Document:

EXHIBIT
        10.1

       

      AMENDED
        AND RESTATED

      LOAN
        AND SECURITY AGREEMENT

       

      This
        Amended and Restated Loan and Security Agreement (the
        “Amended Agreement”) is entered into as of the 1st
        day of
        November, 2005, by and among Wits Basin Precious Minerals Inc., a Minnesota
        corporation (the “Company”), and Pacific Dawn Capital, LLC, a California limited
        liability company (the “Lender”).

       

      INTRODUCTION

       

      A.  On
        September 30, 2005, the Company and the Lender entered into that certain
        Loan
        and Security Agreement (the “Loan Agreement”), pursuant to which the Lender
        provided bridge financing to the Company in the amount of up to $600,000
        against
        a secured convertible promissory note accruing interest at a rate of 6% per
        annum.

       

      B.  On
        the
        date hereof, the Company entered into a similar loan and security agreement
        (the
“Green Loan”) with Andrew Green (“Green”), pursuant to which Green provided
        bridge financing to the Company in the amount of up to $600,000 against a
        secured convertible promissory note accruing interest at a rate of
        12%.

       

      C.  As
        a
        condition to the Green Loan, the Company is required to grant Green a secondary
        security interest in all of its assets, such interest to be pari
        passu
        with the
        Lender’s security interest. 

       

      D.  In
        consideration of the Lender’s agreement to amend the terms of the Loan Agreement
        to (i) consent to the Green Loan, (ii) allow the Company to grant to Green
        a
        security interest in the assets of the Company pari
        passu
        with
        Lender’s security interest and (iii) to provide for a balloon payment of
        principal and interest at the Maturity Date (as defined herein), and certain
        other amendments, the Company has agreed to increase the applicable interest
        rate under the Note (as defined herein) to 12% per annum.

       

      E.  Accordingly,
        the Company and the Lender desire to amend and restate the terms of the Loan
        Agreement as set forth in this Amended Agreement.

       

      AGREEMENT

       

      Now,
        Therefore,
        in
        consideration of the foregoing facts and premises hereby made a part of this
        Amended 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:

       

      Article
        1

      Loan
        

       

      1.1  The
        Loan.
        On the
        terms and conditions hereof, the Lender hereby agrees to loan the Company
        up to
        $600,000 (the “Loan”) pursuant to mutually acceptable monthly draws by the
        Company of up to $100,000 (each a “Monthly Draw”). The parties hereby
        acknowledge the acceptance of the first Monthly Draw, and that such Monthly
        Draw
        occurred on October 1, 2005 via a wire transfer of immediately available
        funds
        by Lender to the Company (the “Initial Monthly Draw”). Thereafter, the parties
        may mutually agree to additional Monthly Draws during each successive month
        commencing November 2005 and ending March 2006 (each such month shall be
        hereinafter referred to as a “Month” and each additional Monthly Draw an
“Additional Monthly Draw”). 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      1.2  Mechanics
        of Additional Monthly Draws. If the Company intends to exercise an
        Additional Monthly Draw for any Month, it shall deliver to the Lender a written
        notice of its intent (each, a “Notice”), such Notice to include the amount of
        such draw (not to exceed $100,000) and current assay reports relating to
        the
        Company’s exploration operations (“Assays”), on or prior to the 25th
        day of
        the calendar month prior to the such Month. If the Lender intends to reject
        such
        Additional Monthly Draw, it shall, within three (3) Business Days of its
        receipt
        of Notice, deliver to the Company written notice of such rejection. If the
        Lender accepts the Additional Monthly Draw, it shall deliver to the Company,
        via
        wire transfer of immediately available funds, the amount of such draw specified
        in the Notice on or before the fifth (5) day of such Month (the “Wire Date”).
        For purpose of this Amended Agreement, “Business Day” means any day other than a
        Saturday, Sunday or legal holiday in the State of Minnesota. In the event
        any
        day upon which notice is required to be delivered falls on Non-Business Day,
        a
        weekend or holiday, the party shall have until the end of next Business Day
        to
        deliver such notice to the other party.

       

      Notwithstanding
        the foregoing, in the event the Company does not exercise its Monthly Draw
        during any Month, the Company waives its right to exercise the funds
        representing the Monthly Draw for that Month. The aggregate amount of the
        Monthly Draws shall be referred to herein as the “Loan Amount.”

       

      1.3  Consideration.

       

      (a)  Initial
        Monthly Draw.
        In
        consideration of the Initial Monthly Draw, the Company shall, within two
        (2)
        Business Days of the Company’s receipt of such Initial Monthly
        Draw:

       

      (i)  Issue
        and
        deliver to the Lender a convertible secured promissory note in a principal
        amount equal to the Loan Amount, in the form attached hereto as Exhibit
        A
        (the
“Note”);

       

      (ii)  Issue
        and
        deliver to the Lender 500,000 shares of its restricted common stock, par
        value
        $.01 per share (the “Common Stock”); and

       

      (iii)  Issue
        and
        deliver to the Lender warrants to purchase 1,000,000 shares of Common Stock
        at
        an exercise price of $0.12 per share (the “Warrants”), a form of which is
        attached hereto as Exhibit
        B.
        

       

      (b)  Additional
        Monthly Draws.
        For
        each additional Monthly Draw, the Company shall:

       

      (i)  Issue
        to
        the Lender, within two (2) Business Days of the Wire Date associated with
        such
        Monthly Draw, Warrants to purchase an additional 1,000,000 shares of Common
        Stock at an exercise price of $0.12 per share; and

       

      (ii)  Reflect
        in the Company’s records the increase to the Principal balance of the Note (as
        such term is defined in the Note). 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (c)  Non-Usage
        of Draws.
        In the
        event the Company does not exercise any Additional Monthly Draws, the Company
        shall issue to the Lender 500,000 shares of Common Stock; provided that,
        the
        Company shall not be required to issue Common Stock pursuant to this Section
        1.3(c) if the Company provides one or more Notices to exercise an Additional
        Monthly Draw and each such Notice is rejected by the Lender. 

       

      Article
        2

      Company
        Representations and Warranties

       

      The
        Company hereby makes the following representations and warranties to the
        Lender
        as of the Closing Date.

       

      2.1  Organization,
        Good Standing and Qualification.
        The
        Company is a corporation duly organized, validly existing and in good standing
        under the laws of the State of Minnesota. The Company has all requisite
        corporate power and authority to own and operate its properties and assets,
        to
        execute and deliver this Amended Agreement, the Note and the Warrants (together,
        the “Transaction Documents”), to issue and sell the shares of Common Stock
        issuable hereunder and upon exercise of the Warrants (the “Warrant
        Shares”), to carry out the provisions of the Transaction Documents, and to carry
        on its business as presently conducted and as presently proposed to be
        conducted. The Company is duly qualified and is authorized to do business
        and is
        in good standing in each jurisdiction in which the nature of its activities
        makes such qualification necessary, except for those jurisdictions in which
        failure to be so qualified would not have a materially adverse effect on
        the
        Company or its business, taken as a whole.

       

      2.2  Authorization;
        Binding Obligations.
        All
        corporate action on the part of the Company, its officers, directors and
        shareholders necessary for the authorization of the Transaction Documents,
        the
        performance of all obligations of the Company hereunder, including the
        authorization, sale, issuance and delivery of the Common Stock, including
        the
        Warrant Shares, has been taken. The Transaction Documents, when executed
        and
        delivered, will be valid and binding obligations of the Company enforceable
        in
        accordance with their respective terms, except as limited by applicable
        bankruptcy, insolvency, reorganization, moratorium or other laws of general
        application affecting enforcement of creditors’ rights and according to general
        principles of equity that restrict the availability of equitable
        remedies.

       

      2.3  Issuance
        of Common Stock.
        The
        shares of Common Stock issuable hereunder, including upon exercise of the
        Warrants, when issued, shall be validly issued, fully paid and
        nonassessable.

       

      2.4  Collateral.
        The
        Company is the legal and beneficial owner of the Collateral, as defined in
        Article 4 hereof. The Collateral is subject to a priority security interest
        held
        by Pandora Select Partners, L.P. (the “Priority Security Interest”) and a
        secondary security interest held by Andrew Green (the “Secondary Security
        Interest”). Except
        for the Priority Security Interest and the Secondary Security Interest, the
        Collateral is free and clear of all mortgages, security interests, liens,
        encumbrances and claims of every kind (the “Encumbrances”). The Collateral is
        and will remain free and clear of all Encumbrances of any nature whatsoever,
        except for the Priority Security Interest, the Secondary Security Interest
        and
        those contemplated herein. 

       

      2.5  Offering.
        Assuming the accuracy of the representations and warranties of the Lender
        contained in Article 3 hereof, the offer, issue and sale of the Note, Warrants,
        the Common Stock and the Warrant Shares (collectively, the “Securities”) is and
        will be exempt from registration and prospectus delivery requirements of
        the
        Securities Act of 1933, as amended, and are exempt from registration and
        qualification under the requirements of all applicable state securities
        laws.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Article
        3

      Lender’s
        Representations and Warranties

       

      The
        Lender hereby represents and warrants to the Company, as of the Closing Date,
        as
        follows:

       

      3.1  Investment
        Representations.
        The
        Lender understands that neither the offer or the sale of the Securities have
        been registered under the Securities Act. The Lender also understands that
        the
        Securities are being offered and sold pursuant to an exemption from registration
        contained in the Securities Act based in material part upon the Lender’s
        representations contained in the Amended Agreement. In this regard, the Lender
        additionally represents and warrants as follows:

       

      (a)  The
        Lender has substantial experience in evaluating and investing in private
        placement transactions of securities in companies similar to the Company
        so that
        it is capable of evaluating the merits and risks of its investment in the
        Company. The Lender must bear the economic risk of this investment indefinitely
        unless the Shares are registered for resale pursuant to the Securities Act,
        or
        an exemption from registration is available. The Lender has no present intention
        of selling or otherwise transferring the Securities, or any interest therein.
        The Lender also understands that there is no assurance that any exemption
        from
        registration under the Securities Act will be available and that, even if
        available, such exemption may not allow the Lender to transfer all or any
        portion of the Securities under the circumstances, in the amounts or at the
        times the Lender might wish. Lender
        represents and agrees that if, contrary to the foregoing representations
        and
        warranties, Lender should later desire to dispose of or transfer all or any
        portion of the Shares or Securities in any manner, Lender shall not do so
        without complying with applicable securities laws.

       

      (b)  The
        Lender is acquiring the Securities for the Lender’s own account, for investment
        only, and not with a view towards their public distribution. Lender is not
        aware
        of any occurrence, event or circumstance upon the happening of which Lender
        intends to transfer or sell the Securities. Lender has been informed that,
        in
        the view of the certain state securities commissions, a purchase of Securities
        with a current intent to resell, by reason of any foreseeable specific
        contingency or anticipated change in market values, any change in the condition
        of the Company or the investment market as a whole, or in connection with
        a
        contemplated liquidation or settlement of any loan obtained for the acquisition
        of the Securities, would represent a purchase with an intent inconsistent
        with
        the representations set forth above, and that certain state securities
        commissions might regard such sale or disposition as a deferred sale with
        regard
        to which an exemption from registration is not available.

       

      (c)  The
        Lender represents that, by reason of the business or financial experience
        of
        Lender’s management , the Lender has the capacity to protect his own interests
        in connection with the transactions contemplated in this Amended Agreement
        and
        the Securities. Further, the Lender is aware of no publication of any
        advertisement in connection with the transactions contemplated in the Amended
        Agreement.

       

      (d)  The
        Lender represents that the Lender is an accredited investor within the meaning
        of Regulation D under the Securities Act.

       

      (e)  Lender
        represents and warrants that this Amended Agreement and the obligations of
        Lender hereunder have been fully authorized by Lender, and are legal, valid
        and
        binding upon Lender, enforceable in accordance with their terms and that
        Lender
        is limited liability company duly organized in the State of
        California.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      3.2  High
        Risk.
        The
        Securities offered hereby are highly speculative in nature and an investment
        therein involves a high degree of risk, including but not limited to the
        risk of
        losing the entire investment in such Securities.

       

      3.3  No
        Governmental Approval.
        No
        federal or state agency, including the Commission or the securities commission
        or authority of any state, has approved or disapproved the Securities, passed
        upon or endorsed the merits of the issuance of Securities or the accuracy
        or
        adequacy of any information provided by the Company, or made any finding
        or
        determination as to the fairness or fitness of the Securities for
        sale.

       

      3.4  No
        Reliance.
        Lender
        has been encouraged to rely upon the advice of its legal counsel, accountants
        or
        other financial advisors with respect to tax and other considerations relating
        to the purchase of the Securities pursuant hereto. Lender is not relying
        upon
        the Company with respect to the economic considerations involved in determining
        to make an investment in the Securities.

       

      3.5  Access
        to Information.
        Lender
        has been given access to full and complete information regarding the Company
        and
        has utilized such access to Lender’s satisfaction for the purpose of obtaining
        information respecting the Company. Particularly, Lender has been given
        reasonable opportunity to meet with and/or contact Company representatives
        for
        the purpose of asking questions of, and receiving answers from, such
        representatives concerning the terms and conditions of the issuance of the
        Securities and to obtain any additional information, to the extent reasonably
        available, necessary to verify the accuracy of information about the Company
        already obtained.

       

      Article
        4

      Other
        Agreements

       

      4.1  Security
        Agreement.
        To
        secure the full and timely payment and performance of the Company’s obligations
        under this Amended Agreement and the Note, the Company hereby grants to Lender
        a
        security interest (the “Security Interest”) in the property of the Company
        identified on Exhibit C hereto, whether now owned or later acquired or created,
        and including all proceeds therefrom, whether cash or non-cash (collectively,
        the “Collateral”). The Security Interest is secondary in interest to the
        Priority Security Interest held by Pandora Select Partners, L.P., and, pursuant
        to [that certain Intercreditor Agreement entered into effective November
        1, 2005
        by and between Lender and Andrew Green], pari
        passu
        with the
        Secondary Security Interest held by Andrew Green.

       

      4.2  “Piggyback”
        Registration. Except in the event of a public offering of securities by the
        Company, at any such time the Company proposes to file a registration statement
        with the SEC under the Securities Act registering equity securities or debt
        with
        equity features for public sale or resale (except by a Form S-4 or Form S-8
        Registration Statement or any successor forms thereto), it will give Lender
        at
        least ten (10) days’ advance written notice of its intention to file such
        registration statement and Lender shall have the right to have included in
        such
        registration statement the number of shares of Common Stock issued to Lender
        hereunder, including shares issued upon conversion of the Note or exercise
        of
        the Warrants, as Lender shall designate to the Company within ten (10) days
        after the date the Company provides such notice. The Company will use
        commercially reasonable efforts to cause all of such shares to be included
        in
        such registration statement proposed to be filed by the Company; provided,
        however,
        that
        nothing herein shall prevent Company from, at any time, abandoning or delaying
        any registration. If any registration pursuant to this Section is underwritten
        in whole or in part, the Company may require that the shares be included
        in the
        underwriting on the same terms and conditions as the securities otherwise
        being
        sold through the underwriters and that the Purchaser execute any underwriting
        agreement, “lock-up” letters or other customary agreements or documents executed
        by all of the other selling securityholders in connection with that underwritten
        offering. If, in the reasonable opinion of the managing underwriter of the
        proposed offering, the number of shares offered for participation in the
        proposed offering cannot be accommodated without adversely affecting the
        proposed offering, then the amount of such shares proposed to be offered,
        as
        well as the number of securities of any other selling stockholders participating
        in the registration, shall be proportionately reduced to a number deemed
        satisfactory by the managing underwriter. 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      4.3  Preemptive
        Rights. Except for Excluded Shares (as defined below), the Company shall
        not,
        for cash, issue, sell or exchange, agree to issue, sell or exchange, or reserve
        or set aside for issuance, sale or exchange, (i) any shares of its Common
        Stock,
        (ii) any other equity securities of the Company, including, without limitation,
        shares of Preferred Stock, (iii) any option, warrant or other right to subscribe
        for, purchase or otherwise acquire any equity securities of the Company,
        or (iv)
        any debt securities convertible into capital stock of the Company (collectively,
        the “Offered Securities”), unless in each such case the Company first delivers
        to the Lender a written notice of any proposed or intended issuance, sale
        or
        exchange of Offered Securities (the “Offer”), which Offer shall
        (i) identify and describe the Offered Securities, (ii) describe
        the
        price and other terms upon which they are to be issued, sold or exchanged,
        and
        the number or amount of the Offered Securities to be issued, sold or exchanged,
        (iii) identify the persons or entities to which or with which the
        Offered
        Securities are to be offered, issued, sold or exchanged and (iv) offer
        to
        issue and sell to or exchange with the Lender such portion of the Offered
        Securities as the aggregate number of shares of Common Stock then held by
        the
        Lender pursuant to this Amended Agreement (on an as-converted basis assuming
        the
        conversion of the Loan Amount on the Note and the exercise of outstanding
        Warrants) bears to the total number of shares of Common Stock outstanding
        on an
        as-converted basis. The Lender shall have the right, for a period of 20 days
        following delivery of the Offer, to purchase or acquire, at a price and upon
        the
        other terms specified in the Offer, the number or amount of Offered Securities
        described above. The Offer by its term shall remain open for such 20-day
        period.
        For purposes of this Amended Agreement, “Excluded Shares” shall include
        securities of the Company issued pursuant to (A) a stock option plan (or
        similar
        equity incentive plan) to employees, consultants or directors for the primary
        purposes of soliciting or retaining services, (B) a conversion or exercise
        of
        derivative securities, (C) a bona fide business acquisition of or by the
        Company, whether by merger, consolidation, sale of all or substantially all
        of
        the assets of the Company or a third party, (D) a financing of the Company
        whereby the Company receives gross proceeds of $2,000,000 or more, (E) a
        public
        offering of securities of the Company, and (F) the Green Loan.

       

      Notwithstanding
        the foregoing, in the event the Board of Directors of the Company determines,
        in
        its good faith and reasonable discretion, that the Company is unable to obtain
        available financing necessary to the Company due to its obligation to provide
        the Lender the rights referenced in this Section 4.3, the Company is entitled
        to
        obtain such financing and shall use its best efforts to offer the Lender
        the
        opportunity to purchase like-securities of the Company at terms similar to
        those
        provided to third-party investors in such financing arrangement.

       

      4.4  Future
        Issuance of Warrants.
        On each
        date which the Company prepays outstanding Principal (as defined in the Note)
        under the Note (each, a “Payment Date”), the Company shall issue to the Lender a
        warrant to purchase the number of shares of Common Stock into which such
        Principal would be convertible on such Payment Date (each, a “Payment Warrant”)
        at an exercise price equal to the Conversion Price applicable on the Payment
        Date (subject to adjustment), in a form substantially similar to that provided
        herein as Exhibit B relating to the Warrants. Each Payment Warrant shall
        be
        exercisable from the date of its issuance through and including the Maturity
        Date (as defined in the Note). 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Article
        5

      General
        Provisions

       

      5.1  Entire
        Agreement.
        The
        Transaction Documents and the other documents delivered pursuant hereto
        constitute the full and entire understanding and agreement between the parties
        with regard to the subjects hereof and no party shall be liable or bound
        to any
        other in any manner by any representations, warranties, covenants and agreements
        except as specifically set forth herein and therein. This Amended Agreement
        amends, restates and supercedes the terms of the Loan Agreement.

       

      5.2  Governing
        Law; Venue.
        This
        Amended Agreement shall be governed by the laws of the State of California
        without regard to its conflicts-of-law principles. The parties expressly
        acknowledge and agree that any judicial action to enforce any right of any
        party
        under this Amended Agreement, the Note or the Warrant may be brought and
        maintained in California state or federal courts. Accordingly, the parties
        hereby submit to the process, jurisdiction and venue of any such court. Each
        party hereby waives, and agrees not to assert, any claim that it is not
        personally subject to the jurisdiction of the foregoing courts in the State
        of
        California or that any action or other proceeding brought in compliance with
        this Section is brought in an inconvenient forum.

       

      5.3  Survival.
        The
        representations, warranties, covenants and agreements made herein shall survive
        the Closing.

       

      5.4  Successors
        and Assigns.
        Except
        as otherwise expressly provided herein, the provisions hereof shall inure
        to the
        benefit of, and be binding upon, the successors, assigns, heirs, executors
        and
        administrators of the parties hereto and shall inure to the benefit of and
        be
        enforceable by each person who shall be a holder of the Securities from time
        to
        time.

       

      5.5  Severability.
        In case
        any provision of the Amended Agreement shall be invalid, illegal or
        unenforceable, the validity, legality and enforceability of the remaining
        provisions shall not in any way be affected or impaired thereby.

       

      5.6  Amendment
        and Waiver.
        This
        Amended Agreement may be amended or modified, and any provision hereunder
        may be
        waived, only upon the written consent of the Company and the
        Lender.

       

      5.7  Notices.
        All
        notices, requests, consents, and other communications hereunder shall be
        in
        writing and shall be deemed effectively given and received when delivered
        in
        person or by national overnight courier service or by certified or registered
        mail, return-receipt requested, or by telecopier, addressed as
        follows:

       

      (a)  if
        to the
        Company:

       

      Wits
        Basin Precious Minerals Inc.

      80
        South
        Eighth Street, Suite 900

      Minneapolis,
        Minnesota 55402

      Attention:
        Mark D. Dacko, Chief Financial Officer

      Facsimile:
        (612) 395-5276

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (b)  if
        to the
        Lender:

       

      Pacific
        Dawn Capital, LLC

      2556
        W.
        Woodland Drive

      Anaheim,
        CA 92801

      Attention:
        Donald S. Stoica

      Facsimile:
        (____) _____________

      

      5.8  Counterparts.
        This
        Amended Agreement may be executed in any number of counterparts, all of which
        taken together shall constitute one agreement binding on the parties. Facsimile
        and electronically transmitted signatures shall be valid and binding to the
        same
        extent as original signatures. Each party shall become bound by this Amended
        Agreement immediately upon signing and delivering any counterpart, independently
        of the signature of any other party. Nevertheless, in making proof of this
        Amended Agreement, it will be necessary to produce only one copy signed by
        the
        party to be charged.

       

      5.9  Further
        Assurances.
        Each
        party hereby agrees to execute and deliver such additional documents and
        instruments and to perform such additional acts as may be necessary or
        appropriate to effectuate, carry out and perform all of the terms, provisions
        and conditions of this Amended Agreement and the transactions contemplated
        hereby.

       

      Signature
        Page Follows

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      In
        Witness Whereof,
        the
        parties hereto have set their hands to this Amended Agreement to be effective
        as
        of the date first set forth above.

       

      
        
          	COMPANY:
                  	 	 	LENDER:
	 	 	 	 
	WITS
                  BASIN PRECIOUS MINERALS INC.	 	 	PACIFIC
                  DAWN CAPITAL, LLC
	 	 	 	 
	By:/s/ Mark
                  D. Dacko	 	 	By:
                  /s/Donald Stoica
	
                  

                  Its: CFO	 	 	
                  

                  Its: ManagerEXHIBIT
        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.

       

      AMENDED
        SECURED CONVERTIBLE PROMISSORY NOTE

       

      

        
          	
                  $600,000

                	
                  September
                    30, 2005

                

        

      

       

      FOR
        VALUE RECEIVED,
        Wits
        Basin Precious Minerals Inc., a corporation organized and existing under
        the
        laws of the State of Minnesota (the “Company”),
        hereby unconditionally promises to pay to Pacific Dawn Capital, LLC, a
        California limited liability company, or its successors and assigns (the
        “Holder”)
        on or
        before April 1, 2006 (the “Maturity
        Date”),
        the
        principal sum of Six Hundred Thousand Dollars ($600,000.00), or such lesser
        amount actually advanced to the Company by Holder pursuant to the Loan Agreement
        (as hereinafter defined) (the “Principal”),
        together with accrued and unpaid interest thereon at the rate of twelve percent
        (12%) per annum, calculated on the basis of actual days elapsed in a year
        of 365
        days. From and after the earlier of the Maturity Date or an Event of Default
        (both as defined below), interest on any Principal and interest outstanding
        shall accrue at the rate of eighteen percent (18%) per annum.

       

      This
        Note
        is issued pursuant to the terms of that certain Amended and Restated Loan
        and
        Security Agreement dated as of November 1, 2005 by and between the Company
        and
        Holder (the “Loan Agreement”), and amends and restates the terms of that certain
        Secured Convertible Promissory Note of the Company in favor of the Holder
        dated
        September 30, 2005, which has been delivered by Holder to the Company on
        the
        date hereof and canceled by the Company. 

       

      ARTICLE
        1

      PAYMENTS

       

      1.1  Manner
        of Payment.
        All
        payments of Principal and interest on this Note, whether in cash or by the
        issuance of Common Stock (as set forth in Section 1.2), shall be made at
        such
        place as the Holder shall designate to the Company in writing. If any payment
        of
        Principal or interest on this Note is due on a day that is not a Business
        Day,
        such payment shall be due on the next succeeding Business Day, with such
        extension of time taken into account in calculating the amount of interest
        payable under this Note. “Business
        Day”
        means
        any day other than a Saturday, Sunday or legal holiday in the State of
        Minnesota.

       

      1.2  Prepayment.
        The
        Company shall have the option, in its sole discretion, on the last Business
        Day
        of each calendar month from the date hereof to the Maturity Date, to prepay
        any
        accrual of interest on the outstanding balance of this Note during such month
        (the “Monthly Accrual”), such payment to be made, at the option of the Company
        in its sole discretion, by:

       

      (a)  payment
        to the Holder in cash or other immediately available funds in the amount
        of the
        Monthly Accrual; or

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (b)  the
        issuance to Holder of 50,000 shares of the Company’s common stock, par value
        $.01 per share (the “Common Stock”). 

       

      If
        the
        Company elects to make a payment of a Monthly Accrual pursuant to this Section
        1.2, the amount of such Monthly Accrual shall be, on the date of such payment,
        subtracted from the outstanding balance of this Note. In the event the Company
        elects to make a payment of a Monthly Accrual pursuant to this Section 1.2,
        it
        shall use its best efforts to provide Holder written notice of its intent
        to do
        so at least five (5) days prior to the date of such payment; provided that,
        the
        Company’s failure to provide such notice shall not prevent it from making such
        payment. 

       

      Notwithstanding
        the foregoing, this Note may be prepaid in cash or other immediately available
        funds, in whole or in part by the Company at any time and from time to time,
        without premium or penalty, except as set forth in Section 4.4 of the Loan
        Agreement. 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.

       

      ARTICLE
        2

      CONVERSION

       

      2.1  Conversion.
        At any
        time while any portion of the Principal or accrued and unpaid interest under
        this Note is outstanding, the Holder shall have the right, at the Holder’s
        option, to convert all or any portion of the unpaid Principal and accrued
        interest under this Note (the “Conversion
        Amount”)
        into
        the number of shares of Common Stock computed by dividing the Conversion
        Amount
        by a conversion price of $0.20 per share (the “Conversion
        Price”).

       

      2.2  Mechanics
        and Effect of Conversion.  Subject
        to the terms hereof, this Note may be converted by the Holder in whole or
        in
        part at any time from time to time after the date hereof, by delivering to
        the
        Company at its principal office a Notice of Conversion (by facsimile or other
        reasonable means of communication) on the Conversion Date prior to 6:00 p.m.
        local time in Minneapolis, Minnesota.

       

      Holder
        shall not be required to physically surrender this Note to the Company unless
        the entire unpaid Principal amount of this Note is so converted after the
        Maturity Date. The Holder and the Company 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 the Company, so as not to require physical
        surrender of this Note upon each such conversion. In the event of any dispute
        or
        discrepancy, such records of the Company shall be controlling and determinative
        in the absence of manifest error. Notwithstanding the foregoing, if any portion
        of this Note is converted as aforesaid, the Holder may not transfer this
        Note
        unless the Holder first physically surrenders this Note to the Company,
        whereupon the Company will forthwith issue and deliver upon the order of
        the
        Holder a new Note of like tenor, registered as the Holder (upon payment by
        the
        Holder of any applicable transfer taxes) may request, representing in the
        aggregate the remaining unpaid Principal and any unpaid and accrued interest
        of
        this Note. The Holder and any assignee, by acceptance of this Note, acknowledge
        and agree that, by reason of the provisions of this paragraph, following
        conversion of a portion of this Note, the unpaid and unconverted Principal
        amount of this Note represented by this Note may be less than the amount
        stated
        on the face hereof. 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Upon
        receipt of any Notice of Conversion, the Company shall, within five (5) Business
        days, issue and deliver to such Holder at the address designated by such
        Holder
        a certificate or certificates for the number of shares of Common Stock the
        Holder shall be entitled upon such conversion (bearing such legends as are
        required by applicable state and federal securities laws in the opinion of
        counsel to the Company). 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, the Company 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. 

       

      2.3  No
        Fractional Shares.
        No
        fractional shares shall be issued upon the conversion of this Note. In lieu
        of
        any fractional share of Common Stock to which Holder would otherwise be
        entitled, an amount in cash equal to such fraction multiplied by the Fair
        Market
        Value of a share of Common Stock, such Fair Market Value to be determined
        as
        follows (as applicable): (a) if the Common Stock is traded on an exchange
        or is
        quoted on The Nasdaq National Market, Nasdaq SmallCap Market or the OTC Bulletin
        Board, then the average closing or last sale prices, respectively, reported
        for
        the date of conversion; (b) if the Common Stock is traded in the
        over-the-counter market, then the average of the closing bid and asked prices
        reported on the date of conversion; (c) if the Common Stock is not publicly
        traded and there has been a bona fide sale for cash on an arm’s-length basis
        within 45 days prior to the conversion date of such Common Stock by the Company
        privately to one or more investors unaffiliated with the Company (a “Qualifying
        Sale”), then such most recent sales price; or (d) if the Common Stock is not
        publicly traded and there has been no Qualifying Sale, then fair market value
        of
        such stock will be determined by the Company’s board of directors, acting in
        good faith utilizing customary business valuation criteria and methodologies
        (without discount for lack of marketability or minority interest).

       

      ARTICLE
        3

      CONVERSION
        PRICE ADJUSTMENTS

       

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

       

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

       

      3.3  Effect
        of Reorganization, Reclassification, Merger, Etc. If
        at any
        time the Company: (i) 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 3.1),
        (ii)
        consolidates or merges with another corporation, or sells, conveys, leases
        or
        otherwise transfers all or substantially all of its property to any other
        corporation, which transaction is effected in a manner such that the holders
        of
        Common Stock shall be entitled to receive cash, stock, securities or assets
        with
        respect to or in exchange for Common Stock, or (iii) pays a dividend or makes
        any other distribution upon any class of its capital stock, which dividend
        or
        distribution is payable in Company securities or other Company 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 or other securities or property
        of the
        Company or of the successor corporation resulting from such transaction,
        or of
        the corporation to which the Company 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
        Company’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 or other property thereafter
        deliverable upon the conversion of this Note as if the Note had been converted
        immediately prior to such transaction and Holder had carried out the terms
        of
        the exchange as provided for by such transaction. The Company shall not effect
        any such capital reorganization, consolidation, merger or transfer unless,
        upon
        or prior to the consummation thereof, the successor corporation(s) to which
        Company property has been sold, conveyed, leased or otherwise transferred
        shall
        assume by written instrument the obligation to deliver to Holder such shares
        of
        stock, securities, cash or property which Holder is entitled to receive under
        the foregoing provisions of this Section 3.3.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      ARTICLE
        4

      DEFAULT

       

      4.1  Default.
        The
        occurrence of any of the following events shall constitute a “Default” under
        this Note:

       

      (a)  The
        Company’s failure to remit to Holder the Principal or interest hereof as the
        same becomes due hereunder;

       

      (b)  The
        Company’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)  The
        Company’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)
        and
(c)
        is
        commenced against the Company and such action or proceeding is not vacated
        within 60 days of its commencement; or

       

      (e)  The
        Company’s dissolution or liquidation.

       

      4.2  Remedies
        Upon Default.
        Upon
        any Default:

       

      (a)  Holder
        may without further notice declare the entire remaining Principal sum of
        this
        Note, together with all interest accrued thereon, immediately due and payable;
        and Holder’s failure to declare the entire remaining Principal sum of this Note,
        together with all interest accrued thereon, immediately due and payable shall
        not constitute a waiver by Holder of its right to so declare at any other
        time;

       

      (b)  Holder
        may employ an attorney to enforce its rights and remedies hereunder and Company
        hereby agrees to pay Holder’s reasonable attorneys’ fees and other reasonable
        expenses incurred by Holder in exercising any of Holder’s rights and remedies
        upon Default; and/or Holder’s
        rights and remedies provided hereunder shall be cumulative and may be pursued
        singly, successively or together in Holder’s sole discretion; and Holder’s
        failure to exercise any such right or remedy shall not be a waiver or release
        of
        such rights or remedies or the right to exercise any of them at another
        time.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      ARTICLE
        5

      OTHER
        AGREEMENTS

       

      5.1  Security.
        The
        full and timely payment of this Note shall be secured by a security interest
        in
        certain assets of the Company and that certain Guaranty of Stephen D. King
        dated
        as of September 30, 2005 in favor of the Holder, as the same may be amended.
        

       

      5.2  Call
        Option. At any time the average over twenty (20) consecutive trading days
        of the
        daily average of the high and low Fair Market Value of the Common Stock is
        at or
        above $0.50 per share and the shares of Common Stock issuable upon conversion
        of
        this Note have been registered for resale pursuant to an effective registration
        with the Securities and Exchange Commission, the Company shall have the option
        to prepay the Note by requiring the Holder to convert the outstanding Principal
        and all accrued and unpaid interest under this Note at the Conversion Price
        then
        in effect. In the event the Company exercises its option under this Section
        5.2,
        it shall provide the Holder written notice of its intent to call (the “Call
        Notice”), identifying the date of conversion and the number of shares of Common
        Stock into which the Note shall be convertible. The Company shall deliver
        to
        Holder certificates representing the number of shares of Common Stock identified
        in the Call Notice within five (5) Business Days of the date of conversion
        specified in the Call Notice. 

       

      ARTICLE
        6

      MISCELLANEOUS

       

      6.1  Transferability.
        Without
        the prior written consent of the Company, Holder is prohibited from transferring
        its right, title and interest in this Note.

       

      6.2  Waiver.
        The
        Company 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

       

      6.3  Notices.
        Any
        notice required or permitted to be given hereunder shall be given by the
        Company
        to the Holder or the Holder to the Company in accordance with the Loan
        Agreement.

       

      6.4  Severability.
        If any
        provision in this Note is held invalid or unenforceable by any court of
        competent jurisdiction, the other provisions of this Note will remain in
        full
        force and effect. Any provision of this Note held invalid or unenforceable
        only
        in part or degree will remain in full force and effect to the extent not
        held
        invalid or unenforceable.

       

      6.5  Governing
        Law.
        This
        Note will be governed by the laws of the State of California without regard
        to
        conflicts of laws principles. 

       

      6.6  Parties
        in Interes.
        The
        terms and conditions of this Note shall inure to the benefit of and be binding
        upon the respective successors and assigns of the parties. 

       

      6.7  Section
        Headings, Construction.
        The
        headings of Sections in this Note are provided for convenience only and will
        not
        affect its construction or interpretation. All references to “Section” or
“Sections” refer to the corresponding Section or Sections of this Note unless
        otherwise specified. All words used in this Note will be construed to be
        of such
        gender or number as the circumstances require. Unless otherwise expressly
        provided, the words “hereof” and “hereunder” and similar references refer to
        this Note in its entirety and not to any specific section or subsection
        hereof.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

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

       

      WITS
        BASIN PRECIOUS MINERALS INC.

      

      

      

      By: /s/
        Mark
        D. Dacko

      Name: Mark
        D.
        Dacko

      Title: CFO

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