Document:

Exhibit
4.7

    

    

    SECONDARY
DEED OF TRUST AND SECURITY AGREEMENT

    

    THIS SECONDARY DEED OF TRUST AND
SECURITY AGREEMENT (“Deed of Trust”) is made as of the
11th
day of September, 2008, between HUNTER BATES MINING CORPORATION, a Minnesota
corporation (“Grantor”),
having an office at 900 IDS Center, 80 South 8th Street,
Minneapolis MN 55402-8773, and the Gilpin County Public Trustee (“Trustee”), whose address is
203 Eureka Street, P.O. Box 368, Central City, CO, 80427.

    

    WITNESSETH:

    

    WHEREAS, that certain Deed of
Trust made by Grantor (the “Otten Deed of Trust”), in
favor of the Trustee, as trustee for George E. Otten, was issued to secure and
enforce the payment of certain obligations of Grantor, including without
limitation, that certain Promissory Note dated on or about June 9, 2008 in the
principal amount of Six Million Seven Hundred Fifty Thousand and 00/100 Canadian
Dollars (CND $6,750,000.00) made by Grantor and payable to the order of George
E. Otten, a Colorado resident whose address is 11438 Weld County Rd 19, Fort
Lupton, CO, 80621 (or his nominee or assignee), with interest and payments, all
as provided therein, being due and payable in full on December 31, 2015 (or
earlier as provided for therein), and all modifications, renewals or extensions
thereof (the “Otten
Note”) and all
obligations of the Otten Deed of Trust or any other instruments (“Otten Loan Documents”) executed by
Grantor in favor of George E. Otten now or hereafter evidencing or securing the
above-described indebtedness or any part thereof (collectively the “Otten
Indebtedness”);

    

    WHEREAS, George E. Otten filed
the Otten Deed of Trust with the Gilpin County Clerk and Recorder on or about
June 9, 2008, as Document No. 136731;

    

    WHEREAS, Wits Basin Precious
Minerals Inc., the parent company to Grantor (“Wits Basin”), has previously
executed (i) a senior secured convertible note in the principal amount of One
Million Twenty Thousand Dollars ($1,020,000), dated February 11, 2008 in favor
of Platinum Long Term Growth V, LLC, a Delaware limited liability company whose
address is Carnegie Hall Tower, 152 W. 57th Street,
54th
Floor, New York, NY 10019 (“Platinum”) and (ii) a secured
promissory note in the principal amount of One Hundred Ten Thousand Dollars
($110,000), dated on or about July 10, 2008 in favor of Platinum (collectively,
the “Notes”) (Platinum,
as payee of the Notes, and all subsequent holders of the Notes or any part
thereof or any interest therein or in any of the Secured Indebtedness, are
hereinafter referred to as the “Beneficiary”) and certain
related agreements with Platinum and (collectively, as amended, restated, or
extended from time to time, the “Loan Documents”) and Platinum
has agreed to make loans to Wits Basin in consideration thereof for up to One
Million One Hundred Thirty Thousand Dollars ($1,130,000) (the “Loans”);

    

    WHEREAS, pursuant to the Loan
Documents, Grantor is obligated to secure the repayment of the Notes and all
obligations, indebtedness and liabilities of the Loan Documents executed by Wits
Basin in favor of the Beneficiary now or hereafter evidencing or securing the
indebtedness or any part thereof owed to Platinum (the “Secured
Indebtedness”).  The terms and provisions of the Notes are
incorporated herein by this reference;

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    In order to secure repayment of the
Secured Indebtedness, Grantor does hereby grant, bargain, sell and convey unto
the Trustee, in trust forever, that certain property situate in Gilpin County,
Colorado, more particularly described on Exhibit A attached hereto and
incorporated herein by this reference, which is commonly known as the Hunter
Gold Mine (sometimes collectively hereinafter referred to as the “Property” or the “Mortgaged Property”); provided
however that this Deed of Trust and any and all liens on the Mortgaged Property
securing the Secured Indebtedness hereby shall be and remain subordinate to the
Otten Indebtedness, as amended, restated, or extended from time to
time;

    

    TOGETHER with all and singular
the tenements, hereditaments, easements, rights of way and appurtenances
thereunto belonging or in any wise appertaining, whether now owned or hereafter
acquired by Grantor, and any and all rights of ingress and egress to and from
adjoining property (whether such rights now exist or subsequently arise),
together with the reversion or reversions, remainder or remainders, and rents,
issues and profits thereof, and also the entire estate, right, title, interest,
claim and demand whatsoever of Grantor of, in and to the same and of, in and to
every part and parcel thereof; and

    

    TOGETHER with all buildings,
structures, parking structures and improvements now or hereafter located on the
Mortgaged Property, including any and all easements and rights of way used in
connection therewith; and

    

    TOGETHER with all right, title
and interest of Grantor, if any, in all trees, shrubs, flowers and other
landscaping features and all oil, gas, minerals, water, water rights, drains and
drainage rights appurtenant to, located on, under or above or used in connection
with the Mortgaged Property and the improvements situate thereon, or any part
thereof, whether now existing or hereafter created or acquired; and

    

    TOGETHER with all leases,
rents, issues, royalties, bonus, income and profits, of each and every kind, now
or hereafter relating to or arising from the Mortgaged Property and the
improvements situate thereon; and

    

    All of the foregoing property,
interests and rights are sometimes hereinafter collectively referred to as the
"Mortgaged Property, Improvements and Rights” or the “Property”;

    

    AND, Grantor, for itself and
its successors and assigns, represents, warrants and covenants that, and has
good right and authority to grant, bargain, sell, convey, transfer, assign and
mortgage the Property; that the execution and delivery of this Deed of Trust,
the Notes and all other instruments securing the payment of the Notes do not
contravene any law, order, decree, rule or regulation to which Grantor is
subject; that the Notes, this Deed of Trust and all other instruments securing
the payment of the Notes constitute the legal, valid and binding obligations of
Grantor and that Grantor will warrant and forever defend the title to the
Property against the claims of all persons whomsoever claiming or to claim the
same or any part thereof, subject to all matters of record.

    
      
         

      

      
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    AND, that for so long as the
Secured Indebtedness or any part thereof remains unpaid, Grantor covenants and
agrees for itself and its successors and assigns as follows:

    

    1.           Covenants.

    

    1.1           Payment.  Grantor
will make prompt payment, as the same become due, of all installments of
principal and interest on the Notes and of all the other Secured
Indebtedness.

     

    1.2           Maintenance
of Mortgaged Property.  Grantor will cause the Mortgaged
Property to be used, occupied and operated in accordance with all applicable
laws and rules, regulations and orders promulgated by all duly constituted
authorities.  Grantor will allow the Beneficiary and/or its authorized
representatives to enter the Property at any reasonable time upon advance
written notice to inspect the Property and Grantor’s books and records
pertaining thereto, and Grantor will reasonably assist the Beneficiary and said
representatives in whatever way necessary to make such
inspection.  Subject to the rights of the beneficiary under the Otten
Deed of Trust (the “Otten Beneficiary”), the Beneficiary shall be entitled to
participate in any condemnation proceeding concerning the
proceeding.  If an Event of Default hereunder shall have occurred and
be continuing, any proceeds of such condemnation shall, subject to the rights of
the Otten Beneficiary, be applied by the Beneficiary to amounts outstanding
under the Loan Documents.

     

    1.3           Taxes.  Grantor
shall pay or cause to be paid prior to delinquency, except to the extent
provision is actually made therefor as set forth hereinafter, all taxes and
assessments theretofore or hereafter levied or assessed against the Property, or
any part thereof, or any other tax asserted as a substitute therefor and upon
request, will furnish the Beneficiary with receipts showing payment of such
taxes and assessments on or before the applicable due date therefor; except that
Grantor may in good faith, by appropriate proceedings, contest and diligently
pursue such contest, the validity, applicability or amount of any asserted tax
or assessment; provided, however, that in any event each such contest shall be
concluded and the taxes, assessments, interests, costs and penalties shall be
paid prior to the date any writ or order is issued under which the Property may
be sold.

     

    1.4           Books and
Records.  Grantor will keep accurate books and records in
accordance with generally accepted accounting principles in which full, true and
correct entries shall be promptly made as to all operations on the Property,
and, as often as reasonably requested by the Beneficiary, but not more often
than once in each calendar quarter.  Grantor will make full reports of
operations in such form as the Beneficiary prescribes, setting out full data as
to the exploration activities and expenditures, mine development activities and
expenditures, mining activities and expenditures and all revenues from the
Property.

     

    2.           Remedies
and Events of Default.

    

    2.1           Events of
Default.  The term "default" or "event of default" as used in
this Deed of Trust shall mean the occurrence of any of the following
events:

    
      
         

      

      
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    (a)           Any
default, event of default, or event that, with the giving of notice or the
passage of time or both would constitute a default or event of default, under
the Notes or the Loan Documents; or

    

    (b)           Except
for a payment default described in paragraph (a) hereof, the failure of Grantor
to make any payment due hereunder within forty-five (45) days from the date such
payment is due; or

    

    (c)           The
failure of Grantor to timely and properly observe, keep or perform any material
nonmonetary covenant, agreement, warranty or condition herein required to be
observed, kept or performed, except that Grantor shall have one hundred and
twenty (120) days from notice of such failure to cure such default and if such
default cannot be cured within one hundred and twenty (120) days, Grantor shall
have a reasonable period of time within which to cure such default, provided
Grantor promptly commences curative action and prosecutes such curative action
diligently to completion and provided such default or failure can be and is
cured within six months from the date of such notice.

    

    2.2           Acceleration.  Upon
the occurrence of a default, which is not cured during the applicable cure
period, if any, the Beneficiary shall have the option of declaring all the
Secured Indebtedness in its entirety to be immediately due and payable without
notice to Grantor, and the liens and security interests evidenced hereby shall
be subject to foreclosure in any manner provided for herein and as provided by
law.

    

    2.3           Management
and Possession.  Subject to the rights of the Otten
Beneficiary, upon the occurrence of a default which is not cured during the
applicable cure period, if any, the Beneficiary is authorized, whether prior or
subsequent to the institution of any foreclosure proceedings, to enter upon the
Property, or any part thereof, and to take possession of the Property and to
exercise, without interference from Grantor, any and all rights to construct,
manage, possess, operate, protect or preserve the Property and all equipment,
data, documents, records, samples, minerals, ore and other materials relating to
and/or derived from the Property (the “Associated Materials”), and to deduct
from the proceeds (if any) resulting from the exercise of such rights all
reasonable costs, expenses and liabilities of every character incurred by the
Beneficiary in exercising such rights and in managing, operating, maintaining,
protecting or preserving the Property and the Associated Materials and to apply
the remainder of such proceeds on the indebtedness secured hereby in such manner
as the Beneficiary may elect.  If necessary to obtain the possession
provided for above, subject to the rights of the Otten Beneficiary, the
Beneficiary may invoke any and all legal remedies to dispossess
Grantor.

    
      
         

      

      
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    2.4           Foreclosure
as Deed of Trust.  Upon the occurrence of a default hereunder,
which is not cured during the applicable cure period, if any, the Beneficiary
may, subject to the rights of any beneficiary holding priority rights, declare a
violation of any of the covenants hereof and elect to advertise the Mortgaged
Property, the Associated Materials, and all improvements and other rights
relating to the foregoing, for sale and demand such sale.  Then, upon
filing notice of such election and demand for sale with the Trustee, the Trustee
shall proceed to foreclose upon the Property and, if directed to do so by the
Beneficiary, upon the Associated Materials, all as provided by applicable
law.  The Trustee shall provide public notice of such foreclosure sale
as provided by applicable law.  Subject to the rights of any
beneficiary holding priority rights, the Trustee shall sell and dispose of the
Property, the Associated Materials, and all improvements and rights relating to
the foregoing (en masse or in separate parcels, as the Trustee may think best)
and all the right, title and interest of Grantor, and its successors and assigns
therein, at public auction all in accordance with the provisions of Colorado
Statutes.  Such sale(s) shall be a perpetual bar, both in law and
equity, against Grantor and its successors and assigns, and all other persons
claiming the Mortgaged Property, the Associated Materials, and all improvements
and rights relating to the foregoing, or any part thereof by, through, from or
under Grantor.  The Beneficiary may purchase the Mortgaged Property,
the Associated Materials, and all improvements and rights relating the
foregoing, or any part thereof, and may bid in any part or all of the
indebtedness secured hereby, and the purchaser(s) at any such sale shall not be
obligated to see to the application of the purchase money.

    

    Any reasonable costs incurred by
Beneficiary or its attorney as a part of the cost of foreclosure in conjunction
with Grantor's default hereunder shall be deemed allowable by the Trustee in a
foreclosure action.  Such allowable costs shall include, but not be
limited to, appraisal fees, attorney fees and all costs incurred by Beneficiary
or its attorney in conjunction with securing, preserving and maintaining the
Property, the Associated Materials, and any improvements and rights relating to
the foregoing, such as, by way of example and not by way of limitation, costs
incurred in conjunction with the appointment and/or institution of a
receivership (whether or not a receiver be appointed).

    

    2.5           Foreclosure
as Mortgage.  This instrument shall be effective as a mortgage
and a security agreement as well as a deed of trust and, upon the occurrence of
a default, may be foreclosed, at the election of the Beneficiary, as to any of
the Property or the Associated Materials in any manner permitted by the laws of
the State of Colorado.

    

    2.6           Application
of Proceeds.  The proceeds of any sale in foreclosure of the
liens evidenced hereby shall be applied:

    

    FIRST, to the payment of all
costs and expenses incident to such foreclosure sale, including, but not limited
to, all reasonable attorneys' fees and court costs and charges of every
character, and the statutory fee to the Trustee;

    

    SECOND, to the payment in full
of the Secured Indebtedness (including, specifically, without limitation, the
principal, interest, late charges and attorneys' fees due and unpaid on the
Notes and the amounts due and unpaid and owed to the Beneficiary under this Deed
of Trust) in such order as the Beneficiary may elect; and

    

    THIRD, the remainder, if any,
shall be paid in accordance with applicable statutory provisions or court
order.

    
      
         

      

      
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    2.7           Receiver.  In
addition to all other remedies herein provided for, Grantor agrees that upon the
occurrence of a default, the Beneficiary shall, as a matter of right, be
entitled to an ex parte appointment of a receiver or receivers for all or any
part of the Property and the Associated Materials without regard to the value of
the Property or the Associated Materials or to the solvency of any person or
persons liable for the payment of the indebtedness secured hereby, and Grantor
does hereby consent to the appointment of such receiver or receivers, waives any
and all defenses to such appointment and agrees not to oppose any application
therefor by the Beneficiary, but nothing herein is to be construed to deprive
Beneficiary of any other right, remedy or privilege it may now have under the
law to have a receiver appointed; provided, however, that the appointment of
such receiver, trustee or other appointee by virtue of any court order, statute
or regulation shall not impair or in any manner prejudice the rights of the
Beneficiary to receive payment of the rents and income.  The receiver
or his/her/its agents shall be entitled to enter upon and take possession of any
and all of the Property and the Associated Materials.  The receiver,
personally or through its agents or attorneys, may exclude Grantor and its
agents, servants and employees wholly from the Property and the Associated
Materials and have, hold, use, operate, manage and control the same and each and
every part thereof, and keep insured, the Property and the Associated
Materials.  Such receivership shall, at the option of the Beneficiary,
continue until full payment of all sums, hereby secured, then due and payable or
until title to the Property and the Associated Materials shall have passed by
foreclosure sale under this Deed of Trust and the period of redemption, if any,
shall have expired.

    

    2.8           Remedies
Cumulative.  All remedies herein expressly provided for are
cumulative of any and all other remedies existing at law or in equity and are
cumulative of any and all other remedies provided for in any other instrument
securing the payment of the Secured Indebtedness, or any part thereof, or
otherwise benefiting the Beneficiary, and the Trustee and the Beneficiary shall,
in addition to the remedies herein provided, be entitled to avail themselves of
all such other remedies as may now or hereafter exist at law or in equity for
the collection of the Secured Indebtedness and the enforcement of the covenants
herein and the foreclosure of the liens and security interests evidenced hereby,
and the use of any remedy provided for hereunder or under any such other
instrument or provided for by law shall not prevent the concurrent or subsequent
use of any other appropriate remedy or remedies.  The Beneficiary
shall be entitled to enforce the provisions of this Deed of Trust and to
exercise its rights and remedies hereunder notwithstanding that some or all of
the indebtedness hereby secured is now or shall hereafter be otherwise secured,
whether by mortgage, pledge, lien, assignment or otherwise.  Neither
the acceptance of this Deed of Trust nor the enforcement thereof shall prejudice
or in any manner affect the right of the Beneficiary to realize upon or enforce
any other security now or hereafter held by the Beneficiary, it being understood
that the Beneficiary shall be entitled to enforce this Deed of Trust and any
other security now or hereafter held by it in such order and manner as it may in
its sole discretion determine.

    

    2.9           Election
of Remedies.  The Beneficiary may resort to any security given
by this Deed of Trust or to any other security now existing or hereafter given
to secure the payment of the Secured Indebtedness, in whole or in part, and in
such portions and in such order as may seem best to the Beneficiary in its sole
discretion.

    
      
         

      

      
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    2.10           Tenancy
of Grantor.  In the event there is a foreclosure sale hereunder
and at the time of such sale Grantor or its representatives, successors or
assigns or any other persons claiming any interest in the Property and/or the
Associated Materials by, through or under Grantor are occupying or using the
Property and/or the Associated Materials, or any part thereof, each and all
shall, at the option of the Beneficiary or the purchaser at such sale, as the
case may be, immediately become the tenant of the Beneficiary or said purchaser
and said tenancy shall be terminable at will by the Beneficiary or said
purchaser, as the case may be.  In the event any tenant fails to
surrender possession of said Property and the Associated Materials upon the
exercise of such option, the purchaser shall be entitled to institute and
maintain an action for forcible entry and detainer.

    

    3.           Miscellaneous.

    

    3.1           Release.  If
the Secured Indebtedness is paid in full, then and in that event only, all
rights under this Deed of Trust shall be released by the Beneficiary in due form
at Grantor's cost.  No release of this Deed of Trust or the lien
thereof shall be valid unless executed by the Beneficiary.

    

    3.2           Beneficiary
Rights.  Without affecting the responsibility of Grantor for
the performance of the covenants and agreements herein contained, and without
affecting the lien of this Deed of Trust upon any of the Property and the
Associated Materials, the Beneficiary may at any time and from time to time
without notice in writing:  (a) waive compliance by Grantor with any
covenant herein made by Grantor to the extent and in the manner specified in
such writing; (b) consent to Grantor doing any act which hereunder Grantor is
required to do, to the extent and in the manner specified in such writing; (c)
release any part of the Property and/or the Associated Materials, or any
interest therein, from the lien and security interest of this Deed of Trust; (d)
release any party liable, either directly or indirectly, for the Secured
Indebtedness or for any covenant herein or in any other instrument now or
hereafter securing the payment of the Secured Indebtedness, without impairing or
releasing the liability of any other party; (e) extend the time for payment of
the Notes or otherwise grant indulgences or modify the Notes, or (f) subordinate
the lien hereof.

    

    3.3           Maximum
Interest.  Any provision contained herein, in the Notes or in
any other instrument evidencing, securing or otherwise relating to any of the
Secured Indebtedness to the contrary notwithstanding, the Beneficiary shall not
be entitled to receive or collect, nor shall Grantor be obligated to pay,
interest on any of the Secured Indebtedness in excess of the maximum rate of
interest permitted by applicable law, and if any provision herein, in the Notes
or in such other instrument shall ever be construed or held to permit the
collection or to require the payment of any amount of interest in excess of that
permitted by applicable law, the provisions of the Notes shall control and shall
override any contrary or inconsistent provision herein or in such other document
or instrument.

    
      
         

      

      
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    3.4           Notices.  Any
and all notices, elections, demands, requests, and responses thereto permitted
or required to be given under this Deed of Trust shall be in writing, signed by
or on behalf of the party giving the same, and shall be deemed to have been
properly given and shall be effective upon being personally delivered, or upon
being deposited in the United States mail, postage prepaid, certified with
return receipt requested, or upon being deposited with an overnight commercial
delivery service requiring proof of delivery, to the other party at the address
of such other party set forth above or at such other address within the
continental United States as such other party may designate by notice
specifically designated as a notice of change of address and given in accordance
herewith; provided, however, that the time period in which a response to any
such notice, election, demand or request must be given shall commence on the
date of receipt thereof; and provided further that no notice of change of
address shall be effective until the date of receipt
thereof.  Personal delivery to a party or to any officer, partner,
agent or employee of such party at said address shall constitute
receipt.  Rejection or other refusal to accept or inability to deliver
because of changed address of which no notice has been received shall also
constitute receipt.  Any such notice, election, demand, request or
response to the respective parties shall be addressed to the addresses provided
above.  A copy of any notices addressed to the Trustee and/or the
Beneficiary shall be delivered at the same time to Burak Anderson & Melloni,
PLC, 30 Main Street, Burlington, VT 05042, Attn: Shane W.
McCormack.

    

    3.5           Binding
Effect.  The terms, provisions, covenants and conditions hereof
shall be binding upon Grantor and the heirs, representatives, successors and
assigns of Grantor, including all heirs and successors in interest of Grantor in
and to all or any part of the Property and/or the Associated Materials, and
shall inure to the benefit of Grantor, the Trustee and the Beneficiary and their
respective successors and assigns, substitutes and assigns and shall constitute
covenants running with the land.  All references in this Deed of Trust
to Grantor, the Trustee or the Beneficiary shall be deemed to include all such
representatives, successors, substitutes and assigns.

    

    3.6           Invalidity.  A
determination that any provision of this Deed of Trust is unenforceable or
invalid shall not affect the enforceability or validity of any remaining
provision, and any determination that the application of any provision of this
Deed of Trust to any person or circumstance is illegal or unenforceable shall
not affect the enforceability or validity of such provision as it may apply to
any other persons or circumstances.

    

    3.7           Redemption.  In
the event the Property or any part thereof shall be sold upon foreclosure as
provided hereunder, the sum for which the same shall have been sold shall, for
purposes of redemption (pursuant to Section 38-38-301, et seq., C.R.S., or the
corresponding provisions of any future law), bear interest at the rate of
interest provided in the Notes from the date of sale until paid.

    

    3.8           Governing
Law.  This Deed of Trust and the Notes secured hereby shall be
governed by and construed according to the laws of the State of Colorado at the
date of execution.

    

    Signature
Page Follows

    
      
         

      

      
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    IN WITNESS WHEREOF, the
Grantor has executed this instrument as of the date first set forth
above.

    

    
      
        
          
            
              
                
                  	 
      	
                          GRANTOR:

                        
	 
      	 
      	 
      
	 
      	
                          HUNTER
      BATES MINING CORPORATION

                        
	 
      	 
      	 
      
	 
      	
                          By:

                        	
                          /s/
      Mark D. Dacko

                        
	 
      	
                          

                            Mark
      D. Dacko, Chief
      Financial
Officer

                          

                        

                

              

            

          

        

      

    

    

    
      
        
          
            	
                    STATE
      OF MINNESOTA

                  	
                    )

                  
	 
      	
                    )
      ss.

                  
	
                    COUNTY
      OF HENNEPIN

                  	
                    )

                  

          

        

      

    

    

    The foregoing instrument was
acknowledged before me this 11th
day of September, 2008, by Mark D. Dacko, as CFO of Hunter Bates Mining
Corporation, a Minnesota corporation, on behalf of the corporation.

    

    
      
        	 
      	
                /s/ Cynthia Koosmann

              
	 
      	
                Notary
      PublicEXHIBIT
4.8

     

    THIS
NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER THE
SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION (TOGETHER, THE “SECURITIES
LAWS”) AND MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED OR
ENCUMBERED IN THE ABSENCE OF COMPLIANCE WITH SUCH SECURITIES LAWS AND UNTIL THE
ISSUER THEREOF SHALL HAVE RECEIVED AN OPINION FROM COUNSEL ACCEPTABLE TO IT THAT
THE PROPOSED DISPOSITION WILL NOT VIOLATE ANY APPLICABLE SECURITIES
LAWS.

     

    CERTIFICATE
NO: 2

     

    PROMISSORY
NOTE

     

    
      	
              $2,500,000.00

            	
              September
      28, 2009

            

    

       

    FOR VALUE RECEIVED, Hunter
Bates Mining Corporation, a corporation organized and existing under the laws of
the State of Minnesota (“Issuer”), hereby
unconditionally promises to pay to the order of Wits Basin Precious Minerals
Inc., a Minnesota corporation, or its successors and assigns (the “Holder”), the principal sum of
Two Million Five Hundred Thousand Dollars and 00/100 Cents ($2,500,000.00) (the
“Principal”) plus
interest on the unpaid Principal at a per annum rate equal to six percent (6%)
compounded annually.  Interest shall be calculated on a basis of the
actual number of days elapsed over a year of 365 days, commencing as of the date
hereof.

     

    1.           Payment of Principal and
Interest.  Subject to acceleration or earlier payment as
provided for elsewhere in this Note, the Principal, and any accrued and unpaid
interest thereon, shall be payable in installments of $150,000, commencing on
December 31, 2009 and then quarterly (on March 31, June 30 and September 30)
thereafter for the next 15 calendar quarters, with all remaining outstanding
Principal and interest accrued and unpaid thereon being due and payable on
December 31, 2013 (the “Maturity
Date”).  Issuer shall make all payments payable in cash under
this Note in lawful money of the United States.  All payments paid by
Issuer to Holder under this Note shall be applied in the following order of
priority:  (a) to amounts, other than Principal and interest, due to
Holder pursuant to this Note for all costs of collection of any kind, including
reasonable attorneys’ fees and expenses; (b) to accrued but unpaid interest on
this Note; and (c) to the unpaid Principal.  If Issuer makes any
payment of Principal, interest or other amounts upon the indebtedness by check,
draft, or other remittance, Holder shall not be deemed to have received such
payment until Holder actually receives the payment instrument.

     

    2.           Acceleration of Maturity
Date.  If, prior to the satisfaction in full of Issuer’s
payment obligations under this Note, Issuer either (i) generates net revenues in
excess of $2,000,000 during any fiscal year, (ii) completes one or more
financings in the aggregate amount of $10,000,000 or (iii) completes a Change in
Control (as defined herein), Holder shall be entitled, at its option and with
written notice delivered to Issuer, accelerate all outstanding Principal and
interest accrued and unpaid thereon to be immediately due and
payable.  For purposes of this Note, a “Change in Control” shall mean:
(a) the acquisition, directly or indirectly, following the date hereof by any
person (as such term is defined in Section 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended), in one transaction or a series of related
transactions, of securities of the Company representing in excess of fifty
percent (50%) or more of the combined voting power of the Company’s then
outstanding securities if such person or his or its affiliate(s) do not own in
excess of 50% of such voting power on the date of this Note; or (b) the future
disposition by Issuer (whether direct or indirect, by sale of assets or stock,
merger, consolidation or otherwise) of all or substantially all of its business
and/or assets in one transaction or series of related transactions (other than a
merger effected exclusively for the purpose of changing the domicile of
Issuer).

     

    
      
         

      

      
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    3.           Prepayment.  This
Note may be prepaid in cash or other immediately available funds, in whole or in
part, by Issuer at any time and from time to time, without premium or penalty (a
“Prepayment”).

     

    4.           Waiver.  Payment
of Principal and interest due under this Note shall be made without presentment
or demand.  The Issuer and all others at any time liable directly or
indirectly (including, without limitation, the Issuer, any co-makers, endorsers,
sureties and guarantors, all of which are referred to herein as “Parties”), severally waive
presentment, demand and protest, notice of protest, demand, and dishonor, and
nonpayment of this Note, and all diligence in collection and agree to pay all
costs of collection when incurred, including reasonable attorneys’ fees, and to
perform and comply with each of the covenants, conditions, provisions, and
agreements of the Issuer contained in every instrument now evidencing the
indebtedness.  No release by Holder of any security for payment of the
Note or any modification or restructuring in respect of any lien or security
interest held or at any time obtained or acquired by Holder for payment of such
Note shall operate to release, discharge, impair or alter the liability of any
Party liable at any time directly or indirectly for payment of such
indebtedness.

     

    5.           Renewal and
Modification.  Issuer further agrees that the Note may be from
time to time, extended, renewed, modified, rearranged, or evidenced by one or
more other notes or obligations in substitution for this Note and upon and for
such term or terms agreed to by Issuer and Holder in writing, and with or
without notice to other Parties.  Issuer agrees that upon and after
such extension, renewal, modification, rearrangement, substitution, or other
change in form of the indebtedness, each of the other Parties shall remain
liable in respect of the indebtedness so renewed, extended, modified,
rearranged, or otherwise evidenced in the same capacity and to the same extent
as prior thereto.  No release or discharge (in whole or in part) of
any Party hereto by Holder shall in any manner impair, release, discharge, or
alter the liability of any other Party.

     

    6.           Events of
Default.  Any one or more of the following events shall
constitute an event of default (each, an “Event of Default”) under this
Note: (a) Issuer shall fail to pay when due any Principal or interest on this
Note and such failure is not remedied within five (5) days after written notice
thereof by Holder; (b) Issuer’s assignment for the benefit of creditors, or
filing of a petition in bankruptcy or for reorganization or to effect a plan or
arrangement with creditors; (c) Issuer’s application for, or voluntary
permission of, the appointment of a receiver of trustee for any or all Company
property; (d) any action or proceeding described in the foregoing paragraphs (b)
or (c) is commenced against Issuer and such action or proceeding is not vacated
within sixty (60) days of its commencement; and (e) Issuer’s dissolution or
liquidation.

     

    7.           Rights and
Remedies.  Upon the occurrence, and during the continuation, of
an Event of Default (a) all Principal and accrued and unpaid interest thereon
shall, at the option of Holder, and upon written notice to Holder delivered to
Issuer, immediately become due and payable, (b) Holder shall have all rights,
powers and remedies available to it under any applicable law or as otherwise
provided at law or in equity; and (c) Issuer shall pay to Holder, in addition to
the sums stated above, the costs of collection, regardless of whether litigation
is commenced, including reasonable attorneys’ fees.

     

    Holder
may employ an attorney to enforce its rights and remedies hereunder and Issuer
hereby agrees to pay Holder’s reasonable attorneys’ fees and other reasonable
expenses, including reasonable expenses relating to any assistance provided by
Holder to Issuer in resolving such defaults and amounts incurred by Holder in
exercising any of Holder’s rights and remedies upon an Event of
Default.  Holder’s rights and remedies under this Note shall be
cumulative.  Holder shall have all other rights and remedies not
inconsistent herewith as provided under the Uniform Commercial Code as in effect
in the State of Minnesota, or otherwise by law, or in equity.  No
exercise by Holder of one right or remedy shall be deemed an election, and no
waiver by Holder of any Event of Default shall be deemed a continuing
waiver.  No delay by Holder shall constitute a waiver, election, or
acquiescence by it.

     

    
      
         

      

      
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    8.           Revival and Reinstatement of
Note.  To the extent that any payment to Holder or any payment
or proceeds of any collateral received by Holder in reduction of the
indebtedness is subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, to Issuer (or
Issuer’s successor) as a debtor-in-possession, or to a receiver or any other
party under any bankruptcy law, state or federal law, common law or equitable
cause, then the portion of the indebtedness intended to have been satisfied by
such payment or proceeds shall remain due and payable hereunder, be evidenced by
this Note, and shall continue in full force and effect as if such payment or
proceeds had never been received by Holder whether or not this Note has been
marked “paid” or otherwise canceled or satisfied or has been delivered to
Issuer, and in such event Issuer shall be immediately obligated to return the
original Note to Holder and any marking of “paid” or other similar marking shall
be of no force and effect.

     

    9.           Authority.  Issuer
warrants and represents that the persons or officers who are executing this Note
on behalf of Issuer have full right, power and authority to do so, and that this
Note constitutes a valid and binding document, enforceable against Issuer in
accordance with its terms, and that no other person, entity, or party is
required to sign, approve, or consent to, this Note.

     

    10.           Governing Law; Consent to
Forum.  This Note shall be governed by the laws of the State of
Minnesota without giving effect to any choice of law rules thereof;

     

    11.           Transfer of
Note.  Issuer shall not transfer any obligations hereunder
without Holder’s prior written consent, which may be withheld in Holder’s sole
and absolute discretion.  With the prior written consent of Issuer,
which shall not be unreasonably withheld, conditioned, or delayed, Holder may
participate, sell, assign, transfer or otherwise dispose of all or any portion
of its interest in this Note (including Holder’s rights, title, interests,
remedies, powers and duties hereunder) to a purchaser, participant, any
syndicate, or any other Person (each, a “Note
Purchaser”).  In connection with any such disposition (and
thereafter), Holder may, with adequate safeguards of confidentiality in a manner
satisfactory to Issuer, disclose any financial information Holder may have
concerning Issuer to any such Note Purchaser or potential Note
Purchaser.

     

    12.           Further
Assurances.  Issuer agrees to execute and deliver such further
documents and to do such other acts as Holder may request in order to effect or
carry out the terms of this Note and the due performance of Issuer’s obligations
hereunder and thereunder.

     

    13.           Miscellaneous.

     

    (a)           Issuer
hereby waives presentment, demand, protest, and notice of dishonor and
protest.  No waiver of any right or remedy of the Holder under this
Note shall be valid unless in a writing executed by the Holder and any such
waiver shall be effective only in the specific instance and for the specific
purpose given.  All rights and remedies of the Holder of this Note
shall be cumulative and may be exercised singly, concurrently, or
successively.

     

    (b)           Unless
otherwise provided herein, any notice required or permitted to be given
hereunder shall be given by Issuer to the Holder or the Holder to Issuer in
accordance with the addresses provided in the initial paragraph
hereof.

     

    (c)           Any
provision of this Note that is prohibited or unenforceable in any jurisdiction
shall be ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof in that jurisdiction or
affecting the validity or enforceability of such provision in any other
jurisdiction.

     

    
      
         

      

      
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    (d)           The
terms “include”, “including” and similar terms shall be construed as if followed
by the phrase “without being limited to.”  The term “or” has, except
where otherwise indicated, the inclusive meaning represented by the phrase
“and/or.”  Words of masculine, feminine or neuter gender shall mean
and include the correlative words of the other genders, and words importing the
singular number shall mean and include the plural number, and vice
versa.  All article, section, schedule, and exhibit captions are used
for convenient reference only and in no way define, limit or describe the scope
or intent of, or in any way affect, any such article, section, schedule, or
exhibit.  Unless the context of this Note clearly requires otherwise,
references to the plural include the singular, references to the singular
include the plural.  Any reference in this Note to this Note shall
include all alterations, amendments, changes, extensions, modifications,
renewals, replacements, substitutions, and supplements thereto, as applicable.
An Event of Default shall “continue” or be “continuing” until such Event of
Default has been waived in writing by Holder or completely cured in accordance
with the terms of this Note.

     

    [The
remainder of this page is intentionally blank.  Signature page
follows.]

     

    
      
         

      

      
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    IN WITNESS WHEREOF, Issuer has
executed and delivered this Note as of the date first stated above.

     

    
    

     

    
      	 	      
              ISSUER:

              

              HUNTER
      BATES MINING CORPORATION

              

              By: /s/ Mark D.
      Dacko                            
      

              Name: Mark D.
      Dacko                             
      

              Title: Chief Financial
      Officer                  
      

            

    

     

     

    
      Signature Page – Promissory
Note

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