EXHIBIT
4.3

    


    SECURITY
AGREEMENT

    


    This
SECURITY AGREEMENT, dated as of February 11, 2008 (this “Agreement”), is among
Wits Basin Precious Minerals Inc., a Minnesota corporation (the “Company”), certain
Subsidiaries of the Company (such subsidiaries, the “Guarantors” and
together with the Company, the “Debtors”) and
Platinum Long Term Growth V, LLC, a Delaware limited liability company (the
“Secured
Party”), the holder of the Company’s Senior Secured Note, issued on
February 11, 2008 in the original principal amount of $1,020,000 (the
“Note”), and
its endorsees, transferees and assigns.

    


    WITNESSETH:

    


    WHEREAS,
pursuant to the Note, the Secured Party has agreed to extend the loans to the
Company evidenced by the Note;

    


    WHEREAS,
pursuant to a certain Guarantee, dated as of the date hereof (the “Guarantee”), the Guarantors
have jointly and severally agreed to guarantee and act as surety for payment of
such Note; and

    


    WHEREAS,
in order to induce the Secured Party to extend the loans evidenced by the Note,
each Debtor has agreed to execute and deliver to the Secured Party this
Agreement and to grant the Secured Party a security interest in certain
property of such Debtor to secure the prompt payment, performance and discharge
in full of all of the Company’s obligations under the Note and the Guarantors’
obligations under the Guarantee.

    


    NOW,
THEREFORE, in consideration of the agreements herein contained and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:

    


    1.           Certain Definitions. As used
in this Agreement, the following terms shall have the meanings set forth in this
Section 1.  Terms used but not otherwise defined in this Agreement
that are defined in Article 9 of the UCC (including the terms “account”,
“chattel paper”, “commercial tort claim”, “deposit account”, “document”,
“equipment”, “fixtures”, “general intangibles”, “goods”, “instruments”,
“inventory”, “investment property”, “letter-of-credit rights”, “proceeds”,
“securities” and “supporting obligations”) shall have the respective meanings
given such terms in Article 9 of the UCC.

    


    (a)           “Collateral” means the
collateral in which the Secured Party is granted a security interest by
this Agreement and which shall include the following personal property of the
Debtors, whether presently owned or existing or hereafter acquired or coming
into existence, wherever situated, and all additions and accessions thereto and
all substitutions and replacements thereof, and all proceeds, products and
accounts thereof, including, without limitation, all proceeds from the sale or
transfer of the Collateral and of insurance covering the same and of any tort
claims in connection therewith, and all dividends, interest, cash, notes,
securities, equity interest or other property at any time and from time to time
acquired, receivable or otherwise distributed in respect of, or in exchange for,
any or all of the Pledged Securities (as defined below):


    
      
         


      

      
        
        

        
          

        

      

      
         


      

    

    


    (i)           All
goods, including, without limitation, (A) all machinery, equipment, computers,
motor vehicles, trucks, tanks, boats, ships, appliances, furniture, special and
general tools, fixtures, test and quality control devices and other equipment of
every kind and nature and wherever situated, together with all documents of
title and documents representing the same, all additions and accessions thereto,
replacements therefor, all parts therefor, and all substitutes for any of the
foregoing and all other items used and useful in connection with any Debtor’s
businesses and all improvements thereto; and (B) all inventory, including all
materials, work in process and finished goods;

    


    (ii)          All
contract rights and other general intangibles, including, without limitation,
all partnership interests, membership interests, stock or other securities,
rights under any of the Organizational Documents, agreements related to the
Pledged Securities, licenses, distribution and other agreements, computer
software (whether “off-the-shelf”, licensed from any third party or developed by
any Debtor), computer software development rights, leases, franchises, customer
lists, quality control procedures, grants and rights, goodwill, trademarks,
service marks, trade styles, trade names, patents, patent applications,
copyrights, and income tax refunds;

     

    (iii)         All
accounts, together with all instruments, all documents of title representing any
of the foregoing, all rights in any merchandising, goods, equipment, motor
vehicles and trucks which any of the same may represent, and all right, title,
security and guaranties with respect to each account, including any right of
stoppage in transit;

    


    (iv)        All
documents, letter-of-credit rights, instruments and chattel paper;

    


    (v)         All
commercial tort claims;

    


    (vi)        All
deposit accounts and all cash (whether or not deposited in such deposit
accounts);

    


    (vii)       All
investment property;

    


    (viii)      All
supporting obligations;

    


    (ix)        All
files, records, books of account, business papers, and computer programs;
and


    
      
         


      

      
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    (x)          the
products and proceeds of all of the foregoing Collateral set forth in clauses
(i)-(ix) above.

    


    Without
limiting the generality of the foregoing, the “Collateral” shall
include, subject to the exclusions below, all investment property and general
intangibles respecting ownership and/or other equity interests of Debtors in
each wholly-owned, majority-owned or minority owned subsidiary (including Kwagga
Gold (Barbados) Limited), including, without limitation, the shares of capital
stock and the other equity interests listed on Schedule H hereto (as
the same may be modified from time to time pursuant to the terms hereof), and
any other shares of capital stock and/or other equity interests of any other
direct or indirect subsidiary of any Debtor obtained in the future, and, in each
case, all certificates representing such shares and/or equity interests and, in
each case, all rights, options, warrants, stock, other securities and/or equity
interests that may hereafter be received, receivable or distributed in respect
of, or exchanged for, any of the foregoing and all rights arising under or in
connection with the Pledged Securities, including, but not limited to, all
dividends, interest and cash.

     

    Notwithstanding
the foregoing, nothing herein shall be deemed to constitute an assignment of any
asset which, in the event of an assignment, becomes void by operation of
applicable law or the assignment of which is otherwise prohibited by applicable
law (in each case to the extent that such applicable law is not overridden by
Sections 9-406, 9-407 and/or 9-408 of the UCC or other similar applicable law);
provided, however, that to the extent permitted by applicable law, this
Agreement shall create a valid security interest in such asset and, to the
extent permitted by applicable law, this Agreement shall create a valid security
interest in the proceeds of such asset.

    


    Notwithstanding
the foregoing, the “Collateral” shall not
be deemed to include (i) any equity interest of the Debtors in China Global
Mining Resources Ltd., a Hong Kong corporation, China Global Mining Resources
Ltd., a British Virgin Islands corporation, Wits-China Acquisition Corp., or any
other entity created by the Company or such entities after the date hereof
(each, a “China
Subsidiary”) to the extent all or substantially all of such entity’s
assets are located in, or relate to, China and such assets are subject to a lien
in favor of China Gold LLC (“China Gold”) pursuant
to that certain Security Agreement dated June 19, 2007 by and between the
Company and China Gold, the Amended and Restated Pledge Agreement dated as of
February 7, 2008, or those certain Subsidiary Security Agreements by and between
China Gold and any China Subsidiary, or any of the respective assets of such
entities or the proceeds thereof, (ii) the portion of any equity interest of the
Debtors in any Dividend Subsidiary (as defined in that certain Note and Warrant
Purchase Agreement dated of even date herewith by and between the Company and
Secured Party (the “Purchase Agreement”))
to the extent such portion is distributed to the holders of the Company’s Common
Stock pursuant to a Subsidiary Dividend (as defined in the Purchase Agreement)
and (iii) the other assets identified in and defined as “Collateral” under the
Security Agreement, dated as of June 19, 2007, between the Company and China
Gold (without giving effect to any amendment to such Security Agreement),
the Amended and Restated Pledge Agreement dated February 7, 2008 by and between
the Company and China Gold, or those certain Subsidiary Security Agreements by
and between China Gold and any China Subsidiary. 


    
      
         


      

      
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    (b)           “Intellectual
Property” means the collective reference to all rights, priorities and
privileges relating to intellectual property, whether arising under United
States, multinational or foreign laws or otherwise, including, without
limitation, (i) all copyrights arising under the laws of the United States, any
other country or any political subdivision thereof, whether registered or
unregistered and whether published or unpublished, all registrations and
recordings thereof, and all applications in connection therewith, including,
without limitation, all registrations, recordings and applications in the United
States Copyright Office, (ii) all letters patent of the United States, any other
country or any political subdivision thereof, all reissues and extensions
thereof, and all applications for letters patent of the United States or any
other country and all divisions, continuations and continuations-in-part
thereof, (iii) all trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade dress, service marks, logos,
domain names and other source or business identifiers, and all goodwill
associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any other
country or any political subdivision thereof, or otherwise, and all common law
rights related thereto, (iv) all trade secrets arising under the laws of the
United States, any other country or any political subdivision thereof, (v) all
rights to obtain any reissues, renewals or extensions of the foregoing, (vi) all
licenses for any of the foregoing, and (vii) all causes of action for
infringement of the foregoing.

    


    (c)           “Necessary
Endorsement” means undated stock powers endorsed in blank or other
proper instruments of assignment duly executed and such other instruments or
documents as the Secured Party may reasonably request.

    


    (d)           “Obligations” means
all of the liabilities and obligations (primary, secondary, direct,
contingent, sole, joint or several) due or to become due, or that are now or may
be hereafter contracted or acquired, or owing to, of any Debtor to the Secured
Party, including, without limitation, all obligations under this Agreement, the
Purchase Agreement, the Note, the Guarantee, the Warrant issued by the Company
to the Secured Party on the date hereof (the “Warrant”) and any
other instruments, agreements or other documents executed and/or delivered in
connection herewith or therewith, in each case, whether now or hereafter
existing, voluntary or involuntary, direct or indirect, absolute or contingent,
liquidated or unliquidated, whether or not jointly owed with others, and whether
or not from time to time decreased or extinguished and later increased, created
or incurred, and all or any portion of such obligations or liabilities that
are paid, to the extent all or any part of such payment is avoided or recovered
directly or indirectly from any of the Secured Party as a preference, fraudulent
transfer or otherwise as such obligations may be amended, supplemented,
converted, extended or modified from time to time.  Without limiting
the generality of the foregoing, the term “Obligations” shall include, without
limitation: (i) principal of, and interest on the Note and the loans extended
pursuant thereto; (ii) any and all other fees, indemnities, costs, obligations
and liabilities of the Debtors from time to time under or in connection with
this Agreement, the Note, the Purchase Agreement, the Guarantee, the Warrant and
any other instruments, agreements or other documents executed and/or delivered
in connection herewith or therewith; and (iii) all amounts (including but not
limited to post-petition interest) in respect of the foregoing that would be
payable but for the fact that the obligations to pay such amounts are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving any Debtor.


    
      
         


      

      
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    (e)           “Organizational
Documents” means with respect to any Debtor, the documents by which such
Debtor was organized (such as a certificate of incorporation, certificate of
limited partnership or articles of organization, and including, without
limitation, any certificates of designation for preferred stock or other forms
of preferred equity) and which relate to the internal governance of such
Debtor (such as bylaws, a partnership agreement or an operating, limited
liability or members agreement).

    


    (f)           “Pledged Securities”
shall have the meaning ascribed to such term in Section 4(i).

    


    (g)           “UCC” means the
Uniform Commercial Code of the State of New York and or any other applicable law
of any state or states which has jurisdiction with respect to all, or any
portion of, the Collateral or this Agreement, from time to time.  It
is the intent of the parties that defined terms in the UCC should be construed
in their broadest sense so that the term “Collateral” will be construed in its
broadest sense.  Accordingly if there are, from time to time, changes
to defined terms in the UCC that broaden the definitions, they are incorporated
herein and if existing definitions in the UCC are broader than the amended
definitions, the existing ones shall be controlling.

    


    2.           Grant of Security Interest in Collateral. As an
inducement for the Secured Party to extend the loans as evidenced by the Note
and to secure the complete and timely payment, performance and discharge in
full, as the case may be, of all of the Obligations, each Debtor hereby
unconditionally and irrevocably pledges, grants and hypothecates to the Secured
Party a security interest in and to, a lien upon and a right of set-off against
all of their respective right, title and interest of whatsoever kind and nature
in and to, the Collateral (a “Security Interest”
and collectively, the “Security
Interests”).

    


    3.           Delivery of Certain
Collateral.  Within ten (10) days of the execution of this
Agreement, each Debtor shall deliver or cause to be delivered to the Secured
Party (a) any and all certificates and other instruments representing or
evidencing the Pledged Securities, and (b) any and all certificates and other
instruments or documents representing any of the other Collateral, in each case,
together with all Necessary Endorsements.  The Debtors are,
contemporaneously with the execution hereof, delivering to the Secured Party, or
have previously delivered to the Secured Party, a true and correct copy of each
Organizational Document governing any of the Pledged
Securities.


    
      
         


      

      
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    4.           Representations, Warranties,
Covenants and Agreements of the Debtors. Except as set forth under the
corresponding section of the disclosure schedules delivered to the Secured Party
concurrently herewith (the “Disclosure
Schedules”), which Disclosure Schedules shall be deemed a part hereof,
each Debtor represents and warrants to, and covenants and agrees with, the
Secured Party as follows:

    


    (a)           Each
Debtor has the requisite corporate, partnership, limited liability company or
other power and authority to enter into this Agreement and otherwise to carry
out its obligations hereunder. The execution, delivery and performance by each
Debtor of this Agreement and the filings contemplated therein have been duly
authorized by all necessary action on the part of such Debtor and no further
action is required by such Debtor.  This Agreement has been duly
executed by each Debtor.  This Agreement constitutes the legal, valid
and binding obligation of each Debtor, enforceable against each Debtor in
accordance with its terms except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization and similar laws of general
application relating to or affecting the rights and remedies of creditors
and by general principles of equity.

    


    (b)           The
Debtors have no place of business or offices where their respective books of
account and records are kept (other than temporarily at the offices of its
attorneys or accountants) or places where Collateral is stored or located,
except as set forth on Schedule A attached
hereto.  Except as specifically set forth on Schedule A, each
Debtor is the record owner of the real property where such Collateral is
located, and there exist no mortgages or other liens on any such real property
except for Permitted Encumbrances (as defined in the Note).  Except as
disclosed on Schedule
A, none of such Collateral is in the possession of any consignee, bailee,
warehouseman, agent or processor.

    


    (c)           Except
for Permitted Encumbrances (as defined in the Note) and except as set forth on
Schedule B
attached hereto, the Debtors are the sole owner of the Collateral, free and
clear of any liens, security interests, encumbrances, rights or claims, and are
fully authorized to grant the Security Interests.  Except as set forth
on Schedule B
attached hereto, there is not on file in any governmental or regulatory
authority, agency or recording office an effective financing statement, security
agreement, license or transfer or any notice of any of the foregoing (other than
those that will be filed in favor of the Secured Party pursuant to this
Agreement) covering or affecting any of the Collateral.  Except as set
forth on Schedule B attached hereto and except pursuant to this Agreement, as
long as this Agreement shall be in effect, the Debtors shall not execute and
shall not knowingly permit to be on file in any such office or agency any other
financing statement or other document or instrument (except to the extent filed
or recorded in favor of the Secured Party pursuant to the terms of this
Agreement).

     

    
      
         


      

      
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    (d)           No
written claim has been received that any Collateral or Debtor's use of any
Collateral violates the rights of any third party. There has been no adverse
decision to any Debtor's claim of ownership rights in or exclusive rights to use
the Collateral in any jurisdiction or to any Debtor's right to keep and maintain
such Collateral in full force and effect, and there is no proceeding involving
said rights pending or, to the best knowledge of any Debtor, threatened before
any court, judicial body, administrative or regulatory agency, arbitrator or
other governmental authority.

    


    (e)           Each
Debtor shall at all times maintain its books of account and records relating to
the Collateral at its principal place of business and its Collateral at the
locations set forth on Schedule A attached
hereto and may not relocate such books of account and records or tangible
Collateral unless it delivers to the Secured Party at least 30 days prior to
such relocation (i) written notice of such relocation and the new location
thereof (which must be within the United States) and (ii) evidence that
appropriate financing statements under the UCC and other necessary documents
have been filed and recorded and other steps have been taken to perfect the
Security Interests to create in favor of the Secured Party a valid, perfected
and continuing perfected first priority lien in the Collateral.

    


    (f)           This
Agreement creates in favor of the Secured Party a valid, security interest in
the Collateral, subject only to Permitted Encumbrances (as defined in the Note)
securing the payment and performance of the Obligations.  Upon Secured
Party making the filings described in the immediately following paragraph, all
security interests created hereunder in any Collateral which may be perfected by
filing Uniform Commercial Code financing statements shall have been duly
perfected.  Except for the filing of the Uniform Commercial Code
financing statements referred to in the immediately following
paragraph,  and the delivery of the certificates and other instruments
provided in Section 3, no action is necessary to create, perfect or protect the
security interests created hereunder.  Without limiting the generality
of the foregoing, except for the filing of said financing statements, no consent
of any third parties and no authorization, approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required for (i) the execution, delivery and performance of this Agreement, (ii)
the creation or perfection of the Security Interests created hereunder in the
Collateral or (iii) the enforcement of the rights of the Secured Party
hereunder.

    


    (g)           Each
Debtor hereby authorizes the Secured Party to file one or more financing
statements under the UCC, with respect to the Security Interests with the proper
filing and recording agencies in any jurisdiction deemed proper by it, which UCC
financing statement may describe the collateral as “All assets”.

    


    (h)           The
execution, delivery and performance of this Agreement by the Debtors does not
(i) violate any of the provisions of any Organizational Documents of any Debtor
or any judgment, decree, order or award of any court, governmental body or
arbitrator or any applicable law, rule or regulation applicable to any Debtor or
(ii) conflict with, or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing any Debtor's debt or otherwise) or other understanding to
which any Debtor is a party or by which any property or asset of any Debtor is
bound or affected. If any, all required consents (including, without limitation,
from stockholders or creditors of any Debtor) necessary for any Debtor to enter
into and perform its obligations hereunder have been obtained.


    
      
         


      

      
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    (i)           Except
as excluded in Section 1(a) hereof, the capital stock and other equity interests
listed on Schedule
H hereto (the “Pledged Securities”)
represent all of the capital stock and other equity interests of the Guarantors,
and represent all capital stock and other equity interests owned, directly or
indirectly, by the Company, other than the Dormant Subsidiaries (as defined
below). All of the Pledged Securities are validly issued, fully paid and
nonassessable, and the Company is the legal and beneficial owner of the Pledged
Securities, free and clear of any lien, security interest or other encumbrance
except for the security interests created by this Agreement and other Permitted
Encumbrances (as defined in the Note).  To the extent the Company owns
capital stock or other equity interests in any Subsidiary that is not set forth
on Schedule H hereto (such Subsidiaries, the “Dormant Subsidiaries”), such
entity or entities shall be dissolved within 45 days of the date
hereof.

    


    (j)           The
ownership and other equity interests in partnerships and limited liability
companies (if any) included in the Collateral (the “Pledged Interests”)
by their express terms do not provide that they are securities governed by
Article 8 of the UCC and are not held in a securities account or by any
financial intermediary.

    


    (k)           Except
for Permitted Encumbrances (as defined in the Note), each Debtor shall at all
times maintain the liens and Security Interests provided for hereunder as valid
and perfected first priority liens and security interests in the Collateral in
favor of the Secured Party until this Agreement and the Security Interest
hereunder shall be terminated pursuant to Section 11 hereof.  Each
Debtor hereby agrees to defend the same against the claims of any and all
persons and entities. Each Debtor shall safeguard and protect all Collateral for
the account of the Secured Party.  At the request of the Secured
Party, each Debtor will sign and deliver to the Secured Party at any time or
from time to time one or more financing statements pursuant to the UCC in form
reasonably satisfactory to the Secured Party and will pay the cost of filing the
same in all public offices wherever filing is, or is deemed by the Secured Party
to be, necessary or desirable to effect the rights and obligations provided for
herein. Without limiting the generality of the foregoing, each Debtor shall pay
all fees, taxes and other amounts necessary to maintain the Collateral and the
Security Interests hereunder, and each Debtor shall obtain and furnish to the
Secured Party from time to time, upon demand, such releases and/or
subordinations of claims and liens which may be required to maintain the
priority of the Security Interests hereunder.

    


    (l)       
    Except for Permitted Encumbrances (as defined in the
Note), no Debtor will transfer, pledge, hypothecate, encumber, license, sell or
otherwise dispose of any of the Collateral (except for non-exclusive licenses
granted by a Debtor in its ordinary course of business and sales of inventory by
a Debtor in its ordinary course of business) without the prior written consent
of the Secured Party.


    
      
         


      

      
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    (m)          Each
Debtor shall keep and preserve its equipment, inventory and other tangible
Collateral in good condition, repair and order and shall not operate or locate
any such Collateral (or cause to be operated or located) in any area excluded
from insurance coverage.

    


    (n)           Each
Debtor shall maintain with financially sound and reputable insurers, insurance
with respect to the Collateral, including Collateral hereafter acquired, against
loss or damage of the kinds and in the amounts customarily insured against by
entities of established reputation having similar properties similarly situated
and in such amounts as are customarily carried under similar circumstances by
other such entities and otherwise as is prudent for entities engaged in similar
businesses but in any event sufficient to cover the full replacement cost
thereof.  Each Debtor shall cause each insurance policy issued in
connection herewith to provide, and the insurer issuing such policy to certify
to the Secured Party that (a) the Secured Party will be named as lender loss
payee and additional insured under each such insurance policy; (b) if such
insurance be proposed to be cancelled or materially changed for any reason
whatsoever, such insurer will promptly notify the Secured Party and such
cancellation or change shall not be effective as to the Secured Party for at
least thirty (30) days after receipt by the Secured Party of such notice, unless
the effect of such change is to extend or increase coverage under the policy;
and (c) the Secured Party will have the right (but no obligation) at its
election to remedy any default in the payment of premiums within thirty (30)
days of notice from the insurer of such default.  If no Event of
Default (as defined in the Note) exists and if the proceeds arising out of any
claim or series of related claims do not exceed $100,000, loss payments in each
instance will be applied by the applicable Debtor to the repair and/or
replacement of property with respect to which the loss was incurred to the
extent reasonably feasible, and any loss payments or the balance thereof
remaining, to the extent not so applied, shall be payable to the applicable
Debtor, provided, however, that payments received by any Debtor after an Event
of Default occurs and is continuing or in excess of $100,000 for any occurrence
or series of related occurrences shall be paid to the Secured Party and, if
received by such Debtor, shall be held in trust for the Secured Party and
immediately paid over to the Secured Party unless otherwise directed in writing
by the Secured Party. Copies of such policies or the related certificates,
in each case, naming the Secured Party as lender loss payee and additional
insured shall be delivered to the Secured Party at least annually and at the
time any new policy of insurance is issued.

    


    (o)           Each
Debtor shall, within ten (10) days of obtaining knowledge thereof, advise the
Secured Party promptly, in sufficient detail, of any material adverse change in
the Collateral, and of the occurrence of any event which would have a material
adverse effect on the value of the Collateral or on the Secured Party’s security
interest therein.

     

    
      
         


      

      
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    (p)          Each
Debtor shall promptly execute and deliver to the Secured Party such further
deeds, mortgages, assignments, security agreements, financing statements or
other instruments, documents, certificates and assurances and take such further
action as the Secured Party may from time to time request and may in its sole
discretion deem necessary to perfect, protect or enforce the Secured Party’s
security interest in the Collateral including, without limitation, if applicable
and requested in writing by the Secured Party, the execution and delivery of a
separate security agreement with respect to each Debtor’s Intellectual Property
(“Intellectual
Property Security Agreement”) in which the Secured Party have been
granted a security interest hereunder, substantially in a form reasonably
acceptable to the Secured Party, which Intellectual Property Security Agreement,
other than as stated therein, shall be subject to all of the terms and
conditions hereof.  Without limiting the generality of the foregoing,
Debtors shall cooperate with Secured Party to perfect the Secured
Party’s security interests in (i) the Company’s rights in and to the Hunter Gold
Mining Corporation assets in Colorado, (ii) the Company’s rights in the Vianey
Mine Concession in the State of Guerrero, Mexico, and (iii) any other mining or
mining related asset disclosed in the Company’s filings with the Securities and
Exchange Commission and held by the Company on the date hereof, subject to the
exclusions set forth in Section 1(a) hereof (each of (i) and (ii) above as
described in the Company’s filings with the Securities and Exchange
Commission).

    


    (q)          Each
Debtor shall permit the Secured Party and its representatives and agents to
inspect the Collateral during normal business hours and upon reasonable prior
notice, and to make copies of records pertaining to the Collateral as may be
reasonably requested by the Secured Party from time to time.

    


    (r)           Each
Debtor shall take all steps reasonably necessary to diligently pursue and seek
to preserve, enforce and collect any rights, claims, causes of action and
accounts receivable in respect of the Collateral.

    


    (s)           Each
Debtor shall promptly notify the Secured Party in sufficient detail upon
becoming aware of any attachment, garnishment, execution or other legal process
levied against any Collateral and of any other information received by such
Debtor that may materially affect the value of the Collateral, the Security
Interest or the rights and remedies of the Secured Party hereunder.

    


    (t)           All
information heretofore, herein or hereafter supplied to the Secured Party by or
on behalf of any Debtor with respect to the Collateral is accurate and complete
in all material respects as of the date furnished.

    


    (u)          The
Debtors shall at all times preserve and keep in full force and effect their
respective valid existence and good standing and any rights and franchises
material to its business.

    


    (v)          No
Debtor will change its name, type of organization, jurisdiction of organization,
organizational identification number (if it has one), legal or corporate
structure, or identity, or add any new fictitious name unless it provides at
least 30 days prior written notice to the Secured Party of such change and, at
the time of such written notification, such Debtor provides any financing
statements or fixture filings necessary to perfect and continue the perfection
of the Security Interests granted and evidenced by this
Agreement.


    
      
         


      

      
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    (w)          Except
in the ordinary course of business and except for Permitted Encumbrances (as
defined in the Note), no Debtor may consign any of its Inventory or sell any of
its Inventory on bill and hold, sale or return, sale on approval, or other
conditional terms of sale without the consent of the Secured Party, which shall
not be unreasonably withheld.

    


    (x)           No
Debtor may relocate its chief executive office to a new location without
providing 30 days prior written notification thereof to the Secured Party and so
long as, at the time of such written notification, such Debtor provides any
financing statements or fixture filings necessary to perfect and continue the
perfection of the Security Interests granted and evidenced by this
Agreement.

    


    (y)          Each
Debtor was organized and remains organized solely under the laws of the state
set forth next to such Debtor’s name in  Schedule D attached
hereto, which Schedule
D sets forth each Debtor’s organizational identification number or, if
any Debtor does not have one, states that one does not exist.

    


    (z)           (i)
The actual name of each Debtor is the name set forth in Schedule D attached
hereto; (ii) no Debtor has any trade names except as set forth on Schedule E attached
hereto; (iii) no Debtor has used any name other than that stated in the preamble
hereto or as set forth on Schedule E for the
preceding five years; and (iv) no entity has merged into any Debtor or been
acquired by any Debtor within the past five years except as set forth on Schedule
E.

    


    (aa)         At
any time and from time to time that any Collateral consists of instruments,
certificated securities or other items that require or permit possession by the
secured party to perfect the security interest created hereby, the applicable
Debtor shall deliver such Collateral to the Secured Party.

    


    (bb)        Each
Debtor, in its capacity as issuer, hereby agrees to comply with any and all
orders and instructions of Secured Party regarding the Pledged Interests
consistent with the terms of this Agreement without the further consent of any
Debtor as contemplated by Section 8-106 (or any successor section) of the
UCC.  Further, each Debtor agrees that it shall not enter into a
similar agreement (or one that would confer “control” within the meaning of
Article 8 of the UCC) with any other person or entity.

     

    (cc)         Each
Debtor shall cause all tangible chattel paper constituting Collateral to be
delivered to the Secured Party, or, if such delivery is not possible, then to
cause such tangible chattel paper to contain a legend noting that it is subject
to the security interest created by this Agreement.  To the extent
that any Collateral consists of electronic chattel paper, the applicable Debtor
shall cause the underlying chattel paper to be “marked” within the meaning of
Section 9-105 of the UCC (or successor section thereto).

    


    (dd)        If
there is any investment property or deposit account included as Collateral that
can be perfected by “control” through an account control agreement, the
applicable Debtor shall cause such an account control agreement, in form and
substance in each case satisfactory to the Secured Party, to be entered into and
delivered to the Secured Party.


    
      
         


      

      
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    (ee)         To
the extent that any Collateral consists of letter-of-credit rights, the
applicable Debtor shall cause the issuer of each underlying letter of credit to
consent to an assignment of the proceeds thereof to the Secured
Party.

    


    (ff)          To
the extent that any Collateral is in the possession of any third party, the
applicable Debtor shall join with the Secured Party in notifying such third
party of the Secured Party’s security interest in such Collateral and shall
obtain an acknowledgement and agreement from such third party with respect to
the Collateral, in form and substance reasonably satisfactory to the Secured
Party.

    


    (gg)        If
any Debtor shall at any time hold or acquire a commercial tort claim, such
Debtor shall promptly notify the Secured Party in a writing signed by such
Debtor of the particulars thereof and grant to the Secured Party in such writing
a security interest therein and in the proceeds thereof, all upon the terms of
this Agreement, with such writing to be in form and substance satisfactory to
the Secured Party.

    


    (hh)        Each
Debtor shall immediately provide written notice to the Secured Party of any and
all accounts which arise out of contracts with any governmental authority and,
to the extent necessary to perfect or continue the perfected status of the
Security Interests in such accounts and proceeds thereof, shall execute and
deliver to the Secured Party an assignment of claims for such accounts and
cooperate with the Secured Party in taking any other steps required, in its
judgment, under the Federal Assignment of Claims Act or any similar federal,
state or local statute or rule to perfect or continue the perfected status of
the Security Interests in such accounts and proceeds thereof.

    


    (ii)           Each
Debtor shall cause each subsidiary of such Debtor with operations or material
operations (which, if in doubt, shall be in the sole determination of the
Secured Party) to immediately become a party hereto (an “Additional Debtor”),
by executing and delivering an Additional Debtor Joinder in substantially the
form of Annex A
attached hereto and comply with the provisions hereof applicable to the
Debtors.  As of the date hereof, the Company represents and warrants
that none of its subsidiaries have any operations or material
assets.  Concurrent therewith, the Additional Debtor shall deliver
replacement schedules for, or supplements to all other Schedules to (or referred
to in) this Agreement, as applicable, which replacement schedules shall
supersede, or supplements shall modify, the Schedules then in
effect.  The Additional Debtor shall also deliver such opinions of
counsel, authorizing resolutions, good standing certificates, incumbency
certificates, organizational documents, financing statements and other
information and documentation as the Secured Party may reasonably
request.  Upon delivery of the foregoing to the Secured Party, the
Additional Debtor shall be and become a party to this Agreement with the same
rights and obligations as the Debtors, for all purposes hereof as fully and to
the same extent as if it were an original signatory hereto and shall be deemed
to have made the representations, warranties and covenants set forth herein as
of the date of execution and delivery of such Additional Debtor Joinder, and all
references herein to the “Debtors” shall be deemed to include each Additional
Debtor.


    
      
         


      

      
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    (jj)           Each
Debtor shall vote the Pledged Securities to comply with the covenants and
agreements set forth herein and in the Note.

    


    (kk)         Each
Debtor shall register the pledge of the applicable Pledged Securities on the
books of such Debtor.  Each Debtor shall notify each issuer of Pledged
Securities to register the pledge of the applicable Pledged Securities in the
name of the Secured Party on the books of such issuer.  Further,
except with respect to certificated securities delivered to the Secured Party,
the applicable Debtor shall deliver to Secured Party an acknowledgement of
pledge (which, where appropriate, shall comply with the requirements of the
relevant UCC with respect to perfection by registration) signed by the issuer of
the applicable Pledged Securities, which acknowledgement shall confirm that: (a)
it has registered the pledge on its books and records; and (b) at any time
directed by Secured Party during the continuation of an Event of Default, such
issuer will transfer the record ownership of such Pledged Securities into the
name of any designee of Secured Party, will take such steps as may be necessary
to effect the transfer, and will comply with all other instructions of Secured
Party regarding such Pledged Securities without the further consent of the
applicable Debtor.  The Debtor shall vote the Pledged Securities so as
to comply with the covenants and agreements of the Debtor set forth in the Note
and the Transaction Documents (as defined in the Purchase
Agreement).

    


    (ll)           In
the event that, upon an occurrence of an Event of Default, Secured Party shall
sell all or any of the Pledged Securities to another party or parties (herein
called the “Transferee”) or shall
purchase or retain all or any of the Pledged Securities, each Debtor shall, to
the extent applicable: (i) deliver to Secured Party or the Transferee, as the
case may be, the articles of incorporation, bylaws, minute books, stock
certificate books, corporate seals, deeds, leases, indentures, agreements,
evidences of indebtedness, books of account, financial records and all other
Organizational Documents and records of the Debtors and their direct and
indirect subsidiaries; (ii) use its best efforts to obtain resignations of the
persons then serving as officers and directors of the Debtors and their direct
and indirect subsidiaries, if so requested; and (iii) use its best efforts to
obtain any approvals that are required by any governmental or regulatory body in
order to permit the sale of the Pledged Securities to the Transferee or the
purchase or retention of the Pledged Securities by Secured Party and allow the
Transferee or Secured Party to continue the business of the Debtors and their
direct and indirect subsidiaries.

     

    (mm)       Without
limiting the generality of the other obligations of the Debtors hereunder, each
Debtor shall promptly give the Secured Party notice whenever it acquires
(whether absolutely or by license) or creates any additional material
Intellectual Property.

    


    (nn)        Each
Debtor will from time to time, at the joint and several expense of the Debtors,
promptly execute and deliver all such further instruments and documents, and
take all such further action as may be necessary or desirable, or as the Secured
Party may reasonably request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable the Secured
Party to exercise and enforce their rights and remedies hereunder and with
respect to any Collateral or to otherwise carry out the purposes of this
Agreement.


    
      
         


      

      
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    (oo)        Schedule F attached
hereto lists all of the patents, patent applications, trademarks, trademark
applications, registered copyrights, and domain names owned by any of the
Debtors as of the date hereof.  Schedule F lists all
material licenses in favor of any Debtor for the use of any patents, trademarks,
copyrights and domain names as of the date hereof.  All material
patents and trademarks of the Debtors have been duly recorded at the United
States Patent and Trademark Office and all material copyrights of the Debtors
have been duly recorded at the United States Copyright Office.

    


    (pp)        Except
as set forth on Schedule G attached
hereto, none of the account debtors or other persons or entities obligated on
any of the Collateral is a governmental authority covered by the Federal
Assignment of Claims Act or any similar federal, state or local statute or rule
in respect of such Collateral.

    


    5.           Effect of Pledge on Certain
Rights. If
any of the Collateral subject to this Agreement consists of nonvoting equity or
ownership interests (regardless of class, designation, preference or rights)
that may be converted into voting equity or ownership interests upon the
occurrence of certain events (including, without limitation, upon the
transfer of all or any of the other stock or assets of the issuer), it is agreed
that the pledge of such equity or ownership interests pursuant to this Agreement
or the enforcement of any of Secured Party’s rights hereunder shall not be
deemed to be the type of event which would trigger such conversion rights
notwithstanding any provisions in the Organizational Documents or agreements to
which any Debtor is subject or to which any Debtor is party.

    


    6.           Defaults. The following events
shall be “Events of
Default”:

    


    (a)           The
occurrence of an Event of Default (as defined in the Note) under the
Note;

    


    (b)           Any
representation or warranty of any Debtor in this Agreement shall prove to have
been incorrect in any material respect when made;

    


    (c)           The
failure by any Debtor to observe or perform any of its obligations hereunder for
three (3) days after delivery to such Debtor of notice of such failure by or on
behalf of a Secured Party unless such default is capable of cure but cannot be
cured within such time frame and such Debtor is using best efforts to cure same
in a timely fashion; or

    


    (d)           If
any provision of this Agreement shall at any time for any reason be declared to
be null and void, or the validity or enforceability thereof shall be contested
by any Debtor, or a proceeding shall be commenced by any Debtor, or by any
governmental authority having jurisdiction over any Debtor, seeking to establish
the invalidity or unenforceability thereof, or any Debtor shall deny that any
Debtor has any liability or obligation purported to be created under this
Agreement.


    
      
         


      

      
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    7.           Duty To Hold In
Trust.

    


    (a)           Upon
the occurrence of any Event of Default and at any time thereafter, each Debtor
shall, upon receipt of any revenue, income, dividend, interest or other sums
subject to the Security Interests, whether payable pursuant to the Note or
otherwise, or of any check, draft, note, trade acceptance or other instrument
evidencing an obligation to pay any such sum, hold the same in trust for the
Secured Party and shall forthwith endorse and transfer any such sums or
instruments, or both, to the Secured Party.

    


    (b)           If
any Debtor shall become entitled to receive or shall receive any securities or
other property (including, without limitation, shares of Pledged Securities or
instruments representing Pledged Securities acquired after the date hereof, or
any options, warrants, rights or other similar property or certificates
representing a dividend, or any distribution in connection with any
recapitalization, reclassification or increase or reduction of capital, or
issued in connection with any reorganization of such Debtor or any of its direct
or indirect subsidiaries) in respect of the Pledged Securities (whether as an
addition to, in substitution of, or in exchange for, such Pledged Securities or
otherwise), such Debtor agrees to (i) accept the same as the agent of the
Secured Party; (ii) hold the same in trust on behalf of and for the benefit of
the Secured Party; and (iii) to deliver any and all certificates or instruments
evidencing the same to Secured Party on or before the close of business on the
fifth business day following the receipt thereof by such Debtor, in the exact
form received together with the Necessary Endorsements, to be held by Secured
Party subject to the terms of this Agreement as Collateral.

    


    8.           Rights and Remedies Upon
Default.

    


    (a)           Upon
the occurrence of any Event of Default and at any time thereafter, the Secured
Party shall have the right to exercise all of the remedies conferred hereunder
and under the Note, and the Secured Party shall have all the rights and remedies
of a secured party under the UCC.  Without limitation, the Secured
Party shall have the following rights and powers:

    


    (i)           The
Secured Party shall have the right to take possession of the Collateral and, for
that purpose, enter, with the aid and assistance of any person, any premises
where the Collateral, or any part thereof, is or may be placed and remove the
same, and each Debtor shall assemble the Collateral and make it available to the
Secured Party at places which the Secured Party shall reasonably select, whether
at such Debtor's premises or elsewhere, and make available to the Secured Party,
without rent, all of such Debtor’s respective premises and facilities for the
purpose of the Secured Party taking possession of, removing or putting the
Collateral in saleable or disposable form.

     

    
      
         


      

      
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    (ii)          Upon
notice to the Debtors by Secured Party, all rights of each Debtor to exercise
the voting and other consensual rights which it would otherwise be entitled to
exercise and all rights of each Debtor to receive the dividends and interest
which it would otherwise be authorized to receive and retain, shall
cease.  Upon such notice, Secured Party shall have the right to
receive any interest, cash dividends or other payments on the Collateral and, at
the option of Secured Party, to exercise in the Secured Party’s discretion all
voting rights pertaining thereto.  Without limiting the generality of
the foregoing, Secured Party shall have the right (but not the obligation) to
exercise all rights with respect to the Collateral as it were the sole and
absolute owner thereof, including, without limitation, to vote and/or to
exchange, at its sole discretion, any or all of the Collateral in connection
with a merger, reorganization, consolidation, recapitalization or other
readjustment concerning or involving the Collateral or any Debtor or any of its
direct or indirect subsidiaries.

    


    (iii)         The
Secured Party shall have the right to operate the business of each Debtor using
the Collateral and shall have the right to assign, sell, lease or otherwise
dispose of and deliver all or any part of the Collateral, at public or private
sale or otherwise, either with or without special conditions or stipulations,
for cash or on credit or for future delivery, in such parcel or parcels and at
such time or times and at such place or places, and upon such terms and
conditions as the Secured Party may deem commercially reasonable, all without
(except as shall be required by applicable statute and cannot be waived)
advertisement or demand upon or notice to any Debtor or right of redemption of a
Debtor, which are hereby expressly waived.  Upon each such sale,
lease, assignment or other transfer of Collateral, the Secured Party, may,
unless prohibited by applicable law which cannot be waived, purchase all or any
part of the Collateral being sold, free from and discharged of all trusts,
claims, right of redemption and equities of any Debtor, which are hereby waived
and released.

    


    (iv)        The
Secured Party shall have the right (but not the obligation) to notify any
account debtors and any obligors under instruments or accounts to make payments
directly to the Secured Party, and to enforce the Debtors’ rights against such
account debtors and obligors.

    


    (v)         The
Secured Party, may (but is not obligated to) direct any financial intermediary
or any other person or entity holding any investment property to transfer the
same to the Secured Party, or its designee.

    


    (vi)        The
Secured Party may (but is not obligated to) transfer any or all Intellectual
Property registered in the name of any Debtor at the United States Patent and
Trademark Office and/or Copyright Office into the name of the Secured Party or
any designee or any purchaser of any Collateral.

    


    (b)           The
Secured Party shall comply with any applicable law in connection with a
disposition of Collateral and such compliance will not be considered adversely
to affect the commercial reasonableness of any sale of the
Collateral.  The Secured Party may sell the Collateral without giving
any warranties and may specifically disclaim such warranties.  If the
Secured Party sells any of the Collateral on credit, the Debtors will only be
credited with payments actually made by the purchaser.  In addition,
each Debtor waives any and all rights that it may have to a judicial hearing in
advance of the enforcement of any of the Secured Party’s rights and remedies
hereunder, including, without limitation, its right following an Event of
Default to take immediate possession of the Collateral and to exercise its
rights and remedies with respect thereto.

     

    
      
         


      

      
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    (c)           For
the purpose of enabling the Secured Party to further exercise rights and
remedies under this Section 8 or elsewhere provided by agreement or applicable
law, each Debtor hereby grants to the Secured Party, an irrevocable,
nonexclusive license (exercisable without payment of royalty or other
compensation to such Debtor) to use, license or sublicense following an Event of
Default, any Intellectual Property now owned or hereafter acquired by such
Debtor, and wherever the same may be located, and including in such license
access to all media in which any of the licensed items may be recorded or stored
and to all computer software and programs used for the compilation or printout
thereof.

    


    9.           Applications of Proceeds. The
proceeds of any such sale, lease or other disposition of the Collateral
hereunder or from payments made on account of any insurance policy insuring any
portion of the Collateral shall be applied first, to the expenses of retaking,
holding, storing, processing and preparing for sale, selling, and the like
(including, without limitation, any taxes, fees and other costs incurred in
connection therewith) of the Collateral, to the reasonable attorneys’ fees and
expenses incurred by the Secured Party in enforcing the Secured Party’s
rights hereunder and in connection with collecting, storing and disposing of the
Collateral, and then to satisfaction of the Obligations, and to the payment of
any other amounts required by applicable law, after which the Secured Party
shall pay to the applicable Debtor any surplus proceeds. If, upon the sale,
license or other disposition of the Collateral, the proceeds thereof are
insufficient to pay all amounts to which the Secured Party is legally
entitled, the Debtors will be liable for the deficiency, together with interest
thereon, at the rate of 20% per annum or the lesser amount permitted by
applicable law (the “Default Rate”), and
the reasonable fees of any attorneys employed by the Secured Party to collect
such deficiency.  To the extent permitted by applicable law, each
Debtor waives all claims, damages and demands against the Secured Party arising
out of the repossession, removal, retention or sale of the Collateral, unless
due solely to the gross negligence or willful misconduct of the Secured Party as
determined by a final judgment (not subject to further appeal) of a court of
competent jurisdiction.

    


    10.         Securities Law
Provision.  Each Debtor recognizes that Secured Party may be
limited in its ability to effect a sale to the public of all or part of the
Pledged Securities by reason of certain prohibitions in the Securities Act of
1933, as amended, or other federal or state securities laws (collectively, the
“Securities
Laws”), and may be compelled to resort to one or more sales to a
restricted group of purchasers who may be required to agree to acquire the
Pledged Securities for their own account, for investment and not with a view to
the distribution or resale thereof.  Each Debtor agrees that sales so
made may be at prices and on terms less favorable than if the Pledged Securities
were sold to the public, and that Secured Party has no obligation to delay the
sale of any Pledged Securities for the period of time necessary to register the
Pledged Securities for sale to the public under the Securities
Laws.  Each Debtor shall cooperate with Secured Party in its attempt
to satisfy any requirements under the Securities Laws (including, without
limitation, registration thereunder if requested by Secured Party) applicable to
the sale of the Pledged Securities by Secured Party.

     

    
      
         


      

      
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    11.           Costs and Expenses. Each
Debtor agrees to pay all reasonable out-of-pocket fees, costs and expenses
incurred in connection with any filing required hereunder, including without
limitation, any financing statements pursuant to the UCC, continuation
statements, partial releases and/or termination statements related thereto or
any expenses of any searches reasonably required by the Secured
Party.  The Debtors shall also pay all other claims and charges which
in the reasonable opinion of the Secured Party is reasonably likely to
prejudice, imperil or otherwise affect the Collateral or the Security Interests
therein.  The Debtors will also, upon demand, pay to the Secured Party
the amount of any and all reasonable expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, which the Secured Party,
may incur in connection with (i) the enforcement of this Agreement, (ii) the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, or (iii) the exercise or enforcement of
any of the rights of the Secured Party under the Note. Until so paid, any fees
payable hereunder shall be added to the principal amount of the Note and shall
bear interest at the Default Rate.

     

    12.           Responsibility for Collateral.
The Debtors assume all liabilities and responsibility in connection with all
Collateral, and the Obligations shall in no way be affected or diminished by
reason of the loss, destruction, damage or theft of any of the Collateral or its
unavailability for any reason.  Without limiting the generality of the
foregoing, (a) in no event shall the Secured Party (i) have any duty (either
before or after an Event of Default) to collect any amounts in respect of the
Collateral or to preserve any rights relating to the Collateral, or (ii) have
any obligation to clean-up or otherwise prepare the Collateral for sale, and (b)
each Debtor shall remain obligated and liable under each contract or agreement
included in the Collateral to be observed or performed by such Debtor
thereunder.  The Secured Party shall not have any obligation or
liability under any such contract or agreement by reason of or arising out of
this Agreement or the receipt by the Secured Party of any payment relating to
any of the Collateral, nor shall the Secured Party be obligated in any manner to
perform any of the obligations of any Debtor under or pursuant to any such
contract or agreement, to make inquiry as to the nature or sufficiency of any
payment received by the Secured Party in respect of the Collateral or as to the
sufficiency of any performance by any party under any such contract or
agreement, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to the Secured Party or to which the Secured Party may be entitled at
any time or times.

     

    
      
         


      

      
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    13.           Security Interests Absolute. All rights of the
Secured Party and all obligations of the Debtors hereunder, shall be absolute
and unconditional, irrespective of: (a) any lack of validity or enforceability
of the Note or any agreement entered into in connection with the Note, or
any portion hereof or thereof; (b) any change in the time, manner or place of
payment or performance of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any consent to any departure
from the Note or any other agreement entered into in connection with the
foregoing; (c) any exchange, release or nonperfection of any of the Collateral,
or any release or amendment or waiver of or consent to departure from any other
collateral for, or any guarantee, or any other security, for all or any of the
Obligations; (d) any action by the Secured Party to obtain, adjust, settle and
cancel in its sole discretion any insurance claims or matters made or arising in
connection with the Collateral; or (e) any other circumstance which might
otherwise constitute any legal or equitable defense available to a Debtor, or a
discharge of all or any part of the Security Interests granted
hereby.  Until the Obligations shall have been paid and performed in
full, the rights of the Secured Party shall continue even if the Obligations are
barred for any reason, including, without limitation, the running of the statute
of limitations or bankruptcy.  Each Debtor expressly waives
presentment, protest, notice of protest, demand, notice of nonpayment and demand
for performance. In the event that at any time any transfer of any Collateral or
any payment received by the Secured Party hereunder shall be deemed by final
order of a court of competent jurisdiction to have been a voidable preference or
fraudulent conveyance under the bankruptcy or insolvency laws of the United
States, or shall be deemed to be otherwise due to any party other than the
Secured Party, then, in any such event, each Debtor’s obligations hereunder
shall survive cancellation of this Agreement, and shall not be discharged or
satisfied by any prior payment thereof and/or cancellation of this Agreement,
but shall remain a valid and binding obligation enforceable in accordance with
the terms and provisions hereof.  Each Debtor waives all right to
require the Secured Party to proceed against any other person or entity or to
apply any Collateral which the Secured Party may hold at any time, or to marshal
assets, or to pursue any other remedy. Each Debtor waives any defense arising by
reason of the application of the statute of limitations to any obligation
secured hereby.

    


    14.           Term of Agreement; Release of Security. This
Agreement and the Security Interests shall terminate on the date on which all
payments under the Note have been indefeasibly paid in full and all other
Obligations have been paid or discharged; provided, however, that all
indemnities of the Debtors contained in this Agreement shall survive and remain
operative and in full force and effect regardless of the termination of this
Agreement. With respect to any Subsidiary Dividend, so long as the Note has
not matured and remain unpaid or so long as the Secured Party has not
accelerated the obligations of the Company under the Note, the Secured Party’s
security interest in the assets of any Subsidiary or Dividend Subsidiary and the
security interest in the portion of the equity interest in such Subsidiary or
Dividend Subsidiary so distributed shall be released and
discharged.  With respect to any other dividend to the Company’s
common stock holders of any equity interest in any Subsidiary, so long as the
Note has not matured and remain unpaid or so long as the Secured Party has not
accelerated the obligations of the Company under the Note, and upon the prior
written consent of the Secured Party (not to be unreasonably withheld or
delayed), the Secured Party’s security interest in the assets of such Subsidiary
and the security interest in the portion of the equity interest in such
Subsidiary so distributed shall be released and discharged.

     

    
      
        
           


        

        
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    15.           Power of Attorney; Further Assurances.

     

     (a)          Each
Debtor authorizes the Secured Party, and does hereby make, constitute and
appoint the Secured Party and its officers, agents, successors or assigns with
full power of substitution, as such Debtor’s true and lawful attorney-in-fact,
with power, in the name of the Secured Party or such Debtor, to, after the
occurrence and during the continuance of an Event of Default, (i) endorse any
note, checks, drafts, money orders or other instruments of payment (including
payments payable under or in respect of any policy of insurance) in respect of
the Collateral that may come into possession of the Secured Party; (ii) to sign
and endorse any financing statement pursuant to the UCC or any invoice, freight
or express bill, bill of lading, storage or warehouse receipts, drafts against
debtors, assignments, verifications and notices in connection with accounts, and
other documents relating to the Collateral; (iii) to pay or discharge taxes,
liens, security interests or other encumbrances at any time levied or placed on
or threatened against the Collateral; (iv) to demand, collect, receipt for,
compromise, settle and sue for monies due in respect of the Collateral; (v) to
transfer any Intellectual Property or provide licenses respecting any
Intellectual Property; and (vi) generally, at the option of the Secured Party,
and at the expense of the Debtors, at any time, or from time to time, to execute
and deliver any and all documents and instruments and to do all acts and things
which the Secured Party deems necessary to protect, preserve and realize upon
the Collateral and the Security Interests granted therein in order to effect the
intent of this Agreement and the Note all as fully and effectually as the
Debtors might or could do; and each Debtor hereby ratifies all that said
attorney shall lawfully do or cause to be done by virtue hereof.  This
power of attorney is coupled with an interest and shall be irrevocable for the
term of this Agreement and thereafter as long as any of the Obligations shall be
outstanding.  The designation set forth herein shall be deemed to
amend and supersede any inconsistent provision in the Organizational Documents
or other documents or agreements to which any Debtor is subject or to which any
Debtor is a party.  Without limiting the generality of the foregoing,
after the occurrence and during the continuance of an Event of Default, each
Secured Party is specifically authorized to execute and file any applications
for or instruments of transfer and assignment of any patents, trademarks,
copyrights or other Intellectual Property with the United States Patent and
Trademark Office and the United States Copyright Office.

    


     (b)          On
a continuing basis, each Debtor will make, execute, acknowledge, deliver, file
and record, as the case may be, with the proper filing and recording agencies in
any jurisdiction, including, without limitation, the jurisdictions indicated on
Schedule C
attached hereto, all such instruments, and take all such action as may
reasonably be deemed necessary or advisable, or as reasonably requested by the
Secured Party, to perfect the Security Interests granted hereunder and otherwise
to carry out the intent and purposes of this Agreement, or for assuring and
confirming to the Secured Party the grant or perfection of a perfected security
interest in all the Collateral under the UCC.

    


    (c)           Each
Debtor hereby irrevocably appoints the Secured Party as such Debtor’s
attorney-in-fact, with full authority in the place and stead of such Debtor and
in the name of such Debtor, from time to time in the Secured Party’s discretion,
to take any action and to execute any instrument which the Secured Party may
deem necessary or advisable to accomplish the purposes of this Agreement,
including the filing, in its sole discretion, of one or more financing or
continuation statements and amendments thereto, relative to any of the
Collateral without the signature of such Debtor where permitted by law, which
financing statements may (but need not), describe the Collateral as “all assets”
or “all personal property” or words of like import, and ratifies all such
actions taken by the Secured Party.  This power of attorney is coupled
with an interest and shall be irrevocable for the term of this Agreement and
thereafter as long as any of the Obligations shall be
outstanding.


    
      
         


      

      
        20

        
          

        

      

      
         


      

    

    


    16.           Notices. Any demand upon or
notice to the Debtors hereunder shall be effective when delivered by hand or
when properly deposited in the mails postage prepaid, or sent by telex,
answerback received, or electronic facsimile transmission, receipt acknowledged,
or delivered to a telegraph company or overnight courier, in each case addressed
to the Debtor at the address shown below.  Any notice by the Debtors
to the Secured Party shall be given as aforesaid, addressed to the Secured Party
at the address shown below or such other address as the Secured Party may advise
the Debtors in writing.

    


    
      	
              Secured
      Party:

            	 
      
	 
      	
              Platinum
      Long Term Growth V, LLC

            
	 
      	
              Carnegie
      Hall Tower

            
	 
      	
              152
      W. 57th Street

            
	 
      	
              54th
      Floor

            
	 
      	
              New
      York, NY 10019

            
	 
      	
              Fax: 

            	
                  

            	 
      
	 
      	 
      
	
              Debtors:

            	 
      
	 
      	
              c/o
      Wits Basin Precious Minerals Inc.

            
	 
      	
              80
      South Eighth Street, Suite 900

            
	 
      	
              Minneapolis,
      MN 55402

            
	 
      	
              Fax:
      (612) 395-5276

            


    

    


    17.           Other Security. To the extent
that the Obligations are now or hereafter secured by property other than the
Collateral or by the guarantee, endorsement or property of any other person,
firm, corporation or other entity, then the Secured Party shall have the right,
in its sole discretion, to pursue, relinquish, subordinate, modify or take any
other action with respect thereto, without in any way modifying or affecting any
of the Secured Party’s rights and remedies hereunder.

    


    18.           Miscellaneous.

    


    (a)          No
course of dealing between the Debtors and the Secured Party, nor any failure to
exercise, nor any delay in exercising, on the part of the Secured Party, any
right, power or privilege hereunder or under the Note shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or thereunder preclude any other or further exercise thereof
or the exercise of any other right, power or privilege.

    


    (b)          All
of the rights and remedies of the Secured Party with respect to the Collateral,
whether established hereby or by the Note or by any other agreements,
instruments or documents or by law shall be cumulative and may be exercised
singly or concurrently.


    
      
         


      

      
        21

        
          

        

      

      
         


      

    

    


    (c)           This
Agreement, together with the exhibits and schedules hereto, contain the entire
understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral or written, with respect
to such matters, which the parties acknowledge have been merged into this
Agreement and the exhibits and schedules hereto. No provision of this
Agreement may be waived, modified, supplemented or amended except in a written
instrument signed, in the case of an amendment, by the Debtors and the Secured
Party or, in the case of a waiver, by the party against whom enforcement of any
such waived provision is sought.

    


    (d)           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.

    


    (e)           No
waiver of any default with respect to any provision, condition or requirement of
this Agreement shall be deemed to be a continuing waiver in the future or a
waiver of any subsequent default or a waiver of any other provision, condition
or requirement hereof, nor shall any delay or omission of any party to exercise
any right hereunder in any manner impair the exercise of any such
right.

    


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

    


    (g)          Each
party shall take such further action and execute and deliver such further
documents as may be necessary or appropriate in order to carry out the
provisions and purposes of this Agreement.

     

    
      
         


      

      
        22

        
          

        

      

      
         


      

    


    (h)          All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof.  Each Debtor agrees that all
proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Agreement and the Note (whether brought
against a party hereto or its respective affiliates, directors, officers,
shareholders, partners, members, employees or agents) shall be commenced
exclusively in the state and federal courts sitting in the City of New York,
Borough of Manhattan. Each Debtor hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of New York,
Borough of Manhattan for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such proceeding is improper. Each party hereto hereby
irrevocably waives personal service of process and consents to process being
served in any such proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law.  Each party hereto
hereby irrevocably waives, to the fullest extent permitted by applicable law,
any and all right to trial by jury in any legal proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby. If any party
shall commence a proceeding to enforce any provisions of this Agreement, then
the prevailing party in such proceeding shall be reimbursed by the other party
for its reasonable attorney’s fees and other costs and expenses incurred with
the investigation, preparation and prosecution of such proceeding.

    


    (i)           This
Agreement may be executed in any number of counterparts, each of which when so
executed shall be deemed to be an original and, all of which taken together
shall constitute one and the same Agreement. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
were the original thereof.

    


    (j)           All
Debtors shall jointly and severally be liable for the obligations of each Debtor
to the Secured Party hereunder.

    


    (k)           Each
Debtor shall indemnify, reimburse and hold harmless the Secured Party and its
partners, members, shareholders, officers, directors, employees and agents (and
any other persons with other titles that have similar functions) (collectively,
“Indemnitees”)
from and against any and all losses, claims, liabilities, damages, penalties,
suits, costs and expenses, of any kind or nature, (including fees relating to
the cost of investigating and defending any of the foregoing) imposed on,
incurred by or asserted against such Indemnitee in any way related to or arising
from or alleged to arise from this Agreement or the Collateral, except any such
losses, claims, liabilities, damages, penalties, suits, costs and expenses which
result from the gross negligence or willful misconduct of the Indemnitee as
determined by a final, nonappealable decision of a court of competent
jurisdiction.  This indemnification provision is in addition to, and
not in limitation of, any other indemnification provision in the Note, the
Purchase Agreement (as such term is defined in the Note) or any other agreement,
instrument or other document executed or delivered in connection herewith or
therewith.


    
      
         


      

      
        23

        
          

        

      

      
         


      

    

    


    (l)           Nothing
in this Agreement shall be construed to subject the Secured Party to liability
as a partner in any Debtor or any if its direct or indirect subsidiaries that is
a partnership or as a member in any Debtor or any of its direct or indirect
subsidiaries that is a limited liability company, nor shall the Secured Party be
deemed to have assumed any obligations under any partnership agreement or
limited liability company agreement, as applicable, of any such Debtor or any if
its direct or indirect subsidiaries or otherwise, unless and until the Secured
Party exercises its right to be substituted for such Debtor as a partner or
member, as applicable, pursuant hereto.

    


    (m)         To
the extent that the grant of the security interest in the Collateral and the
enforcement of the terms hereof require the consent, approval or action of any
partner or member, as applicable, of any Debtor or any direct or indirect
subsidiary of any Debtor or compliance with any provisions of any of the
Organizational Documents, the Debtors hereby grant such consent and approval and
waive any such noncompliance with the terms of said documents.

    


    [SIGNATURE
PAGES FOLLOW]

     

    
      
        
           


        

        
          24

          
            

          

        

        
           


        

      



    IN
WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be
duly executed on the day and year first above written.

     

    
      
        	
                WITS
      BASIN PRECIOUS MINERALS INC.

              	 
      
	 
      	 
      	 
      
	
                By:

              	
                  /s/ Mark D.
    Dacko

              	 
      
	 
      	
                Name:  Mark
      D. Dacko

              	 
      
	 
      	
                Title:  Chief
      Financial Officer

              	 
      
	 
      	 
      	 
      
	
                GREGORY
      GOLD PRODUCERS, INCORPORATED

              	 
      
	 
      	 
      	 
      
	
                By:

              	
                  /s/ Mark D.
    Dacko

              	 
      
	 
      	
                Name:  Mark
      D. Dacko

              	 
      
	 
      	
                Title:  Chief
      Financial Officer

              	 
      
	 
      	 
      	 
      
	
                PLATINUM
      LONG TERM GROWTH V, LLC

              	 
      
	 
      	 
      	 
      
	
                By:

              	
                  /s/ Mark
    Nordlicht

              	 
      
	 
      	
                Name:
      Mark Nordlicht

              	 
      
	 
      	
                Title:  General
      Manager

              	 
      


      

    

    


    Signature
Page

    to
Security Agreement



    
      
         


      

      
        25

        
          

        

      

      
         


      

    

    


    Schedule A

    


    PRINCIPAL
PLACE OF BUSINESS OF DEBTORS:

    


    (1) Wits
Basin Precious Minerals Inc., a Minnesota corporation, 900 IDS Center, 80 S
8th
St, Minneapolis, MN

    


    (2)
Gregory Gold Producers, Inc., a Colorado corporation, 11438 County Road 19, Ft.
Lupton, CO 80321

    


    LOCATIONS
WHERE COLLATERAL IS LOCATED OR STORED:

    


    (1)
Gregory Gold Producers, Inc., 422 Gregory Street, Central City, CO
80427.  Gregory Gold Producers, Inc. holds unencumbered depreciable
assets worth approximately $115,522 in Central City, Colorado, located on
property which is not owned by the Company and to which the Company has no
current rights to use.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Schedule
B

    


    ENCUMBRANCES

    


    None.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Schedule
C

    


    1.
Minnesota

    


    2.
Colorado


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Schedule
D

    


    LEGAL
NAMES AND ORGANIZATIONAL IDENTIFICATION NUMBERS

    


    (1) Wits
Basin Precious Minerals Inc., a Minnesota corporation,
EIN84-1236619

    


    (2)
Gregory Gold Producers, Inc., a Colorado corporation, EIN
56-2454853

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Schedule
E

    


    NAMES;
MERGERS AND ACQUISITIONS

    


    None.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Schedule
F

    


    INTELLECTUAL
PROPERTY

    


    None.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Schedule
G

    


    ACCOUNT
DEBTORS

    


    None.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Schedule
H

    PLEDGED
SECURITIES

    


    1.  100%
equity interest in Gregory Gold Producers, Inc., a Colorado
corporation.

    


    2.  35%
equity interest in Kwagga Gold (Barbados) Limited, a Barbados
corporation.

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    


    ANNEX
A

    to

    SECURITY

    AGREEMENT

    


    
      FORM
OF ADDITIONAL DEBTOR JOINDER

    

    


    Security
Agreement dated as of February 11, 2008 made by

    Wits
Basin Precious Minerals Inc.

    and its
subsidiaries party thereto from time to time, as Debtors

    to and in
favor of

    the
Secured Party identified therein (the “Security
Agreement”)

    


    Reference
is made to the Security Agreement as defined above; capitalized terms used
herein and not otherwise defined herein shall have the meanings given to such
terms in, or by reference in, the Security Agreement.

    


    The
undersigned hereby agrees that upon delivery of this Additional Debtor Joinder
to the Secured Party referred to above, the undersigned shall (a) be an
Additional Debtor under the Security Agreement, (b) have all the rights and
obligations of the Debtors under the Security Agreement as fully and to the same
extent as if the undersigned was an original signatory thereto and (c) be deemed
to have made the representations and warranties set forth therein as of the date
of execution and delivery of this Additional Debtor Joinder.  WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, THE UNDERSIGNED SPECIFICALLY GRANTS TO
THE SECURED PARTY A SECURITY INTEREST IN THE COLLATERAL AS MORE FULLY SET FORTH
IN THE SECURITY AGREEMENT AND ACKNOWLEDGES AND AGREES TO THE WAIVER OF JURY
TRIAL PROVISIONS SET FORTH THEREIN.

    


    Attached
hereto are supplemental and/or replacement Schedules to the Security Agreement,
as applicable.

    


    An
executed copy of this Joinder shall be delivered to the Secured Party, and the
Secured Party may rely on the matters set forth herein on or after the date
hereof.  This Joinder shall not be modified, amended or terminated
without the prior written consent of the Secured Party.

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    


    IN
WITNESS WHEREOF, the undersigned has caused this Joinder to be executed in the
name and on behalf of the undersigned.

    


    
      
        	 
      	
                [Name
      of Additional Debtor]

              
	 
      	 
      
	 
      	
                By:

              
	 	 
	 
      	
                Name:

              
	 
      	
                Title:

              
	 
      	 
      
	 
      	
                Address:

              
	 
      	 
      
	
                Dated: