Golden Queen Mining Co. Ltd.: Exhibit 10.1 - Filed by newsfilecorp.com






EXECUTION VERSION 

AMENDED AND RESTATED TERM LOAN AGREEMENT 

dated as of 

June 8, 2015 

among 

GOLDEN QUEEN MINING CO. LTD., as Borrower, 

and 

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, 
as Lenders 





	SECTION I
      DEFINITIONS 	1

	     
                   1.1
    	Definitions 	1 
	           
             1.2 	Rules of
      Interpretation 	10
  
	SECTION II DESCRIPTION OF LOAN 	11 
	             
           2.1 	The Loan 	11 
	       
                 2.2 	Interest Rates and Payments of Interest 	11 
	             
           2.3 	Closing Fee
    	12 
	       
                 2.4 	Repayment of Loan 	12 
	             
           2.5 	Prepayments
    	12 
	       
                 2.6 	Method of Payments 	13 
	             
           2.7 	Computation of
      Interest and Fees 	13 
	       
                 2.8 	Taxes 	14 
	SECTION III
      CONDITIONS OF LENDING 	14 
	       
                 3.1 	Closing Deliverables 	14 
	             
           3.2 	Indebtedness
    	16 
	       
                 3.3 	Litigation; Investigations 	16 
	             
           3.4 	Accuracy of
      Representations and Warranties 	16 
	       
                 3.5 	No Default 	16 
	             
           3.6 	No Change in Law
      	16 
	SECTION IV REPRESENTATIONS AND WARRANTIES 	16 
	             
           4.1 	Existence,
      Qualification and Power 	16 
	       
                 4.2 	Authorization; No Contravention 	16 
	             
           4.3 	Governmental
      Authorization; Other Consents; Corrupt Practices 	17 
	       
                 4.4 	Binding Effect 	17 
	             
           4.5 	Financial
      Statements 	17 
	       
                 4.6 	Litigation 	18 
	             
           4.7 	No Default
	18 
	       
                 4.8 	Ownership of Property; Encumbrances 	18 
	             
           4.9 	Environmental
      Compliance 	18 
	       
                 4.10 	 Insurance 	18 
	             
           4.11 	 Taxes
    	18 
	       
                 4.12 	 Subsidiaries; Equity Interests 	19 
	             
           4.13 	 Margin
      Regulations; Investment Company Act 	19 
	       
                 4.14 	 Compliance with Laws 	19 
	             
           4.15 	 Solvency
      	19 
	       
                 4.16 	 Compliance with OFAC Rules and Regulations 	19 
	             
           4.17 	 Foreign
      Assets Control Regulations, Etc 	19 
	SECTION V AFFIRMATIVE COVENANTS 	20 
	             
           5.1 	Financial
      Statements 	20
  


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     5.2
      	Conduct
      of Business 	21
      
	           
             5.3
      	Taxes
      	21
      
	     
                   5.4
      	Inspection
      Rights 	21
      
	             
           5.5
      	Maintenance
      of Books and Records 	22
      
	       
                 5.6
      	Use
      of Proceeds 	22
      
	             
           5.7
      	Further
      Assurances 	22
      
	       
                 5.8
      	Notification
      Requirements 	22
      
	             
           5.9
      	Environmental
      Compliance 	22
      
	       
                 5.10
      	 Subsidiary
      Guaranties 	23
      
	             
           5.11
      	 Top
      Up Contribution 	23
      
	SECTION
      VI NEGATIVE COVENANTS 	23
      
	             
           6.1
      	Indebtedness
      	23
      
	       
                 6.2
      	Contingent
      Liabilities 	24
      
	             
           6.3
      	Encumbrances
      	24
      
	       
                 6.4
      	Merger;
      Dispositions; Liquidation 	24
      
	             
           6.5
      	Restricted
      Payments 	25
      
	       
                 6.6
      	Investments;
      Purchases of Assets 	25
      
	             
           6.7
      	Transactions
      with Affiliates 	25
      
	       
                 6.8
      	Fiscal
      Year 	25
      
	SECTION
      VII DEFAULTS 	25
      
	       
                 7.1
      	Events
      of Default 	25
      
	             
           7.2
      	Remedies
      upon Event of Default 	27
      
	SECTION
      VIII GENERAL 	28
      
	             
           8.1
      	Notices
      	28
      
	       
                 8.2
      	Successors
      and Assigns 	30
      
	             
           8.3
      	Expenses
      	30
      
	       
                 8.4
      	Indemnification
      	30
      
	             
           8.5
      	Survival
      of Covenants, Etc 	31
      
	       
                 8.6
      	No
      Waivers 	31
      
	             
           8.7
      	Amendments,
      Waivers, etc 	31
      
	       
                 8.8
      	Lost
      Note, Etc 	31
      
	             
           8.9
      	Captions;
      Counterparts 	32
      
	       
                 8.10
      	 Entire
      Agreement, Etc 	32
      
	             
           8.11
      	 Waiver
      of Jury Trial 	32
      
	       
                 8.12
      	 Governing
      Law 	32
      
	             
           8.13
      	 Jurisdiction;
      Consent to Service of Process 	33
      
	       
                 8.14
      	 Judgment
      Currency 	33
      
	             
           8.15
      	 Severability
      	34
      
	       
                 8.16
      	 Effect
      of Amendment and Restatement 	34
      


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EXHIBITS 

Form of  

	A-1 	Amended and Restated LTC Note 
	A-2 	Amended and Restated EHT Note 
	A-3 	HC Note 
	A-4 	CFT Note 
	B 	Pledge Agreement 
	C 	Subsidiary Guaranty 
	D 	GQ California Consent 
	E 	Option Agreement 
	F 	Registration Rights Agreement 
	G 	Warrants 


SCHEDULES 

	2.1(a) 	Allocations 
	4.2 	No Conflict 
	4.3 	Governmental Authorizations 
	4.6 	Litigation 
	4.7 	No Default 
	4.12 	Subsidiaries; Loan Parties 
	6.1(e) 	Existing Indebtedness 


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AMENDED AND RESTATED TERM LOAN AGREEMENT 

THIS AMENDED AND RESTATED TERM LOAN AGREEMENT is made as of
June 8, 2015, among GOLDEN QUEEN MINING CO. LTD., a British Columbia
corporation, (the “Borrower”), THE LANDON T. CLAY 2009 IRREVOCABLE TRUST
DATED MARCH 6, 2009 (“LTC Lender”), EHT, LLC (“EHT Lender”),
HARRIS CLAY (“HC Lender”) and THE CLAY FAMILY 2009 IRREVOCABLE TRUST
DATED APRIL 14, 2009 (“CFT Lender” and, together with LTC Lender, EHT
Lender and HC Lender, the “Lenders”). 

WHEREAS, the Borrower, LTC Lender and EHT Lender (as assignee
in interest of HC Lender) are parties to that certain Term Loan Agreement, dated
December 31, 2014, as amended (the “Existing Agreement”).

WHEREAS, the parties to the Existing Agreement wish to amend
and restate the Existing Agreement as set forth herein, and HC Lender and CFT
Lender wish to become parties hereto as Lenders. 

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 that the Existing Agreement is hereby
amended and restated in its entirety as follows: 

SECTION I 

DEFINITIONS 

1.1     Definitions. 

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: 

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 Amended and Restated Term Loan
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. 

BC Subco. Golden Queen Mining Canada Ltd., a British
Columbia corporation. 

Borrower. See the Preamble. 




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

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. 

Capital Expenditures. With respect to any Person for any
period, any expenditure in respect of the purchase or other acquisition of any
fixed or capital asset (excluding normal replacements and maintenance which are
properly charged to current operations). 

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

Cash Equivalents. (a) Securities issued or
unconditionally guaranteed by the Federal Government of Canada or the United
States of America, or by any agency or autonomous government entity of the same
countries, provided that such securities have maturities of not more than one
year from the date acquired; (b) certificates of deposit with maturities of not
more than one year from the date acquired issued by a United States Federal or
state chartered commercial bank of recognized standing, or a commercial bank
organized under the laws of any other country which is a member of the
Organisation for Economic Cooperation and Development, or a political
subdivision of any such country, acting through a branch or agency, which bank
has capital and unimpaired surplus in excess of $500,000,000 and which bank or
its holding company has a short term commercial paper rating of at least A-2 or
the equivalent by S&P or at least P-2 or the equivalent by Moody’s; (c)
reverse repurchase agreements with terms of not more than seven days from the
date acquired, for securities of the type described in clause (a) above and
entered into only with commercial banks having the qualifications described in
clause (b) above; (d) commercial paper issued by any Person incorporated under
the laws of the United States of America or any State thereof and rated at least
A-2 or the equivalent thereof by S&P or at least P-2 or the equivalent
thereof by Moody’s, in each case with maturities of not more than one year from
the date acquired; (e) 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; and (f) investments in money
market funds registered under the Investment Company Act of 1940, as amended,
which have net assets of at least $500,000,000, and at least 85% of whose assets
consist of securities and other obligations of the type described in clauses (a)
through (e) above. 

CFT Lender. See the Preamble.

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)
directly or indirectly, 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 directors of the Borrower by Persons who were not
(i) directors of the Borrower on the Closing Date, (ii) appointed or nominated
by the board of directors or other governing body of the Borrower (which
constituted the board of directors or such other governing body on the Closing
Date), or (iii) appointed or nominated by directors so nominated. 

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Clay Family. (i) Landon Clay and Harris 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. 

Closing Fee. See Section 2.3. 

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. 

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. 

Convertible Debentures. Those certain convertible
debentures issued by Borrower on July 26, 2013, pursuant to the terms of
subscription agreements and convertible debt loan agreements with Jonathan Clay
and Thomas Clay dated July 23, 2013 and July 26, 2013, respectively. 

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. 

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Dollars or $. United States dollars. 

EHT Lender. See the Preamble. 

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. 

Event of Default. Any event described in Section
7.1. 

Extraordinary Receipt. Any cash received by or paid to
or for the account of any Person not in the ordinary course of business,
including tax refunds, pension plan reversions, proceeds of insurance (other
than proceeds of business interruption insurance to the extent such proceeds
constitute compensation for lost earnings), condemnation and eminent domain
awards (and payments in lieu thereof), indemnity payments and any purchase price
adjustments. 

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. 10% per annum. 

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


Gauss. Gauss LLC, a Delaware limited liability company.


- 4 - 




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). 

GQ California. Golden Queen Mining Company, LLC, a
California limited liability company (formerly known as Golden Queen Mining Co.,
Inc., a California corporation). 

GQ California Consent. That certain Amended and Restated
Consent under the GQ California LLC Agreement in the form attached hereto as
Exhibit D, as amended, restated, supplemented or otherwise modified from
time to time. 

GQ California LLC Agreement. That certain Amended and
Restated Limited Liability Company Agreement of GQ California, dated as of
September 15, 2014.

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. 

HC Lender. See the Preamble. 

Holdings. Golden Queen Mining Holdings, Inc., a
California corporation. 

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. 

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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. 

LTC Lender. See the Preamble. 

Lenders. LTC Lender, EHT Lender, HC Lender, CFT Lender
and each other Person that may after the date hereof become an assignee of LTC
Lender’s, EHT Lender’s, HC Lender’s or CFT 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(b), “Lenders” shall no longer include such
Person. 

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

Loan Parties. Collectively, the Borrower and each
Subsidiary Guarantor. Loan. See Section 2.1(a). 

LUK Holdco. Gauss Holdings LLC, a Delaware limited
liability company. 

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 Loan Party 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 Loan Party 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 Loan Party 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 Loan Parties disproportionately
relative to other companies operating in the same industry. 

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Maturity Date. December 8, 2016. 

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

Net Cash Proceeds. With respect to: 

(a)     any Disposition by the Borrower, or
any Extraordinary Receipt received or paid to the account of the Borrower, the
excess, if any, of (i) the sum of cash and Cash Equivalents received in
connection with such transaction (including any cash or Cash Equivalents
received by way of deferred payment pursuant to, or by monetization of, a note
receivable or otherwise, but only as and when so received) over (ii) the sum of
(A) the principal amount of any Indebtedness that is secured by the applicable
asset and that is required to be repaid in connection with such transaction
(other than Indebtedness under the Loan Documents), (B) the reasonable and
customary out-of-pocket expenses incurred by the Borrower and its agents,
advisors and representatives (including fees and expenses of financial advisors,
market consultants and legal counsel) in connection with such transaction and
(C) income taxes reasonably estimated to be actually payable within two years of
the date of the relevant transaction as a result of any gain recognized in
connection therewith; provided that, if the amount of any estimated taxes
pursuant to subclause (C) exceeds the amount of taxes actually required to be
paid in cash in respect of such Disposition, the aggregate amount of such excess
shall constitute Net Cash Proceeds; and 

(b)     the sale or issuance after the date
of this Agreement of any Equity Interest by the Borrower, or the incurrence or
issuance of any Indebtedness by the Borrower other than Indebtedness permitted
by Section 6.1, the excess of (i) the sum of the cash and Cash
Equivalents received in connection with such transaction over (ii) the
underwriting discounts and commissions, and other reasonable and customary
out-of-pocket expenses, incurred by the Borrower and its agents, advisors and
representatives (including fees and expenses of financial advisors, market
consultants and legal counsel) in connection therewith. 

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 

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(b)     the due and punctual payment and
satisfaction of all the obligations of each other Loan Party 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. 

Option Agreement. That certain Amended and Restated
Option Agreement among the Lenders and LUK Holdco in the form attached hereto as
Exhibit E, as amended, restated, supplemented or otherwise modified from
time to time; 

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. 

Pledge Agreement. That certain Amended and Restated
Pledge Agreement dated as of the date hereof by the Borrower, Holdings and BC
Subco in favor of the Lenders, in the form attached hereto as Exhibit B,
as amended, restated, supplemented or otherwise modified from time to time. 

Prepayment Fee. See Section 2.5(b). 

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 $500,000,000 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 $500,000,000 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. 

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Registration Rights Agreement. That certain Amended and
Restated Registration Rights Agreement by and among the Borrower and the Clay
Family Members party thereto in the form attached hereto as Exhibit F, as
amended, restated, supplemented or otherwise modified from time to time. 

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 any Loan Party or any attorney-in-fact with
powers to deliver documents on behalf of a Loan Party in connection with the
Loan Documents. Any document delivered hereunder that is signed by a Responsible
Officer of a Loan Party shall be conclusively presumed to have been authorized
by all necessary corporate, partnership and/or other action on the part of such
Loan Party and such Responsible Officer shall be conclusively presumed to have
acted on behalf of such Loan Party. 

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. 

Sanctioned Country. A country subject to a sanctions
program identified on the list maintained by OFAC and available at
http://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx,
or as otherwise published from time to time. 

- 9 - 




Sanctioned Person. Any of the following: (i) a Person
named on the list of “Specially Designated Nationals and Blocked Persons”
maintained by OFAC available at
http://www.treasury.gov/ofac/downloads/t11sdn.pdf, or as otherwise
published from time to time, or (ii) (A) an agency of the government of a
Sanctioned Country, (B) an organization controlled by a Sanctioned Country, or
(C) a person resident in a Sanctioned Country, to the extent subject to a
sanctions program administered by OFAC. 

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. 

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 Guarantor. Holdings, BC Subco and each
Subsidiary of the Borrower existing as of the Closing Date or acquired or
created by the Borrower after the Closing Date, in each case party to the
Subsidiary Guaranty. For the avoidance of doubt, GQ California is not and shall
not become a Subsidiary Guarantor. 

Subsidiary Guaranty. That certain Amended and Restated
Guaranty dated as of the date hereof by the Subsidiary Guarantors in favor of
the Lenders, in the form attached hereto as Exhibit C, as amended,
restated, supplemented or otherwise modified from time to time. 

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. 

Top Up Contribution. See Section 5.11.

1.2      Rules of Interpretation. 

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(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. 

(g)     All terms not specifically defined
herein or by GAAP which terms are defined in the Uniform Commercial Code as in
effect in The State of New York, shall have the meanings assigned to them in
such Uniform Commercial Code. 

SECTION II 

DESCRIPTION OF LOAN 

2.1      The Loan. 

(a)     Term Loan. 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 a term loan (the “Loan”) to the Borrower on the Closing
Date in the principal amount of Thirty-Seven Million Five Hundred Thousand
Dollars ($37,500,000). Each Lender shall fund its respective portion of the Loan
pursuant to the allocations set forth on Schedule 2.1(a). 

(b)     The Notes. The Loan shall be
evidenced by promissory notes dated as of the Closing Date in the aggregate
principal amount equal to the amount of the Loan, such notes to be in
substantially the form of Exhibit A-1, Exhibit A-2, Exhibit
A-3 and Exhibit A-4 hereto (together, the “Notes”). 

2.2      Interest Rates and Payments of Interest. 

(a)     The Loan shall bear interest at a
rate per annum equal to the Fixed Rate. Such interest shall be payable quarterly
in arrears on the first Business Day of each calendar quarter, commencing October 1, 2015. For interest payments due
October 1, 2015, January 4, 2016, April 1, 2016, and July 1, 2016, the Borrower
may elect, by notice to the Lenders prior to the due date for payment of
interest, to pay interest in kind by adding such interest payment to the unpaid
principal balance outstanding under the Loan.

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(b)     If an Event of Default shall occur,
then the unpaid balance of the Loan 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.

(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      Closing Fee. The Borrower shall pay to the Lenders
on the Closing Date a closing fee in the amount of One Million Five Hundred
Thousand Dollars ($1,500,000) (the “Closing Fee”), to 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.

(a)     Mandatory. 

(i)     If the Borrower Disposes of any
property (other than any Disposition of any property permitted by Section
6.4(b)) which results in the realization by the Borrower of Net Cash
Proceeds in excess of $500,000, the Borrower shall prepay an aggregate principal
amount of the Loan equal to 100% of such Net Cash Proceeds immediately upon
receipt thereof by the Borrower. 

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(ii)     Upon any Extraordinary Receipt
received by or paid to or for the account of the Borrower in excess of $500,000,
and not otherwise included in clause (i) of this Section 2.5(b),
the Borrower shall prepay an aggregate principal amount of the Loan equal to
100% of all Net Cash Proceeds received therefrom immediately upon receipt
thereof by the Borrower. 

(iii)     Principal and accrued unpaid
interest and the Prepayment Fee shall become immediately due and payable five
days after GQ California has incurred cumulative debt in a principal amount
greater than $5,000,000 (excluding mobile equipment financing and short term
financing with or on behalf of one or more refineries in connection with their
purchases of GQ California’s gold and silver doré bars), unless all
representatives of Holdings, other than Clay Family Members, on GQ California’s
board of managers vote against GQ California incurring such debt.

(b)     Voluntary. The Borrower may
prepay the Loan in whole or in part at any time prior to the Maturity Date,
provided that the Borrower shall pay a prepayment fee in the amount of 3% of the
amount prepaid (the “Prepayment Fee”). Such Prepayment Fee shall not
apply to prepayments under Section 2.5(a).

2.6 Method of Payments. 

(a)     All payments by the Borrower
hereunder and under any of the other Loan 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. 

(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 360-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. 

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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, 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. 

(c)     Evidence of Payments. Upon
request of the Lenders, 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. 

SECTION III 

CONDITIONS OF LENDING 

The agreement of the Lenders to make the Loan is subject to the
satisfaction of the following conditions precedent on or prior to the Closing
Date: 

3.1      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 signing Loan Party, 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: 

(a)     an executed counterpart of this
Agreement; 

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

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(c)     the Pledge Agreement executed by
the Borrower, Holdings and BC Subco; 

(d)     the Subsidiary Guaranty executed by
each Subsidiary Guarantor; 

(e)     the Registration Rights Agreement
executed by the Borrower; 

(f)     Warrants substantially in the form
of Exhibit G attached hereto to purchase an aggregate of 10,000,000
shares of common stock of the Borrower; such warrants to be allocated among and
issued to the Lenders in accordance with their respective percentages as set
forth on Schedule 2.1(a) attached hereto; 

(g)     an indemnity agreement executed by
the Borrower; 

(h)     evidence satisfactory to the
Lenders that the GQ California Consent has been executed and delivered by each
party thereto; 

(i)     evidence satisfactory to the
Lenders that the Option Agreement has been executed and delivered by each party
thereto; 

(j)     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; 

(k)     such certificates of resolutions or
other action, incumbency certificates and/or other certificates of Responsible
Officers of each Loan Party as the Lenders may require evidencing the authority
of each Loan Party 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 such Loan Party is a party or is to be a party; 

(l)     such documents and certifications
as the Lenders may reasonably require to evidence that each Loan Party 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; 

(m)     a certificate signed by a
Responsible Officer of the Borrower certifying that the conditions specified in
Sections 3.2, 3.3, 3.4, and 3.5 have been
satisfied; 

(n)      certificates attesting to the
Solvency of each Loan Party, from such Loan Party’s chief financial officer,
treasurer, controller, administrator or other officer of equivalent
responsibility; and 

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

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3.2     Indebtedness. The Borrower
shall not have outstanding any Indebtedness for money borrowed other than the
Loan and any other Indebtedness permitted by Section 6.1 including the
Indebtedness set forth on Schedule 6.1(e). 

3.3     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. 

3.4      Accuracy of
Representations and Warranties. The representations and warranties contained
in Section IV hereof and all representations and warranties made by the
Borrower and each other Loan Party under any other Loan Document shall be true
and accurate in all material respects on and as of the Closing Date. 

3.5     No Default. No Default or
Event of Default shall have occurred and be continuing. 

3.6     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 Loan hereunder. 

SECTION IV 

REPRESENTATIONS AND WARRANTIES 

The Borrower represents and warrants to the Lenders as of the
Closing Date and, if different, the date on which the Loan is made to the
Borrower that: 

4.1     Existence, Qualification and
Power. Each Loan Party (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 each Loan Party 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. 

- 16 - 




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, any Loan Party of this Agreement or any other Loan Document, or (ii)
the exercise by a Lender of its rights under the Loan Documents.

(b)     The Borrower and its 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 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 each Loan Party that is party thereto.
This Agreement constitutes, and each other Loan Document when so delivered will
constitute, a legal, valid and binding obligation of such Loan Party,
enforceable against each Loan Party that is party thereto 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 and its Subsidiaries for the fiscal
year of the Borrower ended December 31, 2014, 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 and its
Subsidiaries 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 any Company’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 or its
Subsidiaries’ financial condition, properties or business, taken as a whole. 

- 17 - 




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 Loan Parties or against any of
their 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. 

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 and its Subsidiaries have 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 and its Subsidiaries have (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 as 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 and its Subsidiaries necessary for the ordinary conduct of their
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 applicable
Borrower or Subsidiary operates and as required by applicable Governmental
Authorities. 

4.11     Taxes. The Borrower and its
Subsidiaries have 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 its Subsidiaries, and
have paid all Taxes, assessments, fees and other charges levied or imposed by
any Governmental Authority upon them or their 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 or its Subsidiaries that is not being challenged by
appropriate proceedings with adequate reserves made therefor that would, if
made, have a Material Adverse Effect.

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4.12     Subsidiaries; Equity
Interests. Schedule 4.12 sets forth a complete and accurate list of
all Subsidiaries of the Borrower, showing as of the Closing Date (as to each
Subsidiary) the jurisdiction of its incorporation, the address of its principal
place of business and its U.S. taxpayer identification number or, in the case of
any non-U.S. party that does not have a U.S. taxpayer identification number, its
unique identification number issued to it by the jurisdiction of its
incorporation. 

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)     None of the Borrower or any
Subsidiary of the Borrower is or is required to be registered as an “investment
company” under the Investment Company Act of 1940. 

4.14     Compliance with Laws. The
Borrower and each of its Subsidiaries 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. 

4.15     Solvency. Each of the
Borrower and its Subsidiaries is Solvent. 

4.16     Compliance with OFAC Rules and
Regulations. Neither the Borrower, nor any Affiliate of the Borrower (i) is
a Sanctioned Person, (ii) has any assets in Sanctioned Countries, or (iii)
derives any of its operating income from investments in, or transactions with
Sanctioned Countries or with one or more Persons whom it knows to be a
Sanctioned Person. No part of the proceeds of the Loan will be used directly or
indirectly to fund any operations in, finance any investments or activities in
or make any payments to, a Sanctioned Person or a Sanctioned Country. 

4.17     Foreign Assets Control
Regulations, Etc. The Borrower 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 is not (i) is a blocked person described in
Section 1 of the Executive Order 13224 issued on September 24, 2001 or (ii) to
the Borrower’s knowledge, engages in any dealings or transactions, or is
otherwise associated, with any such blocked person. 

- 19 - 




SECTION V 

AFFIRMATIVE COVENANTS 

The Borrower covenants that so long as the Loan or any other
Obligation remains 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; 

(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; 

- 20 - 




(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 the
Borrower shall send to owners of its Equity Interests or as the Borrower may
file with any Governmental Authority at any time; provided that the
Borrower 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 Borrower as the Lenders may reasonably
request. 

5.2     Conduct of Business.

(a)     The Borrower 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)     The Borrower 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. The Borrower 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. The
Borrower shall permit any authorized representatives designated by a Lender to
visit and inspect any of the properties of the Borrower, 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. 

- 21 - 




5.5     Maintenance of Books and
Records. The Borrower 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. The Borrower 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 Loan to (i) pay the Closing Fee, (ii) finance Holdings’ making of the Top
Up Contribution, (iii) repay the Convertible Debentures in full on July 26,
2015, (iv) pay taxes and expenses associated with the transactions contemplated
hereby and (v) for general corporate purposes of the Borrower.

(b)     No portion of the Loan 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 the Borrower 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.

5.8     Notification Requirements.
The Borrower 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 the Borrower or any of its
  Subsidiaries 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 the Borrower
  or any of its Subsidiaries 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 Borrower shall, and shall
cause its Subsidiaries to, 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) the Borrower
shall, and shall cause its Subsidiaries to, maintain in full force and effect
all required permits, licenses, certificates, authorizations and approvals
relating to Environmental Laws; and (iii) the business of the Borrower and its Subsidiaries shall be operated in a
manner that will not pose any an unreasonable risk to public health or the
environment. 

- 22 -




(b)     The Borrower shall provide the
Lenders upon either Lender’s request with information related to Borrower’s and
its Subsidiaries’ 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 the Borrower 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 the Borrower’s or any of its
Subsidiaries’ 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, a joinder to the Subsidiary Guaranty,
along with any corporate governance and authorization documents. 

5.11     Top Up Contribution. The
Borrower shall cause Holdings to contribute the Top Up Amount (as defined in the
GQ California LLC Agreement) to GQ California (the “Top Up
Contribution”) on or before June 15, 2015. 

SECTION VI 

NEGATIVE COVENANTS 

The Borrower covenants that so long as the Loan or any other
Obligation remains outstanding: 

6.1     Indebtedness. The Borrower
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);

 - 23 - 




(d)     Guarantees permitted under
Section 6.2 hereof; 

(e)     Indebtedness existing as of the
date of this Agreement and disclosed on Schedule 6.1(e), 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 

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

6.2      Contingent
Liabilities. The Borrower shall not create, incur, assume, guarantee or be
or remain liable with respect to any Guarantees other than Guarantees resulting
from the endorsement of negotiable instruments for deposit or collection in the
ordinary course of business. 

6.3     Encumbrances. The Borrower
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 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 

(b)     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 the Borrower, (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)     The Borrower may not merge into or
consolidate with any other Person, or permit any other Person to merge into or
consolidate with it, or liquidate or dissolve, except that, if at the time
thereof and immediately after giving effect thereto no Event of Default shall
have occurred and be continuing any Subsidiary of the Borrower that is a Loan
Party may merge into the Borrower in a transaction in which the Borrower is the
surviving corporation.

(b)      The Borrower 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. 

- 24 - 




6.5      Restricted Payments.
The Borrower shall not make any Restricted Payments, except that: 

(a)      So long as no Event of
Default, including but not limited to the occurrence of a Change of Control, has
occurred and is continuing, the Borrower may make such Restricted Payments that
are unanimously approved by its board of directors or by a committee thereof
whose members have been unanimously approved by its board of directors; 

(b)     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 

(c)     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. The Borrower 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. The Borrower 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 the Borrower 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 directors of the Borrower or by a committee
of its board of directors whose members have been unanimously appointed by its
board of directors; or (ii) between the Borrower and any a Lender, an Affiliate
of a Lender, or a Clay Family Member. 

6.8     Fiscal Year. The Borrower
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 or any other Loan Party fails to (i) pay when and as required to be
  paid herein, any amount of principal of the Loan, or (ii) pay within three (3)
days after the same becomes due, any interest on the Loan or
any fee due hereunder, or (iii) pay within ten (10) days after the same becomes
due, any other amount payable hereunder or under any other Loan Document; or


- 25 - 




(b)     Specific Covenants. (i) The
Borrower 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, or 5.10, or
Section VI, (ii) a Subsidiary Guarantor violates or fails to perform or
observe any term, covenant or agreement contained in the Subsidiary Guaranty, or
(iii) the Borrower or Holdings violates or fails to perform or observe any term,
covenant or agreement contained in the Pledge Agreement; 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 or any other Loan Party
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) The
Borrower (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 $50,000, 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 (iii) a default under the Subsidiary Guaranty shall have
occurred and be continuing; 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 

- 26 - 




(g)     Inability to Pay Debts;
Attachment. (i) Any Loan Party 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 the Borrower (i) except as disclosed on Schedule 4.6, one
or more final judgments or orders for the payment of money in an aggregate
amount (as to all such judgments and orders) exceeding $50,000 (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 any Loan Party contests in any manner the
validity or enforceability of any provision of any Loan Document; or any Loan
Party 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 may
take any or all of the following actions: 

(a)     declare the unpaid principal amount
of the Loan, 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 the Borrower; and 

- 27 - 




(b)      exercise on behalf of itself all rights and remedies
available to it 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 Loan and all interest
and other amounts as aforesaid shall automatically become due and payable,
without further act of the Lenders. 

SECTION VIII 

GENERAL 

8.1      Notices. 

(a)      Notices Generally.
Subject to Section 8.1(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 Co. Ltd. 
	  	2300 – 1066 West Hastings Street
  
	  	Vancouver, British Columbia, Canada
      V6E3X2 
	  	Attention: 	H. Lutz Klingmann (President 
	  	  	and Andrée St-Germain (Chief Financial 
	  	  	Officer) 
	  	Email: 	lklingmann@goldenqueen.com and 
	  	  	astgermain@goldenqueen.com 
	  	  	  
	with copies to: 	Morton Law LLP 
	  	1200 - 750 West Pender Street 
	  	Vancouver, British Columbia 
	  	Canada, V6C 2T8 
	  	Attention: 	Edward L. Mayerhofer, Esq. 
	  	Email: 	elm@mortonlaw.ca 
	  	Fax: 	(604) 681-9652 
	  	  	  
	  	and 	  
	  	  	  
	  	Dorsey & Whitney LLP 
	  	1400 Wewatta Street, Suite 400 
	  	Denver, CO 	80202 
	  	Attention: 	Kenneth Sam, Esq. 
	  	Email: 	sam.kenneth@dorsey.com 


- 28 - 





	  	Fax: 	(303) 629-3450 
	  	Facsimile: 	(212) 755-7306 
	  	  	 
	If to the Lenders: 	c/o East Hill Management Company
  
	  	10 Memorial Boulevard 
	  	Suite 902 	 
	  	Providence, RI 02903 
	  	Email: 	thomas.clay@easthillmgt.com 
	  	Fax: 	(401) 490-0749 
	  	  	 
	with a copy to: 	Sullivan & Worcester LLP 
	  	One Post Office Square 
	  	Boston, MA 02109 
	  	Attention: 	William A. Levine, Esq. 
	  	Telephone: 	(617) 338-2921 
	  	Facsimile: 	(617) 338-2880 
	  	E-mail: 	wlevine@sandw.com 


(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. 

(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. 

- 29 - 




8.2     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 neither the Borrower nor any other Loan Party may 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. 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. 

8.3     Expenses. Whether or not the
transactions contemplated herein shall be consummated, the Borrower shall: 

(a)     reimburse the Lenders for all
reasonable out-of-pocket fees, disbursements and 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 $100,000
without mutual consent.

(b)     reimburse LUK Holdco and Gauss for
all reasonable out-of-pocket fees, disbursements and expenses (including all
reasonable attorneys’ fees) incurred or expended in connection with the
preparation, negotiation, filing or recording and interpretation of any consents
or waivers under or amendments to that certain Transaction Agreement, dated June
8, 2014, among LUK Holdco, Gauss, Auvergne, LLC, the Borrower and GQ California
(the “Transaction Agreement”), and any agreements related to the
Transaction Agreement, provided that such reimbursed expenses shall not exceed
$10,000 without mutual consent.

The Borrower will pay any Taxes (including any interest and
penalties in respect thereof). 

8.4     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 8.4 shall survive
payment or satisfaction of payment of all amounts owing with respect to the
Notes, any other Loan Document or any other Obligation. 

- 30 - 




8.5     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 Loan 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. 

8.6     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.


8.7     Amendments, Waivers, etc.
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. 

8.8     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. 

- 31 - 




8.9     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.

8.10     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.

8.11     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 LOAN 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.

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. 

8.12     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). 

- 32 - 




8.13     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 8.13. 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 8.1. 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. The Borrower hereby appoints Holdings as its authorized
agent solely to receive for and on its behalf service of summons or other legal
process in any action, suit or proceeding in any court specified in this
Section. 

(d)     By its execution hereof, the
Borrower irrevocably designates and appoints Holdings as its agent for service
of process as its authorized to receive, accept, and forward on its behalf
service of process in any such proceeding; and by its execution of an
acknowledgment hereto, Holdings accepts such appointment. Service of process,
writ, judgment, or other notice of legal process upon Holdings shall be deemed
and held in every respect to be effective personal service upon the Borrower.
The Borrower shall maintain such appointment (or that of a successor
satisfactory to the Lenders) continuously in effect at all times while the
Borrower is obligated hereunder or under the Notes or any other Loan Document.
Nothing herein shall affect the Lenders’ right to serve process in any other
manner permitted by applicable law.

8.14     Judgment Currency. This is
an international loan transaction in which the specification of Dollars is of
the essence, and such currency shall be the currency of account in all events.
The payment obligations of the Borrower hereunder and under the Notes or any
other Loan Document shall not be discharged by an amount paid in
another currency, whether pursuant to a judgment or otherwise, to the extent
that the amount so paid on prompt conversion to Dollars in the United States of
America under normal banking procedures does not yield the amount of Dollars
then due. In the event that any payment by the Borrower, whether pursuant to a
judgment or otherwise, upon conversion and transfer, does not result in the
payment of such amount of Dollars at the place such amount is due, the Lenders
shall be entitled to demand immediate payment of, and shall have a separate
cause of action against the Borrower for, the additional amount necessary to
yield the amount of Dollars then due. In the event the Lenders, upon the
conversion of such judgment into Dollars, shall receive (as a result of currency
exchange rate fluctuations) an amount greater than that to which it was
entitled, the Borrower shall be entitled to immediate reimbursement of the
excess amount.

- 33 - 




8.15     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. 

8.16     Effect of Amendment and
Restatement. As of the Closing Date, this Agreement shall amend and restate
the Existing Agreement, and the rights and obligations of the parties under the
Existing Agreement shall be subsumed within and be governed by this Agreement;
provided, however, that (1) all obligations and other liabilities
of the Loan Parties under the Existing Agreement shall remain outstanding
hereunder, shall constitute continuing Obligations, and this Agreement shall not
be deemed to evidence or result in a novation or repayment and reborrowing of
such Obligations and other liabilities and (2) this Agreement shall not in any
way impair or otherwise affect the rights or obligations of the parties
thereunder (including with respect to the Loans and the representations and
warranties made thereunder) except as such rights or obligations are amended or
modified hereby. The Existing Agreement as amended and restated hereby shall be
deemed to be a continuing agreement among the parties, and all documents,
instruments and agreements delivered pursuant to or in connection with the
Existing Agreement not amended and restated in connection with the entry of the
parties into this Agreement shall remain in full force and effect, each in
accordance with its terms. 

- 34 - 




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

	 	BORROWER: 
	 	  	  
	 	  	  
	 	GOLDEN QUEEN MINING CO. LTD. 
	 	  	  
	 	  	  
	 	By: 	/s/ H.
      Lutz Klingmann 
	 	  	Name: H. Lutz Klingmann 
	 	  	Title: President 
	 	  	  
	 	  	  
	 	  	  
	 	  	  
	 	ACKNOWLEDGED AND AGREED FOR 
	 	PURPOSES OF SECTION 8.13: 
	 	  	  
	 	GOLDEN QUEEN MINING HOLDINGS, 
	 	INC. 	  
	 	  	  
	 	  	  
	 	By: 	/s/ H.
      Lutz Klingmann 
	 	  	Name: H. Lutz Klingmann 
	 	  	Title: President 







	 	LENDERS: 
	 	  	  
	 	  	  
	 	THE LANDON T. CLAY 2009 
	 	IRREVOCABLE TRUST DATED 
	 	MARCH 6, 2009 
	 	  	  
	 	  	  
	 	  	  
	 	By: 	/s/
      Thomas M. Clay 
	 	  	Thomas M. Clay, Trustee 
	 	  	  
	 	  	  
	 	  	  
	 	EHT, LLC 
	 	  	  
	 	  	  
	 	  	  
	 	By	:/s/ Jonathan C. Clay
	 		Jonathan C. Clay, Manager 
	 	  	  
	 	  	  
	 	  	  
	 	/s/ Harris Clay 
	 	Harris Clay 
	 	  	  
	 	  	  
	 	  	  
	 	THE CLAY FAMILY 2009 
	 	IRREVOCABLE TRUST DATED 
	 	APRIL 14, 2009 
	 	  	  
	 	  	  
	 	  	  
	 	By	:/s/ Thomas M. Clay
	 		Thomas M. Clay, Trustee
  






Schedule 2.1(a) 

Loan Allocation 


	Name of
      
Lender 	Funded on
      
December 31, 
2014 	New
      Funding 	Total
      Funding 	Percentage
      
Funding 


	LTC Lender 	$9,375,000 	$13,000,000 	$22,375,000 	59.67% 
	EHT Lender 	$3,125,000 	$0 	$3,125,000 	8.33% 
	HC Lender 	$0 	$6,250,000 	$6,250,000 	16.67% 
	CFT Lender 	$0 	$5,750,000 	$5,750,000 	15.33% 
	Total: 	$12,500,000 	$25,000,000 	$37,500,000 	100%








Schedule 4.2 

No Conflict 

None. 




Schedule 4.3 

Governmental Authorizations 

None. 




Schedule 4.6 

Litigation 

On April 22, 2015, a complaint was filed in United States
District Court, District of Massachusetts, seeking recovery, pursuant to Section
16(b) of the Securities and Exchange Act of 1934, as amended, of alleged
short-swing trading profits. The complaint was filed by Ryan T. Darby, as
plaintiff, and names Landon T. Clay, a shareholder of the Borrower, and the
Borrower as defendants. The complaint alleges that Mr. Clay realized short-swing
profits in connection with transactions in the Borrower’s securities within
six-month periods. There can be no assurance that the Borrower will receive any
funds as a result of this suit. Although the Borrower is only a nominal
defendant in this action, time and money may be required to resolve it. The
Borrower is unable to predict the timing or outcome of this litigation. The
Borrower believes that the allegations are without merit and intends to
vigorously defend against the claims. 




Schedule 4.7 

No Defaults 

Under Section 4.12 of the Transaction Agreement dated June 8,
2014, among Gauss Holdings LLC, Auvergne, LLC, Gauss LLC, Golden Queen Mining
Company, Inc. and Golden Queen Mining Co. Ltd., the Borrower was to commence a
rights offering by filing a registration statement with the United States
Securities and Exchange Commission no later than 30 days following the Closing
Date (September 15, 2014). The Borrow has not commenced the rights offering.


Under Section 5(a)(iv) of the Standby Purchase Agreement dated
June 8, 2014, among Gauss Holdings LLC, Auvergne, LLC and Golden Queen Mining
Co. Ltd., the Borrower was to file a registration statement with the United
States Securities and Exchange Commission related to a rights offering no later
than 30 days following the Closing Date (September 15, 2014). The Borrow has not
commenced the rights offering. 




Schedule 4.12 

Subsidiaries; Loan Parties 


	
	Ownership 
Interest 	EIN/Corp. Number
      


	Golden Queen Mining Company, LLC, a 

    California limited liability company 

15772 K Street 
Mojave,
    California, 93501 	50%
      
(indirect) 	Federal Employer
      
Identification Number: 
47-1904841 
California Taxpayer
      
Identification Number: 
026-1672-0 
Secretary Of State
      
Entity Number: 
201425310169 









	Golden Queen Mining
      Holdings, Inc., a 
California corporation 

15772 K Street
      
Mojave, California, 93501 	100%
      
(indirect) 	CALIFORNIA 
CORPORATE
      
NUMBER: C3698788 




	Golden Queen Mining Canada Ltd., a 

    British Columbia corporation 

1200-750 West Pender Street 

    Vancouver, BC, V6C 2T8 	100% 	Incorporation certificate
      
number: BC1024587 











Schedule 6.1(e) 

Existing Indebtedness 

The Borrower is subject to the following indebtedness under the
following agreements: 

On July 26, 2013, the Borrower issued
convertible debentures for aggregate proceeds of C$10,000,000 ($9,710,603),
under the terms of subscription agreements and convertible debt loan agreements
with Jonathan Clay and Thomas Clay dated July 23, 2013 and July 26, 2013,
respectively. The convertible debentures are unsecured and bear interest at 2%
per annum, calculated on the outstanding principal balance, payable annually.
The principal amounts of the notes are convertible into shares of the Company at
a price of C$1.03 per share for a period of two years. If the notes have not
been converted by the holder prior to the maturity date, then the Company may
convert them at the lower of C$1.03 or the market price as at the maturity date.