Document:

Exhibit
        10.2

    

     

    NEITHER
      THIS CONVERTIBLE NOTE NOR THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION
      HEREOF HAVE 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.
      TRANSFER OF THIS CONVERTIBLE NOTE IS ALSO RESTRICTED BY THE CONVERTIBLE NOTES
      PURCHASE AGREEMENT REFERRED TO HEREIN. 

     

    THE
      PAYMENT AND PERFORMANCE OF THIS CONVERTIBLE NOTE IS SUBJECT TO THE TERMS AND
      CONDITIONS OF THAT CERTAIN CONVERTIBLE NOTES PURCHASE AGREEMENT ENTERED INTO
      AS
      OF APRIL 10, 2007, BY THE HOLDER AND ISSUER.

     

    CERTIFICATE
      NO: __

     

    CONVERTIBLE
      PROMISSORY NOTE

     

    
      	
              $________________

            	
              ____________,
                2007

            

    

    

    FOR
      VALUE RECEIVED,
      Wits
      Basin Precious Minerals Inc., a corporation organized and existing under the
      laws of the State of Minnesota (“Issuer”),
      hereby unconditionally promises to pay to the order of China Gold, LLC, a Kansas
      limited liability company, or its successors and assigns (the “Holder”)
      on or
      before _________, ____ (the “Maturity
      Date”),
      the
      principal sum of up to ________________________________ ($_______________)
      (the
“Principal”),
      together with accrued and unpaid interest thereon, as provided herein, from
      the
      date set forth in Section
      2
      below
      until fully paid (the “Indebtedness”),
      all
      without relief from valuation or appraisement laws. This Convertible Promissory
      Note (the “Note”)
      is
      issued pursuant to that certain Convertible Notes Purchase Agreement dated
      of
      even date herewith by and between Issuer and Holder (as amended, modified,
      or
      replace from time to time, the “Convertible
      Notes Purchase Agreement”).

     

    1. Payment
      of Principal and Interest.
      Subject
      to acceleration or earlier required payment as provided for elsewhere in this
      Note, the Convertible Notes Purchase Agreement or any of the other agreements,
      documents, and instruments relating to any of the Indebtedness or any security
      therefor that are required by the Convertible Notes Purchase Agreement to be
      executed and delivered to or for the benefit of Holder (collectively, together
      with this Note and the Convertible Notes Purchase Agreement, the “Investment
      Documents”),
      the
      principal balance of this Note, and any accrued and unpaid interest thereon,
      shall be due and payable as follows:

     

    (a) Beginning
      in the calendar month during which this Note is issued, Issuer shall make
      payments of accrued and unpaid interest, in arrears, on the last calendar day
      of
      each month until such time all amounts due under this Note, including Principal
      and accrued and unpaid interest, are paid in full or the Note is otherwise
      converted pursuant to the terms hereof. All payments of Principal and interest
      on this Note shall be made at such place as the Holder shall designate to Issuer
      in writing. In the event the last calendar day of the month is a non-Business
      Day, the payment for such month shall be due on the next Business Day following
      such last calendar day of the month. “Business
      Day”
means
      any day other than a Saturday, Sunday or legal holiday in the State of Kansas;
      and

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (b) The
      balance of all unpaid Principal and interest thereon and all other amounts
      owed
      pursuant to this Note shall be due and payable on 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 and under
      the other Investment Documents shall be applied in the following order of
      priority: (a) to amounts, other than principal and interest, due to Holder
      pursuant to this Note; (b) to accrued but unpaid interest on this Note; and
      (c)
      to the unpaid principal balance of this Note. 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. Calculation
      of Interest.
      Interest shall accrue on the outstanding principal balance at the end of each
      day on which any amount is outstanding under this Note at the rate of 8.25%
      (the
“Interest
      Rate”)
      per
      annum. 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.

     

    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 after the first anniversary
      of
      the date hereof, without premium or penalty, upon thirty (30) days’ advance
      written notice to Holder. At Holder’s option, any payments on this Note shall be
      applied first to pay Holder for all costs of collection of any kind, including
      reasonable attorneys’ fees and expenses, next to the payment of interest accrued
      through the date of payment, and thereafter to the payment of Principal.

     

    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 Indebtedness 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 Indebtedness 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 Indebtedness 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.

     

     

    
      
        
        

      

      
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              6.

            	
              Conversion.

            

    

     

    6.1 Optional
      Conversion.
      From
      and after the expiration of one hundred twenty (120) days from the date hereof,
      at any time while any portion of the Principal or accrued and unpaid interest
      under this Note is outstanding, the Holder shall have the right, at the Holder’s
      option, to convert (an “Optional
      Conversion”)
      all or
      any portion of the unpaid Principal and accrued interest under this Note (the
      “Conversion
      Amount”)
      into
      the number of shares of Issuer’s common stock (the “Common
      Stock”)
      computed by dividing the Conversion Amount by a conversion price of $1.00 per
      share (the “Conversion
      Price”).
      The
      Conversion Price shall be subject to adjustment from time to time pursuant
      to
      Section 7 hereof.

     

    6.2 Effect
      and Procedure of Optional Conversion.
      An
      Optional Conversion shall occur pursuant to the terms of this Note by Holder’s
      delivery to Issuer at its principal office a notice of Optional Conversion
      identifying the amount of the Optional Conversion (a “Notice
      of Optional Conversion”)
      (by
      facsimile or other reasonable means of communication) prior to 5:00 p.m. local
      time in Minneapolis, Minnesota on the Conversion Date. Holder shall not be
      required to physically surrender this Note to Issuer unless the entire unpaid
      Principal amount of this Note, together with accrued and unpaid interest, is
      so
      converted or otherwise paid in full. The Holder and Issuer shall maintain
      records showing the Principal and accrued and unpaid interest under the Note
      so
      converted and the dates of such conversions or shall use such other method,
      reasonably satisfactory to the Holder and Issuer, so as not to require physical
      surrender of this Note upon each such Optional Conversion. In the event of
      any
      dispute or discrepancy, such records of Issuer shall be controlling and
      determinative in the absence of manifest error. Notwithstanding the foregoing,
      if any portion of this Note is converted as aforesaid, the Holder may not
      transfer this Note unless the Holder first physically surrenders this Note
      to
      Issuer, whereupon Issuer will forthwith issue and deliver upon the order of
      the
      Holder a new note of like tenor, registered as the Holder (upon payment by
      the
      Holder of any applicable transfer taxes) may request, representing in the
      aggregate the remaining unpaid Principal and any unpaid and accrued interest
      of
      this Note. The Holder and any assignee, by acceptance of this Note, acknowledge
      and agree that, by reason of the provisions of this paragraph, following
      conversion of a portion of this Note, the unpaid and unconverted Principal
      amount of this Note may be less than the amount stated on the face hereof.
      

     

    Upon
      receipt of any Notice of Optional Conversion, Issuer shall, within five (5)
      Business Days, issue and deliver to such Holder at the address designated by
      such Holder a certificate or certificates for the number of shares of Common
      Stock the Holder shall be entitled to upon such Optional Conversion (bearing
      such legends as are required by applicable state and federal securities laws
      in
      the opinion of counsel to Issuer). The person or persons entitled to receive
      the
      shares of Common Stock issuable upon such Optional Conversion shall be treated
      for all purposes as the record holder or holders of such shares of Common Stock
      as of the Conversion Date. Upon Optional Conversion of all or a portion of
      this
      Note, Issuer will be forever released from all of its obligations and
      liabilities under this Note with regard to that portion of the Principal and
      accrued interest being converted, including without limitation the obligation
      to
      pay such portion of the Principal and accrued interest.

     

     

    
      
        
        

      

      
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    6.3
      Automatic
      Conversion.
      All
      unpaid Principal and accrued and unpaid interest on this Note shall be
      automatically converted (an “Automatic
      Conversion”),
      effective immediately prior to the effective date of Issuer’s proposed merger
      transaction with Easyknit Enterprises Holdings Limited (the “Merger”),
      into
      the number of shares of Common Stock computed by dividing such outstanding
      amount by the then current Conversion Price.

     

    6.4
      Effect
      and Procedure of Automatic Conversion.
      Upon
      Automatic Conversion, Issuer will be forever released from all of its
      obligations and liabilities to Holder under this Note, including without
      limitation the obligation to pay the principal amount and accrued interest
      under
      the Note. Upon Holder’s surrender of this Note to Issuer at its principal
      office, Issuer shall, at its expense and as soon as practicable thereafter,
      issue and deliver to Holder one or more certificates representing that number
      of
      shares of Common Stock to which Holder is entitled, or, as applicable capital
      stock of the surviving company to the Merger pursuant to Section
      6.3
      hereof
      (in any case, bearing such legends as are required by applicable state and
      federal securities laws in the opinion of counsel to Issuer). The Automatic
      Conversion of this Note shall be deemed to have been made immediately prior
      to
      the effective time of the Merger, and the person or persons entitled to receive
      Common Stock upon such conversion shall be treated for all purposes as the
      record holder(s) of such Common Stock as of such date. 

     

    6.5
      No
      fractional shares.
      No
      fractional shares shall be issued upon any conversion of this Note. In lieu
      of
      any fractional share of Common Stock to which Holder would otherwise be
      entitled, an amount in cash equal to such fraction multiplied by the fair market
      value of a share of Common Stock, such fair market value to be determined as
      follows (as applicable): (a) if the Common Stock is traded on an exchange or
      is
      quoted on The NASDAQ National Market, NASDAQ SmallCap Market or the OTC Bulletin
      Board, then the average closing or last sale prices, respectively, reported
      for
      the date of conversion; (b) if the Common Stock is traded in the
      over-the-counter market, then the average of the closing bid and asked prices
      reported on the date of conversion; or (c) if the Common Stock is not publicly
      traded and there has been no Qualifying Sale, then fair market value of such
      stock will be determined by Issuer’s board of directors, acting in good faith
      utilizing customary business valuation criteria and methodologies (without
      discount for lack of marketability or minority interest).

     

    
      	 	
              7.

            	
              Conversion
                Price Adjustments.

            

    

     

    7.1 Adjustment
      for Stock Splits or Combinations.
      In the
      event of: (a) the payment of dividends on any of Issuer’s capital stock payable
      in Common Stock or securities convertible into or exercisable for Common Stock;
      (b) the subdivision of Issuer’s outstanding shares of Common Stock into a
      greater number of shares; or (c) the combination of Issuer’s outstanding shares
      of Common Stock, by reclassification or otherwise; then the Conversion Price
      shall be adjusted proportionately to reflect the reduction or increase in the
      value of each share of Common Stock.

     

     

    
      
        
        

      

      
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    7.2 Notice
      of Adjustment.
      Upon
      any adjustment of the Conversion Price, Issuer shall give written notice thereof
      within thirty (30) days, by first-class mail, postage prepaid, addressed to
      Holder as shown on Issuer’s books, which notice shall state the adjusted
      Conversion Price and set forth in reasonable detail the method of calculation
      and the facts upon which such calculation is based.

     

    7.3 Effect
      of Reorganization, Reclassification, Merger, Etc.
      If at
      any time Issuer: (a) reorganizes its capital stock (other than by the issuance
      of shares of Common Stock in subdivision of outstanding shares of Common Stock,
      and other than by a share combination, as provided for in Section
      7.1);
      (b)
      consolidates or merges with another corporation, or sells, conveys, leases
      or
      otherwise transfers all or substantially all of its property to any other
      corporation or entity, which transaction is effected in a manner such that
      the
      holders of Common Stock shall be entitled to receive cash, stock, securities,
      ownership interest, or assets with respect to or in exchange for Common Stock;
      or (c) pays a dividend or makes any other distribution upon any class of its
      capital stock, which dividend or distribution is payable in Issuer securities
      or
      other Issuer property (other than cash); then, as a part of such transaction,
      lawful provision shall be made so that Holder shall have the right thereafter
      to
      receive, upon conversion of this Note, the number of shares of stock, ownership
      interests, or other securities or property of the Issuer or of the successor
      corporation or entity resulting from such transaction, or of the corporation
      or
      entity to which the Issuer property has been sold, conveyed, leased or otherwise
      transferred, as the case may be, which Holder would have been entitled to
      receive upon transaction if this Note had been converted immediately prior
      thereto. In any such case, appropriate adjustments (as determined by the
      Issuer’s board of directors) shall be made in the application of the provisions
      set forth in this Note (including an adjustment to the Conversion Price) so
      that
      the provisions set forth herein shall thereafter be applicable, as near as
      reasonably may be, in relation to any shares, ownership interests, or other
      property thereafter deliverable upon the conversion of this Note as if the
      Note
      had been converted immediately prior to such transaction and Holder had carried
      out the terms of the exchange as provided for by such transaction. The Issuer
      shall not effect any such capital reorganization, consolidation, merger or
      transfer unless, upon or prior to the consummation thereof, the successor
      corporation(s) or entity(ies) to which Issuer property has been sold, conveyed,
      leased or otherwise transferred shall assume by written instrument the
      obligation to deliver to Holder such shares of stock, ownership interests,
      securities, cash, or property which Holder is entitled to receive under the
      foregoing provisions of this Section
      7.3.

     

    
      	 	
              7.4

            	
              Subsequent
                Issuance or Sale of Common Stock.

            

    

     

    (a) In
      the
      event Issuer shall issue, after the date hereof and while this Note remains
      outstanding (a “Dilutive
      Issuance”),
      (i)
      any additional shares of Common Stock or other class of the Issuer’s common
      stock (“Additional
      Shares”)
      or
      (ii) options, warrants or other securities that can, by their terms, be
      converted into Common Stock or other classes of Issuer’s common stock
      (“Additional
      Option Shares”)
      for
      consideration per share less than the Conversion Price, the Conversion Price
      shall automatically be adjusted to a price (calculated to the nearest cent)
      determined by dividing:

     

     

    
      
        
        

      

      
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    (i)
      an
      amount equal to the sum of (x) the number of shares of Common Stock outstanding
      immediately prior to such issue or sale multiplied by the Conversion Price,
      (y)
      the number of shares of Common Stock issuable upon conversion or exchange of
      any
      obligations or of any shares of stock of Issuer outstanding immediately prior
      to
      such issue or sale multiplied by the Conversion Price, and (z) an amount equal
      to the aggregate “consideration actually received” by Issuer pursuant to such
      Dilutive Issuance, by

     

    (ii)
      the
      sum of the number of shares of Common Stock outstanding immediately after such
      issue or sale and the number of shares of Common Stock issuable upon conversion
      or exchange of any obligations or of any shares of stock of Issuer outstanding
      immediately after such issue or sale.

     

    Issuer
      shall immediately notify the holder of such adjusted Conversion
      Price.

     

    (b) If
      Issuer
      shall sell and issue shares of Common Stock or other class of Issuer’s common
      stock, or rights, options, warrants, or convertible securities containing the
      right to subscribe for or purchase shares of Common Stock or other class of
      Issuer’s common stock, for consideration consisting, in whole or in part, of
      property other than cash or its equivalent, then in determining the total
      consideration per share paid to Issuer for the purposes of this Section
      7.4,
      the
      board of directors of Issuer shall determine, in its discretion, the fair value
      of said property and such determination, if made in good faith, shall be binding
      upon the Holder.

     

    For
      purposes of this Section
      7.4,
      the
      following provisions will be applicable:

     

    (A) In
      the
      case of an issue or sale for cash of shares of Common Stock, the “consideration
      actually received’” by Issuer relating to a Dilutive Issuance therefore shall be
      deemed to be the amount of cash received in such Dilutive Issuance, before
      deducting therefrom any commissions or expenses paid by Issuer.

     

    (B) In
      case
      of a Dilutive Issuance (otherwise than upon conversion or exchange of
      obligations or shares of stock of Issuer) of additional shares of Common Stock
      for a consideration other than cash or a consideration partly other than cash,
      the amount of the consideration other than cash received by Issuer for such
      shares, then the board of directors shall determine, in its discretion, the
      fair
      the value of such consideration, which, if made in good faith, shall be binding
      upon the Holder.

     

     

    
      
        
        

      

      
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    (C) In
      case
      of a Dilutive Issuance by Issuer in any manner of any rights to subscribe for
      or
      to purchase shares of Common Stock, or any option for the purchase of shares
      of
      Common Stock or stock convertible into Common Stock, all shares of Common Stock
      or stock convertible into Common Stock to which the holders of such rights
      or
      options shall be entitled to subscribe for or purchase pursuant to such rights
      or options shall be deemed “outstanding” as of the date of the offering of such
      rights or the granting of such options, as the case may be, and the minimum
      aggregate consideration named in such rights or options for the shares of Common
      Stock or stock convertible into Common Stock covered thereby, plus the
      consideration, if any, received by Issuer for such rights or options, shall
      be
      deemed to be the “consideration actually received” by Issuer (as of the date of
      the offering of such rights or the granting of such options, as the case may
      be)
      for the issuance of such shares.

     

    (D) In
      case
      of a Dilutive Issuance by Issuer in any manner of any obligations or of any
      shares of stock of Issuer that shall be convertible into or exchangeable for
      Common Stock, all shares of Common Stock issuable upon the conversion or
      exchange of such obligations or shares shall be deemed issued as of the date
      such obligations or shares are issued, and the amount of the “consideration
      actually received” by Issuer for such additional shares of Common Stock shall be
      deemed to be the total of (X) the amount of consideration received by Issuer
      upon the issuance of such obligations or shares, as the case may be, plus (Y)
      the minimum aggregate consideration, if any, other than such obligations or
      shares, receivable by Issuer upon such conversion or exchange, except in
      adjustment of dividends.

     

    (E) The
      amount of the “consideration actually received” by Issuer upon the issuance of
      any rights or options referred to in subparagraph (C) above or upon the issuance
      of any obligations or shares which are convertible or exchangeable as described
      in subparagraph (D) above, and the amount of the consideration, if any, other
      than such obligations or shares so convertible or exchangeable, receivable
      by
      Issuer upon the exercise, conversion or exchange thereof shall be determined
      in
      the same manner provided in subparagraphs (A) and (B) above with respect to
      the
      consideration received by Issuer in case of the issuance of additional shares
      of
      Common Stock; provided,
      however,
      that if
      such obligations or shares of stock so convertible or exchangeable are issued
      in
      payment or satisfaction of any dividend upon any stock of Issuer other than
      Common Stock, the amount of the “consideration actually received” by Issuer upon
      the original issuance of such obligations or shares or stock so convertible
      or
      exchangeable shall be deemed to be the value of such obligations or shares
      of
      stock, as of the date of the adoption of the resolution declaring such dividend,
      as determined by the board of directors of Issuer at or as of that date. On
      the
      expiration of any rights or options referred to in subparagraph (C), or the
      termination of any right of conversion or exchange referred to in subparagraph
      (D), or any change in the number of shares of Common Stock deliverable upon
      exercise of such options or rights or upon conversion of or exchange of such
      convertible or exchangeable securities, the Conversion Price shall forthwith
      be
      readjusted to such Conversion Prices as would have obtained had the adjustments
      made upon the issuance of such options, rights or convertible or exchangeable
      securities been made upon the basis of the delivery of only the number of shares
      of Common Stock actually delivered or to be delivered upon the exercise of
      such
      rights or options or upon the conversion or exchange of such
      securities.

     

     

    
      
        
        

      

      
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    8. 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 fails to timely pay as and when due any monetary
      obligation under this Note in accordance with the terms hereof; (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; (e) Issuer’s dissolution or liquidation; and (f) an event of
      default under any other Investment Document shall have occurred.

     

    9. Rights
      and Remedies.
      Upon
      the occurrence, and during the continuation, of an Event of Default (a) all
      Indebtedness and all other amounts due and owing under this Note shall (at
      the
      option of Holder) immediately become due and payable without demand and without
      notice to Issuer, (b) Holder shall have all rights, powers and remedies set
      forth in the Investment Documents, as well as any and all rights and remedies
      available to it under any applicable law or as otherwise provided at law or
      in
      equity; (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; and (d) notwithstanding any other
      provision of this Note, during the period of existence of such Event of Default,
      upon written notice from Holder, interest on the Indebtedness shall accrue
      and
      be paid, not at the Interest Rate, but at a default interest rate that is equal
      to 11.25% per annum.

    

    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 and the other Investment Documents
      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 Kansas, 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.

    

    10. 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.

     

     

    
      
        
        

      

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

     

    12. Governing
      Law; Consent to Forum.
      This
      Note shall be governed by the laws of the State of Kansas without giving effect
      to any choice of law rules thereof; provided,
      however,
      that if
      any of the collateral securing the Indebtedness shall be located in any
      jurisdiction other than Kansas, the laws of such jurisdiction shall govern
      the
      method, manner and procedure for foreclosure of Holder’s security interest, lien
      or mortgage upon such collateral and the enforcement of Holder’s other remedies
      in respect of such collateral to the extent that the laws of such jurisdiction
      are different from or inconsistent with the laws of Kansas. AS PART OF THE
      CONSIDERATION FOR NEW VALUE THIS DAY RECEIVED, ISSUER HEREBY CONSENTS TO THE
      JURISDICTION OF ANY STATE COURT LOCATED WITHIN JOHNSON COUNTY, KANSAS OR FEDERAL
      COURT IN THE DISTRICT OF KANSAS, AND WAIVES PERSONAL SERVICE OF ANY AND ALL
      PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY
      CERTIFIED OR REGISTERED MAIL AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED
      UPON ACTUAL RECEIPT THEREOF. ISSUER WAIVES ANY OBJECTION TO JURISDICTION AND
      VENUE OF ANY ACTION INSTITUTED AGAINST IT AS PROVIDED HEREIN AND AGREES NOT
      TO
      ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE. ISSUER FURTHER AGREES
      NOT TO ASSERT AGAINST HOLDER (EXCEPT BY WAY OF A DEFENSE OR COUNTERCLAIM IN
      A
      PROCEEDING INITIATED BY HOLDER) ANY CLAIM OR OTHER ASSERTION OF LIABILITY WITH
      RESPECT TO THIS NOTE, THE OTHER INVESTMENT DOCUMENTS, HOLDER’S CONDUCT OR
      OTHERWISE IN ANY JURISDICTION OTHER THAN THE FOREGOING
      JURISDICTIONS.

     

    13. WAIVER
      OF JURY TRIAL AND COUNTERCLAIMS.
      TO THE
      FULLEST EXTENT PERMITTED BY LAW, AND AS SEPARATELY BARGAINED-FOR CONSIDERATION
      TO HOLDER, ISSUER HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY (WHICH HOLDER ALSO
      WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR IN ANY COUNTERCLAIM OF ANY KIND
      ARISING OUT OF OR OTHERWISE RELATING TO THIS NOTE, THE INDEBTEDNESS, THE
      COLLATERAL SECURING THE INDEBTEDNESS, OR THE HOLDER’S CONDUCT IN RESPECT OF ANY
      OF THE FOREGOING.

     

    14. 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.

     

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    15. 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 other Investment Documents and the due performance of Issuer’s obligations
      hereunder and thereunder.

     

    16. Relationship
      to Security Agreement.
      This
      Note shall be entitled to the benefits of, shall be construed in accordance
      with
      any Security Agreement securing the Indebtedness.

     

    17. Miscellaneous.

     

    (a) Time
      is
      of the essence with respect to this Note.

     

    (b) 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. 

     

    (c) 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 the Company
      in
      accordance with the Convertible Notes Purchase Agreement.

     

    (d) 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.

     

    (e) This
      Note
      and the other Investment Documents collectively: (i) constitute the final
      expression of the agreement between Issuer and Holder concerning the
      Indebtedness; (ii) contain the entire agreement between Issuer and Holder
      respecting the matters set forth herein and in the other Investment Documents;
      and (iii) may not be contradicted by evidence of any prior or contemporaneous
      oral agreements or understandings between Issuer and Holder. Neither this Note
      nor any of the terms hereof may be terminated, amended, supplemented, waived
      or
      modified orally, but only by an instrument in writing executed by the party
      against which enforcement of the termination, amendment, supplement, waiver
      or
      modification is sought. 

     

    (f) If
      there
      is a conflict between or among the terms, covenants, conditions or provisions
      of
      this Note and the other Investment Documents, then any term, covenant, condition
      and/or provision that Holder may elect to enforce from time to time so as to
      enlarge the interest of Holder in its security for the Indebtedness, afford
      Holder the maximum financial benefits or security for the Indebtedness, and/or
      provide Holder the maximum assurance of payment of the Indebtedness and the
      Indebtedness in full, shall control. ISSUER ACKNOWLEDGES AND AGREES THAT IT
      HAS
      BEEN PROVIDED WITH SUFFICIENT AND NECESSARY TIME AND OPPORTUNITY TO REVIEW
      THE
      TERMS OF THIS NOTE AND EACH OF THE INVESTMENT DOCUMENTS WITH ANY AND ALL COUNSEL
      IT DEEMS APPROPRIATE, AND THAT NO INFERENCE IN FAVOR OF, OR AGAINST, HOLDER
      OR
      ISSUER SHALL BE DRAWN FROM THE FACT THAT EITHER SUCH PARTY HAS DRAFTED ANY
      PORTION OF THIS NOTE OR ANY OF THE INVESTMENT DOCUMENTS.

     

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (g) 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 or in the Investment
      Documents to this Note or to any of the Investment Documents shall include
      all
      alterations, amendments, changes, extensions, modifications, renewals,
      replacements, substitutions, and supplements thereto and thereof, 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 the applicable Investment Documents.

     

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

     

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

     

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

     

    
      	 	 	 
	 	ISSUER:
	 	 
	 	WITS
              BASIN
              PRECIOUS MINERALS INC.
	 
 	 
 	 
 
	 	By:  	 
	 	 	
              

            
	 	Name: 	 
	 	 Title:	 
	 	 

    

    
 

    Signature
      Page—Convertible Promissory Note
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    NOTICE
      OF CONVERSION

     

    (To
      Be
      Signed Only Upon Conversion of Note)

     

    To
      Wits
      Basin Precious Minerals Inc.

     

    The
      undersigned, the holder of the Note of Wits Basin Precious Minerals Inc. dated
      April 10, 2007, hereby issues this Notice of Conversion to convert $_________
      of
      unpaid Principal and accrued and unpaid interest under such Note into Common
      Stock of Wits Basin Precious Minerals Inc., and requests that the certificates
      for such shares be issued in the name, and delivered to the address set forth
      below:

     

     

    
      	 
	 Exact Name in which
              shares are to be registered
	 	 
	 
	 	 
	 
	Address, city, state and zip
              code	 
	 	 
	 	 
	 Dated: ________________	 

    

     

    
      	 	 HOLDER:
	 	 
	 	 
	 	Signature
	 	 
	 	Name (print or type)
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 (Address)PLEDGE
      AGREEMENT

     

    This
      PLEDGE AGREEMENT (this “Agreement”)
      made
      this 10th day of April, 2007, between Wits Basin Precious Minerals Inc., a
      Minnesota corporation (“Pledgor”),
      and
      China Gold, LLC, a Kansas limited liability company (the “Pledgee”).

     

    WITNESSETH:

     

    WHEREAS,
      the Pledgee and Pledgor have entered into a transaction pursuant to which the
      Pledgee may purchase one or more convertible secured promissory notes of Pledgor
      in an aggregate amount of up to $25,000,000 (collectively, the “Notes”);
      and

     

    WHEREAS,
      as partial security for Pledgor’s obligations under the Note, Pledgor has agreed
      to grant to Pledgee a security interest in 1,000 shares of common stock, par
      value $.01 per share, of Wits-China Acquisition Corp., a wholly owned subsidiary
      of Pledgor incorporated in the State of Minnesota (“Wits-China”),
      such
      shares constituting all of the outstanding shares of capital stock of
      Wits-China, and any other subsidiary thereof which holds assets relating to
      Properties (as defined in that certain Convertible Notes Purchase Agreement
      dated of even date herewith between Pledgor and Pledgee (the “Purchase
      Agreement”))
      (collectively, all shares of common stock of Wits-China and such other
      subsidiaries shall be referred to herein as the “Shares”).

     

    NOW,
      THEREFORE, in consideration of the foregoing and the mutual covenants and
      promises set forth herein, and in consideration of other good and valuable
      consideration, the receipt and sufficiency of which is hereby acknowledged,
      the
      parties agree as follows:

     

    1.  Pledgor
      hereby grants and pledges to Pledgee a security interest in all of Pledgor’s
      right, title and interest in and to the Shares, together with all distributions,
      additions, substitutions or replacements for any of the foregoing property
      and
      together with proceeds of any and all of the foregoing property, each whether
      now owned or hereafter acquired (the “Collateral”),
      as
      security solely for the payment and performance of Pledgor’s obligations to pay
      the principal and accrued interest, if any, due under the Note (the
“Secured
      Obligations”).

     

    2.  All
      certificates or instruments representing or evidencing the Collateral shall
      be
      promptly delivered by Pledgor to Pledgee pursuant thereto at Pledgee’s principal
      place of business, and shall be in a suitable form for transfer by delivery,
      or
      shall be accompanied by duly executed instruments of transfer or assignments
      in
      blank, all in the form and substance reasonably satisfactory to
      Pledgee.

     

    3.  Pledgee’s
      duty of care with respect to Collateral in its possession shall be deemed
      fulfilled if it exercises reasonable care in the physically safekeeping such
      Collateral or, in the case of Collateral in the custody or possession of a
      bailee or other third party, exercise reasonable care in the selection of the
      bailee or other third party, and Pledgee need not otherwise preserve, protect,
      insure or care for any Collateral. Pledgee shall have no liability or
      responsibility to any third party for any action taken or omitted with respect
      to the Collateral on the direction of any third party.

     

    4.  Pledgee,
      in the name of Pledgor or otherwise, after the occurrence and continuance of
      an
      Event of Default (as defined in Section 5 below), shall have the authority
      but
      shall not be obligated to exercise, any rights and remedies granted hereunder,
      all rights and remedies of a secured party under the Uniform Commercial Code
      or
      any other applicable law, including the right to receive all dividends or
      distributions with respect to, and to exercise all voting and other rights
      as a
      holder of, the Shares, and the right to offer and sell the Collateral. So long
      as no Event of Default shall have occurred and be continuing, Pledgor shall
      be
      entitled to receive all distributions and to exercise all voting rights with
      respect to the Shares. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    5.  As
      used
      herein, the term “Event
      of Default”
shall
      mean Pledgor’s failure to perform its material obligations under the Notes when
      due. 

     

    6.  If
      any
      notification of intended disposition of any of the Collateral is required by
      law, such notification shall be deemed reasonably and properly given if mailed
      at least 10 days before such disposition addressed to Pledgor at the following
      address: 

     

    80
      South
      Eighth Street, Suite 900

    Minneapolis,
      MN 55402-8773

    

    7.  No
      delay
      or failure by Pledgee in the exercise of any right or remedy shall constitute
      a
      waiver thereof, and no single or partial exercise by Pledgee of any right or
      remedy shall preclude other or further exercise thereof or the exercise of
      any
      other right or remedy.

     

    8.  Pledgor
      agrees that from time to time, at Pledgor’s expense, it will promptly execute
      and deliver, or cause to be delivered, all further instruments and documents,
      and take all further action that may reasonably necessary in order to perfect
      and protect any security interest granted or purported to be granted hereby
      or
      to enable Pledgee to exercise and enforce its rights and remedies hereunder
      with
      respect to the Collateral.

     

    9.  This
      Agreement shall take effect when signed by Pledgor and Pledgee.

     

    10.  Any
      notice or other communication required or which may be given hereunder shall
      be
      in writing and shall be delivered personally, or sent by facsimile transmission
      with telephone confirmation, or sent by certified, registered, or express mail,
      postage prepaid, and shall be deemed given when so delivered personally, or
      sent
      by facsimile transmission, or if mailed, three days after the date of mailing,
      as follows:

    
      
         

        
          If
            to
            Pledgor:         
  Wits
            Basin Precious Minerals Inc.

                                  
                      80 South Eighth Street,
            Suite 900

                                     
                   Minneapolis,
            MN 55402-8773

                                        
               Attention: Mark Dacko, Chief Financial Officer

                                         
              Facsimile: (612) 395-5276

        

      

      
        

        With
          a
          copy to:         Maslon
          Edelman Borman & Brand, LLP

                                          
          3300 Wells Fargo Center

                                          
          90 South Seventh Street

                                           Minneapolis,
          Minnesota 55402-4140

                             
                      
Attention: William Mower, Esq.

                                          
          Facsimile: (612) 642-8358

        

        If
          to
          Pledgee:            China
          Gold, LLC

                                           7300
          College Blvd., Suite 303

                                          
          Overland Park, KS 66210

                                           Attn:
          C. Andrew Martin, Managing Partner

                                           Facsimile:
          (913) 339-6086

      

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

                          With
        a copy to:        William
        M. Schutte

      
                                          
          Polsinelli Shalton Flanigan Suelthaus PC

                                   6201
          College Blvd., Suite
          500

                                   Facsimile:
          (913)
          451-6205

      

    

    

    11.  This
      Agreement may be executed simultaneously in two or more counterparts, each
      of
      which shall be deemed an original, but all of which shall constitute one
      agreement. 

     

    12.  This
      Agreement shall be governed by the laws of the State of Kansas and, unless
      the
      context otherwise requires, all terms used herein which are defined in Articles
      1 and 9 of the Uniform Commercial Code, as in effect in such state, shall have
      the meanings therein stated. If any provision or application of this Agreement
      is held unlawful or unenforceable in any respect, such illegality or
      unenforceability shall not affect any other provisions or applications which
      can
      be given effect and this Agreement shall be construed as if the unlawful or
      unenforceable application had never been contained herein or prescribed hereby.
      All representations and warranties contained in this Agreement shall survive
      the
      execution, delivery and performance of this Agreement and in the creation and
      payment of the Secured Obligations.

     

    Signature
      Page Follows

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
      day
      and year first above written.

    
      	 	 	 
	 	PLEDGOR:
	 	 
	 	
              Wits
                Basin Precious Minerals inc.

              a
                Minnesota Corporation

            
	 
 	 
 	 
 
	 	By:  	/s/ Mark D. Dacko
              
	 	
              
Its  
Chief
              Financial Officer
	 	
              
                

              

            

    

    
      	 	 	 
	 	PLEDGEE:
	 	 
	 	
              
                China
                  Gold, LLC

                a
                  Kansas limited liability company

              

            
	 
 	 
 	 
 
	 	By:  	Cory
              Lagerstrom
	 	
              
Cory
              Lagerstrom
	 	
              Manager
                of Pioneer Holdings, LLC

              
                Manager
                  of Pledgee

              

            

    

     

    
      
        
        

      

      
        4

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