AMENDED AND RESTATED MEMBERSHIP INTEREST PURCHASE AGREEMENT
This Amended Membership Interest Purchase Agreement (this “Agreement”),
originally dated January 24, 2019, as amended by the Purchase Agreement
Amendment dated April 30, 2019, as amended by the Second Purchase Agreement
Amendment dated May 22, 2019, as amended by the Third Purchase Agreement
Amendment dated June 21, 2019, as amended by the Fourth Purchase Agreement
Amendment dated August 15, 2019 and restated September 17, 2019, as amended by
the Fifth Purchase Agreement Amendment dated October 14, 2019, as amended by the
Sixth Purchase Agreement Amendment dated November 17, 2019, as amended and
restated as of March 20, 2020, as hereby amended and restated as of September 8,
2020, is by and among Comstock Mining Inc., a Nevada corporation (“Seller”),
with an address of 1200 American Flat Road, Virginia City, NV 89440, COMSTOCK
MINING LLC, a Nevada limited liability company (the “Company”), and Tonogold
Resources, Inc., a Delaware corporation (“Buyer”), with an address of 5666 La
Jolla Boulevard, #315, La Jolla, CA 92037. Each of Buyer, the Company and Seller
are sometimes referred to herein as a “Party” and, collectively, they are
sometimes referred to as the “Parties”.
ARTICLE 1
PURCHASE AND SALE OF MEMBERSHIP INTERESTS
1.1 Purchase and Sale of Membership Interests. Subject to the terms and
conditions set forth in this Agreement, Buyer shall purchase from Seller, and
Seller shall sell to Buyer, 100% of the membership interests of the Company (the
“Membership Interests”), all of which are owned by Seller free and clear of any
Liens, and restrictions on transfer, options, rights, calls, commitments,
proxies or other contract or other rights (except with respect to restrictions
on transfer imposed by federal and state securities laws). As used herein,
“Lien” means any lien, security interest, charges, encumbrance, mortgage,
pledge, security agreement, consignment or bailment for security purposes,
reservation or exception, encroachment, purchase right, right of first refusal,
adverse claim of any other person or entity or other encumbrance of any nature
whatsoever.
1.2 Consideration for Membership Interests.
(a) In consideration of the sale of the Membership Interests and the agreements
of Seller herein, Buyer shall pay Seller a total purchase price of $11,200,000
in cash and other non-cash consideration described below (collectively, the
“Purchase Price”) of which:
(i) Buyer made non-refundable cash deposits of $6,025,000 (the “Closing Cash
Consideration”) toward the Purchase Price prior to March 20, 2020, and Buyer has
made non-refundable deposits of $3.8 million in the form of Series D Convertible
Junior Participating Non-Cumulative Perpetual Preferred Stock (“CP Shares”) of
Buyer, and an additional $2.3 million in non-refundable fees in the form of CP
Shares, all of which has been delivered to Seller; and
(ii) Seller delivered a 50.00% Membership Interest to Buyer, representing all
cash and CP Shares delivered to Seller by Buyer on or prior to March 20, 2020;
(iii) Buyer delivered a 12% secured convertible note with principal amount of
$5,475,000 (the “Note”) for the remainder of the Purchase Price to be paid by
Buyer to Seller on March 20, 2020;
(iv) Prior to August 10, 2020, Buyer delivered principal payments of $900,000 on
the Note, together with cash interest payments on the Note, and Seller agreed to
forgive the payment of $100,000 in consideration of Buyer’s early payment of
principal on the Note; and
(v) In addition to the amounts indicated above, all cash received by Seller from
Buyer shall be applied first toward the reimbursement of outstanding invoices
prior to any application toward the payments required pursuant to the terms of
the Note.
(b) Effective as of September 8, 2020, Seller shall deliver 100% of the
Membership Interests to Buyer. Buyer shall receive full control of the Company,
all decision control and operations. Buyer will also continue being forever
responsible for 100% of the Company’s costs starting from November 18, 2019 (the
“Closing Date”). Seller
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shall account for all costs incurred that relate to or arise from, the Company
and will submit monthly invoices to Buyer, which shall be due no later than ten
(10) days after receipt.

(c) In addition to terms of the Note, Buyer and Seller hereby agree:

(i) hereby agrees to pay the Seller a one-off payment of $140,000 in further
consideration for closing the transaction and of the Seller agreeing that the
Buyers obligations under clause 6.d. of Fourth Purchase Agreement Amendment
dated as of August 15, 2019, terminated effective July 31, 2020. The payment of
$140,000 shall be paid in cash at closing;
(ii) All unpaid payments under the Note or amounts reimbursable under this
Agreement shall be secured by a security interest in the Membership Interests
owned by Buyer and all assets owned by the Company (including any and all rights
under contracts such as the operating agreement for Northern Comstock LLC, the
Lease Option Agreement, and the Mineral Exploration and Mining Lease Agreement),
in accordance with the Deed of Trust attached hereto as Exhibit C (the “Deed of
Trust”). Seller shall have the right to record the Deed of Trust as a first
priority security interest.
(iii) As long as the Note is outstanding, Buyer shall not, create, incur, assume
or permit to exist any Indebtedness (as defined below) other than convertible
notes issued by Buyer prior to the Closing Date with aggregate principal amount
of $14 million or less. “Indebtedness” means, without duplication, (a) all
obligations for borrowed money or with respect to deposits or advances of any
kind, (b) all obligations evidenced by bonds, debentures, notes or similar
instruments, (c) all obligations upon which interest charges are customarily
paid, (d) all obligations under conditional sale or other title retention
agreements relating to property acquired, (e) all obligations in respect of the
deferred purchase price of property or services (excluding current accounts
payable and accrued expenses incurred in the ordinary course of business), (f)
all obligations secured by any Lien on property owned or after acquired, (g) all
guarantees of obligations of others, (h) all capital lease obligations, (i) all
obligations, contingent or otherwise, as an account party in respect of letters
of credit and letters of guaranty, (j) all obligations, contingent or otherwise,
in respect of bankers’ acceptances, (k) all obligations under any swap agreement
or under any similar type of agreement, (l) all obligations under sale and
leaseback transactions. Notwithstanding the preceding, Buyer shall be permitted
to incur Indebtedness described in clauses (c) through (l) above not to exceed
$1,000,000 in the aggregate (such Indebtedness, “Permitted Debt”).
(iv) If an event of default occurs under the Note and Buyer fails to remedy such
violation within the cure periods set forth in the Note, then Seller shall have
and be entitled to exercise, in its sole discretion, any of the remedies
available to a secured lender under Nevada law, including the remedies set forth
below. The Seller may foreclose and sell any or all of the Membership Interests
theretofore owned by Buyer and any or all assets owned by the Company in order
to pay off the Note. In addition, the Seller shall have a right to terminate any
of the Transaction Documents; provided that the Seller shall not have the right
to terminate the Mineral Exploration and Mining Lease if Buyer has made
principal payments on the Note of $2,737,500 or more.
(v) Buyer shall be permitted to prepay all or any part of the balance
outstanding under the Note at any time without penalty or premium. Buyer and
Seller hereby agree that Buyer shall pay the cash required to make payments
hereunder from the proceeds of equity raises, royalty sales and/or other
third-party funding agreements, whether in one transaction or a series of
transactions (collectively, a “Capital Raise”). Buyer covenants and agrees that
if Buyer receives any proceeds from any Capital Raise in excess of $6.5 million,
then Buyer shall cause 50% of such proceeds to be immediately paid to Seller and
used to prepay the Note. Except for Permitted Debt, Buyer covenants and agrees
that Buyer shall not use the proceeds of any Capital Raise for any other purpose
other than making payments to Seller, permitting, exploration drilling, a
preliminary economic assessment and costs directly attributable to such Capital
Raise. Buyer covenants and agrees that Buyer shall not commence production until
the Note is repaid in full.
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(vi) As long as the Note is outstanding, Buyer and Seller covenant and agree to
keep the Lucerne Properties at all times free and clear of all Liens, except for
Liens securing the Note (or any instrument issued in substitution of the Note)
or otherwise described in the Schedules to this Agreement.
(d) In addition, if permitted, Seller will assign all of its interest (the
”Northern Comstock Interest“) in Northern Comstock LLC, a Nevada limited
liability company (“Northern Comstock“) to the Company. If such assignment is
not approved by the members and manager of Northern Comstock on or prior to
Closing, then Buyer hereby agrees to forever assume and unconditionally
guarantee the full and punctual payment, fulfilment and performance of all
obligations and benefits of Seller under the current Northern Comstock LLC
Operating Agreement (the “Existing NC Operating Agreement”). The guarantee in
the preceding sentence (the “Guarantee”) shall be an absolute and continuing
guarantee of performance and payment and shall not in any way be conditional or
contingent upon any demand of Northern Comstock or its members to collect or
require anything from Seller or any stated obligations of Seller under the
Existing NC Operating Agreement (including, without limitation, section 13.5 of
such agreement) or upon any other action, occurrence or circumstance whatsoever.
Without limiting the generality of the foregoing, the Guarantee shall not be
released, discharged or otherwise affected by:
(i) any extension, renewal, settlement, compromise, waiver or release in respect
of any obligation of any party under the Existing NC Operating Agreement, by
operation of law or otherwise;
(ii) any modification or amendment of or supplement to the Existing NC Operating
Agreement;
(iii) any change in the organizational existence, structure or ownership of
Buyer or the Company, or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting Buyer, the Company or their respective assets or
any resulting release or discharge of any obligation of Buyer or the Company;
(iv) the existence of any claim, set-off or other rights which Buyer or Company
may have at any time against Seller or Northern Comstock or its members or its
manager;
(v) any invalidity or unenforceability relating to or against Buyer for any
reason of this Agreement, the Existing NC Operating Agreement or any provision
of applicable law or regulation purporting to prohibit the payment by Buyer of
any amounts payable pursuant to the Guarantee; or
(vi) any other act or omission to act or delay of any kind by Buyer, the
Company, Seller, Northern Comstock or any other person or any other circumstance
whatsoever which might, but for the provisions of this paragraph, constitute a
legal or equitable discharge of or defense to Buyer’s obligations pursuant to
the Guarantee.
For so long as Buyer fulfills its obligations with respect to the Guarantee,
Seller hereby agrees to (i) hold legal ownership of the Northern Comstock
Interest, (ii) convey all economic or other benefits associated with the
Northern Comstock Interest to Buyer (or Company, at Buyer's election) and (iii)
exercise its rights with respect to the Northern Comstock Interest under
Existing NC Operating Agreement at Buyer's direction.
(e) The Company owns (or will following the Closing will own) fee property,
patented mining claims, and unpatented mining claims, and through the Seller’s
membership in Northern Comstock LLC, has indirect ownership of additional fee
property, patented mining claims, unpatented mining claims, and leasehold
interests, collectively known as the Lucerne project, as detailed in Exhibit A
(the “Lucerne Properties”). Effective as of the Closing Date, each of the
Parties agreed that the Company will pay Seller a 1.5% NSR royalty on all
minerals produced from the Lucerne Properties, as detailed in Exhibit B (the
“NSR Royalty Agreement”). If Seller directly or indirectly acquires 100%
unencumbered ownership of parcel numbers 800-001-40, 800-001-62 and 800-001-65
(collectively, the “Sutro Claims”) and Buyer pays 100% of the amounts payable
pursuant to the Note, then Seller agrees to transfer the Sutro Claims to the
Company as part of the Lucerne Properties, at no additional cost to Buyer and
subject to the 1.5 % NSR royalty pursuant to the NSR Royalty Agreement.
(f) Effective as of the Closing Date, the Company assumed all current
reclamation liability on the Lucerne Properties and all future liability from
the Company’s operations on the Lucerne Properties. The Company also assumed all
costs of maintaining the Federal, State, and County permits and reclamation
bonds on the Lucerne Properties.
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1.3 Additional Understandings.
(a) Effective as of the Closing Date, Seller granted to the Company an option to
lease its American Flat property, plant, and equipment (“PP&E”) for processing
ores from the Lucerne Properties in accordance with the option agreement, the
form of which is attached as Exhibit D, (the “Lease Option Agreement”).
Effective as of the Closing Date, Seller also agreed to lease additional mining
properties in Storey County to the Company, in accordance with the lease
attached as Exhibit E, (the “Mineral Exploration and Mining Lease”).
(b) Except as otherwise permitted in this Agreement, Buyer shall not, without
the prior written approval of Seller (such approval shall be at Seller's
absolute discretion), directly or indirectly, through Company or otherwise,
either individually or on behalf of or through any person, for the period
commencing on the date of this Agreement until the day being forty-eight (48)
months from the date of this Agreement, in any capacity, (i) locate, stake,
lease, option, purchase or otherwise acquire or become entitled to acquire any
interest, directly or indirectly, in any property, mineral rights, land rights,
surface rights, water rights or other mining-related assets, or (ii) own,
manage, stake, control, advise, operate, provide services to, consult with,
receive remuneration from, be employed by any person engaged or proposing to
engage in, or otherwise engage in any manner in the mining business in any
location that is both (i) within five (5) miles of any property currently owned
or leased by Seller in Lyon County, Nevada, and (ii) within Lyon County, Nevada
(the “Non-Compete Area”).
(c) Buyer hereby covenants and agrees with Seller that until the Note has been
paid in full, Buyer shall have the right (and shall have the right to cause the
Company) to conduct exploration activities at its own discretion and at its own
expense on property controlled by the Company. Buyer represents and warrants
that any such exploration activities shall be conducted in compliance with all
applicable Federal, State, and local regulations and in compliance with all
applicable permits. Seller represents and warrants that Seller will not to take
any actions that would have a material adverse impact on Buyer and Seller will
use commercially reasonable efforts to accommodate Buyer’s reasonable requests
(at Buyer’s expense); provided, however, that nothing in this Agreement shall
limit or restrict (or be construed to limit or restrict) Seller’s right to
enforce its rights under this Agreement.
(d) Until the Note has been repaid in full, Buyer hereby agrees that it will
give Seller the first right to directly or indirectly acquire the Membership
Interest. Should Buyer determine to directly or indirectly sell or otherwise
transfer any part of the Membership Interest (including for the sake of clarity,
if Buyer is party to a merger, amalgamation, consolidation transaction
(excluding a reverse takeover transaction in which Buyer’s stockholders of
record immediately prior to such transaction continue to hold more than 50% of
the voting power of the surviving or acquiring entity after such transaction),
or substantially all assets or the majority of voting securities of Buyer is
acquired by a third party), then Buyer shall give Seller detailed written notice
of the nature and description of the proposed transfer and its intended price
and terms. Seller shall have a period of 30 days to investigate the proposed
transaction and the disposition terms (for which Buyer shall grant full access
to all records and data to Seller) and Seller shall have a period of 30 days
after such investigative period to determine whether it will acquire the
Membership Interest. In the event Seller declines then Buyer may sell at such
offered terms but this first right shall occur again to the benefit of Seller if
the terms shall be reduced or if the disposition does not occur within 180 days
of Buyer’s notice it declines or the expiration of the above 30 day decision
period.
(e) Buyer hereby agrees to pay in full all existing or future invoices issued by
Seller on or prior to the due dates indicated on such invoices, it being agreed
and understood that that reimbursement payments will be prioritized and the
Buyer shall wire funds received by Buyer from any source to Seller within 24
hours of receipt, for such expense reimbursement obligations.
(f) Comstock hereby consents to the Buyer’s acquisition of certain mining
claims, royalties and properties described in Exhibit I (the “Ida Properties”)
which are owned by Art Wilson, Wilson Mining LLC, Ida Consolidated Mines,
Southern Comstock Tailings Disposal, Art Wilson Co (together the “Wilson
Parties”), and waives the restrictions of Section 1.3 (b) for the portion of the
Ida Properties in the Non-Compete Area. This consent is conditioned on (i) Buyer
assigning to Comstock the patented and unpatented mining claims along the State
Route to the south of Silver City and West of Spring Valley, further identified
in Exhibit I, Table I.2, for no additional consideration, concurrently with the
acquisition of the Ida Area Claims from the Wilson Parties; (ii) the Ida Area
Claims will be subject to the NSR Royalty Agreement shown in Exhibit B; and
(iii) Buyer assigning to Comstock
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any royalty interests owned by the Wilson Parties on the Metropolitan patent and
Peach and Wedge unpatented claims, a portion of Comstock’s Dayton property
package and identified in Exhibit I, Table I.3. Comstock undertakes to use
reasonable commercial efforts to make introductions to assist Buyer in
attempting to acquire other patents in close proximity to the Three Brothers,
including the Last Chance, Piedmont, Twin, and Cosmopolitan patents, if such
patents are available for purchase.
(g) Seller has entered into a collaborative venture with Oro Industries Inc.,
and a newly formed company called Mercury Clean Up LLC (“MCU”), for the
manufacture and global deployment of mercury remediation systems with
proprietary mechanical, hydro, electro-chemical and oxidation processes to
reclaim, treat and remediate mercury from tailings and industrial effluents.
Seller has agreed to allow MCU and its affiliates, including future joint
ventures formed for the purpose of mercury remediation (e.g., MCU and Comstock
Mercury Remediation LLC) to conduct certain testing to demonstrate the
feasibility of a mercury remediation system within the historic, world-class,
Comstock Lode mining district. Buyer hereby agrees to permit Seller and MCU to
sample the soils and/or tailings, including taking bulk samples for pilot
testing, and extracting and processing the mercury contaminated materials from
the properties owned or controlled by the Buyer, so long as such activities are
not likely to interfere, with either current or future operations of the Buyer
(to be determined at the sole discretion of the Buyer but not to be unreasonably
withheld), or reduce the value of the Buyer’s assets in any way (it is mutually
understood that the objective and net effect of these remediation activities is
the identification of mercury contamination from these properties and the
removal of such contaminated material). Seller and MCU expect mineralized
materials removed by MCU to contain limited amounts of precious metals, the
recoveries of which are intended to mitigate the overall investment and costs of
removal and Seller will be responsible for any and all costs and obligations
associated with removal by MCU, including royalties, if any, on precious metals
recovered. Neither Seller nor MCU will penetrate bedrock or dislocate any
virgin, mineralized materials. Seller agrees to maintain adequate insurance
coverage to specifically protect Buyer from any damages or costs resulting from
the activities of Seller or MCU. Seller and MCU will comply with all legal and
regulatory requirements on the properties. Seller agrees to provide Buyer with a
detailed plan of MCU’s proposed work programs and schedules in advance of
conducting remediation activities.
1.4 Closing. The closing of the purchase and sale of the Membership Interests
(the “Closing”) took place in part on the Closing Date and in part on September
8, 2020 (the “Subsequent Closing Date”). At the Closing, Buyer and Seller
delivered (on the Closing Date) or shall deliver (on the Subsequent Closing
Date) the following deliverables:
(a) Buyer delivered the Closing Cash Consideration on or prior to the Closing
Date; and
(b) Buyer shall execute and deliver to Seller each of:
(i) the Deed of Trust on the Subsequent Closing Date;
(ii) the NSR Royalty Agreement;
(iii) [intentionally omitted];
(iv) if consent for the assignment of the Northern Comstock Interest is received
from the members and manager of Northern Comstock on the Subsequent Closing
Date;
(1) an assignment of the Northern Comstock Interest (the “Assignment of
Interest”); and
(2) an amended and restated operating agreement of Northern Comstock with the
Company replacing Seller as a party to such operating agreement and assuming all
of Seller’s former obligations thereunder (the “A&R Northern Comstock
Agreement”);
(v) the Lease Option Agreement;
(vi) the Mineral Exploration and Mining Lease;
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(vii) a certification naming Buyer’s representatives who authorize and consent
to the Company’s entry into the agreements effective as of the Closing Date;
together, with this Agreement, the Deed of Trust, the NSR Royalty Agreement, the
Lease Option Agreement and the Mineral Exploration and Mining Lease (the
“Transaction Documents”), in each case duly executed by Buyer and/or the
Company, as the case may be.
(c) If on the Subsequent Closing Date, the A&R Northern Comstock Agreement
cannot be assigned, Seller shall retain its membership interest, and have an
obligation to Buyer to maintain all rights and agreements thereunder, for so
long as Buyer fulfills its obligations with respect to the Guarantee, including,
without limitation, Buyer’s obligation to reimburse Seller for any and all costs
associated with the retention of membership and maintenance of any obligations
of Seller under the Existing NC Operating Agreement, which costs of
reimbursement are estimated on the attached Exhibit G, Table G.2.
(d) At the Closing, Seller shall deliver to Buyer, or cause to be delivered:
(i) each of the Transaction Documents (other than the Deed of Trust), duly
executed by Seller;
(ii) evidence that Seller has no further obligations under that certain 11%
Senior Secured Debenture due 2021, issued to GF Comstock 2, LP, as amended,
restated or otherwise modified from time to time (the “Debenture”);
(iii) evidence satisfactory to Buyer that the Seller has transferred any and all
assets it currently owns that are listed on Exhibit A to the Company; and
(iv) evidence satisfactory to Buyer that the Company has transferred any and all
assets it currently owns not listed on Exhibit A to Seller (and Seller and
Company shall represent and warranted that at the Closing, the Company will own
only the assets listed in Exhibit A).
(e) Effective as of the Subsequent Closing Date, Buyer shall become the sole
lawful owner of 100% of the Membership Interests.
1.5 Permits. The Company currently holds a number of County, State, and Federal
permits which are listed in Exhibit F (the “Permits”). These include a Storey
County Special Use Permit (the “SUP”), a Right of Way granted by the US Bureau
of Land Management (the “ROW”), and a Reclamation permit granted by the State of
Nevada. The Parties agree: (i) that subsequent to Closing, they will work timely
together, and in consultation with the relevant regulators, to either assign or
bifurcate each of the Permits, as necessary, so that the Buyer retains or is
granted contractual rights to the rights granted by the Permits that pertain to
the Lucerne Properties, and the Seller retains all the rights granted by the
Permits that pertain to the American Flat Property; and (ii) until such time as
the Permits can be assigned or bifurcated, to retain the Permits in the Company,
but modify them or clarify contractually so that Seller has the rights granted
by the Permits to continue operations on its owned American Flat Property; or
(iii) until such time as the Permits can be assigned or bifurcated, to retain
the Permits in the Seller or one of its 100%-owned entities, but modify them or
clarify contractually so that the Company has the rights granted by the Permits
to continue operations on the Lucerne Properties; and (iv) in any case, the
Parties agree that they will work to bifurcate the existing reclamation bond
proportionately, or otherwise separately bond the current reclamation liability
in the Lucerne Properties in the name of the Company, and bond the current
reclamation liability in the American Flat Property in the name of the Seller.
To clarify, until such time as the bond can be bifurcated, the Company shall
reimburse Seller for all costs of maintaining the existing bond, and the Company
shall at all times remain responsible for performing the required reclamation on
the Lucerne Properties.
1.6 Further Assurances. Subject to the terms and conditions of this Agreement,
each of the Parties shall execute and deliver such other documents and
instruments, provide such materials and information and take such other actions
as may reasonably be necessary, proper or advisable, or that the Parties may
reasonably request in order fully to effect the purposes of this Agreement. This
Section shall survive the Closing.
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ARTICLE 2
Representations, Warranties and Agreements
2.1 Seller and Company. In connection with the transactions contemplated hereby
Seller hereby represents, warrants, covenants, acknowledges and agrees that the
following are true, accurate, and complete as of the Effective Date and shall be
true, accurate, and complete as of the Closing Date.
(a) Seller has all power and authority necessary to execute, deliver and perform
this Agreement and consummate the transactions contemplated hereby, and has
taken all action necessary to authorize the execution, delivery and performance
of each of the Transaction Documents and the consummation of the transactions
contemplated hereby and thereby. This Agreement has been duly executed and
delivered by Seller and is enforceable against Seller in accordance with its
terms, except that such enforcement may be subject to (i) bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or other similar
laws affecting or relating to enforcement of creditors’ rights generally, and
(ii) general principles of equity, whether such enforceability is considered in
a proceeding at law or in equity (the “Enforceability Exceptions”). The
execution and delivery of this Agreement and each of the other Transaction
Documents, the consummation of the transactions contemplated hereby and thereby
and the performance of Seller’s obligations hereunder and thereunder will not
conflict with, or result in any violation of or default under, any provision of
any charter, by-laws, trust agreement, operating agreement, partnership
agreement, certificate of formation or other governing instrument applicable to
Seller, any agreement or other instrument to which Seller or its properties is a
party, or any judgment, decree, statute, order, rule or regulation applicable to
Seller’s business or properties.
(b) The Company (i) is a limited liability company, duly organized, validly
existing, and in good standing under the laws of Nevada, (ii) has all
organizational power and authority necessary to execute, deliver and perform
this Agreement and the other transaction documents and consummate the
transactions contemplated hereby and thereby and (iii) has taken all
organizational action necessary to authorize the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by the
Company and is enforceable against the Company in accordance with its terms,
except that such enforcement may be subject to the Enforceability Exceptions.
The execution and delivery of each of the Transaction Documents, the
consummation of the transactions contemplated hereby and thereby and the
performance of the Company’s obligations hereunder and thereunder will not
conflict with, or result in any violation of or default under, any provision of
any charter, by-laws, trust agreement, operating agreement, partnership
agreement, certificate of formation or other governing instrument applicable to
the Company, any agreement or other instrument to which the Company or its
properties is a party, or any judgment, decree, statute, order, rule or
regulation applicable to the Company’s business or properties.
(c) The Company is the sole legal and beneficial owner of the Lucerne
Properties, except for those properties held, owned or leased by Northern
Comstock LLC, and that such owned properties are free and clear of any and all
Liens of any kind or nature whatsoever, other than any Liens placed by GF
Comstock 2, LP, which will be released immediately after the Closing. The
Company has previously obtained title insurance for the surface of some of the
Lucerne Properties that it owns. Title insurance is generally not available for
mineral rights and unpatented mining claims. Seller has delivered (or provided
access to) or shall deliver to Buyer prior to the Closing all copies that Seller
possesses of all deeds, leases, mortgages, deeds of trust, certificates of
occupancy, title insurance policies, title reports, surveys and similar
documents, and all amendments thereof, with respect to the real property
described in the exhibits attached hereto.
(d) Certain properties controlled by Northern Comstock, LLC are held through
mineral leases with third-party owners, in particular with the Sutro Tunnel
Company and with Virginia City Ventures. Those leases expire from time to time.
Seller makes no representation or warranty, on its own behalf or on behalf of
Northern Comstock, LLC that any such leases can or will be renewed upon
expiration.
(e) Other than the assets listed in Exhibit A and the rights, responsibilities,
and liabilities under the Permits, including the current reclamation liability
for the Lucerne Properties, the Company does not have, nor will have at the
Closing, any other asset, property, interest, obligation or liability, whether
actual or contingent.
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(f) Seller is the sole legal and beneficial owner of the Membership Interest and
the Northern Comstock Interest.
(g) Upon consummation of the transactions contemplated by this Agreement
(including the repayment of the Debenture), Seller will have conveyed good title
to the Membership Interests free and clear of any and all Liens of any kind or
nature whatsoever.
(h) All of the issued and outstanding equity interests of the Company as of the
date hereof and at Closing have been (and will have been) duly authorized and
validly issued and are fully paid and non-assessable. None of such equity
interests were issued in violation of any pre-emptive rights, rights of first
offer or first refusal or similar rights or in violation of any securities law.
There are no outstanding subscriptions, options, warrants or other rights of any
kind to acquire any additional equity interests of the Company, no class of
equity interest of the has been reserved or set aside for any purpose and the
Company is not party to any agreement, arrangement or understanding in respect
thereof.
(i) Neither Seller nor Company, nor anyone acting on Seller’s or Company’s
behalf, has engaged any finder, broker, solicitor, agent or other person in a
comparable capacity in connection with the transactions contemplated hereby.
There are no contracts, agreements or understandings with Seller or Company that
would give rise to a valid claim against Buyer or Seller or Company for a
commission, finder’s fee or other like payment in connection with the
transactions contemplated hereby.
(i) Except as set forth on Schedule 1, there are no proceedings pending by or
against or, to the actual knowledge of Seller, threatened against or by the
Company (a) affecting any of the Company's business or assets, or (b) that
challenge or seek to prevent, enjoin or otherwise delay the transactions
contemplated by this Agreement.
(j) Except as disclosed on Schedule 2, the Company has not incurred any
liabilities, obligations, claims or losses (whether liquidated or unliquidated,
secured or unsecured, absolute, accrued, contingent or otherwise) other than
those incurred in the ordinary course of the Company's business or which,
individually or in the aggregate, are not reasonably likely to have a Material
Adverse Change on the Company's business or assets.
(k) The Company is not a party to any intercompany loans from or balances due to
the Seller or from any subsidiary entity. Any such balances shall be reduced to
zero on or prior to Closing in a manner that will not create a tax liability for
the Company.
(l) The Company has no subsidiaries.
(m) The minute books and other similar records of the Company in the possession
of Seller have been or shall be delivered to Buyer. Seller is not aware of any
other minute books or other similar records of the Company.
(n) Prior to the Closing, Seller has delivered or shall deliver to Buyer true
and complete copies of the most recently closed balance sheet and financial
statements of the Company, which fairly present in all material respects the
financial condition and results of operations of the Company as of the dates
thereof.
(o) The Company is not required to file a separate tax return given that Seller
files a consolidated U.S. federal income tax return as a group (including the
Company along with other affiliates of Seller). The Company has not executed any
outstanding waivers or comparable consents regarding the application of the
statute of limitations with respect to any taxes or tax returns. There are no
liens with respect to any taxes upon any of the assets or properties of the
Company, other than taxes the payment of which is not yet due.
(p) To the knowledge of Seller, the Company is not presently in violation of or
in default under any law or order applicable to the Company or any of its assets
and properties the effect of which, individually or in the aggregate with other
such violations and defaults, would have a Material Adverse Change on the
Company.
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(q) The Company has obtained all material licenses which are required under
applicable environmental laws in connection with the conduct of the business or
operations of the Company, and each of such licenses is in full force and
effect, or, from time to time, in the process of being renewed or modified, as
required by the terms or business, and the Company is in material compliance
with the terms and conditions of all such licenses. Except as described on
Schedule 3, no oral or written notification of a release of a Hazardous Material
has been filed by or on behalf of the Company in the three year period prior to
the date hereof and with the exception of being located within the broad
boundaries of the Carson River Mercury Superfund Site, none of the Lucerne
Properties is presently listed or proposed for listing on the NPL, CERCLIS or
any similar state or local list of sites requiring investigation or clean-up.
(r) As used herein, “Contract” means any agreement or contract binding on the
Company. Except for the Transaction Documents or as set forth in Schedule 4, the
Company is not a party to, bound by, subject to or otherwise has rights or
benefits under any of the following Contracts (each such Contract described
below, a “Material Contract”):
        (i) Employment or consulting Contract, or any employee collective
bargaining agreement or other Contract with any labor union or any employee of
the Company, except for routine non-solicitation, non-competition,
confidentiality and professional service contracts entered into with employees
(so long as such contracts do not contain severance provisions or impose other
material obligations upon the Company or any of its Subsidiaries);
        (ii) Contract not to compete or otherwise materially restricting the
development, marketing, distribution or sale of any products or services by the
Company;
        (iii) Contract containing any “non-solicitation” or “no-hire” provision
that restricts the Company in any material manner;
        (iv) Contract containing any provision that purports to apply to or
restrict the Company from engaging in any line of business;
        (v) Contract between the Company and the Seller or any affiliate of the
Seller;
        (vi) Lease, sublease or similar Contract with any Person not listed on
Exhibit E2;
        (vii) Contract: (A) calling for performance over a period of more than
one year (excluding leases described above); (B) requiring or otherwise
involving payment by or on behalf of, or to the Company of more than $100,000 in
any twelve month period ending after the Closing Date; (C) in which the Company
has granted “most favored nation” pricing provisions or marketing rights
relating to any products or territory; or (D) in which the Company has agreed to
purchase or sell a minimum quantity of goods or services or has agreed to
purchase or sell goods or services exclusively from a certain party;
        (viii) Contract with any governmental authority, except for the
contractual language included in permits with various governmental units and
regulatory agencies;
        (ix) Contract for the disposition of any assets or business of the
Company or any agreement for the acquisition, directly or indirectly, of the
assets or business of any other person;
        (x) Contract for any joint venture or partnership; and
        (xi) Contract under which the Company has borrowed any money from, or
issued any note, bond, debenture or other evidence of, or otherwise creating or
guaranteeing any indebtedness to, any person;
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(s) Each lease listed on Exhibit E2 is a legal, valid and binding agreement,
enforceable in accordance with its terms, and, to the knowledge of Seller there
is no material default (or any condition or event which, after notice or lapse
of time or both, would constitute a material default) thereunder.
(t) Exhibit F contains a true and complete list of all Permits used in the
business of the Company or applied and, individually or in the aggregate with
other such Permits, material to the business or condition of the Company, which
are validly owned or held and each of which is valid, binding and in full force
and effect, and which are not subject to termination as a result of a change in
ownership or control of the Company. Those Permits expire from time to time.
Seller makes no representation or warranty, on its own behalf that any such
Permits can or will be renewed upon expiration.
(u) The Company owns no equipment.
(v) Seller and Company covenant that each shall cause the Company to conduct
business only in the ordinary course consistent with past practice. Without
limiting the generality of the foregoing, Seller and Company will cause the
Company to use commercially reasonable best efforts, to the extent the officers
of the Company believe such action to be in bests interests of the applicable
entity, to (a) preserve intact the present business organization and reputation
of the Company in all material respects, (b) keep available (subject to
dismissals, resignations and retirements in the ordinary course of business) the
services of the key officers and employees of the Company, (c) maintain the
assets and properties of the Company in good working order and condition,
ordinary wear and tear excepted, and (d) maintain the good will of key
customers, suppliers and lenders and other persons with whom the Company
otherwise has significant business relationships
2.2 Buyer. In connection with the transactions contemplated hereby, Buyer hereby
represents, warrants, acknowledges and agrees as follows:
(a) Buyer (i) is a corporation duly organized and validly existing and in good
standing under the laws of Delaware, (ii) has all corporate power and authority
necessary to execute, deliver and perform this Agreement and consummate the
transactions contemplated hereby and (iii) has taken all organizational action
necessary to authorize the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby. This Agreement has
been duly executed and delivered by Buyer and is enforceable against it in
accordance with its terms except for the Enforceability Exceptions. The
execution and delivery of each of the Transaction Documents, the consummation of
the transactions contemplated hereby and thereby and the performance of Buyer’s
obligations hereunder and thereunder will not conflict with, or result in any
violation of or default under, any provision of any charter, by-laws, trust
agreement, operating agreement, partnership agreement, certificate of formation
or other governing instrument applicable to Buyer, any agreement or other
instrument to which Buyer or its properties is a party, or any judgment, decree,
statute, order, rule or regulation applicable to Buyer’s business or properties.
(b) Buyer has not acted or been engaged to act as Seller’s finder, broker,
solicitor, agent or other person acting in a comparable capacity in connection
with the transactions contemplated hereby. Neither Buyer, nor anyone acting on
Buyer’s behalf, has engaged any finder, broker, solicitor, agent or other person
in a comparable capacity in connection with the transactions contemplated
hereby. Neither Buyer, nor anyone acting on its behalf, has received or will
receive any commission or remuneration directly or indirectly in connection with
or in order to solicit or facilitate the transactions contemplated hereby. There
are no contracts, agreements or understandings with Buyer that would give rise
to a valid claim against Buyer or Seller for a commission, finder’s fee or other
like payment in connection with the transactions contemplated hereby.
(c) Buyer understands that the Membership Interests have not been registered
under the Securities Act of 1933, as amended (the “Securities Act”), and
acknowledges that the transactions contemplated hereby are intended to be exempt
from registration by virtue of Rule 506 promulgated under Section 4(a)(2) of the
Securities Act. Buyer is an “accredited investor” as that term is defined in
Rule 501 promulgated under the Securities Act. Seller has not taken or will not
take any action which might subject the offering and sale of the Membership
Interests to the registration requirements of Section 5 of the Securities Act.
Buyer has consulted with legal counsel and knows of no
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reason why such exemption will not be available. Buyer understands that no
federal or state agency has made any finding or determination regarding the
fairness of the Membership Interests for investment, or any recommendation or
endorsement of the Membership Interests.
(d) Buyer is acquiring the Membership Interests for Buyer’s own account, with no
intention of participating, directly or indirectly, in a distribution of the
Membership Interests.
(e) Buyer has sufficient experience in business, financial and investment
matters to be able to evaluate the risks involved in the acquisition of the
Membership Interests and to makes an informed investment decision with respect
to such acquisition. Buyer has conducted its own independent investigation,
review and analysis of the Company and the Lucerne Properties, and acknowledges
that it has been provided adequate access to the personnel, assets, books and
records of Seller for such purpose. Buyer acknowledges and agrees that: (i) in
making its decision to enter into this Agreement and to consummate the
transactions contemplated hereby, Buyer has relied solely upon its own
investigation and the express representations and warranties of Seller set forth
in this Agreement; (ii) neither Seller nor any of its representatives or any
other person has made any representation or warranty as to the Company, the
Lucerne Properties or any other matter, except as expressly set forth in this
Agreement; (iii) except for the express representations and warranties of Seller
set forth in this Agreement, Seller makes no representation or warranty, express
or implied, as to any matter whatsoever relating to the Company, the Lucerne
Properties or any other matter, including as to (A) merchantability or fitness
for any particular use or purpose, (B) any proposed mining or other business or
operations, (C) the likelihood of governmental authority or regulatory approval
of any proposed mining or other business or operations or (D) the probable
success or profitability of any proposed mining or other business or operations;
and (iv) the Lucerne Properties do not contain any proven or probable reserves
and Seller makes no representation or warranty as to the completeness, accuracy,
materiality or validity of any mineral resource estimates or other scientific or
technical information relating to the Lucerne Properties, and that nothing in
this Agreement shall be deemed to be a representation or a warranty by Seller
that any of the Lucerne Properties contain any economically feasible, valuable
or otherwise useful mineral resources or deposits.
(f) Neither Seller nor any of its representatives or Affiliates will have or
will be subject to any liability or obligation to Buyer or any other person
resulting from the distribution to Buyer or any Affiliates or representatives of
Buyer, or its or their use of, any information relating to the Company, the
Lucerne Properties or any other matter, including any technical reports,
descriptive memoranda, summary business descriptions or other information,
documents or material made available, whether orally or in writing, “data
rooms,” management presentations, functional “break-out” discussions, responses
to questions, due diligence reviews, or any other form in expectation of the
transactions contemplated by this Agreement, or otherwise, including during the
negotiations with respect to the transactions contemplated by this Agreement.
(g) Buyer understands that some of the properties owned or leased by Company are
subject to existing NSR royalty agreements, and the properties are subject to
various restrictions imposed by Federal, State, and County permits and
environmental regulations.
(h) Comstock has delivered to or made available for inspection by Buyer all
maps, drill logs and other drilling data, core tests, core samples, pulps,
reports, surveys, assays, analyses, production reports, operations, technical,
scientific and other material or information relating to any of the Properties
("Existing Data") in its possession or control that it reasonably believes to be
material to the transactions contemplated hereby, and true and correct copies of
all leases or other contracts relating to the Properties; to the knowledge of
Seller, the Lucerne Properties do not have any proven or probable reserves, and
Buyer understands that Seller makes no representation or warranty as to the
completeness, accuracy, materiality or validity of any mineral resource
estimates or other scientific or technical information relating to the
Properties, including, without limitation, that described in the Existing Data,
and that nothing in this Agreement shall be deemed to be a representation or a
warranty that any of the Lucerne Properties contain any economically feasible,
valuable or otherwise useful mineral resources or deposits.
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ARTICLE 3
indemnity
3.1 Seller Indemnity. Subject to Section 3.3, Buyer shall indemnify and defend
Seller against, and shall hold Seller harmless from and against, and shall pay
and reimburse Seller for, any and all Losses (as defined below) incurred or
sustained by, or imposed upon, Seller based upon, arising out of, with respect
to or by reason of any inaccuracy in or breach of any of the representations,
warranties covenants or agreements of Buyer contained in this Agreement.
3.2 Buyer Indemnity. Subject to Section 3.3, Seller shall indemnify and defend
Buyer against, and shall hold Buyer harmless from and against, and shall pay and
reimburse Buyer for, any and all Losses (as defined below) incurred or sustained
by, or imposed upon, Buyer based upon, arising out of, with respect to or by
reason of any inaccuracy in or breach of any of the representations, warranties
covenants or agreements of Seller or the Company contained in this Agreement.
Seller shall not be liable to Buyer for any Losses resulting from or relating to
any inaccuracy in or breach of any representation or warranty in this Agreement
if Buyer had knowledge of such inaccuracy or breach before Closing.
3.3 Losses. As used in this Agreement, “Losses” means losses, damages,
liabilities, deficiencies, judgments, interest, awards, penalties, fines, costs
or expenses of whatever kind, including reasonable attorneys’ fees.
Notwithstanding anything to the contrary herein, none of the Parties shall be
required to pay or reimburse Losses in excess of $1,000,000 and none of the
Parties shall be permitted to bring any claim pursuant to Section 3.1 or Section
3.2 of this Agreement after the date that is eighteen (18) months after the
Closing Date.
ARTICLE 4
MISCELLANEOUS
4.1 Amendment. This Agreement may not be amended or modified except by written
instrument signed by all Parties.
4.2 Confidentiality. Except as required by law, or any state or federal rule or
regulation, including, but not limited to, any securities law filings required
by the Parties, no Party shall make or issue a public statement that
specifically names any other Party without such other Party’s prior written
consent.
4.3 Entire Agreement. This Agreement constitutes the entire understanding of the
Parties with respect to the subject matter hereof and supersedes all prior
agreements whether written or otherwise.
4.4 Governing Law; Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of Nevada, without regard to
its principles of conflicts of laws. ALL ACTIONS HEREUNDER MUST BE BROUGHT IN
THE FEDERAL COURTS IN NEVADA WITHOUT REGARD TO ANY PRESENT OR FUTURE DOMICILE OR
PRINCIPAL PLACE OF BUSINESS OF THE PARTIES. BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH PARTY IRREVOCABLY SUBMITS TO THE JURISDICTION OF SUCH COURTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY WITH RESPECT TO SUCH ACTION. THE PARTIES
IRREVOCABLY AGREE THAT VENUE WOULD BE PROPER IN SUCH COURTS, AND HEREBY WAIVE
ANY OBJECTION THAT SUCH COURT IS AN IMPROPER OR INCONVENIENT FORUM FOR THE
RESOLUTION OF SUCH ACTION. THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE THE RIGHT
TO TRIAL BY JURY IN ANY ACTION TO ENFORCE OR INTERPRET THE PROVISIONS OF THIS
AGREEMENT.
4.5 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction, shall as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
4.6 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original but all of which together will
constitute one and the same instrument.
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4.7 Headings. The article and section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
4.8 Delivery by PDF and Facsimile. This Agreement and any amendments hereto, to
the extent signed and delivered by means of portable document format (“PDF”) or
a facsimile machine, shall be treated in all manner and respects as an original
contract and shall be considered to have the same binding legal effects as if it
were the original signed version thereof delivered in person. At the request of
any Party hereto or to any such contract, each other Party hereto or thereto
shall re-execute original forms thereof and deliver them to all other Parties.
No Party hereto or to any such contract shall raise the use of PDF or a
facsimile machine to deliver a signature or the fact that any signature or
contract was transmitted or communicated through the use of PDF or a facsimile
machine as a defense to the formation of a contract and each such Party forever
waives any such defense.
4.9 [Intentionally Omitted]
 4.10 Notices.
All notices shall be in writing to the applicable address set forth below and
shall be given by personal delivery or recognized international overnight
courier. All notices shall be effective and shall be deemed delivered on the
date of delivery if delivered before 5:00 p.m. local destination time on a
business day, otherwise on the next business day after delivery. Each party will
send a copy of their notice by email, as a courtesy, but the notice will not be
valid until delivered in writing. Any notice delivered by email shall only be
deemed to be official notice hereunder if the Party receiving such email
confirms receipt in writing.
 
To the Buyer or the Company:
  
Tonogold Resources, Inc.,
5666 La Jolla Boulevard, #315, La Jolla, CA 92037
Email: mjashley3@gmail.com
To the Seller:  
Comstock Mining Inc.
1200 American Flat Road, PO Box 1118, Virginia City, NV 89440
Email: DeGasperis@comstockmining.com

Each Party may change its address from time to time by notice given in the
manner described above.
4.11 No Assignment. Except as provided below, no Party may assign or delegate
any rights or obligations under this Agreement or any other Transaction Document
without first obtaining the written consent of the other Parties hereto;
provided, however, that Tonogold may assign this Agreement to any successor of
Tonogold (whether by merger, consolidation or amalgamation).
4.12 Attorney's Fees. If either party hereto employs an attorney in connection
with claims against another party arising from the operation of this Agreement,
each party shall individually be responsible for all of its own fees and
expenses incurred. The provisions of this Section shall survive the termination
or the Closing of this Agreement.

[SIGNATURE PAGE FOLLOWS]

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

Tonogold Resources, Inc.By:  /s/ Mark AshleyName:  Mark AshleyTitle:  Chief
Executive Officer

               

COmSTOCK MINING INC.By:  /s/ Corrado De GasperisName:  Corrado De
GasperisTitle:  Executive Chairman and CEO

COmSTOCK MINING LLC, by its manager Comstock Mining Inc.
By:  /s/ Corrado De GasperisName: Corrado De GasperisTitle: Executive Chairman
and CEO

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