Document:

Warrant to Trident Growth Fund, L.P.

    
      

      

    

    Exhibit
      10.6

    
 

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

     

    
      	
              COMMON
                STOCK PURCHASE WARRANT

            	
              NO.
                2

            

    

     

    To
      Purchase Shares of Common Stock of

     

    ZONE
      MINING LIMITED

     

    This
      COMMON STOCK PURCHASE WARRANT (this “Warrant”)
      certifies that, for value received, TRIDENT GROWTH FUND, L.P., a Delaware
      limited partnership having an address at 700 Gemini, Houston, TX 77058 (the
      “Holder”),
      is
      entitled, upon the terms and subject to the limitations on exercise and the
      conditions hereinafter set forth, at any time on or after the date hereof,
      October 20, 2006 (the “Initial
      Exercise Date”),
      and
      on or prior to the close of business on the fifth anniversary of the Initial
      Exercise Date (the “Termination
      Date”),
      to
      subscribe for and purchase from ZONE MINING LIMITED, a Nevada corporation (the
      “Company”),
      one
      hundred thousand (100,000) shares of common stock, par value $.00001 per share
      of the Company (the “Common
      Stock”),
      subject to adjustment herein (the “Warrant
      Shares”)
      as
      provided below. 

     

    The
      purchase price of one share of Common Stock under this Warrant shall be equal
      to
      the Exercise Price, as defined in Section 1(b), as adjusted.

     

    
      	 	
              Section
                1.

            	
              Exercise.

            

    

     

    a)  Exercise
      of Warrant.
      Exercise of the purchase rights represented by this Warrant may be made at
      any
      time or times on or after the Initial Exercise Date and on or before the
      Termination Date (each, an “Exercise
      Date”)
      by
      delivery to the Company of a duly executed facsimile copy of the Notice of
      Exercise Form annexed hereto (or such other office or agency of the Company
      as
      it may designate by notice in writing to the registered Holder at the address
      of
      such Holder appearing on the books of the Company); provided,
      however,
      within
      five Business Days of the date said Notice of Exercise is delivered to the
      Company, the Holder shall have surrendered this Warrant to the Company and
      the
      Company shall have received payment of the aggregate Exercise Price of the
      shares thereby purchased by wire transfer or cashier’s check drawn on a United
      States bank.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    b)  Exercise
      Price.
      The
Exercise
      Price
      (so
      called herein) of each share of Common Stock under this Warrant shall be equal
      to the lesser of:

     

    
      	 	
              (i)

            	
              100%
                of
                the average price per share of the Common Stock and Common Stock
                Equivalents sold to any Person in the Qualifying Transaction to be
                consummated following the Initial Exercise Date (determined by dividing
                the total number of shares of Common Stock issued plus shares issuable
                under Common Stock Equivalents in such Qualifying Transaction, by
                the
                aggregate consideration received by the Company plus all consideration
                to
                be received upon exercise or conversion of all Common Stock
                Equivalents issued in such Qualifying Transaction);
                or

            

    

     

    
      	 	
              (ii)

            	
              $1.25
                per share.

            

    

     

    The
      term
“Common
      Stock Equivalents”
means
      any securities of the Company which would entitle the holder thereof to acquire
      at any time Common Stock, including without limitation, any debt, preferred
      stock, rights, options, warrants or other instrument that is at any time
      convertible into or exchangeable for, or otherwise entitles the holder thereof
      to receive, Common Stock. The term “Qualifying
      Transaction”
shall
      mean an equity financing wherein the Company receives gross proceeds equal
      to at
      least $1,000,000 from the sale of Common Stock or Common Stock
      Equivalents.

     

    c)  Cashless
      Exercise.
      If at
      any time after one year from the date of issuance of this Warrant there is
      no
      effective Registration Statement registering the resale of the Warrant Shares
      by
      the Holder, then this Warrant may also be exercised at such time by means of
      a
“cashless exercise” in which the Holder shall be entitled to receive a
      certificate for the number of Warrant Shares equal to the quotient obtained
      by
      dividing [(A-B) (X)] by (A), where:

    
       

      (A)  
        =    the price of said Common Stock determined by reference
        to the last reported sale price for the Common Stock on such day on the
        principal securities exchange on which the Common Stock is listed or admitted
        to
        trading or if no such sale takes place on such date, the average of the closing
        bid and asked prices thereof as officially reported, or, if not so listed
        or
        admitted to trading on any securities exchange, the last sale price for the
        Common Stock on the National Association of Securities Dealers national market
        system on such date, or, if there shall have been no trading on such date
        or if
        the Common Stock shall not be listed on such system, the average of the closing
        bid and asked prices in the over-the-counter market as furnished by any NASD
        member firm selected from time to time by the Company for such purpose or,
        if
        the Common Stock is not traded, then such price as is reasonably determined
        by
        the Company’s Board of Directors (the “Market
        Value”);

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      

      (B)  
         =    the Exercise Price of this Warrant, as adjusted;
        and 

      

      (X)  
        =    the number of Warrant Shares issuable upon exercise of
        this Warrant in accordance with the terms of this Warrant by means of a cash
        exercise rather than a cashless exercise.

       

    

    Notwithstanding
      anything herein to the contrary, on the Termination Date, this Warrant shall
      be
      automatically exercised via cashless exercise pursuant to this Section
      1(c).

    

    d)  Exercise
      Limitations.
      The
      Holder shall not have the right to exercise any portion of this Warrant,
      pursuant to Section 1 or otherwise, to the extent that after giving effect
      to
      such issuance after exercise, the Holder (together with the Holder’s
      affiliates), as set forth on the applicable Notice of Exercise, would
      beneficially own in excess of 4.99% (or as applicable, 9.99%) of the number
      of
      shares of the Common Stock outstanding immediately after giving effect to such
      issuance.  For purposes of the foregoing determination, 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 such exercise of
      this
      Warrant less the number of shares of Common Stock which would be issuable upon
      (A) exercise of the remaining, nonexercised portion of this Warrant and (B)
      exercise or conversion of the unexercised or unconverted portion of any other
      Securities (including, without limitation, any other Debentures or Warrants)
      subject to a limitation on conversion or exercise analogous to the limitation
      contained herein beneficially owned by the Holder.  Except as set forth in
      the preceding sentence, for purposes of this Section 1(d), beneficial ownership
      shall be calculated in accordance with Section 13(d) of the Exchange Act. To
      the
      extent that the limitation contained in this Section 1(d) applies, the
      determination of whether this Warrant is exercisable (in relation to other
      securities owned by the Holder) and of which a portion of this Warrant is
      exercisable shall be in the sole discretion of such Holder. For purposes of
      this
      Section 1(d), in determining the number of outstanding shares of Common Stock,
      the Holder may rely on the number of outstanding shares of Common Stock as
      reflected in (x) the most recent annual or quarterly report of Form 10-KSB
      or
      10-QSB filed with the Securities and Exchange Commission (the “Commission”);
      or
      (y) any other notice by the Company or the Company’s transfer agent setting
      forth the number of shares of Common Stock outstanding.  Upon the written
      or oral request of the Holder, the Company shall within five Business Days
      confirm orally and in writing to the Holder the number of shares of Common
      Stock
      then outstanding.  The provisions of this Section 1(d) may be waived by the
      Holder upon, at the election of the Holder, not less than 61 days’ prior notice
      to the Company, and the provisions of this Section 1(d) shall continue to apply
      until such 61st day (or such later date, as determined by the Holder, as may
      be
      specified in such notice of waiver).

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    e)  Mechanics
      of Exercise.
      

     

    i.  Authorization
      of Warrant Shares.
      The
      Company covenants that all Warrant Shares which may be issued upon the exercise
      of the purchase rights represented by this Warrant will, upon exercise of the
      purchase rights represented by this Warrant, be duly authorized, validly issued,
      fully paid and nonassessable and free from all taxes, liens and charges in
      respect of the issuance thereof (other than taxes in respect of any transfer
      occurring contemporaneously with such issuance). The Company covenants that
      during the period the Warrant is outstanding, it will reserve from its
      authorized and unissued Common Stock a sufficient number of shares to provide
      for the issuance of the Warrant Shares upon the exercise of any purchase rights
      under this Warrant. The Company further covenants that its issuance of this
      Warrant shall constitute full authority to its officers who are charged with
      the
      duty of executing stock certificates to execute and issue the necessary
      certificates for the Warrant Shares upon the exercise of the purchase rights
      under this Warrant. The Company will take all such reasonable action as may
      be
      necessary to assure that such Warrant Shares may be issued as provided herein
      without violation of any applicable law or regulation, or of any requirements
      of
      the trading market upon which the Common Stock may be listed.

     

    ii.  Delivery
      of Certificates Upon Exercise.
      To the
      extent permitted by applicable federal securities laws, certificates for shares
      purchased hereunder shall be transmitted by the transfer agent of the Company
      to
      the Holder by crediting the account of the Holder’s prime broker with the
      Depository Trust Company through its Deposit Withdrawal Agent Commission
      (“DWAC”)
      system
      if the Company is a participant in such system and if the certificates may
      be
      issued without a restrictive legend in accordance with applicable federal
      securities laws, and otherwise by physical delivery to the address specified
      by
      the Holder in the Notice of Exercise within five (5) Business Days from the
      delivery to the Company of the Notice of Exercise Form, surrender of this
      Warrant and payment of the aggregate Exercise Price as set forth above
      (“Warrant
      Share Delivery Date”).
      This
      Warrant shall be deemed to have been exercised on the date the Exercise Price
      is
      received by the Company. The Warrant Shares shall be deemed to have been issued,
      and Holder or any other person so designated to be named therein shall be deemed
      to have become a holder of record of such shares for all purposes, as of the
      date the Warrant has been exercised by payment to the Company of the Exercise
      Price and all taxes required to be paid by the Holder, if any, pursuant to
      Section 1(d)(vii) prior to the issuance of such shares, have been paid.

     

    
      
        
        

      

      
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    iii.  Delivery
      of New Warrants Upon Exercise.
      If this
      Warrant shall have been exercised in part, the Company shall, at the time of
      delivery of the certificate or certificates representing Warrant Shares, deliver
      to Holder a new Warrant evidencing the rights of Holder to purchase the
      unpurchased Warrant Shares called for by this Warrant, which new Warrant shall
      in all other respects be identical with this Warrant.

     

    iv.  Rescission
      Rights.
      If the
      Company fails to cause its transfer agent to transmit to the Holder a
      certificate or certificates representing the Warrant Shares pursuant to this
      Section 1(d)(iv) by the Warrant Share Delivery Date, then the Holder will have
      the right to rescind such exercise.

     

    v.  Failure
      to Timely Deliver Certificates Upon Exercise.
      In
      addition to any other rights available to the Holder, if the Company or the
      Company’s transfer agent fails to cause delivery to the Holder of a certificate
      or certificates representing the Warrant Shares or if the Company or its
      transfer agent fails to deliver such certificates without the restrictive legend
      (if applicable) on or before the Warrant Share Delivery Date, the Company shall
      pay to Holder, in cash, as partial liquidated damages and not as a penalty,
      the
      greater of (i) $500 for each Business Day after the Warrant Share Delivery
      Date
      until such certificate is delivered with an appropriate legend or without a
      restrictive legend, as the case may be; and (ii) the difference in the Market
      Value of the Warrant Shares on the Warrant Share Delivery Date and the date
      such
      shares are actually received by the Holder. Nothing herein shall limit Holder’s
      right to pursue all equitable remedies for the Company’s failure to deliver
      certificates representing any Securities as required herein, including, without
      limitation, a decree of specific performance and/or injunctive relief.

     

    vi.  No
      Fractional Shares or Scrip.
      No
      fractional shares or scrip representing fractional shares shall be issued upon
      the exercise of this Warrant. As to any fraction of a share which Holder would
      otherwise be entitled to purchase upon such exercise, the Company shall round
      such fractional share up to the next whole number. 

     

    vii.  Charges,
      Taxes and Expenses.
      Issuance of certificates for Warrant Shares shall be made without charge to
      the
      Holder for any issue or transfer tax or other incidental expense in respect
      of
      the issuance of such certificate, all of which taxes and expenses shall be
      paid
      by the Company, and such certificates shall be issued in the name of the Holder
      or in such name or names as may be directed by the Holder; provided,
      however,
      that in
      the event certificates for Warrant Shares are to be issued in a name other
      than
      the name of the Holder, this Warrant when surrendered for exercise shall be
      accompanied by the Assignment Form attached hereto duly executed by the Holder;
      and the Company may require, as a condition thereto, the payment of a sum
      sufficient to reimburse it for any transfer tax incidental thereto.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    viii.  Closing
      of Books.
      The
      Company will not close its stockholder books or records in any manner which
      prevents the timely exercise of this Warrant, pursuant to the terms
      hereof.

     

    
      	 	
              Section
                2.

            	
              Certain
                Adjustments.

            

    

     

    a)  Stock
      Dividends and Splits.
      If the
      Company, at any time while this Warrant is outstanding: (A) pays a stock
      dividend or otherwise make a distribution or distributions on shares of its
      Common Stock or any other equity or equity equivalent securities payable in
      shares of Common Stock, (B) subdivides outstanding shares of Common Stock into
      a
      larger number of shares, (C) combines (including by way of reverse stock split)
      outstanding shares of Common Stock into a smaller number of shares, or (D)
      issues by reclassification of shares of the Common Stock any shares of capital
      stock of the Company, then in each case the Exercise Price shall be multiplied
      by a fraction of which the numerator shall be the number of shares of Common
      Stock (excluding treasury shares, if any) outstanding before such event and
      of
      which the denominator shall be the number of shares of Common Stock outstanding
      after such event and the number of shares issuable upon exercise of this Warrant
      shall be proportionately adjusted. Any adjustment made pursuant to this Section
      2(a) shall become effective immediately after the record date for the
      determination of stockholders entitled to receive such dividend or distribution
      and shall become effective immediately after the effective date in the case
      of a
      subdivision, combination or re-classification.

     

    b)  Pro
      Rata Distributions.
      If the
      Company, at any time prior to the Termination Date, shall distribute to all
      holders of Common Stock (and not to Holders of the Warrants) evidences of its
      indebtedness or assets or rights or warrants to subscribe for or purchase any
      security other than the Common Stock, then in each such case the Exercise Price
      shall be adjusted by multiplying the Exercise Price in effect immediately prior
      to the record date fixed for determination of stockholders entitled to receive
      such distribution by a fraction of which the denominator shall be the closing
      bid price of the Common Stock on the then principal trading market determined
      as
      of the record date mentioned above (if the closing bid price of the Common
      Stock
      on the then principal trading market shall then be determinable and otherwise
      the fair market value per share as determined by the Board of Directors in
      good
      faith, and of which the numerator shall be such closing bid price of the Common
      Stock on the then principal trading market on such record date less the then
      per
      share fair market value at such record date of the portion of such assets or
      evidence of indebtedness so distributed applicable to one outstanding share
      of
      the Common Stock as determined by the Board of Directors in good faith. In
      either case the adjustments shall be described in a statement provided to the
      Holders of the portion of assets or evidences of indebtedness so distributed
      or
      such subscription rights applicable to one share of Common Stock. Such
      adjustment shall be made whenever any such distribution is made and shall become
      effective immediately after the record date mentioned above.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    c)  Fundamental
      Transaction.
      If, at
      any time while this Warrant is outstanding, (A) the Company effects any merger
      or consolidation of the Company with or into another Person, (B) the Company
      effects any sale of all or substantially all of its assets in one or a series
      of
      related transactions, (C) any tender offer or exchange offer (whether by the
      Company or another Person) is completed pursuant to which holders of Common
      Stock are permitted to tender or exchange their shares for other securities,
      cash or property, or (D) the Company effects any reclassification of the Common
      Stock or any compulsory share exchange pursuant to which the Common Stock is
      effectively converted into or exchanged for other securities, cash or property
      (“Fundamental
      Transaction”),
      then,
      upon any subsequent conversion of this Warrant, the Holder shall have the right
      to receive, for each Warrant Share that would have been issuable upon such
      exercise absent such Fundamental Transaction (a) upon exercise of this Warrant,
      the number of shares of Common Stock of the successor or acquiring corporation
      or of the Company, if it is the surviving corporation, and Alternate
      Consideration receivable upon or as a result of such reorganization,
      reclassification, merger, consolidation or disposition of assets by a Holder
      of
      the number of shares of Common Stock for which this Warrant is exercisable
      immediately prior to such event or (b) if the Company is acquired in an all
      cash
      transaction, cash equal to the value of this Warrant as determined by the
      difference between the applicable Exercise Price and the amount of cash paid
      per
      share to the shareholders of the Company (the “Alternate
      Consideration”).
      For
      purposes of any such exercise, the determination of the Exercise Price shall
      be
      appropriately adjusted to apply to such Alternate Consideration based on the
      amount of Alternate Consideration issuable in respect of one share of Common
      Stock in such Fundamental Transaction, and the Company shall apportion the
      Exercise Price among the Alternate Consideration in a reasonable manner
      reflecting the relative value of any different components of the Alternate
      Consideration. If holders of Common Stock are given any choice as to the
      securities, cash or property to be received in a Fundamental Transaction, then
      the Holder shall be given the same choice as to the Alternate Consideration
      it
      receives upon any exercise of this Warrant following such Fundamental
      Transaction. To the extent necessary to effectuate the foregoing provisions,
      any
      successor to the Company or surviving entity in such Fundamental Transaction
      shall issue to the Holder a new warrant consistent with the foregoing provisions
      and evidencing the Holder’s right to exercise such warrant into Alternate
      Consideration. The terms of any agreement pursuant to which a Fundamental
      Transaction is effected shall include terms requiring any such successor or
      surviving entity to comply with the provisions of this Section 2(d) and insuring
      that this Warrant (or any such replacement security) will be similarly adjusted
      upon any subsequent transaction analogous to a Fundamental
      Transaction.

     

    d)  Calculations.
      All
      calculations under this Section 2 shall be made to the nearest cent or the
      nearest 1/100th of a share, as the case may be. The number of shares of Common
      Stock outstanding at any given time shall not includes shares of Common Stock
      owned or held by or for the account of the Company, and the description of
      any
      such shares of Common Stock shall be considered on issue or sale of Common
      Stock. For purposes of this Section 2, the number of shares of Common Stock
      deemed to be issued and outstanding as of a given date shall be the sum of
      the
      number of shares of Common Stock (excluding treasury shares, if any) issued
      and
      outstanding.

     

    e)  Voluntary
      Adjustment By Company.
      The
      Company may at any time during the term of this Warrant reduce the then current
      Exercise Price to any amount and for any period of time deemed appropriate
      by
      the Board of Directors of the Company.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    f)  Intentionally
      Omitted.

     

    g)  Notice
      to Holders.

     

    i.  Adjustment
      to Exercise Price.
      Whenever the Exercise Price is adjusted pursuant to this Section 2, the Company
      shall promptly mail to each Holder a notice setting forth the Exercise Price
      after such adjustment and setting forth a brief statement of the facts requiring
      such adjustment. 

     

    ii.  Notice
      to Allow Exercise by Holder.
      If (A)
      the Company shall declare a dividend (or any other distribution) on the Common
      Stock; (B) the Company shall declare a special nonrecurring cash dividend on
      or
      a redemption of the Common Stock; (C) the Company shall authorize the granting
      to all holders of the Common Stock rights or warrants to subscribe for or
      purchase any shares of capital stock of any class or of any rights; (D) the
      approval of any stockholders of the Company shall be required in connection
      with
      any reclassification of the Common Stock, any consolidation or merger to which
      the Company is a party, any sale or transfer of all or substantially all of
      the
      assets of the Company, of any compulsory share exchange whereby the Common
      Stock
      is converted into other securities, cash or property; (E) the Company shall
      authorize the voluntary or involuntary dissolution, liquidation or winding
      up of
      the affairs of the Company; then, in each case, the Company shall cause to
      be
      mailed to the Holder at its last address as it shall appear upon the Warrant
      Register of the Company, at least 20 calendar days prior to the applicable
      record or effective date hereinafter specified, a notice stating (x) the date
      on
      which a record is to be taken for the purpose of such dividend, distribution,
      redemption, rights or warrants, or if a record is not to be taken, the date
      as
      of which the holders of the Common Stock of record to be entitled to such
      dividend, distributions, redemption, rights or warrants are to be determined
      or
      (y) the date on which such reclassification, consolidation, merger, sale,
      transfer or share exchange is expected to become effective or close, and the
      date as of which it is expected that holders of the Common Stock of record
      shall
      be entitled to exchange their shares of the Common Stock for securities, cash
      or
      other property deliverable upon such reclassification, consolidation, merger,
      sale, transfer or share exchange; provided,
      however
      that the
      failure to mail such notice or any defect therein or in the mailing thereof
      shall not affect the validity of the corporate action required to be specified
      in such notice. The Holder is entitled to exercise this Warrant during the
      20-day period commencing the date of such notice to the effective date of the
      event triggering such notice.

     

    
      	 	
              Section
                3.

            	
              Transfer
                of Warrant.

            

    

     

    a)  Transferability.
      Subject
      to compliance with any applicable securities laws and the conditions set forth
      in Section 3(d) hereof, this Warrant and all rights hereunder are transferable,
      in whole or in part, upon surrender of this Warrant at the principal office
      of
      the Company, together with a written assignment of this Warrant substantially
      in
      the form attached hereto duly executed by the Holder or its agent or attorney
      and funds sufficient to pay any transfer taxes payable upon the making of such
      transfer. Upon such surrender and, if required, such payment, the Company shall
      execute and deliver a new Warrant or Warrants in the name of the assignee or
      assignees and in the denomination or denominations specified in such instrument
      of assignment, and shall issue to the assignor a new Warrant evidencing the
      portion of this Warrant not so assigned, and this Warrant shall promptly be
      cancelled. A Warrant, if properly assigned, may be exercised by a new holder
      for
      the purchase of Warrant Shares without having a new Warrant issued.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    b)  New
      Warrants.
      This
      Warrant may be divided or combined with other Warrants upon presentation hereof
      at the aforesaid office of the Company, together with a written notice
      specifying the names and denominations in which new Warrants are to be issued,
      signed by the Holder or its agent or attorney. Subject to compliance with
      Section 3(a), as to any transfer which may be involved in such division or
      combination, the Company shall execute and deliver a new Warrant or Warrants
      in
      exchange for the Warrant or Warrants to be divided or combined in accordance
      with such notice.

     

    c)  Warrant
      Register.
      The
      Company shall register this Warrant, upon records to be maintained by the
      Company for that purpose (the “Warrant
      Register”),
      in
      the name of the record Holder hereof from time to time. The Company may deem
      and
      treat the registered Holder of this Warrant as the absolute owner hereof for
      the
      purpose of any exercise hereof or any distribution to the Holder, and for all
      other purposes, absent actual notice to the contrary.

     

    d)  Transfer
      Restrictions.
      If,
      at the
time
      of
      the surrender of this Warrant in connection with any transfer of this Warrant,
      the transfer of this Warrant shall not be registered pursuant to an effective
      registration
      statement under the Securities Act
      and
under
      applicable state securities or blue sky laws, the Company may require, as a
      condition of allowing such transfer (i) that the Holder or transferee of this
      Warrant, as the case may be, furnish to the Company a written opinion of counsel
      (which opinion shall be in form, substance and scope customary for opinions
      of
      counsel in comparable transactions) to the effect that such transfer may be
      made
      without
      registration under
      the
      Securities Act and under applicable state securities or blue sky laws, (ii)
      that
      the holder or transferee execute and deliver to the Company an investment letter
      in form and substance acceptable to the Company and (iii) that the transferee
      be
      an “accredited
      investor” as defined in Rule 501(a) of Regulation D promulgated under the
      Securities Act or a qualified institutional buyer as defined in Rule 144A(a)
      under the Securities Act.

     

    
      	 	
              Section
                4.

            	
              Covenants.
                [Intentionally deleted].

            

    

     

    
      	 	
              Section
                5.

            	
              Registration
                Rights.

            

    

     

    
      	 	
              (a)

            	
              Piggyback
                Registrations.
                

            

    

    

    A.    At
      any time
      after the Closing Date, if the Company proposes to register any Common Stock
      for
      sale solely for cash, either for its own account or for the account of a
      stockholder or stockholders (a “Company
      Registration”),
      then
      the Company shall give the Holder written notice of its intention to do so
      and
      of the intended method of sale (the “Registration
      Notice”)
      not
      fewer than 30 days prior to the anticipated filing date of the Registration
      Statement effecting such Company Registration. The Holder may request inclusion
      of any Warrant Shares in such Company Registration by delivering to the Company,
      within 20 days after receipt of the Registration Notice, a written notice (the
      “Piggyback
      Notice”)
      stating the number of shares of Warrant Shares proposed to be included and
      that
      such shares are to be included in any underwriting only on the same terms and
      conditions as the shares of Common Stock otherwise being sold through
      underwriters under such Company Registration. The Company shall use its best
      efforts to cause all Warrant Shares specified in the Piggyback Notice to be
      included in the Company Registration and any related offering, all to the extent
      requisite to permit the sale by the Holder of such Warrant Shares in accordance
      with the method of sale applicable to the other shares of Common Stock included
      in the Company Registration. If the Company fails to file the Warrant Shares
      in
      such Registration Statement, then, at the option of the Holder, for each full
      day that the Warrant Shares are not fully registered, Company shall pay the
      Holder, as partial liquidated damages and not as a penalty, the sum of $1,000
      per day until the shares are registered (not to exceed $150,000 under any
      circumstances).

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    

    B.    The
      Company’s obligation to include Warrant Shares in a Company Registration
      pursuant to this Section 5(a) shall be subject to the following
      limitations:

     

     (i)    The
      Company shall not be obligated to include any Warrant Shares in a registration
      statement (I) filed on Form S-4 or Form S-8 or such other similar successor
      forms then in effect under the Securities Act, (II) pursuant to which the
      Company is offering to exchange its own securities, or (III) relating to
      dividend reinvestment plans.

    

     (ii)    If
      the
      managing underwriter(s), if any, of an offering related to the Company
      Registration determines in its reasonable judgment that marketing factors
      require a limitation of the number of shares of Common Stock that can be
      included in such offering, the managing underwriter(s) may exclude the
      appropriate number of shares of Common Stock held by the stockholders of the
      Company, including Holder, from such registration. If the managing
      underwriter(s) determine(s) to exclude from such offering any Warrant Shares
      that the Holder desires to include or any shares of Common Stock that other
      Company stockholders with applicable registration rights desire to include,
      the
      Holder and such other Company stockholders (except for such Person or Persons,
      if any, upon whose demand such Company Registration is being made) shall share
      pro rata in the portion of such offering available to them (the “Available
      Portion”),
      with
      the Holder and each such other Company stockholder entitled to include in such
      Company Registration and related offering a number of shares of Common Stock
      equal to the product of (I) the Available Portion and (II) a fraction, the
      numerator of which is the total number of Warrant Shares which the Holder
      desires to include in such Company Registration (in the case of the Holder)
      or
      the total number of shares of Common Stock which such other Company stockholder
      desires to include in such Company Registration (in the case of each such other
      Company stockholder) and the denominator of which is (x) the total of the number
      of Warrant Shares which the Holder desires to include in such Company
      Registration plus (y) the total number of shares of Common Stock that such
      other
      Company stockholders desire to include in such Company
      Registration.

    

    C.    Notwithstanding
      anything contained herein to the contrary, the Holder agrees as
      follows:

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (i)    At
      any
      time when a Registration Statement is effective, upon written notice from
      the Company to the Holder that the Company has determined in good faith that
      the
      sale of restricted stock pursuant to the Registration Statement would require
      disclosure of non-public material information, the Holder shall suspend sales
      of
      restricted stock pursuant to such Registration Statement until such time as
      the
      Company notifies the Holder that such material information has been disclosed
      to
      the public or has ceased to be material, or that sales pursuant to such
      Registration Statement may otherwise be resumed; provided, however, such
      restrictions shall not exceed (a) an aggregate of ninety (90) days in any year,
      (b) nor more than sixty (60) days during any single period of
      suspension.

     

    (ii)    Notwithstanding
      any other provision of this Warrant, in the event that the Company undertakes
      a
      primary offering of shares of its unissued Common Stock, which may also include
      other securities, excluding a primary offering related to an employee benefit
      plan (a “Primary
      Offering”),
      in
      which all of the shares of restricted stock are not included, the Holder shall
      not sell, transfer, make any short sale of, grant any option for the purchase
      of, or enter into any hedging or similar transaction with the same economic
      effect as a sale of, any Common Stock (or other securities) of the Company
      held
      by the Holder (except for shares included in the Primary Offering), during
      the
      thirty (30) days prior to the commencement of any such Primary Offering and
      ending ninety (90) days after completion of any such Primary Offering, unless
      the Company, in the case of a non-underwritten Primary Offering, or the managing
      underwriter, in the case of an underwritten Primary Offering, otherwise agrees
      in writing. The Company may impose stop-transfer instructions with respect
      to
      the shares of Common Stock (or other securities) subject to the foregoing
      restriction until the end of said ninety (90) day period. 

    
       

      
        	 	
                (b)

              	
                 Provisions
                  Applying to All Registrations Under Section 5.

              

      

       

    

    (i)    Selection
      of Underwriter.
      Any
      Company Registration and related offering shall be managed by the Company;
      the
      Company shall have the power to select the managing underwriter(s) for such
      offering, and shall in consultation with the managing underwriter(s) have the
      power to determine the offering price, the underwriting discounts and
      commissions, the terms of the underwriting agreement and, the timing of the
      registration and related offering. To the extent that the Holder participates
      in
      a Company Registration and related offering, the Holder shall enter into, and
      sell its Warrant Shares only pursuant to, the underwriting arranged by the
      Company, and shall either commit to attend the closing of the offering and
      take
      such other actions as may be reasonably necessary to effect the Holder’s
      participation in the offering and to provide any assurances reasonably requested
      by the Company and the managing underwriter(s) in that regard, or shall deliver
      to the Company in custody certificates representing all Warrant Shares to be
      included in the registration and shall execute and deliver to the Company a
      custody agreement and a power of attorney, each in form and substance
      appropriate for the purpose of effecting the Holder’s participation in the
      Company Registration and related offering and otherwise reasonably satisfactory
      to the Company. If the Holder disapproves of the features of the Company
      Registration and related offering, the Holder may withdraw therefrom (in whole
      or part) by written notice to the Company and the managing underwriter(s)
      delivered no later than ten days prior to the effectiveness of the applicable
      registration statement and the Warrant Shares of the Holder shall thereupon
      be
      withdrawn from such registration.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    

    (ii)    The
      Company shall furnish the Holder such number of copies of a prospectus,
      including a preliminary prospectus, in conformity with the requirements of
      the
      Securities Act, and such other documents as they may reasonably request in
      order
      to facilitate the disposition of the Warrant Shares owned by it that are
      included in such registration;

     

    (iii)    Whenever
      required to include Warrant Shares in any registration or to effect the
      registration of any Warrant Shares pursuant to this Warrant, the Company shall,
      as expeditiously as reasonably possible, prepare and file with the Commission
      a
      registration statement with respect to such Warrant Shares and use all
      commercially reasonable efforts to cause such registration statement to become
      effective, and use all commercially reasonable efforts to keep such registration
      statement effective until the earliest of (a) the date as of which all such
      Warrant Shares have been distributed by the Holder, (b) the date as of which
      all
      of the Warrant Shares covered by such registration statement may be sold without
      restriction pursuant to Rule 144(k)(or any successor thereto) promulgated by
      the
      Commission under the Securities Act, and (c) two years after the Exercise Date.
      In addition, the Company shall use all commercially reasonable efforts to
      register and qualify the securities covered by such registration statement
      under
      such other securities or Blue Sky laws of such jurisdictions as shall be
      reasonably requested by the Holder, provided that the Company shall not be
      required in connection therewith or as a condition thereto to qualify as a
      broker-dealer in any states or jurisdictions or to do business or to file a
      general consent to service of process in any of such states or
      jurisdictions.

     

    (iv)    All
      expenses, other than underwriting discounts and commissions incurred in
      connection the registrations contemplated herein, including, without limitation,
      all registration, filing and qualification fees, printers’ and accounting fees,
      fees and disbursements of counsel for the Company, and the reasonable fees
      and
      disbursements of one counsel for each selling the Holder, shall be borne by
      the
      Company.

     

        (c)     
      Subject
      to the terms and conditions of this Warrant, the right to cause the Company
      to
      register Warrant Shares pursuant to this Warrant may be assigned by the Holder
      to any transferee or assignee of such securities; provided that said transferee
      or assignee is a transferee or assignee of at least five percent (5%) of the
      such Holder’s Warrant Shares.

     

    
      	 	
              Section
                6.

            	
              Miscellaneous.
                

            

    

     

    a)  Title
      to Warrant.
      Prior
      to the Termination Date and subject to compliance with applicable laws and
      Section 3 of this Warrant, this Warrant and all rights hereunder are
      transferable, in whole or in part, at the office or agency of the Company by
      the
      Holder in person or by duly authorized attorney, upon surrender of this Warrant
      together with the Assignment Form annexed hereto properly endorsed. The
      transferee shall sign an investment letter in form and substance reasonably
      satisfactory to the Company.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    b)  No
      Rights as Shareholder Until Exercise.
      This
      Warrant does not entitle the Holder to any voting rights or other rights as
      a
      shareholder of the Company prior to the exercise hereof. Upon the surrender
      of
      this Warrant and the payment of the aggregate Exercise Price (or by means of
      a
      cashless exercise), the Warrant Shares so purchased shall be and be deemed
      to be
      issued to such Holder as the record owner of such shares as of the close of
      business on the later of the date of such surrender or payment.

     

    c)  Loss,
      Theft, Destruction or Mutilation of Warrant.
      The
      Company covenants that upon receipt by the Company of evidence reasonably
      satisfactory to it of the loss, theft, destruction or mutilation of this Warrant
      or any stock certificate relating to the Warrant Shares, and in case of loss,
      theft or destruction, of indemnity or security reasonably satisfactory to it
      (which, in the case of the Warrant, shall not include the posting of any bond),
      and upon surrender and cancellation of such Warrant or stock certificate, if
      mutilated, the Company will make and deliver a new Warrant or stock certificate
      of like tenor and dated as of such cancellation, in lieu of such Warrant or
      stock certificate.

     

    d)  Saturdays,
      Sundays, Holidays, etc.
      If the
      last or appointed day for the taking of any action or the expiration of any
      right required or granted herein shall be a Saturday, Sunday or a legal holiday,
      then such action may be taken or such right may be exercised on the next
      succeeding day not a Saturday, Sunday or legal holiday.

     

    e)  Authorized
      Shares.

     

    The
      Company covenants that during the period the Warrant is outstanding, it will
      reserve from its authorized and unissued Common Stock a sufficient number of
      shares to provide for the issuance of the Warrant Shares upon the exercise
      of
      any purchase rights under this Warrant. The Company further covenants that
      its
      issuance of this Warrant shall constitute full authority to its officers who
      are
      charged with the duty of executing stock certificates to execute and issue
      the
      necessary certificates for the Warrant Shares upon the exercise of the purchase
      rights under this Warrant. The Company will take all such reasonable action
      as
      may be necessary to assure that such Warrant Shares may be issued as provided
      herein without violation of any applicable law or regulation, or of any
      requirements of the trading market upon which the Common Stock may be listed.
      

     

    Except
      and to the extent as waived or consented to by the Holder, the Company shall
      not
      by any action, including, without limitation, amending its articles of
      incorporation or through any reorganization, transfer of assets, consolidation,
      merger, dissolution, issue or sale of securities or any other voluntary action,
      avoid or seek to avoid the observance or performance of any of the terms of
      this
      Warrant, but will at all times in good faith assist in the carrying out of
      all
      such terms and in the taking of all such actions as may be necessary or
      appropriate to protect the rights of Holder as set forth in this Warrant against
      impairment. Without limiting the generality of the foregoing, the Company will
      (a) not increase the par value of any Warrant Shares above the amount payable
      therefor upon such exercise immediately prior to such increase in par value,
      (b)
      take all such action as may be necessary or appropriate in order that the
      Company may validly and legally issue fully paid and nonassessable Warrant
      Shares upon the exercise of this Warrant, and (c) use commercially reasonable
      efforts to obtain all such authorizations, exemptions or consents from any
      public regulatory body having jurisdiction thereof as may be necessary to enable
      the Company to perform its obligations under this Warrant.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    Before
      taking any action which would result in an adjustment in the number of Warrant
      Shares for which this Warrant is exercisable or in the Exercise Price, the
      Company shall obtain all such authorizations or exemptions thereof, or consents
      thereto, as may be necessary from any public regulatory body or bodies having
      jurisdiction thereof.

     

    f)  Jurisdiction.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Warrant shall be governed by and construed and enforced in accordance
      with the internal laws of the State of Texas, without regard to the principles
      of conflicts of law thereof, except to the extent that the General Corporation
      Law of the State of Nevada (excluding any provisions thereof relating to
      conflict of laws) governs the affairs and operation of the Company. Each party
      agrees that all legal proceedings concerning the interpretations, enforcement
      and defense of the transactions contemplated by this Warrant (whether brought
      against a party hereto or its respective affiliates, directors, officers,
      shareholders, employees or agents) shall be commenced exclusively in the state
      and federal courts sitting in the City of Dallas, Texas. Each party hereby
      irrevocably submits to the exclusive jurisdiction of the state and federal
      courts sitting in the City of Dallas, Texas for the adjudication of any dispute
      hereunder or in connection herewith or with any transaction contemplated hereby
      or discussed herein, and hereby irrevocably waives, and agrees not to assert
      in
      any suit, action or proceeding, any claim that it is not personally subject
      to
      the jurisdiction of any such court, that such suit, action or proceeding is
      improper or inconvenient venue for such proceeding. THE
      PARTIES HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.
      If
      either party shall commence an action or proceeding to enforce any provisions
      of
      this Warrant, then the prevailing party in such action or proceeding shall
      be
      reimbursed by the other party for its attorneys’ fees and other costs and
      expenses incurred with the investigation, preparation and prosecution of such
      action or proceeding..

     

    g)  Restrictions.
      The
      Holder acknowledges that the Warrant Shares acquired upon the exercise of this
      Warrant, if not registered, will have restrictions upon resale imposed by state
      and federal securities laws.

     

    h)  Expenses.
      If the
      Company willfully and knowingly fails to comply with any provision of this
      Warrant, which results in any material damages to the Holder, the Company shall
      pay to Holder such amounts as shall be sufficient to cover any costs and
      expenses including, but not limited to, reasonable attorneys’ fees, including
      those of appellate proceedings, incurred by Holder in collecting any amounts
      due
      pursuant hereto or in otherwise enforcing any of its rights, powers or remedies
      hereunder.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    i)  Notices.
      Any and
      all notices or other communications or deliveries required or permitted to
      be
      provided hereunder shall be in writing and shall be deemed given and effective
      on the earliest of (a) the date of transmission, if such notice or communication
      is delivered via facsimile at the facsimile number set forth on the signature
      pages attached hereto prior to 5:30 p.m. (Dallas, Texas time) on a business
      day,
      (b) the next business day after the date of transmission, if such notice or
      communication is delivered via facsimile at the facsimile number set forth
      on
      the signature pages attached hereto on a day that is not a business day or
      later
      than 5:30 p.m. (Dallas, Texas time) on any business day, (c) the second business
      day following the date of mailing, if sent by U.S. nationally recognized
      overnight courier service, or (d) upon actual receipt by the party to whom
      such
      notice is required to be given. The address for such notices and communications
      are set forth in this Warrant.

     

    j)  Limitation
      of Liability.
      No
      provision hereof, in the absence of any affirmative action by Holder to exercise
      this Warrant or purchase Warrant Shares, and no enumeration herein of the rights
      or privileges of Holder, shall give rise to any liability of Holder for the
      purchase price of any Common Stock or as a stockholder of the Company, whether
      such liability is asserted by the Company or by creditors of the
      Company.

     

    k)  Remedies.
      Holder,
      in addition to being entitled to exercise all rights granted by law, including
      recovery of damages, will be entitled to specific performance of its rights
      under this Warrant. The Company agrees that monetary damages would not be
      adequate compensation for any loss incurred by reason of a breach by it of
      the
      provisions of this Warrant and hereby agrees to waive the defense in any action
      for specific performance that a remedy at law would be adequate.

     

    
      l)  Successors
        and Assigns.
        Subject
        to applicable securities laws, this Warrant and the rights and obligations
        evidenced hereby shall inure to the benefit of and be binding upon the
        successors of the Company and the successors and permitted assigns of Holder.
        The provisions of this Warrant are intended to be for the benefit of all
        Holders
        from time to time of this Warrant and shall be enforceable by any such Holder
        or
        holder of Warrant Shares.

       

      m)  Amendment
        and Waiver.
        This
        Warrant may be modified or amended only with the written consent of the Company
        and the Holder. No course of dealing or any delay or failure to exercise
        any
        right hereunder on the part of Holder shall operate as a waiver of such right
        or
        otherwise prejudice Holder’s rights, powers or remedies, notwithstanding the
        fact that all rights hereunder terminate on the Termination Date. 

       

      n)  Severability.
        Wherever possible, each provision of this Warrant shall be interpreted in
        such
        manner as to be effective and valid under applicable law, but if any provision
        of this Warrant shall be prohibited by or invalid under applicable law, such
        provision shall be ineffective to the extent of such prohibition or invalidity,
        without invalidating the remainder of such provisions or the remaining
        provisions of this Warrant.

       

      o)  Headings.
        The
        headings used in this Warrant are for the convenience of reference only and
        shall not, for any purpose, be deemed a part of this Warrant.

       

      [Signature
        Page Follows]

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

      
 

      
        IN
          WITNESS WHEREOF,
          the
          Company has caused this Warrant to be executed by its officer thereunto
          duly
          authorized as of the date first written above.

         

        
          	 	 	 
	 	ZONE
                  MINING LIMITED
	 
 	 
 	 
 
	 	By:  	/s/ Stephen
                  P. Harrington
	 	
                  

                  Name:
                    Stephen P. Harrington

                  Title:
                    President

                   

                  Address:
111
                    Presidential
                    Blvd., Suite 165

                   
Bala
                    Cynwyd, PA 19004

                
	 	 

        

         

      

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

      NOTICE
        OF EXERCISE

      

      TO: ZONE
        MINING LIMITED

      

      (1)  The
        undersigned hereby elects to purchase ________ Warrant Shares of Zone Mining
        Limited pursuant to the terms of the attached Warrant (only if exercised
        in
        full), and tenders herewith payment of the exercise price in full, together
        with
        all applicable transfer taxes, if any.

       

      (2)  Payment
        shall take the form of (check applicable box):

       

      [ 
]
        in lawful money of the United States; or

       

      [ 
]
        the cancellation of such number of Warrant Shares as is necessary, in accordance
        with the formula set forth in subsection 2(c), to exercise this Warrant with
        respect to the maximum number of Warrant Shares purchasable pursuant to the
        cashless exercise procedure set forth in subsection 2(c).

       

      (3)  Please
        issue a certificate or certificates representing said Warrant Shares in the
        name
        of the undersigned or in such other name as is specified below:

       

      _______________________________

       

      

      The
        Warrant Shares shall be delivered to the following:

      

      _______________________________

       

      _______________________________

       

      _______________________________

       

      
        (4)  Accredited
          Investor.
          The
          undersigned, and, if applicable, the person or entity identified in subsection
          3
          above, is an “accredited investor” as defined in Regulation D promulgated under
          the Securities Act of 1933, as amended.

         

      

      [SIGNATURE
        OF HOLDER]

       

      Name
        of
        Investing Entity:
        _____________________________________________________________

      Signature
        of Authorized Signatory of Investing Entity:
        _______________________________________

      Name
        of
        Authorized Signatory:
        _________________________________________________________

      Title
        of
        Authorized Signatory:
        __________________________________________________________

      Date:
        _____________________________________________________________________________

      

        
          
            
            

          

          
            17

            
              

            

          

          
            
            

          

        

      

       

      ASSIGNMENT
        FORM

       

      

      (To
        assign the foregoing warrant, execute

      this
        form
        and supply required information. 

      Do
        not
        use this form to exercise the warrant.)

      

      

      

      FOR
        VALUE
        RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby
        assigned to

       

      

      _______________________________________________
        whose address is

      

      _______________________________________________________________.

      

      

      

      _______________________________________________________________

      

      Dated:
        ______________, _______

      

      

      
        	
                Holder’s
                  Signature:

              	__________________________
	 	 
	
                Holder’s
                  Address:  

              	__________________________
	 	 
	 	__________________________
	 	 

      

      

      
        

        
          	
                  
                    Signature
                      Guaranteed:
                      ______________________________________________

                  

                

        

        
 

      

      NOTE:
        The
        signature to this Assignment Form must correspond with the name as it appears
        on
        the face of the Warrant, without alteration or enlargement or any change
        whatsoever, and must be guaranteed by a bank or trust company. Officers of
        corporations and those acting in a fiduciary or other representative capacity
        should file proper evidence of authority to assign the foregoing
        Warrant.

    

     

    18Exhibit
      4.1

     

    EXECUTION
      COPY

    

    SECOND
      AMENDED AND RESTATED

    PROMISSORY
      NOTE

     

    
      	$8,500,000	
              October
                25, 2006 

            

    

     

    

      FOR
        VALUE
        RECEIVED, DISCOVERY LABORATORIES, INC., a Delaware corporation (“Borrower”),
        hereby promises to pay
        to the
        order of PHARMABIO DEVELOPMENT INC., a North Carolina corporation, d/b/a
        NovaQuest (“Lender”),
        in
        lawful money of the United States of America in immediately available funds,
        the
        lesser of (i) the principal sum of Eight Million, Five Hundred Thousand Dollars
        ($8,500,000) and (ii) the aggregate unpaid principal amount of the Loan (as
        defined in the Loan Agreement referred to below) made by Lender to Borrower
        pursuant to the Loan Agreement (as defined below), together with interest
        accrued thereon. Interest shall accrue and compound on the unpaid principal
        amount of the Loan at the rates and in the manner provided in the Loan
        Agreement. Payment of the principal amount of this Note and accrued interest
        on
        this Note shall be made at the times and in the manner provided in the Loan
        Agreement. 

      

      This
        Note
        is made and dated as of December 10, 2001, as amended and restated as of
        November 3, 2004, and further amended and restated of the date set forth
        above.
        Capitalized terms used but not defined herein shall have the meanings ascribed
        to them in the Loan Agreement.

      

      This
        Note
        is the Note referenced in the Second Amended and Restated Loan Agreement
        between
        Borrower and Lender dated as of December 10, 2001, as amended and restated
        as of November 3, 2004, and amended and restated as of the date hereof (as
        same
        may be amended from time to time, the “Loan
        Agreement”),
        and
        is entitled to the benefits of, and subject to the restrictions provided
        under,
        the Loan Agreement. The Loan Agreement, among other things, provides that
        this
        Note is secured by, and Borrower has granted a security interest in, certain
        of
        its assets as set forth in the Second Amended and Restated Security Agreement
        between Borrower and Lender dated as of the date hereof.

      

      In
        case
        an Event of Default shall occur and be continuing and not cured prior to
        the
        expiration of any applicable cure or grace periods set forth in the Loan
        Agreement, the unpaid principal amount of, and accrued interest on, this
        Note
        may be declared to be due and payable in the manner and with the effect provided
        in the Loan Agreement. 

      

      Borrower
        hereby waives presentment, demand, notice, protest and all other demands
        and
        notices in connection with the delivery, acceptance, performance and enforcement
        of this Note.

      

      This
        Note
        may be voluntarily prepaid, in whole or in part, on the terms and conditions
        set
        forth in the Loan Agreement. Provided that all obligations under the Loan
        Agreement have been irrevocably paid in full, the Lender shall, at the request
        of Borrower, promptly, and in no event later than ten (10) Business Days
        after
        notice from Borrower, cancel and return this Note to Borrower. 

       

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      This
        Note
        shall be governed by and construed in accordance with the law of the State
        of
        Delaware without regard to the conflicts of law rules of such
        state.

      

      Lender
        and Borrower agree that disputes relating to this Note shall be subject to
        the
        provisions of the Loan Agreement entitled “Internal Review” and “Arbitration”
set forth in Sections 8.14 and 8.15 thereof, respectively.

      

      IN
        WITNESS WHEREOF, Borrower has caused this Note to be duly executed by its
        duly
        authorized officer, as of the date first above written.

      

    

    
      	 	 	 
	 	DISCOVERY
              LABORATORIES, INC.
	 
 	 
 	 
 
	 	By:  	/s/ John Cooper
              
	 	
              
Name:
              John Cooper
	 	
              Title:
                 Executive
                Vice President and Chief
                Financial Officer

            

    

     

    
      
        
        

      

      2

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00111-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00111-of-00352.parquet"}]]