AMENDMENT NO. 4 TO NOTES PURCHASE AGREEMENT
EXHIBIT
10.69
AMENDMENT
NO. 4 TO
This
Amendment No. 4 to Notes Purchase Agreement (this “Amendment”) is entered into on
this 17th day of December, 2009, 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 Notes Purchase Agreement dated
April 10, 2007 by and between Issuer and Purchaser, as previously amended on
June 19, 2007, November 10, 2008 and December 22, 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. 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”).
B. 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 “Wits BVI Guaranty”) of Wits
Basin (BVI) Ltd. (f/k/a China Global Mining Resources Limited), a British Virgin
Islands corporation (registered number 1386052) and wholly owned subsidiary of
Issuer (“Wits BVI”);
(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 Wits BVI and Purchaser (the “Wits 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, Wits BVI Guaranty, HK Guaranty, Wits-China
Subsidiary Security Agreement, Wits BVI Subsidiary Security Agreement and HK
Subsidiary Security Agreement are referred to herein as the “Security
Documents.”
C. 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 38,200,000 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”).
D. 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”).
E. In
March 2009, Issuer entered into a joint venture transaction (the “JV Transaction”) with London
Mining Plc (“London
Mining”), whereby London Mining and Issuer formed a joint venture entity
in the British Virgin Islands entitled China Global Mining Resources (BVI)
Limited (registered number 1513743) (“CGMR BVI”) to acquire and
operate certain mining properties in the People’s Republic of China (the “PRC Properties”) pursuant to
certain rights to acquire the PRC Properties held by the Issuer through certain
of its subsidiaries (the “Rights”). Such
Rights were subject to the security interest of Purchaser under the terms of the
Original Security Agreement.
F. To
enable Issuer to complete the JV Transaction, on December 22, 2008, Issuer and
Purchaser entered into Amendment No. 3 to the Purchase Agreement (“Amendment No. 3”), pursuant to
which (i) Issuer and Purchaser cancelled the Amended and Restated Note and the
Additional Note, and issued in replacement thereof a Second Amended and Restated
Note in the aggregate principal amount of $10,241,000, with accrued and unpaid
interest of $179,693.45 thereon as of the date thereof (the “Second Amended Note”), and
(ii) Issuer and Purchaser amended certain of the Security Documents to (A)
release Purchaser’s security interest in the Rights, the PRC Properties and
Issuer’s equity interest in CGMR HK, (B) release and terminate the HK Guaranty
and the HK Subsidiary Security Agreement and (C) permit the transfer to CGMR BVI
of the equity interests in CGMR HK. Pursuant to Amendment No. 3,
Purchaser and Issuer amended and superseded the terms of the Security Agreement
pursuant to an Amended and Restated Security Agreement (the “Amended Security Agreement”)
and the Amended and Restated Pledge Agreement pursuant to a Second Amended and
Restated Pledge Agreement (the “Second Amended Pledge
Agreement”).
G. On
March 17, 2009, contemporaneously with the closing of the JV Transaction, Issuer
prepaid the Second Amended Note in the aggregate amount of
$5,600,000.
H. On
April 20, 2009, Purchaser purchased from Platinum Long Term Growth V, LLC
(“Platinum”) the rights
of Platinum under (i) that certain Note and Warrant Purchase Agreement dated on
or around February 11, 2008 by and between Issuer and Platinum (the “Platinum Purchase Agreement”),
pursuant to which Issuer issued that certain 10% Senior Secured Convertible
Promissory Note in the principal amount of $1,020,000 issued by Issuer in favor
of Platinum on or around February 11, 2008 (the “Original Platinum Note”) and
(ii) that certain 10% Senior Secured Convertible Promissory Note in the
principal amount of $110,000 issued by Issuer in favor of Platinum on or around
July 10, 2008 (collectively with the Original Platinum Note, the “Platinum
Notes”). The Issuer’s obligations under the Platinum Notes are
secured pursuant to the terms of (i) that certain Security Agreement dated
February 11, 2008 (the “Platinum Security Agreement”)
by and between Purchaser (as a successor-in-interest to Platinum), Issuer,
▇▇▇▇▇▇ ▇▇▇▇▇ Mining Corporation (“▇▇▇▇▇▇ ▇▇▇▇▇”), as an
additional debtor, and ▇▇▇▇▇▇▇ Gold Producers, Inc. (“▇▇▇▇▇▇▇ Gold”), as an
additional debtor, and (ii) that certain Amended and Restated Guaranty of
▇▇▇▇▇▇▇ Gold and ▇▇▇▇▇▇ ▇▇▇▇▇, each of which were wholly owned subsidiaries of
Issuer at such time. Pursuant to the acquisition of the Platinum
Security Agreement, Purchaser obtained a security interest in all of Issuer’s
assets with the exception of equity interests and assets held in CGMR BVI, Wits
BVI and Wits-China Acquisition, a wholly owned subsidiary of Issuer, to the
extent such entities or assets were located in or relate to China and were
subject to a lien in favor of Purchaser pursuant to the Purchase Agreement and
related security documents.
I. On
June 9, 2009, Purchaser loaned Issuer an additional $100,000 pursuant to the
terms of the Second Amended Note. On September 1, 2009, Purchaser
loaned Issuer an additional $150,000 pursuant to terms of the Second Amended
Note. On November 10, 2009, Purchaser loaned Issuer an additional
$150,000 pursuant to the terms of the Second Amended Note (the “Additional
Loans”).
J. On
December 14, 2009, Issuer entered into a financing arrangement with Kenglo One,
Ltd., a company incorporated under the laws of Jersey (“Kenglo”), whereby Issuer
issued Kenglo a secured promissory note in the principal amount of
US$5,000,000. As a condition to the financing, Purchaser agreed to
permit Issuer to grant Kenglo a security interest in certain assets of Debtors
on a pari
passu basis with Purchaser.
K. Issuer
and Purchaser wish to amend the Purchase Agreement with this Amendment No. 4 to
(i) consolidate the Second Amended Note and the Additional Loans into a Third
Amended and Restated Note in the aggregate principal amount of $6,153,321.86,
such amount including all accrued and unpaid interest on the Second Amended Note
and the Additional Loans as of the date hereof and (ii) amend and modify the
Security Documents to consolidate the security interests of Purchaser as held
pursuant to the security agreements between Purchaser and Issuer and Issuer and
Platinum. Pursuant to the amendments, Purchaser has also agreed to
release and terminate the Wits-China Subsidiary Security Agreement, Wits-China
Guaranty, Wits BVI Subsidiary Security Agreement and the Wits-BVI Guaranty on
the understanding that Wits-China and Wits BVI are not currently, nor are they
contemplated to be, operating entities and thus Issuer intends to dissolve such
entities. As additional consideration for Purchaser’s agreement to
enter into this Amendment No. 4, Issuer has agreed to reduce the exercise prices
of the Warrants to $0.01 per share.
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:
1. Amendment to
Notes. As of the date hereof, Issuer and Purchaser hereby
cancel the Second Amended Note and Additional Loans, and Issuer shall issue
Purchaser a promissory note in the aggregate principal amount of $6,153,321.86
and having a maturity date of February 15, 2010, in the form attached as Exhibit
A (the “Third Amended and
Restated Note”). Together with the execution and delivery of
this Amendment, Purchaser has delivered to Issuer the original Second Amended
Note marked “Cancelled,” and the Additional Loans shall be deemed satisfied in
full.
2. Amendment of Platinum
Agreements. As additional consideration for Issuer’s agreement
to the terms hereof, Purchaser hereby agrees to (i) extend the maturity date
applicable to the Platinum Notes to February 15, 2010, (ii) amend Issuer’s
obligation under Section 3.15 of the Platinum Purchase Agreement with respect to
reservation of shares for conversion of the Platinum Notes from 150% of the
aggregate number of shares issuable upon conversion of the Platinum Notes to
100% of such maximum number, and (iii) amend the conversion feature of the
Original Platinum Note to provide for a minimum Conversion Price (as defined in
the Platinum Notes) of $0.01 per share. Additionally, Purchaser
hereby waives any rights to call such Platinum Notes into default solely based
on Issuer’s failure to timely satisfy its payment obligations under the Platinum
Notes as of the date hereof until February 15, 2010.
3. Amendment to Security
Agreement. As of the date hereof, Purchaser and Issuer amend,
restate and supersede in their entirety the terms of the Amended Security
Agreement and Platinum Security Agreement into the form attached hereto as
Exhibit B (the “Second Amended
and Restated Security Agreement”).
4. Amendment to Pledge
Agreement. As of the date hereof, Purchaser and Issuer amend,
restate and supersede in their entirety the terms of the Second Amended and
Restated Pledge Agreement into the form attached hereto as Exhibit C (the “Third Amended and Restated Pledge
Agreement”). Without limitation as to the terms of the Third
Amended and Restated Pledge Agreement, Purchaser hereby agrees to release
Issuer’s equity interest in Wits-China and Wits BVI to enable Issuer to dissolve
such entities; provided that, in the event Issuer or any of its subsidiaries
begins to operate or otherwise utilize such entities prior to dissolution,
Issuer hereby covenants and agrees to pledge such equity interests to Purchaser
on the terms previously pledged.
5. Other Forms of
Security. Purchaser hereby agrees to release and terminate
Wits-China and Wits BVI from their respective obligations under the Wits-China
Guaranty, the Wits-China Subsidiary Security Agreement, the Wits BVI Guaranty
and the Wits BVI Subsidiary Security Agreement; provided that, in the event
Issuer or any of its subsidiaries begin to operate or otherwise utilize such
entities prior to their dissolution, Issuer shall cause such entities to enter
into a security agreement and guaranty on the terms set forth in the respective
agreements. Notwithstanding the foregoing, Purchaser’s other forms of
security, including without limitation the Amended and Restated Guaranty of
▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇ Gold, shall continue in full force and effect except as
expressly set forth herein.
6. Modification and Issuance of
Warrants. In consideration of Purchaser’s agreement to enter
into the amendments set forth herein:
a. Issuer
hereby agrees to modify the Warrants to reduce the Exercise Price (as defined in
the respective Warrants) to $0.01 per share effective as of the date
hereof. At the request of Purchaser, together with delivery to Issuer
of the original certificates of the Warrants, Issuer shall reissue to Purchaser
modified warrant certificates reflecting the modified Exercise Prices as set
forth herein. Additionally, Issuer hereby agrees to extend the
expiration date of the Second Warrant to October 28, 2013.
b. Issuer
hereby agrees to issue Purchaser a five-year warrant to purchase 1,600,000
shares of Issuer’s common stock at an exercise price of $0.01 per
share.
7. Miscellaneous.
a. This
Amendment shall be construed in connection with and as part of the Purchase
Agreement, and, except as modified and expressly amended by this Amendment, all
terms, conditions and covenants contained in the Purchase Agreement, are hereby
ratified and shall be and remain in full force and effect.
b. Any
and all notices, requests, certificates and other instruments executed and
delivered after the execution and delivery of this Amendment may refer to the
Purchase Agreement without making specific reference to this Amendment, but
nevertheless all such references shall include this Amendment, unless the
context otherwise requires.
c. The
description headings of the various sections or parts of this Amendment are for
convenience only and shall not affect the meaning or construction of any of the
provisions hereof.
d. This
Amendment shall be governed by and construed in accordance with Kansas
law.
e. This
Amendment may be executed in any number of counterparts, each executed
counterpart constituting an original, but all together only one
agreement. Signature to this Amendment may be given by facsimile or
other electronic transmission and such signatures shall be fully binding on the
party sending the same.
[Remainder
of page left blank intentionally.
Signature
page follows.]
IN WITNESS WHEREOF, the
parties hereto have executed this Agreement on the date first written
above.
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ISSUER:
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a
Minnesota corporation
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By:
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/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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Name:
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▇▇▇▇▇▇▇
▇. ▇▇▇▇
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Title:
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Chief
Executive Officer
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PURCHASER:
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CHINA GOLD,
LLC,
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a
Kansas limited liability company
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By:
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Pioneer
Holdings, LLC
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Its:
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Manager
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By:
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/s/ C. ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Name:
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C.
▇▇▇▇▇▇ ▇▇▇▇▇▇
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Title:
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Manager
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