FOURTHAMENDMENT TO ASSET PURCHASE AGREEMENT

THIS FOURTH AMENDMENT to Asset Purchase Agreement is dated this 14th day of January, 2008, by and among Wits Basin Precious Minerals Inc. (the “Purchaser”), Central City Mining Corp. and George Otten (collectively, the “Sellers” and each individually as a “Seller”), and Hunter Gold Mining Corp. and Hunter Gold Mining Inc. (collectively the “Covenantors” and each a “Covenantor”) (the Purchaser, Sellers and Covenantors are individually or collectively, as the case may be, a “Party” or “Parties”).

 

RECITALS: The Parties entered into an Asset Purchase Agreement dated on or about September 20, 2006, for the sale and purchase of assets, real estate and real estate mining claims described in such asset purchase agreement, which was amended by that certain First Amendment to Asset Purchase Agreement dated October 31, 2006, that Second Amendment to Asset Purchase Agreement dated as of March 1, 2007 and that Third Amendment to Purchase Agreement dated May 31, 2007 (collectively, “Purchase Agreement”); and the wish to amend the Purchase Agreement on the terms and conditions hereafter set forth.

NOW, THEREFORE, in consideration of the foregoing, the parties agree that the Purchase Agreement shall be revised as follows:

 

1.      The reference to $800,000 in Section 3.1(a) is hereby revised to be $2,500,000.

2.      The reference to $6,750,000.00 CND in Section 3.2 is hereby revised to be $6,500,000.00 CND.

3.      The reference to March 31, 2008 in Section 3.3(a) and November 30, 2006 in Article 11 are revised to June 30, 2008.

4.      Section 3.3(b)(ii) is hereby deleted in its entirety and replaced with the following language:  

“Purchaser shall deliver to Sellers (or Sellers’ nominee) a note payable to Sellers (or Sellers’ nominee) in the original principal amount of Six Million Five Hundred Thousand Canadian Dollars ($6,500,000.00 CDN) in the form of Exhibit C* hereto and hereby made a part hereof (“Note”), (iii) a deed of trust in the form of Exhibit D* hereto and hereby made a part hereof with George Otten (or other Sellers’ nominee) as the trustee for the Sellers securing the Note (the “Deed of Trust”), and (iv) Three Million Six Hundred Twenty Thousand (3,620,000) shares of the unregistered and restricted .01 par value common capital stock of the Purchaser.”

5.      The Note attached as Exhibit C* shall be revised as follows:

a.           No interest shall accrue until January 1, 2010, and quarterly installments shall begin March 31, 2010.

b.           The reference in the definition of the “Balloon Demand Date” shall be revised from December 31, 2008 to be December 31, 2011 and the Maturity Date shall be the later of the Balloon Demand Date or December 31, 2015.

6.      Except as provided for above, all the terms and conditions of the Purchase Agreement shall remain in full force and effect.  This amendment may be executed in counterparts.  A facsimile signature shall be deemed an original.

IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to Asset Purchase Agreement to be duly executed and delivered, all on and as of the date first written above.

 

 

CDN $6,750,000.00	Minneapolis, Minnesota, USA
	________ ___, 2008

1.           FOR VALUE RECEIVED, the undersigned, WITS BASIN PRECIOUS MINERALS, INC., a Minnesota corporation (hereinafter “Borrower”) whose address is _________________________________________________, Minnesota  55____ promises to pay to the order of HUNTER GOLD MINING INC., a Colorado corporation (“Holder”) whose address is ___________________________________________________, ___________, the principal sum of Six Million Seven Hundred Fifty Thousand and 00/100 Canadian Dollars (CDN $6,750,000.00), in lawful money of Canada, together with interest on the unpaid principal balance, at the interest rate as set forth below, in installments as follows:

(i)           Commencing on October 1, 2007, and continuing on each January 1, April 1, July 1, and October 1 thereafter (each, a “Payment Date”) until the Maturity Date (as defined below), the Borrower shall pay a quarterly installment of accrued interest only plus a Production Revenue Payment (as defined below), calculated at the interest rate as set forth below.

(ii)           On the earlier of (i) fifth anniversary of the first Production Revenue Payment, (ii) December 31, 2013, or (iii) the occurrence of the “Balloon Demand Date”, as defined in Paragraph 4 below  (such earlier date is referred to herein as the “Maturity Date”), the entire remaining principal balance together with any unpaid accrued interest shall be due and payable.

2.           From the date hereof until June 30, 2007, no interest shall accrue on the unpaid balance hereunder.  From July 1, 2007 until this Note is paid in full, interest shall accrue on the unpaid balance hereunder at the rate of five percent (5.00%) per annum.

3.           In addition to the interest payments due above, Borrower agrees that, on the first Payment Date following the first Calendar Quarter (which is defined as any (i) January 1 to March 31, (ii) April 1 to June 30, (iii) July 1 to September 30, or (iv) October 1 to December 31, of any year) in which Borrower realizes Profit (as defined below) in excess of US$100,000 in such Calendar Quarter from the real estate commonly known as the “Hunter Gold Mine”, located in the ______________ County, Colorado, USA (the “Mine”), which was acquired by Borrower from Holder on the date of this Note, and continuing on each Payment Date thereafter until this Note is repaid in full, Borrower shall make principal repayments hereunder (each a “Production Revenue Payment”), which payment(s) shall equal the lesser of (i) CDN $325,000.00 or (ii) that amount equal to all revenue received by Borrower from sales of minerals or mineral by-products from the Mine, less all Borrower’s expenses, including interest expense but excluding depreciation, distributions or dividends paid to shareholders of Borrower, incurred in connection with such sales or the operation of the Mine for the immediately preceding Calendar Quarter (any positive number from the formula contained in this clause (ii) over a Calendar Quarter shall be defined as “Profit”).

 

4.           Notwithstanding anything contained in this Note to the contrary, the Holder may demand payment in full and declare the outstanding balance due hereunder immediately due and payable in the event that there has been no Calendar Quarter prior to December 31, 2008 in which Borrower has been obligated to make a Production Revenue Payment hereunder.  The Balloon Demand Date is defined as that date which is thirty (30) days after the last of the following:  (i) by December 31, 2008, if there has been no Calendar Quarter in which Borrower has been obligated to make a Production Revenue Payment hereunder, and (ii) Holder has demanded from Borrower, in writing, payment in full of the outstanding balance due hereunder and has declared such balance to be immediately due and payable.

5.           All payments shall be made at the office of the Holder set forth above, or at such other place as the Holder hereof may from time to time designate in writing.

6.           It is hereby expressly agreed that should default be made in the payment of any installment of principal, interest or other sums when due hereunder or any other note or agreement between Borrower and Holder, and such default continues for ninety (90) days after the date due, an “Event of Default” shall occur under the Deed of Trust and Security Agreement (“Deed of Trust”) of even date herewith securing this Note and covering property located in _____________ County, Colorado, the whole sum of principal, accrued interest and other sums outstanding hereunder shall, at the option of the Holder hereof, be fully accelerated and become immediately due and payable, anything contained herein or in any instrument now or hereafter securing this Note to the contrary notwithstanding.  Said acceleration option and Default Rate shall continue until all such defaults have been cured.  In the event of such acceleration, the term “Maturity Date” shall be deemed to mean the date on which this Note is due and payable as a result of such acceleration.   Notwithstanding any other provision of this Note to the contrary, it is agreed that the Borrower of this Note shall have no personal liability for any default hereunder and that the sole recourse in the event of any default hereunder shall be the Holder’s right to the disposition and/or foreclosure of any personalty and/or realty securing this Note.

7.           Borrower may prepay a portion or the entire principal amount due hereunder at any time without penalty, and such prepayment shall be applied as hereinabove provided.

8.           Borrower consents to the personal jurisdiction of the state and federal courts located in the State of Colorado in connection with any controversy related in any way to this Note or any security or guaranty for this Note, waives any argument that venue in such forums is not convenient, and agrees that any litigation initiated by any of them against the Holder or any other holder of this Note relating in any way to this Note or any security or guaranty for this Note shall be venued in either the District Court of ___________ County, Colorado, or the United States District Court for the District of Colorado.

 

 

 

 

 

THIS SECURITY AGREEMENT (“Deed of Trust”) is made as of the ______ day of ______________, 200_, between WITS BASIN PRECIOUS MINERALS, INC., a Minnesota corporation (“Grantor”), whose address _______________________________, and GEORGE OTTEN (“Trustee”), whose address is _____________________________.

WHEREAS, this Deed of Trust is made by Grantor to secure and enforce the payment of the following note, obligations, indebtedness and liabilities:  (a) a certain Promissory Note of even date herewith in the principal amount of Six Million and 00/100 Canadian Dollars (CND $6,500,000.00) made by Grantor and payable to the order of HUNTER GOLD MINING, INC., a Colorado corporation, at ___________________________________________________, with interest and payments, all as provided therein, being due and payable in full on _____________, and all modifications, renewals or extensions thereof (the “Note”) (said payee and all subsequent holders of the Note or any part thereof or any interest therein or in any of the Secured Indebtedness, as hereinafter defined, are hereinafter collectively called the “Beneficiary”); and (b) all obligations of this Deed of Trust or any other instruments (“Loan Documents”) executed by Grantor in favor of Beneficiary now or hereafter evidencing or securing the above-described indebtedness or any part thereof (collectively the “Secured Indebtedness”).  The terms and provisions of the Note are incorporated herein by this reference.

In order to secure payment of the Secured Indebtedness, Grantor does hereby grant, bargain, sell and convey unto the Trustee, in trust forever, that certain property situate in the ___________ County, Colorado, more particularly described on Exhibit A attached hereto and incorporated herein by this reference, which is commonly known as the Hunter Gold Mine (sometimes collectively hereinafter referred to as the “Property” or the “Mortgaged Property”); and

TOGETHER with all and singular the tenements, hereditaments, easements, rights of way and appurtenances thereunto belonging or in any wise appertaining, whether now owned or hereafter acquired by Grantor, and any and all rights of ingress and egress to and from adjoining property (whether such rights now exist or subsequently arise), together with the reversion or reversions, remainder or remainders, and rents, issues and profits thereof, and also the entire estate, right, title, interest, claim and demand whatsoever of Grantor of, in and to the same and of, in and to every part and parcel thereof; and

 

TOGETHER with all buildings, structures, parking structures and improvements now or hereafter located on the Mortgaged Property, including any and all easements and rights of way used in connection therewith; and

TOGETHER with all right, title and interest of Grantor, if any, in all trees, shrubs, flowers and other landscaping features and all oil, gas, minerals, water, water rights, drains and drainage rights appurtenant to, located on, under or above or used in connection with the Mortgaged Property and the improvements situate thereon, or any part thereof, whether now existing or hereafter created or acquired; and

TOGETHER with all leases, rents, issues, royalties, bonus, income and profits, of each and every kind, now or hereafter relating to or arising from the Mortgaged Property and the improvements situate thereon; and

All of the foregoing property, interests and rights are sometimes hereinafter collectively referred to as the "Mortgaged Property, Improvements and Rights, or the “Property”;

AND, Grantor, for itself and its successors and assigns, represents, warrants and covenants that, and has good right and authority to grant, bargain, sell, convey, transfer, assign and mortgage the Property; that the execution and delivery of this Deed of Trust, the Note and all other instruments securing the payment of the Note do not contravene any law, order, decree, rule or regulation to which Grantor is subject; that the Note, this Deed of Trust and all other instruments securing the payment of the Note constitute the legal, valid and binding obligations of Grantor and that Grantor will warrant and forever defend the title to the Property against the claims of all persons whomsoever claiming or to claim the same or any part thereof, subject to all matters of record.

AND, that for so long as the Secured Indebtedness or any part thereof remains unpaid, Grantor covenants and agrees for itself and its successors and assigns as follows:

1.           Covenants.

1.1          General Covenants.

1.1.1     Payment.  Grantor will make prompt payment, as the same become due, of all installments of principal and interest on the Note and of all the other Secured Indebtedness.

1.1.2     Maintenance of Mortgaged Property.  Grantor will cause the Mortgaged Property to be operated in accordance with all applicable laws and rules, regulations and orders promulgated by all duly constituted authorities.  Grantor will allow the Beneficiary or its authorized representative to enter the Property at any reasonable time upon advance written notice to inspect the Property and Grantor's books and records pertaining thereto, and Grantor will reasonably assist the Beneficiary or said representative in whatever way necessary to make such inspection.

 

1.1.3     Taxes.  Grantor shall pay or cause to be paid prior to delinquency, except to the extent provision is actually made therefor as set forth hereinafter, all taxes and assessments theretofore or hereafter levied or assessed against the Property, or any part thereof, or any other tax asserted as a substitute therefor and upon request, will furnish the Beneficiary with receipts showing payment of such taxes and assessments on or before the applicable due date therefor; except that Grantor may in good faith, by appropriate proceedings, contest and diligently pursue such contest, the validity, applicability or amount of any asserted tax or assessment; provided, however, that in any event each such contest shall be concluded and the taxes, assessments, interests, costs and penalties shall be paid prior to the date any writ or order is issued under which the Property may be sold.

1.1.4     Condemnation.  Immediately upon obtaining knowledge of the institution of any proceedings for the condemnation of the Property or any portion thereof, or any other proceedings arising out of injury or damage to the Property, or any portion thereof, Grantor will notify the Beneficiary of the pendency of such proceedings and the time and place of all settings, hearings, trials or other proceedings relating thereto.  The Beneficiary may participate in any such proceedings, and Grantor shall from time to time deliver to the Beneficiary all instruments required by it to permit such participation.  Grantor shall, at its expense, diligently prosecute any such proceedings.  All proceeds of condemnation awards or proceeds of sale in lieu of condemnation with respect to the Property and all judgments, decrees and awards for injury or damage to the Property shall be paid to the Grantor and shall be applied to the repair, restoration or replacement of the property condemned. In the event the proceeds of the condemnation award (after deduction for reimbursements to the Beneficiary or Trustee) are deemed inadequate, in the sole discretion of a licensed engineer or architect hired by Grantor, to repair or restore any injury or damage arising from such condemnation, Grantor shall pay said amount necessary for such repair, restoration or replacement.  Determination by Grantor's licensed engineer or architect of the amount required to be contributed by the Grantor shall be deemed conclusive.  If (i) there exists an event of default under the Note, this Deed of Trust, or the Loan Documents, the condemnation proceeds shall be applied by Beneficiary to cure such default and the remainder shall be paid to Grantor for the restoration or repair of the Property, or (ii) Grantor and Beneficiary mutually agree, in which case the condemnation proceeds shall be applied in payment of the Secured Indebtedness, either in whole or in part (without a premium or penalty), in the inverse order of maturity, with the remainder, if any, to be paid to Grantor.  Beneficiary shall send to Grantor a notice of the balance of the Secured Indebtedness remaining, if any, after the application of said funds.  Grantor shall not be obligated to repair or rebuild the damaged portion of the Property.

1.1.5     Books and Records.  Grantor will keep accurate books and records in accordance with generally accepted accounting principles in which full, true and correct entries shall be promptly made as to all operations on the Property, and, as often as reasonably requested by the Beneficiary, but nor more often than once in each calendar quarter, Grantor will make reports of operations in such form as the Beneficiary prescribes, setting out full data as to the revenues from the Property.