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EXHIBIT 10.1 AMENDMENT NO. 3 TO CONVERTIBLE NOTES
PURCHASE AGREEMENT This Amendment No. 3 to Convertible Notes
Purchase Agreement (this “Amendment”) is entered into
on this 22nd day of December, 2008, by and between Wits Basin
Precious Minerals Inc., a Minnesota corporation (the
“Issuer”), and China Gold, LLC, a Kansas limited
liability company, its successors and assigns (together with its
successors and assigns “Purchaser”), to amend, as
hereinafter set forth, the terms of that certain Convertible Notes
Purchase Agreement dated April 10, 2007 by and between Issuer and
Purchaser, as previously amended on June 19, 2007 and November 10,
2008 (as amended, the “Purchase
Agreement”). Capitalized terms used in this
Amendment and not otherwise defined herein shall have the same
meanings as defined in the Purchase Agreement.
A. Issuer
and Purchaser entered into the Purchase Agreement on April 10,
2007, which contemplated the initial sale by Issuer, and purchase
by Purchaser, of an aggregate minimum of $12,000,000 and an
aggregate maximum of $25,000,000 in convertible notes of Issuer
within 12 months of the Initial Closing Date.
B. Pursuant
to the Purchase Agreement, on April 10, 2007, Issuer sold, and
Purchaser purchased, that certain Convertible Note in the amount of
$3,000,000 (“Note 1”). On May 7, 2007,
Issuer sold, and Purchaser purchased, that certain Convertible Note
in the amount of $2,000,000
(“Note 2”). On June 19, 2007,
Issuer sold and Purchaser purchased that certain Convertible Note
in the aggregate amount of $4,000,000
(“Note 3”). On July 9, 2007, Issuer
sold, and Purchaser purchased, that certain Convertible Note in the
amount of $800,000 (“Note 4”; collectively with
Note 1, Note 2 and Note 3, the “Prior
Notes”).
C. To
secure its obligations under the Prior Notes, Issuer entered into a
Security Agreement with Purchaser dated June 19, 2007 (the
“Security Agreement”), whereby Issuer granted Purchaser
a security interest in all of the assets acquired by Issuer from
the use of the proceeds from the sale of the Prior
Notes. Pursuant to the Purchase Agreement and Security
Agreement, Issuer and certain of its subsidiaries further entered
into the following agreements with Purchaser relating to such
security: (i) that certain Pledge Agreement dated as of
April 10, 2007 by and between Purchaser and Issuer, as amended
pursuant to that certain Amended and Restated Pledge Agreement
dated February 7, 2008 by and between Purchaser and Issuer (as
amended, the “Pledge Agreement”); (ii) that
certain Guaranty dated April 10, 2007 (the “Wits-China
Guaranty”) of Wits-China Acquisition Corporation, a Minnesota
corporation and wholly owned subsidiary of Issuer
(“Wits-China”); (iii) that certain Guaranty dated
February 7, 2008 (the “BVI Guaranty”) of China Global
Mining Resources Limited, a British Virgin Islands corporation
(registered number 1386052) and wholly owned subsidiary of Issuer
(“Original BVI Co”); (iv) that certain Guaranty dated
February 7, 2008 (the “HK Guaranty”) of China Global
Mining Resources Limited, a Hong Kong corporation and wholly owned
subsidiary of Issuer (“CGMR HK”); (v) that certain
Subsidiary Security Agreement dated February 7, 2008 by and between
Wits-China and Purchaser (the “Wits-China Subsidiary Security
Agreement”); (vi) that certain Subsidiary Security Agreement
dated February 7, 2008 by and between Original BVI Co and Purchaser
(the “BVI Subsidiary Security Agreement”); and (vii)
that certain Subsidiary Security Agreement dated February 7, 2008
by and between CGMR HK and Purchaser (the “HK Subsidiary
Security Agreement”). Collectively, the Security
Agreement, Pledge Agreement, Wits-China Guaranty, BVI Guaranty, HK
Guaranty, Wits-China Subsidiary Security Agreement, BVI Subsidiary
Security Agreement and HK Subsidiary Security Agreement are
referred to herein as the “Security Documents.”
D. On
November 10, 2008, Issuer and Purchaser cancelled the Prior Notes
and Issuer issued Purchaser an Amended and Restated Promissory Note
in the aggregate principal amount of $9,800,000 (the “Amended
and Restated Note”), which, amongst other amendments to the
terms of the Prior Notes, terminated the conversion feature of the
Prior Notes and terminated certain Purchase Rights (as defined in
the Purchase Agreement) provided to Purchaser. In
consideration thereof, Issuer issued Purchaser a five-year warrant
to purchase up to 39,200,000 shares of the Issuer’s common
stock, par value $0.01 per share, at an exercise price of $0.15 per
share (the “First Warrant”). As of the date
hereof, the accrued and unpaid interest on the Amended and Restated
Note is $171,930.86.
E. On
October 28, 2008, Purchaser loaned Issuer an additional $441,000
pursuant to the terms of that certain Promissory Note dated October
28, 2008 of Issuer in favor of Purchaser (the “Additional
Note”), the payment obligations of which are secured by the
Security Documents. In consideration of the Additional
Note, Issuer issued Purchaser a five-year warrant to purchase up to
882,000 shares of Issuer’s common stock at an exercise price
of $0.11 per share (the “Second Warrant”; and
collectively with the First Warrant, the
“Warrants”). As of the date hereof, the
accrued and unpaid interest on the Additional Note is $7,762.59.
F. Pursuant
to the terms of that certain Subscription Agreement dated November
17, 2008 by and between London Mining Plc (“London
Mining”) and Issuer (the “Subscription
Agreement”), Issuer and London Mining have formed a joint
venture entity incorporated in the British Virgin Islands under the
name China Global Mining Resources (BVI) Limited (with registered
number 1513743) (“CGMR BVI”), to acquire and operate
certain mining properties in the People’s Republic of China
operated through Maanshan Xiaonanshan Mining Co Limited, Nanjing
Sudan Mining Co Ltd and Maanshan Zhaoyuan Mining Co Limited
(collectively, the “PRC
Properties”). Issuer, through certain of its
subsidiaries, currently holds the rights to acquire the PRC
Properties (the “Rights”), and such Rights are subject
to the security interest of Purchaser pursuant to the terms of the
Security Agreement. The transactions contemplated by
Issuer and London Mining are hereinafter referred to as the
“JV Transaction.”
G. As
a condition to the JV Transaction, Issuer is required to (i)
consolidate the Rights in CGMR HK and transfer its equity interests
in CGMR HK to CGMR BVI and (ii) restructure the terms of the
Amended and Restated Note and the Additional Note provided by
Purchaser to Issuer (collectively, the “Loans”),
including without limitation (a) extending the Maturity Date (as
defined in the Amended and Restated Note and Additional Note,
respectively), (b) amending certain of the Security Documents to
release Purchaser’s security interest in the Rights, the PRC
Properties and Issuer’s equity interest in CGMR HK, and (c)
release and terminate the HK Guaranty and the HK Subsidiary
Security Agreement and (d) to permit the transfer to CGMR BVI of
the equity interests in CGMR HK.
H. Issuer
and Purchaser wish to consolidate the Amended and Restated and
Additional Note into a Second Amended and Restated Note (as defined
below) in the aggregate principal amount of $10,241,000, with
accrued and unpaid interest of $179,693.45 thereon as of the date
hereof. Contemporaneously with the closing of the JV
Transaction, Issuer intends to make a prepayment of the Amended and
Restated Note in the aggregate amount of $5,600,000.
I. Issuer
and Purchaser wish to amend the Purchase Agreement in the respects
set forth herein to restructure the terms of the related agreements
in a manner permitting Issuer to complete the JV Transaction.
Now, Therefore, in consideration of the foregoing facts and
premises hereby made a part of this Agreement, the mutual promises
hereinafter set forth and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound,
hereby agree as follows: 2
Section
1. PREPAYMENT
AND AMENDMENT OF NOTE
1.1
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