Common use of Formation of Jointly Owned Company Clause in Contracts

Formation of Jointly Owned Company. Upon Purchaser having exercised the Initial Earn-In Option and acquired an 80% undivided interest in the Property but having failed to exercise or having terminated the Subsequent Earn-In Option as provided for in Section 2.2(g), a joint venture shall have been formed and Purchaser and Lithium as of the date of failure to exercise or the date of 4 <PAGE> termination of the Subsequent Earn-In Option, then as of the date of failure to exercise or the date of termination of the Subsequent Earn-In Option, Purchaser and Lithium shall either (a) enter into a formal joint venture agreement, generally in accordance with the Rocky Mountain Mineral Law Foundation Exploration, Development and Mine Operating Agreement (Model Form 5A), or, (b) alternatively, if agreed to by both parties, an LLC Operating Agreement and accompanying contribution agreements based on the Rocky Mountain Mineral Law Foundation Form 5 LLC Operating Agreement, pursuant to which Lithium and Purchaser would form a limited liability company of which they would be the members, to which they would contribute their respective interests in the Property. That agreement will govern the parties' ongoing activities at the Project, in either case including the concepts set forth in Section 6 below, and such other terms and provisions as are mutually agreeable to the parties. Lithium will be manager of the joint venture or the LLC. The parties agree to begin good faith negotiations of the applicable agreement at any time during the Initial Earn-In Period, when requested by Purchaser. If Purchaser has exercised the Initial Earn-In Option and either failed to exercise or terminate the Subsequent Earn-In Option and the parties have not completed their negotiation of and executed and delivered a joint venture agreement or an LLC Operating Agreement, the provisions of Section 6 shall govern their relationship until the appropriate agreement(s) are executed and delivered. In the event Purchaser exercises the Subsequent Earn-in Right, the applicable agreement entered into shall terminate. 3.4 Net Smelter Return(a) . If Purchaser exercises the Subsequent Earn-In Option to acquire a 100% interest in the Property, Lithium shall be vested with a 2.5% net smelter returns royalty on the production of minerals from the Property (the "Lithium NSR"), as described in Exhibit C. Upon the exercise of the Subsequent Earn-In Option, the Purchaser must promptly execute and deliver to Lithium a royalty deed in form and substance reasonably acceptable to Lithium. 3.5 NSR Buy-Back(a) . Purchaser shall have the right to purchase up to 50% of the Lithium NSR at a cost of US$1,000,000, to reduce the Lithium NSR to 1.25%. 3.6 NSR Transfer(a) . Subject to the buy-back right set forth above, Lithium shall have the right to sell, assign or transfer the Lithium NSR at any time, upon the provision of 30 days' notice to Purchaser. 4. REPRESENTATION, WARRANTIES, COVENANTS AND CONDITIONS 4.1 Representations of Lithium. Lithium represents, warrants and covenants to Purchaser that: (a) Lithium is the owner of 100% of the Claims, free and clear of all liens, claims and encumbrances, and such claims are validly staked in accordance with the laws of the State of Nevada. Lithium is in exclusive possession of the Property, free and clear of all liens, claims, and encumbrances. 5 <PAGE> (b) As to each of the Claims, subject to the paramount title of the United States of America: (i) the Claims have been properly located and monumented on public domain land open to appropriation by mineral location, free and clear of any conflicting claims of which Lithium is aware; (ii) location notices and certificates and required maps have been properly posted, recorded and filed with the appropriate governmental agencies for each of the Claims; (iii) all filings and recordings required to maintain the Claims in good standing through the Effective Date, including evidence of timely payment of required claim maintenance fees, have been timely and properly made in the appropriate governmental offices; and, (iv) all required annual claim maintenance fees, Bureau of Land Management fees, Nevada county and state mining claim fees and other payments necessary to maintain the Claims through the assessment year ending August 31, 2016, have been timely and properly made. (c) All operations and activities conducted by or on behalf of Lithium on the Claims and the Property have been conducted in compliance with applicable federal, state and local laws, rules and regulations, including without limitation Environmental Laws (as defined in Exhibit B). (d) Lithium is duly incorporated, validly existing and in good standing under the laws of the State of Nevada and is qualified to do business in and is in good standing under the laws of the State of Nevada. Lithium has the requisite corporate power and capacity to carry on business as presently conducted, to enter into this Agreement, and to perform all of its obligations hereunder. (e) There are no outstanding agreements, leases or options (whether oral or written) which contemplate the acquisition of the Claims, or any other interest in the Property or within the Area of Interest or any interest therein by any other person or entity, or which limit or define in any way the activities that may be conducted on the Claims or on any other part of the Property. Except for the State of Nevada net proceeds of mines tax, there are no production royalties or other payments based on mineral production payable on the Claims. (f) The entering into of this Agreement and the performance by Lithium of its obligations hereunder will not violate or conflict with its constating documents, including its articles of incorporation or by-laws, any applicable law or any order, decree or notice of any court or other governmental agency, nor conflict with, or result in a breach of or default under any other contract or other commitment to which Lithium is a party or by which it is bound. (g) All requisite corporate actions on the part of Lithium, and on the part of its officers and directors necessary for the execution, delivery, and performance by it of this Agreement and all other agreements contemplated hereby, have been taken. This Agreement and all agreements and instruments contemplated hereby are, and when executed and delivered by it (assuming valid execution and delivery by the other party), will be, legal, valid, and binding 6 <PAGE> obligations of it enforceable against it in accordance with their respective terms. Notwithstanding the foregoing, no representation is made as to the availability of equitable remedies for the enforcement of this Agreement or any other agreement contemplated hereby. Additionally, this representation is limited by applicable bankruptcy, insolvency, moratorium, and other similar laws affecting generally the rights and remedies of creditors and secured parties. (h) To the best of the knowledge of Lithium, there are no adverse environmental conditions at the Property which constitute a nuisance or that have caused or could result in a violation of or liability under any Environmental Laws. In conducting activities on the Property, Lithium has complied with all applicable Environmental Laws as they relate to the Property and there have been no breaches of or liabilities caused or permitted to arise by Lithium under any Environmental Laws. Lithium has not (i) received notification from any person, including without limitation, any governmental authority, of any potential violation or alleged violation of any applicable Environmental Laws relating to the Property or of any inspection or possible inspection or investigation by any governmental authority under any applicable Environmental Laws relating to the Property, (ii) received any notification of or has knowledge of the presence or release of any Hazardous Materials (as defined in Exhibit B), in the soil, subsurface strata or water in, on or under the Property and (iii) been the subject of any claims or incurred any expenses in respect of the presence of any contaminants in the soil, subsurface strata or water in, on or under the Property. (i) There is no circumstance that would prevent any and all governmental licenses and permits required to carry out exploration, development, mining, processing, and reclamation operations on the Property from being obtained, as and when necessary. (j) Lithium has obtained all consents required under any other agreement to which it is a party and all required consents and approvals from governmental agencies as necessary for it to execute, deliver and perform its obligations under this Agreement. (k) There are no actions, suits or proceedings pending or, to the knowledge of Lithium, threatened against or affecting the Property or the interest of Lithium in the Property or any portion of the Property, including any actions, suits, or proceedings being prosecuted by any federal, state or local department, commission, board, bureau, agency, or instrumentality. To the knowledge of Lithium, it is not subject to any order, writ, injunction, judgment or decree of any court or any federal, state or local department, commission, board, bureau, agency, or instrumentality which relates to the Property. (l) Lithium will assist Purchaser in making applications for required permits or other required approvals from regulatory authorities required in order to conduct exploration and development activities and operations and related work on the Property. (m) All negotiations relative to this Agreement and the transactions contemplated hereby have been carried on by Lithium in such a manner as not to give rise to any valid claim against the Purchaser or any third party for a brokerage commission, finder's fee or other fee or commission arising by reason of the transactions contemplated by this Agreement. 7 <PAGE> (n) Lithium acknowledges that the Consideration Shares will not be registered under the United States SECURITIES ACT OF 1933, as amended (the "U.S. SECURITIES ACT") or the securities laws of any State of the United States and may not be offered and sold, directly or indirectly, in the United States or by or to or for the account or benefit of a U.S. Person (as defined in Regulation S promulgated under the U.S. Securities Act) without registration under the U.S. Securities Act and any applicable State securities laws, unless an exemption from registration is available. Further, neither the Purchaser, nor the Resulting Issuer, has any present intention and is not obligated under any circumstances to register the Consideration Shares, or to take any other actions to facilitate or permit any proposed resale or transfer thereof in the United States or otherwise by or to or for the account or benefit of a U.S. Person, and in particular Lithium further acknowledges and agrees that Purchaser is hereby required to refuse to register any transfer of the Consideration Shares not made in accordance with the provisions of Regulation S, pursuant to registration under the U.S. Securities Act, or pursuant to an available exemption from registration. (o) Lithium is acquiring the Consideration Shares pursuant to the exemption from registration provided by section 4(2) of the U.S. Securities Act in a transaction not involving a "public offering". 4.2

Formation of Jointly Owned Company. Upon Purchaser Optionee having exercised the Initial Earn-In Option and acquired an 80% undivided interest in the Property but having failed to exercise or having terminated the Subsequent Earn-In Option as provided for in Section 2.2(g), a joint venture shall have been formed and Purchaser Optionee and Lithium Optionor as of the date of failure to exercise or the date of 4 <PAGE> termination of the Subsequent Earn-In Option, then as of the date of failure to exercise or the date of termination of the Subsequent Earn-In Option, Purchaser Optionee and Lithium Optionor shall either (a) enter into a formal joint venture agreement, generally in accordance with the Rocky Mountain Mineral Law Foundation Exploration, Development and Mine Operating Agreement (Model Form 5A), or, (b) alternatively, if agreed to by both parties, an LLC Operating Agreement and accompanying contribution agreements based on the Rocky Mountain Mineral Law Foundation Form 5 LLC Operating Agreement, pursuant to which Lithium Optionor and Purchaser Optionee would form a limited liability company of which they would be the members, to which they would contribute their respective interests in the Property. That agreement will govern the parties' ongoing activities at the Project, in either case including the concepts set forth in Section 6 below, and such other terms and provisions as are mutually agreeable to the parties. Lithium Optionor will be manager of the joint venture or the LLC. The parties agree to begin good faith negotiations of the applicable agreement at any time during the Initial Earn-In Period, when requested by PurchaserOptionee. If Purchaser Optionee has exercised the Initial Earn-In Option and either failed to exercise or terminate the 4 <PAGE> Subsequent Earn-In Option and the parties have not completed their negotiation of and executed and delivered a joint venture agreement or an LLC Operating Agreement, the provisions of Section 6 shall govern their relationship until the appropriate agreement(s) are executed and delivered. In the event Purchaser Optionee exercises the Subsequent Earn-in Right, the applicable agreement entered into shall terminate. 3.4 Net Smelter Return(a) . If Purchaser exercises the Subsequent Earn-In Option to acquire a 100% interest in the Property, Lithium shall be vested with a 2.5% net smelter returns royalty on the production of minerals from the Property (the "Lithium NSR"), as described in Exhibit C. Upon the exercise of the Subsequent Earn-In Option, the Purchaser must promptly execute and deliver to Lithium a royalty deed in form and substance reasonably acceptable to Lithium. 3.5 NSR Buy-Back(a) . Purchaser shall have the right to purchase up to 50% of the Lithium NSR at a cost of US$1,000,000, to reduce the Lithium NSR to 1.25%. 3.6 NSR Transfer(a) . Subject to the buy-back right set forth above, Lithium shall have the right to sell, assign or transfer the Lithium NSR at any time, upon the provision of 30 days' notice to Purchaser. 4. REPRESENTATION, WARRANTIES, COVENANTS AND CONDITIONS 4.1 Representations of Lithium. Lithium represents, warrants and covenants to Purchaser that: (a) Lithium is the owner of 100% of the Claims, free and clear of all liens, claims and encumbrances, and such claims are validly staked in accordance with the laws of the State of Nevada. Lithium is in exclusive possession of the Property, free and clear of all liens, claims, and encumbrances. 5 <PAGE> (b) As to each of the Claims, subject to the paramount title of the United States of America: (i) the Claims have been properly located and monumented on public domain land open to appropriation by mineral location, free and clear of any conflicting claims of which Lithium is aware; (ii) location notices and certificates and required maps have been properly posted, recorded and filed with the appropriate governmental agencies for each of the Claims; (iii) all filings and recordings required to maintain the Claims in good standing through the Effective Date, including evidence of timely payment of required claim maintenance fees, have been timely and properly made in the appropriate governmental offices; and, (iv) all required annual claim maintenance fees, Bureau of Land Management fees, Nevada county and state mining claim fees and other payments necessary to maintain the Claims through the assessment year ending August 31, 2016, have been timely and properly made. (c) All operations and activities conducted by or on behalf of Lithium on the Claims and the Property have been conducted in compliance with applicable federal, state and local laws, rules and regulations, including without limitation Environmental Laws (as defined in Exhibit B). (d) Lithium is duly incorporated, validly existing and in good standing under the laws of the State of Nevada and is qualified to do business in and is in good standing under the laws of the State of Nevada. Lithium has the requisite corporate power and capacity to carry on business as presently conducted, to enter into this Agreement, and to perform all of its obligations hereunder. (e) There are no outstanding agreements, leases or options (whether oral or written) which contemplate the acquisition of the Claims, or any other interest in the Property or within the Area of Interest or any interest therein by any other person or entity, or which limit or define in any way the activities that may be conducted on the Claims or on any other part of the Property. Except for the State of Nevada net proceeds of mines tax, there are no production royalties or other payments based on mineral production payable on the Claims. (f) The entering into of this Agreement and the performance by Lithium of its obligations hereunder will not violate or conflict with its constating documents, including its articles of incorporation or by-laws, any applicable law or any order, decree or notice of any court or other governmental agency, nor conflict with, or result in a breach of or default under any other contract or other commitment to which Lithium is a party or by which it is bound. (g) All requisite corporate actions on the part of Lithium, and on the part of its officers and directors necessary for the execution, delivery, and performance by it of this Agreement and all other agreements contemplated hereby, have been taken. This Agreement and all agreements and instruments contemplated hereby are, and when executed and delivered by it (assuming valid execution and delivery by the other party), will be, legal, valid, and binding 6 <PAGE> obligations of it enforceable against it in accordance with their respective terms. Notwithstanding the foregoing, no representation is made as to the availability of equitable remedies for the enforcement of this Agreement or any other agreement contemplated hereby. Additionally, this representation is limited by applicable bankruptcy, insolvency, moratorium, and other similar laws affecting generally the rights and remedies of creditors and secured parties. (h) To the best of the knowledge of Lithium, there are no adverse environmental conditions at the Property which constitute a nuisance or that have caused or could result in a violation of or liability under any Environmental Laws. In conducting activities on the Property, Lithium has complied with all applicable Environmental Laws as they relate to the Property and there have been no breaches of or liabilities caused or permitted to arise by Lithium under any Environmental Laws. Lithium has not (i) received notification from any person, including without limitation, any governmental authority, of any potential violation or alleged violation of any applicable Environmental Laws relating to the Property or of any inspection or possible inspection or investigation by any governmental authority under any applicable Environmental Laws relating to the Property, (ii) received any notification of or has knowledge of the presence or release of any Hazardous Materials (as defined in Exhibit B), in the soil, subsurface strata or water in, on or under the Property and (iii) been the subject of any claims or incurred any expenses in respect of the presence of any contaminants in the soil, subsurface strata or water in, on or under the Property. (i) There is no circumstance that would prevent any and all governmental licenses and permits required to carry out exploration, development, mining, processing, and reclamation operations on the Property from being obtained, as and when necessary. (j) Lithium has obtained all consents required under any other agreement to which it is a party and all required consents and approvals from governmental agencies as necessary for it to execute, deliver and perform its obligations under this Agreement. (k) There are no actions, suits or proceedings pending or, to the knowledge of Lithium, threatened against or affecting the Property or the interest of Lithium in the Property or any portion of the Property, including any actions, suits, or proceedings being prosecuted by any federal, state or local department, commission, board, bureau, agency, or instrumentality. To the knowledge of Lithium, it is not subject to any order, writ, injunction, judgment or decree of any court or any federal, state or local department, commission, board, bureau, agency, or instrumentality which relates to the Property. (l) Lithium will assist Purchaser in making applications for required permits or other required approvals from regulatory authorities required in order to conduct exploration and development activities and operations and related work on the Property. (m) All negotiations relative to this Agreement and the transactions contemplated hereby have been carried on by Lithium in such a manner as not to give rise to any valid claim against the Purchaser or any third party for a brokerage commission, finder's fee or other fee or commission arising by reason of the transactions contemplated by this Agreement. 7 <PAGE> (n) Lithium acknowledges that the Consideration Shares will not be registered under the United States SECURITIES ACT OF 1933, as amended (the "U.S. SECURITIES ACT") or the securities laws of any State of the United States and may not be offered and sold, directly or indirectly, in the United States or by or to or for the account or benefit of a U.S. Person (as defined in Regulation S promulgated under the U.S. Securities Act) without registration under the U.S. Securities Act and any applicable State securities laws, unless an exemption from registration is available. Further, neither the Purchaser, nor the Resulting Issuer, has any present intention and is not obligated under any circumstances to register the Consideration Shares, or to take any other actions to facilitate or permit any proposed resale or transfer thereof in the United States or otherwise by or to or for the account or benefit of a U.S. Person, and in particular Lithium further acknowledges and agrees that Purchaser is hereby required to refuse to register any transfer of the Consideration Shares not made in accordance with the provisions of Regulation S, pursuant to registration under the U.S. Securities Act, or pursuant to an available exemption from registration. (o) Lithium is acquiring the Consideration Shares pursuant to the exemption from registration provided by section 4(2) of the U.S. Securities Act in a transaction not involving a "public offering". 4.23.4

Formation of Jointly Owned Company. Upon Purchaser having exercised the Initial Earn-In Option and acquired an 80% undivided interest in the Property but having failed to exercise or having terminated the Subsequent Earn-In Option as provided for in Section 2.2(g), a joint venture shall have been formed and Purchaser and Lithium as of the date of failure to exercise or the date of 4 <PAGE> termination of the Subsequent Earn-In Option, then as of the date of failure to exercise or the date of termination of the Subsequent Earn-In Option, Purchaser and Lithium shall either (a) enter into a formal joint venture agreement, generally in accordance with the Rocky Mountain Mineral Law Foundation Exploration, Development and Mine Operating Agreement (Model Form 5A), or, (b) alternatively, if agreed to by both parties, an LLC Operating Agreement and accompanying contribution agreements based on the Rocky Mountain Mineral Law Foundation Form 5 LLC Operating Agreement, pursuant to which Lithium and Purchaser would form a limited liability company of which they would be the members, to which they would contribute their respective interests in the Property. That agreement will govern the parties' ongoing activities at the Project, in either case including the concepts set forth in Section 6 below, and such other terms and provisions as are mutually agreeable to the parties. Lithium will be manager of the joint venture or the LLC. The parties agree to begin good faith negotiations of the applicable agreement at any time during the Initial Earn-In Period, when requested by Purchaser. If Purchaser has exercised the Initial Earn-In Option and either failed to exercise or terminate the Subsequent Earn-In Option and the parties have not completed their negotiation of and executed and delivered a joint venture agreement or an LLC Operating Agreement, the provisions of Section 6 shall govern their relationship until the appropriate agreement(s) are executed and delivered. In the event Purchaser exercises the Subsequent Earn-in Right, the applicable agreement entered into shall terminate. 3.4 Net Smelter Return(a) . If Purchaser exercises the Subsequent Earn-In Option to acquire a 100% interest in the Property, Lithium shall be vested with a 2.5% net smelter returns royalty on the production of minerals from the Property (the "Lithium NSR"), as described in Exhibit C. Upon the exercise of the Subsequent Earn-In Option, the Purchaser must promptly execute and deliver to Lithium a royalty deed in form and substance reasonably acceptable to Lithium. 3.5 NSR Buy-Back(a) . Purchaser shall have the right to purchase up to 50% of the Lithium NSR at a cost of US$1,000,000, to reduce the Lithium NSR to 1.25%. 3.6 NSR Transfer(a) . Subject to the buy-back right set forth above, Lithium shall have the right to sell, assign or transfer the Lithium NSR at any time, upon the provision of 30 days' notice to Purchaser. 4. REPRESENTATION, WARRANTIES, COVENANTS AND CONDITIONS 4.1 Representations of Lithium. Lithium represents, warrants and covenants to Purchaser that: (a) Lithium is the owner of 100% of the Claims, free and clear of all liens, claims and encumbrances, and such claims are validly staked in accordance with the laws of the State of Nevada. Lithium is in exclusive possession of the Property, free and clear of all liens, claims, and encumbrances. 5 <PAGE> (b) As to each of the Claims, subject to the paramount title of the United States of America: (i) the Claims have been properly located and monumented on public domain land open to appropriation by mineral location, free and clear of any conflicting claims of which Lithium is aware; (ii) location notices and certificates and required maps have been properly posted, recorded and filed with the appropriate governmental agencies for each of the Claims; (iii) all filings and recordings required to maintain the Claims in good standing through the Effective Date, including evidence of timely payment of required claim maintenance fees, have been timely and properly made in the appropriate governmental offices; and, (iv) all required annual claim maintenance fees, Bureau of Land Management fees, Nevada county and state mining claim fees and other payments necessary to maintain the Claims through the assessment year ending August 31, 2016, have been timely and properly made. (c) All operations and activities conducted by or on behalf of Lithium on the Claims and the Property have been conducted in compliance with applicable federal, state and local laws, rules and regulations, including without limitation Environmental Laws (as defined in Exhibit B). (d) Lithium is duly incorporated, validly existing and in good standing under the laws of the State of Nevada and is qualified to do business in and is in good standing under the laws of the State of Nevada. Lithium has the requisite corporate power and capacity to carry on business as presently conducted, to enter into this Agreement, and to perform all of its obligations hereunder. (e) There are no outstanding agreements, leases or options (whether oral or written) which contemplate the acquisition of the Claims, or any other interest in the Property or within the Area of Interest or any interest therein by any other person or entity, or which limit or define in any way the activities that may be conducted on the Claims or on any other part of the Property. Except for the State of Nevada net proceeds of mines tax, there are no production royalties or other payments based on mineral production payable on the Claims. (f) The entering into of this Agreement and the performance by Lithium of its obligations hereunder will not violate or conflict with its constating documents, including its articles of incorporation or by-laws, any applicable law or any order, decree or notice of any court or other governmental agency, nor conflict with, or result in a breach of or default under any other contract or other commitment to which Lithium is a party or by which it is bound. (g) All requisite corporate actions on the part of Lithium, and on the part of its officers and directors necessary for the execution, delivery, and performance by it of this Agreement and all other agreements contemplated hereby, have been taken. This Agreement and all agreements and instruments contemplated hereby are, and when executed and delivered by it (assuming valid execution and delivery by the other party), will be, legal, valid, and binding 6 <PAGE> obligations of it enforceable against it in accordance with their respective terms. Notwithstanding the foregoing, no representation is made as to the availability of equitable remedies for the enforcement of this Agreement or any other agreement contemplated hereby. Additionally, this representation is limited by applicable bankruptcy, insolvency, moratorium, and other similar laws affecting generally the rights and remedies of creditors and secured parties. (h) To the best of the knowledge of Lithium, there are no adverse environmental conditions at the Property which constitute a nuisance or that have caused or could result in a violation of or liability under any Environmental Laws. In conducting activities on the Property, Lithium has complied with all applicable Environmental Laws as they relate to the Property and there have been no breaches of or liabilities caused or permitted to arise by Lithium under any Environmental Laws. Lithium has not (i) received notification from any person, including without limitation, any governmental authority, of any potential violation or alleged violation of any applicable Environmental Laws relating to the Property or of any inspection or possible inspection or investigation by any governmental authority under any applicable Environmental Laws relating to the Property, (ii) received any notification of or has knowledge of the presence or release of any Hazardous Materials (as defined in Exhibit B), in the soil, subsurface strata or water in, on or under the Property and (iii) been the subject of any claims or incurred any expenses in respect of the presence of any contaminants in the soil, subsurface strata or water in, on or under the Property. (i) There is no circumstance that would prevent any and all governmental licenses and permits required to carry out exploration, development, mining, processing, and reclamation operations on the Property from being obtained, as and when necessary. (j) Lithium has obtained all consents required under any other agreement to which it is a party and all required consents and approvals from governmental agencies as necessary for it to execute, deliver and perform its obligations under this Agreement. (k) There are no actions, suits or proceedings pending or, to the knowledge of Lithium, threatened against or affecting the Property or the interest of Lithium in the Property or any portion of the Property, including any actions, suits, or proceedings being prosecuted by any federal, state or local department, commission, board, bureau, agency, or instrumentality. To the knowledge of Lithium, it is not subject to any order, writ, injunction, judgment or decree of any court or any federal, state or local department, commission, board, bureau, agency, or instrumentality which relates to the Property. (l) Lithium will assist Purchaser in making applications for required permits or other required approvals from regulatory authorities required in order to conduct exploration and development activities and operations and related work on the Property. (m) All negotiations relative to this Agreement and the transactions contemplated hereby have been carried on by Lithium in such a manner as not to give rise to any valid claim against the Purchaser or any third party for a brokerage commission, finder's fee or other fee or commission arising by reason of the transactions contemplated by this Agreement. 7 <PAGE> (n) Lithium acknowledges that the Consideration Shares will not be registered under the United States SECURITIES ACT OF 1933, as amended (the "U.S. SECURITIES ACT") or the securities laws of any State of the United States and may not be offered and sold, directly or indirectly, in the United States or by or to or for the account or benefit of a U.S. Person (as defined in Regulation S promulgated under the U.S. Securities Act) without registration under the U.S. Securities Act and any applicable State securities laws, unless an exemption from registration is available. Further, neither the Purchaser, nor the Resulting Issuer, has any present intention and is not obligated under any circumstances to register the Consideration Shares, or to take any other actions to facilitate or permit any proposed resale or transfer thereof in the United States or otherwise by or to or for the account or benefit of a U.S. Person, and in particular Lithium further acknowledges and agrees that Purchaser is hereby required to refuse to register any transfer of the Consideration Shares not made in accordance with the provisions of Regulation S, pursuant to registration under the U.S. Securities Act, or pursuant to an available exemption from registration. (o) Lithium is acquiring the Consideration Shares pursuant to the exemption from registration provided by section 4(2) of the U.S. Securities Act in a transaction not involving a "public offering". 4.2.

Formation of Jointly Owned Company. Upon Purchaser Optionee having exercised the Initial Earn-In Option and acquired an 80% undivided interest in the Property but having failed to exercise or having terminated the Subsequent Earn-In Option as provided for in Section 2.2(g), a joint venture shall have been formed and Purchaser Optionee and Lithium Optionor as of the date of failure to exercise or the date of 4 <PAGE> termination of the Subsequent Earn-In Option, then as of the date of failure to exercise or the date of termination of the Subsequent Earn-In Option, Purchaser Optionee and Lithium Optionor shall either (a) enter into a formal joint venture agreement, generally in accordance with the Rocky Mountain Mineral Law Foundation Exploration, Development and Mine Operating Agreement (Model Form 5A), or, (b) alternatively, if agreed to by both parties, an LLC Operating Agreement and accompanying contribution agreements based on the Rocky Mountain Mineral Law Foundation Form 5 LLC Operating Agreement, pursuant to which Lithium Optionor and Purchaser Optionee would form a limited liability company of which they would be the members, to which they would contribute their respective interests in the Property. That agreement will govern the parties' ongoing activities at the Project, in either case including the concepts set forth in Section 6 below, and such other terms and provisions as are mutually agreeable to the parties. Lithium Optionor will be manager of the joint venture or the LLC. The parties agree to begin good faith negotiations of the applicable agreement at any time during the Initial Earn-In Period, when requested by PurchaserOptionee. If Purchaser Optionee has exercised the Initial Earn-In Option and either failed to exercise or terminate the Subsequent Earn-In Option and the parties have not completed their negotiation of and executed and delivered a joint venture agreement or an LLC Operating Agreement, the provisions of Section 6 shall govern their relationship until the appropriate agreement(s) are executed and delivered. In the event Purchaser Optionee exercises the Subsequent Earn-in Right, the applicable agreement entered into shall terminate. 3.4 Net Smelter Return(a) . If Purchaser exercises the Subsequent Earn-In Option to acquire a 100% interest in the Property, Lithium shall be vested with a 2.5% net smelter returns royalty on the production of minerals from the Property (the "Lithium NSR"), as described in Exhibit C. Upon the exercise of the Subsequent Earn-In Option, the Purchaser must promptly execute and deliver to Lithium a royalty deed in form and substance reasonably acceptable to Lithium. 3.5 NSR Buy-Back(a) . Purchaser shall have the right to purchase up to 50% of the Lithium NSR at a cost of US$1,000,000, to reduce the Lithium NSR to 1.25%. 3.6 NSR Transfer(a) . Subject to the buy-back right set forth above, Lithium shall have the right to sell, assign or transfer the Lithium NSR at any time, upon the provision of 30 days' notice to Purchaser. 4. REPRESENTATION, WARRANTIES, COVENANTS AND CONDITIONS 4.1 Representations of Lithium. Lithium represents, warrants and covenants to Purchaser that: (a) Lithium is the owner of 100% of the Claims, free and clear of all liens, claims and encumbrances, and such claims are validly staked in accordance with the laws of the State of Nevada. Lithium is in exclusive possession of the Property, free and clear of all liens, claims, and encumbrances. 5 <PAGE> (b) As to each of the Claims, subject to the paramount title of the United States of America: (i) the Claims have been properly located and monumented on public domain land open to appropriation by mineral location, free and clear of any conflicting claims of which Lithium is aware; (ii) location notices and certificates and required maps have been properly posted, recorded and filed with the appropriate governmental agencies for each of the Claims; (iii) all filings and recordings required to maintain the Claims in good standing through the Effective Date, including evidence of timely payment of required claim maintenance fees, have been timely and properly made in the appropriate governmental offices; and, (iv) all required annual claim maintenance fees, Bureau of Land Management fees, Nevada county and state mining claim fees and other payments necessary to maintain the Claims through the assessment year ending August 31, 2016, have been timely and properly made. (c) All operations and activities conducted by or on behalf of Lithium on the Claims and the Property have been conducted in compliance with applicable federal, state and local laws, rules and regulations, including without limitation Environmental Laws (as defined in Exhibit B). (d) Lithium is duly incorporated, validly existing and in good standing under the laws of the State of Nevada and is qualified to do business in and is in good standing under the laws of the State of Nevada. Lithium has the requisite corporate power and capacity to carry on business as presently conducted, to enter into this Agreement, and to perform all of its obligations hereunder. (e) There are no outstanding agreements, leases or options (whether oral or written) which contemplate the acquisition of the Claims, or any other interest in the Property or within the Area of Interest or any interest therein by any other person or entity, or which limit or define in any way the activities that may be conducted on the Claims or on any other part of the Property. Except for the State of Nevada net proceeds of mines tax, there are no production royalties or other payments based on mineral production payable on the Claims. (f) The entering into of this Agreement and the performance by Lithium of its obligations hereunder will not violate or conflict with its constating documents, including its articles of incorporation or by-laws, any applicable law or any order, decree or notice of any court or other governmental agency, nor conflict with, or result in a breach of or default under any other contract or other commitment to which Lithium is a party or by which it is bound. (g) All requisite corporate actions on the part of Lithium, and on the part of its officers and directors necessary for the execution, delivery, and performance by it of this Agreement and all other agreements contemplated hereby, have been taken. This Agreement and all agreements and instruments contemplated hereby are, and when executed and delivered by it (assuming valid execution and delivery by the other party), will be, legal, valid, and binding 6 <PAGE> obligations of it enforceable against it in accordance with their respective terms. Notwithstanding the foregoing, no representation is made as to the availability of equitable remedies for the enforcement of this Agreement or any other agreement contemplated hereby. Additionally, this representation is limited by applicable bankruptcy, insolvency, moratorium, and other similar laws affecting generally the rights and remedies of creditors and secured parties. (h) To the best of the knowledge of Lithium, there are no adverse environmental conditions at the Property which constitute a nuisance or that have caused or could result in a violation of or liability under any Environmental Laws. In conducting activities on the Property, Lithium has complied with all applicable Environmental Laws as they relate to the Property and there have been no breaches of or liabilities caused or permitted to arise by Lithium under any Environmental Laws. Lithium has not (i) received notification from any person, including without limitation, any governmental authority, of any potential violation or alleged violation of any applicable Environmental Laws relating to the Property or of any inspection or possible inspection or investigation by any governmental authority under any applicable Environmental Laws relating to the Property, (ii) received any notification of or has knowledge of the presence or release of any Hazardous Materials (as defined in Exhibit B), in the soil, subsurface strata or water in, on or under the Property and (iii) been the subject of any claims or incurred any expenses in respect of the presence of any contaminants in the soil, subsurface strata or water in, on or under the Property. (i) There is no circumstance that would prevent any and all governmental licenses and permits required to carry out exploration, development, mining, processing, and reclamation operations on the Property from being obtained, as and when necessary. (j) Lithium has obtained all consents required under any other agreement to which it is a party and all required consents and approvals from governmental agencies as necessary for it to execute, deliver and perform its obligations under this Agreement. (k) There are no actions, suits or proceedings pending or, to the knowledge of Lithium, threatened against or affecting the Property or the interest of Lithium in the Property or any portion of the Property, including any actions, suits, or proceedings being prosecuted by any federal, state or local department, commission, board, bureau, agency, or instrumentality. To the knowledge of Lithium, it is not subject to any order, writ, injunction, judgment or decree of any court or any federal, state or local department, commission, board, bureau, agency, or instrumentality which relates to the Property. (l) Lithium will assist Purchaser in making applications for required permits or other required approvals from regulatory authorities required in order to conduct exploration and development activities and operations and related work on the Property. (m) All negotiations relative to this Agreement and the transactions contemplated hereby have been carried on by Lithium in such a manner as not to give rise to any valid claim against the Purchaser or any third party for a brokerage commission, finder's fee or other fee or commission arising by reason of the transactions contemplated by this Agreement. 7 <PAGE> (n) Lithium acknowledges that the Consideration Shares will not be registered under the United States SECURITIES ACT OF 1933, as amended (the "U.S. SECURITIES ACT") or the securities laws of any State of the United States and may not be offered and sold, directly or indirectly, in the United States or by or to or for the account or benefit of a U.S. Person (as defined in Regulation S promulgated under the U.S. Securities Act) without registration under the U.S. Securities Act and any applicable State securities laws, unless an exemption from registration is available. Further, neither the Purchaser, nor the Resulting Issuer, has any present intention and is not obligated under any circumstances to register the Consideration Shares, or to take any other actions to facilitate or permit any proposed resale or transfer thereof in the United States or otherwise by or to or for the account or benefit of a U.S. Person, and in particular Lithium further acknowledges and agrees that Purchaser is hereby required to refuse to register any transfer of the Consideration Shares not made in accordance with the provisions of Regulation S, pursuant to registration under the U.S. Securities Act, or pursuant to an available exemption from registration. (o) Lithium is acquiring the Consideration Shares pursuant to the exemption from registration provided by section 4(2) of the U.S. Securities Act in a transaction not involving a "public offering". 4.2.