Document:

Lithium Exploration Group, Inc.: Exhibit 10.98 - Filed by newsfilecorp.com

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS, AND MAY
NOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL IN THE FORM,
SUBSTANCE AND SCOPE REASONABLY SATISFACTORY TO THE COMPANY THAT THIS NOTE MAY BE
SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF, UNDER AN EXEMPTION FROM
REGISTRATION UNDER THE ACT AND SUCH STATE SECURITIES LAWS. 

	LITHIUM EXPLORATION GROUP, INC. 
	10% OID Convertible Promissory Note 
	Due April 4, 2018 
	 	  	  
	 	  	  
	April 4, 2017 		  
	 	 	 
	 	Purchase Price: 	USD $128,752.00 
	 	Principal Price: 	$141,627.20 

For value received, Lithium
Exploration Group, Inc., a Nevada corporation (the "Company"), hereby
promises to pay to the order of JDF Capital Inc. (together with its
successors, representatives, and permitted assigns, the "Holder"), in accordance
with the terms hereinafter provided, up to an aggregate of $141,627.20(One
hundred forty-one thousand and six hundred twenty-seven dollars and twenty
cents) the (the "Principal Amount"), which includes the aggregate
principal sum of $123,800.00 (One hundred twenty-three thousand eight hundred
dollars) advanced by the Holder, $ 4 , 9 5 2 . 0 0 (Four thousand Nine hundred
and fifty-two dollars) document prep fees (deducted from the amount funded) and
$12,875.00 (Twelve thousand eight hundred seventy-five dollars) Original Issue
Discount incurred by the Holder shall be due and payable on April 4, 2018. 

The due dates of any outstanding
principal balance are referred to herein as the "Maturity Date". 

All payments under or pursuant to
this Note refer to and shall be made in United States Dollars in immediately
available funds to the Holder at the address of the Holder first set forth above
or at such other place as the Holder may designate from time to time in writing
to the Company or by wire transfer of funds to the Holder's account,
instructions for which are attached hereto as Exhibit A. 

ARTICLE I 

Section
1.1      Purchase Agreement. This Note has
been executed and delivered pursuant to the Security Purchase Agreement dated as
of April 4, 2017 (the "Purchase Agreement'') by and among the Company and the
purchasers listed therein. Capitalized terms used and not otherwise defined
herein shall have the meanings set forth for such terms in the Purchase
Agreement. 

Section
1.2      Interest. 

(a)      Beginning
on the issuance date of this Note (the "Issuance Date"), the outstanding
principal balance of this Note shall bear interest at a rate per annum equal to
10 percent (10%) accruing on a 12 month basis, which shall consist of the
pre-paid interest referred to above, which may be converted to shares of the
Company's common stock, par value $0.001 per share (the "Common Stock") at the
option of the Holder on the same terms as the Note. 

1 

Section
1.3      Payment on Non-Business Days.
Whenever any payment to be made shall be due on a Saturday, Sunday or a public
holiday under the laws of the State of Nevada, such payment may be due on the
next succeeding business day and such next succeeding day shall be included in
the calculation of the amount of accrued interest payable on such date. 

Section
1.4      Transfer. This Note may be
transferred or sold, subject to the provisions of Section 4.8 of this Note, or
pledged, hypothecated or otherwise granted as security by the Holder. 

Section
1.5      Replacement. Upon receipt of a
duly executed, notarized and unsecured written statement from the Holder with
respect to the loss, theft or destruction of this Note (or any replacement
hereof), and without requiring an indemnity bond or other security, or, in the
case of a mutilation of this Note, upon surrender and cancellation of such Note,
the Company shall issue a new Note, of like tenor and amount, in lieu of such
lost, stolen, destroyed or mutilated Note. 

ARTICLE II 

EVENTS OF DEFAULT; REMEDIES 

Section
2.1      Events of Default. The occurrence
of any of the following events shall be an "Event of Default" under this Note:

(a)      the
Company shall fail to make the payment of any amount of principal outstanding on
the date such payment is due hereunder; 

(b)      the
Company shall fail to make any payment of interest in shares of Common Stock for
a period of three (3) days after the date such interest is due; 

(c)      the
suspension from listing, without subsequent listing on any one of, or the
failure of the Common Stock to be listed on at least one of the OTC Bulletin
Board, Nasdaq Small Cap Market, Nasdaq National Market, American Stock Exchange
or The New York Stock Exchange, Inc. for a period of five (5) consecutive
Trading Days; 

(d)      the
Company's notice to the Holder, including by way of public announcement, at any
time, of its inability to comply or its intention not to comply with proper
requests for conversion of this Note into shares of Common Stock;

(e)      the
Company shall fail to (i) timely deliver the shares of Common Stock upon
conversion of the Note or any accrued and unpaid interest, or (ii) make the
payment of any fees and/or liquidated damages under this Note or the Purchase
Agreement, which failure in the case of items (i) and (ii) of this Section
2.1(e) is not remedied within three (3) business days after the incurrence
thereof; 

(f)      default
shall be made in the performance or observance of (i) any material covenant,
condition or agreement contained in this Note (other than as set forth in clause
(e) of this Section 2.1) and such default is not fully cured within five (5)
business days after the occurrence thereof or (ii) any material covenant,
condition or agreement contained in the Purchase Agreement or any other
Transaction Document which is not covered by any other provisions of this
Section 2.1 and such default is not fully cured within five (5) business days
after the occurrence thereof; 

(g)      any
material representation or warranty made by the Company herein or in the
Purchase Agreement or any other Transaction Document shall prove to have
been false or incorrect or breached in a material respect on the date as of
which made; 

2 

(h)      the
  Company shall (A) default in any payment of any amount or amounts of principal
  of or interest on any Indebtedness (other than the Indebtedness hereunder) the
  aggregate principal amount of which Indebtedness is in excess of $50,000 or (B)
  default in the observance or performance of any other agreement or condition
  relating to any Indebtedness or contained in any instrument or agreement
  evidencing, securing or relating thereto, or any other event shall occur or
  condition exist, the effect of which default or other event or condition is to
  cause, or to perm it the holder or holders or beneficiary or beneficiaries of
  such Indebtedness to cause with the giving of notice if required, such
Indebtedness to become due prior to its stated maturity; 

(i)      the
Company shall (i) apply for or consent to the appointment of, or the taking of
possession by, a receiver, custodian, trustee or liquidator of itself or of all
or a substantial part of its property or assets, (ii) make a general assignment
for the benefit of its creditors, (iii) commence a voluntary case under the
United States Bankruptcy Code (as now or hereafter in effect) or under the
comparable laws of any jurisdiction (foreign or domestic), (iv) file a petition
seeking to take advantage of any bankruptcy, insolvency, moratorium,
reorganization or other similar law affecting the enforcement of creditors'
rights generally, (v) acquiesce in writing to any petition filed against it in
an involuntary case under United States Bankruptcy Code (as now or hereafter in
effect) or under the comparable laws of any jurisdiction (foreign or domestic),
(vi) issue a notice of bankruptcy or winding down of its operations or issue a
press release regarding same, or (vii) take any action under the laws of any
jurisdiction (foreign or domestic) analogous to any of the foregoing; 

(j)      a
proceeding or case shall be commenced in respect of the Company, without its
application or consent, in any court of competent jurisdiction, seeking (i) the
l iquidation, reorganization, moratorium, dissolution, winding up, or
composition or readjustment of its debts, (ii) the appointment of a trustee,
receiver, custodian, liquidator or the like of it or of all or any substantial
part of its assets in connection with the liquidation or dissolution of the
Company or (iii) similar relief in respect of it under any law providing for the
relief of debtors, and such proceeding or case described in clause (i), (ii) or
(iii) shall continue undismissed, or unstayed and in effect, for a period of
sixty (60) days or any order for relief shall be entered in an involuntary case
under United States Bankruptcy Code (as now or hereafter in effect) or under the
comparable laws of any jurisdiction (foreign or domestic) against the Company or
action under the laws of any jurisdiction (foreign or domestic) analogous to any
of the foregoing shall be taken with respect to the Company and shall continue
undismissed, or unstayed and in effect for a period of sixty (60) days; or 

(k)      the
failure of the Company to instruct its transfer agent to remove any legends from
shares of Common Stock eligible to be sold under Rule 144 of the Securities Act
and issue such unlegended certificates to the Holder within five (5) business
days of the Holder's request so long as the Holder has provided reasonable
assurances and opinions of counsel to the Company that such shares of Common
Stock can be resold pursuant to Rule 144; or 

(I)      the
failure of the Company to pay any amounts due to the Holder herein within three
(3) business days of receipt of notice to the Company. 

Section
2.2      Remedies Upon An Event of Default.
If an Event of Default shall have occurred and shall be continuing, the Holder
of this Note may at any time at its option, (a) declare the entire unpaid
principal balance of this Note, together with all interest accrued hereon, due
and payable, and thereupon, the same shall be accelerated and so due and
payable, without presentment, demand, protest, or notice, all of which are
hereby expressly unconditionally and irrevocably waived by the Company;
provided, however, that upon the occurrence of an Event of Default described in
(i) Sections (k) or (I), the outstanding principal balance and interest
hereunder shall be automatically due and payable and (ii) Sections 2.1 (a)-(j) and 2.l (m)-(n),
demand the prepayment of this Note pursuant to Section 3.6 hereof, (b) subject
to Section 3.4 hereof, demand that the principal amount of this Note then
outstanding shall be converted into shares of Common Stock at a Conversion Price
(as defined in Section 3.2(a) hereof) per share calculated pursuant to Section
3.1 hereof assuming that the date that the Event of Default occurs is the
Conversion Date and demand that all accrued and unpaid interest under this Note
shall be converted into shares of Common Stock in accordance with Section 1 .2
hereof, or (c) exercise or otherwise enforce any one or more of the Holder's
rights, powers, privileges, remedies and interests under this Note, the Purchase
Agreement, other Transaction Document or applicable law. No course of delay on
the part of the Holder shall operate as a waiver thereof or otherwise prejudice
the right of the Holder. No remedy conferred hereby shall be exclusive of any
other remedy referred to herein or now or hereafter available at law, in equity,
by statute or otherwise. 

3 

ARTICLE III 

CONVERSION; ANTIDILUTION; PREPAYMENT 

Section
3.1      Conversion Option. 

(a)      At
any time on or after the Issuance Date, this Note shall be convertible (in whole
or in part), at the option of the Holder (the "Conversion Option"), into
such number of fully paid and non- assessable shares of Common Stock (the
"Conversion Rate") as is determined by dividing that portion of the
outstanding principal balance under this Note as of such date that the Holder
elects to convert by the Conversion Price (as defined in Section 3.2(a) hereof)
then in effect on the date on which the Holder faxes a notice of conversion (the
"Conversion Notice"), duly executed, to the Company (the "Voluntary
Conversion Date"), provided, however, that the Conversion Price shall be
subject to adjustment as described in Section 3.5 below. The Holder shall
deliver this Note to the Company at the address designated in the Purchase
Agreement at such time that this Note is fully converted. With respect to
partial conversions of this Note, the Company shall keep written records of the
amount of this Note converted as of each Conversion Date. 

(b)      On any Voluntary Conversion
Date, the Holder may cause the any outstanding Principal Amount of this Note
plus all accrued and unpaid interest to convert into a number of fully paid and
non-assessable shares of Common Stock equal to the quotient of the elected
outstanding principal amount of this Note plus all accrued interest on the
elected outstanding on the Voluntary Conversion Date (as described in this
Section below) divided by the Conversion Price as described in Section 3.2(a)
below. 

Furthermore, upon the occurrence of an Event of Default (as
defined in Section 2.1 hereof), then to the extent permitted by law, the Company
will pay interest to the Holder, payable on demand, on the outstanding principal
balance of the Note from the date of the Event of Default until such Event of
Default is cured at the rate of the lesser of fifteen percent (15%) and the
maximum applicable legal rate per annum. 

(B)                      Conversion
Limitations; Holder's Restriction on Conversion. The Company shall
not effect any conversion of this Note, and the Holder shall not have the right
to convert any portion of this Note, to the extent that after giving effect to
such conversion, the Holder (together with the Holder's affiliates), as set
forth on the applicable Conversion Notice, would beneficially own in excess of
4.99% of the number of shares of the Common Stock outstanding immediately after
giving effect to such conversion. For purposes of the foregoing sentence, the
number of shares of Common Stock beneficially owned by the Holder and its
affiliates shall include the number of shares of Common Stock issuable upon
conversion of this Note with respect to which the determination of such sentence
is being made, but shall exclude the number of shares of Common Stock which
would be issuable upon (A) conversion of the remaining, nonconverted portion of
this Note beneficially owned by the Holder or any of its affiliates and (B)
Exercise or conversion of the unexercised or nonconverted portion of any other
securities of the Company (including, without limitation, any other Notes or the
Warrants) subject to a limitation on conversion or exercise analogous to the
limitation contained herein beneficially owned by the Holder or any of its
affiliates. Except as set forth in the preceding sentence, for purposes of this
Section, beneficial ownership shall be calculated in accordance with Section
13(d) of the Exchange Act. To the extent that the limitation contained in this
section applies, the determination of whether this Note is convertible (in
relation to other securities owned by the Holder) and of which a portion of this
Note is convertible shall be in the sole discretion of such Holder. To ensure
compliance with this restriction, the Holder will be deemed to represent to the
Company each time it delivers a Conversion Notice that such Conversion Notice
has not violated the restrictions set forth in this paragraph and the Company
shall have no obligation to verify or confirm the accuracy of such
determination. For purposes of this Section, in determining the number of
outstanding shares of Common Stock, the Holder may rely on the number of
outstanding shares of Common Stock as reflected in (x) the Company's most recent
Form 10-Q or Form 10-K (or such related form), as the case may be, (y) a more
recent public announcement by the Company or (z) any other notice by the Company
or the Company's Transfer Agent setting forth the number of shares of Common
Stock outstanding. Upon the written or oral request of the Holder, the Company
shall within two Trading Days confirm orally and in writing to the Holder the
number of shares of Common Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall be determined after giving effect to
the conversion or exercise of securities of the Company, including this Note, by
the Holder or its affiliates since the date as of which such number of
outstanding shares of Common Stock was reported. The provisions of this Section
may be waived by the Holder upon, at the election of the Holder, not less than
61 days' prior notice to the Company, and the provisions of this Section shall
continue to apply until such 61st day (or such later date, as determined by the
Holder, as may be specified in such notice of waiver). 

4 

Section
3.2      Conversion Price. 

The Holder of this Note is
entitled, at its option, at any time, to convert all or any amount of the
principal face amount of this Note then outstanding into shares of the Company's
common stock (the "Common Stock") at a price ("Conversion Price")
for each share of Common Stock equal to 50% of the lowest trading
price of the Common Stock as reported on the OTC Markets
electronic quotation service or such marketplace upon which the Company’s shares
are traded or any exchange upon which the Common Stock may be traded in the
future ("Exchange"), for the twenty prior
trading days including the day upon which a Notice of Conversion is received
by the Company or its transfer agent (provided such Notice of Conversion is
delivered by fax or other electronic method of communication to the Company or
its transfer agent after 4 P.M. Eastern Standard or Daylight Savings Time if the
Holder wishes to include the same day closing price). No fractional shares or
scrip representing fractions of shares will be issued on conversion, but the
number of shares issuable shall be rounded to the nearest whole share. To
the extent the Conversion Price of the Company’s Common Stock closes below the
par value per share, the Company will take all steps necessary to solicit the
consent of the stockholders to reduce the par value to the lowest value possible
under law. The Company agrees to honor all conversions submitted pending this
increase. In the event the Company experiences a DTC “Chill” on its shares,
the conversion price shall be decreased by 10% while that “Chill” is in
effect. 

Section
3.3      Mechanics of Conversion. 

(a)      Not
later than three (3) Trading Days after any Conversion Date, the Company or its
designated transfer agent, as applicable, shall issue and deliver to the
Depository Trust Company ("DTC") account on the Holder's behalf via the Deposit
Withdrawal Agent Commission System ("DWAC") as specified in the Conversion
Notice, registered in the name of the Holder or its designee, for the number of
shares of Common Stock to which the Holder shall be entitled. I n the
alternative, not later than three (3) Trading Days after any Conversion Date,
the Company shall deliver to the applicable Holder by express courier a
certificate or certificates which shall be free of restrictive legends and
trading restrictions (other than those required by Section 5. l of the Purchase
Agreement) representing the number of shares of Common Stock being acquired upon
the conversion of this Note (the "Delivery Date"). 

5 

Notwithstanding the foregoing to the contrary, the Company or
its transfer agent shall only be obligated to issue and deliver the shares to
the OTC on the Holder's behalf via DWAC (or certificates free of restrictive
legends) if such conversion is in connection with a sale and the Holder has
complied with the applicable prospectus delivery requirements. lf in the case of
any Conversion Notice such certificate or certificates are not delivered to or
as directed by the applicable Holder by the Delivery Date, the Holder shall be
entitled by written notice to the Company at any time on or before its receipt
of such certificate or certificates thereafter, to rescind such conversion, in
which event the Company shall immediately return this Note if tendered for
conversion, whereupon the Company and the Holder shall each be restored to their
respective positions immediately prior to the delivery of such notice of
revocation, except that any amounts described in Sections 3.3(b) and (c) shall
be payable through the date notice of rescission is given to the Company. 

(b)      The
Company understands that a delay in the delivery of the shares of Common Stock
upon conversion of this Note beyond the Delivery Date could result in economic
loss to the Holder. If the Company fails to deliver to the Holder such shares
via DWAC or a certificate or certificates pursuant to this Section hereunder by
the Delivery Date, the Company shall pay to such Holder, in cash, an amount per
Trading Day for each Trading Day until such shares are delivered via DWAC or
certificates are delivered, together with interest on such amount at a rate of l
0% per annum, accruing until such amount and any accrued interest thereon is
paid in full, equal to the greater of (A) (i) 1% of the aggregate principal
amount of the Note requested to be converted for the first five (5) Trading Days
after the Delivery Date and (ii) 2% of the aggregate principal amount of the
Note requested to be converted for each Trading Day thereafter and (B) $2,000
per day (which amount shall be paid as liquidated damages and not as a penalty).
Nothing herein shall limit a Holder's right to pursue actual damages for the
Company's failure to deliver certificates representing shares of Common Stock
upon conversion within the period specified herein and such Holder shall have
the right to pursue all remedies available to it at law or in equity (including,
without limitation, a decree of specific performance and/or injunctive relief).
Notwithstanding anything to the contrary contained herein, the Holder shall be
entitled to withdraw a Conversion Notice, and upon such withdrawal the Company
shall only be obligated to pay the liquidated damages accrued in accordance with
this Section 3.3(b) through the date the Conversion Notice is withdrawn. 

(c)      ln
addition to any other rights available to the Holder, if the Company fails
to cause its transfer agent to transmit to the Holder a certificate or
certificates representing the shares of Common Stock issuable upon conversion of
this Note on or before the Delivery Date, and if after such date the Holder is
required by its broker to purchase (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by the Holder of the
shares of Common Stock issuable upon conversion of this Note which the Holder
anticipated receiving upon such exercise (a "Buy- In"), then the
Company shall ( 1) pay in cash to the Holder the amount by which (x) the
Holder's total purchase price (including brokerage commissions, if any) for the
shares of Common Stock so purchased exceeds (y) the amount obtained by multi
plying (A) the number of shares of Common Stock issuable upon conversion of this
Note that the Company was required to deliver to the Holder in connection with
the conversion at issue times (B) the price at which the sell order giving rise
to such purchase obligation was executed, and (2) at the option of the Holder,
either reinstate the portion of the Note and equivalent number of shares of
Common Stock for which such conversion was not honored or deliver to the Holder
the number of shares of Common Stock that would have been issued had the Company
timely complied with its conversion and delivery obligations hereunder. For
example, if the Holder purchases Common Stock having a total purchase price of
$11,000 to cover a Buy-In with respect to an attempted conversion of shares of
Common Stock with an aggregate sale price giving rise to such purchase
obligation of $10,000, under clause (1) of the immediately preceding sentence
the Company shall be required to pay the Holder $1,000. The Holder shall provide
the Company written notice indicating the amounts payable to the Holder in
respect of the Buy-In, together with applicable confirmations and other evidence
reasonably requested by the Company. Nothing herein shall limit a Holder's right
to pursue any other remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or injunctive relief with respect to the
Company's failure to timely deliver certificates representing shares of Common
Stock upon conversion of this Note as required pursuant to the terms hereof.

6 

Section
  3.4      Ownership Cap and Certain Conversion
Restrictions. 

Notwithstanding
anything to the contrary set forth in Section 3 of this Note, at no time may the
Holder convert all or a portion of this Note if the number of shares of Common
Stock to be issued pursuant to such conversion would exceed, when aggregated
with all other shares of Common Stock owned by the Holder at such time, the
number of shares of Common Stock which would result in the Holder beneficially
owning (as determined in accordance with Section l3(d) of the Exchange Act and
the rules thereunder) more than 9.9% of all of the Common Stock outstanding at
such time; provided, however, that upon the Holder providing the Company with
sixty-one (61) days notice (pursuant to Section 4.1 hereof) (the "Waiver
Notice") that the Holder would like to waive this Section 3.4 with regard to any
or all shares of Common Stock issuable upon conversion of this Note, this
Section 3.4 will be of no force or effect with regard to all or a portion of the
Note referenced in the Waiver Notice; provided, further, that this provision
shall be of no further force or effect during the sixty-one (61) days
immediately preceding the Maturity Date. 

Section
3.5      Adjustment of Conversion Price.

(a)      The
Conversion Price shall be subject to adjustment from time to time as follows:

(i)      Adjustments
for Stock Splits and Combinations. If the Company shall at any time or from
time to time after the Issuance Date, effect a stock split of the outstanding
Common Stock, the applicable Conversion Price in effect immediately prior to the
stock split shall be proportionately decreased. If the Company shall at any time
or from time to time after the Issuance Date, combine the outstanding shares of
Common Stock, the applicable Conversion Price in effect immediately prior to the
combination shall be proportionately increased. Any adjustments u nder this
Section 3.5(a)(i) shall be effective at the close of business on the date the
stock split or combination occurs. 

(ii)      Adjustments
for Certain Dividends and Distributions. If the Company shall at any time or
from time to time after the Issuance Date, make or issue or set a record date
for the determination of holders of Common Stock entitled to receive a dividend
or other distribution payable in shares of Common Stock, then, and in each
event, the applicable Conversion Price in effect immediately prior to such event
shall be decreased as of the time of such issuance or, in the event such record
date shall have been fixed, as of the close of business on such record date, by
multiplying, the applicable Conversion Price then in effect by a fraction: 

(1) the numerator of which shall be the total n umber of shares of Common Stock
issued and outstanding immediately prior to the time of such issuance or the
close of business on such record date; and 

(2)
the denominator of which shall be the total number of shares of Common Stock
issued and outstanding immediately prior to the time of such issuance or the
close of business on such record date; plus the number of shares of Common Stock
issuable in payment of such dividend or distribution. 

(iii)     
Adjustment for Other Dividends and Distributions. If the Company shall at
any time or from time to time after the Issuance Date, make or issue or set a
record date for the determination of holders of Common Stock entitled to receive
a dividend or other distribution payable in other than shares of Common Stock,
then, and in each event, an appropriate revision to the applicable Conversion Price shall be made and provision shall be made (by
adjustments of the Conversion Price or otherwise) so that the holders of this
Note shall receive upon conversions thereof, in addition to the number of shares
of Common Stock receivable thereon, the number of securities of the Company
which they would have received had this Note been converted into Common Stock on
the date of such event and had thereafter, during the period from the date of
such event to and including the Conversion Date, retained such securities
(together with any distributions payable thereon during such period), giving
application to all adjustments called for during such period under this Section
3.5(a)(iii ) with respect to the rights of the holders of this Note; provided,
however, that if such record date shall have been fixed and such dividend is not
fully paid or if such distribution is not fully made on the date fixed therefor,
the Conversion Price shall be adjusted pursuant to this paragraph as of the time
of actual payment of such dividends or distributions. 

7 

(iv)      Adjustments
  for Reclassification, Exchange or Substitution. If the Common Stock issuable
  upon conversion of this Note at any time or from time to time after the Issuance
  Date shall be changed to the same or different n umber of shares of any class or
  classes of stock, whether by reclassification, exchange, substitution or
  otherwise (other than by way of a stock split or combination of shares or stock
  dividends provided for in Sections 3.5(a)(i), (ii) and (iii), or a
  reorganization, merger, consolidation, or sale of assets provided for in Section
  3.5(a)(v)), then, and in each event, an appropriate revision to the Conversion
  Price shall be made and provisions shall be made (by adjustments of the
  Conversion Price or otherwise) so that the Holder shall have the right
  thereafter to convert this Note into the kind and amount of shares of stock and
  other securities receivable upon reclassification, exchange, substitution or
  other change, by holders of the number of shares of Common Stock into which such
  Note might have been converted immediately prior to such reclassification,
  exchange, substitution or other change, all subject to further adjustment as
provided herein. 

(v)      Adjustments
for Reorganization, Merger, Consolidation or Sales of Assets. If at any time
or from time to time after the Issuance Date there shall be a capital
reorganization of the Company (other than by way of a stock split or combination
of shares or stock dividends or distributions provided for in Section 3.5(a)(i),
(ii) and (iii), or a reclassification, exchange or substitution of shares
provided for in Section 3.5(a)(iv)), or a merger or consolidation of the Company
with or into another corporation where the holders of outstanding voting
securities prior to such merger or consolidation do not own over fifty percent
(50%) of the outstanding voting securities of the merged or consolidated entity,
immediately after such merger or consolidation, or the sale of all or
substantially all of the Company's properties or assets to any other person (an
"Organic Change"), then as a part of such Organic Change an
appropriate revision to the Conversion Price shall be made and provision shall
be made (by adjustments of the Conversion Price or otherwise) so that the Holder
shall have the right thereafter to convert such Note into the kind and amount of
shares of stock and other securities or property of the Company or any successor
corporation resulting from Organic Change. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Section
3.5(a)(v) with respect to the rights of the Holder after the Organic Change to
the end that the provisions of this Section 3.5(a)(v) (including any adjustment
in the applicable Conversion Price then in effect and the number of shares of
stock or other securities deliverable upon conversion of this Note) shall be
applied after that event in as nearly an equivalent manner as may be
practicable. 

(vi)      Issuance
of Common Stock Equivalents. If the Company, at any time after the Issuance
Date, shall issue any securities convertible into or exchangeable for, directly
or indirectly, Common Stock ("Convertible Securities"), other than the
Note, or any rights or warrants or options to purchase any such Common Stock or
Convertible Securities, shall be issued or sold (collectively, the "Common
Stock Equivalents") and the aggregate of the price per share for which
Additional Shares of Common Stock may be issuable thereafter pursuant to such
Common Stock Equivalent, plus the consideration received by the Company for
issuance of such Common Stock Equivalent divided by the number of shares of Common Stock
issuable pursuant to such Common Stock Equivalent (the "Aggregate Per Common
Share Price") shall be less than the applicable Conversion Price then in
effect, or if, after any such issuance of Common Stock Equivalents, the price
per share for which Additional Shares of Common Stock may be issuable thereafter
is amended or adjusted, and such price as so amended shall make the Aggregate
Per Share Common Price be less than the applicable Conversion Price in effect at
the time of such amendment or adjustment, then the applicable Conversion Price
upon each such issuance or amendment shall be adjusted as provided in the first
sentence of subsection (vi) of this Section 3.5(a) on the basis that (1) the
maximum number of Additional Shares of Common Stock issuable pursuant to all
such Common Stock Equivalents shall be deemed to have been issued (whether or
not such Common Stock Equivalents are actually then exercisable, convertible or
exchangeable in whole or in part) as of the earlier of (A) the date on which the
Company shall enter into a firm contract for the issuance of such Common Stock
Equivalent, or (B) the date of actual issuance of such Common Stock Equivalent.
No adjustment of the applicable Conversion Price shall be made under this
subsection (vii) upon the issuance of any Convertible Security which is issued
pursuant to the exercise of any warrants or other subscription or purchase
rights therefor, if any adjustment shall previously have been made to the
exercise price of such warrants then in effect upon the issuance of such
warrants or other rights pursuant to this subsection (vii). No adjustment shall
be made to the Conversion Price upon the issuance of Common Stock pursuant to
the exercise, conversion or exchange of any Convertible Security or Common Stock
Equivalent where an adjustment to the Conversion Price was made as a result of
the issuance or purchase of any Convertible Security or Common Stock Equivalent. 

8 

(vii)      Consideration
  for Stock. In case any shares of Common Stock or any Common Stock
Equivalents shall be issued or sold: 

(1)      in
connection with any merger or consolidation in which the Company is the
surviving corporation (other than any consolidation or merger in which the
previously outstanding shares of Common Stock of the Company shall be changed to
or exchanged for the stock or other securities of another corporation), the
amount of consideration therefor shall be, deemed to be the fair value, as
determined reasonably and in good faith by the Board of Directors of the
Company, of such portion of the assets and business of the non-surviving
corporation as such Board may determine to be attributable to such shares of
Common Stock, Convertible Securities, rights or warrants or options, as the case
may be; or 

(2)      in
the event of any consolidation or merger of the Company in which the Company is
not the surviving corporation or in which the previously outstanding shares of
Common Stock of the Company shall be changed into or exchanged for the stock or
other securities of another corporation, or in the event of any sale of all or
substantially all of the assets of the Company for stock or other securities of
any corporation, the Company shall be deemed to have issued a number of shares
of its Common Stock for stock or securities or other property of the other
corporation computed on The basis of the actual exchange ratio on which the
transaction was predicated, and for a consideration equal to the fair market
value on the date of such transaction of all such stock or securities or other
property of the other corporation. If any such calculation results in adjustment
of the applicable Conversion Price, or the number of shares of Common Stock
issuable upon conversion of the Note, the determination of the applicable
Conversion Price or the number of shares of Common Stock issuable upon
conversion of the Note immediately prior to such merger, consolidation or sale,
shall be made after giving effect to such adjustment of the number of shares of
Common Stock issuable upon conversion of the Note. In the event Common Stock is
issued with other shares or securities or other assets of the Company for
consideration which covers both, the consideration computed as provided in this
Section 3.5(viii) shall be allocated among such securities and assets as
determined in good faith by the Board of Directors of the Company. 

9 

(b)      Record
Date. In case the Company shall take record of the holders of its Common
Stock for the purpose of entitling them to subscribe for or purchase Common
Stock or Convertible Securities, then the date of the issue or sale of the
shares of Common Stock shall be deemed to be such record date. 

(c)      Certain
Issues Excepted Anything herein to the contrary notwithstanding, the Company
shall not be required to make any adjustment to the Conversion Price in
connection with (i) securities issued (other than for cash) in connection with a
merger, acquisition, or consolidation, (ii) securities issued pursuant to a bona
fide firm underwritten public offering of the Company's securities, (iii)
securities issued pursuant to the conversion or exercise of convertible or
exercisable securities issued or outstanding on or prior to the date hereof or
issued pursuant to the Purchase Agreement, (iv) the shares of Common Stock
issuable upon the exercise of Warrants, (v) securities issued i n connection
with strategic license agreements or other partnering arrangements so long as
such issuances are not for the purpose of raising capital, (vi) Common Stock
issued or options to purchase Common Stock granted or issued pursuant to the
Company's stock option plans and employee stock purchase plans as they now
exist, (vii) the payment of any accrued interest in shares of Common Stock
pursuant to this Note. 

(d)      No
Impairment. The Company shall not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company, but will at all times in good
faith, assist in the carrying out of all the provisions of this Section 3.5 and
in the taking of all such action as may be necessary or appropriate in order to
protect the Conversion Rights of the Holder against impairment. In the event a
Holder shall elect to convert any Note as provided herein, the Company cannot
refuse conversion based on any claim that such Holder or anyo ne associated or
affiliated with such Holder has been engaged in any violation of law, violation
of an agreement to which such Holder is a party or for any reason whatsoever,
unless, an injunction from a court, or notice, restraining and or adjoining
conversion of all or of said Note shall have issued and the Company posts a
surety bond for the benefit of such Holder in an amount equal to one hundred
thirty percent ( 130%) of the amount of the Note the Holder has elected to
convert, which bond shall remain in effect until the completion of
arbitration/litigation of the dispute and the proceeds of which shall be payable
to such Holder in the event it obtains judgment. 

(e)      Certificates
as to Adjustments. Upon occurrence of each adjustment or readjustment of the
Conversion Price or n umber of shares of Common Stock issuable upon conversion
of this Note pursuant to this Section 3.5, the Company at its expense shall
promptly compute such adjustment or readjustment in accordance with the terms
hereof and furnish to the Holder a certificate setting forth such adjustment and
readjustment, showing i n detail the facts upon which such adjustment or
readjustment is based. The Company shall, upon written request of the Holder, at
any time, furnish or cause to be furnished to the Holder a like certificate
setting forth such adjustments and readjustments, the applicable Conversion
Price in effect at the time, and the number of shares of Common Stock and the
amount, if any, of other securities or property which at the time would be
received upon the conversion of this Note. Notwithstanding the foregoing, the
Company shall not be obligated to deliver a certificate unless such certificate
would reflect an increase or decrease of at least one percent (1%) of such
adjusted amount. 

(f)      Issue
Taxes. The Company shall pay any and all issue and other taxes, excluding
federal, state or local income taxes, that may be payable in respect of any
issue or delivery of shares of Common Stock on conversion of this Note pursuant
thereto; provided, however, that the Company shall not be obligated to pay any
transfer taxes resulting from any transfer requested by the Holder in connection
with any such conversion. 

10 

(g)      Fractional
Shares. No fractional shares of Common Stock shall be issued upon conversion
of this Note. In lieu of any fractional shares to which the Holder would
otherwise be entitled, the Company shall pay cash equal to the product of such
fraction multiplied by the average of the Closing Bid Prices of the Common Stock
for the five (5) consecutive Trading Days immediately preceding the Conversion
Date. 

(h)      Reservation
of Common Stock. The Company shall at all times when this Note shall be
outstanding, reserve and keep available out of its authorized but unissued
Common Stock, such number of shares of Common Stock as shall from time to time
be sufficient to effect the conversion of this Note and all interest accrued
thereon; provided that the number of shares of Common Stock so reserved
shall at no time be less than one hundred twenty percent ( 120%) of the number
of shares of Common Stock for which this Note and all interest accrued thereon
are at any time convertible. The Company shall, from time to time in accordance
with Nevada corporate law, increase the authorized number of shares of Common
Stock if at any time the unissued number of authorized shares shall not be
sufficient to satisfy the Company's obligations under this Section 3.5(h) . 

(i)      Regulatory
Compliance. If any shares of Common Stock to be reserved for the purpose of
conversion of this Note or any interest accrued thereon require registration or
listing with or approval of any governmental authority, stock exchange or other
regulatory body under any federal or state law or regulation or otherwise before
such shares may be validly issued or delivered upon conversion, the Company
shall, at its sole cost and expense, i n good faith and as expeditiously as
possible, endeavor to secure such registration, listing or approval, as the case
may be. 

Section
3.6      Prepayment. 

(a)      Prepayment
Upon an Event of Default. Notwithstanding anything to the contrary contained
herein, upon the occurrence of an Event of Default described i n Sections 2.1
(a)-(j)) and 2.1 (m)- (o) hereof, the Holder shall have the right, at such
Holder's option, to require the Company to prepay in cash all or a portion of
this Note at a price equal to one hundred twenty percent (120%) of the aggregate
principal amount of this Note plus all accrued and unpaid interest applicable at
the time of such request (the "Event of Default Prepayment Price").
Nothing i n this Section 3.6(a) shall limit the Holder's rights under Section
2.2 hereof. 

(b)      Prepayment
Option Upon Major Transaction. In addition to all other rights of the Holder
contained herein, simultaneous with the occurrence of a Major Transaction (as
defined in Section 3.6(e) hereof), the Holder shall have the right, at the
Holder's option, to require the Company to prepay all or a portion of the
Holder's Note at a price equal to one hundred ten percent (110%) of the
aggregate principal amount of this Note plus all accrued and unpaid interest
(the "Major Transaction Prepayment Price"). 

(c)      Prepayment
Option Upon Triggering Event. In addition to all other rights of the Holder
contained herein, after a Triggering Event (as defined below), the Holder shall
have the right, at the Holder's option, to require the Company to prepay all or
a portion of this Note in cash at a price equal to the sum of (i) the greater of
(A) one hundred twenty percent (120%) of the aggregate principal amount of this
Note plus all accrued and un paid interest and (B) in the event at such time the
Holder is unable to obtain the benefit of its conversion rights through the
conversion of this Note and resale of the shares of Common Stock issuable upon
conversion hereof in accordance with the terms of this Note and the other
Transaction Documents, the aggregate principal amount of this Note plus all
accrued but unpaid interest hereon, divided by the Conversion Price on (x) the
date the Prepayment Price (as defined below) is demanded or otherwise due or (y)
the date the Prepayment Price is paid in full, whichever is less, multiplied by
the VWAP on (x) the date the Prepayment Price is demanded or otherwise due, and
(y) the date the Prepayment Price is paid in full, whichever is greater, and
(ii) all other amounts, costs, expenses and liquidated damages due in respect of
this Note and the other Transaction Documents (the "Triggering Event Prepayment
Price," and, collectively with the "Major Transaction Prepayment Price," the
"Prepayment Price"). 

11 

(d)      Major
  Transaction.      A "Major Transaction" shall
be deemed to have occurred at such time as any of the following events: 

(i)      the
consolidation, merger or other business combination of the Company with or into
another Person (other than (A) pursuant to a migratory merger effected solely
for the purpose of changing the jurisdiction of incorporation of the Company or
(B) a consolidation, merger or other business combination in which holders of
the Company's voting power immediately prior to the transaction continue after
the transaction to hold, directly or indirectly, the voting power of the
surviving entity or entities necessary to elect a majority of the members of the
board of directors (or their equivalent if other than a corporation) of such
entity or entities); or 

(ii)      the
sale or transfer of more than fifty percent (50%) of the Company's assets (based
on the fair market value as determined in good faith by the Company's Board of
Directors) other than inventory in the ordinary course of business in one or a
related series of transactions; or 

(iii)      closing
of a purchase, tender or exchange offer made to the holders of more than fifty
percent (50%) of the outstanding shares of Common Stock in which more than fifty
percent (50%) of the outstanding shares of Common Stock were tendered and
accepted. 

(e)      Triggering
Event. A "Triggering Event" shall be deemed to have occurred at such time as
any of the following events: 

(i)      the
suspension from listing, without subsequent listing on any one of, or the
failure of the Common Stock to be listed on at least one of the OTC Bulletin
Board, Nasdaq SmallCap Market, Nasdaq National Market, American Stock Exchange
or The New York Stock Exchange, Inc. for a period of five (5) consecutive
Trading Days; 

(ii)      the
Company's notice to any holder of the Note, including by way of public
announcement, at any time, of its inability to comply (including for any of the
reasons described in Section 3.8) or its intention not to comply with proper
requests for conversion of any Note into shares of Common Stock; or (iii) the
Company's failure to comply with a Conversion Notice tendered in accordance with
the provisions of this Note within ten (10) business days after the receipt by
the Company of the Conversion Notice; or 

(iv)      the
Company deregisters its shares of Common Stock and as a result such shares of
Common Stock are no longer publicly traded; or 

(v)      the
Company consummates a ''going private" transaction and as a result the Common
Stock is no longer registered under Sections l 2(b) or 12(g) of the Exchange
Act. 

(f)      Mechanics
of Prepayment at Option of Holder Upon Major Transaction. No sooner than
fifteen (15) days nor later than ten (10) days prior to the consummation of a
Major Transaction, but not prior to the public announcement of such Major
Transaction, the Company shall deliver written notice thereof via facsimile and
overnight courier ("Notice of Major Transaction") to the Holder of this Note. At
any time after receipt of a Notice of Major Transaction (or, in the event a
Notice of Major Transaction is not delivered at least ten (10) days prior to a
Major Transaction, at any time within ten (10) days prior to a Major
Transaction), any holder of the Notes then outstanding may require the Company
to prepay, effective immediately prior to the consummation of such Major
Transaction, all of the holder's Notes then outstanding by delivering written
notice thereof via facsimile and overnight courier ("Notice of Prepayment at
Option of Holder Upon Major Transaction") to the Company, which Notice of
Prepayment at Option of Holder Upon Major Transaction shall indicate (i) the
number of Notes that such holder is electing to prepay and (ii) the applicable
Major Transaction Prepayment Price, as calculated pursuant to Section 3.6(b)
above. 

12 

(g)      Mechanics
  of Prepayment at Option of Holder Upon Triggering Event. Within one (1)
  business day after the occurrence of a Triggering Event, the Company shall
  deliver written notice thereof via facsimile and overnight courier ("Notice of
  Triggering Event") to each holder of the Notes. At any time after the earlier of
  a holder's receipt of a Notice of Triggering Event and such holder becoming
  aware of a Triggering Event, any holder of this Note may require the Company to
  prepay all of the Notes on a pro rata basis by delivering written notice thereof
  via facsimile and overnight courier ("Notice of Prepayment at Option of
    Holder Upon Triggering Event") to the Company, which Notice of Prepayment at
  Option of Holder Upon Triggering Event shall indicate (i) the amount of the Note
  that such holder is electing to have prepaid and (ii) the applicable Triggering
  Event Prepayment Price, as calculated pursuant to Section 3.6(c) above. A holder
  shall only be permitted to require the Company to prepay the Note pursuant to
  Section 3.6 hereof for the greater of a period of ten (10) days after receipt by
  such holder of a Notice of Triggering Event or for so long as such Triggering
Event is continuing. 

(h)      Payment
of Prepayment Price. Upon the Company's receipt of a Notice(s) of Prepayment
at Option of Holder Upon Triggering Event or a Notice(s) of Prepayment at Option
of Holder Upon Major Transaction from any holder of the Notes, the Company shall
immediately notify each holder of the Notes by facsimile of the Company's
receipt of such Notice(s) of Prepayment at Option of Holder Upon Triggering
Event or Notice(s) of Prepayment at Option of Holder Upon Major Transaction and
each holder which has sent such a notice shall promptly submit to the Company
such holder's certificates representing the Notes which such holder has elected
to have prepaid. The Company shall deliver the applicable Triggering Event
Prepayment Price, in the case of a prepayment pursuant to Section 3.6(i), to
such holder within five (5) business days after the Company's receipt of a
Notice of Prepayment at Option of Holder Upon Triggering Event and, in the case
of a prepayment pursuant to Section 3.6(f), the Company shall deliver the
applicable Major Transaction Prepayment Price immediately prior to the
consummation of the Major Transaction; provided that a holder's original Note
shall have been so delivered to the Company; provided further that if the
Company is u nable to prepay all of the Notes to be prepaid, the Company shall
prepay an amount from each holder of the Notes being prepaid equal to such
holder's pro-rata amount (based on the number of Notes held by such holder
relative to the number of Notes outstanding) of all Notes being prepaid. If the
Company shall fail to prepay all of the Notes submitted for prepayment (other
than pursuant to a dispute as to the arithmetic calculation of the Prepayment
Price), in addition to any remedy such holder of the Notes may have under this
Note and the Purchase Agreement, the applicable Prepayment Price payable in
respect of such Notes not prepaid shall bear interest at the rate of two percent
(2%) per month (prorated for partial months) until paid in full. Until the
Company pays such unpaid applicable Prepayment Price in full to a holder of the
Notes submitted for prepayment, such holder shall have the option (the "Void
Optional Prepayment Option") to, in lieu of prepayment, require the Company to
promptly return to such holder(s) all of the Notes that were submitted for
prepayment by such holder(s) under this Section 3.6 and for which the applicable
Prepayment Price has not been paid, by sending written notice thereof to the
Company via facsimile (the "Void Optional Prepayment Notice"). Upon the
Company's receipt of such Void Optional Prepayment Notice(s) and prior to
payment of the full applicable Prepayment Price to such holder, (i) the
Notice(s) of Prepayment at Option of Holder Upon Triggering Event or the
Notice(s) of Prepayment at Option of Holder Upon Major Transaction, as the case
may be, shall be null and void with respect to those Notes submitted for prepayment and for which the applicable
Prepayment Price has not been paid, (ii) the Company shall immediately return
any Notes submitted to the Company by each holder for prepayment under this
Section 3.6(h) and for which the applicable Prepayment Price has not been paid
and (iii) the Conversion Price of such returned Notes shall be adjusted to the
lesser of (A) the Conversion Price as in effect on the date on which the Void
Optional Prepayment Notice(s) is delivered to the Company and (B) the lowest
Closing Bid Price during the period beginning on the date on which the Notice(s)
of Prepayment of Option of Holder Upon Major Transaction or the Notice(s) of
Prepayment at Option of Holder Upon Triggering Event, as the case may be, is
delivered to the Company and ending on the date on which the Void Optional
Prepayment Notice(s) is delivered to the Company; provided that no adjustment
shall be made if such adjustment would result in an increase of the Conversion
Price then in effect. A holder's delivery of a Void Optional Prepayment Notice
and exercise of its rights following such notice shall not effect the Company's
obligations to make any payments which have accrued prior to the date of such
notice. Payments provided for in this Section 3.6 shall have priority to
payments to other stockholders in connection with a Major Transaction. 

13 

(i)      Company
  Prepayment Option upon Major Transaction. Upon the consummation of a Major
  Transaction, the Company may prepay in cash all or any portion of the
  outstanding principal amount of this Note together with all accrued and unpaid
  interest thereon upon at least thirty (30) days prior written notice to the
  Holder (the "Company's Prepayment Notice") at a price equal to one
  hundred twenty percent (120%) of the aggregate principal amount of this Note
  plus any accrued but unpaid interest (the "Company's Prepayment Price");
  provided, however, that if a holder has delivered a Conversion Notice to the
  Company or delivers a Conversion Notice within such thirty (30) day period
  following delivery of the Company's Prepayment Notice, the principal amount of
  the Notes plus any accrued but unpaid interest designated to be converted may
  not be prepaid by the Company and shall be converted in accordance with Section
  3.3 hereof; provided further that if during the period between delivery of the
  Company's Prepayment Notice and the Company's Prepayment Date (as defined
  below), a holder shall become entitled and elects to deliver a Notice of
  Prepayment at Option of Holder Upon Major Transaction or Notice of Prepayment at
  Option of Holder upon Triggering Event, then such rights of the holders shall
  take precedence over the previously delivered Company Prepayment Notice if the
  holder so elects. The Company's Prepayment Notice shall state the date of
  prepayment which date shall be the date of the consummation of the Major
  Transaction (the "Company's Prepayment Date"), the Company's Prepayment Price
  and the principal amount of Notes plus any accrued but unpaid interest to be
  prepaid by the Company. The Company shall deliver the Company's Prepayment Price
  on the Company's Prepayment Date, provided, that if the holder(s) delivers a
  Conversion Notice before the Company's Prepayment Date, then the portion of the
  Company's Prepayment Price which would be paid to prepay the Notes covered by
  such Conversion Notice shall be returned to the Company upon delivery of the
  Common Stock issuable i n connection with such Conversion Notice to the
  holder(s). On the Company's Prepayment Date, the Company shall pay the Company's
  Prepayment Price, subject to any adjustment pursuant to the immediately
  preceding sentence, to the holder(s) on a pro rata basis. If the Company fails
  to pay the Company's Prepayment Price by the third (3rd) business day after the
  Company's Prepayment Date, the prepayment will be declared null and void and the
  Company shall lose its right to serve a Company's Prepayment Notice pursuant to
  this Section 3.6(i) in the future. Notwithstanding the foregoing to the
  contrary, the Company may effect a prepayment pursuant to this Section 3.6(i)
  only if trading in the Common Stock shall not have been suspended by the
  Securities and Exchange Commission or the Nasdaq SmallCap Market (or other
  exchange or market on which the Common Stock is trading), and and the Company is
  in material compliance with the terms and conditions of this Note and the other
Transaction Documents. 

Section
3.7      Inability to Fully Convert. 

(a)      Holder's
Option if Company Cannot Fully Convert. If, upon the Company's receipt of a
Conversion Notice, the Company cannot issue shares of Common Stock for any
reason, including, without limitation, because the Company (w) does not have a
sufficient number of shares of Common Stock authorized and available, or (x) is otherwise
prohibited by applicable law or by the rules or regulations of any stock
exchange, interdealer quotation system or other self-regulatory organization
with jurisdiction over the Company or any of its securities from issuing all of
the Common Stock which is to be issued to the Holder pursuant to a Conversion
Notice, then the Company shall issue as many shares of Common Stock as it is
able to issue in accordance with the Holder's Conversion Notice and, with
respect to the unconverted portion of this Note, the Holder, solely at Holder's
option, can elect to: 

14 

(i)      require
  the Company to prepay that portion of this Note for which the Company is unable
  to issue Common Stock in accordance with the Holder's Conversion Notice (the
  "Mandatory Prepayment") at a price per share equal to the
  Triggering Event Prepayment Price as of such Conversion Date (the "Mandatory
Prepayment Price"); 

(ii)      void
its Conversion Notice and retain or have returned, as the case may be, this Note
that was to be converted pursuant to the Conversion Notice (provided that the
Holder's voiding its Conversion Notice shall not effect the Company's
obligations to make any payments which have accrued prior to the date of such
notice). 

In the event a Holder shall elect to convert any portion of its
Notes as provided herein, the Company cannot refuse conversion based on any
claim that such Holder or anyone associated or affiliated with such Holder has
been engaged in any violation of law, violation of an agreement to which such
Holder is a party or for any reason whatsoever, unless, an injunction from a
court, on notice, restraining and or adjoining conversion of all or of said
Notes shall have been issued and the Company posts a surety bond for the benefit
of such Holder in an amount equal to 130% of the principal amount of the Notes
the Holder has elected to convert, which bond shall remain i n effect until the
completion of arbitration/litigation of the dispute and the proceeds of which
shall be payable to such Holder in the event it obtains judgment. 

(b)      Mechanics
of Fulfilling Holder's Election. The Company shall immediately send via
facsimile to the Holder, upon receipt of a facsimile copy of a Conversion Notice
from the Holder which cannot be fully satisfied as described in Section 3.7(a)
above, a notice of the Company's inability to fully satisfy the Conversion
Notice (the "Inability to Fully Convert Notice"). Such Inability to Fully
Convert Notice shall indicate (i) the reason why the Company is unable to fully
satisfy such holder's Conversion Notice, (ii) the amount of this Note which
cannot be converted and (iii) the applicable Mandatory Prepayment Price. The
Holder shall notify the Company of its election pursuant to Section 3.7(a) above
by delivering written notice via facsimile to the Company ("Notice in
Response to Inability to Convert"). 

(c)      Payment
of Prepayment Price. If the Holder shall elect to have its Notes prepaid
pursuant to Section 3.7(a)(i) above, the Company shall pay the Mandatory
Prepayment Price to the Holder within thirty (30) days of the Company's receipt
of the Holder's Notice in Response to Inability to Convert, provided that prior
to the Company's receipt of the Holder's Notice in Response to Inability to
Convert the Company has not delivered a notice to the Holder stating, to the
satisfaction of the Holder, that the event or condition resulting i n the
Mandatory Prepayment has been cured and all Conversion Shares issuable to the
Holder can and will be delivered to the Holder in accordance with the terms of
this Note. If the Company shall fail to pay the applicable Mandatory Prepayment
Price to the Holder on a timely basis as described in this Section 3.7(c) (other
than pursuant to a dispute as to the determination of the arithmetic calculation
of the Prepayment Price), in addition to any remedy the Holder may have under
this Note and the Purchase Agreement, such unpaid amount shall bear interest at
the rate of two percent (2%) per month (prorated for partial months) until paid
in full. Until the full Mandatory Prepayment Price is paid in full to the
Holder, the Holder may (i) void the Mandatory Prepayment with respect to that
portion of the Note for which the full Mandatory Prepayment Price has not been
paid, (ii) receive back such Note, and (iii) require that the Conversion Price
of such returned Note be adjusted to the lesser of (A) the Conversion Price as
in effect on the date on which the Holder voided the Mandatory Prepayment and (B) the lowest Closing Bid Price during the period
beginning on the Conversion Date and ending on the date the Holder voided the
Mandatory Prepayment. 

15 

(d)      Pro-rata
  Conversion and Prepayment. In the event the Company receives a Conversion
  Notice from more than one holder of the Notes on the same day and the Company
  can convert and prepay some, but not all, of the Notes pursuant to this Section
  3.7, the Company shall convert and prepay from each holder of the Notes electing
  to have its Notes converted and prepaid at such time an amount equal to such
  holder's pro-rata amount (based on the principal amount of the Notes held by
  such holder relative to the principal amount of the Notes outstanding) of all
the Notes being converted and prepaid at such time. 

Section
3.8      No Rights as Shareholder. Nothing
contained in this Note shall be construed as conferring upon the Holder, prior
to the conversion of this Note, the right to vote or to receive dividends or to
consent or to receive notice as a shareholder in respect of any meeting of
shareholders for the election of directors of the Company or of any other
matter, or any other rights as a shareholder of the Company. 

ARTICLE IV 

MISCELLANEOUS 

Section
4.1      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 by
telex (with correct answer back received), telecopy or facsimile at the address
or number designated in the Purchase Agreement (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 Company will give written notice to
the Holder at least ten (10) days prior to the date on which the Company takes a
record (x) with respect to any dividend or distribution upon the Common Stock,
(y) with respect to any pro rata subscription offer to holders of Common Stock
or (z) for determining rights to vote with respect to any Organic Change,
dissolution, liquidation or winding-up and in no event shall such notice be
provided to such holder prior to such information being made known to the
public. The Company will also give written notice to the Holder at least ten
(10) days prior to the date on which any Organic Change, dissolution,
liquidation or winding-up will take place and in no event shall such notice be
provided to the Holder prior to such information being made known to the public.

Section
4.2      Governing Law. This Note shall be
governed by and construed in accordance with the internal laws of the State of
Nevada, without giving effect to any of the conflicts of law principles which
would result in the application of the substantive law of another jurisdiction.
This Note shall not be interpreted or construed with any presumption against the
party causing this Note to be drafted. 

Section
4.3      Headings. Article and section
headings in this Note are included herein for purposes of convenience of
reference only and shall not constitute a part of this Note for any other
purpose. 

Section
4.4      Remedies, Characterizations, Other
Obligations, Breaches and Injunctive Relief. The remedies provided in
this Note shall be cumulative and in addition to all other remedies available
under this Note, at law or in equity (including, without limitation, a decree of
specific performance and/or other injunctive relief), no remedy contained herein
shall be deemed a waiver of compliance with the provisions giving rise to such
remedy and nothing herein shall limit a holder's right to pursue actual damages for any failure by the Company to
comply with the terms of this Note. Amounts set forth or provided for herein
with respect to payments, conversion and the like (and the computation thereof)
shall be the amounts to be received by the holder thereof and shall not, except
as expressly provided herein, be subject to any other obligation of the Company
(or the performance thereof). The Company acknowledges that a breach by it of
its obligations hereunder will cause irreparable and material harm to the Holder
and that the remedy at law for any such breach may be inadequate. Therefore the
Company agrees that, in the event of any such breach or threatened breach, the
Holder shall be entitled, in addition to all other available rights and
remedies, at law or in equity, to seek and obtain such equitable relief,
including but not limited to an injunction restraining any such breach or
threatened breach, without the necessity of showing economic loss and without
any bond or other security being required. 

16 

Section
  4.5      Enforcement Expenses. The Company
  agrees to pay all costs and expenses of enforcement of this Note, including,
without limitation, reasonable attorneys' fees and expenses. 

Section
4.6      Binding Effect. The obligations of
the Company and the Holder set forth herein shall be binding upon the successors
and assigns of each such party, whether or not such successors or assigns are
permitted by the terms hereof. 

Section
4.7      Amendments. This Note may not be
modified or amended many manner except in writing executed by the Company and
the Holder. 

Section
4.8      Compliance with Securities Laws.
The Holder of this Note acknowledges that this Note is being acquired solely for
the Holder's own account and not as a nominee for any other party, and for
investment, and that the Holder shall not offer, sell or otherwise dispose of
this Note. This Note and any Note issued in substitution or replacement therefor
shall be stamped or imprinted with a legend in substantially the following form:

	
      "THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
      ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS,
      AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
      RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL IN THE FORM, SUBSTANCE AND
      SCOPE REASONABLY SATISFACTORY TO THE COMPANY THAT THIS NOTE MAY BE SOLD,
      TRANSFERRED, HYPOTHECATED OR OTHERWISE DISPOSED OF, UNDER AN EXEMPTION
      FROM REGISTRATION UNDER THE ACT AND SUCH STATE SECURITIES LAWS."
  

Section
4.9      Consent to Jurisdiction. Each of
the Company and the Holder (i) hereby irrevocably submits to the exclusive
jurisdiction of the State of Nevada for the purposes of any suit, action or
proceeding arising out of or relating to this Note and (ii) hereby waives, and
agrees not to assert in any such suit, action or proceeding, any claim that it
is not personally subject to the jurisdiction of such court, that the suit,
action or proceeding is brought in an inconvenient forum or that the venue of
the suit, action or proceeding is improper. Each of the Company and the Holder
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address in effect for notices to it
under the Purchase Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing in this Section
4.9 shall affect or limit any right to serve process in any other manner
permitted by law. Each of the Company and the Holder hereby agree that the
prevailing party in any suit, action or proceeding arising out of or relating to
this Note shall be entitled to reimbursement for reasonable legal fees from the
non-prevailing party. 

17 

Section
4.10      Parties in Interest. This Note
shall be binding upon, inure to the benefit of and be enforceable by the
Company, the Holder and their respective successors and permitted assigns. 

Section
4.1 1      Failure or Indulgence Not
Waiver. No failure or delay on the part of the Holder in the exercise of any
power, right or privilege hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or privilege.

Section
4.12      Company Waivers. Except as
otherwise specifically provided herein, the Company and all others that may
become liable for all or any part of the obligations evidenced by this Note,
hereby waive presentment, demand, notice of nonpayment, protest and all other
demands' and notices in connection with the delivery, acceptance, performance
and enforcement of this Note, and do hereby consent to any number of renewals of
extensions of the time or payment hereof and agree that any such renewals or
extensions may be made without notice to any such persons and without affecting
their liability herein and do further consent to the release of any person
liable hereon, all without affecting the liability of the other persons, firms
or Company liable for the payment of this Note, AND DO HEREBY WAIVE TRlAL BY
JURY. 

(a)      No
delay or omission on the part of the Holder in exercising its rights under this
Note, or course of conduct relating hereto, shall operate as a waiver of such
rights or any other right of the Holder, nor shall any waiver by the Holder of
any such right or rights on any one occasion be deemed a waiver of the same
right or rights on any future occasion. 

(b)      THE
COMPANY ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS NOTE IS A PART IS A
COMMERCIAL TRANSACTION, AND TO THE EXTENT ALLOWED BY APPLICA BLE LAW, HEREBY
WAIVES ITS RIGHT TO NOTICE AND HEARING WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH THE HOLDER OR ITS
SUCCESSORS OR ASSIGNS MAY DESIRE TO USE. 

18 

	LITHIUM EXPLORATION GROUP, INC. 
	  	 	  
	  	 	  
	By: 	
    
		Name: 	Alexander Walsh 
		Title: 	Chief Executive Officer

FORM OF 

NOTICE OF CONVERSION 

(To be Executed by the Registered Holder in order to Convert the
Note) 

The undersigned hereby irrevocably elects to convert
$                       of
the principal amount of the above Note No. _ into shares of Common Stock of
Lithium Exploration Group, Inc. (the "Company") according to the conditions
hereof, as of the date written below. 

Date of Conversion:
________________________________________________________________________

ApplicableConversion Price:
__________________________________________________________________

Number of shares of Common Stock beneficially owned or deemed
beneficially owned by the Holder on the Date of Conversion:
_________________

Signature:           ____________________________________________________________________________

Print Name:       
____________________________________________________________________________

 Address:           
____________________________________________________________________________

                          
____________________________________________________________________________Lithium Exploration Group, Inc. - Exhibit 10.99 - Filed by newsfilecorp.com

PURCHASE AGREEMENT 

THIS PURCHASE AGREEMENT,
dated as of May 2, 2017, is entered into by and among Lithium Exploration
Group, Inc., a Nevada corporation (the "Company"), and JDF Capital Inc. (the
"Purchaser"). 

WITNESSETH: 

WHEREAS, the Company and
the Purchaser are executing and delivering this Agreement in accordance with and
in reliance upon the exemption from securities registration for offers and sales
to accredited investors afforded, inter alia, by Rule 506 under
Regulation D ("Regulation D") as promulgated by the United States Securities and
Exchange Commission (the "SEC") under the Securities Act of l 933, as amended
(the "1933 Act"), and/or Section 4(2) of the 1933 Act; and 

WHEREAS, the Purchaser
wishes to purchase a 10% Original Issue Discount (“OID) Convertible Promissory
Note of the Company (the "Note"), i n t h e o r i g i n a l p r i n c i p a l a
m o u n t o f $ 2 8 , 6 0 0 . 0 0 , subject to and upon the terms and conditions
of this Agreement and acceptance of this Agreement by the Company, on the terms
and conditions referred to herein. 

NOW THEREFORE, in
consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows: 

1.    
AGREEMENT TO PURCHASE; PURCHASE PRICE. 

a.    
Purchase. 

(i)    
Subject to the terms and conditions of this Agreement and the other Transaction
Documents, the Purchaser hereby agrees to purchase a Note in the aggregate
amount of $26,000.00 (the "Purchase Amount"), which Note shall be funded on the
Closing Date as described therein. 

$25,000.00 of the Note shall be funded
directly to the company ($26,000.00 minus $1000.00 document prep fees) and
issued by May 2, 2017 (the “Closing Date”) 

(ii)     The
Note referred to herein shall be in the form of Annex I annexed hereto.

(iii)     The
purchase of the Note by the Purchaser and the other transactions contemplated
hereby are sometimes referred to herein and in the other Transaction Documents
as the purchase and sale of the Securities (as defined below), and are referred
to collectively as the "Transactions". 

(iv)     The
Purchaser shall deliver the Purchase Amount to counsel for the Company, which
Purchase Amount shall be held in trust until authorized for release to the
Company by written instruction of the Purchaser. The Purchase Amount shall be
promptly returned to the Purchaser if not authorized for release by the
Purchaser by the Closing Date. 

1

b.    
Certain Definitions. As used herein, each of the following
terms has the meaning set forth below, unless the context otherwise requires:

"Affiliate" means, with respect
to a specific Person referred to in the relevant provision, another Person who
or which controls or is controlled by or is under common control with such
specified Person. 

"Certificate" means the original
signed Note duly executed by the Company. 

"Closing Date" means the date of
the closing of the issuance of Note. 

"Common Stock Equivalents" means
any securities of the Company or the Subsidiaries which would entitle the holder
thereof to acquire at any time Common Stock, including without limitation, any
debt, preferred stock, rights, options, warrants or other instrument that is at
any time convertible into or exchangeable for, or otherwise entitles the holder
thereof to receive, Common Stock. 

"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 (as defined below). 

"Conversion Shares" means shares
of Common Stock underlying and issuable upon conversions of the Note funded
herein and to be funded pursuant to the second tranche in Section 1a.(v). 

"Exchange Act" means the
Securities Exchange Act of 1934, as amended. 

"Holder" means the Person holding
  the relevant Securities at the relevant time. 

"Last Audited Date" means December
  31 , 2014. 

"Purchaser Control Person" means
each director, executive officer, promoter, and such other Persons as may be
deemed in control of the Purchaser pursuant to Rule 405 under the 1933 Act or
Section 20 of the 1934 Act. 

"Material Adverse Effect" means
an event or combination of events, which individually or in the aggregate, would
reasonably be expected to (w) adversely affect the legality, validity or
enforceability of the Securities or any of the Transaction Documents, (x) have
or result in a material adverse effect on the results of operations, assets,
prospects, or condition (financial or otherwise) of the Company and its
subsidiaries, taken as a whole, (y) adversely impair the Company's ability to
perform fully on a timely basis its obligations under any of the Transaction
Documents or the transactions contemplated thereby, or (z) materially and
adversely affect the value of the rights granted to the Purchaser in the
Transaction Documents. 

2

"Person" means any living person
or any entity, such as, but not necessarily limited to, a corporation,
partnership or trust. 

"Principal Trading Market" means
the Over the Counter Bulletin Board or such other market on which the Common
Stock is principally traded at the relevant time. 

"Securities" means the Note, the
Conversion Shares, the Warrants and the Warrant Shares, and any shares of common
stock of the Company that may be issued to the Purchaser in connection with any
other agreements between the parties. 

"Shares" means the shares of
representing any or all of the Conversion Shares. 

"State of Incorporation" means
Nevada. 

"Subsidiary" means any subsidiary
of the Company. 

"Trading Day" means any day
during which the Principal Trading Market shall be open for business. 

"Transfer Agent" means, at any
time, the transfer agent for the Company's Common Stock. 

"Transaction Documents" means
this Purchase Agreement and the Note, and includes all ancillary documents
referred to in those agreements. 

c.    
Form of Payment; Delivery of Certificates. 

(i)     The
Purchaser shall pay the Purchase Amount payable under the Note by delivering
immediately available good funds in United States Dollars to the Company on the
applicable Closing Date. 

(ii)     On
the applicable Closing Date, the Company shall deliver the Note duly executed on
behalf of the Company to the Purchaser. 

(iii)     By
signing this Agreement, each of the Purchaser and the Company agrees to all of
the terms and conditions of the Transaction Documents, all of the provisions of
which are incorporated herein by this reference as if set forth in full. 

3

2.    
PURCHASER REPRESENTATIONS, ETC.; ACCESS TO INFORMATION;
INDEPENDENT INVESTIGATION. 

The Purchaser represents and
warrants to, and covenants and agrees with, the Company as follows: 

a.    
Without limiting Purchaser's right to sell the Securities pursuant to an
effective registration statement or otherwise in compliance with the 1933 Act,
the Purchaser is purchasing the Securities for its own account for investment
only and not with a view towards the public sale or distribution thereof and not
with a view to or for sale in connection with any distribution thereof. 

b.    
The Purchaser is (i) an "accredited investor" as that term is defined in Rule
501 of the General Rules and Regulations under the 1933 Act by reason of Rule
501(a)(3), (ii) experienced in making investments of the kind described in this
Agreement and the related documents, (iii) able, by reason of the business and
financial experience of its officers (if an entity) and professional advisors
(who are not affiliated with or compensated in any way by the Company or any of
its Affiliates or selling agents), to protect its own interests in connection
with the transactions described in this Agreement, and the related documents,
and to evaluate the merits and risks of an investment in the Securities, and
(iv) able to afford the entire loss of its investment in the Securities. 

c.     All
subsequent offers and sales of the Securities by the Purchaser shall be made
pursuant to registration of the relevant Securities under the 1933 Act or
pursuant to an exemption from registration. 

d.    
The Purchaser understands that the Securities are being offered and sold to it
in reliance on specific exemptions from the registration requirements of the
1933 Act and state securities laws and that the Company is relying upon the
truth and accuracy of, and the Purchaser's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of the Purchaser set
forth herein in order to determine the availability of such exemptions and the
eligibility of the Purchaser to acquire the Securities. 

e.     The
Purchaser and its advisors, if any, have been furnished with or have been given
access to all materials relating to the business, finances and operations of the
Company and materials relating to the offer and sale of the Securities which
have been requested by the Purchaser, including those set forth on i n any
annex attached hereto. The Purchaser and its advisors, if any, have been
afforded the opportunity to ask questions of the Company and its management and
have received complete and satisfactory answers to any such inquiries. Without
limiting the generality of the foregoing, the Purchaser has also had the
opportunity to obtain and to review the Company's filings on EDGAR
(collectively, the "Company's SEC Documents"). 

f.    
The Purchaser understands that its investment in the Securities involves a high
degree of risk. 

g.     The
Purchaser hereby represents that, in connection with its purchase of the Securities, it has not relied on any statement or
representation by the Company or any of its officers, directors and employees or
any of their respective attorneys or agents, except as specifically set forth
herein. 

4

h.    
The Purchaser understands that no United States federal or state agency or
any other government or governmental agency has passed on or made any
recommendation or endorsement of the Securities. 

i.    
This Agreement and the other Transaction Documents to which the Purchaser is
a party, and the transactions contemplated thereby, have been duly and validly
authorized, executed and delivered on behalf of the Purchaser and are valid and
binding agreements of the Purchaser enforceable in accordance with their
respective terms, subject as to enforceability to general principles of equity
and to bankruptcy, insolvency, moratorium and other similar laws affecting the
enforcement of creditors' rights generally. 

3.    
COMPANY REPRESENTATIONS, ETC. The Company represents and warrants to
the Purchaser as of the date hereof and as of the Closing Date. 

a.    
Rights of Others Affecting the Transactions. There are no preemptive
rights of any shareholder of the Company, as such, to acquire the Note, or any
shares of the Company's common stock that may be issued to the Purchaser in
connection with any other agreements between the parties, in the event such
shares are issued. No party other than a Purchaser has a currently exercisable
right of first refusal which would be applicable to any or all of the
transactions contemplated by the Transaction Documents. 

b.    
Status. The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Incorporation and has the
requisite corporate power to own its properties and to carry on its business as
now being conducted. The Company is duly qualified as a foreign corporation to
do business and is in good standing in each jurisdiction where the nature of the
business conducted or property owned by it makes such qualification necessary,
other than those jurisdictions in which the failure to so qualify would not have
or result in a Material Adverse Effect. The Company has registered its stock and
is obligated to file reports pursuant to Section 12 or Section 15(d) of the Securities Exchange Act of
1934, as amended (the "1934 Act"). The Common Stock is, or immediately following
the Closing Date will be, quoted on the Principal Trading Market. The Company
has received no notice, either oral or written, with respect to the continued
eligibility of the Common Stock for such quotation on the Principal Trading
Market, and the Company has maintained all req uirements on its part for the
continuation of such quotation. 

5

c.    
Authorized Shares. 

(i)     The
authorized capital stock of the Company consists of 1 0 , 0 00,000,000 shares of
Common Stock, $0.001 par value. 

(ii)     The
Company has sufficient authorized and unissued shares of Common Stock as may be
necessary to effect the issuance of the Shares on the Closing Date. 

(iii)     As
of the Closing Date, the Shares shall have been duly authorized by all necessary
corporate action on the part of the Company, and, when issued pursuant to the
relevant provisions of the Transaction Documents, in each case in accordance
with their respective terms, will be duly and validly issued, fully paid and
non-assessable and will not subject the Holder thereof to personal liability by
reason of being such Holder. 

d.    
Transaction Documents and Stock. This Agreement and each of the other
Transaction Documents, and the transactions contemplated thereby, have been duly
and validly authorized by the Company, this Agreement has been duly executed and
delivered by the Company and this Agreement is, and the Note and each of the
other Transaction Documents, when executed and delivered by the Company, will
be, valid and binding agreements of the Company enforceable in accordance with
their respective terms, subject as to enforceability to general principles of
equity and to bankruptcy, insolvency, moratorium, and other similar laws
affecting the enforcement of creditors' rights generally. 

e.    
Non-contravention. The execution and delivery of this Agreement and
each of the other Transaction Documents by the Company, the issuance of the
Securities, and the consummation by the Company of the other transactions
contemplated by this Agreement, each of the Notes and the other Transaction
Documents do not and will not conflict with or result in a breach by the Company
of any of the terms or provisions of, or constitute a default under (i) the
certificate of incorporation or by-laws of the Company, each as currently in
effect, (ii) any indenture, mortgage, deed of trust, or other material agreement
or instrument to which the Company is a party or by which it or any of its
properties or assets are bound, including any listing agreement for the Common
Stock except as herein set forth, or (ii i) to its knowledge, any existing
applicable law, rule, or regulation or any applicable decree, judgment, or order
of any court, United States federal or state regulatory body, administrative
agency, or other governmental body having jurisdiction over the Company or any
of its properties or assets, except such conflict, breach or default which would
not have or result in a Material Adverse Effect. 

f.    
Approvals. No authorization, approval or consent of any court,
governmental body, regulatory agency, self-regulatory organization, or stock
exchange or market or the shareholders of the Company is required to be obtained by
the Company for the issuance and sale of the Securities to the Purchaser as
contemplated by this Agreement, except such authorizations, approvals and
consents that have been obtained. 

6

g.    
Filings. None of the Company's SEC Documents contained, at the time
they were filed, any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
made therein in light of the circumstances under which they were made, not
misleading. 

h.    
Absence of Certain Changes. Since the Last Audited Date, there has
been no material adverse change and no Material Adverse Effect, except as
disclosed in the Company's SEC Documents. Since the Last Audited Date, except as
provided in the Company's SEC Documents, the Company has not (i) incurred or
become subject to any material liabilities (absolute or contingent) except
liabilities incurred in the ordinary course of business consistent with past
practices; (ii) discharged or satisfied any material lien or encumbrance or paid
any material obligation or liability (absolute or contingent), other than
current liabilities paid in the ordinary course of business consistent with past
practices; (iii) declared or made any payment or distribution of cash or other
property to shareholders with respect to its capital stock, or purchased or
redeemed, or made any agreements to purchase or redeem, any shares of its
capital stock; (iv) sold, assigned or transferred any other tangible assets, or
canceled any debts owed to the Company by any third party or claims of the
Company against any third party, except in the ordinary course of business
consistent with past practices; (v) waived any rights of material value, whether
or not in the ordinary course of business, or suffered the loss of any material
amount of existing business; (vi) made any increases in employee compensation,
except in the ordinary course of business consistent with past practices; or
experienced any material problems with labor or management in connection with
the terms and conditions of their employment. 

i.    
Full Disclosure. To the best of the Company's knowledge, there is no
fact known to the Company (other than general economic conditions known to the
public generally or as disclosed in the Company's SEC Documents) that has not
been disclosed in writing to the Purchaser that would reasonably be expected to
have or result in a Material Adverse Effect. 

j.    
Absence of Litigation. Except as disclosed in the SEC Reports, there is no
action, suit, proceeding, inquiry or investigation before or by any court,
public board or body pending or, to the knowledge of the Company, threatened
against or affecting the Company before or by any governmental authority or
nongovernmental department, commission, board, bureau, agency or instrumentality
or any other person, wherein an unfavorable decision, ruling or finding would
have a Material Adverse Effect or which would adversely affect the validity or
enforceability of, or the authority or ability of the Company to perform its
obligations under, any of the Transaction Documents. The Company is not aware of
any valid basis for any such claim that (either individually or in the aggregate
with all other such events and circumstances) could reasonably be expected to
have a Material Adverse Effect. There are no outstanding or unsatisfied
judgments, orders, decrees, writs, injunctions or stipulations to which the
Company is a party or by which it or any of its properties is bound, that
involve the transaction contemplated herein or that, alone or i n the aggregate,
could reasonably be expect to have a Material Adverse Effect. 

7

k.    
Absence of Events of Default. Except as set forth in Section 3(e) and
3(g) hereof, (i) neither the Company nor any of its subsidiaries is in default
in the performance or observance of any material obligation, agreement, covenant
or condition contained in any material indenture, mortgage, deed of trust or
other material agreement to which it is a party or by which its property is
bound, and (ii) no Event of Default (or its equivalent term), as defined in the
respective agreement to which the Company or its subsidiary is a party, and no
event which, with the giving of notice or the passage of time or both, would
become an Event of Default (or its equivalent term) (as so defined in such
agreement), has occurred and is continuing, which would have a Material Adverse
Effect. 

I.    
No Undisclosed Liabilities or Events. To the best of the Company's
knowledge, the Company has no liabilities or obligations other than those
disclosed in the Transaction Documents or the Company's SEC Documents or those
incurred in the ordinary course of the Company's business since the Last Audited
Date, or which individually or in the aggregate, do not or would not have a
Material Adverse Effect. No event or circumstances has occurred or exists with
respect to the Company or its properties, business, operations, condition
(financial or otherwise), or results of operations, which, under applicable law,
rule or regulation, requires public disclosure or announcement prior to the date
hereof by the Company but which has not been so publicly announced or disclosed.
There are no proposals currently under consideration or currently anticipated to
be under consideration by the Board of Directors or the executive officers of
the Company which proposal would (x) change the articles or certificate of
incorporation or other charter document or by-laws of the Company, each as
currently in effect, with or without shareholder approval, which change would
reduce or otherwise adversely affect the rights and powers of the shareholders
of the Common Stock or (y) materially or substantially change the business,
assets or capital of the Company, including its interests in subsidiaries. 

m.    
No Integrated Offering. Neither the Company nor any of its Affiliates
nor any Person acting on its or their behalf has, directly or indirectly, at any
time since D e c e m b e r 3 1 , 2 0 0 7 , made any offer or sales of any
security or solicited any offers to buy any security under circumstances that
would eliminate the availability of the exemption from registration under
Regulation D in connection with the offer and sale of the Securities as
contemplated hereby. 

n.    
Dilution. Any shares of the Company's common stock issued to the
Purchaser in connection with any agreements between the parties hereto, in the
event such shares are issued may have a dilutive effect on the ownership
interests of the other shareholders (and Persons having the right to become
shareholders) of the Company. The Company's executive officers and directors
have studied and fully understand the nature of the Securities being sold hereby
and recognize that they have such 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. 

o.    
Confirmation. The Company confirms that all statements of the Company
contained herein shall survive acceptance of this Agreement by the Purchaser.
The Company agrees that, if any events occur or circumstances exist prior to the
Closing Date or the release of the Purchase Amount to the Company which would
make any of the Company's representations, warranties, agreements or other
information set forth herein materially untrue or materially inaccurate as of
such date, the Company shall immediately notify the Purchaser (directly or
through its counsel, if any) in writing prior to such date of such fact,
specifying which representation, warranty or covenant is affected and the reasons therefor. 

p.    
Authorization; Enforcement. The Company has the requisite corporate
power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations thereunder. The execution and delivery of each of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary action on the
part of the Company and no further action is required by the Company in
connection therewith. Each Transaction Agreement has been (or upon delivery will
have been) duly executed by the Company and, when delivered in accordance with
the terms hereof, will constitute the valid and binding obligation of the
Company enforceable against the Company i n accordance with its terms except (i)
as limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors' rights
generally and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies. 

q.    
SEC Reports; Financial Statements. Other than as previously disclosed
to the Purchaser, the Company has filed all reports required to be filed by it
under the Exchange Act, including pursuant to Section l 3(a) or 15(d) thereof,
for the two years preceding the date hereof (or such shorter period as the
Company was required by law to file such material) (the foregoing materials,
including the exhibits thereto, being collectively referred to herein as the
"SEC Reports") on a timely basis or has received a valid extension of such time
of filing and has filed any such SEC Reports prior to the expiration of any such
extension. As of their respective dates, the SEC Reports complied in all
material respects with the requirements of the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of the Company comply
in all material respects with applicable accounting requirements and the rules
and regulations of the Commission with respect thereto as in effect at the time
of filing. Such financial statements have been prepared in accordance with
United States generally accepted accounting principles applied on a consistent
basis during the periods involved ("GAAP"), except as may be otherwise specified
in such financial statements or the notes thereto and except that unaudited
financial statements may not contain all footnotes required by GAAP, and fairly
present in all material respects the financial position of the Company and its
consolidated subsidiaries as of and for the dates thereof and the results of
operations and cash flows for the periods then ended, subject, in the case of
unaudited statements, to normal, immaterial, year-end audit adjustments. 

r.    
Sarbanes-Oxley; Internal Accounting Controls. Except as disclosed in
the SEC Reports, the Company is in material compliance with all provisions of
the Sarbanes-Oxley Act of 2002 which are applicable to it as of the Closing
Date. The Company and the Subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management's general or
specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences. The Company has established disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such
disclosure controls and procedures to ensure that material information relating
to the Company, including its Subsidiaries, is made known to the certifying
officers by others within those entities, particularly during the period in
which the Company's most recently filed periodic report under the Exchange Act,
as the case may be, is being prepared. The Company's certifying officers have
evaluated the effectiveness of the Company's controls and procedures as of the
date prior to the filing date of the most recently filed periodic report under
the Exchange Act (such date, the "Evaluation Date"). The Company presented in
its most recently filed periodic report under the Exchange Act the conclusions
of the certifying officers about the effectiveness of the disclosure controls
and procedures based on their evaluations as of the Evaluation Date. Since the
Evaluation Date, there have been no significant changes in the Company's
internal controls (as such term is defined in Item 307(b) of Regulation S-K u
nder the Exchange Act) or, to the Company's knowledge, in other factors that
could significantly affect the Company's internal controls. 

s.    
Tax Status. Except for matters that would not, individually or in the aggregate,
have or reasonably be expected to result in a Material Adverse Effect, the
Company and each Subsidiary has filed all necessary federal, state and foreign
income and franchise tax returns and has paid or accrued all taxes shown as due
thereon, and the Company has no knowledge of a tax deficiency which has been
asserted or threatened against the Company or any Subsidiary, has no knowledge
of a tax deficiency which has been asserted
or threatened against the Company or any Subsidiary. 

t.     No
Disagreements with Accountants and Lawyers. There are no disagreements of
any kind presently existing, or reasonably anticipated by the Company to arise,
between the accountants and lawyers formerly or presently employed by the
Company and the Company is current with respect to any fees owed to its
accountants and lawyers. By making this representation the Company does not, in
any manner, waive the attorney/client privilege or the confidentiality of the
communications between the Company and its lawyers. 

4.    
CERTAIN COVENANTS AND ACKNOWLEDGMENTS. 

a.    
Transfer Restrictions. The Purchaser acknowledges that (I ) the
Securities have not been and are not being registered under the provisions of
the 1933 Act and, the Shares have not been and are not being registered under
the 1933 Act, and may not be transferred unless (A) subsequently registered
thereunder or (B) the Purchaser shall have delivered to the Company an opinion
of counsel, reasonably satisfactory in form, scope and substance to the Company,
to the effect that the Securities to be sold or transferred may be sold or
transferred pursuant to an exemption from such registration; (2) any sale of the
Securities made in reliance on Rule 144 promulgated under the 1933 Act ("Rule
144") may be made only in accordance with the terms of said Rule and further, if
said Rule is not applicable, any resale of such Securities under circumstances
in which the seller, or the Person through whom the sale is made, may be deemed
to be an underwriter, as that term is used in the 1933 Act, may require
compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder; and (3) neither the Company nor any other
Person is under any obligation to register the Securities under the 1933 Act or
to comply with the terms and conditions of any exemption thereunder. 

b.    
Restrictive Legend. The Purchaser acknowledges and agrees that the
certificates and other instruments representing any of the Securities shall bear
a restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of any such Securities): 

	
      "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE
      AND MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE
      REGISTRATION STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL OR
      OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT
      REQUIRED." 

c.    
Filings. The Company undertakes and agrees to make all necessary filings
in connection with the sale of the Securities to the Purchaser under any United
States laws and regulations applicable to the Company, or by any domestic
securities exchange or trading market, and to provide a copy thereof to the
Purchaser promptly after such fi ling. 

d.    
Reporting Status. So long as the Purchaser beneficially owns any of the
Securities, the Company shall file all reports required to be filed with the SEC
pursuant to Section 13 or l 5(d) of the 1934 Act, shall take all reasonable
action under its control to ensure that adequate current public information with
respect to the Company, as required in accordance with Rule 144(c)(2) of the
1933 Act, is publicly available, and shall not terminate its status as an issuer
required to file reports under the 1934 Act even if the 1934 Act or the rules
and regulations thereunder would permit such termination. The Company will take
all reasonable action under its control to maintain the continued listing and
quotation and trading of its Common Stock on the Principal Trading Market or a
listing on the NASDAQ/Small Cap or National Markets and, to the extent
applicable to it, will comply in all material respects with the Company's
reporting, filing and other obligations under the by-laws or rules of the
Principal Trading Market and/or the National Association of Securities Dealers,
Inc., as the case may be, applicable to it for so long as the Purchaser
beneficially owns any of the Securities. 

e.     Use
of Proceeds. The Company will use the proceeds received hereunder (excluding
amounts paid by the Company for legal fees in connection with the sale of the
Securities) for working capital. 

f.    
Publicity, Filings, Releases, Etc. Each of the parties agrees that it
will not disseminate any information relating to the Transaction Documents or
the transactions contemplated thereby, including issuing any press releases,
holding any press conferences or other forums, or filing any reports
(collectively, "Publicity"), without giving the other party reasonable advance
notice and an opportunity to comment on the contents thereof. Neither party will
include in any such Publicity any statement or statements or other material to
which the other party reasonably objects, unless i n the reasonable opinion of
counsel to the party proposing such statement, such statement is legally
required to be included. In furtherance of the foregoing, the Company will
provide to the Purchaser drafts of the applicable text of the first filing of a
Current Report on Form 8-K or a Quarterly or Annual Report on Form 10-Q or 10-K
intended to be made with the SEC which refers to the Transaction Documents or
the transactions contemplated thereby as soon as practicable (but at least two
(2) Trading Days before such filing will be made) will not include in such
filing any statement or statements or other material to which the other party
reasonably objects, unless in the reasonable opinion of counsel to the party
proposing such statement, such statement is legally required to be included.
Notwithstanding the foregoing, each of the parties hereby consents to the
inclusion of the text of the Transaction Documents in filings made with the SEC
as well as any descriptive text accompanying or part of such filing which is accurate and
reasonably determined by the Company's counsel to be legally required.
Notwithstanding, but subject to, the foregoing provisions of this Section 4(i),
the Company will, after the Closing Date, promptly file a Current Report on Form
8-K or, if appropriate, a quarterly or annual report on the appropriate form,
referring to the transactions contemplated by the Transaction Documents. 

5.    
TRANSFER AGENT INSTRUCTIONS. 

a.    
The Company warrants that, with respect to the Securities, other than the stop
transfer instructions to give effect to Section 4(a) hereof, it will give its
transfer agent no instructions inconsistent with instructions to issue the
Shares to the Holder as contemplated in the Transaction Documents. Nothing in
this Section shall affect i n any way the Purchaser's obligations and agreement
to comply with all applicable securities laws upon resale of the Securities. If
the Purchaser provides the Company with an opinion of counsel reasonably
satisfactory to the Company that registration of a resale by the Purchaser of
any of the Securities in accordance with clause ( 1)(B) of Section 4(a) of this
Agreement is not required under the 1933 Act, the Company shall (except as
provided in clause (2) of Section 4(a) of this Agreement) permit the transfer or
issue of the Shares represented by one or more certificates for Common Stock
without legend (or where applicable, by electronic registration) in such name
and in such denominations as specified by the Purchaser. 

b.    
The Company will authorize the Transfer Agent to give information relating to
the Company directly to the Holder or the Holder's representatives upon the
request of the Holder or any such representative, to the extent such information
relates to (i) the status of shares of Common Stock issued or claimed to be
issued to the Holder in connection with a Notice of Exercise, or (ii) the
aggregate number of outstanding shares of Common Stock of all shareholders (as a
group, and not individually) as of a current or other specified date. At the
request of the Holder, the Company will provide the Holder with a copy of the
authorization so given to the Transfer Agent. 

6.    
CLOSING DATE. 

a.    
The respective Closing Date shall occur as indicated in Section 1(a)(1) after
each of the conditions contemplated by Sections 7 and 8 hereof shall have either
been satisfied or been waived by the party in whose favor such conditions run.

b.    
The closing of the Transactions shall occur on the respective Closing Date at
the offices of the Purchaser and shall take place no later than 3:00 P.M., PST,
on such day or such other time as is mutually agreed upon by the Company and the
Purchaser. 

7.    
CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL. 

The Purchaser understands that
the Company's obligation to sell the Note to the Purchaser pursuant to this
Agreement on the Closing Date is conditioned upon: 

	 	a. 	
      The execution and delivery of this Agreement by the
      Purchaser; and

	 	 	 
	 	b. 	
      Delivery by the Purchaser to the Company of good funds as
      payment in full of an amount equal to the Purchase Amount in accordance
      with this Agreement;

	 	c. 	
      The accuracy on such Closing Date of the representations
      and warranties of the Purchaser contained in this Agreement, each as if
      made on such date, and the performance by the Purchaser on or before such
      date of all covenants and agreements of the Purchaser by the Purchaser
      required to be performed on or before such date; and

	 	 	 
	 	d. 	
      There shall not be 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.

8.    
CONDITIONS TO THE PURCHASER’S OBLIGATION TO PURCHASE 

The Company understands that the
Purchaser's obligation to purchase any Notes and its acceptance of any shares of
the Company's common stock that may be issued in connection with any agreements
between the parties hereto on a Closing Date is conditioned upon: 

a.    
The execution and delivery of this Agreement and the other Transaction
Documents by the Company; 

b.    
Delivery by the Company to the Purchaser of the Note in accordance with
this Agreement or any other agreements between the parties; 

c.    
The accuracy in all material respects on the Closing Date of the
representations and warranties of the Company contained in this Agreement, each
as if made on such date, and the performance by the Company on or before such
date of all covenants and agreements of the Company required to be performed on
or before such date; 

d.    
The Company must be current with all required Exchange Act filings.

e.    
There shall not be 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; and 

f.    
From and after the date hereof to and including the Closing Date, each of
the following conditions will remain in effect: (i) the trading of the Common
Stock shall not have been suspended by the SEC or on the Principal Trading
Market; (ii) trading in securities generally on the Principal Trading Market
shall not have been suspended or limited; (iii ) no minim um prices shall been
established for securities traded on the Principal Trading Market; and (iv)
there shall not have been any Material Adverse Effect in regards to the Company.

9.    
INDEMNIFICATION AND REIMBURSEMENT. 

a.                 
(i)     The Company agrees to indemnify and hold harmless the Purchaser and
its officers, directors, employees, and agents, and each Purchaser Control
Person from and against any losses, claims, damages, liabilities or expenses
incurred (collectively, "Damages"), joint or several, and any action in respect
thereof to which the Purchaser, its partners, Affiliates, officers, directors,
employees, and duly authorized agents, and any such Purchaser Control Person
becomes subject to, resulting from, arising out of or relating to any
misrepresentation, breach of warranty or nonfulfillment of or failure to perform
any covenant or agreement on the part of Company contained in this Agreement, as
such Damages are incurred, except to the extent such Damages result primarily
from Purchaser's failure to perform any covenant or agreement contained in this
Agreement or the Purchaser's or its officer's, director's, employee's, agent's
or Purchaser Control Person's negligence, recklessness or bad faith in
performing its obligations under this Agreement. 

(ii)     The
Company hereby agrees that, if the Purchaser, other than by reason of its
negligence, illegal or willful misconduct (in each case, as determined by a non-
appealable judgment to such effect), (x) becomes involved in any capacity in any
action, proceeding or investigation brought by any shareholder of the Company,
in connection with or as a result of the consummation of the transactions
contemplated by this Agreement or the other Transaction Documents, or if the
Purchaser is impleaded in any such action, proceeding or investigation by any
Person, or (y) becomes involved in any capacity in any action, proceeding or
investigation brought by the SEC, any self-regulatory organization or other body
having jurisdiction, against or involving the Company or in connection with or
as a result of the consummation of the transactions contemplated by this Agreement or the other Transaction
Documents, or (z) is impleaded in any such action, proceeding or investigation
by any Person, then in any such case, the Company shall indemnify, defend and
hold harmless the Purchaser from and against and in respect of all losses,
claims, liabilities, damages or expenses resulting from, imposed upon or
incurred by the Purchaser, directly or indirectly, and reimburse such Purchaser
for its reasonable legal and other expenses (including the cost of any
investigation and preparation) incurred in connection therewith, as such
expenses are incurred. The indemnification and reimbursement obligations of the
Company under this paragraph shall be in addition to any liability which the
Company may otherwise have, shall extend upon the same terms and conditions to
any Affiliates of the Purchaser who are actually named in such action,
proceeding or investigation, and partners, directors, agents, employees and
Purchaser Control Persons (if any), as the case may be, of the Purchaser and any
such Affiliate, and shall be binding upon and inure to the benefit of any
successors, assigns, heirs and personal representatives of the Company, the
Purchaser, any such Affiliate and any such Person. The Company also agrees that
neither the Purchaser nor any such Affiliate, partner, director, agent, employee
or Purchaser Control Person shall have any liability to the Company or any
Person asserting claims on behalf of or in right of the Company in connection
with or as a result of the consummation of this Agreement or the other
Transaction Documents, except as may be expressly and specifically provided in
or contemplated by this Agreement. 

b.     All
claims for indemnification by any Indemnified Party (as defined below) under
this Section shall be asserted and resolved as follows: 

(i)     In the
event any claim or demand in respect of which any Person claiming
indemnification under any provision of this Section (an "Indemnified Party")
might seek indemnity under paragraph (a) of this Section is asserted against or
sought to be collected from such Indemnified Party by a Person other than a
party hereto or an Affiliate thereof (a "Third Party Claim"), the Indemnified
Party shall deliver a written notification, enclosing a copy of all papers
served, if any, and specifying the nature of and basis for such Third Party
Claim and for the Indemnified Party's claim for indemnification that is being
asserted under any provision of this Section against any Person (the
"Indemnifying Party"), together with the amount or, if not then reasonably
ascertainable, the estimated amount, determined in good faith, of such Third
Party Claim (a "Claim Notice") with reasonable promptness to the Indemnifying
Party. If the Indemnified Party fails to provide the Claim Notice with
reasonable promptness after the Indemnified Party receives notice of such Third
Party Claim, the Indemnifying Party shall not be obligated to indemnify the
Indemnified Party with respect to such Third Party Claim to the extent that the
Indemnifying Party's ability to defend has been prejudiced by such failure of
the Indemnified Party. The Indemnifying Party shall notify the Indemnified Party
as soon as practicable within the period ending thirty (30) calendar days
following receipt by the Indemnifying Party of either a Claim Notice or an
Indemnity Notice (as defined below) (the "Dispute Period") whether the
Indemnifying Party disputes its liability or the amount of its liability to the
Indemnified Party under this Section and whether the Indemnifying Party desires,
at its sole cost and expense, to defend the Indemnified Party against such Third
Party Claim. The following provisions shall also apply. 

(ii)     If the
Indemnifying Party notifies the Indemnified Party within the Dispute Period that
the Indemnifying Party desires to defend the Indemnified Party with respect to
the Third Party Claim pursuant to this paragraph (b) of this Section, then the
Indemnifying Party shall have the right to defend, with counsel reasonably
satisfactory to the Indemnified Party, at the sole cost and expense of the
Indemnifying Party, such Third Party Claim by all appropriate proceedings, which
proceedings shall be vigorously and diligently prosecuted by the Indemnifying
Party to a final conclusion or will be settled at the discretion of the
Indemnifying Party (but only with the consent of the Indemnified Party in the
case of any settlement that provides for any relief other than the payment of
monetary damages or that provides for the payment of monetary damages as to
which the Indemnified Party shall not be indemnified in full pursuant to
paragraph (a) of this Section). The Indemnifying Party shall have full control
of such defense and proceedings, including any compromise or settlement thereof; provided, however, that
the Indemnified Party may, at the sole cost and expense of the Indemnified
Party, at any time prior to the Indemnifying Party's delivery of the notice
referred to in the first sentence of this subparagraph (x), file any motion,
answer or other pleadings or take any other action that the Indemnified Party
reasonably believes to be necessary or appropriate protect its interests; and
provided further, that if requested by the Indemnifying Party, the Indemnified
Party will, at the sole cost and expense of the Indemnifying Party, provide
reasonable cooperation to the Indemnifying Party in contesting any Third Party
Claim that the Indemnifying Party elects to contest. The Indemnified Party may
participate in, but not control, any defense or settlement of any Third Party
Claim controlled by the Indemnifying Party pursuant to this subparagraph (x),
and except as provided in the preceding sentence, the Indemnified Party shall
bear its own costs and expenses with respect to such participation.
Notwithstanding the foregoi ng, the Indemnified Party may take over the control
of the defense or settlement of a Third Party Claim at any time if it
irrevocably waives its right to indemnity under paragraph (a) of this Section
with respect to such Third Party Claim. 

 

(iii)     If the
Indemnifying Party fails to notify the Indemnified Party within the Dispute
Period that the Indemnifying Party desires to defend the Third Party Claim
pursuant to paragraph (b) of this Section, or if the Indemnifying Party gives
such notice but fails to prosecute vigorously and diligently or settle the Third
Party Claim, or if the Indemnifying Party fails to give any notice whatsoever
within the Dispute Period, then the Indemnified Party shall have the right to
defend, at the sole cost and expense of the Indemnifying Party, the Third Party
Claim by all appropriate proceedings, which proceedings shall be prosecuted by
the I ndemnified Party in a reasonable manner and in good faith or will be
settled at the discretion of the Indemnified Party (with the consent of the
Indemnifying Party, which consent will not be unreasonably withheld). The
Indemnified Party will have full control of such defense and proceedings,
including any compromise or settlement thereof; provided, however, that if
requested by the Indemnified Party, the Indemnifying Party will, at the sole
cost and expense of the Indemnifying Party, provide reasonable cooperation to
the Indemnified Party and its counsel in contesting any Third Party Claim which
the Indemnified Party is contesting. Notwithstanding the foregoing provisions of
this subparagraph (y), if the Indemnifying Party has notified the Indemnified
Party within the Dispute Period that the Indemnifying Party disputes its
liability or the amount of its liability hereunder to the Indemnified Party with
respect to such Third Party Claim and if such dispute is resolved in favor of
the Indemnifying Party in the manner provided in subparagraph (z)
below, the Indemnifying Party will not be required to bear the costs and
expenses of the Indemnified Party's defense pursuant to this subparagraph (y) or
of the Indemnifying Party's participation therein at the Indemnified Party's
request, and the Indemnified Party shall reimburse the Indemnifying Party in
full for all reasonable costs and expenses incurred by the Indemnifying Party in
connection with such litigation. The Indemnifying Party may participate in, but
not control, any defense or settlement controlled by the Indemnified Party
pursuant to this subparagraph (y), and the Indemnifying Party shall bear its own
costs and expenses with respect to such participation. 

(iv)     If the
Indemnifying Party notifies the Indemnified Party that it does not dispute its
liability or the amount of its liability to the Indemnified Party with respect
to the Third Party Claim under paragraph (a) of this Section or fails to notify
the Indemnified Party within the Dispute Period whether the Indemnifying Party
disputes its liability or the amount of its liability to the Indemnified Party
with respect to such Third Party Claim, the amount of Damages specified in the
Claim Notice shall be conclusively deemed a liability of the Indemnifying Party
under paragraph (a) of this Section and the Indemnifying Party shall pay the
amount of such Damages to the Indemnified Party on demand. If the Indemnifying
Party has timely disputed its liability or the amount of its liability with
respect to such claim, the Indemnifying Party and the Indemnified Party shall
proceed in good faith to negotiate a resolution of such dispute; provided,
however, that if the dispute is not resolved within thirty (30) days after the
Claim Notice, the Indemnifying Party shall be entitled to institute such legal
action as it deems appropriate. 

(v)     In the
event any Indemnified Party should have a claim under paragraph (a) of this
Section against the Indemnifying Party that does not involve a Third Party
Claim, the Indemnified Party shall deliver a written notification of a claim for
indemnity under paragraph (a) of this Section specifying the nature of and basis
for such claim, together with the amount or, if not then reasonably
ascertainable, the estimated amount, determined in good faith, of such claim (an
"Indemnity Notice") with reasonable promptness to the Indemnifying Party. The
failure by any Indemnified Party to give the Indemnity Notice shall not impair
such party's rights hereunder except to the extent that the Indemnifying Party
demonstrates that it has been irreparably prejudiced thereby. If the
Indemnifying Party notifies the Indemnified Party that it does not dispute the
claim or the amount of the claim described in such Indemnity Notice or fails to
notify the Indemnified Party within the Dispute Period whether the Indemnifying
Party disputes the claim or the amount of the claim described in such Indemnity
Notice, the amount of Damages specified in the Indemnity Notice will be
conclusively deemed a liability of the Indemnifying Party under paragraph (a) of
this Section and the Indemnifying Party shall pay the amount of such Damages to
the Indemnified Party on demand. If the Indemnifying Party has timely disputed
its liability or the amount of its l iability with respect to such claim, the
Indemnifying Party and the Indemnified Party shall proceed in good faith to
negotiate a resolution of such dispute; provided, however, that it the dispute
is not resolved within thirty (30) days after the Claim Notice, the I
ndemnifying Party shall be entitled to institute such legal action as it deems
appropriate. 

c.     The
indemnity agreements contained herein shall be in addition to (i) any cause of
action or similar rights of the indemnified party against the indemnifying party
or others, and (ii) any liabilities the indemnifying party may be subject to.

10.     JURY TRIAL
WAIVER. The Company and the Purchaser hereby waive a trial by jury in any
action, proceeding or counterclaim brought by either of the Parties hereto
against the other in respect of any matter arising out or in connection with the
Transaction Documents. 

11.    
GOVERNING LAW: MISCELLANEOUS. 

a.                 
(i)     This Agreement shall be governed by and interpreted
in accordance with the laws of the State of Nevada for contracts to be wholly
performed in such state and without giving effect to the principles thereof
regarding the conflict of laws. Each of the parties consents to the exclusive
jurisdiction of the federal courts whose districts encompass any part of the
state courts of the State of Nevada as in connection with any dispute arising
under this Agreement or any of the other Transaction Documents and hereby
waives, to the maximum extent permitted by law, any objection, including any
objection based on forum non conveniens, to the bringing of any such
proceeding in such jurisdictions or to any claim that such venue of the suit,
action or proceeding is improper. To the extent determined by such court, the
Company shall reimburse the Purchaser for any reasonable legal fees and
disbursements incurred by the Purchaser in enforcement of or protection of any
of its rights under any of the Transaction Documents. Nothing in this Section
shall affect or limit any right to serve process in any other manner permitted
by law. 

(ii)     The
Company and the Purchaser acknowledge and agree that irreparable damage would
occur in the event that any of the provisions of this Agreement or the other
Transaction Documents were not performed in accordance with their specific terms
or were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent or cure breaches of the
provisions of this Agreement and the other Transaction Documents and to enforce
specifically the terms and provisions hereof and thereof, this being in addition
to any other remedy to which any of them may be entitled by law or equity.

b.    
Failure of any party to exercise any right or remedy under this Agreement or
otherwise, or delay by a party in exercising such right or remedy, shall not
operate as a waiver thereof. 

c.     This
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties hereto. 

d.     All
pronouns and any variations thereof refer to the masculine, feminine or neuter,
singular or plural, as the context may require. 

e.     An e m
a i l of this signed Agreement shall be legal and binding on all parties hereto.

f.    
This Agreement may be signed in one or more counterparts, each of which
shall be deemed an original. 

g.     The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement. 

h.     If any
provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement or the validity or
enforceability of this Agreement in any other jurisdiction. 

i.     This
Agreement may be amended only by an instrument in writing signed by the party to
be charged with enforcement thereof. 

j.     This
Agreement supersedes all prior agreements and understandings among the parties
hereto with respect to the subject matter hereof. 

13.    
NOTICES. Any notice required or permitted hereunder shall be given in
writing (unless otherwise specified herein) and shall be deemed effectively
given on the earliest of 

(a)     the
date delivered, if delivered by personal delivery as against written receipt
therefor or by confirmed email, 

(b)     the
fifth Trading Day after deposit, postage prepaid, in the United States Postal
Service by registered or certified mail, or 

(c)     the
third Trading Day after mailing by domestic or international express courier,
with delivery costs and fees prepaid, 

in each case, addressed to each of the other parties thereunto
entitled at the following addresses (or at such other addresses as such party
may designate by ten (10) days' advance written notice similarly given to each
of the other parties hereto): 

	COMPANY: 	Lithium Exploration Group Inc. 
	  	4635 S Lakeshore Drive 
	  	Tempe, AZ 85282 
	  	Attn: Alex Walsh 
	  	  
	PURCHASER: 	JDF CAPITAL INC. 
	  	62 E Main Street 
	  	Freehold, NJ 07728 
	  	Attn: John Fierro 
	  	Telephone No.: 718-290-4058

14.    
SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The Company's and the Purchaser's
representations and warranties herein shall survive the execution and delivery
of this Agreement and the delivery of the Certificates and the payment of the
Purchase Amount, and shall inure to the benefit of the Purchaser and the Company
and their respective successors and assigns. 

[Balance of page intentionally left blank] 

IN WITNESS WHEREOF, this
Agreement has been duly executed by the Purchaser and the Company as of the date
set first above written. 

	JDF CAPITAL INC 
	 
	 
	Name: John Fierro 
	Title: President 

 

	
      LITHIUM EXPLORATION GROUP, INC. 

	 	 
	BY: 	 
	Alexander Walsh, Chief Executive Officer

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