Document:

EXHIBIT
        10.3

       

      LOAN
        AND SECURITY AGREEMENT

       

      THIS
        LOAN AND SECURITY AGREEMENT (the
        “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 Andrew Green, a resident of Ohio (the
“Lender”).

       

      INTRODUCTION

       

      A.  The
        Company currently has an unsecured $250,000 bridge financing (the “Existing
        Financing”) with the Lender.

       

      B.  The
        Company is in need of additional bridge financing and wishes to borrow from
        the
        Lender, and the Lender desires to loan the Company, up to an additional $350,000
        in principal (for an aggregate of up to $600,000) against a secured convertible
        promissory note.

       

      C.  The
        parties wish to enter into an agreement in connection with the financing,
        in the
        form of this Agreement

       

      AGREEMENT

       

      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:

       

      Article
        1

      Loan
        

       

      1.1  The
        Loan.
        On the
        terms and conditions hereof, the Lender hereby agrees to loan the Company
        up to
        an aggregate amount of $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 and agree that the Existing Financing is set against
        the Loan, thereby allowing additional Monthly Draws of up to an aggregate
        of
        $350,000 in principal. Additionally, the parties also agree to the acceptance
        of
        the first Monthly Draw, and that such Monthly Draw shall occur on November
        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 December
        2005
        and ending February 2006 (each such month shall be hereinafter referred to
        as a
“Month” and each additional Monthly Draw an “Additional Monthly Draw”); provided
        that, the aggregate of such Monthly Draws (including the Existing Financing),
        shall not exceed $600,000. The aggregate amount of the Monthly Draws shall
        be
        referred to herein as the “Loan Amount.”   

       

      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 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. 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      1.3  Consideration.

       

      (a)  Existing
        Financing.In
        consideration for the Existing Financing, the Company will, within two (2)
        Business Days of the date hereof:

       

      (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”); provided that the Company shall not be required to issue the Note to
        Lender until such time it has received from Lender the original note underlying
        the Existing Financing; and 

       

      (ii)  Issue
        and
        deliver to the Lender warrants to purchase 2,500,000 shares of the Company’s
        common stock, par value $.01 per share (the “Common Stock”) at an exercise price
        of $0.12 per share, in the form attached hereto as Exhibit
        B
        (the
“Warrants”).

       

      (b)  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 500,000 shares of restricted Common Stock; 

       

      (ii)  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; and 

       

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

       

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

       

      (i)  Issue
        and
        deliver 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 (or pro-rated amount) 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). 

       

      (d)  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 restricted shares of Common Stock; provided
        that, the Company shall not be required to issue Common Stock pursuant to
        this
        Section 1.3(d) 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 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 Pacific Dawn Capital, LLC (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 and 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 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 Agreement and the
        Securities. Further, the Lender is aware of no publication of any advertisement
        in connection with the transactions contemplated in the Agreement.

       

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

       

      (e)  The
        Lender represents that the obligations of Lender hereunder are legal, valid
        and
        binding upon the Lender, enforceable in accordance with their terms and that
        Lender is an individual residing in the State of Ohio.

       

      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 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 Pacific Dawn Capital, LLC, pari
        passu
        with the
        Secondary Security Interest held by Pacific Dawn Capital, LLC. 

       

      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 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 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) that certain Amended and Restated Loan
        and
        Security Agreement dated November 1, 2005, by and between the Company and
        Pacific Dawn Capital, LLC and transactions related thereto.

       

      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.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      5.2  Governing
        Law; Venue.
        This
        Agreement shall be governed by the laws of the State of Ohio 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 Agreement,
        the Note or the Warrant may be brought and maintained in Ohio 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 Ohio 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 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
        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:

       

      Andrew
        Green

      9900
        Carver Road, Suite 102

      Cincinnati,
        OH 45242

      Facsimile:
        (513) 794-1303

      

      5.8  Counterparts.
        This
        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 Agreement
        immediately upon signing and delivering any counterpart, independently of
        the
        signature of any other party. Nevertheless, in making proof of this 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 Agreement and the transactions contemplated
        hereby.

       

      Signature
        Page Follows

       

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

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

       

       

      
        	COMPANY:
                	 	 	LENDER:
	 	 	 	 
	WITS
                BASIN PRECIOUS MINERALS INC.	 	 	
              
	 	 	 	 
	By:/s/ Mark
                D. Dacko	 	 	By:
                /s/ Andrew Green
	
                

                Its: CFO	 	 	
                
Andrew
                GreenEXHIBIT
        10.4

       

      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.

       

      SECURED
        CONVERTIBLE PROMISSORY NOTE

       

      
        	$600,000	 	
                November
                  1, 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 Andrew Green, an individual resident
        of Ohio, or his successors and assigns (the “Holder”)
        on or
        before April 30, 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. The Company and Holder acknowledge that as of October 31, 2005, there
        is
        accrued and unpaid interest of $15,441.53 owed to Holder pursuant to the
        Existing Financing, as defined in that certain Loan and Security Agreement
        dated
        November 1, 2005 by and between Company and Holder (the “Loan Agreement”), and
        such amount shall be included as interest owing to Holder hereunder. 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.

       

      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
        of Interest.
        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 or 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 5:00 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

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (c)  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 November 1, 2005 in favor of the Holder. 

       

      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 Ohio without regard to
        conflicts of laws principles. 

       

      6.6  Parties
        in Interest.
        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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