

    	 

    

 

		·	Purchase Order 3, dated July 30, 2008.

		·	Purchase Order 4, dated August 4, 2008.

		·	Purchase Order 5, dated September 30, 2008.

		·	Purchase Order 6, dated November 4, 2008.

		·	Purchase Order 7, dated November 4, 2008.

		·	Purchase Order 8, dated November 4, 2008.

		·	Purchase Order 9, dated November 4, 2008.

		·	Purchase Order 10, dated December 2, 2008.

		·	Purchase Order 11, dated February 24, 2009.*

		·	Subscriber share transfer from Ogier to
PRCM G.P.

		·	Assignment Agreement of USD335,000 debt dated June 18, 2009

 

* This purchase Order was titled 07-09, but corresponds to PO
11.

 

Copy of these Contracts have been delivered
to Buyer and are contained in the CD “Alfredo Due Diligence Documents” under numbers 1.14, 1.15, 1.16,1.17, 3, 7.1,
7.2, 7.3, 7.4, 7.5, 8 and 9.

 

Section 3.25(a): Mining Concessions:

 

The Mining Concessions are the following:

 

Uno) “Alfredo Uno Uno al Sesenta”,
cuya sentencia constitutiva y acta de mensura se encuentra inscrita a fojas ciento treinta y nueve número treinta y siete
del Registro de Propiedad correspondiente al año dos mil ocho.

Dos) “Alfredo Dos Uno al Sesenta”,
cuya sentencia constitutiva y acta de mensura se encuentra inscrita a fojas ciento cuarenta y cuatro número treinta y ocho
del Registro de Propiedad correspondiente al año dos mil ocho.

Tres) “Alfredo Tres Uno al
Cuarenta”, cuya sentencia constitutiva y acta de mensura se encuentra inscrita a fojas ciento cuarenta y nueve número
treinta y nueve del Registro de Propiedad correspondiente al año dos mil ocho.

Cuatro) “Alfredo Cuatro Uno
al Sesenta”, cuya sentencia constitutiva y acta de mensura se encuentra inscrita a fojas ciento cincuenta y cuatro número
cuarenta del Registro de Propiedad correspondiente al año dos mil ocho.

Cinco) “Alfredo Cinco Uno
al Treinta”, cuya sentencia constitutiva y acta de mensura se encuentra inscrita a fojas ciento cincuenta y nueve número
cuarenta y uno del Registro de Propiedad correspondiente al año dos mil ocho.

Seis) “Alfredo Seis Uno al
Veinte”, cuya sentencia constitutiva y acta de mensura se encuentra inscrita a fojas ciento sesenta y cuatro número
cuarenta y dos del Registro de Propiedad correspondiente al año dos mil ocho.

 

    	 

    	 

    

 

Section 3.25 (g): Mining Matters: 

 

 By means of an email
sent on April 20, 2010 by Mr. Antonio Rojas, as legal representative of SCMLF, to Carlos Alberto Reyes, as legal representative
of PRMC, SCMLF granted PRMC a one-time grace period for the payment of the option payment due on March 30, 2010. Accordingly, the
referred option payment was paid by PRMC within the grace period granted by SCMLF but after the expiration of the cure period provided
for in the OPA. SCMLF acknowledged the receipt of such option payment to its entire satisfaction pursuant to the terms of the grace
period arrangement. Such late payment does not affect or jeopardize in any manner PRMC’s rights under the Option to Purchase
Agreement. A copy of the email is contained in the Alfredo Due Diligence CD under number 7.6.

 

Section 3.25 (g): Mining Matters: 

 

Buyer is aware that the option payment
due on July 30, 2010, amounting to $140,000 has not been paid by PRMC. The OPA establishes a cure period of 15 business days counted
from the due date in order to effect the payment. PRMC has the right to make the payment within such cure period without affecting
or jeopardizing in any manner PRMC’s rights under the Option to Purchase Agreement.

 

Section 3.26(a): Representations Relating
to Sellers’ Acquisition of the Purchase Price Shares:

 

Seller discloses that it has agreed to
deliver a part of the Purchase Price Shares to the Persons and in the amounts indicated in Schedule 2.1(d).

 

Section 5.2(a): Confidentiality:

 

Sellers disclosed certain
information of the Acquired Company and PRMC prior to the Closing Date [pursuant to] confidentiality
agreements contained in the CD “Alfredo Due Diligence Documents” under number 9.

 

    	 

    	 

    

 

BUYER DISCLOSURE SCHEDULE

 

Section 4.1     Charter Documents

 

		·	Articles of Incorporation of Buyer as filed with the Nevada Secretary
of State on June 24, 2005 – incorporated by reference to Exhibit 3.1 to the Buyer’s registration statement on Form
SB-2 (SEC File No. 333-127703), filed with the Securities and Exchange Commission on August 19, 2005.

 

		·	Certificate of Amendment to Articles of Incorporation of Buyer as
filed with the Nevada Secretary of State on July 11, 2008 – incorporated by reference to Exhibit 3.1 to the Buyer’s
Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 29, 2008.

 

		·	Certificate of Amendment to Articles of Incorporation of Buyer as
filed with the Nevada Secretary of State on October 19, 2009 – incorporated by reference to Exhibit 3.1 to the Buyer’s
Current Report on Form 8-K, filed with the Securities and Exchange Commission on October 23, 2009. 

 

		·	Bylaws of Buyer – incorporated by reference to Exhibit 3.2 to
the Buyer’s registration statement on Form SB-2 (SEC File No. 333-127703), filed with the Securities and Exchange Commission
on August 19, 2005.

 

Section 4.2(a)Securities

 

	 	 	Shares	 
	 	 	 	 
	Currently Outstanding	 	 	76,625,095	 
	Outstanding Warrants[1]	 	 	20,483,000	 
	2009 Equity Incentive Plan[2]	 	 	5,000,000	 
	Convertible Note[3]	 	 	114,349	 
	 	 	 	 	 
	 	 	 	 	 
	Total Outstanding	 	 	76,625,095	 
	Total Fully Diluted	 	 	102,222,444	 

 

		[1]	The outstanding warrants consist of warrants to purchase 7,101,500 shares of Common Stock for $0.50
per share, warrants to purchase 7,101,500 shares of Common Stock for $1.00 per share. Also includes Warrants to purchase 6,000,000
shares of Common Stock for $0.50 per share and Agent Warrants to purchase 420,000 shares of Common Stock for $0.25 per share.

 

    	 

    	 

    

 

		[2]	Includes all shares reserved for issuance pursuant to awards granted under the Plan. The Buyer
currently has outstanding options granted under the Plan to purchase an aggregate of 800,000 shares of Common Stock.

		[3]	Assumes conversion of $45,000 principal plus $4,170 accrued interest at $0.43 per share (closing
price on 22 June 2010).

 

Schedule 4.2(f)           Obligations to Fund

 

The description of Buyer’s obligations, contingent or
otherwise, to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any Person
are incorporated herein by reference to Buyer’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission
on May 18, 2010, including the disclosure therein under the caption “Management’s Discussion and Analysis of Financial
Condition and Results of Operation.”

 

Schedule 4.6    Buyer Financial Statements

 

		·	The Buyer Interim Financial Statements are incorporated herein by
reference to Buyer’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 18, 2010.

 

		·	The Buyer Annual Financial Statements for the year ended June 30,
2009 are incorporated herein by reference to Buyer’s Annual Report on Form 10-K filed with the Securities and Exchange Commission
on September 25, 2009.

 

		·	The Buyer Annual Financial Statements for the year ended June 30,
2008 are incorporated herein by reference to Buyer’s Annual Report on Form 10-KSB filed with the Securities and Exchange
Commission on September 25, 2008.Li3
ENERGY INC.

    

    INVESTMENT
AGREEMENT

    

    THE
SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE OR OTHER SECURITIES
AUTHORITIES.  THEY MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE FEDERAL AND STATE SECURITIES LAWS.

    

    THIS
INVESTMENT AGREEMENT DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF
AN OFFER TO PURCHASE, ANY OF THE SECURITIES DESCRIBED HEREIN BY OR TO ANY PERSON
IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE
UNLAWFUL.  THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL
OR STATE SECURITIES AUTHORITIES, NOR HAVE SUCH AUTHORITIES CONFIRMED THE
ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT.  ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

    

    AN
INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK.  THE
INVESTOR MUST RELY ON ITS OWN ANALYSIS OF THE INVESTMENT AND ASSESSMENT OF THE
RISKS INVOLVED.  SEE THE RISK FACTORS SET FORTH IN THE ATTACHED
DISCLOSURE DOCUMENTS AS EXHIBIT
I.

    

    THIS INVESTMENT AGREEMENT (this
”Agreement“ or “Investment Agreement”) is made as of the 2nd day of December,
2010, by and between Li3 Energy, Inc., a corporation duly organized and existing
under the laws of the State of Nevada (the "Company"), and Centurion Private
Equity, LLC, a Georgia Limited Liability Company ("Investor").

    

    RECITALS:

    

    WHEREAS, the parties desire
that, upon the terms and subject to the conditions contained herein, the Company
shall issue to the Investor, and the Investor shall purchase from the Company,
from time to time as provided herein, shares of the Company's Common Stock, as
part of an offering of Common Stock by the Company to Investor, for a maximum
aggregate offering amount of up to Ten Million Dollars ($10,000,000) (the
"Maximum Offering Amount"); and 

    

    WHEREAS, the solicitation of
this Investment Agreement and, if accepted by the Company, the offer and sale of
the Common Stock are being made in reliance upon the provisions of Regulation D
("Regulation D") promulgated under the Act, Section 4(2) of the Act, and/or upon
such other exemption from the registration requirements of the Act as may be
available with respect to any or all of the purchases of Common Stock to be made
hereunder.

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    

    TERMS:

    

    NOW, THEREFORE, the parties
hereto agree as follows:

    

    1.           
Certain
Definitions.  As used in this Agreement (including the recitals
above), the following terms shall have the following meanings (such meanings to
be equally applicable to both the singular and plural forms of the terms
defined):

    

    “4.9% Limitation” shall have the
meaning set forth in Section 2.3.1(f).

    

    “Accredited Investor” shall have the
meaning set forth in Section 3.1.

    

    “Act” shall mean the Securities Act of
1933, as amended.

    

    “Additional Registration Statement”
shall have the meaning set forth in the Registration Rights
Agreement.

    

    “Advance Put Notice” shall have the
meaning set forth in Section 2.3.1(a), the form of which is attached hereto as
Exhibit
A.

    

    “Advance Put Notice Date” shall have
the meaning set forth in Section 2.3.1(a).

    

    “Affiliate” shall have the meaning as
set forth Section 6.5.

    

    “Aggregate Issued Shares” equals the
aggregate number of shares of Common Stock issued to Investor pursuant to the
terms of this Agreement or the Registration Rights Agreement as of a given date,
including Put Shares.

    

    “Agreed Upon Procedures Report” shall
have the meaning set forth in Section 2.4.3(b).

    

    “Agreement” shall mean this Investment
Agreement.

    

    “Approved Primary Market” shall mean
any of the following: the O.T.C. Bulletin Board, the NASDAQ Capital Market, the
NASDAQ Global Select Market, the NYSE Amex, or the New York Stock
Exchange.

    

    “Automatic Termination” shall have the
meaning set forth in Section 2.3.2.

    

    “Bring Down Cold Comfort Letters” shall
have the meaning set forth in Section 2.3.7(b).

    

    “Business Day” shall mean any day
during which the Principal Market is open for trading.

    

    “Calendar
Month” shall mean the
period of time beginning on the numeric day in question in a calendar month and
for Calendar Months thereafter, beginning on the earlier of (i) the same numeric
day of the next calendar month or (ii) the last day of the next calendar
month.  Each Calendar Month shall end on the day immediately preceding
the beginning of the next succeeding Calendar Month.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

    “Cap Amount” shall have the meaning set
forth in Section 2.3.11.

    

    “Capitalization Schedule” shall have
the meaning set forth in Section 3.2.4, attached hereto as Exhibit
B.

    

    “Change in Control” shall have the
meaning set forth within the definition of Major Transaction,
below.

    

    “Closing” shall mean one of (i) the
Investment Commitment Closing and (ii) each closing of a purchase and sale of
Common Stock pursuant to Section 2.

    

    "Closing
Bid Price" means, for any security as of any date, the last closing bid price
for such security during Normal Trading on the O.T.C. Bulletin Board, or, if the
O.T.C. Bulletin Board is not the principal securities exchange or trading market
for such security, the last closing bid price during Normal Trading of such
security on the principal securities exchange or trading market where such
security is listed or traded as reported by such principal securities exchange
or trading market, or if the foregoing do not apply, the last closing bid price
during Normal Trading of such security in the over-the-counter market on the
electronic bulletin board for such security, or, if no closing bid price is
reported for such security, the average of the bid prices of any market makers
for such security as reported in the "pink sheets" by the Pink OTC Markets,
Inc. If the Closing
Bid Price cannot be calculated for such security on such date on any of the
foregoing bases, the Closing Bid Price of such security on such date shall be
the fair market value as mutually determined by the Company and the Investor in
this Offering.  If the Company and the Investor in this Offering are
unable to agree upon the fair market value of the Common Stock, then such
dispute shall be resolved by an investment banking firm mutually acceptable to
the Company and the Investor in this offering and any fees and costs associated
therewith shall be paid by the Company.

    

     “Commission
Documents” shall mean (1) all reports, schedules, registrations, forms,
statements, information and other documents filed with or furnished to the SEC
by the Company pursuant to the reporting requirements of the Exchange Act,
including all material filed or furnished pursuant to Section 13(a) or
15(d) of the Exchange Act, which have been filed or furnished by the
Company since June 30, 2009, including, without
limitation, the Annual Report on Form 10-K filed by the Company for the
year ended June 30, 2009 (the “2009
Form 10-K”), the Company’s Quarterly Report on Form 10-Q for its
fiscal quarter ended March 31, 2010 and such reports which
hereafter shall be filed with or furnished to the SEC by the Company, including,
without limitation, the Current Report, (2) the Registration Statement, as
the same may be amended from time to time, the Prospectus and each Prospectus
Supplement and (3) all information contained in such filings and all
documents and disclosures that have been and heretofore shall be incorporated by
reference therein.

    

    “Commitment Closing Date” means the date of the
Investment Commitment Closing.

     

    “Commitment
Shares” shall have the meaning set forth in Section 9.10(ii).

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    

    “Commitment Period” shall have the
meaning set forth in Section 2.3.2(g).

    

    “Common Shares” shall mean the shares
of Common Stock of the Company.

    

    “Common Stock” shall mean the common
stock of the Company.

    

    “Company” shall have the meaning set
forth in the opening paragraph hereof.

    

    “Company Designated Maximum Put Dollar
Amount” shall have the meaning set forth in Section 2.3.1(a).

    

    “Company Designated Minimum Put Share
Price” shall have the meaning set forth in Section 2.3.1(a).

    

    “Company Termination” shall have the
meaning set forth in Section 2.3.12.

    

    “Conditions to Investment Commitment
Closing” shall have the meaning as set forth in Section 2.2.2.

    

    “Current Report” shall have the meaning
ascribed to it in Section 6.10 hereof.

    

     “Delisting Event” shall mean any
time during the term of this Investment Agreement, that the Company’s Common
Stock is not listed for and actively trading on an Approved Primary Market or is
suspended or delisted with respect to the trading of the shares of Common Stock
on such market or exchange.

    

    “Disclosure Documents” shall have the
meaning as set forth in Section 3.2.4.

    

    “Due Diligence Review” shall have the
meaning as set forth in Section 2.4.

    

    “Effective Date” shall have the meaning
set forth in Section 2.3.1.

    

    “Equity Securities” shall have the
meaning set forth in Section 6.6.1.

    

    “Evaluation Day” shall have the meaning
set forth in Section 2.3.1(b).

    

    “Exchange Act” shall mean the
Securities Exchange Act of 1934, as amended.

    

    “Excluded Day” shall have the meaning
set forth in Section 2.3.1(b).

    

    “Extended Put Period” shall mean the
period of time between the Advance Put Notice Date until the Pricing Period End
Date.

    

    “Fee
Shares” shall have the meaning set forth in Section 9.10(ii).

    

    “FINRA” shall mean the Financial
Industry Regulatory Authority.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    

    “Indemnified Liabilities” shall have
the meaning set forth in Section 8.

    

    “Indemnitees” shall have the meaning
set forth in Section 8.

    

    “Indemnitor” shall have the meaning set
forth in Section 8.

    

    “Individual Put Limit” shall have the
meaning set forth in Section 2.3.1 (b).

    

    “Ineffective Period” shall mean any
period of time after the Effective Date during the term hereof that the
Registration Statement or any Supplemental Registration Statement (each as
defined herein) becomes ineffective or unavailable for use for the sale or
resale, as applicable, of any or all of the Registrable Securities (as defined
herein) for any reason (or in the event the prospectus under either of the above
is not current and deliverable).

    

    “Intended Put Share Amount” shall have
the meaning set forth in Section 2.3.1(a).

    

    “Investment Commitment Closing” shall
have the meaning set forth in Section 2.2.1.

    

    “Investment Agreement” shall mean this
Investment Agreement.

    

    “Investment Commitment Opinion of
Counsel” shall mean an opinion from Company’s independent counsel, substantially
in the form attached as Exhibit C, or such
other form as agreed upon by the parties, as to the Investment Commitment
Closing.

    

    “Investment Date” shall mean the date
of the Investment Commitment Closing.

    

    “Investor” shall have the meaning set
forth in the preamble hereto.

    

    “Key Employee” shall have the meaning
set forth in Section 5.20, as set forth in Exhibit
D.

    

    “Knowledge”
means the actual knowledge of the Company’s Chief Executive Officer or Chief
Financial Officer, after reasonable inquiry of all officers, directors and
employees of the Company who could reasonably be expected to have knowledge or
information with respect to the matter in question.

    

    “Legend” shall have the meaning set
forth in Section 9.10(iii).

    

    “Legend Removal Condition” shall have
the meaning set forth in Section 9.10(iv).

    

    “Liquidity Date” shall have the meaning
set forth in Section 2.3.5(t).

    

    “Major Transaction" shall mean and
shall be deemed to have occurred at such time upon any of the following
events:

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    

    (i) a consolidation, merger or other
business combination or event or transaction following which the holders of
Common Stock of the Company immediately preceding such consolidation, merger,
combination or event either (i) no longer hold a majority of the shares of
Common Stock of the Company or (ii) no longer have the ability to elect the
board of directors of the Company (a “Change of Control”);

    

    (ii) the sale or transfer of a portion
of the Company's assets not in the ordinary course of business;

    

    (iii) the purchase of assets by the
Company not in the ordinary course of business; or

    

    (iv) a purchase, tender or exchange
offer made to the holders of outstanding shares of Common Stock.

    

    “Market Price” shall equal the average
of the three lowest daily VWAPS for the Common Stock on the Principal Market
during the Pricing Period for the applicable Put.

    

    “Material
Adverse Effect” means (i) any condition, occurrence, state of facts or
event having, or insofar as reasonably can be foreseen would likely have, any
material adverse effect on the legality, validity or enforceability of the
Transaction Documents or the transactions contemplated thereby, (ii) any
condition, occurrence, state of facts or event having, or insofar as reasonably
can be foreseen would likely have, any effect on the business, operations,
properties or condition (financial or otherwise) of the Company that is material
and adverse to the Company and its Subsidiaries, taken as a whole, and/or
(iii) any condition, occurrence, state of facts or event that would, or
insofar as reasonably can be foreseen would likely, prohibit or otherwise
materially interfere with or delay the ability of the Company to perform any of
its obligations under any of the Transaction Documents to which it is a party;
provided ,
however , that
none of the following, individually or in the aggregate, shall be taken into
account in determining whether a Material Adverse Effect has occurred or insofar
as reasonably can be foreseen would likely occur: (a) changes in conditions
in the U.S. or global capital, credit or financial markets generally, including
changes in the availability of capital or currency exchange rates, provided such
changes shall not have affected the Company in a materially disproportionate
manner as compared to other similarly situated companies; (b) changes
generally affecting the industries in which the Company is engaged, provided
such changes shall not have affected the Company in a materially
disproportionate manner as compared to other similarly situated companies;
(c) any effect of the announcement of, or the consummation of the
transactions contemplated by, this Agreement and the other Transaction Documents
on the Company’s relationships, contractual or otherwise, with customers,
suppliers, vendors, bank lenders, strategic venture partners or employees; and
(d) the receipt of any notice that the Common Stock may be ineligible to
continue listing or quotation on the Trading Market, other than a final and
non-appealable notice that the listing or quotation of the Common Stock on the
Trading Market shall be terminated on a date certain.

    

    “Material Facts” shall have the meaning
set forth in Section 2.3.7(a).

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    

    “Maximum Put Dollar Amount” shall mean
the lesser of (i) the Company Designated Maximum Put Dollar Amount, if any,
specified by the Company in a Put Notice, and (ii) $250,000.

    

    “Maximum Offering Amount” shall mean
have the meaning set forth in the recitals hereto.

    

    “Nasdaq 20% Rule” shall have the
meaning set forth in Section 2.3.11.

    

    “NASDAQ Market” shall mean NASDAQ
Capital Market, the NASDAQ Global Select Market or the NASDAQ Global
Market.

    

    “Normal Trading” shall mean trading
that occurs between 9:30 AM and 4:00 PM, New York City Time, on any Business
Day, and shall expressly exclude “after hours” trading.

    

    “Numeric Day” shall mean the numerical
day of the month of the Investment Date or the last day of the calendar month in
question, whichever is less.

    

    “Offering” shall mean the Company’s
offering of Common Stock issued under this Investment Agreement.

    

    “Officer’s Certificate” shall have the
meaning set forth in Section 2.2.2(e).

    

    “Opinion of Counsel” shall mean, as
applicable, the Investment Commitment Opinion of Counsel, the Put Opinion of
Counsel and the Registration Opinion.

    

    “Payment Due Date” shall have the
meaning set forth in Section 2.3.9.

    

    “Pricing
Period” shall mean, unless otherwise shortened under the terms of this
Agreement, the period beginning on the Business Day immediately following the
Put Date and ending on and including the date which is 15 Business Days after
such Put Date.

    

    “Pricing
Period End Date” shall mean the last Business Day of any Pricing
Period.

    

    “Principal Market” shall mean the
single principal trading exchange, over the counter market or other market on
which the Common Stock is then listed or traded in the United
States.

    

    “Proceeding” shall have the meaning as
set forth Section 5.1.

    

    “Prospectus
Supplement” means any prospectus supplement to the Prospectus filed with the SEC
from time to time pursuant to Rule 424(b) under the Securities Act,
including the documents incorporated by reference therein.

    

    “Purchase” shall have the meaning set
forth in Section 2.3.8.

    

    “Put” shall have the meaning set forth
in Section 2.3.1(d).

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    

    “Put Closing” shall have the meaning
set forth in Section 2.3.9.

    

    “Put Closing Date” shall have the
meaning set forth in Section 2.3.9.

    

    “Put Conditions” shall have the meaning
set forth in Section 2.3.5.

    

    “Put Date” shall mean the date that is
specified by the Company in any Put Notice for which the Company intends to
exercise a Put under Section 2.3.1, unless the Put Date is postponed pursuant to
the terms hereof, in which case the “Put Date” is such postponed
date.

    

    “Put Dollar Amount” shall be determined
by multiplying the Put Share Amount by the respective Put Share Prices with
respect to such Put Shares, subject to the limitations herein.

    

    “Put Interruption Date” shall have the
meaning set forth in Section 2.3.4.

    

    “Put Interruption Event” shall have the
meaning set forth in Section 2.3.4.

    

    “Put Interruption Notice” shall have
the meaning set forth in Section 2.3.4.

    

    “Put Notice” shall have the meaning set
forth in Section 2.3.1(d), the form of which is attached hereto as Exhibit
E.

    

    “Put Opinion of Counsel” shall mean an
opinion from Company’s independent counsel, in the form attached as Exhibit F, or such
other form as agreed upon by the parties, as to any Put Closing.

    

    “Put Share Amount” shall have the
meaning as set forth Section 2.3.1(b).

    

    “Put Share Price” shall have the
meaning set forth in Section 2.3.1(c).

    

    “Put Shares” shall mean shares of
Common Stock that are purchased by the Investor pursuant to a Put.

    

    “Registrable Securities” shall have the
meaning as set forth in the Registration Rights Agreement.

    

    “Registration Opinion” shall have the
meaning set forth in Section 2.3.7(a), the form of which is attached hereto as
Exhibit
G.

    

    “Registration Opinion Deadline” shall
have the meaning set forth in Section 2.3.7(a).

    

    “Registration Rights Agreement” shall
mean that certain registration rights agreement entered into by the Company and
Investor on even date herewith, in the form attached hereto as Exhibit H, or such
other form as agreed upon by the parties.

    

    “Registration Statement” shall have the
meaning as set forth in the Registration Rights Agreement.

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    

    “Regulation D” shall have the meaning
set forth in the recitals hereto.

    

    “Reporting Issuer” shall have the
meaning set forth in Section 6.2.

    

    “Required Put Documents” shall have the
meaning set forth in Section 2.3.6.

    

    “Resolutions” shall have the meaning
set forth in Section 2.3.5(u).

    

    “Right of First Refusal” shall have the
meaning set forth in Section 6.6.2.

    

    “Risk Factors” shall have the meaning
set forth in Section 3.2.4.

    

    “Schedule of Exceptions” shall have the
meaning set forth in Section 5, and is attached hereto as Exhibit
I.

    

    “SEC” shall mean the United States
Securities and Exchange Commission or any successor entity.

    

    “Secretary’s Certificate” shall have
the meaning set forth in Section 2.2.2(a).

    

    “Securities” shall mean the Common
Stock of the Company issuable pursuant to this Investment Agreement, including
but not limited to the Commitment Shares, the Fee Shares and the Put
Shares.

    

    “Securities Act” shall mean the
Securities Act of 1933, as amended.

    

     “Short
Sales” shall mean “short sales” as defined in Rule 200 promulgated under
Regulation SHO under the Exchange Act.

    

    “SOX ”
shall mean the Sarbanes-Oxley Act of 2002 and the rules and regulations of
the SEC thereunder.

    

    “Stockholder 20% Approval” shall have
the meaning set forth in Section 2.3.11.

    

    “Subsidiary”
shall mean any corporation or other entity of which at least a majority of the
securities or other ownership interest having ordinary voting power (absolutely
or contingently) for the election of directors or other persons performing
similar functions are at the time owned directly or indirectly by the Company
and/or any of its other Subsidiaries.

    

    “Term” shall mean the term of this
Agreement, which shall be a period of time beginning on the date of this
Agreement and ending on the Termination Date.

    

    “Termination Date” shall mean the
earlier of (i) the date that is two (2) years after the Effective Date, (ii) the
date that is thirty (30) calendar months after the date of this Agreement, or
(iii) the date that is thirty (30) Business Days after the later of (a) the Put
Closing Date on which the sum of the aggregate Put Share Price for all Put
Shares equal the Maximum Offering Amount, (b) the date that the Company has
delivered a Termination Notice to the Investor, and (c) the date of an Automatic
Termination.

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    

    “Termination Notice” shall have the
meaning as set forth in Section 2.3.12.

    

    “Third Party Reports” shall have the
meaning set forth in Section 3.2.4.

    

    “Trading Day” shall mean any day on
which the Principal Market is open for trading including any day on which the
Principal Market is open for trading for a period of time less than the
customary time.

    

    “Transaction
Documents” means, collectively, this Agreement and the exhibits hereto, the
Registration Rights Agreement and each of the other agreements, documents,
certificates and instruments entered into or furnished by the parties hereto in
connection with the transactions contemplated hereby and thereby, including,
without limitation, the Disclosure Documents.

    

    “Trading
Market” means whichever Approved Primary Market is at the time the principal
trading exchange or market for the Common Stock.

    

    “Trading Volume” shall mean the volume
of shares of the Company’s Common Stock that trade between 9:30 AM and 4:00 PM,
New York City Time, on any Business Day, and shall expressly exclude any shares
trading during “after hours” trading.

    

    “Transfer Agent” shall have the meaning
set forth in Section 6.9.

    

    “Transfer Agent Instructions” shall
have the meaning set forth in Section 6.9.

    

    “Trigger Price” shall have the meaning
set forth in Section 2.3.1(b).

    

    “Unlegended Share Certificates” shall
mean a certificate or certificates (or electronically delivered shares, as
appropriate) (in denominations as instructed by Investor) representing the
shares of Common Stock to which the Investor is then entitled to receive,
registered in the name of Investor or its nominee (as instructed by Investor)
and not containing a restrictive legend or stop transfer order, including but
not limited to the Put Shares for the applicable Put, and the Commitment Shares
and the Fee Shares when a Legend Removal Condition has been met.

    

    “Use of Proceeds Schedule” shall have
the meaning as set forth in Section 3.2.4, attached hereto as Exhibit
K.

    

    “Volume Limitations” shall have the
meaning set forth in Section 2.3.1(b).

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    2.           
Purchase and Sale of Common
Stock.

    

    2.1         
Offer to
Subscribe.

    

    Subject to the terms and conditions
herein and the satisfaction of the conditions to closing set forth in Sections
2.2 and 2.3 below and the other terms and conditions set forth in this
Agreement, Investor hereby agrees to purchase such amounts of Common Stock as
the Company may, in its sole and absolute discretion, from time to time elect to
issue and sell to Investor according to one or more Puts pursuant to Section 2.3
below.

    

    2.2         
Investment
Commitment. 

    

    2.2.1  Investment Commitment
Closing.  The closing of this Agreement (the “Investment
Commitment Closing") shall be deemed to occur when this Agreement has been duly
executed and delivered by both the Company and the Investor, and the other
Conditions to Investment Commitment Closing set forth in Section 2.2.2 below
have been met.

    

    2.2.2Conditions to Investment Commitment
Closing.  As a prerequisite to the Investment Commitment
Closing, all of the following (the “Conditions to Investment Commitment
Closing”) shall have been satisfied within five (5) Business Days of the
Company’s execution and delivery of this Agreement:

    

    
      
        	
              	
                (a)

              	
                the
      following documents shall have been delivered to the Investor: (i) the
      Registration Rights Agreement (duly executed by the Company and Investor),
      (ii) the Investment Commitment Opinion of Counsel (signed by the Company’s
      counsel) and  (iii) the Transfer Agent Instructions (executed by
      the Company and the Transfer Agent), and (iv) a Secretary's Certificate,
      in the form of Exhibit L hereto (“Secretary’s Certificate”), (A) attaching
      the Resolutions of the Company's board of directors authorizing this
      transaction and certifying that they remain in full force and effect
      without any amendment or supplement thereto as of the Commitment Closing
      Date, (B) attaching a certified copy of the Company's Certificate of
      Incorporation evidencing the incorporation and good standing of the
      Company in its state of incorporation, issued by the secretary of state of
      the state of incorporation within the ten (10) Business Days prior to the
      Commitment Closing Date, and (C)attaching a true and
      complete copy of the Bylaws of the Company and certifying that they remain
      in full force and
effect;

              

      

    

    

    
      
        	
              	
                (b)

              	
                this
      Investment Agreement, duly executed by the Company, shall have been
      received by the Investor;

              

      

    

    

    
      
        	
              	
                (c)

              	
                the
      Company’s Common Stock shall be listed for trading and actually trading on
      an Approved Primary Market;

              

      

    

    

    
      
        	
              	
                (d)

              	
                other
      than continuing losses described in the Risk Factors set forth in the
      Disclosure Documents (provided for in Section 3.2.4), up through the
      Investment Commitment Closing there have been no
      material adverse changes in the Company’s business prospects or financial
      condition since the date of the last balance sheet included in the
      Disclosure Documents, including but not limited to incurring material
      liabilities; 

              

      

    

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    

    
      
        	
              	
                (e)

              	
                the
      representations and warranties of the Company in this Agreement shall be
      true and correct in all material respects and the Conditions to Investment
      Commitment Closing set forth in this Section 2.2.2 shall have been
      satisfied on the date of such Investment Commitment Closing and all of the
      conditions and limitations set forth in this Agreement for the applicable
      Closing has been satisfied; and the Company shall deliver an Officer’s
      Certificate in the form of Exhibit M hereto (“Officer’s Certificate”),
      signed by an officer of the Company, to such effect to the Investor;
      and

              

      

    

    

    
      
        	
              	
                (f)

              	
                the
      Company shall have paid by wire transfer of immediately available funds to
      an account designated by the Investor’s counsel, the Cash Document
      Preparation Fee in accordance with Section 9.10(i) hereof, all of which
      fees shall be non-refundable regardless of whether any Puts are exercised
      by the Company or settled hereunder. The Company shall have issued to the
      Investor, or shall have caused its transfer agent to issue to the
      investor, certificates representing the Commitment Shares and the Fee
      Shares, respectively, in the name of the Investor or its designee (in
      which case such designee name shall have been provided to the Company
      prior to the Commitment Closing Date), in consideration for the Investor’s
      execution and delivery of this Agreement.  Such certificate
      shall be delivered to the Investor by overnight courier at its address set
      forth in Section 9.12 hereof.  For the avoidance of doubt, all
      of the Commitment Shares and Fee Shares shall be fully earned upon receipt
      regardless of whether any Puts are exercised by the Company or settled
      hereunder.

              

      

    

    

    2.3         
Puts of Common Shares
to the Investor.

    

    2.3.1   Procedure  to Exercise a
Put. Subject to the Individual Put Limit, the Maximum Offering Amount and
the Cap Amount (if applicable), and subject to the satisfaction of the Put
Conditions and the other conditions and limitations set forth in this Agreement,
at any time beginning on the date on which the Registration Statement is
declared effective by the SEC (the “Effective Date”), the Company may, in its
sole and absolute discretion, elect to exercise one or more Puts according to
the following procedure, provided that each subsequent Put Date after the first
Put Date shall be no sooner than five (5) Business Days following the preceding
Pricing Period End Date:

    

    (a) Delivery of Advance Put
Notice.At least one (1) Business Day but not more than twenty (20)
Business Days prior to any intended Put Date, the Company shall deliver advance
written notice (the “Advance Put Notice,” the form of which is attached hereto
as Exhibit A,
the date of such Advance Put Notice being the “Advance Put Notice Date”) to
Investor stating the Put Date for which the Company shall, subject to the
limitations and restrictions contained herein, exercise a Put and stating the
number of shares of Common Stock (subject to the Individual Put Limit and the
Maximum Put Dollar Amount) which the Company intends to sell to the Investor for
the Put (the “Intended Put Share Amount”).   

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    

    The Company may, at its option, also
designate in any Advance Put Notice (i) a maximum dollar amount of Common Stock,
not to exceed $250,000, which it shall sell to Investor during the Put (the
“Company Designated Maximum Put Dollar Amount”) and/or (ii) a minimum purchase
price per Put Share at which the Investor may purchase shares of Common Stock
pursuant to such Put Notice (a "Company Designated Minimum Put Share
Price").  The Company Designated Minimum Put Share Price, if
applicable, shall be no greater than the lesser of (i) 80% of the Closing Bid
Price of the Company’s common stock on the Business Day immediately preceding
the Advance Put Notice Date, or (ii) the Closing Bid Price of the Company’s
common stock on the Business Day immediately preceding the Advance Put Notice
Date minus $0.0125.  The Company may decrease (but not increase) the
Company Designated Minimum Put Share Price for a Put at any time by giving the
Investor written notice of such decrease not later than 12:00 Noon, New York
City time, on the Business Day immediately preceding the Business Day that such
decrease is to take effect.  A decrease in the Company Designated
Minimum Put Share Price shall have no retroactive effect on the determination of
Trigger Prices and Excluded Days for days preceding the Business Day that such
decrease takes effect, provided that the Put Share Price for all shares in a Put
shall be calculated using the lowest Company Designated Minimum Put Share Price,
as decreased.

    

    (b) Put Share Amount. The
“Put Share Amount” is the number of shares of Common Stock that the Investor
shall be obligated to purchase in a given Put, and shall equal the lesser of (i)
the Intended Put Share Amount, and (ii) the Individual Put Limit.  The
“Individual Put Limit” shall equal the lesser of (A) 1,500,000 shares, (B) 15%
of the sum of the aggregate daily reported Trading Volumes in the outstanding
Common Stock on the Company’s Principal Market, excluding any block trades that
exceed 20,000 shares of Common Stock, for all Evaluation Days (as
defined below) in the Pricing Period, (C) the number of Put Shares which, when
multiplied by their respective Put Share Prices, equals the Maximum Put Dollar
Amount, and (D) the 4.9% Limitation (collectively referred to
herein as the “Volume Limitations”).  Company agrees not to
trade Common Stock or arrange for Common Stock to be traded for the purpose of
artificially increasing the Volume
Limitations.    

    

    For purposes of this
Agreement:

    

    "Trigger Price" for any Pricing Period
shall mean the greater of (i) the Company Designated Minimum Put Share Price,
plus $0.01, or (ii) the Company Designated Minimum Put Share Price divided by
..96.

    

    An “Excluded Day” shall mean each
Business Day during a Pricing Period where the lowest intra-day trading price of
the Common Stock is less than the Trigger Price and each Business Day defined in
Section 2.3.4 as an “Excluded Day”.

    

    An “Evaluation Day” shall mean each
Business Day during a Pricing Period that is not an Excluded
Day.

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    

    (c) Put Share
Price.  The purchase price for the Put Shares (the “Put Share
Price”) shall equal the lesser of (i) the Market Price for such Put, minus
$0.01, or (ii) 96% of the Market Price for such Put, but shall in no event be
less than the Company Designated Minimum Put Share Price for such Put, if
applicable. 

    

    (d) Delivery of Put
Notice.  After delivery of an Advance Put Notice, on the Put
Date specified in the Advance Put Notice the Company shall deliver written
notice (the “Put Notice,” the form of which is attached hereto as Exhibit E) to
Investor stating (i) the Put Date, (ii) the Intended Put Share Amount as
specified in the Advance Put Notice (such exercise a “Put”), (iii) the Company
Designated Maximum Put Dollar Amount (if applicable), and (iv) the Company
Designated Minimum Put Share Price (if applicable).  In order to
effect delivery of the Put Notice, the Company shall (i) send the Put Notice by
facsimile on the Put Date so that such notice is received by the Investor by
6:00 p.m., New York, NY time, and (ii) surrender such notice on the Put Date to
a courier for overnight delivery to the Investor (or two (2) day delivery in the
case of an Investor residing outside of the U.S.). 

    

    (e) Delivery of Required Put
Documents. On or before the Put Date for such Put, the Company shall
deliver the Required Put Documents (as defined in Section 2.3.6 below) to the
Investor (or to an agent of Investor, if Investor so directs).  Unless
otherwise specified by the Investor or not permitted by DTC, the Put Shares of
Common Stock shall be delivered to the Investor in accordance with Section 2.3
by crediting the Investor’s or its designees’ account at DTC through its
Deposit/Withdrawal at Custodian (DWAC) system.

    

     (f)
Limitation on
Investor's Obligation to Purchase Shares. Notwithstanding anything to the
contrary in this Agreement, in no event shall the Investor be required to
purchase, and an Intended Put Share Amount may not include, an amount of Put
Shares, which when added to the number of shares of Common Stock of the Company
then beneficially owned by the Investor would exceed 4.9% of the number of
shares of Common Stock outstanding after issuance of such Put Shares, as
determined in accordance with Section 13(d) of the Exchange Act.  Each
Put Notice shall include a representation of the Company as to the number of
shares of Common Stock outstanding on the related Put Date.  In the
event that the number of shares of Common Stock outstanding decreases during a
Pricing Period from the number as of the Put Date associated with such Pricing
Period, then the number of shares of Common Stock outstanding on such date
during such Pricing Period shall govern for purposes of determining whether the
number of shares beneficially owned by the Investor following the issuance of
the subject Put Shares, would constitute in excess of 4.9% of the number of
shares of Common Stock outstanding.  The limitation set forth in this
Section 2.3.1(f) is referred to as the “4.9%
Limitation.”

    

    2.3.2  Termination of Right to
Put.  The Company’s right to initiate subsequent Puts to the
Investor shall terminate permanently (each, an “Automatic Termination”) upon the
occurrence of any of the following:

    

    (a) if,
at any time, either the Company or any director or executive officer of the
Company has engaged in a transaction or conduct related to the Company that has
resulted in (i) a Securities and Exchange Commission enforcement action, or (ii)
a civil judgment or criminal conviction for fraud or misrepresentation, or for
any other offense that, if prosecuted criminally, would constitute a felony
under applicable law;

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    

    (b) on
any date after a cumulative time period or series of time periods, consisting
only of Ineffective Periods, that continues for a period of ten (10) consecutive
Business Days or for more than an aggregate of thirty (30) Business Days in any
365-day period;

    

    (c) if at
any time the Company has filed for and/or is subject to any bankruptcy,
insolvency, reorganization or liquidation proceedings or other proceedings for
relief under any bankruptcy law or any law for the relief of debtors instituted
by or against the Company or any subsidiary of the Company;

    

    (d)
 if any Person commences a proceeding against the Company pursuant to or
within the meaning of any Bankruptcy Law;

    

    (e)
 if the Company pursuant to or within the meaning of any Bankruptcy Law;
(A) commences a voluntary case, (B) consents to the entry of an order for relief
against it in an involuntary case, (C) consents to the appointment of a
Custodian of it or for all or substantially all of its property, (D) makes a
general assignment for the benefit of its creditors or is generally unable to
pay its debts as the same become due;

    

    (f)  a
court of competent jurisdiction enters an order or decree under any Bankruptcy
Law that (A) is for relief against the Company in an involuntary case, (B)
appoints a Custodian of the Company or for all or substantially all of its
property, or (C) orders the liquidation of the Company or any
Subsidiary;

    

    (g) after
the sooner of (i) the date that is two (2) years after the Effective Date, (ii)
the date that is thirty (30) calendar months after the date of this Agreement,
or (iii) the Put Closing Date on which the aggregate of the Put Dollar Amounts
for all Puts equal the Maximum Offering Amount (the period from the date of this
Agreement to the sooner or (i), (ii) or (iii) is referred to as the “Commitment
Period”);

    

    (h) the
Company has breached any covenant in Section 5, Section 6, Section 8 or Section
9 hereof;

    

    (i) if no
Registration Statement has been declared effective by the date that is one (1)
year after the date of this Agreement, the Automatic Termination shall occur on
the date that is one (1) year after the date of this Agreement.

    

    (j)  the
suspension from trading or failure of the Common Stock to be listed on an
Approved Primary Market for a period of three (3) consecutive Business
days;

    

    (k)  the
delisting of the Company’s Common Stock from the Principal Market, provided,
however, that the Common Stock is not immediately thereafter trading on another
Approved Primary Market;

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    

    (l)  the
failure for any reason by the Transfer Agent to issue Commitment Shares or Fee
Shares to the Investor, without restrictive legends, pursuant to a legend
removal request, within five (5) Business Days after the applicable Required
Delivery Date; or

    

    (m)  the
Company breaches any representation, warranty, covenant or other term or
condition under any Transaction Document if such breach could have a Material
Adverse Effect and except, in the case of a breach of a covenant which is
reasonably curable, only if such breach continues for a period of at least five
(5) Business Days after notice thereof is provided to the Company by
Investor.

    

    For
purposes of clarification, notwithstanding any Automatic Termination hereunder,
the Investor shall retain all of the Cash Document Preparation Fee, the
Commitment Shares and the Fee Shares in consideration for this
Agreement.

    

    2.3.3     Maximum Offering
Amount.  The Investor shall not be obligated to purchase any
additional Put Shares once the aggregate Put Dollar Amount paid by Investor
equals the Maximum Offering Amount.

    

    2.3.4     Put
Interruption.  Once the Company delivers an Advance Put Notice
to the Investor, the Company may not cancel the Put.  In the event of
a Put Interruption Event (as defined below), in each case during any Pricing
Period, then (A) the Company shall notify the Investor in writing (a “Put
Interruption Notice”) as soon as possible by facsimile and overnight courier,
but no later than the end of the Business Day in which the Company becomes aware
of such facts, (B) the Pricing Period shall be extended or shortened, as
applicable, such that the Pricing Period End Date is the tenth (10th)
Business Day after the date of such Put Interruption Notice from the Company,
(the “Put Interruption Date”), (C) each Business Day from and including the Put
Interruption Date through and including the Pricing Period End Date for the
applicable Put (as extended or shortened, if applicable), shall be considered to
be an “Excluded Day,” as that term is used in this Agreement, and (D) the
Company Designated Minimum Put Share Price, if any, shall not apply to the
affected Put.  In the event that a Put Interruption Event occurs after
an Advance Put Notice Date, but before the applicable Put Date, that Put shall
be deemed to be terminated, and the Company may deliver an Advance Put Notice
for a new Put anytime beginning on the following Business Day, if otherwise
allowed under this Agreement.  A “Put Interruption Event” shall mean
any of the following: (i) an Automatic Termination, (ii) the failure of one of
the items specified in Section 2.3.5 below to be true and correct on any day
during an Extended Pricing Period, or (iii) the occurrence of one of the
following events:

    

    (a) the
Company has announced a subdivision or combination, including a reverse split,
of its Common Stock or has subdivided or combined its Common Stock;

    

    (b) the
Company has paid a dividend of its Common Stock or has made any other
distribution of its Common Stock;

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    

    (c) the
Company has made a distribution of all or any portion of its assets or evidences
of indebtedness to the holders of its Common Stock;

    

    (d) a
Major Transaction has occurred; or

    

    (e)  the
Company discovers or is notified of the existence of Material Facts or any
Ineffective Period or Delisting Event occurs.

    

    2.3.5   Conditions Precedent to the Right of
the Company to Deliver an Advance Put Notice or a Put
Notice.  The right of the Company to deliver an Advance Put
Notice or a Put Notice is subject to the satisfaction, on the date of delivery
of such Advance Put Notice or Put Notice, of each of the following conditions
(the “Put Conditions”):

    

    
      	
               
      

            	
              (a)

            	
              Investment Commitment
      Closing. The Conditions to Investment Commitment Closing shall have
      been timely satisfied as required in this Agreement and the Investment
      Commitment Closing shall have
occurred;

            

    

    

    
      	
               
      

            	
              (b)

            	
              Time Since Prior Put
      Notice. At least five Business Days shall have passed from the most
      recent Pricing Period End Date until the Put Date for the proposed Put;
      

            

    

    

    
      	
               
      

            	
              (c)

            	
              Required Put
      Documents. The Investor shall have received the Required Put
      Documents on or before the applicable Put
Date;

            

    

    

    
      	
               
      

            	
              (d)

            	
              Listing. The
      Company’s Common Stock shall be listed for and actively trading on and
      Approved Primary Market and the Commitment Shares, the Fee Shares and the
      Put Shares shall be so listed;

            

    

    

    
      
        	
              	
                (e)

              	
                No Suspension of
      Trading in or Delisting of Common Stock.  Trading in the
      Common Stock shall not have been suspended or delisted by the SEC, the
      Trading Market or the FINRA, the Company shall not have received any final
      and non-appealable notice that the listing or quotation of the Common
      Stock on the Trading Market shall be terminated on a date certain, and, at
      any time prior to the applicable Put Date and applicable Put Closing Date,
      trading in securities generally as reported on the Trading Market shall
      not have been suspended or limited, nor shall a banking moratorium have
      been declared either by the United States or New York State authorities,
      nor shall there have occurred any material outbreak or escalation of
      hostilities or other national or international calamity or crisis of such
      magnitude in its effect on, or any material adverse change in, any
      financial, credit or securities
market;

              

      

    

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    
      
        	
              	
                (f)

              	
                Registration
      Effective; No Stop Order. The Company shall
      have satisfied any and all obligations pursuant to the Registration Rights
      Agreement, including, but not limited to, the filing of the Registration
      Statement with the SEC with respect to the resale of all Registrable
      Securities and the requirement that the Registration Statement shall have
      been declared effective under the Securities Act by the SEC and shall
      remain current and effective such that the Investor shall be permitted to
      utilize the Prospectus therein to resell (a) all of the Commitment Shares,
      (b) all of the Fee Shares, (c) all of the Shares issued pursuant to all
      prior Put Notices, and (d) all of the Shares issuable pursuant to the
      applicable Put Notice, there shall exist no Material Facts or material
      non-public information that is not covered by the Prospectus (as
      supplemented or amended) and the Company shall have satisfied and shall be
      in compliance with any and all obligations pursuant to this Agreement and
      the Registration Rights Agreement. The Registration Statement is not
      subject to an Ineffective Period as defined in the Registration Rights
      Agreement, the prospectus included therein is current and deliverable, and
      to the Company’s knowledge there is no notice of any investigation or
      inquiry concerning any stop order with respect to the Registration
      Statement;   

              

      

    

    

    
      
        	
              	
                (g)

              	
                No Knowledge of Events
      Which Would Suspend Registration.  The Company shall
      have no knowledge of any event that, in the Company’s opinion, is more
      likely than not to have the effect of causing any Registration Statement
      to be suspended or otherwise ineffective (which event is more likely than
      not to occur within the thirty Business Days following the date on which
      such Advance Put Notice and Put Notice is deemed
    delivered);

              

      

    

    

    
      
        	
              	
                (h)

              	
                No Material
      Notices. None of the following events shall have occurred and be
      continuing: (a) receipt of any request by the SEC or any other federal or
      state governmental authority for any additional information relating to
      the Registration Statement, the Prospectus or any Prospectus Supplement,
      or for any amendment of or supplement to the Registration Statement, the
      Prospectus, or any Prospectus Supplement; (b) the issuance by the SEC or
      any other federal or state governmental authority of any stop order
      suspending the effectiveness of the Registration Statement or prohibiting
      or suspending the use of the Prospectus or any Prospectus Supplement, or
      of the suspension of qualification or exemption from qualification of the
      securities for offering or sale in any jurisdiction, or the initiation or
      contemplated initiation of any proceeding for such purpose; or (c) the
      occurrence of any event or the existence of any condition or state of
      facts, which makes any statement of a material fact made in the
      Registration Statement, the Prospectus or any Prospectus Supplement untrue
      or which requires the making of any additions to or changes to the
      statements then made in the Registration Statement, the Prospectus or any
      Prospectus Supplement in order to state a material fact required by the
      Securities Act to be stated therein or necessary in order to make the
      statements then made therein (in the case of the Prospectus or any
      Prospectus Supplement, in light of the circumstances under which they were
      made) not misleading, or which requires an amendment to the Registration
      Statement or a supplement to the Prospectus or any Prospectus Supplement
      to comply with the Securities Act or any other law (other than the
      transactions contemplated by the applicable Put Notice and the settlement
      thereof). The Company shall have no Knowledge of any event that could
      reasonably be expected to have the effect of causing the suspension of the
      effectiveness of the Registration Statement or the prohibition or
      suspension of the use of the Prospectus or any Prospectus Supplement in
      connection with the resale of the Registrable Securities by the
      Investor;

              

      

    

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

    

    
      
        	
              	
                (i)

              	
                Representations and
      Warranties True and Correct.  The
      representations and warranties of the Company in Section 5 hereof (except
      for Sections 5.11 and 5.13 and all but the first and last sentences of
      Section 5.12, which speak only as of the date of this Agreement) are true
      and correct as of the Put Date in all material respects as if made on such
      date, the Company has satisfied its obligations under Section 2.3 hereof
      and the conditions to Investor’s obligations set forth in this Section
      2.3.5 are satisfied as of such Closing, and the Company shall deliver a
      certificate, signed by an officer of the Company, to such effect to the
      Investor; 

              

      

    

    

    
      
        	
              	
                (j)

              	
                Authorization and
      Reservation of Shares.  The Company shall have authorized
      by all necessary corporate action and reserved for issuance a sufficient
      number of Common Shares for the purpose of enabling the Company to satisfy
      any obligation to issue Common Shares pursuant to any
  Put;

              

      

    

    

    
      
        	
              	
                (k)

              	
                Cap Amount Not
      Exceeded.  If the Aggregate
      Issued Shares after the Closing of the Put would exceed the Cap Amount,
      the Company shall have obtained the Stockholder 20% Approval as specified
      in Section 2.3.11, if the Company’s Common Stock is listed on a NASDAQ
      Market, and such approval is required by the rules of the
      NASDAQ;

              

      

    

    

    
      
        	
              	
                (l)

              	
                4.9% Limitation Not
      Exceeded. The aggregate
      number of Put Shares to be issued in the Put, when combined with the
      number of shares of Common Stock of the Company then beneficially owned by
      the Company, would not cause the Investor to exceed the 4.9% Limitation
      (as defined herein);

              

      

    

    

    
      
        	
              	
                (m)

              	
                Maximum Offering
      Amount Not Exceeded. The aggregate
      number of Put Shares to be issued in the Put, when combined with all Put
      Share issued in prior Puts, would not cause the Maximum Offering Amount to
      be exceeded;

              

      

    

    

    
      
        	
              	
                (n)

              	
                No Adverse Law, Rule,
      Regulation, or Pending Proceeding.  There is not then in
      effect any law, rule or regulation prohibiting or restricting the
      transactions contemplated hereby, or requiring any consent or approval
      which shall not have been obtained, nor is there any pending or threatened
      proceeding or investigation which may have the effect of prohibiting or
      adversely affecting any of the transactions contemplated by this
      Agreement;

              

      

    

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    

    
      
        	
              	
                (o)

              	
                No Pending or
      Threatened Injunctions. No statute, rule, regulation, executive
      order, decree, ruling or injunction shall have been enacted, entered,
      promulgated or adopted by any court or governmental authority of competent
      jurisdiction that prohibits the transactions contemplated by this
      Agreement, and no actions, suits or proceedings shall be in progress,
      pending or threatened by any person (other than the Investor or any
      affiliate of the Investor), that seek to enjoin or prohibit the
      transactions contemplated by this Agreement.  For purposes of
      this paragraph (i), no proceeding shall be deemed pending or threatened
      unless one of the parties has received written or oral notification
      thereof prior to the applicable Put Closing Date;
  

              

      

    

    

    
      
        	
              	
                (p)

              	
                Put Shares DTC
      Eligible.  The Put Shares
      delivered to the Investor are DTC eligible and can be immediately
      converted into electronic form;

              

      

    

    

    
      
        	
              	
                (q)

              	
                No Allegation of
      Section 5 Violation.  There has been no assertion by the
      SEC that there has been a violation of Section 5 of the Securities Act
      caused by the integration of the private sale of common stock to the
      Investor and the public offering pursuant to the Registration Statement,
      and there have been no claims made by third parties against the Investor
      based on a such an alleged Section 5
violation;

              

      

    

    

    
      
        	
              	
                (r)

              	
                Compliance with
      Laws.  The Company shall have complied with all applicable
      federal, state and local governmental laws, rules, regulations and
      ordinances in connection with the execution, delivery and performance of
      this Agreement and the other Transaction Documents to which it is a party
      and the consummation of the transactions contemplated hereby and thereby,
      including, without limitation, the Company shall have obtained all permits
      and qualifications required by any applicable state securities or “blue
      sky” laws for the offer and sale of the Securities by the Company to the
      Investor and the subsequent resale of the Registrable Securities by the
      Investor (or shall have the availability of exemptions
      therefrom);

              

      

    

      

    
      	
               
      

            	
              (s)

            	
              No Material Adverse
      Effect. No condition, occurrence, state of facts or event
      constituting a Material Adverse Effect shall have occurred and be
      continuing;

            

    

     

    
      
        	
              	
                (t)

              	
                No Restrictive
      Legends. If requested by the Investor from and after the earlier of
      (x) the Effective Date, or (y) the date that the Commitment Shares and Fee
      Shares can be sold under Rule 144 without volume restrictions (the earlier
      of (x) and (y) is referred to in this Agreement as the “Liquidity Date”),
      the Company shall have either (i) issued and delivered (or caused to be
      issued and delivered) to the Investor certificates representing the
      Commitment Shares and the Fee Shares, respectively, that are free from all
      restrictive and other legends or (ii) caused the Company’s transfer agent
      to credit the Investor’s or its designee’s account at DTC through its
      Deposit/Withdrawal at Custodian (DWAC) system with a number of shares of
      Common Stock equal to the number of Commitment Shares and Fee Shares
      represented by the certificate delivered by the Investor to the Company in
      accordance with Section 9.10(iv) of this
  Agreement.

              

      

    

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

    

    
      	
               
      

            	
              (u)

            	
              Resolutions
      Adopted.  The Board of Directors of the Company shall
      have adopted resolutions (“Resolutions”) in the form attached hereto as
      Exhibit N, which shall be in full force and effect without any amendment
      or supplement thereto as of the Put
Date;

            

    

    

    
      
        	
              	
                (v)

              	
                No Material Non-Public
      Information.  The Investor shall not be in possession of
      any material non-public information.  If the Company discovers
      or is notified of Material Facts or of the existence of material
      non-public information that is not included in the Prospectus or any
      Ineffective Period occurs, the Company shall not initiate a Put until the
      Prospectus is amended to include any material non-public information or
      Material Facts and the Company’s counsel provides in a Registration
      Opinion that no Material Facts or material non-public information exists
      that is not included in the
Prospectus.

              

      

    

    

    
      	
               
      

            	
              (w)

            	
              Requested Due
      Diligence Information Provided.  The Company shall have
      provided the Investor with the information requested by the Investor in
      connection with its due diligence requests made prior to, or in connection
      with, the Put in accordance with Section 2.4
  hereof.

            

    

    

    
      	
               
      

            	
              (x)

            	
              Reporting
      Issuer.  The Company shall be a Reporting Issuer and
      shall have a class of securities registered under Section 12 of the
      Exchange Act.

            

    

    

    2.3.6  Documents Required to be Delivered
on the Put Date as Conditions to Closing of any Put.  The
Closing of any Put and Investor’s obligations hereunder shall additionally be
conditioned upon the delivery to the Investor of each of the following (the
“Required Put Documents”) on or within three (3) Business Days before the
applicable Put Date (or such earlier time as may be specifically required under
the terms hereof):

    

    (a) a
number of Unlegended Share Certificates equal to the Intended Put Share Amount,
which shall be delivered by crediting the Investor’s or its designees’ account
at DTC through its Deposit/Withdrawal at Custodian (DWAC) system (unless the
Investor requests physical certificates, in which such certificates shall be in
denominations of not more than 50,000 shares per certificate);

    

    (b) the
following documents: Put Opinion of Counsel, Registration Opinion, Officer’s
Certificate, Secretary’s Certificate, Resolutions, Put Notice, and any report or
disclosure required under Section 2.3.7 or Section 2.4 hereof, each dated as of
the Put Date or a date within three Business Days prior to the Put
Date;

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

    

    (c) all
documents, instruments and other writings required to be delivered on or before
the Put Date pursuant to any provision of this Agreement in order to implement
and effect the transactions contemplated herein.

    

    
      2.3.7   Accountant’s Letter and Registration
Opinion.

    

    

    (a)  The Company shall have
caused to be delivered to the Investor, (i) whenever required by Section
2.3.7(b) or by Section 2.5.3, and (ii) on the date that is three (3) Business
Days prior to each Put Date (the “Registration Opinion Deadline”), an opinion of
the Company's independent counsel, in substantially the form of Exhibit G (the
“Registration Opinion”), addressed to the Investor stating, inter alia, that no
facts (“Material Facts”) have come to such counsel's attention that have caused
it to believe that the Registration Statement is subject to an Ineffective
Period or to believe that the Registration Statement, any Supplemental
Registration Statement (as each may be amended, if applicable), and any related
prospectuses, contain an untrue statement of material fact or omits a material
fact required to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.  If a
Registration Opinion cannot be delivered by the Company's independent counsel to
the Investor on the Registration Opinion Deadline due to the existence of
Material Facts or an Ineffective Period, the Company shall promptly notify the
Investor and as promptly as possible amend each of the Registration Statement
and any Supplemental Registration Statements, as applicable, and any related
prospectus or cause such Ineffective Period to terminate, as the case may be,
and deliver such Registration Opinion and updated prospectus as soon as possible
thereafter.  If at any time after a Put Notice shall have been
delivered to Investor but before the related Pricing Period End Date, the
Company acquires knowledge of such Material Facts or any Ineffective Period
occurs, the Company shall promptly notify the Investor and shall deliver a Put
Interruption Notice to the Investor pursuant to Section 2.3.4 by facsimile and
overnight courier by the end of that Business Day.  

    

    (b)        
(i)  the Company shall engage its independent auditors to perform the
procedures in accordance with the provisions of Statement on Auditing Standards
No. 71, as amended, as agreed to by the parties hereto, and reports thereon (the
“Bring Down Cold Comfort Letters”) as shall have been reasonably requested by
the Investor with respect to certain financial information contained in the
Registration Statement and shall have delivered to the Investor such a report
addressed to the Investor, on the date that is three (3) Business Days prior to
each Put Date.

    

    (ii)  in the event that the
Investor shall have requested delivery of an Agreed Upon Procedures Report
pursuant to Section 2.4.3, the Company shall engage its independent auditors to
perform certain agreed upon procedures and report thereon as shall have been
reasonably requested by the Investor with respect to certain financial
information of the Company and the Company shall deliver to the Investor a copy
of such report addressed to the Investor.  In the event that the
report required by this Section 2.3.7(b) cannot be delivered by the Company's
independent auditors, the Company shall, if necessary, promptly revise the
Registration Statement and the Company shall not deliver a Put Notice until such
report is delivered.

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

    

    2.3.8   Investor’s Obligation and Right to
Purchase Shares.    Subject to the conditions set
forth in this Agreement, following the Investor's receipt of a validly delivered
Put Notice, the Investor shall be required to purchase (each a “Purchase”) from
the Company a number of Put Shares equal to the Put Share Amount, in the manner
described below.

    

    2.3.9   Mechanics of Put
Closing.  Each of the Company and the Investor shall deliver
all documents, instruments and writings required to be delivered by either of
them pursuant to this Agreement at or prior to each Put
Closing.  Subject to such delivery and the satisfaction of the
conditions set forth in this Section 2, the closing of the purchase by the
Investor of Put Shares shall occur by 5:00 PM, New York City Time, on the date
which is five (5) Business Days following the applicable Pricing Period End Date
(the “Payment Due Date”) at the offices of Investor.  On each or
before each Payment Due Date, the Investor shall deliver to the Company, in the
manner specified in Section 7 below, the Put Dollar Amount to be paid for such
Put Shares, determined as aforesaid.  The closing (each a “Put
Closing”) for each Put shall occur on the date that (i) the Company has
delivered to the Investor all Required Put Documents, (ii)_each of the Put
Conditions have been met and (iii) the Investor has delivered to the Company
such Put Dollar Amount (each a “Put Closing Date”).

    

    2.3.10  Limitation on Short
Sales.  The Investor and its affiliates shall not engage in
short sales of the Company's Common Stock; provided, however, that the Investor
may enter into any short exempt sale or any short sale or other hedging or
similar arrangement it deems appropriate with respect to Put Shares after it
receives a Put Notice with respect to such Put Shares so long as such sales or
arrangements do not involve more than the number of such Put Shares specified in
the Put Notice.

    

    2.3.11  Cap Amount.  If the
Company becomes listed on a NASDAQ Market, then, unless the Company has obtained
the necessary approval (“Stockholder 20% Approval”) of its shareholders as
required under the Nasdaq 20% Rule or unless otherwise permitted by Nasdaq, in
no event shall the Aggregate Issued Shares exceed the maximum number of shares
of Common Stock (the “Cap Amount”) that the Company can, without stockholder
approval, so issue pursuant to Nasdaq Rule 4350(i)(1)(d)(i) (or any other
applicable Nasdaq Rules or any successor rule) (the “Nasdaq 20%
Rule”).

    

    2.3.12   Investment Agreement
Termination.   The Company may terminate (a “Company
Termination”) its right to initiate future Puts by providing written notice
(“Termination Notice”) to the Investor, by facsimile and overnight courier, at
any time other than during an Extended Put Period, provided that such
termination shall have no effect on the parties’ other rights and obligations
under this Agreement, the Registration Rights Agreement, and the Transfer Agent
Instructions.  Notwithstanding the above, any Put Interruption Notice
occurring during an Extended Put Period is governed by Section
2.3.4.

    

    2.3.13  Return of Excess Common
Shares.  In the event that the number of Put Shares purchased
by the Investor in any Put pursuant to its obligations hereunder is less than
the Intended Put Share Amount, the Investor shall promptly return to the Company
any shares of Common Stock in the Investor’s possession that are not being
purchased by the Investor, unless the parties mutually agree for the Investor to
retain such excess Common Shares to apply to the next Put.

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

    

    2.4          
Due Diligence
Review.  The Company shall make available for inspection and
review by the Investor (the “Due Diligence Review”), advisors to and
representatives of the Investor (who may or may not be affiliated with the
Investor and who are reasonably acceptable to the Company), any underwriter
participating in any disposition of Common Stock on behalf of the Investor
pursuant to the Registration Statement, any Supplemental Registration
Statement, or
amendments or supplements thereto or any blue sky, FINRA or other filing, all
financial and other records, all filings with the SEC, and all other corporate
documents and properties of the Company as may be reasonably necessary for the
purpose of such review, and cause the Company's officers, directors and
employees to supply all such information reasonably requested by the Investor or
any such representative, advisor or underwriter in connection with such
Registration Statement (including, without limitation, in response to all
questions and other inquiries reasonably made or submitted by any of them),
prior to and from time to time after the filing and effectiveness of the
Registration Statement for the sole purpose of enabling the Investor and such
representatives, advisors and underwriters and their respective accountants and
attorneys to conduct initial and ongoing due diligence with respect to the
Company and the accuracy of the Registration Statement.

    

    2.4.1 
Treatment of Nonpublic
Information.  Following the Liquidity Date, the Company shall
not disclose nonpublic information to the Investor or to its advisors or
representatives unless prior to disclosure of such information the Company
identifies such information as being nonpublic information and provides the
Investor and such advisors and representatives with the opportunity to accept or
refuse to accept such nonpublic information for review. The Company and Investor
agree to be bound by the terms of the Confidentiality Agreement between them,
dated as of September 29, 2010.  The Company shall ensure that any
information disclosed by the Company to Investor in connection with the
Agreement shall cease to be material nonpublic information on or prior to the
Liquidity Date.

    

    Nothing
herein shall require the Company to disclose any information to the Investor or
its advisors or representatives that will constitute material nonpublic
information after the Liquidity Date, and the Company represents that it does
not disseminate material nonpublic information to any investors who purchase
stock in the Company in a public offering, to money managers or to securities
analysts, provided, however, that notwithstanding anything herein to the
contrary, the Company will, as hereinabove provided, immediately notify the
advisors and representatives of the Investor and, if any, underwriters, of any
event or the existence of any circumstance (without any obligation to disclose
the specific event or circumstance) of which it becomes aware, constituting
nonpublic information (whether or not requested of the Company specifically or
generally during the course of due diligence by and such persons or entities),
which, if not disclosed in the Prospectus included in the Registration
Statement, would cause such Prospectus to include a material misstatement or to
omit a material fact required to be stated therein in order to make the
statements therein, in light of the circumstances in which they were made, not
misleading.

    
      
         

      

      
        24

        
          

        

      

      
         

      

    

    2.4.2   Disclosure of Misstatements and
Omissions. The Investor's advisors
or representatives shall make complete disclosure to the Investor's counsel of
all events or circumstances constituting nonpublic information discovered by
such advisors or representatives in the course of their due diligence upon which
such advisors or representatives form the opinion that the Registration
Statement contains an untrue statement of a material fact or omits a material
fact required to be stated in the Registration Statement or necessary to make
the statements contained therein, in the light of the circumstances in which
they were made, not misleading.  Upon receipt of such disclosure, the
Investor's counsel shall consult with the Company's independent counsel in order
to address the concern raised as to the existence of a material misstatement or
omission and to discuss appropriate disclosure with respect thereto; provided,
however, that such consultation shall not constitute the advice of the Company's
independent counsel to the Investor as to the accuracy of the Registration
Statement and related Prospectus. 

    

    2.4.3   Procedure if Material Facts are
Reasonably Believed to be Untrue or are Omitted.  In the event
after such consultation the Investor or the Investor's counsel reasonably
believes that the Registration Statement contains an untrue statement of a
material fact or omits a material fact required to be stated in the Registration
Statement or necessary to make the statements contained therein, in light of the
circumstances in which they were made, not misleading, and the Company, after a
request from the Investor, has failed to promptly provide reasonable information
indicating that that the Registration Statement is in fact complete, accurate
and current, then 

    

    (a) the Company shall promptly file
with the SEC an amendment to the Registration Statement responsive to such
alleged untrue statement or omission and provide the Investor, as promptly as
practicable, with copies of the Registration Statement and related Prospectus,
as so amended, or

    

    (b) if the Company disputes the
existence of any such material misstatement or omission, (i) the Company's
independent counsel (who is a member of a law firm having at least 20 attorneys)
shall provide the Investor's counsel with a Registration Opinion, at the
Company’s expense, and (ii) in the event the dispute relates to the adequacy of
financial disclosure and the Investor shall reasonably request, the Company
shall promptly cause its independent auditors to provide to the Company a letter
(“Agreed Upon Procedures Report”) outlining the performance of such "agreed upon
procedures" as shall be reasonably requested by the Investor and the Company
shall promptly provide the Investor with a copy of such letter.

    

    2.5         
Legending of
Shares.  In the event that, at any time after unlegended shares
are issued to the Investor by the Company under this Agreement, the Registration
Statement becomes subject to an Ineffective Period, and such unlegended shares
may not at that time be resold by the Investor without volume limitations
pursuant to Rule 144, if so requested by the Company in writing, the Investor
shall promptly return such shares to the Company or its Transfer Agent to have
restrictive legends placed on the shares until such time as the Ineffective
Period ends or a Legend Removal Condition has otherwise been met.  In
the event that, at any time after unlegended shares are issued to the Investor
by the Company under this Agreement, any such shares are transferred by Investor
pursuant to an exemption from the registration requirements of the Securities
Act other than Rule 144, the Investor shall promptly notify the Company thereof
and return such shares to the Company or its Transfer Agent to have restrictive
legends placed on the shares.

    
      
         

      

      
        25

        
          

        

      

      
         

      

    

    

    3.          
Representations, Warranties
and Covenants of Investor. Investor hereby represents and warrants to and
agrees with the Company as follows:

    

    3.1         
Accredited
Investor.  Investor is an accredited investor (“Accredited
Investor”), as defined in Rule 501 of Regulation D.

    

    3.2         
Investment Experience;
Access to Information; Independent Investigation.

    

    3.2.1   Access to
Information.  Investor or Investor’s professional advisor has
been granted the opportunity to ask questions of and receive answers from
representatives of the Company, its officers, directors, employees and agents
concerning the terms and conditions of this Offering, the Company and its
business and prospects, and to obtain any additional information which Investor
or Investor’s professional advisor deems necessary to verify the accuracy and
completeness of the information received.

    

    3.2.2   Reliance on Own
Advisors.  Investor has relied completely on the advice of, or
has consulted with, Investor’s own personal tax, investment, legal or other
advisors and has not relied on the Company or any of its affiliates, officers,
directors, attorneys, accountants or any affiliates of any thereof and each
other person, if any, who controls any of the foregoing, within the meaning of
Section 15 of the Act for any tax or legal advice (other than reliance on
information in the Disclosure Documents as defined in Section 3.2.4 below and on
the Opinion of Counsel).  The foregoing, however, does not limit or
modify Investor’s right to rely upon covenants, representations and warranties
of the Company in this Agreement.

    

    3.2.3 Capability to
Evaluate.  Investor has such knowledge and experience in
financial and business matters so as to enable such Investor to utilize the
information made available to it in connection with the Offering in order to
evaluate the merits and risks of the prospective investment, which are
substantial, including without limitation those set forth in the Disclosure
Documents (as defined in Section 3.2.4 below).

    

    3.2.4   Disclosure
Documents.  Investor, in making Investor’s investment decision
to subscribe for the Investment Agreement hereunder, represents that (a)
Investor has received and had an opportunity to review (i) the Company’s Annual
Report on Form 10-K for the year ended June 30, 2009, (ii) the Company’s
quarterly reports on Form 10-Q for the quarters ended September 30, 2009,
December 31, 2009, and March 31, 2010, (iii) the Company’s current Report on
Form 8-K filed on May 14, 2010, (iv) the Risk Factors, attached as Exhibit O, (the “Risk
Factors”) (v) the Capitalization Schedule, attached as Exhibit B, (the
“Capitalization Schedule”) and (vi) the Use of Proceeds Schedule, attached as
Exhibit K, (the
“Use of Proceeds Schedule”); (b) Investor has read, reviewed, and relied solely
on the documents described in (a) above, the Company’s representations and
warranties and other information in this Agreement, including the exhibits,
documents prepared by the Company which have been specifically provided to
Investor in connection with this Offering (the documents described in this
Section 3.2.4 (a) and (b) are collectively referred to as the “Disclosure
Documents”), and an independent investigation made by Investor and Investor’s
representatives, if any; (c) Investor has, prior to the date of this Agreement,
been given an opportunity to review material contracts and documents of the
Company which have been filed as exhibits to the Company’s filings under the Act
and the Exchange Act and has had an opportunity to ask questions of and receive
answers from the Company’s officers and directors; and (d) is not relying on any
oral representation of the Company or any other person, nor any written
representation or assurance from the Company other than those contained in the
Disclosure Documents or incorporated herein or therein.  The
foregoing, however, does not limit or modify Investor’s right to rely upon
covenants, representations and warranties of the Company in Sections 5 and 6 of
this Agreement.  Investor acknowledges and agrees that the Company has
no responsibility for, does not ratify, and is under no responsibility
whatsoever to comment upon or correct any reports, analyses or other comments
made about the Company by any third parties, including, but not limited to,
analysts’ research reports or comments (collectively, “Third Party Reports”),
and Investor has not relied upon any Third Party Reports in making the decision
to invest.

    
      
         

      

      
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    3.2.5  Investment Experience; Fend for
Self.  Investor has substantial experience in investing in
securities and it has made investments in securities other than those of the
Company.  Investor acknowledges that Investor is able to fend for
Investor’s self in the transaction contemplated by this Agreement, that Investor
has the ability to bear the economic risk of Investor’s investment pursuant to
this Agreement and that Investor is an "Accredited Investor" by virtue of the
fact that Investor meets the investor qualification standards set forth in
Section 3.1 above.  Investor has not been organized for the purpose of
investing in securities of the Company, although such investment is consistent
with Investor’s purposes.

    

    3.3         Exempt Offering Under
Regulation D.

    

    3.3.1  No General
Solicitation.  The Investment Agreement was not offered to
Investor through, and Investor is not aware of, any form of general solicitation
or general advertising, including, without limitation, (i) any advertisement,
article, notice or other communication published in any newspaper, magazine or
similar media or broadcast over television or radio, and (ii) any seminar or
meeting whose attendees have been invited by any general solicitation or general
advertising.

    

    3.3.2  Restricted
Securities.  Investor understands that the Investment Agreement
is, the Common Stock issued at each Put Closing will be characterized as
"restricted securities" under the federal securities laws inasmuch as they are
being acquired from the Company in a transaction exempt from the registration
requirements of the federal securities laws and that under such laws and
applicable regulations such securities may not be transferred or resold without
registration under the Act or pursuant to an exemption therefrom.  In
this connection, Investor represents that Investor is familiar with Rule 144
under the Act, as presently in effect, and understands the resale limitations
imposed thereby and by the Act.

    

    3.3.3  Disposition.  Investor
further agrees not to sell, transfer, assign, or pledge the Securities (except
for any bona fide pledge arrangement to the extent that such pledge does not
require registration under the Act or unless an exemption from such registration
is available and provided further that if such pledge is realized upon, any
transfer to the pledgee shall comply with the requirements set forth herein), or
to otherwise dispose of all or any portion of the Securities unless and
until:

    

    (a)There is then in effect a
registration statement under the Act and any applicable state securities laws
covering such proposed disposition and such disposition is made in accordance
with such registration statement and in compliance with applicable prospectus
delivery requirements; or

    
      
         

      

      
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    (b)          
(i) Investor shall have notified the Company of the proposed disposition and
shall have furnished the Company with a statement of the circumstances
surrounding the proposed disposition to the extent relevant for determination of
the availability of an exemption from registration, and (ii) if reasonably
requested by the Company, Investor shall have furnished the Company with an
opinion of counsel, reasonably satisfactory to the Company, that such
disposition will not require registration of the Securities under the Act or
state securities laws.  It is agreed that the Company will not require
the Investor to provide opinions of counsel for transactions made pursuant to
Rule 144 provided that Investor and Investor’s broker, if necessary, provide the
Company with the necessary representations and documents for counsel to the
Company to issue an opinion with respect to such transaction.

    

    The Investor is entering into this
Agreement for its own account and the Investor has no present arrangement or
intention to sell the security represented by this Agreement to or through any
person or entity, has no present arrangement (whether or not legally binding) to
sell the Common Stock to or through any person or entity and has no present
intention to sell such Common Stock to or through any person or entity;
provided, however, that by making the representations herein, the Investor does
not agree to hold the Common Stock for any minimum or other specific term and
reserves the right to dispose of the Common Stock at any time in accordance with
federal and state securities laws applicable to such disposition.

    

    3.4         
Due
Authorization.

    

    3.4.1  Authority.  The
person executing this Investment Agreement, if executing this Agreement in a
representative or fiduciary capacity, has full power and authority to execute
and deliver this Agreement and each other document included herein for which a
signature is required in such capacity and on behalf of the subscribing
individual, partnership, trust, estate, corporation or other entity for whom or
which Investor is executing this Agreement.  Investor has reached the
age of majority (if an individual) according to the laws of the state in which
he or she resides.

    

    3.4.2   Due
Organization.  Investor is duly and validly organized, validly
existing and in good standing as a limited liability company under the laws of
Georgia with full power and authority to purchase the Securities to be purchased
by Investor and to execute and deliver this Agreement.

    

    3.4.3   Partnerships.  If
Investor is a partnership, the representations, warranties, agreements and
understandings set forth above are true with respect to all partners of Investor
(and if any such partner is itself a partnership, all persons holding an
interest in such partnership, directly or indirectly, including through one or
more partnerships), and the person executing this Agreement has made due inquiry
to determine the truthfulness of the representations and warranties made
hereby.

    
      
         

      

      
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    3.5          No Registration As A
Dealer. The Investor is not and will not be required to be registered as
a "dealer" under the 1934 Act, either as a result of its execution and
performance of its obligations under this Agreement or otherwise.

    

    3.6          Beneficial
Owner.  Upon the initial issuance thereof, the Investor will be
the sole beneficial owner of all Put Shares purchased under this
Agreement.

    

    3.7          Investor has Sufficient
Funds.  Investor and its affiliates have sufficient financial
resources to satisfy its obligations under this Agreement.  Investor
and its affiliate shall, at all times from the Effective Date until the
Termination Date, maintain cash, cash equivalents and other highly liquid assets
in sufficient quantities to satisfy its obligations to purchase Put Shares when
and as required pursuant to this Agreement.

    

    4.           
Acknowledgments and
Agreements  Investor is aware that:

    

    4.1          Risks of
Investment.  Investor recognizes that an investment in the
Company involves substantial risks, including the potential loss of Investor's
entire investment herein.  Investor recognizes that the Disclosure
Documents, this Agreement and the exhibits hereto do not purport to contain all
the information which would be contained in a registration statement under the
Act; 

    

    4.2          No Government
Approval.  No federal or state agency has passed upon the
Securities, recommended or endorsed the Offering, or made any finding or
determination as to the fairness of this transaction;

    

    4.3          No Registration,
Restrictions on Transfer.  As of the date of this Agreement,
the Securities and any component thereof have not been registered under the Act
or any applicable state securities laws by reason of exemptions from the
registration requirements of the Act and such laws, and may not be sold, pledged
(except for any limited pledge in connection with a margin account of Investor
to the extent that such pledge does not require registration under the Act or
unless an exemption from such registration is available and provided further
that if such pledge is realized upon, any transfer to the pledgee shall comply
with the requirements set forth herein), assigned or otherwise disposed of in
the absence of an effective registration of the Securities and any component
thereof under the Act or unless an exemption from such registration is
available;

    

    4.4          Restrictions on
Transfer.  Investor may not attempt to sell, transfer, assign,
pledge or otherwise dispose of all or any portion of the Securities or any
component thereof in the absence of either an effective registration statement
or an exemption from the registration requirements of the Act and applicable
state securities laws; 

    

    4.5          No Assurances of
Registration.  There can be no assurance that any registration
statement will become effective at the scheduled time, or ever, or remain
effective when required, and Investor acknowledges that it may be required to
bear the economic risk of Investor's investment for an indefinite period of
time;

    
      
         

      

      
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    4.6          Exempt
Transaction.  Investor understands that the Securities are
being offered and sold in reliance on specific exemptions from the registration
requirements of federal and state law and that the representations, warranties,
agreements, acknowledgments and understandings set forth herein are being relied
upon by the Company in determining the applicability of such exemptions and the
suitability of Investor to acquire such Securities.

    

    4.7          Legends.  The
certificates representing the Put Shares shall not bear a legend restricting the
sale or transfer thereof.

    

    5.          
Representations, Warranties
and Covenants of the Company.  The Company hereby makes the
following representations and warranties to Investor (which shall be true at the
signing of this Agreement, and as of any such later date as specified hereunder)
and agrees with Investor that, except as set forth in the “Schedule of
Exceptions” attached hereto as Exhibit
I:

    

    5.1           Organization, Good Standing,
and Qualification.  The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada, USA and has all requisite corporate power and authority to carry on its
business as now conducted and as proposed to be conducted.  The
Company is duly qualified to transact business and is in good standing in each
jurisdiction in which the failure to so qualify would, in the Company’s opinion,
have a material adverse effect on the business or properties of the Company and
its subsidiaries taken as a whole.  The Company is not the subject of
any pending, threatened or, to its knowledge, contemplated investigation or
administrative or legal proceeding (a “Proceeding”) by the Internal Revenue
Service, the taxing authorities of any state or local jurisdiction, or the
Securities and Exchange Commission, the FINRA, the Nasdaq Stock Market, Inc. or
any state securities commission, or any other governmental entity, which have
not been disclosed in the Disclosure Documents.  None of the disclosed
Proceedings, if any, will, in the Company’s opinion, have a material adverse
effect upon the Company. Each of the Company’s
subsidiaries, if any, the jurisdiction of incorporation or organization of each,
and the percentage of the Company’s ownership of each is listed in Schedule 5.1
hereto.

    

    5.2          Corporate
Condition.  The Company's condition is, in all material
respects, as described in the Disclosure Documents (as further set forth in any
subsequently filed Disclosure Documents, if applicable), except for changes in
the ordinary course of business and normal year-end adjustments that are not, in
the aggregate, materially adverse to the Company.  Except for
continuing losses, there have been no material adverse changes to the Company’s
business, financial condition, or prospects from the dates of such Disclosure
Documents through the date of the Investment Commitment Closing.  The
financial statements as contained in the 10-K and 10-Q have been prepared in
accordance with generally accepted accounting principles, consistently applied
(except as otherwise permitted by Regulation S-X of the Exchange Act, or
Generally Accepted Accounting Principles, as applicable), subject, in the case
of unaudited interim financial statements, to customary year end adjustments and
the absence of certain footnotes, and fairly present the financial condition of
the Company as of the dates of the balance sheets included therein and the
consolidated results of its operations and cash flows for the periods then
ended.  Without limiting the foregoing, there are no material
liabilities, contingent or actual, that are not disclosed in the Disclosure
Documents (other than liabilities incurred by the Company in the ordinary course
of its business, consistent with its past practice, after the period covered by
the Disclosure Documents).  The Company has paid all material taxes
that are due, except for taxes that it reasonably disputes.  There is
no material claim, litigation, or administrative proceeding pending or, to the
best of the Company’s knowledge, threatened against the Company, except as
disclosed in the Disclosure Documents.  This Agreement and the
Disclosure Documents do not contain any untrue statement of a material fact and
do not omit to state any material fact required to be stated therein or herein
necessary to make the statements contained therein or herein not misleading in
the light of the circumstances under which they were made.  No event
or circumstance exists relating to the Company which, under applicable law,
requires public disclosure but which has not been so publicly announced or
disclosed.

    
      
         

      

      
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    5.3          Commission Documents,
Financial Statements. 

    

    (a)           Except
as set forth in the Schedule of Exceptions, the Company has timely filed (giving
effect to permissible extensions in accordance with Rule 12b-25 under the
Exchange Act) all Commission Documents.  The Company has delivered or made
available to the Investor via EDGAR or otherwise true and complete copies of the
Commission Documents filed with or furnished to the SEC prior to the Commitment
Closing Date (including, without limitation, the 2009 Form 10-K). No
Subsidiary of the Company is required to file or furnish any report, schedule,
registration, form, statement, information or other document with the SEC. As of
its filing date, each Commission Document filed with or furnished to the SEC
prior to the Commitment Closing Date (including, without
limitation, the 2009 Form 10-K) complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as applicable, and other
federal, state and local laws, rules and regulations applicable to it, and,
as of its filing date (or, if amended or superseded by a filing prior to the
Commitment Closing Date,
on the date of such amended or superseded filing), such Commission Document did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Registration Statement, on the date it is filed with the SEC, on
the date it is declared effective by the SEC, on each Put Date and on each Put
Closing Date, shall comply in all material respects with the requirements of the
Securities Act (including, without limitation, Rule 415 under the
Securities Act) and shall not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, except that this
representation and warranty shall not apply to statements in or omissions from
the Registration Statement made in reliance upon and in conformity with
information relating to the Investor furnished to the Company in writing by
or on behalf of the Investor expressly for use therein (which to the Company’s
Knowledge are not false or misleading). The Prospectus and each Prospectus
Supplement required to be filed pursuant to this Agreement or the Registration
Rights Agreement, when taken together, on its date, on each Put Date and on each
Put Closing Date, shall comply in all material respects with the requirements of
the Securities Act (including, without limitation, Rule 424(b) under
the Securities Act) and shall not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading, except that this representation and
warranty shall not apply to statements in or omissions from the Prospectus or
any Prospectus Supplement made in reliance upon and in conformity with
information relating to the Investor furnished to the Company in writing by or
on behalf of the Investor expressly for use therein (which to the Company’s
Knowledge are not false or misleading). Each Commission Document (other than the
Registration Statement, the Prospectus or any Prospectus Supplement) to be filed
with or furnished to the SEC after the Commitment Closing Date and incorporated
by reference in the Registration Statement, the Prospectus or any Prospectus
Supplement required to be filed pursuant to this Agreement or the Registration
Rights Agreement (including, without limitation, the Current Report), when such
document is filed with or furnished to the SEC and, if applicable, when such
document becomes effective, as the case may be, shall comply in all material
respects with the requirements of the Securities Act or the Exchange Act, as
applicable, and other federal, state and local laws, rules and regulations
applicable to it, and shall not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The Company has delivered or made available to
the Investor via EDGAR or otherwise true and complete copies of all comment
letters and substantive correspondence received by the Company from the SEC
relating to the Commission Documents filed with or furnished to the SEC as of
the Commitment Closing Date, together with all written responses of the Company
thereto. There are no outstanding or unresolved comments or undertakings in such
comment letters received by the Company from the SEC. The SEC has not issued any
stop order or other order suspending the effectiveness of any registration
statement filed by the Company under the Securities Act or the Exchange
Act.

    
      
         

      

      
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    (b) 
       The financial statements, together with the
related notes and schedules, of the Company included in the Commission Documents
comply as to form in all material respects with all applicable accounting
requirements and the published rules and regulations of the SEC and all
other applicable rules and regulations with respect thereto as may be
subject to any applicable out of period adjustments disclosed in the Commission
Documents. Such financial statements, together with the related notes and
schedules, have been prepared in accordance with GAAP applied on a consistent
basis during the periods involved (except (i) as may be otherwise indicated
in such financial statements or the notes thereto or (ii) in the case of
unaudited interim statements, to the extent they may not include footnotes or
may be condensed or summary statements and are subject to customary year-end
audit adjustments), and fairly present in all material respects the financial
condition of the Company and its consolidated Subsidiaries as of the dates
thereof and the results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments).

     

    (c)           The
Company has timely filed with the SEC and made available to the Investor via
EDGAR or otherwise all certifications and statements required by
(x) Rule 13a-14 or Rule 15d-14 under the Exchange Act or
(y) 18 U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act
of 2002 (“ SOXA ”))
with respect to all relevant Commission Documents.  The Company is in
compliance in all material respects with the provisions of SOXA applicable to it
as of the date hereof.  The Company maintains disclosure controls and
procedures required by Rule 13a-15 or Rule 15d-15 under the Exchange
Act; except to the extent disclosed in the Commission Documents, such controls
and procedures are effective to ensure that all material information concerning
the Company and its Subsidiaries is made known on a timely basis to the
individuals responsible for the timely and accurate preparation of the Company’s
Commission filings and other public disclosure documents.  As used in this
Section 5.3(c), the term “file” shall be broadly construed to include any
manner in which a document or information is furnished, supplied or otherwise
made available to the SEC.

    
      
         

      

      
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    (d)           GBH
CPAs, PC who shall express their opinion on the audited financial statements and
related schedules to be included or incorporated by reference in the
Registration Statement and the Prospectus are, with respect to the Company,
independent public accountants as required by the Securities Act and is an
independent registered public accounting firm within the meaning of SOXA as
required by the rules of the Public Company Accounting Oversight
Board.

    

    5.4          Authorization.  All
corporate action on the part of the Company by its officers, directors and
stockholders necessary for the authorization, execution and delivery of this
Agreement and all of the Transaction Documents, the performance of all
obligations of the Company hereunder and the authorization, issuance and
delivery of the Common Stock being sold hereunder have been taken, and this
Agreement and the Registration Rights Agreement constitute valid and legally
binding obligations of the Company, enforceable in accordance with their terms,
except insofar as the enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, or other similar laws affecting creditors’ rights
generally or by principles governing the availability of equitable
remedies.  The Company has obtained all consents and approvals
required for it to execute, deliver and perform each agreement referenced in the
previous sentence.  The Board of
Directors of the Company shall have adopted resolutions granting the above
authorizations (the "Resolutions") and, as a condition to each Put, such
Resolutions shall not have been amended or rescinded prior to such Put
Date.

    

    5.5          Valid Issuance of Common
Stock.  The Commitment Shares, Fee Shares and Put Shares, when
issued, sold and delivered in accordance with the terms hereof, for the
consideration expressed herein, will be validly issued, fully paid and
nonassessable, will be issued free of any preemptive rights and, based in part
upon the representations of Investor in this Agreement, will be issued in
compliance with all applicable U.S. federal and state securities
laws.  

    

    5.6.        
Securities Act.
The Company has complied and shall comply with all applicable federal and state
securities laws in connection with the offer, issuance and sale of the
Securities hereunder, including, without limitation, the applicable requirements
of the Securities Act. Without limiting the generality of the foregoing, the
Company satisfies, and the Registration Statement upon filing with the SEC and
at the time it is declared effective by the SEC shall satisfy, all of the
requirements of the Securities Act to register the resale of the Registrable
Securities by the Investor in accordance with the Registration Rights Agreement
on a delayed or continuous basis under Rule 415 under the Securities Act at
then-prevailing market prices, and not fixed prices. The Company is not, and has
never been, an issuer identified in, or subject to,
Rule 144(i).

    
      
         

      

      
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    5.7          Compliance with Other
Instruments.  The Company is not in violation or default of any
provisions of its Certificate of Incorporation or Bylaws, each as amended and in
effect on and as of the date of the Agreement, or, except as disclosed in
Disclosure Documents, of any material provision of any material instrument or
material contract to which it is a party or by which it is bound or of any
provision of any federal or state judgment, writ, decree, order, statute, rule
or governmental regulation applicable to the Company, which would, in the
Company’s opinion, have a material adverse effect on the Company's business or
prospects, or on the performance of its obligations under this Agreement or the
Registration Rights Agreement.  The execution, delivery and
performance of this Agreement and the other agreements entered into in
conjunction with the Offering and the consummation of the transactions
contemplated hereby and thereby will not (a) result in any such violation or be
in conflict with or constitute, with or without the passage of time and giving
of notice, either a default under any such provision, instrument or contract or
an event which results in the creation of any lien, charge or encumbrance upon
any assets of the Company, which would, in the Company’s opinion, have a
material adverse effect on the Company’s business or prospects, or on the
performance of its obligations under this Agreement, the Registration Rights
Agreement, or (b) violate the Company’s Certificate of Incorporation or By-Laws
or (c) violate any statute, rule or governmental regulation applicable to the
Company which violation would, in the Company’s opinion, have a material adverse
effect on the Company's business or prospects.

    

    5.8          Reporting
Company.  The Company is subject to the reporting requirements
of the Exchange Act, has a class of securities registered under Section 12 of
the Exchange Act, and has filed all reports required by the Exchange Act since
the date the Company first became subject to such reporting obligations. The
Company undertakes to furnish Investor with copies of such reports as may be
reasonably requested by Investor prior to consummation of this Offering and
thereafter, to make such reports available, for the full term of this Agreement,
including any extensions thereof, and for as long as Investor holds the
Securities.  The Common Stock is duly listed or approved for quotation
on the O.T.C. Bulletin Board.  The Company is not in violation of the
listing requirements of the O.T.C. Bulletin Board and does not reasonably
anticipate that the Common Stock will be delisted by the O.T.C. Bulletin Board
for the foreseeable future.  The Company has filed all reports
required under the Exchange Act.  

    

    5.9.        
Listing and
Maintenance Requirements. The Company’s Common Stock is registered
pursuant to Section 12(b) or 12(g) of the Exchange Act, and the
Company has taken no action designed to, or which to its Knowledge is likely to
have the effect of, terminating the registration of the Common Stock under the
Exchange Act, nor has the Company received any notification that the SEC is
contemplating terminating such registration. The Company has not, in the 12
months preceding the Commitment Closing Date, received notice from any Trading
Market on which the Common Stock is or has been listed or quoted to the effect
that the Company is not in compliance with the listing or maintenance
requirements of such Trading Market. The Company currently is, and has no reason
to believe that it will not in the foreseeable future continue to be, in
compliance with all such listing and maintenance requirements.

    

    5.10.       Indebtedness. 
The Company’s Quarterly Report on Form 10-Q for its fiscal quarter ended
March 31, 2010 sets forth, as of March 31, 2010, all outstanding secured and
unsecured Indebtedness of the Company or any Subsidiary, or for which the
Company or any Subsidiary has commitments through such date.  For the
purposes of this Agreement, “Indebtedness ” shall mean (a) any liabilities
for borrowed money or amounts owed in excess of $100,000 (other than trade
accounts payable incurred in the ordinary course of business), (b) all
guaranties, endorsements, indemnities and other contingent obligations in
respect of Indebtedness of others in excess of $100,000, whether or not the same
are or should be reflected in the Company’s balance sheet (or the notes
thereto), except guaranties by endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of business; and
(c) the present value of any lease payments in excess of $100,000 due under
leases required to be capitalized in accordance with GAAP.  There is no
existing or continuing default or event of default in respect of any
Indebtedness of the Company or any of its Subsidiaries. The Company has not
taken any steps, and does not currently expect to take any steps, to seek
protection pursuant to Title 11 of the United States Code or any similar federal
or state bankruptcy law or law for the relief of debtors, nor does the Company
have any Knowledge that its creditors intend to initiate involuntary bankruptcy,
insolvency, reorganization or liquidation proceedings or other proceedings for
relief under Title 11 of the United States Code or any other federal or state
bankruptcy law or any law for the relief of debtors.

    
      
         

      

      
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    5.11        
Capitalization.  The
capitalization of the Company as of the date hereof subject to exercise of any
outstanding warrants and/or exercise of any outstanding stock options, and after
taking into account all other share issuances occurring prior to this Offering,
is as set forth in the Capitalization Schedule as set forth in Exhibit
B.  Except as disclosed in the Capitalization Schedule, there
are no securities or instruments containing anti-dilution or similar provisions
that will be triggered by the issuance of the Securities.  Except as
disclosed in the Capitalization Schedule, as of the date of this Agreement, (i)
there are no outstanding options, warrants, scrip, rights to subscribe for,
calls or commitments of any character whatsoever relating to, or securities or
rights convertible into or exercisable or exchangeable for, any shares of
capital stock of the Company or any of its subsidiaries, or arrangements by
which the Company or any of its subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its subsidiaries,
and (ii) there are no agreements or arrangements under which the Company or any
of its subsidiaries is obligated to register the sale of any of its or their
securities under the Act (except the Registration Rights
Agreement).

    

    5.12         Intellectual
Property.  The Company has valid, unrestricted and exclusive
ownership of or rights to use the patents, trademarks, trademark registrations,
trade names, copyrights, know-how, technology and other intellectual property
necessary to the conduct of its business.  Exhibit P lists all
patents, trademarks, trademark registrations, trade names and copyrights of the
Company.  The Company has granted such licenses or has assigned or
otherwise transferred a portion of (or all of) such valid, unrestricted and
exclusive patents, trademarks, trademark registrations, trade names, copyrights,
know-how, technology and other intellectual property necessary to the conduct of
its business as set forth in Exhibit
P.  The Company has been granted licenses, know-how, technology
and/or other intellectual property necessary to the conduct of its business as
set forth in Exhibit
P.  To the best of the Company’s knowledge after due inquiry,
the Company is not infringing on the intellectual property rights of any third
party, nor is any third party infringing on the Company’s intellectual property
rights.  There are no restrictions in any agreements, licenses,
franchises, or other instruments that preclude the Company from engaging in its
business as presently conducted.

    

    5.13         Use of
Proceeds.  As of the date hereof, the Company expects to use
the proceeds from this Offering (less fees and expenses) for the purposes and in
the approximate amounts set forth on the Use of Proceeds Schedule set forth
as Exhibit K
hereto.  These purposes and amounts are estimates and are subject to
change without notice to any Investor.

    

    5.14         No Rights of
Participation.  No person or entity, including, but not limited
to, current or former stockholders of the Company, underwriters, brokers, agents
or other third parties, has any right of first refusal, preemptive right, right
of participation, or any similar right to participate in the financing
contemplated by this Agreement which has not been waived.

    
      
         

      

      
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    5.15         No Advance Regulatory
Approval.  The Company acknowledges that this Investment
Agreement, the transaction contemplated hereby and the Registration Statement
contemplated hereby have not been approved by the SEC, or any other regulatory
body and there is no guarantee that this Investment Agreement, the transaction
contemplated hereby and the Registration Statement contemplated hereby will ever
be approved by the SEC or any other regulatory body.  The Company is
relying on its own analysis and is not relying on any representation by Investor
that either this Investment Agreement, the transaction contemplated hereby or
the Registration Statement contemplated hereby has been or will be approved by
the SEC or other appropriate regulatory body.

    

    5.16         Underwriter’s Fees and
Rights of First Refusal.  The Company is not obligated to pay
any compensation or other fees, costs or related expenditures in cash or
securities to any underwriter, broker, agent or other representative in
connection with this Offering.

     

    5.17         Availability of Suitable
Form for Registration.  The Company is currently eligible and
agrees to maintain its eligibility to register the resale of its Common Stock on
a registration statement on a suitable form under the Act.

    

    5.18         No Integrated
Offering.  Neither the Company, nor any of its affiliates, nor
any person acting on its or their behalf, has directly or indirectly made any
offers or sales of any of the Company’s securities or solicited any offers to
buy any security under circumstances that would prevent the parties hereto from
consummating the transactions contemplated hereby pursuant to an exemption from
registration under Regulation D of the Act or would require the issuance of any
other securities to be integrated with this Offering under the Rules of the
SEC.  The Company has not engaged in any form of general solicitation
or advertising in connection with the offering of the Common Stock.

    

    5.19         Foreign Corrupt
Practices.  Neither the Company, nor any of its subsidiaries,
nor any director, officer, agent, employee or other person acting on behalf of
the Company or any subsidiary has, in the course of its actions for, or on
behalf of, the Company, used any corporate funds for any unlawful contribution,
gift, entertainment or other unlawful expenses relating to political activity;
made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; violated or is in
violation of any provision of the U.S.  Foreign Corrupt Practices Act
of 1977, as amended; or made any bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any foreign or domestic government
official or employee.

    

    5.20         Key
Employees.  As of the date of this Agreement, each “Key
Employee” (as defined in Exhibit D) is
currently serving the Company in the capacity disclosed in Exhibit D, or, if
modified after the date hereof, as disclosed in the Commission Documents. No Key
Employee, to the best knowledge of the Company and its subsidiaries, is, or is
now expected to be, in violation of any material term of any employment
contract, confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or any restrictive
covenant, and the continued employment of each Key Employee does not subject the
Company or any of its subsidiaries to any liability with respect to any of the
foregoing matters.  No Key Employee has, to
the best knowledge of the Company and its subsidiaries, any intention to
terminate his employment with, or services to, the Company or any of its
subsidiaries.

    
      
         

      

      
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    5.21         Absence of Certain Company
Control Person Actions Or Events.  For purposes hereof,
“Company Control Person” means each director, executive officer, promoter, and
such other Persons as may be deemed in control of the Company pursuant to Rule
405 under the 1933 Act or Section 20 of the 1934 Act.  To the
Company’s knowledge, during the past ten (10) years:

    

    (i) No
petition under the federal bankruptcy laws or any state insolvency law was filed
by or against, and no receiver, fiscal agent or similar officer was appointed by
a court for the business or property of such Company Control Person, or any
partnership in which he was a general partner at or within two years before the
time of such filing, or any corporation or business association of which he was
an executive officer at or within two years before the time of such
filing;

    

    (ii) No Company Control
Person was convicted in a criminal proceeding or is a named subject of a pending
criminal proceeding (excluding traffic violations and other minor
offenses), or
has not been convicted of, found guilty of, or have pled guilty nolo
contendere of a crime or felony, entered into a pre trial diversion for or
otherwise been charged for any action, misdemeanor or felony, involving fraud,
dishonesty, breach of trust, contract or money laundering, or which may be
considered to be a crime concerning moral turpitude, including but not limited
to any disciplinary action by any branch of the United State military,
regulatory bodies, including but not limited to any professional licensing
authority [or has been the Defendant in a civil action for fraud or material
breach of a financing agreement];

    

    (iii) No
Company Control Person has been the subject of any order, judgment or decree,
that was not subsequently reversed, suspended or vacated, of any court of
competent jurisdiction, permanently or temporarily enjoining him from, or
otherwise limiting, the following activities:

    

    (A)
acting, as an investment advisor, underwriter, broker or dealer in securities,
or as an affiliated person, director or employee of any investment company,
bank, savings and loan association or insurance company, as a futures commission
merchant, introducing broker, commodity trading advisor, commodity pool
operator, floor broker, any other Person regulated by the Commodity Futures
Trading Commission (“CFTC”) or engaging in or continuing any conduct or practice
in connection with such activity;

    

    (B)
engaging in any type of business practice; or

    

    (C)
engaging in any activity in connection with the purchase or sale of any security
or commodity or in connection with any violation of federal or state securities
laws or federal commodities laws;

    
      
         

      

      
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    (iv) No
Company Control Person has been the subject of any order, judgment or decree,
not subsequently reversed, suspended or vacated, of any federal or state
authority barring, suspending or otherwise limiting for more than 60 days the
right of such Company Control Person to engage in any activity described in
paragraph (iii) of this item, or to be associated with Persons engaged in any
such activity; or

    

    (v) No
Company Control Person was found by a court of competent jurisdiction in a civil
action or by the CFTC or SEC to have violated any federal or state securities
law, and the judgment in such civil action or finding by the CFTC or SEC has not
been subsequently reversed, suspended, or vacated.

    

    5.22         Representations
Correct.  The
foregoing representations, warranties and agreements are true, correct and
complete in all material respects, and shall survive any Put Closing and the
issuance of the shares of Common Stock thereby.

    

    5.23         Tax
Status.  The Company has made or filed all federal and state
income and all other tax returns, reports and declarations required by any
jurisdiction to which it is subject (unless and only to the extent that the
Company has set aside on its books provisions reasonably adequate for the
payment of all unpaid and unreported taxes) and has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and has set aside on its books provision
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply.  There
are no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and the officers of the Company know of no basis
for any such claim.

    

    5.24         Material
Agreements.  Except as set forth in the Commission Documents,
neither the Company nor any Subsidiary of the Company is a party to any written
or oral contract, instrument, agreement commitment, obligation, plan or
arrangement, a copy of which would be required to be filed with the SEC as an
exhibit to an annual report on Form 10-K (collectively, “ Material
Agreements ”). 
Except as set forth in the Disclosure Documents, the Company and each of its
Subsidiaries have performed in all material respects all the obligations
required to be performed by them under the Material Agreements, have received no
notice of default or an event of default by the Company or any of its
Subsidiaries thereunder and are not aware of any basis for the assertion
thereof, and neither the Company or any of its Subsidiaries nor, to the
Knowledge of the Company, any other contracting party thereto are in default
under any Material Agreement now in effect, the result of which would have a
Material Adverse Effect.  Except as set forth in the Disclosure Documents,
each of the Material Agreements is in full force and effect, and constitutes a
legal, valid and binding obligation enforceable in accordance with its terms
against the Company and/or any of its Subsidiaries and, to the Knowledge of the
Company, each other contracting party thereto, except as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation, conservatorship, receivership or similar laws relating to, or
affecting generally the enforcement of, creditor’s rights and remedies or by
other equitable principles of general application.

    
      
         

      

      
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    5.25         Transactions With
Affiliates.  Except as set forth in the Disclosure Documents,
none of the officers, directors, or employees of the Company is presently a
party to any transaction with the Company (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the Company, any
corporation, partnership, trust or other entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director,
trustee or partner.

    

            5.26         Application of Takeover
Protections.  The Company has not adopted and will not adopt
any “poison pill” provision that will be applicable to Investor as a result of
transactions contemplated by this Agreement.

    

    5.27         Investment Company Act
Status.  The Company is not, and as a result of the consummation of
the transactions contemplated by the Transaction Documents and the application
of the proceeds from the sale of the Shares as set forth in the Prospectus and
any Prospectus Supplement shall not be, an “investment company” or a company
“controlled” by an “investment company,” within
the meaning of the Investment Company Act of 1940, as amended.

     

    5.28         Taxes.  The
Company and each of its Subsidiaries (i) has filed all necessary federal,
state and foreign income and franchise tax returns or has duly requested
extensions thereof, except for those the failure of which to file would not have
a Material Adverse Effect, (ii) has paid all federal, state, local and
foreign taxes due and payable for which it is liable, except to the extent that
any such taxes are being contested in good faith and by appropriate proceedings,
except for such taxes the failure of which to pay would not have a Material
Adverse Effect, and (iii) does not have any tax deficiency or claims
outstanding or assessed or, to the Company’s Knowledge, proposed against it
which would have a Material Adverse Effect. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction,
and the officers of the Company and its Subsidiaries know of no basis for any
such claim. The Company is not operated in such a manner as to qualify as a
passive foreign investment company, as defined in Section 1297 of the U.S.
Internal Revenue Code of 1986, as amended.

     

    5.29         Insurance. The
Company and each of its Subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
management of the Company believes to be prudent and customary in the businesses
in which the Company and its Subsidiaries are engaged. Neither the Company nor
any such Subsidiary has been refused any insurance coverage sought or applied
for, and neither the Company nor any such Subsidiary has any reason to believe
that it will be unable to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not have a Material
Adverse Effect.

    

    5.30         U.S. Real Property Holding
Corporation. Neither the Company nor any of its Subsidiaries is, or has
ever been, and so long as any of the Securities are held by the Investor, shall
become a U.S. real property holding corporation within the meaning of
Section 897 of the Code.

    
      
         

      

      
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    5.31         Acknowledgment Regarding
Investor's Purchase of Shares. The Company acknowledges and agrees that
the Investor is acting solely in the capacity of an arm's length purchaser with
respect to the Equity Line Transaction Documents and the transactions
contemplated hereby and thereby. The Company further acknowledges that the
Investor is not acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to the Equity Line Transaction Documents and
the transactions contemplated hereby and thereby and any advice given by the
Investor or any of its respective representatives or agents in connection with
the Equity Line Transaction Documents and the transactions contemplated hereby
and thereby is merely incidental to the Investor's purchase of the Securities,
and is not being relied on by the Company. The Company further represents to the
Investor that the Company's decision to enter into the Equity Line Transaction
Documents has been based solely on the independent evaluation by the Company and
its representatives.

    

    5.32         Lock-Up. The Company
shall cause its officers, directors, and any related parties under control
of the Company, to refrain from selling Common Stock during each Pricing Period,
and the Company shall use best efforts to cause other insiders or Affiliates to
refrain from selling any Stock during each Pricing Period.

    

    5.33         Other
Agreements.  The Company has not, directly or indirectly, made
any agreements with the Investor under a subscription in the form of this
Agreement for the purchase of Common Stock, relating to the terms or conditions
of the transactions contemplated hereby or thereby except as expressly set forth
herein, respectively, or in exhibits hereto or thereto.

    

    5.34         Major
Transactions.  As of the date of this Agreement, there are no
other Major Transactions currently pending or contemplated by the Company,
except as set forth in the Commission Documents.

    

    5.35         Financings.  As
of the date of this Agreement, there are no other financings currently pending
or contemplated by the Company.

    

    5.36         Acknowledgment of
Limitations on Put Amounts.  The Company understands and
acknowledges that the amounts available under this Investment Agreement are
limited, among other things, based upon the liquidity of the Company’s Common
Stock traded on its Principal Market.

    

    5.37         Dilution.  The number of
shares of Common Stock issuable as Put Shares may increase substantially in
certain circumstances, including, but not necessarily limited to, the
circumstance wherein the trading price of the Common Stock declines during the
period between the Effective Date and the end of the Commitment
Period.  The Company’s executive officers and directors fully
understand the nature of the transactions contemplated by this Agreement and
recognize that they have a potential dilutive effect.  The board of
directors of the Company has concluded, in its good faith business
judgment, that such issuance is in the best interests of the
Company.  The Company specifically acknowledges that, whenever the
Company elects to initiate a Put, its obligation to issue the Put Shares is
binding upon the Company and enforceable regardless of the dilution such
issuance may have on the ownership interests of other shareholders of the
Company.  The Company acknowledges that the Investor may sell shares
of Common Stock during any Pricing Period, and may enter into a short exempt sale or any
short sale or other hedging or similar arrangement in accordance with
Section 2.3.10 during any Pricing Period, and that such sales, short sales or
hedging arrangements may serve to lower the Purchase Price thereby having a
potential dilutive effect on the Company’s Common Stock. 

    
      
         

      

      
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    5.38.        No Brokers.  No
brokers, finders or financial advisory fees or commissions shall be payable by
the Company or any Subsidiary (or any of their respective Affiliates) with
respect to the transactions contemplated by the Transaction
Documents.

    

    5.39         No Material Non-Public
Information.  The Company has not furnished to the Investor any
information concerning the Company that will constitute material nonpublic
information on or after the Liquidity Date.

    

    6.          
Additional Covenants of the
Company.

    

    6.1         
Independent
Auditors.  The Company shall, until at least the Termination
Date, maintain as its independent auditors an accounting firm authorized to
practice before the SEC.

    

    6.2         
Corporate Existence
and Taxes; Change in Corporate Entity.  The Company shall,
until at least the Termination Date, maintain its corporate existence in good
standing and, once it becomes a “Reporting Issuer” (defined as a Company which
files periodic reports under the Exchange Act), remain a Reporting Issuer and
shall pay all its taxes when due except for taxes which the Company
disputes.  Notwithstanding the terms of Section 9.2 below, the Company
may, at any time after the date hereof, enter into any merger, consolidation or
corporate reorganization of the Company with or into, or transfer all or
substantially all of the assets of the Company to, another entity only if the
resulting successor or acquiring entity in such transaction, if not the Company
(the “Surviving Entity”), (i) has Common Stock listed for trading on a Nasdaq
Market or on another national stock exchange and is a Reporting Issuer,
(ii) assumes by
written instrument the Company's obligations with respect to this Investment
Agreement, the Registration Rights Agreement, the Transfer Agent Instructions
and the other agreements referred to herein, including but not limited to the
obligations to deliver to the Investor shares of Common Stock and/or securities
that Investor is entitled to receive pursuant to this Investment
Agreement.  

    

    6.3           Registration
Rights.  The Company will enter into a registration rights
agreement covering the resale of the Common Shares substantially in the form of
the Registration Rights Agreement attached as Exhibit
H.  During the period from the Effective Date through the
Termination Date, the Company shall use its best efforts to maintain the
continuous effectiveness of the Registration Statement under the Securities
Act.

     

    
      
         

      

      
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    6.4.          Blue Sky.  The
Company shall use its commercially reasonable efforts to register or qualify the
registration or qualification (or exemption from the registration or
qualification requirements) of the Securities for sale to the Investor pursuant
to the Transaction Documents and the subsequent resale of the Registrable
Securities by the Investor, in each case, under applicable state securities or
“blue sky” laws of such jurisdictions in which such qualification is legally
required in order for the Securities to be issued to the Investor and resold by
the Investor into the Principal Market and such other jurisdictions within the
United States as Investor reasonably requests in writing, to keep each
registration or qualification (or exemption therefrom) effective during the
period of effectiveness of the Registration Statement and to do any and all
other acts or things reasonably necessary to enable the disposition in such
jurisdictions of the Registrable Securities covered by the Registration
Statement, and to cooperate with the Investor in connection therewith; provided that the Company
shall not be required to qualify generally to do business in any jurisdiction
where it is not then so qualified or subject the Company to any material tax in
any such jurisdiction where it is not then so subject or file a general consent
to service of process in any such jurisdiction.  Upon the Investor’s
request therefor, the Company shall provide evidence of any such action so taken
to the Investor from time to time following the Commitment Closing
Date.

    

    6.5         
Asset
Transfers.  The Company shall not (i) transfer, sell, convey or
otherwise dispose of any of its material assets to any subsidiary except for a
cash or cash equivalent consideration and for a proper business purpose or (ii)
transfer, sell, convey or otherwise dispose of any of its material assets to any
Affiliate, as defined below, during the Term of this Agreement.  For
purposes hereof, “Affiliate” shall mean any officer of the Company, director of
the Company or owner of twenty percent (20%) or more of the Common Stock or
other securities of the Company.

    

    6.6         
Capital Raising
Limitations and Rights of First Refusal. 

    

    6.6.1        Capital Raising
Limitations.  During the period from the date of this Agreement
until the date that is thirty (30) days after the Termination Date, the Company
shall not issue or sell, or agree to issue or sell Variable Equity Securities
(as defined below).  For purposes hereof,
the following shall be collectively referred to herein as, the “Equity
Securities”: (i) Common Stock or any other equity securities, (ii) any debt or
equity securities which are convertible into, exercisable or exchangeable for,
or carry the right to receive additional shares of Common Stock or other equity
securities, or (iii) any securities of the Company pursuant to an equity line
structure or format similar in nature to this Offering.  For purposes
hereof, the following shall be collectively referred to herein as, the “Variable
Equity Securities”: any debt or Equity Securities which are convertible into,
exercisable or exchangeable for, or carry the right to receive additional shares
of Common Stock either (i) at any conversion, exercise or exchange rate or other
price that is based upon and/or varies with the trading prices of or quotations
for Common Stock at any time after the initial issuance of such debt or equity
security, or (ii) with a fixed conversion, exercise or exchange price that is
subject to being reset at some future date at any time after the initial
issuance of such debt or equity security or upon the occurrence of specified
contingent events directly or indirectly related to the business of the Company
or the market for the Common Stock.

    

    6.6.2        Investor’s Right of First
Refusal. For any private capital raising transactions of Equity
Securities which close after the date hereof and on or prior to the date that is
sixty (60) days after the Termination Date of this Agreement, the Company agrees
to deliver to Investor, at least ten (10) days prior to the closing of such
transaction, written notice describing the proposed transaction, including the
terms and conditions thereof, and providing the Investor and its affiliates an
option (the “Right of First Refusal”) during the ten (10) day period following
delivery of such notice to purchase the securities being offered in such
transaction on the same terms as contemplated by such
transaction.

    
      
         

      

      
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    6.6.3  Exceptions to Rights of
First Refusal.  Notwithstanding the above, the Rights of First
Refusal shall not apply to any transaction involving issuances of securities by
the Company to a company being acquired by the Company, as payment to such
company for such acquisition, in connection with a merger, consolidation,
acquisition or sale of assets, or in connection with any strategic partnership
or joint venture (the primary purpose of which is not to raise equity capital),
or in connection with the disposition or acquisition of a business, product or
license by the Company or any other transaction that is not for the primary
purpose of raising capital, or a primary underwritten offering of the Company’s
Common Stock.  The Rights of First Refusal also shall not apply to (a)
the issuance of securities upon exercise or conversion of the Company's options,
warrants or other convertible securities outstanding as of the date hereof, (b)
the grant of additional options or warrants, or the issuance of additional
securities, under any Company stock option or restricted stock plan for the
benefit of the Company's employees,  directors or eligible
consultants, or (c) the issuance of debt securities, with no equity feature,
incurred solely for working capital purposes.  

    

    6.7  Opinion of
Counsel.  Investor shall, concurrent with the Investment
Commitment Closing, receive an opinion letter from the Company’s legal counsel,
in the form of the Investment Commitment Opinion of Counsel attached as Exhibit C, or in such
form as agreed upon by the parties, and shall, concurrent with each Put Date,
receive an opinion letter from the Company’s legal counsel, in the form of the
Put Opinion of Counsel attached as Exhibit F or in such
form as agreed upon by the parties.

    

    6.8   Listing.  Subject
to the remainder of this Section 6.8, the Company shall ensure that, on or prior
to the Liquidity Date, its shares of Common Stock (including all Commitment
Shares, Fee Shares and Put Shares) are listed and available for trading (or
quotation, as the case may be) on an Approved Primary
Market.  Thereafter, the Company shall (i) use its best efforts to
continue the listing and trading of its Common Stock on an Approved Primary
Market; and (ii) comply in all material respects with the Company’s reporting,
filing and other obligations under the By-Laws or rules of FINRA and such
exchanges, as applicable.  The Company may maintain a dual listing of
its Common Stock on the TSX, TSX-V or the AIM (the “Approved Dual Listing
Markets”), provided that its Common Stock must also be listed on an Approved
Primary Exchange.

    
      
         

      

      
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    6.9     The Company’s Instructions
to Transfer Agent.  The Company will instruct the Transfer
Agent of the Common Stock (the “Transfer Agent”), by delivering irrevocable
instructions in the form of Exhibit J hereto (the
“Transfer Agent Instructions”), to issue certificates, registered in the name of
each Investor or its nominee, for the Commitment Shares, for the Fee Shares and
for the Put Shares in such amounts as specified from time to time by the Company
upon any exercise by the Company of a Put by the holder thereof.  Such
certificates shall not bear a Legend unless issuance with a Legend is permitted
by the terms of this Agreement and Legend removal is not permitted by Section
9.10(iv) hereof and the Company shall cause the Transfer Agent to issue such
certificates without a Legend, and the Irrevocable Instructions to Transfer
Agent shall so indicate.  Nothing in this Section shall affect in any
way Investor’s obligations and agreement set forth in Sections 3.3.2 or 3.3.3
hereof to resell the Securities pursuant to an effective registration statement
and to deliver a prospectus in connection with such sale or in compliance with
an exemption from the registration requirements of applicable securities
laws.  If (a) an Investor provides the Company with an opinion of
counsel, which opinion of counsel shall be in form, substance and scope
reasonably acceptable to counsel for the Company, to the effect that the
Securities to be sold or transferred may be sold or transferred pursuant to an
exemption from registration or (b) an Investor transfers Securities, pursuant to
Rule 144, to a transferee which is an accredited investor, then the Company
shall permit the transfer; provided, that Investor and
the Company shall cooperate to ensure that a legend in substantially the form
set forth in Section 9.10(iii) be affixed to any certificates representing
shares sold pursuant to an exemption from registration other than Rule
144.  The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to an Investor by vitiating the intent and
purpose of the transaction contemplated hereby.  Accordingly, the
Company acknowledges that the remedy at law for a breach of its obligations
under this Section 6.9 will be inadequate and agrees, in the event of a breach
or threatened breach by the Company of the provisions of this Section 6.9, that
an Investor shall be entitled, in addition to all other available remedies, to
an injunction restraining any breach and requiring immediate issuance and
transfer, without the necessity of showing economic loss and without any bond or
other security being required. 

    

    6.10   Initial Public Announcements
and Required Filings.  The
Company shall, at or before 8:30 a.m., New York City time, on the first
Trading Day after the Commitment Closing Date, issue a press release (the “Press
Release”) reasonably acceptable to the Investor disclosing the execution of this
Agreement and the Registration Rights Agreement by the Company and the Investor
and the issuance of the Commitment Shares and the Fee Shares to the Investor,
and briefly describing the transactions contemplated thereby. Any Press Release
or other public announcement relating to this financing shall be submitted to
the Investor for review at least two (2) Business Days prior to the planned
release.  The Company shall not disclose the Investor’s name in any
press release or other public announcement without the Investor’s prior written
approval.  The Company shall obtain the Investor’s written approval of
the Press Release prior to issuance by the Company.  

    

    At or
before 8:30 a.m., New York City time, on the second Trading Day following
the Commitment Closing Date, the Company shall file a Current Report on
Form 8-K describing all the material terms of the transactions contemplated
by the Transaction Documents in the form required by the Exchange Act and
attaching copies of each of this Agreement, the Registration Rights Agreement
and the Press Release as exhibits thereto (including all exhibits thereto, the
“Current Report”). The Company shall provide the Investor a
reasonable opportunity to comment on a draft of such Current Report and has
given due consideration to such comments.  From and after the Liquidity
Date, the Company shall have disclosed all material, nonpublic information
delivered to the Investor (or the Investor’s representatives or agents) by the
Company or any of its Subsidiaries, or any of their respective officers,
directors, employees, agents or representatives (if any) in connection with the
transactions contemplated by the Transaction Documents. The Investor covenants
that until such time as the transactions contemplated by this Agreement are
publicly disclosed by the Company as described in this Section 6.10, the
Investor will maintain the confidentiality of all disclosures made to it in
connection with the transactions contemplated by the Transaction Documents
(including the existence and terms of the transactions), except that the
Investor may disclose the terms of such transactions to its financial,
accounting, legal and other advisors.  Not later than 15 calendar days
following the Commitment Closing Date, the Company shall file a Form D with
respect to the Securities in accordance with Regulation D and shall provide a
copy thereof to the Investor promptly after such filing. The Company shall
prepare and file with the SEC the Registration Statement (including the
prospectus therein) covering only the resale by the Investor of the Registrable
Securities in accordance with the Securities Act and the Registration Rights
Agreement.

    
      
         

      

      
        44

        
          

        

      

      
         

      

    

    

    6.11   Change in Law or
Policy.  In the event of a change in law, or policy of the SEC,
as evidenced by a No-Action letter or other written statements of the SEC or
FINRA which causes the Investor or the Company to be unable to perform its
obligations hereunder, this Agreement shall be automatically terminated,
provided that notwithstanding any termination under this Section 6.11, the
Investor shall retain full ownership of the Commitment Shares, the Fee Shares
and the Cash Document Preparation Fee as partial consideration for its
commitment hereunder.

    

    6.12    Notice of Certain
Litigation.  Promptly following the commencement thereof, the
Company shall provide the Investor written notice and a description in
reasonable detail of any litigation or proceeding to which the Company or any
subsidiary of the Company is a party; in which the amount involved is $250,000
or more and which is not covered by insurance or in which injunctive or similar
relief is sought and shall simultaneously file a Form 8-K covering such
occurrence.

    

    6.13    Broker/Dealer. 
The Investor shall use one or more broker-dealers to effectuate all sales, if
any, of Securities that it may purchase or otherwise acquire from the Company
pursuant to the Transaction Documents, as applicable, which (or whom) shall be
unaffiliated with the Investor and not then currently engaged or used by the
Company (collectively, the “Broker-Dealer”). The Investor shall be solely
responsible for all fees and commissions of the Broker-Dealer, which shall not
exceed customary brokerage fees and commissions.

    

    
      	
            	
              7.

            	
              Subscription and Wiring
      Instructions;
Irrevocability.

            

    

    

    
      
        	
              	
                (a)

              	
                Wire transfer of
      Subscription Funds.  Investor shall deliver Put Dollar
      Amounts (as payment towards any Put Share Price) by wire transfer, to the
      Company pursuant to a wire instruction letter to be provided by the
      Company, and signed by the
Company.

              

      

    

     

    
      
         

      

      
        45

        
          

        

      

      
         

      

    

    
      
        	
              	
                (b)

              	
                Irrevocable
      Subscription.  Investor
      hereby acknowledges and agrees, subject to the provisions of any
      applicable laws providing for the refund of subscription amounts submitted
      by Investor, that this Agreement is irrevocable and that Investor is not
      entitled to cancel, terminate or revoke this Agreement or any other
      agreements executed by such Investor and delivered pursuant hereto, and
      that this Agreement and such other agreements shall survive the death or
      disability of such Investor and shall be binding upon and inure to the
      benefit of the parties and their heirs, executors, administrators,
      successors, legal representatives and assigns.  If the
      Securities subscribed for are to be owned by more than one person, the
      obligations of all such owners under this Agreement shall be joint and
      several, and the agreements, representations, warranties and
      acknowledgments herein contained shall be deemed to be made by and be
      binding upon each such person and his heirs, executors, administrators,
      successors, legal representatives and
  assigns.  

              

      

    

    

    8.           Indemnification.

    

    In consideration of the Investor’s
execution and delivery of the Investment Agreement, the Registration Rights
Agreement and acquiring the Securities thereunder and in addition to all of the
Company’s other obligations under the Transaction Documents, the Company shall
defend, protect, indemnify and hold harmless Investor and all of its
stockholders, officers, directors, employees and direct or indirect investors
and any of the foregoing person’s agents, members, partners or other
representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the
“Indemnitees”) from and against any and all actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith (irrespective of whether any such Indemnitee is a party to
the action for which indemnification hereunder is sought), and including
reasonable attorney’s fees and disbursements (the “Indemnified Liabilities”),
incurred by any Indemnitee as a result of, or arising out of, or relating to (a)
any material misrepresentation or breach of any representation or warranty made
by the Company in the Transaction Documents or any other certificate, instrument
or documents contemplated hereby or thereby, (b) any material breach of any
covenant, agreement or obligation of the Company contained in the Transaction
Documents or any other certificate, instrument or document contemplated hereby
or thereby, or (c) any cause of action, suit or claim, derivative or otherwise,
by any stockholder of the Company based on a breach or alleged breach by the
Company or any of its officers or directors of their fiduciary or other
obligations to the stockholders of the Company.

    

    To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company
shall make the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities which it would be required to make if such foregoing
undertaking was enforceable which is permissible under applicable
law.

    

    Promptly after receipt by an
Indemnified Party of notice of the commencement of any action pursuant to which
indemnification may be sought, such Indemnified Party will, if a claim in
respect thereof is to be made against the other party (hereinafter “Indemnitor”)
under this Section 8, deliver to the Indemnitor a written notice of the
commencement thereof and the Indemnitor shall have the right to participate in
and to assume the defense thereof with counsel reasonably selected by the
Indemnitor.  The failure to deliver written notice to the Indemnitor
within a reasonable time of the commencement of any such action, if prejudicial
to the Indemnitor’s ability to defend such action, shall relieve the Indemnitor
of any liability to the Indemnified Party under this Section 8, but the omission
to so deliver written notice to the Indemnitor will not relieve it of any
liability that it may have to any Indemnified Party other than under this
Section 8 to the extent it is prejudicial.

    
      
         

      

      
        46

        
          

        

      

      
         

      

    

    

    9.           Miscellaneous.

    

    9.1     Representations and
Warranties Survive the Closing; Severability.  Investor’s and
the Company’s representations and warranties shall survive the Investment Date
and any Put Closing contemplated by this Agreement notwithstanding any due
diligence investigation made by or on behalf of the party seeking to rely
thereon.  In the event that any provision of this Agreement becomes or
is declared by a court of competent jurisdiction to be illegal, unenforceable or
void, or is altered by a term required by the Securities Exchange Commission to
be included in the Registration Statement, this Agreement shall continue in full
force and effect without said provision; provided that if the removal of such
provision materially changes the economic benefit of this Agreement to the
Investor, this Agreement shall terminate.

    

    9.2     Successors and
Assigns.  The Transaction Documents, including this Investment
Agreement, shall not be assignable by the Investor.  The Transaction
Documents, including this Investment Agreement, shall not be assignable by the
Company except in conjunction with a transaction permitted under the terms of
Section 6.2 above.

    

    9.3     Execution in Counterparts
Permitted.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement and shall become effective
when counterparts have been signed by each party and delivered to the other
parties.  This Agreement, once executed by a party, may be delivered
to the other parties hereto by facsimile transmission of, or an e-mail of a
“PDF” of, a copy of this Agreement bearing the signature of the party so
delivering this Agreement.

    

    9.4     Titles and Subtitles;
Gender.  The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.  The use in this Agreement of a
masculine, feminine or neuter pronoun shall be deemed to include a reference to
the others.

    

    9.5     Written Notices,
Etc. Any
notice, demand or request required or permitted to be given by the Company or
Investor pursuant to the terms of this Agreement shall be in writing and shall
be deemed given when delivered personally, or by facsimile or upon receipt if by
overnight or two (2) day courier, addressed to the parties at the addresses and/or facsimile
telephone number of the parties set forth at the end of this Agreement or such
other address as a party may request by notifying the other in writing;
provided, however, that in order for any notice to be effective as to the
Investor such notice shall be delivered and sent, as specified herein, to all
the addresses and
facsimile telephone numbers of the Investor set forth at the end of this
Agreement or such other address and/or facsimile telephone number as Investor
may request in writing.

    

    9.6     Expenses. Except as
set forth in the Registration Rights Agreement, each of the Company and Investor
shall pay all costs and expenses that it respectively incurs, with respect to
the negotiation, execution, delivery and performance of this
Agreement.

    
      
         

      

      
        47

        
          

        

      

      
         

      

    

    

    9.7     Entire Agreement; Written
Amendments Required.  This Agreement,
including the Exhibits attached hereto, the Common Stock certificates, the
Registration Rights Agreement, and the other documents delivered pursuant hereto
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof and thereof, and no party shall be liable or
bound to any other party in any manner by any warranties, representations or
covenants, whether oral, written, or otherwise except as specifically set forth
herein or therein.  Except as expressly provided herein, neither this
Agreement nor any term hereof may be amended, waived, discharged or terminated
other than by a written instrument signed by the party against whom enforcement
of any such amendment, waiver, discharge or termination is sought. The
Disclosure Documents and all exhibits to this Agreement are hereby incorporated
by reference in, and made a part of, this Agreement as if set forth in full
herein.

    

    9.8     Headings.  The
article, section and subsection headings in this Agreement are for convenience
only and shall not constitute a part of this Agreement for any other purpose and
shall not be deemed to limit or affect any of the provisions hereof. Unless the
context clearly indicates otherwise, each pronoun herein shall be deemed to
include the masculine, feminine, neuter, singular and plural forms thereof. The
terms “including,” “includes,” “include” and words of like import shall be
construed broadly as if followed by the words “without limitation.”  The
terms “herein,” “hereunder,” “hereof” and words of like import refer to this
entire Agreement instead of just the provision in which they are found.
 

    

    9.9     Reporting Entity for the
Common Stock.  The reporting entity relied upon for the
determination of the trading price or trading volume of the Common Stock on the
Principal Market on any given Trading Day for the purposes of this Agreement
shall be the Bloomberg L.P.  The written mutual consent of the
Investor and the Company shall be required to employ any other reporting
entity.

     

    9.10     Fees and
Expenses.

     

    (i)  Counsel Fees; Diligence
Expenses. Each party shall bear its own fees and expenses related to the
transactions contemplated by this Agreement; provided , however , that
concurrently with the execution of this Agreement the Company shall pay, by wire
transfer of immediately available funds to an account designated by the
Investor’s counsel, a non-accountable and non-refundable Cash Document
Preparation Fee of $5,000, exclusive of disbursements and out-of-pocket expenses
(the “Cash Document Preparation Fee”), in connection with the preparation,
negotiation, execution and delivery of the Transaction Documents and legal due
diligence of the Company. For the avoidance of doubt, the Cash Document
Preparation Fee shall be non-refundable, regardless of whether any Put Shares
are issued by the Company or settled hereunder. The Company shall pay all U.S.
federal, state and local stamp and other similar transfer and other taxes and
duties levied in connection with issuance of the Securities pursuant
hereto.

    
      
         

      

      
        48

        
          

        

      

      
         

      

    

    (ii)
 Commitment Shares.
Concurrently with the execution and delivery of this Agreement, in consideration
for the Investor’s execution and delivery of this Agreement, the Company shall
issue to the Investor a number of shares of restricted Common Stock (the
“Commitment Shares”) having a value equal to 2% of the Maximum Offering Amount
and a number of shares of restricted Common Stock (the “Fee Shares”) having a
value equal to $20,000, in each case based upon a deemed valuation per share
equal to 96% of the VWAP of the Company’s Common Stock for the 5 trading days
immediately preceding the issuance date of such shares.  Concurrently
with the execution and delivery of this Agreement, the Company shall deliver
irrevocable Transfer Agent Instructions to its transfer agent to issue to the
Investor, not later than 4:00 p.m. (New York City time) on the second Trading
Day immediately following the Commitment Closing Date, a certificate
representing the Commitment Shares and a certificate representing the Fee
Shares, each in the name of the Investor or its designee (in which case such
designee’s name shall have been provided to the Company prior to the Commitment
Closing Date and such designee shall have executed and delivered to the Company
an Investment Letter in substantially the form attached hereto as Annex 9.10), in
consideration for the Investor’s execution and delivery of this Agreement. Such
certificate shall be delivered to the Investor by overnight courier at its
address set forth in Section 9.12 hereof. For the avoidance of doubt, all of the
Commitment Shares and Fee Shares shall be fully earned as of the Commitment
Closing Date regardless of whether any Puts are issued by the Company or settled
hereunder. Upon issuance, the Commitment Shares and the Fee Shares shall
constitute “restricted securities” as such term is defined in Rule
144(a)(3) under the Securities Act and, subject to the provisions of subsection
(iv) of this Section 9.10, the certificate(s) representing the Commitment Shares
and the Fee Shares shall bear the restrictive legend set forth below in
subsection (iii) of this Section 9.10. The Commitment Shares and the Fee Shares
shall constitute Registrable Securities and shall be included in the
Registration Statement in accordance with the terms of the Registration Rights
Agreement.

    

    (iii)  Legends. The
certificate representing the Commitment Shares and the certificated representing
the Fee Shares, except as set forth below, shall each bear a restrictive legend
(“Legend”) in substantially the following form (and a stop-transfer order may be
placed against transfer of such stock certificate):

     

    THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND NEITHER
SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED
OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT
THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR
(2) AN EXEMPTION FROM SUCH REGISTRATION EXISTS AND EITHER (A) THE COMPANY
RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH COUNSEL
AND OPINION ARE SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE
OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR APPLICABLE STATE
SECURITIES LAWS OR (B) SUCH SECURITIES ARE SOLD OR ELIGIBLE TO BE SOLD PURSUANT
TO RULE 144 UNDER SAID ACT.

    
      
         

      

      
        49

        
          

        

      

      
         

      

    

    Investor
acknowledges and agrees that the Company was, at one time, a “shell company” as
defined in Rule 12b-2 under the Exchange Act.  Pursuant to Rule 144(i)
under the Securities Act, securities issued by a current or former shell company
(such as the Securities) that otherwise meet the holding period and other
requirements of Rule 144 nevertheless cannot be sold in reliance on Rule 144
until one year after the date on which such company filed current “Form 10
information” (as defined in Rule 144(i)) with the SEC reflecting that it ceased
being a shell company (and that, in the Company’s case, such Form 10 Information
was filed on May 14, 2010), and provided that at the time of a proposed sale
pursuant to Rule 144, the issuer is subject to the reporting requirements of
section 13 or 15(d) of the Exchange Act and has filed all reports and other
materials required to be filed by section 13 or 15(d) of the Exchange Act, as
applicable, during the preceding 12 months (or for such shorter period that the
issuer was required to file such reports and materials), other than Form 8-K
reports.  As a result, shares issued without legend may need to be
returned to have such legend affixed to them in the event that the Registration
Statement is not effective and the Company ceases to be subject to the reporting
requirements of section 13 or 15(d) of the Exchange Act or fails to file a
required report, subject to legend removal once a Legend Removal Condition has
again been met. Investor acknowledges the need to place such legend on any
shares transferred by Investor otherwise than pursuant to an effective
registration under the Securities Act or pursuant to Rule 144 and its agreement
to do so pursuant to Section 2.5 hereof, subject to legend removal once a Legend
Removal Condition has been met.

    

    Notwithstanding
the foregoing and for the avoidance of doubt, all Shares to be issued in respect
of any Put Notice delivered to the Investor pursuant to this Agreement shall be
issued to the Investor in accordance with Section 2.3 by crediting the
Investor’s or its designees’ account at DTC through its Deposit/Withdrawal at
Custodian (DWAC) system, and all such Shares shall be transferable pursuant to
the effective Registration Statement (and no stop-transfer order shall be placed
against transfer thereof), and the Company shall not take any action or give
instructions to any transfer agent of the Company otherwise, except as otherwise
provided in Section 6.9.

     

    (iv)
 Removal
of Legend.  If either (a) the Registration Statement is
Effective, or (b) such holder provides the Company with an opinion of counsel,
in form, substance and scope reasonably acceptable to counsel for the Company
(the reasonable cost of which shall be borne by the Investor), to the effect
that such shares can be sold or have been sold pursuant to Rule 144 (each, a
“Legend Removal Condition”), then the Company shall, no later than two Trading
Days following the delivery by the Investor to the Company or the Company’s
transfer agent (with notice to the Company) of a legended certificate
representing  the Commitment Shares and a legended certificate
representing  the Fee Shares (each endorsed or with stock powers
attached, signatures guaranteed, and otherwise in form necessary to affect the
reissuance and/or transfer, if applicable), as directed by the Investor, either:
(A) issue and deliver (or cause to be issued and delivered) to the Investor a
certificate(s) representing such Commitment Shares and Fee Shares that is free
from all restrictive and other legends or (B) cause the Company’s transfer agent
to credit the investor’s or its designee’s account at DTC through its
Deposit/Withdrawal at Custodian (DWAC) system with a number of shares of Common
Stock equal to the number of Commitment Shares and Fee Shares represented by the
certificate(s) so delivered by the Investor (the date by which such certificate
is required to be delivered to the investor or such credit is so required to be
made to the account of the Investor or its designee at DTC pursuant to the
foregoing is referred to herein as the “Required Delivery
Date”).

    
      
         

      

      
        50

        
          

        

      

      
         

      

    

    

    9.11         Specific Enforcement,
Governing Law, Consent to Jurisdiction, Waiver of Jury
Trial.

     

    (i)  The
Company and the Investor acknowledge and agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that either party shall be entitled to an injunction or
injunctions to prevent or cure breaches of the provisions of this Agreement by
the other party and to enforce specifically the terms and provisions hereof
(without the necessity of showing economic loss and without any bond or other
security being required), this being in addition to any other remedy to which
either party may be entitled by law or equity.

     

    (ii) Governing Law and
Jurisdiction.  All questions concerning the construction,
validity, enforcement and interpretation of this Agreement and the other
Transaction Documents shall be governed by and construed and enforced in
accordance with the internal laws of the State of Georgia without regard to the
principles of conflicts of law thereof.  Each party agrees that all
legal proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Agreement and any other Transaction Documents
(whether brought against a party hereto or its respective affiliates, directors,
officers, shareholders, employees or agents) shall be commenced exclusively in
the state and federal courts sitting in the City of Atlanta, Georgia. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of Atlanta, Georgia for the adjudication of
any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein (including with respect to the
enforcement of any of the Transaction Documents), and hereby irrevocably waives,
and agrees not to assert in any suit, action or proceeding, any claim that it is
not personally subject to the jurisdiction of any such court, that such suit,
action or proceeding is improper or is an inconvenient venue for such
proceeding.  If either party shall commence an action or proceeding to
enforce any provisions of the Transaction Documents, then the prevailing party
in such action or proceeding shall be reimbursed by the other party for its
reasonable attorneys’ fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or
proceeding.  THE
PARTIES HEREBY WAIVE ALL RIGHTS TO, AND AGREES NOT TO REQUEST, A TRIAL BY JURY
FOR ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT
OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR BY ANY OF THE
TRANSACTION DOCUMENTS.  

    

    9.12        Notices.  Any
notice, demand, request, waiver or other communication required or permitted to
be given hereunder shall be in writing and shall be effective (a) upon hand
delivery or facsimile (with facsimile machine confirmation of delivery received)
at the address or number designated below (if delivered on a Business Day during
normal business hours where such notice is to be received), or the first
Business Day following such delivery (if delivered other than on a Business Day
during normal business hours where such notice is to be received) or (b) on the
second Business Day following the date of mailing by express courier service,
fully prepaid, addressed to such address, or upon actual receipt of such
mailing, whichever shall first occur. The address for such communications shall
be:

    
      
         

      

      
        51

        
          

        

      

      
         

      

    

    

    If to the
Company:

     

    Li3
Energy, Inc.

    Attn:
Luis Saenz, Chief Executive Officer

    Av. Pardo
y Aliaga 699 Of. 802

    San
Isidro, Lima

    PERU

    Telephone
Number: +511 (212) 1880

    Fax:
+511 421-1649

     

    With a
copy (which shall not constitute notice) to:

     

    Gottbetter
& Partners, LLP

    Attn:
Adam S. Gottbetter

    488
Madison Avenue, 12th
Floor

    New York,
NY  10022

    Telephone
Number:  (212) 400-6900

    Fax:
(212) 400-6901

     

    If to the
Investor:

     

    Attn:
Eric S. Swartz

    1120
Sanctuary Parkway, Suite 325

    Alpharetta,
GA 30009

    Telephone
Number: (770) 640-8130

    Fax: 
(770) 777-5844

     

    With a
copy (which shall not constitute notice) to:

     

    Attn: P.
Bradford Hathorn, Esq.

    1120
Sanctuary Parkway, Suite 325

    Alpharetta,
GA 30009

    Telephone
Number: (770) 640-8130

    Fax: 
(770) 777-5844

    Email:
BradHathorn@RoswellCapitalPartners.com

    

    Either
party hereto may from time to time change its address for notices by giving at
least 10 days advance written notice of such changed address to the other party
hereto.

    

    9.13        Construction. The
parties agree that each of them and their respective counsel has reviewed and
had an opportunity to revise the Transaction Documents and, therefore, the
normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of the Transaction Documents. In addition, each and every reference to share
prices and shares of Common Stock in any Transaction Document shall be subject
to adjustment for any stock splits, stock combinations, stock dividends,
recapitalizations and other similar transactions that occur on or after the date
of this Agreement.

    
      
         

      

      
        52

        
          

        

      

      
         

      

    

     

    IN WITNESS WHEREOF, the undersigned
Investor has caused this Agreement to be executed as of the date and year set
forth below by its duly authorized officer.

    

    The undersigned Investor hereby
subscribes for the Maximum Offering Amount and acknowledges that this Agreement
and the subscription represented hereby shall not be effective unless accepted
by the Company as indicated below.

    

    Dated
this 2nd day of
December,
2010.

    

    
      
        	
                CENTURION
      PRIVATE EQUITY, LLC

              
	 
      	 
      
	
                By:

              	
                /s/ Eric S. Swartz

              
	 
      	
                Eric
      S. Swartz, Manager

              

      

    

    

    SECURITY DELIVERY
INSTRUCTIONS:

    Centurion
Private Equity, LLC

    c/o Eric
S. Swartz

    1120
Sanctuary Parkway, Suite 325

    Alpharetta,
GA 30009

    Telephone:
(770) 640-8130

    Fax:
770-777-5844

     

    THIS
AGREEMENT IS ACCEPTED BY THE COMPANY IN THE AMOUNT OF THE MAXIMUM OFFERING
AMOUNT ON THE 2nd DAY OF DECEMBER,
2010.

     

    
      
        
          	
                  Li3
      ENERGY, INC.

                
	 
      	 
      
	
                  By:

                	
                  /s/ Luis Saenz

                
	 
      	
                  Name:
      Luis Saenz

                
	 
      	
                  Title:  Chief
      Executive Officer

                

        

      

    

    
      
         

      

      
        53

        
          

        

      

      
         

      

    

    Exhibit
List to the

    INVESTMENT
AGREEMENT

    

    
      
        	
                Exhibit

              	
                A

              	
                Advance
      Put Notice

              
	
                Exhibit

              	
                B

              	
                Capitalization
      Schedule

              
	
                Exhibit

              	
                C

              	
                Investment
      Commitment Opinion of Counsel

              
	
                Exhibit

              	
                D

              	
                Key
      Employees

              
	
                Exhibit

              	
                E

              	
                Put
      Notice

              
	
                Exhibit

              	
                F

              	
                Put
      Opinion of Counsel

              
	
                Exhibit

              	
                G

              	
                Registration
      Opinion of Counsel

              
	
                Exhibit

              	
                H

              	
                Registration
      Rights Agreement

              
	
                Exhibit

              	
                I

              	
                Schedule
      of Exceptions

              
	
                Exhibit

              	
                J

              	
                Transfer
      Agent Instructions

              
	
                Exhibit

              	
                K

              	
                Use
      of Proceeds

              
	
                Exhibit

              	
                L

              	
                Secretary’s
      Certificate

              
	
                Exhibit

              	
                M

              	
                Officer’s
      Certificate

              
	
                Exhibit

              	
                N

              	
                Resolutions

              
	
                Exhibit

              	
                O

              	
                Risk
      Factors

              
	
                Exhibit

              	
                P

              	
                Intellectual
      Property

              

      

    

     

    
      
        	
                Schedule
      5.1

              	 
      	
                Organizational
      Structure

              
	
                Annex
      9.10

              	 
      	
                Form
      of Investment Letter

              

      

    

     

    
      
         

      

      
        54

        
          

        

      

      
         

      

    

    ADVANCE
PUT NOTICE

    

    Li3
ENERGY, INC. (the "Company") hereby intends, subject to the Individual Put Limit
(as defined in the Investment Agreement), to elect to exercise a Put to sell the
number of shares of Common Stock of the Company specified below, to Centurion
Private Equity, LLC, as of the Intended Put Date written below, all pursuant to
that certain Investment Agreement (the “Investment Agreement”) by and between
the Company and Centurion Private Equity, LLC dated on or about December 2,
2010.

     

    
      
        
          
            	
                    Date
      of Advance Put Notice:                                               
      

                  
	 
      
	
                    Intended
      Put Date:                                                                  
      

                  
	 
      
	
                    Intended
      Put Share Amount:                                               
      

                  
	 
      
	
                    Company
      Designation Maximum Put Dollar Amount (Optional):

                  
	
                    _______________________________________.

                  
	 
      
	
                    Company
      Designation Minimum Put Share Price (Optional):

                  
	
                    _______________________________________.

                  

          

        

      

    

    
 

    
      
        
          
            	 
      	
                    Li3
      ENERGY, INC.

                  
	 
      	 
      
	
                    By:

                  	 
      
	 
      	
                    Name:

                  
	 
      	
                    Title:

                  

          

        

      

    

    

    
      
        
          	
                  Address:

                
	 
      
	
                  Attn:
      Chief Executive Officer

                
	
                  Av.
      Pardo y Aliaga 699

                
	
                  Oficina
      802

                
	
                  San
      Isidro, Lima, Peru

                

        

      

    

     

    EXHIBIT
A

    
      
         

      

      
        55

        
          

        

      

      
         

      

    
EXHIBIT
B

(Capitalization
Schedule)

 

	 	 	Shares	 
	 	 	 	 
	Currently Outstanding[1]	 	 	91,109,033	 
	Outstanding Warrants[2] [3]	 	 	29,574,124	 
	2009 Equity Incentive Plan[4]	 	 	5,000,000	 
	Double Option [5]	 	 	8,000,000	 
	Convertible Note[6]	 	 	362,622	 
	 	 	 	 	 
	Total Fully Diluted	 	 	134,045,779	 

  

		[1]	Includes the 87,096 Fee Shares issued to Roswell Capital Partners, LLC, pursuant to the Agreement.
Does not include the Commitment Shares issuable pursuant to the Agreement. Includes 236,842 shares issued to an affiliate of the
Company’s Chief Operating Officer as part of a signing bonus in connection with his employment, but does not include 2,500,000
shares issuable to the same affiliate pursuant to an award of restricted stock granted under the 2009 Equity Incentive Plan (see
below, under footnote 4).

 

Does not include additional shares of Common Stock
that the Company may issue in settlement of certain outstanding claims or liabilities that the Company is in the process of negotiating.

 

		[2]	The outstanding warrants consist of:

		(i)	Warrants to purchase up to 8,647,223 shares of Common Stock for $0.4106 per share (“A Warrants”);

		(ii)	Warrants to purchase up to 9,257,695 shares of Common Stock for $0.7671 per share (“B Warrants”);

		(iii)	Warrants to purchase 7,188,035 shares of Common Stock for $0.4285 per share (“C Warrants”);

		(iv)	Warrants to purchase up to 481,171 shares of Common Stock for $0.2182 per share (“PPO Agent
Warrants”); and

		(v)	Warrants to purchase up to 4,000,000 shares of Common Stock for $0.05 per share (“D Warrants”).

 

Although certain of the A Warrants and B Warrants
do not explicitly provide for inverse adjustment to the number of shares of Common Stock issuable upon exercise thereof whenever
the exercise price is adjusted, the Company may determine to make such adjustment. The numbers of shares reported as issuable upon
exercise of the A Warrants and B Warrants in the Commission Documents do not reflect any such adjustment, however the figures in
this table do.

 

    	 

    	 

    

 

		[3]	The A Warrants, B Warrants, C Warrants, PPO Agent Warrants and D Warrants each provide for weighted-average
anti-dilution adjustments that may be triggered, among other things, by issuances of Common Stock pursuant to the Agreement.

 

		[4]	Includes all shares reserved for issuance pursuant to awards granted under the Plan. The Issuer
currently has outstanding options granted under the Plan to purchase an aggregate of 1,800,000 shares of Common Stock. In addition,
in connection with the Company’s employment of R. Thomas Currin, Jr., as Chief Operating Officer, the Company has granted
to MIZ Comercializadora, S. de R.L., an award of “Restricted Stock” under the Plan pursuant to which the Company must
issue an additional 2,500,000 shares of Common Stock.

 

		[5]	The subscription agreements between the Company and each investor in the private placement offering
that closed on November 8 and 15, 2010, provide each such investor with the right (the “Double Option”), subject to
certain conditions, to purchase, at any time prior to November 8, 2011, a number of additional units of common stock and D Warrants
(“Five Cent Units”) up to the number of Five Cent Units purchased at the closing of such offering by such investor.
In the aggregate, the Double Option permits such investors to purchase Five Cent Units consisting of up to 4,000,000 shares of
Common Stock and D Warrants to purchase an additional 4,000,000 shares of Common Stock.

 

		[6]	Assumes conversion of $45,000 principal and interest accrued thereon through November 18, 2010,
at $0.14 per share (the closing price on November 18, 2010). Does not include shares issuable upon conversion of interest accrued
after such date. Since the Convertible Note is future priced, to the extent the issuance of the Securities may depress the market
price for the Common Stock, the Convertible Note may be deemed to have anti-dilution protection.

 

    	 

    	 

    

 

Registration Rights

 

The Company has agreed, pursuant to a Registration
Rights Agreement, to use its commercially reasonable efforts to file a registration statement under the Securities Act, covering
the shares of Common Stock included in the Units and the shares of Common Stock issuable upon exercise of the Current PPO Warrants,
within 60 days after the final closing of the PPO (the “Registration Filing Date”) and to have such registration statement
declared effective within 180 days of such final closing date (the “Registration Effectiveness Date”). The Company
will, in certain circumstances, be obliged to pay the holders of such registrable securities liquidated damages if the registration
statement is not filed by the Registration Filing Date or declared effective by the Registration Effectiveness Date, of if another
Registration Event, as such term is defined in the Registration Rights Agreement, occurs, in the amount of 1% of the purchase price
in the PPO of the Units which are affected by such Registration Event, for each full thirty (30) days during which such Registration
Event continues to affect such shares (which shall be pro-rated for any period less than 30 days), up to a maximum of 10% of the
purchase price paid in the PPO for such Units. The Company is required to keep the registration statement effective until the earlier
of one year from the date the registration statement is declared effective or until all of the registrable securities may be sold
under Rule 144 during any 90 day period.

 

The Company has granted “piggy-back”
registration rights to the investors purchasing units in the 2009 Private Placement. If the Company determines to register for
sale for cash any of its Common Stock for its own account or for the account of others, then the holders of 14,000,000 shares of
Common Stock and the A Warrants and B Warrants will have the right to have such shares, and the shares of Common Stock issuable
upon exercise of the A Warrants and B Warrants, included in such registration statement, subject to customary exceptions and scale
backs.

 

The Company has also granted “piggy-back”
registration rights with respect to 4,000,000 shares of Common Stock issued in connection with the Company’s acquisition
of certain options from Next Lithium.

 

The Company has also granted “piggyback”
registration rights with respect to the 4,000,000 shares of Common Stock included in the Five Cent Units (including any Five Cent
Units issued upon exercise of the Double Option) and the shares of Common Stock issuable upon exercise of the D Warrants (including
D Warrants included in any Five Cent Units issued upon exercise of the Double Option).

 

    	 

    	 

    

 

EXHIBIT D

(Key Employees)

 

The following persons are employed as executive officers (“Key
Employees”) of the Company in the capacities indicated:

 

Luis Francisco Saenz, Chief Executive Officer

David Rector, President, Treasurer, Secretary and
Director

Eric E. Marin, Interim Chief Financial Officer

R. Thomas Currin, Jr., Chief Operating Officer

 

    	 

    	 

    

 

    PUT
NOTICE

    

    Li3
ENERGY, INC., (the "Company") hereby elects to exercise a Put to sell shares of
common stock ("Common Stock") of the Company to Centurion Private Equity, LLC
(the “Investor”), as of the Put Date, at the Put Share Price and for the number
of Put Shares written below, all pursuant to that certain Investment Agreement
(the “Investment Agreement”) by and between the Company and Centurion Private
Equity, LLC dated on or about December 2, 2010.

     

    
      
        	
                Put
      Date: _________________

              
	 
      
	
                Intended
      Put Share Amount (from Advance Put Notice): _________________ Common
      Shares

              
	 
      
	 
      
	
                Company
      Designation Maximum Put Dollar Amount (Optional):

              
	
                ________________________________________.

              
	 
      
	
                Company
      Designation Minimum Put Share Price (Optional):

              
	________________________________________.
      

      

    

    

    Note:  Capitalized
terms shall have the meanings ascribed to them in this Investment
Agreement.

    

    
      
        
          
            	
                    Li3
      ENERGY, INC.

                  
	 
      	 
      
	
                    By:

                  	 
      
	 
      	
                    Name:

                  
	 
      	
                    Title:

                  

          

        

      

    

    

    
      
        
          	
                  Address:

                
	 
      
	
                  Attn:
      Chief Executive Officer

                
	
                  Av.
      Pardo y Aliaga 699

                
	
                  Oficina
      802

                
	
                  San
      Isidro, Lima, Peru

                

        

      

    

     

    EXHIBIT
E

    
      
         

      

      
        56

        
          

        

      

      
         

 

      

    
EXHIBIT I

(Schedule of Exceptions)

 

Section 5.2Any claim, litigation, or administrative proceeding
pending or, to the best of the Company’s knowledge, threatened against the Company and not disclosed in Commission Documents.

None

 

Section 5.3Failures to timely file Commission Documents.

 

The Company did not timely file its Annual Report on Form 10-K
for the year ended June 30, 2010.

 

Without conceding that such filing would be required by applicable
law, the Company hereby discloses that it has not yet filed a Current Report on Form 8-K reporting its default under the Company’s
Option Agreements with GeoXplor Corp., with respect to certain mining claims in Nevada.

 

The Company failed to file a Current Report on Form 8-K reporting
the appointment, as of August 12, 2010, of R. Thomas Currin, Jr. as its Chief Operating Officer, and the entry into an Employment
Services Agreement, a Restricted Stock Agreement and an Option Agreement with Mr. Currin’s affiliate, MIZ Comercializadora,
S. de R.L., in connection therewith.

 

A Current Report on Form 8-K reporting certain matters that
occurred as early as February 18, 2010 (note: the reference therein to February 18, 2008 was a typo), was not filed until March
3, 2010.

 

The Company may have failed to timely file additional Commission
Documents that were due prior to September 25, 2009 – the date that the Company filed its Annual Report on Form 10-K for
the year ended June 30, 2009.

 

Section 5.7Failures to Comply with Other Instruments.

 

The Company is in default under the Company’s Option Agreements
with GeoXplor Corp.

 

Section 5.8Reporting Company Exceptions.

 

The Company is not subject to the reporting requirements of
the Exchange Act, and does not have any class of securities registered under Section 12 of the Exchange Act. This failure to register
is a violation of the requirements of the O.T.C. Bulletin Board and may jeopardize the Common Stock’s quotation by the O.T.C.
Bulletin Board.

 

    	 

    	 

    

 

 

Section 5.9Listing and Maintenance Exceptions.

 

The Company is not subject to the reporting requirements of
the Exchange Act, and does not have any class of securities registered under Section 12 of the Exchange Act. This failure to register
is a violation of the requirements of the O.T.C. Bulletin Board and may jeopardize the Common Stock’s quotation by the O.T.C.
Bulletin Board.

 

Section 5.24Material Agreements Exceptions.

 

The Company has not disclosed its entry, as of August 12, 2010,
into an Employment Services Agreement, a Restricted Stock Agreement and an Option Agreement with Mr. Currin’s affiliate,
MIZ Comercializadora, S. de R.L., in connection with Mr. Currin’s employment as Chief Operating Officer.

 

The Company has not filed a copy of its Addendum to Master Option
Agreement with Lacus Minerals S.A., dated July 29, 2010.

 

The Company is in default under the Company’s Option Agreements
with GeoXplor Corp. GeoXplor Corp. has cancelled such Option Agreements.

 

Section 5.25Transactions With Affiliates.

 

Starting in November 2009, the Company started utilizing the
administrative personnel and office space of a company, with an office located in Lima, Peru in which the Company’s Chief
Executive Officer and Interim Chief Financial Officer function in the same capacities (the “Related Party Company”).
As such, certain net common costs initially paid by the Related Party Company for the year ended June 30, 2010 and 2009, were allocable
to the Company, as follows:

 

	 	 	Year Ended  
June 30,	 
	 	 	2010	 	 	2009	 
	Administrative salaries	 	$	5,100	 	 	$	-	 
	Utilities and maintenance expenses	 	 	16,759	 	 	 	-	 
	 	 	$	21,859	 	 	$	-	 

 

During the year ended June 30, 2010, the Company paid $11,188
to the Related Party Company. As of June 30, 2010, the payable due to the Related Party Company arising from these net common costs
amounting to $10,671 is presented as “Payable to related party” in the Company’s consolidated balance sheet.

 

Section 5.33Other Agreements.

 

The Company has issued 87,096 shares of Common Stock to Roswell
Capital Partners, LLC (the “Roswell Shares”), pursuant to the Confidential Term Sheet for the transaction that is being
memorialized in the Agreement. Notwithstanding anything to the contrary in the Agreement, the Roswell Shares constitute, and are
co-extensive with, the Fee Shares described in the Agreement.

 

    	 

    	 

    

  

Section 5.34Major Transactions.

 

None.

 

    	 

    	 

    

 

EXHIBIT K

(Use of Proceeds)

 

The proceeds of the Offering (after any placement and finder
fees, legal fees and other offering expenses) shall be used by the Issuer towards payment of certain amounts due from time to time
to vendors and other counterparties, the Company’s committed expenditures with respect to its existing properties, possibly
towards costs of acquiring additional properties and for additional expenditures with respect to any additional properties it may
acquire, and for working capital and general corporate purposes.

 

Without limiting the generality of the foregoing, the Company
plans to spend the following amounts on the following items on or prior to December 31, 2010:

 

		·	$150,000 as the cash component of the settlement of certain potential
claims related to our Master Option Agreement with Lacus Minerals S.A., and the termination thereof;

 

		·	Approximately $500,000 to satisfy certain accounts payable; and

 

		·	$280,000 in option payments with respect to the Alfredo Property.

 

    	 

    	 

    

 

EXHIBIT P

(Patents, Trademarks, Trademark Registrations,
Trade Names and Copyrights)

 

Other than its name “Li3 Energy, Inc.,” the Company
does not own, either legally or beneficially, any patent, trademark, trademark registration, trade names or copyrights nor any
material license, and are not dependent on any such rights.

 

    	 

    	 

    

 

SCHEDULE 5.1

(Subsidiaries)

 

Li3 Energy Peru SRL, a private limited company organized under
the laws of Peru (“Li3 Peru”). The Company owns 100% of Li3 Peru.

 

Alfredo Holdings, Ltd., an exempted limited company incorporated
under the laws of the Cayman Islands (“Alfredo”). The Company owns 100% of Alfredo.

 

Pacific Road Mining Chile, SA, a Chilean corporation (“PRMC”).
Alfredo owns 873,863 of the 873,865 (approximately 99.9998%) issued share capital of PRMC.

 

Noto
Energy S.A., an Argentinean corporation (“Noto”). The Company owns 90% of Noto, and Li3 Peru owns the other
10% of Noto.

 

    	 

    	 

    

 

    Annex
9.10

    Form of
Investment Letter

    

    Li3
Energy, Inc.

    Av. Pardo
y Aliaga 699 Of. 802

    San
Isidro, Lima

    PERU

    

    Dear
Gentlemen:

    

    In connection with the undersigned’s
receipt of ________ shares (the “Securities”) of common stock, par value $0.001
per share (the “Common Stock”), of Li3 Energy, Inc., a Nevada corporation (the
“Company”), as the designee of Investor (as defined below) pursuant to the
Investment Agreement, dated as of _________ __, 2010, between the Company and
Centurion Private Equity, LLC (“Investor”), the undersigned represents that the
undersigned is aware that the Securities have not been registered under the
Securities Act of 1933, as amended (the “Securities Act”), and that the
undersigned has received the Securities for investment purposes and not with a
view to distribution or resale, or otherwise for transfer of the Securities or
any interest therein without an effective registration statement with respect
thereto or an opinion of counsel that registration is not required under the
Securities Act.

    

    The undersigned further represents and
warrants to the Company as follows:

    

    1.           
The undersigned is an “accredited investor” within the meaning of Regulation D
of the Securities Act and/or the undersigned has such knowledge and experience
in financial, tax, and business matters so as to utilize information made
available to me in order to evaluate the merits and risks of an investment
decision with respect thereto.

    

    2.           
The undersigned has no contract, undertaking, agreement or arrangement with any
person to sell, transfer or pledge to such person or anyone else the Securities
or any part thereof, and the undersigned has no present plans to enter into any
such contract, undertaking, agreement or arrangement.

    

    3.           
The undersigned will not attempt to dispose of any Securities or any interest
therein, unless and until the Company shall have determined to its satisfaction
that the proposed disposition does not violate the registration requirements of
the Securities Act; the undersigned understands that the Company may require an
opinion of counsel, satisfactory in form and substance to the foregoing effect
before permitting a transfer.

    

    4.           
The undersigned understands that there is no assurance that there will be a
public market for any of the Securities and that the undersigned recognizes, in
light of these considerations and those set forth above, that it may not be
possible for the undersigned to liquidate such securities readily, or at all,
and that the undersigned may not be able to dispose of them for a lengthy period
of time, if at all.

    
      
         

      

      
        57

        
          

        

      

      
         

      

    

    

    5.           
The undersigned acknowledges and understands that the certificate(s)
representing the Securities to be issued to the undersigned may bear the
following, or similar, legend:

    

    THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS,
AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD,
PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT
WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS, OR (2) AN EXEMPTION FROM SUCH REGISTRATION EXISTS AND THE
COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH
COUNSEL AND OPINION ARE SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE
OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR APPLICABLE STATE
SECURITIES LAWS.

    

    6.           
The undersigned acknowledges and agrees that the Company was, at one time, a
“shell company” as defined in Rule 12b-2 under the Exchange
Act.  Pursuant to Rule 144(i) under the Securities Act, securities
issued by a current or former shell company (such as the Securities) that
otherwise meet the holding period and other requirements of Rule 144
nevertheless cannot be sold in reliance on Rule 144 until one year after the
date on which such company filed current “Form 10 information” (as defined in
Rule 144(i)) with the SEC reflecting that it ceased being a shell company (and
that, in the Company’s case, such Form 10 Information was filed on May 14,
2010), and provided that at the time of a proposed sale pursuant to Rule 144,
the issuer is subject to the reporting requirements of section 13 or 15(d) of
the Exchange Act and has filed all reports and other materials required to be
filed by section 13 or 15(d) of the Exchange Act, as applicable, during the
preceding 12 months (or for such shorter period that the issuer was required to
file such reports and materials), other than Form 8-K reports.  As a
result, the restrictive legends on certificates for the Securities set forth
above cannot be removed except in connection with an actual sale meeting the
foregoing requirements.

    

    
      
        
          
            
              
                
                  
                    
                      	
                              Very
      truly yours,

                            
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
                              Name:

                            	 
      	 
      	
                              Date

                            	 
      

                    

                  

                

              

            

          

        

      

    

    
      
         

      

      
        58

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