Document:

Lithium Exploration Group, Inc.: Exhibit 10.8 - Filed by newsfilecorp.com

EXHIBIT D 

REGISTRATION RIGHTS AGREEMENT 

          This
Registration Rights Agreement (this “Agreement”) is made and entered into
as of June 29, 2011, between Lithium Exploration Group, Inc., a Nevada
corporation (the “Company”) and the purchaser signatory hereto (the
“Purchaser”). 

          This
Agreement is made pursuant to the Securities Purchase Agreement, dated as of the
date hereof, between the Company and the Purchaser (the “Purchase
Agreement”). 

          The
Company and the Purchaser hereby agrees as follows: 

          1.
Definitions 

          Capitalized
terms used and not otherwise defined herein that are defined in the Purchase
Agreement shall have the meanings given such terms in the Purchase
Agreement. As used in this Agreement, the following terms shall have the
following meanings: 

          “Advice”
shall have the meaning set forth in Section 6(d). 

          “Effectiveness
Date” means, with respect to the Initial Registration Statement required to
be filed hereunder, the 90th calendar day following the date hereof
(or, in the event of a “full review” by the Commission, the 120th
calendar day following the date hereof) and with respect to any additional
Registration Statements which may be required pursuant to Section 3(c), the
90th calendar day following the date on which an additional
Registration Statement is required to be filed hereunder; provided,
however, that in the event the Company is notified by the Commission that
one or more of the above Registration Statements will not be reviewed or is no
longer subject to further review and comments, the Effectiveness Date as to such
Registration Statement shall be the fifth Trading Day following the date on
which the Company is so notified if such date precedes the dates otherwise
required above. 

          “Effectiveness
Period” shall have the meaning set forth in Section 2(a). 

          “Event”
shall have the meaning set forth in Section 2(b). 

          “Event
Date” shall have the meaning set forth in Section 2(b). 

          “Filing
Date” means, with respect to the Initial Registration Statement required
hereunder, the 30th calendar day following the date hereof and, with
respect to any additional Registration Statements which may be required pursuant
to Section 3(c), the earliest practical date on which the Company is permitted
by SEC Guidance to file such additional Registration Statement related to the
Registrable Securities. 

1

          “Holder”
or “Holders” means the holder or holders, as the case may be, from time
to time of Registrable Securities. 

          “Indemnified
Party” shall have the meaning set forth in Section 5(c). 

          “Indemnifying
Party” shall have the meaning set forth in Section 5(c). 

          “Initial
Shares” means a number of Registrable Securities equal to the lesser of (i)
the total number of Registrable Securities and (ii) one-third of the number of
issued and outstanding shares of Common Stock that are held by non-affiliates of
the Company on the day immediately prior to the filing date of the Initial
Registration Statement. 

          “Initial
Registration Statement” means the initial Registration Statement filed
pursuant to this Agreement. 

          “Losses”
shall have the meaning set forth in Section 5(a). 

          “Plan
of Distribution” shall have the meaning set forth in Section 2(a).

          “Prospectus”
means the prospectus included in a Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon
Rule 430A promulgated by the Commission pursuant to the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by a
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus. 

          “Registrable
Securities” means (a) all of the shares of Common Shares issuable to the
Purchaser upon conversion of the Debentures (assuming on the date of
determination the Debentures are converted in full without regard to any
exercise limitations therein, and including the payment of interest thereon),
(b) all Warrant Shares (assuming on the date of determination the Warrants are
exercised in full without regard to any exercise limitations therein), (d) any
additional shares of Common Stock issuable in connection with any anti-dilution
provisions in the Debentures or Warrants (without giving effect to any
limitations on exercise set forth in the Warrants) and (e) any securities issued
or issuable upon any stock split, dividend or other distribution,
recapitalization or similar event with respect to the foregoing;
provided, however, that the Company shall not be required to
maintain the effectiveness, or file another Registration Statement hereunder
with respect to any Registrable Securities that are not subject to the current
public information requirement under Rule 144 and that are eligible for resale
without volume or manner-of-sale restrictions without current public information
pursuant to Rule 144 promulgated by the Commission pursuant to a written opinion
letter to such effect, addressed, delivered and acceptable to the Transfer Agent
and the affected Holders. 

2

          “Registration
Statement” means any registration statement required to be filed hereunder
pursuant to Section 2(a) and any additional registration statements contemplated
by Section 3(c), including (in each case) the Prospectus, amendments and
supplements to any such registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference or deemed to be incorporated by reference in any such registration
statement. 

          
“Rule 415” means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended or interpreted from time to time, or
any similar rule or regulation hereafter adopted by the Commission having
substantially the same purpose and effect as such Rule. 

          “Rule
424” means Rule 424 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended or interpreted from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same purpose and effect as such Rule. 

          “Selling
Stockholder Questionnaire” shall have the meaning set forth in Section 3(a).

          “SEC
Guidance” means (i) any publicly-available written or oral guidance,
comments, requirements or requests of the Commission staff and (ii) the
Securities Act. 

          2.
Resale Registration 

          (a) On
or prior to each Filing Date, the Company shall prepare and file with the
Commission a Registration Statement covering the resale of all of the
Registrable Securities that are not then registered on an effective Registration
Statement for an offering to be made on a continuous basis pursuant to Rule 415.
Each Registration Statement filed hereunder shall be on Form S-3 (except if the
Company is not then eligible to register for resale the Registrable Securities
on Form S-3, in which case such registration shall be on another appropriate
form in accordance herewith) and shall contain substantially the “Plan of
Distribution” attached hereto as Annex A. In the event the amount of
Registrable Securities which may be included in the Registration Statement is
limited due to SEC Guidance (provided that, the Company shall use diligent
efforts to advocate with the Commission for the registration of all of the
Registrable Securities in accordance with the SEC Guidance, including without
limitation, the Manual of Publicly Available Telephone Interpretations D.29) the
Company shall use its best efforts to register such maximum portion of the
Registrable Securities as permitted by SEC Guidance. Subject to the terms of
this Agreement, the Company shall use its best efforts to cause a Registration
Statement to be declared effective under the Securities Act as promptly as
possible after the filing thereof, but in any event prior to the applicable
Effectiveness Date, and shall use its best efforts to keep such Registration
Statement continuously effective under the Securities Act until all Registrable
Securities covered by such Registration Statement have been sold, or may be sold
without volume or manner-of-sale restrictions pursuant to Rule 144, without the
requirement for the Company to be 

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in compliance with the current public
information requirement under Rule 144, as determined by the counsel to the
Company pursuant to a written opinion letter to such effect, addressed and
acceptable to the Transfer Agent and the affected Holders (the “Effectiveness
Period”). The Company shall telephonically request effectiveness of a
Registration Statement as of 5:00 p.m. New York City time on a Trading Day. The
Company shall immediately notify the Holders via facsimile or by e-mail of the
effectiveness of a Registration Statement on the same Trading Day that the
Company telephonically confirms effectiveness with the Commission, which shall
be the date requested for effectiveness of such Registration Statement. The
Company shall, by 9:30 a.m. New York City time on the Trading Day after the
effective date of such Registration Statement, file a final Prospectus with the
Commission as required by Rule 424. Failure to so notify the Holder within one
Trading Day of such notification of effectiveness or failure to file a final
Prospectus as foresaid shall be deemed an Event under Section 2(b).
Notwithstanding any other provision of this Agreement, if any SEC Guidance sets
forth a limitation on the number of Registrable Securities permitted to be
registered on a particular Registration Statement (and notwithstanding that the
Company used diligent efforts to advocate with the Commission for the
registration of all or a greater portion of Registrable Securities), unless
otherwise directed in writing by a Holder as to its Registrable Securities, the
number of Registrable Securities to be registered on such Registration Statement
will first be reduced by Registrable Securities represented by Warrant Shares
(applied, in the case that some Warrant Shares may be registered, to the Holders
on a pro rata basis based on the total number of unregistered Warrant Shares
held by such Holders), and second by Registrable Securities represented by the
Common Shares issuable upon conversion of the Debentures by the Purchasers
pursuant to the Purchase Agreement. In the event of a cutback hereunder, the
Company shall give the Holder at least five Trading Days prior written notice
along with the calculations as to such Holder’s allotment.

          (b)
If: (i) the Initial Registration Statement is not filed on or prior to its
Filing Date, or (ii) the Company fails to file with the Commission a request for
acceleration of a Registration Statement in accordance with Rule 461 promulgated
by the Commission pursuant to the Securities Act, within five Trading Days of
the date that the Company is notified (orally or in writing, whichever is
earlier) by the Commission that such Registration Statement will not be
“reviewed” or will not be subject to further review, or (iii) prior to the
effective date of a Registration Statement, the Company fails to file a
pre-effective amendment and otherwise respond in writing to comments made by the
Commission in respect of such Registration Statement within 20 calendar days
after the receipt of comments by or notice from the Commission that such
amendment is required in order for such Registration Statement to be declared
effective, or (iv) as to, in the aggregate among all Holders on a pro-rata basis
based on their purchase of the Securities pursuant to the Purchase Agreement, a
Registration Statement registering for resale all of the Initial Shares is not
declared effective by the Commission by the Effectiveness Date of the Initial
Registration Statement (unless the sole reason for such non-registration of all
or any portion of the Initial Shares is solely as a result of SEC Guidance under
Rule 415 or similar rule which limits the number of Registrable Securities which
may be included in a registration statement with respect to the Holders), or (v)
after the effective 

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date of a Registration Statement, such
Registration Statement ceases for any reason to remain continuously effective as
to all Registrable Securities included in such Registration Statement, or the
Holders are otherwise not permitted to utilize the Prospectus therein to resell
such Registrable Securities, for more than 10 consecutive calendar days or more
than an aggregate of 15 calendar days (which need not be consecutive calendar
days) during any 12-month period, or (vi) the Company shall fail for any reason
to satisfy the current public information requirement under Rule 144 as to the
applicable Registrable Securities (any such failure or breach being referred to
as an “Event”, and for purposes of clauses (i), (iv), and (vi), the date
on which such Event occurs, and for purpose of clause (ii) the date on which
such five Trading Day period is exceeded, and for purpose of clause (iii) the
date which such 15 calendar day period is exceeded, and for purpose of clause
(v) the date on which such 10 or 15 calendar day period, as applicable, is
exceeded being referred to as “Event Date”), then, the Company shall be
deemed to be in default under this Agreement and it shall constitute an Event of
Default under the Debentures.

          3.
Registration Procedures. 

          In
connection with the Company’s registration obligations hereunder, the Company
shall: 

          (a)
Not less than five (5) Trading Days prior to the filing of each Registration
Statement and not less than one (1) Trading Day prior to the filing of any
related Prospectus or any amendment or supplement thereto (including any
document that would be incorporated or deemed to be incorporated therein by
reference), the Company shall (i) furnish to the Holders copies of all such
documents proposed to be filed, which documents (other than those incorporated
or deemed to be incorporated by reference) will be subject to the review of the
Holders, and (ii) cause its officers and directors, counsel and independent
registered public accountants to respond to such inquiries as shall be
necessary, in the reasonable opinion of the Holders, to conduct a reasonable
investigation within the meaning of the Securities Act. The Company shall not
file a Registration Statement or any such Prospectus or any amendments or
supplements thereto to which the Holders of a majority of the Registrable
Securities shall reasonably object in good faith, provided that, the Company is
notified of such objection in writing no later than five (5) Trading Days after
the Holders have been so furnished copies of a Registration Statement or one (1)
Trading Day after the Holders have been so furnished copies of any related
Prospectus or amendments or supplements thereto. Each Holder agrees to furnish
to the Company a completed questionnaire in the form attached to this Agreement
as Annex B (a “Selling Stockholder Questionnaire”) on a date that
is not less than two (2) Trading Days prior to the Filing Date or by the end of
the fourth (4th) Trading Day following the date on which such Holder
receives draft materials in accordance with this Section.

          (b)
(i) Prepare and file with the Commission such amendments, including
post-effective amendments, to a Registration Statement and the Prospectus used
in 

5

connection therewith as may be
necessary to keep a Registration Statement continuously effective as to the
applicable Registrable Securities for the Effectiveness Period and prepare and
file with the Commission such additional Registration Statements in order to
register for resale under the Securities Act all of the Registrable Securities,
(ii) cause the related Prospectus to be amended or supplemented by any required
Prospectus supplement (subject to the terms of this Agreement), and, as so
supplemented or amended, to be filed pursuant to Rule 424, (iii) respond as
promptly as reasonably possible to any comments received from the Commission
with respect to a Registration Statement or any amendment thereto and provide as
promptly as reasonably possible to the Holders true and complete copies of all
correspondence from and to the Commission relating to a Registration Statement
(provided that, the Company may excise any information contained therein which
would constitute material non-public information as to any Holder which has not
executed a confidentiality agreement with the Company), and (iv) comply in all
material respects with the provisions of the Securities Act and the Exchange Act
with respect to the disposition of all Registrable Securities covered by a
Registration Statement during the applicable period in accordance (subject to
the terms of this Agreement) with the intended methods of disposition by the
Holders thereof set forth in such Registration Statement as so amended or in
such Prospectus as so supplemented. 

          (c)
Notify the Holders of Registrable Securities to be sold (which notice shall,
pursuant to clauses (iii) through (vi) hereof, be accompanied by an instruction
to suspend the use of the Prospectus until the requisite changes have been made)
as promptly as reasonably possible (and, in the case of (i)(A) below, not less
than one Trading Day prior to such filing) and (if requested by any such Person)
confirm such notice in writing no later than one Trading Day following the day
(i)(A) when a Prospectus or any Prospectus supplement or post-effective
amendment to a Registration Statement is proposed to be filed, (B) when the
Commission notifies the Company whether there will be a “review” of such
Registration Statement and whenever the Commission comments in writing on such
Registration Statement, and (C) with respect to a Registration Statement or any
post-effective amendment, when the same has become effective, (ii) of any
request by the Commission or any other federal or state governmental authority
for amendments or supplements to a Registration Statement or Prospectus or for
additional information, (iii) of the issuance by the Commission or any other
federal or state governmental authority of any stop order suspending the
effectiveness of a Registration Statement covering any or all of the Registrable
Securities or the initiation of any Proceedings for that purpose; (iv) of the
receipt by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening of any
Proceeding for such purpose, (v) of the occurrence of any event or passage of
time that makes the financial statements included in a Registration Statement
ineligible for inclusion therein or any statement made in a Registration
Statement or Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires any revisions to a Registration Statement, Prospectus or other
documents so that, in the case of a Registration Statement or the Prospectus, as
the case may be, it will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under 

6

which they were made, not misleading
and (vi) of the occurrence or existence of any pending corporate development
with respect to the Company that the Company believes may be material and that,
in the determination of the Company, makes it not in the best interest of the
Company to allow continued availability of a Registration Statement or
Prospectus, provided that, any and all of such information shall remain
confidential to each Holder until such information otherwise becomes public,
unless disclosure by a Holder is required by law; provided,
further, that notwithstanding each Holder’s agreement to keep such
information confidential, each such Holder makes no acknowledgement that any
such information is material, non-public information. 

          (d)
Use its best efforts to avoid the issuance of, or, if issued, obtain the
withdrawal of (i) any order stopping or suspending the effectiveness of a
Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment. 

          (e)
Furnish to each Holder, without charge, at least one conformed copy of each such
Registration Statement and each amendment thereto, including financial
statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference to the extent requested by such Person, and
all exhibits to the extent requested by such Person (including those previously
furnished or incorporated by reference) promptly after the filing of such
documents with the Commission; provided, that any such item which is available
on the EDGAR system need not be furnished in physical form. 

          (f)
Subject to the terms of this Agreement, the Company hereby consents to the use
of such Prospectus and each amendment or supplement thereto by each of the
selling Holders in connection with the offering and sale of the Registrable
Securities covered by such Prospectus and any amendment or supplement thereto,
except after the giving of any notice pursuant to Section 3(c). 

          (g)
The Company shall cooperate with any broker-dealer through which a Holder
proposes to resell its Registrable Securities in effecting a filing with the
FINRA Corporate Financing Department. 

          (h)
Prior to any resale of Registrable Securities by a Holder, use its commercially
reasonable efforts to register or qualify or cooperate with the selling Holders
in connection with the registration or qualification (or exemption from the
Registration or qualification) of such Registrable Securities for the resale by
the Holder under the securities or Blue Sky laws of such jurisdictions within
the United States as any Holder reasonably requests in writing, to keep each
registration or qualification (or exemption therefrom) effective during the
Effectiveness Period and to do any and all other acts or things reasonably
necessary to enable the disposition in such jurisdictions of the Registrable
Securities covered by each Registration Statement; provided, that, the Company
shall not be required to qualify generally to do business in any jurisdiction
where it is not then so qualified, subject the Company to any material tax in
any such 

7

jurisdiction where it is not then so
subject or file a general consent to service of process in any such
jurisdiction. 

          (i) If
requested by a Holder, cooperate with such Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be delivered to a transferee pursuant to a Registration Statement, which
certificates shall be free, to the extent permitted by the Purchase Agreement,
of all restrictive legends, and to enable such Registrable Securities to be in
such denominations and registered in such names as any such Holder may request.

          (j) If
the Company notifies the Holders in accordance with clauses (iii) through (vi)
of Section 3(d) above to suspend the use of any Prospectus until the requisite
changes to such Prospectus have been made, then the Holders shall suspend use of
such Prospectus. The Company will use its best efforts to ensure that the use of
the Prospectus may be resumed as promptly as is practicable. The Company shall
be entitled to exercise its right under this Section 3(j) to suspend the
availability of a Registration Statement and Prospectus, for a period not to
exceed 60 calendar days (which need not be consecutive days) in any 12 month
period. 

          (k)
Comply with all applicable rules and regulations of the Commission. 

          (l)
The Company may require each selling Holder to furnish to the Company a
certified statement as to the number of shares of Common Stock beneficially
owned by such Holder and, if required by the Commission, the natural persons
thereof that have voting and dispositive control over the shares. During any
periods that the Company is unable to meet its obligations hereunder with
respect to the registration of the Registrable Securities solely because any
Holder fails to furnish such information within three Trading Days of the
Company’s request, any liquidated damages that are accruing at such time as to
such Holder only shall be tolled and any Event that may otherwise occur solely
because of such delay shall be suspended as to such Holder only, until such
information is delivered to the Company. 

          4.
Registration Expenses. All fees and expenses incident to the performance
of or compliance with this Agreement by the Company shall be borne by the
Company whether or not any Registrable Securities are sold pursuant to a
Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses of the Company’s counsel and
independent registered public accountants) (A) with respect to filings made with
the Commission, (B) with respect to filings required to be made with any Trading
Market on which the Common Stock is then listed for trading, (C) in compliance
with applicable state securities or Blue Sky laws reasonably agreed to by the
Company in writing (including, without limitation, fees and disbursements of
counsel for the Company in connection with Blue Sky qualifications or exemptions
of the Registrable Securities) and (D) if not previously paid by the Company in
connection with an Issuer Filing, with respect to any filing that may be
required to be made by any broker through which a Holder intends to make sales
of Registrable Securities with the FINRA, so long as the broker is receiving no
more than a customary brokerage commission in 

8

connection with such sale, (ii) printing expenses (including,
without limitation, expenses of printing certificates for Registrable
Securities), (iii) messenger, telephone and delivery expenses, (iv) fees and
disbursements of counsel for the Company, (v) Securities Act liability
insurance, if the Company so desires such insurance, and (vi) fees and expenses
of all other Persons retained by the Company in connection with the consummation
of the transactions contemplated by this Agreement. In addition, the Company
shall be responsible for all of its internal expenses incurred in connection
with the consummation of the transactions contemplated by this Agreement
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual
audit and the fees and expenses incurred in connection with the listing of the
Registrable Securities on any securities exchange as required hereunder. In no
event shall the Company be responsible for any broker or similar commissions of
any Holder or, except to the extent provided for in the Transaction Documents,
any legal fees or other costs of the Holders. 

          5.
Indemnification. 

          (a)
Indemnification by the Company. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless each Holder, the
officers, directors, members, partners, agents, brokers (including brokers who
offer and sell Registrable Securities as principal as a result of a pledge or
any failure to perform under a margin call of Common Stock), investment advisors
and employees (and any other Persons with a functionally equivalent role of a
Person holding such titles, notwithstanding a lack of such title or any other
title) of each of them, each Person who controls any such Holder (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
and the officers, directors, members, stockholders, partners, agents and
employees (and any other Persons with a functionally equivalent role of a Person
holding such titles, notwithstanding a lack of such title or any other title) of
each such controlling Person, to the fullest extent permitted by applicable law,
from and against any and all losses, claims, damages, liabilities, costs
(including, without limitation, reasonable attorneys’ fees) and expenses
(collectively, “Losses”), as incurred, arising out of or relating to (1)
any untrue or alleged untrue statement of a material fact contained in a
Registration Statement, any Prospectus or any form of prospectus or in any
amendment or supplement thereto or in any preliminary prospectus, or arising out
of or relating to any omission or alleged omission of a material fact required
to be stated therein or necessary to make the statements therein (in the case of
any Prospectus or supplement thereto, in light of the circumstances under which
they were made) not misleading or (2) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act or any state securities law, or
any rule or regulation thereunder, in connection with the performance of its
obligations under this Agreement, except to the extent, but only to the extent,
that (i) such untrue statements or omissions are based solely upon information
regarding such Holder furnished in writing to the Company by such Holder
expressly for use therein, or to the extent that such information relates to
such Holder or such Holder’s proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing by such Holder
expressly for use in a Registration Statement, such Prospectus or in any
amendment or supplement thereto (it being understood that the Holder has
approved Annex A hereto for this purpose) or (ii) in 

9

the case of an occurrence of an event
of the type specified in Section 3(d)(iii)-(vi), the use by such Holder of an
outdated or defective Prospectus after the Company has notified such Holder in
writing that the Prospectus is outdated or defective and prior to the receipt by
such Holder of the Advice contemplated in Section 6(d). The Company shall notify
the Holders promptly of the institution, threat or assertion of any Proceeding
arising from or in connection with the transactions contemplated by this
Agreement of which the Company is aware. 

          (b)
Indemnification by Holders. Each Holder shall, severally and not jointly,
indemnify and hold harmless the Company, its directors, officers, agents and
employees, each Person who controls the Company (within the meaning of Section
15 of the Securities Act and Section 20 of the Exchange Act), and the directors,
officers, agents or employees of such controlling Persons, to the fullest extent
permitted by applicable law, from and against all Losses, as incurred, to the
extent arising out of or based solely upon: (x) such Holder’s failure to comply
with the prospectus delivery requirements of the Securities Act or (y) any
untrue or alleged untrue statement of a material fact contained in any
Registration Statement, any Prospectus, or in any amendment or supplement
thereto or in any preliminary prospectus, or arising out of or relating to any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading (i) to the extent, but
only to the extent, that such untrue statement or omission is contained in any
information so furnished in writing by such Holder to the Company specifically
for inclusion in such Registration Statement or such Prospectus or (ii) to the
extent that such information relates to such Holder’s proposed method of
distribution of Registrable Securities and was reviewed and expressly approved
in writing by such Holder expressly for use in a Registration Statement (it
being understood that the Holder has approved Annex A hereto for this purpose),
such Prospectus or in any amendment or supplement thereto or (ii) in the case of
an occurrence of an event of the type specified in Section 3(d)(iii)-(vi), the
use by such Holder of an outdated or defective Prospectus after the Company has
notified such Holder in writing that the Prospectus is outdated or defective and
prior to the receipt by such Holder of the Advice contemplated in Section 6(d).
In no event shall the liability of any selling Holder hereunder be greater in
amount than the dollar amount of the net proceeds received by such Holder upon
the sale of the Registrable Securities giving rise to such indemnification
obligation. 

          (c)
Conduct of Indemnification Proceedings. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity hereunder (an
“Indemnified Party”), such Indemnified Party shall promptly notify
the Person from whom indemnity is sought (the “Indemnifying Party”) in
writing, and the Indemnifying Party shall have the right to assume the defense
thereof, including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided, that, the failure of any Indemnified
Party to give such notice shall not relieve the Indemnifying Party of its
obligations or liabilities pursuant to this Agreement, except (and only) to the
extent that it shall be finally determined by a court of competent jurisdiction
(which determination is not subject to appeal or further review) that such
failure shall have prejudiced the Indemnifying Party. 

10

          An
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
expenses, (2) the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding, or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified Party
and the Indemnifying Party, and counsel to the Indemnified Party shall
reasonably believe that a material conflict of interest is likely to exist if
the same counsel were to represent such Indemnified Party and the Indemnifying
Party (in which case, if such Indemnified Party notifies the Indemnifying Party
in writing that it elects to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party shall not have the right to assume
the defense thereof and the reasonable fees and expenses of no more than one
separate counsel shall be at the expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld or delayed. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending
Proceeding in respect of which any Indemnified Party is a party, unless such
settlement includes an unconditional release of such Indemnified Party from all
liability on claims that are the subject matter of such Proceeding. 

          Subject
to the terms of this Agreement, all reasonable fees and expenses of the
Indemnified Party (including reasonable fees and expenses to the extent incurred
in connection with investigating or preparing to defend such Proceeding in a
manner not inconsistent with this Section) shall be paid to the Indemnified
Party, as incurred, within ten Trading Days of written notice thereof to the
Indemnifying Party; provided, that, the Indemnified Party shall promptly
reimburse the Indemnifying Party for that portion of such fees and expenses
applicable to such actions for which such Indemnified Party is judicially
determined not to be entitled to indemnification hereunder. 

          (d)
Contribution. If the indemnification under Section 5(a) or 5(b) is
unavailable to an Indemnified Party or insufficient to hold an Indemnified Party
harmless for any Losses, then each Indemnifying Party shall contribute to the
amount paid or payable by such Indemnified Party, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in this 

11

Agreement, any reasonable attorneys’ or
other fees or expenses incurred by such party in connection with any Proceeding
to the extent such party would have been indemnified for such fees or expenses
if the indemnification provided for in this Section was available to such party
in accordance with its terms. 

          The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 5(d), no Holder shall be required
to contribute, in the aggregate, any amount in excess of the amount by which the
net proceeds actually received by such Holder from the sale of the Registrable
Securities subject to the Proceeding exceeds the amount of any damages that such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. 

          The
indemnity and contribution agreements contained in this Section are in addition
to any liability that the Indemnifying Parties may have to the Indemnified
Parties. 

          6.
Miscellaneous. 

          (a)
Remedies. In the event of a breach by the Company or by a Holder of any
of their respective obligations under this Agreement, each Holder or the
Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of damages,
shall be entitled to specific performance of its rights under this Agreement.
The Company and each Holder agree that monetary damages would not provide
adequate compensation for any losses incurred by reason of a breach by it of any
of the provisions of this Agreement and hereby further agrees that, in the event
of any action for specific performance in respect of such breach, it shall not
assert or shall waive the defense that a remedy at law would be adequate. 

          (b)
No Piggyback on Registrations; Prohibition on Filing Other Registration
Statements. Neither the Company nor any of its security holders (other
than the Holders in such capacity pursuant hereto) may include securities of the
Company in any Registration Statements other than the Registrable Securities.
The Company shall not file any other registration statements until all
Registrable Securities are registered pursuant to a Registration Statement that
is declared effective by the Commission, provided that this Section 6(b) shall
not prohibit the Company from filing amendments to registration statements filed
prior to the date of this Agreement. 

          (c)
Compliance. Each Holder covenants and agrees that it will comply with the
prospectus delivery requirements of the Securities Act as applicable to it in
connection with sales of Registrable Securities pursuant to a Registration
Statement. 

          (d)
Discontinued Disposition. By its acquisition of Registrable Securities,
each Holder agrees that, upon receipt of a notice from the Company of the
occurrence of any event of 

12

the kind described in Section 3(d)(iii) through (vi), such
Holder will forthwith discontinue disposition of such Registrable Securities
under a Registration Statement until it is advised in writing (the
“Advice”) by the Company that the use of the applicable Prospectus (as it
may have been supplemented or amended) may be resumed. The Company will use its
best efforts to ensure that the use of the Prospectus may be resumed as promptly
as is practicable. The Company agrees and acknowledges that any periods during
which the Holder is required to discontinue the disposition of the Registrable
Securities hereunder shall be subject to the provisions of Section 2(b). 

          (e)
Piggy-Back Registrations. If, at any time during the Effectiveness
Period, there is not an effective Registration Statement covering all of the
Registrable Securities and the Company shall determine to prepare and file with
the Commission a registration statement relating to an offering for its own
account or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with the Company’s stock option or
other employee benefit plans, then the Company shall deliver to each Holder a
written notice of such determination and, if within fifteen days after the date
of the delivery of such notice, any such Holder shall so request in writing, the
Company shall include in such registration statement all or any part of such
Registrable Securities such Holder requests to be registered; provided,
however, that the Company shall not be required to register any
Registrable Securities pursuant to this Section 6(e) that are eligible for
resale pursuant to Rule 144 promulgated by the Commission pursuant to the
Securities Act or that are the subject of a then effective Registration
Statement. 

          (f)
Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the same shall be in writing and signed by the Company and the Holders of
67% or more of the then outstanding Registrable Securities (including, for this
purpose any Registrable Securities issuable upon exercise or conversion of any
Security). If a Registration Statement does not register all of the Registrable
Securities pursuant to a waiver or amendment done in compliance with the
previous sentence, then the number of Registrable Securities to be registered
for each Holder shall be reduced pro rata among all Holders and each Holder
shall have the right to designate which of its Registrable Securities shall be
omitted from such Registration Statement. Notwithstanding the foregoing, a
waiver or consent to depart from the provisions hereof with respect to a matter
that relates exclusively to the rights of a Holder or some Holders and that does
not directly or indirectly affect the rights of other Holders may be given by
such Holder or Holders of all of the Registrable Securities to which such waiver
or consent relates; provided, however, that the provisions of this
sentence may not be amended, modified, or supplemented except in accordance with
the provisions of the first sentence of this Section 6(f).

          (g)
Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be delivered as set forth
in the Purchase Agreement.

13

          (h)
Successors and Assigns. This Agreement shall inure to the benefit of and
be binding upon the successors and permitted assigns of each of the parties and
shall inure to the benefit of each Holder. The Company may not assign (except by
merger) its rights or obligations hereunder without the prior written consent of
all of the Holders of the then outstanding Registrable Securities. Each Holder
may assign their respective rights hereunder in the manner and to the Persons as
permitted under the Purchase Agreement. 

          (i)
No Inconsistent Agreements. Neither the Company nor any of its
Subsidiaries has entered, as of the date hereof, nor shall the Company or any of
its Subsidiaries, on or after the date of this Agreement, enter into any
agreement with respect to its securities, that would have the effect of
impairing the rights granted to the Holders in this Agreement or otherwise
conflicts with the provisions hereof. Except as set forth on Schedule
6(i), neither the Company nor any of its Subsidiaries has previously entered
into any agreement granting any registration rights with respect to any of its
securities to any Person that have not been satisfied in full. 

          (j)
Execution and Counterparts. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission or by e-mail delivery of a “.pdf” format
data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile or “.pdf” signature page were an original
thereof. 

          (k)
Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be determined in
accordance with the provisions of the Purchase Agreement. 

          (l)
Cumulative Remedies. The remedies provided herein are cumulative and not
exclusive of any other remedies provided by law. 

          (m)
Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their commercially reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable. 

          (n)
Headings. The headings in this Agreement are for convenience only, do not
constitute a part of the Agreement and shall not be deemed to limit or affect
any of the provisions hereof. 

14

          (o)
Independent Nature of Holders’ Obligations and Rights. The obligations of
each Holder hereunder are several and not joint with the obligations of any
other Holder hereunder, and no Holder shall be responsible in any way for the
performance of the obligations of any other Holder hereunder. Nothing contained
herein or in any other agreement or document delivered at any closing, and no
action taken by any Holder pursuant hereto or thereto, shall be deemed to
constitute the Holders as a partnership, an association, a joint venture or any
other kind of entity, or create a presumption that the Holders are in any way
acting in concert with respect to such obligations or the transactions
contemplated by this Agreement. Each Holder shall be entitled to protect and
enforce its rights, including without limitation the rights arising out of this
Agreement, and it shall not be necessary for any other Holder to be joined as an
additional party in any proceeding for such purpose. 

******************** 

(Signature Pages Follow) 

15

          IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as
of the date first written above. 

	 	LITHIUM EXPLORATION
      GROUP, INC. 
	 	 	  
	 	 	  
	 	By:	/s/
      Alexander Walsh
	 	 	Name: Alexander Walsh 
	 	 	Title: CEO 

[SIGNATURE PAGE OF HOLDERS FOLLOWS] 

16

[SIGNATURE PAGE OF HOLDERS TO LITHIUM EXPLORATION GROUP, INC.
RRA] 

	Name of Holder: 	 Hagen Investments Ltd. 
	 	 
	Signature of Authorized Signatory of
      Holder: 	 /s/ Hugh O’Neill
	 	 
	Name of Authorized Signatory: 	 Hugh O’Neill
	 	 
	Title of Authorized Signatory: 	 President

[SIGNATURE PAGES CONTINUE] 

17

Annex A 

Plan of Distribution 

     Each Selling Stockholder (the
“Selling Stockholders”) of the common stock and any of their pledgees,
assignees and successors-in-interest may, from time to time, sell any or all of
their shares of common stock on the OTC Bulletin Board or any other stock
exchange, market or trading facility on which the shares are traded or in
private transactions. These sales may be at fixed or negotiated prices. A
Selling Stockholder may use any one or more of the following methods when
selling shares: 

	
  ordinary brokerage transactions and transactions in which the broker-dealer
  solicits purchasers; 

  
	
  block trades in which the broker-dealer will attempt to sell the shares as
  agent but may position and resell a portion of the block as principal to
  facilitate the transaction; 

  
	
  purchases by a broker-dealer as principal and resale by the broker-dealer
  for its account; 

  
	
  an exchange distribution in accordance with the rules of the applicable
  exchange; 

  
	
  privately negotiated transactions; 

  
	
  settlement of short sales entered into after the effective date of the
  registration statement of which this prospectus is a part; 

  
	
  broker-dealers may agree with the Selling Stockholders to sell a specified
  number of such shares at a stipulated price per share; 

  
	
  through the writing or settlement of options or other hedging transactions,
  whether through an options exchange or otherwise; 

  
	
  a combination of any such methods of sale; or 

  
	
  any other method permitted pursuant to applicable law. 

     The Selling Stockholders may also
sell shares under Rule 144 under the Securities Act of 1933, as amended (the
“Securities Act”), if available, rather than under this prospectus. 

     Broker-dealers engaged by the
Selling Stockholders may arrange for other brokers-dealers to participate in
sales. Broker-dealers may receive commissions or discounts from the Selling
Stockholders (or, if any broker-dealer acts as agent for the purchaser of
shares, from the purchaser) in amounts to be negotiated, but, except as set
forth in a supplement to this Prospectus, in the case of an agency transaction
not in excess of a customary brokerage 

18

commission in compliance with FINRA Rule 2440; and in the case
of a principal transaction a markup or markdown in compliance with IM-2440.

     In connection with the sale of
the common stock or interests therein, the Selling Stockholders may enter into
hedging transactions with broker-dealers or other financial institutions, which
may in turn engage in short sales of the common stock in the course of hedging
the positions they assume. The Selling Stockholders may also sell shares of the
common stock short and deliver these securities to close out their short
positions, or loan or pledge the common stock to broker-dealers that in turn may
sell these securities. The Selling Stockholders may also enter into option or
other transactions with broker-dealers or other financial institutions or the
creation of one or more derivative securities which require the delivery to such
broker-dealer or other financial institution of shares offered by this
prospectus, which shares such broker-dealer or other financial institution may
resell pursuant to this prospectus (as supplemented or amended to reflect such
transaction). 

     The Selling Stockholders and any
broker-dealers or agents that are involved in selling the shares may be deemed
to be “underwriters” within the meaning of the Securities Act in connection with
such sales. In such event, any commissions received by such broker-dealers or
agents and any profit on the resale of the shares purchased by them may be
deemed to be underwriting commissions or discounts under the Securities Act.
Each Selling Stockholder has informed the Company that it does not have any
written or oral agreement or understanding, directly or indirectly, with any
person to distribute the Common Stock. In no event shall any broker-dealer
receive fees, commissions and markups which, in the aggregate, would exceed
eight percent (8%). 

     The Company is required to pay
certain fees and expenses incurred by the Company incident to the registration
of the shares. The Company has agreed to indemnify the Selling Stockholders
against certain losses, claims, damages and liabilities, including liabilities
under the Securities Act.

     Because Selling Stockholders may
be deemed to be “underwriters” within the meaning of the Securities Act, they
will be subject to the prospectus delivery requirements of the Securities Act
including Rule 172 thereunder. In addition, any securities covered by this
prospectus which qualify for sale pursuant to Rule 144 under the Securities Act
may be sold under Rule 144 rather than under this prospectus. There is no
underwriter or coordinating broker acting in connection with the proposed sale
of the resale shares by the Selling Stockholders. 

     We agreed to keep this prospectus
effective until the earlier of (i) the date on which the shares may be resold by
the Selling Stockholders without registration and without regard to any volume
or manner-of-sale limitations by reason of Rule 144, without the requirement for
the Company to be in compliance with the current public information under Rule
144 under the Securities Act or any other rule of similar effect or (ii) all of
the shares have been sold pursuant to this prospectus or Rule 144 under the
Securities Act or any other rule of similar effect. The resale shares will be
sold only through registered or licensed brokers or dealers if required under
applicable state securities laws. In addition, in certain states, the resale
shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with. 

19

     Under applicable rules and
regulations under the Exchange Act, any person engaged in the distribution of
the resale shares may not simultaneously engage in market making activities with
respect to the common stock for the applicable restricted period, as defined in
Regulation M, prior to the commencement of the distribution. In addition, the
Selling Stockholders will be subject to applicable provisions of the Exchange
Act and the rules and regulations thereunder, including Regulation M, which may
limit the timing of purchases and sales of shares of the common stock by the
Selling Stockholders or any other person. We will make copies of this prospectus
available to the Selling Stockholders and have informed them of the need to
deliver a copy of this prospectus to each purchaser at or prior to the time of
the sale (including by compliance with Rule 172 under the Securities Act). 

20

Annex B 

LITHIUM EXPLORATION GROUP, INC. 

Selling Stockholder Notice and Questionnaire 

     The undersigned beneficial owner
of common stock (the “Registrable Securities”) of LITHIUM EXPLORATION
GROUP, INC., a Nevada corporation (the “Company”), understands that the
Company has filed or intends to file with the Securities and Exchange Commission
(the “Commission”) a registration statement (the “Registration
Statement”) for the registration and resale under Rule 415 of the Securities
Act of 1933, as amended (the “Securities Act”), of the Registrable
Securities, in accordance with the terms of the Registration Rights Agreement
(the “Registration Rights Agreement”) to which this document is annexed.
A copy of the Registration Rights Agreement is available from the Company upon
request at the address set forth below. All capitalized terms not otherwise
defined herein shall have the meanings ascribed thereto in the Registration
Rights Agreement. 

     Certain legal consequences arise
from being named as a selling stockholder in the Registration Statement and the
related prospectus. Accordingly, holders and beneficial owners of Registrable
Securities are advised to consult their own securities law counsel regarding the
consequences of being named or not being named as a selling stockholder in the
Registration Statement and the related prospectus. 

NOTICE 

     The undersigned beneficial owner
(the “Selling Stockholder”) of Registrable Securities hereby elects to
include the Registrable Securities owned by it in the Registration Statement.

21

The undersigned hereby provides the following information to
the Company and represents and warrants that such information is accurate: 

QUESTIONNAIRE 

	1. 	
      Name.

	 	 	 
		(a) 	
      Full Legal Name of Selling Stockholder

	 	 	 
	 	 	 
	 	 	 
		(b) 	
      Full Legal Name of Registered Holder (if not the same as
      (a) above) through which Registrable Securities are held:

	 	 	 
	 	 	 
	 	 	 
		(c) 	
      Full Legal Name of Natural Control Person (which means a
      natural person who directly or indirectly alone or with others has power
      to vote or dispose of the securities covered by this
  Questionnaire):

	 	 	 
	 	 	 

2. Address for Notices to Selling Stockholder: 

	 
	 
	 
	Telephone: 	 
	Fax: 	 
	Contact Person: 	 

3. Broker-Dealer Status: 

	 	(a) 	
      Are you a broker-dealer?

Yes [     ]     
 No [     ]

	 	(b) 	
      If “yes” to Section 3(a), did you receive your
      Registrable Securities as compensation for investment banking services to
      the Company?

Yes [     ]     
 No [     ]

		Note: 	If “no” to Section 3(b), the Commission’s staff
      has indicated that you should be identified as an underwriter in the
      Registration Statement. 

22

	 	(c) 	
      Are you an affiliate of a
broker-dealer?

Yes [     ]     
 No [     ]

	 	(d) 	
      If you are an affiliate of a broker-dealer, do you
      certify that you purchased the Registrable Securities in the ordinary
      course of business, and at the time of the purchase of the Registrable
      Securities to be resold, you had no agreements or understandings, directly
      or indirectly, with any person to distribute the Registrable
      Securities?

Yes [     ]     
 No [     ]

		Note: 	If “no” to Section 3(d), the Commission’s staff
      has indicated that you should be identified as an underwriter in the
      Registration Statement. 

4. Beneficial Ownership of Securities of the Company Owned
by the Selling Stockholder. 

Except as set forth below in this
Item 4, the undersigned is not the beneficial or registered owner of any
securities of the Company other than the securities issuable pursuant to the
Purchase Agreement. 

	 	(a) 	
      Type and Amount of other securities beneficially owned by
      the Selling Stockholder:

	 	 	 
	 	 	 
	 	 	 

23

5. Relationships with the Company: 

Except as set forth below, neither
the undersigned nor any of its affiliates, officers, directors or principal
equity holders (owners of 5% of more of the equity securities of the
undersigned) has held any position or office or has had any other material
relationship with the Company (or its predecessors or affiliates) during the
past three years. 

	 	State any exceptions here: 
	 	 
	 	 
	 	 

     The undersigned agrees to
promptly notify the Company of any inaccuracies or changes in the information
provided herein that may occur subsequent to the date hereof at any time while
the Registration Statement remains effective. 

     By signing below, the undersigned
consents to the disclosure of the information contained herein in its answers to
Items 1 through 5 and the inclusion of such information in the Registration
Statement and the related prospectus and any amendments or supplements thereto.
The undersigned understands that such information will be relied upon by the
Company in connection with the preparation or amendment of the Registration
Statement and the related prospectus. 

     IN WITNESS WHEREOF the
undersigned, by authority duly given, has caused this Notice and Questionnaire
to be executed and delivered either in person or by its duly authorized agent.

	Date: 	 	 	 Beneficial Owner: 	
	  	 	 	 	  
	  	 	 	 By: 	 	
	  	 	 	 	Name: 	
	  	 	 	 	Title: 	

PLEASE FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND
QUESTIONNAIRE, AND RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO: 

24Lithium Exploration Group, Inc.: Exhibit 10.9 - Filed by newsfilecorp.com

EXHIBIT A

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS
SECURITY IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON
CONVERSION OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

Original Issue Date: June 29, 2011
Original Conversion Price
(subject to adjustment herein): $0.83

$1,000,000.00

12% SENIOR CONVERTIBLE DEBENTURE 
DUE DECEMBER 28,
2012

     THIS 12% SENIOR CONVERTIBLE
DEBENTURE is one of a series of duly authorized and validly issued 12% Senior
Convertible Debentures of Lithium Exploration Group, Inc., a Nevada corporation,
(the “Company”), having its principal place of business at 3200 N. Hayden
Road, Suite 300, Scottsdale, AZ 85251, designated as its 12% Senior Convertible
Debenture due December 28, 2012 (this debenture, the “Debenture” and,
collectively with the other debentures of such series, the
“Debentures”).

     FOR VALUE RECEIVED, the Company
promises to pay to Hagen Investments Ltd. or its registered assigns (the
“Holder”), or shall have paid pursuant to the terms hereunder, the
principal sum of $1,000,000.00 on December 28, 2012 (the “Maturity Date”)
or such earlier date as this Debenture is required or permitted to be repaid as
provided hereunder, and to pay interest to the Holder on the aggregate
unconverted and then outstanding principal amount of this Debenture in
accordance with the provisions hereof. This Debenture is subject to the
following additional provisions:

     Section 1.
Definitions. For the purposes hereof, in addition to the terms defined
elsewhere in this Debenture, (a) capitalized terms not otherwise defined herein
shall have the 

1

meanings set forth in the Purchase Agreement and (b) the
following terms shall have the following meanings:

     “Alternate Consideration”
shall have the meaning set forth in Section 5(e).

     “Bankruptcy Event” means any
of the following events: (a) the Company or any Significant Subsidiary (as such
term is defined in Rule 1-02(w) of Regulation S-X) thereof commences a case or
other proceeding under any bankruptcy, reorganization, arrangement, adjustment
of debt, relief of debtors, dissolution, insolvency or liquidation or similar
law of any jurisdiction relating to the Company or any Significant Subsidiary
thereof, (b) there is commenced against the Company or any Significant
Subsidiary thereof any such case or proceeding that is not dismissed within 60
days after commencement, (c) the Company or any Significant Subsidiary thereof
is adjudicated insolvent or bankrupt or any order of relief or other order
approving any such case or proceeding is entered, (d) the Company or any
Significant Subsidiary thereof suffers any appointment of any custodian or the
like for it or any substantial part of its property that is not discharged or
stayed within 60 calendar days after such appointment, (e) the Company or any
Significant Subsidiary thereof makes a general assignment for the benefit of
creditors, (f) the Company or any Significant Subsidiary thereof calls a meeting
of its creditors with a view to arranging a composition, adjustment or
restructuring of its debts or (g) the Company or any Significant Subsidiary
thereof, by any act or failure to act, expressly indicates its consent to,
approval of or acquiescence in any of the foregoing or takes any corporate or
other action for the purpose of effecting any of the foregoing.

     “Base
Conversion Price” shall have the meaning set forth in Section 5(b).

     “Beneficial Ownership
Limitation” shall have the meaning set forth in Section 4(d). 

     “Business Day” means any day
except any Saturday, any Sunday, any day which is a federal legal holiday in the
United States or any day on which banking institutions in the State of New York
are authorized or required by law or other governmental action to close.

     “Buy-In” shall have the
meaning set forth in Section 4(c)(v).

     “Change of Control
Transaction” means the occurrence after the date hereof of any of (a) an
acquisition after the date hereof by an individual or legal entity or “group”
(as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of
effective control (whether through legal or beneficial ownership of capital
stock of the Company, by contract or otherwise) of in excess of 33% of the
voting securities of the Company (other than by means of conversion or exercise
of the Debentures and the Securities issued together with the Debentures), (b)
the Company merges into or consolidates with any other Person, or any Person
merges into or consolidates with the Company and, after giving effect to such
transaction, the stockholders of the Company immediately prior to 

2

such transaction own less than 66% of
the aggregate voting power of the Company or the successor entity of such
transaction, (c) the Company sells or transfers all or substantially all of its
assets to another Person and the stockholders of the Company immediately prior
to such transaction own less than 66% of the aggregate voting power of the
acquiring entity immediately after the transaction, (d) a replacement at one
time of more than one-half of the members of the Board of Directors which is not
approved by a majority of those individuals who are members of the Board of
Directors on the Original Issue Date (or by those individuals who are serving as
members of the Board of Directors on any date whose nomination to the Board of
Directors was approved by a majority of the members of the Board of Directors
who are members on the date hereof), or (e) the execution by the Company of an
agreement to which the Company is a party or by which it is bound, providing for
any of the events set forth in clauses (a) through (d) above.

     “Conversion” shall have the
meaning ascribed to such term in Section 4.

     “Conversion Date” shall have
the meaning set forth in Section 4(a).

     “Conversion Price” shall have
the meaning set forth in Section 4(b).

     “Conversion Schedule” means
the Conversion Schedule in the form of Schedule 1 attached hereto.

     “Conversion Shares” means,
collectively, the shares of Common Stock issuable upon conversion of this
Debenture in accordance with the terms hereof.

     “Debenture Register” shall
have the meaning set forth in Section 2(c).

     “Dilutive Issuance” shall
have the meaning set forth in Section 5(b).

     “Dilutive Issuance Notice”
shall have the meaning set forth in Section 5(b).

     “Equity Conditions” means,
during the period in question, (a) the Company shall have duly honored all
conversions scheduled to occur or occurring by virtue of one or more Notices of
Conversion of the Holder, if any, (b) the Company shall have paid all liquidated
damages and other amounts owing to the Holder in respect of this Debenture,
(c)(i) there is an effective Registration Statement pursuant to which the Holder
is permitted to utilize the prospectus thereunder to resell all of the shares of
Common Stock issuable pursuant to the Transaction Documents (and the Company
believes, in good faith, that such effectiveness will continue uninterrupted for
the foreseeable future) or (ii) all of the Conversion Shares issuable pursuant
to the Transaction Documents (and shares issuable in lieu of cash payments of
interest) may be resold pursuant to Rule 144 without volume or manner-of-sale
restrictions or current public information requirements as determined by the
counsel to the Company as set forth in a written opinion letter to such effect,
addressed and acceptable to the Transfer Agent and the Holder, (d) the Common
Stock is trading on a Trading Market and all of the shares issuable pursuant to
the 

3

Transaction Documents are listed or
quoted for trading on such Trading Market (and the Company believes, in good
faith, that trading of the Common Stock on a Trading Market will continue
uninterrupted for the foreseeable future), (e) there is a sufficient number of
authorized but unissued and otherwise unreserved shares of Common Stock for the
issuance of all of the shares then issuable pursuant to the Transaction
Documents, (f) there is no existing Event of Default and no existing event
which, with the passage of time or the giving of notice, would constitute an
Event of Default, (g) the issuance of the shares in question to the Holder would
not violate the limitations set forth in Section 4(d) herein, (h) there has been
no public announcement of a pending or proposed Fundamental Transaction or
Change of Control Transaction that has not been consummated, (i) the applicable
Holder is not in possession of any information provided by the Company that
constitutes, or may constitute, material non-public information and (j) for each
Trading Day in a period of 20 consecutive Trading Days prior to the applicable
date in question, the daily trading volume for the Common Stock on the principal
Trading Market exceeds $50,000 per Trading Day.

     “Event
of Default” shall have the meaning set forth in Section 8(a).

     “Fundamental Transaction”
shall have the meaning set forth in Section 5(e).

     “Late
Fees” shall have the meaning set forth in Section 2(d).

     “Mandatory Default Amount”
means the sum of (a) the greater of (i) the outstanding principal amount of this
Debenture, plus all accrued and unpaid interest hereon, divided by the
Conversion Price on the date the Mandatory Default Amount is either (A) demanded
(if demand or notice is required to create an Event of Default) or otherwise due
or (B) paid in full, whichever has a lower Conversion Price, multiplied by the
VWAP on the date the Mandatory Default Amount is either (x) demanded or
otherwise due or (y) paid in full, whichever has a higher VWAP, or (ii) 130% of
the outstanding principal amount of this Debenture, plus 100% of accrued and
unpaid interest hereon, and (b) all other amounts, costs, expenses and
liquidated damages due in respect of this Debenture.

     “New
York Courts” shall have the meaning set forth in Section 9(d).

     “Notice of Conversion” shall
have the meaning set forth in Section 4(a).

     “Original Issue Date” means
the date of the first issuance of the Debentures, regardless of any transfers of
any Debenture and regardless of the number of instruments which may be issued to
evidence such Debentures.

     “Permitted Indebtedness”
means (a) the indebtedness evidenced by the Debentures, (b) the Indebtedness
existing on the Original Issue Date and set forth on Schedule 3.1(aa)
attached to the Purchase Agreement, (c) lease obligations and purchase money
indebtedness of up to $150,000, in the aggregate, incurred in connection with
the 

4

acquisition of capital assets and lease
obligations with respect to newly acquired or leased assets, and (d) such
indebtedness as shall be explicitly subordinate to the Indebtedness in terms of
repayment and other rights..

     “Permitted Lien” means the
individual and collective reference to the following: (a) Liens for taxes,
assessments and other governmental charges or levies not yet due or Liens for
taxes, assessments and other governmental charges or levies being contested in
good faith and by appropriate proceedings for which adequate reserves (in the
good faith judgment of the management of the Company) have been established in
accordance with GAAP, (b) Liens imposed by law which were incurred in the
ordinary course of the Company’s business, such as carriers’, warehousemen’s and
mechanics’ Liens, statutory landlords’ Liens, and other similar Liens arising in
the ordinary course of the Company’s business, and which (x) do not individually
or in the aggregate materially detract from the value of such property or assets
or materially impair the use thereof in the operation of the business of the
Company and its consolidated Subsidiaries or (y) are being contested in good
faith by appropriate proceedings, which proceedings have the effect of
preventing for the foreseeable future the forfeiture or sale of the property or
asset subject to such Lien and (c) Liens incurred in connection with Permitted
Indebtedness under clauses (a) and (b) and (d) Liens incurred in connection with
Permitted Indebtedness under clause (c) thereunder, provided that such Liens are
not secured by assets of the Company or its Subsidiaries other than the assets
so acquired or leased.

     “Purchase Agreement” means
the Securities Purchase Agreement, dated as of June 29, 2011 among the Company
and the original Holder, as amended, modified or supplemented from time to time
in accordance with its terms.

     “Registration Statement”
means a registration statement covering the resale of the Underlying Shares by
each Holder.

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

     “Share
Delivery Date” shall have the meaning set forth in Section 4(c)(ii).

     “Successor Entity” shall have
the meaning set forth in Section 5(e). 

     “Trading Day” means a day on
which the principal Trading Market is open for trading.

     “Trading Market” means any of
the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the NYSE AMEX, the Nasdaq Capital Market,
the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock
Exchange or the OTC Bulletin Board (or any successors to any of the
foregoing).

5

     “VWAP” means, for any date,
the price determined by the first of the following clauses that applies: (a) if
the Common Stock is then listed or quoted on a Trading Market, the daily volume
weighted average price of the Common Stock for such date (or the nearest
preceding date) on the Trading Market on which the Common Stock is then listed
or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m.
(New York City time) to 4:02 p.m. (New York City time)), (b) if the OTC Bulletin
Board is not a Trading Market, the volume weighted average price of the Common
Stock for such date (or the nearest preceding date) on the OTC Bulletin Board,
(c) if the Common Stock is not then listed or quoted for trading on the OTC
Bulletin Board and if prices for the Common Stock are then reported in the “Pink
Sheets” published by Pink OTC Markets, Inc. (or a similar organization or agency
succeeding to its functions of reporting prices), the most recent bid price per
share of the Common Stock so reported, or (d) in all other cases, the fair
market value of a share of Common Stock as determined by an independent
appraiser selected in good faith by the Holders of a majority in interest of the
Securities then outstanding and reasonably acceptable to the Company, the fees
and expenses of which shall be paid by the Company.

Section
2.      Interest.

     a)     
Payment of Interest in Cash or Kind. The Company shall pay interest to
the Holder on the aggregate unconverted and then outstanding principal amount of
this Debenture at the rate of 12% per annum, payable on the Maturity Date (if
the Maturity Date is not a Business Day, then the applicable payment shall be
due on the next succeeding Business Day), in cash or at the Company’s option, in
duly authorized, validly issued, fully paid and non-assessable shares of Common
Stock at the Conversion Price; provided, however, that payment in
shares of Common Stock may only occur if (i) all of the Equity Conditions have
been met (unless waived by the Holder in writing) during the 20 Trading Days
immediately prior to the Maturity Date and through and including the date such
shares of Common Stock are actually issued to the Holder, (ii) the Company shall
have given the Holder notice in accordance with the notice requirements set
forth below and (iii) the Company shall have delivered to the Holder’s account
with The Depository Trust Company a number of shares of Common Stock to be
applied against such interest payment equal to the quotient of (x) the
applicable Interest Share Amount divided by the then Conversion Price (the
“Interest Conversion Shares”).

     b)      Company’s
Election to Pay Interest in Cash or Kind. Subject to the terms and
conditions herein, the decision whether to pay interest hereunder in cash,
shares of Common Stock or a combination thereof shall be at the sole discretion
of the Company. At least 20 days prior to the Maturity Date, the Company shall
deliver to the Holder a written notice of its election to pay interest hereunder
in shares of Common Stock or a combination of cash and shares of Common Stock.
Subject to the aforementioned conditions, failure to timely deliver such written
notice to the Holder shall be deemed an election by the Company to pay the
interest in cash. At any time the Company delivers a notice to the Holder of its
election to pay the interest in shares of Common Stock, the 

6

Company shall timely file a prospectus
supplement pursuant to Rule 424 disclosing such election.

     c)     
Interest Calculations. Interest shall be calculated on the basis of a
360-day year, consisting of twelve 30 calendar day periods, and shall accrue
daily commencing on the Original Issue Date until payment in full of the
outstanding principal, together with all accrued and unpaid interest, liquidated
damages and other amounts which may become due hereunder, has been made.
Interest shall cease to accrue with respect to any principal amount converted,
provided that, the Company actually delivers the Conversion Shares within the
time period required by Section 4(c)(ii) herein. Interest hereunder will be paid
to the Person in whose name this Debenture is registered on the records of the
Company regarding registration and transfers of this Debenture (the
“Debenture Register”). Except as otherwise provided herein, if at
any time the Company pays interest partially in cash and partially in shares of
Common Stock to the holders of the Debentures, then such payment of cash shall
be distributed ratably among the holders of the then-outstanding Debentures
based on their (or their predecessor’s) initial purchases of Debentures pursuant
to the Purchase Agreement.

     d)     
Late Fee. All overdue accrued and unpaid interest to be paid
hereunder shall entail a late fee at an interest rate equal to the lesser of 18%
per annum or the maximum rate permitted by applicable law (the “Late
Fees”) which shall accrue daily from the date such interest is due hereunder
through and including the date of actual payment in full. 

     e)      Prepayment.
Except as otherwise set forth in this Debenture, the Company may not prepay any
portion of the principal amount of this Debenture without the prior written
consent of the Holder.

Section
3.      Registration of Transfers and
Exchanges.

     a)      Different
Denominations. This Debenture is exchangeable for an equal aggregate
principal amount of Debentures of different authorized denominations, as
requested by the Holder surrendering the same. No service charge will be payable
for such registration of transfer or exchange.

     b)      Investment
Representations. This Debenture has been issued subject to certain
investment representations of the original Holder set forth in the Purchase
Agreement and may be transferred or exchanged only in compliance with the
Purchase Agreement and applicable federal and state securities laws and
regulations.

     c)      Reliance
on Debenture Register. Prior to due presentment for transfer to the Company
of this Debenture, the Company and any agent of the Company may treat the Person
in whose name this Debenture is duly registered on the Debenture Register as the
owner hereof for the purpose of receiving payment as herein provided and for all

7

other purposes, whether or not this
Debenture is overdue, and neither the Company nor any such agent shall be
affected by notice to the contrary.

Section
4.      Conversion.

     a)      Voluntary
Conversion. At any time after the Original Issue Date until this Debenture
is no longer outstanding, this Debenture shall be convertible, in whole or in
part, into shares of Common Stock at the option of the Holder, at any time and
from time to time (subject to the conversion limitations set forth in Section
4(d) hereof). The Holder shall effect conversions by delivering to the Company a
Notice of Conversion, the form of which is attached hereto as Annex A
(each, a “Notice of Conversion”), specifying therein the principal
amount of this Debenture to be converted and the date on which such conversion
shall be effected (such date, the “Conversion Date”). If no Conversion
Date is specified in a Notice of Conversion, the Conversion Date shall be the
date that such Notice of Conversion is deemed delivered hereunder. To effect
conversions hereunder, the Holder shall not be required to physically surrender
this Debenture to the Company unless the entire principal amount of this
Debenture, plus all accrued and unpaid interest thereon, has been so converted.
Conversions hereunder shall have the effect of lowering the outstanding
principal amount of this Debenture in an amount equal to the applicable
conversion. The Holder and the Company shall maintain records showing the
principal amount(s) converted and the date of such conversion(s). The Company
may deliver an objection to any Notice of Conversion within one (1) Business Day
of delivery of such Notice of Conversion. In the event of any dispute or
discrepancy, the records of the Holder shall be controlling and determinative in
the absence of manifest error. The Holder, and any assignee by acceptance of
this Debenture, acknowledge and agree that, by reason of the provisions of this
paragraph, following conversion of a portion of this Debenture, the unpaid and
unconverted principal amount of this Debenture may be less than the amount
stated on the face hereof.

     b)      Conversion
Price. The Conversion Price shall mean the lesser of (i) sixty five percent
(65%) of the lowest reported sale price of the Common Stock for the twenty
trading days immediately prior to the Conversion Date, or (ii) $0.83. In the
event the Registration Statement is not declared effective by the SEC within six
months from the date of the Purchase Agreement, the Conversion price set forth
in clause (i) above shall be reduced to fifty five percent (55%) of the lowest
reported sale price of the Common Stock for the ten trading days immediately
prior to the Conversion Date. In the event there shall be a Public Information
Failure, and such failure shall cause Rule 144 to be unavailable for the resale
of Common Stock issuable upon conversion of this Debenture in the reasonable
opinion of counsel for the Holder, the Conversion Price set forth herein shall
be reduced an additional ten percent (10%) of the lowest reported sale price of
the Common Stock for the ten trading days immediately prior to the Conversion
Date, for each such Public Information Failure. For purposes of clarity, it is
understood that if there shall be a Public Information Failure which is cured
and then repeated once, the Conversion Price shall be reduced an additional
twenty percent (20%) of the lowest 

8

reported sale price of the Common Stock
for the ten trading days immediately prior to the Conversion Date The Conversion
Price may be adjusted pursuant to the other terms of this Debenture.

     c)      Mechanics
of Conversion.

     i.      Conversion
Shares Issuable Upon Conversion of Principal Amount. The number of
Conversion Shares issuable upon a conversion hereunder shall be determined by
the quotient obtained by dividing (x) the outstanding principal amount of this
Debenture to be converted by (y) the Conversion Price.

     ii.     
Delivery of Certificate Upon Conversion. Not later than three (3) Trading
Days after each Conversion Date (the “Share Delivery Date”), the Company
shall deliver, or cause to be delivered, to the Holder (A) a certificate or
certificates representing the Conversion Shares which, on or after the earlier
of (i) the six month anniversary of the Original Issue Date or (ii) the
Effective Date, shall be free of restrictive legends and trading restrictions
(other than those which may then be required by the Purchase Agreement)
representing the number of Conversion Shares being acquired upon the conversion
of this Debenture, and (B) a bank check in the amount of accrued and unpaid
interest (if the Company has elected or is required to pay accrued interest in
cash). The Company shall use its best efforts to deliver any certificate or
certificates required to be delivered by the Company under this Section 4(c)
electronically through the Depository Trust Company or another established
clearing corporation performing similar functions.

     iii.      Failure
to Deliver Certificates. If, in the case of any Notice of Conversion, such
certificate or certificates are not delivered to or as directed by the
applicable Holder by the Share Delivery Date, the Holder shall be entitled to
elect by written notice to the Company at any time on or before its receipt of
such certificate or certificates, to rescind such Conversion, in which event the
Company shall promptly return to the Holder any original Debenture delivered to
the Company and the Holder shall promptly return to the Company the Common Stock
certificates issued to such Holder pursuant to the rescinded Conversion Notice.

     iv.      Obligation
Absolute; Partial Liquidated Damages. The Company’s obligations to issue and
deliver the Conversion Shares upon conversion of this Debenture in accordance
with the terms hereof are absolute and unconditional, irrespective of any action
or inaction by the Holder to enforce the same, any waiver or consent with
respect to any provision hereof, the recovery of any judgment against any Person
or any action to enforce the same, or any setoff, counterclaim, recoupment,
limitation or termination, or any breach or alleged breach by the Holder or any
other Person of any obligation to the Company or any

 9

violation or alleged violation of law
by the Holder or any other Person, and irrespective of any other circumstance
which might otherwise limit such obligation of the Company to the Holder in
connection with the issuance of such Conversion Shares; provided,
however, that such delivery shall not operate as a waiver by the Company
of any such action the Company may have against the Holder. In the event the
Holder of this Debenture shall elect to convert any or all of the outstanding
principal amount hereof, the Company may not refuse conversion based on any
claim that the Holder or anyone associated or affiliated with the Holder has
been engaged in any violation of law, agreement or for any other reason, unless
an injunction from a court, on notice to Holder, restraining and or enjoining
conversion of all or part of this Debenture shall have been sought and obtained,
and the Company posts a surety bond for the benefit of the Holder in the amount
of 150% of the outstanding principal amount of this Debenture, which is subject
to the injunction, which bond shall remain in effect until the completion of
arbitration/litigation of the underlying dispute and the proceeds of which shall
be payable to the Holder to the extent it obtains judgment. In the absence of
such injunction, the Company shall issue Conversion Shares or, if applicable,
cash, upon a properly noticed conversion. If the Company fails for any reason to
deliver to the Holder such certificate or certificates pursuant to Section
4(c)(ii) by the Share Delivery Date, the Company shall pay to the Holder, in
cash, as liquidated damages and not as a penalty, for each $1,000 of principal
amount being converted, $10 per Trading Day (increasing to $20 per Trading Day
on the fifth (5th) Trading Day after such liquidated damages begin to
accrue) for each Trading Day after such Share Delivery Date until such
certificates are delivered or Holder rescinds such conversion. Nothing herein
shall limit a Holder’s right to pursue actual damages or declare an Event of
Default pursuant to Section 8 hereof for the Company’s failure to deliver
Conversion Shares within the period specified herein and the Holder shall have
the right to pursue all remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief. The exercise of any such rights shall not prohibit the Holder
from seeking to enforce damages pursuant to any other Section hereof or under
applicable law.

     v.      Compensation
for Buy-In on Failure to Timely Deliver Certificates Upon Conversion.
In addition to any other rights available to the Holder, if the Company fails
for any reason to deliver to the Holder such certificate or certificates by the
Share Delivery Date pursuant to Section 4(c)(ii), and if after such Share
Delivery Date the Holder is required by its brokerage firm to purchase (in an
open market transaction or otherwise), or the Holder’s brokerage firm otherwise
purchases, shares of Common Stock to deliver in satisfaction of a sale by the
Holder of the Conversion Shares which the Holder was entitled to receive upon
the conversion relating to such Share Delivery Date (a “Buy-In”), then
the Company shall (A) pay in cash to the Holder (in addition to any other
remedies available to or elected by the Holder) the amount, if any, by which (x)
the 

10

Holder’s total purchase price
(including any brokerage commissions) for the Common Stock so purchased exceeds
(y) the product of (1) the aggregate number of shares of Common Stock that the
Holder was entitled to receive from the conversion at issue multiplied by (2)
the actual sale price at which the sell order giving rise to such purchase
obligation was executed (including any brokerage commissions) and (B) at the
option of the Holder, either reissue (if surrendered) this Debenture in a
principal amount equal to the principal amount of the attempted conversion (in
which case such conversion shall be deemed rescinded) or deliver to the Holder
the number of shares of Common Stock that would have been issued if the Company
had timely complied with its delivery requirements under Section 4(c)(ii). 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 this
Debenture with respect to which the actual sale price of the Conversion Shares
(including any brokerage commissions) giving rise to such purchase obligation
was a total of $10,000 under clause (A) 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 and, upon request of the Company, evidence of the amount
of such loss. 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 Debenture as required pursuant to
the terms hereof.

     vi.      Reservation
of Shares Issuable Upon Conversion. The Company covenants that it will at
all times reserve and keep available out of its authorized and unissued shares
of Common Stock for the sole purpose of issuance upon conversion of this
Debenture and payment of interest on this Debenture, each as herein provided,
free from preemptive rights or any other actual contingent purchase rights of
Persons other than the Holder (and the other holders of the Debentures), not
less than such aggregate number of shares of the Common Stock as shall (subject
to the terms and conditions set forth in the Purchase Agreement) be issuable
(taking into account the adjustments and restrictions of Section 5) upon the
conversion of the then outstanding principal amount of this Debenture and
payment of interest hereunder. The Company covenants that all shares of Common
Stock that shall be so issuable shall, upon issue, be duly authorized, validly
issued, fully paid and nonassessable and, if the Registration Statement is then
effective under the Securities Act, shall be registered for public resale in
accordance with such Registration Statement.

     vii.      Fractional
Shares. No fractional shares or scrip representing fractional shares shall
be issued upon the conversion of this Debenture. As to any fraction of a share
which the Holder would otherwise be entitled to purchase upon 

11

such conversion, the Company shall at
its election, either pay a cash adjustment in respect of such final fraction in
an amount equal to such fraction multiplied by the Conversion Price or round up
to the next whole share.

     viii.      Transfer
Taxes. The issuance of certificates for shares of the Common Stock on
conversion of this Debenture shall be made without charge to the Holder hereof
for any documentary stamp or similar taxes that may be payable in respect of the
issue or delivery of such certificates, provided that, the Company shall not be
required to pay any tax that may be payable in respect of any transfer involved
in the issuance and delivery of any such certificate upon conversion in a name
other than that of the Holder of this Debenture so converted and the Company
shall not be required to issue or deliver such certificates unless or until the
Person or Persons requesting the issuance thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.

     d)      Holder’s
Conversion Limitations. The Company shall not effect any conversion of this
Debenture, and a Holder shall not have the right to convert any portion of this
Debenture, to the extent that after giving effect to the conversion set forth on
the applicable Notice of Conversion, the Holder (together with the Holder’s
Affiliates, and any Persons acting as a group together with the Holder or any of
the Holder’s Affiliates) would beneficially own in excess of the Beneficial
Ownership Limitation (as defined below). 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 Debenture with respect to which such determination is being
made, but shall exclude the number of shares of Common Stock which are issuable
upon (i) conversion of the remaining, unconverted principal amount of this
Debenture beneficially owned by the Holder or any of its Affiliates and (ii)
exercise or conversion of the unexercised or unconverted portion of any other
securities of the Company subject to a limitation on conversion or exercise
analogous to the limitation contained herein (including, without limitation, any
other Debentures or the Warrants) beneficially owned by the Holder or any of its
Affiliates. Except as set forth in the preceding sentence, for purposes of this
Section 4(d), beneficial ownership shall be calculated in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder. To the extent that the limitation contained in this Section 4(d)
applies, the determination of whether this Debenture is convertible (in relation
to other securities owned by the Holder together with any Affiliates) and of
which principal amount of this Debenture is convertible shall be in the sole
discretion of the Holder, and the submission of a Notice of Conversion shall be
deemed to be the Holder’s determination of whether this Debenture may be
converted (in relation to other securities owned by the Holder together with any
Affiliates) and which principal amount of this Debenture is convertible, in each
case subject to the Beneficial Ownership Limitation. To ensure compliance with
this restriction, the Holder will be deemed to represent to the Company each
time it delivers a Notice of Conversion that such Notice 

12

of Conversion 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. In addition,
a determination as to any group status as contemplated above shall be determined
in accordance with Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder. For purposes of this Section 4(d), in
determining the number of outstanding shares of Common Stock, the Holder may
rely on the number of outstanding shares of Common Stock as stated in the most
recent of the following: (i) the Company’s most recent periodic or annual report
filed with the Commission, as the case may be, (ii) a more recent public
announcement by the Company, or (iii) a more recent written 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 a 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 Debenture, by the Holder or its Affiliates since the date as of which such
number of outstanding shares of Common Stock was reported. The
“Beneficial Ownership Limitation” shall be 4.99% of the number of
shares of the Common Stock outstanding immediately after giving effect to the
issuance of shares of Common Stock issuable upon conversion of this Debenture
held by the Holder. The Holder, upon not less than 61 days’ prior notice to the
Company, may increase or decrease the Beneficial Ownership Limitation provisions
of this Section 4(d), provided that the Beneficial Ownership Limitation in no
event exceeds 9.99% of the number of shares of the Common Stock outstanding
immediately after giving effect to the issuance of shares of Common Stock upon
conversion of this Debenture held by the Holder and the Beneficial Ownership
Limitation provisions of this Section 4(d) shall continue to apply. Any such
increase or decrease will not be effective until the 61st day after
such notice is delivered to the Company. The Beneficial Ownership Limitation
provisions of this paragraph shall be construed and implemented in a manner
otherwise than in strict conformity with the terms of this Section 4(d) to
correct this paragraph (or any portion hereof) which may be defective or
inconsistent with the intended Beneficial Ownership Limitation contained herein
or to make changes or supplements necessary or desirable to properly give effect
to such limitation. The limitations contained in this paragraph shall apply to a
successor holder of this Debenture.

Section
5.      Certain Adjustments.

     a)      Stock
Dividends and Stock Splits. If the Company, at any time while this Debenture
is outstanding: (i) pays a stock dividend or otherwise makes a distribution or
distributions payable in shares of Common Stock on shares of Common Stock or any
Common Stock Equivalents (which, for avoidance of doubt, shall not include any
shares of Common Stock issued by the Company upon conversion of, or payment of
interest on, the Debentures), (ii) subdivides outstanding shares of Common Stock
into a larger number of shares, (iii) combines (including by way of a reverse
stock split) outstanding 

13

shares of Common Stock into a smaller
number of shares or (iv) issues, in the event of a reclassification of shares of
the Common Stock, any shares of capital stock of the Company, then the
Conversion Price shall be multiplied by a fraction of which the numerator shall
be the number of shares of Common Stock (excluding any treasury shares of the
Company) outstanding immediately before such event, and of which the denominator
shall be the number of shares of Common Stock outstanding immediately after such
event. Any adjustment made pursuant to this Section shall become effective
immediately after the record date for the determination of stockholders entitled
to receive such dividend or distribution and shall become effective immediately
after the effective date in the case of a subdivision, combination or
re-classification.

     b)     
Subsequent Equity Sales. If, at any time while this Debenture is
outstanding, the Company or any Subsidiary, as applicable, sells or grants any
option to purchase or sells or grants any right to reprice, or otherwise
disposes of or issues (or announces any sale, grant or any option to purchase or
other disposition), any Common Stock or Common Stock Equivalents entitling any
Person to acquire shares of Common Stock at an effective price per share that is
lower than the then Conversion Price (such lower price, the “Base Conversion
Price” and such issuances, collectively, a “Dilutive
Issuance”) (if the holder of the Common Stock or Common Stock Equivalents
so issued shall at any time, whether by operation of purchase price adjustments,
reset provisions, floating conversion, exercise or exchange prices or otherwise,
or due to warrants, options or rights per share which are issued in connection
with such issuance, be entitled to receive shares of Common Stock at an
effective price per share that is lower than the Conversion Price, such issuance
shall be deemed to have occurred for less than the Conversion Price on such date
of the Dilutive Issuance), then the Conversion Price shall be reduced to equal
the Base Conversion Price. Such adjustment shall be made whenever such Common
Stock or Common Stock Equivalents are issued. Notwithstanding the foregoing, no
adjustment will be made under this Section 5(b) in respect of an Exempt
Issuance. If the Company enters into a Variable Rate Transaction, despite the
prohibition set forth in the Purchase Agreement, the Company shall be deemed to
have issued Common Stock or Common Stock Equivalents at the lowest possible
conversion price at which such securities may be converted or exercised. The
Company shall notify the Holder in writing, no later than the Trading Day
following the issuance of any Common Stock or Common Stock Equivalents subject
to this Section 5(b), indicating therein the applicable issuance price, or
applicable reset price, exchange price, conversion price and other pricing terms
(such notice, the “Dilutive Issuance Notice”). For purposes of
clarification, whether or not the Company provides a Dilutive Issuance Notice
pursuant to this Section 5(b), upon the occurrence of any Dilutive Issuance, the
Holder is entitled to receive a number of Conversion Shares based upon the Base
Conversion Price on or after the date of such Dilutive Issuance, regardless of
whether the Holder accurately refers to the Base Conversion Price in the Notice
of Conversion.

     c)      Subsequent
Rights Offerings. If the Company, at any time while the Debenture is
outstanding, shall issue rights, options or warrants to all holders of Common

14

Stock (and not to the Holders)
entitling them to subscribe for or purchase shares of Common Stock at a price
per share that is lower than the VWAP on the record date referenced below, then
the Conversion Price shall be multiplied by a fraction of which the denominator
shall be the number of shares of the Common Stock outstanding on the date of
issuance of such rights, options or warrants plus the number of additional
shares of Common Stock offered for subscription or purchase, and of which the
numerator shall be the number of shares of the Common Stock outstanding on the
date of issuance of such rights, options or warrants plus the number of shares
which the aggregate offering price of the total number of shares so offered
(assuming delivery to the Company in full of all consideration payable upon
exercise of such rights, options or warrants) would purchase at such VWAP. Such
adjustment shall be made whenever such rights, options or warrants are issued,
and shall become effective immediately after the record date for the
determination of stockholders entitled to receive such rights, options or
warrants.

     d)      Pro
Rata Distributions. If the Company, at any time while this Debenture is
outstanding, distributes to all holders of Common Stock (and not to the Holders)
evidences of its indebtedness or assets (including cash and cash dividends) or
rights or warrants to subscribe for or purchase any security (other than the
Common Stock, which shall be subject to Section 5(b)), then in each such case
the Conversion Price shall be adjusted by multiplying such Conversion Price in
effect immediately prior to the record date fixed for determination of
stockholders entitled to receive such distribution by a fraction of which the
denominator shall be the VWAP determined as of the record date mentioned above,
and of which the numerator shall be such VWAP on such record date less the then
fair market value at such record date of the portion of such assets or evidence
of indebtedness or rights or warrants so distributed applicable to one
outstanding share of the Common Stock as determined by the Board of Directors of
the Company in good faith. In either case the adjustments shall be described in
a statement delivered to the Holder describing the portion of assets or
evidences of indebtedness so distributed or such subscription rights applicable
to one share of Common Stock. Such adjustment shall be made whenever any such
distribution is made and shall become effective immediately after the record
date mentioned above.

     e)      Fundamental
Transaction. If, at any time while this Debenture is outstanding, (i) the
Company, directly or indirectly, in one or more related transactions effects any
merger or consolidation of the Company with or into another Person, (ii) the
Company, directly or indirectly, effects any sale, lease, license, assignment,
transfer, conveyance or other disposition of all or substantially all of its
assets in one or a series of related transactions, (iii) any, direct or
indirect, purchase offer, tender offer or exchange offer (whether by the Company
or another Person) is completed pursuant to which holders of Common Stock are
permitted to sell, tender or exchange their shares for other securities, cash or
property and has been accepted by the holders of 50% or more of the outstanding
Common Stock, (iv) the Company, directly or indirectly, in one or more related
transactions effects any reclassification, reorganization or recapitalization of
the Common Stock or any compulsory share exchange pursuant to which the Common
Stock 

15

is effectively converted into or
exchanged for other securities, cash or property, (v) the Company, directly or
indirectly, in one or more related transactions consummates a stock or share
purchase agreement or other business combination (including, without limitation,
a reorganization, recapitalization, spin-off or scheme of arrangement) with
another Person whereby such other Person acquires more than 50% of the
outstanding shares of Common Stock (not including any shares of Common Stock
held by the other Person or other Persons making or party to, or associated or
affiliated with the other Persons making or party to, such stock or share
purchase agreement or other business combination) (each a “Fundamental
Transaction”), then, upon any subsequent conversion of this Debenture, the
Holder shall have the right to receive, for each Conversion Share that would
have been issuable upon such conversion immediately prior to the occurrence of
such Fundamental Transaction (without regard to any limitation in Section 4(d)
on the conversion of this Debenture), the number of shares of Common Stock of
the successor or acquiring corporation or of the Company, if it is the surviving
corporation, and any additional consideration (the “Alternate
Consideration”) receivable as a result of such Fundamental Transaction by a
holder of the number of shares of Common Stock for which this Debenture is
convertible immediately prior to such Fundamental Transaction (without regard to
any limitation in Section 4(d) on the conversion of this Debenture). For
purposes of any such conversion, the determination of the Conversion Price shall
be appropriately adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one (1) share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the
Conversion Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as to the
securities, cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate Consideration it
receives upon any conversion of this Debenture following such Fundamental
Transaction. The Company shall cause any successor entity in a Fundamental
Transaction in which the Company is not the survivor (the “Successor
Entity”) to assume in writing all of the obligations of the Company under
this Debenture and the other Transaction Documents (as defined in the Purchase
Agreement) in accordance with the provisions of this Section 5(e) pursuant to
written agreements in form and substance reasonably satisfactory to the Holder
and approved by the Holder (without unreasonable delay) prior to such
Fundamental Transaction and shall, at the option of the holder of this
Debenture, deliver to the Holder in exchange for this Debenture a security of
the Successor Entity evidenced by a written instrument substantially similar in
form and substance to this Debenture which is convertible for a corresponding
number of shares of capital stock of such Successor Entity (or its parent
entity) equivalent to the shares of Common Stock acquirable and receivable upon
conversion of this Debenture (without regard to any limitations on the
conversion of this Debenture) prior to such Fundamental Transaction, and with a
conversion price which applies the conversion price hereunder to such shares of
capital stock (but taking into account the relative value of the shares of
Common Stock pursuant to such Fundamental Transaction and the value of such
shares of capital stock, such number of shares of 

16

capital stock and such conversion price
being for the purpose of protecting the economic value of this Debenture
immediately prior to the consummation of such Fundamental Transaction), and
which is reasonably satisfactory in form and substance to the Holder. Upon the
occurrence of any such Fundamental Transaction, the Successor Entity shall
succeed to, and be substituted for (so that from and after the date of such
Fundamental Transaction, the provisions of this Debenture and the other
Transaction Documents referring to the “Company” shall refer instead to the
Successor Entity), and may exercise every right and power of the Company and
shall assume all of the obligations of the Company under this Debenture and the
other Transaction Documents with the same effect as if such Successor Entity had
been named as the Company herein.

     f)      Calculations.
All calculations under this Section 5 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. For purposes of this Section 5,
the number of shares of Common Stock deemed to be issued and outstanding as of a
given date shall be the sum of the number of shares of Common Stock (excluding
any treasury shares of the Company) issued and outstanding.

     g)      Notice
to the Holder.

     i.      Adjustment
to Conversion Price. Whenever the Conversion Price is adjusted pursuant to
any provision of this Section 5, the Company shall promptly deliver to each
Holder a notice setting forth the Conversion Price after such adjustment and
setting forth a brief statement of the facts requiring such adjustment.

     ii.      Notice
to Allow Conversion by Holder. If (A) the Company shall declare a dividend
(or any other distribution in whatever form) on the Common Stock, (B) the
Company shall declare a special nonrecurring cash dividend on or a redemption of
the Common Stock, (C) the Company shall authorize the granting to all holders of
the Common Stock of rights or warrants to subscribe for or purchase any shares
of capital stock of any class or of any rights, (D) the approval of any
stockholders of the Company shall be required in connection with any
reclassification of the Common Stock, any consolidation or merger to which the
Company is a party, any sale or transfer of all or substantially all of the
assets of the Company, or any compulsory share exchange whereby the Common Stock
is converted into other securities, cash or property or (E) the Company shall
authorize the voluntary or involuntary dissolution, liquidation or winding up of
the affairs of the Company, then, in each case, the Company shall cause to be
filed at each office or agency maintained for the purpose of conversion of this
Debenture, and shall cause to be delivered to the Holder at its last address as
it shall appear upon the Debenture Register, at least twenty (20) calendar days
prior to the applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution, redemption, rights or warrants, or if a record is not to
be taken, the 

17

date as of which the holders of the
Common Stock of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date on which
such reclassification, consolidation, merger, sale, transfer or share exchange
is expected to become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be entitled to
exchange their shares of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer or
share exchange, provided that the failure to deliver such notice or any defect
therein or in the delivery thereof shall not affect the validity of the
corporate action required to be specified in such notice. To the extent that any
notice provided hereunder constitutes, or contains, material, non-public
information regarding the Company or any of the Subsidiaries, the Company shall
simultaneously file such notice with the Commission pursuant to a Current Report
on Form 8-K. The Holder shall remain entitled to convert this Debenture during
the 20-day period commencing on the date of such notice through the effective
date of the event triggering such notice except as may otherwise be expressly
set forth herein. 

     Section
6.      Reserved.

     Section
7.      Negative Covenants. As long as any
portion of this Debenture remains outstanding, unless the holders of all of the
then outstanding Debentures shall have otherwise given prior written consent,
the Company shall not, and shall not permit any of the Subsidiaries to, directly
or indirectly:

     a)     
other than Permitted Indebtedness, enter into, create, incur, assume, guarantee
or suffer to exist any indebtedness for borrowed money of any kind, including,
but not limited to, a guarantee, on or with respect to any of its property or
assets now owned or hereafter acquired or any interest therein or any income or
profits therefrom;

     b)      other
than Permitted Liens, enter into, create, incur, assume or suffer to exist any
Liens of any kind, on or with respect to any of its property or assets now owned
or hereafter acquired or any interest therein or any income or profits
therefrom;

     c)     
amend its charter documents, including, without limitation, its certificate of
incorporation and bylaws, in any manner that materially and adversely affects
any rights of the Holder;

     d)     
repay, repurchase or offer to repay, repurchase or otherwise acquire more than a
de minimis number of shares of its Common Stock or Common Stock
Equivalents other than as to the Conversion Shares or Warrant Shares as
permitted or required under the Transaction Documents; 

18

     e)      repay,
repurchase or offer to repay, repurchase or otherwise acquire any Indebtedness,
other than the Debentures if on a pro-rata basis, other than regularly scheduled
principal and interest payments as such terms are in effect as of the Original
Issue Date, provided that such payments shall not be permitted if, at such time,
or after giving effect to such payment, any Event of Default exist or occur;

     f)      pay
cash dividends or distributions on any equity securities of the Company;

     g)     
enter into any transaction with any Affiliate of the Company which would be
required to be disclosed in any public filing with the Commission, unless such
transaction is made on an arm’s-length basis and expressly approved by a
majority of the disinterested directors of the Company (even if less than a
quorum otherwise required for board approval); or

     h)      enter
into any agreement with respect to any of the foregoing.

Section
8.      Events of Default.

     a)      “Event
of Default” means, wherever used herein, any of the following events
(whatever the reason for such event and whether such event shall be voluntary or
involuntary or effected by operation of law or pursuant to any judgment, decree
or order of any court, or any order, rule or regulation of any administrative or
governmental body):

     i.      any
default in the payment of (A) the principal amount of any Debenture or (B)
interest, liquidated damages and other amounts owing to a Holder on any
Debenture, as and when the same shall become due and payable (whether on a
Conversion Date or the Maturity Date or by acceleration or otherwise) which
default, solely in the case of an interest payment or other default under clause
(B) above, is not cured within 3 Trading Days;

     ii.     
the Company shall fail to observe or perform any other covenant or agreement
contained in the Debentures (other than a breach by the Company of its
obligations to deliver shares of Common Stock to the Holder upon conversion,
which breach is addressed in clause (ix) below) which failure is not cured, if
possible to cure, within the earlier to occur of (A) 5 Trading Days after notice
of such failure sent by the Holder or by any other Holder to the Company and (B)
10 Trading Days after the Company has become or should have become aware of such
failure;

     iii.      a
default or event of default (subject to any grace or cure period provided in the
applicable agreement, document or instrument) shall occur under (A) any of the
Transaction Documents or (B) any other material agreement, lease, 

19

document or instrument to which the
Company or any Subsidiary is obligated (and not covered by clause (vi)
below);

     iv.      any
representation or warranty made in this Debenture, any other Transaction
Documents, any written statement pursuant hereto or thereto or any other report,
financial statement or certificate made or delivered to the Holder or any other
Holder shall be untrue or incorrect in any material respect as of the date when
made or deemed made;

     v.      the
Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w)
of Regulation S-X) shall be subject to a Bankruptcy Event;

     vi.      the
Company or any Subsidiary shall default on any of its obligations under any
mortgage, credit agreement or other facility, indenture agreement, factoring
agreement or other instrument under which there may be issued, or by which there
may be secured or evidenced, any indebtedness for borrowed money or money due
under any long term leasing or factoring arrangement that (a) involves an
obligation greater than $100,000, whether such indebtedness now exists or shall
hereafter be created, and (b) results in such indebtedness becoming or being
declared due and payable prior to the date on which it would otherwise become
due and payable; 

     vii.      the
Common Stock shall not be eligible for listing or quotation for trading on a
Trading Market and shall not be eligible to resume listing or quotation for
trading thereon within five Trading Days;

     viii.      the
Company shall be a party to any Change of Control Transaction or Fundamental
Transaction or shall agree to sell or dispose of all or in excess of 33% of its
assets in one transaction or a series of related transactions (whether or not
such sale would constitute a Change of Control Transaction);

     ix.      the
Company shall fail for any reason to deliver certificates to a Holder prior to
the fifth Trading Day after a Conversion Date pursuant to Section 4(c) or the
Company shall provide at any time notice to the Holder, including by way of
public announcement, of the Company’s intention to not honor requests for
conversions of any Debentures in accordance with the terms hereof;

     x.      any
Person shall breach any agreement delivered to the initial Holders pursuant to
Section 2.2 of the Purchase Agreement; or

     xi.      any
monetary judgment, writ or similar final process shall be entered or filed
against the Company, any subsidiary or any of their respective property or other
assets for more than $50,000, and such judgment, writ or similar 

20

final process shall remain unvacated,
unbonded or unstayed for a period of 45 calendar days.

     b)
Remedies Upon Event of Default. If any Event of Default occurs, the
outstanding principal amount of this Debenture, plus accrued but unpaid
interest, liquidated damages and other amounts owing in respect thereof through
the date of acceleration, shall become, at the Holder’s election, immediately
due and payable in cash at the Mandatory Default Amount. Commencing 5 days after
the occurrence of any Event of Default that results in the eventual acceleration
of this Debenture, the interest rate on this Debenture shall accrue at an
interest rate equal to the lesser of 18% per annum or the maximum rate permitted
under applicable law. Upon the payment in full of the Mandatory Default Amount,
the Holder shall promptly surrender this Debenture to or as directed by the
Company. In connection with such acceleration described herein, the Holder need
not provide, and the Company hereby waives, any presentment, demand, protest or
other notice of any kind, and the Holder may immediately and without expiration
of any grace period enforce any and all of its rights and remedies hereunder and
all other remedies available to it under applicable law. Such acceleration may
be rescinded and annulled by Holder at any time prior to payment hereunder and
the Holder shall have all rights as a holder of the Debenture until such time,
if any, as the Holder receives full payment pursuant to this Section 8(b). No
such rescission or annulment shall affect any subsequent Event of Default or
impair any right consequent thereon.

Section
9.      Miscellaneous.

     a)      Notices.
Any and all notices or other communications or deliveries to be provided by the
Holder hereunder, including, without limitation, any Notice of Conversion, shall
be in writing and delivered personally, by facsimile, or sent by a nationally
recognized overnight courier service, addressed to the Company, at the address
set forth above, or such other facsimile number or address as the Company may
specify for such purposes by notice to the Holder delivered in accordance with
this Section 9(a). Any and all notices or other communications or deliveries to
be provided by the Company hereunder shall be in writing and delivered
personally, by facsimile, or sent by a nationally recognized overnight courier
service addressed to each Holder at the facsimile number or address of the
Holder appearing on the books of the Company, or if no such facsimile number or
address appears on the books of the Company, at the principal place of business
of such Holder, as set forth in the Purchase Agreement. Any notice or other
communication or deliveries hereunder shall be deemed given and effective on the
earliest of (i) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number set forth on the signature pages
attached hereto prior to 5:30 p.m. (New York City time) on any date, (ii) the
next Trading Day after the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number set forth on the signature
pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m.
(New York City time) on any Trading Day, (iii) the second Trading Day following
the date of mailing, if sent by U.S. nationally 

21

recognized overnight courier service or
(iv) upon actual receipt by the party to whom such notice is required to be
given.

     b)     
Absolute Obligation. Except as expressly provided herein, no provision of
this Debenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, liquidated damages and
accrued interest, as applicable, on this Debenture at the time, place, and rate,
and in the coin or currency, herein prescribed. This Debenture is a direct debt
obligation of the Company. This Debenture ranks pari passu with all other
Debentures now or hereafter issued under the terms set forth herein.

     c)      Lost
or Mutilated Debenture. If this Debenture shall be mutilated, lost, stolen
or destroyed, the Company shall execute and deliver, in exchange and
substitution for and upon cancellation of a mutilated Debenture, or in lieu of
or in substitution for a lost, stolen or destroyed Debenture, a new Debenture
for the principal amount of this Debenture so mutilated, lost, stolen or
destroyed, but only upon receipt of evidence of such loss, theft or destruction
of such Debenture, and of the ownership hereof, reasonably satisfactory to the
Company.

     d)      Governing
Law. All questions concerning the construction, validity, enforcement and
interpretation of this Debenture shall be governed by and construed and enforced
in accordance with the internal laws of the State of New York, without regard to
the principles of conflict of laws thereof. Each party agrees that all legal
proceedings concerning the interpretation, enforcement and defense of the
transactions contemplated by any of the Transaction Documents (whether brought
against a party hereto or its respective Affiliates, directors, officers,
shareholders, employees or agents) shall be commenced in the state and federal
courts sitting in the City of New York, Borough of Manhattan (the “New York
Courts”). Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of such New York Courts, or such New York Courts are
improper or inconvenient venue for such proceeding. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Debenture
and agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to limit in
any way any right to serve process in any other manner permitted by applicable
law. Each party hereto hereby irrevocably waives, to the fullest extent
permitted by applicable law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Debenture or the transactions
contemplated hereby. If any party shall commence an action or proceeding to
enforce any 

22

provisions of this Debenture, then the
prevailing party in such action or proceeding shall be reimbursed by the other
party for its attorneys fees and other costs and expenses incurred in the
investigation, preparation and prosecution of such action or proceeding.

     e)      Waiver.
Any waiver by the Company or the Holder of a breach of any provision of this
Debenture shall not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of this
Debenture. The failure of the Company or the Holder to insist upon strict
adherence to any term of this Debenture on one or more occasions shall not be
considered a waiver or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Debenture on any other
occasion. Any waiver by the Company or the Holder must be in writing.

     f)     
Severability. If any provision of this Debenture is invalid, illegal or
unenforceable, the balance of this Debenture shall remain in effect, and if any
provision is inapplicable to any Person or circumstance, it shall nevertheless
remain applicable to all other Persons and circumstances. If it shall be found
that any interest or other amount deemed interest due hereunder violates the
applicable law governing usury, the applicable rate of interest due hereunder
shall automatically be lowered to equal the maximum rate of interest permitted
under applicable law. The Company covenants (to the extent that it may lawfully
do so) that it shall not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay, extension or
usury law or other law which would prohibit or forgive the Company from paying
all or any portion of the principal of or interest on this Debenture as
contemplated herein, wherever enacted, now or at any time hereafter in force, or
which may affect the covenants or the performance of this Debenture, and the
Company (to the extent it may lawfully do so) hereby expressly waives all
benefits or advantage of any such law, and covenants that it will not, by resort
to any such law, hinder, delay or impede the execution of any power herein
granted to the Holder, but will suffer and permit the execution of every such as
though no such law has been enacted.

     g)      Next
Business Day. Whenever any payment or other obligation hereunder shall be
due on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day.

     h)      Headings.
The headings contained herein are for convenience only, do not constitute a part
of this Debenture and shall not be deemed to limit or affect any of the
provisions hereof.

*********************

23

(Signature Pages Follow)

24

     IN WITNESS WHEREOF, the Company
has caused this Debenture to be duly executed by a duly authorized officer as of
the date first above indicated.

	 	LITHIUM EXPLORATION GROUP, INC. 
	 	  
	 	  
	 	  
	 	By: /s/ Alexander
      Walsh                
      
	 	       Name: Alexander
      Walsh 
	 	       Title: CEO 
	 	  
	 	Facsimile No. for delivery of Notices:
      480-641-4794 

25

ANNEX A

NOTICE OF CONVERSION

     The undersigned hereby elects to
convert principal under the 12% Senior Convertible Debenture due December 28,
2012, of Lithium Exploration Group, Inc., a Nevada corporation (the
“Company”), into shares of common stock (the “Common Stock”), of
the Company according to the conditions hereof, as of the date written below. If
shares of Common Stock are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto and is delivering herewith such certificates and opinions as reasonably
requested by the Company in accordance therewith. No fee will be charged to the
holder for any conversion, except for such transfer taxes, if any.

     By the delivery of this Notice of
Conversion the undersigned represents and warrants to the Company that its
ownership of the Common Stock does not exceed the amounts specified under
Section 4 of this Debenture, as determined in accordance with Section 13(d) of
the Exchange Act.

     The undersigned agrees to comply
with the prospectus delivery requirements under the applicable securities laws
in connection with any transfer of the aforesaid shares of Common Stock.

Conversion calculations:

	 	Date to Effect Conversion: 
	 	 
	 	Principal Amount of Debenture to be Converted:
    
	 	 
	 	Payment of Interest in Common Stock __ yes __
      no 
	 	           
             If yes, $_____of Interest Accrued on Account of
    
	 	           
             Conversion at Issue. 
	 	 
	 	Number of shares of Common Stock to be issued:
    
	 	 
	 	Signature: 
	 	 
	 	Name: 
	 	 
	 	Address for Delivery of Common Stock
      Certificates: 
	 	 
	 	Or 
	 	 
	 	DWAC Instructions: 
	 	 
	 	Broker No: _____________
	 	Account No: 
____________

26

Schedule 1

CONVERSION SCHEDULE

The 12% Senior Convertible Debentures due on December 28, 2012
in the aggregate principal amount of $1,000,000.00 are issued by Lithium
Exploration Group, Inc., a Nevada corporation. This Conversion Schedule reflects
conversions made under Section 4 of the above referenced Debenture.

Dated: 

	Date of Conversion 
(or for first entry,
      
Original Issue Date) 	Amount of
      
Conversion 	Aggregate 
Principal
      
Amount 
Remaining 
Subsequent to 
Conversion 
(or original
      
Principal 
Amount) 	Company Attest 
	 

	 	 	 
	 

	 	 	 
	 

	 	 	 
	 

	 	 	 
	 

	 	 	 
	 

	 	 	 
	 

	 	 	 
	 

	 	 	 
	 

	 	 	 

27

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