Unassociated Document


    EXHIBIT
4.1

    


    NEITHER THE ISSUANCE AND SALE OF THIS NOTE NOR THE SECURITIES INTO WHICH
THIS NOTE IS CONVERTIBLE HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.
 THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
IN THE ABSENCE OF
(I) AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
(II) AN OPINION OF COUNSEL, IN A FORM
REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT.  NOTWITHSTANDING THE FOREGOING, THIS NOTE MAY BE PLEDGED IN CONNECTION WITH A BONA
FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THIS NOTE.  ANY TRANSFEREE OF THIS NOTE
SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE.  THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE AND,
ACCORDINGLY, THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE LESS THAN THE
AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO THIS
NOTE.

     

    TOUCHSTONE MINING
LIMITED

     

    8.25% CONVERTIBLE PROMISSORY NOTE

     

    
      	
              Issuance Date:  May 8, 2009

            	
              Principal Amount: U.S.
      $80,000.00

            


    

     

    FOR VALUE RECEIVED, Touchstone Mining
Limited, a Nevada corporation (the "Company"), hereby promises to pay to MILESTONE ENHANCED
FUND LTD. or registered assigns ("Holder") the amount set out above as the
Original Principal Amount
(as reduced pursuant to the terms hereof pursuant to redemption, conversion or
otherwise, the "Principal") when due, whether upon the Maturity
Date (as defined below), acceleration, redemption or otherwise (in each case in
accordance with the terms
hereof) and to pay interest
at the rate of 8.25% per annum  ("Interest") from the date set out above as the
Issuance Date (the "Issuance
Date") until the same becomes due and payable on
the Maturity
Date.

     

    1.  PAYMENTS OF
PRINCIPAL; MATURITY.  Payment of Principal and Interest due on
this Note is payable no later than November 8, 2010 (the “Maturity
Date”); provided,
however, that each of the
parties hereto may mutually agree to extend the term of this Note beyond the
Maturity Date.

     

    2.  PREPAYMENT.  The Company and the Holder
understand and agree that the principal amount of the Note and any interest
accrued thereon be prepaid by the Company at any time without
penalty.

     

    3.  CONVERSION
OF NOTE.  This Note
shall be convertible into shares of the Company’s common stock (the "Shares"), on the terms and conditions set forth
in this Section 3.

     

    (a)  Conversion
Right.  Subject to the
provisions of Section 3(c)(i) hereof and pursuant to terms to be
mutually agreed upon by the Company and the Holder in writing at a later date, the Holder shall be entitled to
convert any portion of the outstanding and unpaid principal and interest balance due on
the Note in accordance with
Section 3 of this Note into
Shares at a conversion price to be mutually determined by the Company and the Holder (the
“Conversion
Price”).   The Company shall
not issue any fractions of a Share upon any conversion.  If the
issuance would result in the issuance of a fraction of a Share, the Company shall round such fraction
of a Share up to the nearest whole Share.  The Company shall pay any and
all taxes that may be payable with respect to the issuance and delivery of
Shares upon conversion of any conversion amount.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (b)  Mechanics of
Conversion.

     

    (i)  Notice of
Conversion. To convert this Note, the
Holder hereof shall deliver written notice thereof, substantially in the form of
Exhibit A
to this Note, with appropriate insertions (the “Conversion Notice”),
to the Company at its address as set forth herein.  The date upon
which the conversion shall be effective (the “Conversion Date”)
shall be deemed to be the date set forth in the Conversion
Notice.  Except as otherwise provided herein, the Company shall not
have the right to object to the conversion or the calculation of the applicable
conversion price, absent manifest error.  Any conversion of any
portion of the Note to Shares shall be deemed to be a pre-payment of principal,
without any penalty, and shall be credited against any future payments of
principal in the order that such payments become due and payable

     

    (ii)  Disputes.  In the event of a dispute as to the
number of Shares issuable to the Holder in connection
with a conversion of this Note, the Company shall issue to the Holder the number
of Shares not in dispute and resolve such dispute
using good faith efforts with the
Holder.

     

    (c)  Limitations
on Conversions. 

     

    Beneficial
Ownership.
 The Holder of this Note (including any
successor, transferee or assignee) shall not have the right or obligation to convert any portion of
this Note pursuant to
Section 3(b)(i) hereof
to the extent
that, after giving effect to such conversion,
the Holder (together with the Holder's Affiliates) would beneficially own in
excess of 4.99% (as may be
adjusted in the manner described below, the "Maximum
Percentage") of the number of shares of Common Stock
outstanding immediately after giving effect to such conversion.  For
purposes of the foregoing sentence, the number of shares of Common Stock
beneficially owned by the Holder and its Affiliates shall include the number of
shares of Common Stock
issuable upon conversion of this Note with respect to which the determination
of such sentence is being made, but shall exclude the number of shares of Common
Stock which would be issuable upon (A) conversion of the remaining,
nonconverted portion of
this Note beneficially owned by the Holder or any of its
Affiliates and (B) exercise
or conversion of the unexercised or nonconverted portion of any other securities
of the Company (including,
without limitation, any Other Notes or Warrants) subject to a limitation on
conversion or exercise analogous to the limitation contained herein beneficially
owned by the Holder or any
of its Affiliates.
 Except as set forth in the preceding sentence, for purposes of this
Section 3(c), beneficial ownership shall be calculated in accordance
with Section 13(d) of the Securities Exchange Act of 1934, as amended.  For
purposes of this Section 3(c), in determining the number of
outstanding shares of Common Stock, the Holder may rely on the number of
outstanding shares of
Common Stock as reflected in the most recently filed document
among: (x) the Company's
most recent public filing
with the Securities and Exchange Commission containing such information,
(y) a more recent public
announcement by the Company or (z) any other notice by the Company or
the Transfer Agent setting forth the number of shares of Common Stock
outstanding.  For any reason at any time, during regular business hours of
the Company and upon the written request of the Holder, the Company
shall within two (2) Business Days confirm
in writing to the Holder the number of shares of Common Stock then outstanding.
 In any case, the number of outstanding shares of Common Stock shall be
determined after giving effect to the conversion or exercise of securities of the Company, including
this Note, by the Holder or
its Affiliates since the
date as of which such number of outstanding shares of Common Stock was reported.
 By written notice to the Company, the Holder may increase or decrease the
Maximum Percentage to any
other percentage specified in such notice; provided that
(i) any such increase will not be effective until the sixty-first
(61st ) day after such notice is delivered to
the Company, (ii) any such increase or decrease will apply only to the
Holder and not to any other
holder of Notes, and (iii)
such Maximum Percentage shall not, in any event, exceed 19.99%.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    4.  EVENT OF
DEFAULT.  Failure by the Company to
make payment pursuant to Section 1 hereof shall constitute an event of default
(“Event of Default”).  In an Event of Default,
the Holder shall be entitled to all legal remedies available to it to pursue
collections, and the Company shall bear all reasonable costs of collection,
including but not limited to necessary attorneys’ fees.

     

    5.  NO
WAIVER.  No failure or delay by the
Holder in exercising any right, power or privilege under this Note shall operate
as a waiver thereof nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any other right, power or
privilege.  The rights and remedies herein provided shall be
cumulative and not exclusively of any rights or remedies provided by applicable
law.  No course of dealing between the Company and the Holder shall
operate as a waiver of any rights by the Holder.

     

    6.  NOTICES;
PAYMENTS.

     

    (a)  Notices.  Whenever notice is required to
be given under this Note, unless otherwise provided herein, such notice shall be
given in accordance with the Securities Purchase Agreement.  Unless a specific notice
is otherwise required under
this Note, the Company
shall provide the Holder with prompt written notice of all actions taken
pursuant to this Note, including in reasonable detail a description of such
action and the reason therefore.

     

    (b)  Payments.  Except as otherwise provided in this Note,
whenever any payment of
cash is to be made by the Company to the Holder, such payment shall be made in lawful
money of the United States of America by a check drawn on the account of the
Company and sent via overnight courier service to the Holder at such address as previously provided
to the Company in writing (which address shall be set forth in the Securities Purchase Agreement);
provided that the Holder may elect to receive a payment of cash via wire
transfer of immediately
available funds by providing the Company with prior written notice setting out
such request and the Holder's wire transfer instructions.  Whenever any
amount expressed to be due by the terms of this Note is due on any day which is
not a Business Day, the same shall instead be due on the
next succeeding day which
is a Business Day.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    7.  TRANSFER.  The Holder acknowledges and agrees that
this Note may only be
offered, sold, assigned or transferred by the Holder if consented to in writing by the
Company.

     

    8.  CONSTRUCTION;
HEADINGS.  This Note
shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against
any person as the drafter
hereof.  The headings of this Note are for
convenience of reference and shall not form part of, or affect the interpretation of,
this Note.

     

    9.  SEVERABILITY.  In the event that one or
more of the provisions of this Note shall for any reasons be held invalid,
illegal, or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not
affect any other provision of this Note, but this Note shall be construed as if
such invalid, illegal or unenforceable provision had never been contained
herein.

     

    10.  GOVERNING
LAW.  This Note and the rights and
obligations of the Company and the Holder shall be governed by and
construed in accordance with the laws of the State of New York.

     

    


     

    [SIGNATURE PAGE
FOLLOWS]

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    IN WITNESS WHEREOF, the Company has
caused this Note to be duly executed as of the Issuance Date set out
above.

     

    
      	 	 
      
	TOUCHSTONE MINING LIMITED
	 
	By:  	
              /s/ Nanuk
      Warman

            
	 	
              Name:   Nanuk
  Warman

            
	 	
              Title:     Chief Executive
      Officer

            


    

    


    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
A

     

    NOTICE OF
CONVERSION

     

    (To
be executed by the Holder in order to convert the Note)

     

    
      	
              TO:

            	 
      


    

     

    The
undersigned hereby irrevocably elects to convert $ of the principal amount of
the above Note into Shares of Common Stock of Touchstone Mining Limited,
according to the conditions stated therein, as of the Conversion Date written
below.

     

    
      	
              Conversion
      Date:

            	 
      
	 	 
	
              Applicable
      Conversion Price:

            	 
      
	 	 
	
              Signature:

            	 
      
	 	 
	
              Name:

            	 
      
	 	 
	
              Address:

            	 
      
	 	 
	
              Amount
      to be converted:

            	
              $                                                                                     

            
	 	 
	
              Amount
      of Note unconverted:

            	
              $                                                                                     

            
	 	 
	
              Conversion
      Price per Unit:

            	
              $                                                                                     

            
	 	 
	
              Number
      of shares of Common Stock and Warrants to be issued including as payment
      of interest, if applicable:

            	 
      
	 	 
	
              Please
      issue the shares of Common Stock and Warrants in the following name and to
      the following address:

            	 
      
	 	 
	
              Issue
      to the following account of the Holder:

            	 
      
	 	 
	
              Authorized
      Signature:

            	 
      
	 	 
	
              Name:

            	 
      
	 	 
	
              Title:

            	 
      
	 	 
	
              Phone
      Number:

            	 
      
	 	 
	
              Broker
      DTC Participant Code:

            	 
      
	 	 
	
              Account
      Number:

            	 
      


    

     

    
      
        
        

      

      
        6