EXHIBIT 10.2
 
Wits Basin Precious Minerals Inc.
Stock Option Agreement
(Non-Statutory)

This Stock Option Agreement is made and entered into as of the 19th day of
February, 2007, between William B. Green (“Optionee”) and Wits Basin Precious
Minerals Inc., a Minnesota corporation (the “Company”).

1. Grant of Option; Purchase Price. Subject to the terms and conditions herein
set forth, and in consideration of Optionee’s agreement to serve as the
Company’s President of Asia Operations, the Company hereby irrevocably grants to
Optionee the right and option (the “Option”) to purchase all or any part of an
aggregate of 2,500,000 shares of common stock, $.01 par value, of the Company
(the “Shares”), at a price per Share of $0.43 (the “Exercise Price”), which is
equal to the fair market value of the Company’s common stock on the date of
grant, as determined by the Board of Directors in its discretion.

2. Exercise and Vesting of Option. The Option shall be exercisable only to the
extent that all, or any portion thereof, has vested in the Optionee. Except as
provided herein in paragraph 2, the Options shall vest in Optionee as follows
(the date of each such event is hereinafter referred to singularly as a “Vesting
Date” and collectively as “Vesting Dates”):

(a) The Option shall vest with respect to 1,000,000 shares at such time
Executive relocates to Hong Kong and establishes a home office in Hong Kong on
behalf of the Company;

(b) The Option shall vest with respect to an additional 500,000 shares on the
earlier of (i) the first anniversary of the Effective Date, (ii) the achievement
of a milestone, as determined by the Board of Directors, or (iii) the
termination of Executive's employment with the company; and

(c) The Option shall vest with respect to the remaining 1,000,000 shares at the
earlier of (i) such time the Company achieves certain performance criteria
established by the Company’s Board of Directors, with such achievement
determined by the Board of Directors, each in its sole discretion, and (ii) the
third anniversary of the date hereof.

Notwithstanding the foregoing, in the event of an acquisition of the Company
through the sale of substantially all of the Company’s assets and the consequent
discontinuance of its business, or through a merger, consolidation, exchange,
reorganization, reclassification or extraordinary dividend resulting in
shareholders of the Company immediately prior to the effective time of such
transaction holding, immediately afterwards, less than 50% of the outstanding
voting power of the resulting entity, or through a divestiture or liquidation of
the Company (collectively referred to as a “Change in Control”), all or any
portion of the Option remaining unvested hereunder shall become immediately
exercisable, whether or not such portion of the Option had become exercisable
prior to the Change in Control; provided that, the Company’s consummation of a
merger or other transaction with Easyknit Enterprises Holdings Limited and/or
its affiliates shall not constitute a Change in Control under the terms of this
Agreement. The Company’s Board of Directors may restrict the rights of or the
applicability of this Section 2 to the extent necessary to comply with Section
16(b) of the Securities Exchange Act of 1934, the Internal Revenue Code or any
other applicable law or regulation. This Option shall not limit in any way the
right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge,
exchange or consolidate or to dissolve, liquidate, sell or transfer all or any
part of its business or assets.
 

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3. Termination of Employment. In the event that the Optionee ceases to be
employed by the Company, for any reason or no reason, with or without cause,
prior to any Vesting Date, that part of the Option scheduled to vest on such
Vesting Date, and all parts of the Option remaining unvested as of such Vesting
Date, shall not vest and all of Optionee's rights to and under such non-vested
parts of the Option shall terminate.
 
4. Term of Option. To the extent vested, and except as otherwise provided in
this Agreement, the Option shall be exercisable for ten (10) years from the date
hereof; provided, however, that in the event Optionee ceases to be employed by
the Company, for any reason or no reason, with or without cause, Optionee or
Optionee’s legal representative shall have ninety (90) days from the date of
such termination of Optionee’s position as an employee to exercise any part of
the Option vested pursuant to Section 2 of this Agreement. Upon the expiration
of such ninety (90) day period, or, if earlier, upon the expiration date of the
Option as set forth above, the Option shall terminate and become null and void.
 
5. Manner of Exercise. Subject to the terms and conditions of this Agreement,
the Option may be exercised by written notice to the Company. Such notice shall
state the election to exercise the Option and the number of Shares in respect of
which it is being exercised, and shall be signed by the person or persons so
exercising the Option. Such notice shall be accompanied by payment in cash of
the full Exercise Price of such Shares, in which event the Company shall deliver
a certificate or certificates representing such Shares as soon as practicable
after the notice shall be received. Any such notice shall be deemed given when
received by the Company pursuant to Section 10 hereof. All Shares that shall be
purchased upon the exercise of the Option as provided herein shall be fully paid
and non-assessable.
 
If at the time of exercise of all or any portion of the Option, the Company
determines that under applicable law and regulations it could be liable for the
withholding of any federal or state tax upon exercise or with respect to a
disposition of any Shares acquired upon exercise of the Option, the Company may
withhold any portion of the Shares necessary, in its discretion, to satisfy the
payment obligations.
 
6. Adjustment. In the event of any recapitalization, stock dividend, stock
split, combination of shares or other such change in the Company’s common stock,
the number of Shares subject to this Option shall be adjusted in proportion to
the change in outstanding shares of common stock. In the event of any such
adjustments, the Exercise Price of the Option and the shares of common stock
issuable pursuant to the Option shall be adjusted as and to the extent
appropriate, in the discretion of the Board of Directors, to provide Optionee
the same relative rights before and after such adjustment.
 
7. Change of Control. In the event of a Change of Control (as defined in Section
2 hereof), the Board of Directors shall be authorized, in its sole discretion,
to take any and all action it deems equitable under the circumstances, including
but not limited to any one or more of the following:
 
(a) providing that the Option shall terminate and Option shall receive, in lieu
of any Shares he would have been entitled to receive under the Option, such
stock, securities or assets, including cash, as would have been paid to Optionee
had he exercised the Option immediately prior to such Change of Control (with
appropriate adjustment for the Exercise Price, if any);
 
(b) providing that Optionee shall receive, with respect to each Share issuable
pursuant to any or all vested portions of this Option as of the effective date
of any such Change of Control, at the determination of the Board of Directors,
cash, securities or other property, or any combination thereof, in an amount
equal to the excess, if any, of the fair market value of such Shares, as
determined in the discretion of the Board of Directors, on a date within ten
days prior to the effective date of such Change of Control over the Exercise
Price or other amount owed by Optionee, if any, and that such Option shall be
cancelled, including the cancellation without consideration of all options that
have an Exercise Price below the per share value of the consideration received
by the Company in the Change of Control transaction; or
 
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(c) providing that all or any unvested portion of this Option, as of the
effective date of such Change in Control transaction, shall be void and deemed
terminated, or, in the alternative, for the acceleration or waiver of any
vesting provision of the Option.
 
The Company’s Board of Directors may restrict the rights of or the applicability
of this Section 7 to the extent necessary to comply with Section 16(b) of the
Securities Exchange Act of 1934, the Internal Revenue Code or any other
applicable law or regulation.

8. Rights of Option Holder. Optionee, as holder of the Option, shall not have
any of the rights of a shareholder with respect to the Shares covered by the
Option except to the extent that one or more certificates for such Shares shall
be delivered to him or her upon the due exercise of all or any part of the
Option.

9. Transferability. No part of the Option may be transferred, pledged or
assigned by Optionee (except, in the event of Optionee’s death, by will or the
laws of descent and distribution), or pursuant to a qualified domestic relations
order as defined by the Code or Title I of the Employee Retirement Income
Security Act, or the rules thereunder, and the Company shall not be required to
recognize any attempted assignment of such rights by Optionee. Notwithstanding
the preceding sentence, the Option (or any portion thereof) may be transferred
by Optionee to Optionee’s spouse, children, grandchildren or parents
(collectively, the “Family Members”), to trusts for the benefit of Family
Members, to partnerships or limited liability companies in which Family Members
are the only partners or shareholders, or to entities exempt from federal income
taxation pursuant to Code Section 501(c)(3). During Optionee’s lifetime, the
Option may be exercised only by him, by his guardian or legal representative or
by the transferees as permitted by the preceding sentence.
 
10. Securities Law Matters. Optionee acknowledges that the Shares to be received
by Optionee upon exercise of the Option may have not been registered under the
Securities Act of 1933 or the Blue Sky laws of any state (collectively, the
“Securities Acts”). If such Shares have not been so registered, Optionee
acknowledges and understands that the Company is under no obligation to
register, under the Securities Acts, the Shares received by Optionee or to
assist Optionee in complying with any exemption from such registration if
Optionee should at a later date wish to dispose of the Shares. Optionee
acknowledges that if not then registered under the Securities Acts, the Shares
shall bear a legend restricting the transferability thereof, such legend to be
substantially in the following form:
 

“The shares represented by this certificate have not been registered or
qualified under federal or state securities laws. The shares may not be offered
for sale, sold, pledged or otherwise disposed of unless so registered or
qualified, unless an exemption exists or unless such disposition is not subject
to the federal or state securities laws, and the Company may require that the
availability or any exemption or the inapplicability of such securities laws be
established by an opinion of counsel, which opinion of counsel shall be
reasonably satisfactory to the Company.”

11. Optionee Representations. Optionee hereby represents and warrants that
Optionee has reviewed with Optionee’s own tax advisors the federal, state, and
local tax consequences of the transactions contemplated by this Agreement.
Optionee is relying solely on such advisors and not on any statements or
representation of the Company or any of its agents. Optionee understands that
Optionee will be solely responsible for any tax liability that may result to
Optionee as a result of the transactions contemplated by this Agreement. The
Option, if exercised, will be exercised for investment and not with a view to
the sale or distribution of the Shares to be received upon exercise thereof.
 
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12. Breach of Agreements. In the event that Optionee materially breaches the
terms of any confidentiality, noncompete agreement or other agreement entered
into with the Company or any affiliate thereof, whether such breach occurs
before or after termination of Optionee’s employment with the Company, the Board
of Directors in its discretion may immediately terminate all rights of Optionee
under this Option without notice of any kind.

13. Notices. All notices and other communications provided in this Agreement
will be in writing and will be deemed to have been duly given when received by
the party to whom it is directed at the following addresses:
 
If to the Company:
 
Wits Basin Precious Minerals Inc.
900 IDS Center, 80 South Eighth Street
Minneapolis, MN 55402-8773
Attn: Chief Executive Officer
If to Optionee:
 
William B. Green
4424 Carver Woods, Suite 102
Cincinnati, OH 45242

14. General.

(a) The Company shall at all times during the term of the Option reserve and
keep available such number of Shares as will be sufficient to satisfy the
requirements of this Option Agreement.

(b) Nothing herein expressed or implied is intended or shall be construed as
conferring upon or giving to any person, firm, or corporation other than the
parties hereto, any rights or benefits under or by reason of this Agreement.

(c) Each party hereto agrees to execute such further documents as may be
necessary or desirable to effect the purposes of this Agreement.

(d) This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which shall constitute one and the same
agreement.

(e) This Agreement, in its interpretation and effect, shall be governed by the
laws of the State of Minnesota applicable to contracts executed and to be
performed therein.

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

     
OPTIONEE:
WITS BASIN PRECIOUS MINERALS INC.
 
   
   
 
/s/ William B Green
By:   /s/ Stephen D King

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Name: William B. Green

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By: Its: CEO

 
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