PARTIAL PAYMENT AND TEMPORARY STAND STILL AGREEMENT

 

THIS PARTIAL PAYMENT AND TEMPORARY STAND STILL AGREEMENT (this “Partial Payment
Agreement”) is entered into as of January 14, 2019, by and among Quantum
Materials Corp., a Nevada corporation (the “Company”), Carson Diversified
Investments, LP, a Texas limited partnership (“Diversified”), and Carson Haysco
Holdings, LP, a Texas limited partnership (“Haysco,” and together with
Diversified, the “Holders”). Each of the parties to this Partial Payment
Agreement will be referred to individually as a “Party” or jointly as the
“Parties.”

 

WHEREAS, the Company and Holders entered into that certain Amended and Restated
Subscription Agreement dated January 15, 2015 (the “Subscription Agreement”).

 

WHEREAS, the Company previously issued that certain Convertible Debenture, dated
January 15, 2015 (the “Diversified Debenture”), in the original principal amount
of $250,000 to Diversified.

 

WHEREAS, the Company previously issued that certain Convertible Debenture, dated
January 15, 2015 (the “Haysco Debenture,” and together with the Diversified
Debenture, the “Debentures”), in the original principal amount of $250,000 to
Haysco.

 

WHEREAS, the Parties previously entered into that certain agreement, dated as of
October 10, 2016 (the “First Extension Agreement”), for the purpose of, among
other things, amending the Debentures to extend the Maturity Date of each of the
Debentures.

 

WHEREAS, the Parties previously entered into that certain Ten-Day Extension
Agreement, dated as of January 12, 2018 (the “Ten-Day Extension Agreement”), for
the purpose of amending the Debentures to extend the Maturity Date of each of
the Debentures.

 

WHEREAS, the Parties previously entered into that certain Extension Agreement,
dated as of January 24, 2018 (the “2018 Extension Agreement), for the purpose
of, among other things, amending the Debentures to extend the Maturity Date of
each of the Debentures, allow for the partial conversion of the Debentures at
Holders’ election, and to expand the secured interest for each Debenture to
include both the Phase 1 and Phase 2 Microreactors.

 

WHEREAS, the Holders sent Company a Notice of Default and Immediate Demand for
Payment on December 21, 2018 via certified mail after Company did not pay the
outstanding principal amounts due to Diversified and Haysco on the Maturity
Date.

 

WHEREAS, the Parties desire to amend the Debentures as set forth in this
Amendment.

 

NOW, THEREFORE, in consideration of the mutual promises contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree, intending to be legally bound, as
follows:

 

Section 1. Payments.

 

 (a)Diversified Payments. The Company shall pay to Diversified:

 

  (i) $75,000.00 in immediately available funds by cash or wire transfer on the
date of this Amendment as a payment applicable first to interest accrued on the
outstanding principal since December 15, 2018 at the Default Rate (as defined in
Section 1C of the Debentures) and then to the original principal amount; and

 

 

 

 

  (ii) the remaining outstanding principal amount under the Diversified
Debenture, plus all accrued and unpaid interest on the Diversified Debenture at
the Default Rate, on the Amended Maturity Date (as defined in Section 2 below).

 

  (b)Haysco Payments. The Company shall pay to Haysco:

 

  (i) $75,000.00 in immediately available funds by cash or wire transfer on the
date of this Amendment as a payment applicable first to interest accrued on the
outstanding principal since December 15, 2018 at the Default Rate and then to
the original principal amount; and         (ii) the remaining outstanding
principal amount under the Haysco Debenture, plus all accrued and unpaid
interest on the Haysco Debenture at the Default Rate, on the Amended Maturity
Date.

 

(c) Effect of Payments. Upon full payment of the funds described in Section 1(a)
and Section 1(b) above, each Holder agrees, covenants, promises, represents and
warrants that:

 

  (i) all indebtedness of the Company owed to such Holder on, as of and through
the Amended Maturity Date (the “Outstanding Amounts”), and all guaranties,
liens, pledges, security interests, subordinating interests and other collateral
interests that may have been granted or created in favor of such Holder in
connection with Outstanding Amounts (including but not limited to the security
interests granted in Section 3 of each of the Debentures, as amended, the
“Collateral Interests”), shall be discharged, paid, released, satisfied and
terminated in full and shall be of no further force and effect;         (iii) to
evidence the foregoing, such Holder agrees to execute such UCC-3 termination
statements, assignments and other releases and discharges as shall reasonably be
accurately prepared and requested by the Company related to the secured
interests granted by the Debentures. After receipt of the Outstanding Amounts,
the Company or its designee is authorized to file any and all UCC termination
statements as may be necessary to release the liens and security interests
granted to the Holders pursuant to each of the Debentures at the Company’s
expense; and         (iv) such Holder shall, upon receipt of the its respective
portion of the Outstanding Amounts, forward the original Diversified Debenture
or Haysco Debenture, as applicable, to the Company.

 

Section 2. Amendment to Debentures. The Maturity Date, as defined in Section
2(A) of each of the Debentures and as amended, shall be March 1, 2019 (herein
the “Amended Maturity Date”).

 

Section 3. Standstill. Each of the Holders agrees, covenants, promises,
represents and warrants that it shall not do any of the following prior to the
Maturity Date:

 

  (a) exercise any remedy under either or both of the Debentures with respect to
any Event of Default or any other breach, default or other violation under
either or both of the Debentures or the other agreements, certificates,
documents and other instruments described in Section 15(D) of each of the
Debentures, including but not limited to the any rights under Section 3 of each
of the Debentures; or

 

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  (c) demand any payment of principal, accrued and unpaid interest, penalties or
any other amounts under either or both of the Debentures prior to the Amended
Maturity Date.

 

Section 4. Full Force and Effect. This Amendment is not intended by the parties
to be a novation of the Debentures, and, except as expressly modified herein,
all agreements, covenants, obligations, promises, representations, terms or
warranties as set forth in the Debentures are hereby reaffirmed and shall
otherwise remain in full force and effect as originally written, including, but
not limited to, Holders’ rights of partial conversion of any outstanding
principal balance as granted in Section 1(b) of the 2018 Extension Agreement.
Any reference to either Debenture shall refer to such Debenture as amended by
the First Extension Agreement, the Ten-Day Extension Agreement, the 2018
Extension Agreement, and this Partial Payment Agreement. The execution, delivery
and performance of this Partial Payment Agreement shall not operate as a
limitation or waiver of or, except as expressly set forth herein, as an
amendment to any power, remedy or right of the Holders under their respective
Debentures.

 

Section 5. Governing Law. This Partial Payment Agreement shall be construed and
enforced in accordance with, and all questions concerning the construction,
validity, interpretation and performance of this Partial Payment Agreement shall
be governed by, the laws of the State of Texas without giving effect to
provisions thereof regarding conflict of laws.

 

Section 6. Counterparts. This Partial Payment Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. Counterparts may be
delivered via facsimile, electronic mail or other transmission method and any
counterpart so delivered shall be deemed to have been duly and validly delivered
and be valid and effective for all purposes.

 

[Signature page follows.]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the
day and year first above written.

 

  QUANTUM MATERIALS CORP.         By: /s/ Stephen B. Squires   Name: Stephen B.
Squires   Title: President         CARSON DIVERSIFIED INVESTMENTS, LP        
By: Carson Diversified GP, LLC,     its General Partner

            By: /s/ W. C. Carson     Name: W.C Carson     Title: Manager of the
General Partner        

  CARSON HAYSCO HOLDINGS, LP         By: Carson Diversified GP, LLC,     its
General Partner      

    By: /s/ W. C. Carson     Name: W.C Carson     Title: Manager of the General
Partner