Document:

EXHIBIT
4.3

    

    COMSTOCK
MINING INC.

    

    CERTIFICATE
OF DESIGNATION OF PREFERENCES,

    RIGHTS
AND LIMITATIONS

    OF

    7
1⁄2% SERIES B CONVERTIBLE PREFERRED STOCK

    

    PURSUANT
TO SECTION 78.1955 OF THE

    NEVADA
REVISED STATUTES

    

    The
undersigned, Corrado De Gasperis, does hereby certify that:

    

    1.  He
is the President and Chief Executive Officer of Comstock Mining Inc., a Nevada
corporation (the “Corporation”).

    

    2.  The
Corporation is authorized to issue up to 50,000,000 shares of its preferred
stock, none of which have been issued.

    

    3.  The
following resolutions were duly adopted by the board of directors of the
Corporation (the “Board of
Directors”):

    

    WHEREAS,
the certificate of incorporation of the Corporation provides for a class of its
authorized stock known as the “Preferred Stock,”
consisting of up to 50,000,000 shares, $0.000666 par value per share, issuable
from time to time in one or more series;

    

    WHEREAS,
the Board of Directors is authorized to fix the dividend rights, dividend rate,
voting rights, conversion rights, rights and terms of redemption and liquidation
preferences of any wholly unissued series of the Preferred Stock and the number
of shares constituting any series and the designation thereof, of any of them;
and

    

    WHEREAS,
it is the desire of the Board of Directors, pursuant to its authority as
aforesaid, to fix the rights, preferences, restrictions and other matters
relating to a series of the Preferred Stock, which shall consist of up to
600,000 shares of the Preferred Stock which the Corporation has the authority to
issue, to be designated as “7 1⁄2 % Series B Convertible Preferred Stock,” as
follows:

    

    NOW,
THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby provide for
the issuance of a series of Preferred Stock for cash or exchange of other
securities, rights or property and does hereby fix and determine the rights,
preferences, restrictions and other matters relating to such series of Preferred
Stock as follows:

    

    TERMS
OF 7 1⁄2% SERIES B CONVERTIBLE PREFERRED STOCK

    

    Section
1.  Definitions.  For
the purposes hereof, the following terms shall have the following
meanings:

    

    “Additional Shares of Common
Stock” shall have the meaning set forth in Section
7(b).

    

    “Affiliate” means any
Person that, directly or indirectly through one or more intermediaries, controls
or is controlled by or is under common control with a Person, as such terms are
used in and construed under Rule 405 of the Securities Act.

    
      
         

      

      
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    EXHIBIT
4.3

    

    “Aggregate
Consideration” received by the Corporation with respect to any issuance
of Additional Shares of Common Stock shall: (a) to the extent it consists of
cash, be computed at the gross amount of cash received by the Corporation before
deduction of any underwriting or similar commissions, compensation or
concessions paid or allowed by the Corporation in connection with such issuance
and without deduction of any expenses payable by the Corporation, (b) to the
extent it consists of property other than cash, be computed at the fair value of
that property as determined in good faith by the Board of Directors, and (c)
with respect to Common Stock Equivalents, the purchase price or other
consideration received by the Corporation in connection with the issuance of
such Common Stock Equivalents, together with the amount of any exercise price or
other additional consideration payable to the Corporation in connection with the
exercise or conversion (as applicable) of such Common Stock
Equivalents.

    

    “Alternate
Consideration” shall have the meaning set forth in Section
7(d).

    

    “Bankruptcy
Proceeding” means (i)(a) a voluntary case, action, proceeding or petition
or (b) the consent to the institution of, or failure to contest in a timely and
appropriate manner, any involuntary case, action, proceeding or petition seeking
the liquidation, reorganization or other relief in respect of the Corporation,
or of a substantial part of its assets, under any Federal or state bankruptcy,
insolvency, receivership or similar law now or hereafter in effect or (ii) the
application or consent to the appointment of a receiver, interim receiver,
receiver manager, trustee, custodian, sequestrator, conservator or similar
official for the Corporation or for a substantial part of its assets and, in any
such case, such case, action, proceeding or petition shall continue undismissed
for 60 days or an order or decree approving or ordering any of the foregoing
shall be entered.

    

    “Base Conversion
Price” shall have the meaning set forth in Section
7(b).

    

    “Business Day” means
any day except any Saturday, any Sunday, any day which is a federal legal
holiday in the United States or any day on which banking institutions in the
State of New York are authorized or required by law or other governmental action
to close.

    

    “Change of Control
Transaction” means the occurrence after the date hereof of any of (a) an
acquisition after the date hereof by any Person or “group” (as described in Rule
13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether
through legal or beneficial ownership of capital stock of the Corporation, by
contract or otherwise) of a majority of the voting securities of the Corporation
(other than by means of conversion or exercise of Series B Preferred Stock and
the Parity Securities or upon conversion of any currently outstanding
convertible securities in accordance with the terms thereof as in effect on the
date hereof), (b) the Corporation merges into or consolidates with any other
Person, or any Person merges into or consolidates with the Corporation and,
after giving effect to such transaction, the stockholders of the Corporation as
of immediately prior to such transaction do not own a majority of the aggregate
voting power of the Corporation or the successor entity of such transaction, (c)
the Corporation sells or transfers all or substantially all of its assets to
another Person and the stockholders of the Corporation as of immediately prior
to such transaction do not own a majority of the aggregate voting power of the
acquiring entity immediately after the transaction, (d) the Corporation,
directly or indirectly, transfers a majority of the asset value and/or
enterprise value of the Corporation (whichever is lower) to another Person and
the stockholders of the Corporation as of immediately prior to such transaction
do not own a majority of the aggregate voting power of the acquiring entity
immediately after the transaction, or (e) a replacement at one time or within a
one year period of more than one-half of the members of the Board of Directors
which is not approved by the Winfield Group or a majority of those individuals
who are members of the Board of Directors on the Closing Date (or by those
individuals who are serving as members of the Board of Directors on any date
whose nomination to the Board of Directors was approved by the Winfield Group or
a majority of the members of the Board of Directors who are members on the
Closing Date), in each case that has been approved by the stockholders of the
Corporation as required under: (i) the Nevada corporate law, (ii) the
Corporation’s certificate of incorporation, (iii) this Certificate of
Designation or (iv) any other agreement to which the Corporation is a party, as
applicable. Notwithstanding the foregoing, none of the following shall
constitute a Change of Control Transaction: (a) any pledge, mortgage, grant of
security interest, sale-leaseback or similar transaction (excluding any
foreclosure sale), (b) any transaction or series of transactions principally for
bona fide equity financing purposes in which cash is received by the Corporation
or any successor to the Corporation and no acquiring Person or group acquires
20% or more of the outstanding voting securities of the Corporation in such
transaction or transactions, or (c) any transaction or series of transactions
principally for the bona fide acquisition of another Person after which no
Person or group acquires 20% or more of the outstanding voting securities of the
Corporation.

    
      
         

      

      
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    EXHIBIT
4.3

    

    “Closing” means the
closing of the purchase and sale of the Securities pursuant to Section 2.1 of the
Purchase Agreement.

    

    “Closing Date” means
the date on which the Closing occurs pursuant to Section 2.1 of the
Purchase Agreement.

    

    “Common Stock” means
the Corporation’s common stock, par value $0.000666 per share, and stock of any
other class of securities into which such common stock may hereafter be
reclassified or changed.

    

    “Common Stock
Equivalents” means any securities of the Corporation or the Subsidiaries
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 exercisable
or exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.

    

    “Conversion Date”
means the Elective Conversion Date or VWAP Automatic Conversion Date, as
applicable.

    

    “Conversion Price”
shall have the meaning set forth in Section 6(d).

    

    “Conversion Shares”
means, collectively, the shares of Common Stock issuable upon conversion of the
shares of Series B Preferred Stock in accordance with the terms
hereof.

    

    “Conversion Shares
Registration Statement” means a registration statement that registers the
resale of all Conversion Shares, so long as such Conversion Shares are
Registrable Securities (as such term is defined in the Registration Rights
Agreement) of the Holders, who shall be named as “selling stockholders” therein
and meets the requirements of the Registration Rights Agreement.

    

    “Dilutive Issuance”
shall have the meaning set forth in Section
7(b).

    

    “Dilutive Issuance
Notice” shall have the meaning set forth in Section
7(b).

    

    “Dividend Payment
Date” shall have the meaning set forth in Section
3(a).

    

    “Effective Date” has
the meaning set forth in the Purchase Agreement.

    

    “Elective Conversion
Date” shall have the meaning set forth in Section
6(a).

    
      
         

      

      
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    EXHIBIT
4.3

    

    “Equity Conditions”
means, as of the date in question: (a) the Corporation shall have duly honored
all conversions of Series B Preferred Stock occurring pursuant to one or more
Notices of Elective Conversion provided by the applicable Holder to the
Corporation, if any; (b) the Corporation shall have paid all amounts owing to
the applicable Holder under this Certificate of Designation in respect of its
Series B Preferred Stock, if any; (c) the Common Stock is trading on a Trading
Market (and the Corporation believes, in good faith, that trading of the Common
Stock on a Trading Market will continue uninterrupted for the foreseeable
future); (d) there is a sufficient number of authorized, but unissued and
otherwise unreserved, shares of Common Stock for the issuance of all of the
Conversion Shares; (e) there has been no public announcement of a pending or
proposed Fundamental Transaction or Change of Control Transaction that has not
been consummated; (f) the applicable Holder is not in possession of any
information provided by the Corporation that constitutes, or may constitute,
material non-public information; and (g) a Bankruptcy Proceeding shall not be
pending against the Corporation.

    

    “Exchange Act” means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.

    

    “Exempt Issuance”
shall have the meaning set forth in the Purchase Agreement.

    

    “Fundamental
Transaction” shall have the meaning set forth in Section 7(d).

    

    “GAAP” means United
States generally accepted accounting principles.

    

    “Holder” shall have
the meaning given such term in Section 3(a).

    

    “Indebtedness” means
(a) any liabilities for borrowed money or amounts owed in excess of $50,000
(other than trade accounts payable incurred in the ordinary course of business),
(b) all guaranties, endorsements and other contingent obligations in respect of
indebtedness of others, whether or not the same are or should be reflected in
the Corporation’s balance sheet (or the notes thereto), except guaranties by
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business, and (c) the present value of
any lease payments in excess of $50,000 due under leases required to be
capitalized in accordance with GAAP.

    

    “Junior Securities”
means the Common Stock and all other Common Stock Equivalents of the Corporation
other than those securities that are explicitly senior or pari passu to the Series B
Preferred Stock in dividend rights or liquidation preference.

    

    “Liens” means a lien,
charge, security interest, encumbrance, right of first refusal, preemptive right
or other restriction.

    

    “Liquidation” shall
have the meaning set forth in Section
5.

    

    “Make-Whole Payment”
shall have the meaning set forth in Section
3(a).

    

    “New York Courts”
shall have the meaning set forth in Section 10(d).

    

    “Notice of COC” shall have the
meaning set forth in Section
5.

    

    “Notice of
Elective
Conversion” shall have the meaning set forth in Section
6(a).

    

    “Notice of VWAP Automatic
Conversion” shall have the meaning set forth in Section
6(c).

    
      
         

      

      
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    EXHIBIT
4.3

    

    “Originally Issued”
means that number of shares of the Series B Preferred Stock issued on the date
of the first issuance of such shares, regardless of the number of transfers of
any particular shares of Series B Preferred Stock thereafter and regardless of
the number of certificates which may be issued to evidence such Series B
Preferred Stock.

    

    “Parity Securities”
means the Series A-1 Preferred Stock, the Series A-2 Preferred Stock and all
other capital stock of the Corporation, whether now or hereafter authorized,
that is explicitly stated to be pari passu with the Series B
Preferred Stock in dividend rights or liquidation preference.

    

    “Participation
Maximum” shall have the meaning set forth in Section
9(a).

    

    “Permitted
Indebtedness” means, with respect to the Corporation, any: (a)
indebtedness and other obligations arising in the ordinary course of operations
or business such as those in respect of business expense reimbursements,
workers’ compensation claims, bid or performance bonds, reclamation or appeal
bonds, surety bonds or letters of credit, leases or deferred purchase price of
equipment, trade credit, endorsement of checks, and completion guarantees, (b)
indebtedness under a revolving credit facility from banks or similar financial
institutions in a principal amount of up to $5,000,000, (c) indebtedness
incurred to finance the acquisition, construction or improvement of any newly
acquired business, property or asset so long as recourse with respect to such
indebtedness is limited solely to such newly acquired business, property or
asset; and (d) indebtedness existing as of immediately after the Closing
that is set forth on the Disclosure Schedule to the Purchase
Agreement.

    

    “Permitted Lien” means
Liens incurred in connection with Permitted Indebtedness.

    

    “Person” means an
individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any
kind.

    

    “Pre-Notice” shall
have the meaning set forth in Section
9(b).

    

    “Preferred A” shall
have the meaning set forth in Section 7(b).

    

    “Pro Rata Portion”
shall have the meaning set forth in Section
9(e).

    

    “Purchase Agreement”
means Securities Purchase Agreement, dated on or about the Closing Date, among
the Corporation and the original Holders, as amended, modified or supplemented
from time to time in accordance with its terms.

    

    “Registration Rights
Agreement” means the Registration Rights Agreement, dated as of the date
of the Purchase Agreement, among the Corporation and the original Holders, in
the form of Exhibit
B attached to the Purchase Agreement, as amended, modified or
supplemented from time to time in accordance with its terms.

    

    “Securities” has the
meaning set forth in the Purchase Agreement.

    

    “Securities Act” means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.

    

    “Series A-1 Preferred
Stock” means the Series A-1 Convertible Preferred Stock of the
Corporation, with the rights, preferences and privileges set forth in the
Certificate of Designation of Preferences, Rights and Limitations of 7 1⁄2% Series
A-1 Convertible Preferred Stock, filed contemporaneously herewith in the Office
of the Secretary of State of the State of Nevada.

    
      
         

      

      
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    EXHIBIT
4.3

    

    “Series A-2 Preferred
Stock” means the Series A-2 Convertible Preferred Stock of the
Corporation, with the rights, preferences and privileges set forth in the
Certificate of Designation of Preferences, Rights and Limitations of 7 1⁄2% Series
A-2 Convertible Preferred Stock, filed contemporaneously herewith in the Office
of the Secretary of State of the State of Nevada.

    

    “Series B Preferred
Stock” shall have the meaning set forth in Section
2.

    

    “Stated Value” shall
have the meaning set forth in Section 2.

    

    “Subsequent Financing”
shall have the meaning set forth in Section
9(a).

    

    “Subsequent Financing
Notice” shall have the meaning set forth in Section
9(b).

    

    “Subsidiary” shall
have the meaning set forth in the Purchase Agreement.

    

    “Successor Entity”
shall have the meaning set forth in Section
7(d).

    

    “Threshold Period”
shall have the meaning set forth in Section
6(c).

    

    “Trading Day” means a
day on which the principal Trading Market is open for business.

    

    “Trading Market” means
any of the following markets or exchanges on which the Common Stock is listed or
quoted for trading on the date in question: the American Stock Exchange, the
Toronto Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the
Nasdaq Global Select Market, the New York Stock Exchange or the OTC Bulletin
Board (or any successors to any of the foregoing).

    

    “Transaction
Documents” has the meaning set forth in the Purchase
Agreement.

    

    “VWAP” means, for any
date, the price determined by the first of the following clauses that applies:
(a) if the Common Stock is then listed or quoted on a Trading Market, the daily
volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the Trading Market on which the Common Stock is then listed
or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m.
(New York City time) to 4:02 p.m. (New York City time)), (b)  if the
OTC Bulletin Board is not a Trading Market, the volume weighted average price of
the Common Stock for such date (or the nearest preceding date) on the OTC
Bulletin Board, (c) if the Common Stock is not then listed or quoted for trading
on the OTC Bulletin Board and if prices for the Common Stock are then reported
in the “Pink Sheets” published by Pink OTC Markets, Inc. (or a similar
organization or agency succeeding to its functions of reporting prices), the
most recent bid price per share of the Common Stock so reported, or (d) in all
other cases, the fair market value of a share of Common Stock as determined by
an independent appraiser selected in good faith by the Holders of a majority in
interest of the Securities then outstanding and reasonably acceptable to the
Corporation, the fees and expenses of which shall be paid by the
Corporation.

    

    “VWAP Automatic Conversion
Date” shall have the meaning set forth in Section
6(c).

    

    “Winfield Group” means
John V. Winfield, his heirs, personal representatives and family trusts created
and controlled by Mr. Winfield, any individual retirement accounts held by Mr.
Winfield, Santa Fe Financial Corporation, Portsmouth Square, Inc. and InterGroup
Corporation, and any Affiliates of Mr. Winfield; provided, that the Winfield
Group shall also include all transferees and assigns of the Winfield Group at
any time that a default has occurred under Section 4.2 of the Purchase Agreement
and such default has not been cured pursuant to Section 5.13(b) of the Purchase
Agreement.

    
      
         

      

      
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    EXHIBIT
4.3

    

    Section
2.  Designation, Amount and Par
Value.  The series of Preferred Stock designated by this
Certificate of Designation shall be the Corporation’s 7 1⁄2% Series B Convertible
Preferred Stock (the “Series B Preferred
Stock”) and the authorized number of shares so designated shall be up to
600,000. Each share of Series B Preferred Stock shall have a par value of
$0.000666 per share and a stated value equal to $1,000 (the “Stated
Value”).

    

    Section
3.  Dividends.

    

    a)           Dividends in Cash or in
Kind.  Subject to Section 3(e) below,
Holders of Series
B Preferred Stock (each, a “Holder” and
collectively, the “Holders”) shall be
entitled to receive, and the Corporation shall pay, cumulative dividends at the
rate per share (as a percentage of the Stated Value per share) of 7 1⁄2% per
annum, payable semiannually on January 1 and July 1, commencing on January 1,
2011 and on each Conversion Date (with respect only to Series B Preferred Stock
being converted) (each such date, a “Dividend Payment
Date”) (if any Dividend Payment Date is not a Trading Day, the applicable
payment shall be due on the next succeeding Trading Day), as set forth below in
this Section
3(a); provided,
however, that in the event of the automatic conversion of Series B
Preferred Stock into shares of Common Stock pursuant to Section 6(c) prior to
October 18, 2013, the Corporation shall also pay to the Holders of Series B
Preferred Stock so converted an additional dividend, for each share of Series B
Preferred Stock, equal to: (i) the net present value, as of the Conversion Date,
of a payment equal to 22 1⁄2% of the Stated Value of one (1) share of Series B
Preferred Stock occurring on October 18, 2013 (calculated assuming a discount
rate of 7 1⁄2%), minus
(ii) the aggregate amount of any semi-annual dividends paid on one (1) share of
Series B Preferred Stock before the Conversion Date (the ”Make-Whole
Payment”).  The form of any semi-annual dividend payments or
any Make-Whole Payment to each Holder shall be, at the election of the
Corporation: (A) if funds are legally available for the payment of dividends, in
cash, (B) subject to the satisfaction of the Equity Conditions, in shares of
Common Stock, which shall be valued solely for such purpose at the average of
the VWAPs for the 5 consecutive Trading Days ending on the Trading Day that is
immediately prior to: (1) the applicable Dividend Payment Date; or (2) with
respect to dividends paid upon conversion of Series B Preferred Stock into
Common Stock, the Conversion Date, (C) subject to the satisfaction of the Equity
Conditions, in additional shares (including, without limitation, fractional
shares) of Series B Preferred Stock, in an amount equal to the dollar amount of
such dividend payment or Make-Whole Payment (as applicable) divided by the
Stated Value per share, or (D) subject to the satisfaction of the Equity
Conditions, in any combination of the property described in the foregoing clauses (A), (B), and (C).

    

    b)           Corporation’s Payment of
Dividends in Cash or in Additional Shares of Stock.  The
Corporation shall promptly notify the Holders at any time the Corporation shall
become unable to legally pay semi-annual dividends or Make-Whole Payments in
cash.  The Corporation shall provide the Holders with at least 20
Trading Days’ notice of its election to pay a semi-annual dividend or Make-Whole
Payment in shares of Common Stock or additional shares of Series B Preferred
Stock (the Corporation may indicate, in any such notice relating to semi-annual
dividends, that the election contained in such notice shall continue for later
periods until revised by a subsequent notice).

    
      
         

      

      
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    EXHIBIT
4.3

    

    c)           Dividend
Calculations.  Dividends on the Series B Preferred Stock shall
be calculated on the basis of a 360-day year, consisting of twelve 30 calendar
day periods, and shall accrue daily commencing on the Closing Date, and shall be
deemed to accrue from such date whether or not earned or declared and whether or
not there are profits, surplus or other funds of the Corporation legally
available for the payment of dividends.  Payment of dividends in
shares of Common Stock or additional shares of Series B Preferred Stock (as
applicable) shall be made in a manner consistent with Section 6(e)(i)
herein and, solely for purposes of the payment of dividends in shares, the
Dividend Payment Date shall be deemed to be the Conversion
Date.  Dividends shall cease to accrue with respect to any Series B
Preferred Stock when converted.  Except as otherwise provided herein,
if at any time the Corporation pays dividends partially in cash and partially in
shares of Common Stock and/or Series B Preferred Stock, then such payment shall
be distributed ratably among the Holders based upon the number of shares of
Series B Preferred Stock held by each Holder on such Dividend Payment
Date.

    

    d)           Other
Securities.  So long as any Series B Preferred Stock shall
remain outstanding: (i) neither the Corporation nor any Subsidiary thereof shall
redeem, purchase or otherwise acquire directly or indirectly any Junior
Securities; and (ii) the Corporation and any Subsidiaries thereof shall only
redeem, repurchase or otherwise acquire, directly or indirectly, any Parity
Securities ratably with the Series B Preferred Stock on a pari passu
basis.  So long as any Series B Preferred Stock shall remain
outstanding: (i) neither the Corporation nor any Subsidiary thereof shall
directly or indirectly pay or declare any dividend or make any distribution upon
any Junior Securities (other than a dividend or distribution solely in
additional shares of Junior Securities), in each case as long as any dividends
due on the Series B Preferred Stock remain unpaid, nor shall any monies be set
aside for or applied to the purchase or redemption (through a sinking fund or
otherwise) of any Junior Securities; and (ii) the Corporation and any
Subsidiaries thereof shall only, directly or indirectly, pay or declare any
dividend or make any distribution upon any Parity Securities, or set aside or
apply any monies for the purchase or redemption (through a sinking fund or
otherwise) of any Parity Securities, if it simultaneously, on a pari passu basis and ratably
among the holders of the Series A Preferred Stock and the holders of all Parity
Securities, pays or declares a dividend or distribution, or sets aside or
applies monies for the purchase or redemption (through a sinking fund or
otherwise), of the Series B Preferred Stock.

    

    e)           Payment of Dividends in
Kind.  During the period commencing on the Closing Date and
ending on the eighteen (18) month anniversary of the Closing Date, in the event
on any Dividend Payment Date the Registration Statement (as defined in the
Registration Rights Agreement) has not been declared effective in accordance
with Section 2(b) of the Registration Rights Agreement, any dividend payable in
Common Stock or Series B Preferred Stock shall accrue and be payable to the
Holders of the Series B Preferred Stock within five (5) business days following
the date that such Registration Statement is declared effective.  In
the event on any Dividend Payment Date following the eighteen (18) month
anniversary of the Closing Date, the Registration Statement has not been
declared effective or the Corporation has failed to maintain its effectiveness
during the Effectiveness Period (as defined in the Registration Rights
Agreement), all dividends payable to the Holders of the Series B Preferred Stock
shall be payable, if funds are legally available for payment, in cash only. If
such funds are not legally available for payment, any dividend payable shall
accrue and be immediately payable to the Holders of the Series B Preferred Stock
in cash, when such funds become legally available, or, at the option of the
Corporation, subject to the effectiveness on such date of the Registration
Statement, as otherwise provided for herein; provided however, that if such
funds are not legally available and the Registration Statement is not effective,
the Holders of the Series B Preferred Stock can waive the requirement that the
Registration Statement be effective and elect to received dividend payments as
otherwise provided for herein.

    

    Section
4.  Voting
Rights.

    

    a)           Except
as otherwise provided herein or as otherwise required by law, each Holder of
Series B Preferred Stock shall: (i) be entitled to notice of any annual or
special meeting of the stockholders of the Corporation, at the same time and in
the same manner as of the holders of Common Stock in accordance with the by-laws
of the Corporation; and (ii) vote together with the Common Stock at any annual
or special meeting of the stockholders of the Corporation, or in any action by
written consent of stockholders of the Corporation in lieu of meeting, on an
as-converted to Common Stock basis, with each share of Series B Preferred Stock
entitling its Holder to the number of votes equal the number of shares of Common
Stock into which such share of Series B Preferred Stock could be converted under
this Certificate of Designation as of the close of business on the record date
fixed for such meeting or the effective date of such written
consent.

    
      
         

      

      
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    EXHIBIT
4.3

    

    b)           Each
share of Series B Preferred Stock shall entitle its holder to one (1) vote in
any matter submitted to vote of the holders of Preferred Stock, voting as a
separate class (as opposed to voting with the holders of Common Stock as
provided in Section
4(a)).

    

    Section
5.  Liquidation and Change of
Control Transactions.  Upon any liquidation, dissolution or
winding-up of the Corporation, whether voluntary or involuntary (a “Liquidation”) or a
Change of Control Transaction, the Holders shall be entitled to receive out of
the assets, whether capital or surplus, of the Corporation in the case of a
Liquidation, or out of the aggregate consideration received by the Corporation
and its stockholders  in the case of a  Change of Control
Transaction, an amount equal to (i) the Stated Value, plus any accrued and
unpaid dividends on the Series B Preferred Stock, together with any other fees
then due and owing thereon under this Certificate of Designation, for each share
of  Series B Preferred Stock, on a pari passu basis with any
distribution or payment upon a Liquidation or Change of Control Transaction to
the holders of Parity Securities and before any distribution or payment shall be
made to the holders of any Junior Securities, plus (ii) the amount
the Holders would have been entitled to receive as holders of the number of
shares of Common Stock for which the shares of Series B Preferred Stock are
convertible immediately prior to such Liquidation or Change of Control
Transaction, on a pari
passu basis with any distribution or payment upon a Liquidation or Change
of Control Transaction to the holders of Parity Securities and Junior Securities
combined. If the assets of the Corporation or aggregate consideration received
shall be insufficient to pay in full the respective preference amounts to the
Holders of Series B Preferred Stock and the holders of any Parity Securities
described in this Section 5, then the
entire assets of the Corporation or aggregate consideration shall be ratably
distributed among the Holders of Series B Preferred Stock and the holders of any
Parity Securities, in accordance with the respective amounts that would be
payable on such shares if all amounts payable thereon were paid in
full.  The Corporation shall mail written notice of any Liquidation,
not less than 45 days prior to the payment date stated therein, to each Holder.
The Corporation shall provide each Holder with
reasonable advance notice (a “Notice of COC”) of the occurrence of a Change of Control Transaction
or potential Change of Control Transaction, which shall specify, for each
Holder, the number of shares of Series B Preferred Stock
owned on the date of such Notice of COC, the number of shares of Common Stock
issuable upon conversion of such Series B Preferred Stock
and the date, if known, on which such Change of Control Transaction is to be
effected, which date may not be prior to the date the Corporation delivers such
Notice of COC to the Holders.  The calculations and entries set forth
in the Notice of COC shall control in the absence of manifest or mathematical
error.  Each Holder shall deliver the certificate(s) representing the
shares of Series B Preferred Stock as instructed in the Notice of
COC.

    

    Section
6.  Conversion.

    

    a)           Conversions at Option of
Holder.  Each share of Series B Preferred Stock shall be
convertible, at any time and from time to time from and after the Closing Date
at the option of the Holder thereof, into that number of shares of Common Stock
determined by dividing the Stated Value of such share of Series B Preferred
Stock by the Conversion Price then in effect.  Holders shall
effect  voluntary conversions pursuant to this Section 6(a) by
providing the Corporation with the form of conversion notice attached hereto as
Annex A (a
“Notice of
Elective
Conversion”).  Each
Notice of Elective Conversion shall specify the number of shares of Series B
Preferred Stock to be converted, the number of shares of Series B Preferred
Stock owned prior to the conversion at issue, the number of shares of Series B
Preferred Stock owned subsequent to the conversion at issue and the date on
which such conversion is to be effected, which date may not be prior to the date
the applicable Holder delivers such Notice of Conversion to the Corporation
(such date, the “Elective Conversion
Date”).  If no Elective Conversion Date is specified in a
Notice of Elective Conversion, the Elective Conversion Date shall be the date
that such Notice of Elective Conversion is delivered hereunder.  The
calculations and entries set forth in the Notice of Elective Conversion shall
control in the absence of manifest or mathematical error.  To effect
elective conversions of shares of Series B Preferred Stock pursuant to this
Section 6(a), a
Holder shall not be required to surrender the certificate(s) representing the
shares of Series B Preferred Stock to the Corporation unless all of the shares
of Series B Preferred Stock represented thereby are so converted, in which case
such Holder shall deliver the certificate representing such shares of Series B
Preferred Stock promptly following the Elective Conversion Date at
issue.  Any certificate representing shares of Series B Preferred
Stock that have been converted in whole or part by such Holder shall be void and
should be destroyed upon receipt of replacement certificate(s) from the
Corporation.  Shares of Series B Preferred Stock converted into Common
Stock pursuant to this Section 6(a) shall be
canceled and shall not be reissued.

    
      
         

      

      
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    EXHIBIT
4.3

    

    b)           [RESERVED]

    

    c)           Automatic Conversion Upon
Sufficient VWAP.  If: (i) the VWAP for each of any twenty (20)
Trading Days during any thirty (30) consecutive Trading Day period starting on
or after the Effective Date (“Threshold Period”),
exceeds $4.50 (subject to adjustment for forward and reverse stock splits,
recapitalizations, stock dividends and the like after the Closing Date); and
(ii) all of the Equity Conditions have been met on each Trading Day during the
applicable Threshold Period through and including the later of the VWAP
Automatic Conversion Date and the Trading Day after the date that the Conversion
Shares issuable pursuant to such conversion are actually delivered to the
Holders pursuant to the Notice of VWAP Automatic Conversion, then all
outstanding shares of Series B Preferred Stock shall automatically be converted
into shares of Common Stock, based on the then-effective Conversion
Price.  The Corporation shall provide each Holder with notice (a
“Notice of VWAP
Automatic Conversion”) of the occurrence of an automatic conversion of
the Series B Preferred Stock pursuant to this Section 6(c) within
one (1) Trading Day after the end of any such Threshold Period, which shall
specify, for each Holder, the number of shares of Series B Preferred Stock owned
prior to the automatic conversion at issue, the number of shares of Common Stock
issuable upon conversion of such Series B Preferred Stock and the date on which
such automatic conversion is to be effected, which shall be the third Trading
Day following the date the Corporation delivers such Notice of VWAP Automatic
Conversion to the Holders (such date, the “VWAP Automatic Conversion
Date”).  The calculations and entries set forth in the Notice
of VWAP Automatic Conversion shall control in the absence of manifest or
mathematical error.  Each Holder shall deliver the certificate(s)
representing all of its shares of Series B Preferred Stock to the Corporation
promptly following the VWAP Automatic Conversion Date.  Shares of
Series B Preferred Stock converted into Common Stock pursuant to this Section 6(c) shall be
canceled and shall not be reissued.

    

    d)           Conversion
Price.  The conversion price for the Series B Preferred Stock
shall initially equal $1.65, subject to adjustment herein (the “Conversion
Price”).

    

    e)           Mechanics of
Conversion

    

    i.           Delivery of Certificate Upon
Conversion.  Not later than three (3) Trading Days after each
Conversion Date, the Corporation shall deliver, or cause to be delivered, to the
converting Holder (A) a certificate or certificates representing the Conversion
Shares which, on or after the earlier of: (1) the six (6) month anniversary of
the Closing Date; or (2) the Effective Date, shall be free of restrictive
legends and trading restrictions (other than those which may then be required by
the Purchase Agreement) representing the number of Conversion Shares being
acquired upon the conversion of the Series B Preferred Stock, and/or (B) a bank
check in the amount of accrued and unpaid dividends and, if applicable, the
Make-Whole Payment (to the extent that the Corporation has elected to pay
accrued dividends or the Make-Whole Payment in cash).  On or after the
earlier of: (1) the six (6) month anniversary of the Closing Date or (2) the
Effective Date, the Corporation shall use commercially reasonable efforts to
deliver any certificate or certificates required to be delivered by the
Corporation under this Section 6
electronically through the Depository Trust Company or another established
clearing corporation performing similar functions.

    
      
         

      

      
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    EXHIBIT
4.3

    

    ii.          Obligation
Absolute.  The Corporation’s obligation to issue and deliver
the Conversion Shares upon conversion of Series B Preferred Stock in accordance
with the terms hereof are absolute and unconditional, irrespective of any action
or inaction by a Holder to enforce the same, any waiver or consent with respect
to any other provision hereof, the recovery of any judgment against any Person
or any action to enforce the same, or any setoff, counterclaim, recoupment,
limitation or termination, or any breach or alleged breach by such Holder or any
other Person of any obligation to the Corporation or any violation or alleged
violation of law by such Holder or any other Person, and irrespective of any
other circumstance which might otherwise limit such obligation of the
Corporation to such Holder in connection with the issuance of such Conversion
Shares; provided,
however, that such delivery shall not operate as a waiver by the
Corporation of any such action that the Corporation may have against such Holder
or such other Person.  In the event a Holder shall elect to convert
any or all of its Series B Preferred Stock, the Corporation may not refuse
conversion based on any claim that such Holder or any one associated or
affiliated with such Holder has been engaged in any violation of law, agreement
or for any other reason, unless an injunction from a court, on notice to Holder,
restraining and/or enjoining conversion of all or part of the Series B Preferred
Stock of such Holder shall have been sought and obtained.  In the
absence of such injunction, the Corporation shall issue Conversion Shares and,
if applicable, cash, upon a properly noticed conversion.  Nothing
herein shall limit a Holder’s right to pursue actual damages or all other
remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive
relief.  The exercise of any such rights shall not prohibit a Holder
from seeking to enforce damages pursuant to any other Section hereof or under
applicable law.

    

    iii.         Liquidated
Damages.  If the Corporation fails to deliver to a Holder such
certificate or certificates representing Conversion Shares within five (5)
Trading Days after the Elective Conversion Date provided in a Notice of Elective
Conversion pursuant to Section 6(a), the Corporation shall pay to such Holder,
in cash, as liquidated damages and not as a penalty, for each share of Series B
Preferred Stock elected to be converted, $50 per Trading Day for each Trading
Day after such fifth (5th) Trading Day after the Elective Conversion Date until
such certificates are delivered or such Holder is reimbursed in accordance with
Section 6(e)(iv). Nothing herein shall limit a Holder’s right to pursue actual
damages for the Corporation’s failure to deliver Conversion Shares and such
Holder shall have the right to pursue all remedies available to it hereunder, at
law or in equity including, without limitation, a decree of specific performance
and/or injunctive relief.  The exercise of any such rights shall not
prohibit a Holder from seeking to enforce damages pursuant to any other Section
hereof or under applicable law.

    

    iv.         Compensation for Buy-In on
Failure to Timely Deliver Certificates Upon Conversion.  If the
Corporation fails to deliver to a Holder the applicable certificate or
certificates within five (5) Trading Days after the Elective Conversion Date,
and if after such date such Holder is required by its brokerage firm to purchase
(in an open market transaction or otherwise), or the Holder’s brokerage firm
purchases, shares of Common Stock to deliver in satisfaction of a sale by such
Holder of the Conversion Shares which such Holder was entitled to receive upon
the conversion relating to such Notice of Elective Conversion (a “Buy-In”), then the
Corporation shall (A) pay in cash to such Holder (in addition to any other
remedies available to or elected by such Holder) the amount by which (x) such
Holder’s total purchase price (including any brokerage commissions) for the
shares of Common Stock so purchased exceeds (y) the product of (1) the aggregate
number of shares of Common Stock that such Holder was entitled to receive from
the conversion at issue multiplied by (2) the actual sale price at which the
sell order giving rise to such purchase obligation was executed (including any
brokerage commissions) and (B) at the option of such Holder, either reissue (if
surrendered) the shares of Series B Preferred Stock equal to the number of
shares of Series B Preferred Stock submitted for conversion or deliver to such
Holder the number of shares of Common Stock that would have been issued if the
Corporation had timely complied with the Notice of Elective Conversion. For
example, if a Holder purchases shares of Common Stock having a total purchase
price of $11,000 to cover a Buy-In with respect to an attempted conversion of
shares of Series B Preferred Stock with respect to which the actual sale price
(including any brokerage commissions) giving rise to such purchase obligation
was a total of $10,000 under clause (A) of the immediately preceding sentence,
the Corporation shall be required to pay such Holder $1,000. The Holder shall
provide the Corporation written notice indicating the amounts payable to such
Holder in respect of the Buy-In and, upon request of the Corporation, evidence
of the amount of such loss. Nothing herein shall limit a Holder’s right to
pursue any other remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Corporation’s failure to timely deliver
certificates representing shares of Common Stock upon conversion of the shares
of Series B Preferred Stock as required pursuant to the terms
hereof.

    
      
         

      

      
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    EXHIBIT
4.3

    

    v.         Reservation of Shares
Issuable Upon Conversion.  The Corporation covenants that it
will, at all times while any Series B Preferred Stock: (A) remains outstanding
or (B) is reserved for issuance or otherwise issuable under any promissory note
or agreement to which the Corporation is a party, reserve and keep available out
of its authorized and unissued shares of Common Stock, for the sole purpose of
issuance upon conversion of such Series B Preferred Stock, free from preemptive
rights or any other purchase rights of Persons other than the Holder (and the
other holders of the Series B Preferred Stock), not less than 130% of the
aggregate number of shares of the Common Stock as shall be issuable (taking into
account the adjustments and restrictions of Section 7) upon: (A)
the conversion of such Series B Preferred Stock; and (B) payment of dividends on
such Series B Preferred Stock in shares of Common Stock
hereunder.  The Corporation covenants that it will, at all times while
any Series B Preferred Stock: (A) remains outstanding or (B) is reserved for
issuance or otherwise issuable under any promissory note or agreement to which
the Corporation is a party, reserve and keep available out of its authorized and
unissued shares of Preferred Stock, for the sole purpose of issuance upon
payment of dividends on such Series B Preferred Stock in additional shares of
Series B Preferred Stock as herein provided, free from preemptive rights or any
other purchase rights of Persons other than the Holder (and the other holders of
the Series B Preferred Stock), not less than 130% of the aggregate number of
shares of the Series B Preferred Stock as shall (subject to the terms and
conditions set forth in the Purchase Agreement) be issuable (taking into account
the adjustments and restrictions of Section 7) upon the
payment of dividends on such Series B Preferred Stock in additional shares of
Series B Preferred Stock hereunder.  The Corporation covenants that
all shares of Common Stock and Series B Preferred Stock that shall be so
issuable shall, upon issue, be duly authorized, validly issued, fully paid and
nonassessable and, if the Conversion Shares Registration Statement is then
effective under the Securities Act, shall be, with respect to such Common Stock
and the Common Stock issuable upon conversion of such Series B Preferred Stock,
registered for public resale in accordance with such Conversion Shares
Registration Statement (subject to such Holder’s compliance with its obligations
under the Registration Rights Agreement).

    

    vi.         Fractional
Shares.  No fractional shares or scrip representing fractional
shares of Common Stock shall be issued upon the conversion of the Series B
Preferred Stock.  As to any fraction of a share of Common Stock, which
the Holder would otherwise be entitled to receive upon such conversion, the
Corporation shall at its election, either pay a cash adjustment in respect of
such final fraction in an amount equal to such fraction multiplied by the
Conversion Price or round up to the next whole share.  The Corporation
may issue fractional shares of Series B Preferred Stock.

    
      
         

      

      
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    EXHIBIT
4.3

    

    vii.        Transfer
Taxes.  The issuance of certificates for shares of the Common
Stock upon conversion of the Series B Preferred Stock shall be made without
charge to any Holder for any documentary stamp or similar taxes that may be
payable in respect of the issue or delivery of such certificates, provided that the Corporation
shall not be required to pay any tax that may be payable in respect of any
transfer involved in the issuance and delivery of any such certificate upon
conversion in a name other than that of the Holders of such shares of Series B
Preferred Stock and the Corporation shall not be required to issue or deliver
such certificates unless or until the Person or Persons requesting the issuance
thereof shall have paid to the Corporation the amount of such tax or shall have
established to the satisfaction of the Corporation that such tax has been
paid.

    

    Section
7.  Certain
Adjustments.

    

    a)           Stock Dividends and Stock
Splits.  If the Corporation, at any time while any Series B
Preferred Stock is outstanding: (i) pays a stock dividend or otherwise makes a
distribution or distributions payable in shares of Common Stock on shares of
Common Stock or any Common Stock Equivalents (which, for avoidance of doubt,
shall not include any shares of Common Stock issued by the Corporation upon
conversion of, or payment of a dividend on, the Series B Preferred Stock), (ii)
subdivides outstanding shares of Common Stock into a larger number of shares,
(iii) combines (including by way of a reverse stock split) outstanding shares of
Common Stock into a smaller number of shares, or (iv) issues, in the event of a
reclassification of shares of the Common Stock, any shares of capital stock of
the Corporation, then the Conversion Price shall be multiplied by a fraction of
which the numerator shall be the number of shares of Common Stock (excluding any
treasury shares of the Corporation) outstanding immediately before such event,
and of which the denominator shall be the number of shares of Common Stock
outstanding immediately after such event.  Any adjustment made
pursuant to this Section 7(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)           Subsequent Equity
Sales.  If, at any time while any Series B Preferred Stock is
outstanding, the Corporation or any Subsidiary, as applicable, sells or grants
any option to purchase or sells or grants any right to reprice, or otherwise
disposes of or issues (or announces any sale, grant or any option to purchase or
reprice or other disposition), any Common Stock or Common Stock Equivalents
(“Additional Shares of
Common Stock”) at an effective price per share of Common Stock that is
lower than the lower of: (i) 93% of the average of the VWAPs for the 10
consecutive Trading Days ending on the Trading Day that is immediately prior to
the date of issuance of the Additional Shares of Common Stock; or (ii) the then
effective Conversion Price of the Series A-1 Preferred A-1 Stock and the Series
A-2 Preferred Stock (“Preferred A”)(such
lower price, the “Base
Conversion Price” and such issuances, collectively, a “Dilutive Issuance”)
(if the holder of the Additional Shares of Common Stock so issued shall at any
time, whether by operation of purchase price adjustments, reset provisions,
floating conversion, exercise or exchange  prices or otherwise, or due
to warrants, options or rights per share which are issued in connection with
such issuance, be entitled to receive shares of Common Stock or Common Stock
Equivalents at an effective price per share that is lower than the Conversion
Price, such issuance shall be deemed to have occurred for less than the
Conversion Price on the date of the Dilutive Issuance), then the Conversion
Price shall be reduced to equal the price determined by multiplying the
Conversion Price in effect immediately prior to such issuance by a
fraction:

    

    i.           the
numerator of which shall be: (A) the number of shares of Common Stock issuable
upon the conversion of the Series B Preferred Stock immediately prior to such
Dilutive Issuance, plus
(B) the number of shares of Common Stock or Common Stock Equivalents
which the Aggregate Consideration received or deemed to be received by the
Corporation for the total number of Additional Shares of Common Stock so issued
would purchase at such then-existing Base Conversion Price; and

    
      
         

      

      
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    EXHIBIT
4.3

    

    ii.          the
denominator of which shall be the number of shares of Common Stock issuable upon
the conversion of the Series B Preferred Stock immediately prior to such
Dilutive Issuance plus
the total number of Additional Shares of Common Stock actually so
issued.

    

    Such
adjustment shall be made upon any issuance of Additional Shares of Common Stock;
provided, however, that
no adjustment will be made under this Section 7(b) in
respect of an Exempt Issuance.  The Corporation shall notify the
Holders in writing, no later than the Trading Day following the issuance of any
Additional Shares of Common Stock subject to this Section 7(b),
indicating therein the applicable issuance price, or applicable reset price,
exchange price, conversion price and other pricing terms (such notice, the
“Dilutive Issuance
Notice”).  For purposes of clarification, whether or not the
Corporation provides a Dilutive Issuance Notice pursuant to this Section 7(b), upon
the occurrence of any Dilutive Issuance, the Holders are entitled to receive a
number of Conversion Shares based upon the Base Conversion Price on or after the
date of such Dilutive Issuance, regardless of whether a Holder accurately refers
to the Base Conversion Price in the Notice of Conversion.

    

    c)           Pro Rata
Distributions.  If the Corporation, at any time while any
Series B Preferred Stock is outstanding, distributes to all holders of Common
Stock (and not to the Holders) evidences of its indebtedness or assets
(including cash and cash dividends) or rights or warrants to subscribe for or
purchase any security (other than the Common Stock, which shall be subject to
Section 7(b)),
then in each such case the Conversion Price shall be adjusted by multiplying
such Conversion 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 VWAP determined as of the record
date mentioned above, and of which the numerator shall be such VWAP on such
record date less the then fair market value at such record date of the portion
of such assets or evidence of indebtedness or rights or warrants so distributed
applicable to one outstanding share of Common Stock as determined by the Board
of Directors of the Corporation in good faith.  In either case the
adjustments shall be described in a statement delivered to the Holders
describing 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.

    
      
         

      

      
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    EXHIBIT
4.3

    

    d)           Fundamental
Transaction.  If, at any time while any Series B Preferred
Stock is outstanding, (i) the Corporation, directly or indirectly, in one or
more related transactions effects any merger or consolidation of the Corporation
with or into another Person, (ii) the Corporation, directly or indirectly,
effects any sale, lease, license, assignment, transfer, conveyance or other
disposition of all or substantially all of its assets in one or a series of
related transactions, (iii) any, direct or indirect, purchase offer, tender
offer or exchange offer (whether by the Corporation or another Person) is
completed pursuant to which holders of Common Stock are permitted to sell,
tender or exchange their shares for other securities, cash or property and has
been accepted by the holders of 50% or more of the outstanding Common Stock,
(iv) the Corporation, directly or indirectly, in one or more related
transactions effects any reclassification, reorganization or recapitalization 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, (v) the Corporation, directly or indirectly, in one or more related
transactions consummates a stock or share purchase agreement or other business
combination (including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with another Person whereby such other Person
acquires more than 50% of the outstanding shares of Common Stock (not including
any shares of Common Stock held by the other Person or other Persons making or
party to, or associated or affiliated with the other Persons making or party to,
such stock or share purchase agreement or other business combination), in each
case other than a Change of Control Transaction (each, a ”Fundamental
Transaction”), then, upon any subsequent conversion of Series B Preferred
Stock, the Holder shall have the right to receive, for each Conversion Share
that would have been issuable upon such conversion immediately prior to the
occurrence of such Fundamental Transaction, the number of shares of Common Stock
of the successor or acquiring corporation or of the Corporation, if it is the
surviving corporation, and any additional consideration (the “Alternate
Consideration”) receivable as a result of such Fundamental Transaction by
a holder of the number of shares of Common Stock for which Series B Preferred
Stock is convertible immediately prior to such Fundamental
Transaction.  For purposes of any such conversion, the determination
of the Conversion 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
Corporation shall apportion the Conversion 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 conversion of
Series B Preferred Stock following such Fundamental Transaction.  To
the extent necessary to effectuate the foregoing provisions, any successor to
the Corporation or surviving entity in such Fundamental Transaction shall file a
new Certificate of Designation with the same terms and conditions as those
hereof, and issue to the Holders new Series B Preferred Stock consistent with
the foregoing provisions and evidencing the Holders’ right to convert such
Series B Preferred Stock into Alternate Consideration.  The
Corporation shall cause any successor entity in a Fundamental Transaction in
which the Corporation is not the survivor (the “Successor Entity”) to
assume in writing all of the obligations of the Corporation under this
Certificate of Designation and the other Transaction Documents in accordance
with the provisions of this Section 7(d),
pursuant to written agreements in form and substance reasonably satisfactory to
the Holders of a majority of the then outstanding shares of Series B Preferred
Stock issued pursuant to the Purchase Agreement and approved by such Holders
(without unreasonable delay) prior to such Fundamental Transaction, and shall
deliver to each Holder in exchange for its Series B Preferred Stock a security
of the Successor Entity evidenced by a written instrument substantially similar
in form and substance to the Series B Preferred Stock which is convertible for a
corresponding number of shares of capital stock of such Successor Entity (or its
parent entity) equivalent to the shares of Common Stock acquirable and
receivable upon conversion of the Series B Preferred Stock prior to such
Fundamental Transaction, and with a conversion price which applies the
conversion price hereunder to such shares of capital stock (but taking into
account the relative value of the shares of Common Stock pursuant to such
Fundamental Transaction and the value of such shares of capital stock, such
number of shares of capital stock and such conversion price being for the
purpose of protecting the economic value of the Series B Preferred Stock
immediately prior to the consummation of such Fundamental Transaction), and
which is reasonably satisfactory in form and substance to the Holders of a
majority of the then outstanding shares of Series B Preferred Stock issued
pursuant to the Purchase Agreement.  Upon the occurrence of any such
Fundamental Transaction, the Successor Entity shall succeed to, and be
substituted for (so that from and after the date of such Fundamental
Transaction, the provisions of this Certificate of Designation and the other
Transaction Documents referring to the “Corporation” shall refer instead to the
Successor Entity), and may exercise every right and power of the Corporation and
shall assume all of the obligations of the Corporation under this Certificate of
Designation and the other Transaction Documents with the same effect as if such
Successor Entity had been named as the Corporation herein.

    

    e)           Calculations.  All
calculations under this Section 7 shall be
made to the nearest cent or the nearest 1/100th of a share, as the case may
be.  For purposes of this Section 7, 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 any treasury
shares of the Corporation) issued and outstanding.

    
      
         

      

      
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    EXHIBIT
4.3

    

    f)           Notice to the
Holders.

    

    i.           Adjustment to Conversion
Price.  Whenever the Conversion Price is adjusted pursuant to
any provision of this Section 7, the
Corporation shall promptly deliver to each Holder a notice setting forth the
Conversion Price after such adjustment and setting forth a brief statement of
the facts requiring such adjustment.

    

    ii.          Notice to Allow Conversion
by Holder.  If (A) the Corporation shall declare a dividend (or
any other distribution in whatever form) on the Common Stock, (B) the
Corporation shall declare a special nonrecurring cash dividend on or a
redemption of the Common Stock, (C) the Corporation shall authorize the granting
to all holders of the Common Stock of 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 Corporation shall be required in connection
with any reclassification of the Common Stock, any consolidation or merger to
which the Corporation is a party, any sale or transfer of all or substantially
all of the assets of the Corporation, or any compulsory share exchange whereby
the Common Stock is converted into other securities, cash or property or (E) the
Corporation shall authorize the voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the Corporation, then, in each case,
the Corporation shall cause to be filed at each office or agency maintained for
the purpose of conversion of the Series B Preferred Stock, and shall cause to be
delivered to each Holder at its last address as it shall appear upon the stock
books of the Corporation, at least twenty (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 that the failure to
deliver such notice or any defect therein or in the delivery thereof shall not
affect the validity of the corporate action required to be specified in such
notice.  To the extent that any notice provided hereunder constitutes,
or contains, material, non-public information regarding the Corporation or any
of the Subsidiaries, the Corporation shall, as required by applicable federal
securities law, file such notice with the Commission pursuant to a Current
Report on Form 8-K.  The Holder shall remain entitled to convert the
Series B Preferred Stock during the 20-day period commencing on the date of such
notice through the effective date of the event triggering such notice, except as
may otherwise be expressly set forth herein.

    

    Section
8.  Negative Covenants.

    

    (a)          As
long as at least 25% of the Parity Securities that were Originally Issued are
still outstanding, the Corporation shall not, and shall not permit any of the
Subsidiaries to, directly or indirectly, without the affirmative vote of the
holders of a majority of the then outstanding Parity Securities (which shall, as
long as the Winfield Group still holds at least 25% of the Parity Securities
that were Originally Issued, include the Winfield Group):

    

    i)    
       other than Permitted Indebtedness,
enter into, create, incur, assume, guarantee or suffer to exist any Indebtedness
for borrowed money;

    

    ii)           other
than Permitted Liens, grant, assume or allow to exist any Liens of any kind, on
or with respect to any of its property or assets now owned or hereafter acquired
or any interest therein or any income or profits therefrom;

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    EXHIBIT
4.3

    

    iii)          repay,
repurchase or offer to repay, repurchase or otherwise acquire Common Stock
constituting more than 5% of the outstanding shares of Common Stock (measured as
of immediately after the Closing), other than as to (i) the Conversion Shares as
permitted or required under this Certificate of Designation or any other
Transaction Documents and (ii) repurchases of Common Stock or Common Stock
Equivalents of departing officers and directors of the Corporation, provided
that such repurchases shall not exceed an aggregate of $100,000 for all officers
and directors for so long as the Parity Securities are outstanding;

    

    iv)         enter
into any transaction with any Affiliate of the Corporation which would be
required to be disclosed in any public filing with the Commission, unless such
transaction is made on an arm’s-length basis and expressly approved by a
majority of the disinterested directors of the Corporation (even if less than a
quorum otherwise required for board approval);

    

    v)          enter
into any transaction with any Affiliate of an Officer or Director of the
Corporation, if such transaction provides for the payment of services in
Securities of the Corporation;

    

    vi)         amend
the Corporation’s certificate of incorporation, by-laws or the Certificate of
Designation of any of the Parity Securities in any manner that materially
adversely affects any of the rights, preferences or privileges of the Holders of
such Parity Securities;

    

    vii)        approve
the issuance of any Preferred Stock, other than the Series A-1 Preferred Stock,
the Series A-2 Preferred Stock and the Series B Preferred Stock issued in
connection with the transactions contemplated under the Transaction
Documents;

    

    viii)       pay
any dividends or make any distributions on any Junior Securities (except in
additional shares of Junior Securities);

    

    ix)          adopt
an executive equity incentive plan which provides for the issuance of greater
than 6.0% of the fully diluted equity of the Corporation after taking into
account the transactions contemplated under the Transaction
Documents;

    

    x)           enter
into any transaction for the sale or pledge of a material asset of the
Corporation;

    

    xi)          approve
or consent to the initiation of a Bankruptcy Proceeding;

    

    xii)         issue
any securities of the Corporation in exchange for services to a consultant;
or

    

    xiii)        enter
into any agreement with respect to any of the foregoing.

    

    b)           As
long as at least 25% of the Parity Securities that were Originally Issued are
still outstanding, and as long as the Winfield Group still holds at least 25% of
the Parity Securities that were Originally Issued, the Corporation shall not,
and shall not permit any of the Subsidiaries to, directly or indirectly, without
the affirmative vote of the Winfield Group:

    

    i)   
        enter into any transaction for
the acquisition of any business, property or asset pursuant to which the
Corporation will incur Indebtedness to finance such acquisition in principal
amount in excess of $500,000;

    

    ii)           pay
any dividends pursuant to Section 3(a) hereof in cash in an amount to exceed
$500,000;

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    EXHIBIT
4.3

    

    iii)          engage
in a private placement (or series of private placements within any twelve (12)
month period) of any Common Stock or Common Stock Equivalents of the
Corporation;

    

    iv)         enter
into any transaction that would constitute a Change of Control
Transaction;

    

    v)          enter
into any transaction that would constitute a Fundamental Transaction;
or

    

    vi)         engage
in a registered offering of any Common Stock or Common Stock Equivalents of the
Corporation.

    

    c)           If
the Corporation defaults in complying with the covenants set out in subsection
(a) or (b) above, the Corporation shall have thirty (30) days following notice
by the holders of the Parity Securities and/or the Winfield Group, respectively,
specifying the nature of the such default, to remedy such default by (i) taking
all necessary corporate action to void the action that is the subject of such
default; (ii) obtaining the requisite approval of the holders of the Parity
Securities and/or the Winfield Group, respectively, for such action consistent
with the provisions of this Section 8; or (iii) obtaining a waiver of such
default from the holders of the Parity Securities and/or the Winfield Group,
respectively.

    

    Section
9.  Preemptive
Rights.

    

    a)           From
the date hereof until such time all Holders no longer hold any shares
of  Series B Preferred Stock, upon any issuance by the Corporation or
any of its Subsidiaries of Common Stock, Common Stock Equivalents for cash
consideration, or a combination of units hereof (a “Subsequent
Financing”), each Holder, collectively with all holders of Parity
Securities, shall have the right to participate in up to an amount of the
Subsequent Financing equal to 100% of the Subsequent Financing (the “Participation
Maximum”) on the same terms, conditions and price provided for in the
Subsequent Financing.

    

    b)           At
least five (5) Trading Days prior to the closing of the Subsequent Financing,
the Corporation shall deliver to each Holder a written notice of its intention
to effect a Subsequent Financing (“Pre-Notice”), which
Pre-Notice shall ask such Holder if it wants to review the details of such
financing (such additional notice, a “Subsequent Financing
Notice”).  Upon the request of a Holder, and only upon a
request by such Holder, for a Subsequent Financing Notice, the Corporation shall
promptly, but no later than one (1) Trading Day after such request, deliver a
Subsequent Financing Notice to such Holder.  The Subsequent Financing
Notice shall describe in reasonable detail the proposed terms of such Subsequent
Financing, the amount of proceeds intended to be raised thereunder and the
Person or Persons through or with whom such Subsequent Financing is proposed to
be effected and shall include a term sheet or similar document relating thereto
as an attachment.

    

    c)           Any
Holder desiring to participate in such Subsequent Financing must provide written
notice to the Corporation by not later than 5:30 p.m. (New York City time) on
the fourth (4th)
Trading Day after all of the Holders have received the Pre-Notice that the
Holder is willing to participate in the Subsequent Financing, the amount of the
Holder’s participation, and representing and warranting that the Holder has such
funds ready, willing, and available for investment on the terms set forth in the
Subsequent Financing Notice.  If the Corporation receives no such
notice from a Holder as of such fourth (4th)
Trading Day, such Holder shall be deemed to have notified the Corporation that
it does not elect to participate.

    
      
         

      

      
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    EXHIBIT
4.3

    

    d)           If
by 5:30 p.m. (New York City time) on the fourth (4th) Trading
Day after all of the Holders have received the Pre-Notice, notifications by the
Holders and holders of Parity Securities of their willingness to participate in
the Subsequent Financing (or to cause their designees to participate) is, in the
aggregate, less than the total amount of the Subsequent Financing, then the
Corporation may effect the remaining portion of such Subsequent Financing on the
terms and with the Persons set forth in the Subsequent Financing
Notice.

    

    e)           If
by 5:30 p.m. (New York City time) on the fourth (4th)
Trading Day after all of the Holders have received the Pre-Notice, the
Corporation receives responses to a Subsequent Financing Notice from Holders and
holders of Parity Securities seeking to purchase more than the aggregate amount
of the Participation Maximum, each such Holder shall have the right to purchase
its Pro Rata Portion (as defined below) of the Participation
Maximum.  “Pro Rata Portion” of
a Holder means the ratio of: (x) the aggregate Stated Value of the Parity
Securities issued to such Holder on the Closing Date; and (y) the aggregate
Stated Value of the Parity Securities issued to all holders of Parity Securities
participating in such Subsequent Financing under this Section 9.

    

    f)           The
Corporation must provide the Holders with a second Subsequent Financing Notice,
and the Holders will again have the right of participation set forth above in
this Section 9,
if the Subsequent Financing subject to the initial Subsequent Financing Notice
is not consummated for any reason on the terms set forth in such Subsequent
Financing Notice within thirty (30) Trading Days after the date of the initial
Subsequent Financing Notice.

    

    g)           Notwithstanding
the foregoing, this Section 9 shall not
apply in respect of (i) an Exempt Issuance or (ii) an underwritten public
offering of Common Stock.

    

    Section
10.  Miscellaneous.

    

    a)           Notices.  Any
and all notices or other communications or deliveries to be provided by the
Holders hereunder including, without limitation, any Notice of Conversion, shall
be in writing and delivered personally, or sent by a nationally recognized
overnight courier service, addressed to the Corporation, at P.O. Box 1118, 1200
American Flat Road, Virginia City, NV 89440, Attention: President, or such other
address as the Corporation may specify for such purposes by notice to the
Holders delivered in accordance with this Section 10(a).  Any
and all notices or other communications or deliveries to be provided by the
Corporation hereunder shall be in writing and delivered personally, or sent by a
nationally recognized overnight courier service addressed to each Holder at the
address of such Holder appearing on the books of the Corporation, or if no such
address appears on the books of the Corporation, at the principal place of
business of such Holder, as set forth in the Purchase Agreement.  Any
notice or other communication or deliveries hereunder shall be deemed given and
effective on the earliest of (i) the second Trading Day following the date of
mailing, if sent by U.S. nationally recognized overnight courier service, or
(ii) upon actual receipt by the party to whom such notice is required to be
given.

    

    b)           Absolute
Obligation.  Except as expressly provided herein, no provision
of this Certificate of Designation shall alter or impair the obligation of the
Corporation, which is absolute and unconditional, to pay accrued dividends on
the shares of Series B Preferred Stock at the time, place, and rate, and in the
coin, currency or shares (as applicable), herein prescribed.

    

    c)           Lost or Mutilated Series B
Preferred Stock Certificate.  If a Holder’s Series B Preferred
Stock certificate shall be mutilated, lost, stolen or destroyed, the Corporation
shall execute and deliver, in exchange and substitution for and upon
cancellation of a mutilated certificate, or in lieu of or in substitution for a
lost, stolen or destroyed certificate, a new certificate for the shares of
Series B Preferred Stock so mutilated, lost, stolen or destroyed, but only upon
receipt of evidence of such loss, theft or destruction of such certificate, and
of the ownership hereof reasonably satisfactory to the
Corporation.

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    EXHIBIT
4.3

    

    d)           Governing
Law.  All questions concerning the construction, validity,
enforcement and interpretation of this Certificate of Designation shall be
governed by and construed and enforced in accordance with the internal laws of
the State of Nevada, without regard to the principles of conflict of laws
thereof.  The Corporation and each Holder agrees that all legal
proceedings concerning the interpretation, enforcement and defense of the
transactions contemplated by any of the Transaction Documents (whether brought
against a party hereto or its respective Affiliates, directors, officers,
shareholders, employees or agents) shall be commenced in the state and federal
courts sitting in the City of New York, Borough of Manhattan (the “New York
Courts”).  The Corporation and each Holder hereby irrevocably
submits to the exclusive jurisdiction of the New York Courts for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of any of the Transaction Documents), 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 such New York Courts,
or such New York Courts are improper or inconvenient venue for such
proceeding.  The Corporation and each Holder hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to it at the address in
effect for notices to it under this Certificate of Designation and agrees that
such service shall constitute good and sufficient service of process and notice
thereof.  Nothing contained herein shall be deemed to limit in any way
any right to serve process in any other manner permitted by applicable law. The
Corporation and each Holder hereby irrevocably waives, to the fullest extent
permitted by applicable law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Certificate of Designation or the
transactions contemplated hereby.  If the Corporation or any Holder
shall commence an action or proceeding to enforce any provisions of this
Certificate of Designation, 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 in the investigation, preparation and
prosecution of such action or proceeding.

    

    e)           Waiver.  Any
waiver by the Corporation or a Holder of a breach of any provision of this
Certificate of Designation shall not operate as or be construed to be a waiver
of any other breach of such provision or of any breach of any other provision of
this Certificate of Designation or a waiver by any other Holders.  The
failure of the Corporation or a Holder to insist upon strict adherence to any
term of this Certificate of Designation on one or more occasions shall not be
considered a waiver or deprive that party (or any other Holder) of the right
thereafter to insist upon strict adherence to that term or any other term of
this Certificate of Designation on any other occasion.  Any waiver by
the Corporation or a Holder must be in writing.

    

    f)           Severability.  If
any provision of this Certificate of Designation is invalid, illegal or
unenforceable, the balance of this Certificate of Designation shall remain in
effect, and if any provision is inapplicable to any Person or circumstance, it
shall nevertheless remain applicable to all other Persons and
circumstances.  If it shall be found that any interest or other amount
deemed interest due hereunder violates the applicable law governing usury, the
applicable rate of interest due hereunder shall automatically be lowered to
equal the maximum rate of interest permitted under applicable law.

    

    g)           Next Business
Day.  Whenever any payment or other obligation hereunder shall
be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day.

    

    h)           Headings.  The
headings contained herein are for convenience only, do not constitute a part of
this Certificate of Designation and shall not be deemed to limit or affect any
of the provisions hereof.

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

    EXHIBIT
4.3

    

    i)   
        Status of Converted or
Redeemed Series B Preferred Stock.  Shares of Series B
Preferred Stock may only be issued pursuant to the Transaction
Documents.  If any shares of Series B Preferred Stock shall be
converted, redeemed or reacquired by the Corporation, such shares shall resume
the status of authorized but unissued shares of Preferred Stock and shall no
longer be designated as 7 1⁄2% Series B Convertible Preferred Stock.

    

    *********************

    
      
         

      

      
        21EXHIBIT
10.1

    

    SECURITIES
PURCHASE AGREEMENT

     

    This
Securities Purchase Agreement (this “Agreement”) is dated
as of August 31, 2010, between Comstock Mining Inc., a Nevada corporation (the
“Company”), and
each Purchaser identified on Schedule A hereto
(each, including its successors and assigns, a “Purchaser” and
collectively, the “Purchasers”).

     

    WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to
Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”), and
Rule 506 promulgated thereunder, the Company desires to issue and sell to each
Purchaser, and each Purchaser, severally and not jointly, desires to purchase
from the Company, securities of the Company as more fully described in this
Agreement; and

     

    NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration the receipt and adequacy of which
are hereby acknowledged, the Company and each Purchaser agree as
follows:

    

    ARTICLE
1

    DEFINITIONS

     

    1.1          Definitions.  In
addition to the terms defined elsewhere in this Agreement: (a) capitalized terms
that are not otherwise defined herein have the meanings given to such terms in
the other Transaction Documents (as applicable), and (b) the following terms
have the meanings set forth in this Section
1.1:

     

    “Affiliate” means any
Person that, directly or indirectly through one or more intermediaries, controls
or is controlled by or is under common control with a Person, as such terms are
used in and construed under Rule 405 under the Securities Act.

     

    “Board of Directors”
means the board of directors of the Company.

     

    “Business Day” means
any day except any Saturday, any Sunday, any day which is a federal legal
holiday in the United States or any day on which banking institutions in the
State of New York are authorized or required by law or other governmental action
to close.

    

    “Closing” means the
closing of the purchase and sale of the Securities pursuant to Section
2.1.

     

    “Closing Date” has the
meaning set forth in Section
2.1.

     

    “Commission” means the
United States Securities and Exchange Commission.

     

    “Common Stock” means
the common stock of the Company, par value $0.000666 per share, and any other
class of securities into which such common stock may hereafter be reclassified
or changed.

     

    “Common Stock
Equivalents” means any securities of the Company or the Subsidiaries
which would, directly or indirectly, 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, directly or
indirectly, convertible into or exercisable or exchangeable for, or otherwise
entitles the holder thereof to receive, Common Stock.

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    EXHIBIT
10.1

    

    “Company Counsel”
means Kelley Drye & Warren LLP, with offices located at 101 Park Avenue, New
York, NY 10178.

    

    “Cross-Receipt” means
the cross receipts executed by the Purchasers and the Company, each in the form
of Exhibit F
hereto.

     

    “Disclosure Schedules”
shall have the meaning set forth in Section
3.1.

    

    “Effective
Date” means the earlier of the date that (a) all of the Registrable
Securities (as defined in the Registration Rights Agreement) have been
registered for resale by the holders thereof pursuant to a registration
statement(s) declared effective by the Commission or (b) all of the Registrable
Securities have been sold pursuant to Rule 144 or may be sold pursuant to Rule
144 without volume or manner-of-sale restrictions, so long as the Company is
current with the public information requirements under Rule 144.

     

    “Exchange Act” means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.

     

    “Exempt Issuance”
means the issuance of (a) shares of Common Stock or options to employees,
officers or directors of the Company pursuant to any stock or option plan (i)
duly adopted for such purpose, by a majority of the non-employee members of the
Board of Directors or a majority of the members of a committee of non-employee
directors established for such purpose, and (ii) approved pursuant to the
provisions of Section 8 of the Series A-1 Certificate of Designation and the
Series A-2 Certificate of Designation, (b) securities upon the exercise or
exchange of or conversion of any Securities issued hereunder (including, without
limitation, any Underlying Shares) and/or other securities exercisable or
exchangeable for or convertible into shares of Common Stock issued and
outstanding on the date of this Agreement or as disclosed in the Company’s
Disclosure Schedules, provided that such securities have not been amended on or
after the date of this Agreement to increase the number of such securities or to
decrease the exercise price, exchange price or conversion price of such
securities (it being understood that such securities may be adjusted for
anti-dilution purposes in connection with this Agreement), (c) securities issued
pursuant to acquisitions or strategic transactions approved by (i) a majority of
the disinterested directors of the Company, and (ii) pursuant to the provisions
of Section 8 of the Series A-1 Certificate of Designation and the Series A-2
Certificate of Designation, and (d) securities issued as consideration for (i)
dividends to the Purchasers of the Preferred Stock under the Series A-1
Certificate of Designation and the Series A-2 Certificates of Designation and to
purchasers of any other Parity Securities (including, solely with respect to the
Series A-2 Preferred Stock and any other Parity Securities, as the case may be,
any and all shares of Common Stock issuable in lieu of cash payments pursuant to
the Make-Whole Payment and including, solely with respect to the Series A-1
Preferred Stock, any and all shares of Common Stock issuable in lieu of cash
payments pursuant to the Additional Dividend payment (as defined in the Series
A-1 Certificate of Designation)); or (ii) capital contributions to Northern
Comstock LLC made pursuant to the Limited Liability Company Operating
Agreement.

     

    “Existing Debt Amount”
means, with respect to each Purchaser, the amount owed by the Company to such
Purchaser under such Purchaser’s Existing Promissory Note as of the Closing, as
set forth on Schedule
A hereto.

    

    “Existing Promissory
Notes” means the promissory notes listed on Schedule B
hereto.

    

    “GAAP” shall have the
meaning ascribed to such term in Section
3.1(h).

     

    “Liens” means a lien,
charge, security interest, encumbrance, right of first refusal, preemptive right
or other restriction.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    EXHIBIT
10.1

    

    “Limited Liability Company
Operating Agreement” means the Northern Comstock LLC Limited Liability
Company Operating Agreement, dated August __, 2010, entered into among DWC
Resources Inc., John Winfield and the Company, in the form of Exhibit G
hereto.

     

    “Lost Note Affidavit and
Indemnity Agreement” means a Lost Note Affidavit and Indemnity Agreement
in a form reasonably acceptable to the Company in the form attached hereto as
Exhibit
E.

    

    “Material Adverse
Effect” shall have the meaning assigned to such term in Section
3.1(b).

     

    “Northern Comstock
LLC” means the limited liability company formed under Chapter 86 of the
Nevada Revised Statutes Act on August __, 2010.

    

    “Participation
Maximum” shall have the meaning ascribed to such term in Section
4.8(a).

     

    “Payoff Letter” means
the payoff letters executed by the Purchasers in favor of the Company, each in
the form of Exhibit
A hereto, providing for termination and release of all obligations under
the applicable Existing Promissory Note and related Loan Documents (as defined
in such Payoff Letter).

    

    “Person” means an
individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any
kind.

     

    “Preferred Stock”
means shares of Series A-1 Preferred Stock and shares of Series A-2 Preferred
Stock issued to the Purchasers hereunder.

    

    “Pre-Notice” shall
have the meaning ascribed to such term in Section
4.8(b).

     

    “Pro Rata Portion”
shall have the meaning ascribed to such term in Section
4.8(e).

     

    “Proceeding” means an
action, claim, suit, investigation or proceeding (including, without limitation,
an informal investigation or partial proceeding, such as a deposition), whether
commenced or threatened.

     

    “Purchaser Party”
shall have the meaning ascribed to such term in Section
4.6.

     

    “Registration Rights
Agreement” means the Registration Rights Agreement, in the form of Exhibit B hereto, by
and among the Company and the Purchasers, providing registration rights with
respect to the Underlying Shares held by the Purchasers on the terms and
conditions set forth therein.

    

    “Required Approvals”
shall have the meaning ascribed to such term in Section
3.1(e).

     

    “Required Minimum”
means, as of any date, the maximum aggregate number of shares of Common Stock
then issued or potentially issuable in the future pursuant to the Transaction
Documents, including any Underlying Shares, ignoring any conversion or exercise
limits set forth therein and assuming that any previously unconverted shares of
Preferred Stock are held until the third anniversary of the Closing Date and all
dividends are paid in shares of Common Stock or Preferred Stock until such third
anniversary.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    EXHIBIT
10.1

    

    “Rule 144” means Rule
144 promulgated by the Commission pursuant to the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same effect as such
Rule.

     

    “SEC Reports” shall
have the meaning ascribed to such term in Section
3.1(h).

     

    “Securities” means the
Preferred Stock and the Underlying Shares.

     

    “Securities Act” means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.

    

    “Series A-1 Certificate of
Designation” means the 71⁄2% Series A-1 Convertible Preferred Stock
Certificate of Designation to be filed prior to the Closing by the Company with
the Secretary of State of Nevada, in the form of Exhibit C attached
hereto.

    

    “Series A-1 Preferred
Stock” means the Company’s 71⁄2% Series A-1 Convertible Preferred Stock
issued hereunder having the rights, preferences and privileges set forth in the
Series A-1 Certificate of Designation.

    

    “Series A-2 Certificate of
Designation” means the 71⁄2% Series A-2 Convertible Preferred Stock
Certificate of Designation to be filed prior to the Closing by the Company with
the Secretary of State of Nevada, in the form of Exhibit D attached
hereto.

    

    “Series A-2 Preferred
Stock” means the Company’s 71⁄2% Series A-2 Convertible Preferred Stock
issued hereunder having the rights, preferences and privileges set forth in the
Series A-2 Certificate of Designation.

    

    “Short Sales” means
all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange
Act (but shall not be deemed to include the location and/or reservation of
borrowable shares of Common Stock).

     

    “Stated Value” means
$1,000 per share of Preferred Stock, subject to adjustment as provided in the
Series A-1 Certificate of Designation or the Series A-2 Certificate of
Designation (as applicable).

     

    “Subsequent Financing”
shall have the meaning ascribed to such term in Section
4.8(a).

     

    “Subsequent Financing
Notice” shall have the meaning ascribed to such term in Section
4.8(b).

     

    “Subsidiary” shall
have the meaning ascribed to such term in Section 3.1(a) and
shall, where applicable, also include any direct or indirect subsidiary of the
Company formed or acquired after the date hereof.

     

    “Trading Day” means a
day on which the principal Trading Market is open for trading.

     

    “Trading Market” means
any of the following markets or exchanges on which the Common Stock is listed or
quoted for trading on the date in question: the New York Stock Exchange,
American Stock Exchange, the Toronto Stock Exchange, the Nasdaq Capital Market,
the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock
Exchange or the OTC Bulletin Board (or any successors to any of the
foregoing).

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    EXHIBIT
10.1

    

    “Transaction
Documents” means this Agreement, the Series A-1 Certificate of
Designation, the Series A-2 Certificate of Designation, the Registration Rights
Agreement, all exhibits and schedules thereto and hereto, and any other
documents or agreements executed in connection with the transactions
contemplated hereunder (including, without limitation, the documents referenced
in Section
2.2(c)(ii)(B)).

     

    “Transfer Agent” means
Corporate Stock Transfer Inc., the current transfer agent of the Company, with a
mailing address of 3200 Cherry Creek South Drive, Suite 430, Denver, CO 80209,
and any successor transfer agent of the Company.

     

    “Underlying Shares”
means the shares of Common Stock that are:

    

    (a)       
  issued and issuable upon conversion of the Series A-1 Preferred
Stock or Series A-2 Preferred Stock issued to the Purchasers hereunder;
and

    

    (b) 
        issued or issuable in lieu of
cash payment of dividends on the Preferred Stock referenced in clause (a) in
accordance with the terms of the Series A-1 Certificate of Designation and the
Series A-2 Certificate of Designation, as applicable (including, solely with
respect to the Series A-2 Preferred Stock, any and all shares of Common Stock
issuable in lieu of cash payments pursuant to the Make-Whole Payment (as defined
in the Series A-2 Certificate of Designation) and including, solely with respect
to the Series A-1 Preferred Stock, any and all shares of Common Stock issuable
in lieu of cash payments pursuant to the Additional Dividend payment (as defined
in the Series A-1 Certificate of Designation).

     

    ARTICLE
2

    PURCHASE
AND SALE

     

    2.1     
    Closing.  

    

    (a)     
    On the date hereof (the “Closing Date”), upon
the terms and subject to the conditions set forth herein, substantially
concurrent with the execution and delivery of this Agreement by the parties
hereto, the Company agrees to sell, and the Purchasers, severally and not
jointly, each agree to purchase, the number of shares of Series A-1 Preferred
Stock or Series A-2 Preferred Stock (as applicable), as set forth on Schedule A hereto,
determined by dividing such Purchaser’s Existing Debt Amount, as set forth on
Schedule A
hereto, by the Stated Value of one (1) share of Series A-1 Preferred Stock or
Series A-2 Preferred Stock (as applicable)

    

    (b)     
    The Company and each Purchaser shall each deliver the
items set forth in Section 2.2
deliverable at the Closing.  Upon satisfaction of the covenants and
conditions set forth in Sections 2.2 and
2.3, the
Closing shall occur at the offices of Company Counsel or such other location as
the parties shall mutually agree.

     

    2.2    
     Deliveries.

     

    (a)     
    On or prior to the Closing Date, the Company shall
deliver or cause to be delivered to each Purchaser the following:

     

    (i)           this
Agreement and the Registration Rights Agreement, and such Purchaser’s Payoff
Letter and Cross-Receipt, each duly executed by the Company, and (ii) evidence
of the filing and acceptance of the Series A-1 Certificate of Designation or the
Series A-2 Certificate of Designation (as applicable), from the Secretary of
State of Nevada.

    
      
         

      

      
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    EXHIBIT
10.1

    

    (b)          Within
five (5) Business Days after the Closing Date, the Company shall deliver or
cause to be delivered to each Purchaser a certificate evidencing the number of
shares of Preferred Stock issued to such Purchaser, determined as provided
herein, registered in the name of such Purchaser.

    

    (c)          On
or prior to the Closing Date, each Purchaser shall deliver or cause to be
delivered to the Company the following:

     

    (i)           this
Agreement, the Registration Rights Agreement and such Purchaser’s Payoff Letter,
each duly executed by such Purchaser, and (ii) such Purchaser’s original
Existing Promissory Note or a Lost Note Affidavit and Indemnity Agreement, duly
executed by such Purchaser.

    

    (d)          Upon
receipt of the certificate identified in subsection (b) above, the Purchaser
shall deliver or cause to be delivered to the Company such Purchaser’s
Cross-Receipt, duly executed by such Purchaser.

     

    2.3         
Closing
Conditions.

     

    (a)          The
obligations of the Company hereunder in connection with the Closing are subject
to the following conditions being met:

     

    (i)          
the accuracy in all material respects on the Closing Date of the representations
and warranties of the Purchasers contained herein (unless as of a specific date
therein);

     

    (ii)          all
obligations, covenants and agreements of each Purchaser required to be performed
at or prior to the Closing Date shall have been performed; and

     

    (iii)         the
delivery by each Purchaser of the items set forth in Sections 2.2(c) and
(d) of this Agreement.

     

    (b)          The
respective obligations of the Purchasers hereunder in connection with the
Closing are subject to the following conditions being met:

     

    (i)          
the accuracy in all material respects when made and on the Closing Date of the
representations and warranties of the Company contained herein (unless as of a
specific date therein);

     

    (ii)         
all obligations, covenants and agreements of the Company required to be
performed at or prior to the Closing Date shall have been performed;
and

     

    (iii)         the
delivery by the Company of the items set forth in Sections 2.2(a) and
(b) of this Agreement.

     

    ARTICLE
3

    REPRESENTATIONS
AND WARRANTIES

     

    3.1          Representations and
Warranties of the Company.  Except as set forth in the Disclosure Schedules,
which Disclosure Schedules shall be deemed a part hereof and shall qualify any
representation otherwise made herein to the extent of the disclosure contained
in the corresponding section of the Disclosure Schedules, the Company hereby
makes the following representations and warranties to each
Purchaser:

    
      
         

      

      
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    EXHIBIT
10.1

    

    (a)           Subsidiaries.  GoldSpring,
LLC, The Plum Mining Company, LLC, and the Plum Mine Special Purpose Company LLC
(collectively, the “Subsidiaries,” and
each a “Subsidiary”) are the
only direct or indirect subsidiaries of the Company.  The Company
owns, directly or indirectly, all of the capital stock or other equity interests
of each Subsidiary free and clear of any Liens, other than Liens incurred in
connection with the Existing Promissory Notes and which shall be discharged at
the Closing of the transactions contemplated hereunder, and all of the issued
and outstanding shares of capital stock of each Subsidiary are validly issued
and are fully paid, non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities.

     

    (b)           Organization and
Qualification.  The Company and each of the Subsidiaries is an
entity duly incorporated or otherwise organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization, with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently
conducted.  Neither the Company nor any Subsidiary is in violation or
default of any of the material provisions of its respective certificate or
articles of incorporation, bylaws or other organizational or charter
documents.  Each of the Company and the Subsidiaries is duly qualified
to conduct business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, could not
have or reasonably be expected to result in: (i) a material adverse effect on
the legality, validity or enforceability of any Transaction Document, (ii) a
material adverse effect on the results of operations, assets, business,
prospects or condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole, or (iii) a material adverse effect on the
Company’s ability to perform in any material respect on a timely basis its
obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse
Effect”) and no Proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing or seeking to revoke, limit or curtail such
power and authority or qualification.

    

    (c)           Authorization;
Enforcement.  The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by each
of the Transaction Documents and otherwise to carry out its obligations
hereunder and thereunder.  The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary action on the part of the Company and no further action is required by
the Company, the Board of Directors or the Company’s stockholders in connection
therewith.  Each Transaction Document to which it is a party has been
(or upon delivery will have been) duly executed by the Company and, when
delivered in accordance with the terms hereof and thereof, will constitute the
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except: (i) as limited by general equitable
principles and applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors’ rights
generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable
law.

    
      
         

      

      
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    EXHIBIT
10.1

    

    (d)           No
Conflicts.  The execution, delivery and performance by the
Company of the Transaction Documents, the issuance and sale of the Securities
and the consummation by it of the transactions contemplated hereby and thereby
to which it is a party do not and will not: (i) conflict with or violate any
provision of the Company’s or any Subsidiary’s certificate or articles of
incorporation, bylaws or other organizational or charter documents, (ii)
conflict with, or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, result in the creation of any Lien
upon any of the properties or assets of the Company or any Subsidiary, or give
to others any rights of termination, amendment, acceleration or cancellation
(with or without notice, lapse of time or both) of, any agreement, credit
facility, debt or other instrument (evidencing a Company or Subsidiary debt or
otherwise) or other understanding to which the Company or any Subsidiary is a
party or by which any property or asset of the Company or any Subsidiary is
bound or affected, or (iii) subject to the Required Approvals, conflict with or
result in a violation of any law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or governmental authority to which the
Company or a Subsidiary is subject (including federal and state securities laws
and regulations), or by which any property or asset of the Company or a
Subsidiary is bound or affected; except in the case of each of clauses (ii) and
(iii), such as
could not have or reasonably be expected to result in a Material Adverse
Effect.

     

    (e)           Filings, Consents and
Approvals.  The Company is not required to obtain any consent,
waiver, authorization or order of, give any notice to, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of the Transaction Documents, other
than: (i) the filings required pursuant to Section 4.5 of this
Agreement, (ii) the filings with the Commission pursuant to the Registration
Rights Agreement, (iii) the notice and/or application(s) to each applicable
Trading Market for the issuance and sale of the Preferred Stock and the listing
of the Underlying Shares for trading thereon in the time and manner required
thereby, and (iv) the filing of Form D with the Commission and such filings as
are required to be made under applicable state securities laws (collectively,
the “Required
Approvals”).

    

    (f)           
Issuance of the
Securities.  The Securities are duly authorized and, when
issued and paid for in accordance with the applicable Transaction Documents,
will be duly and validly issued, fully paid and nonassessable, free and clear of
all Liens imposed by the Company other than restrictions on transfer provided
for in the Transaction Documents.  The Underlying Shares, when issued
in accordance with the terms of the Transaction Documents, will be validly
issued, fully paid and nonassessable, free and clear of all Liens imposed by the
Company other than restrictions on transfer provided for in the Transaction
Documents.  The Company has reserved from its duly authorized capital
stock a number of shares of Common Stock for issuance of the Underlying Shares
at least equal to 100% of the shares of Common Stock initially issuable upon
conversion of the Preferred Stock issuable hereunder.

     

    (g)           Capitalization.  The
capitalization of the Company is as set forth on Schedule 3.1(g),
which Schedule
3.1(g) also includes the number of shares of Common Stock owned
beneficially, and of record, by Affiliates of the Company as of the date
hereof.  No Person has any right of first refusal, preemptive right,
right of participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents.  Except as a result of the
purchase and sale of the Securities or as set forth in Schedule 3.1(g) or in
the SEC Reports, there are no outstanding options, warrants, scrip rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities, rights or obligations convertible into or exercisable or
exchangeable for, or giving any Person any right to subscribe for or acquire any
shares of Common Stock, or contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary is or may become bound to
issue additional shares of Common Stock or Common Stock
Equivalents.  The issuance and sale of the Securities will not
obligate the Company to issue shares of Common Stock or other securities to any
Person (other than the Purchasers) and will not result in a right of any holder
of Company securities to adjust the exercise, conversion, exchange or reset
price under any of such securities.  All of the outstanding shares of
capital stock of the Company are validly issued, fully paid and nonassessable,
have been issued in compliance with all federal and state securities laws, and
none of such outstanding shares was issued in violation of any preemptive rights
or similar rights to subscribe for or purchase securities.  No further
approval or authorization of any stockholder, the Board of Directors or others
is required for the issuance and sale of the Securities.  There are no
stockholders agreements, voting agreements or other similar agreements with
respect to the Company’s capital stock to which the Company is a party or, to
the knowledge of the Company, between or among any of the Company’s
stockholders.

    
      
         

      

      
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    EXHIBIT
10.1

    

    (h)           SEC Reports; Financial
Statements.  The Company has filed all quarterly and annual
reports required to be filed by the Company under the Exchange Act for the three
(3) years preceding the date hereof (the foregoing materials, including the
exhibits thereto and documents incorporated by reference therein, being
collectively referred to herein as the “SEC Reports”) on a
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Reports prior to the expiration of any such
extension.  As of their respective dates, the SEC Reports complied in
all material respects with the requirements of the Securities Act and the
Exchange Act, as applicable, and none of the SEC Reports, when filed, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.  The financial statements of the Company included in the SEC
Reports comply in all material respects with applicable accounting requirements
and the rules and regulations of the Commission with respect thereto as in
effect at the time of filing.  Such financial statements have been
prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis during the periods involved (“GAAP”), except as may
be otherwise specified in such financial statements or the notes thereto and
except that unaudited financial statements may not contain all footnotes
required by GAAP, and fairly present in all material respects the financial
position of the Company and its consolidated Subsidiaries as of and for the
dates thereof and the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal, immaterial,
year-end audit adjustments.

     

    (i)
           Material Changes;
Undisclosed Events, Liabilities or Developments. Except as set forth on
Schedule 3.1(i)
or the SEC Reports, since the date of the latest audited financial statements
included within the SEC Reports: (i) there has been no event, occurrence or
development that has had or that could reasonably be expected to result in a
Material Adverse Effect, (ii) the Company has not incurred any liabilities
(contingent or otherwise) other than (a) trade payables and accrued expenses
incurred in the ordinary course of business consistent with past practice and
(b) liabilities not required to be reflected in the Company’s financial
statements pursuant to GAAP or disclosed in filings made with the Commission,
(iii) the Company has not altered its method of accounting, (iv) the Company has
not declared or made any dividend or distribution of cash or other property to
its stockholders or purchased, redeemed or made any agreements to purchase or
redeem any shares of its capital stock and (v) the Company has not issued any
equity securities to any officer, director or Affiliate, except pursuant to
existing Company stock option plans.  The Company does not have
pending before the Commission any request for confidential treatment of
information.  Except for the issuance of the Securities contemplated
by this Agreement or as set forth on Schedule 3.1(i), no
event, liability, fact, circumstance, occurrence or development has occurred or
exists or is reasonably expected to occur or exist with respect to the Company
or its Subsidiaries or their respective business, properties, operations, assets
or financial condition, that would be required to be disclosed by the Company
under applicable securities laws at the time this representation is made or
deemed made that has not been publicly disclosed at least one (1) Trading Day
prior to the date that this representation is made.

    

    (j)
          Private Placement.
Assuming the accuracy of the Purchasers’ representations and warranties set
forth in Section
3.2, no registration under the Securities Act is required for the offer
and sale of the Securities by the Company to the Purchasers as contemplated
hereby.  The issuance and sale of the Securities hereunder does not
contravene the rules and regulations of the Trading Market.

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    EXHIBIT
10.1

    

    (k)  
        No Integrated
Offering. Assuming the accuracy of the Purchasers’ representations and
warranties set forth in Section 3.2, neither
the Company, nor any of its Affiliates, nor any Person acting on its or their
behalf has, directly or indirectly, made any offers or sales of any security or
solicited any offers to buy any security, under circumstances that would cause
this offering of the Securities to be integrated with prior offerings by the
Company for purposes of (i) the Securities Act which would require the
registration of any such securities under the Securities Act, or (ii) any
applicable stockholder approval provisions of any Trading Market on which any of
the securities of the Company are listed or designated.

     

    (l) 
          No General
Solicitation.  Neither the Company nor any person acting on
behalf of the Company has offered or sold any of the Securities by any form of
general solicitation or general advertising.  The Company has offered
the Securities for sale only to the Purchasers and certain other “accredited
investors” within the meaning of Rule 501 under the Securities Act.

    

    (m)          Litigation.  There
is no action, suit, inquiry, notice of violation, proceeding or investigation
pending or, to the knowledge of the Company, threatened against or affecting the
Company, any Subsidiary or any of their respective properties before or by any
court, arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an “Action”) which (i)
adversely affects or challenges the legality, validity or enforceability of any
of the Transaction Documents or the Securities or (ii) could, if there were an
unfavorable decision, have or reasonably be expected to result in a Material
Adverse Effect.  There has not been, and to the knowledge of the
Company, there is not pending or contemplated, any investigation by the
Commission involving the Company or any current or former director or officer of
the Company.  The Commission has not issued any stop order or other
order suspending the effectiveness of any registration statement filed by the
Company or any Subsidiary under the Exchange Act or the Securities
Act.

    

    (n)           Compliance.  Neither
the Company nor any Subsidiary: (i) is in default under or in violation of (and
no event has occurred that has not been waived that, with notice or lapse of
time or both, would result in a default by the Company or any Subsidiary under),
nor has the Company or any Subsidiary received notice of a claim that it is in
default under or that it is in violation of, any indenture, loan or credit
agreement or any other agreement or instrument to which it is a party or by
which it or any of its properties is bound (whether or not such default or
violation has been waived), except as described in the SEC Reports or as set
forth in Schedule
3.1(n) hereto, (ii) is in violation of any judgment, decree or order of
any court, arbitrator or governmental body or (iii) is or has been in violation
of any statute, rule, ordinance or regulation of any governmental authority,
including without limitation all foreign, federal, state and local laws relating
to taxes, environmental protection, occupational health and safety, product
quality and safety and employment and labor matters, except in each case as
could not have or reasonably be expected to result in a Material Adverse
Effect.

    

    (o)           Title to
Assets.  Except as set forth in the SEC Reports, the Company
and the Subsidiaries have good and marketable title in fee simple to all real
property owned by them and good and marketable title in all personal property
owned by them that is material to the business of the Company and the
Subsidiaries, in each case free and clear of all Liens, except for Liens as do
not materially affect the value of such property and do not materially interfere
with the use made and proposed to be made of such property by the Company and
the Subsidiaries and Liens for the payment of federal, state or other taxes, the
payment of which is neither delinquent nor subject to penalties.  Any
real property and facilities held under lease by the Company and the
Subsidiaries are held by them under valid, subsisting and enforceable leases
with which the Company and the Subsidiaries are in compliance.

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    EXHIBIT
10.1

    

    (p)           Sarbanes-Oxley; Internal
Accounting Controls.  The Company is in compliance with any and
all requirements of the Sarbanes-Oxley Act of 2002 applicable to smaller
reporting companies that are effective as of the date hereof, and any and all
applicable rules and regulations promulgated by the Commission thereunder that
are effective as of the date hereof and as of the Closing Date.  The
Company and the Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that: (i) transactions are executed
in accordance with management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management’s general or
specific authorization, and (iv) the recorded balances of assets are compared
with the actual assets of the Company at reasonable intervals and appropriate
action is taken with respect to any differences.  The Company has
established disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls
and procedures to ensure that information required to be disclosed by the
Company in the reports it files or submits under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the
Commission’s rules and forms.  The Company’s certifying officers have
evaluated the effectiveness of the Company’s disclosure controls and procedures
as of the end of the period covered by the Company’s most recently filed
periodic report under the Exchange Act (such date, the “Evaluation
Date”).  The Company presented in its most recently filed
periodic report under the Exchange Act the conclusions of the certifying
officers about the effectiveness of the disclosure controls and procedures based
on their evaluations as of the Evaluation Date.  Since the Evaluation
Date, there have been no changes in the Company’s internal control over
financial reporting (as such term is defined in the Exchange Act) that has
materially affected, or is reasonably likely to materially affect, the Company’s
internal control over financial reporting.

    

    (q)           Tax
Status.  Except for matters that would not, individually or in
the aggregate, have or reasonably be expected to result in a Material Adverse
Effect, the Company and each Subsidiary (i) has made or filed all required
United States federal and state income and all foreign income and franchise tax
returns (or extension requests related thereto), reports and declarations
required by any jurisdiction to which it is subject, (ii) has paid all taxes and
other governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations and (iii) has set
aside on its books provision reasonably adequate for the payment of all material
taxes for periods subsequent to the periods to which such returns, reports or
declarations apply.  There are no unpaid taxes in any material amount
claimed to be due by the taxing authority of any jurisdiction, and the officers
of the Company or of any Subsidiary know of no basis for any such
claim.

     

    3.2          Representations and
Warranties of the Purchasers.  Each Purchaser, for itself and
for no other Purchaser, severally and not jointly, hereby represents and
warrants as of the date hereof and as of the Closing Date to the Company as
follows (unless as of a specific date therein):

     

    (a)           Organization;
Authority.  Such Purchaser is either an individual or an entity
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with full right, corporate or other power and
authority to enter into and to consummate the transactions contemplated by the
Transaction Documents and otherwise to carry out its obligations hereunder and
thereunder.  The execution and delivery of the Transaction Documents
and performance by such Purchaser of the transactions contemplated by the
Transaction Documents have been duly authorized by all necessary corporate,
partnership, limited liability company or similar action, as applicable, on the
part of such Purchaser.  Each Transaction Document to which it is a
party has been duly executed by such Purchaser, and when delivered by such
Purchaser in accordance with the terms hereof, will constitute the valid and
legally binding obligation of such Purchaser, enforceable against it in
accordance with its terms, except: (i) as limited by general equitable
principles and applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors’ rights
generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies, and (iii) insofar as
indemnification and contribution provisions may be limited by applicable
law.  If the Purchaser(s) is a corporation, trust, partnership or
other entity that is not an individual person, it has not been organized for the
specific purpose of purchasing the Securities and is not prohibited from doing
so.

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    EXHIBIT
10.1

    

    (b)           Own
Account.  Such Purchaser understands that the Securities are
“restricted securities” and have not been registered under the Securities Act or
any applicable state securities law and is acquiring the Securities as principal
for its own account and not with a view to or for distributing or reselling such
Securities or any part thereof in violation of the Securities Act or any
applicable state securities law, has no present intention of distributing any of
such Securities in violation of the Securities Act or any applicable state
securities law and has no direct or indirect arrangement or understandings with
any other persons to distribute or regarding the distribution of such Securities
in violation of the Securities Act or any applicable state securities law (this
representation and warranty not limiting such Purchaser’s right to sell the
Securities pursuant to the Registration Statement or otherwise in compliance
with applicable federal and state securities laws).  Such Purchaser is
acquiring the Securities hereunder in the ordinary course of its
business.

    

    (c)           Purchaser
Status.  At the time such Purchaser was offered the Securities,
it was, and as of the date hereof it is, and on each date on which it converts
any shares of Preferred Stock, it will be either: (i) an “accredited investor”
as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the
Securities Act or (ii) a “qualified institutional buyer” as defined in Rule
144A(a) under the Securities Act.  Such Purchaser is not required to
be registered as a broker-dealer under Section 15 of the Exchange
Act.

     

    (d)           Experience of Such
Purchaser.  Such Purchaser, either alone or together with its
representatives, has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and risks of
the prospective investment in the Securities, and has so evaluated the merits
and risks of such investment.  Such Purchaser is able to bear the
economic risk of an investment in the Securities and, at the present time, is
able to afford a complete loss of such investment.

     

    (e)           Reliance on
Exemptions.  Each Purchaser understands that the Securities are
being offered and sold to it in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying in part upon the truth and accuracy of, and such
Purchaser’s compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Purchaser set forth herein in order
to determine the availability of such exemptions and the eligibility of such
Purchaser to acquire the Securities.  Each Purchaser understands that
no United States federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of the
Securities, or the fairness or suitability of the investment in the Securities,
nor have such authorities passed upon or endorsed the merits of the offering of
the Securities.

     

    (f) 
         General
Solicitation.  Such Purchaser is not purchasing the Securities
as a result of any advertisement, article, notice or other communication
regarding the Securities published in any newspaper, magazine or similar media
or broadcast over television or radio or presented at any seminar or any other
general solicitation or general advertisement.

    

    (g)           Representations of
Purchasers.  Each Purchaser solely owns all right, title and
interest in and to its respective Existing Promissory Note(s) and has not
conveyed any interest or other right in any such Existing Promissory Note to any
other Person or otherwise subjected, or allowed to be subjected, such Existing
Promissory Note to any lien or other encumbrance.  The transactions
contemplated by this Agreement will result in the full and complete release and
satisfaction of any and all obligations of the Company with respect to each
Purchaser’s Existing Promissory Note(s).  The Existing Promissory
Note(s) being tendered by each Purchaser to the Company pursuant to this
Agreement are the only promissory notes or other debt obligations of the Company
to such Purchaser.

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    EXHIBIT
10.1

    

    (h)           No Legal Advice From the
Company; Sole Representations in Agreement.  Each Purchaser
acknowledges that it had the opportunity to review this Agreement and the
transactions contemplated by this Agreement with his or its own legal counsel
and investment and tax advisors.  Each Purchaser is relying solely on
such counsel and advisors and not on any statements or representations of the
Company or any of its representatives or agents for legal, tax or investment
advice with respect to this investment, the transactions contemplated by this
Agreement or the securities laws of any jurisdiction.  Each Purchaser
acknowledges that the only representations being made by the Company in
connection with the transactions contemplated by this Agreement are set forth in
this Article
III and that in connection with its decision to enter into the
transactions contemplated by this Agreement, it is relying only on such
representations in this Article III and the SEC Reports, and not on any other
statements or representations of the Company or any of its representatives or
agents.

     

    (i)
           Each Purchaser
acknowledges, by its execution of this Agreement, that its obligations hereunder
are irrevocable.

    

    The
Company acknowledges and agrees that the representations contained in Section 3.2 shall not
modify, amend or affect such Purchaser’s right to rely on the Company’s
representations and warranties contained in this Agreement or any
representations and warranties contained in any other Transaction Document or
any other document or instrument executed and/or delivered in connection with
this Agreement or the consummation of the transaction contemplated
hereby.

     

    ARTICLE
4

    OTHER
AGREEMENTS OF THE PARTIES

     

    4.1  
        Transfer
Restrictions.

     

    (a)           The
Securities may only be disposed of in compliance with state and federal
securities laws.  In connection with any transfer of Securities other
than pursuant to an effective registration statement or Rule 144, to the Company
or to an Affiliate of a Purchaser or in connection with a pledge as contemplated
in Section
4.1(b), the Company may require the transferor thereof to provide to the
Company an opinion of counsel selected by the transferor and reasonably
acceptable to the Company, the form and substance of which opinion shall be
reasonably satisfactory to the Company, to the effect that such transfer does
not require registration of such transferred Securities under the Securities
Act.  As a condition of transfer, any such transferee shall agree in
writing to be bound by the terms of this Agreement and shall have the rights and
obligations of a Purchaser under this Agreement.

    

    (b) 
         The Purchasers agree to
the imprinting, so long as is required by this Section 4.1, of a
legend on any of the Securities in the following form:

     

    NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAS
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 CONVERSION OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A
REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN
“ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR
OTHER LOAN SECURED BY SUCH SECURITIES.

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    EXHIBIT
10.1

    

    The
Company acknowledges and agrees that a Purchaser may from time to time pledge
pursuant to a bona fide margin agreement with a registered broker-dealer or
grant a security interest in some or all of the Securities to a financial
institution that is an “accredited investor” as defined in Rule 501(a) under the
Securities Act and who agrees to be bound by the provisions of this Agreement
and, if required under the terms of such arrangement, such Purchaser may
transfer pledged or secured Securities to the pledgees or secured
parties.  Such a pledge or transfer would not be subject to approval
of the Company and no legal opinion of legal counsel of the pledgee, secured
party or pledgor shall be required in connection therewith.  Further,
no notice shall be required of such pledge.

    

    (c)           Certificates
evidencing the Underlying Shares shall not contain any legend (including the
legend set forth in Section 4.1(b)
hereof): (i) while a registration statement covering the resale of such security
is effective under the Securities Act, (ii) following any sale of such
Underlying Shares pursuant to Rule 144, (iii) if such Underlying Shares are
eligible for sale under Rule 144, without the requirement for the Company to be
in compliance with the current public information required under Rule 144 as to
such Underlying Shares and without volume or manner-of-sale restrictions or (iv)
if such legend is not required under applicable requirements of the Securities
Act (including judicial interpretations and pronouncements issued by the staff
of the Commission).  The Company shall cause its counsel to issue a
legal opinion to the Transfer Agent promptly after the Effective Date if
required by the Transfer Agent to effect the removal of the legend
hereunder.  If all or any shares of Preferred Stock are converted at a
time when there is an effective registration statement to cover the resale of
the Underlying Shares, or if such Underlying Shares may be sold under Rule 144
and the Company is then in compliance with the current public information
required under Rule 144, or if the Underlying Shares may be sold under Rule 144
without the requirement for the Company to be in compliance with the current
public information required under Rule 144 as to such Underlying Shares and
without volume or manner-of-sale restrictions or if such legend is not otherwise
required under applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the Commission), then
such Underlying Shares shall be issued free of all legends.  The
Company agrees that following the Effective Date or at such time as such legend
is no longer required under this Section 4.1(c), it
will, no later than three Trading Days following the delivery by a Purchaser to
the Company or the Transfer Agent of a certificate representing Underlying
Shares, as applicable, issued with a restrictive legend, deliver or cause to be
delivered to such Purchaser a certificate representing such shares that is free
from all restrictive and other legends.  The Company may not make any
notation on its records or give instructions to the Transfer Agent that enlarge
the restrictions on transfer set forth in this Section
4.1(c).  Certificates for Underlying Shares subject to legend
removal hereunder shall be transmitted by the Transfer Agent to the Purchaser by
crediting the account of the Purchaser’s prime broker with the Depository Trust
Company System as directed by such Purchaser.

     

    (d)           Each
Purchaser, severally and not jointly with the other Purchasers, agrees with the
Company that such Purchaser will only sell any Securities pursuant to either the
registration requirements of the Securities Act, including any applicable
prospectus delivery requirements, or an exemption therefrom, and acknowledges
that the removal of the restrictive legend from certificates representing
Securities as set forth in this Section 4.1 is
predicated upon the Company’s reliance upon this understanding.

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    EXHIBIT
10.1

    

    4.2   
       Furnishing of
Information.  Until the time that no Purchaser owns any
Securities, the Company covenants to maintain the registration of the Common
Stock under Section 12(b) or 12(g) of the Exchange Act and to timely file (or
obtain extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the date hereof
pursuant to the Exchange Act even if the Company is not then subject to the
reporting requirements of the Exchange Act.  As long as any Purchaser
owns any Securities, if the Company is not required to file reports pursuant to
the Exchange Act, it will prepare and furnish to the Purchasers and make
publicly available in accordance with Rule 144(c) such information as is
required for the Purchasers to sell the Securities, including without
limitation, under Rule 144.  The Company further covenants that it
will take such further action as any holder of Securities may reasonably
request, to the extent required from time to time to enable such Person to sell
such Securities without registration under the Securities Act, including without
limitation, within the requirements of the exemption provided by Rule
144.  With regard to the Securities purchased relating to the
Purchasers’ Existing Debt Amount owed by the Plum Mine Special Purpose Company
LLC, as evidenced by the Existing Promissory Notes issued by the Plum Mine
Special Purpose Company, the Company
represents that it has been advised by counsel that, if the Purchasers sought to
transfer such Securities immediately after the Closing, such Securities would be
eligible for tacking under Rule 144.

    

    4.3    
      Integration.  The
Company shall not sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the Securities
Act) that would be integrated with the offer or sale of the Securities in a
manner that would require the registration under the Securities Act of the sale
of the Securities or that would be integrated with the offer or sale of the
Securities for purposes of the rules and regulations of any Trading Market such
that it would require stockholder approval prior to the closing of such other
transaction unless stockholder approval is obtained before the closing of such
subsequent transaction.

     

    4.4     
     Conversion
Procedure.  The form of Notice of Conversion included in the
Series A-1 Certificate of Designation or the Series A-2 Certificate of
Designation (as applicable) sets forth the totality of the procedures required
of the Purchasers in order to convert the Preferred Stock.  No
additional legal opinion, other information or instructions shall be required of
the Purchasers to convert their Preferred Stock.  The Company shall
honor conversions of the Preferred Stock and shall deliver Underlying Shares in
accordance with the terms, conditions and time periods set forth in the
Transaction Documents.

     

    4.5     
     Securities Laws Disclosure;
Publicity.  The Company shall, in accordance with applicable
federal securities law, issue a Current Report on Form 8-K and press release
disclosing the material terms of the transactions contemplated hereby, and
including the Transaction Documents as exhibits thereto.  From and
after the issuance of such press release, the Company shall have publicly
disclosed all material, non-public information delivered to any of the
Purchasers by the Company or any of its subsidiaries, or any of their respective
officers, directors, employees or agents in connection with the transactions
contemplated by the Transaction Documents. The Company and each Purchaser shall
consult with each other in issuing any other press releases with respect to the
transactions contemplated hereby, and neither the Company nor any Purchaser
shall issue any such press release nor otherwise make any such public statement
without the prior consent of the Company, with respect to any press release of
any Purchaser, or without the prior consent of each Purchaser, with respect to
any press release of the Company, which consent shall not unreasonably be
withheld or delayed, except if such disclosure is required by law, in which case
the disclosing party shall promptly provide the other party with prior notice of
such public statement or communication.  Notwithstanding the
foregoing, the Company shall not publicly disclose the name of any Purchaser, or
include the name of any Purchaser in any filing with the Commission or any
regulatory agency or Trading Market, without the prior written consent of such
Purchaser, except: (a) as required by federal securities law in connection with
(i) any registration statement contemplated by the Registration Rights Agreement
and (ii) the filing of final Transaction Documents (including signature pages
thereto) with the Commission; and (b) to the extent such disclosure is required
by law or Trading Market regulations, in which case the Company shall provide
the Purchasers with prior notice of such disclosure permitted under this Section
4.5.

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    EXHIBIT
10.1

    

    4.6    
      Indemnification of
Purchasers.   Subject to the provisions of this Section 4.6, the
Company will indemnify and hold each Purchaser and its directors, officers,
shareholders, members, partners, employees and agents (and any other Persons
with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title), each Person who
controls such Purchaser (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding a
lack of such title or any other title) of such controlling persons (each, a
“Purchaser
Party”) harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and
costs of investigation that any such Purchaser Party may suffer or incur as a
result of or relating to any breach of any of the representations, warranties,
covenants or agreements made by the Company in this Agreement or in the other
Transaction Documents.  The indemnification required by this Section 4.6 shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or are
incurred.

     

    4.7       
   Reservation and Listing of
Securities.

     

    (a)           The
Company shall maintain a reserve from its duly authorized shares of Common Stock
for issuance pursuant to the Transaction Documents in such amount as may then be
required to fulfill its obligations in full under the Transaction
Documents.

     

    (b)           If,
on any date, the number of authorized but unissued (and otherwise unreserved)
shares of Common Stock and/or Preferred Stock is less than 130% of (i) the
Required Minimum on such date, minus (ii) the number of shares of Common Stock
or Preferred Stock (as applicable) previously issued pursuant to the Transaction
Documents, then the Board of Directors shall use commercially reasonable efforts
to amend the Company’s certificate or articles of incorporation to increase the
number of authorized but unissued shares of Common Stock and/or Preferred Stock
(as applicable) to at least the Required Minimum at such time (minus the number
of shares of Common Stock and/or Preferred Stock (as applicable) previously
issued pursuant to the Transaction Documents), as soon as possible and in any
event not later than the 120th day
after such date; provided that the Company will not be required at any time to
authorize a number of shares of Common Stock and/or Preferred Stock (as
applicable) greater than the maximum remaining number of shares of Common Stock
or Preferred Stock (as applicable) that could possibly be issued after such time
pursuant to the Transaction Documents.

    

    (c)           The
Company shall, if applicable: (i) in the time and manner required by the
principal Trading Market, prepare and file with such Trading Market an
additional shares listing application covering a number of shares of Common
Stock at least equal to the Required Minimum on the date of such application,
(ii) take all steps necessary to cause such shares of Common Stock to be
approved for listing or quotation on such Trading Market as soon as possible
thereafter, (iii) provide to the Purchasers evidence of such listing or
quotation and (iv) maintain the listing or quotation of such Common Stock on any
date at least equal to the Required Minimum on such date on such Trading Market
or another Trading Market.

    
      
         

      

      
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    EXHIBIT
10.1

    

    4.8  
        Participation in Future
Financing.

     

    (a)           From
the date hereof until such time as the Purchasers no longer hold any shares of
Preferred Stock, upon any issuance by the Company or any of its Subsidiaries of
Common Stock, Common Stock Equivalents for cash consideration, or a combination
of units hereof (a “Subsequent
Financing”), each Purchaser shall have the right to participate in up to
an amount of the Subsequent Financing equal to 100% of the Subsequent Financing
(the “Participation
Maximum”) on the same terms, conditions and price provided for in the
Subsequent Financing.

     

    (b)           At
least five (5) Trading Days prior to the closing of the Subsequent Financing,
the Company shall deliver to each Purchaser a written notice of its intention to
effect a Subsequent Financing (“Pre-Notice”), which
Pre-Notice shall ask such Purchaser if it wants to review the details of such
financing (such additional notice, a “Subsequent Financing
Notice”).  Upon the request of a Purchaser, and only upon a
request by such Purchaser, for a Subsequent Financing Notice, the Company shall
promptly, but no later than one (1) Trading Day after such request, deliver a
Subsequent Financing Notice to such Purchaser.  The Subsequent
Financing Notice shall describe in reasonable detail the proposed terms of such
Subsequent Financing, the amount of proceeds intended to be raised thereunder
and the Person or Persons through or with whom such Subsequent Financing is
proposed to be effected and shall include a term sheet or similar document
relating thereto as an attachment.

     

    (c)           Any
Purchaser desiring to participate in such Subsequent Financing must provide
written notice to the Company by not later than 5:30 p.m. (New York City time)
on the fourth (4th)
Trading Day after all of the Purchasers have received the Pre-Notice that the
Purchaser is willing to participate in the Subsequent Financing, the amount of
the Purchaser’s participation, and representing and warranting that the
Purchaser has such funds ready, willing, and available for investment on the
terms set forth in the Subsequent Financing Notice.  If the Company
receives no such notice from a Purchaser as of such fourth (4th)
Trading Day, such Purchaser shall be deemed to have notified the Company that it
does not elect to participate.

     

    (d)           If
by 5:30 p.m. (New York City time) on the fourth (4th) Trading
Day after all of the Purchasers have received the Pre-Notice, notifications by
the Purchasers of their willingness to participate in the Subsequent Financing
(or to cause their designees to participate) is, in the aggregate, less than the
total amount of the Subsequent Financing, then the Company may effect the
remaining portion of such Subsequent Financing on the terms and with the Persons
set forth in the Subsequent Financing Notice.

     

    (e)           If
by 5:30 p.m. (New York City time) on the fourth (4th)
Trading Day after all of the Purchasers have received the Pre-Notice, the
Company receives responses to a Subsequent Financing Notice from Purchasers
seeking to purchase more than the aggregate amount of the Participation Maximum,
each such Purchaser shall have the right to purchase its Pro Rata Portion (as
defined below) of the Participation Maximum.  “Pro Rata Portion” of
a Purchaser means the ratio of: (x) the aggregate Stated Value of the Preferred
Stock issued to such Purchaser on the Closing Date; and (y) the aggregate Stated
Value of the Preferred Stock issued to all Purchasers participating in such
Subsequent Financing under this Section
4.8.

     

    (f)
           The Company
must provide the Purchasers with a second Subsequent Financing Notice, and the
Purchasers will again have the right of participation set forth above in this
Section 4.8, if
the Subsequent Financing subject to the initial Subsequent Financing Notice is
not consummated for any reason on the terms set forth in such Subsequent
Financing Notice within thirty (30) Trading Days after the date of the initial
Subsequent Financing Notice.

     

    (g)           Notwithstanding
the foregoing, this Section 4.8 shall not
apply in respect of (i) an Exempt Issuance or (ii) an underwritten public
offering of Common Stock.

    
      
         

      

      
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    EXHIBIT
10.1

    

    4.9       
   Equal Treatment of
Purchasers.  No consideration (including any modification of
any Transaction Document) shall be offered or paid to any Person to amend or
consent to a waiver or modification of any provision of any of the Transaction
Documents unless the same consideration is also offered to all of the parties to
the Transaction Documents.  For clarification purposes, this provision
constitutes a separate right granted to each Purchaser by the Company and
negotiated separately by each Purchaser, and is intended for the Company to
treat the Purchasers as a class and shall not in any way be construed as the
Purchasers acting in concert or as a group with respect to the purchase,
disposition or voting of Securities or otherwise.

     

    4.10   
     Certain Transactions and
Confidentiality.  Each Purchaser, severally and not jointly
with the other Purchasers, covenants that neither it, nor any Affiliate acting
on its behalf or pursuant to any understanding with it will execute any
purchases or sales, including Short Sales, of any of the Company’s securities
during the period commencing with the execution of this Agreement and ending at
such time that the transactions contemplated by this Agreement are first
publicly announced pursuant to the initial press release as described in Section 4.5. 
Each Purchaser, severally and not jointly with the other Purchasers, covenants
that until such time as the transactions contemplated by this Agreement are
publicly disclosed by the Company pursuant to the initial press release as
described in Section
4.5, such Purchaser will maintain the confidentiality of the existence
and terms of this transaction and the information included in the Transaction
Documents and the Disclosure Schedules.  Notwithstanding the
foregoing, and notwithstanding anything contained in this Agreement to the
contrary, the Company expressly acknowledges and agrees that (i) no Purchaser
makes any representation, warranty or covenant hereby that it will not engage in
effecting transactions in any securities of the Company after the time that the
transactions contemplated by this Agreement are first publicly announced
pursuant to the initial press release as described in Section 4.5, (ii) no
Purchaser shall be restricted or prohibited from effecting any transactions in
any securities of the Company in accordance with applicable securities laws from
and after the time that the transactions contemplated by this Agreement are
first publicly announced pursuant to the initial press release as described in
Section 4.5;
and (iii) no Purchaser shall have any duty of confidentiality to the Company or
its Subsidiaries after the issuance of the initial press release as described in
Section
4.5.  Notwithstanding the foregoing, in the case of a Purchaser that
is a multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of such Purchaser’s assets and the portfolio managers have no
direct knowledge of the investment decisions made by the portfolio managers
managing other portions of such Purchaser’s assets, the covenant set forth above
shall only apply with respect to the portion of assets managed by the portfolio
manager that made the investment decision to purchase the Securities covered by
this Agreement.

     

    4.11    
    Form D; Blue Sky
Filings.  The Company agrees to timely file a Form D with
respect to the Securities as required under Regulation D and to provide a copy
thereof, promptly upon request of any Purchaser.  The Company shall
take such action as the Company shall reasonably determine is necessary in order
to obtain an exemption for, or to qualify the Securities for, sale to the
Purchasers at the Closing under applicable securities or “Blue Sky” laws of the
states of the United States, and shall provide evidence of such actions promptly
upon request of any Purchaser. 

    

    ARTICLE
5

    MISCELLANEOUS

     

    5.1  
        Fees and
Expenses.  Except as expressly set forth in the Transaction
Documents to the contrary, each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement.  The Company shall pay all
Transfer Agent fees, stamp taxes and other taxes and duties levied in connection
with the delivery of any Securities to the Purchasers.

    
      
         

      

      
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    EXHIBIT
10.1

    

    5.2       
   Entire
Agreement.  The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and
schedules.

     

    5.3     
     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. (New York City time) on a
Trading Day, (b) the next Trading 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 Trading Day
or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second
(2nd)  Trading
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 shall be as set forth on the signature pages attached
hereto.

     

    5.4      
    Amendments;
Waivers.  No provision of this Agreement may be waived,
modified, supplemented or amended except in a written instrument signed, in the
case of an amendment, by the Company and Purchaser(s) holding Existing
Promissory Note(s) representing at least a majority of the aggregate Existing
Debt Amount for all Existing Promissory Notes or, in the case of a waiver, by
the party against whom enforcement of any such waived provision is
sought.  No waiver of any default with respect to any provision,
condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a waiver of any
other provision, condition or requirement hereof, nor shall any delay or
omission of any party to exercise any right hereunder in any manner impair the
exercise of any such right. The parties agree and
acknowledge that this Section 5.4 relates
solely to waivers, modifications, supplements and amendments to this Agreement,
and not to any other Transaction Document.

     

    5.5     
     Headings.  The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.

     

    5.6     
     Successors and
Assigns.  This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and permitted
assigns.  The Company may not assign this Agreement or any rights or
obligations hereunder without the prior written consent of each Purchaser (other
than by merger).  Any Purchaser may assign any or all of its rights
under this Agreement to any Person to whom such Purchaser assigns or transfers
any Securities, provided that such transferee agrees in writing to be bound,
with respect to the transferred Securities, by the provisions of the Transaction
Documents that apply to the “Purchasers.”

     

    5.7     
     No Third-Party
Beneficiaries.  This Agreement is intended for the benefit of
the parties hereto and their respective successors and permitted assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person, except as otherwise set forth in Section 4.9.

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    EXHIBIT
10.1

    

    5.8       
   Governing
Law.  ALL
QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION
OF THE TRANSACTION DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICTS OF LAW THEREOF.  EACH PARTY AGREES THAT
ALL LEGAL PROCEEDINGS CONCERNING THE INTERPRETATIONS, ENFORCEMENT AND DEFENSE OF
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND ANY OTHER TRANSACTION
DOCUMENTS (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 NEW
YORK.  EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF NEW YORK,
BOROUGH OF MANHATTAN FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED
HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION
DOCUMENTS), 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 IS AN  INCONVENIENT VENUE FOR SUCH PROCEEDING.  EACH
PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO
PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY
THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF
DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS
AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT
SERVICE OF PROCESS AND NOTICE THEREOF.  NOTHING CONTAINED HEREIN SHALL
BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW.  IF EITHER PARTY SHALL COMMENCE AN ACTION OR
PROCEEDING TO ENFORCE ANY PROVISIONS OF THE TRANSACTION DOCUMENTS, THEN, IN
ADDITION TO THE OBLIGATIONS OF THE COMPANY UNDER SECTION 4.6, THE PREVAILING
PARTY IN SUCH ACTION OR PROCEEDING SHALL BE REIMBURSED BY THE OTHER PARTY FOR
ITS REASONABLE ATTORNEYS’ FEES AND OTHER COSTS AND EXPENSES INCURRED WITH THE
INVESTIGATION, PREPARATION AND PROSECUTION OF SUCH ACTION OR
PROCEEDING.

     

    5.9   
       Survival.  The
representations and warranties contained herein shall survive the Closing and
the delivery of the Securities.

     

    5.10  
      Execution.  This
Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party, it being understood that both parties need not sign the same
counterpart.  In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a “.pdf” format data file, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such facsimile or “.pdf” signature page were an original thereof.

     

    5.11    
   Severability.  If
any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

    EXHIBIT
10.1

    

    5.12  
      Replacement of
Securities.  If any certificate or instrument evidencing any
Securities is mutilated, lost, stolen or destroyed, the Company shall issue or
cause to be issued in exchange and substitution for and upon cancellation
thereof (in the case of mutilation), or in lieu of and substitution therefor, a
new certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction.  The
applicant for a new certificate or instrument under such circumstances shall
also pay any reasonable third-party costs (including customary indemnity)
associated with the issuance of such replacement Securities.

     

    5.13
        Remedies.  (a) In
addition to being entitled to exercise all rights provided herein or granted by
law, including recovery of damages, each of the Purchasers and the Company will
be entitled to specific performance under the Transaction
Documents.  The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations contained in the Transaction Documents and hereby agree to waive and
not to assert in any action for specific performance of any such obligation the
defense that a remedy at law would be adequate.

    

    (b)           If
the Company defaults in complying with the covenants set out in Section 4.2
hereof and the Company fails to remedy such default within 30 days after notice
by Purchasers specifying the nature of the default, the Company shall, at its
cost and in the manner described in the Registration Rights Agreement, as
promptly as practicable file with the Commission and thereafter cause to be
declared effective (unless it becomes effective automatically upon filing) on or
prior to the 90th day
after the expiration of such 30 day cure period, a registration statement on an
appropriate form under the Securities Act relating to the offer and sale of the
Underlying Shares; provided, that if the Commission comments on such
registration statement, then the Company shall cause such registration statement
to be declared effective on or prior to the 120th day after the expiration of
such 30 day cure period.

     

    5.14     
   Independent Nature of
Purchasers’ Obligations and Rights.  The obligations of each
Purchaser under any Transaction Document are several and not joint with the
obligations of any other Purchaser, and no Purchaser shall be responsible in any
way for the performance or non-performance of the obligations of any other
Purchaser under any Transaction Document.  Nothing contained herein or
in any other Transaction Document, and no action taken by any Purchaser pursuant
thereto, shall be deemed to constitute the Purchasers as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Documents.  Each Purchaser shall be entitled to
independently protect and enforce its rights, including, without limitation, the
rights arising out of this Agreement or out of the other Transaction Documents,
and it shall not be necessary for any other Purchaser to be joined as an
additional party in any proceeding for such purpose.  The Company has
elected to provide all Purchasers with the same terms and Transaction Documents
for the convenience of the Company and not because it was required or requested
to do so by any of the Purchasers.

     

    5.15  
      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 not be a
Business Day, then such action may be taken or such right may be exercised on
the next succeeding Business Day.

     

    5.16    
    Construction. The
parties agree that each of them and/or their respective counsel has reviewed and
had an opportunity to revise the Transaction Documents and, therefore, the
normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of the Transaction Documents or any amendments hereto. In addition, each and
every reference to share prices and shares of Common Stock in any Transaction
Document shall be subject to adjustment for reverse and forward stock splits,
stock dividends, stock combinations and other similar transactions of the Common
Stock that occur after the date of this Agreement.

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

    EXHIBIT
10.1

    

    5.17   
    WAIVER OF
JURY TRIAL.  IN ANY ACTION, SUIT, OR
PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE
PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY
APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY
WAIVES FOREVER TRIAL BY JURY.

     

    
      
         

      

      
        22

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