Document:

Exhibit 10.1

             

             

             

             

             

             

            SALE AND PURCHASE AGREEMENT

             

            MADE BETWEEN

             

            BEKEM METALS, INC.

             

            AND

             

            ERTIS FERRONICKEL WORKS LLP.

             

            DATED November 03, 2009

             

            Almaty city

             

             

            
                

            

            Table of Contents

             

            Sale and purchase agreement

             

            Agreement

            Section 1 – Sale of Share

            Section 2 – Purchase Price

            Section 3 – Closing

            Section 4 – Representations and Warranties by BEKEM

            Section 5 – Representations and Warranties by ERTIS

            Section 6 – Access to Information

            Section 7 – Covenants of BEKEM

            Section 8 – Covenants of ERTIS

            Section 9 – Additional Covenants of the Parties

            Section 10 – Term of the Agreement

            Section 11 – Additional Obligations of the Parties Prior to Closing

            Section 12 – Termination and Amendment of the Agreement. 

            Section 13 – Miscellaneous

             

            Exhibit List

             

            
                

            

            SALE AND PURCHASE AGREEMENT

             

            This Sale and Purchase Agreement (“Agreement”) is concluded on 03rd day of November 2009 by and between BEKEM METALS INC., a Utah corporation (“BEKEM”), represented by Kudabayev Ermek Askerbekovich, its President acting on the basis of
            constituent documents, and ERTIS FERRONICKEL WORKS LLP, a Kazakhstan Limited Liability Partnership (“ERTIS”), represented by its General Director Zhangabulova Gulnara Bekengaliyevna, acting on the basis of the Charter, jointly named hereinafter as the “Parties”, and individually as a “Party”. 

             

            Subject of the Agreement 

            The transaction contemplated by the present Agreement is a sale and purchase transaction whereby ERTIS shall acquire 100% of the paid authorized capital of KAZNICKEL, LLP, a Kazakhstan Limited Liability Partnership (“KAZNICKEL”), which is owned by
            BEKEM, in exchange for payment of KZT 280,000 (two hundred eighty thousand of Kazakhstan tenge) conditioned on ERTIS granting to KAZNICKEL financial aid in the amount of US $5,000,000 (five million US Dollars) (the “Target Loan”) for the specific purpose of early partial repayment of the total indebtedness of KAZNICKEL
            to BEKEM in the amount of US $5,814,456 (five million eight hundred and fourteen thousand four hundred and fifty six US dollars) (the “KAZNICKEL DEBT"). The foregoing contemplated transaction is hereinafter referred to in this Agreement as the “Contemplated Transaction." The Target Loan shall be transferred
            by ERTIS to the bank account of KAZNICKEL converted into Kazakhstan tenge at the exchange rate of the National Bank of the Republic of Kazakhstan as of the transfer date.

            BEKEM undertakes to assign the remaining portion of the KAZNICKEL DEBT in the amount of US $814,456 (eight hundred and fourteen thousand four hundred and fifty six US dollars) to SAT & Company, being one of owner of ERTIS, by signing the Assignment Agreement.
            

            KAZNICKEL is a Kazakhstan Limited Liability Partnership registered under Certificate of State Reregistration Nr782-1917-27-TOO (ИУ) issued on October 22, 2005 by Legal Department of the city of Semei, located to the address: 8a, Shkolnaya Street, Semei.

            Upon closing the Contemplated Transaction KAZNICKEL will cease to be a subsidiary of BEKEM. 

            AGREEMENT

            Section 1

            Sale of Share

            
                	
                            1.1

                        	
                            By the date of Closing as such term is defined in Section 3 herein (the “Closing” or the “Closing Date”), BEKEM shall sell 100% of its share in the paid authorized capital of KAZNICKEL (“Authorized Capital of
                            KAZNICKEL”) to ERTIS.

                        

            

             

            
                

            

            
                	
                            1.2

                        	
                            As of the date of execution of the Agreement, the outstanding capital of KAZNICKEL and the Authorized Capital of KAZNICKEL is KZT 91,900 (ninety one thousand nine hundred of Kazakhstan tenge) and KAZNICKEL has no present obligation or
                            commitment to increase or decrease the Authorized Capital of KAZNICKEL.

                        

            

            
                	
                            1.3

                        	
                            As of the Closing date the paid Authorized Capital of KAZNICKEL shall be KZT 91,900 (ninety one thousand nine hundred of Kazakhstan tenge).

                        

            

             

            Section 2

            Purchase Price

            
                	
                            2.1

                        	
                            The cost of the 100% of BEKEM'S share in Authorized capital of KAZNICKEL is KZT 280,000 (two hundred eighty thousand of Kazakhstan tenge), which shall be paid by ERTIS
                            to BEKEM within 20 business days after execution of the present Agreement. 

                        

            

            
                	
                            2.2

                        	
                            ERTIS shall grant to KAZNICKEL the Target Loan in the amount of US $5,000,000 (five million US Dollars) (including the first tranche of US $500,000 (five hundred thousands US Dollars) that has already been provided by ERTIS to
                            KAZNICKEL) for the purpose of repayment of a portion of the KAZNICKEL DEBT, as set forth in Section 9.1 herein. 

                        

            

            
                	
                            2.3

                        	
                            BEKEM undertakes to assign the remaining portion of the KAZNICKEL DEBT in the amount of US $814,456 (eight hundred and fourteen thousand four hundred and fifty six US dollars) to SAT & Company, being one of owner of ERTIS. 

                        

            

            Section 3

            Closing

            
                	
                            3.1

                        	
                            Closing of Transaction. The Closing of the Contemplated Transaction shall take place on the date of fulfillment by BEKEM and ERTIS of all their obligations under the present Agreement but not later than 20 business days after the date of signing
                            the present Agreement, unless mutually agreed by the parties.

                        

            

            
                	
                            3.2

                        	
                            Closing Date. The Closing Date of the Contemplated Transaction shall be the date when ERTIS fulfills all its payment obligations to BEKEM and delivers to KAZNICKEL the Target Loan in the amount of
                            US $5,000,000 (five million US Dollars) under the present Agreement and when BEKEM and ERTIS fulfill in full all their other obligations under the present Agreement but not later than 20 business days after the date of signing the present Agreement. 

                        

            

            
                	
                            3.3

                        	
                            Documents to be Delivered at Execution of the Present Agreement.

                        

            

            
                	
                             

                        	
                            (a)

                        	
                            BEKEM shall deliver at execution of the present Agreement:

                        

            

             

            
                

            

            
                	
                             

                        	
                            (i)

                        	
                            the certified true copies of the resolution of the Board of Directors of BEKEM dated 26 May 2009 authorizing BEKEM to enter into Contemplated Transaction and of the resolution of the Board of Directors dated 23 September 2009 authorizing increase of the cost of the Contemplated
                            Transaction;

                        

            

            
                	
                             

                        	
                            (ii)

                        	
                            original financial statements of KAZNICKEL as set forth in detail in Section 4.1(d) hereof.

                        

            

            
                	
                             

                        	
                            (b)

                        	
                            ERTIS shall deliver to BEKEM at execution of the present Agreement:

                        

            

             

            
                	
                             

                        	
                            (i)

                        	
                            the certified true copies of the minutes of the General Meeting of ERTIS' Participants dated February 11, 2009 authorizing ERTIS to enter into Contemplated Transaction and the original of the resolution of the General Meeting of ERTIS'
                            Participants dated 10 September 2009 authorizing increase of the cost of the Contemplated Transaction ;

                        

            

            
                	
                             

                        	
                            (ii)

                        	
                            the duly executed Investment Letter set forth in Exhibit A of this Agreement.

                        

            

            
                	
                            3.4

                        	
                            Documents to be Delivered by BEKEM to Ertis Following Full Payment under Sections 2.1, 2.2 and 9.1 of the present Agreement.

                        

            

            
                	
                             

                        	
                            (a)

                        	
                            BEKEM shall deliver to ERTIS within 3 business days after ERTIS makes in full all payments under Sections 2.1, 2.2 and 9.1, the following documents:

                        

            

            
                	
                             

                        	
                            (i)

                        	
                            original of Certificate of State Reregistration of KAZNICKEL Nr 1436-1917-27-ТОО (ИУ) issued on December 11, 2008;

                        

            

            
                	
                             

                        	
                            (ii)

                        	
                            original of the KAZNICKEL Charter approved on October 13, 2005 with the amendment approved on December 22, 2006;

                        

            

            
                	
                             

                        	
                            (iii)

                        	
                            original of Certificate of the Tax Registration of KAZNICKEL dated 11 March 2004 г; 

                        

            

            
                	
                             

                        	
                            (iv)

                        	
                            original of Statistical Card of KAZNICKEL dated 25 January 2007 г.;

                        

            

            
                	
                             

                        	
                            (v) 

                        	
                            the Assignment Agreement for assignment of the remaining portion of the KAZNICKEL DEBT in the amount of US $814,456 (eight hundred and fourteen thousand four hundred and fifty six US dollars) to SAT & Company;

                        

            

            
                	
                             

                        	
                            (vi)

                        	
                            the Satisfaction of Debt letter signed by Bekem confirming satisfaction of the KAZNICKEL DEBT by receiving from Ertis full payments under Sections 2.1, 2.2 and 9.1 of the present Agreement and assignment of the remaining portion KAZNICKEL DEBT to SAT & Company
                            (Exhibit B).

                        

            

             

            
                

            

            
                	
                            3.5

                        	
                            Filings; Cooperation.

                        

            

            
                	
                             

                        	
                            (a)

                        	
                            Prior to execution of the present Agreement, BEKEM and ERTIS acknowledge that ERTIS has examined with due diligence and in good faith all books, records and documents of KAZNICKEL referring to the
                            Contemplated Transaction and ERTIS will not require the delivery of any additional books, records or documents of KAZNICKEL in connection with the Closing of the Contemplated Transaction.

                        

            

            
                	
                             

                        	
                            (b)

                        	
                            After execution of the present Agreement, BEKEM and ERTIS shall submit or ensure submitting on request of the other Party any additional information and/or any additional documents being at their disposal, as may be reasonably and legally required by the Parties to
                            consummate the Contemplated Transaction.

                        

            

            Section 4

            Representations and Warranties by BEKEM

            
                	
                            4.1

                        	
                            BEKEM represent and warrant to ERTIS as of the date of executing the present Agreement:

                        

            

            
                	
                             

                        	
                            (a)

                        	
                            Proper registration of KAZNICKEL Charter. The Charter of KAZNICKEL and all valid amendments thereto were approved by the authorized management body of KAZNICKEL and passed appropriate registration with the State
                            bodies.

                        

            

            
                	
                             

                        	
                            (b)

                        	
                            Authorized capital. The total Authorized Capital of KAZNICKEL is KZT 91,900 (ninety one thousand nine hundred of Kazakhstan tenge), 100% of which is owned by BEKEM. As of the Closing Date of the Contemplated Transaction the total registered and paid
                            Authorized Capital of KAZNICKEL shall be KZT 91,900 (ninety one thousand nine hundred of Kazakhstan tenge). 

                        

            

            
                	
                             

                        	
                            (c)

                        	
                            Subsidiaries. KAZNICKEL has no subsidiaries. 

                        

            

            
                	
                             

                        	
                            (d)

                        	
                            Financial Statements. BEKEM has delivered to ERTIS a copy of KAZNICKEL’s audited financial statements for the fiscal years ended December 31, 2008 and 2007 prepared in compliance with IFRS and approved by
                            independent auditors according to IAS and as well non-audited financial statements for 3 (three) months, i.e. up to March 31, 2009, being true, complete and prepared according to IFRS (collectively referred to herein as the “KAZNICKEL Financial Statements”). There were no material adverse changes in such financial statements as of the date of execution of the present Agreement, except for routine changes
                            in KAZNICKEL'S activity. 

                        

            

             

            
                

            

            
                	
                             

                        	
                            (e)

                        	
                            Absence of Undisclosed Liabilities. To the best of BEKEM’s knowledge, KAZNICKEL has no liabilities except for those adequately reflected and corresponding to the KAZNICKEL Financial Statements
                            provided to ERTIS by KAZNICKEL.

                        

            

            
                	
                             

                        	
                            (f)

                        	
                            Litigation. To the best of BEKEM’s knowledge, there are no outstanding orders, judgments, injunctions, awards or decrees of any court, governmental or regulatory body or arbitration tribunal against KAZNICKEL
                            or its properties, or any actions, suits or proceedings pending or threatened against KAZNICKEL which might result in any material adverse change in the operations or financial condition of KAZNICKEL.

                        

            

            
                	
                             

                        	
                            (g)

                        	
                            Compliance with Laws. To the best of BEKEM’s knowledge, the operations and affairs of KAZNICKEL do not violate any law, ordinance, rule or regulation currently in effect, or any order, writ, injunction or decree of any court or governmental
                            agency, the violation of which would substantially and adversely affect business, financial conditions or operations of KAZNICKEL.

                        

            

            
                	
                             

                        	
                            (h)

                        	
                            Absence of Specific Changes. To the best of BEKEM’s knowledge, except as otherwise disclosed to ERTIS during its due diligence investigation of KAZNICKEL, since March 31, 2009; 

                        

            

            
                	
                             

                        	
                            (i)

                        	
                            KAZNICKEL has not entered into any material transactions; 

                        

            

            
                	
                             

                        	
                            (ii)

                        	
                            there has been no change in the condition (financial or otherwise), business, property, prospects, assets or liabilities of KAZNICKEL as shown on the KAZNICKEL Financial Statements submitted to ERTIS, other than changes that do not have a
                            consequence that is materially adverse to such condition, business, property, prospects, assets or liabilities; 

                        

            

            
                	
                             

                        	
                            (iii)

                        	
                            there has been no damage to, destruction of or loss of any of the properties or assets of KAZNICKEL (whether or not covered by insurance) materially and adversely affecting the condition (financial or otherwise), business, property, prospects, assets or liabilities of KAZNICKEL;
                            

                        

            

            
                	
                             

                        	
                            (iv)

                        	
                            KAZNICKEL has neither declared, nor paid any dividend nor made any distribution on its Authorized Capital, nor increased its Authorized Capital; 

                        

            

            
                	
                             

                        	
                            (v)

                        	
                            there has been no material change in KAZNICKEL'S line of business, nor has KAZNICKEL entered into any new material liabilities by way of guaranty, endorsement, indemnity, warranty or otherwise; 

                        

            

             

            
                

            

            
                	
                             

                        	
                            (vi)

                        	
                            there have been no loans made by KAZNICKEL to its employees, officers or directors; 

                        

            

            
                	
                             

                        	
                            (vii)

                        	
                            there has been no waiver by KAZNICKEL of any its valuable rights, nor forgiveness of any material debt owed to it;

                        

            

            
                	
                             

                        	
                            (viii)

                        	
                            there has been no extraordinary increase in the compensation of any of KAZNICKEL’s employees;

                        

            

            
                	
                             

                        	
                            (ix)

                        	
                            there has been no agreement or commitment by KAZNICKEL to do or perform any of the acts described in this subsection; and 

                        

            

            
                	
                             

                        	
                            (x)

                        	
                            there has been no other event or condition of any character, which might reasonably be expected either to result in a material and adverse change in the condition (financial or otherwise), business, property, prospects, assets or liabilities of KAZNICKEL or to impair materially the ability of
                            KAZNICKEL to conduct the business now being conducted.

                        

            

            
                	
                             

                        	
                            (i)

                        	
                            Employees. To the best of BEKEM’s knowledge, there are no bonuses, profit sharing, compensations or other plans, agreements or arrangements between KAZNICKEL and any of its directors, officers or employees, except for those shown in the
                            KAZNICKEL Financial Statements provided by KAZNICKEL to ERTIS.

                        

            

            
                	
                             

                        	
                            (j)

                        	
                            Continuation of Key Management and Employees. To the best knowledge of BEKEM, all key management personnel and employees of KAZNICKEL intend to continue their employment with KAZNICKEL after the Closing.

                        

            

            
                	
                             

                        	
                            (k)

                        	
                            Assets. All assets shown as of March 31, 2009 in the KAZNICKEL Financial Statements or acquired and held as of the Closing Date belong to KAZNICKEL. KAZNICKEL owns and has valid title to all of such assets. None of
                            KAZNICNEL’S equipment used by it in connection with its business has any material defects and all of such equipment is, in all material respects, in good operating condition and repair, and is adequate for the uses to which it is being put; none of KAZNICKEL’s equipment is in need of overhaul or repairs, except for routine maintenance
                            and repair. BEKEM represents that it is not aware of any accounts and contracts receivable existing that in its judgment would be uncollectible as of the date of execution of the present Agreement, except to those shown in the KAZNICKEL Financial Statements as of March 31, 2009.

                        

            

            
                	
                             

                        	
                            (l)

                        	
                            Tax Matters. To the best of BEKEM’s knowledge, all federal, foreign, state and local tax returns, reports and information statements required to be filed by or with respect to the activities of KAZNICKEL have been filed timely. Since March 31,
                            2009, KAZNICKEL has not incurred any liability with respect to any federal, foreign, state or local taxes except those emerging in the ordinary and regular course of business. Such returns, reports and information statements are true and correct in all material respects insofar as they relate to the activities of KAZNICKEL. KAZNICKEL has no material delay with payment of any such tax
                            or assessment as of the date of execution of the present Agreement.

                        

            

             

            
                

            

            
                	
                             

                        	
                            (m)

                        	
                            Permits. To the best knowledge of BEKEM, KAZNICKEL has all permissions, governmental certificates and licenses (“Permits”) required to conduct its business as it is presently conducted. Such Permits are in full force and effect. To the best
                            knowledge of BEKEM, no material violations of any Permit by KAZNICKEL exist and no proceeding is pending or threatened to revoke or limit any Permit.

                        

            

            
                	
                             

                        	
                            (n)

                        	
                            Contracts/Agreements

                        

            

            
                	
                             

                        	
                            (i)

                        	
                            As of the date of execution of the present Agreement, BEKEM has delivered to ERTIS a copy of: 

                        

            

            
                 
            

            Subsoil use contract No 1349, dated February 26, 2004 for exploration and mining of the Gornostai Ni-Co deposit, together with Appendix No 1 (registration No 1396 dated May 23, 2006, drawn up in connection with the transfer of the right on Subsoil use from Shagan LLP to Kaznickel LLP), Appendix No 2 (registration No 2046 dated April 22 , 2004 drawn up in connection with the extension
            of the Geological Allotment and extension of the exploration period to February 26, 2008) and Appendix No 3 (registration No 2568 dated May 16, 2009 drawn up in connection with extension of the exploration period to February 26, 2010) and Appendix No 4 (registration No 3372 dated April 22, 2009 drawn up in connection with change of the taxation terms);

             

            
                	
                             

                        	
                            (o)

                        	
                            Environmental Matters. To the best of BEKEM’s knowledge, as of the date of execution of the present Agreement:

                        

            

            
                	
                             

                        	
                            (i)

                        	
                            KAZNICKEL is in full compliance with the environmental laws of the Republic of Kazakhstan. KAZNICKEL has not received any order, notice or other communication from any governmental body of any actual violation of any environmental law.

                        

            

            
                	
                             

                        	
                            (ii)

                        	
                            BEKEM is not aware of, nor has it actually received any order, notice, summons, warning nor any other communication relating to a violation by KAZNICKEL of any environmental law.

                        

            

            
                	
                             

                        	
                            (iii)

                        	
                            BEKEM is not aware of any hazardous materials violating any environmental law that are or have been held at the facilities belonging to KAZNICKEL or released to third parties.

                        

            

            
                	
                             

                        	
                            (p)

                        	
                            Books and Records. The books and records of KAZNICKEL are complete and correct; they are kept in strict compliance with the requirements of the 

                        

            

             

            
                

            

            Republic of Kazakhstan and reflect, in all material respects, KAZNICKEL'S transactions with third persons.

            
                	
                             

                        	
                            (q)

                        	
                            Authority to Execute Agreement. The Board of Directors of BEKEM, acting pursuant to the powers and authorities legally vested with it, has duly authorized execution and delivery by BEKEM of the present Agreement. BEKEM
                            has power and authority to execute and deliver the present Agreement and to take all actions required to be taken by it pursuant to provisions hereof. The present Agreement constitutes the legal, valid and binding obligation of BEKEM. No condition of the present Agreement will constitute a violation or breach of the Articles of Incorporation, as amended, or Bylaws, as amended, of
                            BEKEM, or any agreement, stipulation, order, writ, injunction, decree, law, rule or regulation applicable to BEKEM.

                        

            

            
                	
                             

                        	
                            (r)

                        	
                            Finder’s Fees. BEKEM shall pay at its expense finder’s fee in the amount of US $50,000 (fifty thousand US Dollars) within 30 days term after the Closing Date.

                        

            

            
                	
                            4.2

                        	
                            Disclosure. BEKEM has disclosed all facts, known to it as of the date of execution of the present Agreement and capable to affect materially the business of KAZNICKEL. BEKEM has not concealed any facts capable of
                            materially affecting the business of KAZNICKEL. The present Agreement does not contain any untrue statement by BEKEM of material facts relating to the present Agreement.

                        

            

            Section 5

            Representations and Warranties by ERTIS

            
                	
                            5.1

                        	
                            ERTIS represents and warrants as of the date of executing of the present Agreement:

                        

            

            
                	
                             

                        	
                            (a)

                        	
                            Proper registration. ERTIS is currently a limited liability partnership duly organized and validly existing under the laws of the Republic of Kazakhstan and has full corporate power and authority to purchase property on its behalf and to exercise all its other tangible and intangible
                            property rights and bear its liabilities.

                        

            

            
                	
                             

                        	
                            (b)

                        	
                            Founders of ERTIS. SAT & Company is one of the owners of ERTIS.

                        

            

            
                	
                             

                        	
                            (c)

                        	
                            No Violation. Execution of the present Agreement by ERTIS and fulfillment of its conditions by ERTIS shall not constitute:

                        

            

            
                	
                             

                        	
                            (i)

                        	
                            a violation or a conflict with any provision of the Charter of ERTIS, any agreement or other liability taken by ERTIS in relation to any third parties; or

                        

            

            
                	
                             

                        	
                            (ii)

                        	
                            a violation of any order, writ, injunction or decree, or any statute of the Republic of Kazakhstan applicable to ERTIS.

                        

            

             

            
                

            

            
                	
                             

                        	
                            (d)

                        	
                            Liabilities to third persons. ERTIS has no liabilities to any third persons which might prevent ERTIS from performing its obligations under the present Agreement.

                        

            

            
                	
                             

                        	
                            (e)

                        	
                            Authority to Execute the Agreement. The decision of the interest holders of ERTIS, made at the General Meeting of participants in compliance with the order established by the Republic of Kazakhstan, has duly authorized execution and delivery by ERTIS
                            of the present Agreement, the Purchase Price and other obligations specified in Sections 2.1, 2.2 and 9.1 of the present Agreement. ERTIS has the power and authority to execute the present Agreement and to take all other actions required to be taken by it pursuant to the provisions hereof. ERTIS has taken all the actions required by law, its Charter, as amended, to enter in the
                            present Agreement. The present Agreement constitutes the legal, valid and binding obligation of ERTIS, enforceable against it in accordance with its terms. Execution of the present Agreement by ERTIS will not constitute a violation or breach of the Charter of ERTIS, as amended, or any agreement, stipulation, order, writ, decree, law, rule or regulation
                            applicable to ERTIS.

                        

            

            
                	
                             

                        	
                            (f)

                        	
                            Due-diligence. ERTIS made a full examination of KAZNICKEL'S books, records and documents and guarantees that it will not require the deliver of any additional books, records or documents of KAZNICKEL in connection
                            with the Closing of the Contemplated Transaction and will not have any claims to BEKEM relating to any liabilities of KAZNICKEL to any tax or other authorities of the Republic of Kazakhstan. ERTIS guarantees that ERTIS will perform re-registration of change in KAZNICKEL'S shareholders
                            under requirements of the legal and tax authorities, statistic bodies, and the Ministry of Energy and Mineral Resources of the Republic of Kazakhstan by itself and at its own expense providing Bekem delivers to ERTIS documents indicated in sub-sections (i)-(iv) of section 3.4(a) of the present Agreement. ERTIS confirms that the conditions and the Price of Purchase of
                            KAZNICKEL set in the Sections 2 and 9 of the present Agreement cover all rights and liabilities of KAZNICKEL existing as of the date of execution of the present Agreement.

                        

            

            
                	
                             

                        	
                            (g)

                        	
                            Finder’s Fees. ERTIS shall not pay any finder’s fee under the present Agreement.

                        

            

            
                	
                             

                        	
                            (i)

                        	
                            US. Securities Law Matters. ERTIS understands and acknowledges that the Authorized Capital of KAZNICKEL is being offered and sold to it in reliance on specific exemptions or exclusions from the registration requirements of
                            United States federal and state securities laws and that BEKEM is relying upon the truth and accuracy of the representations contained in the Investment Letter set forth in Exhibit A of this Agreement in order to determine the applicability of such exemptions or exclusions and that the representation and warranties of ERTIS in the Investment Letter are incorporated herein by this reference.

                        

            

             

            
                

            

            
                	
                            5.2

                        	
                            Disclosure. ERTIS has disclosed all known to it facts capable to affect materially the conditions, execution and performance of the present Agreement. ERTIS has not concealed any facts capable to affect materially the conditions, execution and
                            performance of the present Agreement. Conditions of the present Agreement do not contain any untrue statement of ERTIS on material facts relating to the present Agreement.

                        

            

            Section 6

            Access to Information

            
                	
                            6.1

                        	
                            In compliance with the sub-Section 5.1 (f) hereof, BEKEM has provided to ERTIS and to ERTIS’ counsel, accountants and other representatives full access to all of KAZNICKEL’s properties, books and
                            records, including information concerning work program, products and contract on extracting mineral resources.

                        

            

            Section 7

            Covenants of BEKEM

            
                	
                            7.1

                        	
                            Conducting activities from the date of execution of the present Agreement till the Closing Date. BEKEM undertakes to ERTIS that from the date of execution of the present Agreement until the Closing Date:

                        

            

            
                	
                             

                        	
                            (a)

                        	
                            KAZNICKEL shall conduct its business in the ordinary and usual course. 

                        

            

            
                	
                             

                        	
                            (b)

                        	
                            KAZNICKEL shall neither amend its Charter nor pay dividends.

                        

            

            
                	
                             

                        	
                            (c)

                        	
                            KAZNICKEL shall not increase its Authorized Capital.

                        

            

            
                	
                             

                        	
                            (d)

                        	
                            KAZNICKEL shall not sell, lease, pledge or otherwise dispose any its assets or property.

                        

            

            
                	
                             

                        	
                            (e)

                        	
                            KAZNICKEL will continue to file properly and promptly tax returns and reports required by the laws of the Republic of Kazakhstan.

                        

            

            
                	
                             

                        	
                            (f)

                        	
                            KAZNICKEL will comply with all laws and regulations applicable to it and its operations.

                        

            

            
                	
                             

                        	
                            (g) 

                        	
                            Kaznickel shall not incur any long-term or short-term indebtedness for money borrowed or make any capital expenditures or commitment for capital expenditures

                        

            

            
                	
                             

                        	
                            (i)

                        	
                            Kaznickel shall not enter into any material agreement or commitment, without prior written approval from ERTIS.

                        

            

             

            
                

            

            Section 8

            Covenants of ERTIS

            
                	
                            8.1

                        	
                            Required Approvals. ERTIS shall deliver to BEKEM all documents stipulated by the present Agreement. ERTIS also shall cooperate with BEKEM in obtaining all required consents,
                            provided. ERTIS undertakes not to change its line of business, not to spend considerable resources and not to take any liabilities to third persons if these liabilities are capable to violate conditions and affect performance of the present Agreement.

                        

            

            
                	
                            8.2

                        	
                            Making Payments. ERTIS undertakes to make timely and in full all payments stipulated by sub-Sections 2.1, 2.2 and 9.1 of the present Agreement.

                        

            

            Section 9

            Additional Covenants of the Parties

            
                	
                            9.1

                        	
                            Satisfaction of Kaznickel Debt. ERTIS agrees to grant to KAZNICKEL the Target Loan intended for early payment of KAZNICKEL DEBT to BEKEM in the amount of
                            US $5,000,000 (five million US dollars), and BEKEM agrees to accept this repayment of the Debt in the following order:

                        

            

            
                	
                             

                        	
                            (a)

                        	
                            US $500,000 (five hundred thousand US dollars) has already been paid by ERTIS to KAZNICKEL as the first tranche of the Target Loan according to the conditions of the Preliminary Agreement of February 11, 2009.

                        

            

            
                	
                             

                        	
                            (b)

                        	
                            US $4,500,000 (four million five hundred thousand US dollars) shall be paid by ERTIS to KAZNICKEL as the second tranche of the Target Loan within 20 business days after the date of execution of the present Agreement. The
                            Target Loan shall be transferred by ERTIS to KAZNICKEL in Kazakhstan tenge converted under the exchange rate of the National Bank of the Republic of Kazakhstan as of the transfer date.

                        

            

            
                	
                             

                        	
                            (c)

                        	
                            BEKEM and ERTIS undertake to fulfill all actions required to facilitate payment by KAZNICKEL to BEKEM of the Target Loan received from ERTIS in the amount of US $5,000,000 (five million U.S.
                            dollars) (including the first tranche of US $500,000 (five hundred thousands US Dollars) that has already been provided by ERTIS to KAZNICKEL). Repayment of the debt shall be made by KAZNICKEL within 1 (one) banking day of receipt of each tranche of the Target Loan from ERTIS. The Debt shall be returned in US dollars or,
                            on demand by BEKEM, in Kazakh Tenge in the amount equivalent to US $5,000,000 (five million US dollars) (including the first tranche of US $500,000 (five hundred thousands US Dollars) that has already been provided by ERTIS to KAZNICKEL) based on the exchange rate of the National Bank of the Republic of Kazakhstan on the
                            date of payment to Bekem.

                        

            

             

            
                

            

            
                	
                             

                        	
                            (d)

                        	
                            BEKEM undertakes to assign the remaining part of the KAZNICKEL'S debt in the amount of US $814,456 (eight hundred and fourteen thousand four hundred and fifty six US dollars) to SAT & Company.

                        

            

            
                	
                            9.2

                        	
                            Cooperation. Both BEKEM and ERTIS will cooperate with each other in fulfilling the terms of the present Agreement.

                        

            

            
                	
                            9.3

                        	
                            Expenses. Each of the Parties shall pay all its respective costs and expenses (including attorneys’ and accountants’ fees, and other expenses) incurred by it in connection with the present Agreement and these expenses are not subject to reimbursement by the other Party.

                        

            

            
                	
                            9.4

                        	
                            Publicity. Prior to the Closing Date, any written news releases or public disclosure by either Party pertaining to the present Agreement shall be submitted to the other Party for its review and approval prior to such release or disclosure, except for the cases when such a disclosure is stipulated by legislation of the State
                            of Utah or the Republic of Kazakhstan or under requirements of the United States Securities and Exchange Commission.

                        

            

            
                	
                            9.5

                        	
                            Confidentiality. While BEKEM is obligated to provide ERTIS with information according to the present Agreement, it is understood and agreed that all received by ERTIS information is confidential in nature.
                            ERTIS agrees to hold such information in confidence and not to reveal any such information to any third persons. ERTIS undertakes to ensure fulfillment of the provisions hereof by all its officers and other specialists or persons involved into the process of Due Diligence by ERTIS, except for cases where it is required by legislation of the Republic of
                            Kazakhstan.

                        

            

            Section 10

            Term of the Agreement

            
                	
                            10.1

                        	
                            The warranties, rights and covenants of the present Agreement inure from the date of execution of the present Agreement and will remain in full force up to the Closing Date.

                        

            

            Section 11

            Additional Obligations of the Parties Prior to Closing

            
                	
                            11.1

                        	
                            Obligations of the Parties Prior to Closing. The obligations of BEKEM and ERTIS under the present Agreement shall be subject to the fulfillment, on or prior to the Closing, of all conditions elsewhere herein set forth, including, but not limited to,
                            receipt by the appropriate party of all deliveries required by Sections 4 and 5 herein, and fulfillment of each of the following conditions:

                        

            

            
                	
                             

                        	
                            (a)

                        	
                            All representations and warranties made by BEKEM and ERTIS in the present Agreement shall be true and correct in all material respects and cannot be modified unilaterally after execution of the present Agreement.

                        

            

             

            
                

            

            
                	
                             

                        	
                            (b)

                        	
                            The parties shall have timely performed or complied with all covenants, agreements and conditions contained in the present Agreement. 

                        

            

            
                	
                             

                        	
                            (c)

                        	
                            ERTIS undertakes to perform all payments for satisfaction and settlement of the KAZNICKEL DEBT to BEKEM in compliance with the present Agreement. 

                        

            

            
                	
                             

                        	
                            (d)

                        	
                            Fulfillment by the Parties of their obligations under the present Agreement shall not violate any permit or order, decree or judgment of any court or governmental body having competent jurisdiction and there shall not be any legal or administrative action or proceeding to declare the Contemplated Transaction invalid and to seek damages from any Party in
                            connection with this Agreement.

                        

            

            Section 12

            Termination and Amendment of the Agreement. 

            
                	
                            12.1

                        	
                            The present Agreement may be terminated without liability to either party, except with respect to the obligations set forth in subsections 9.4 and 9.5 of the present Agreement, if there emerge any of the following:

                        

            

            
                	
                             

                        	
                            (a)

                        	
                            By Bekem on the 21st business day after the date of the present Agreement if ERTIS has failed to deliver to Bekem US $5,000,000 (five million US dollars) (including the first tranche of US
                            $500,000 (five hundred thousands US Dollars) that has been already provided by ERTIS to KAZNICKEL) as early repayment of a portion of the KAZNICKEL DEBT as set forth in subsections 2.2 and 9.1 of the present Agreement. The present Agreement shall be terminated in this case irrespective of ERTIS'
                            payment of its share of participation in the Authorized Capital of KAZNICKEL. The date of termination is the date of mailing by BEKEM of written notice on termination of the present Agreement to the address of ERTIS.

                        

            

            
                	
                             

                        	
                            (b)

                        	
                            By Bekem on the 21st business day after the date of the present Agreement if ERTIS has failed to pay its share of participation in the Authorized Capital of KAZNICKEL in the amount of KZT 280,000 (two hundred eighty thousand of Kazakhstan
                            tenge), as stipulated in subsection 2.1 of the present Agreement. The date of termination is the date of mailing by BEKEM of written notice on termination of the present Agreement to the address of ERTIS.

                        

            

            
                	
                             

                        	
                            (c)

                        	
                            Under mutual agreement of BEKEM and ERTIS. The date of termination is the date of execution by BEKEM and ERTIS of a special agreement on termination of the present
                            Agreement.

                        

                	
                             

                        	
                            (d)

                        	
                             In case of force-majeure events. In case of occurrence of force-majeure events which: (i) make it impossible to perform the contemplated transaction; (ii) last more than three months, (iii) which are not expected to end in the foreseeable future; (iv) occur after signing of the present
                            Agreement; and (v) are not dependent upon action by the Parties, the date of termination is the date of mailing by one of the Parties of written notice on termination of the present Agreement with a document confirming the fact of the force-majeure event. 

                        

            

            
                

            

            
                	
                            12.2

                        	
                            If the present Agreement is terminated, each of the Parties shall pay all its respective costs and expenses (including attorneys’ and accountants’ fees, and other expenses) incurred by it in connection with the present Agreement.

                        

            

            
                	
                            12.3

                        	
                            No modification or amendment of any provision of the present Agreement shall be effective unless specifically made in writing and duly signed by authorized representatives of the Parties.

                        

                	
                            12.4

                        	
                            In case of termination of the present Agreement in accordance with section 12.1 of the present Agreement, the Parties shall be returned to the initial position they were in before the signing of the present Agreement and each Party shall deliver to the other Party the cash, documents and information received under the present Agreement
                            within 90 business days from the date of the termination of the present Agreement.

                        

            

            Section 13

            Miscellaneous

            
                	
                            13.1

                        	
                            Entire Agreement. The present Agreement (including the exhibits and schedules hereto) contains the entire agreement between the parties with respect to the transactions contemplated hereby, No modification or amendment of any provision of the present Agreement shall be effective unless specifically made in writing and duly
                            signed by authorized representatives of the Parties.

                        

            

            
                	
                            13.2

                        	
                            Binding Agreement. 

                        

            

            
                	
                             

                        	
                            (a)

                        	
                            The present Agreement inures from the date of its execution by authorized representatives of the Parties.

                        

            

            
                	
                             

                        	
                            (b)

                        	
                            The present Agreement shall be binding upon the respective Parties and their authorized representatives.

                        

            

            
                	
                             

                        	
                            (c)

                        	
                            All disputes arising out of the present Agreement are settled according to sub-Section 13.8 of the present Agreement and the winning Party is entitled to recover from the Party determined to be in default all of its reasonable costs incurred in said litigation, including attorneys’ fees.

                        

            

            
                	
                            13.3

                        	
                            Counterparts. The present Agreement is made in the Russian and English languages, and shall be executed in two counterparts, each of which shall be deemed an original and each Party shall be delivered an original. In the event of a discrepancy between the Russian and English versions of the present Agreement
                            and in the event the Parties do not make a mutual decision on the discrepancy, the Parties agree to submit the matter to an independent international legal company, agreed by Parties, for a determination of the intent of the Parties and based upon principles of fairness.

                        

            

             

            
                

            

            
                	
                            13.4

                        	
                            Severability. If any provisions hereof are found invalid, illegal or unenforceable the remaining provisions of the present Agreement shall remain in full force and effect.

                        

            

            
                	
                            13.5

                        	
                            Assignment. The present Agreement shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto; provided, that neither the present Agreement nor any right hereunder shall be assignable by one party without prior written consent of the other party.

                        

            

            
                	
                            13.6

                        	
                            Captions. The captions of the various Sections of the present Agreement have been inserted only for convenience and shall not influence interpretation of any provisions of the present Agreement.

                        

            

            
                	
                            13.7

                        	
                            Governing Law. The validity, interpretation and effect of the present Agreement shall be governed exclusively by the laws of the Republic of Kazakhstan.

                        

            

            
                	
                            13.8

                        	
                            Dispute Resolution. Any dispute, controversy or claim arising out of or relating to the present Agreement, or the breach, termination or invalidity thereof, shall be settled by arbitration under the UNCITRAL Arbitration Rules in effect on the date of the present Agreement.

                        

            

            
                	
                             

                        	
                            (a)

                        	
                            The appointing authority shall be the International Centre for Dispute Resolution. The case shall be administered by the International Centre for Dispute Resolution under its Procedures for Cases under the UNCITRAL Arbitration Rules.

                        

            

            
                	
                             

                        	
                            (b)

                        	
                            The arbitration is to be held before a panel of three arbitrators, each of whom must be independent of the parties. No later than 15 days after the arbitration begins, each party shall select an arbitrator and request the two selected arbitrators to select a third neutral arbitrator. If the two arbitrators fail to select a third on or before the
                            10th day after the second arbitrator was selected, either party is entitled to request the International Centre for Dispute Resolution to appoint the third neutral arbitrator in accordance with its rules. Before beginning the hearings, each arbitrator must provide an oath or undertaking of impartiality.

                        

            

            
                	
                             

                        	
                            (c)

                        	
                            The arbitrators are to interpret all controversies and claims arising under or relating to the present Agreement in accordance with the laws of the Republic of Kazakhstan.

                        

            

            
                	
                             

                        	
                            (d)

                        	
                            The venue for any arbitration proceedings arising under or relating to the present Agreement shall be the city of Salt Lake City, State of Utah.

                        

            

             

            
                

            

            
                	
                             

                        	
                            (e)

                        	
                            Each party shall submit to any court of competent jurisdiction for purposes of the enforcement of any award, order or judgment of arbitration. Any award, order or judgment pursuant to arbitration is final and may be entered and enforced in any court of competent jurisdiction. 

                        

            

            
                	
                             

                        	
                            (f)

                        	
                            The costs of such dispute resolution shall be borne by the Parties equally and each Party shall pay its own attorneys’ fees; provided, however, that in the event either Party challenges or in any way seeks to have the arbiters’ decision or award vacated or corrected or modified, if the challenge is denied or the original decision or award is
                            affirmed, the challenging Party shall pay the costs and fees, including reasonable attorneys’ fees, of the non-challenging Party, both for the challenge and for the original dispute resolution process.

                        

            

            
                	
                            13.9

                        	
                            Notices. All notices, requests, demands and other communications under the present Agreement shall be in writing and delivered in person or sent by certified mail, postage prepaid and properly addressed as follows:

                        

            

             

            To ERTIS:

            Zhangabulova Gulnar Bekengaliyevna, General Director 

            Ertis Ferronickel Works LLP

            Bespayev Street 10A

            Semei, Kazakhstan 071400

            Fax: +7 7222 56 80 04

            To BEKEM:

            Kudabayev Yermek Askerbekovich, President

            Bekem Metals, Inc. 

            050020 Almaty, Kazakhstan 

            Kyz jibek str. 149

            Fax: 7-727-227-94-05, 393-60-46

             

            With a Copy to:

            Ronald Poulton

            Poulton & Yordan

            324 South 400 West, Suite 250

            Salt Lake City, Utah 84101

            Fax (801) 355-2990

             

            Any party may from time to time change its address for the purpose of notices to that party by a similar notice specifying a new address, but no such change shall be deemed to have been given until it is actually received by the respective party hereto.

             

            
                

            

             

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

             

            
                	
                             

                        	
                            BEKEM METALS, INC.

                        
	
                             

                        	
                            324 South 400 West, Suite 225

                            Salt Lake City, UT 84101

                             

                             

                            By:       /s/ Kudabayev Yermek Askerbekovich

                            Kudabayev Yermek Askerbekovich, President

                        
	
                             

                        	
                             

                        
	
                             

                        	
                             

                             

                        
	
                             

                        	
                            ERTIS FERRONICKEL WORKS LLP

                        
	
                             

                        	
                             

                             

                             

                            By:       /s/Zhangabulova Gulnar Bekengaliyevna

                            Zhangabulova Gulnar Bekengaliyevna, General Directorex4-4tosept272009form10q.htm

    Exhibit
4.4

    
 

    
      

      *00001440055-10001-095510312009*

       

      PROMISSORY
NOTE

      

      
        	
                Principal

              	
                Loan
      Date

              	
                Maturity

              	
                Loan
      No

              	
                Call
      / Coll

              	
                Account

              	
                Officer

              	
                Initials

              
	
                $20,000,000.00

              	
                10-31-2009

              	
                10-30-2010

              	
                1440055-10001-

              	 
      	
                00000992919

              	
                06137

              	
                 

              

      

      

      References
in the boxes above are for Lender's use only and do not limit the applicability
of this document to any particular loan or item.

       

      Any item
above containing "***" has been omitted due to text length
limitations.

      

      
        	
                Borrower:

              	
                STRATTEC
      SECURITY CORPORATION

                3333
      W Good Hope Rd

                Milwaukee,
      WI  53209-2043

              	
                Lender:

              	
                M&I
      Marshall & Ilsley Bank

                SE
      Wisconsin Region Commercial Lending

                770
      North Water Street

                Milwaukee,
      WI  53202

              

      

      

      
        	
                Principal
      Amount:  $20,000,000.00

              	
                Date
      of Note:  October 31,
2009

              

      

      

       

      PROMISE
TO PAY.  STRATTEC SECURITY CORPORATION ("Borrower") promises to pay to
M&I Marshall & Ilsley Bank ("Lender"), or order, in lawful money of the
United States of America, the principal amount of Twenty Million & 00/100
Dollars ($20,000,000.00) or so much as may be outstanding, together with
interest on the unpaid outstanding principal balance of each
advance.  Interest shall be calculated from the date of each advance
until repayment of each advance.

       

      PAYMENT.  Borrower
will pay this loan in one payment of all outstanding principal plus all accrued
unpaid interest on October 30, 2010.  In addition, Borrower will pay
regular monthly payments of all accrued unpaid interest due as of each payment
date, beginning November 30, 2009, with all subsequent interest payments to be
due on the last day of each month after that.  Unless otherwise agreed
or required by applicable law, payments will be applied to Accrued Interest,
Principal, Late Charges, and Escrow.  Borrower will pay Lender at
Lender's address shown above or at such other place as Lender may designate in
writing.

       

      VARIABLE INTEREST
RATE.  The interest rate on this Note is subject to change from
time to time based on changes in an independent index which is the one month
British Bankers Association (BBA) LIBOR and reported by a major news service
selected by Lender (such as Reuters, Bloomberg or Moneyline
Telerate).  If BBA LIBOR for the one month period is not provided or
reported on the first day of a month because, for example, it is a weekend or
holiday or for another reason, the One Month LIBOR Rate shall be established as
of the preceding day on which a BBA LIBOR rate is provided for the one month
period and reported by the selected news service (the "Index").  The
Index is not necessarily the lowest rate charged by Lender on its
loans.  If the Index becomes unavailable during the term of this loan,
Lender may designate a substitute index after notifying
Borrower.  Lender will tell Borrower the current Index rate upon
Borrower's request.  The interest rate change will not occur more
often than each first day of each calendar month and will become effective
without notice to the Borrower.  Borrower understands that Lender may
make loans based on other rates as well.  The Index currently is
0.256% per annum.  Interest on the unpaid principal balance of
this Note will be calculated as described in the "INTEREST CALCULATION METHOD"
paragraph using a rate of 2.500 percentage points over the Index, adjusted if
necessary for any minimum and maximum rate limitations described below,
resulting in an initial rate of 4.000% per annum based on a year of 360
days.  NOTICE:  Under no circumstances will the interest
rate on this Note be less than 4.000% per annum or more than the maximum rate
allowed by applicable law.

       

      INTEREST
CALCULATION METHOD.  Interest on this Note is computed on a 365/360
basis; that is, by applying the ratio of the interest rate over a year of 360
days, multiplied by the outstanding principal balance, multiplied by the actual
number of days the principal balance is outstanding.  All interest
payable under this Note is computed using this method.  This
calculation method results in a higher effective interest rate than the numeric
interest rate stated in this Note.

       

       

      
        
           

        

        
          1

          
            

          

        

        
           

        

      

       

      PREPAYMENT.  Borrower
may pay without penalty all or a portion of the amount owed earlier than it is
due.  Early payments will not, unless agreed to by Lender in writing,
relieve Borrower of Borrower's obligation to continue to make payments of
accrued unpaid interest.  Rather, early payments will reduce the
principal balance due.  Borrower agrees not to send Lender payments
marked "paid in full", "without recourse", or similar language.  If
Borrower sends such a payment, Lender may accept it without losing any of
Lender's rights under this Note, and Borrower will remain obligated to pay any
further amount owed to Lender.  All written communications concerning
disputed amounts, including any check or other payment instrument that indicates
that the payment constitutes "payment in full" of the amount owed or that is
tendered with other conditions or limitations or as full satisfaction of a
disputed amount must be mailed or delivered to:  M&I Marshall
& Ilsley Bank, P.O. 3114 Milwaukee, WI  53201-3114.

       

      LATE CHARGE.  If a
payment is not made on or before the 10th day after its due date, Borrower will
be charged 5.000% of the unpaid
portion of the regularly scheduled payment.

       

      INTEREST AFTER
DEFAULT.  Upon default, including failure to pay upon final
maturity, the interest rate on this Note shall be increased by adding a 5.000
percentage point margin ("Default Rate Margin").  The Default Rate
Margin shall also apply to each succeeding interest rate change that would have
applied had there been no default.  However, in no event will the
interest rate exceed the maximum interest rate limitations under applicable
law.

       

      DEFAULT.  Each of
the following shall constitute an event of default ("Event of Default") under
this Note:

       

      Payment
Default.  Borrower fails to make any payment when due under
this Note.

       

      Other
Defaults.  Borrower fails to comply with or to perform any
other term, obligation, covenant or condition contained in this Note or in any
of the related documents or to comply with or to perform any term, obligation,
covenant or condition contained in any other agreement between Lender and
Borrower.

       

      Default in Favor of Third
Parties.  Borrower or any Grantor defaults under any loan,
extension of credit, security agreement, purchase or sales agreement, or any
other agreement, in favor of any other creditor or person that may materially
affect any of Borrower's property or Borrower's ability to repay this Note or
perform Borrower's obligations under this Note or any of the related
documents.

       

      False
Statements.  Any warranty, representation or statement made or
furnished to Lender by Borrower or on Borrower's behalf under this Note or the
related documents is false or misleading in any material respect, either now or
at the time made or furnished or becomes false or misleading at any time
thereafter.

       

      Insolvency.  The
dissolution or termination of Borrower's existence as a going business, the
insolvency of Borrower, the appointment of a receiver for any part of Borrower's
property, any assignment for the benefit of creditors, any type of creditor
workout, or the commencement of any proceeding under any bankruptcy or
insolvency laws by or against Borrower.

       

      Creditor or Forfeiture
Proceedings.  Commencement of foreclosure or forfeiture
proceedings, whether by judicial proceeding, self-help, repossession or any
other method, by any creditor of Borrower or by any governmental agency against
any collateral securing the loan.  This includes a garnishment of any
of Borrower's accounts, including deposit accounts, with
Lender.  However, this Event of Default shall not apply if there is a
good faith dispute by Borrower as to the validity or reasonableness of the claim
which is the basis of the creditor or forfeiture proceeding and if Borrower
gives Lender written notice of the creditor or forfeiture proceeding and
deposits with Lender monies or a surety bond for the creditor or forfeiture
proceeding, in an amount determined by Lender, in its sole discretion, as being
an adequate reserve or bond for the dispute.

       

      Events Affecting
Guarantor.  Any of the preceding events occurs with respect to
any guarantor, endorser, surety, or accommodation party of any of the
indebtedness or any guarantor, endorser, surety, or accommodation party dies or
becomes incompetent, or revokes or disputes the validity of, or liability under,
any guaranty of the indebtedness evidenced by this Note.

       

      Change In
Ownership.  Any change in ownership of twenty-five percent
(25%) or more of the common stock of Borrower.

       

      Adverse Change.  A
material adverse change occurs in Borrower's financial condition, or Lender
believes the prospect of payment or performance of this Note is
impaired.

       

      Insecurity.  Lender
in good faith believes itself insecure.

       

      LENDER'S RIGHTS.  Upon default, Lender
may declare the entire unpaid principal balance under this Note and all accrued
unpaid interest immediately due, and then Borrower will pay that amount.

       

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

       

      ATTORNEYS' FEES;
EXPENSES.  Lender may hire or pay someone else to help collect
this Note if Borrower does not pay.  Borrower will pay Lender that
amount.  This includes, subject to any limits under applicable law,
Lender's attorneys' fees and Lender's legal expenses, whether or not there is a
lawsuit, including attorneys' fees, expenses for bankruptcy proceedings
(including efforts to modify or vacate any automatic stay or injunction), and
appeals.  If not prohibited by applicable law, Borrower also will pay
any court costs, in addition to all other sums provided by law.

       

      JURY
WAIVER.  Lender and Borrower hereby waive the right to any jury trial
in any action, proceeding, or counterclaim brought by either Lender or Borrower
against the other.

       

      GOVERNING
LAW.  This Note will be governed by federal law applicable to Lender
and, to the extent not preempted by federal law, the laws of the State of
Wisconsin without regard to its conflicts of law provisions.  This
Note has been accepted by Lender in the State of Wisconsin.

       

      CHOICE OF VENUE.  If
there is a lawsuit, Borrower agrees upon Lender's request to submit to the
jurisdiction of the courts of Milwaukee County, State of Wisconsin.

       

      DISHONORED ITEM
FEE.  Borrower will pay a fee to Lender of $30.00 if Borrower
makes a payment on Borrower's loan and the check or preauthorized charge with
which Borrower pays is later dishonored.

       

      RIGHT OF SETOFF.  To
the extent permitted by applicable law, Lender reserves a right of setoff in all
Borrower's accounts with Lender (whether checking, savings, or some other
account).  This includes all accounts Borrower holds jointly with
someone else and all accounts Borrower may open in the
future.  However, this does not include any IRA or Keogh accounts, or
any trust accounts for which setoff would be prohibited by
law.  Borrower authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on the debt against any and
all such accounts, and, at Lender's option, to administratively freeze all such
accounts to allow Lender to protect Lender's charge and setoff rights provided
in this paragraph.

       

      LINE OF
CREDIT.  This Note evidences a revolving line of
credit.  Advances under this Note, as well as directions for payment
from Borrower's accounts, may be requested orally or in writing by Borrower or
by an authorized person.  Lender may, but need not, require that all
oral requests be confirmed in writing.  Borrower agrees to be liable
for all sums either:  (A)  advanced in accordance with the
instructions of an authorized person or  (B)  credited to
any of Borrower's accounts with Lender.  The unpaid principal balance
owing on this Note at any time may be evidenced by endorsements on this Note or
by Lender's internal records, including daily computer
print-outs.  Lender will have no obligation to advance funds under
this Note if:  (A)  Borrower or any guarantor is in default
under the terms of this Note or any agreement that Borrower or any guarantor has
with Lender, including any agreement made in connection with the signing of this
Note;  (B)  Borrower or any guarantor ceases doing business
or is insolvent;  (C)  any guarantor seeks, claims or
otherwise attempts to limit, modify or revoke such guarantor's guarantee of this
Note or any other loan with Lender;  (D)  Borrower has
applied funds provided pursuant to this Note for purposes other than those
authorized by Lender; or  (E)  Lender in good faith believes
itself insecure.

       

      HEDGING INSTRUMENTS. The
Indebtedness includes, without limitation all obligations, indebtedness and
liabilities arising pursuant to or in connection with any interest rate swap
transaction, basis swap, forward rate transaction, interest rate option, price
risk hedging transaction or any similar transaction between the Borrower and
Lender.

       

      PRIOR NOTE.  This
Promissory Note provides for the renewal or refinance of the existing debt
evidenced by the Promissory Note, dated October 31, 2003, as may have been
modified, extended or amended.  This Note is not intended to satisfy
or extinguish the underlying debt and obligation evidenced by the October 31,
2003 Promissory Note, but rather set forth the terms and conditions on which
such debt is being renewed or refinanced.

       

      SUCCESSOR
INTERESTS.  The terms of this Note shall be binding upon
Borrower, and upon Borrower's heirs, personal representatives, successors and
assigns, and shall inure to the benefit of Lender and its successors and
assigns.

       

      GENERAL
PROVISIONS.  This Note benefits Lender and its successors and
assigns, and binds Borrower and Borrower's heirs, successors, assigns, and
representatives.  If any part of this Note cannot be enforced, this
fact will not affect the rest of the Note.  Lender may delay or forgo
enforcing any of its rights or remedies under this Note without losing
them.  Borrower and any other person who signs, guarantees or endorses
this Note, to the extent allowed by law, waive presentment, demand for payment,
and notice of dishonor.  Upon any change in the terms of this Note,
and unless otherwise expressly stated in writing, no party who signs this Note,
whether as maker, guarantor, accommodation maker or endorser, shall be released
from liability.  All such parties agree that Lender may renew or
extend (repeatedly and for any length of time) this loan or release any party or
guarantor or collateral; or impair, fail to realize upon or perfect Lender's
security interest in the collateral; and take any other action deemed necessary
by Lender without the consent of or notice to anyone.  All such
parties also agree that Lender may modify this loan without the consent of or
notice to anyone other than the party with whom the modification is
made.  The obligations under this Note are joint and
several.

       

       

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      PRIOR
TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS
NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS.  BORROWER
AGREES TO THE TERMS OF THE NOTE.

       

      BORROWER
ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.

       

      BORROWER:

       

      STRATTEC SECURITY
CORPORATION

      
      

       

      
        	

                By:
      /s/ Patrick J.
      Hansen                                            

                       Patrick
      J. Hansen, Senior V. P. & CFO of

                       STRATTEC
      SECURITY CORPORATION

              	By:
      /s/ Harold M.
      Stratton
      II                                                             
      

                   Harold
      M. Stratton II, Chairman, President & CEO of 

                   STRATTEC
      SECURITY CORPORATION

              

      

       

      LASER PRO
Lending, Ver. 5.45.00.004  Copr. Harland Financial Solutions, Inc.
1997, 2009.   All Rights Reserved.   -
WI  L:\LPL\CFI\LPL\D20.FC  TR-182789  PR-89
(M)

       

       

      
4

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