Document:

bea_ex107.htm

 

 

	
 

	
 

 

 

	
 

 

 

INVESTMENT AGREEMENT

 

MINERA SALAR BLANCO S.A.;

 

MINERA SALAR BLANCO SpA;

 

MINERA LI ENERGY SPA;

 

LITHIUM POWER INVERSIONES CHILE SpA;

 

AND

 

LITHIUM POWER INTERNATIONAL LIMITED

 

September 12, 2016

 

 

 

 

 

	 
	 
 

 

	

 
	 

  

INVESTMENT AGREEMENT

 

The following Investment Agreement (the "Agreement") is made and entered into this September 12th, 2016, by and among:

 

(i)                 MINERA SALAR BLANCO S.A. ("Salar Blanco") a stock corporation incorporated and in process of formalization under the laws of the Republic of Chile, Tax Payer Number in process, domiciled at Rosario Norte N° 100, of. 403, Las Condes Santiago;

 

(ii)               MINERA SALAR BLANCO SpA (''MSB'') a stock company (sociedad por acciones) organized and existing under the laws of the Republic of Chile, Tax Payer Number 76,319,337-3, domiciled at Rosario Norte N° 100, of. 403, Las Condes Santiago;

 

(iii)             MINERA LI ENERGY SpA (''MLI'') a stock company (sociedad por acciones) organized and existing under the laws of the Republic of Chile, Tax Payer Number 76,102,972-K, domiciled at; Marchant Pereira N" 150, of. 803, Providencia, Santiago;

 

(iv)             LITHIUM POWER INVERSIONES CHILE SpA ("LPI") a stock company (sociedad por acciones) organized and existing under the laws of the Republic of Chile, Tax Payer Number in process, domiciled at El Golf 40, 20th Floor, Las Condes, Santiago; and

 

(v)               LITHIUM POWER INTERNATIONAL LIMITED ("LITHIUM") a company organized and existing under the laws of Australia, Tax Payer Number in process, domiciled at level 7/151 Macquarie Street, Sidney NSW 2000 - Australia.

 

(Safar Blanco, MSB, MLI, LPI AND LITHIUM, hereinafter jointly the "Parties")

 

1.                  RECITALS.

 

WHEREAS, MSB is a company organized by Chilean investors with broad experience on a wide range of investments in different industries.

 

WHEREAS, MSB is the owner (controller) of fifty one percent (51%) of MLI, which is organized to develop, invest in and operate mining assets with focus on Lithium and Potash production in Chile, based on is mining properties at the Maricunga Salar.

 

WHEREAS, LPI is a subsidiary of LITHIUM, a company organized by Australian investors which intends to invest in lithium projects in Chile.

 

WHEREAS, MSB and MLI are in the process of formalizing the incorporation of Salar Blanco under the laws of Chile. The shareholders of Salar Blanco will be:

 

(i)                   MLI, with 537,545,908 shares representing seventy two point eleven percent (72.11%) of the total Shares issued by Salar Blanco; and

 

(ii)                 MSB, with 207,906,745 shares representing twenty seven point eighty nine percent (27.89%) of the total Shares issued by Salar Blanco.

 

	 
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WHEREAS, MSB and LITHIUM executed on July 14th, 2016, a Term Sheet (the "Term Sheet”), as amended by letter dated August 30th, 2016, setting the general terms and conditions for their joint exploration and development of the Maricunga Assets (as defined below).

 

WHEREAS, as result of the transactions described herein and the execution of the Transaction's Documents, as such terms are defined below, MSB, MLI and LPI will be the sole shareholders of Salar Blanco, whereby LPI will hold fifty percent (50%), MLI will hold thirty six point five percent (36.05%) and MSB will hold thirteen point ninety five percent (13.95%) of the total Shares issued by Salar Blanco.

 

NOW, THEREFORE, the Parties agree as follows:

 

2.                      DEFINITIONS.

 

The following terms have the meanings indicated below, wherever they appear in this Agreement or in the Schedules to this Agreement, except as the context otherwise requires:

 

"Affiliate" means, with respect to any Person, (a) any Person who directly, or indirectly through one or more intermediaries, Controls or is controlled by, or is under common control with, such Person; (b) any Person who is a partner, director or executive officer (i) of such Person, (ii) of any Subsidiary of such Person, or (iii) of any Person described in clause (a) above.

 

"Agreement" means this Agreement.

 

"Business" means developing, financing, implementing, owning, exploiting and operating lithium and potash assets in Chile, including trading of lithium and potash.

 

"Business Day" means any other than a day on which commercial banks in Santiago, Chile are authorized or required by law to close. 

 

"Capital Increase" has the meaning set out in Section 3.

 

"Claim Notice" has the meaning set forth in Section 7.5.1.

 

"Condition Precedent" has the meaning set forth in Section 5.

 

"Contract" means any contract (written or oral), undertaking, commitment, instrument, arrangement, plan or other legally binding agreement or understanding, and all amendments, modifications or supplements thereof.

 

"Control" of a Person means the power, by itself or by means of a formal and binding agreement to act jointly with other third parties, directly or through other individuals or legal entities, (i) to vote or direct the voting of more than fifty percent (50%) of the outstanding voting shares of such Person, or (ii) to direct or cause the direction of the management and policies of such Person, whether by contract, ownership of shares (including fifty percent (50%) or less of the outstanding shares of such Person) or otherwise, In partnerships, limited liability companies and joint stock companies, the managing partner shall be deemed as the controller

 

	 
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"Dollars" and ''USD$'' means the lawful currency of the United States of America.

 

"Environmental Law" means any legal requirement that requires or relates to (i) advising appropriate authorities, employees, and the public of intended or actual releases of pollutants or hazardous substances or materials, violations of discharge limits, or other prohibitions and of the commencements of activities, such as resource extraction or construction, that could have significant impact on the environment; (ii) preventing or reducing to acceptable levels the release of pollutants or hazardous substances or materials into the environment; (iii) reducing the quantities, preventing the release, or minimizing the hazardous characteristics of wastes that are generated; (iv) assuring that products are designed, formulated, packaged, and used so that they do not present unreasonable risks to human health or the environment when used or disposed of; (v) protecting resources, species, or ecological amenities; (vi) reducing to acceptable levels the risks inherent in the transportation of hazardous substances, pollutants, oil, or other potentially harmful substances; (vii) cleaning up pollutants that have been released, preventing the threat of release. or paying the costs of such clean up or prevention; or (viii) making responsible parties pay private parties, or groups of them, for damages done to their health or the environment, or permitting self-appointed representatives of the public interest to recover for injuries done to public assets.

 

"Fifth Shares Subscription Agreement" has the meaning given to it in Section 5.1.5. 

 

"First Shares Subscription Agreement" has the meaning given to it in Section 5.1.1.

 

"Fourth Shares Subscription Agreement" has the meaning given to it in Section 5.1.4. 

 

''Governmental Entity" means any national, regional, provincial or municipal governmental entity or any court, tribunal or regulatory or administrative agency, or any political or other subdivision or department thereof.

 

"Indemnified Party" means a Person entitled to indemnification pursuant to Section 7 of this Agreement.

 

''Indemnifying Party" means a Party obligated to indemnify an Indemnified Party pursuant to Section 7 of this Agreement.

 

"Law'' means any national or foreign law, statute, code, ordinance, rule, regulation or other requirement enacted, promulgated, issued or entered by any Governmental Entity.

 

"Legal Action" means any action, claim, demand, suit, proceeding, citation, summons, subpoena, inquiry or investigation of any nature, civic, criminal, administrative, regulatory or otherwise, in law or in equity by or before any Governmental Entity.

 

"Liens" means any liens, security interests, encumbrances, pledges, mortgages, attachments ("embargos"), easements (i.e. rights of way) and charges.

 

''LITHIUM" means LITHIUM POWER INTERNATIONAL LIMITED.

 

	 
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"LITHIUM Shareholders Letter" means the letter dated the date hereof from [•] and [•], shareholders of LITHIUM holding more than fifty percent (50%) of the issued and outstanding shares of LITHIUM with right to vote, and attached hereto as Schedule[•).

 

"Litigation" means any action, arbitration, audit, hearing, investigation, litigation or suit (whether civil, criminal or administrative) commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Entity or arbitrator.

 

"Loan Agreement" means the loan agreement executed between Salar Blanco, MSB, LPI and LITHIUM on this date, a copy of which attached hereto as Schedule A.

 

"LPI'' means LITHIUM POWER INVERSIONES CHILE SpA.

 

''LPI Shares" means 16,000,000 shares In LITHIUM at the date of subscription of such shares by MSB, provided, however, that the number of LPI Shares shall be adjusted if prior to the issue to MSB LITHIUM issues any shares without payment (whether as a consequence of a stock, spilt, capitalization of profits or otherwise).

 

"LPI Shares Subscription Price" has the meaning set forth in Section 4.2.2 (i)

 

"Maricunga Assets" means jointly the MSB Assets, the MLI Assets and the Optioned Mining Concessions.

 

"Material Adverse Effect" has the meaning set out In Section 6.1.10 of this Agreement.

 

"Material Contract" means the contracts executed by MSB or MLI in favor of the Project and assigned to Salar Blanco on or prior to the date hereof and listed in Schedule 6.1.16 attached hereto.

 

"MSB'' means Minera Salar Blanco SpA.

 

"MSB Assets" means all assets listed in Schedule B.

 

"MLI" means Minera Li Energy SpA.

 

"MLI Assets" means all assets listed in Schedule C.

 

"Notice Period" shall have the meaning given to it In Section 7-5.1.

 

"Option Agreement'' or "Option" means the mining option agreement over the Optioned Mining Concessions, executed between Sociedad de lnversiones Mercedes Limitada and MSB by means of public deed dated December 30, 2014 granted before the Notary Public of Mr. Patricio Raby Benavente and duly registered before the Mining Custodian of Copiapo on page 1, number 1 of the Mortgages and Encumbrances Registry, corresponding to year 2015.

 

"Option Agreement Assignment" means the agreement between MSB and LPI pursuant to which MSB will assign the Option to LPI at a price equivalent to the market value of the LPI Shares at the time of executing such agreement; in terms substantially similar to the draft attached hereto as Schedule 4.2.

 
	 
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"Option Agreement Assignment Price" shall have the meaning given to it in Section 4.2.1.

 

"Option Exercise Deed" means the draft attached hereto as Schedule 4.2.2(ii).

 

"Optioned Mining Concessions" means the Salamina, Despreciada and San Francisco mining properties, which are individualized in Schedule D.

 

"Ordinary Course of Business" means actions taken by a Person which are (i) consistent with the past practices of such Person and is taken in the ordinary course of the normal day-to-day operations of such Person; (ii) not required to be authorized by the board of directors or shareholders' meeting of such Person; and (iii) similar in nature and magnitude to actions customarily taken, without any authorization by the board of directors or shareholders' meeting, In the ordinary course of the normal day-to-day operations of other Persons that are in the same line of business a such Person,

 

"Owners of the Optioned Mining Concessions'' means Sociedad de Inversiones Mercedes Limitada.

 

"Parties" has the meaning assigned to such term in the recitals.

 

"Permits" mean written permits, licenses, franchises, registrations, variants and approvals obtained from any Governmental Entity, but do not include any notices of self-certifications required to be filed with any Governmental Entity.

 

"Person" means any individual or legal entity, including an association, corporation, partnership, trust, unincorporated association, sole proprietorship, joint venture, limited liability partnership, limited liability company, stock company, fund, estate or any other entity.

 

"Preliminary Resource Report" means the report prepared by Flo Solution and sign by Mr. Frits Reidel showing a preliminary estimation of the resources contained at the Cocina, San Francisco, Salamina, and Despreciada mining Concessions after the drilling campaign has been finished,

 

"Project" means developing, financing, implementing, owning, exploiting and operating lithium and potash assets in Chile's III region, at the Maricunga Salar, including trading of its lithium and potash production, and engage in such business associated therewith as determined by the Board of Directors from time to time.

 

"Representatives" mean as to any Person, its officers, directors and employees.

 

"Salar Blanco's New Shares", means the amount of Shares to be issued pursuant to the Capital Increase to be agreed by MSB and MLI in terms substantially similar to the draft attached hereto as Schedule 3.3.

 

"Salar Blanco's Special Shareholders Meeting" means the extraordinary shareholders' meeting to be held by MLI and MSB armed at Increasing Salar Blanco's capital, in terms substantially similar to the draft attached hereto as Schedule 3.3.

 
	 
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"Second Shares Subscription Agreement" has the meaning set forth in Section 5.1.2.

 

"Shareholders Agreement" means the agreement that shall be executed among MSB, MLI and LPI concurrently with the execution of the Shares Subscription Agreements, substantially in the form attached hereto as Schedule 5.2.

 

"Shares" means each and all of the shares in the capital stock of Salar Blanco, whether authorized, issued, subscribed or paid for, in whole or in part.

 

“Shares Subscription Agreements” means the First Shares Subscription Agreement, the Second Shares Subscription Agreement, the Third Shares Subscription Agreement, the Fourth Shares Subscription Agreement, and the Fifth Shares Subscription Agreement, collectively. 

 

"Sociedades Legales Mineras Litio" mean (i) Sociedad Legal Minera Litio Uno de la Sierra Hoyada de Maricunga; (ii) Sociedad Legal Minera Litio Dos de la Sierra Hoyada de Maricunga; (iii) Sociedad Legal Minera Litio Tres de la Sierra Hoyada de Maricunga; (iv) Sociedad Legal Minera Litio Cuatro de la Sierra Hoyada de Maricunga; (v) Sociedad Legal Minera Litio Cinco de la Sierra Hoyada de Maricunga; and (vi) Sociedad Legal Minera Litio Seis de la Sierra Hoyada de Maricunga,

 

"Sociedades Legates Mineras Litio Mining Concessions'' means the mining concessions listed in Schedule E

 

"Subsidiary" means with respect to any Person, any entity:

 

(i)                   over fifty percent (50%) of whose capital is owned, directly or indirectly, by that Person;

 

(ii)                 for which that Person may nominate or appoint a majority of the members of the board of directors or such other body performing similar functions: or

 

(iii)                which is otherwise effectively Controlled by that Person:

 

"Tax" or "Taxes" means all taxes, levies, charges or fees, including income, corporation, advance corporation, gross receipts, transfer; excise, property, sales, use, value-added, license, payroll, pay-as-you-earn, withholding, social security and franchise or other governmental taxes or charges, imposed by any Governmental Entity, as well as any interest, penalties or additions to tax attributable to any such taxes.

 

"Tax Authority" means any national, regional, local, or municipal or other governmental body or authority of any kind in Chile with the power to impose any Tax.

 

"Third Shares Subscription Agreement" has the meaning set forth in Section 5.1.3. 

 

"Transaction Documents" mean the Loan Agreement, the LITHIUM Shareholders Letter and the transaction documents mentioned in Sections 3, 4 and 5 below, and any agreement, document, instrument or certificate to be entered into or executed in connection with this Agreement and the transactions contemplated hereby.

 

	 
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3.                     TRANSACTION.

 

As of this date, the Parties have agreed to the execution of the following documents and agreements:

 

3.1                                        Completion of Salar Blanco Incorporation.

 

MSB and MLI undertake to complete the process of incorporation of Salar Blanco, including the proper and timely registration at the Commerce Registry of the Santiago Real Estate Registrar, the publication in the Official Gazette, the obtaining of the relevant Tax ID number and commencement of commercial activities with the Chilean Tax Authority.

 

3.2                                        Judicial Seizure Release and Assets Registration.

 

3.2.1                           MSB undertakes to own and possess complete and legal title as beneficiary of an option over the Optioned Mining Concessions, which shall be duly registered at the Register of the relevant Mining Custodian. MSB and MLI undertake to completely, fully and legally release the judicial seizure ordered by the 30◦ Civil Court of Santiago on the trial C-31.793-2009 "HUMLID con SERRANO and OTHER", currently affecting the Sociedades Mineras Utio's shares individualized therein. Regarding the Framework Agreement for Development of Mining Project and Purchase of Shares of Sociedad Legal Minera Litio Uno de la Sierra Hoyada de Maricunga y Otras executed between MLI, Jorge Rodlon Barrozo and Others, MLI undertakes to sign the cancellation and termination deed in relation to such agreement within 18 months as from this date.

 

3.2.2                            MSB and MLI undertake to, immediately following the incorporation of Salar Blanco, complete the due registration in Salar Blanco's name, before the relevant Registrars, of the MLI Assets, the MSB Assets and the Sociedades Legales Mineras Litio Mining Concessions to be contributed to Salar Blanco in the act of incorporation of said company,

 

3.3                                       Capita Increase - Salar Blanco' Special Shareholders Meeting.

 

MSB and MLI, as Salar Blanco's shareholders, undertake to summon and hold a special shareholders meeting of Salar B1anco (the “Salar Blanco's Special Shareholders Meeting”) whereby it shall be resolved:

 

(i)                 to increase the capital of Salar Blanco to the amount of USD$ [•] by means of issuing [•] shares (the "Salar Blanco's New Shares"), representing fifty percent (50%) of Salar Blanco's total shares (the “capital Increase''); and

 

(ii)               MSB and MLI shall waive their preemptive right to subscribe for Salar Blanco's New Shares for the benefit of LPI.

 

All of the foregoing in terms substantially similar to those in Schedule 3.3.

 

	 
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The Capital Increase shall be properly and timely registered at the Commerce Registry of the Santiago Real Estate Registrar and published in the Official Gazzette.

 

Undertakings under sections 3.1, 3.2 and 3.3 shall be fulfilled no later than September 30, 2016.

 

4.                     EXECUTION DATE

 

On or before October 15th, 2016 the following actions shall occur:

 

4.1                           LPI's Notice.

 

LPI shall notify MSB whether LITHIUM has been able to raise the necessary funds to proceed with the Transaction as detailed in this Agreement. 

 

In the negative case, this Agreement shall immediately terminate and no Party will be liable to any other Party as a result of the termination and the Parties will not be entitled to any indemnification whatsoever due to such termination.

 

On the contrary, if the notice is affirmative, section 4.2 and following will be applicable. Failure by LPI to deliver the notice referred to in this section shall be deeming as a notification by LPI that it has raised the funds and is proceeding with the transactions set forth herein.

In addition to the foregoing LITHIUM shall cause its shareholders to hold a general meeting and approve the issuance and subscription by MSB of the LPI Shares on or before November 30, 2016. The subscription price shall be the amount equivalent to the market value of the LPI shares at the time of executing the Option Agreement Assignment (the "LPI Shares Subscription Price"), which shall be payable on the later of (a) satisfaction of the Condition Precedent; and (b) five (5) Business Days after LITHIUM's general shareholders meeting which approves the Issuance of the LPI Shares and the transactions set forth herein. If for any reason LITHIUM and LPI do not allow MSB to subscribe the LPI Shares or do not deliver the LPI Shares on or before the date set forth herein, Section 5.1.6 shall apply.

 

4.2                              Option Agreement Assignment and Exercise

 

4.2.1                            MSB and LPI shall execute the Option Agreement Assignment; with the consent of the Owners of the Optioned Mining Concessions at a price which is the equivalent of the market value of the LPI Shares at tf1e date of execution of the Option Agreement Assignment (the ''Option Agreement Assignment Price"), no later than October 15, 2016, with the effect that LPI shall become the beneficiary of said option. The Option Agreement Assignment Price shall be payable upon the later of (a) satisfaction of the Condition Precedent; and (b) five (5) Business Days after LITHIUM's general shareholders meeting which approves the issuance of the LPI Shares and the transactions set forth herein.

 

Pursuant to the Option Agreement, LPI shall become the beneficiary of a mining option, in terms of Article 169 of the Chilean Mining Code, to acquire the Optioned Mining Concessions which shall be exercised no later than October 15th, 2016 and the purchase price of the Optioned Mining Concessions shall be USD 5,220,000.

 

The Option Agreement Assignment shall be excited on the third (3rd) Business Day following receipt by MSB of a written notice from LPI at the offices of LPI's lawyers in Santiago, Chile.

 

	 
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4.2.2                            Upon the execution of the Option Agreement Assignment, LPI (and LITHIUM, as the case maybe) undertakes to:

 

(i)                                                                   to concurrently exercise the option contained in the Option Agreement by means of a public deed in terms substantially similar to the draft attached hereto as Schedule 4.2.2 (ii) (the ''Option Exercise Deed"); and

 

(ii)                                                                  to pay five million two hundred and twenty thousand Dollars (USD$5,220,000) (the "Option Exercise Price''); to the Owners of the Optioned Mining Concessions jointly with the exercise of the same, in terms and conditions set forth in the Option Agreement.

 

4.2.3                           Novation and Setoff. The Parties hereby agree that the Option Agreement Assignment Price will be setoff and satisfied in full with the LPI Shares Subscription Price. For that purposes LITHIUM assume the payment of the Option Agreement Assignment Price by novation and such obligation shall be setoff with MSB obligation to pay the LPI Shares. A draft of the novation and setoff deed is attached hereto as Schedule 4.2.3.

 

5.                     CLOSING

 

Subject to the terms and conditions of this Agreement, the closing (the "Closing Date" or "Closing") shall take place at 11:00 a.m., Santiago, Chile time, on the third Business Day after the Optioned Mining Concessions have been registered in the name of LPI (the "Condition Precedent"). The Closing shall take place at the offices of PPU, at El Golf 40, floor 20th, Las Condes, Santiago, Chile, or at such other time or place as the Pares may agree in writing. At Closing, except as otherwise specifically provided herein, the following actions shall occur, and all such actions shall be deemed to occur simultaneously and none of the following actions shall be legally effective unless all such actions have been taken:

 

5.1                   Shares Subscription Agreements.

 

5.1.1                           First Shares Subscription Agreement. On the Closing Date Salar Blanco and LPI will execute the first shares subscription agreement (the "First Shares Subscription Agreement"), Pursuant to the First Shares Subscription Agreement LPI shall subscribe such amount of Salar Blanco's New Shares that represent the aggregate amount of three million five hundred thousand Dollars (USD 3,500,000), and shall pay such shares upon execution of the agreement through (a) the capitalization of the loans disbursed to Salar Blanco under the Loan Agreement until such date, valued at par; and (b) the balance shall be contributed in Dollars in immediately available funds, and capitalized on the same date. A draft of the First Shares Subscription Agreement is attached hereto as Schedule 5.1.1.

 

5.1.2                           Second Shares Subscription Agreement. Concurrently with the execution of the First Share Subscription Agreement, Salar Blanco and LPI will execute the second shares subscription agreement (the "Second Shares Subscription Agreement"), Pursuant to the Second Shares Subscription Agreement, LPI shall subscribe such amount of Salar Blanco's New Shares that represent an amount equivalent to Option Agreement Assignment Price plus five million two hundred twenty thousand Dollars (USD 5,220,000), and shall pay such shares through the contribution of the Optioned Mining Concessions, apprising the Optioned Mining Concessions to be contributed by LPI to the Salar Blanco in the amount of five million two hundred twenty thousand Dollars (USD 5,220,000) plus the Option Agreement Assignment Price. This payment will not be deemed made until the Optioned Mining Concessions are duly registered under the Company's name before the relevant Mining Custodian free and clear of any Liens. Salar Blanco and LPI shall use reasonable commercial efforts In having the Optioned Mining Concessions registered in the name of the Company as soon as practicable. A draft of the Second Shares Subscription Agreement is attached hereto as Schedule 5.1.2.

 

	 
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5.1.3                           Third Shares Subscription Agreement. Concurrently with the execution of title First Share Subscription Agreement. Salar Blanco and LPI will execute the third shares subscription agreement (the ''Third Shares Subscription Agreement"), pursuant to which LPI shall subscribe such amount of Salar Blanco's New Shares equivalent to three millon five hundred thousand Dollars (USD 3,500,000) and shall pay such shares on November 30, 2016, in Dollars in Immediately available funds. A draft of the Third Shares Subscription Agreement is attached hereto as Schedule 5.1.3.

 

The Parties acknowledge and agree that upon full payment of the First Shares Subscription Agreement, the Second Shares Subscription Agreement and the Third Shares Subscription Agreement; the total and duly paid cumulative equity that LPI will hold in Salar Blanco will represent twenty five percent (25%) of the total shares of Salar Blanco.

 

5.1.4                            Fourth Shares Subscription Agreement. Concurrently with the execution of the First Share Subscription Agreement, Salar Blanco and LPI will execute the fourth shares subscription agreement (the "Fourth Shares Subscription Agreement"), pursuant to which LPI shall subscribe [•] Salar Blanco's New Shares representing fifteen percent (15%) of the total shares of Salar Blanco for an aggregate amount of nine million Dollars (USD 9,000,000), and shall pay such shares, on April 1st, 2017, in Dollars in immediately available funds. Article VII of the Shareholders Agreement shall apply upon LPI's failure to pay for its subscribed Shares. A draft of the Fourth Shares Subscription Agreement is attached hereto as Schedule 5.1.4.

 

Notwithstanding the above, LPI may pay the amount required under the Fourth Shares Subscription Agreement in two installments of USD 4,500,000 each; whereby the first one is paid on April 1st, 2017 and the latter upon request of Salar Blanco and no later than June 30th, 2017.

 

Nevertheless, if the Preliminary Resource Report has not been delivered to Salar Blanco by March 30th 2017, the first USD 4,500,000 installment can be postponed until such date that is one month after the Preliminary Resource Report has been delivered. In any case, LPI shall pay for such amounts not exceeding USD 4,500,000, as required for Salar Blanco, to fulfill the approved Project Budget - as this term ls defined in the Shareholders Agreement, immediately upon request of Salar Blanco's Board of Directors.

 

5.1.5                           Fifth Shares Subscription Agreement. Concurrently with the execution of the First Share Subscription Agreement, Salar Blanco and LP (will execute the fifth shares subscription agreement (the "Fifth Shares Subscription Agreement"), pursuant to which LPI shall subscribe [•] Salar Blanco's New Shares representing ten percent (10%) of the total shares of Salar Blanco for an aggregate amount of six million Dollars (USD 6,000,000), and shall pay such shares, on December 30, 2017, in Dollars in immediately available funds. Article VII of the Shareholders Agreement shall apply upon LPI's failure to pay for its subscribed Shares. A draft of the Fifth Shares Subscription Agreement is attached hereto as Schedule 5.1.5.

 

Notwithstanding the above, LPI may pay the amount required under the Fifth Shares Subscription Agreement in two installments of USD 3,000,000 each; whereby the first one is paid on December 31st, 2017 and the latter upon request of Salar Blanco and no later than August 30th, 2018.

 

Nevertheless, if Salar Blanco has not finalized the preparation of the Environmental Impact Assesment (EIA) by December 31st, 2017, the first USD 3,000,000 installment can be postponed until such date that is one month after the EIA has been finalized. In any case, LPI shall pay for such amounts not exceeding USD 3,000,000, as required for Salar Blanco, to fulfill the approved Project Budget - as this term is defined in the Shareholders Agreement, immediately upon request of Salar Blanco's Board of Directors.

 

	 
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5.1.6                           Failure of the Condition Precedent or Deliver of the LPI Shares.

 

5.1.6.1                           Failure of Condition Precedent.

 

If on or before November 30, 2016, the Condition Precedent is not fulfilled for any reason, this Agreement shall immediately terminate and the Parties will not be entitled to any indemnification whatsoever due to such termination.

 

In such case, LPI shall assign back to MSB any right it may have under the Option Agreement and the Option Agreement Assignment shall be deemed to be terminated and there will be no obligations between the Parties in connection therewith.

 

It is expressly stated and agreed that LPI will not be liable for the failure of the Condition Precedent, provided it has duly exercised the Option, filed it for registration before the relevant Mining Custodian and use commercially reasonable efforts to have the Optioned Mining Concessions registered in LPI's name.

 

5.1.6.2                           Failure to Deliver LPI Shares.

 

Should the Condition Precedent be fulfilled and (a) LPI failed to execute the Shares Subscription Agreements after it has given the positive notice referred to in Section 4.1. above, or (b) LITHIUM and/or LPI do not allow MSB to subscribe the LPI Shares or do not deliver the LPI Shares to MSB by November 30 2016, this Agreement shall be deemed terminated and MSB shall have the option to acquire the Optioned Mining Concessions and all Shares subscribed by LPI, if any, in each case free and clear of any Liens, by reimbursing any amounts paid by LPI under the Shares Subscription Agreements and all amounts paid by LPI to the Owners of the Optioned Mining Concess1ons under the Option Exercise Deed. In this case the Option Agreement Assignment shall be deemed to be terminated and there will be no obligations between the Parties in connection therewith.

 

5.2                           Shareholders Agreement. MSB, MLI and LPI shall execute the Shareholders Agreement concurrently with the execution of all Shares Subscription Agreements, A draft of the Shareholders Agreement is attached hereto as Schedule 5.2.

 

	 
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6.                                          REPRESENTATIONS AND WARRANTIES.

 

6.1                           Representations and Warranties Regarding Salar Blanco. Each of MSB and MLI, severally and not jointly, represents and warrants to LPI that on the date hereof.

 

6.1.1                           Salar Blanco is in process of being incorporated. The incorporation of Salar Blanco was validly approved by MSB and MLI shareholders meetings, held on [•] and on August 30, 2016, respectively and was materialized by means of public deed dated [•] granted before [•].

 

6.1.2                            On the date of incorporation of Salar Blanco, MLI and MSB will be the record and beneficial owners of all of the Shares issued in the Salar Blanco, and will have good and marketable title to such shares and such ownership is free and clear of any Liens.

 

6.1.3                           Upon incorporation of Salar Blanco there will be no pending options or subscriptions for shares or rights or convertible options, rights or securities committing Salar Blanco to issue new shares or equity interests, other than pursuant to this Agreement.

 

6.1.4                           Upon its incorporation Salar Blanco will not have other Subsidiaries nor any equity interests in other companies.

 

6.1.5                           The drafts of the Salar Blanco organizational documents made available to LPI are true, complete and correct, and no amendments thereto are pending.

 

6.1.6                           Before giving effect to the Capital Increase, Salar Blanco's capital will be the amount of [•], divided into [•] nominative shares, with no par value, all fully subscribed and paid for, of which [•] shares will belong to MSB, equivalent to twenty seven point eight nine percent (27.89%) of Salar Blanco's capital ("MSB's Shares'') and [•] shares will be the property of MLI, representative of the outstanding seventy two point eleven percent (72.11%) of the Salar Blanco's capital ("MLI Shares").

 

MSB's Shares will be paid by means of MSB's contribution of the MSB Assets. The property of the same under the name of Salar Blanco is in process of registration.

 

On its turn, the MLI Shares will be paid by MLI's contribution of the MLI Assets. The property of the same under the name of Salar Blanco is the process of registration.

 

6.1.7                           After the registration of the MSB Assets and the MLI Assets under the name of Salar Blanco, the latter will have valid title over the same free and clear of any Liens.

 

6.1.8                           Sociedades Legales Mineras Litio Mining Concessions are all in force and do not overlap with any mining concessions pertaining to third parties that could enable that third party to explore or exploit any mining substance on the same land.

 

6.1.9                           Sociedades Legales Mineras Litio Mining Concessions were acquired in accordance with applicable laws, regulations and all other and the transfers of ownership regarding them have been undertaken legally and nobody is able to successfully claim any rights or report any material defects. Additionally, the applicable mining licenses have been paid on time. Finally, there are no lawsuits or claims pending to which Sociedades Legales Mineras Litio Mining Concessions, MLB, MLI or Salar Blanco are party or participate as third parties which relate to the Sociedades Legales Mineras Litio Ml11ing Concessions, MSB Assets and MLI Assets and neither are MSB or MLI aware of any lawsuits pending that could affect them, specially but not limited to potential mining or environmental liabilities.

 

	 
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6.1.10                           Regarding MSB Assets, MLI Assets and the Sociedades Legales Mineras Litio Mining Concessions, there has been no notice of: /I/ any expropriation for a public utility or other similar proceeding or claim for expropriation, confiscation or other transfer imposed compulsorily by the authority, whether pending or about to be decreed, or to any use, state or condition of a property or asset that violates any applicable law, regulation or rule, including environmental regulations. There is no knowledge of any actual or potential breach of law that might have or come to have a Material Adverse Effect. For purposes of this Agreement, "Material Adverse Effect" means any event, occurrence, fact, condition or change that is materially adverse to the business, result of operations, final condition or assets of Salar Blanco.

 

6.1.11                           The municipal license, real estate and mining taxes assessed or to be paid in relation to the MSB Assets the MLI Assets and the Sociedades Legales Mineras Litio Mining Concessions, accrued or arising through the date hereof, have been duly paid when due and there is no fax, revenue or municipal debt. MSB and MLI shall be liable for, and shall therefore bear exclusively and solely the expense of, any tax and tax liability payable or accrued up to the Closing Date.

 

6.1.12                           Salar Blanco will comply in all material respects with all applicable laws in relation to its formation and the carrying of its business.

 

6.1.13                           Salar Blanco will not own any patents, trademarks, trade names, service marks, service names, copyrights, accounting records, books records, formal records of tax returns, maps, computer software and programs owned thereby; including applications, licenses and other rights in respect thereof ("Intellectual Property"), other than the Salar Blanco trademark which will be registered in its name. There is no material conflict in this respect with third-party rights.

 

6.1.14                           Salar Blanco will comply until the Closing Date with Chilean labor laws with respect to its employees all material respects and it is not party to any collective bargaining agreement or any another similar agreement.

 

6.1.15                           The MSB Assets and the MLI Assets are in compliance with all Environmental Laws in all material respects and have not received from any person any (i) environmental notice or environmental claim, or (ii) written request for Information pursuant to Environmental Law.

 

6.1.16                           Disclaimer of Other Representations and Warranties. Except as expressly set forth in this Section, MSB, MLI and Salar Blanco make no representation or warranty, express or implied, at law or in equity, in respect of Salar Blanco or any of its assets, liabilities, operations. Including with respect to merchantability or fitness for any particular purpose, and any such other representations or warranties are hereby expressly disclaimed.

 

	 
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6.2                           Representations and Warranties Regarding MSB and MLI. Each of MSB and MLI represents and warrants to LPI as to itself that at the date hereof:

 

6.2.1                           Organization and Authority. (a) Is a sociedad por acciones duly organized, validly existing and in good standing under the laws of Chile and has all requisite powers and corporate authorities and has taken all actions necessary in order to execute, deliver and prior its obligations under this Agreement. (b) This Agreement has been duly executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles. (c) The execution, delivery and performance of this Agreement by it does not, and the consummation by it of the transactions contemplated hereby will not, constitute or result in a breach or violation of, or a default under its certificate of incorporation, bylaws, shareholders' agreements, any of its constitutional documents or any other agreement with third parties.

 

6.2.2                           Consents and Approvals. No filings, permits, authorizations, consents approvals and/or notices are required to be made or obtained by it with or from, as the case may be, any Governmental Entity, in connection with the execution, delivery and performance of this Agreement by it and the consummation by it of the transactions contemplated hereby.

 

6.2.3                           Litigation. There is no Litigation pending or, to its knowledge, threatened against it, which would be reasonably likely to have a Material Adverse Effect on its business or financial condition or would be reasonably likely to prevent, delay or otherwise impair the transactions contemplated hereby.

 

6.3                           Representations and Warranties Regarding LPI and LITHIUM. Each of LITHIUM and LPI represents and warrants to MSB and MLI that at the date hereof:

 

6.3.1                           Organization and Authority. (a) It is duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation and has all requisite powers and authorities and has taken all actions necessary in order to execute, deliver and perform its obligations under this Agreement. (b) This Agreement has been duly executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles. (c) The execution, delivery and performance of this Agreement by it does not, and the consummation by it the transactions contemplated hereby will not, constitute or result in a breach or violation of, or a default under its certificate of incorporation or bylaws or any of its constitutional documents.

 

6.3.2                           Consents and Approvals. No filings, permits, authorizations, consents, approvals and/or notices are required to be made or obtained by it with or from, as the case may be, any Governmental Entity, in connection with the execution, delivery and performance of this Agreement by it and the consummation by it of the transactions contemplated hereby.

 

6.3.3                           Litigation. There is no Litigation pending or, to its knowledge, threatened against it, which would be reasonably likely to have a material adverse effect on its business or financial condition or would be reasonably likely to prevent, delay or otherwise impair the transactions contemplated hereby.

 

	 
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6.4.                           Conduct of Business. As from Salar Blanco's incorporation and until the date of execution of the Shares Subscription Agreements; MSB and MLI must ensure that the business of Salar Blanco shall be conducted solely in the Ordinary Course of Business, except for purposes of complying with this Agreement, the Capital increase and carrying out the Project in accordance with the proposed budget and business plan, and shall make reasonable commercial efforts to avoid any Material Adverse Effect that may affect Salar Blanco, and, in particular that Salar Blanco does not:

 

(i)                   sell, transfer or grant a Lien over any of its shares or material assets, including the MSB Assets and MLI Assets;

 

(ii)                 enter into any material contract, other than the Loan Agreement with LPI;

 

(iii)                inccur any debt, other than under the Loan Agreement with LPI;

 

(iv)                hire any employee other than employees of MLI and MSB which Salar Blanco may employ recognizing their seniority;

 

(v)                 enter into any joint venture, partnership or similar arrangements; or

 

(vi)                terminate or fails to renew any of its authorizations; including its mining concessions, without LPI's prior written consent.

 

6.5 Prohibition. From this date and until the date the Shareholders Agreement is executed MSB and MLI undertake no to transfer or in any way dispose of their Shares, either directly or indirectly and undertake not to establish any Liens over the same,

 

6.6 LPI Shares Lock-Up Period. From the date that MSB subscribes the LPI Shares and until June 24, 2018, MSB undertakes no to transfer or in any way dispose of the LPI Shares, either directly or indirectly and undertakes not to establish any Liens over the same, provided that this covenant will not restrict MSB from disposing of its LPI Shares (a) if a third party launches a tender offer for the shares of LITHIUM, or (b) If the shareholders of LITHIUM executing the LITHIUM Shareholders Letter sell any of their shares in LITHIUM.

 

7.                                          INDEMNIFICATION.

 

7.1                           Each of MSB and MLI shall defend, Indemnify and hold LPI, LITHIUM and Salar Blanco and their respective Representatives harmless from and against, and pay or reimburse them for, any and all damages, losses, fines, liabilities, obligations, claims of any kind, interest or expenses (including, without limitation, reasonable attorneys' fees and expenses, and reasonable costs and expenses incurred in recovering Losses from any Person) (collectively, "Losses") resulting from or arising out of; (i) any Inaccuracy of any representation or warranty made by it in Section 6.1 and Section 6.2; (ii) failure to comply with Sections 6.4 and 6.5; and (iii) any failure of it to perform any covenant or agreement contained in this Agreement or any other Transaction Document. LPI, LITHIUM and Salar Blanco may not make a claim under Section 7.1(i) for events or circumstances disclosed to it during the due diligence.

 

7.2                           Each of LPI and LITHIUM shall defend, Indemnify and hold MSB, MLI and Salar Blanco and their respective Representatives harmless from and against, and pay or reimburse them for, any and all Losses resulting from or arising out of; (i) any inaccuracy of any representation or warranty made by it in Section 6.3; and (ii) any failure of it to perform any covenant or agreement contained in this Agreement or any other Transaction Document.

 

	 
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7.3                            (a)      Except for claims based on fraud or willful misconduct and for those cases in which this Agreement contemplates a specific remedy, the obligations to indemnify and hold harmless pursuant to this Section 7 shall be the only remedy available to the Parties for any misrepresentation in, or breach of this Agreement. The Parties acknowledge and agree that the indemnification provisions in this Section 7 shall be their exclusive remedy with respect to the transactions contemplated by this Agreement and waive any remedies allowing the resolution of this Agreement or the transaction contemplated hereunder after the date the Option Agreement Assignment is executed. The Parties declare and acknowledge that the rules set forth in Paragraph 8, Title XXIII, Book Four of the Civil Code, regarding latent defects (vicios redhibitorios) shall not be applicable to this Agreement and are hereby expressly and irrevocably waived.

 

(b)      Except for claims based on fraud or willful misconduct claims for any breach of the representations and warranties of any of the Parties shall be made by the Indemnified Party only until 1 year following the date hereof and for an aggregate amount not exceeding USD $2,000,000, except in case of gross negligence and fraud, in which case there shall be no time nor amount limit. Claims resulting from, arising out of, relating to, in the nature of, or caused by the breach of any covenant of any of the Parties contained in this Agreement or in any Transaction Document may be made by the Indemnified Party until the expiration of the applicable statute of limitations past thirty (30) days (including any extension thereto).

 

(c)      The liability of each of the parties is several and not joint.

 

7.4                           No Person will be entitled to lost of profits, indirect, incidental, consequential, punitive or moral damages arising from a breach of this Agreement.

 

7.5                           Indemnification Procedures.

 

7.5.1                           Third Party Claims. If any claim is asserted by a third party against an Indemnified Party, copy of the respective notice and the amount which payment is sought thereunder, if any, or the non-binding estimated amount thereof (the "Claim Notice") shall be given by the Indemnified Party to the Indemnifying Party promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, provided that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its indemnification obligation under this Agreement, except to the extent that such failure results in a lack of actual notice to the Indemnifying Party and such Indemnifying Party is materially prejudiced as a result of such failure to give notice. The Indemnifying Party shall have 30 days from receipt of the Claim Notice (the "Notice Period") to notify the Indemnified Party whether or not it elects to assume the defense of the Indemnified Party against such claim or demand.

 

7.5.2                           Control of Defense of Claim. (i) If the Indemnifying Party notifies the Indemnified Party within the Notice Period that it elects to defend the Indemnified Party against such claim or demand, the Indemnifying Party shall have the right to defend the Indemnified Party by appropriate proceedings and shall have the sole power to direct and control such defense and to negotiate, settle or otherwise deal with such claim or demand, provided that, except with the prior written consent of the Indemnified Party, no Indemnifying Party, in the defense of such claim or demand, shall consent to the entry of any judgment or enter into any settlement that provides for injunctive or non-monetary relief affecting the Indemnified Party. (ii) if the Indemnifying Party does not accept the defense of a matter that it should indemnify pursuant to the terms of this Section 7, all costs and expenses, including reasonable attorneys' fees, incurred by the Indemnified Party in defending such claim or demand shall be a liability of, and shall be paid as incurred by, the indemnifying Party and the Indemnified Party shall have the full right to defend against any such c1aim or demand, but shall not be entitled to settle or agree to pay in full such claim or demand, unless it has prior authorization to do so from the indemnifying Party.

 

	 
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7.5.3                           Access to Business Records. If the Indemnifying Party were to direct, control or participate in the defense or settlement of any third-party claim or demand, the Indemnified Party will give the Indemnifying Party and its counsel access to, during normal business hours, the relevant business records and other documents, and shall permit them of consult with and involve as witnesses the employees and counsel of the Indemnified Party.

 

7.5.4 Non-Third Party Claims. If an Indemnified Party should have a claim against the Indemnifying Party hereunder which does not involve a claim or demand being asserted by a third party, the Indemnified Party shall send a Claim Notice to the Indemnifying Party immediately following its discovery of the existence of the facts giving rise to such claim. The Indemnifying Party shall have fifteen (15) Business Days from the date such Claim Notice is received to notify the Indemnified Party in writing of any objections it has to the Indemnified Party's notice or claims for indemnification. If the Indemnifying Party does not deliver such written notice of objection within such fifteen (15) day period, the Indemnifying Party shall be deemed to have accepted the claim. If the Indemnifying Party accepts the claim, it shall have fifteen (15) Business Days from the date of acceptance to pay such claim; if the Indemnifying Party rejects the claim, the Indemnified Party shall have the right to require that the claim be resolved by means of arbitration pursuant to Section 12.2.

 

8.                                          GUARANTY.

 

(a)                Guaranty. LITHIUM hereby unconditionally and irrevocably guarantees to MSB and MLI (each a "Beneficiary"), on the terms and conditions set forth in this Section 8, the prompt performance, when due, of those LPI's obligations under this Agreement (the "Guaranty" and the obligations guaranteed under the Guaranty, the "Guaranteed Obligations"). LITHIUM furthermore undertakes to call and convene shareholders meetings of LITHIUM for the approval of the consummation of the transactions contemplated by this Agreement and the issuance and subscription by MSB of the LPI Shares in accordance with the terms of this Agreement.

 

(b)               Demand. If LPI fails to fulfil any of the Guaranteed Obligations, when and as the same shall become due, then any Beneficiary shall be entitled to make a demand upon LITHIUM hereunder in writing specifying in reasonable detail (i) the provision of this Agreement or any Transaction Document of which LPI is in breach, (ii) in what manner and in what amount LPI has failed to perform pursuant to this Agreement or any Transaction Document; and (iii) an explanation of why such payment is due with a specific statement by an officer of the Beneficiary that the Beneficiary is demanding performance by LITHIUM under the Guaranty (hereinafter referred to as a "Demand"). A single written Demand shall be effective as to any specific default during the continuance of such default, until LPI or LITHIUM have cured such default, and additional written Demands concerning such default shall not be required unless such default Is cured and subsequently recurs.

 

	 
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(c)                Payment, LITHIUM shall within ten (10) Business Days following receipt of a Demand, fully pay and perform such Guaranteed Obligations then due and owing as set forth in the Demand to such account as the Beneficiary may specify in writing to LITHIUM from time to time. Any payment made by LITHIUM hereunder shall, to the extent so made, discharge the obligations of LITHIUM hereunder with respect to such amounts paid.

 

(d)               LITHIUM Obligations Unconditional. The obligations of Lithium hereunder shall remain in full force and effect notwithstanding any act, omission, event or circumstance whatsoever, until full, valid and proper performance of the Guaranteed Obligations.

 

(e)                Independent Obligations. The obligations of LITHIUM hereunder are independent of the obligations of LPL.

 

(f)                Waiver of Notice. LITHIUM unconditionally waives: (i) demands, protests, or notices as the same pertain to the Beneficiaries; (ii) any right to require the Beneficiaries to proceed against LPI or to exhaust any security held by the Beneficiaries or to pursue any to the remedy; and (iii) any defense based upon an election of remedies by the Beneficiaries, unless the same would excuse performance by LPI under this Agreement.

 

(g)                Subrogation. LITHIUM agrees with respect to the Guaranty that it shall have no right of subrogation, reimbursement contribution or indemnity, nor any right of repurpose to security for the Guaranteed Obligations until all of the Guaranteed Obligations have been paid in full.

 

(h)               Discharge; Reinstatement; Preference. If at any time any payment by or on behalf of LPI in respect of the Guaranteed Obligations is rescinded or must be otherwise restored or returned upon the Insolvency, bankruptcy or reorganization of LPI or otherwise, LITHIUM's obligations with respect to such payment shall be reinstated at such time as though such payment had been made but not made at such time. If any payment by LPI or LITHIUM to the Beneficiaries is held to constitute a preference under any applicable bankruptcy laws, or if under applicable bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or other similar laws of general application-on with respect to creditors, any Beneficiary is required to refund part or all of any payment or pay the amount thereof to any other party, such payment to the Beneficiaries shall not constitute a release from any liability hereunder, and LITHIUM'S liability hereunder shall be reinstated to the extent of such refund or payment to another party.

 

9.                     ENTIRE AGREEMENT.

 

This Agreement, together with the Transaction Documents, and their Schedules, documents, certificates and instruments referred to herein or therein, embody the entire agreement and understanding of the Parties in respect of the transactions contemplated by this Agreement and the Transaction Documents. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to herein or therein. This Agreement supersedes all prior agreements and understandings between the Parties with respect to such transactions.

 

	 
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10.                                      MISCELLANEOUS PROVISIONS.

 

10.1                           Termination. This Agreement may be terminated by common agreement of all Parties and in case of occurrence of the termination events contemplated in the present Agreement. MSB may also terminate this Agreement if LPI does not execute the Option Agreement Assignment pursuant to the terms of this Agreement.

 

10.2                           Amendment and Modification. This Agreement may be amended, modified or supplemented only by a written agreement signed by the duly authorized representatives of all the Parties hereto.

 

10.3                           Waiver of Compliance: Consents. Except as otherwise provided in this Agreement, any failure of any of the Parties to comply with any obligation, covenant or agreement herein may be waived by the party entitled to the benefits thereof only by a written instrument signed by the party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, covenant or agreement shall not operate as a waiver of, or estoppel with respect to; any subsequent or other failure. Same rule applies to conditions and terms established in benefit only of one of the Parties.

 

10.4                           Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the signor hereto and their respective successors but neither this Agreement nor any of the rights, Interests or obligations hereunder shall be assigned by any signor hereto, including by operation of law, without the prior written consent of all other signors, nor is this Agreement intended to confer upon any other Person except the signors hereto any rights or remedies hereunder. Notwithstanding the foregoing, the Parties expressly authorize MLI to assign its rights and obligations under this Agreement to its shareholders upon its dissolution.

 

10.5                           Interpretation. The article and section headings contained ln this Agreement are solely for the purpose of reference, are not part of the agreement of the parties and shall not in any way affect the meaning or interpretation of this Agreement.

 

10.6                           Schedules. All Schedules referred to herein are intended to be and hereby are specifically made a part of this Agreement.

 

10.7                           Partial Invalidity. If any provisions of this Agreement, or the application of a provision to any Person or circumstance, shall be held invalid, the validity or legality of the remainder of this Agreement, or the application of such provision to Persons or circumstances other than those to which it is held invalid, shall not be affected or become unenforceable by virtue of violation of norms of public order, the remaining provisions shall not be affected and shall remain in full force and effect, and in such a case the parties shall be obliged to replace the unenforceable provision by other or others which provide the economic purpose envisaged by such provision.

 

10.8                           Counterparts. This Agreement is executed in two counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement.

 

	 
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10.9                           Expenses. Salar Blanco shall bear the costs, fees and expenses of in connection with the negotiation, preparation, execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby including fees, commissions and expenses payable to brokers, finders, investment bankers, consultants, exchange or transfer agents, attorneys, accountants and other professionals, whether or not the transactions contemplated herein are consummated or terminated. Each Party shall bear and shall be responsible for its tax obligations arising from the execution and performance of this Agreement and the consummation of the transactions contemplated hereby.

 

10.10                           No Third Party Beneficiaries. Nothing in this Agreement shall entitle any Person or entity (other than a party hereto and his, her or its respective successors and assigns permitted hereby) to any claim, cause of action, remedy or right of any kind.

 

10.11                           Survival. If this Agreement is terminated, for whatever reason, Sections 10, 11 and 12 shall remain effective.

 

10.12                           Exclusivity. Parties agree that from the present date and up to the date that LPI subscribes the Salar Blanco New Shares; MSB, MLI and Salar Blanco shall refrain from negotiating with third parties any bids or offers for the Project, its assets or shares in Salar Blanco in the same terms as this has been agreed in the Term Sheet, hence being the same penalties applicable to a breach of this undertaking. Likewise, LPI and Lithium will not engage in the Business or otherwise compete with the Project while this Agreement is effect.

 

11.                                      NOTICES.

 

11.1                           All notifications or communications to be made by the Parties by virtue of this Agreement, shall be in writing by letter delivered personally with acknowledgment of receipt or by registered mail dispatched by a Notary Public certifying the delivery. Such communications should be sent simultaneously by email to the other Party.

 

If to LPI:

 

Attention: Mr. Martin C. Holland

Email: holland@lithiumpowerinternational.com

Tel: +61 2 9276 1235

 

If to MSB:

 

Attention: Mr. Cristobal Garcia-Huldobro / Mr. Francisco Bartucevic

Email: cgh@msblanco.com / fbartucevic@msblanco.com

Tel: +562 2 5827200

 

If to MLI:

 

Attention: Mr. Cristobal Garcia-Huldobro / Mr. Francisco Bartucevic

Email: cgh@msblanco.com / fbartucevic@msblanco.com

Tel: +562 2 5827200

 

	 
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11.2                           Except when indicated otherwise, all notices shall be deemed given, and the terms contemplated in this Agreement shall start running for each party, upon actual receipt of such notice when delivered by a notary public in the address given above, or three (3) days Business Days after the date of delivery of such notice to a courier of international reputation.

 

12.                                      GOVERNING LAW AND ARBITRATION.

 

12.1                           Governing Law. This Agreement and my claim if a party hereunder, or otherwise, shall be governed by and construed in accordance With the laws of Chile without giving effect to the principles of the conflict of laws provisions of Chile that would direct the general applicability of laws of another Jurisdiction.

 

12.2                           Arbitration.

 

Any difficulty or controversy arising among the parties to the contract with respect to the application, interpretation, duration, validity or execution of the contract, or for any other reason, shall be submitted to arbitration pursuant to the Rules of Arbitration Procedure of the Santiago Arbitration and Mediation Center in effect at the time of its initiation.

 

The parties confer an irrevocable special power of attorney upon the Santiago Chamber of Commerce so that it may, at the written request of any of the parties, appoint an arbitrator from among the members of the arbitration corps of the Santiago Arbitration and Mediation Center, who will be empowered to act as arbitrator-at-law with regard to the substance of the dispute and as ex aequo et bono with regard to the procedure (arbitro mixto).

 

There shall be no remedy against the arbitrator's resolutions. The arbitrator is especially empowered to resolve any matter relating to his/her competence and/or Jurisdiction.

 

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

 

	 
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 23wordproof.doc

EXHIBIT 10.8

 

 

 

SHAREHOLDERS AGREEMENT

 

MINERA SALAR BLANCO S.A.

 

By and among

 

MINERA SALAR BLANCO SpA LITHIUM

 

POWER INVERSIONES CHILE SpA And

 

MINERA Ll ENERGY SPA

 

January 13, 2017

 

 

 

	 
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SHAREHOLDERS AGREEMENT

 

MINERA SALAR BLANCO S.A.

 

IN SANTIAGO, CHILE, on January 13, 2017, this Shareholders Agreement is entered into by and among:

 

MINERA SALAR BLANCO SPA, a sociedad por acciones duly organized and existing under the laws of Chile, Tax ID No 76.319.337-3, whose principal place of business is at Rosario Norte No 100, of. 403, Santiago, Chile (“MSB”);

 

MINERA Ll ENERGY SPA, a sociedad por acciones duly organized and existing under the laws of Chile, Tax ID No 76.102.972-K, whose principal place of business is at Marchant Pereira No 150, of. 803, Providencia, Santiago, Chile (“MLI”); and

 

LITHIUM POWER INVERSIONES CHILE SpA, a sociedad por acciones duly organized and existing under the laws of Chile, Tax ID No 76.598.914-0, whose principal place of business is at El Golf 40, piso 20, Las Condes, Santiago, Chile (“LPI’’).

 

For all purposes of this Agreement, each of MSB, MLI, LPI, individually a “Party” and collectively the “Parties”.

 

W I T N E S S E T H:

 

WHEREAS, MINERA SALAR BLANCO S.A. (the ‘‘Company” or “Salar Blanco”) is a private corporation duly organized and existing under the laws of Chile; being incorporated by means of public deed dated September 7, 2016, granted before the Notary Public of Santiago of Mr. Patricio Zaldivar Mackenna, which excerpt was registered on page 70,633, number 38,016 of the Commerce Registry of the Real Estate Registrar Office of Santiago, corresponding to year 2016 and published in the Official Gazette on September 24, 2016.

 

WHEREAS, as of the date hereof the capital of the Company is divided into 2,964,802,242 common shares. The equity participations of the shareholders in the Company is currently the following:

 

	 
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	(i)	MINERA Ll ENERGY SpA owns 1,068,959,449 shares representing 36.05% of the total issued and outstanding shares issued by Salar Blanco;
	
 
	
 
	
 

	
 
	(ii)	MSB owns 413,441,672 shares representing 13.95% of the total issued and outstanding shares issued by Salar Blanco; and
	
 
	
 
	
 

	
 
	(iii)	LPI owns 1,482,401,121 shares, representing 50% of the total issued and outstanding shares issued by Salar Blanco.

 

WHEREAS, on September 12, 2016, Salar Blanco, MINERA Ll ENERGY SpA, MSB, LPI and LITHIUM POWER INTERNATIONAL LIMITED executed certain Investment Agreement (‘‘Investment Agreement”) pursuant to which they have agreed and set out the terms and conditions upon which the Parties are developing, financing, implementing, owning, exploiting and operating lithium and potash assets in Chile’s III region, at the Maricunga Salar, including trading of its lithium and potash production, and engage in such business associated therewith as determined by the Board of Directors from time to time (hereinafter, the “Project”).

 

WHEREAS, the Parties have agreed on the terms and conditions for the corporate governance of the Company and the restriction for the transfer of Shares and other matters related thereto, and therefore have agreed to enter into this shareholders agreement, hereinafter the “Agreement” or the ‘‘Shareholders Agreement”.

 

NOW, THEREFORE, in consideration of the agreements and covenants contained herein, the parties hereto agree as follows:

 

ARTI CLE I

 

DEFINITIONS

 

The following terms as used herein have the following meanings:

 

“Affiliate” means, with respect to any Person, (a) any Person who directly or indirectly through one or more intermediaries, Controls, or is Controlled by, or is under common control with, such Person; (b) any Person who is a partner, director or executive officer (i) of such Person, (ii) of any Subsidiary of such Person, or (iii) of any Person described in clause (a) above.

 

	 
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“Agreement” has the meaning set forth in the recitals.

 

“Big Four Accounting Firms” means PricewaterhouseCoopers, Deloitte, Ernst & Young and KPMG.

 

“Book Value” means the net-worth (patrimonio) account of financial statements of the Company divided by the total number of subscribed and paid Shares.

 

“Business Day” means any day other than a day on which commercial banks in Santiago, Chile are authorized or required by law to close.

 

“Business Plan” means the business plan of the Company to be submitted by the CEO to the Board of Directors.

 

“Capital Increase” means the last capital increase of the Company equivalent to 31,843,840 Dollars, whereby Shares representing fifty percent (50%) of the total Company’s Shares were issued, all of which were duly subscribed by LPI and shall be paid by LPI as agreed in the Investment Agreement, the relevant shareholders meeting and the subscription agreements executed on the date hereof.

 

“Chilean Corporation Law” means Chilean law No 18,046 Ley sobre Sociedades Anónimas and its amendments.

 

“Control” of a Person means the power, by itself or by means of a formal and binding agreement to act jointly with other third parties, directly or through other individuals or legal entities, (i) to vote or direct the voting of more than fifty percent (50%) of the outstanding voting shares of such Person, or (ii) to direct or cause the direction of the management and policies of such Person, whether by contract, ownership of shares (including fifty percent (50%) or less of the outstanding shares of such Person) or otherwise. In partnerships, limited liability companies and joint stock companies, the managing partner shall be deemed as the controller.

 

	 
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”Deed of Adherence” means a document substantially in the form of Exhibit B hereto, pursuant to which a Permitted Assignee or a Third Party who has acquired Shares pursuant to the terms of this Agreement becomes a party hereto.

 

“Encumbrance” means any (a) security agreement, financing statement (whether or not filed), or conditional sale or other title retention agreement; (b) lease, consignment, or bailment given for security purposes; and (c) lien, charge, restrictive agreement, prohibition to transfer, pledge, third party preferred right, subsequent condition, option, usufruct, encumbrance, adverse interest, security interest, constructive trust or other trust, claim, pending litigation, attachment, exception to or defect in title, or other ownership interest (including, without limitation, reservations, possibilities of reverse, encroachments, restrictive covenants, and leases) of any kind, but excluding any of the foregoing created or imposed by or pursuant to this Agreement.

 

“Family” means, with respect to an individual, his/her siblings, spouse or lineal descendants, the spouses of any such lineal descendants, and trusts that are primarily for the benefit of any of the foregoing (provided that any of the foregoing has the right to control such trust).

 

‘‘Final Investment Decision” means the final investment decision to proceed with the development of the Project in accordance with the Business Plan and Project Budget from time to time.

 

“IFRS’’ means the International Financial Reporting Standards set by the International Accounting Standards Board as applicable in Chile.

 

“Investment Agreement” means that certain Investment Agreement among MSB, MLI, LPI and Lithium Power International Limited, dated September 12, 2016, as amended on September 30, 2016 and on the date hereof.

 

“LPI Shares” means the 16,000,000 shares of LPI issued and paid pursuant to Section 4.1 of the Investment Agreement.

 

“Permitted Assignees” means in respect of any Shareholder, the current Ultimate Controller of such Shareholder or any Person that is under the Control of the current Ultimate Controller of such Shareholder.

 

	 
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”Person” means any individual, sole proprietorship, corporation, partnership, joint venture, limited liability partnership, limited liability company. stock company, trust, fund, unincorporated association, institution, or any other entity or government, political subdivision, agency, or instrumentality of any government.

 

“Project Budget” means the budget necessary for operating the Project once It reaches marketing stage.

 

‘‘Project Development Termination” means any time after the notice to proceed has been delivered by the Company following approval by the Board.

 

“Related Persons” shall have the meaning given to the term personas relacionadas under article 100 of Law No. 18.045 on Securities Markets.

 

“Shareholder” or “Shareholders” means jointly or indistinctly MSB, MLI or LPI, and their Permitted Assignees or Third Party purchasers pursuant to the terms hereof.

 

“Shares” means each and all shares issued by the Company from time to time, either with or without payment, as well as the options to subscribe for them, the instruments convertible into shares of the Company, and any other securities that confer future rights over shares of the Company.

 

“Shares Registry” means the register of the Shareholders in the Company from time to time.

 

“Third Party’’ means any Person other than the Parties and that is not a Shareholder.

 

“Transfer” means any direct or indirect transfer, sale, conveyance, exchange, assignment, gift, or Encumbrance or disposition of a Share or the rights attached thereto, whether for value or no value, whether voluntary or involuntary (including by operation of law or by judgment, levy, attachment, garnishment or bankruptcy).

 

“Ultimate Controllers” means (i) Mr. Martin Borda and his Family with regard to MSB; (ii) Messrs. Martin Christopher Holland, Reccared Pranker Fertig, Andrew Guy Phillips and David Ross Hannon with regard to LPI; and (iii) MSB with regard to MLI.

 

“USD” “US$” or “Dollars”, mean the lawful currency of the United States of America.

 

	 
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Capitalized terms used in this Agreement and not otherwise defined herein shall have the meanings set forth in the Investment Agreement.

 

ARTICLE II

 

MINERA SALAR BLANCO S.A,

 

2.1 The Shareholders of the Company shall be governed by the corporate by-laws of the Company and the terms of this Agreement and, in the absence of rules in the same, by the provisions set forth in the Chilean Corporation Law.

 

2.2 The corporate by-laws shall in all respects reflect and be consistent with the provisions of this Agreement. If an inconsistency emerges between the corporate by-laws and this Agreement, this Agreement shall prevail and the Shareholders shall amend the by- laws to the extent it may be necessary in order to eliminate such inconsistency.

 

ARTI CLE III

 

RESTRICTIONS TO THE TRANSFER OF AND ENCUMBRANCES OVER THE SHARES

 

During the term of this Agreement, no Shareholder may Transfer its Shares, either directly or indirectly, except:

 

	
 
	(i)	with the prior written consent of the each of the other Shareholders, which consent may be withheld in each Shareholder’s absolute discretion; or
	
 
	
 
	
 

	
 
	(ii)	in accordance with this Section 3.

 

3.1 Prohibition of Encumbrance

 

During the term of this Agreement, no Shareholder may establish any Encumbrance over its Shares, other than (a) pledges granted by Li3 Energy Inc. (“Li3”) in favor of MSB to secure the loans granted by MSB to Li3 prior to or after the date hereof: (b) pledges to secure any loans granted to the Company by its lenders and {c) pledges to secure any loans granted to a Shareholder to comply with its funding obligations under Section 4.1.8(v) to the extent that the beneficiaries of such pledges have entered into binding agreements with the other Shareholders, committing to comply (in terms acceptable to the other Shareholders) with the Transfer restrictions contained in this Agreement.

 

	 
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3.2 Permitted Assignees and certain transfers by MLI

 

3.2.1 Notwithstanding anything in this Agreement to the contrary, any Shareholder may at any time Transfer any of its Shares to one or more of its Permitted Assignees without the consent of any other Shareholders, to the extent that (a) notice of the details of such Transfer is provided to the other Shareholders no less than fifteen (15) Business Days prior to the occurrence of the same, and (b) the Transfer to such Permitted Assignee is not in violation of any applicable laws.

 

3.2.2 Likewise, notwithstanding anything in this Agreement to the contrary, MLI will cause the Transfer of all its Shares to its current shareholders without the consent of any other Shareholders, to the extent that (a) notice of the details of such Transfer is provided to the other Shareholders no less than fifteen (15) Business Days prior to the occurrence of the same, (b) the Transfer to such shareholders is not in violation of any applicable laws; (c) the Transfer made by MLI to its shareholders is pro-rata to their current participations in MLI, whether as a consequence of the dissolution of MLI or otherwise; and (d) the current shareholder of MLI, other than MSB, shall execute a Deed of Adherence. For the avoidance of any doubts, the current shareholders of MLI are: MSB owner of 51% of its shares, and Li3 Energy Inc., owner of 49% of its shares. Upon occurrence of the above mentioned Transfer, MSB will receive 18,39% of the total Shares issued by Salar Blanco, and Li3 Energy Inc. will receive 17,67% of the total Shares issued by Salar Blanco. Once MLI has transferred all its Shares to MSB and Li3 Energy Inc., any reference made in this Agreement to MLI shall be deemed made to MSB and Li3 Energy Inc., as the case may be, as applicable.

 

3.2.3 Notwithstanding the foregoing for such Transfers of Shares to be duly recorded by the Company in the relevant Shares Registry, it shall be necessary that (i) the Permitted Assignees or shareholder, as the case may be, execute, before or at the time of the acquisition of the relevant Shares, a Deed of Adherence and delivers executed copies thereof to each Party and the Company, and (ii) such Permitted Assignee is not in receivership, bankruptcy, insolvency, dissolution, liquidation or any similar proceeding.  Likewise, if after the Transfer the Permitted Assignee ceases to have that relationship relative to the transferring Party, prior to the Permitted Assignee losing its capacity as such, both the transferring Party and the Permitted Assignee shall perform all necessary acts and agreements in order that all the Shares held by the Permitted Assignee be re-acquired by the transferring Party of the Permitted Assignee.

 

	 
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3.3 Right of First Offer

 

The Parties hereby agree that any Transfer of Shares made by any Shareholder will be subject to a right of first offer (the “Right of First Offer’’), under which the Shareholder wishing to Transfer its Shares (“Selling Shareholder”) will first be required to offer such Shares for sale to the other Shareholders (the ‘‘Other Shareholders’’) prior to their Transfer to a Third Party.

 

The above-mentioned obligation will not apply to Transfers governed by Section 3.2.

 

3.3.1 Delivery of the notice of Right of First Offer

 

The Selling Shareholder shall report in writing its intention to Transfer any of its Shares through a written notice to the Other Shareholders pursuant to Section 13.1 of this Agreement (the “Offer”) specifying the following:

 

	
 
	(i)	The number of Shares that intends to Transfer;
	
 
	
 
	
 

	
 
	(ii)	The price of the Shares (“Offer Price”), which may be freely set by the Selling Shareholder, and which shall be payable in cash or in kind at the time of transfer of the Shares; provided, however, that in case of payment in kind the Selling Shareholder shall attach two valuations of the assets with which payment will be made from any of the Chilean affiliates of the big four auditing firms; and
	
 
	
 
	
 

	
 
	(iii)	The date and time in which the sale and payment of the offered Shares will be executed, which in any case shall be not less than sixty (60) days or more than ninety (90) days from acceptance of the Offer (the “Closing Date for the Right of First Offer”), as well as the place where the sale shall happen.

 

	 
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3.3.2 Response from the Other Shareholder

 

The Other Shareholder shall have a period of twenty-five (25) days from receipt of the Offer, to choose one of the following alternatives:

 

	
 
	(i)	Accepting the Offer: the Other Shareholder accepting the Offer (“Purchasing Shareholder”) shall inform the Selling Shareholder in writing about its irrevocable decision to purchase the Shares included in the Offer (“Acceptance”).
	
 
	
 
	
 

	
 
	(ii)	Rejecting the Offer: it shall be understood that the Other Shareholder rejects the Offer in the event that:

	
 

 
	
 
	a)	The Other Shareholder fails to respond to the Offer within the twenty five (25) day period specified in Section 3.3.2; or
	
 
	
 
	
 
	
 

	
 
	
 
	b)	The Other Shareholder expressly states its decision not to acquire the Shares under the terms of the Offer.

 

In the event that the Other Shareholder rejects the Offer, the Selling Shareholder shall have ninety (90) days as of the actual or deemed rejection of the Offer (‘‘Term to Sell”) to execute with a Third Party the purchase agreement with regard to the Shares included in the Offer under terms and conditions no more favorable or advantageous to the Third Party than the Offer’s conditions. The terms of the purchase agreement must require the Third Party to adhere and become a party of the Shareholder Agreement by entering into a Deed of Adherence. Upon expiry of the Term to Sell without having performed the sale of the Shares included in the Offer, if the Selling Shareholder is willing to persist in its intention to sell, the Selling Shareholder must restart the procedure described in this Section 3.3.

 

3.3.3 More than one Other Shareholder:

 

If there is more than one Other Shareholder the following rules shall apply:

 

	
 
	(i)	If the Selling Shareholder is Li3, and the Other Shareholders include MSB and Other Shareholders, MSB shall have the preference to acquire all Shares offered by Li3 if it so states in its Acceptance; and

 

	 
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	(ii)	In all other events the Other Shareholders shall have the right to accept the Offer pro rata to the Shares each such Other Shareholder owns in the Company, and if any Other Shareholder is interested in acquiring more Shares than its pro rata it shall expressly state so in its Acceptance. If the Acceptances of all Other Shareholders do not include all Shares included in the Offer, the Offer shall be deemed rejected for purposes of Section 3.3.2(ii).

 

3.3.4 Share Purchase, payment of the Price of the Offer, and default

 

	
 
	(i)	Acts on the Closing Date for the Right of First Offer: if the Other Shareholder has accepted the Offer, on the Closing Date for the Right of First Offer, the Selling Shareholder and the Purchasing Shareholder will meet at the agreed time and place, and at that time:

 

	
 
	
 
	a)	They will execute the documents required for the transfer of Shares, whereby the Selling Shareholder shall transfer the Shares on which the sale was committed, being liable only for the ownership of the Shares and the absence of Encumbrances before the Purchasing Shareholder (other than Encumbrances permitted under this Agreement):
	
 
	
 
	
 
	
 

	
 
	
 
	b)	The Purchasing Shareholder shall pay the Offer Price, provided that with respect to any compensation in kind the Purchasing Shareholder shall pay the average of the valuations referred to in 3.3.1(ii) in cash;
	
 
	
 
	
 
	
 

	
 
	
 
	c)	The Selling Shareholder must deliver to the Purchasing Shareholder certificates representing the Shares so that they may request from the Company the delivery of new share certificates under its name;
	
 
	
 
	
 
	
 

	
 
	
 
	d)	If the Shares are subject to an Encumbrance permitted under this Agreement, the Purchasing Shareholder shall execute such documents as the pledgees may require; and

 

	 
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	e)	They will perform all other acts that may be necessary to complete the Shares’ transfer.

 

	
 
	(ii)	Breach of the Right of First Offer: should any Shareholder proceed to the sale of its Shares to a Third Party without respecting the rules set out above, it shall pay to the Other Shareholder, as a penalty, the equivalent to 150% of the total price or other consideration paid or payable by the Third Party. If the price of the Shares paid or payable by the Third Party is lower than Book Value of the transferred Shares, the amount of the fine shall be equal to 150% of the Book Value of the transferred Shares. In addition to the foregoing, the Other Shareholder will be entitled to exert any other applicable legal actions aimed at seeking indemnification of the damages arising from the breach of the Right of First Offer.

 

3.4 Tag Along Right

 

During the period in which the Other Shareholders may accept or reject the Offer pursuant to Section 3.3.2, each Other Shareholder may decide to participate in the sale by the Selling Shareholder in the same terms as the Selling Shareholder (as amended by Section 3.4.1), (“Tag-Along Right”) by informing the Selling Shareholder in writing (“Acceptance of Joint Sale”).

 

If any of the Other Shareholder does not exercise the Tag Along Right in accordance with this Section 3.4 such Shareholder shall be deemed as waiving such right regarding the pretended sale to that Third Party and the Selling Shareholder may sell to that Third Party all of its Shares, within the deadline, terms, and conditions communicated pursuant to Section 3.3.1.

 

If the Offer has been rejected by the Other Shareholders (but one or more Other Shareholders have delivered an Acceptance of Joint Sale) and the Third Party is unwilling to acquire all Shares of the Selling Shareholder and those Other Shareholders who have delivered their Acceptance of Joint Sale (the ‘‘Tag-Along Shareholder”), the Third Party shall acquire the number of Shares included in the Offer (or a higher number if so agreed by the Selling Shareholder and the Tag-Along Shareholders) pro rata to the Shares owned by the Selling Shareholder and the Tag-Along Shareholders.

 

	 
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The foregoing shall not apply to Transfers governed by Section 3.2.

 

3.4.1 Purchase agreement price, payment, and default

 

	
 
	(i)	Acts on the Closing Date for Tag Along Right: the Tag-Along Shareholders and the Selling Shareholder shall have a period of forty-five (45) days from receipt of the notice of Acceptance of Joint Sale or from the expiry of the twenty five (25) days period specified in Section 3.3.1 to execute a purchase agreement with the Third Party (“Closing Date for Tag Along Right”). The purchase agreement shall include the number of Shares owned by the Selling Shareholder and by Tag-Along Shareholders, which shall be sold to the Third Party and must require the Third Party to adhere and become a party of the Shareholder Agreement by entering into a Deed of Adherence. The Selling Shareholder shall send with at least ten (10) days in advance of the date on which the purchase agreement shall be executed, a written notice to the Tag-Along Shareholders indicating the day, time, and the place of execution of the corresponding agreement; it being understood that the terms and conditions of said agreement should be substantially identical to the terms and conditions described in the Offer and (i) shall not impose more stringent obligations than those assumed by the Selling Shareholder, (ii) shall not include joint and several obligations between the Tag-Along Shareholders and the Selling Shareholder, (iii) shall not include Indemnity obligations in excess of the price received by the Tag-Along Shareholder and (iv) the representations and warranties of the Tag-Along Shareholder shall be limited to ownership of the shares free and clear of Encumbrances (other than Encumbrances permitted under this Agreement) and capacity.

 

3.5 Preemptive Rights

 

Except if and to the extent otherwise agreed to in writing by such Shareholder, each Shareholder shall have full preemptive or preferential rights, pursuant to applicable law in Chile, to subscribe for and purchase such Shareholder’s pro rata share of any Shares or other convertible securities that may be issued at any time by the Company.

 

	 
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3.6 Special Rule - Sales by LPI

 

If LPI sells its Shares before it has paid all its Shares, the purchaser shall withhold from the payment to LPI the amount which has not yet been paid (and this shall be expressly stated in the relevant share transfer agreement) and shall pay it to the Company at the moment of executing the relevant Deed of Adherence, or otherwise be liable of the payment of the subscribed but unpaid Shares in accordance with Chilean law. In addition, if:

 

	
 
	(i)	any of the Parties or the Company receive an offer from a Third Party to acquire all of the Company’s Shares, or the Project;
	
 
	
 
	
 

	
 
	(ii)	such offer is received before Project Development Termination or before LPI has fully paid the Capital Increase; and
	
 
	
 
	
 

	
 
	(iii)	all of the Parties accept that offer, 
	
 
	
 
	
 

	
 
	
then LPI shall be entitled to receive 50% of the final offer price in accordance to its shareholding ratio, provided that the amount pending to be paid by LPI in order to have fully paid the total amount of the Capital Increase shall be discounted from LPI’s payment and be paid directly from the Third Party buyer to MSB and MLI in accordance to their shareholding ratio on the date of the last acceptance of the offer from a Third Party purchaser.

 

3.7 Drag Along.

 

If the Offer includes more than seventy five percent (75%) of the total Shares of the Company, the Selling Shareholder (or Selling Shareholders if there are more than one) may compel each Other Shareholder (together, the “Drag-Along Stockholders”) to Transfer all of its Shares in the Transfer on the same terms and conditions as those proposed by the Selling Shareholders to a Third Party (the “Drag-Along Buyer”).

 

(b) The Selling Shareholders shall promptly give written notice (a “Drag-Along Notice) to the Drag-Along Stockholders not later than twenty (20) Business Days prior to the consummation of the drag-along Transfer (the “Drag-Along Sale Date” and “Drag-Along Transfer”, respectively) of any election by the Selling Shareholders to exercise its Drag- Along Rights under this Section 3.7. Each Drag-Along Notice shall set forth: (i)the name and address of the Drag-Along Buyer; (ii) the total number of Shares proposed to be Transferred by the Selling Shareholders; (Iii) the proposed amount and form of consideration (including a good faith valuation of any non-cash consideration), as well as other terms and conditions of payment offered by the Drag-Along Buyer for such Shares, including the estimated amount of the proceeds to be distributed to each Drag-Along Stockholder upon completion of the Drag-Along Transfer, and all other material terms and conditions of the Drag-Along Transfer (including the nature of the Drag-Along Transfer), together with any written proposals or agreements, if any, with respect thereto; and (iv) the Drag-Along Sale Date.

 

	 
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(c) Any Transfer of Shares by a Drag-Along Stockholder shall be on the same terms and conditions as the proposed Drag-Along Transfer by the Selling Shareholders. Each Drag-Along Stockholder shall reasonably cooperate in good faith with the Selling Shareholders and the Company in connection with the consummation of such Drag-Along Transfer, including by executing a document containing customary representations, warranties, indemnities and agreements as requested by the Drag-Along Buyer in connection with such Drag-Along Transfer, which shall be substantially identical to the terms and conditions described in the Drag-Along Notice other than (i) it shall not impose more stringent obligations than those assumed by the Selling Shareholder, (ii) shall not include joint and several obligations between the Drag-Along Stockholders and the Selling Shareholders, (iii) shall not include indemnity obligations in excess of the price received by the Drag-Along Stockholders and (iv) the representations and warranties of the Drag-Along Stockholders shall be limited to ownership of the shares free and clear of Encumbrances (other than Encumbrances permitted under this Agreement) and capacity

 

(d) On the Drag-Along Sale Date, at the closing of the Drag-Along Transfer to any Drag- Along Buyer pursuant to this Section 3.7, the Selling Shareholders shall cause the Drag- Along Buyer to remit to each of the Drag-Along Stockholders the consideration payable to such Drag-Along Stockholders for its Shares, against delivery by such Drag-Along Stockholders of all of such Drag-Along Stockholders’ Shares. In addition, each Drag-Along Stockholder shall take all action as the Selling Shareholders or the Drag-Along Buyer shall reasonably request as necessary to vest in the Drag-Along Buyer all Shares owned by such Drag-Along Stockholders. In the event that the proposed Transfer of the Shares to such Drag-Along Buyer(s) is not consummated, the Drag-Along Right set forth in this Section 3.7 shall continue to be applicable to proposed subsequent Transfers of seventy five percent (75%) of the total Shares of the Company.

 

	 
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3.8 Change of control of Shareholders.

 

The Shareholders agree that in the event of a direct or indirect change in the Ultimate Controller of a Shareholder (a “Change of Control” and the “Affected Shareholder”, respectively) each of the other Shareholders (the “Option Holders”) shall have an option to sell to the Affected Shareholder, at their own discretion, all its or their Shares in accordance with this Section 3.8 (the “Put Option”).

 

The Affected Shareholder must notify the Option Holders in writing no later than five (5) Business Days as from the date on which the Change of Control occurs (the “Change of Control Notice”). Each Option Holder may request, within fifteen (15) Business Days from the later of (i) receipt of the Change of Control Notice or (ii) the date in which it otherwise learns of the Change of Control, two determinations of the value of the Shares in the Company owned by the Option Holders made by two of the Big Four Accounting Firms, to be appointed by mutual consent of the Option Holders. Such valuations shall be based on the price paid or payable in the transaction giving rise to the Change of Control, but without considering any other assets owned by the Ultimate Controller. Any consideration paid or payable in such transaction different from cash shall be valued at fair market value.

 

Once the values of the Shares of Option Holders in the Company have been determined and communicated to the Parties, each of the Option Holders shall have twenty (20) Business Days to inform the Affected Shareholder whether it exercises the Option, and in case the Option is exercised, the Affected Shareholder shall have the obligation to acquire all, but not less than all the Shares of such Option Holder no later than fifteen (15) Business Days counted from the date the Put Option is exercised.

 

The price for the Shares shall be the average of the values determined by the two abovementioned valuations; provided that if the two valuations are more than ten percent (10%) apart, another of the Big Four Accounting Firms shall choose between one of the two.

 

This Section 3.8 shall not apply to Ll3 Energy Inc. in case the latter becomes, at any moment, a Shareholder of the Company. Notwithstanding the aforementioned, if at any time, Li3 Energy Inc. becomes a shareholder of the company with an ownership percentage equal to or higher than 25% of the shares, this Section 3.8 shall fully apply to it.

 

	 
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ARTICLE IV

 

ADMINISTRATION OF THE COMPANY

 

4.1 Board of Directors

 

4.1.1 Composition, Compensation, Appointment and Chairman.

 

The management of the Company shall be exercised by a Board of Directors composed of six (6) members, who may or may not be Shareholders, and who shall hold office for one (1) year, being entitled to be reappointed. The Parties shall have the right to appoint the number of Directors proportionate to their respective Company interest at the relevant time, provided that any Shareholder who has at least ten percent (10%) of the Shares of the Company shall be entitled to appoint one director. Considering the current participation of the Parties in the Company, MSB shall be entitled to appoint two (2) board members, MLI shall be entitled to appoint one (1) board member and LPI is entitled to appoint three (3) board members from the date of the Investment Agreement. If the Transfer described in Section 3.2.2 occurs , then MSB shall be entitled to appoint two (2) board members, Li3 shall be entitled to appoint one (1) board member and LPI shall be entitled to appoint three (3) board members.

 

LPI’s right to appoint directors shall be adjusted to reflect its shareholding percentage if it fails to pay for the Shares subscribed pursuant to any of the Shares Subscription Agreements (as that term is defined in the Investment Agreement).

 

The Board shall elect a Chairman and a secretary of the Board by simple majority of the members in office. The Chairman shall not have casting vote.

 

The members of the Board of Directors shall not be compensated.

 

4.1.2 Replacements

 

Any vacancy due to the resignation, death or inability of one of the Directors to continue in office, must be completed by resolution of the Board, and the appointment shall lie in the individual or individuals proposed by the same Party that appointed the director whose resignation, death or inability created the vacancy, forcing the other Party, as a promise of a third party’s action pursuant to the provisions of article 1450 of the Civil Cadet to obtain that its own Directors vote for the replacement nominee. The new director shall hold office until the next shareholders meeting, which shall proceed to elect a new Board in accordance with the rules under the present Agreement. If it is not possible to appoint the new director in the terms indicated above in the next Board meeting to be held, the Parties undertake to call for a special shareholders’ meeting within the maximum term of twenty (20) days for the purpose of proceeding with the total renewal of the Board under the terms stated in this Agreement and until such meeting takes place no Board meeting shall occur.

 

	 
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4.1.3 Quorum to hold meetings and pass resolutions

 

	
 
	(i)	At all meetings of the Board, a minimum of five (5) Directors shall constitute a quorum for holding a meeting. In the event that the absence of one (1) or more Directors prevents the establishment of a quorum at a regular or special meeting of the Board, such meeting shall be adjourned until a date that is not earlier than five (5) days following the date for which such meeting was originally called. Notice of the date and time for such new meeting shall be given to the Directors no later than three (3) days prior to the scheduled date for the new meeting.
	
 
	
 
	
 

	
 
	(ii)	The favorable vote of at least five (5) Directors shall be needed to approve any matter submitted to the Board.

 

4.1.4 Minutes

 

The Parties hereto shall cause the Company to send to each of the Parties hereto copies of minutes of all meetings of the Board in Spanish and English within seven (7) days after such meetings may have taken place and after these minutes have been signed by the attending Directors. The CEO shall act as secretary to the Board, unless a secretary is specifically appointed by the Board of Directors.

 

4.1.5 Officers and Advisory Committee

 

The officers of the Company shall consist of the Chief Executive Officer (“CEO”), who will be appointed by the Board, and other members from time to time agreed by the Board.

 

	 
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The CEO shall be responsible for the day-to-day administration of the Company and shall receive adequate powers of attorney to perform such duty.

 

The Parties agree that the CEO of the Company will be Mr. Cristobal Garcia-Huidobro Ramirez.

 

An Advisory Committee composed by expert engineers appointed by the Board will be established during the development of the Project. The members of the initial Advisory Committee shall be: [•], [•], [•] and [•]. The role of the Advisory Committee is to act as advisor of the Board during the development of the Project. The Advisory Committee shall hold meetings at the Company offices in Chile on a monthly basis. Notwithstanding the aforementioned, the Committee may meet more often if needed.

 

4.1.6 Meetings

 

Regular Board meetings shall be held quarterly at the Company offices in Chile at the times and days previously agreed by the Board and will not require summoning.

 

Special Board meetings shall be held whenever summoned by the Chairman) at its own initiative or at the request of one or more directors within fifteen (15) days of the day the request is received by the Chairman, without the Chairman being authorized to qualify the need for the meeting. Members of the Board shall be summoned to special meetings no later than ten (10) days prior to the date scheduled for the meeting.

 

4.1.7 Attendance of the Directors through technological means

 

Directors who, despite not being physically present at a meeting, are simultaneously and permanently communicated with the other directors through technological means authorized by the Chilean Superintendence of Securities and Insurance by instructions of general applicability shall be deemed to have participated at the meeting for all legal purposes. In this case, their attendance and participation at the meeting shall be certified under the responsibility of the Chairman, or whoever acts as such, and the Secretary to the Board of D1rectors, being this fact evidenced in the relevant minute.

 

The Company shall make the arrangements required in order to permit that one or more Directors attend the meetings of the Board in the manner indicated above, not being possible for the Board to adopt resolutions limiting the right of the Directors to attend through technological means.

 

	 
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4.1.8 Accounting Principles, Business Plans, Dividends and Funding

 

	
 
	(i)	Best interest of the Company. The Company must be managed exclusively in its best interest.
	
 
	
 
	
 

	
 
	(ii)	Accounting. The accounts of the Company will be prepared in accordance with IFRS. The Company shall prepare a general balance sheet, income statement and cash flow statements as of March 31, June 30, September 30 and December 31 of each fiscal year and shall be provided to the Parties within thirty (30) days as from each of the above dates, except for the information to be provided as of December 31, in which case the same shall be provided within sixty (60) days from such date.
	
 
	
 
	
 

	
 
	(iii)	Reports. The CEO shall provide the Directors at least seventy two (72) hours prior to each Board meeting all the reasonable or pertinent information regarding the matters to be discussed at the relevant meeting.
	
 
	
 
	
 

	
 
	(iv)	Business Plans. Once the Company starts the commercialization of its production, the Company shall maintain a Business Plan with an associated budget to be reviewed and approved at least annually by the Board of Directors.

 

	
 
		After the initial Business Plan, the Board shall require the CEO to prepare and submit for consideration the annual business plan with an itemized Project Budget showing the estimated revenues and expenditures, and proposed investments, borrowing and capital increases for such Business Plan.
	
 
	
 
	
 

	
 
		Business Plans and Project Budgets shall be prepared for periods of twelve (12) months or the duration of a particular project, whichever is longer, but shall be reviewed by the Board of Directors annually.

 

	 
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Supplementary or revised Business Plans and Project Budgets may be prepared for shorter periods when required. Business Plans and Project Budgets, including supplementary or revised Business Plans and Project Budgets, shall be submitted to the Board at least thirty (30) days prior to the meetings at which they will be considered. Such meetings shall be held prior to the period to which such plans or budgets relate. If a business plan is not approved, the Parties will apply the business plan for the previous year, duly adjusted by inflation.

	
 
	
 
	
 

	
 
	
(v)
	
Continued Funding. The Parties agree that following the total payment of the Capital Increase and prior to the Project Development Termination, any further funding required for the Project which has been approved by the Board in the Business Plans and Project Budgets of the Company and which not may be obtained from banks or financial institutions must be contributed by the Shareholders as equity injections in the Company or shareholders loans to the Company proportionately to their interest in the Company. Absent an agreement among the Parties to the contrary any further funding shall be contributed in the form of shareholders loans. Where a Party fails to provide any further funding required for the Project in accordance with the Business Plans and Budget (the ‘‘Non-Funding Party”):

 

	
 
	
a)
	
the Non-Funding Party will be deemed to be in breach of this Agreement; and

	
 
	
 
	
 

	
 
	
b)
	
the other Party has the right (but not the obligation) to provide further funding in accordance with the Business Plans and Project Budgets, such funds to be contributed by subscription for additional Shares in the Company (at an issue price to be determined based on the net assets of the Company divided by the number of Shares) or shareholder loans accruing the maximum interest rate permitted by applicable law, depending on the decision taken by the Shareholders pursuant to this Section.

 

	
 
	
 
	
Under no circumstance will any Shareholder be required to finance the construction of the Project. Moreover, if in the context of the financing of the Project the financing entities request the Company to grant collateral, no Shareholder will be required as part of the ‘‘security package” to guarantee the obligations of the Company, or to Encumber any of its assets to secure such financing (other than its Shares and any subordinated loans it may have granted to the Company).

 
	 
	21
	

 
	 

 

	
 
	
(vi)
	
Dividends Policy. Unless otherwise agreed, the profits generated by the Company shall be distributed to the Shareholders to the maximum possible extent with due regard to the covenants agreed upon by the Company in its financing documents, prudent financial management, reserve accounts and allowances for anticipated major future maintenance costs.

	
 
	
 
	
 

	
 
	
 
	
Prudent financial management shall include maintaining the Company’s equity/debt ratio in accordance with widely accepted international standards for this type of Company.

 

Shareholder loans made pursuant to Section 4.1.8(v) shall be repaid as quickly as the Company’s financial position permits and thereby no dividend shall be distributed by the Company until all its shareholders loans have been fully repaid.

 

The Company shall pay interim dividends at intervals during the financial year as approved by the Board pursuant to Chilean Corporations Law.

	
 
	
 
	
 

	
 
	
(vii)
	
Audits. The financial statements of the Company shall be audited once a year at the Company’s expense.

	
 
	
 
	
 

	
 
	
 
	
Any of the Parties may request that an additional audit per year be performed at any other time, being in this case for the account of the Party requesting such audit the totality of the costs and expenses that the additional audit demands to the Company. Once a Party has exercised this right the other Parties shall be prevented from exercising it during such year.

 

In any event, the audits must always be made by an independent external auditor registered in the register that to that effect is maintained by the Chilean Superintendence of Securities and Insurance, and that have been in turn for the period of two years auditors of companies issuers of public offer instruments supervised by the above-mentioned Superintendence.

 
	 
	22
	

 
	 

 

	
 
	(viii)	Access to Company information. All the Parties shall always have unrestricted access to the accounting, legal, financial and any other information of the Company, for which purpose they shall have the right to visit the offices of the Company, its executives, personnel and accountants or internal advisors during normal office hours, upon reasonable prior notice and without affecting the normal operations of the Company. For the above-indicated purposes, all Persons providing information to the Parties regarding the Company shall be considered released and not subject to any duty of reserve or confidentiality in favor of the Company or its shareholders. The Parties shall keep in strict confidence all information they receive from the Company and may only use it in the best interest of the Company without prejudice to their disclosure obligations under applicable securities laws. The information shall be provided in the shortest time possible. If a Shareholder wishes to sell its Shares in accordance with Section 3, it will be permitted to disclose information on the Company to genuine interested third parties provided those parties enter into a standard confidentiality agreement with the Company agreeing in favour of the Company to keep that information confidential.
	
 
	
 
	
 

	
 
	(ix)	Press releases. If any of the Parties is required by applicable law to include information about the Project or the Company in the information they have to disclose to their investors or regulators, the Party shall obtain the prior approval of the CEO to such disclosure, and the CEO shall provide his/her comments as promptly as reasonably practicable. The CEO shall not withhold its approval without reasonable grounds and shall be deemed as granted in case the CEO does not reply within 3 Business Days following the request from the Party.
	
 
	
 
	
 

	
 
	(x)	Insurance. The Company must, to the full extent permitted by law, purchase and maintain, or procure the purchase and maintenance of, insurance for each Director against any liability incurred by the Director as an officer of the Company including, but not limited to, liability for negligence, and for reasonable costs and expenses incurred in defending proceedings, whether civil or criminal.

 
	 
	23
	

 
	 

 

4.2 Shareholders’ Meetings

 

	
 
	(a)	Shareholders’ Meetings: Meetings of the shareholders may be called by the Board or any Shareholder holding at least ten percent (10%) or more of the total Shares in the Company.
	
 
	
 
	
 

	
 
	
 
	
Any meetings of the shareholders shall take the decisions as set forth by law, as provided in the bylaws and as provided herein and its resolutions shall be binding upon all shareholders, including those shareholders absent or dissenting.

 

The Board may designate any place as the place of meeting for any meeting of the shareholders. Written or printed notice stating the place, day and hour of the meeting and the purposes for which the meeting is called, shall be delivered to each shareholder entitled to vote thereat not less than five (5) Business Days before the meeting.

 

At any meetings of the shareholders, the attendance (whether in person, by proxy or otherwise) of shareholders representing fifty percent (50%) plus one (1) Share having the right to vote on the matter or action subject to such vote shall be sufficient and necessary to constitute a quorum for transaction of business at such meeting. A quorum must exist at all times during any meeting of the shareholders, including the reconvening of a meeting adjourned, in order for any action to be taken at such meeting.

 

Except as otherwise required in this Agreement, all matters submitted to a vote of any meetings of the shareholders shall require the affirmative vote of at least seventy five percent (75%) of the Shares having the right to vote on the matter or action subject to such vote present at a meeting at which a quorum is present.

	
 
	
 
	
 

	
 
	
(b)
	
LPI’s Rights: Notwithstanding any provision in this Agreement, the Parties agree that on and from the date of this Agreement. LPI will own fifty percent (50%) of the Shares in the Company and shall be deemed as having all voting rights corresponding to such fifty percent (50%) interest, provided that where LPI fails to pay for the Shares subscribed pursuant to any of the Shares Subscription Agreements (as that term is defined in the Investment Agreement), LPI’s rights as a fifty percent (50%) holder of Shares in the Company will be reduced by the amount of Shares it fails to pay for under the Shares Subscription Agreements, and the capital of the Company shall be reduced in the same applicable amount.

 
	 
	24
	

 
	 

 

ARTICLE V

 

DEADLOCKS

 

	
 
	(a)	Deadlock: A deadlock occurs when the same resolution concerning the following matters is proposed at two (2) consecutive Board or Shareholders’ Meetings and at each meeting the votes are insufficient to pass the resolution by the required majority:

 

	
 
	(i)	approval and/or any variations to the Business Plan and/or Project Budget, including variations to the exploration budget;
	
 
	
 
	
 

	
 
	(ii)	the Final Investment Decision; and
	
 
	
 
	
 

	
 
	(iii)	to the approval of a firm and underwritten offer for the senior secured financing of the Project.

 

	
 
	(b)	Resolving a Deadlock by negotiation: If a Deadlock occurs a Shareholder may, within fourteen (14) days after the second meeting is held, give a notice (the “Deadlock Notice”) to the other Shareholder and the Company that: (i) states that a Deadlock has occurred; (ii) sets out the proposed resolution and the dates on which the two (2) Board or Shareholder meetings were held; and (iii) sets out the proposed date, time and place for senior representatives from each Shareholder, with full authority to resolve the Deadlock, to meet and consult to resolve the Deadlock for a period of up to two (2) days. If a Deadlock is not resolved within the initial two (2) day period, the most senior officer that is available from each Shareholder must meet and consult to resolve the Deadlock for a further period of two (2) days.
	
 
	
 
	
 

	
 
	(c)	Deadlock resolved by negotiation: If the Deadlock is resolved in accordance with paragraph (b) above: (i) the Shareholders must, as soon as possible, execute a statement setting out the terms of the agreement reached (including whether the agreement is take to be a resolution of the Board or Shareholders); and (ii) each Shareholder must do anything (including execute any document) reasonably required by the other Shareholders to give effect to the agreement.

 
	 
	25
	

 
	 

 

	
 
	(d)	Deadlock not resolved by negotiation: If the dispute which is the subject of the Deadlock Notice cannot be resolved within the periods referred to above, the Shareholders shall vote their Shares and cause the directors appointed by them to maintain the status quo.

 

ARTICLE VI

 

CONFLICT OF INTEREST

 

6.1 All transactions and agreements between the Company, on one hand, and any Shareholder or any of such Shareholder’s Related Persons, on the other hand (such a transaction, a “Related Party Transaction”, such Shareholder, an “Interested Shareholder”) or any Directors appointed by such Interested Shareholder, (an “Interested Director’’), shall be governed in accordance with this Article Six.

 

6.2 Any action to be taken by the Company with respect to entering into, exercising, renewing, terminating, extending, modifying, waiving, compromising, asserting or enforcing any material claim, term, right or obligation under, or with respect to, any Related Party Transaction (collectively, a “Conflicting Action”) shall require and be controlled solely by the consent of all Directors other than the Interested Director(s) (the “Disinterested Directors”), or 51% of all Shares other than Shares held by the Interested Shareholder(s) (the “Disinterested Shareholder”).

 

6.3 Prior to voting on any Related Party Transaction or Conflicting Action at which an Interested Director or Interested Shareholder, as applicable, is present, each Interested Director shall identify himself or herself to the other Directors and each Interested Shareholder shall identify himself or herself to the other Shareholders. The Interested Directors or the Interested Shareholder, as applicable, shall not be permitted to vote regarding such matter.

 

6.4 Notwithstanding any of the provisions set forth in this Article Six, each Party shall be entitled to be present and participate in the discussions, but not vote, in tile matters related to the agreements to which they are a party, except any decision referring to the litigation and judicial procedure arising from the referred agreements, including the decision to initiate litigation or judicial procedure under such agreements.

 
	 
	26
	

 
	 

 

6.5 The Company shall not enter into any agreement with any Shareholders or its Related Persons which has the effect of materially modifying any of the rights of or obligations due to the Company from such Shareholder other than upon the approval of the Board in accordance with this Article Six.

 

ARTICLE VII

 

LPI’S FAILURE TO PAY SUBSCRIBED SHARES

 

7.1 Prior to the date of this Agreement. MSB and MLI, as Salar Blanco’s shareholders, have held a special shareholders meeting of Salar Blanco whereby, among other matters, it was resolved to: (i) increase the capital of Salar Blanco to the amount of 31,534,810,778 Chilean pesos by means of issuing 1,482,401,121 Shares (the ‘‘Salar Blanco’s New Shares”), representative of fifty percent (50%) of the Salar Blanco’s total Shares; and (ii) MSB and MLI waived their preemptive rights to subscribe the shares of the Capital Increase for the benefit of LPI.

 

7.2 On the date of this Agreement LPI subscribed all of its Shares pursuant to four (4) subscriptions agreements as detailed in the Investment Agreement.

 

7.3 LPI shall pay all the subscribed Shares issued pursuant to the Capital Increase pursuant to the terms of the Investment Agreement and the subscription agreements.

 

7.4 In case LPI does not pay for any of the subscribed Shares when due, then, at the sole discretion of the Shareholders: (a) the Shareholders, pro rata to their shareholding ratio in the Company will have a call option on all the Company’s shares held by LPI with a twenty percent (20%) discount (purchase price of the Shares will be equal to eighty percent (80%) of the amount already paid by LPI) (‘‘Call Option”); or (b) LPI will hold the Company’s Shares already paid, with no further rights under this Agreement, other than the limitation to the Transfer of the shares as provided in Article III above. In no case MSB, MLI, or any other future Shareholder, nor the Company, may pursue the fulfillment of this payment obligation, therefore waiving their rights in that connection, and being the sole remedy for the non- payment, the one contemplated in this Section 7.4.

 

7.4.1 If one or more of the Shareholders exercise the Call Option it must send a written notice to LPI within ten (10) days as from the expiration of the term for payment of any of the subscribed Shares (“Call Option Notice”). The Call Option Notice shall mention if the Shareholder is willing to purchase any Shares not being acquired by the Other Shareholders, the date and time in which the sale and payment of the offered Shares will be executed, which in any case shall be within ninety (90) days from the reception of the notification of the Call Option Notice, as well as the place where the sale shall happen. LPI shall Transfer the Shares to the Shareholders exercising the Call Option free and clear of any Encumbrances, provided that the Call Option has been exercised by one or more Shareholders for all LPI’s Shares.

 
	 
	27
	

 
	 

 

7.4.2 In case the Shareholders exercising the Call Option do not execute the purchase agreement on the stated day, time, and place, the Shareholders will be deemed to have not exercised the Call Option right.

 

7.5 In the event that the Call Option is exercised by MSB, then LPI will have a call option of all LPI Shares acquired by MSB with a twenty percent (20%) discount (purchase price of the LPI Shares will be equal to eighty percent (80%) of the then market value of the LPI Shares) (“LPI Call Option”). For clarification, should MSB (or any Affiliate) have sold any LPI Shares prior to the payment of all subscribed Shares, then LPI will not have right to exercise the LPI Call Option.

 

7.5.1 If LPI exercises the LPI Call Option it must send a written notice to MSB within ten (10) days as from reception of Call Option Notice (the “LPI Call Option Notice”). The LPI Call Option Notice shall mention the date and time in which the sale and payment of the offered Shares will be executed, which in any case shall be within five (5) days from the closing of the transaction described in Section 7.4.1.

 

7.5.2 In case LPI does not execute the purchase agreement on the stated day, time, and place, LPI will be deemed to have not exercised the LPI Call Option right.

 

ARTICLE VIII

 

RESPONSIBILITY

 

8.1 Non-compliance with this Agreement

 

In case of breach of any of the obligations under this Agreement by any of the Parties, the other Parties will notify the breaching Party in writing of the relevant breach.

 
	 
	28
	

 
	 

 

If a breaching Party does not remedy such breach within a period of sixty (60) Business Days from the date of delivery of the abovementioned notice, any non-breaching Party will have the right to i) bring any proceedings in the nature of specific performance, injunction or other equitable remedy; ii) bring an action at law or otherwise to be reimbursed and indemnified by the breaching Party for any damages or expenses incurred by such non- breaching Party; iii) bring any action at law as may be permitted in order to recover damages or for such other remedy or remedies as may be available to it under this Agreement or applicable laws. The rights and remedies granted to the non-breaching Parties in this Article shall be cumulative, not exclusive, and shall be in addition to any other rights and remedies that may be available to the non-breaching Parties, whether at law, in equity or otherwise. Each right and remedy available to the non-breaching Parties may be exercised from time to time and so often and in such order as may be considered expedient by the non-breaching Parties in their sole discretion.

 

8.2 Indemnity

 

Each Party agrees to indemnify and hold harmless the other Party from any and all liabilities, losses, costs, damages and expenses which may be sustained with the other Party by reason of the breach of any of the obligations set forth in this Agreement. No Party shall be required to indemnify indirect, consequential or moral damages,

 

ARTICLE IX

 

PERIOD OF EFFECTIVENESS

 

9.1 This Agreement will become effective commencing on the date of this instrument, and will terminate in respect of the Party that ceases to be the holder of Shares in the Company on the date in which it losses the capacity as shareholder of the Company.

 

9.2 The compliance with the obligations and rights stipulated in this Agreement shall be mandatory for the Parties appearing hereto and any Person that becomes the holder of the Shares in the Company, for all the time in which the agreements referred to in this instrument remain in force. Likewise, this Agreement shall be binding in respect of those new shares that the Parties, or their assignees. acquire by virtue of the acquisition of shares issued free of payment or the subscription and payment of new shares that it is resolved to issue.

 
	 
	29
	

 
	 

 

ARTICLE X

 

INTERPRETATION, TOLERANCE OF INFRACTIONS

 

10.1 Interpretation

 

This Agreement must be performed in good faith and, in consequence, it obligates not only to what it is expressed on it but to all the things that arise precisely from the nature of the obligation, or that by the law or the custom belong to it.

 

10.2 Tolerance of infraction

 

The mere circumstance that the Parties accept or tolerate facts that imply lack of observance of this Agreement, or the fact that any of the Parties fails to exercise the rights that this Agreement confers upon it, shall only constitute mere tolerance and shall not be interpreted as an implied amendment of the Agreement, or prevent that the relevant Party may exercise such rights in respect of future situations, if it considers it convenient.

 

ARTICLE XI

 

APPLICABLE LAW AND DOMICILE

 

This Agreement shall be governed by the laws of the Republic of Chile. For all purposes of this instrument, the Parties hereto set their domicile in the city of Santiago.

 

ARTICLE XII

 

ARBITRATION

 

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

 
	 
	30
	

 
	 

 

ARTICLE XIII

 

MISCELLANEOUS

 

13.1 Notices

 

Any notice to be given or delivered pursuant to this Agreement shall be ineffective unless given or delivered in writing, and shall be given or delivered in writing as follows:

 

MINERA SALAR BLANCO SPA

 

Attn: Mr. Francisco Bartucevic

 

Email: fbartucevic@ msblanco.com

 

LITHIUM POWER INVERSIONES CHILE SPA

 

Attn: Mr. Martin C. Holland

 

E-mall: holland@lithiumpowerinternational.com

 

MINERA Ll ENERGY SPA

 

Attn: Mr. Francisco Bartucevic

 

E-mail: fbartucevic@msblanco.com

 

Notices so addressed shall be deemed to have been duly given (a) on the third Business Day after the day of registration, if sent by registered or certified mail, postage prepaid, (b) on the next Business Day following the documented acceptance thereof for next-day delivery by a national overnight air courier service, if so sent, or (c) on the date actually received (or the following Business Day if received on a day which is not a Business Day).

 

13.2 Amendment; Waiver

 

This Agreement may not be amended except by an instrument in writing signed by the Parties. In addition, any failure of a Party to comply with any obligation, covenant, agreement or condition contained herein may be waived only if set forth in an instrument in writing signed by the Party or Parties to be bound by such waiver, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any other failure.

 
	 
	31
	

 
	 

 

13.3 Assignability

 

Except as otherwise provided herein, neither this Agreement nor any of the rights and obligations hereunder may be assigned without the prior written consent of the other Parties.

 

13.4 Counterparts

 

This Agreement may be executed and delivered in multiple counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. A facsimile or other copy of a signature shall be deemed an original for purposes of this Agreement.

 

13.5 Third Parties

 

Except as may otherwise be expressly stated herein, no provision of this Agreement is intended or shall be construed to confer on any Person, other than the Parties hereto, any rights hereunder.

 

13.6 Interpretation

 

Each of the Parties hereto acknowledges and agrees that it has been represented by independent counsel of its choice throughout all negotiations that have preceded the execution of this Agreement and that it has executed the same with consent and upon the advice of said independent counsel. Each Party hereto and its counsel cooperated in the drafting and preparation of this Agreement and the documents referred to herein, and any and all drafts relating thereto shall be deemed the work product of the Parties hereto and shall not be construed against any Party by reason of its preparation. Accordingly, any rule of law or any legal decision that would require interpretation of any ambiguities in this Agreement against any Party that drafted it is of no application and is hereby expressly waived.

 
	 
	32
	

 
	 

 

Whenever the context requires in this Agreement, the masculine gender includes the feminine or neuter, the neuter gender includes the masculine or feminine, the singular number includes the plural, and the plural number includes the singular. In every place where it is used in this Agreement, the word ‘‘including” is intended and shall be construed to mean ‘‘including, without limitation.”

 

13.7 Confidentiality

 

The Parties shall maintain strict confidentiality in relation to the provisions of this Agreement. Each Shareholder agrees that all non-public or confidential information concerning the business or the affairs of the Company or the Project shall be kept strictly confidential in accordance with the procedures adopted by such Shareholder in good faith to protect confidential information of Third Parties generally delivered to such Shareholder and shall not be sold, traded, published, or otherwise disclosed, without the prior consent of the Board or as otherwise permitted pursuant to this Agreement.

 

Despite the above, the confidentiality obligation contained herein shall not apply to the information that (i) to this date or afterwards comes into the public domain through no breaching of this Agreement; (ii) is delivered or made available to any Party by any Third Party that has the legitimate right to disclose or deliver such information, (iii) has been known of any of the Parties prior to their delivery by the other Party, as may be irrefutably demonstrated, and (iv) should be disclosed to Third Parties for legal or competent courts mandate.

 

13.8 Power of attorney

 

The Parties hereby confer special power of attorney upon the bearer of a signed copy of this Agreement to request its filing and the annotation in the Register of Shareholders of the Company in the terms of section 14 of Chilean Corporation Law.

 

13.9 Authority

 

The authority of Mr. Andres Lafuente Dominguez y don Francisco Bartucevic Sanchez to represent MINERA SALAR BLANCO SPA is evidenced in public deed granted at the Notary Public of Mr. Eduardo Avella Concha on September 5, 2013.

 
	 
	33
	

 
	 

 

The authority of Mr. Andres Lafuente Dominguez and Mr. Francisco Bartucevic Sanchez to represent MINERA Ll ENERGY SPA is evidenced in public deed granted at the Notary Public of Mrs. Antonieta Mendoza Escalas on January 28, 2014.

 

The authority of Mr. Martin C. Holland to represent LITHIUM POWER INVERSIONES CHILE SPA is evidenced in public deed granted at the Notary Public of Mr. Patricio Zaldivar Mackenna on September 1, 2016.

 

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the first date set forth herein above.

 

 

	
MINERA SALAR BLANCO SpA
	
 
	
MINERA SALAR BLANCO SpA
	
 

	
 
	
 
	
 
	
 
	
 
	
 

	
Signature:
	

	
 
	
Signature:
	

	
 

	
Name:
	

	
 
	
Name:
	

	
 

	
 
	
 
	
 
	
 
	
 
	
 

	
LITHIUM POWER INVERSIONES CHILE SpA
	
 
	
LITHIUM POWER INVERSIONES CHILE SpA
	
 

	
 
	
 
	
 
	
 
	
 
	
 

	
Signature:
	

	
 
	
Signature:
	
 
	
 

	
Name:
	

	
 
	
Name:
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 

	
MINERA LI ENERGY SPA
	
 
	
MINERA LI ENERGY SPA
	
 

	
 
	
 
	
 
	
 
	
 
	
 

	
Signature:
	

	
 
	
Signature:
	

	
 

	
Name:
	

	
 
	
Name:
	

	
 

 

	 
	34
	

 
	 

 

Annex A

Deed of Adherence

 

To: The Shareholders of Minera Salar Blanco S.A.

 

CC: Minera Salar Blanco S.A.

 

From: [NAME OF THE TRANSFEREE] Date: [•]

 

	1.	This adherence agreement (the “Adherence Agreement”), dated [•), is delivered pursuant to the shareholders agreement dated [•] by and among MINERA SALAR BLANCO SpA, LITHIUM POWER INVERSIONES CHILE SpA, and MINERA Ll ENERGY SPA (hereinafter the “Shareholders Agreement”). Capitalized terms used in this Adherence Agreement and not otherwise defined herein shall have the meanings set forth in the Shareholders Agreement.
	
 
	
 

	2.	By executing and delivering this Adherence Agreement, (NAME OF THE TRANSFEREE] hereby agree(s) with each Shareholder of the Company to comply with and to be bound by all of the provisions of the Shareholders Agreement (a copy of which has been delivered to it/them and which he/they has/have initialed and attached hereto for identification) in all respects as if he/they was/were a party(ies) to the Shareholders Agreement and was/were named therein as a Shareholder and a Party(ies) and on the basis that references therein to each Shareholder and Party include a separate reference to it/them.
	
 
	
 

	3.	The undertakings given in this Adherence Agreement shall be given to each of you for your own benefit and for the benefit of each of your successors or assigns
	
 
	
 

	4.	This Adherence Agreement shall be governed by and construed in accordance with Chilean law and the provisions of Articles XI and XII of the Shareholders’ Agreement (Applicable Law, Domicile and Arbitration) shall apply to this Adherence Agreement mutatis mutandis.

 
	 
	35
	

 
	 

 

Annex A

Deed of Adherence

 

IN WITNESS WHEREOF, [NAME OF THE TRANSFEREE] and [NAME OF THE TRANSFEROR] HAVE CAUSED THIS ADHERENCE AGREEMENT TO BE DULY EXECUTED AND DELIVERED AS OF THE DATE FIRST ABOVE WRITIEN.

 

 

	
Signature:
	
 
	
 

	
Name:
	
 
	
 

	
Title:
	
 
	
 

	
 
	
 
	
 

	
Signature:
	
 
	
 

	
Name:
	
 
	
 

	
Title:
	
 
	
 

 

 

	
36

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