Document:

Unassociated Document

    EXHIBIT
      10.7

    
 

    INVESTMENT
      MANAGEMENT TRUST AGREEMENT

    

    This
      Agreement is made as of ________, 2008 by and between Staccato Acquisition
      Corp.
      (the “Company”) and American Stock Transfer & Trust Company
      (“Trustee”).

    

    WHEREAS,
      the Company’s registration statement on Form S-1, No. 333-151642
      (“Registration Statement”), for its initial public offering of securities
      (“IPO”) has been declared effective as of the date hereof (“Effective Date”) by
      the Securities and Exchange Commission (capitalized terms used herein and not
      otherwise defined shall have the meanings set forth in the Registration
      Statement); and 

    

    WHEREAS,
      EarlyBirdCapital, Inc. (“EBC”) is acting as the representative of the
      underwriters in the IPO; and

    

    WHEREAS,
      as described in the Registration Statement, and in accordance with the Company’s
      Amended and Restated Certificate of Incorporation, $47,635,000 of the gross
      proceeds of the IPO and sale of the Sponsors’ Warrants (or $54,727,750) if the
      underwriters’ over-allotment option is exercised in full) will be delivered to
      the Trustee to be deposited and held in a trust account for the benefit of
      the
      Company and the holders of the Company’s common stock, par value $.0001 per
      share, issued in the IPO as hereinafter provided (the amount to be delivered
      to
      the Trustee will be referred to herein as the “Property”, the stockholders for
      whose benefit the Trustee shall hold the Property will be referred to as the
      “Public Stockholders,” and the Public Stockholders and the Company will be
      referred to together as the “Beneficiaries”); and 

    

    WHEREAS,
      the Company and the Trustee desire to enter into this Agreement to set forth
      the
      terms and conditions pursuant to which the Trustee shall hold the
      Property;

    

    IT
      IS
      AGREED:

    

    1. Agreements
      and Covenants of Trustee.
      The
      Trustee hereby agrees and covenants to:

    

    (a) Hold
      the
      Property in trust for the Beneficiaries in accordance with the terms of this
      Agreement in a segregated trust account (“Trust Account”) established by the
      Trustee; 

    

    (b) Manage,
      supervise and administer the Trust Account subject to the terms and conditions
      set forth herein;

    

    (c) In
      a
      timely manner, upon the instruction of the Company, to invest and reinvest
      the
      Property in United States “government securities” within the meaning of Section
      2(a)(16) of the Investment Company Act of 1940 having a maturity of 180 days
      or
      less,
      and/or
      in any open ended investment company registered under the Investment Company
      Act
      of 1940 that holds itself out as a money market fund selected by the Company
      meeting the conditions of paragraphs (c)(2), (c)(3) and (c)(4) of Rule 2a-7
      promulgated under the Investment Company Act of 1940, as determined by the
      Company;

    

    (d) Collect
      and receive, when due, all principal and income arising from the Property,
      which
      shall become part of the “Property,” as such term is used herein;

    

    (e) Notify
      the Company and EBC of all communications received by it with respect to any
      Property requiring action by the Company;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (f) Supply
      any necessary information or documents as may be requested by the Company in
      connection with the Company’s preparation of the tax returns relating to income
      from the property in the Trust Account (or otherwise);

    

    (g) Participate
      in any plan or proceeding for protecting or enforcing any right or interest
      arising from the Property if, as and when instructed by the Company and/or
      EBC
      to do so;

    

    (h) Render
      to
      the Company and to EBC, and to such other person as the Company may instruct,
      monthly written statements of the activities of and amounts in the Trust Account
      reflecting all receipts and disbursements of the Trust Account; and

    

    (i) Commence
      liquidation of the Trust Account only after and promptly after receipt of,
      and
      only in accordance with, the terms of a letter (“Termination Letter”), in a form
      substantially similar to that attached hereto as either Exhibit A or Exhibit
      B
      hereto, signed on behalf of the Company by its President or Chairman of the
      Board and Secretary or Assistant Secretary and affirmed by counsel for the
      Company, and complete the liquidation of the Trust Account and distribute the
      Property in the Trust Account only as directed in the Termination Letter and
      the
      other documents referred to therein; provided, however, that in the event that
      a
      Termination Letter has not been received by the Trustee by the 24-month
      anniversary of the closing (“Closing”) of the IPO (“First Date”), or the
      30-month anniversary of the Closing (“Last Date”) in the event that a definitive
      agreement for a Business Combination has been executed on or prior to the First
      Date but the Business Combination has not been consummated by the First Date,
      the Trust Account shall be liquidated in accordance with the procedures set
      forth in the Termination Letter attached as Exhibit B hereto to the stockholders
      of record on the record date established by the Company for such purpose. The
      Company shall set the record date to be within ten days of the Last Date, or
      as
      soon thereafter as reasonably practicable and legally permissible. In all cases,
      the Trustee shall provide EBC with a copy of any Termination Letters and/or
      any
      other correspondence that it receives with respect to any proposed withdrawal
      from the Trust Account promptly after it receives same.

    

    2. Limited
      Distributions from Trust Account.
      

    

    (a) Upon
      written request from the Company, which may be given from time to time in a
      form
      substantially similar to that attached hereto as Exhibit C, the Trustee shall
      distribute to the Company the amount requested by the Company to cover any
      income or other tax obligation owed by the Company;

    

    (b) Upon
      written request from the Company, which may be given from time to time in a
      form
      substantially similar to that attached hereto as Exhibit D, the Trustee shall
      distribute to the Company the amount requested by the Company to cover expenses
      related to investigating and selecting a target business and other working
      capital requirements; provided, however, that the aggregate amount of all such
      distributions shall not exceed $1,350,000 and the Company will not be allowed
      to
      withdraw interest income earned on the trust account unless there is sufficient
      funds available to pay the Company’s tax obligations on such interest income or
      otherwise then due at that time; 

    

    (c) Upon
      written request from the Company, which may be given from time to time
      commencing after the Company has filed a preliminary proxy statement for its
      initial business combination and ending on the date immediately prior to the
      vote held to approve such business combination, in a form substantially similar
      to that attached as Exhibit E, the Trustee shall distribute to the Company
      the
      amount requested by the Company so that it may purchase up to 918,750 shares
      of
      common stock (or up to 1,056,562 shares of common stock if the over-allotment
      option in the IPO is exercised in full (in either case, such amount being
      referred to as the “Maximum Amount”)), at prices (including commissions) not to
      exceed the amount arrived at by dividing the total amount held in the Trust
      Account on the day prior to the purchase by the number of shares of common
      stock
      sold in the IPO (such price being referred to as the “Maximum Price”);
      and

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

    (d) The
      limited distributions referred to in Sections 2(a) and 2(b) above shall be
      made
      only from income collected on the Property. Except as provided in Section 2(a),
      2(b) and 2(c) above, no other distributions from the Trust Account shall be
      permitted except in accordance with Section 1(i) hereof.

    

    (e) In
      all
      cases, the Company shall provide EBC with a copy of any Termination Letters
      and/or any other correspondence that it issues to the Trustee with respect
      to
      any proposed withdrawal from the Trust Account promptly after such issuance.
      

    

    3. Agreements
      and Covenants of the Company.
      The
      Company hereby agrees and covenants to:

    

    (a) Give
      all
      instructions to the Trustee hereunder in writing, signed by the Company’s
      Chairman of the Board or President or other authorized officer. In addition,
      except with respect to its duties under paragraphs 1(i), 2(a) and 2(b) above,
      the Trustee shall be entitled to rely on, and shall be protected in relying
      on,
      any verbal or telephonic advice or instruction which it in good faith believes
      to be given by any one of the persons authorized above to give written
      instructions, provided that the Company shall promptly confirm such instructions
      in writing;

    

    (b) Hold
      the
      Trustee harmless and indemnify the Trustee from and against, any and all
      expenses, including reasonable counsel fees and disbursements, or loss suffered
      by the Trustee in connection with any action, suit or other proceeding brought
      against the Trustee involving any claim, or in connection with any claim or
      demand which in any way arises out of or relates to this Agreement, the services
      of the Trustee hereunder, or the Property or any income earned from investment
      of the Property, except for expenses and losses resulting from the Trustee's
      gross negligence or willful misconduct. Promptly after the receipt by the
      Trustee of notice of demand or claim or the commencement of any action, suit
      or
      proceeding, pursuant to which the Trustee intends to seek indemnification under
      this paragraph, it shall notify the Company in writing of such claim
      (hereinafter referred to as the “Indemnified Claim”). The Trustee shall have the
      right to conduct and manage the defense against such Indemnified Claim,
      provided, that the Trustee shall obtain the consent of the Company with respect
      to the selection of counsel, which consent shall not be unreasonably withheld.
      The Trustee may not agree to settle any Indemnified Claim without the prior
      written consent of the Company, which consent shall not be unreasonably
      withheld. The Company may participate in such action with its own counsel;
      

    

    (c) Pay
      the
      Trustee annual and transaction fees as agreed upon by the
      parties, which fees shall be subject to modification by the parties from time
      to
      time. It is expressly understood that the Property shall not be used to pay
      such
      fees unless and until it is distributed to the Company pursuant to Section
      2.
      The Company shall pay the Trustee the initial acceptance fee and first year’s
      fee at the consummation of the IPO and thereafter on the anniversary of the
      Effective Date. The Trustee shall refund to the Company the annual fee (on
      a pro
      rata basis) with respect to any period after the liquidation of the Trust Fund.
      The Company shall not be responsible for any other fees or charges of the
      Trustee except as set forth in this Section 3(c) and as may be provided in
      Section 3(b) hereof (it being expressly understood that the Property shall
      not
      be used to make any payments to the Trustee under such Sections);

    

    (d) In
      connection with any vote of the Company’s stockholders regarding a Business
      Combination, provide to the Trustee an affidavit or certificate of a firm
      regularly engaged in the business of soliciting proxies and/or tabulating
      stockholder votes (which firm may be the Trustee) verifying the vote of the
      Company’s stockholders regarding such Business Combination.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    

    4. Limitations
      of Liability.
      The
      Trustee shall have no responsibility or liability to:

    

    (a) Take
      any
      action with respect to the Property, other than as directed in paragraphs 1
      and
      2 hereof and the Trustee shall have no liability to any party except for
      liability arising out of its own gross negligence or willful
      misconduct;

    

    (b) Institute
      any proceeding for the collection of any principal and income arising from,
      or
      institute, appear in or defend any proceeding of any kind with respect to,
      any
      of the Property unless and until it shall have received instructions from the
      Company given as provided here-in to do so and the Company shall have advanced
      or guaranteed to it funds sufficient to pay any expenses incident
      thereto;

    

    (c) Change
      the investment of any Property, other than in compliance with
      paragraph 1(c);

    

    (d) Refund
      any depreciation in principal of any Property;

    

    (e) Assume
      that the authority of any person designated by the Company to give instructions
      hereunder shall not be continuing unless provided otherwise in such designation,
      or unless the Company shall have delivered a written revocation of such
      authority to the Trustee;

    

    (f) The
      other
      parties hereto or to anyone else for any action taken or omitted by it, or
      any
      action suffered by it to be taken or omitted, in good faith and in the exercise
      of its own best judgment, except for its gross negligence or willful misconduct.
      The Trustee may rely conclusively and shall be protected in acting upon any
      order, notice, demand, certificate, opinion or advice of counsel (including
      counsel chosen by the Trustee), statement, instrument, report or other paper
      or
      document (not only as to its due execution and the validity and effectiveness
      of
      its provisions, but also as to the truth and acceptability of any information
      therein contained) which is believed by the Trustee, in good faith, to be
      genuine and to be signed or presented by the proper person or persons. The
      Trustee shall not be bound by any notice or demand, or any waiver, modification,
      termination or rescission of this Agreement or any of the terms hereof, unless
      evidenced by a written instrument delivered to the Trustee signed by the proper
      party or parties and, if the duties or rights of the Trustee are affected,
      unless it shall give its prior written consent thereto;

    

    (g) Verify
      the correctness of the information set forth in the Registration Statement
      or to
      confirm or assure that any acquisition made by the Company or any other action
      taken by it is as contemplated by the Registration Statement; and

    

    (h) Prepare,
      execute and file tax reports, income or other tax returns and pay any taxes
      with
      respect to income and other activities relating to the Trust Account, regardless
      of whether such tax is payable by the Trust Account or the Company (including
      but not limited to income tax obligations), it being expressly understood that
      as set forth in Section 1(i), if there is any income or other tax obligation
      relating to the Trust Account or the Property in the Trust Account, as
      determined from time to time by the Company and regardless of whether such
      tax
      is payable by the Company or the Trust, at the written instruction of the
      Company, the Trustee shall make funds available in cash from the Property in
      the
      Trust Account an amount specified by the Company as owing to the applicable
      taxing authority, which amount shall be paid directly to the Company by
      electronic funds transfer, account debit or other method of payment, and the
      Company shall forward such payment to the taxing authority.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    

    5. Termination.
      This
      Agreement shall terminate as follows:

    

    (a) If
      the
      Trustee gives written notice to the Company that it desires to resign under
      this
      Agreement, the Company shall use its reasonable efforts to locate a successor
      trustee. At such time that the Company notifies the Trustee that a successor
      trustee has been appointed by the Company and has agreed to become subject
      to
      the terms of this Agreement, the Trustee shall transfer the management of the
      Trust Account to the successor trustee, including but not limited to the
      transfer of copies of the reports and statements relating to the Trust Account,
      whereupon this Agreement shall terminate; provided, however, that, in the event
      that the Company does not locate a successor trustee within ninety days of
      receipt of the resignation notice from the Trustee, the Trustee may submit
      an
      application to have the Property deposited with any court in the State of New
      York or with the United States District Court for the Southern District of
      New
      York and upon such deposit, the Trustee shall be immune from any liability
      whatsoever; or 

    

    (b) At
      such
      time that the Trustee has completed the liquidation of the Trust Account in
      accordance with the provisions of paragraph 1(i) hereof, and distributed the
      Property in accordance with the provisions of the Termination Letter, this
      Agreement shall terminate except with respect to Paragraph 3(b).

    

    6. Miscellaneous.

    

    (a) The
      Company and the Trustee each acknowledge that the Trustee will follow the
      procedures set forth below with respect to funds transferred from the Trust
      Account. Upon receipt of written instructions, the Trustee will confirm such
      instructions with an Authorized Individual at an Authorized Telephone Number
      listed on the attached Exhibit F. In executing funds transfers, the Trustee
      will
      rely upon account numbers or other identifying numbers of a beneficiary,
      beneficiary’s bank or intermediary bank, rather than names. The Trustee shall
      not be liable for any loss, liability or expense resulting from any error in
      an
      account number or other identifying number, provided it has accurately
      transmitted the numbers provided.

    

    (b) This
      Agreement shall be governed by and construed and enforced in accordance with
      the
      laws of the State of New York, without giving effect to conflicts of law
      principles that would result in the application of the substantive laws of
      another jurisdiction. It may be executed in several original or facsimile
      counterparts, each one of which shall constitute an original, and together
      shall
      constitute but one instrument.

    

    (c) This
      Agreement contains the entire agreement and understanding of the parties hereto
      with respect to the subject matter hereof. Except for Section 1(i) (which may
      not be amended under any circumstances), this Agreement or any provision here-of
      may only be changed, amended or modified by a writing signed by each of the
      parties hereto; provided, however, that no such change, amendment or
      modification may be made without the prior written consent of EBC. As to any
      claim, cross-claim or counterclaim in any way relating to this Agreement, each
      party waives the right to trial by jury.

    

    (d) The
      parties hereto consent to the jurisdiction and venue of any state or federal
      court located in the City of New York, Borough of Manhattan, for purposes of
      resolving any disputes hereunder.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    

    (e) Any
      notice, consent or request to be given in connection with any of the terms
      or
      provisions of this Agreement shall be in writing and shall be sent by express
      mail or similar private courier service, by certified mail (return receipt
      requested), by hand delivery or by facsimile transmission:

    

    if
      to the
      Trustee, to:

    

    American
      Stock Transfer 

    &
      Trust Company

    59
      Maiden
      Lane

    New
      York,
      New York 10038

    Attn:
      

    Facsimile:
      (___) ___-____

    

    if
      to the
      Company, to:

      

    Staccato
      Acquisition Corp.

    825
      Third
      Avenue, 40th Floor

    New
      York,
      New York 10022

    Attn: Eric
      S.
      Rosenfeld

    Facsimile.:
      (___)
      ___-____

    

    in
      either
      case with a copy to:

    

    Graubard
      Miller

    The
      Chrysler Building

    405
      Lexington Avenue

    New
      York,
      New York 10174

    Attn:
       David
      Alan Miller, Esq.

    Facsimile.:
      (212)
      818-8881

    

    and:

    

    EarlyBirdCapital,
      Inc. 

    275
      Madison Avenue

    New
      York,
      New York 10016

    Attn:
       Steven
      Levine

    Facsimile.:
      (___)
      ___-____

    

    and:

    

    Greenberg
      Traurig, LLP

    Met
      Life
      Building

    200
      Park
      Avenue

    New
      York,
      New York 10166

    Attn: Robert
      H.
      Cohen, Esq.

    Facsimile.:
      (212)
      801-6400

    

    

    (f) This
      Agreement may not be assigned by the Trustee without the prior consent of the
      Company and EBC.

    

    (g) Each
      of
      the Trustee and the Company hereby represents that it has the full right and
      power and has been duly authorized to enter into this Agreement and to perform
      its respective obligations as contemplated hereunder. The Trustee acknowledges
      and agrees that it shall not make any claims or proceed against the Trust
      Account, including by way of set-off, and shall not be entitled to any funds
      in
      the Trust Account under any circumstance.

    

    (h) Each
      of
      the Company and the Trustee hereby acknowledge that EBC is a third party
      beneficiary of this Agreement.

    (i) 
      The
      Trustee hereby consents to the inclusion of American Stock Transfer & Trust
      Company in the Registration Statement and other materials related to the
      IPO.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties have duly executed this Investment Management
      Trust
      Agreement as of the date first written above.

     

    
      	
               

            	
               

            	
               

            
	
               

            	
              AMERICAN
                STOCK TRANSFER

              &
                TRUST COMPANY, as Trustee

            
	
               

               

            	
               

               

            	
               

               

            
	
               

            	
              By:  

            	
               

            
	
               

            	
              
                

                Name:

            
	
               

            	
              Title:

            

    

     

    
      	
               

            	
               

            	
               

            
	
               

            	
              STACCATO
                ACQUISITION CORP.

            
	
               

               

            	
               

               

            	
               

               

            
	
               

            	
              By:  

            	
               

            
	
               

            	
              
                

                Name:

            
	
               

            	
              Title:

            

    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    

    EXHIBIT
      A

    

    [Letterhead
      of Company]

    

    [Insert
      date]

    

    American
      Stock Transfer 

    &
      Trust Company

    59
      Maiden
      Lane

    New
      York,
      New York 10038

    

    
      	 	
              Re:

            	
              Trust
                Account No.          
                Termination Letter

            

    

    

    Gentlemen:

    

    Pursuant
      to paragraph 1(i) of the Investment Management Trust Agreement between Staccato
      Acquisition Corp. (“Company”) and American Stock Transfer & Trust Company
      (“Trustee”), dated as of _________, 2008 (“Trust Agreement”), this is to advise
      you that the Company has entered into an agreement (“Business Agreement”) with
      __________________ (“Target Business”) to consummate a business combination with
      Target Business (“Business Combination”) on or about [insert
      date].
      The
      Company shall notify you at least 48 hours in advance of the actual date of
      the
      consummation of the Business Combination (“Consummation Date”).

    

    In
      accordance with the terms of the Trust Agreement, we hereby authorize you to
      commence liquidation of the Trust Account to the effect that, on the
      Consummation Date, all of funds held in the Trust Account will be immediately
      available for transfer to the account or accounts that the Company shall direct
      on the Consummation Date.

    

    On
      the
      Consummation Date (i) counsel for the Company shall deliver to you written
      notification that the Business Combination has been consummated (“Counsel’s
      Letter”) and (ii) the Company shall deliver to you (a) [an affidavit] [a
      certificate] of __________________, which verifies the vote of the Company’s
      stockholders in connection with the Business Combination and (b) written
      instructions with respect to the transfer of the funds held in the Trust Account
      (“Instruction Letter”). You are hereby directed and authorized to transfer the
      funds held in the Trust Account immediately upon your receipt of the Counsel's
      Letter and the Instruction Letter, in accordance with the terms of the
      Instruction Letter. In the event that certain deposits held in the Trust Account
      may not be liquidated by the Consummation Date without penalty, you will notify
      the Company of the same and the Company shall direct you as to whether such
      funds should remain in the Trust Account and distributed after the Consummation
      Date to the Company. Upon the distribution of all the funds in the Trust Account
      pursuant to the terms hereof, the Trust Agreement shall be terminated and the
      Trust Account closed.

    

    In
      the
      event that the Business Combination is not consummated on the Consummation
      Date
      described in the notice thereof and we have not notified you on or before the
      original Consummation Date of a new Consummation Date, then the funds held
      in
      the Trust Account shall be reinvested as provided in the Trust Agreement on
      the
      business day immediately following the Consummation Date as set forth in the
      notice.

     

    
      	
               

            	
               

            	
               

            
	
               

            	
              Very
                truly yours,

            
	
               

            	
               

            
	
               

            	
              STACCATO
                ACQUISITION CORP. 

            
	
               

               

            	
               

               

            	
               

               

            
	
               

            	
              By:  

            	
               

            
	
               

            	
              
                

                Name:

              Title:

            

    

     

    
      	
               

            	
               

            	
               

            
	
               

            	
              By:  

            	
               

            
	
               

            	
              
                

                Name:

              Title:

            

    

     

    
      	
              cc:

            	
              EarlyBirdCapital,
                Inc. 

            

    

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    EXHIBIT
      B

    

    [Letterhead
      of Company]

    

    [Insert
      date]

     

    American
      Stock Transfer 

    &
      Trust Company

    59
      Maiden
      Lane

    New
      York,
      New York 10038

    

    

    
      	 	
              Re:

            	
              Trust
                Account No.          
                Termination Letter

            

    

    

    Gentlemen:

    

    Pursuant
      to paragraph 1(i) of the Investment Management Trust Agreement between Staccato
      Acquisition Corp. (“Company”) and American Stock Transfer & Trust Company
      (“Trustee”), dated as of ___________, 2008 (“Trust Agreement”), this is to
      advise you that the Company has been unable to effect a Business Combination
      with a Target Company within the time frame specified in the Company’s
      Certificate of Incorporation, as described in the Company’s prospectus relating
      to its IPO.

    

    In
      accordance with the terms of the Trust Agreement, we hereby authorize you,
      to
      commence liquidation of the Trust Account as promptly as practicable, but no
      later than ten business days from the date hereof, to stockholders of record
      on
      the Last Date (as defined in the Trust Agreement). You will notify the Company
      in writing as to when all of the funds in the Trust Account will be available
      for immediate transfer (“Transfer Date”) in accordance with the terms of the
      Trust Agreement and the Certificate of Incorporation of the Company. You shall
      commence distribution of such funds in accordance with the terms of the Trust
      Agreement and the Certificate of Incorporation of the Company and you shall
      oversee the distribution of the funds. Upon the distribution of all the funds
      in
      the Trust Account, your obligations under the Trust Agreement shall be
      terminated.

     

    
      	
               

            	
               

            	
               

            
	
               

            	
              Very
                truly yours,

            
	
               

            	
               

            
	
               

            	
              STACCATO
                ACQUISITION CORP. 

            
	
               

               

            	
               

               

            	
               

               

            
	
               

            	
              By:  

            	
               

            
	
               

            	
              
                

                Name:

              Title:

            

    

     

    
      	
               

            	
               

            	
               

            
	
               

            	
              By:  

            	
               

            
	
               

            	
              
                

                Name:

              Title:

            

    

     

    
      	
              cc:

            	
              EarlyBirdCapital,
                Inc. 

            

    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    EXHIBIT
      C

    

    [Letterhead
      of Company]

    

    [Insert
      date]

     

    American
      Stock Transfer 

    &
      Trust Company

    59
      Maiden
      Lane

    New
      York,
      New York 10038

    

    

    
      	 	
              Re:

            	
              Trust
                Account No.

            

    

    

    Gentlemen:

    

    Pursuant
      to paragraph 2(a) of the Investment Management Trust Agreement between Staccato
      Acquisition Corp. (“Company”) and American Stock Transfer & Trust Company
      (“Trustee”), dated as of ___________, 2008 (“Trust Agreement”), the Company
      hereby requests that you deliver to the Company $_______ of the income earned
      on
      the Property as of the date hereof. The Company needs such funds to pay for
      the
      tax obligations as set forth on the attached tax return or tax statement. In
      accordance with the terms of the Trust Agreement, you are hereby directed and
      authorized to transfer (via wire transfer) such funds promptly upon your receipt
      of this letter to the Company’s operating account at:

    

    [WIRE
      INSTRUCTION INFORMATION]

     

    
      	
               

            	
               

            	
               

            
	
               

            	
              Very
                truly yours,

            
	
               

            	
               

            
	
               

            	
              STACCATO
                ACQUISITION CORP. 

            
	
               

               

            	
               

               

            	
               

               

            
	
               

            	
              By:  

            	
               

            
	
               

            	
              
                

                Name:

              Title:

            

    

     

    
      	
               

            	
               

            	
               

            
	
               

            	
              By:  

            	
               

            
	
               

            	
              
                

                Name:

              Title:

            

    

     

    
      	
              cc:

            	
              EarlyBirdCapital,
                Inc. 

            

    

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      D

    

    

    [Letterhead
      of Company]

    

    [Insert
      date]

     

    American
      Stock Transfer 

    &
      Trust Company

    59
      Maiden
      Lane

    New
      York,
      New York 10038

    

    

    
      	 	
              Re:

            	
              Trust
                Account No. 

            

    

    

    Gentlemen:

    

    Pursuant
      to paragraph 2(b) of the Investment Management Trust Agreement between Staccato
      Acquisition Corp. (“Company”) and American Stock Transfer & Trust Company
      (“Trustee”), dated as of __________, 2008 (“Trust Agreement”), the Company
      hereby requests that you deliver to the Company $_______ of the income earned
      on
      the Property as of the date hereof, which does not exceed, in the aggregate
      with
      all such prior disbursements pursuant to paragraph 2(b), if any, the maximum
      amount set forth in paragraph 2(b). The Company needs such funds to cover its
      expenses relating to investigating and selecting a target business and other
      working capital requirements. In accordance with the terms of the Trust
      Agreement, you are hereby directed and authorized to transfer (via wire
      transfer) such funds promptly upon your receipt of this letter to the Company’s
      operating account at:

    

    [WIRE
      INSTRUCTION INFORMATION]

     

    
      	
               

            	
               

            	
               

            
	
               

            	
              Very
                truly yours,

            
	
               

            	
               

            
	
               

            	
              STACCATO
                ACQUISITION CORP. 

            
	
               

               

            	
               

               

            	
               

               

            
	
               

            	
              By:  

            	
               

            
	
               

            	
              
                

                Name:

              Title:

            

    

     

    
      	
               

            	
               

            	
               

            
	
               

            	
              By:  

            	
               

            
	
               

            	
              
                

                Name:

              Title:

            

    

     

    
      	
              cc:

            	
              EarlyBirdCapital,
                Inc. 

            

    

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    EXHIBIT
      E

    

    

    [Letterhead
      of Company]

    

    [Insert
      date]

     

    American
      Stock Transfer 

    &
      Trust Company

    59
      Maiden
      Lane

    New
      York,
      New York 10038

    

    

    
      	 	
              Re:

            	
              Trust
                Account No. 

            

    

    

    Gentlemen:

    

    Pursuant
      to paragraph 2(c) of the Investment Management Trust Agreement between Staccato
      Acquisition Corp. (“Company”) and American Stock Transfer & Trust Company
      (“Trustee”), dated as of __________, 2008 (“Trust Agreement”), the Company
      hereby requests that you deliver to the Company $_______ from the Property
      in
      order to purchase _____ shares (“Shares”) of the Company’s common stock at a
      price of $___ per share (“Purchase Price”). The Purchase Price is below the
      Maximum Price (as defined in the Trust Agreement). Additionally, the Shares,
      together with any shares of common stock previously purchased by the Company
      pursuant to paragraph 2(c) of the Trust Agreement, do not exceed the Maximum
      Amount (as defined in the Trust Agreement). In accordance with the terms of
      the
      Trust Agreement, you are hereby directed and authorized to transfer (via wire
      transfer) such funds promptly upon your receipt of this letter to the Company’s
      operating account at:

    

    [WIRE
      INSTRUCTION INFORMATION]

     

    
      	
               

            	
               

            	
               

            
	
               

            	
              Very
                truly yours,

            
	
               

            	
               

            
	
               

            	
              STACCATO
                ACQUISITION CORP. 

            
	
               

               

            	
               

               

            	
               

               

            
	
               

            	
              By:  

            	
               

            
	
               

            	
              
                

                Name:

              Title:

            

    

     

    
      	
               

            	
               

            	
               

            
	
               

            	
              By:  

            	
               

            
	
               

            	
              
                

                Name:

              Title:

            

    

     

    
      	
              cc:

            	
              EarlyBirdCapital,
                Inc. 

            

    

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     EXHIBIT
      F

    

    
      	
              AUTHORIZED
                INDIVIDUAL(S)

              FOR
                TELEPHONE CALL BACK

            	
               

            	
              AUTHORIZED

              TELEPHONE
                NUMBER(S)

            
	
               

            	
               

            	
               

            
	
              Company:

            	
               

            	
               

            
	
               

            	
               

            	
               

            
	
              Staccato
                Acquisition Corp.

              825
                Third Avenue, 40th Floor

              New
                York, New York 10022

              Attn: Eric
                S. Rosenfeld

            	
               

            	
              (212)
                319-7676

            
	
               

            	
               

            	
               

            
	
              Trustee:

            	
               

            	
               

            
	
               

            	
               

            	
               

            
	
              American
                Stock Transfer 

              &
                Trust Company

              59
                Maiden Lane

              New
                York, New York 10038

              Attn:
                

            	
               

            	 

    

     

     

    13EXHIBIT
      10.1

     

    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 REASONABLY ACCEPTABLE
      TO IT THAT THE PROPOSED DISPOSITION WILL NOT VIOLATE ANY APPLICABLE SECURITIES
      LAWS. 

     

    CONVERTIBLE
      PROMISSORY NOTE

    

      
        	
                $1,000,000

              	
                August
                  22, 2008

              

      

    

     

    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 London Mining Plc, a
      corporation formed under the laws of England and Wales, or its successors and
      assigns (the “Holder”)
      on or
      before the Maturity Date the principal sum of up to One Million U.S. Dollars
      ($1,000,000) or such lesser amount actually advanced to Issuer by Holder in
      its
      sole and absolute discretion (such amount actually advanced referred to herein
      as the “Principal”),
      together with accrued and unpaid interest thereon, as provided herein, from
      the
      date hereof until fully paid (the “Indebtedness”).
      The
“Maturity
      Date”
as
      defined herein shall be the earlier to occur of (i) the closing of the
      acquisition of Nanjing Sudan Mining Co Ltd, Maanshan Zhaoyuan Mining Co Ltd
      and
      Maanshan Xiaonanshan Mining Co Ltd by an entity in which the Issuer or any
      of
      its affiliates has any direct or indirect interest and (ii) August 22, 2009.
      Issuer shall use any Principal advanced hereunder for the purposes set forth
      in
      the Letter of Intent by and between Issuer and Holder dated August 18, 2008
      (the
“Letter
      of Intent”)
      unless
      otherwise authorized by Holder. 

     

    Issuer
      shall be advanced by Holder $500,000 under this Note upon the date of this
      Note.
      Issuer shall by not less than 10 Business Days' prior written notice to Holder
      be entitled to a further advance of up to $500,000 under this Note once (a)
      the
      initial $500,000 advance has been spent on due diligence as contemplated and
      permitted by the Letter of Intent and (b) Issuer has provided evidence to Holder
      of such fact to its reasonable satisfaction. 

     

    This
      Note
      constitutes a direct and unsecured obligation of Issuer ranking at least
pari
      passu
      with all
      other present and future unsecured and unsubordinated obligations of
      Issuer.

     

    1. Payment
      of Principal and Interest.
      Subject
      to acceleration or earlier conversion or payment as provided for elsewhere
      in
      this Note, the principal balance of this Note, and any accrued and unpaid
      interest thereon, shall be due and payable on the Maturity Date at such place
      as
      the Holder shall designate to Issuer in writing. 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; (b) to accrued but unpaid interest on
      this
      Note; and (c) to the unpaid principal balance of this Note. “Business
      Day”
means
      any day other than a Saturday, Sunday or legal holiday in the State of
      Minnesota; and

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    2. Calculation
      of Interest.
      Interest shall accrue on the Principal outstanding under this Note at the rate
      of eight percent (8%) (the “Interest
      Rate”)
      per
      annum. Interest shall be calculated on a basis of a 365 day year, 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 on giving not less than 10
      days prior notice to Holder, without premium or penalty. If prior to the expiry
      of the prepayment notice to Holder, Holder serves a Notice of Conversion as
      contemplated by Section 5.2 hereof in respect of any part of this Note, no
      prepayment of such part of this Note shall be permitted and such Notice of
      Conversion shall prevail. 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 and without set-off or deduction. 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 this Note. 

     

    All
      payments in respect of this Note shall be made free and clear of, and without
      withholding or deduction for, any present or future taxes, duties, assessments
      or charges of whatever nature imposed, levied, collected, withheld or assessed
      by any taxation authority unless such withholding or deduction is required
      by
      law. In the event that any such withholding or deduction is required by law
      to
      be made, Issuer shall pay such additional amounts as will result in the receipt
      by Holder of such amounts as would have been received by it if no such
      withholding or deduction had been required.

     

    5. Conversion.
      

     

    5.1.
      Conversion.
      At any
      time while any portion of the Indebtedness under this Note is outstanding,
      the
      Holder shall have the right, at the Holder’s option, to convert 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 US$0.20
      per
      share (the “Conversion
      Price”).
      The
      Conversion Price is subject to adjustment from time to time pursuant to Section
      6 hereof.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    5.2 Effect
      and Procedure of Conversion.
      A
      conversion shall occur pursuant to the terms of this Note by Holder’s delivery
      to Issuer, at 900 IDS Center, 80 South 8th
      Street,
      Minneapolis, MN 55402-8773, a notice of conversion identifying the amount of
      the
      conversion (a “Notice
      of Conversion”)
      (by
      facsimile or other reasonable means of communication) prior to 5:00 p.m. local
      time in Minneapolis, Minnesota. The date on which Issuer issues to Holder shares
      of Common Stock pursuant to a Notice of Conversion shall constitute the
      Conversion Date in respect of such part of this Note so converted. Holder shall
      not be required to physically surrender this Note to Issuer unless the entire
      unpaid Principal amount of this Note, together with all 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 partial conversion. 

     

    Upon
      receipt of any Notice of Conversion, Issuer shall, within ten (10) 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 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 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 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.

     

    5.3No
      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 or quoted on an
      exchange 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, 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).

     

    5.4Listing.
      If the
      Common Stock of Issuer is traded or quoted on any exchange or market at the
      date
      of issue of shares of Common Stock following the receipt of a Notice of
      Conversion, Issuer shall use best endeavours to procure that any shares of
      Common Stock issued on conversion of any part of this Note are also so traded
      or
      listed. 

     

    5.5Issuer's
      Undertaking.
      Shares
      of Common Stock issued upon conversion of any part of this Note shall rank
      in
      full for all dividends and distributions paid on or after the date of the
      relevant Notice of Conversion and shall be issued free from all liens, charges,
      encumbrances and third party claims. Issuer shall, for so long as this Note
      remains outstanding, ensure that it has sufficient authorities and unissued
      shares of Common Stock to enable it to meet any of its obligations
      hereunder.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    6. Conversion
      Price Adjustments.

     

    6.1 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 payment in cash or other assets of any exceptional dividend; (c) the
      subdivision of Issuer’s outstanding shares of Common Stock into a greater number
      of shares; (d) the combination of Issuer’s outstanding shares of Common Stock,
      by reclassification or otherwise; (e) any reductions of Issuer's shares of
      Common Stock; or (f) other than Excepted Issuances (as defined herein), the
      issue of shares of Common Stock at less than fair market value, in each case
      at
      any time prior to the Conversion Date; then the Conversion Price shall be
      adjusted either in such manner as Issuer and Holder agree in writing is
      appropriate or, failing agreement, in such manner as Issuer's auditors shall
      certify is appropriate. If Issuer's auditors refuse to so certify, Issuer and
      Holder shall refer the matter to an independent accountant agreed by them (or,
      in the absence of agreement within 10 Business Days, as nominated by the
      President of Chartered Accountants in England and Wales on the application
      of
      either party). The costs of Issuer's auditors or the independent accountants
      in
      making any determination under this Section 6.1 shall be borne by Issuer. For
      the purposes of this section 6.1, an adjustment to the Conversion Price shall
      be
      "appropriate" if, as a consequence of the adjustment, Holder enjoys the same
      economic effect on the conversion of this Note (or any part of it) as if the
      relevant event had not occurred or arisen. For purposes of this Section 6.1,
      “Excepted
      Issuances”
shall
      mean any of the following: (A) issuances of shares of Common Stock or options
      to
      employees, officers or directors of Issuer if such grants are duly approved
      by a
      majority of the non-employee members of the Board of Directors of Issuer or
      a
      majority of the members of a committee of non-employee directors established
      for
      such purpose as part of the remuneration incentive package for the relevant
      employee, director or officer; (B) issuances of securities upon the exercise
      or
      exchange of or conversion of any securities issued hereunder and/or securities
      exercisable or exchangeable for or convertible into shares of Common Stock
      issued and outstanding on the date of this Note, or (C) securities issued
      pursuant to acquisitions or strategic transactions, provided any such issuance
      shall only be to a person which is, itself or through its subsidiaries, an
      operating company in a business synergistic with the business of Issuer as
      determined in good faith by the Board of Directors of Issuer.

     

    6.2 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
      6.1);
      (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. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    7. 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 or is in default
      for a continuous period of 30 days in the performance or observance of any
      other
      material provision of this Note; (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; (e) Issuer’s dissolution or
      liquidation; or (f) Issuer’s becoming insolvent or otherwise unable to pay its
      debts.

     

    Issuer
      shall forthwith notify Holder of the happening of any Event of Default promptly
      after becoming aware of the same.

     

    8. 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 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
      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.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

    10. 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 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). Upon any transfer
      of
      this Note (or part thereof), Issuer shall upon physical receipt of this Note,
      issue a new Note of like tenor to each of Holder (if only a transfer of part
      of
      this Note) and the transferee in the amounts requested by the Holder (subject
      to
      payment by Holder or transferee of any applicable transfer taxes).

     

    11. 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.

     

    12. Warranties
      and Representations.
      Issuer
      warrants and represents to Holder that:

     

    (a) Issuer
      has the power and capacity and good and sufficient right and authority to enter
      into this Agreement on the terms and conditions herein set forth and to issue
      to
      Holder this Note;

     

    (b) Issuer
      is
      a corporation duly incorporated, validly existing and in good standing under
      the
      laws of the State of Minnesota;

     

    (c) the
      issue
      of this Note and the performance of and compliance with the terms hereof, does
      not conflict with or result in the breach of or the acceleration of any
      indebtedness under, any terms, provisions or conditions of, or constitute
      default under the constitution of Issuer or any agreement or arrangement to
      which it or any of its affiliates is a party or is bound or any judgment,
      decree, order, rule or regulation of any court or administrative body by which
      Issuer or any of its affiliates is bound, or, of any statute or regulation
      applicable to the Issuer.

     

    13. 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 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 (i) by Issuer to the Holder at London Mining Plc,
      39
      Sloan Street, London United Kingdom SW1X 9LP, or such other address Holder
      identifies to Issuer in writing or (ii) by Holder to the Issuer at Wits Basin
      Precious Minerals Inc., 900 IDS Center, 80 South 8th
      Street,
      Minneapolis, MN 55402-8773, or such other address Issuer identifies to Holder
      in
      writing.

     

    (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
      shall constitute the final expression of the agreement between Issuer and Holder
      concerning the Indebtedness and the matters set forth herein and 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.
      

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

    
      
        	
                ISSUER:

              
	
                 

              	
                 

              
	
                WITS
                  BASIN PRECIOUS MINERALS INC.

              
	
                 

              	
                 

              
	
                By:

              	
                /s/
                  Mark D. Dacko

              
	
                Name:

              	
                Mark
                  D. Dacko

              
	
                Title:

              	
                CFO

              

      

    

     

    Signature
      Page—Convertible Promissory Note

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