Document:

EXHIBIT
10.4

    

    REGISTRATION
RIGHTS AGREEMENT

    

    This
Registration Rights Agreement (this “Agreement”) is made
and entered into as of October 20, 2010, between Comstock Mining Inc., a Nevada
corporation (the “Company”), and each
of the Persons who are signatories hereto (each such purchaser, a “Purchaser” and,
collectively, the “Purchasers”).

    

    This
Agreement is made pursuant to the Purchase Agreement (as defined
herein).

    

    The
Company and each Purchaser hereby agrees as follows:

    

    1.           Definitions.  Capitalized
terms used and not otherwise defined herein that are defined in the Purchase
Agreement shall have the meanings given such terms in the Purchase
Agreement.  As used in this Agreement, the following terms shall have
the following meanings:

     

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

    

    “Additional Dividends”
shall have the meaning set forth in Section
6(a).

    

    “Commission” means the
U.S. Securities and Exchange Commission.

    

    “Effectiveness Period”
shall have the meaning set forth in Section
2(b).

    

    “FINRA” means the
Financial Industry Regulatory Authority.

    

    “Holder” or “Holders” means the
holder or holders, as the case may be, from time to time of Registrable
Securities.

    

    “Indemnified Party”
shall have the meaning set forth in Section
5(c).

    

    “Indemnifying Party”
shall have the meaning set forth in Section
5(c).

    

    “Losses” shall have
the meaning set forth in Section
5(a).

    

    “Prospectus” means the
prospectus included in a Registration Statement (including, without limitation,
a prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated by the Commission pursuant to the Securities Act), as amended or
supplemented, with respect to the terms of the offering of any portion of the
Registrable Securities covered by a Registration Statement, and all other
amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.

    

    “Purchase Agreement”
means the Securities Purchase Agreement, dated as of the date hereof, among the
Company and the initial Holders party hereto, as amended, modified or
supplemented from time to time in accordance with its terms.

    

    “Registration Default”
shall have the meaning set forth in Section
6(a).

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
10.4

    

    “Registrable
Securities” means, as of any date of determination, (a) the Underlying
Shares with respect to the Preferred Stock; (b) any securities issued or then
issuable upon any stock split, dividend or other
distribution,  recapitalization or similar event with respect to the
foregoing; provided,
however, that any such Registrable Securities shall cease to be
Registrable Securities (and the Company shall not be required to maintain the
effectiveness of any, or file another, Registration Statement hereunder with
respect thereto) for so long as (i) a Registration Statement with respect to the
sale of such Registrable Securities is declared effective by the Commission
under the Securities Act and such Registrable Securities have been disposed of
by the Holder in accordance with such effective Registration Statement, (ii)
such Registrable Securities have been previously sold in accordance with Rule
144, or (iii) such securities become eligible for resale without volume or
manner-of-sale restrictions (provided the Company is current with the public
information requirements as determined by the counsel to the Company as set
forth in a written opinion letter to such effect, addressed, delivered and
acceptable to the Transfer Agent and the affected Holders (assuming that such
securities and any securities issuable upon exercise, conversion or exchange of
which, or as a dividend upon which, such securities were issued or are issuable,
were at no time held by any Affiliate of the Company), as reasonably determined
by the Company, upon the advice of counsel to the Company.

    

    “Registration
Statement” means any registration statement required to be filed
hereunder pursuant to Section 2
(Registration) or Section 6(d)
(Piggyback Registrations), including (in each case) the Prospectus, amendments
and supplements to any such registration statement or Prospectus, including pre-
and post-effective amendments, all exhibits thereto, and all material
incorporated by reference or deemed to be incorporated by reference in any such
registration statement.

    

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

    

    “Rule 424” means Rule
424 promulgated by the Commission pursuant to the Securities Act, as such Rule
may be amended or interpreted from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same
purpose and effect as such Rule.

    

    “Selling Stockholder
Questionnaire” shall have the meaning set forth in Section
3(a).

    

    “Significant Holder”
shall have the meaning set forth in Section
3(a).

    

    “10-K Filing Date”
shall have the meaning set forth in Section
2(a).

    

    2.           Registration.

     

    (a)           The
Company shall, at its own cost, prepare and, not later than 45 days after (or if
the 45th day is not a business day, the first business day thereafter) the date
upon which the Company’s annual report on Form 10-K for the fiscal year ending
December 31, 2010 is filed with the Commission (the “10-K Filing Date”), file
with the Commission a Registration Statement covering the resale of the
Registrable Securities by each Holder.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
10.4

     

    (b)           The
Registration Statement filed hereunder shall be on an appropriate form as
determined by the Board of Directors.  Subject to the terms of this
Agreement, the Company shall cause a Registration Statement filed hereunder to
be declared effective under the Securities Act as promptly as possible after the
filing thereof but in no event later than the one (1) year anniversary of the
Closing Date, and shall use its best efforts to keep such Registration Statement
continuously effective under the Securities Act until the earlier of: (i) the
date on which all Registrable Securities covered by such Registration Statement
may be resold without registration and without regard to any volume or
manner-of-sale limitations by reason of Rule 144, without the requirement for
the Company to be in compliance with the current public information under Rule
144 or any other rule of similar effect; (ii) the date on which all Registrable
Securities covered by such Registration Statement have been sold pursuant to a
Prospectus or Rule 144 or any other rule of similar effect; or (iii) as
otherwise mutually agreed to between the parties hereto (the “Effectiveness
Period”).  The Company shall telephonically request
effectiveness of a Registration Statement as of 5:00 p.m. New York City time on
a Trading Day.  The Company shall immediately notify the Holders via
facsimile or by e-mail of the effectiveness of such Registration Statement on
the same Trading Day that the Company telephonically confirms effectiveness with
the Commission, which shall be the date requested for effectiveness of such
Registration Statement.  The Company shall, by 9:30 a.m. New York City
time on the Trading Day after the effective date of such Registration Statement,
file a final Prospectus with the Commission as required by Rule
424.

     

    (c)           If,
and for so long as the Company shall elect to pay dividends in the form of
Common Stock, the Company shall take the following actions:

     

    (i)          The
Company shall, at its cost, as promptly as practicable file with the Commission
and thereafter shall use its commercially reasonable efforts to cause to be
declared effective (unless it becomes effective automatically upon filing) a
registration statement (the “Shelf Registration
Statement”) on an appropriate form under the Securities Act relating to
the offer and sale of Registrable Securities delivered to Holders in connection
with dividends declared in the form of Common Stock, by the Holders thereof from
time to time in accordance with the methods of distribution set forth in the
Shelf Registration Statement and Rule 415 under the Securities Act; provided,
however, that no Holder (other than Holders party to this Agreement on the date
hereof) shall be entitled to have the Registrable Securities held by it covered
by such Shelf Registration Statement unless such Holder agrees in writing to be
bound by all the provisions of this Agreement applicable to such
Holder.

     

    (ii)         The
Company shall use its commercially reasonable efforts to keep the Shelf
Registration Statement continuously effective, or replace such Shelf
Registration Statement, in order to permit the prospectus included therein to be
lawfully delivered by the Holders of the relevant Securities, for such period of
time that will terminate when all the Securities covered by the Shelf
Registration Statement (i) have been sold pursuant thereto or (ii) can be sold
pursuant to Rule 144 under the Securities Act, or any successor rule thereof,
without any limitations under clauses (c), (e), (f) and (h) of Rule
144.

     

    (iii)        Notwithstanding
any other provisions of this Agreement to the contrary, the Company shall cause
the Shelf Registration Statement and the related prospectus and any amendment or
supplement thereto, as of the effective date of the Shelf Registration
Statement, amendment or supplement, (i) to comply in all material respects with
the applicable requirements of the Securities Act and the rules and regulations
of the Commission and (ii) not to contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading.

     

    (iv)        Notwithstanding
any other provisions of this Agreement to the contrary, the Company shall be
entitled to postpone for a reasonable period of time (not to exceed ninety (90)
days) the filing or effectiveness of, or suspend for a reasonable period of time
(not to exceed ninety (90) days) the rights of the Holders to make offers or
sales pursuant to, any Shelf Registration Statement otherwise required to be
prepared, filed and made and kept effective by it hereunder if there has been a
determination by the Board of Directors that filing, amending or supplementing,
or making offers or sales pursuant to, such Shelf Registration Statement would
have a material adverse effect on (i) any proposal or plan by the Company or any
of its subsidiaries to engage in any financing, acquisition, divestiture, joint
venture, merger, consolidation, tender offer or other significant transaction or
(ii) the pursuit or defense of any material third party claim, and the Company
advises the Holders of such postponement or suspension; provided, however, that
the Company shall have the right to so postpone only one (1) time during any
period of twelve (12) consecutive months.  If so advised, the Holders
shall comply therewith and, if in connection with such advice, the Holders
receive material non-public information from the Company, they shall keep such
information confidential and shall not effect (or allow others for whom they
could reasonably be expected to have responsibility to effect) transactions in
securities of the Company until such information becomes public or, if sooner,
the expiration of such ninety (90) day period.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
10.4

     

    3.           Registration
Procedures.  In connection with the Company’s registration
obligations hereunder, the Company shall:

     

    (a)         Not
less than ten (10) Trading Days prior to the filing of such Registration
Statement and not less than three (3) Trading Days prior to the filing of any
related Prospectus or any amendment or supplement thereto (including any
document that would be incorporated or deemed to be incorporated therein by
reference), the Company shall (i) furnish to each Holder that has Registrable
Securities constituting at least 35% of the aggregate Registrable Securities
included in such Registration Statement (each, “Significant Holder”)
copies of all such documents proposed to be filed, which documents (other than
those incorporated or deemed to be incorporated by reference) will be subject to
the review of such Significant Holders, and (ii) cause its officers and
directors, counsel and independent registered public accountants to respond to
such inquiries as shall be necessary, in the reasonable opinion of respective
counsel to each Significant Holder, to conduct a reasonable investigation within
the meaning of the Securities Act.  The Company shall not file a
Registration Statement or any amendments or supplements thereto to which the
Significant Holders shall reasonably object in good faith, provided that, the Company is
notified of such objection in writing no later than five (5) Trading Days after
the Significant Holders have been so furnished copies of a Registration
Statement or one (1) Trading Day after the Significant Holders have been so
furnished copies of any related Prospectus or amendments or supplements
thereto.  Each Holder agrees to furnish to the Company a completed
questionnaire in the form attached to this Agreement as Annex A (a “Selling Stockholder
Questionnaire”) promptly after it has been requested by the Company, but
in no event less than five (5) Trading Days prior to the filing date of the
Registration Statement.

     

    (b)         (i)
Prepare and file with the Commission such amendments, including post-effective
amendments, to a Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep a Registration Statement effective as to
the applicable Registrable Securities for the Effectiveness Period and prepare
and file with the Commission such additional Registration Statements in order to
register for resale under the Securities Act all of the Registrable Securities,
(ii) cause the related Prospectus to be amended or supplemented by any required
Prospectus supplement (subject to the terms of this Agreement), and, as so
supplemented or amended, to be filed pursuant to Rule 424, (iii) respond as
promptly as reasonably possible to any comments received from the Commission
with respect to a Registration Statement or any amendment thereto and provide as
promptly as reasonably possible to the Significant Holders true and complete
copies of all correspondence from and to the Commission relating to a
Registration Statement (provided that, the Company
may excise any information contained therein which would constitute material
non-public information as to any Significant Holder which has not executed a
confidentiality agreement with respect thereto with the Company), and (iv)
comply in all material respects with the applicable provisions of the Securities
Act and the Exchange Act with respect to the disposition of all Registrable
Securities covered by a Registration Statement during the applicable period in
accordance (subject to the terms of this Agreement) with the intended methods of
disposition by the Holders thereof set forth in such Registration Statement as
so amended or in such Prospectus as so supplemented.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
10.4

     

    (c)         Provide
notice to the Holders whose Registrable Securities are to be sold (which notice
shall, pursuant to clauses (iii) through
(vi) hereof, be
accompanied by an instruction to suspend the use of the Prospectus until the
requisite changes have been made) as promptly as reasonably possible (and, in
the case of clause
(i)(A) below, not less than one (1) Trading Day prior to such filing) and
(if requested by any such Person) confirm such notice in writing no later than
one (1) Trading Day following the day:

     

    (i)          (A)          with
respect to the Significant Holders and all other Holders whose Registrable
Securities are to be sold in such registration, notice of when a Prospectus or
any Prospectus supplement or post-effective amendment to a Registration
Statement is proposed to be filed;

     

    (B)         with
respect only to the Significant Holders, notice when the Commission notifies the
Company whether there will be a “review” of such Registration Statement and
whenever the Commission comments in writing on such Registration Statement;
and

     

    (C)         with
respect to the Significant Holders and all other Holders whose Registrable
Securities are to be sold in such registration, notice of when the Registration
Statement or any post-effective amendment thereto has become
effective;

     

    (ii)         with
respect only to the Significant Holders, notice of any request by the Commission
or any other federal or state governmental authority for amendments or
supplements to a Registration Statement or Prospectus or for additional
information;

     

    (iii)        with
respect to the Significant Holders and all other Holders whose Registrable
Securities are to be sold in such registration, notice of the issuance by the
Commission or any other federal or state governmental authority of any stop
order suspending the effectiveness of a Registration Statement covering any or
all of the Registrable Securities or the initiation of any Proceedings for that
purpose;

     

    (iv)        with
respect to the Significant Holders and all other Holders whose Registrable
Securities are to be sold in such registration, notice of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction, or the initiation or threatening of any Proceeding for such
purpose;

     

    (v)         with
respect to the Significant Holders and all other Holders whose Registrable
Securities are to be sold in such registration, notice of the occurrence of any
event or passage of time that makes the financial statements included in a
Registration Statement ineligible for inclusion therein or any statement made in
a Registration Statement or Prospectus or any document incorporated or deemed to
be incorporated therein by reference untrue in any material respect or that
requires any revisions to a Registration Statement, Prospectus or other
documents so that, in the case of a Registration Statement or the Prospectus, as
the case may be, it will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading; and

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
10.4

     

    (vi)        with
respect to the Significant Holders and all other Holders whose Registrable
Securities are to be sold in such registration, notice of the occurrence or
existence of any pending corporate development with respect to the Company that
the Company believes may be material and that, in the determination of the
Company, makes it not in the best interest of the Company to allow continued
availability of a Registration Statement or Prospectus, provided that, any and all of
such information shall remain confidential to each Holder until such information
otherwise becomes public, unless disclosure by a Holder is required by law;
provided, further, that
notwithstanding each Holder’s agreement to keep such information confidential,
each such Holder makes no acknowledgement that any such information is material,
non-public information.

     

    (d)         Use
its best efforts to avoid the issuance of, or, if issued, obtain the withdrawal
of (i) any order stopping or suspending the effectiveness of a Registration
Statement, or (ii) any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any
jurisdiction, at the earliest practicable moment.

     

    (e)         Furnish
to each Holder, without charge, at least one conformed copy of each such
Registration Statement and each amendment thereto, including financial
statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference to the extent requested by such Person, and
all exhibits to the extent requested by such Person (including those previously
furnished or incorporated by reference) promptly after the filing of such
documents with the Commission; provided, that any such item
which is available on the EDGAR system (or successor thereto) need not be
furnished in physical form.

     

    (f)          Subject
to the terms of this Agreement, the Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
Holders in connection with the offering and sale of the Registrable Securities
covered by such Prospectus and any amendment or supplement thereto, except after
the giving of any notice pursuant to Section
3(d).

     

    (g)         The
Company shall cooperate with any broker-dealer through which a Holder proposes
to resell its Registrable Securities in effecting a filing with the FINRA
Corporate Financing Department pursuant to FINRA Rule 5110, as requested by any
such Holder, and the Company shall pay the filing fee required by such filing
within two (2) Business Days of request therefor.

     

    (h)         Prior
to any resale of Registrable Securities by a Holder, use its commercially
reasonable efforts to register or qualify or cooperate with the selling Holders
in connection with the registration or qualification (or exemption from the
Registration or qualification) of such Registrable Securities for the resale by
the Holder under the securities or Blue Sky laws of such jurisdictions within
the United States as any Holder reasonably requests in writing, to keep each
registration or qualification (or exemption therefrom) effective during the
Effectiveness Period and to do any and all other acts or things reasonably
necessary to enable the disposition in such jurisdictions of the Registrable
Securities covered by each Registration Statement; provided, that, the Company
shall not be required to qualify generally to do business in any jurisdiction
where it is not then so qualified, subject the Company to any material tax in
any such jurisdiction where it is not then so subject or file a general consent
to service of process in any such jurisdiction.

     

    (i)          If
requested by a Holder, cooperate with such Holder to facilitate and coordinate
with the Company’s transfer agent the timely preparation and delivery of
certificates representing Registrable Securities to be delivered to a transferee
pursuant to a Registration Statement, which certificates shall be free, to the
extent permitted by the Purchase Agreement, of all restrictive legends, and to
enable such Registrable Securities to be in such denominations and registered in
such names as any such Holder may request.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
10.4

     

    (j)          Upon
the occurrence of any event contemplated by Section 3(c), as
promptly as reasonably possible under the circumstances taking into account the
Company’s good faith assessment of any adverse consequences to the Company and
its stockholders of the premature disclosure of such event, prepare a supplement
or amendment, including a post-effective amendment, to a Registration Statement
or a supplement to the related Prospectus or any document incorporated or deemed
to be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, neither a Registration Statement nor such
Prospectus will contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.  If the Company notifies the Holders in accordance
with clauses
(iii) through (vi) of Section 3(c) above to
suspend the use of any Prospectus until the requisite changes to such Prospectus
have been made, then the Holders shall suspend use of such
Prospectus.  The Company will use its best efforts to ensure that the
use of the Prospectus may be resumed as promptly as is reasonably
practicable.  The Company shall be entitled to exercise its right
under this Section
3(j) to suspend the availability of a Registration Statement and
Prospectus for a period not to exceed 60 calendar days (which need not be
consecutive days) in any 12-month period.

     

    (k)         Comply
with all applicable rules and regulations of the Commission.

     

    (l)          The
Company may require each selling Holder to furnish to the Company a certified
statement as to the number of shares of Common Stock beneficially owned by such
Holder and, if required by the Commission, the natural persons thereof that have
voting and dispositive control over the shares.

     

    4.           Registration
Expenses.  All fees and expenses incident to the performance of
or compliance with, this Agreement by the Company shall be borne by the Company
whether or not any Registrable Securities are sold pursuant to a Registration
Statement.  The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, reasonable fees and expenses of the Company’s
counsel and independent registered public accountants) (A) with respect to
filings made with the Commission, (B) with respect to filings required to be
made with any Trading Market on which the Common Stock is then listed for
trading, (C) in compliance with applicable state securities or Blue Sky laws
reasonably agreed to by the Company in writing (including, without limitation,
fees and disbursements of counsel for the Company in connection with Blue Sky
qualifications or exemptions of the Registrable Securities) and (D) with respect
to any sales of Registrable Securities in an underwritten offering any filing
fees payable to FINRA pursuant to FINRA Rule 5110, so long as the broker is
receiving no more than a customary brokerage commission in connection with such
sale, (ii) printing expenses (including, without limitation, expenses of
printing certificates for Registrable Securities), (iii) fees and disbursements
of counsel for the Company, (iv) Securities Act liability insurance, if the
Company so desires such insurance, and (v) fees and expenses of all other
Persons retained by the Company in connection with the consummation of the
transactions contemplated by this Agreement.  In addition, the Company
shall be responsible for all of its internal expenses incurred in connection
with the consummation of the transactions contemplated by this Agreement
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual
audit and the fees and expenses incurred in connection with the listing of the
Registrable Securities on any securities exchange as required
hereunder.  In no event shall the Company be responsible for any
broker or similar commissions of any Holder or, except to the extent provided
for in the Transaction Documents, any legal fees or other costs of the
Holders.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
10.4

     

    5.           Indemnification.

     

    (a)         Indemnification by the
Company.  The Company shall, notwithstanding any termination of
this Agreement, indemnify and hold harmless each Holder, the officers,
directors, members, partners, agents, brokers (including brokers who offer and
sell Registrable Securities as principal as a result of a pledge or any failure
to perform under a margin call of Common Stock), investment advisors and
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
each of them, each Person who controls any such Holder (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) and the
officers, directors, members, stockholders, partners, agents and 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 each such
controlling Person, to the fullest extent permitted by applicable law, from and
against any and all losses, claims, damages, liabilities, costs (including,
without limitation, reasonable attorneys’ fees) and expenses (collectively,
“Losses”), as
incurred, arising out of or relating to (1) any untrue or alleged untrue
statement of a material fact contained in a Registration Statement, any
Prospectus or any form of prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, (2) any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein (in the case of any Prospectus or supplement thereto, in light of the
circumstances under which they were made) not misleading or (3) any violation or
alleged violation by the Company of the Securities Act, the Exchange Act or any
state securities law, or any rule or regulation thereunder, in connection with
the performance of its obligations under this Agreement, except to the extent,
but only to the extent, that (i) such untrue statements or omissions are based
solely upon information regarding such Holder furnished in writing to the
Company by such Holder expressly for use in a Registration Statement, such
Prospectus or in any amendment or supplement thereto (it being understood that
the Holder has approved Annex A hereto for this purpose) or (ii) in the case of
an occurrence of an event of the type specified in Section
3(c)(iii)-(vi), the use by such
Holder of an outdated, defective or otherwise unavailable Prospectus after the
Company has notified such Holder in writing that the Prospectus is outdated,
defective or otherwise unavailable for use by such Holder and prior to the
receipt by such Holder of the Advice contemplated in Section
6(c).  The Company shall notify the Holders promptly of the
institution, threat or assertion of any Proceeding arising from or in connection
with the transactions contemplated by this Agreement of which the Company is
aware.

     

    (b)         Indemnification by
Holders.  Each Holder shall, severally and not jointly,
indemnify and hold harmless the Company, its directors, officers, agents and
employees, each Person who controls the Company (within the meaning of Section
15 of the Securities Act and Section 20 of the Exchange Act), and the directors,
officers, agents or employees of such controlling Persons, to the fullest extent
permitted by applicable law, from and against all Losses, as incurred, to the
extent arising out of or relating to: (x) such Holder’s failure to comply with
the prospectus delivery requirements of the Securities Act, (y) any untrue or
alleged untrue statement of a material fact contained in any Registration
Statement, any Prospectus, or in any amendment or supplement thereto or in any
preliminary prospectus, or (z) any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading (i) to the extent, but only to the extent, that such untrue
statement or omission is contained in any information so furnished in writing by
such Holder to the Company specifically for inclusion in such Registration
Statement or such Prospectus or (ii) in the case of an occurrence of an event of
the type specified in Section
3(c)(iii)-(vi), the use by such
Holder of an outdated, defective or otherwise unavailable Prospectus after the
Company has notified such Holder in writing that the Prospectus is outdated,
defective or otherwise unavailable for use by such Holder and prior to the
receipt by such Holder of the Advice contemplated in Section
6(c).  A Holder shall notify the Company promptly of the
institution, thread or assertion of any Proceeding arising from or in connection
with the transactions contemplated by this Agreement of which the Holder is
aware.  In no event shall the liability of any selling Holder under
this Section
5(b) be greater in amount than the dollar amount of the net proceeds
received by such Holder upon the sale of the Registrable Securities giving rise
to such indemnification obligation.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
10.4

     

    (c)         Conduct of Indemnification
Proceedings.  If any Proceeding shall be brought or asserted
against any Person entitled to indemnity hereunder (an “Indemnified Party”),
such Indemnified Party shall promptly notify the Person from whom indemnity is
sought (the “Indemnifying Party”)
in writing, and the Indemnifying Party shall have the right to assume the
defense thereof, including the employment of counsel reasonably satisfactory to
the Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided, that, the failure
of any Indemnified Party to give such notice shall not relieve the Indemnifying
Party of its obligations or liabilities pursuant to this Agreement, except (and
only) to the extent that it shall be finally determined by a court of competent
jurisdiction (which determination is not subject to appeal or further review)
that such failure shall have prejudiced the Indemnifying Party.

     

    An
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless:  (1) the Indemnifying Party has agreed in writing to pay such
fees and expenses, (2) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding, or (3) the named
parties to any such Proceeding (including any impleaded parties) include both
such Indemnified Party and the Indemnifying Party, and counsel to the
Indemnified Party shall reasonably believe that a material conflict of interest
is likely to exist if the same counsel were to represent such Indemnified Party
and the Indemnifying Party (in which case, if such Indemnified Party notifies
the Indemnifying Party in writing that it elects to employ separate counsel at
the expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and the reasonable fees and expenses of no
more than one separate counsel shall be at the expense of the Indemnifying
Party).  The Indemnifying Party shall not be liable for any settlement
of any such Proceeding effected without its written consent, which consent shall
not be unreasonably withheld or delayed.  No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, effect any
settlement of any pending Proceeding in respect of which any Indemnified Party
is a party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter of
such Proceeding.

    

    Subject
to the terms of this Agreement, all reasonable fees and expenses of the
Indemnified Party (including reasonable fees and expenses to the extent incurred
in connection with investigating or preparing to defend such Proceeding in a
manner not inconsistent with this Section) shall be paid to the Indemnified
Party, as incurred, within ten (10) Trading Days of written notice thereof to
the Indemnifying Party; provided, that, the Indemnified Party shall promptly
reimburse the Indemnifying Party for that portion of such fees and expenses
applicable to such actions for which such Indemnified Party is judicially
determined not to be entitled to indemnification hereunder.

    

    (d)         Contribution.  If
the indemnification under Section 5(a) or 5(b) is unavailable
to an Indemnified Party or insufficient to hold an Indemnified Party harmless
for any Losses, then each Indemnifying Party shall contribute to the amount paid
or payable by such Indemnified Party, in such proportion as is appropriate to
reflect the relative fault of the Indemnifying Party and Indemnified Party in
connection with the actions, statements or omissions that resulted in such
Losses as well as any other relevant equitable considerations.  The
relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission.  The amount
paid or payable by a party as a result of any Losses shall be deemed to include,
subject to the limitations set forth in this Agreement, any reasonable
attorneys’ or other fees or expenses incurred by such party in connection with
any Proceeding to the extent such party would have been indemnified for such
fees or expenses if the indemnification provided for in this Section 5 was
available to such party in accordance with its terms.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
10.4

    

    The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d) were
determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding
paragraph.  Notwithstanding the provisions of this Section 5(d), no
Holder shall be required to contribute pursuant to this Section 5(d), in the
aggregate, any amount in excess of the amount by which the net proceeds actually
received by such Holder from the sale of the Registrable Securities subject to
the Proceeding exceeds the amount of any damages that such Holder has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission.

    

    The
indemnity and contribution agreements contained in this Section 5 are in
addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.

    

    6.           Miscellaneous.

     

    (a)         Remedies.  (i)  Additional
Dividends Under Certain Circumstances.  Additional dividends (the
“Additional Dividends”) with respect to the Preferred Stock shall be assessed if
the Registration Statement is not declared effective by the Commission on or
prior to the one (1) year anniversary of the Closing Date as provided in Section
2(b) hereof (such event, a “Registration Default”). Additional Dividends shall
accrue on the Preferred Stock over and above the dividend rate set forth in the
title of the Securities from and including the date on which such Registration
Default shall occur to but excluding the date on which such Registration Default
has been cured. The rate of the Additional Dividends will be 1.00% per annum for
the first 30-day period (or pro rata portion thereof) immediately following the
occurrence of a Registration Default, and such rate will increase by an
additional 1.00% per annum with respect to each subsequent 30-day period (or pro
rata portion thereof) until such Registration Default has been cured. Additional
Dividends shall be paid on Dividend Payment Dates. Such Additional Dividends
will be in addition to any other dividends payable from time to time with
respect to the Preferred Stock.

     

    (ii)         In
the event of a breach by the Company or by a Holder of any of their respective
obligations under this Agreement, each Holder or the Company, as the case may
be, in addition to being entitled to exercise all rights granted by law and
under this Agreement, including recovery of damages, shall be entitled to
specific performance of its rights under this Agreement.  Each of the
Company and each Holder agrees that monetary damages would not provide adequate
compensation for any losses incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any
action for specific performance in respect of such breach, it shall not assert
or shall waive the defense that a remedy at law would be adequate.

     

    (b)         Compliance.  Each
Holder covenants and agrees that it will comply with the prospectus delivery
requirements of the Securities Act as applicable to it in connection with sales
of Registrable Securities pursuant to a Registration Statement.

     

    (c)         Discontinued
Disposition.  By its acquisition of Registrable Securities,
each Holder agrees that, upon receipt of a notice from the Company of the
occurrence of any event of the kind described in Section 3(c)(iii)
through (vi),
such Holder will forthwith discontinue disposition of such Registrable
Securities under a Registration Statement until it is advised in writing (the
“Advice”) by
the Company that the use of the applicable Prospectus (as it may have been
supplemented or amended) may be resumed.  The Company will use its
best efforts to ensure that the use of the Prospectus may be resumed as promptly
as is practicable.  The Company agrees and acknowledges that any
periods during which the Holder is required to discontinue the disposition of
the Registrable Securities hereunder shall be subject to the provisions of Section
3(b).

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
10.4

     

    (d)         Piggy-Back
Registrations.  If, at any time during the Effectiveness
Period, there is not an effective Registration Statement covering all of the
Registrable Securities and the Company shall determine to prepare and file with
the Commission a registration statement relating to an offering for its own
account or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with the Company’s stock option or
other employee benefit plans, then the Company shall deliver to each Holder a
written notice of such determination and, if within fifteen days after the date
of the delivery of such notice, any such Holder shall so request in writing, the
Company shall include in such registration statement all or any part of such
Registrable Securities such Holder requests to be registered; provided, however, that the
Company shall not be required to register any Registrable Securities pursuant to
this Section
6(d) that are eligible for resale pursuant to Rule 144 promulgated by the
Commission pursuant to the Securities Act or that are the subject of a then
effective Registration Statement.

     

    (e)         Amendments and
Waivers. The provisions of this Agreement, including the provisions of
this sentence, may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the
same shall be in writing and signed by the Company and the Holders of at least
85% of the then outstanding Registrable Securities (including, for this purpose
any Registrable Securities issuable upon exercise or conversion of any Security
issued and issuable under the Purchase Agreement).  If a Registration
Statement does not register all of the Registrable Securities pursuant to a
waiver or amendment done in compliance with the previous sentence, then the
number of Registrable Securities to be registered for each Holder shall be
reduced pro rata among
all Holders and each Holder shall have the right to designate which of its
Registrable Securities shall be omitted from such Registration
Statement.  Notwithstanding the foregoing, a waiver or consent to
depart from the provisions hereof with respect to a matter that relates
exclusively to the rights of a Holder or some Holders and that does not directly
or indirectly affect the rights of other Holders may be given by such Holder or
Holders of all of the Registrable Securities to which such waiver or consent
relates; provided,
however, that the provisions of this sentence may not be amended,
modified, or supplemented except in accordance with the provisions of the first
sentence of this Section
6(e).

     

    (f)          Notices.  Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be delivered as set forth in the Purchase
Agreement.

     

    (g)         Successors and
Assigns.  This Agreement shall inure to the benefit of and be
binding upon the successors and permitted assigns of each of the parties and
shall inure to the benefit of each Holder.  The Company may not assign
(except by merger) its rights or obligations hereunder without the prior written
consent of all of the Holders of the then outstanding Registrable
Securities.  Each Holder may assign their respective rights hereunder
in the manner and to the Persons as permitted under Section 5.6 of the
Purchase Agreement.

     

    (h)         No Inconsistent
Agreements.  Neither the Company nor any of its Subsidiaries
has entered, as of the date hereof, nor shall the Company or any of its
Subsidiaries, on or after the date of this Agreement, enter into any agreement
with respect to its securities, that would have the effect of impairing the
rights granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof.  Neither the Company nor any of its Subsidiaries
has previously entered into any agreement granting any registration rights with
respect to any of its securities to any Person that have not been satisfied in
full.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
10.4

     

    (i)          Execution and
Counterparts.  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.

     

    (j)          Governing
Law.  All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be determined in
accordance with the provisions of the Purchase Agreement.

     

    (k)         Cumulative
Remedies.  The remedies provided herein are cumulative and not
exclusive of any other remedies provided by law.

     

    (l)          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.

     

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

     

    (n)         Independent Nature of
Holders’ Obligations and Rights.  The obligations of each
Holder hereunder are several and not joint with the obligations of any other
Holder hereunder, and no Holder shall be responsible in any way for the
performance of the obligations of any other Holder hereunder. Nothing contained
herein or in any other agreement or document delivered at any closing, and no
action taken by any Holder pursuant hereto or thereto, shall be deemed to
constitute the Holders as a partnership, an association, a joint venture or any
other kind of entity, or create a presumption that the Holders are in any way
acting in concert with respect to such obligations or the transactions
contemplated by this Agreement. Each Holder shall be entitled to protect and
enforce its rights, including without limitation the rights arising out of this
Agreement, and it shall not be necessary for any other Holder to be joined as an
additional party in any proceeding for such purpose.

    

    ********************EXHIBIT
10.5

    

    NORTHERN
COMSTOCK LLC

     

    LIMITED
LIABILITY COMPANY OPERATING AGREEMENT

     

    LIMITED
LIABILITY COMPANY OPERATING AGREEMENT dated as of October 19, 2010 among the
undersigned signatories hereto.

     

    WITNESSETH:

     

    WHEREAS,
the undersigned have caused a Certificate of Formation to be filed with the
Secretary of State of the State of Nevada for the purpose of forming a limited
liability company under Chapter 86 of the Nevada Revised Statutes Act and such
Certificate of Formation has become effective; and

     

    WHEREAS,
the name of such limited liability company is Northern Comstock LLC;
and

     

    WHEREAS,
the undersigned desire to set forth in this Agreement the terms and conditions
which shall govern the affairs of such limited liability company;

     

    NOW,
THEREFORE, in consideration of the premises, representations and warranties and
the mutual covenants and set forth herein and other good, valuable and
sufficient consideration, the receipt of which is hereby acknowledged, the
undersigned, intending to be legally bound, hereby agree as
follows:

     

    ARTICLE
1

     

    DEFINITIONS;
REPRESENTATIONS

     

    1.1           Definitions.  As
used herein, the following terms shall have the following meanings:

     

    “Accelerated Capital
Call” has the meaning set forth in Section 3.2(c).

     

    “Additional Member”
means a Person who is admitted to the Company as a Member pursuant to Section
7.3.

     

    “Adjusted Capital Account
Balance” of a Member means the balance in such Member’s Capital Account
(a) increased by any amount such Member is deemed to be obligated to contribute
to the Company pursuant to Treasury Regulation section 1.704-1(b)(2)(ii)(c),
1.704-2(g)(1) or 1.704-2(i)(5) and (b) reduced by any allocations or
distributions to such Member described in Treasury Regulation section
1.704-1(b)(2)(ii)(d)(4), (5) or (6).

     

    “Affiliate” means,
with respect to any Person, any other Person that controls, is controlled by or
is under common control with, directly or indirectly, such Person, and, if such
Person is a natural person, includes any member of such Person’s immediate
family, or, if such Person is an entity, includes (a) any trustee, general
partner, manager, director or executive officer of, or any Person performing
similar functions for, such entity and (b) any Person with the power
directly or indirectly to vote or direct the voting of more than 50% of the
voting shares in such entity, to elect or appoint a majority of the trustees,
directors, general partners or managers of such entity or to otherwise manage or
direct the management of the business and affairs of such entity, whether by
reason of ownership of securities, contractual rights or otherwise.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Agreement” means this
Limited Liability Company Operating Agreement.

     

    “Assign” an Ownership
Interest means to assign, transfer, sell, pledge, donate, bequeath, hypothecate,
mortgage or otherwise encumber or dispose of such Ownership Interest by any
means, whether voluntarily or involuntarily and including by merger, by transfer
of ownership of an entity that holds such Ownership Interest, in connection with
any Proceeding under any Law relating to bankruptcy, insolvency or the rights of
creditors generally, and by operation of Law.

     

    “Bankruptcy” of a
Person means:

     

    (a)  the
filing by such Person of a petition commencing a voluntary Proceeding under any
applicable bankruptcy, insolvency or similar Law;

     

    (b)  the
entry against such Person of an order for relief under any applicable
bankruptcy, insolvency or similar Law, if such order shall not have been vacated
or stayed within 120 days after such entry;

     

    (c)  the
written admission by such Person of its inability to pay its debts as they
mature or the assignment by such Person of all or substantially of its assets
for the benefit of creditors; or

     

    (d)  the
appointment of a trustee, receiver or similar representative to manage or wind
up the affairs, or manage or liquidate all or substantially all of the assets,
of such Person.

     

    “Book Value” of any
asset of the Company means the adjusted basis of such assets for federal income
tax purposes, except that:

     

    (a)  the
initial Book Value of any asset contributed by a Member to the Company will be
the Fair Market Value of such asset as of the date of contribution;
and

     

    (b)  the
Book Values of all assets (including intangible assets such as goodwill) will be
adjusted to equal their respective Fair Market Values as of the following
times:

     

    (i)  the
acquisition of an additional interest in the Company by any new or existing
Member in exchange for more than a de minimis capital
contribution;

     

    (ii)  the
distribution by the Company to a Member of more than a de minimis amount of
cash or property as consideration for an interest in the Company;
and

     

    (iii)  the
liquidation of the Company within the meaning of Treasury Regulation section
1.704-1(b)(2)(ii)(g).

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    This
definition is intended to comply with the provisions of Treasury Regulation
section 1.704-1(b)(2)(iv) and will be interpreted and applied consistently
therewith.

     

    “Capital Account” of a
Member means the account maintained by the Company for such Member pursuant to
Section 3.4.

     

    “Capital Contribution”
of a Member means the Fair Market Value of property contributed by such Member
to the capital of the Company.

     

    “Certificate” means
the Certificate of Formation of Northern Comstock LLC filed with the Secretary
of State of the State of Nevada.

     

    “Claim” means a
complaint, allegation, charge, petition, appeal, demand, notice, filing or claim
of any kind that commences, alleges a basis to commence or threatens to commence
any Proceeding by or before any Governmental Authority or Judicial Authority or
that asserts, alleges a basis to assert or threatens to assert any right,
breach, default, violation, noncompliance, termination, cancellation or other
action or omission that could reasonably be expected to result in a Liability or
Loss.

     

    “Code” means the
Internal Revenue Code of 1986.

     

    “Company” means the
limited liability company formed pursuant to the Certificate and governed by
this Agreement.

     

    “Company Business” has
the meaning set forth in Section 2.3.

     

    “Company Expenses”
mean expenses, costs, fees and other charges incurred by the
Company.  Company Expenses shall include:

     

    (a)  costs
and expenses incurred in connection with the offices of the
Company;

     

    (b)  salaries,
bonuses and other compensation and benefits of employees of the
Company;

     

    (c)  fees
and expenses of consultants, accountants, counsel and other third-party
professionals engaged by the Company;

     

    (d)  premiums
and fees for insurance coverage maintained with respect to the Company Business
or the Managers, Managing Directors or employees of the Company;

     

    (e)  taxes,
fees and governmental charges assessed or levied against the Company or imposed
on property owned or used by the Company;

     

    (f)  indemnification
payments and expense advancements by the Company;

     

    (g)
royalty expenses of 1% of Net Smelter Returns to Art Wilson with respect to the
DWC Property;

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (h)
royalty expenses of 5% of Net Smelter Returns to Sutro Tunnel Company with
respect to the Sutro Property;

     

    (i)
royalty expenses of 5% of Net Smelter Returns, pre-production rent of $500 per
month and post-production rent of $1,000 per month (credited against royalty
payments, if applicable), in each case, with respect to the VCV Property;
and

     

    (j)  fees,
expenses and costs incurred in connection with the formation of the
Company.

     

    “Company Minimum Gain”
means the aggregate amount of gain (of whatever character), determined for each
nonrecourse liability of the Company, that would be realized by the Company if
it disposed of the property subject to such liability in a taxable transaction
in full satisfaction thereof, determined in accordance with Treasury Regulation
section 1.704-2(d).

     

    “Company Nonrecourse
Deductions” mean the excess, if any, of the net increase, if any, in the
amount of Company Minimum Gain during a fiscal year over the aggregate amount of
any distributions during that fiscal year of proceeds of a nonrecourse liability
as defined in Treasury Regulation section 1.704-2(c).

     

    “Comstock Mining”
means Comstock Mining Inc., a Nevada corporation.

     

    “Contract” means a
written or oral contract, agreement, note, bond, mortgage, indenture, deed of
trust, lease, sublease, license, sublicense, purchase or sale order, or other
commitment, obligation or instrument of any kind that is legally binding or
enforceable under applicable Law.

     

    “DWC” means DWC
Resources, Inc., a Nevada corporation.

     

    “DWC Property” means
the real property and improvements, and all patented and unpatented lode mining
claims located in Storey County, Nevada as more particularly described on Exhibit A attached
hereto.

     

    “Fair Market Value” of
any asset of the Company, any Ownership Interest or the Company Business means
the value thereof determined in accordance with Article 9.

     

    “Fiscal Year” has the meaning set
forth in Section 8.3.

     

    “Force Majeure” has
the meaning set forth in Section 6.11(b).

     

    “Governmental
Authority” means a government (including any federal, foreign, state,
provincial, city, municipal, cantonal or county government), a political
subdivision thereof and a governmental, administrative, ministerial, regulatory,
central bank, self-regulatory, quasi-governmental, taxing, executive or
legislative department, commission, body, agency, authority or instrumentality
of any thereof.

     

    “Indemnified Action”
has the meaning set forth in Section 6.7(a).

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Indemnified Party”
has the meaning set forth in Section 6.7(a).

     

    “Information” of a
Person (the “Disclosing Party”),
in relation to any other Person (the “Receiving Party”),
means all information (whether in written, electronic, oral or other form and
including trade secrets and non-public, confidential or proprietary
information), including information relating to technology, intellectual
property, financing sources, business opportunities, contact information, ideas,
developments, strategies and plans, developed or acquired by or for such
Disclosing Party and all files, books, records,
notes, compilations, analyses, forecasts, studies, reports and other documents
(whether in written or electronic form) prepared by or for such
Disclosing Party or any of its Representatives, to the extent they contain or
reflect any of such information.  “Information” of a
Disclosing Party, in relation to a Receiving Party, includes any of such
information obtained through visual inspection of properties or through
meetings.  “Information” does
not, however, include information which (i) is at the time of receipt by the
Receiving Party or becomes after such time publicly available or in the public
domain, other than as a result of a disclosure by the Receiving Party or its
Representatives which constitutes a breach of this Agreement, (ii) is at the
time of receipt or becomes after such time known on a non-confidential basis
from a source which is not prohibited from disclosing such information by a
contractual, statutory, fiduciary or other obligation or (iii) was or is
developed independent of any information furnished by or for the Disclosing
Party or any of its Representatives.  Information will not be deemed
to be (i) so publicly available if it relates to business opportunities or
contact information and was directly or indirectly brought to the attention of
the Receiving Party or any of its Representatives by, for or through the
Disclosing Party or any of its Representatives (unless it is so widely known
that a reasonable individual could not consider it to be valuable confidential
information) or (ii) so known on a non-confidential basis or so independently
developed unless such knowledge or development is clearly demonstrated by dated
written records of a type customarily generated and maintained in the ordinary
course of business.

     

    “Judicial Authority”
means a court, arbitrator, special master, receiver, tribunal or similar body of
any kind.

     

    “Law” means a treaty,
code, statute, law (including common law of any Judicial Authority), rule,
regulation or ordinance of any kind of any Governmental Authority. 

     

    “Leased Property”
means the Sutro Property and the VCV Property.

     

    “Liability” means a
liability, duty, responsibility, obligation, assessment, cost, expense,
expenditure, charge, fee, penalty, fine, contribution, premium or obligation of
any kind, whether known or unknown, asserted or unasserted, absolute or
contingent, accrued or unaccrued, liquidated or unliquidated, or due or to
become due.

     

    “Liquidator” has the
meaning set forth in Section 10.2(a).

     

    “LLC Act” means
Chapter 86 of the Nevada Revised Statutes.

     

    “Loss” means a
Liability, shortage, damage, diminution in value, deficiency or loss of any
kind.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Majority
Interest” means one or more
Ownership Interests which, taken together, represent more than 50% of the
aggregate of all of the Ownership Interests as measured by the aggregate value
of Members’ Capital Accounts, without regard to any special allocations, bonuses
or similar adjustments of any kind.

     

    “Manager” has the
meaning set forth in Section 6.1(a).

     

    “Managing Director”
has the meaning set forth in Section 6.1(c).

     

    “Member” means,
initially, each of the undersigned (an “Initial Member”) and,
at any time thereafter, each of the undersigned and each of the other Persons
who at such time shall have become an Additional Member or a Substituted Member
in accordance herewith, but excluding each of the undersigned and each of such
other Persons who, at such time, shall have ceased to be a Member in accordance
herewith.

     

    “Member Nonrecourse
Debt” has the meaning set forth in Treasury Regulation section
1.704-2(b)(4).

     

    “Member Nonrecourse Debt
Minimum Gain” means an amount, with respect to each Member Nonrecourse
Debt, equal to the Company Minimum Gain that would result if such Member
Nonrecourse Debt were treated as a nonrecourse liability, determined in
accordance with Treasury Regulation section 1.704-2(i).

     

    “Member Nonrecourse
Deductions” mean the excess, if any, of the net increase, if any, in the
amount of Member Nonrecourse Debt Minimum Gain attributable to a Member
Nonrecourse Debt during a Fiscal Year over the aggregate amount of any
distributions during such Fiscal Year to the Member that bears the economic risk
of loss for the related Member Nonrecourse Debt to the extent such distributions
are made from the proceeds of such Member Nonrecourse Debt and are allocable to
an increase in Member Nonrecourse Debt Minimum Gain attributable to such Member
Nonrecourse Debt, determined in accordance with Treasury Regulation section
1.704-2(i).

     

    “Membership Period”
has the meaning set forth in Section 7.6(b).

     

    “Minerals” has the
meaning set forth in Section 6.10(a).

     

    “Minerals Produced”
means the bullion or other minerals recovered from the ore mined out of the
ground but untreated and minerals produced from the milling or reduction of ore
to a higher grade produced from the DWC Property or Leased Property, as
applicable,  or finished products produced from any such
property.

     

    “Net Income” and “Net Loss” for each
Fiscal Year or part thereof means the Company’s taxable income or loss for such
Fiscal Year determined in accordance with Code section 703(a) (and for this
purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to Code section 703(a)(1) will be included in taxable income
or loss), with the following adjustments:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (a)  any
income of the Company that is exempt from federal income tax will be added to
such taxable income or loss;

     

    (b)  any
expenditures of the Company described in Code section 705(a)(2)(B) or treated as
such pursuant to Treasury Regulation section 1.704-1(b)(2)(iv)(i) (to the extent
such expenditures are not taken into account in computing the Members’ shares of
Company Nonrecourse Deductions or Member Nonrecourse Deductions) will be
subtracted from such taxable income or loss;

     

    (c)  gain
or loss resulting from any disposition of property of the Company with respect
to which gain or loss is recognized for federal income tax purposes will be
computed with reference to the Book Value of the property disposed, rather than
the adjusted tax basis of such property;

     

    (d)  such
taxable income or loss will not be deemed to include any income, gain, loss,
deduction or other item thereof allocated pursuant to Section 5.1(b) (relating
to allocations caused by the occurrence of deficit Adjusted Capital Account
Balances or the presence of nonrecourse debt);

     

    (e)  if
any property of the Company is distributed in kind to any Member, the difference
between its Fair Market Value and its Book Value at the time of distribution
will be treated as Net Income or Net Loss, as the case may be, recognized by the
Company as if it arose from a sale of such property; and

     

    (f)  if
the value of any assets of the Company are adjusted pursuant to clause (b) of
the definition of Book Value, the difference between their Fair Market Value and
their Book Value at the time will be treated as Net Income or Net Loss, as the
case may be, recognized by the Company as if from a sale of such
assets.

     

    “Net Smelter Returns”
shall mean the actual financial proceeds received from any mint, smelter,
refinery, or other purchaser from the sale of bullion, dore, concentrates or
finished products produced from the relevant property, less the following costs:
shipping, all minting, smelter or refinery costs.  In the event
smelting or refining are carried out in facilities owned or controlled, in whole
or in part, by Comstock Mining, charges, costs and penalties for such operations
shall mean the amount Comstock Mining would have incurred if such operations
were carried out at facilities not owned or controlled by Comstock Mining then
offering comparable services for comparable products on prevailing
terms.

    

    “Order” means a
judgment, writ, decree, directive, decision, injunction, ruling, award or order
(including any consent decree or cease and desist order) of any kind of any
Governmental Authority or Judicial Authority.

     

    “Ownership Interest”
of a Member means the legal and beneficial ownership interest of such Member in
the Company, including all of such Member’s rights in and obligations to the
Company.

     

    “Person” means an
individual, a partnership, a sole proprietorship, a company, a firm, a
corporation, a limited liability company, an association, a joint stock company,
a trust, a joint venture, an unincorporated organization, a union, a group
acting in concert, a Judicial Authority, a Governmental Authority or any other
entity or association of any kind.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Proceeding” means an
action, suit, arbitration, mediation, litigation, hearing, investigation,
inquiry or other proceeding of any kind involving any Governmental Authority,
any Judicial Authority or any other Person.

     

    “Representatives” of a
Person mean controlling persons, trustees, general partners, managers,
directors, officers, employees, representatives, advisors, attorneys,
consultants, accountants and agents of such Person.

     

    “RRA” means the
Registration Rights Agreement dated August 31, 2010 among Comstock Mining and
the other parties thereto.

     

    “Securities Purchase
Agreement” means the Securities Purchase Agreement dated as of August 31,
2010, among Comstock Mining and the other parties thereto.

     

    “Series A-1 Certificate of
Designation” means the 7 1⁄2% Series A-1 Convertible Preferred Stock
Certificate of Designation filed by Comstock Mining with the Secretary of State
of Nevada on October 19, 2010.

     

    “Series A-1 Preferred
Stock” means Comstock Mining’s 7 1⁄2% Series A-1 Convertible Preferred
Stock having the rights, preferences and privileges set forth in the Series A-1
Certificate of Designation.

     

    “Subsidiary” means,
with respect to any Person, any other Person which, directly or indirectly, is a
controlled Affiliate of such Person.

     

    “Substituted Member”
means a Person who is admitted to the Company as a Member pursuant to Section
7.2.

     

    “Sutro Property” means
the real property that is the subject of the Mineral Exploration and Mining
Lease Agreement dated January 1, 2008 between Sutro Tunnel Company and John V.
Winfield as more fully described in the lease attached hereto as Exhibit
B.

     

    “VCV Property” means
the real property that is the subject of the Mineral Exploration and Mining
Lease Agreement dated January 1, 2008 between Virginia City Ventures, Inc. and
John V. Winfield as more fully described in the lease attached hereto as Exhibit
C.

     

    “Winfield” means John
V. Winfield, a resident of the State of California.

     

    “Yearly Distribution
Date” has the meaning set forth in Section 5.2(a)(i).

     

    1.2         Interpretations.  Unless
otherwise expressly stated in this Agreement:

     

    (a)  the
words “hereof”,
“hereby” and
“hereunder,”
and correlative words, refer to this Agreement as a whole and not any particular
provision;

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (b)  the
words “includes” and “including”, and
correlative words, are deemed to be followed by the phrase “without
limitation”;

     

    (c)  the
word “written”
and the phrase “in
writing,” and correlative words and phrases, include e-mail, pdf and
facsimile transmissions;

     

    (d)  the
words “asset”
and “property”
are synonymous and include owned, leased and licensed real, personal and
intangible property of every kind, including contractual rights, tort claims,
cash, securities and information;

     

    (e)  the
masculine, feminine or neuter form of a word includes the other forms of such
word and the singular and plural forms of a word have correlative
meanings;

     

    (f)  the
word “or” is
not exclusive;

     

    (g)  the
words “will”
and “shall”
shall be construed to have the same meaning and effect;

     

    (h)  references
to any Contract or Order mean such Contract or Order as amended and, in the case
of any Law, mean such Law as amended, supplemented or modified and any successor
Law and, in the case of any Contract, includes any and all exhibits, annexes,
schedules and documents attached thereto, incorporated therein or constituting a
part thereof;

     

    (i)  references
to an Article, Section, Schedule or Exhibit mean an Article or Section of, or a
Schedule or Exhibit to, this Agreement;

     

    (j)  references
to “amendments”
of a Contract or other document, and correlative terms, include amendments,
modifications, supplements, novations, waivers, releases, discharges and other
changes to such Contract or document; and

     

    (k)  capitalized
terms that are correlative to terms defined in Section 1.1 shall have
correlative meanings.

     

    1.3        
  Representations and
Warranties of All Members.  Each Member represents and warrants
to the Company and the other Members, as of the date such Person becomes a
Member, as follows: 

     

    (a)           If
it is a Person other than an individual, such Member is duly organized or
formed, validly existing and in good standing under the laws of its jurisdiction
of organization or formation.

     

    (b)           Such
Member has all power and authority necessary to execute, deliver and perform his
or its obligations under this Agreement and consummate the transactions
contemplated hereby to be consummated by him or it.

     

    (c)           If
it is a Person other than an individual, the execution and delivery by it of
this Agreement, the performance by it of its obligations hereunder and the
consummation by it of the transactions contemplated hereby to be consummated by
him or it have been duly authorized by all necessary action required to be taken
by it.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (d)           This
Agreement constitutes the legal, valid and binding obligation of such Member,
enforceable against him or it in accordance with its terms.  The
execution and delivery by such Member of this Agreement, the performance by such
Member of his or its obligations hereunder and the consummation by such Member
of the transactions contemplated hereby by him or it will not conflict with,
result in any violation of or constitute a default under any Contract or Order
to which he or it is a party or by which he or it is bound or, if such Member is
a Person other than individual, under its operating agreement, certificate or
articles of formation, by-laws or other organizational instruments.

     

    (e)           No
approval, consent, exemption, authorization or license is required to be
obtained from, no notice is required to be given to and no filing is required to
be made with any third party (including, without limitation, financial
institutions and governmental and quasi-governmental agencies, commissions,
boards, bureaus and instrumentalities) by such Member in order (i) for this
Agreement to constitute his or its legal, valid and binding obligation or (ii)
to authorize or permit the consummation by his or it of the transactions
contemplated hereby to be consummated by him or it.

     

    1.4           Representations and
Warranties of Comstock Mining to each other Member.  Comstock
Mining hereby makes all of the representations and warranties set forth in
Section 3.1 of the Securities Purchase Agreement mutatis mutandis, as if such
representations and warranties were set forth in this Agreement in their
entirety.

     

    1.5           Representations and
Warranties of DWC to each other Member. DWC hereby represents and
warrants to each other Member that (a) it solely owns all right, title and
interest in and to the DWC Property and has not conveyed any interest or other
right in the DWC Property to any other Person or otherwise subjected, or allowed
to be subject, the DWC Property to any liens, easements, restrictions on use, or
other encumbrances, except as set forth on Schedule 1.5 and (b)
the transactions contemplated by this Agreement will result in Comstock Mining
(on behalf of the Company) having the exclusive rights to mine and explore the
DWC Property, free and clear of any and all liens, easements, restrictions on
use, or other encumbrances, except as set forth on Schedule
1.5.

     

    1.6           Representations and
Warranties of Winfield to each other Member. Winfield hereby represents
and warrants to each other Member that (a) he holds valid and enforceable
leasehold interests in the Leased Property, free and clear of any and all liens
and other encumbrances, all of the terms and conditions of which leasehold
interest are set forth in the Mineral Exploration and Mining Lease Agreements,
each dated January 1, 2008, between Sutro Tunnel Company and Winfield, and
Virginia City Ventures, Inc. and Winfield, correct and complete copies of which,
including any amendments, supplements and other documents relating thereto, are
attached as Exhibit
B and Exhibit
C hereto, (b) none of Sutro Tunnel Company, Virginia City Ventures, Inc.
or Winfield is in breach of, or default under, the lease agreements pertaining
to the Leased Property and no event or occurrence has occurred that, with or
without the passage of time or the giving or receipt of notice, will result in
any breach of or default under either lease, (c) this Agreement will convey to
Comstock Mining (on behalf of the Company) the sole right to use all of the
Leased Property, (d) there are no other restrictions on use by Comstock Mining
of the Leased Property and (e) Winfield is permitted to contribute the Leased
Property to the Company pursuant to the terms of his leases of the Leased
Property.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    ARTICLE
2

     

    FORMATION;
GENERAL PROVISIONS

     

    2.1           Formation.  The
Company has been formed as a limited liability company under the Certificate
pursuant to the LLC Act.  When and as required under the LLC Act, the
Manager shall cause the Certificate to be properly amended.

     

    2.2           Name.  The
name of the Company is “Northern Comstock LLC” or such other name as may be
determined from time to time by the Manager.

     

    2.3           Business.  The
business of the Company (the “Company Business”)
shall be to:

     

    (a)  explore,
analyze, permit, drill, excavate, produce and sell gold and silver ore from the
DWC Property and the Leased Property;

     

    (b)  develop
and engage in any and all businesses and activities which are incidental,
ancillary, supplementary or complementary to, or may be associated with or
related to, the businesses described in Section 2.3(a); and

     

    (c)  engage
in any lawful activity for which a limited liability company may be formed under
the LLC Act as determined by the Manager.

     

    2.4           Powers.  The
Company shall have the power to:

     

    (a)  acquire,
own, lease, license, sell and otherwise deal with real, personal and intangible
property of any kind;

     

    (b)  hire,
engage, compensate, provide benefits to, award interests in the Company to,
discharge and otherwise deal with employees, agents, consultants, counsel,
accountants, advisers, independent contractors, partners, investors, creditors
and other Persons in any manner;

     

    (c)  incur,
guaranty, pay, satisfy, discharge, defend against, commence, prosecute, settle
and otherwise deal with Liabilities, Losses, Claims and
Proceedings;

     

    (d)  prepare,
file, publish, acknowledge, execute, deliver, undertake, perform and terminate
Contracts and reports, applications, registrations, returns and other documents
of any kind; and

     

    (e)  exercise
any and all powers which a limited liability company may be permitted to
exercise under the LLC Act.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    2.5           Offices.  The
principal offices of the Company shall be located at 1200 American Flat Road,
Virginia City, Nevada 89440 and such other locations as may be determined by the
Manager.

     

    2.6           Term.  The
term of the Company commenced upon the date hereof and shall continue in
perpetuity, unless earlier terminated pursuant to Article 10.

     

    2.7           Ownership of Company
Property.  Except as otherwise provided in this Agreement, all
property now held or hereafter acquired by the Company shall be owned by the
Company as an entity, and no Member, individually, shall have any ownership
interest therein.  Each Member hereby expressly waives the right to
require partition of any Company property or any part thereof.

     

    2.8           No Partnership; No
Agency.  The Members desire the Company to be treated as a
limited liability company, and not as a partnership, limited partnership or
joint venture of
any kind.  No Member shall be an agent, partner or joint venturer of
any other Member by virtue of this Agreement or admission to or membership in
the Company, except that a Member may act as an agent of any other Member for
tax purposes pursuant to tax elections duly made.

     

    ARTICLE
3

     

    CAPITAL
CONTRIBUTIONS; CAPITAL ACCOUNTS

     

    3.1           Initial Capital
Contributions.  On or promptly after the date hereof, each of
the Initial Members shall contribute either real property rights or capital
stock to the capital of the Company as set forth on Schedule A opposite
its name in consideration for its initial Ownership Interest.

     

    3.2           Additional Capital
Contributions.

     

    (a)  On
each anniversary of this Agreement, up to and including the thirty-ninth
(39th)
anniversary of this Agreement, Comstock Mining shall make Capital Contributions
to the Company in the amount of Eight-Hundred Sixty-Two Thousand Five-Hundred
and 00/100 Dollars ($862,500.00).  Such annual Capital Contributions
shall be made in the form of: (i) subject to the Equity Conditions (as defined
in the Series A-1 Certificate of Designation), in shares of Series A-1 Preferred
Stock; or (ii) if such stock is unavailable, or if the Equity Conditions have
not been satisfied, or if the Company requests the same (but subject to
subsection (b) below), then in the form of cash.  Any Member may
contribute additional cash or property to the Company in such amount or amounts
and at such time or times as, but only as, shall have been approved by the
Manager.  Except as set forth in this Section 3.2 and Section 3.3, no
Member shall be required to make any Capital Contributions to the Company, cure
any deficit in such Member’s Capital Account or lend any cash or property to the
Company.

     

    (b)  Notwithstanding
anything to the contrary set forth in subsection (a) above, if the Company
desires that a cash payment be made in lieu of any Series A-1 Preferred Stock,
the Company shall notify Comstock Mining no later than six (6) months prior to
the date of the next scheduled Capital Contribution.  If Comstock
Mining’s Board of Directors, in good faith and upon reasonable diligence,
concludes that payment in cash would have a material adverse effect on Comstock
Mining’s cash flow or liquidity, then, subject to satisfaction of the Equity
Conditions, Comstock Mining may disregard such request and such payment shall be
made in Series A-1 Preferred Stock, as set forth in subsection (a)
above.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (c)  Notwithstanding
anything to the contrary set forth in subsection (a) above, for each 200,000
ounces of gold equivalent validated after the date hereof through an independent
external report (that is, a National Instrument 43-101 Compliant Mineral
Resource Estimate Report or its successor of qualified resources (at least
measured and indicated) and reserves (probable and proven) on the DWC Property
and Leased Property, the Capital Contributions of Comstock Mining shall be
automatically accelerated (in reverse order beginning with the last Capital
Contribution due on the thirty-ninth (39th)
anniversary of this Agreement) equal to $5,000,000 (“Accelerated Capital
Call”) whereupon the Accelerated Capital Call shall be paid in shares of
Series A-1 Preferred Stock within sixty (60 days) after the date of such
occurrence.  Upon the payment of an Accelerated Capital Call, the
amount of the aggregate future Capital Contributions to be made by Comstock
Mining to the Company shall be reduced by the difference of $5,000,000 less
$862,500 for each such Accelerated Capital Call.

     

    (d)  Any
expenditures made by Comstock Mining pursuant to its obligations set forth in
Section 6.10(b)
and Section
6.10(c), shall be recorded in Comstock Mining’s Capital Account as
Capital Contributions to the Company.

     

    3.3           Additional
Members.  Any Person admitted to the Company as an Additional
Member after the date hereof pursuant to Section 7.3 shall contribute cash and
property to the capital of the Company in such amount or amounts and at such
time or times as shall have been specified by the Manager in connection with
such admission.

     

    3.4           Capital
Accounts.

     

    (a)  A
separate Capital Account shall be established for each Member and maintained in
accordance with the provisions of Treasury Regulation section
1.704-1(b)(2)(iv).  Each Member’s Capital Account shall be (i)
increased by such Member’s Capital Contributions and by such Member’s allocable
share of  Net Income and items of Company income and gain, (ii)
decreased by such Member’s allocable share of Net Loss (calculated in accordance
with Section
5.1 herein) and items of Company loss and deduction and by the amount of
cash and the net Fair Market Value of property distributed by the Company to
such Member and (iii) otherwise adjusted in the manner provided in this
Agreement.

     

    (b)  Immediately
prior to any distribution of Company assets in kind, each Member’s Capital
Account shall be adjusted to reflect the manner in which the unrealized income,
gain, loss or deduction inherent in the assets to be distributed (and not
already reflected in the Members’ Capital Accounts) would be allocated among the
Members pursuant to Article 5 if such assets were sold for Fair Market Value on
the date of distribution.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (c)  Immediately
prior to (i) any contribution of cash or property to the capital of the Company
by a new or existing Member as consideration for an Ownership Interest in the
Company, (ii) any distribution of cash or property by the Company to a Member in
redemption of all or part of such Member’s Ownership Interest or (iii) the
liquidation of the Company pursuant to Article 10, each Member’s Capital Account
shall be adjusted to reflect the manner in which the unrealized income, gain,
loss or deduction inherent in all Company assets (and not already reflected in
the Members’ Capital Accounts) would be allocated among the Members pursuant to
Article 5 if such assets were sold for Fair Market Value on the date of such
contribution, distribution or liquidation.

     

    (d)  If
any asset is contributed by a Member to the capital of the Company, the amount
credited to such Member’s Capital Account for such contribution will be equal to
the Fair Market Value of such asset as of the date of contribution.

     

    3.5           No Return of Capital; No
Interest.  No Member will have the right to the return of all
or any part of such Member’s Capital Account or Capital Contribution, to
withdraw all or any part of such Member’s Capital Account or Capital
Contribution, to require the acquisition of such Member’s Capital Account or
Ownership Interest by the Company, to receive interest on such Member’s Capital
Account or Capital Contributions or to receive any distributions or payments of
any kind from the Company, except as expressly provided in this
Agreement.

     

    ARTICLE
4

     

    COMPANY
EXPENSES

     

    The
Company shall be responsible for and shall pay, and shall reimburse the Members
and the Manager for their payment of, Company Expenses.  Company
Expenses shall be paid out of funds of the Company and, subject to the last
sentence of this Article 4, shall be paid when and as determined by the
Manager.  Notwithstanding anything contained in the preceding two
sentences or the definition of Company Expenses to the contrary, expenses,
costs, fees and other charges incurred for the benefit of the Company by
Members, the Manager or employees shall not constitute Company Expenses to the
extent that such incurrence or related documentation shall be inconsistent with
policies or procedures adopted by the Manager.  Promptly after the
date hereof, the Company shall pay or reimburse the Members for their payment of
all fees, expenses and costs incurred on behalf of the Company in connection
with the formation of the Company and, to the extent approved by the Manager,
other activities on behalf of the Company prior to the date hereof.

     

    ARTICLE
5

     

    ALLOCATIONS;
DISTRIBUTIONS; LOANS

     

    5.1           Allocations of Net Income
and Net Losses.

     

    (a)  Subject
to Section 5.1(b), the Net Income and Net Losses of the Company for each Fiscal
Year will be allocated to the Members in the following manner:

     

    (i)   Net
Income in an amount equal to any distribution made to DWC pursuant to Section
5.2(b)(i) shall be allocated to DWC as Net Income for such Fiscal
Year;

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (ii)  Net
Income in an amount equal to any distribution made to Winfield pursuant to
Section 5.2(b)(ii) shall be allocated to Winfield as Net Income for such Fiscal
Year; and

     

    (iii) all
remaining Net Income or Net Losses of the Company, as the case may
be,  for each Fiscal Year shall be allocated to Comstock
Mining.

     

    (b)  Notwithstanding
the general allocation rules set forth in Section 5.1(a), the following special
allocation rules shall apply under the circumstances described
therein.

     

    (i)   If
in any Fiscal Year a Member unexpectedly receives an adjustment, allocation or
distribution described in Treasury Regulation section 1.704-1(b)(2)(ii)(d)(4),
(5) or (6), and such adjustment, allocation or distribution causes or increases
a deficit Adjusted Capital Account Balance for such Member, then, before any
other allocations are made under this Agreement, such Member shall be allocated
items of income and gain (consisting of a pro rata portion of each item of
Company income, including gross income and gain) in an amount and manner
sufficient to eliminate such deficit Adjusted Capital Account Balance as quickly
as possible.

     

    (ii)  If
there is a net decrease in Company Minimum Gain during any Fiscal Year, each
Member shall be allocated items of income and gain for such Fiscal Year (and, if
necessary, for subsequent Fiscal Years) in proportion to and to the extent of an
amount equal to such Member’s share of the net decrease in Company Minimum Gain,
in accordance with Treasury Regulation section 1.704-2(f) and (g).

     

    (iii)  If
there is a net decrease in Member Nonrecourse Debt Minimum Gain attributable to
a Member Nonrecourse Debt during any Fiscal Year, each Member who has a share of
the Member Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse
Debt, determined in accordance with Treasury Regulation section 1.704-2(i), will
be specially allocated items of Company income and gain for such Fiscal Year
(and, if necessary, subsequent Fiscal Years) in an amount equal to such Member’s
share of the net decrease in Member Nonrecourse Debt Minimum Gain attributable
to such Member Nonrecourse Debt, determined in accordance with Treasury
Regulation section 1.704-2(i).

     

    (iv)  Member
Nonrecourse Deductions for any Fiscal Year shall be specially allocated to the
Member who bears the economic risk of loss with respect to the Member
Nonrecourse Debt to which such Member Nonrecourse Deductions are attributable in
accordance with Treasury Regulation section 1.704-2(i).

     

    (c)  The
following tax allocations shall be applicable.

     

    (i)  Except
as set forth in Section 5.1(c)(ii), allocations for tax purposes of items of
income, gain, loss, deduction and credit shall be made in the same manner as
allocations for book purposes.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (ii)  In
accordance with Code section 704(c) and the Treasury Regulations thereunder,
income, gain, loss and deduction with respect to any property contributed to the
capital of the Company shall, solely for tax purposes, be allocated among the
Members so as to take account of any variation between the adjusted basis of
such property to the Company for federal income tax purposes and its initial
Book Value.  The Manager will make such allocations in accordance with
Treasury Regulation section 1.704-3 using the method selected by the
Manager.

     

    (iii)  Allocations
pursuant to this Section 5.1(c) are solely for purposes of federal, state and
local taxes and will not affect, or in any way be taken into account in
computing, any Member’s Capital Account or share of profits, losses, tax items
or distributions pursuant to any other provision of this Agreement.

     

    (d)  Pursuant
to Treasury Regulation section 1.752-3(a), Company nonrecourse liabilities shall
be allocated in the following order:

     

    (i)  first,
to each Member to the extent of its respective share of Company Minimum Gain;
and

     

    (ii)  second,
to each Member in the amount of any taxable gain that would be allocated to that
Member under Code section 704(c) or in connection with a revaluation of Company
property pursuant to Treasury Regulation section 1.704-1(b)(2)(iv)(f) or (r), if
the Company disposed of (in a taxable transaction) all Company property subject
to one or more nonrecourse liabilities of the Company in full satisfaction of
such liabilities and for no other consideration; and

     

    (iii)  thereafter,
to the Members pro rata in proportion to their respective Capital
Accounts.

     

    5.2           Distributions; Record
Dates.

     

    (a)        To
the extent the Company holds Series A-1 Preferred Stock, and subject to Section
5.3, the Company shall make:

     

    (i)      to
DWC on the 366th day
after the date hereof and on each anniversary of such date thereafter (each such
date a “Yearly
Distribution Date”), a distribution of five hundred (500) shares of
Series A-1 Preferred Stock plus any shares previously retained pursuant to this
Section
5.2(a)(i) and not so distributed; provided, that the Company shall not
make such distribution unless DWC shall deliver written notice to the Company at
least sixty (60) days prior to such Yearly Distribution Date requesting that
such shares be distributed; and

     

    (ii)     to
Winfield on each Yearly Distribution Date, a distribution of three hundred sixty
two and one half (362.5) shares of Series A-1 Preferred Stock plus any shares
previously retained pursuant to this Section 5.2(a)(ii)
and not so distributed; provided, that the Company shall not make such
distribution unless Winfield shall deliver written notice to the Company at
least sixty (60) days prior to such Yearly Distribution Date requesting that
such shares be distributed.

     

    (b)   For
as long as the Company shall exist, the Company shall make:

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (i)     to
DWC (or its permitted Assigns), a distribution of cash flows as a percentage of
the Net Smelter Returns on the Minerals Produced from the DWC Property, as
listed in the following table:

     

    
      
        
          
            	
                    Gold Price / Ounce

                  	 	
                    Up to 500,000

                    oz.

                  	 	 	
                    Over 500,000

                    oz.

                  	 
	
                    $250.00
      of less

                  	 	 	1.0	%	 	 	2.0	%
	
                    $250.00
      to $500.00

                  	 	 	1.5	%	 	 	3.0	%
	
                    $501.00
      to $750.00

                  	 	 	2.0	%	 	 	5.0	%
	
                    $751.00
      or over

                  	 	 	3.0	%	 	 	6.0	%

          

        

      

    

    

    (ii)     to
Winfield (or his permitted Assigns), a distribution of cash flows as a
percentage of the Net Smelter Returns on the Minerals Produced from the Sutro
Property, as listed in the following table:

     

    
      
        
          
            	
                    Gold Price / Ounce

                  	 	
                    Up to 500,000

                    oz.

                  	 	 	
                    Over 500,000

                    oz.

                  	 
	
                    $250.00
      of less

                  	 	 	0.5	%	 	 	1.0	%
	
                    $250.00
      to $500.00

                  	 	 	1.0	%	 	 	2.0	%
	
                    $501.00
      or over

                  	 	 	1.0	%	 	 	2.0	%

          

        

      

    

     

    (iii)   to
Comstock Mining (or its permitted Assigns), a distribution of the remaining cash
flows on the Minerals Produced from the DWC Property and the Sutro Property
after any distributions made to DWC or Winfield pursuant to Section 5.2(b)(i)
and Section 5.2(b)(ii), and all cash flows on the Minerals Produced from the VCV
Property.

     

    Distributions
made pursuant to Section 5.2(b)(i), Section 5.2(b)(ii) or Section 5.2(b)(iii)
shall be made no later than thirty (30) days after receipt of payment from the
smelter or other purchaser; provided, that upon request by DWC, Winfield or
Comstock Mining, as the case may be (or their respective Assigns), the Company
shall give a written instruction to the smelter, refinery or other purchaser
that such distributions are to be paid directly to DWC, Winfield or Comstock
Mining (or their respective Assigns) from the sums payable to the
Company.  If any Initial Member shall Assign less than all of its
Ownership Interests to another Person in accordance with this Agreement,
distributions made pursuant to Section 5.2(b)(i), Section 5.2(b)(ii) or Section
5.2(b)(iii) shall be prorated between or among such Initial Members and its
Assign(s) in proportion to the respective Capital Accounts of such Initial
Member and its Assign(s) (or as otherwise agreed to by the Initial Members and
their Assigns). All payments shall be accompanied by a statement explaining the
manner in which the payment was calculated, including a determination of weights
and values of the Minerals Produced.

     

    (c)  Except
as provided in Section 5.2(b) or Article 10, without the prior written consent
of each Member, the Company shall not be permitted, and none of the Manager(s),
any Managing Director or any other Person shall cause the Company, to make any
distributions of cash or any other property of the Company to the Members except
for distributions in the form of Series A-1 Preferred Stock.  To the
extent deemed to be necessary or appropriate by the Manager, the Manager may fix
a record date for the determination of Members entitled to receive any such
distribution.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    5.3           Limitation upon
Distributions.  No distribution shall be made by the Company
unless, after the distribution is made, the fair value of the assets of the
Company exceeds the liabilities of the Company, except liabilities to Members on
account of their Capital Contributions, in each case, as determined by the
Manager.

     

    5.4           Loans by
Members.  Any Member may provide credit of any kind to the
Company so long as (but only so long as) such indebtedness by the Company shall
have been approved by the Manager.

     

    ARTICLE
6

     

    MANAGEMENT
OF THE COMPANY

     

    6.1           Manager and Managing
Directors.

     

    (a)  Subject
to Section 6.1(b), Section 6.1(c) and Section 6.1(d), the Company shall be
managed, and the conduct of its affairs, operations and activities shall be
controlled, exclusively by or under the direction of  John V. Winfield
(the “Manager”)
in accordance with this Agreement.

     

    (b)  The
number of Managers shall be determined by, and only by, the Members holding a
Majority Interest of the Company.  The initial number of Managers
shall be 1. A Manager must be an individual, but need not be a
Member.  If there is more than one Manager, each Manager shall have no
authority as such, but shall act only as a board.   Managers may
be elected at any time.  Each Manager shall hold office until his or
her such successor is elected and qualified or until his or her earlier
resignation or removal as such.  Removal as such will not affect any
rights or obligations of a Manager (i) such as those under Sections 6.4, 6.6 and
6.7 or (ii) as a Managing Director or a Member hereunder or under any other
Contract, in each case, except as otherwise expressly provided herein or
therein.  A Manager may resign as such at any time by giving written
notice to that effect to the Members.

     

    (c)  The
Manager may delegate the management and conduct of the Company’s day-to-day
business affairs, operations and activities to one or more managing directors
(the “Managing
Directors”).  The number of Managing Directors shall be
determined by, and only by, the Manager.  The initial number of
Managing Directors shall be 1. Managing Directors shall
be appointed by, and only by, the Manager.  Managing Directors may be
appointed at any time.  Each Managing Director shall hold office until
his or her such successor is elected and qualified or until his or her earlier
resignation or removal as such. Any or all Managing Directors (including those
set forth in Schedule
B) may be removed as such at any time by, and only by, the
Manager.  Removal as such shall not affect any rights or obligations
of a Managing Director (i) such as those under Sections 6.4, 6.6 and 6.7 or (ii)
as a Manager or a Member hereunder or under any other Contract, in each case,
except as otherwise expressly provided herein or therein.  A Managing
Director may resign as such at any time by giving written notice to the effect
to the Members.  The initial Managing Directors shall be those Persons
set forth on Schedule B.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (d)  Notwithstanding
any provision of this Agreement to the contrary, so long as Winfield is a
Member, none of the Company, any Manager or any Managing Director may take any
of the following actions without the prior written consent of
Winfield:

     

    (i)  the
sale, transfer, conveyance or other disposition of any portion of the DWC
Property or the Leased Property;

     

    (ii) the
distribution of any assets of the Company to any Member;

     

    (iii) the
admission of any Additional Member;

     

    (iv) the
issuance of any equity interest in the Company;

     

    (v) the
incurrence of any indebtedness other than trade payables in the ordinary course
of business; or

     

    (vi) the
existence of any lien or other encumbrance on the DWC Property or the Leased
Property.

     

    6.2           Action by Multiple
Managers.  If there is more than one Manager:

     

    (a)  Regular
meetings of the Managers shall be held when and as determined by the
Managers.  A copy of every resolution fixing or changing the time or
place of regular meetings shall be given to all Managers at least 5 days before
the first meeting held pursuant thereto.  Any and all business may be
transacted at a regular meeting.

     

    (b)  Special
meetings of the Managers may be held at any time.  Special meetings
may be called by, and only by, (i) a Manager or (ii) Members holding a Majority
Interest.  Written notice of the day, hour and place of each special
meeting shall be given to all Managers at least 2 days before the meeting by the
Person or Persons calling such meeting.  No business shall be
transacted at any special meeting except the business described in the notice
thereof; provided, however, that, if all of the Managers shall be present, and
shall so agree, any other business may be transacted thereat.

     

    (c)  Meetings
shall be held at the principal office of the Company or at such other place as
the Managers or the Person or Persons calling such meetings, as the case may be,
may reasonably determine.

     

    (d)  The
presence of a majority of the Managers then serving at any duly called meeting
of the Managers shall be required in order to constitute a quorum for the
transaction of business thereat.  If at any meeting of the Managers
there shall be less than a quorum, a majority of those Managers present may
adjourn such meeting to a different time and place. Any business which could
have been transacted at such meeting may be transacted at the adjourned meeting
so long as written notice of the adjourned meeting shall have been given to all
Managers at least 1 day prior to the adjourned meeting.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (e)  No
proposed or purported act at any meeting of the Managers shall have been duly
authorized unless authorized (i) at a duly called meeting at which a quorum is
present at either the commencement of such meeting or the time such
authorization is given at such meeting and (ii) by a majority of the Managers
present at such meeting.

     

    (f)  Managers
may participate in a meeting of the Managers by means of conference telephone or
similar communications equipment by means of which all Persons participating in
the meeting can hear each other, and such participation shall constitute
presence in person at such meeting.

     

    (g)  Any
action required or permitted to be taken at any meeting of the Managers may be
taken without a meeting if all Managers consent thereto in writing.

     

    (h)  The
Managers shall use good faith reasonable efforts to keep minutes or other
records of their actions, decisions and determinations, including those relating
to matters that may be within or without the scope of the Company Business, and
minutes or other records of actions, decisions and determinations of the
Members.

     

    6.3           Duties of the
Manager.

     

    (a)  The
Manager shall take or cause to be taken all actions as may be necessary or
appropriate for the conduct of the Company Business in accordance with this
Agreement and applicable Laws.  The Manager shall act at all times in
good faith and in such manner as he reasonably believes to be in the best
interests of the Company and the Members.

     

    (b)  Prior
to conducting any business in any jurisdiction, the Manager shall use reasonable
efforts to cause the Company either to comply with all requirements for the
qualification of the Company to conduct business as a limited liability company
in such jurisdiction or to conduct business in such jurisdiction through other
entities or by such other means as the Manager, upon the advice of counsel,
determines to be necessary or appropriate to preserve the Members’ limited
liability.

     

    6.4           Reliance.  Each
Manager and Managing Director shall be fully protected in relying in good faith
upon the records of the Company and upon information, opinions, reports or
statements presented to the Company by any Manager, Managing Director or
employee of the Company (other than such Manager or Managing Director) or by any
other Person as to matters which such Manager or Managing Director reasonably
believes to be within the scope of responsibility and competence of such
Manager, Managing Director, employee or other Person and whom such Manager or
Managing Director reasonably believes to have been selected with reasonable care
by or on behalf of the Company, including information, opinions, reports or
statements as to the value or amount of Claims, Liabilities, Losses, profits or
assets or as to any facts pertinent to the existence and amount of assets from
which distributions to which Members might properly be paid.

     

    6.5           Managing Director’s
Authority to Act for the Company.  Each Managing Director shall
have the authority inherent in such position, including the authority to act for
and bind the Company (including the authority to execute and deliver any
Contract on behalf of the Company) to the extent (but only to the extent) that
such act is taken in accordance with this Agreement, except as such authority
may be otherwise expanded or limited, generally or in a specific instance, by
the Manager.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    6.6           Limitation on
Liability.  Notwithstanding anything contained herein to the
contrary, no Manager or Managing Director (i) shall be liable, responsible or
accountable in damages or otherwise to the Company or any Member for any action
taken or failure to act (including action or failure to act that constitutes a
breach of this Agreement), except to the extent that such action or failure to
act constitutes gross negligence, bad faith, willful misconduct or fraud, or
(ii) shall have any obligation, responsibility or duty (by virtue of this
Agreement, as a fiduciary to the Company or the Members, or otherwise) to
disclose information, take action or refrain from taking action to the extent
that such disclosure, taking or refraining could reasonably be expected to
violate or breach an obligation, responsibility or duty owed to another
Person.  If such an obligation, responsibility or duty to another
Person could reasonably be expected to be materially adverse to the Company or
to present a material conflict of interest with the Company, such Manager or
Managing Director shall disclose it, in reasonable detail, to all of the
Managers prior to the date on which such Manager or Managing Director becomes
such or the date on which such service to such other Person commences, whichever
is later.  Thereafter, such Manager or Managing Director shall seek to
establish arrangements satisfactory to the Members in its good faith judgment to
minimize any material adverse consequences to the Company (and, if such
obligation, responsibility or duty relates to a Managing Director who is not an
Affiliate of an Initial Member, the Manager shall have the right to exercise its
authority under Section 6.1(c) to limit or change the duties, responsibilities
and authority of, or to remove, such Managing Director).

     

    6.7           Indemnification of Managers
and Managing Directors.

     

    (a)  The
Company shall indemnify and hold harmless, to the fullest extent permitted by
Law, each Manager and Managing Director (an “Indemnified Party”)
for, from and against any and all Liabilities and Losses from any and all Claims
and Proceedings (each, an “Indemnified Action”)
in which such Indemnified Party may be involved, or threatened to be involved,
as a party, a witness or otherwise, as a result of such Person’s status as a
Manager or Managing Director, regardless of whether such Indemnified Party
continued or continues in such capacity at the time of occurrence, assertion,
commencement, incurrence or payment thereof, or otherwise, and regardless of
whether such Indemnified Action is brought by a third party or a Member or by or
in the right of the Company, so long as the Indemnified Party acted in good
faith and in a manner the Indemnified Party reasonably believed to be in or not
opposed to the best interests of the Company (and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his or her conduct was
unlawful).

     

    (b)  The
Company shall pay or reimburse, to the fullest extent permitted by applicable
Law, in advance of the final disposition of each Indemnified Action, all fees,
charges, expenses and costs incurred by an Indemnified Party in connection with
any Indemnified Action, when and as incurred.  Such Indemnified Party
shall repay all amounts received from the Company pursuant to this Section
6.7(b) if such Indemnified Party is a defendant or respondent in such
Indemnified Action and it shall ultimately be determined at the final
disposition of such Indemnified Action that such Indemnified Party is not
entitled to be indemnified by the Company hereunder, unless the relevant
Judicial Authority or the disinterested Members shall have determined that
repayment is not warranted under the circumstances.  Such Indemnified
Party may request such a determination at any time before, or within a
reasonable time after, such final disposition.  The Manager or Members
shall promptly afford the Indemnified Party a reasonable opportunity to be heard
in respect of such determination and shall make such determination in good
faith.  If such a request is made, repayment shall not be required
until a decision as to such determination shall have been made.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (c)  The
Manager may cause the Company to purchase and maintain insurance or establish
other arrangements to protect the Indemnified Parties or the Company against any
Claim, Liability or Loss asserted or incurred by reason of a Person’s status as
a Manager or Managing Director, regardless of whether the Company would have the
power to indemnify such Person in respect thereof under this Section
6.7.  The indemnification and expense advancement provided by this
Section 6.7 shall be in addition to, and shall not be a limitation on, any other
rights to which the Indemnified Parties may be entitled under any Contract, by
reason of any determination or vote of the Members or the Manager, as a matter
of Law, or otherwise, and shall inure to the benefit of the estates, heirs,
successors, assigns and legal representatives of the Indemnified
Parties.

     

    6.8           Compensation and
Reimbursement of Managers and Managing Directors.  Each Manager
and Managing Director shall be entitled to such compensation for his or her
services as such as may determined by the Members holding a Majority
Interest.  The Company shall reimburse each Manager and Managing
Director for all out-of-pocket expenses reasonably incurred by him or her in his
or her capacity as such.

     

    6.9           Acceptance by Managers and
Managing Directors.  Each Manager and Managing Director agrees,
by accepting to undertake the duties and accept the rights and benefits as such,
to observe and bound by the provisions of this Agreement relating to such
capacity as if a party to it.

     

    6.10         Operations.

     

    (a)  Other
than as provided in Section 6.11, for as
long as the Company shall exist, Comstock Mining, on behalf of the Company,
shall have the exclusive right to:

     

    (i)   explore,
develop and mine all minerals, metals and ores (collectively, the “Minerals”) on or in
the DWC Property and the Leased Property and, perform such exploration,
development and mining in any manner deemed necessary or convenient by Comstock
Mining, whether by surface, underground, solution or other mining
methods;

     

    (ii)  temporarily
to store, or permanently to dispose of minerals, water, waste rock or other
materials produced from or near the DWC Property or the Leased
Property;

     

    (iii)  to
crush, grind, or otherwise prepare for transportation to an off-site processing
facility all Minerals on the DWC Property or the Leased Property, whether such
Minerals were produced from the DWC Property, the Leased Property or other
proximate lands;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (iv)  to
use, alter, or destroy, consume and deplete so much of the surface and surface
resources of the DWC Property or the Leased Property as Comstock Mining may deem
desirable or convenient in connection with its operations on the DWC Property or
the Leased Property.  Notwithstanding the foregoing, Comstock Mining
shall be responsible for the undertaking and completing any and all land
reclamation resulting from its activities during the term of this Agreement as
required by federal and state law, and county ordinance; and

     

    (v)  exercise
such other rights as are reasonably necessary to accomplish the
foregoing.

     

    (b)  With
respect to the DWC Property, Comstock Mining shall expend not less than $150,000
in the first twelve (12) months following the date hereof, and at least $150,000
per year during each of the following four (4) years following the execution of
this Agreement.   Within thirty (30) days after the end of each
twelve (12) month period, Comstock Mining shall deliver to the Members
reasonable supporting documentation showing compliance with Comstock Mining’s
obligations hereunder.

     

    (c)  With
respect to the Sutro Property, Comstock Mining shall expend not less than
$100,000 in the first twelve (12) months following the date hereof, and at least
$100,000 per year during each of the following five (5) years following the
execution of this Agreement, and not less than $750,000 in the aggregate during
the five (5) years following the execution of this
Agreement.   Within thirty (30) days after the end of each twelve
(12) month period, Comstock Mining shall deliver to the Members reasonable
supporting documentation showing compliance with Comstock Mining’s obligations
hereunder.

     

    (d)  Comstock
Mining agrees to conduct its operations hereunder in a good and miner-like
manner and in compliance with all applicable laws, rules and regulations of any
governmental entity having jurisdiction over such operations or the DWC Property
or the Leased Property including, but not limited to, mine safety and health,
environmental, land-use and zoning and operational permits and
consents.

     

    (e)  Comstock
Mining shall continuously engage in exploration, development, mining or
processing operations upon the DWC Property and the Leased Property so that at
no time will there be any period of 180 consecutive days in which no
exploration, development, mining or processing operations are conducted on the
respective properties (excluding periods of Force Majeure as defined
below).

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    6.11         Defaults by Comstock Mining;
Remedies.

    (a)  If:
(i) Comstock Mining fails to make any Capital Contribution pursuant to Section
3.2, and fails to remedy such default within thirty (30) days following notice
from the Company; or (ii) Comstock Mining defaults in fulfilling any other
covenant of this Agreement and Comstock Mining fails to remedy such default
within sixty (60) days after notice by the Company specifying the nature of such
default (or, if said default cannot be completely cured or remedied within said
sixty (60) day period and Comstock Mining shall not have diligently commenced
curing such default within such sixty (60) day period; or (iii) a Bankruptcy of
Comstock Mining, and such Bankruptcy shall continue and remain undischarged or
unstayed for an aggregate period of one hundred twenty (120) days (whether or
not consecutive) or shall not be remedied by Comstock Mining within one hundred
twenty (120) days; or (iv) Comstock Mining fails to comply with its obligations
set forth in Section 8 of the Series A-1 Certificate of Designation and Comstock
Mining fails to remedy such default pursuant to Section 8(c) of the Series A-1
Certificate of Designation within thirty (30) days after notice by the Company;
or (v) Comstock Mining defaults under Section 4.2 of the Securities Purchase
Agreement and fails to remedy such default under the provisions of Section
5.13(b) of the Securities Purchase Agreement; or (vi) Comstock Mining fails to
comply with its obligations under Section 2(a) of the RRA and fails to remedy
such default within thirty (30) days after notice by the Company; or (vii)
Comstock Mining fails to comply with its obligations under Section 2(b) of the
RRA in that the Registration Statement (as defined therein) is not declared
effective no later than the one (1) year anniversary of the Closing Date (as
defined therein) and Comstock Mining fails to remedy such default within thirty
(30) days after notice by the Company; or (viii) a Change of Control Transaction
(as defined in the Series A-1 Certificate of Designation) occurs; then the same
shall constitute a default by Comstock Mining under this Agreement and, if and
so long as such default shall continue uncured or unremedied, the Company shall
have and be entitled to exercise, in its sole discretion, by written notice one
of the remedies set forth below.  If the Company’s notice of default
shall indicate its election of either remedy set forth in (i) or (ii) of
subsection (b) below and the date for expiration of the applicable cure period,
then the Company’s election of the remedy in subsection (b) below shall be
effective as of such date set forth in the default notice (provided, however,
that such default remains uncured or unremedied at such date) and, without any
further action by or notice from the Company, either (x) this Agreement shall
terminate and the Company shall be dissolved in accordance with Article 10
hereof; or (y) this Agreement shall continue in full force and
effect  and the remaining Capital Contributions to be made by Comstock
Mining shall accelerate and be due and payable in the form of shares of Series
A-1 Preferred Stock to the Company on such date, as the case may be, as provided
by the Company in the notice of default.   Notwithstanding the
foregoing, it shall be deemed that Comstock Mining is not in default under the
terms of this Agreement by reason of mining operations or other required
activities having been suspended or prevented or prohibited by Law, by the
inability to obtain permits or licenses, by scarcity or inability to obtain
equipment, material, power or fuel, by strike, lockout or industrial
disturbance, by failure of carriers to transport or furnish facilities for
transportation, by operation of any Acts of God (including, without limitation,
lightning, earthquake, fire, storm, flood, washout), by breakage or accident to
machinery or facilities, or by any cause beyond Comstock Mining’s control (the
foregoing are collectively referred to as “Force Majeure”);
provided, however, that Comstock Mining shall exercise reasonable diligence to
resume mining operations.

     

    (b)  In
case of any such default,  the Manager shall have the right to either:
(i) terminate this Agreement and dissolve the Company in accordance with Article
10 hereof; or (ii) continue this Agreement in full force and effect and
accelerate the remaining Capital Contributions to be made by Comstock Mining in
the form of shares of Series A-1 Preferred Stock from such date until the thirty
ninth (39th)
anniversary of the execution of this Agreement.  If this Agreement is
terminated, Comstock Mining may remove all of its personal property within three
(3) months after said termination.  The 3-month period may be extended
for periods when inclement weather will not allow the removal of equipment. All
such items not removed within six months shall become the property of the then
holder of the DWC Property or the lessee of the Leased Property, as
applicable.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    6.12         Rights of First Refusal;
Right to Purchase.

     

    (a)  The
Company hereby assigns to Comstock Mining, subject to the condition of
limitation and termination that no default by Comstock Mining shall have
occurred and be continuing under Section 6.11 of this
Agreement, (i) all of its rights under Section 29 of the lease with Sutro Tunnel
Company set forth in Exhibit B and, the
Company shall cause the Sutro Tunnel Company to recognize Comstock Mining’s
right of first refusal with respect to any sale of the Sutro Property and (ii)
all of its rights under Section 13 of the lease with Virginia City Ventures,
Inc. set forth in Exhibit C and, the
Company shall cause Virginia City Ventures, Inc. to recognize Comstock Mining’s
right of first refusal with respect to any sale of the VCV
Property.

     

    (b)  Notwithstanding
subsection (a) above, if Comstock Mining is unwilling or unable to purchase
either Leased Property in connection with the right of first refusal, or a
default by Comstock Mining shall have occurred and be continuing under Section 6.11 of this
Agreement, the Company shall have the right to do so as if the right of first
refusal had never been assigned.

     

    (c)  In
the event the Company proposes to sell the DWC Property or any patents or lots
therein to a bona fide third party, it shall give Comstock Mining written notice
of its intention to sell, describing the property, the parcel number(s), the
price and the general terms upon which the Company proposes to sell the same.
Comstock Mining shall then have ten (10) days from receipt of notice sent by
registered mail to Comstock Mining to agree to purchase same under substantially
the same terms and conditions.  If Comstock Mining does not exercise
its rights within such ten (10) day period then Comstock Mining shall be deemed
to have waived its right of first refusal with respect to the offer which was
the subject of the Company’s notice; provided, that Comstock Mining’s right of
first refusal shall not be deemed waived in connection with any subsequent offer
to purchase the DWC Property received by the Company or any
successor-in-interest to the Company.  Notwithstanding the foregoing
if, following Comstock Mining’s waiver of its right of first refusal hereunder,
the terms of the underlying transaction change in any material respect, the
Company shall, again, send a notice to Comstock Mining describing the modified
terms and conditions of the offer and Comstock Mining shall have a right of
first refusal with respect to such modified offer.

     

    (d)  The
Company hereby assigns to Comstock Mining, subject to the condition of
limitation and termination that no default by Comstock Mining shall have
occurred and be continuing under Section 6.11 of this
Agreement, all of its rights to purchase the VCV Property subject to the terms
and conditions set forth in Section 14 of the lease with Virginia City Ventures,
Inc. set forth in Exhibit
C.

     

    6.13         Company
Covenants.

     

    (a)   Promptly
following the execution and delivery of this Agreement by the parties, Winfield
and/or the Company shall furnish to Comstock Mining copies of any and all
records, reports, studies, analyses, permits, approvals, licenses, notices sent
to and from Sutro Tunnel Company, Virginia City Ventures, Inc. and all other
documents in Winfield’s or the Company’s possession which relate to the Leased
Property including, without limitation, all title abstracts under Section 4 of
the leases for each Leased Property, all current exploration data described in
Sections 20 and 22 of the leases for the Sutro Property and the VCV Property,
respectively, and all maps, reports and other data described in Sections 22 and
24 of the lease for the Sutro Property and the VCV Property,
respectively.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (b)    As
long as no default by Comstock Mining shall have occurred and be continuing
under Section
6.11 of this Agreement, the Company shall not enter into any amendment or
otherwise modify or amend the lease set forth in Exhibit B without the
prior written consent of Comstock Mining in its sole discretion; provided,
however, that the foregoing shall not preclude the Company from extending the
term of or reducing its payment obligations under such lease.

     

    (c)   As
long as no default by Comstock Mining shall have occurred and be continuing
under Section
6.11 of this Agreement, the Company shall not terminate the lease set
forth in Exhibit
B in accordance with Sections 17 or 18(a) of such lease, or otherwise,
without the prior written consent of Comstock Mining in its sole
discretion.

     

    (d)  The
Company shall furnish to Comstock Mining copies of any notices issued to or
received from Sutro Tunnel Company or Virginia City Ventures, Inc. immediately
upon issuing or receiving such notices.  Comstock Mining shall have
the right, but not the obligation, to cure any default by the Company under the
leases set forth in Exhibit B or Exhibit C, and the
Company shall promptly reimburse Comstock Mining for all costs and expenses
(including, without limitation, reasonable attorneys’ fees) incurred by Comstock
Mining in connection with such cure.

     

    (e)  As
long as no default by Comstock Mining shall have occurred and be continuing
under this Agreement, the Company shall not alienate its interest or encumber
its interests in the leases set forth in Exhibit B or Exhibit C, the Leased
Property or this Agreement or otherwise deal or attempt to deal with its right,
title and interest in the leases set forth in Exhibit B or Exhibit C, the Leased
Property, or this Agreement in any way that is adverse to Comstock Mining’s
rights under this Agreement.

     

    (f)  As
long as no default by Comstock Mining shall have occurred and be continuing
under Section
6.11 of this Agreement, the Company shall not do anything or suffer or
permit anything to be done that would result in a default under the leases set
forth in Exhibit
B or Exhibit
C, or permit such leases to be canceled or terminated.

     

    ARTICLE
7

     

    MEMBERS

     

    7.1           Initial Members; Limited
Liability.

     

    (a)  The
Initial Members shall be those Persons set forth on Schedule
A  on the date hereof.

     

    (b)  The
Members as such will not have any responsibility or obligation in any way or of
any kind for any Liabilities or Losses of the Company or to make contributions
to the Company in excess of their respective Capital Contributions.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    7.2           Assignment of Ownership
Interests; Substituted Members.  A Member may Assign all or any
part of its Ownership Interest with, but only with, the approval of each
Member.  An Assignee will become a Member when, but only when, the
Members shall have approved substitution of such Assignee for the Assigning
Member and the Assignee shall have executed and delivered a joinder agreement to
become a party to this Agreement in form and substance reasonably satisfactory
to the Manager.  Any Substituted Member admitted to the Company will
succeed to all rights and be subject to all obligations, including with respect
to Comstock Mining the rights and obligations set forth in Section 6.10 hereof,
of the Assigning Member with respect to the Ownership Interest Assigned.
Notwithstanding anything contained herein (other than the next sentence) to the
contrary, the Members shall promptly give approval to: (a) the Assignment of an
Ownership Interest to the estates, heirs, legal representatives and Affiliates
of Members to whom such Ownership Interests are Assigned in connection with the
transfer of all or a majority of, or the restructuring or reorganization of,
their businesses or ownership interests or in connection with tax and estate
planning, or by reason of disability or death; and (b) the admission of any such
Assignee as a Substituted Member.  Notwithstanding anything contained
herein to the contrary, no Person shall be admitted as a Substituted Member
unless such admission would not result in (i) a violation of any applicable Law,
including applicable securities Laws, or this Agreement or (ii) a change in the
Members’ limited liability.

     

    7.3           Admission of Additional
Members.  One or more Persons may be admitted as Members with,
but only with, the consent of each Member.  The terms of any such
admission, including such Person’s Capital Contributions, shall be determined by
the Members.  Notwithstanding anything contained herein to the
contrary, no Person shall be admitted as an Additional Member unless such
Additional Member shall have executed and delivered a joinder agreement to
become a party to this Agreement in form and substance reasonably satisfactory
to each Member and such admission would not result in (i) a violation of any
applicable Law, including applicable securities Laws, or this Agreement or (ii)
a change in the Members’ limited liability.

     

    7.4           No Acquisition of Ownership
Interests by the Company.  The Company shall not acquire, by
purchase, redemption or otherwise, all or any part of the Ownership Interest of
any Member, without the consent of each Member.  Notwithstanding
anything contained herein to the contrary, no Ownership Interest shall be
acquired unless such acquisition would not result in (i) a violation of any
applicable Law, including applicable securities laws, or this Agreement or (ii)
a change in the Members’ limited liability.

     

    7.5           Action by the
Members.

     

    (a)  Meetings
of the Members may be held at any time.  Meetings of the Members may
be called by, but only by, (i) the Manager, (ii) Members holding a Majority
Interest or (iii) an Initial Member.  Written notice of the day, hour
and place of each special meeting shall be given to all Members at least 2 days
before such meeting by the Person or Persons calling such meeting.  To
the extent deemed necessary or appropriate by the Manager, the Manager may fix a
record date for the determination of Members entitled to receive such notice and
to act at such meeting and their respective Ownership Interests at the time of
such meeting.  The Manager may change the day and time of such meeting
to the extent necessary or appropriate to fix such record date and give written
notice thereof to all Members.  No business shall be transacted at any
meeting except business which Members are expressly permitted to take hereunder
and which is described in the notice thereof.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (b)  The
presence of Members holding a Majority Interest at any duly called meeting of
the Members shall be required in order to constitute a quorum for the
transaction of business thereat.  If at any meeting of the Members
there shall be less than a quorum present, a majority of those Members present
may adjourn such meeting to a different time and place.  Any business
which could have been transacted at such meeting may be transacted at the
adjourned meeting so long as written notice of the adjourned meeting shall have
been given to all Members at least 1 day prior to the adjourned
meeting.

     

    (c)  No
proposed or purported act at any meeting of the Members shall have been duly
authorized unless authorized (i) at a duly called meeting at which a quorum is
present at either the commencement of such meeting or the time such
authorization is given at such meeting and (ii) by Members holding a Majority
Interest (or such other interest as may be set forth herein).

     

    (d)  Members
may participate in a meeting of the Members by means of conference telephone or
similar communications equipment by means of which all Persons participating in
the meeting can hear each other, and such participation shall constitute
presence in person at such meeting.

     

    (e)  Any
action required or permitted to be taken at any meeting of the Members may be
taken without a meeting if Members holding the requisite number of Ownership
Interests necessary to take such action consent thereto in
writing.  Notice of such action shall be given by the Company to the
other Members, but no failure to give or delay in giving such notice, and no
defect in such notice, shall impair or limit the validity of such
action.

     

    7.6           Independent
Conduct.

     

    (a)  Except
as provided in Section 6.6 or 7.6(b), each Member and its Affiliates shall have
the right to (i) engage in any and all businesses and activities of any kind
(irrespective of whether such businesses and activities compete with the
businesses and activities of the Company, the other Members or any of their
respective Affiliates), (ii) use, lease and own any and all rights and
properties of any kind, however used, leased or owned and wherever used, leased
or owned, and (iii) receive compensation or profit therefrom for its or their
own account and without in any manner being obligated to disclose or offer such
businesses, activities, rights, properties, compensation or profit to the
Company, the other Members or any of their respective
Affiliates.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (b)  So
long as a Member or any of its Affiliates is a member of the Company or a
Manager or Managing Director (the “Membership Period”)
and for 2 years thereafter, unless otherwise approved by the Manager, such
Member shall not
and shall not permit its Affiliates to, directly or indirectly, either
individually or on behalf of or through any other Person (other than the
Company), (i) solicit or induce, or in any manner attempt to solicit or induce,
any customer of the Company or any Person who during the Membership Period had
been specifically identified as a prospective customer of the Company to become
a customer or client of another Person in respect of any business, transaction
or opportunity within the scope of the Company Business, (ii) solicit or induce,
or in any manner attempt to solicit or induce, any Person who is employed by, a
material agent or representative of or a material service provider to the
Company to terminate such Person’s relationship with the Company, (iii) divert,
or in any manner attempt to divert, any Person from doing business with the
Company or pursuing any business opportunity within the scope of the Company
Business with the Company, (iv) induce, or in any manner attempt to induce, any
Person to reduce the business such Person does with the Company or to cease
being a customer of, or maintaining such Person’s other business relationships
with, the Company or (v) compete with or take or divert to itself the Company
Business, any material part thereof or any material opportunity within the scope
thereof.

     

    7.7           Confidentiality.

     

    (a)  During
the Membership Period in relation to a Member and for 2 years thereafter, such
Member will keep, and with cause its Affiliates and its and their
Representatives to keep, all Information of the Company, each other Member and
each Affiliate of each other Member confidential and will not disclose or use,
or permit any of its Affiliates or its or their Representatives to disclose or
use, any of such Information in any manner; provided, however, that such
Information may be disclosed to Representatives of such Member who (i) need to
know such Information for the conduct of the affairs of the Company in
accordance with this Agreement (or for the purpose of assisting such Member to
meet or comply with legal requirements (e.g., the preparation and filing of tax
returns)), (ii) are informed in writing by such Member of the confidential
nature and restricted use of such Information and (iii) agree in writing to
observe the terms of this Section 7.7 as if they were such
Member.  Such Member will and will cause its Representatives to only
make that number of copies of such Information (whether in written,
electronic or other form) that is necessary for the purpose set forth in clause
(i) of the preceding sentence.

     

    (b)  The
Company will keep, and will cause its Subsidiaries and its and their
Representatives (including the Managers and the Managing Directors) to keep, all
Information of the Members confidential and will not, and will not permit
its Subsidiaries or its or their Representatives (including the Managers and the
Managing Directors) to, disclose or use such Information in any manner; provided, however, that such
Information may be used by the Company and disclosed to and used by its
Subsidiaries and its and their Representatives who (i) need to know such
Information for the conduct of the Company Business and the affairs of the
Company in accordance with this Agreement and (ii) are informed by the
Company of the confidential nature and restricted use of such
Information.

     

    (c)  At
any time after such Membership Period, upon written of the Person to whom
Information belongs, such Member will, at its election, either (i) promptly
cause to be destroyed at its expense all of such Information (in any form other
than oral) in the possession of it, its Affiliates or its or their
Representatives (including all copies) and confirm such destruction to such
Person in writing or (ii) promptly cause to be delivered to such Person at such
Member’s expense all of such Information (in any form other than oral) in the
possession of it, its Affiliates or its or their Representatives (including all
copies).  All of such Information in oral form will continue to be
subject to this Section 7.7; provided, that such
Member may retain and use any such Information as needed by such Member to meet
or comply with legal requirements (e.g., the preparation and filing of tax
returns).

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (d)  If
a Person subject to this Section 7.7 becomes required by Law to disclose any
Information of another Person which such Person is required to keep confidential
and not disclose under this Section 7.7, such Person will as promptly as
possible give written notice to that effect to such other
Person.  Such other Person, in its sole discretion, shall be entitled
to seek a protective order or other appropriate remedy.  If such other
Person seeks such an order or remedy, such Person will, upon request, use all
reasonable efforts to fully cooperate with such other
Person.  Regardless of whether such protective order or other remedy
is obtained, such Person will furnish only that portion of such Information
which it is legally required to furnish.  If such a protective order
or remedy is not obtained, such Person will exercise best efforts to obtain
reliable assurance that confidential treatment will be accorded such
Information.  If such a protective order or other remedy is obtained,
such Person will exercise best efforts to obtain reliable assurance that such
Information is furnished in accordance with and subject to such protective order
or remedy.  To the extent that such Person is an Affiliate of a Member
or a Representative of a Member or its Affiliates, such Member will cause them
to comply with this Section 7.7(e).  To the extent that such Person or
its Representatives furnish Information in accordance with this Section 7.7(d),
such furnishing will not constitute a breach of this Section 7.7.  The
Company shall provide such assistance as may be reasonably feasible and
necessary to carry out the purposes of this Section 7.7(d).

     

    7.8           Certain
Remedies.  Each of the parties hereto agrees, on behalf of
itself, its Affiliates and its and their Representatives, that money damages for
a breach of Section 7.6 or 7.7 by it or them is unlikely to be calculable, that
such a breach is likely to cause irreparable harm to the aggrieved Person and
that remedies at law are likely to be inadequate to protect the aggrieved Person
against any actual or threatened breach of Section 7.6 or
7.7.  Accordingly, each of the parties hereto agree, on behalf of
itself, its Affiliates and its and their Representatives, to the granting of
injunctive relief in favor of the aggrieved Person in the event of any such
breach or threatened breach, without proof of actual damages and without the
requirement of posting bond or other security.  Such relief shall not
be the exclusive remedy for a breach or threatened breach of Section 7.6 or 7.7,
but shall be in addition to all other rights and remedies available at law, in
equity or otherwise to the aggrieved Person.  In the event of
litigation relating to Section 7.6 or 7.7 wherein a court of competent
jurisdiction determines in a final, non-appealable order that Section 7.6 or 7.7
has been breached, then each of the parties hereto agrees, on behalf of itself,
its Affiliate and its and their Representatives, that the breaching Person will
also be liable to the aggrieved Person for all costs and expenses (including
reasonable legal fees and expenses) incurred in connection with such litigation
and all other litigation related to such breach.

     

    7.9           Obligations and Material
Developments.  The Members intend to act in good faith and in
close cooperation on all matters relating to this Agreement and the Company
Business.  Each Member shall use reasonable and good faith efforts to
promptly inform the Manager of material developments relating thereto, consult
with the Manager as to such developments and act by consensus with respect to
such developments.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    7.10         Member Books and
Records.  Each Member shall maintain (and shall cause its
respective Affiliates to maintain) accurate and complete books and records, in
accordance with generally accepted accounting principles and practices and
otherwise, to the extent necessary to demonstrate compliance with this
Agreement.

     

    7.11         Further
Assurances.  Each of the parties hereto will (and will cause
its Affiliates and Representatives to) use its
respective commercially reasonable efforts to take or cause to be taken all
appropriate actions, do or cause to be done all things necessary, proper or
advisable, and execute such applications,
filings, certificates and other
documents to carry out and give effect to this
Agreement.

     

    ARTICLE
8

     

    ACCOUNTS;
RETURNS

     

    8.1           Books.  The
Manager shall use reasonable efforts to cause the Company to maintain complete
and accurate books and records, in accordance with general accepted accounting
principles and practice and otherwise, of all transactions, operations and
activities of the Company and its Subsidiaries.  Each Member shall
have the right to inspect the Company’s books and records at any reasonable
time.

     

    8.2           Reports and
Returns.  The Manager shall use reasonable efforts to cause to
be furnished to each Member:

     

    (a)  within
90 days after the end of each Fiscal Year, an Internal Revenue Service Schedule
K-1 with respect to such Member (and, within the applicable period under
applicable foreign Law, any similar information statement with respect to such
Member); and

     

    (b)  within
120 days after the end of each Fiscal Year, a balance sheet of the Company as at
the end of such Fiscal Year and statements of income and cash flow of the
Company for such Fiscal Year.

     

    8.3           Fiscal
Year.  The fiscal year of the Company for both financial
reporting and tax purposes shall be the calendar year (the “Fiscal
Year”).

     

    8.4           Method of Accounting and
Reporting.  The books and accounts of the Company shall be
maintained using the cash method of accounting for both financial reporting and
tax purposes.  The Company shall elect to be treated as a partnership
for federal income tax purposes.

     

    8.5           Tax
Returns.  The Manager shall use reasonable efforts to cause to
be prepared and filed on a timely basis all foreign, federal, state and local
tax returns and tax information returns required on the part of the
Company.

     

    8.6           Bank
Accounts.  The Manager shall use reasonable efforts to cause
all funds of the Company to be deposited in the name of the Company in an
account or accounts maintained with a bank or banks selected by the
Manager.  Checks shall be drawn upon the Company account or accounts
only for the purposes of the Company and must be signed by at least one Managing
Director or, if they exceed $1,000, at least two Managing
Directors.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    ARTICLE
9

     

    VALUATION
OF ASSETS

     

    For
purposes of this Agreement, the Fair Market Value of any asset of the Company,
of a Member’s Ownership Interest or of the Company Business shall be determined
by agreement of all Members affected thereby or, at the option of any such
Member or if such Members are unable to agree on such value within a reasonable
time, by an independent expert selected by the Manager.  If required
to make such a selection, the Manager shall make any such selection
promptly.

     

    ARTICLE
10

     

    DISSOLUTION
OF THE COMPANY

     

    10.1         Dissolution.  Subject
to the LLC Act, the Company shall be dissolved upon the earliest to occur
of:

     

    (a)  the
determination, at a duly called and convened meeting of the Members, of Members
holding a Majority Interest to dissolve the Company; or

     

    (b)  the
sale or distribution by the Company of all or substantially all of its
assets.

     

    Except as
otherwise expressly provided under the LLC Act, the withdrawal, removal, death
or incompetency of a Member, the Bankruptcy of a Member, the reorganization,
termination, dissolution or liquidation of a Member, the distribution or sale by
a Member of its Ownership Interest, or the occurrence of a similar event or
transaction will not effect a dissolution of the Company.

     

    10.2         Liquidation.

     

    (a)  Upon
dissolution and liquidation of the Company pursuant to Section 10.1, the assets,
liabilities, business and affairs of the Company will be liquidated and wound up
in an orderly manner. The Manager shall select a Person or Persons, any or all
of whom may be a Member or a Manager, to serve as liquidator (individually and
collectively, the “Liquidator”).  The
Liquidator shall have the same duties, power and authority, and shall be
entitled to the same rights and protections, as those afforded to the Manager
and a Managing Director.  Upon appointment of the Liquidator, the
Manager shall cease to have any duties, power or authority and the Manager shall
be discharged as such.

     

    (b)  Upon
dissolution and liquidation of the Company, a final allocation of all items of
income, gain, loss and deduction shall be made in accordance with Article 5 and
all of the Company’s assets, or the proceeds therefrom, shall be distributed or
used as follows and in the following order of priority (which order shall be
without prejudice to the liability of the Company to its
creditors):

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (i)  for
the payment of the Company’s debts, liabilities and obligations (including
liabilities and obligations to the Manager and Managing Directors) and the
expenses of its liquidation;

     

    (ii)  to
the setting up of any reserves that the Liquidator may deem necessary or
appropriate for any contingent or unforeseen debts, liabilities or obligations
(including debts, liabilities and obligations to the Manager and Managing
Directors) of the Company; and

     

    (iii)  to
the Members in accordance with the positive balances in their respective Capital
Accounts (after adjustments under Articles 3 and 5 have been made to such
Capital Accounts, until such balances have been reduced to zero).

     

    10.3         Liability for Return of
Capital Contributions.  Each Member shall look solely to the
assets of the Company for all distributions by the Company, including
distributions in connection with the dissolution of the Company.  No
Member shall have any recourse therefor against any of the other Members, any
Manager, any Managing Director or any of the Representatives of the Company
(other than by reason of a breach of this Agreement or another Contract between
or among any of them and the Company).

     

    ARTICLE
11

     

    AMENDMENTS;
WAIVERS

     

    11.1         Amendments.  No
addition to, and no cancellation, renewal, extension, modification or amendment
of, this Agreement shall be binding upon any party hereto unless such addition,
cancellation, renewal, extension, modification or amendment is set forth in a
written instrument which states that it adds to, amends, cancels, renews,
extends or modifies this Agreement and which is executed and delivered by each
party hereto.

     

    11.2         Waivers.  No
waiver of any provision of this Agreement shall be binding upon a party hereto
unless such waiver is expressly set forth in a written instrument which is
executed and delivered by such party.  Such waiver shall be effective
only to the extent specifically set forth in such written
instrument.  Neither the exercise (from time to time and at any time)
by a party hereto of, nor the delay or failure (at any time or for any period of
time) to exercise, any right, power or remedy shall constitute a waiver of the
right to exercise, or impair, limit or restrict the exercise of, such right,
power or remedy or any other right, power or remedy at any time and from time to
time thereafter.  No waiver of any right, power or remedy or a party
hereto shall be deemed to be a waiver of any other right, power or remedy of
such party or shall, except to the extent so waived, impair, limit or restrict
the exercise of such right, power or remedy.

     

    ARTICLE
12

     

    NOTICES

     

    All
notices, requests, demands and other communications required or permitted to be
given pursuant to this Agreement shall be given in writing, shall be transmitted
by personal delivery, by a nationally recognized courier service, by registered
or certified mail, return receipt requested, postage prepaid, by facsimile, or
by email, receipt
requested, and shall be addressed as follows:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (a)  when
the Company is the intended recipient, to the address of its principal office
set forth in Section 2.5; and

     

    (b)  when
any Member, Manager or Managing Director is the intended recipient, to its
address set forth on Schedule A or B.

     

    The
Company, a Member, a Manager or a Managing Director, or any other party hereto,
may designate a new address to which notices, requests, demands and other
communications required or permitted to be given pursuant to this Agreement
shall thereafter be transmitted by giving written notice to that effect to the
Manager.  The Manager shall use reasonable efforts to advise all
affected Persons of such change.  Each notice, request, demand or
other communication transmitted in the manner described in this Article 12 shall
be deemed to have been given, received and become effective for all purposes at
the time it shall have been (a) delivered to the addressee as indicated by the
receipt (if transmitted by mail or email), the affidavit of the messenger (if
transmitted by personal delivery), the receipt of the courier service (if
transmitted by courier service), or the e-mail receipt, answer back or call back
(if transmitted by e-mail or facsimile) or (b) presented for delivery to the
addressee as so indicated during normal business hours, if such delivery shall
have been refused for any reason.

     

    ARTICLE
13

     

    MISCELLANEOUS

     

    13.1         Publicity.  Each
party hereto agrees that it shall not and shall not permit its Affiliates or its
or their Representatives to issue any publicity, release or announcement
concerning the execution, delivery, performance or termination of this
Agreement, the provisions hereof or the transactions contemplated hereby without
the prior written consent of the form and content of such publicity, release or
announcement by the Manager; provided, however, that no such
consent shall be required when such publicity, release or announcement is
required by any applicable Law and, provided further, that, prior to issuing any
such required publicity, release or announcement without such prior written
consent, the party hereto issuing or whose Affiliates or Representatives is
issuing such publicity, release or announcement shall have given reasonable
prior notice to the Manager of such intended issuance and shall have used good
faith efforts to take or cause to be taken into account any comments thereon
that it may have.

     

    13.2         Expenses of
Members.  Except as otherwise provided in this Agreement, each
party hereto agrees
to pay or cause its Affiliates to pay all expenses, fees and costs (including
legal, accounting and consulting expenses) incurred by it or its Affiliates in
connection with the transactions contemplated by this Agreement.

     

    13.3         Entire
Agreement.  This Agreement constitutes the entire agreement
among the parties hereto with respect to the subject matter hereof and cancels
and supersedes all of the previous or contemporaneous agreements,
representations, warranties and understandings (whether oral or written) by,
between or among the parties hereto with respect to the subject matter hereof
(including the Letter of Intent dated August 13, 2008, between GoldSpring, Inc.
and DWC Resources, Inc. and the Letter of Intent dated August 13, 2008, between
GoldSpring, Inc. and John V. Winfield).

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    13.4         Governing Law; Forum; Jury
Trial.  THE VALIDITY, INTERPRETATION, PERFORMANCE AND
ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
NEVADA (WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW RULE THAT WOULD
CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE INTERNAL
LAWS OF THE STATE OF NEVADA).  EACH PARTY HERETO, ON BEHALF OF ITSELF,
ITS AFFILIATES AND ITS AND THEIR REPRESENTATIVES, AGREES THAT ANY CLAIM OR
PROCEEDING ARISING OUT OF THIS AGREEMENT OR THE BREACH OR THREATENED BREACH OF
THIS AGREEMENT SHALL BE COMMENCED AND PROSECUTED IN A COURT IN THE STATE OF
NEVADA.  EACH PARTY HERETO, ON BEHALF OF ITSELF, ITS AFFILIATES AND
ITS AND THEIR REPRESENTATIVES, CONSENTS AND SUBMITS TO THE NON-EXCLUSIVE
PERSONAL JURISDICTION OF ANY COURT IN THE STATE OF NEVADA IN RESPECT OF ANY SUCH
CLAIM OR PROCEEDING.  EACH PARTY HERETO, ON BEHALF OF ITSELF, ITS
AFFILIATES AND ITS AND THEIR REPRESENTATIVES, CONSENTS TO SERVICE OF PROCESS
UPON IT OR THEM WITH RESPECT TO ANY SUCH CLAIM OR PROCEEDING BY REGISTERED MAIL,
RETURN RECEIPT REQUESTED, AND BY ANY OTHER MEANS PERMITTED BY APPLICABLE
LAWS.  EACH PARTY HERETO, ON BEHALF OF ITSELF, ITS AFFILIATES AND ITS
AND THEIR REPRESENTATIVES, WAIVES ANY OBJECTION THAT IT OR THEY MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH CLAIM OR PROCEEDING IN ANY
COURT IN THE STATE OF NEVADA AND ANY CLAIM
THAT IT OR THEY MAY NOW OR HEREAFTER HAVE THAT ANY SUCH CLAIM OR PROCEEDING IN
ANY COURT IN THE STATE OF NEVADA HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.  EACH PARTY HERETO, ON BEHALF OF ITSELF, ITS AFFILIATES AND ITS
AND THEIR REPRESENTATIVES, WAIVES TRIAL BY JURY IN ANY SUCH CLAIM OR
PROCEEDING.

     

    13.5         Binding Effect; Assignment;
Third Party Beneficiaries.  This Agreement shall be binding
upon the parties hereto and their respective successors and assigns and shall
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.  Except as expressly provided in Section 7.2, no
party hereto shall assign any of its rights or delegate any of its duties under
this Agreement (by operation of Law or otherwise) without the prior written
consent of each Member, and any purported assignment of rights or delegation of
duties under this Agreement without such prior written consent, if such consent
is required hereby, shall be void.  No such assignment or delegation
shall relieve the assignor or delegator of its obligations
hereunder.  No Person (including any employee), other than Indemnified
Parties as provided in the next sentence, shall be, or be deemed to be, a third
party beneficiary of this Agreement.  Each Indemnified Party is
intended to be a third party beneficiary of Section 6.6.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    13.6          Headings;
Counterparts.

     

    (a)  The
headings set forth herein have been inserted for convenience of reference only,
shall not be considered a part of this Agreement and shall not limit, modify or
affect in any way the meaning or interpretation of this Agreement.

     

    (b)  This
Agreement may be signed in any number of counterparts, each of which (when
executed and delivered) shall constitute an original instrument, but all of
which together shall constitute one and the same instrument.  It shall
not be necessary when making proof of this Agreement to account for any
counterparts other than a sufficient number of counterparts which, when taken
together, contain signatures of all of the parties hereto.  Delivery
of a counterpart by facsimile, PDF or similar means shall be as effective as
delivery of an original.

     

    13.7          Severability.  If
any provision of this Agreement shall hereafter be held to be invalid,
unenforceable or illegal, in whole or in part, in any jurisdiction under any
circumstances for any reason, (a) such provision shall be reformed to the
minimum extent necessary to cause such provision to be valid, enforceable and
legal while preserving the intent of the parties hereto as expressed in, and the
benefits and burdens provided by, this Agreement or (b) if such provision cannot
be so reformed, such provision shall be severed from this Agreement and an
equitable adjustment shall be made to this Agreement (including addition of
necessary further provisions to this Agreement) so as to give effect to the
intent so expressed and the benefits and burdens so provided.  Such
holding shall not affect or impair the validity, enforceability or legality of
such provision in any other jurisdiction or under any other
circumstances.  Neither such holding nor such reformation nor
severance shall affect or impair the legality, validity or enforceability of any
other provision of this Agreement.

     

    13.8          Interpretation.  All
parties hereto have participated substantially in the negotiation and drafting
of this Agreement and no ambiguity herein shall be construed against the
draftsman.

     

    13.9          No Consequential
Damages.  Except for the indemnification provisions
specifically set forth in this Agreement, no party hereto shall be liable for any special, indirect,
incidental, consequential or punitive damages arising out of any breach of this
Agreement, even if informed of the possibility of such damages in
advance.

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