Exhibit 10.3

 

Execution Version

 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

REVOLVING CREDIT AGREEMENT

 

dated as of

 

October 12, 2018

 

among

 

GOLDEN QUEEN MINING COmpany, Llc., as Borrower,

 

GOLDEN QUEEN MINING HOLDINGS, INC. and GAUSS LLC, as Pledgors

 

GAUSS HOLDINGS LLC, as Administrative Agent

 

and

 

auvergne, llc and GAUSS HOLDINGS LLC, as Lenders

 

 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

TABLE OF CONTENTS

 

Section I DEFINITIONS 1 1.1 Definitions 1 1.2 Rules of Interpretation 9      
Section II DESCRIPTION OF LOANS 10 2.1 The Loans 10 2.2 Interest Rates and
Payments of Interest 10 2.3 Commitment Fee 11 2.4 Repayment of Loan 11 2.5
Prepayments 11 2.6 Method of Payments 11 2.7 Computation of Interest and Fees 12
2.8 Taxes 12       Section III CONDITIONS OF LENDING 13 3.1 Conditions Precedent
to Initial Loans 13 3.2 Conditions Precedent to all Loans 14       Section IV
REPRESENTATIONS AND WARRANTIES 15 4.1 Existence, Qualification and Power 15 4.2
Authorization; No Contravention 15 4.3 Governmental Authorization; Other
Consents; Corrupt Practices 15 4.4 Binding Effect 16 4.5 Financial Statements 16
4.6 Litigation 16 4.7 No Default 16 4.8 Ownership of Property; Encumbrances 17
4.9 Environmental Compliance 17 4.10 Insurance 17 4.11 Taxes 17 4.12
Subsidiaries 17 4.13 Margin Regulations; Investment Company Act. 17 4.14
Compliance with Laws 17 4.15 Solvency 18 4.16 Compliance with OFAC Rules and
Regulations 18 4.17 Foreign Assets Control Regulations, Etc 18       Section V
AFFIRMATIVE COVENANTS 18 5.1 Financial Statements 18 5.2 Conduct of Business 20
5.3 Taxes 20 5.4 Inspection Rights 20 5.5 Maintenance of Books and Records 20
5.6 Use of Proceeds 20 5.7 Further Assurances 20

 

 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

5.8 Notification Requirements 21 5.9 Environmental Compliance 21 5.10 Subsidiary
Guaranties 21 5.11 Exploration of Strategic Alternatives 22       Section VI
NEGATIVE COVENANTS 22 6.1 Indebtedness 22 6.2 Contingent Liabilities 23 6.3
Encumbrances 23 6.4 Merger; Dispositions; Liquidation 23 6.5 Restricted Payments
24 6.6 Investments; Purchases of Assets 24 6.7 Transactions with Affiliates 24
6.8 Fiscal Year 24       Section VII DEFAULTS 24 7.1 Events of Default 24 7.2
Remedies upon Event of Default 26       Section VIII GRANT OF SECURITY INTEREST
27 8.1 Security Interests 27 8.2 Use of Collateral 27 8.3 Possession; Sale of
Collateral; etc 28 8.4 Financing Statements, Direct Payments 29 8.5 Remedies Not
Exclusive 29       Section IX PLEDGE 29 9.1 Pledge 29 9.2 Covenant 30 9.3
Registration in Nominee Name; Denominations 30 9.4 Voting Rights; Dividends; etc
30 9.5 Remedies Upon Default 31 9.6 Waiver of Guarantor Defenses 32      
Section X GENERAL 34 10.1 Notices 34 10.2 Successors and Assigns 36 10.3
Expenses 36 10.4 Indemnification 37 10.5 Survival of Covenants, Etc 37 10.6 No
Waivers 37 10.7 Amendments, Waivers, etc. 38 10.8 Lost Note, Etc 38 10.9
Captions; Counterparts 38 10.10 Entire Agreement, Etc 38 10.11 Waiver of Jury
Trial 38 10.12 Governing Law 39

 

ii 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

10.13 Jurisdiction; Consent to Service of Process 39 10.14 Severability 40 10.15
Administrative Agent 40 10.16 Press Releases, etc 42

 

EXHIBIT

 

AForm of Note

 

SCHEDULES

 

2.1(a)Allocations

4.2No Conflict

4.3Governmental Authorizations

4.6Litigation

4.7No Default

6.1(f)Existing Indebtedness

6.2Contingent Liabilities

6.3Permitted Encumbrances

9.1Pledged Securities

 

iii 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

REVOLVING CREDIT AGREEMENT

 

REVOLVING CREDIT AGREEMENT made as of October 12, 2018, among GOLDEN QUEEN
MINING COMPANY, LLC, a California limited liability company (the “Borrower”),
GOLDEN QUEEN MINING HOLDINGS, INC., a California corporation (“GQM Holdings
Pledgor”), GAUSS LLC, a Delaware limited liability company (“Gauss Pledgor”),
GAUSS HOLDINGS LLC, a Delaware limited liability company (“LUK Holdco”), as
administrative agent (in such capacity, the “Administrative Agent”), and
AUVERGNE, LLC, a Delaware limited liability company (“Auvergne” and, together
with LUK Holdco, the “Initial Lenders”).

 

WHEREAS, the Borrower has requested the Lenders to extend credit in the form of
a senior secured revolving credit facility, on the terms and subject to the
conditions set forth herein.

 

NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:

 

Section I

 

DEFINITIONS

 

1.1Definitions.

 

All capitalized terms used in this Agreement or in the Notes or in any
certificate, report or other document made or delivered pursuant to this
Agreement (unless otherwise defined therein) shall have the meanings assigned to
them below:

 

Administrative Agent. See the Preamble.

 

Affiliate. With reference to any Person, (i) any director or officer of that
Person, or (ii) another Person that directly, or indirectly through one or more
intermediaries, Controls or is Controlled by or is under common Control with the
Person specified. For the purposes hereof, no Lender shall be deemed to be an
Affiliate of the Borrower.

 

Agreement. This Revolving Credit Agreement, including the Exhibits and Schedules
hereto, as the same may be amended, restated, supplemented or otherwise modified
from time to time.

 

Attributable Indebtedness. On any date, in respect of any Capitalized Lease of
any Person, the capitalized amount thereof that would appear on a balance sheet
of such Person prepared as of such date in accordance with GAAP.

 

Borrower. See the Preamble.

 

Borrower’s Accountants. PricewaterhouseCoopers LLP, Chartered Accountants, or
such other independent certified public accountants as are selected by the
Borrower and reasonably acceptable to the Lenders.

 

 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

Business Day. Any day other than a Saturday, Sunday or legal holiday on which
banks in New York City, New York are open for the conduct of a substantial part
of their commercial banking business.

 

Capitalized Leases. All leases that have been or should be, in accordance with
GAAP recorded as capitalized leases.

 

Change of Control. (a) The acquisition of ownership or voting control, directly
or indirectly, beneficially (within the meaning of Rules 13d-3 and 13d-5 of the
Securities Exchange Act of 1934, as then in effect), on or after the Closing
Date, by any Person or group (within the meaning of Sections 13d and 14d of the
Securities Exchange Act of 1934, as then in effect) other than a Lender, an
Affiliate of a Lender, or any Clay Family Member, of Equity Interests
representing more than 35% percent of the aggregate ordinary voting power
represented by the issued and outstanding Equity Interests of the Borrower; or
(b) the occupation of a majority of the seats (other than vacant seats) on the
board of managers of the Borrower by Persons who were not (i) managers of the
Borrower on the Closing Date, (ii) appointed or nominated by the board of
managers or other governing body of the Borrower (which constituted the board of
managers or such other governing body on the Closing Date), or (iii) appointed
or nominated by managers so nominated.

 

Clay Family. (i) Landon Clay, (ii) any lineal descendant (including adoptive
relationships) of Landon Clay or Harris Clay, (iii) any trust primarily for the
benefit of, or the estate of, one or more of the Persons described in the
foregoing clauses (i) and (ii), and (iv) any partnership, corporation, joint
venture, limited liability company, limited liability partnership, business
trust, cooperative, association or other entity the entire beneficial ownership
of which is held by one or more of the Persons described in the foregoing
clauses (i), (ii) and (iii).

 

Clay Family Member. Any Person in the Clay Family.

  

[**] 

 

Closing Date. The first date on which the conditions set forth in Section 3.1
have been satisfied.

 

Code. The Internal Revenue Code of 1986 and the rules and regulations
thereunder, collectively, as the same may from time to time be supplemented or
amended and remain in effect.

 

Collateral. (a) With respect to the Borrower, all of the Borrower’s right, title
and interest in and to all personal property, tangible and intangible, wherever
located or situated and whether now owned, presently existing or hereafter
acquired or created, including, but not limited to, all goods, accounts,
instruments, intercompany obligations, contract rights, partnership and joint
venture interests, documents, chattel paper, general intangibles, payment
intangibles, goodwill, equipment, machinery, inventory, investment property,
copyrights, trademarks, trade names, insurance proceeds, cash, deposit accounts,
letter of credit rights and the Pledged Securities and any other Pledged
Collateral, and any proceeds thereof, products thereof or income therefrom and
(b) with respect to each Pledgor, all of such Pledgor’s right, title and
interest in and to all Pledged Securities and any proceeds thereof, products
thereof or income therefrom, but in each of the foregoing clauses (a) and (b),
excluding the Excluded Assets.

 

2 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

Commitment. See Section 2.1(a).

 

Commitment Fee. See Section 2.3(b).

 

Control. The possession, by one or more persons, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by contract or
otherwise. “Controlling” and “Controlled” have meanings correlative thereto.

 

Controlled Foreign Corporation. A Subsidiary of the Borrower which is a
“controlled foreign corporation” as defined in Section 957(a) of the Code.

 

Corrupt Practices Laws. (i) The Foreign Corrupt Practices Act of 1977 (15 U.S.C.
§§ 78dd-1, et seq.), as amended, and (ii) any other law, regulation, order,
decree, or directive having the force of law in any applicable jurisdiction and
relating to bribery, kick-backs, or similar business practices.

 

Default. An Event of Default or event or condition that, but for the requirement
that time elapse or notice be given, or both, would constitute an Event of
Default.

 

Disposition or Dispose. The sale, transfer, license, lease or other disposition
(including any sale and leaseback transaction) of any property by any Person (or
the granting of any option or other right to do any of the foregoing), including
any sale, assignment, transfer or other disposal, with or without recourse, of
any notes or accounts receivable or any rights and claims associated therewith.

 

Dollars or $. United States dollars.

 

Encumbrances. See Section 6.3.

 

Environmental Laws. All provisions of law (including the common law), statutes,
ordinances, codes, rules, guidelines, policies, procedures, orders-in-council,
regulations, permits, licenses, judgments, writs, injunctions, decrees, orders,
awards and standards promulgated by a Governmental Authority or by any court,
agency, instrumentality, regulatory authority or commission of any of the
foregoing concerning environmental health or safety and protection of, or
regulation of the discharge of substances into, the environment.

 

Equity Interests. With respect to any Person, all of the shares of capital stock
of (or other ownership or profit interests in) such Person, all of the warrants,
options or other rights for the purchase or acquisition from such Person of
shares of capital stock of (or other ownership or profit interests in) such
Person, all of the securities convertible into or exchangeable for shares of
capital stock of (or other ownership or profit interests in) such Person or
warrants, rights or options for the purchase or acquisition from such Person of
such shares (or such other interests), and all of the other ownership or profit
interests in such Person (including partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares, warrants,
options, rights or other interests are outstanding on any date of determination.

 

3 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

Excluded Assets. The following assets: (a) real property, including leasehold
interests, (b) the Borrower’s rights under any equipment lease, or other
contract that contains a provision that would result in a default thereunder if
a security interest were granted under this Agreement, except to the extent such
provision is unenforceable by reason of the Uniform Commercial Code, (c) any
other properties owned by the Borrower as to which the Lenders shall have
determined that the cost to the Borrower of perfecting a security interest
thereon is disproportionate to the benefit to be realized by the Lenders, (d)
any funds reserved for accrued payroll held in a deposit account, and (e) any
intent-to-use trademark application but only until such time as and until an
amendment to allege use or a statement of use has been filed by the Borrower
under 15 U.S.C. §1501(d) and accepted by the U.S. Patent and Trademark Office.

 

Event of Default. Any event described in Section 7.1.

 

Fiscal Quarter. Each quarterly accounting period of the Borrower in any Fiscal
Year.

 

Fiscal Year. The accounting year of the Borrower, commencing on January 1 and
ending on December 31 in each calendar year.

 

Fixed Rate. 8.0% per annum.

 

Foreign Subsidiary Holding Company. Any Subsidiary of the Borrower with no
material assets other than equity (or equity and debt interests) of one or more
Controlled Foreign Corporations.

 

GAAP. Generally accepted accounting principles in the United States of America
as in effect from time to time, consistently applied.

 

Governmental Authority. The government of the United States of America, Canada,
and any other nation, and any political subdivision thereof, whether state,
provincial, or local, and any agency, authority, instrumentality, regulatory
body, court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government (including any supra-national bodies such as the
European Union or the European Central Bank).

 

Guarantees. As applied to the Borrower, all guarantees, endorsements or other
contingent or surety obligations with respect to obligations of others, whether
or not reflected on the balance sheet of the Borrower, including any obligation
to furnish funds, directly or indirectly (whether by virtue of partnership
arrangements, by agreement to keep-well or otherwise), through the purchase of
goods, supplies or services, or by way of stock purchase, capital contribution,
advance or loan, or to enter into a contract for any of the foregoing, for the
purpose of payment of obligations of any other Person.

 

4 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

Indebtedness. As to any Person at a particular time, without duplication, all of
the following, whether or not included as indebtedness or liabilities in
accordance with GAAP: (a) all obligations of such Person for borrowed money and
all obligations of such Person evidenced by bonds, debentures, notes, loan
agreements or other similar instruments; (b) the maximum amount of all direct or
contingent obligations of such Person arising under letters of credit (including
standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and
similar instruments; (c) net obligations of such Person under any swap
agreement; (d) all obligations of such Person to pay the deferred purchase price
of property or services (other than trade accounts payable in the ordinary
course of business and not past due for more than 60 days after the date on
which such trade account was created); (e) indebtedness (excluding prepaid
interest thereon) secured by an Encumbrance on property owned or being purchased
by such Person (including indebtedness arising under conditional sales or other
title retention agreements), whether or not such indebtedness shall have been
assumed by such Person or is limited in recourse; (f) all Attributable
Indebtedness in respect of Capitalized Leases; (g) all obligations of such
Person to purchase, redeem, retire, defease or otherwise make any payment in
respect of any Equity Interest in such Person or any other Person or any
warrant, right or option to acquire such Equity Interest, valued, in the case of
a redeemable preferred interest, at the greater of its voluntary or involuntary
liquidation preference plus accrued and unpaid dividends; and (h) all Guarantees
of such Person in respect of any of the foregoing. For all purposes hereof, the
Indebtedness of any Person shall include the Indebtedness of any partnership or
joint venture (other than a joint venture that is itself a corporation or
limited liability company) in which such Person is a general partner or a joint
venturer, unless such Indebtedness is expressly made non-recourse to such
Person.

 

Initial Lenders. See the Preamble.

 

Investment. As applied to the Borrower, the purchase or acquisition of any
Equity Interests of any other Person, any loan, advance or extension of credit
(excluding accounts receivable arising in the ordinary course of business) to,
or contribution to the capital of, any other Person, any real estate held for
sale or investment, any securities or commodities futures contracts held, any
other investment in any other Person, and the making of any commitment or
acquisition of any option to make an Investment.

 

Lenders. The Initial Lenders and each other Person that may after the date
hereof become an assignee of such Lender’s rights and obligations hereunder in
accordance with the terms hereof and, thereby a party to this Agreement as a
Lender hereunder, but from and after the effective date that any Person shall
have assigned the entirety of its rights and obligations hereunder pursuant to
Section 8.2, “Lenders” shall no longer include such Person.

 

Loan Documents. This Agreement, the Notes, and the Subordination Agreement,
together with any agreements, instruments or documents executed and delivered
pursuant to or in connection with any of the foregoing.

 

Loans. See Section 2.1(a).

 

Loan Party. The Borrower and each other Person that becomes a Loan Party
hereafter pursuant to the execution of joinder documents.

 

5 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

Material Adverse Effect. Any of (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties, liabilities (actual
or contingent) or condition (financial or otherwise) of the Borrower; (b) a
material impairment of the rights and remedies of the Lenders under any Loan
Document, or of the ability of any Borrower to perform its material obligations
under any Loan Document to which it is a party; or (c) a material adverse effect
upon the legality, validity, binding effect or enforceability against any
Borrower of any Loan Document to which it is a party; provided that the term
“Material Adverse Effect” shall not include any change, effect or circumstance
to the extent resulting from (x) changes in general economic, financial market
or geopolitical conditions, or (y) any failure by any Borrower to meet any
published analyst estimates or expectations of their respective revenue,
earnings or other financial performance or results of operations for any period,
in and of itself, or any failure thereby to meet its respective internal or
published projections, budgets, plans or forecasts of its revenues, earnings or
other financial performance or results of operations, in and of itself and
whether or not the same was delivered to the Lenders pursuant to the provisions
hereof (it being understood that the facts or occurrences giving rise or
contributing to such failure that are not otherwise excluded from this
definition of a “Material Adverse Effect” may be taken into account in
determining whether there has been a Material Adverse Effect); provided further
that, in the case of the immediately preceding clause (x), such changes, effects
or circumstances do not affect the relevant Borrower disproportionately relative
to other companies operating in the same industry.

 

Maturity Date. March 31, 2020.

 

Moody’s. Moody’s Investors Service, Inc. and its successors.

 

Note Record. Any internal record, including a computer record, maintained by a
Lender with respect to the Loan.

 

Notes. See Section 2.1(b).

 

Obligations. The following:

 

(a)       the due and punctual payment and satisfaction by the Borrower of
(i) the principal of and interest (including interest accruing during the
pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Loan, when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise and (ii) all other obligations of the
Borrower under this Agreement and under the other Loan Documents, including
obligations to pay fees, expense reimbursement obligations and indemnification
obligations, whether primary, secondary, direct, contingent, fixed or otherwise,
arising under the Loan Documents (including monetary obligations incurred during
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding), and

 

(b)       the due and punctual performance of all the obligations of the
Pledgors under or pursuant to this Agreement and each of the other Loan
Documents.

 

OFAC. The U.S. Department of the Treasury’s Office of Foreign Assets Control.

 

6 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

Other Taxes. All present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies arising from any payment
made hereunder or under any other Loan Document or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement or any other
Loan Document.

 

Permitted Encumbrances. See Section 6.3.

 

Person. Any individual, corporation, partnership, trust, unincorporated
association, business or other legal entity, and any government or governmental
agency or political subdivision thereof.

 

Pledged Collateral. The Pledged Securities and any proceeds (as defined in
Section 9-102(64) of the UCC) including cash proceeds (as defined in Section
9-102(9) of the UCC) of the Pledged Securities and all voting and other rights
associated with the Pledged Securities.

 

Pledged Securities. 100% of all issued and outstanding Equity Interests issued
by the Borrower or by any Subsidiary of the Borrower, whether now owned or
hereafter acquired; provided, however, the definition of “Pledged Securities”
shall not include more than 65% of the voting Equity Interests issued by a
Controlled Foreign Corporation or a Foreign Subsidiary Holding Company.

 

Pledgors. Collectively, the Borrower (with respect to the Equity Interests in
its Subsidiaries), and GQM Holdings Pledgor and Gauss Pledgor (with respect to
their respective Equity Interests in the Borrower).

 

Public Official. Any individual who, even transitorily or without payment, holds
a public office or official position in any Governmental Authority, any public
company controlled by a Governmental Authority or any company in which a
Governmental Authority participates in a material respect its affairs, as well
as political parties.

 

Qualified Investments. As applied to the Borrower, investments in (i) notes,
bonds or other obligations of the United States of America or any agency thereof
that as to principal and interest constitute direct obligations of or are
guaranteed by the United States of America and that have maturity dates not more
than one year from the date of acquisition; (ii) notes, bonds or other
obligations of the Federal Government of Canada or any agency thereof that as to
principal and interest constitute direct obligations of or are guaranteed by the
Federal Government of Canada and that have maturity dates not more than one year
from the date of acquisition; (iii) certificates of deposit, demand deposit
accounts or other deposit instruments or accounts maintained in the ordinary
course of business with banks or trust companies organized under the laws of the
United States or any state thereof that have capital and surplus of at least
$50,000,000 which certificates of deposit and other deposit instruments, if not
payable on demand, have maturities of not more than one year from the date of
acquisition; (iv) certificates of deposit, demand deposit accounts or other
deposit instruments or accounts maintained in the ordinary course of business
with banks or trust companies organized under the laws of Canada or any province
thereof that have capital and surplus of at least $50,000,000 which certificates
of deposit and other deposit instruments, if not payable on demand, have
maturities of not more than one year from the date of acquisition; (iv)
commercial paper issued by any Person that is incorporated under the laws of the
United States of America or any state thereof and rated at least A-2 by S&P or
at least P-2 by Moody’s that is rated not less than P-2 or A-2 or their
equivalents by Moody’s or S&P, respectively, or their successors, and in each
case maturing not more than one year from the date of acquisition; (v)
commercial paper issued by any Person that is incorporated or organized under
the laws of Canada or any Province thereof, which is rated at least A-2 by S&P
or at least P-2 by Moody’s, or any Canadian affiliate of the same rating
agencies, in each case with maturities of not more than one year from the date
acquired; or (vi) any repurchase agreement secured by any one or more of the
foregoing.

 

7 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

Responsible Officer. The chief executive officer, president, vice-president,
chief financial officer, treasurer (or assistant treasurer, if applicable), or
secretary (or assistant secretary, if applicable), controller or administrators
of the Borrower or any attorney-in-fact with powers to deliver documents on
behalf of the Borrower in connection with the Loan Documents. Any document
delivered hereunder that is signed by a Responsible Officer of the Borrower
shall be conclusively presumed to have been authorized by all necessary
corporate, partnership and/or other action on the part of the Borrower and such
Responsible Officer shall be conclusively presumed to have acted on behalf of
the Borrower.

 

Restricted Payment. Any of the following: (a) any dividend, distribution, loan,
advance, guaranty, extension of credit or other payment, whether in cash or
property, to or for the benefit of any Person who holds an Equity Interest in
the Borrower, whether or not such Interest is evidenced by a security; (b) any
purchase, redemption, retirement or other acquisition for value of any Equity
Interest of the Borrower, whether now or hereafter outstanding, or of any
options, warrants or similar rights to purchase such Equity Interest or any
security convertible into or exchangeable for such Equity Interest and (c) any
payment or prepayment of any kind, whether in cash or property, to or for the
benefit of any Person (other than the Borrower) that is an Affiliate of the
Borrower.

 

SDN List. See Section 4.16.

 

Solvent and Solvency. With respect to any Person on any date of determination,
that on such date (a) the fair value of the property of such Person is greater
than the total amount of liabilities, including contingent liabilities, of such
Person, (b) the present fair salable value of the assets of such Person is not
less than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured, (c) such Person does
not intend to, and does not believe that it will, incur debts or liabilities
beyond such Person’s ability to pay such debts and liabilities as they mature,
(d) such Person is not engaged in business or a transaction, and is not about to
engage in business or a transaction, for which such Person’s property would
constitute an unreasonably small capital, and (e) such Person is able to pay its
debts and liabilities, contingent obligations and other commitments as they
mature in the ordinary course of business. The amount of contingent liabilities
at any time shall be computed as the amount that, in the light of all the facts
and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.

 

S&P. Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies,
Inc., and its successors.

 

Strategic Alternative Assessment. See Section 5.11.

 

8 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

Subordination Agreement. That certain Subordination Agreement dated as of the
Closing Date, among the Borrower, Golden Queen Mining Holdings, Inc., the
Administrative Agent, The Landon T. Clay 2009 Irrevocable Trust Dated March 6,
2009, EHT, LLC, Harris Clay and the Clay Family 2009 Irrevocable Trust Dated
April 14, 2009.

 

Subsidiary. With respect to any Person, a corporation, partnership, joint
venture, limited liability company or other business entity of which a majority
of the shares of securities or other interests having ordinary voting power for
the election of directors or other governing body (other than securities or
interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, or the management of which is otherwise
controlled, directly, or indirectly through one or more intermediaries, or both,
by such Person.

 

Subsidiary Guaranty. See Section 5.10.

 

Taxes. All present or future taxes, levies, imposts, duties, deductions,
withholdings, assessments, fees or other charges imposed by any Governmental
Authority, including any interest, additions to tax or penalties applicable
thereto.

 

Uniform Commercial Code. The Uniform Commercial Code as in effect in the State
of New York or, with respect to matters of perfection of the Administrative
Agent’s security interest on the Collateral, the jurisdiction of formation or
incorporation of the Borrower or a Pledgor, as applicable.

 

1.2Rules of Interpretation.

 

(a)       All terms of an accounting character used herein but not defined
herein shall have the meanings assigned thereto by GAAP and in each case applied
on a consistent basis.

 

(b)       A reference to any document or agreement shall include such document
or agreement as amended, modified or supplemented and in effect from time to
time in accordance with its terms and the terms of this Agreement.

 

(c)       The singular includes the plural and the plural includes the singular.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms.

 

(d)       A reference to any Person includes its permitted successors and
permitted assigns.

 

(e)       The words “include”, “includes” and “including” are not limiting.

 

(f)       The words “herein”, “hereof”, “hereunder” and words of like import
shall refer to this Agreement as a whole and not to any particular section or
subdivision of this Agreement.

 

9 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

(g)       All terms not specifically defined herein or by GAAP and which are
defined in the Uniform Commercial Code, shall have the meanings assigned to them
in the Uniform Commercial Code.

 

Section II

 

DESCRIPTION OF LOANS

 

2.1The Loans.

 

(a)       Revolving Credit Loans. Upon the terms and subject to the conditions
of this Agreement, and in reliance upon the representations, warranties and
covenants of the Borrower herein, the Lenders agree to make revolving credit
loans (the “Loans”) to the Borrower at the Borrower’s request from time to time
from and after the Closing Date and prior to the Maturity Date, provided that
the total amount of outstanding Loans shall not at any time exceed $20,000,000
(the “Commitment”). Subject to the terms and conditions of this Agreement, the
Borrower may borrow, repay, prepay and reborrow amounts, up to the limit imposed
by this Section 2.1(a), from time to time between the Closing Date and the
Maturity Date upon request given to the Lenders pursuant to Section 2.1(b). Each
Lender shall fund and hold its respective portion of the Loans pursuant to the
allocations set forth on Schedule 2.1(a). The Commitment of the Lenders is
several and not joint, with each Lender committing to the percentage of the
Commitment shown on Schedule 2.1(a).

 

(b)       Notice and Manner of Borrowing Loans. Whenever the Borrower desires to
obtain a Loan hereunder, the Borrower shall give the Lenders written notice of
its request specifying the amount of the Loan and the effective date on which
such Loan is requested to be made. Each Loan shall be in a minimum principal
amount of $5,000,000 or in integral multiples of $5,000,000 in excess of such
minimum amount. Such notice must be received by the Lenders at least ten (10)
Business Days before the day on which the requested Loan is to be made.

 

(c)       The Notes. The Loans shall be evidenced by separate promissory notes
for each Lender, dated as of the Closing Date in the aggregate principal amount
equal to the amount of each Lender’s share of the Commitment, such notes to be
in substantially the form of Exhibit A hereto (together, the “Notes”).

 

2.2Interest Rates and Payments of Interest.

 

(a)       The Loans shall bear interest at a rate per annum equal to the Fixed
Rate. Such interest shall not be paid in cash but shall be accrued and paid in
kind and added to the principal balance of the Loans at the end of each fiscal
quarter of the Borrower. Such interest shall be allocated among the Lenders in
accordance with their respective percentages as set forth on Schedule 2.1(a).

 

(b)       If an Event of Default shall occur, then the unpaid balance of the
Loans shall bear interest, to the extent permitted by law, compounded daily at
an interest rate equal to 2% per annum above the Fixed Rate, until such Event of
Default is cured or waived.

 

10 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

(c)       All agreements between or among the Borrower and the Lenders are
hereby expressly limited so that in no contingency or event whatsoever, whether
by reason of acceleration of maturity of the Obligations or otherwise, shall the
amount paid or agreed to be paid to the Lenders for the use or the forbearance
of the Obligations exceed the maximum permissible under applicable law. As used
herein, the term “applicable law” shall mean the law in effect as of the date
hereof; provided, however, that in the event there is a change in the law which
results in a higher permissible rate of interest, then the Loan Documents shall
be governed by such new law as of its effective date. In this regard, it is
expressly agreed that it is the intent of the Borrower and the Lenders in the
execution, delivery and acceptance of the Loan Documents to contract in strict
compliance with the laws of The State of New York from time to time in effect.
If, under or from any circumstances whatsoever, fulfillment of any provision of
any of the Loan Documents at the time of performance of such provision shall be
due, shall involve transcending the limit of such validity prescribed by
applicable law, then the Obligations to be fulfilled shall automatically be
reduced to the limits of such validity, and if under or from circumstances
whatsoever the Lenders should ever receive as interest an amount which would
exceed the highest lawful rate, such amount which would be excessive interest
shall be applied to the reduction of the principal balance of the Obligations
and not to the payment of interest. This provision shall control every other
provision of all Loan Documents.

 

2.3         Commitment Fee. The Borrower shall pay to the Lenders a commitment
fee (the “Commitment Fee”) computed on a daily basis, equal to one percent (1%)
per annum of the excess of (i) the Commitment, over (ii) the average daily
amount of outstanding Loans for each fiscal quarter of the Borrower; provided,
that if an Event of Default shall occur, then such rate shall be increased to
three percent (3%) per annum in respect of the period during which such Event of
Default is ongoing. The Commitment Fee shall not be paid in cash but shall be
accrued and paid in kind and added to the principal balance of the Loans at the
end of each fiscal quarter of the Borrower. The Commitment Fee shall be
allocated among the Lenders in accordance with their respective percentages as
set forth on Schedule 2.1(a).

 

2.4         Repayment of Loan. The Borrower shall repay the principal amount of
the Loan on the Maturity Date in an amount equal to the aggregate unpaid
principal amount of the Loan, together with all accrued and unpaid interest,
fees and other charges hereunder.

 

2.5         Prepayments. The Borrower may prepay the Loans in whole or in part
at any time prior to the Maturity Date without premium, penalty or prepayment
fee.

 

2.6         Method of Payments.

 

(a)       All payments by the Borrower hereunder and under any of the other
Loans Documents shall be made in lawful money of the United States in
immediately available funds, and shall be deemed to have been made only when
made in compliance with this Section 2.6(a). All such payments shall be made
without set-off or counterclaim and free and clear of and without deduction for
any taxes, levies, imposts, duties, charges, fees, deductions, withholdings,
compulsory loans, restrictions or conditions of any nature now or hereafter
imposed or levied by any jurisdiction or any political subdivision thereof or
taxing or other authority therein unless the Borrower is compelled by law to
make such deduction or withholding. If any such obligation is imposed upon the
Borrower with respect to any amount payable by it hereunder or under any of the
other Loan Documents, the Borrower will pay to the Lenders such additional
amount in Dollars as shall be necessary to enable the Lenders to receive the
same net amount which the Lenders would have received on such due date had no
such obligation been imposed upon the Borrower. The Borrower will deliver
promptly to the Lenders certificates or other valid vouchers or other evidence
of payment reasonably satisfactory to the Lenders for all Taxes or other charges
deducted from or paid with respect to payments made by the Borrower hereunder or
under such other Loan Document.

 

11 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

(b)       All such payments shall be made at the applicable Lender’s office or
at such other location that each Lender may from time to time designate, in each
case in immediately available funds.

 

2.7         Computation of Interest and Fees. All computation of fees and
interest shall be made on the basis of a 365-day year and actual days elapsed.
If the due date for any payment of principal is extended by operation of law,
interest shall be payable for such extended time. If any payment required by
this Agreement becomes due on a day that is not a Business Day such payment may
be made on the next succeeding Business Day, and such extension shall be
included in computing interest in connection with such payment.

 

2.8         Taxes.

 

(a)       Payments Free of Taxes. Any and all payments by or on account of any
obligation of the Borrower hereunder or under any other Loan Document shall be
made free and clear of and without reduction or withholding for any Taxes;
provided that if the Borrower shall be required by applicable law to deduct any
Taxes from such payments, then (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section) each Lender receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall
timely pay the full amount deducted to the relevant Governmental Authority in
accordance with applicable law.

 

(b)       Indemnification by the Borrower. The Borrower shall indemnify the
Lenders, within ten days after demand therefor, for the full amount of any Taxes
(including Taxes imposed or asserted on or attributable to amounts payable under
this Section 2.8) paid by the Lenders, as the case may be, for or on account of
Taxes in relation to a payment received or receivable (or any payment deemed to
be received or receivable) under a Loan document, and any penalties, interest
and reasonable expenses arising therefrom or with respect thereto, whether or
not such Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or
liability delivered to the Borrower by the Lenders shall be conclusive absent
manifest error. The foregoing indemnification does not apply with respect to any
Tax assessed on the Lender if that Tax is imposed on or calculated by reference
to the net income received or receivable (under U.S. federal income tax
principles) by the Lender.

 

(c)       Evidence of Payments. As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority,
the Borrower shall deliver to the Lenders the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Lenders.

 

12 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

(d)       Tax Treatment. Each Lender and the Borrower agree to treat the Loans
as “debt” for tax purposes, and where applicable as a transaction controlled by
Section 707(a) of the Internal Revenue Code of 1986, as amended. Each party
shall file all federal, state, county and local tax returns and information
reporting forms required to be filed consistent with this treatment of the
Loans. Except as otherwise required by law, no party to this Agreement shall
take a position inconsistent with the foregoing on any tax return or otherwise.

 

Section III

 

CONDITIONS OF LENDING

 

3.1         Conditions Precedent to Initial Loans. The agreement of the Lenders
to make the initial Loan is subject to the satisfaction of the following
conditions precedent on or prior to the Closing Date:

 

(a)       Closing Deliverables. The Lenders shall have received the following,
each of which shall be originals, “pdfs” or telecopies (followed promptly by
originals) unless otherwise specified, each properly executed by a Responsible
Officer of the Borrower, each dated the Closing Date (or, in the case of
certificates of governmental officials, a recent date before the Closing Date)
and each in form and substance satisfactory to the Lenders:

 

(i)        an executed counterpart of this Agreement;

 

(ii)       the Notes executed by the Borrower in favor of the Lenders;

 

(iii)      evidence satisfactory to the Lenders that all approvals, consents,
exemptions, authorizations, notices to or filings with any Governmental
Authority or other Person set forth on Schedule 4.3 have been obtained or made
by the Borrower or its applicable Subsidiary or Affiliate;

 

(iv)      such certificates of resolutions or other action, incumbency
certificates and/or other certificates of Responsible Officers of the Borrower
and each Pledgor as the Lenders may require evidencing the authority of the
Borrower and each Pledgor to consummate the transactions contemplated hereby and
the identity, authority and capacity of each Responsible Officer thereof
authorized to act as a Responsible Officer in connection with this Agreement and
the other Loan Documents to which the Borrower and each Pledgor is a party or is
to be a party;

 

(v)       such documents and certifications as the Lenders may reasonably
require to evidence that the Borrower and each Pledgor is duly organized or
formed; is validly existing and is in good standing and qualified to engage in
business in each jurisdiction where its ownership, lease or operation of
properties or the conduct of its business requires such qualification, except to
the extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect;

 

13 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

(vi)      a certificate signed by a Responsible Officer of the Borrower
certifying that the conditions specified in Sections 3.1 and 3.2 have been
satisfied;

 

(vii)     certificates attesting to the Solvency of the Borrower, from the
Borrower’s chief financial officer, treasurer, controller, administrator or
other officer of equivalent responsibility;

 

(viii)    such other assurances, certificates, documents, consents and opinions
as the Lenders reasonably may require; and

 

(ix)       an executed copy of the Subordination Agreement.

 

(b)       Indebtedness. The Borrower shall not have outstanding any Indebtedness
for money borrowed other than the Loans and any other Indebtedness permitted by
Section 6.1, including the Indebtedness set forth on Schedule 6.1(f).

 

(c)       Independent Director Approval. The Lenders shall have received written
evidence satisfactory to them of the approval of this Agreement and the
borrowing hereunder by a majority of the independent directors of Golden Queen
Mining Co. Ltd.

 

3.2         Conditions Precedent to all Loans. The obligation of the Lenders to
make any Loan, including the initial Loans, is further subject to the following
conditions:

 

(a)       Loan Limit. The outstanding Loans do not and, after giving effect to
any requested Loan, will not exceed the limitation set forth in Section 2.1.

 

(b)       Litigation; Investigations. No litigation, arbitration, proceeding or
investigation shall be pending or, to the knowledge of the Borrower, threatened
in writing which questions the validity or legality of the transactions
contemplated by any Loan Document or seeks a restraining order, injunction or
damages in connection therewith, or which, in the reasonable judgment of the
Lenders, would reasonably be expected to adversely affect the transactions
contemplated hereby or thereby.

 

(c)       Accuracy of Representations and Warranties. The representations and
warranties contained in Section IV hereof and all representations and warranties
made by the Borrower under any other Loan Document shall be true and accurate in
all material respects on and as of the date any Loan is made.

 

(d)       No Default. No Default or Event of Default shall have occurred and be
continuing.

 

(e)       No Change in Law. No change shall have occurred in any law or
regulation or interpretation thereof that, in the reasonable opinion of counsel
for the Lenders, would make it illegal or against the formally adopted and
published policy of any Governmental Authority for the Lenders to make the Loans
hereunder.

 

14 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

(f)       Approval of Borrower’s Board of Managers. The Lenders shall have
received evidence satisfactory to them that the Borrower’s board of managers has
approved the specific Loan being requested by action contemporaneous with such
request (as distinguished from an advance blanket authorization by the Borrower
to obtain Loan advances).

 

Section IV

 

REPRESENTATIONS AND WARRANTIES

 

The Borrower (and each Pledgor, with respect to Section 4.1, 4.2, 4.3, 4.4, 4.6,
4.16 and 4.17, as applied to itself only) represents and warrants to the Lenders
that:

 

4.1         Existence, Qualification and Power. The Borrower and each Pledgor
(a) is duly organized or formed, validly existing and, as applicable, in good
standing under the laws of the jurisdiction of its incorporation, organization
or formation, (b) has all requisite power and authority and all requisite
governmental licenses, authorizations, consents and approvals to (i) own or
lease its assets and carry on its business and (ii) execute, deliver and perform
its obligations under the Loan Documents to which it is a party and (c) is duly
qualified and is licensed and, as applicable, in good standing under the laws of
each jurisdiction where its ownership, lease or operation of properties or the
conduct of its business requires such qualification or license; except in each
case referred to in clause (b)(i) or (c), to the extent that failure to do so
could not reasonably be expected to have a Material Adverse Effect.

 

4.2         Authorization; No Contravention. The execution, delivery and
performance by the Borrower and each Pledgor of each Loan Document to which such
Person is or is to be a party have been duly authorized by all necessary
corporate or other organizational action, and, except as disclosed on Schedule
4.2, do not and will not (a) contravene the terms of any of such Person’s
organizational documents; (b) conflict with or result in any breach or
contravention of, or the creation of any Encumbrance under, or require any
payment to be made under (i) any contractual obligation to which such Person is
a party or affecting such Person or the properties of such Person or any of its
Subsidiaries or (ii) any order, injunction, writ or decree of any Governmental
Authority or any arbitral award to which such Person or its property is subject;
or (c) violate any law, rule or regulation, except in each case referred to in
clause (b)(i) or clause (c) to the extent any such conflict or violation could
not reasonably be expected to have a Material Adverse Effect.

 

4.3         Governmental Authorization; Other Consents; Corrupt Practices.
Except as disclosed on Schedule 4.3:

 

(a)       no approval, consent, exemption, authorization, or other action by, or
notice to, or filing with, any Governmental Authority or any other Person is
necessary or required in connection with (i) the execution, delivery or
performance by, or enforcement against, the Borrower or any Pledgor of this
Agreement or any other Loan Document, or (ii) the exercise by a Lender of its
rights under the Loan Documents.

 

15 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

(b)       The Borrower, each Pledgor and their respective officers, directors,
employees, and agents have complied in all material respects with all applicable
Corrupt Practices Laws in obtaining any Governmental Approvals, consents,
licenses, approvals, permits, authorizations, rights, and privileges in respect
of the Borrower’s business, and are otherwise conducting the business of the
Borrower in compliance in all material respects with applicable Corrupt
Practices Laws, the Borrower declares that at no time in the course of its
business has the Borrower or its officers, directors, employees or agents
offered or promised any undue advantage, directly or indirectly, to a Public
Official, with the objective of influencing him or her to perform, omit or delay
an official act, or to obtain improper business advantage for themselves or for
the Borrower. (For purposes of this Agreement, “undue advantage” is not limited
to payments or financial benefits, but consists of anything that has value to a
Public Official.);

 

(c)       The Borrower’s and each Pledgor’s internal management and accounting
practices and controls are adequate to ensure compliance in all material
respects with applicable Corrupt Practices Laws.

 

4.4         Binding Effect. This Agreement has been, and each other Loan
Document, when delivered hereunder, will have been, duly executed and delivered
by the Borrower and each Pledgor. This Agreement constitutes, and each other
Loan Document when so delivered will constitute, a legal, valid and binding
obligation of the Borrower and each Pledgor, enforceable against the Borrower
and each Pledgor in accordance with its terms except as limited by bankruptcy,
insolvency, reorganization, moratorium or other laws affecting the enforcement
of creditors’ rights generally, and except as the remedy of specific performance
or of injunctive relief is subject to the discretion of the court before which
any proceeding therefor may be brought.

 

4.5         Financial Statements. The audited financial statements of the
Borrower for the fiscal year of the Borrower ended December 31, 2017, furnished
to the Lenders, are true and complete in all material respects, have been
prepared in accordance with GAAP, and fairly present the financial condition of
the Borrower as of the date of such financial statements and the results of
their operations for the period then ending. Since the date of such statements,
there has been no material change in the Borrower’s accounting procedures. Since
the delivery to the Lenders of the most recently audited financial statements of
the Borrower, there has been no material adverse change in the Borrower’s
financial condition, properties or business, taken as a whole.

 

4.6         Litigation. There are no actions, suits, proceedings, claims or
disputes pending or, to the knowledge of the Borrower, threatened in writing, at
law, in equity, in arbitration or before any Governmental Authority, by or
against the Borrower or any Pledgor or against any of their respective
properties or revenues that (a) purport to affect or pertain to this Agreement
or any other Loan Document, or (b) except as set forth on Schedule 4.6, either
individually or in the aggregate, if determined adversely, could reasonably be
expected to have a Material Adverse Effect.

 

4.7         No Default. Except as set forth on Schedule 4.7, the Borrower is not
in default under or with respect to, or a party to, any contractual obligation
that would, either individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. No Default has occurred and is continuing or
would result from the consummation of the transactions contemplated by this
Agreement or any other Loan Document.

 

16 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

4.8         Ownership of Property; Encumbrances. The Borrower has good record
and sufficient title to its material properties, including all real property
necessary for the ordinary conduct of its business, except for such defects in
title as could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. The Borrower’s properties are not subject to any
Encumbrances, except for Permitted Encumbrances.

 

4.9         Environmental Compliance. The Borrower has duly complied with, and
its business, operations, assets, equipment, property, leaseholds, and other
facilities are in compliance with, the provisions of all applicable
Environmental Laws, except as any noncompliance therewith could not reasonably
be expected to have a Material Adverse Effect. The Borrower has (a) been issued
and will maintain all required consents, permits, licenses, certificates,
authorizations, and approvals relating to, and (b) received no complaint, order,
directive, claim, citation, or notice by any Governmental Authority or any other
Person with respect to, any and all Environmental Laws, except to the extent any
such failure to have issued or maintained or any such receipt in each case could
not reasonably be expected to have a Material Adverse Effect.

 

4.10       Insurance. The properties of the Borrower necessary for the ordinary
conduct of its business are insured with financially sound and reputable
insurance companies not Affiliates of the Borrower, in such amounts, with such
deductibles and covering such risks as are customarily carried by companies
engaged in similar businesses and owning similar properties in localities where
the Borrower operates and as required by applicable Governmental Authorities.

 

4.11      Taxes. The Borrower has filed all federal, state, provincial, and all
material local tax returns and reports required by law to be filed in respect of
the income, business, properties, and employees of the Borrower, and has paid
all Taxes, assessments, fees and other charges levied or imposed by any
Governmental Authority upon it or its properties, income or assets otherwise due
and payable, except those which are being contested in good faith by appropriate
proceedings diligently conducted and for which adequate reserves have been
provided in accordance with GAAP. There is no proposed Tax assessment against
the Borrower that is not being challenged by appropriate proceedings with
adequate reserves made therefor that would, if made, have a Material Adverse
Effect.

 

4.12       Subsidiaries. The Borrower has no Subsidiaries other than [**].

 

4.13       Margin Regulations; Investment Company Act.

 

(a)       The Borrower has not engaged nor will engage, principally or as one of
its important activities, in the business of purchasing or carrying margin stock
(within the meaning of Regulation U issued by the FRB), or extending credit for
the purpose of purchasing or carrying margin stock.

 

(b)       The Borrower is not required to be registered as an “investment
company” under the Investment Company Act of 1940.

 

4.14       Compliance with Laws. The Borrower is in compliance in all material
respects with the requirements of all laws, rules and regulations and all
orders, writs, injunctions and decrees applicable to it or to its properties,
except where the failure to comply therewith, either individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.

 

17 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

4.15       Solvency. The Borrower is Solvent.

 

4.16       Compliance with OFAC Rules and Regulations. The Borrower and each
Pledgor is and will remain in compliance in all material respects with all
United States economic sanctions laws, executive orders and implementing
regulations as promulgated by OFAC and all applicable anti-money laundering and
counter-terrorism financing provisions of the Bank Secrecy Act (P.L. 91-508, 84
Stat. 1118 (1970) and all regulations issued pursuant to it. None of the
Borrower, the Pledgors, nor any Person directly or indirectly controlling the
Borrower or any Pledgor (i) is a Person designated by the United States
government on the list of the Specially Designated Nationals and Blocked Persons
(the “SDN List”) with which a United States Person cannot deal with or otherwise
engage in business transactions, (ii) is a Person who is otherwise the target of
United States economic sanctions laws such that a United States Person cannot
deal or otherwise engage in business transactions with such Person, or (iii) is
controlled by (including by virtue of such person being a director or owning
voting shares or interests), or acts, directly or indirectly, for or on behalf
of, any person or entity on the SDN List or a foreign government that is the
target of United States economic sanctions prohibitions such that the entry
into, or performance under, this Agreement or any other Loan Document would be
prohibited under United States law.

 

4.17       Foreign Assets Control Regulations, Etc. The Borrower and each
Pledgor is not an “enemy” or an “ally of the enemy” within the meaning of
Section 2 of the Trading with the Enemy Act of the United States of America (50
U.S.C. App. §§ 1 et seq.), as amended. The Borrower is not in violation of (a)
the Trading with the Enemy Act, as amended, (b) any of the foreign assets
control regulations of the United States Treasury Department (31 CFR, Subtitle
B, Chapter V, as amended) or any enabling legislation or executive order
relating thereto or (c) the USA Patriot Act (Title III of Pub. L. 107-56 (signed
into law October 26, 2001)). The Borrower (i) is not a blocked person described
in Section 1 of the Executive Order 13224 issued on September 24, 2001, and (ii)
to the Borrower’s knowledge, does not engage in any dealings or transactions, or
is otherwise associated, with any such blocked person.

 

Section V

 

AFFIRMATIVE COVENANTS

 

Each Loan Party covenants that so long as the Loans or any other Obligation
remain outstanding:

 

5.1         Financial Statements. The Borrower shall furnish to the Lenders:

 

(a)       as soon as available to the Borrower, but in any event within 120 days
after the end of each Fiscal Year, the balance sheet of the Borrower and its
Subsidiaries as of the end of such year and related statements of income,
retained earnings and cash flow of the Borrower and its Subsidiaries for such
year, prepared in accordance with GAAP and audited and certified without
qualification by the Borrower’s Accountants; and, concurrently with such
financial statements, a copy of the Borrower’s Accountants management report and
a written statement by the Borrower’s Accountants that in the making of the
audit necessary for their report and opinion upon such financial statements,
they have obtained no knowledge of any Default or, if in the opinion of such
accountants any such Default exists, they shall disclose in such written
statement the nature and status thereof; provided that the Borrower shall be
deemed to be in compliance with its delivery obligations pursuant to this
Section 5.1(a) with respect to any material or information set forth in this
Section 5.1(a) to the extent such material or information is publicly filed via
the Securities and Exchange Commission’s Electronic Data Gathering, Analysis and
Retrieval System (EDGAR) or any public electronic filing system successor
thereto;

 

18 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

(b)       as soon as available to the Borrower, but in any event within 60 days
after the end of each Fiscal Quarter of each Fiscal Year, a balance sheet of the
Borrower and its Subsidiaries as of the end of, and related statements of
income, retained earnings and cash flow of the Borrower and its Subsidiaries
for, the Fiscal Quarter then ended and the portion of the Fiscal Year then
ended, prepared in accordance with GAAP and certified by the chief financial
officer or other officer of equivalent responsibility of the Borrower, subject
to normal, recurring year-end adjustments that shall not in the aggregate be
material in amount; provided that the Borrower shall be deemed to be in
compliance with its delivery obligations pursuant to this Section 5.1(b) with
respect to any material or information set forth in this Section 5.1(b) to the
extent such material or information is publicly filed via the Securities and
Exchange Commission’s Electronic Data Gathering, Analysis and Retrieval System
(EDGAR) or any public electronic filing system successor thereto;

 

(c)       concurrently with their filing, true and correct copies of the
Borrower’s and its Subsidiaries’ Tax returns and each amendment thereto;

 

(d)       promptly after the receipt thereof by the Borrower, copies of any
reports (including any so-called management letters) submitted to the Borrower
by independent public accountants in connection with any annual or interim
review of the accounts of the Borrower or its Subsidiaries made by such
accountants;

 

(e)       promptly after the same are delivered or filed, copies of all
financial statements and reports as any Loan Party shall send to owners of its
Equity Interests or as the Borrower may file with any Governmental Authority at
any time; provided that such Loan party shall be deemed to be in compliance with
its delivery obligations pursuant to this Section 5.1(e) with respect to any
material or information set forth in this Section 5.1(e) to the extent such
material or information is publicly filed via the Securities and Exchange
Commission’s Electronic Data Gathering, Analysis and Retrieval System (EDGAR) or
any public electronic filing system successor thereto; and

 

(f)       from time to time, such other financial data and information about the
Loan Parties as the Lenders may reasonably request.

 

19 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

5.2         Conduct of Business.

 

(a)       Each Loan Party shall duly observe and comply in all material respects
with all material contracts and with all applicable laws, regulations, decrees,
orders, judgments and valid requirements of any Governmental Authority
applicable to its corporate existence, rights and franchises, to the conduct of
its business and to its property and assets (including without limitation all
Environmental Laws and Corrupt Practices Laws), except in any case where the
failure to observe and comply would not reasonably be expected to have a
Material Adverse Effect and shall maintain and keep in full force and effect and
comply in all material respects with all licenses and permits necessary to the
proper conduct of its business.

 

(b)       Each Loan Party shall maintain its legal existence, comply with its
organizational documents, and observe all legally necessary or contractually
required formalities in its governance. The Borrower shall and remain or engage
in substantially the same business as that in which it is now engaged.

 

5.3         Taxes. Each Loan Party shall pay or cause to be paid all Taxes on or
against it or its properties on or prior to the time when they become
delinquent; except for any Tax or charge that is being contested in good faith
by appropriate proceedings and with respect to which adequate reserves have been
established and are being maintained in accordance with GAAP, if no Encumbrance
shall have been filed (the enforcement of which shall not have been stayed
within 30 days of the filing thereof) to secure such Tax, assessment or charge.

 

5.4         Inspection Rights. Each Loan Party shall permit any authorized
representatives designated by a Lender to visit and inspect any of the
properties of such Loan Party, to inspect, copy and take extracts from its
financial and accounting records, and to discuss its affairs, finances and
accounts with its officers and independent public accountants, all upon
reasonable notice and at such reasonable times during normal business hours. The
reasonable out-of-pocket expenses of the Lenders in connection with such
inspections shall be payable by the Borrower.

 

5.5         Maintenance of Books and Records. Each Loan Party shall keep
adequate books and records of account, in which true and complete entries will
be made reflecting all of its business and financial transactions, and such
entries will be made in accordance with GAAP, in each case consistently applied
and applicable law. Each Loan Party shall keep internal management and
accounting practices and controls that are adequate to ensure compliance with
applicable Corrupt Practices Laws.

 

5.6         Use of Proceeds.

 

(a)       The Borrower will use the proceeds of the Loans for general working
capital and other corporate purposes of the Borrower.

 

(b)       No portion of the Loans shall be used for the “purpose of purchasing
or carrying” any “margin stock” or “margin security” as such terms are used in
Regulations T, U and X of the Board of Governors of the Federal Reserve System,
or otherwise in violation of such regulations.

 

5.7         Further Assurances. At any time and from time to time each Loan
Party shall execute and deliver such further documents and take such further
action as may reasonably be requested by the Lenders to effect the purposes of
the Loan Documents.

 

20 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

5.8         Notification Requirements. Each Loan Party shall furnish to the
Lenders:

 

(a)       promptly upon becoming aware of the existence of any condition or
event that constitutes a Default, written notice thereof specifying the nature
and duration thereof and the action being or proposed to be taken with respect
thereto;

 

(b)       promptly upon becoming aware of any investigative proceedings by a
Governmental Authority or of any litigation commenced or threatened in writing
against any Loan Party of which it has notice, the outcome of which could
reasonably be expected to have a Material Adverse Effect, written notice thereof
and the action being or proposed to be taken with respect thereto; and

 

(c)       promptly after becoming aware of any occurrence or any condition
affecting any Loan Party which could reasonably be expected to have a Material
Adverse Effect, written notice thereof.

 

5.9         Environmental Compliance.

 

(a)       Except as could not reasonably be expected to have a Material Adverse
Effect, (i) the Each Loan Party shall comply with, and shall conduct its
business, operations, assets, equipment, property, leaseholds, and other
facilities in compliance with, the provisions of all Environmental Laws; (ii)
each Loan Party shall maintain in full force and effect all required permits,
licenses, certificates, authorizations and approvals relating to Environmental
Laws; and (iii) the business of each Loan Party shall be operated in a manner
that will not pose any an unreasonable risk to public health or the environment.

 

(b)       Each Loan Party shall provide the Lenders upon either Lender’s request
with information related such Loan Party’s compliance with those Environmental
Laws that are reasonably necessary to the ordinary conduct of its business
within ten days as of the receipt by a Responsible Officer of such Loan Party of
such request.

 

(c)       The Borrower shall promptly inform the Lenders of the receipt of any
(i) notice of violation of any environmental permits, licenses, certificates and
authorizations (ii) notice of violation of any Environmental Laws, the violation
of which could reasonably be expected to be material and adverse to the ordinary
conduct of any Loan Party’s business.

 

5.10       Subsidiary Guaranties. Each Subsidiary of the Borrower created,
acquired or held on any date subsequent to the Closing Date, shall as promptly
as possible but in any event within thirty (30) days (or such later date as may
be agreed upon by the Lenders) of such date, execute and deliver to the Lenders,
along with any corporate governance and authorization documents, a guaranty of
all Obligations (a “Subsidiary Guaranty”) in form and substance reasonably
satisfactory to the Lenders.

 

21 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

5.11       Exploration of Strategic Alternatives. Promptly after the Closing
Date the Borrower, in consultation with the Lenders, will commence and
diligently engage in a process to explore, evaluate and pursue strategic
alternatives to (i) repay the Obligations in full and (ii) finance the
Borrower’s future capital needs (the “Strategic Alternative Assessment”). Upon
the conclusion of the Strategic Alternative Assessment, the Borrower shall
proceed with any resulting strategic alternative; provided that the Borrower
shall not be obligated to proceed with such strategic alternative if the
Borrower has identified a bona fide alternative transaction, satisfactory to the
Lenders, that will repay in cash the Obligations in full by the Maturity Date.
The Lenders shall have the right to approve all advisors used by the Borrower in
connection with the Strategic Alternative Assessment.

 

5.12       Post-closing Obligations. Borrower shall cause [**], as promptly as
possible but in any event within thirty (30) days of the Closing Date (or such
later date as agreed by the Administrative Agent in their discretion), to
execute and deliver to the Lenders, along with any corporate governance and
authorization documents, a Subsidiary Guaranty in form and substance
satisfactory to the Lenders.

 

Section VI

 

NEGATIVE COVENANTS

 

Each Loan Party covenants that so long as the Loans or any other Obligation
remain outstanding:

 

6.1         Indebtedness. Each Loan Party shall not create, incur, assume,
guarantee or be or remain liable with respect to any Indebtedness other than the
following:

 

(a)       Obligations;

 

(b)       Indebtedness for Taxes to the extent that payment therefor shall at
the time not be required to be made in accordance with Section 5.3;

 

(c)       current liabilities on open account for the purchase price of
services, materials and supplies incurred by the Borrower in the ordinary course
of business (not as a result of borrowing), so long as all of such open account
current liabilities shall be promptly paid and discharged in conformity with
customary trade terms and practices, except for any such open account
Indebtedness which is being contested in good faith by the Borrower, as to which
adequate reserves required by GAAP, as applicable, have been established and are
being maintained and as to which no Encumbrance has been placed on any property
of the Borrower (other than Permitted Encumbrances);

 

(d)       mobile equipment financing and short term financing with or on behalf
of one or more refineries in connection with their purchases of the Borrower’s
gold and silver doré bars;

 

(e)       Guarantees permitted under Section 6.2 hereof;

 

(f)       Indebtedness existing as of the date of this Agreement and disclosed
on Schedule 6.1(f), together with any renewals, extensions or refinancing
thereof, provided that the amount of such resulting Indebtedness shall not
exceed the amount of Indebtedness originally being renewed, extended or
refinanced; and

 

22 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

(g)       endorsements of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business.

 

6.2         Contingent Liabilities. Each Loan Party shall not create, incur,
assume, guarantee or be or remain liable with respect to any Guarantees other
than (i) Guarantees resulting from the endorsement of negotiable instruments for
deposit or collection in the ordinary course of business and (ii) reclamation
obligations supported by surety bonds, as set forth on Schedule 6.2, the amount
of which may increase over time.

 

6.3         Encumbrances. Each Loan Party shall not create, grant, incur, assume
or suffer to exist any direct or indirect mortgage, pledge, security interest,
lien or other charge or encumbrance of any kind, including any negative pledge
or any lien or retained security title of a conditional vendor, upon or with
respect to any of its property or assets (“Encumbrances”), or assign or
otherwise convey any right to receive income, including the sale or discount of
accounts receivable with or without recourse, except the following (“Permitted
Encumbrances”):

 

(a)       liens of the Administrative Agent (for the benefit of the Lenders)
under this Agreement, the other Loan Documents and any other document
contemplated hereby or thereby;

 

(b)       liens incurred in connection with the posting of cash collateral to
support the surety bonds set forth on Schedule 6.2, together with any
replacement, extension or renewal thereof;

 

(c)       liens existing as of the date of this Agreement and disclosed on
Schedule 6.3, together with any replacement, extension or renewal thereof upon
or in the same property subject thereto arising out of the extension, renewal or
replacement of the Indebtedness secured thereby;

 

(d)       liens for Taxes to the extent that payment of the same may be
postponed or is not required in accordance with the provisions of Section 5.3;
and

 

(e)       any Encumbrances arising by mandatory provision of law securing
obligations incurred in the ordinary course of business that (i) do not
interfere with the ordinary conduct of the business of any Loan Party, (ii) are
not yet more than 90 days overdue or that are being contested or litigated in
good faith, including (A) Encumbrances of carriers, warehousemen, mechanics,
laborers, and materialmen incurred in the ordinary course of business for sums
not yet due, (B) Encumbrances on real estate for real estate taxes not yet
delinquent, (C) Encumbrances incurred in the ordinary course of business in
connection with worker’s compensation and unemployment insurance, (D) easements,
rights-of-way, restrictions, and other similar encumbrances on the use of real
property approved in advance by the Lenders, and (E) employee claims regarding
wages and benefits.

 

6.4         Merger; Dispositions; Liquidation.

 

(a)       No Loan Party may merge into or consolidate with any other Person, or
permit any other Person to merge into or consolidate with it, or liquidate or
dissolve.

 

23 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

(b)       Each Loan Party shall not Dispose of any assets or properties
reasonably necessary to the ordinary conduct of its business, other than sales
of Qualified Investments in the ordinary course of business and consistent with
past practices.

 

6.5         Restricted Payments. Each Loan Party shall not make any Restricted
Payments, except that:

 

(a)       the Borrower may declare and pay dividends and make other
distributions and payments with respect to its Equity Interests if payable
solely in its Equity Interests; and

 

(b)       the Borrower may purchase or otherwise acquire Equity Interests in any
Subsidiary of the Borrower using additional shares of its Equity Interests.

 

6.6         Investments; Purchases of Assets. Each Loan Party shall not make or
maintain any Investments or purchase or otherwise acquire any material amount of
assets other than:

 

(a)       Qualified Investments;

 

(b)       Subsidiaries created, acquired, or held in accordance with the terms
of this Agreement; and

 

(c)       to the extent permitted by applicable law, loans or other extensions
of credit to officers, directors and employees of the Borrower in the ordinary
course of business, for travel, entertainment, relocation and analogous ordinary
business purposes, which Investments shall not exceed at any time $200,000 in
the aggregate.

 

6.7         Transactions with Affiliates. Each Loan Party will not directly or
indirectly, enter into any purchase, sale, lease or other transaction with any
Affiliate except transactions on terms that are no less favorable to such Loan
Party than those which might be obtained at the time in a comparable
arm’s-length transaction with any Person who is not an Affiliate; except any
such transaction (i) unanimously approved by the board of managers of such Loan
Party or by a committee of its board of managers whose members have been
unanimously appointed by its board of managers; or (ii) between any Loan Party
and a Lender or an Affiliate of a Lender.

 

6.8         Fiscal Year. Each Loan Party shall not change its Fiscal Year
without at least 90 days’ prior written notice to the Lenders.

 

Section VII

 

DEFAULTS

 

7.1         Events of Default. Any of the following shall constitute an Event of
Default:

 

(a)       Non-Payment. The Borrower fails to (i) pay when and as required to be
paid in herein, any amount of principal of the Loans (including any interest and
Commitment fee added to the principal of the Loans), or (ii) pay within ten (10)
days after the same becomes due, any other amount payable hereunder or under any
other Loan Document; or

 

24 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

(b)       Specific Covenants. (i) Any Loan party fails to perform or observe any
term, covenant or agreement contained in any of Sections 5.1(a), (b), or (c),
Sections 5.2(b), 5.4, 5.6, 5.7, 5.8, 5.10, or 5.11 or Section VI, or (ii) a
Subsidiary of Borrower violates or fails to perform or observe any term,
covenant or agreement contained in any Subsidiary Guaranty; or

 

(c)       Other Defaults. Any Loan Party fails to perform or observe any other
covenant or agreement (not specified in Section 7.1(a) or 7.1(b) above)
contained in any Loan Document on its part to be performed or observed and such
failure continues for 30 days; or

 

(d)       Representations and Warranties. Any representation, warranty,
certification or statement of fact made or deemed made by or on behalf of the
Borrower herein, in any other Loan Document, or in any document delivered in
connection herewith or therewith shall be materially incorrect or misleading
when made or deemed made; or

 

(e)       Cross-Default. (i) Each Loan Party (A) shall fail to make any payment
when due (whether by scheduled maturity, required prepayment, acceleration,
demand, or otherwise) in respect of any Indebtedness or Guarantee (other than
Indebtedness hereunder) having an aggregate principal amount (including undrawn
committed or available amounts and including amounts owing to all creditors
under any combined or syndicated credit arrangement) of more than $150,000, or
(B) shall fail to observe or perform any other agreement or condition relating
to any such Indebtedness or Guarantee or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event occurs,
the effect of which default or other event is to cause, or to permit the holder
or holders of such Indebtedness or the beneficiary or beneficiaries of such
Guarantee (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause, with the giving of notice if required,
such Indebtedness to be demanded or to become due or to be repurchased, prepaid,
defeased or redeemed (automatically or otherwise), or an offer to repurchase,
prepay, defease or redeem such Indebtedness to be made, prior to its stated
maturity, or such Guarantee to become payable or cash collateral in respect
thereof to be demanded; or (ii) the Borrower shall fail to pay when due (after
any applicable period of grace) any amount payable under one or more agreements
for the use of real or personal property requiring aggregate payments in excess
of $100,000 in any twelve month period, or fails to observe or perform any term,
covenant or agreement or relating to such agreement(s) for the use of real or
personal property, and the result of any such failure is to permit any other
party to such agreement(s) to exercise remedies under or terminate such
agreement(s) prior to the expiration date thereof; or

 

(f)       Insolvency Proceedings, Etc. Any Loan Party institutes or consents to
the institution of any proceeding under any bankruptcy, insolvency,
reorganization, receivership or other debtor relief law, or makes a general
assignment for the benefit of creditors; or applies for or consents to the
appointment of any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer for it or for all or any material part of its
property; or any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer is appointed without the application or consent
of such Person and the appointment continues undischarged or unstayed for 60
calendar days; or any proceeding under any bankruptcy, insolvency,
reorganization, receivership or other debtor relief law relating to any such
Person or to all or any material part of its property is instituted without the
consent of such Person and continues undismissed or unstayed for 60 calendar
days, or an order for relief is entered in any such proceeding; or

 

25 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

(g)       Inability to Pay Debts; Attachment. (i) The Borrower becomes unable or
admits in writing its inability or fails generally to pay its debts as they
become due, or (ii) any writ or warrant of attachment or execution or similar
process is issued or levied against all or any material part of the property of
any such Person and is not released, vacated or fully bonded within 45 days
after its issue or levy; or

 

(h)       Judgments. There is entered against any Loan Party (i) one or more
final judgments or orders, not disclosed on Schedule 4.6, for the payment of
money in an aggregate amount (as to all such judgments and orders) exceeding
$100,000 (to the extent not covered by independent third-party insurance as to
which the insurer is rated at least “A” by A.M. Best Company, has been notified
of the potential claim and does not dispute coverage), or (ii) any one or more
non-monetary final judgments that have, or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect and, in either case,
(A) enforcement proceedings are commenced by any creditor upon such judgment or
order, or (B) there is a period of 30 consecutive days while such judgment shall
not have been discharged during which a stay of enforcement of such judgment, by
reason of a pending appeal or otherwise, is not in effect; or

 

(i)       Invalidity of Loan Documents. Any material provision of any Loan
Document, at any time after its execution and delivery and for any reason other
than as expressly permitted hereunder or thereunder or satisfaction in full of
all the Obligations, ceases to be in full force and effect; or the Borrower
contests in any manner the validity or enforceability of any provision of any
Loan Document; or the Borrower denies that it has any or further liability or
obligation under any provision of any Loan Document, or purports to revoke,
terminate or rescind any provision of any Loan Document; or

 

(j)       Change of Control. There occurs any Change of Control.

 

7.2         Remedies upon Event of Default. If any Event of Default occurs and
is continuing, the Lenders, acting jointly, may take any or all of the following
actions:

 

(a)       declare the aggregate unpaid principal amount of the Loans, all
interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by each Loan Party; and

 

(b)       exercise on behalf of themselves all rights and remedies available to
them under the Loan Documents and applicable laws;

 

provided, however, that upon the occurrence of an Event of Default specified in
Section 7.1(f), the unpaid principal amount of the Loans and all interest and
other amounts as aforesaid shall automatically become due and payable, without
further act of the Lenders. All amounts collected from any enforcement of
remedies hereunder, including any proceeds from the sale of Collateral, shall be
applied to the amounts owing to each Lender under this Agreement in proportion
to the amount of outstanding Loans owed to such Lender.

 

26 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

Section VIII

 

GRANT OF SECURITY INTEREST

 

8.1         Security Interests. The Borrower, as security for the due and
punctual payment of the Obligations (including interest accruing on and after
the filing of any petition in bankruptcy or of reorganization of the Borrower
whether or not post filing interest is allowed in such proceeding), hereby
grants, mortgages, pledges, assigns, transfers, sets over, conveys and delivers
to the Administrative Agent (for the benefit of the Lenders), a security
interest in the Collateral.

 

8.2         Use of Collateral. So long as no Event of Default shall have
occurred and be continuing, and subject to the various provisions of this
Agreement and the other Loan Documents, the Borrower may use its Collateral in
any lawful manner.

 

27 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

8.3         Possession; Sale of Collateral; etc. In addition to any other rights
and remedies granted to the Administrative Agent and the Lenders in the Loan
Documents, if any Event of Default shall have occurred and be continuing, the
Administrative Agent (on behalf of the Lenders and with the consent of both
Lenders) may exercise all rights and remedies of a secured party under the
Uniform Commercial Code or any other applicable law. Without limiting the
generality of the foregoing, the Administrative Agent without demand of
performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice required by law referred to below) to or upon the
Borrower or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, or consent to the use by the Borrower of any cash collateral
arising in respect of the Collateral on such terms as the Administrative deems
reasonable, and/or may forthwith sell, lease, assign give an option or options
to purchase or otherwise dispose of and deliver, or acquire by credit bid on
behalf of the Lenders, the Collateral or any part thereof (or contract to do any
of the foregoing), in one or more parcels at public or private sale or sales, at
any exchange, broker’s board or office of the Administrative Agent or any Lender
or elsewhere, upon such terms and conditions as it may deem advisable and at
such prices as it may deem best, for cash or on credit or for future delivery,
all without assumption of any credit risk, without demand of performance but
with ten (10) days’ prior written notice of the time and place of any such
public sale or sales (which notice the Borrower hereby agrees is commercially
reasonable) and with such other notices as may be required by applicable law and
cannot be waived. The Administrative Agent, on behalf of the Lenders, or the
Lenders, acting jointly, shall have the right upon any such public sale or
sales, and, to the extent permitted by law, upon any such private sale or sales,
to purchase the whole or any part of the Collateral so sold, free of any right
or equity of redemption in the Borrower, which right or equity is hereby waived
and released. The Borrower further agrees, at the Administrative Agent’s request
to assemble the Collateral and make it available to the Administrative Agent at
places which the Administrative Agent shall reasonably select, whether at the
Borrower’s premises or elsewhere and the Administrative Agent may enter upon the
premises of the Borrower or wherever the Collateral may be, and take possession
of the Collateral, and may demand and receive such possession from any Person
who has possession thereof, and the Administrative Agent may take such measures
as it deems necessary or proper for the care or protection thereof, including
the right to remove all or any portion of the Collateral. The Administrative
Agent shall apply the net proceeds of any action taken by it pursuant to this
Section VIII, after deducting all costs and expenses of every kind incurred in
connection therewith or incidental to the care or safekeeping of any of the
Collateral or in any other way relating to the Collateral or the rights of the
Administrative Agent and the Lenders hereunder, including attorneys’ fees and
disbursements, to the payment in whole or in part of the obligations of the
Borrower under the Loan Documents, in such order as the Administrative Agent may
elect, and only after such application and after the payment by the
Administrative Agent of any other amount required by any provision of law,
including Section 9-615(a)(3) of the Uniform Commercial Code, need the
Administrative Agent account for the surplus, if any, to the Borrower. None of
the Administrative Agent or the Lenders shall have any liability should the
proceeds resulting from a private sale of any Collateral be less than the
proceeds realizable from a public sale of such Collateral, and the
Administrative Agent (on behalf of the Lenders) or any other Person may be the
purchaser of all or any portion of the Collateral so sold and thereafter hold
the same absolutely, free (to the fullest extent permitted by applicable law)
from any claim or right of whatever kind, including any equity of redemption, of
the Borrower, any such demand, notice, claim, right or equity being hereby
expressly waived and released. The Administrative Agent (on behalf of the
Lenders) shall in any such sale make no representations or warranties with
respect to the Collateral or any part thereof, and none of the Administrative
Agent or any Lender shall be chargeable with any of the obligations or
liabilities of the Borrower. The Borrower hereby agrees that (i) it will
indemnify and hold the Administrative Agent and the Lenders harmless from and
against any and all claims with respect to any Collateral asserted before the
taking of actual possession or control of such Collateral by the Administrative
Agent pursuant to this Section VIII, or arising out of any act of, or omission
to act on the part of, any Person (other than the Administrative Agent or the
Lenders) prior to such taking of actual possession or control by the
Administrative Agent (whether asserted before or after such taking of possession
or control), or arising out of any act on the part of the Borrower or its
Affiliates or agents before or after the commencement of such actual possession
or control by the Administrative Agent but excluding therefrom all claims with
respect to the Collateral resulting from (x) the gross negligence or willful
misconduct of the Administrative Agent or any Lender, as finally determined by a
court of competent jurisdiction in a non-appealable decision or in an appealable
decision that the party seeking indemnification does not appeal within the time
required, or (y) any claims with respect to the Collateral asserted against an
indemnified party by the Borrower in which the Borrower is the prevailing party
(i.e., the party in whose favor a monetary award is issued); and (ii) none of
the Administrative Agent or any Lender shall have any liability or obligation to
the Borrower arising out of any such claim except for acts of willful misconduct
or gross negligence of such Person, as finally determined by a court of
competent jurisdiction in a non-appealable decision or in an appealable decision
that the party seeking indemnification does not appeal within the time required.
To the extent permitted by applicable law, the Borrower waives all claims,
damages and demands it may acquire against the Administrative Agent or any
Lender arising out of the exercise by them of any rights hereunder. If any
notice of a proposed sale or other disposition of Collateral shall be required
by law, such notice shall be deemed reasonable and proper if given at least ten
(10) days before such sale or other disposition. In any action hereunder, the
Administrative Agent shall be entitled, if permitted by applicable law, to the
appointment of a receiver without notice, to take possession of all or any
portion of the Collateral and to exercise such powers as a court shall confer
upon the receiver. Notwithstanding the foregoing, upon the occurrence and during
the continuance of an Event of Default, the Administrative Agent and the Lenders
shall be entitled to apply, without prior notice to the Borrower, any cash or
cash items constituting Collateral in the possession of the Administrative Agent
and the Lenders in any manner at their sole discretion.

 

28 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

8.4         Financing Statements, Direct Payments. The Borrower hereby
authorizes the Administrative Agent to file financing statements under the
Uniform Commercial Code and any amendments thereto and continuations thereof and
any other reasonably appropriate security documents or instruments and to give
any notices necessary or desirable as determined by the Administrative Agent to
perfect the security interest of the Administrative Agent (for the benefit of
the Lenders) in the Collateral, in all cases without the signature of the
Borrower or to execute such items as attorney-in-fact for the Borrower;
provided, that the Administrative Agent shall provide copies of any such
documents or instruments to the Borrower. The Borrower hereby specifically
authorizes the Administrative Agent to describe and indicate the collateral
covered by any such financing statement as “all assets” and/or “all personal
property” of the Borrower now owned or hereafter acquired. The Borrower further
authorizes the Administrative Agent to notify, at the time that any Event of
Default shall have occurred and be continuing and is not waived, any account
debtors that all sums payable to the Borrower relating to the Collateral shall
be paid directly to the Administrative Agent or as otherwise directed by the
Administrative Agent, and to confirm directly with account debtors the amounts
payable by them to the Borrower with regard to the Collateral and the terms of
all accounts receivable.

 

8.5         Remedies Not Exclusive. The remedies conferred upon or reserved to
the Administrative Agent in this Section VIII are intended to be in addition to,
and not in limitation of, any other remedy or remedies available to the
Administrative Agent. Without limiting the generality of the foregoing, the
Administrative Agent and the Lenders shall have all rights and remedies of a
secured creditor under Article 9 of the Uniform Commercial Code and under any
other applicable law.

 

Section IX

 

PLEDGE

 

9.1         Pledge.

 

(a)       Each Pledgor, as security for the due and punctual payment in full of
the Obligations (including interest accruing on and after the filing of any
petition in bankruptcy or of reorganization of the Borrower whether or not post
filing interest is allowed in such proceeding), hereby grants, pledges,
hypothecates, assigns, transfers, sets over, conveys and delivers unto the
Administrative Agent (for the benefit of the Lenders) a first priority security
interest in all Pledged Collateral (including without limitation the Borrower’s
Equity Interests in [**]) now owned or hereafter acquired by them, senior in
right and priority to the claims of any other Persons. The foregoing will
constitute the approval of each Pledgor to a transfer of units of the Borrower
forming part of the Pledged Collateral pursuant to Section 11.1 of the Golden
Queen Mining Company, LLC Amended and Restated Limited Liability Company
Agreement.

 

29 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

(b)       On or prior to the Closing Date, the Pledgors shall deliver to the
Administrative Agent the definitive instruments (if any) representing all
Pledged Securities, accompanied by undated stock or transfer powers (or any
comparable documents for non-corporate entities to the extent certificated),
duly endorsed or executed in blank by the appropriate Pledgor, and such other
instruments or documents as the Administrative Agent or its counsel shall
reasonably request. Schedule 9.1 sets forth all of the Pledged Securities as of
the Closing Date.

 

9.2         Covenant. Each Pledgor covenants that as the owner of Equity
Interests in each of its respective Subsidiaries it will not take any action to
allow any additional Equity Interests of such Subsidiaries or any securities
convertible or exchangeable into Equity Interest of such Subsidiaries to be
issued, or grant any options or warrants, unless all such interests (or in the
case of such Subsidiaries that are Controlled Foreign Corporations or Foreign
Subsidiary Holding Companies, 65% of such voting Equity Interests and 100% of
such non-voting Equity Interests) are pledged to the Administrative Agent (for
the benefit of the Lenders) as security for the Obligations.

 

9.3         Registration in Nominee Name; Denominations. Until an Event of
Default shall have occurred and be continuing, the Administrative Agent shall
have the right to hold the certificates (if any) representing any Pledged
Securities in the name of the appropriate Pledgor, endorsed or assigned in blank
or in favor of the Administrative Agent. The Administrative Agent shall have the
right to exchange the certificates representing any of the Pledged Securities
for certificates of smaller or larger denominations for any purpose consistent
with this Agreement.

 

9.4         Voting Rights; Dividends; etc.

 

(a)       The appropriate Pledgor shall be entitled to exercise any and all
voting and/or consensual rights and powers accruing to an owner of the Pledged
Securities being pledged by it hereunder or any part thereof for any purpose not
inconsistent with the terms hereof, at all times, except that upon the
occurrence and during the continuance of an Event of Default and notice to the
applicable Pledgor from the Administrative Agent of the transfer of such rights
to the Administrative Agent, all rights of such Pledgor with respect to such
Pledged Securities to exercise the voting and/or consensual rights and powers
which it is permitted to exercise pursuant to this Section 9.4 shall cease.

 

(b)       All dividends or distributions of any kind whatsoever (other than cash
dividends or cash distributions paid while no Event of Default is continuing and
distributions made pursuant to Section 6.5(a)) received by a Pledgor on account
of any Pledged Securities, whether resulting from a subdivision, combination, or
reclassification of the outstanding capital stock or other Equity Interests of
the issuer or received in exchange for the Pledged Securities or any part
thereof or as a result of any merger, consolidation, acquisition, or other
exchange of assets to which the issuer may be a party, or otherwise, shall be
and become part of the Pledged Securities pledged hereunder and shall
immediately be delivered to the Administrative Agent, to be held subject to the
terms hereof. All dividends and distributions which are received by a Pledgor
contrary to the provisions of this clause (b) shall be received in trust for the
benefit of the Lenders, segregated from such Pledgor’s own assets, and shall be
delivered to the Administrative Agent.

 

30 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

(c)       So long as no Event of Default shall have occurred and be continuing,
any cash dividends or cash distributions received by the Borrower in accordance
with the terms hereof may be used for any purpose not prohibited hereunder.

 

9.5         Remedies Upon Default. If an Event of Default shall have occurred
and be continuing, the Administrative Agent (on behalf of the Lenders and with
the consent of both Lenders) may sell the Pledged Securities or any part thereof
at a public or private sale or at any broker’s board or on any securities
exchange, for cash, upon credit or for future delivery as the Administrative
Agent shall deem appropriate subject to the terms hereof or as otherwise
provided in the UCC. The Administrative Agent shall be authorized at any such
sale (if the Administrative Agent deems it advisable to do so) to restrict to
the fullest extent permitted by applicable law the prospective bidders or
purchasers to Persons who will represent and agree that they are purchasing the
Pledged Securities for their own account for investment and not with a view to
the distribution or sale thereof, and upon consummation of any such sale, the
Administrative Agent shall have the right to assign, transfer, and deliver to
the purchaser or purchasers thereof the Pledged Securities so sold. Each such
purchaser at any such sale shall hold the property sold absolutely, free from
any claim or right on the part of any Pledgor. The Administrative Agent shall
give the Pledgors ten (10) days’ prior written notice of any such public or
private sale, or sale at any broker’s board or on any such securities exchange,
or of any other disposition of the Pledged Securities. Such notice, in the case
of a public sale, shall state the time and place for such sale and, in the case
of sale at a broker’s board or on a securities exchange, shall state the board
or exchange at which such sale is to be made and the day on which the Pledged
Securities, or portion thereof, will first be offered for sale at such board or
exchange. Any such public sale shall be held at such time or times within
ordinary business hours and at such place or places as the Administrative Agent
may fix and shall state in the notice of such sale. At any such sale, the
Pledged Securities, or portion thereof, to be sold may be sold in one lot as an
entirety or in separate parcels, as the Administrative Agent may (in its sole
and absolute discretion) determine. The Administrative Agent shall not be
obligated to make any sale of the Pledged Securities if it shall determine not
to do so, regardless of the fact that notice of sale of the Pledged Securities
may have been given. The Administrative Agent may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned. In case the sale of all or any part of the
Pledged Securities is made on credit or for future delivery, the Pledged
Securities so sold may be retained by the Administrative Agent until the sale
price is paid by the purchaser or purchasers thereof, but the Administrative
Agent shall not incur any liability in case any such purchaser or purchasers
shall fail to take up and pay for the Pledged Securities so sold and, in case of
any such failure, such Pledged Securities may be sold again upon like notice. At
any sale or sales made pursuant to this Section 9.5, the Administrative Agent
(on behalf of the Secured Parties) may bid for or purchase, free from any claim
or right of whatever kind, including any equity of redemption, of the Pledgors,
any such demand, notice, claim, right or equity being hereby expressly waived
and released to the maximum extent permitted by applicable law, any or all of
the Pledged Securities offered for sale, and may make any payment on the account
thereof by using any claim for moneys then due and payable to the Administrative
Agent or any other consenting Lender by the Borrower as a credit against the
purchase price; and the Administrative Agent, upon compliance with the terms of
sale, may hold, retain and dispose of the Pledged Securities without further
accountability therefor to any Pledgor or any third party (other than the other
Lenders). The Administrative Agent shall in any such sale make no
representations or warranties with respect to the Pledged Securities or any part
thereof, and shall not be chargeable with any of the obligations or liabilities
of the Pledgors with respect thereto. Each Pledgor hereby agrees that (i) it
will indemnify and hold the Administrative Agent and the Lenders harmless from
and against any and all claims with respect to the Pledged Securities asserted
before the taking of actual possession or control of the Pledged Securities by
the Administrative Agent pursuant to this Agreement, or arising out of any act
of, or omission to act on the part of, any Person prior to such taking of actual
possession or control by the Administrative Agent (whether asserted before or
after such taking of possession or control), or arising out of any act on the
part of any Pledgor, its agents or Affiliates before or after the commencement
of such actual possession or control by the Administrative Agent, but excluding
therefrom all claims with respect to the Pledged Securities resulting from (x)
the gross negligence or willful misconduct of the Administrative Agent or any
Lender, as finally determined by a court of competent jurisdiction in a
non-appealable decision or in an appealable decision that the party seeking
indemnification does not appeal within the time required, or (y) any claims with
respect to the Pledged Securities asserted against an indemnified party by a
Pledgor in which such Pledgor is the prevailing party (i.e., the party in whose
favor a monetary award is issued), and (ii) none of the Administrative Agent or
any Lender shall have any liability or obligation to any Pledgor arising out of
any such claim except for acts of willful misconduct or gross negligence of such
Person, as finally determined by a court of competent jurisdiction in a
non-appealable decision or in an appealable decision that the party seeking
indemnification does not appeal within the time required. As an alternative to
exercising the power of sale herein conferred upon it, the Administrative Agent
may proceed by a suit or suits at law or in equity to foreclose upon the
Collateral and Pledged Securities under this Agreement and to sell the Pledged
Securities, or any portion thereof, pursuant to a judgment or decree of a court
or courts having competent jurisdiction.

 

31 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

9.6         Waiver of Guarantor Defenses. The intent of the Pledgors is that the
provisions of this Section IX not be construed as a guaranty or surety and that
they not have available to them any defenses available to a guarantor or surety
under applicable law. To the extent that, notwithstanding such intent, this
pledge herein is construed or is asserted to be a guaranty or surety, the
Pledgors agree as follows:

 

(a)       Each Pledgor waives presentment to, demand for payment from and
protest to, as the case may be, Borrower or any other guarantor of any of the
Obligations, and also waives notice of protest for nonpayment, notice of
acceleration and notice of intent to accelerate. The obligations of each Pledgor
hereunder shall not be affected by (i) the failure of the Administrative Agent
or the Lenders to assert any claim or demand or to enforce any right or remedy
against Borrower or any Pledgor or any other guarantor under the provisions of
this Agreement or any other agreement or otherwise, (ii) any extension or
renewal of any provision hereof or thereof, (iii) the failure of the
Administrative Agent or the Lenders to obtain the consent of such Pledgor with
respect to any rescission, waiver, compromise, acceleration, amendment or
modification of any of the terms or provisions of this Agreement, or any other
agreement, (iv) the release, exchange, waiver or foreclosure of any security
held by the Administrative Agent (on behalf of the Lenders) for the Obligations
or any of them, (v) the failure of the Administrative Agent or the Lenders to
exercise any right or remedy against any other Pledgor or any other guarantor of
the Obligations, (vi) any bankruptcy, reorganization, liquidation, dissolution
or receivership proceeding or case by or against the Borrower or any other
Pledgor, or any change in the corporate existence, structure, ownership or
control of the Borrower or any other Pledgor (including any of the foregoing
arising from any merger, consolidation, amalgamation, reorganization or similar
transaction), or (vii) the release or substitution of any Pledgor or any other
guarantor of the Obligations. Without limiting the generality of the foregoing
or any other provision hereof (including, without limitation, Section 13.6 and
Section 13.12), to the extent permitted by Applicable Law, each Pledgor hereby
expressly waives any and all benefits which might otherwise be available to it
under California Civil Code Sections 2799, 2809, 2810, 2815, 2819, 2820, 2821,
2822, 2838, 2839, 2845, 2848, 2849, 2850, 2899 and 3433 or similar applicable
law.

 

32 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

(b)       Each Pledgor further agrees that the pledge herein is a continuing
pledge, shall secure the Obligations and any ultimate balance thereof,
notwithstanding that Borrower or any other Persons may from time to time satisfy
the Obligations in whole or in part and thereafter incur further Obligations,
and waives any right to require that any resort be had by the Administrative
Agent or any Lender to any security held for payment of the Obligations or to
any balance of any deposit, account or credit on the books of the Administrative
Agent or any Lender in favor of Borrower or any Pledgor, or to any other Person.

 

(c)       Each Pledgor’s obligations under the this Section IX shall not be
affected by the genuineness, validity, regularity or enforceability of the
Obligations or any other instrument evidencing any Obligations, or by the
existence, validity, enforceability, perfection, or extent of any collateral
therefor or by any other circumstance relating to the Obligations which might
otherwise constitute a defense to the pledge in this Section IX. The
Administrative Agent and the Lenders make no representation or warranty with
respect to any such circumstances and have no duty or responsibility whatsoever
to any Pledgor with respect to the management and maintenance of the Obligations
or any collateral security for the Obligations.

 

(d)       The obligations of each Pledgor hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason (except payment
and performance in full of the Obligations), including, without limitation, any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to any defense or set-off, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality or unenforceability of the
Obligations or otherwise. Without limiting the generality of the foregoing, the
obligations of each Pledgor hereunder shall not be discharged or impaired or
otherwise affected by the failure of the Administrative Agent or any Lender to
assert any claim or demand or to enforce any remedy under this Agreement or any
other agreement, by any waiver or modification of any provision hereof or
thereof, by any default, failure or delay, willful or otherwise, in the
performance of the Obligations, or by any other act or thing or omission or
delay to do any other act or thing which may or might in any manner or to any
extent vary the risk of such Pledgor or would otherwise operate as a discharge
of such Pledgor as a matter of law, unless and until the Obligations are
indefeasibly paid and performed in full and the commitments to lend herein have
terminated.

 

33 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

Section X

 

GENERAL

 

10.1       Notices.

 

(a)       Notices Generally. Subject to Section 10.1(c), all notices, requests
and demands to or upon the respective parties hereto to be effective shall be in
writing (including by facsimile or .pdf), and, unless otherwise expressly
provided herein, shall be deemed to have been duly given or made (a) when
delivered by hand, (b) when transmitted via facsimile to the number set out
herein, (c) when delivered by electronic mail, when delivered, or (d) the second
Business Day following the day on which the same has been delivered prepaid to a
reputable national express air courier service, addressed as follows in the case
of the Borrower and the Lenders, or to such other address as may be hereafter
notified by the respective parties hereto:

 

If to the Borrower: Golden Queen Mining Company, LLC   P.O. Box 1030   Mojave,
CA  93502   Attention: Robert C. Walish, President & CEO   Email:
rwalish@goldenqueen.com     with a copy to: Dorsey & Whitney LLP   1400 Wewatta
Street, Suite 400   Denver, CO 80202-5549   Attention: Kenneth G. Sam   Email:
Sam.kenneth@dorsey.com   Facsimile: (303) 629-3450     If to Auvergne: c/o East
Hill Management Company   70 Main Street   Suite 300   Petersborough, NH  03458
  Email: thomas.clay@easthillmgt.com   Facsimile: (603) 371-9034     with a copy
to: Sullivan & Worcester LLP   One Post Office Square   Boston, MA 02109  
Attention: William A. Levine, Esq.   Facsimile: (617) 338-2880   E-mail:
wlevine@sandw.com      

34 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

If to LUK Holdco or Gauss Pledgor:

c/o Jeffries Financial Group

  520 Madison Avenue   New York, NY 10022   Attention: H. Jimmy Hallac  
Facsimile: 212-598-4869   Email: jhallac@leucadia.com      

With a copy to:

Mike Sharp

msharp@jefferies.com

      If to GQM Holdings Pledgor: Golden Queen Mining Co. Ltd.     2300-1066
West Hastings Street    

Vancouver, British

Columbia, Canada

V6E3X2

    Attention: Guy Lebel (Chief Financial Officer)   Email:
glebel@goldenqueen.com       With a copies to: Dorsey & Whitney LLP     1400
Wewatta Street, Suite 400     Denver, CO 80202-5549     Attention: Kenneth G.
Sam   Email: Sam.kenneth@dorsey.com   Facsimile: (303) 629-3450       and Morton
Law LLP     1200 – 750 West Pender Street    

Vancouver, British

Columbia, Canada,

V6C 2T8

    Attention: Edward L. Mayerhofer, Esq.   Email: elm@mortanlaw.com  
Facsimile: (604) 681-9652

 

(b)       Reliance by the Lenders. The Lenders shall be entitled to rely and act
upon any notices purportedly given by or on behalf of the Borrower even if (i)
such notices were not made in a manner specified herein, were incomplete or were
not preceded or followed by any other form of notice specified herein, or (ii)
the terms thereof, as understood by the recipient, varied from any confirmation
thereof. The Borrower shall indemnify each Lender from all losses, costs,
expenses and liabilities resulting from the reliance by a Lender on each notice
purportedly given by or on behalf of the Borrower, provided that such indemnity
shall not be available to the extent that such losses, costs, expenses and
liabilities have been determined in a final non-appealable judgment of a court
of competent jurisdiction to have resulted from the gross negligence or willful
misconduct of such Lender.

 

35 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

(c)       Telephone, Facsimile and E-mail Notices. Each Lender is authorized to
rely on and to act on any telephone, any facsimile-transmitted, or any e-mail
transmitted instructions concerning the transactions contemplated by the
Agreement which a Lender believes without any need to inquire or investigate as
to, or verify, the genuineness or authenticity of the instructions, to be from
the Borrower, and no Lender shall be liable to the Borrower or any third party
for so acting or refraining from acting, except in the case of gross negligence
or willful misconduct of such Lender. No Lender shall further be under any duty
to make any inquiry or investigation with respect to, or verification of, the
telephone, facsimile-transmitted or e-mail transmitted instructions, except to
confirm that its records show that the person purporting to be issuing the
instructions on behalf of the Borrower has authority to do so. No Lender shall
be under any duty or obligation to accept any telephone, facsimile, or e-mail
instructions from the Borrower, and each Lender may refuse to accept any such
instructions in its sole and absolute discretion. The Borrower shall at all
times indemnify, defend and hold each Lender, and its officers, directors,
employees, attorneys, agents, and Affiliates, harmless from all actions or
claims arising in connection with any action or failure to act with respect to
telephone, facsimile-transmitted, or e-mail transmitted instructions, except in
the case of gross negligence or willful misconduct of such Persons.

 

10.2       Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby, except that the Borrower may not assign
or otherwise transfer any of its rights or obligations hereunder or the other
Loan Documents without the prior written consent of the Lenders. Each Lender may
at any time assign all or a portion of its rights and obligations under this
Agreement only to an U.S. Affiliate of such Lender. Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby)
any legal or equitable right, remedy or claim under or by reason of this
Agreement.

 

10.3       Expenses. Whether or not the transactions contemplated herein shall
be consummated, the Borrower shall reimburse the Lenders for all reasonable
out-of-pocket fees, disbursements, expenses (including all reasonable attorneys’
fees) incurred or expended in connection with the preparation, negotiation,
filing or recording and interpretation of this Agreement and the other Loan
Documents, or any amendment, modification, approval, consent or waiver hereof or
thereof, or in connection with the enforcement of any Obligations or the
satisfaction of any Indebtedness of the Borrower hereunder or thereunder, or in
connection with any litigation, proceeding or dispute in any way related to the
credit hereunder; provided that all of the foregoing incurred in connection with
this Agreement and the transactions contemplated by Section III hereof shall not
exceed $50,000 without mutual consent.

 

36 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

10.4       Indemnification. The Borrower agrees to indemnify and hold harmless
each Lender, as well as its shareholders, directors, offices, agents, attorneys,
subsidiaries and Affiliates, from and against all damages, losses, settlement
payments, obligations, liabilities, claims, suits, penalties, assessments,
citations, directives, demands, judgments, actions or causes of action, whether
statutorily created or under the common law, all reasonable out-of-pocket costs
and expenses (including, without limitation, reasonable fees and disbursements
of attorneys, engineers and consultants) and all other liabilities whatsoever
(including, without limitation, liabilities under Environmental Laws) which
shall at any time or times be incurred, suffered, sustained or required to be
paid by any such indemnified Person (except any of the foregoing which result
from the gross negligence or willful misconduct of the indemnified Person) on
account of or in relation to or any way in connection with any of the
arrangements or transactions contemplated by, associated with or ancillary to
this Agreement, the other Loan Documents or any other documents executed or
delivered in connection herewith or therewith, all as the same may be amended
from time to time, whether or not all or part of the transactions contemplated
by, associated with or ancillary to this Agreement, any of the Loan Documents or
any such other documents are ultimately consummated. In any investigation,
proceeding or litigation, or the preparation therefor, each Lender shall select
its own counsel and, in addition to the foregoing indemnity, the Borrower agrees
to pay promptly the reasonable fees and expenses of such counsel. In the event
of the commencement of any such proceeding or litigation, the Borrower shall be
entitled to participate in such proceeding or litigation with counsel of its
choice at its own expense, provided that such counsel shall be reasonably
satisfactory to each Lender. The Borrower authorizes each Lender to charge any
deposit account or Note Record which it may maintain with any of them for any of
the foregoing. The covenants of this Section 10.4 shall survive payment or
satisfaction of payment of all amounts owing with respect to the Notes, any
other Loan Document or any other Obligation.

 

10.5       Survival of Covenants, Etc. All covenants, agreements,
representations and warranties made herein, in the other Loan Documents or in
any documents or other papers delivered by or on behalf of the Borrower pursuant
hereto shall be deemed to have been relied upon by the Lenders, notwithstanding
any investigation heretofore or hereafter made by it, and shall survive the
making by the Lenders of the Loans as herein contemplated, and shall continue in
full force and effect so long as any Obligation remains outstanding and unpaid
or a Lender has any obligations hereunder. All statements contained in any
certificate or other writing delivered by or on behalf of the Borrower pursuant
hereto or in connection with the transactions contemplated hereby shall
constitute representations and warranties by the Borrower hereunder.

 

10.6       No Waivers. No failure or delay by a Lender in exercising any right,
power or privilege hereunder, under the Notes or under any other Loan Document
shall operate as a waiver thereof; nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. No waiver shall extend to or affect any
Obligation not expressly waived or impair any right consequent thereon. No
course of dealing or omission on the part of a Lender in exercising any right
shall operate as a waiver thereof or otherwise be prejudicial thereto. No notice
to or demand upon the Borrower shall entitle the Borrower to other or further
notice or demand in similar or other circumstances, except as otherwise
specifically provided in the Loan Documents. The rights and remedies herein and
in the Notes and the other Loan Documents are cumulative and not exclusive of
any rights or remedies otherwise provided by agreement or law.

 

37 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

10.7       Amendments, Waivers, etc.

 

(a)       Neither this Agreement nor the Notes nor any other Loan Document nor
any provision hereof or thereof may be amended, waived, discharged or terminated
except by a written instrument signed by each Lender, and, in the case of
amendments, by the Borrower.

 

(b)       Any action to be taken (including the giving of notice) by the Lenders
may be taken, and any consent or approval required or permitted by this
Agreement or any other Loan Document to be given by the Lenders may be given,
and any term of this Agreement, any other Loan Document or any other instrument,
document or agreement related to this Agreement or the other Loan Documents or
mentioned therein may be amended, and the performance or observance by the
Borrower or any other Person of any of the terms thereof and any Default or
Event of Default (as defined in any of the above-referenced documents or
instruments) may be waived (either generally or in a particular instance and
either retroactively or prospectively), in each case only with the written
consent of both Lenders.

 

10.8       Lost Note, Etc. Upon receipt of an affidavit of a Lender as to the
loss, theft, destruction or mutilation of a Note and, in the case of any such
loss, theft, destruction or mutilation, upon cancellation of a Note, if
available, the Borrower will issue, in lieu thereof, a replacement Note in the
same principal amount thereof and otherwise of like tenor.

 

10.9       Captions; Counterparts. The captions in this Agreement are for
convenience of reference only and shall not define or limit the provisions
hereof. This Agreement and any amendment hereof may be executed in several
counterparts and by each party on a separate counterpart, each of which when so
executed and delivered shall be an original, but all of which together shall
constitute one instrument. In proving this Agreement it shall not be necessary
to produce or account for more than one such counterpart signed by the party
against whom enforcement is sought. This Agreement shall become effective when
it shall have been executed by the Lenders and when the Lenders shall have
received counterparts hereof that, when taken together, bear the signatures of
each of the other parties hereto.

 

10.10     Entire Agreement, Etc. The Loan Documents and any other documents
executed in connection herewith or therewith express the entire understanding of
the parties with respect to the transactions contemplated hereby and supersede
all prior agreements with respect to the subject matter hereof.

 

10.11     Waiver of Jury Trial. THE BORROWER AND EACH LENDER HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THEIR RIGHT TO A JURY TRIAL WITH RESPECT TO
ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS
AGREEMENT, THE NOTES OR ANY OF THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR
OBLIGATIONS HEREUNDER OR THEREUNDER, THE PERFORMANCE OF SUCH RIGHTS AND
OBLIGATIONS OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY INCLUDING, WITHOUT LIMITATION, ANY
COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS OR ACTIONS OF A LENDER
RELATING TO THE ADMINISTRATION OR ENFORCEMENT OF THE LOANS AND THE LOAN
DOCUMENTS, AND AGREE THAT THEY WILL NOT SEEK TO CONSOLIDATE ANY SUCH ACTION WITH
ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.

 

38 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

EXCEPT AS PROHIBITED BY LAW, THE BORROWER AND EACH LENDER HEREBY WAIVE ANY RIGHT
THEY MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO IN THE PRECEDING
SENTENCE ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY
DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.

 

THE BORROWER (a) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF A LENDER
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT ANY LENDER WOULD NOT, IN THE EVENT
OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (b) ACKNOWLEDGES THAT
EACH LENDER HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS TO WHICH EACH IS A PARTY BECAUSE OF, AMONG OTHER THINGS, THE
BORROWER’S WAIVERS AND CERTIFICATIONS CONTAINED HEREIN.

 

10.12       Governing Law. This Agreement and each of the other Loan Documents
are contracts under the laws of the State of New York and shall for all purposes
be construed in accordance with and governed by the laws of said State without
reference to its conflict or choice of laws principles (other than Sections
5-1401 and 5-1402 of the New York General Obligations Law, which shall apply to
this Agreement).

 

10.13       Jurisdiction; Consent to Service of Process. (a) The Borrower hereby
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of the Supreme Court of the State of New York sitting
in New York County and of the United States District Court for the Southern
District of New York, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to any Loan Document, or for recognition
or enforcement of any judgment, and each of the parties hereto hereby
irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in such New York State or, to
the extent permitted by law, in such Federal court. Each of the parties hereto
agrees that a final, non-appealed judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement or
any other Loan Document shall affect any right that the Borrower or the Lenders
may otherwise have to bring any action or proceeding relating to this Agreement
or any other Loan Document against any other party hereto or their properties in
the courts of any jurisdiction.

 

(b)       The Borrower hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or any other Loan Document in any
court referred to in paragraph (a) of this Section 10.13. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.

 

(c)       Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 10.1. Nothing in this
Agreement or any other Loan Document will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.

 

39 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

10.14     Severability. The provisions of this Agreement are severable and if
any one clause or provision hereof shall be held invalid or unenforceable in
whole or in part in any jurisdiction, then such invalidity or unenforceability
shall affect only such clause or provision, or part thereof, in such
jurisdiction, and shall not in any manner affect such clause or provision in any
other jurisdiction, or any other clause or provision of this Agreement in any
jurisdiction.

 

10.15     Administrative Agent.

 

(a)       Each Lender hereby irrevocably designates and appoints the
Administrative Agent as the agent of such Lender under this Agreement and the
other Loan Documents, and, subject to the express limitations contained herein,
each such Lender irrevocably authorizes the Administrative Agent, in such
capacity, to take or refrain from taking such action on its behalf under the
provisions of this Agreement and the other Loan Documents and to exercise or
refrain from exercising such powers and perform such duties as are expressly
delegated to the Administrative Agent by the terms of this Agreement and the
other Loan Documents, together with such other powers as are reasonably
incidental thereto, including, without limitation. Notwithstanding any provision
to the contrary elsewhere in this Agreement, the Administrative Agent shall not
have any duties or responsibilities, except those expressly set forth herein, or
any fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Administrative Agent.

 

(b)       The Administrative Agent shall not exercise any discretion or take any
action unless it has received written instructions from both Lenders. The
Administrative Agent shall be fully protected in acting pursuant to any such
instruction and from refraining to act in the absence of any such instruction.
The Administrative Agent shall not be required to take any action that (i) the
Administrative Agent in good faith believes exposes it to liability unless the
Administrative Agent receives an indemnification satisfactory to it from the
Lenders with respect to such action or (ii) is contrary to this Agreement or any
other Loan Document or applicable law, including any action that may be in
violation of the automatic stay under any requirement of law relating to
bankruptcy, insolvency or reorganization or relief of debtors or that may effect
a forfeiture, modification or termination of property of a Defaulting Lender in
violation of any requirement of law relating to bankruptcy, insolvency or
reorganization or relief of debtors; provided, further, that the Administrative
Agent may seek clarification or direction from the Lenders prior to the exercise
of any such instructed action and may refrain from acting until such
clarification or direction has been provided. Except as expressly set forth in
the Loan Documents, the Administrative Agent shall not have any duty to
disclose, and shall not be liable for the failure to disclose, any information
relating to the Borrower, any Subsidiary or any Affiliate of any of the
foregoing that is communicated to or obtained by the Person serving as
Administrative Agent or any of its Affiliates in any capacity. Nothing in this
Agreement shall require the Administrative Agent to expend or risk its own funds
or otherwise incur any financial liability in the performance of any of its
duties hereunder or in the exercise of any of its rights or powers if it shall
have reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.

 

40 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

(c)       In performing its functions and duties hereunder and under the other
Loan Documents, the Administrative Agent is acting solely on behalf of the
Lenders, and its duties are entirely mechanical and administrative in nature.

 

(d)       The Lenders agree to indemnify the Agent and any of its Affiliates and
their respective officers, directors, employees, agents, attorneys and advisers
(each, an “Agent Indemnitee”) (to the extent not reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so), ratably according to
their respective outstanding principal balances of Loans in effect on the date
on which indemnification is sought under this Section (or, if indemnification is
sought after the date upon which the Loans shall have been paid in full, ratably
in accordance with such principal balances immediately prior to such date of
repayment), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, arbitrations, costs, expenses or
disbursements of any kind whatsoever that may at any time (whether before or
after the payment of the Loans) be imposed on, incurred by or asserted against
such Agent Indemnitee in any way relating to or arising out of, the Loans, this
Agreement, any of the other Loan Documents or any documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or thereby
or any action taken or omitted by such Agent Indemnitee under or in connection
with any of the foregoing; provided that no Lender shall be liable for the
payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, arbitrations, costs, expenses or
disbursements that are found by a final and nonappealable decision of a court of
competent jurisdiction to have resulted from such Agent Indemnitee’s gross
negligence or willful misconduct. The agreements in this Section shall survive
the termination of this Agreement and the payment of the Loans and all other
amounts payable hereunder.

 

(e)       The Administrative Agent and its affiliates may make loans to, make
equity investments in, hold warrants from, and generally engage in any kind of
business with the Borrower or any Pledgor as though such Agent were not an
Agent. With respect to its Loans made or renewed by it, the Administrative Agent
shall have the same rights and powers under this Agreement and the other Loan
Documents as any Lender and may exercise the same as though it were not an
Agent, and the terms “Lender” and “Lenders” shall include the Administrative
Agent in its individual capacity.

 

(f)       The Administrative Agent may resign at any time by giving fifteen (15)
days’ prior written notice thereof to the Lenders and the Borrower, but (except
as provided below), such resignation shall not become effective until acceptance
by a successor agent of its appointment pursuant hereto. Upon any such
resignation, the retiring Administrative Agent shall consult with the Borrower
and promptly appoint a successor agent from among the Lenders; provided, that
such replacement is reasonably acceptable (as evidenced in writing) to the
Lenders and the Borrower; provided, however, that such approval by the Borrower
shall not be required at any time when an Event of Default is continuing. If no
successor agent shall have been so appointed by the retiring Administrative
Agent and shall have accepted such appointment within thirty (30) days after the
retiring Administrative Agent’s giving of notice of resignation, the Lenders may
appoint a successor agent (which successor may be replaced by the Lenders).
Whether or not a successor agent has been appointed, such resignation shall
become effective in accordance with such notice on the date that is forty-five
(45) days after the date of such notice. Upon the acceptance of any appointment
as Administrative Agent hereunder by a successor agent, such successor agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations under
this Agreement, the other Loan Documents and any other credit documentation.
Upon the acceptance of any appointment as Administrative Agent hereunder by a
successor agent or the effectiveness of any resignation notice without the
appointment of a successor agent, the retiring Administrative Agent shall
automatically be discharged from its duties and obligations under this
Agreement, the other Loan Documents or any related agreement or document. After
any retiring Administrative Agent’s resignation hereunder as Administrative
Agent, the provisions of this Section X shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was the Administrative Agent
under this Agreement.

 

41 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

10.16     Press Releases, etc. Each Loan Party and each Pledgor will not, and
will not permit any of its respective Affiliates, to publish any press release
or other similar public disclosure or announcements (including any marketing
materials) regarding this Agreement or the other Loan Documents without first
providing a draft of any such press release or disclosure to the Administrative
Agent for review and comment prior to publication thereof.

 

[Remainder of Page Intentionally Left Blank]

 

42 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

IN WITNESS WHEREOF, the undersigned have duly executed this Revolving Credit
Agreement under seal as of the date first above written.

 

  BORROWER:         GOLDEN QUEEN MINING COMPANY, LLC         By: /s/ Robert
Walish     Name:  Robert Walish     Title:  President & CEO

 

[Signature page to Revolving Credit Agreement]

 

 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

  GAUSS HOLDINGS LLC, as Administrative Agent and Lender         By: /s/ H.
Jimmy Hallac     Name: H. Jimmy Hallac     Title: Vice President        
AUVERGNE, LLC, as Lender         By: /s/ Thomas M. Clay     Name: Thomas M. Clay
    Title: Manager

 

[Signature page to Revolving Credit Agreement]

 

 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

  PLEDGORS:         GOLDEN QUEEN MINING HOLDINGS, INC.         By: /s/ Guy Lebel
    Name: Guy Lebel     Title:         GAUSS LLC         By: /s/ H. Jimmy Hallac
    Name: H. Jimmy Hallac     Title: President

 

[Signature page to Revolving Credit Agreement] 

 

 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

Schedule 2.1(a)

 

Loan Allocation

 

Name of Lender  Percentage        LUK Holdco   50%        Auvergne   50%       
Total:   100%

 

 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

Schedule 4.2

 

No Conflict

 

Nil

 

 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

Schedule 4.3

 

Governmental Authorizations

 

Nil

 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

Schedule 4.6

 

Litigation

 

Private Attorney General Act (PAGA) claim filed on behalf of Mr. Ricky Windham,
a former employee. The claim was filed with the Los Angeles County and alleges
wage and hour violations on the part of Golden Queen Mining Company LLC.

 

 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

Schedule 4.7

 

No Defaults

 

Nil

 

 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

Schedule 6.1(f)

 

Existing Indebtedness

 

See attached.

 

 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

Schedule 6.2

 

Contingent Liabilities

 

See attached.

 

 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

Schedule 6.3

 

Permitted Encumbrances

 

Liens securing the reclamation obligations listed on Schedule 6.2.

 

 

*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
EXHIBIT. CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE DESIGNATED BY [**]. A
COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARETLY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

 

Schedule 9.1

 

Pledged Securities 

 

Issuing

Entity

 

Parent

Entity

 

Authorized

Capitalization

 

Issued

Capitalization

 

Certificated

(Y/N)

 

Certificate

No. (if any)

 

Percentage

Ownership

Interest

  Golden Queen Mining Company LLC  Golden Queen Mining Holdings Inc.  265,000
units  265,000 units  No.  N/A   50%    Gauss LLC               50%            
          [**]  Golden Queen Mining Company LLC  Limited Liability Company
Membership interests  Limited Liability Company Membership Interests  No.  N/A 
 100%