Document:

EXHIBIT
10.1

     

    AMENDMENT
NO. 3 TO

    CONVERTIBLE
NOTES PURCHASE AGREEMENT

     

    This
Amendment No. 3 to Convertible Notes Purchase Agreement (this “Amendment”) is entered into on
this 22nd day of December, 2008, by and between Wits Basin Precious Minerals
Inc., a Minnesota corporation (the “Issuer”), and China Gold, LLC,
a Kansas limited liability company, its successors and assigns (together with
its successors and assigns “Purchaser”), to amend, as
hereinafter set forth, the terms of that certain Convertible Notes Purchase
Agreement dated April 10, 2007 by and between Issuer and Purchaser, as
previously amended on June 19, 2007 and November 10, 2008 (as amended, the
“Purchase
Agreement”).  Capitalized terms used in this Amendment and not
otherwise defined herein shall have the same meanings as defined in the Purchase
Agreement.

     

    A.           Issuer
and Purchaser entered into the Purchase Agreement on April 10, 2007, which
contemplated the initial sale by Issuer, and purchase by Purchaser, of an
aggregate minimum of $12,000,000 and an aggregate maximum of $25,000,000 in
convertible notes of Issuer within 12 months of the Initial Closing
Date.

     

    B.           Pursuant
to the Purchase Agreement, on April 10, 2007, Issuer sold, and Purchaser
purchased, that certain Convertible Note in the amount of $3,000,000 (“Note 1”).  On
May 7, 2007, Issuer sold, and Purchaser purchased, that certain Convertible Note
in the amount of $2,000,000 (“Note 2”).  On
June 19, 2007, Issuer sold and Purchaser purchased that certain Convertible
Note in the aggregate amount of $4,000,000 (“Note 3”).  On
July 9, 2007, Issuer sold, and Purchaser purchased, that certain Convertible
Note in the amount of $800,000 (“Note 4”; collectively
with Note 1, Note 2 and Note 3, the “Prior Notes”).

     

    C.           To
secure its obligations under the Prior Notes, Issuer entered into a Security
Agreement with Purchaser dated June 19, 2007 (the “Security Agreement”), whereby
Issuer granted Purchaser a security interest in all of the assets acquired by
Issuer from the use of the proceeds from the sale of the Prior
Notes.  Pursuant to the Purchase Agreement and Security Agreement,
Issuer and certain of its subsidiaries further entered into the following
agreements with Purchaser relating to such security:  (i) that certain
Pledge Agreement dated as of April 10, 2007 by and between Purchaser and Issuer,
as amended pursuant to that certain Amended and Restated Pledge Agreement dated
February 7, 2008 by and between Purchaser and Issuer (as amended, the “Pledge Agreement”);
(ii)  that certain Guaranty dated April 10, 2007 (the “Wits-China Guaranty”) of
Wits-China Acquisition Corporation, a Minnesota corporation and wholly owned
subsidiary of Issuer (“Wits-China”); (iii) that
certain Guaranty dated February 7, 2008 (the “BVI Guaranty”) of China Global
Mining Resources Limited, a British Virgin Islands corporation (registered
number 1386052) and wholly owned subsidiary of Issuer (“Original BVI Co”); (iv) that certain
Guaranty dated February 7, 2008 (the “HK Guaranty”) of China Global
Mining Resources Limited, a Hong Kong corporation and wholly owned subsidiary of
Issuer (“CGMR HK”); (v)
that certain Subsidiary Security Agreement dated February 7, 2008 by and between
Wits-China and Purchaser (the “Wits-China Subsidiary Security
Agreement”); (vi) that certain Subsidiary Security Agreement dated
February 7, 2008 by and between Original BVI Co and Purchaser (the “BVI Subsidiary Security
Agreement”); and (vii) that certain Subsidiary Security Agreement dated
February 7, 2008 by and between CGMR HK and Purchaser (the “HK Subsidiary Security
Agreement”).  Collectively, the Security Agreement, Pledge
Agreement, Wits-China Guaranty, BVI Guaranty, HK Guaranty, Wits-China Subsidiary
Security Agreement, BVI Subsidiary Security Agreement and HK Subsidiary Security
Agreement are referred to herein as the “Security
Documents.”

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    D.           On
November 10, 2008, Issuer and Purchaser cancelled the Prior Notes and Issuer
issued Purchaser an Amended and Restated Promissory Note in the aggregate
principal amount of $9,800,000 (the “Amended and Restated Note”),
which, amongst other amendments to the terms of the Prior Notes, terminated the
conversion feature of the Prior Notes and terminated certain Purchase Rights (as
defined in the Purchase Agreement) provided to Purchaser.  In
consideration thereof, Issuer issued Purchaser a five-year warrant to purchase
up to 39,200,000 shares of the Issuer’s common stock, par value $0.01 per share,
at an exercise price of $0.15 per share (the “First Warrant”).  As
of the date hereof, the accrued and unpaid interest on the Amended and Restated
Note is $171,930.86.

     

    E.           On
October 28, 2008, Purchaser loaned Issuer an additional $441,000 pursuant to the
terms of that certain Promissory Note dated October 28, 2008 of Issuer in favor
of Purchaser (the “Additional
Note”), the payment obligations of which are secured by the Security
Documents.  In consideration of the Additional Note, Issuer issued
Purchaser a five-year warrant to purchase up to 882,000 shares of Issuer’s
common stock at an exercise price of $0.11 per share (the “Second Warrant”; and
collectively with the First Warrant, the “Warrants”).  As of
the date hereof, the accrued and unpaid interest on the Additional Note is
$7,762.59.

     

    F.           Pursuant
to the terms of that certain Subscription Agreement dated November 17, 2008 by
and between London Mining Plc (“London Mining”) and Issuer
(the “Subscription
Agreement”), Issuer and London Mining have formed a joint venture entity
incorporated in the British Virgin Islands under the name China Global Mining
Resources (BVI) Limited (with registered number 1513743) (“CGMR BVI”), to acquire and
operate certain mining properties in the People’s Republic of China operated
through Maanshan Xiaonanshan Mining Co Limited, Nanjing Sudan Mining Co Ltd and
Maanshan Zhaoyuan Mining Co Limited (collectively, the “PRC
Properties”).  Issuer, through certain of its subsidiaries,
currently holds the rights to acquire the PRC Properties (the “Rights”), and such Rights are
subject to the security interest of Purchaser pursuant to the terms of the
Security Agreement.  The transactions contemplated by Issuer and
London Mining are hereinafter referred to as the “JV Transaction.”

     

    G.           As
a condition to the JV Transaction, Issuer is required to (i) consolidate the
Rights in CGMR HK and transfer its equity interests in CGMR HK to CGMR BVI and
(ii) restructure the terms of the Amended and Restated Note and the Additional
Note provided by Purchaser to Issuer (collectively, the “Loans”), including without
limitation (a) extending the Maturity Date (as defined in the Amended and
Restated Note and Additional Note, respectively), (b) amending certain of the
Security Documents to release Purchaser’s security interest in the Rights, the
PRC Properties and Issuer’s equity interest in CGMR HK, and (c) release and
terminate the HK Guaranty and the HK Subsidiary Security Agreement and (d) to
permit the transfer to CGMR BVI of the equity interests in CGMR HK.

     

    H.           Issuer
and Purchaser wish to consolidate the Amended and Restated and Additional Note
into a Second Amended and Restated Note (as defined below) in the aggregate
principal amount of $10,241,000, with accrued and unpaid interest of $179,693.45
thereon as of the date hereof.  Contemporaneously with the closing of
the JV Transaction, Issuer intends to make a prepayment of the Amended and
Restated Note in the aggregate amount of $5,600,000.

     

    I.           Issuer
and Purchaser wish to amend the Purchase Agreement in the respects set forth
herein to restructure the terms of the related agreements in a manner permitting
Issuer to complete the JV Transaction.

     

    Now,
Therefore, in consideration of the foregoing facts and premises hereby made a
part of this Agreement, the mutual promises hereinafter set forth and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree as
follows:

     

    
      
         

      

      
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    Section
1.                      PREPAYMENT AND AMENDMENT OF
NOTE

     

    1.1           Amendment to
Notes.  On the date of this Agreement, Issuer and Purchaser
hereby cancel the Amended and Restated Note and Additional Note, and Issuer
shall issue Purchaser a promissory note in the aggregate principal amount of
$10,421,107.18 having a maturity date of February 15, 2010, in the form attached
as Exhibit A
(the “Second Amended and
Restated Note”).  Together with the execution and delivery of
this Amendment, Purchaser has delivered to Issuer the original Amended and
Restated Note and Additional Note, each marked “Cancelled.”

     

    1.2           Prepayment.  On
the Effective Date (as defined below), Issuer, or another party at the direction
of and on behalf of Issuer, shall make a prepayment of the Amended and Restated
Note in the aggregate amount of $5,600,000 (the “Prepayment”), payable in cash
or other immediately available funds.

     

    1.3           Modification of
Warrants.  In consideration of the terms hereof, on the
Effective Date, Purchaser and Issuer shall modify the terms of the Warrants to
reduce the Exercise Price (as defined in each of the Warrants) to $0.075 per
share.  Upon the request of Purchaser, together with delivery of the
Warrants, Issuer shall reissue to Purchaser modified warrant certificates
reflecting the modified Exercise Price as set forth herein.

     

    1.4           Effective
Date.  Except with respect to the transactions contemplated in
Sections 1.1 and 2.2, the Prepayment and the other transactions contemplated
pursuant to this Amendment shall take place contemporaneously with the closing
of the JV Transaction pursuant to the terms of the Subscription Agreement (as
defined in the Subscription Agreement as the Completion Date) (the “Effective Date”).

     

     

    Section
2.                      MODIFICATION AND/OR TERMINATION OF
SECURITY INTERESTS

     

    2.1           Amendment to Security
Agreement.  Purchaser and Issuer amend and restate as of the
Effective Date the terms of the Security Agreement, in the form attached hereto
as Exhibit B
(the “Amended and Restated
Security Agreement”), to reflect the changes to the collateral subject to
the Purchaser’s security interest from the date hereof.

     

    2.2           Amendment to Pledge
Agreement.  Purchaser and Issuer amend and restate as of the
date of this Agreement the terms of the Pledge Agreement, in the form attached
hereto as Exhibit
C (the “Second Amended
and Restated Pledge Agreement”), to reflect the release from Purchaser’s
security interest of Issuer’s equity interest in CGMR HK and any other
Collateral under the Pledge Agreement not forming Collateral under the Second
Amended and Restated Pledge Agreement.

     

    2.3           Release of
Security.

     

    1.      Effects of Amendments to Security
Agreement and Pledge Agreement.  Purchaser hereby completely,
fully and irrevocably releases, discharges and acquits, as of the Effective
Date, Issuer from (i) the Pledge Agreement and (ii) subject to receipt of the
Prepayment, the Security Agreement, in each case only to the extent not restated
in the Second Amended and Restated Pledge Agreement and the Amended and Restated
Security Agreement, respectively.

     

    
      
         

      

      
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    2.      Release of CGMR HK Security
Interests.  Subject to receipt of the Prepayment, Purchaser
hereby completely, fully and irrevocably releases, discharges and acquits, as of
the Effective Date, CGMR HK from (i) the HK Guaranty and (ii) the HK Subsidiary
Security Agreement, and terminates the obligations of CGMR HK under the HK
Guaranty and HK Subsidiary Security Agreement.  With the exception of
the release of CGMR HK, nothing in this Section 2.3(2) shall operate to release
Issuer or any other third party from Issuer’s continuing indebtedness under the
Note or the remaining Security Documents.

     

    3.      Release of
Claims.

     

    a.      CGMR
HK hereby absolutely and unconditionally releases and forever discharges
Purchaser and its officers, directors, agents, employees and other affiliates
thereof, from any and all claims, demands or causes of action of any kind,
nature or description, whether arising in law or equity or upon contract or tort
or under any state or federal law or otherwise, which CGMR HK has had, now has
or has made claim to have against any such person for or by reason of any act,
omission, matter, cause or thing whatsoever arising from the beginning of time
to and including the date of this release, whether such claims, demands and
causes of action are matured or unmatured or known or unknown.

     

    b.      Purchaser
hereby absolutely and unconditionally releases and forever discharges CGMR HK
and its officers, directors, agents and employees, from any and all claims,
demands or causes of action of any kind, nature or description, whether arising
in law or equity or upon contract or tort or under any state or federal law or
otherwise, which Purchaser has had, now has or has made claim to have against
any such person for or by reason of any act, omission, matter, cause or thing
whatsoever arising from the beginning of time to and including the date of this
release, whether such claims, demands and causes of action are matured or
unmatured or known or unknown.

     

    4.      Releases
Irrevocable.  Upon execution of this Agreement, and subject to
receipt of the Prepayment from or on behalf of the Issuer, Purchaser’s release
of security interests as set forth in this Section 2.3 are irrevocable by
Purchaser unless with the written consent of London Mining.  Purchaser
acknowledges and agrees that the Prepayment may be made by the Issuer or London
Mining (or such other person as London Mining directs) on behalf of the
Issuer.

     

    5.      Effect of
Release.  Purchaser acknowledges, without limiting this Section
2.3, that the effect of this Section 2.3 includes the complete, full and
irrevocable release from its security interest of the Issuer’s equity interests
in CGMR HK, the Rights and any other interests in the PRC Properties such that
on and from the Effective Date, Purchaser has no other security over any equity
interests in (except with respect to the pledge of Issuer’s equity interest
pursuant to the Second Amended and Restated Pledge Agreement) or the assets of,
or otherwise in relation to, CGMR BVI and any of its subsidiary undertakings,
from time to time other than that specified in Section 1 of the Amended and
Restated Security Agreement.

     

    6.      Further Actions;
Authorization.  Purchaser agrees that it shall, from time to
time, promptly execute and deliver all further instruments and documents, and
take all further action, that may be necessary or desirable, or that Issuer or
CGMR HK may reasonably request, in order to terminate or amend any security
interest released or amended (as applicable) pursuant to the terms of this
Section 2.  Purchaser by this Agreement authorizes Issuer and CGMR HK
to file one or more financing, continuation or termination statements, and
amendments thereto, relative to the related collateral and security
interests.

     

    
      
         

      

      
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    Section
3.                      CONSENTS AND
WAIVERS

     

    3.1           Access to
Information.  Purchaser acknowledges that it (i) has been
provided a copy of the Subscription Agreement dated November 17, 2008 by and
between Issuer and London Mining setting forth the terms of London Mining’s
investment in CGMR BVI, (ii) has been provided a form of the Shareholders’
Agreement to be entered into by and among Issuer, London Mining and CGMR BVI
relating to certain governance and other terms and conditions applicable to CGMR
BVI (the “Shareholders’
Agreement” and forms of the documents referenced in the Shareholders’
Agreement are collectively referred to herein as the “Provided JV Documents”) and
(iii) has been afforded the opportunity to access full and complete information
regarding the JV Transaction, including the opportunity to contact Issuer
representatives concerning the JV Transaction, and has utilized such access to
Purchaser’s satisfaction.

     

    3.2           Consent, Waiver and
Undertaking.  Purchaser hereby provides its consents under, and
any required waivers and undertakings in respect of, pursuant to, the terms of
the Purchase Agreement and the agreements referenced therein, including without
limitation the Security Documents, the Pledge Agreement to the consummation by
Issuer and the subsidiaries (as appropriate) of the JV Transaction on terms
substantially similar to those set forth in the Provided JV
Documents.  Without limitation, the consent, waiver and undertaking
provided for herein shall include in particular the following:

     

    1.      consent
to the JV Transaction (provided there have been no amendments to the Provided JV
Documents which materially effect the security to which the Purchaser has been
granted under the Amended and Restated Security Agreement and the Second Amended
and Restated Pledge Agreement) with respect to the negative covenants set forth
in Section 4.4 of the Purchase Agreement;

     

    2.      an
acknowledgment and agreement that the JV Transaction (provided there have been
no amendments to the Provided JV Documents which materially effect the security
to which the Purchaser has been granted under the Amended and Restated Security
Agreement and the Second Amended and Restated Pledge Agreement) does not
constitute an Event of Default pursuant to Section 7.1 of the Purchase
Agreement;

     

    3.      an
acknowledgment that any enforcement of its rights under the Second Amended and
Restated Pledge Agreement pertaining to CGMR BVI will be subject to the terms of
the Shareholders' Agreement between London Mining and the Issuer to be entered
into on the date of London Mining's subscription into CGMR BVI;

     

    4.      consent
to the transfer by Issuer of its equity interest in CGMR HK to CGMR BVI pursuant
to the terms of the JV Transaction;

     

    5.      consent
to the transfer by Original BVI Co of the Rights to Maanshan Global Mining
Resources Limited, a corporation organized under the laws of the People’s
Republic of China and a wholly owned subsidiary of Original BVI Co (“MGMR”), and the transfer by
MGMR of the Rights to CGMR HK;

     

    6.      consent
to the change of the name of Original BVI Co.;

     

    7.      consent
to the acquisition of Issuer’s equity interest in CGMR BVI pursuant to the terms
of the Shareholders’ Agreement by London Mining or a member of its Group (as
defined in the Shareholders’ Agreement) or a third party under the “Come Along”
provisions of the Shareholders’ Agreement with respect to the negative covenants
set forth in Section 4.4 of the Purchase Agreement and an acknowledgment and
agreement that any such sale would not constitute an Event of Default pursuant
to Section 7.1 of the Purchase Agreement; and

     

    
      
         

      

      
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    8.      an
undertaking that if Purchaser elects to enforce any of its rights under the
Amended and Restated Pledge Agreement it will enter into a Deed of Adherence in
accordance with the terms of the Shareholders’ Agreement prior to the transfer
of any equity interests in CGMR BVI from Issuer to Purchaser.

     

    Section
4.                      MISCELLANEOUS

     

    4.1           This
Amendment shall be construed in connection with and as part of the Purchase
Agreement, and, except as modified and expressly amended by this Amendment, all
terms, conditions and covenants contained in the Purchase Agreement, are hereby
ratified and shall be and remain in full force and effect.

     

    4.2           Any
and all notices, requests, certificates and other instruments executed and
delivered after the execution and delivery of this Amendment may refer to the
Purchase Agreement without making specific reference to this Amendment, but
nevertheless all such references shall include this Amendment, unless the
context otherwise requires.

     

    4.3           Purchaser
and Issuer acknowledge and agree that CGMR BVI and its successors and assigns
(collectively, the “Beneficiaries”) are expressly intended to be third-party
beneficiaries to this Agreement, and that all provisions of this Agreement
relating to each such Beneficiary are intended to inure to the benefit of such
Beneficiary.  Each such party is entitled to any rights, interest or
claims arising hereunder.

     

    4.4           The
description headings of the various sections or parts of this Amendment are for
convenience only and shall not affect the meaning or construction of any of the
provisions hereof.

     

    4.5           This
Amendment shall be governed by and construed in accordance with Kansas
law.

     

    4.6           This
Amendment may be executed in any number of counterparts, each executed
counterpart constituting an original, but all together only one
agreement.  Signature to this Amendment may be given by facsimile or
other electronic transmission and such signatures shall be fully binding on the
party sending the same.

     

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

     

    
      
         

      

      
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    IN WITNESS WHEREOF, the
parties hereto have executed this Agreement on the date first written
above.

     

    
      
        	
                ISSUER:

              	
                WITS
      BASIN PRECIOUS MINERALS INC.,

              
	 
      	
                a
      Minnesota corporation

              
	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/ Mark D. Dacko

              
	 
      	
                Name:

              	
                Mark
      D. Dacko

              
	 
      	
                Title:

              	
                Chief
      Financial Officer

              
	 
      	 
      	 
      
	
                PURCHASER:

              	
                CHINA
      GOLD, LLC,

              
	 
      	
                a
      Kansas limited liability company

              
	 
      	 
      	 
      
	 
      	
                By:

              	
                Pioneer
      Holdings, LLC

              
	 
      	
                Its:

              	
                Manager

              

      

    

    

    
      
        	
                By:

              	
                /s/ C. Andrew Martin

              
	
                Name:
      C. Andrew Martin

              
	
                Title:  Manager

              

      

    

    

    
      
        	
                CGMR
      HK:

              	
                CHINA
      GLOBAL MINING RESOURCES LTD

              
	 
      	
                a
      company registered under the laws of Hong Kong

              
	 
      	
                (with
      respect to Section 2.3 only)

              
	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/ Mark D. Dacko

              
	 
      	
                Name:

              	
                Mark
      D. Dacko

              
	 
      	
                Title:

              	
                DirectorEXHIBIT
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, AS AMENDED BY THAT CERTAIN AMENDMENT TO CONVERTIBLE NOTES
PURCHASE AGREEMENT DATED JUNE 19, 2007, THAT CERTAIN AMENDMENT NO. 2 DATED
NOVEMBER 10, 2008, AND THAT CERTAIN AMENDMENT NO. 3 DATED DECEMBER 22, 2008 BY
THE HOLDER AND ISSUER.

     

    CERTIFICATE
NO: 1

     

    SECOND AMENDED AND RESTATED
PROMISSORY NOTE

     

    
      	
              $10,421,107.18

            	
              December
      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 China Gold LLC, a Kansas limited
liability company, or its successors and assigns (the “Holder”) on demand at any time
on or after February 15, 2010 (the “Maturity Date”), the principal
sum of up to Ten Million Four Hundred Twenty-One Thousand One Hundred Seven and
18/100 Dollars ($10,421,107.18) (the “Principal”), together with
accrued and unpaid interest thereon, as provided herein and from the Prior Notes
below until fully paid (the “Indebtedness”), all without
relief from valuation or appraisement laws.

     

    This
Second Amended and Restated Promissory Note (the “Note”) is issued pursuant to
that certain Convertible Notes Purchase Agreement dated as of April 10, 2007, as
previously amended by that certain Amendment to Convertible Notes Purchase
Agreement dated June 19, 2007, as further amended by that certain Amendment No.
2 to Convertible Notes Purchase Agreement on November 10, 2008, and as further
amended by that certain Amendment No. 3 to Convertible Notes Purchase Agreement
on the date hereof  (as amended, modified, or replace from time to
time, the “Notes Purchase
Agreement”).  Pursuant to that certain Amended and Restated
Promissory Note dated November 11, 2008 (the “First Amended Note”), the
Issuer and Holder amended and consolidated the following notes issued pursuant
to the Notes Purchase Agreement:  (i) Convertible Promissory Note
issued on April 10, 2007 in the principal amount of $3,000,000; (ii) Convertible
Promissory Note issued on May 7, 2007 in the principal amount of $2,000,000;
(iii) Convertible Promissory Note issued on June 19, 2007 in the principal
amount of $4,000,000; and (iv) Convertible Promissory Note issued on July 9,
2007 in the principal amount of $800,000 (collectively, the “Prior
Notes”).  Pursuant to this Note, the First Amended Note is
consolidated with that certain Promissory Note dated October 28, 2008 in the
principal amount of $441,000.  Holder has delivered the Prior Notes
and First Amended Note to Issuer and they have been cancelled in their
entirety.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    1.           Payment of Principal and
Interest.  Subject to acceleration or earlier payment as
provided for elsewhere in this Note, the 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 Notes Purchase Agreement to be
executed and delivered to or for the benefit of Holder (collectively, together
with this Note and the Notes Purchase Agreement, and as each have and may be
amended from time to time, the “Investment Documents”), the
principal balance of this Note, and any accrued and unpaid interest thereon,
shall be due and payable upon Holder’s demand on or after 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 for all costs
of collection of any kind, including reasonable attorneys’ fees and expenses;
(b) to accrued but unpaid interest on this Note; and (c) to the unpaid principal
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 12.25% (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, without premium or penalty (a
“Prepayment”).

     

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

     

    7.           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; and (c) Issuer shall pay to Holder, in
addition to the sums stated above, the costs of collection, regardless of
whether litigation is commenced, including reasonable attorneys’
fees.

     

    Holder
may employ an attorney to enforce its rights and remedies hereunder and Issuer
hereby agrees to pay Holder’s reasonable attorneys’ fees and other reasonable
expenses, including reasonable expenses relating to any assistance provided by
Holder to Issuer in resolving such defaults and amounts incurred by Holder in
exercising any of Holder’s rights and remedies upon an Event of
Default.  Holder’s rights and remedies under this Note 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.

     

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

     

    9.           Authority.  Issuer
warrants and represents that the persons or officers who are executing this Note
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.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    10.           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.

     

    11.           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.

     

    12.           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.

     

    13.           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.

     

    14.           Relationship to Security
Agreement.  The Indebtedness shall be entitled to the benefits
of, shall be construed in accordance with the security granted by Issuer to
Holder pursuant to that certain Amended and Restated Security Agreement and that
certain Second Amended and Restated Pledge Agreement, each dated of even date
herewith by and between Holder and Issuer.  Holder acknowledges and
agrees that, pursuant to the terms of Amendment No. 3 to the Convertible Notes
Purchase Agreement, it has completely and fully released from its security
interest the Rights and any other interests in the PRC Properties, and that upon
effectiveness of the releases, it has no other security over any equity
interests in (except with respect to the pledge of Issuer’s equity interest
pursuant to that certain Second Amended and Restated Pledge Agreement dated of
even date herewith by and between Issuer and Holder) or the assets of, or
otherwise in relation to, China Global Mining Resources (BVI) Limited, with
registered number 1513743 in the British Virgin Islands, and any of its
subsidiary undertakings, from time to time other than that specified in Section
1 of the Amended and Restated Security Agreement.

     

    
      
        
        

      

      
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    15.           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 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.

     

      (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.]

     

    
      
        
        

      

      
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    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:

            	
              Chief Financial
  Officer

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