Golden Queen Mining Co. Ltd. : Exhibit 10.5 - Filed by newsfilecorp.com





CONFIDENTIAL 

 

 

GOLDEN QUEEN MINING COMPANY, LLC 

AMENDED AND RESTATED 

LIMITED LIABILITY COMPANY AGREEMENT 

DATED AS OF SEPTEMBER 15, 2014 

 

 




TABLE OF CONTENTS 

	 	 	 	Page      
	  	  	  	  
	1.
      	DEFINITIONS
      	2
      
	2.
      	FORMATION
      AND PURPOSE 	11
      
	  	2.1
      	Formation
      	11
      
	  	2.2
      	Name
      	11
      
	  	2.3
      	Registered
      Office/Agent 	11
      
	  	2.4
      	Term
      	11
      
	  	2.5
      	Purpose
      	11
      
	  	2.6
      	Powers
      	11
      
	  	2.7
      	Certificates
      	12
      
	  	2.8
      	Principal
      Office 	13
      
	3.
      	MEMBERSHIP,
      CAPITAL CONTRIBUTIONS AND UNITS 	13
      
	  	3.1
      	Members
      	13
      
	  	3.2
      	Member
      Interests and Units 	13
      
	  	3.3
      	Additional
      Members and Units 	13
      
	  	3.4
      	Capital
      Contributions 	14
      
	  	3.5
      	Interest
      Payments 	15
      
	  	3.6
      	Additional
      Capital 	15
      
	4.
      	CAPITAL
      ACCOUNTS 	16
      
	  	4.1
      	Allocations
      	16
      
	5.
      	DISTRIBUTIONS
      	17
      
	  	5.1
      	Board
      of Managers Determination 	17
      
	  	5.2
      	Distributions
      	17
      
	  	5.3
      	No
      Violation 	17
      
	  	5.4
      	Withholdings
      	17
      
	  	5.5
      	Property
      Distributions and Installment Sales 	19
      
	6.
      	STATUS,
      RIGHTS AND POWERS OF MEMBERS AND CERTAIN MEMBER AGREEMENTS 	19
      
	  	6.1
      	Limited
      Liability 	19
      
	  	6.2
      	Return
      of Distributions of Capital 	19
      
	  	6.3
      	No
      Management or Control 	20
      
	  	6.4
      	Specific
      Limitations 	20
      


i 





	TABLE OF CONTENTS 
	(continued) 



	 	 	 	Page      
	  	  	  	  
	  	6.5
      	Member
      Voting 	20
      
	  	6.6
      	Contracts
      with Managers or their Affiliates 	20
      
	  	6.7
      	Member
      Compensation; Expenses 	20
      
	7.
      	DESIGNATION,
      RIGHTS, AUTHORITIES, POWERS, RESPONSIBILITIES AND DUTIES OF THE BOARD OF
      MANAGERS 	20
      
	  	7.1
      	Board
      of Managers 	20
      
	  	7.2
      	Initial
      Managers 	21
      
	  	7.3
      	Number
      and Designation Rights. 	21
      
	  	7.4
      	Voting
      and Act of the Board; Action without a Meeting. 	22
      
	  	7.5
      	Tenure
      	23
      
	  	7.6
      	Resignation
      	23
      
	  	7.7
      	Removal
      	23
      
	  	7.8
      	Vacancies
      	23
      
	  	7.9
      	Meetings
      	24
      
	  	7.10
      	Notice
      	24
      
	  	7.11
      	Waiver
      	24
      
	  	7.12
      	Quorum
      	24
      
	  	7.13
      	Compensation
      	24
      
	  	7.14
      	Authority
      of Board of Managers 	24
      
	  	7.15
      	Reliance
      by Third Parties 	25
      
	8.
      	DESIGNATION,
      RIGHTS, AUTHORITIES, POWERS, RESPONSIBILITIES AND DUTIES OF OFFICERS AND
      AGENTS 	25
      
	  	8.1
      	Officers,
      Agents 	25
      
	  	8.2
      	Election
      	26
      
	  	8.3
      	Tenure
      	26
      
		8.4
      	Chairman
      of the Board of Managers, Chief Executive Officer, President and Vice
      President 	26
      
	  	8.5
      	Chief
      Financial Officer 	26
      
	  	8.6
      	Chief
      Accounting Officer 	26
      
	  	8.7
      	Secretary
      and Assistant Secretaries 	27
      
	  	8.8
      	Vacancies
      	27
      
	  	8.9
      	Resignation
      and Removal 	27
      


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	TABLE OF CONTENTS 
	(continued) 



	 	 	 	Page      
	  	  	  	  
	  	8.10
      	Compensation
      	27
      
	  	8.11
      	Standard
      of Care 	27
      
	  	8.12
      	Programs
      and Budgets 	27
      
	  	8.13
      	Certain
      Actions Requiring Board of Manager Consent 	28
      
	  	8.14
      	Emergencies
      	29
      
	9.
      	BOOKS,
      RECORDS, ACCOUNTING AND REPORTS 	29
      
	  	9.1
      	Books
      and Records 	29
      
	  	9.2
      	Delivery
      to Member, Inspection; etc 	30
      
	  	9.3
      	Reports
      	30
      
	  	9.4
      	Filings
      	31
      
	  	9.5
      	Non-Disclosure
      	32
      
	10.
      	[INTENTIONALLY
      LEFT BLANK] 	33
      
	11.
      	TRANSFER
      OF INTERESTS 	33
      
	  	11.1
      	Restricted
      Transfer 	33
      
	  	11.2
      	Permitted
      Transferees 	33
      
	  	11.3
      	Transfer
      Requirements 	34
      
	  	11.4
      	Consent
      	34
      
	  	11.5
      	Withdrawal
      of Member 	34
      
	  	11.6
      	Noncomplying
      Transfers Void 	35
      
	  	11.7
      	Amendment
      of Exhibit A 	35
      
	  	11.8
      	Transfer
      of Rights 	35
      
	  	11.9
      	Indirect
      Transfers 	35
      
	12.
      	FIRST
      OFFER; FORCED SALE 	35
      
	  	12.1
      	Right
      of First Offer/Refusal 	35
      
	  	12.2
      	Tag-Along
      Rights 	37
      
	  	12.3
      	Miscellaneous
      	39
      
	  	12.4
      	Remain
      Subject 	40
      
	  	12.5
      	Forced
      Sale 	41
      
	13.
      	DISSOLUTION
      OF COMPANY 	44
      
	  	13.1
      	Termination
      of Membership 	44
      
	  	13.2
      	Events
      of Dissolution 	44
      


iii 





	TABLE OF CONTENTS 
	(continued) 



	 	 	 	Page      
	  	  	  	  
	  	13.3
      	Liquidation
      	44
      
	  	13.4
      	No
      Action for Dissolution 	45
      
	  	13.5
      	No
      Further Claim 	45
      
	14.
      	INDEMNIFICATION
      	45
      
	  	14.1
      	General
      	45
      
	  	14.2
      	Exculpation
      	46
      
	  	14.3
      	Persons
      Entitled to Indemnity 	46
      
	  	14.4
      	Procedure
      Agreements 	46
      
	  	14.5
      	Duties
      of Board of Managers and Officers 	46
      
	  	14.6
      	Interested
      Transactions 	46
      
	  	14.7
      	Fiduciary
      and Other Duties 	46
      
	15.
      	REPRESENTATIONS
      AND COVENANTS BY THE MEMBERS 	47
      
	  	15.1
      	Investment
      Intent 	47
      
	  	15.2
      	Securities
      Regulation 	47
      
	  	15.3
      	Knowledge
      and Experience 	48
      
	  	15.4
      	Economic
      Risk 	48
      
	  	15.5
      	Binding
      Agreement 	48
      
	  	15.6
      	Tax
      Position 	48
      
	  	15.7
      	Information
      	48
      
	  	15.8
      	Licenses
      and Permits 	48
      
	16.
      	COMPANY
      REPRESENTATIONS 	48
      
	  	16.1
      	Duly
      Formed 	48
      
	  	16.2
      	Valid
      Issue 	49
      
	17.
      	AMENDMENTS
      TO AGREEMENT 	49
      
	  	17.1
      	Amendments
      	49
      
	  	17.2
      	Amendments
      by the Board of Managers 	49
      
	  	17.3
      	Corresponding
      Amendment of Articles of Organization 	50
      
	  	17.4
      	Binding
      Effect 	50
      
	18.
      	GENERAL
      	50
      
	  	18.1
      	Successors;
      California Law; Etc 	50
      
	  	18.2
      	Notices,
      Etc 	50
      


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	TABLE OF CONTENTS 
	(continued) 



	 	 	 	Page      
	 	  	  	  
	 	18.3
      	Execution
      of Documents 	50
      
	 	18.4
      	Arbitration
      	51
      
	 	18.5
      	Waiver
      of Jury Trial 	53
      
	 	18.6
      	Severability
      	53
      
	 	18.7
      	Table
      of Contents, Headings 	54
      
	 	18.8
      	No
      Third Party Rights 	54
      
	 	18.9
      	Obligation
      of Golden Queen 	54
      



	EXHIBITS 
	 
	Exhibit A – Members Of The Company, Capital
      Contributions, Issued Units And Percentage Interest 
	Exhibit B – Tax Matters 
	Exhibit C – Initial Program and Budget
  


v 




GOLDEN QUEEN MINING COMPANY, LLC 
AMENDED AND
RESTATED LIMITED LIABILITY COMPANY AGREEMENT 

     This Amended and Restated Limited
Liability Company Agreement of Golden Queen Mining Company, LLC (this
“Agreement”) is entered into and made effective as of September 15, 2014
(the “Effective Date”), and is by and among Golden Queen Mining Company,
LLC, a California limited liability company (the “Company”), Gauss LLC, a
Delaware limited liability company (“Gauss”), Golden Queen Mining
Holdings, Inc., a California corporation (“GQ Holdco”) (Gauss and
GQ Holdco, collectively, the “Original Members”, and together with
certain other Persons from time to time in accordance with the terms of this
Agreement, the “Members”) and, solely for purposes of Section
18.9, Golden Queen Mining Co. Ltd., a British Columbia corporation and the
sole stockholder of GQ Holdco (“Golden Queen”). 

RECITALS 

     WHEREAS, Golden Queen Mining
Company, Inc., was organized as a California corporation on December 19, 1985
(the “Corporation”); 

     WHEREAS, on September 10, 2014,
the board of directors of the Corporation adopted a resolution adopting and
approving the conversion of the Corporation to a limited liability company and
the adoption of a Limited Liability Company Agreement (the “LLC
Agreement”), and recommending such conversion and the adoption of the LLC
Agreement to the sole stockholder of the Corporation, pursuant to Section 1152
of the California Corporations Code (the “CCC”); 

     WHEREAS, on September 10, 2014,
GQ Holdco as the sole stockholder of the Corporation adopted and approved the
conversion of the Corporation to a limited liability company and the adoption of
the LLC Agreement pursuant to Section 1152 of the CCC; 

     WHEREAS, on September 10, 2014,
the Corporation was converted to a limited liability company pursuant to Section
1152 of the CCC and the California Revised Uniform Limited Liability Company
Act, as amended from time to time (the “Act”), by causing the filing with
the Secretary of State of the State of California of Articles of Organization –
Conversion (the “Articles of Organization” and such conversion, the
“Conversion”); 

     WHEREAS, pursuant to the
Conversion, the sole stockholder of the Corporation became the sole member of
the Company, the shares of capital stock in the Corporation were converted into
one hundred and ten thousand (110,000) Units of the Company, and the sole
stockholder of the Corporation became the owner of all of the limited liability
company interests in the Company (the “Interests”); 

     WHEREAS, on September 10, 2014,
following the effective time of the Conversion, GQ Holdco as the sole member of
the Company, entered into the LLC Agreement; 

     WHEREAS, Gauss Holdings LLC, a
Delaware limited liability company and a member of Gauss (“LUK Holdco”),
Auvergne, LLC, a Delaware limited liability company and a member of Gauss
(“Auvergne”), Gauss, Golden Queen and the Corporation, entered into that
certain Transaction Agreement, dated as of June 8, 2014 (the “Transaction
Agreement”); 




     WHEREAS, the Transaction
Agreement provides that, in connection with the consummation of the transactions
contemplated by the Transaction Agreement, the Company shall issue one hundred
and ten thousand (110,000) Units to Gauss in exchange for a capital contribution
by Gauss in the amount of one hundred and ten million U.S. Dollars
(US$110,000,000.00), Gauss shall become a member of the Company, and the LLC
Agreement shall be amended and restated in its entirety; 

     WHEREAS, GQ Holdco and the
Company are entering into this Agreement in reliance upon Gauss’s obligation to
make, as applicable, the Mandatory Top Up Contribution in accordance with
Section 3.4(b) or the Mandatory Alternative Contribution in accordance
with Section 3.4(c) to provide adequate funding for the Soledad Mountain
Project, and, in connection therewith, Leucadia National Corporation, a New York
corporation and parent of LUK Holdco (“LUK”), entered into an equity
commitment letter with LUK Holdco and Gauss whereby LUK agreed to fund such
amounts to LUK Holdco (for LUK Holdco to subscribe for units of Gauss) as are
necessary for Gauss to be able to fund the Mandatory Top Up Contribution or the
Mandatory Alternative Contribution, as applicable; 

     WHEREAS, the Original Members are
entering into this Agreement to provide for, among other things, the management
of the business and affairs of the Company, the allocation of profits and losses
among the Members, the respective rights and obligations of the Members to each
other and to the Company, and certain other matters; 

     WHEREAS, the Members intend to
treat, and the Company shall take no position inconsistent with treating, the
Company as a partnership for United States federal, state and local income and
franchise tax purposes, unless otherwise agreed by all of the Members; and 

     WHEREAS, the parties hereto wish
to effect (i) the amendment and restatement of the LLC Agreement, and (ii) the
continued operation of the Company on the terms set forth herein. 

AGREEMENT 

     NOW, THEREFORE, the Members agree
as follows: 

1. DEFINITIONS 

     For purposes of this Agreement:
(a) references to “Articles,” “Exhibits” and “Sections” are
to Articles, Exhibits and Sections of this Agreement unless explicitly indicated
otherwise, (b) references to statutes include all rules and regulations
thereunder, and all amendments and successors thereto from time to time; and (c)
the word “including” shall be construed as “including without limitation.” 

     “Accredited Investor” has
the meaning defined in Rule 501(a) of Regulation D. 

     “Act” is defined in the
Recitals to this Agreement. 

     “Affiliate” means with
respect to any specified Person, any Person that directly or through one or more
intermediaries Controls or is Controlled by or is under common Control with the
specified Person. 

2 




     “Agreement” is defined in
the Preamble to this Agreement. 

     “Answer” is defined in
Section 18.4.1. 

     “Appraiser” is defined in
Section 3.6(d)(ii). 

     “Arbitration” is defined
in Section 18.4. 

     “Arbitration Hearing” is
defined in Section 18.4.5. 

     “Arbitration Rules” is
defined in Section 18.4.3. 

     “Arbitrator” is defined in
Section 18.4.2. 

     “Arbitrator Engagement
Date” is defined in Section 18.4.4. 

     “Articles of Organization”
is defined in the Recitals to this Agreement. 

     “Asset Value” of any
property of the Company means its adjusted basis for federal income tax purposes
unless: 

     (a) the property was accepted by
the Company as a contribution to capital at a value different from its adjusted
basis, in which event the initial Asset Value for such property shall mean the
gross fair market value of the property agreed to by the Company and the
contributing Member; or 

     (b) as a consequence of the issuance of additional Units
  or the redemption of all or part of the Interest of a Member, the property of
  the Company is revalued in accordance with Treasury Regulations Sections 1.704
  -1(b) and 1.704 -2. 

     As of any date, references to the
“then prevailing Asset Value” of any property shall mean the Asset Value last
determined for such property less the depreciation, amortization and cost
recovery deductions taken into account in computing Profit or Loss in fiscal
periods subsequent to such prior determination date. 

     “Auvergne” is defined in
the Recitals to this Agreement. 

     “Available Cash” means all
cash on hand less any amounts necessary to pay or establish reserves for all
expenses of the Company (including general and administrative expenses, contract
and marketing costs, debt payments, taxes, capital expenditures, replacements,
future acquisitions and investments and contingencies), all as reasonably
determined on a periodic basis by the Board of Managers. 

     “Award” is defined in
Section 18.4.6. 

     “Board of Managers” or
“Board” means the board of managers of the Company elected and determined
in accordance with Article 7. 

3 




     “Budget” means a detailed
estimate of the income and expenses of the Company for a given period in the
future and a plan of operations based on such estimate. 

     “Business Day” means any
day other than: (a) a Saturday, Sunday or federal holiday or (b) a day on which
commercial banks in New York, New York are authorized or required to be closed.


     “Capital Account” is
defined in Section 4.1 of Exhibit B. 

     “Capital Contribution”
means with respect to any Member, the sum of (i) the amount of money plus (ii)
the fair market value of any other property (net of liabilities assumed or to
which the property is subject) contributed to the Company with respect to the
Interest held by such Member pursuant to this Agreement. 

     “Capital Raise Amount” is
defined in Section 3.6(b). 

     “CCC” is defined in the
Recitals to this Agreement. 

     “Claimant” is defined in
Section 18.4.1. 

     “Clay Family” means (i)
Landon Clay and Harris Clay, (ii) any Family Member 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” means
any Person in the Clay Family. 

     “Code” means the Internal
Revenue Code of 1986, as amended from time to time. 

     “Company” is defined
  in the Preamble to this Agreement. 

     “Confidential Information”
is defined in Section 9.5.1. 

     “Continuing Obligations”
means obligations or responsibilities that are reasonably expected to continue
or arise after Operations on a particular area of the Properties have ceased or
are suspended (including future monitoring, stabilization or Environmental
Compliance). 

     “Control” (including the
terms “Controlled by” and “under common Control with”) means the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of a Person, whether through the ownership of voting
securities, by contract, or otherwise. 

     “Conversion” is defined in
the Recitals to this Agreement. 

     “Corporation” is defined
in the Recitals to this Agreement. 

     “Demand” is defined in
Section 18.4.1. 

4 




     “Development” means all
preparation (other than Exploration) for the removal and recovery of Products,
including construction and installation of a mill or any other improvements to
be used for the mining, handling, milling, processing or other beneficiation of
Products, and all related Environmental Compliance. 

     “Distribution” means cash
or property (net of liabilities assumed or to which the property is subject)
distributed to a Member in respect of the Member’s Interest. 

     “Effective Date” is
defined in the Preamble to this Agreement. 

     “Election Date” is defined
in Section 3.6(b). 

     “Emergency” shall mean a
sudden and unexpected event (including, for the avoidance of doubt, any release
or threatened release of hazardous substances into the environment) that (i)
requires notification to any Governmental Entity under applicable law or (ii)
that causes, or risks causing, (A) substantial damage to any of the assets or
properties of the Company or the property of any other Person, (B) death of or
injury to any Person, (C) damage or substantial risk of damage to natural
resources (including wildlife) or the environment, (D) safety concerns
associated with continued operations of the Company’s assets and properties or
(E) non-compliance with any applicable law; in each case, to the extent
such event is of such nature that immediate action is required and, in the
reasonable discretion of the Chief Executive Officer, cannot await prior
consultation with, or (to the extent a formal decision would otherwise be
required under the terms of this Agreement) a formal decision from, the Board of
Managers. 

     “Environmental Compliance”
means any actions performed during or after Operations to comply with the
requirements of all Environmental Laws or contractual commitments related to
reclamation of the Properties or other compliance with Environmental Laws. 

     “Environmental Compliance
Fund” means such amounts as the Board of Managers may determine will be
necessary to cover the costs of reasonably anticipated Environmental Compliance
(including reasonably anticipated costs of mine closures, post-Operations
Environmental Compliance and Continuing Obligations). 

     “Environmental Laws” means
any law, now or hereafter in effect, aimed at or in any way relating to the
protection of human health and safety, the environment or natural resources, or
reclamation or restoration of the Properties, including without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.
§ 9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. App. §
1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et
seq.), the Clean Water Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42
U.S.C. § 7401 et seq.) the Toxic Substances Control Act (15 U.S.C. § 2601 et
seq.), the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. § 136
et seq.), the Emergency Planning and Community Right to Know Act (42 U.S.C. §
11001 et seq.), the Safe Drinking Water Act (42 U.S.C. § 300 et seq.), the
Pollution Prevention Act (42 U.S.C. § 13101 et seq.), the Federal Mine Safety
and Health Act (30 U.S.C. § 801 et seq.), and the Occupational Safety and Health
Act (29 U.S.C. § 651 et seq.), and all counterpart or other similar California
laws, including, without limitation, Division 20, Chapter 6.5 of the California
Health & Safety Code (Hazardous Waste Control, Division 20, Chapter 6.8 of
the California Health & Safety Code (the Carpenter-Presley-Tanner
Hazardous Substance Act), Division 20, Chapter 6.6 (the Safe Drinking Water and
Toxic Enforcement Act of 1986), Division 7 of the California Water Code (the
Porter-Cologne Water Quality Control Act) and Chapter 9, Division 2 of the
California Public Resources Code (the Surface Mining and Reclamation Act), as
each has been or may be amended, and the regulations promulgated pursuant
thereto, and common law principles, including, without limitation, nuisance,
trespass and negligence. 

5 




     “Excess Amount” is defined
in Section 3.6(b). 

     “Excess Units” is defined
in Section 12.1.1. 

     “Exchange Act” means the
Securities Exchange Act of 1934, as amended. 

     “Expense Reimbursement
Letter” means that certain letter agreement, by and between the Company and
Golden Queen, dated as of the date of this Agreement, relating to the
reimbursement by the Company of certain expenses of Golden Queen. 

     “Exploration” means all
activities directed toward ascertaining the existence, location, quantity,
quality or commercial value of deposits of Products, including but not limited
to additional drilling required after discovery of potentially commercial
mineralization, and including related Environmental Compliance. 

     “Fair Market Value” is
defined in Section 3.6(c). 

     “Family Member” means,
with respect to any Person who is an individual, any lineal descendants
(including adoptive relationships) of such Person. 

     “Feasibility Contractor”
means any engineering firm engaged by the Company for purposes of preparing or
auditing any Feasibility Study. 

     “Feasibility Study” means
a report, in a form and of a scope generally acceptable to reputable financial
institutions that provide financing to the Mining industry, containing an
analysis and evaluation of a proposed project to determine whether (i) it is
technically feasible, (ii) it is feasible within a certain cost estimate, and
(iii) it will be profitable. 

     “Final Transfer Date” is
defined in Section 12.1.3. 

     “Fiscal Year” means the
fiscal year of the Company, which shall be the Company’s taxable year as
determined under Regulations Section 1.441 -1 or Section 1.441 -2 and the
Regulations under Section 706 of the Code, which is the taxable year ending on
December 31, or such other Fiscal Year as determined by the Board of Managers.


     “GAAP” means generally
accepted accounting principles in effect in the United States of America from
time to time. 

     “Gauss” is defined in the
Preamble to this Agreement. 

6 




     “Gauss LLC Agreement”
means the Amended and Restated Limited Liability Company Agreement of Gauss,
dated as of September 15, 2014. 

     “Gauss Permitted
Transferee” means, (a) with respect to LUK Holdco, any Subsidiary of LUK
which LUK Controls and of which it is the beneficial owner (within the meaning
of the Securities Act) of at least 80% of the outstanding equity interests; and
(b) with respect to Auvergne, any Clay Family Member. 

     “Golden Queen” is defined
in the Preamble to this Agreement. 

     “Governmental Entity”
shall mean any (a) national, state, county, municipal or local government
(whether domestic or foreign) and any political subdivision thereof, (b) court
or administrative tribunal, (c) other governmental, quasi-governmental,
judicial, public or statutory instrumentality, authority, body, agency, bureau
or entity of competent jurisdiction (including any zoning authority, or state
public utility commission, or any comparable authority), (d) nongovernmental
agency, tribunal or entity that is properly vested by a governmental authority
with applicable jurisdiction, and (e) arbitrator or arbitral panel. 

     “Governmental Fees” means
all location fees, mining claim rental fees, mining claim maintenance payments
and similar payments required by applicable law to locate and hold unpatented
mining claims. 

     “GQ Holdco” is defined in
the Preamble to this Agreement. 

     “GQ Top Up Right” has the
meaning given to such term in Section 3.4(b).

      “Indemnified
Persons” is defined in Section 14.1. 

     “Initiating Seller” is
defined in Section 12.2.1. 

     “Interests” is defined in
the Recitals to this Agreement. 

     “IRS” means the Internal
Revenue Service. 

     “Issuance Notice” is
defined in Section 3.6(b). 

     “JAMS” is defined in
Section 18.4.2. 

     “LLC Agreement” is defined
in the Recitals to this Agreement. 

     “Loss” means any item of
loss or deduction of the Company as determined under the capital accounting
rules of Treasury Regulations Section 1.704 -1(b)(2)(iv) for purposes of
adjusting the Capital Accounts of the Members including, without limitation, the
provisions of paragraphs (b), (f) and (g) of those regulations relating to the
computation of items of deduction and loss. 

     “LUK” is defined in the
Recitals to this Agreement. 

     “LUK Holdco” is defined in
the Recitals to this Agreement. 

7 




     “Majority Member” is
defined in Section 12.5.1. 

     “Manager” means any Person
that is a member of the Board of Managers. 

     “Manager Supermajority”
means a majority of the Managers appointed by each of Gauss and GQ Holdco;
provided, that, if GQ Holdco only has the right to designate two (2)
Managers in accordance with Section 7.3.2, the affirmative vote or
written consent of four of the five Managers shall be required. 

     “Mandatory Alternative
Contribution” is defined in Section 3.4(c). 

     “Mandatory Top Up
Contribution” is defined in Section 3.4(b). 

     “Members” means the
Original Members and any other Person that both acquires an Interest in the
Company and is admitted to the Company as a Member in accordance with this
Agreement. 

     “Mining” means the mining,
extracting, producing, beneficiating, handling, milling or other processing of
Products. 

     “Minority Member” is
defined in Section 12.5.1. 

     “Minority Units Price” is
defined in Section 12.5.2(b)(i). 

     “Modification” means (i) a
material increase in mining or production capacity; (ii) a material change in
the recovery process; or (iii) a material change in waste or tailings disposal
methods; provided, that such increase or change shall be deemed
“material” if (a) it is anticipated to cost more than 50% of the original
capital costs attributable to the Development of the mining or production
capacity, recovery process or waste or tailings disposal facility or (b) it adds
more than 50% to the mineable ore reserves, plant throughput or tailings
disposal capacity to be expanded or modified. 

     “MSHA” means the Federal
Mine Safety and Health Administration, which administers the Federal Mine Safety
and Health Act, 30 U.S.C. §801, et seq. 

     “Net Smelter Return
Royalty” means a percentage of the total receipts from any smelter, mint, or
refinery on account of the sale of ores, minerals and other mineral resources by
the Company, less the transportation costs from the Soledad Mountain
Project to the place of sale, and less the costs, penalties, treatment
charges and other charges paid to (or deducted from any amount paid by) the
smelter, mint, or refinery. 

     “New Units” is defined in
Section 3.6(b). 

     “Non-Selling Members” is
defined in Section 12.1.1. 

     “Notice of Proposed Sale”
is defined in Section 12.2.2. 

     “Notice of Purchase” is
defined in Section 12.1.1. 

8 




     “Notice of Sale” is
defined in Section 12.1.1. 

     “Offer Period” is defined
in Section 12.1.1. 

     “Offered Units” is defined
in Section 12.1.1. 

     “Operations” means the
Exploration, Development and Mining activities of the Company. 

     “Optional Contribution
Period” is defined in Section 3.4(b). 

     “Original Members” is
defined in the Preamble to this Agreement. 

     “Original Unit Price”
shall be an amount of one thousand U.S. Dollars (US$1,000.00). 

     “Participating Member” is
defined in Section 12.1.1. 

     “Percentage Interest” of a
Member as of a particular time shall mean the amount, expressed as a percentage,
equal to (i) the number of Units such Member owns at such time, divided by (ii)
the total number of Units outstanding at such time. 

     “Permitted Transferee”
means, with respect to any Person, an Affiliate of such Person; provided,
that, for purposes of this definition, Auvergne and LUK Holdco shall be (or
deemed to be) Affiliates of Gauss. 

     “Person” means an
individual, partnership, joint venture, association, corporation, trust, estate,
limited liability company, limited liability partnership, unincorporated entity
of any kind, Governmental Entity, or any other legal entity, including any
Member. 

     “Products” means all ores
and minerals produced from the Properties. 

     “Profit” means any item of
income or gain of the Company as determined under the capital accounting rules
of Treasury Regulation § 1.704 -1(b)(2)(iv) for purposes of adjusting the
Capital Accounts of the Members including, without limitation, the provisions of
paragraphs (b), (f) and (g) of those regulations relating to the computation of
items of income or gain. 

     “Program” means a detailed
description of Operations to be conducted and objectives to be accomplished by
the officers of the Company for a given period in the future. 

     “Property” or
“Properties” means any interests in real property owned by the
Company.

      “Proposed
Transferee” is defined in Section 12.2.1. 

     “Qualified Sale” shall
mean (i) a transaction or series of related transactions, whether or not the
Company is a party thereto, in which, after giving effect to such transaction or
transactions and the provisions of Section 12.5.3, GQ Holdco and its
Permitted Transferees and Gauss and its Permitted Transferees would cease to
own, either directly or indirectly, any Units or equity securities of any other
surviving entity immediately following the consummation of such transaction or transactions, or (ii) a sale or other
disposition of all or substantially all of the assets of the Company; in each
case, where the aggregate purchase price shall be payable in cash. 

9 




     “Regulation D” means
Regulation D under the Securities Act. 

     “Regulations” means the
Treasury regulations, including temporary regulations, promulgated under the
Code. 

     “Respondent” is defined in
Section 18.4.1. 

     “Sale” is defined in
Section 12.2.1. 

     “Sale Percentage” is
defined in Section 12.2.1. 

     “Sale Process” is defined
in Section 12.5.1(c). 

     “SEC” means the U.S.
Securities and Exchange Commission. 

     “Securities Act” means the
Securities Act of 1933, as amended, and the rules, regulations and
interpretations promulgated pursuant thereto. 

     “Selling Member” is
defined in Section 12.1.1. 

     “Soledad Mountain Project”
means the mine exploration, development and operating project located in Kern
County, California and owned and controlled by the Company. 

     “Tag-Along Notice” is
defined in Section 12.2.3. 

     “Tag-Along Period” is
defined in Section 12.2.3.

      “Tag-Along Right” is
defined in Section 12.2.1. 

     “Taxes on Pass-Through
Income” is defined in Section 5.1.2(a). 

     “TMP” is defined in
Section 1.1 of Exhibit B. 

     “Top Up Amount” is defined
in Section 3.4(b). 

     “Top Up Notice” is defined
in Section 3.4(b). 

     “Transaction Agreement” is
defined in the Recitals to this Agreement. 

     “Transfer” means a direct
or indirect sale, assignment, pledge, encumbrance, abandonment, disposition or
other transfer. 

     “Trigger Date” is defined
in Section 12.5.1. 

     “Units” is defined in
Section 3.2. 

10 




     “Unwinding Event” is
defined in Section 11.2. 

     “Withholding Indemnified
Parties” and “Withholding Indemnified Party” are defined in
Section 5.4. 

2. FORMATION AND PURPOSE 

     2.1 Formation. The Company
was converted from a California corporation into a California limited liability
company in accordance with Section 1152 of the CCC by the filing of the Articles
of Organization – Conversion with the California Secretary of State. The LLC
Agreement is hereby amended and restated in its entirety, and the Company is
hereby continued. The rights and liabilities of the Members shall be determined
pursuant to the Act and this Agreement. To the extent that the rights or
obligations of any Member are different by reason of any provision of this
Agreement than they would be in the absence of such provision, this Agreement
shall, to the extent permitted by the Act, control. 

     2.2 Name. The name of the
Company is “Golden Queen Mining Company, LLC”. The business of the Company may
be conducted under that name or, upon compliance with applicable laws, any other
name that the Board of Managers deems appropriate. The Board of Managers shall
file, or shall cause to be filed, any fictitious name certificates and similar
filings, and any amendments thereto, that the Board of Managers considers
appropriate. 

     2.3 Registered
Office/Agent. The registered office required to be maintained by the Company
in the State of California pursuant to the Act shall initially be 15772 K
Street, Mojave California, 93501. The name and address of the registered agent
of the Company pursuant to the Act shall initially be CT Corporation System, 818
W. Seventh St., Los Angeles, CA 90017. The Company may, upon compliance with the
applicable provisions of the Act, change its registered office or registered
agent from time to time in the discretion of the Board of Managers.

     2.4 Term. The term of the
Company shall continue indefinitely unless sooner terminated as provided herein.
The existence of the Company as a separate legal entity shall continue until the
cancellation of the Articles of Organization as provided in the Act. 

     2.5 Purpose. The Company
is formed solely for the purpose of, and the nature of the business to be
conducted by the Company is solely, developing, bringing into production and
operating the Soledad Mountain Project. In pursuance solely thereof, the Company
shall possess and may exercise all the powers and privileges granted by the Act,
by any other law or by this Agreement, together with any powers incidental
thereto, including such powers and privileges as are necessary or convenient to
the conduct, promotion or attainment of the purposes of the Company. 

     2.6 Powers. Without
limiting the generality of Section 2.5, the Company shall have the power
and authority to take any actions necessary, convenient or incidental to or for
the furtherance of the purposes set forth in Section 2.5, including
without limitation the power: 

     (a) To conduct its business,
carry on its operations and exercise the powers granted to a limited liability
company by the Act in any country, state, territory, district or other
jurisdiction, whether domestic or foreign; 

11 




     (b) To acquire by purchase,
lease, contribution of property or otherwise, own, hold, operate, maintain,
finance, improve, lease, sell, convey, mortgage, transfer, demolish or dispose
of any real or personal property; 

     (c) To negotiate, enter into,
renegotiate, extend, renew, terminate, modify, amend, waive, execute, perform
and carry out and take any other action with respect to contracts or agreements
of any kind, and any leases, licenses, guarantees and other contracts for the
benefit of or with any Member or any Affiliate of any Member, to the extent that
such contracts may be deemed necessary, convenient or incidental to the
accomplishment of the purpose of the Company; 

     (d) To purchase, take, receive,
subscribe for or otherwise acquire, own, hold, vote, use, employ, sell,
mortgage, lend, pledge or otherwise dispose of, and otherwise use and deal in
and with, shares or other interests in or obligations of domestic or foreign
corporations, associations, general or limited partnerships, trusts, limited
liability companies, individuals or other Persons, or direct or indirect
obligations of the United States or any government, state, territory,
governmental district or municipality or any instrumentality of any of them;


     (e) To lend money, to invest and
reinvest its funds, and to accept real and personal property for the payment of
funds so loaned or invested; 

     (f) To borrow money and issue
evidence of indebtedness, and to secure the same by a mortgage, pledge, security
interest or other lien on the assets of the Company; 

     (g) To pay, collect, compromise,
litigate, arbitrate or otherwise adjust or settle any other claims or demands of
or against the Company or to hold such proceeds against the payment of
contingent liabilities; 

     (h) To sue and be sued, defend
and participate in administrative or other proceedings in its name; 

     (i) To appoint employees,
officers, agents, consultants and representatives of the Company, and define
their duties and fix their compensation; 

     (j) To indemnify any Person in
accordance with the Act and this Agreement; 

     (k) To cease its activities and
cancel its Articles of Organization; and 

     (l) To make, execute, acknowledge
and file any documents or instruments necessary, convenient or incidental to the
accomplishment of the purpose of the Company. 

     2.7 Certificates. The
officers of the Company and such other Persons as may be designated from time to
time by the Board of Managers are hereby designated as authorized persons,
within the meaning of the Act, to execute, deliver and file any amendments or
restatements of the Articles of Organization or any certificate of cancellation
of the Articles of Organization and any other certificates and any amendments or
restatements thereof necessary for the Company to qualify to do business in a
jurisdiction in which the Company may wish to conduct business. 

12 




     2.8 Principal Office. The
principal executive office of the Company shall be located at such place as the
Board of Managers shall establish, and the Board may from time to time change
the location of the principal executive office of the Company to any other place
within or without the State of California. The Board may establish and maintain
such additional offices and places of business of the Company, either within or
without the State of California, as it deems appropriate. The records required
to be maintained by the Act shall be maintained at one of the Company’s
principal offices, except as required by the Act. 

3. MEMBERSHIP, CAPITAL CONTRIBUTIONS AND
UNITS 

     3.1 Members. The Members
of the Company shall be listed on Exhibit A, as from time to time amended
and supplemented in accordance with this Agreement. Exhibit A shall be
amended from time to time so that it sets forth the then current list of
Members, the total amount of Capital Contributions made by each such Member, the
number of Units held by such Member, and the Member’s Percentage Interest. The
Board of Managers shall have the right to cause Exhibit A to be updated
from time to time as necessary to reflect accurately the information required to
be included therein by virtue of any developments after the date hereof. Any
revision to Exhibit A made in accordance with this Section 3.1,
Section 3.3, Section 3.4 or Section 3.6, or in connection
with any Transfer of Units permitted under this Agreement, shall not be deemed
an amendment to this Agreement for purposes of Article 17 and no action
of any Member shall be required to amend or update Exhibit A hereto. Any
reference in this Agreement to Exhibit A shall be deemed to be a
reference to Exhibit A as revised and in effect from time to time. 

     3.2 Member Interests and
Units. The Interests of the Members of the Company shall be divided into
units of one class (“Units”). 

     3.3 Additional Members and
Units. Subject to Sections 3.4(b) and 3.4(c), (i) no Member
shall be required to make any additional Capital Contributions to the Company
and (ii) no Member shall be permitted to make any additional Capital
Contributions to the Company without the consent of the Board of Managers.
Subject to Section 3.6 hereof, the Board of Managers may issue Units and
admit Persons as Members in exchange for such contributions to capital
(including commitments to make contributions to capital) or such other
consideration (including past or future services) and on such terms and
conditions (including in the case of Units issued to employees and consultants
such vesting and forfeiture provisions) as the Board determines to be
appropriate. If additional Units are subsequently issued by the Company, the
Capital Account (if any) with respect to those Units as of the date of issuance
and the Capital Contributions (if any) that shall be deemed to be made by the
Member receiving such Units as of the date of issuance shall be set forth in the
agreement pursuant to which the additional Units are issued. Promptly following
the issuance of Units, the Board shall cause the books and records of the
Company, and an amended Exhibit A hereto, to reflect the number of Units
issued, any Members or additional Members holding such Units, the revised
Percentage Interests of each Member and, in the case of Units issued other than
in connection with the performance of services, the Capital Contribution per
Unit, and the Company shall promptly provide the amended Exhibit A to
each Member. Upon the receipt of approvals as required under this Agreement,
execution of this Agreement or a counterpart of this Agreement, together with
any other documents or instruments required by the Board in connection
therewith, and the making of the Capital Contribution (if any) specified to be made at
such time, a Person shall be admitted to the Company as a Member of the Company.

13 




     3.4 Capital Contributions.


     (a) Each Member’s Capital
Contribution, if any, whether in cash or in-kind, and the number of Units issued
to such Member shall be as set forth in Exhibit A. Any Member making an
in-kind Capital Contribution agrees from time to time to do such further acts
and execute such further documents as the Board may direct to perfect the
Company’s interest in such in-kind Capital Contribution. None of the Members or
their Affiliates shall be obligated to make any loan or advance to the Company.


     (b) GQ Holdco shall have the
right, which it may elect to exercise in its sole discretion, to make a single
Capital Contribution to the Company during the period from the Effective Date to
the date that is nine (9) months following the Effective Date (“Optional
Contribution Period”), in an amount determined in GQ Holdco’s sole
discretion (the “Top Up Amount”), but that shall be no less than
fifteen million U.S. Dollars (US$15,000,000.00) and no more than twenty five
million U.S. Dollars (US$25,000,000.00), with each such threshold being reduced
by fifty percent (50%) of the amount of any proceeds received by the Company
from any debt financing transaction that is not specifically contemplated by
this Agreement (the “GQ Top Up Right”), and Gauss shall be
required to make a Capital Contribution in an amount equal to the Top Up Amount
(“Mandatory Top Up Contribution”) on the same date as GQ Holdco makes its
Capital Contribution. In the event that GQ Holdco elects to exercise the GQ Top
Up Right, GQ Holdco shall give written notice thereof to Gauss at least twenty
(20) Business Days prior to the proposed funding date (the “Top Up
Notice”), and the delivery of such notice shall constitute an irrevocable
undertaking by GQ Holdco to make its Capital Contribution as set forth therein.
The Top Up Notice shall specify the Top Up Amount and the proposed funding date
(which must be a date within the Optional Contribution Period). GQ Holdco and
Gauss shall make their Capital Contributions pursuant to this Section
3.4(b) on the proposed funding date set forth in the Top Up Notice. 

     (c) In the event that GQ Holdco
does not exercise the GQ Top Up Right, then Gauss shall be obligated, and hereby
agrees, to make a Capital Contribution to the Company in an amount of forty
million U.S. Dollars (US$40,000,000.00), with such amount being reduced on a
dollar for dollar basis in the amount of any proceeds received by the Company
from any debt financing transaction that is not specifically contemplated by
this Agreement (“Mandatory Alternative Contribution”), within
twenty (20) Business Days after the earliest to occur of (i) the expiration of
the Optional Contribution Period, (ii) the date on which GQ Holdco delivers a
written notice to Gauss and the Company that it fully and irrevocably waives its
right to exercise the GQ Top Up Right and (iii) GQ Holdco’s failure to
contribute the Top Up Amount in accordance with Section 3.4(b). 

     (d) The Company shall issue Units
in exchange for the Capital Contributions made by GQ Holdco and Gauss pursuant
to Section 3.4(b) or by Gauss pursuant to Section 3.4(c), and,
notwithstanding anything to the contrary in this Agreement, such Units shall be
issued at a price per Unit equal to the Original Unit Price. 

14 




     (e) Notwithstanding anything to
the contrary in this Agreement, for all purposes under this Section 3.4,
if, during the Optional Contribution Period, Golden Queen has filed a
registration statement with the SEC in respect of the Rights Offering (as
defined in the Transaction Agreement) and, prior to the expiration of the
Optional Contribution Period, the SEC has notified Golden Queen that such
registration statement will be subject to a “full review”, then the Optional
Contribution Period shall end on the date that is the one (1) year anniversary
of the Effective Date. 

     3.5 Interest Payments. No
interest shall be paid to any Member with respect to such Member’s Capital
Contributions or Capital Account. All Capital Contributions shall be denominated
and payable in U.S. dollars. 

     3.6 Additional Capital.


     (a) The Board of Managers shall
not seek additional Capital Contributions from Members or issue additional Units
to non-Members except in compliance with the provisions of Section 3.4
and this Section 3.6. This Section 3.6 shall not in any way
restrict the Board of Managers’ ability to borrow money or seek financing for
Company activities by means other than seeking additional Capital Contributions.


     (b) In the event the Board of
Managers determines to raise capital, it shall issue Units (such Units to be
issued by the Company, collectively, the “New Units”), with the Board of
Managers giving each Member written notice of such proposed issuance at least
ten (10) days prior to the proposed issuance date (an “Issuance Notice”).
The Issuance Notice shall specify the aggregate amount of capital proposed to be
raised (the “Capital Raise Amount”), the proposed price at which the New
Units are proposed to be issued (subject to Section 3.6(c)) and the other
material terms and conditions of the issuance, including the proposed closing
date. Each Member shall be entitled to subscribe, on the terms and conditions
specified in the Issuance Notice, for its pro rata portion (in accordance
with its Percentage Interest) of the Capital Raise Amount. A Member may exercise
its right by delivering written notice of its election to subscribe for a
portion of the Capital Raise Amount to the Board of Managers within ten (10)
days after receipt of the Issuance Notice. If any Member fails to exercise its
right under this Section 3.6(b), or elects to exercise such rights with
respect to less than such Member’s pro rata share (the difference between
such Member’s pro rata share of the Capital Raise Amount and the portion
of the Capital Raise Amount for which such Member exercised its preemptive
rights, the “Excess Amount”), the other Member, if it elected to exercise
its rights with respect to its full pro rata share shall be entitled to
subscribe for the Excess Amount (the date on which the other Member delivers
notice of its election to subscribe for the Excess Amount, the “Election
Date”). This Section 3.6(b) shall not apply to any Capital
Contributions and issuances of Units pursuant to, and in accordance with,
Sections 3.4(b), 3.4(c) and 3.4(d). 

     (c) If any Member fails to
exercise its right under Section 3.6(b), or elects to exercise such right with
respect to less than such Member’s pro rata share, and the other Member
elects to subscribe for an additional portion of the Capital Raise Amount, then,
notwithstanding anything to the contrary in this Agreement, the New Units shall
be issued at the price per New Unit set forth in Section 3.6(d) (the
“Fair Market Value”). 

15 




     (d) The Fair Market Value of a
New Unit for purposes of Section 3.6(c) shall be determined as follows:


     (i) the
Fair Market Value of such New Unit shall be an amount agreed in writing by the
good faith determination of the Board of Managers within ten (10) days after the
Election Date; or 

     (ii) if
the Board of Managers, after good faith efforts, does not reach an agreement
pursuant to clause (i) above, GQ Holdco and Gauss shall, within fifteen
(15) days following the Election Date, designate a qualified independent mining
valuator of recognized national standing (an “Appraiser”) acceptable to
both GQ Holdco and Gauss to determine the Fair Market Value. If GQ Holdco and
Gauss cannot agree on the identity of the Appraiser within the fifteen (15) day
determination period, each of GQ Holdco and Gauss shall, within three (3) days,
provide a list of three (3) such qualified independent mining valuators, and
they shall each alternately strike (with the person striking first being
randomly drawn) names from the combined list until only one (1) name remains;
the remaining name shall be the Appraiser. The Appraiser shall determine the
Fair Market Value of the New Units, which shall be the amount that would be
distributed in respect of such Units if (1) all of the Units were sold for cash
in an arm’s-length transaction qualifying as a change of control with a single
willing unaffiliated third party, with no party to such sale transaction having
any compulsion to buy or sell in the context of such sale transaction, but
without applying any discount for minority status, control premium, or discount
for lack of liquidity, and (2) the proceeds of such sale had been distributed by
the Company in complete liquidation pursuant to the rights and preferences set
forth in Section 5.2. The Appraiser’s final determination of the Fair
Market Value shall be (i) in writing and signed by the Appraiser, and (ii)
furnished to the Board of Managers and the Members as soon as practicable after
such matter has been referred to such Appraiser, which shall not be more than
fifteen (15) days after his or her appointment. The Appraiser’s final
determination shall be conclusive and binding upon the Board of Managers and the
Members on the date of delivery of such written determination and shall not be
subject to collateral attack for any reason (other than fraud or manifest
error). The Company shall provide the Appraiser reasonable access to members of
management of the Company and to the books and records of the Company so as to
allow the Appraiser to conduct due diligence examinations in scope and duration
as are customary in valuations of this kind. The fees and expenses of the
Appraiser shall be borne by the Company. In no event shall the price referred to
in this Section 3.6(d)(ii) be zero (-0-) or less than zero (-0-). 

4. CAPITAL ACCOUNTS 

     4.1 Allocations. The
Profit and Loss of the Company and any items of income, gain, deduction or loss
that are specially allocated in any Fiscal Year or other fiscal period shall be
allocated among the Members as provided in Exhibit B. 

16 




5. DISTRIBUTIONS 

     5.1 Board of Managers
Determination.

     5.1.1 The Members shall be
entitled to receive distributions, including distributions in connection with
the liquidation, dissolution or winding up of the affairs of the Company, when
and as determined by the Board of Managers, out of funds of the Company legally
available therefor, payable on such payment dates to Members on such record date
as shall be determined by the Board of Managers. All determinations made
pursuant to this Article 5 shall be made by the Board of Managers in its
sole discretion. To the extent that the Board of Managers determines that any
distributions shall be made to the Members, such distributions shall be made in
accordance with the provisions of this Article 5. Notwithstanding any
provision to the contrary contained in this Agreement, the Company shall make a
distribution in an aggregate amount of ten million U.S. Dollars
(US$10,000,000.00) to the Members on the date of this Agreement.

     5.1.2 Notwithstanding Section
5.1.1, the Company shall make the following distributions to cover Member
income tax liabilities: 

     (a) The
Company shall, to the extent of Available Cash, make distributions of money to
all of the Members, pro rata in accordance with each Member’s Percentage
Interest, in amounts that the Board of Managers considers reasonably sufficient
to enable each Member to pay the federal and state income taxes on the income
and gain (net of any cumulative tax benefits produced for the Members by the
Company’s losses, deductions, and credits) that passes through the Company to
that Member under the applicable provisions of the Code (the “Taxes on
Pass-Through Income”). 

     (b) The
Company shall, to the extent practicable, make the distributions required above
in a timely manner to enable each Member to timely pay its underlying tax
liability, as and when required by applicable law. 

     (c) All
distributions to a Member made pursuant to this Section 5.1.2 shall be
treated for all purposes under this Agreement as advances on distributions
pursuant to Section 5.1.1 and shall reduce the amount of the next
succeeding distribution or distributions that would otherwise have been
distributed to such Member pursuant to Section 5.1.1. 

     5.2 Distributions. All
Distributions from the Company to its Members shall be made pro rata in
accordance with each Member’s Percentage Interest. 

     5.3 No Violation.
Notwithstanding any provision to the contrary contained in this Agreement, the
Company, and the Board of Managers on behalf of the Company, shall not make a
Distribution to any Member on account of such Member’s Interest in the Company
if such Distribution would violate the Act, or other applicable law or any
credit facility to which the Company is party to from time to time. 

17 




     5.4 Withholdings. The
Board of Managers is authorized to withhold from Distributions to Members, or
with respect to allocations to Members, and in each case to pay over to the appropriate federal, state, local or foreign
government any amounts required by law to be so withheld. All amounts withheld
pursuant to the Code or any federal, state, local or foreign tax law with
respect to any payment, distribution or allocation to the Company shall be
treated as amounts paid to the Company and each Member shall be treated as
having received a distribution pursuant to Section 5.2 hereof equal to
the portion of the withholding tax allocable to such Member, as determined by
the Board of Managers. Any taxes withheld on a payment to the Company or a
payment by the Company to a Member pursuant to this Section 5.4 shall be
treated as if distributed to the relevant Member to the extent that an amount
equal to such withheld taxes would then be distributable to such Member, and, to
the extent in excess of such distributable amounts, as a demand loan payable by
the Member to the Company with interest at the prime rate in effect from time to
time plus two percent (2%), compounded annually. The Board of Managers may, in
its sole discretion, either demand payment of the principal and accrued interest
on such demand loan at any time, and enforce payment thereof by legal process,
or withhold from one or more distributions to a Member amounts sufficient to
satisfy such Member’s obligations under any demand loan payable to the Company.
In the event that the Company receives a refund of taxes previously withheld by
a third party from one (1) or more payments to the Company, the economic benefit
of such refund shall be apportioned among the Members in a manner reasonably
determined by the Board of Managers to offset the prior operation of this
Section 5.4 in respect of such withheld taxes. Promptly upon request,
each Member shall provide the Company with any information related to such
Member that is necessary (i) to allow the Company to comply with any tax
reporting, tax withholding, or tax payment obligations of the Company or (ii) to
establish the Company’s legal entitlement to an exemption from, or reduction of,
withholding tax, including U.S. federal withholding tax under Sections 1471 and
1472 of the Code. As a security for any withholding tax or other liability or
obligation to which the Company may be subject as a result of any act or status
of any Member, or to which the Company may become subject with respect to the
Interest of any Member, the Company shall have (and each Member hereby grants to
the Company) a security interest in all distributable assets of the Company
distributable to such Member to the extent of the amount of such withholding tax
or other liability or obligation. Neither the Company nor the Board of Managers
shall be liable for any excess taxes withheld in respect of any Member’s
Interest, and, in the event of over-withholding, a Member’s sole recourse shall
be to apply for a refund from the appropriate governmental authority. If the
Company, the Board of Managers, the TMP, or any of their respective Affiliates,
or any of their respective officers, directors, employees, managers, members
and, as determined by the Board of Managers in its sole and absolute discretion,
consultants or agents (the “Withholding Indemnified Parties” and each a
“Withholding Indemnified Party”), becomes liable as a result of failure
to withhold and remit taxes in respect of any Member, then, in addition to, and
without limiting, any indemnities for which such Member may be liable under this
Agreement, unless otherwise agreed by the Board of Managers in writing, such
Member shall, to the fullest extent permitted by law, indemnify and hold
harmless the Withholding Indemnified Parties, in respect of all taxes, including
interest and penalties, and any expenses incurred in any examination,
determination, resolution and payment of such liability, except with respect to
any penalties or expenses which arise as a result of any act or omission with
respect to which a court of competent jurisdiction has issued a final,
non-appealable judgment that such applicable Withholding Indemnified Party was
grossly negligent or engaged in willful misconduct or fraud. The provisions
contained in this Section 5.4 shall survive the termination of the
Company and the Transfer of any Interest. 

18 




     5.5 Property Distributions and
Installment Sales. The Board of Managers is authorized, in its sole
discretion, to make distributions to the Members in the form of assets received
or otherwise held by the Company; provided, however, that, if any
assets of the Company shall be distributed in kind pursuant to this Article 5,
such assets shall be distributed to the Members entitled thereto in the same
proportions as the Members would have been entitled to cash Distributions
pursuant to Section 5.2. The amount by which the fair market value of any
property to be distributed in kind to the Members exceeds or is less than the
then prevailing Asset Value of such property shall, to the extent not otherwise
recognized by the Company, be taken into account in determining Profit and Loss
and determining the Capital Accounts of the Members as if such property had been
sold at its fair market value immediately prior to such Distribution. If any
assets are sold in transactions in which, by reason of Section 453 of the Code,
gain is realized but not recognized, such gain shall be taken into account when
realized in computing gain or loss of the Company for purposes of allocation of
Profit or Loss under this Article 5 and, if such sales shall involve
substantially all the assets of the Company, the Company shall be deemed to have
been dissolved and terminated notwithstanding any election by the Members to
continue the Company for purposes of collecting the proceeds of such sales. 

6. STATUS, RIGHTS AND POWERS OF MEMBERS
AND 
CERTAIN MEMBER AGREEMENTS 

     6.1 Limited Liability.
Except as otherwise provided by the Act, the debts, obligations and liabilities
of the Company, whether arising in contract, tort or otherwise, shall be solely
the debts, expenses, obligations and liabilities of the Company, and no Member
or Indemnified Person shall be obligated personally for any such debt, expense,
obligation or liability of the Company solely by reason of being a Member or
Indemnified Person. All Persons dealing with the Company shall have recourse
solely to the assets of the Company for the payment of the debts, obligations or
liabilities of the Company. In no event shall any Member be required to make up
any deficit balance in such Member’s Capital Account upon the liquidation of
such Member’s Interest or otherwise. 

     6.2 Return of Distributions of
Capital. Except as otherwise expressly required by applicable law, a Member,
in such capacity, shall have no liability for obligations or liabilities of the
Company in excess of (a) the amount of such Member’s Capital Contributions, (b)
such Member’s share of any assets and undistributed profits of the Company and
(c) to the extent required by applicable law, the amount of any Distributions
wrongfully distributed to such Member. Except as required by applicable law, no
Member shall be obligated by this Agreement to return any Distribution to the
Company or pay the amount of any Distribution for the account of the Company or
to any creditor of the Company; provided, however, that if any
court of competent jurisdiction holds that, notwithstanding this Agreement, any
Member is obligated to return or pay any part of any Distribution, such
obligation shall bind such Member alone and not any other Member or any Manager.
The provisions of the immediately preceding sentence are solely for the benefit
of the Members and shall not be construed as benefiting any third party. The
amount of any Distribution returned to the Company by a Member or paid by a
Member for the account of the Company or to a creditor of the Company shall be
added to the account or accounts from which it was subtracted when it was
distributed to such Member. 

19 




     6.3 No Management or
Control. Except as expressly provided in this Agreement, no Member shall
take part in or interfere in any manner with the management of the business and
affairs of the Company or have any right or authority to act for or bind the
Company. 

     6.4 Specific Limitations.
No Member shall have the right or power to: (a) withdraw or reduce such Member’s
Capital Contribution except as a result of the dissolution of the Company or as
otherwise provided by applicable law or in this Agreement; (b) make voluntary
Capital Contributions, except as expressly set forth in this Agreement, or to
contribute any property to the Company other than cash; (c) bring an action for
partition against the Company or any Company assets; (d) cause the termination
and dissolution of the Company, except as expressly set forth in this Agreement;
or (e) upon the Distribution of its Capital Contribution require that property
other than cash be distributed in return for its Capital Contribution. Each
Member hereby irrevocably waives any such rights. 

     6.5 Member Voting. Except
as otherwise set forth in this Agreement, all powers of the Members shall be
exercised in accordance with Section 7.3 by the appointment of the Board
of Managers. Any action required or permitted to be taken at a meeting of the
Members may be taken without a meeting, without prior notice and without a vote,
only if a consent or consents signed in writing, setting forth the action so
taken, are signed by the requisite Members required by this Agreement, and such
writing or writings shall be filed with the records of the meetings of the
Members. 

     6.6 Contracts with Managers or
their Affiliates. No contract or transaction between the Company and a
Manager or its Affiliate or between the Company and any other entity in which a
Manager or its Affiliate has a material financial interest, shall be void or
voidable solely for this reason, or solely because the Manager is present at or
participates in the Board of Managers meeting at which the contract or
transaction is authorized or votes to authorize such contract or transaction,
if: (i) the material facts of such Manager’s material financial interest are
disclosed to the Board of Managers; and (ii) the contract or transaction is
otherwise permitted, authorized or approved in accordance with this Agreement.
The presence of the interested Manager may be counted in determining both the
presence of a quorum at any such meeting at which the contract or transaction is
authorized and the vote with respect thereto. 

     6.7 Member Compensation;
Expenses. Except as otherwise provided in a written agreement approved by
the Board of Managers, no Member shall receive any salary, fee, or draw for
services rendered to or on behalf of the Company. Except as otherwise approved,
permitted or contemplated by or pursuant to a policy approved by the Board of
Managers, no Member shall be reimbursed for any expenses incurred by such Member
on behalf of the Company. 

7. DESIGNATION, RIGHTS, AUTHORITIES, POWERS,
RESPONSIBILITIES 
AND DUTIES OF THE BOARD OF MANAGERS 

     7.1 Board of Managers. The
business of the Company shall be managed by the Board of Managers. The Board
shall initially be the individuals set forth in Section 7.2. Thereafter,
the individuals constituting the Board shall be designated by the Members in
accordance with the provisions of Section 7.3. Decisions of the Board
shall be decisions of the Company’s “manager” for all purposes of the Act and
shall be carried out by officers or agents of the Company designated by the Board in the resolution in question
or in one or more standing resolutions or with the power and authority to do so
under Article 8. A decision of the Board may be amended, modified or
repealed in the same manner in which it was adopted or in accordance with the
procedures set forth in this Article 7 as then in effect, but no such amendment,
modification or repeal shall affect any Person who has been furnished a copy of
the original resolution, certified by a duly authorized officer of the Company,
until such Person has been notified in writing of such amendment, modification
or repeal. 

20 




     7.2 Initial Managers. The
initial Managers of the Company comprising the initial Board of Managers, who
shall serve for such terms and in such manner as prescribed by this Article
7, are the following Persons: 


	Manager Name 	Address 	Designated By 
	Brian Friedman 

	c/o Leucadia National Corporation
      
520 Madison Avenue, 10th Floor 
New York, NY 10022 	Gauss 


	H. Jimmy Hallac 

	c/o Leucadia National Corporation
      
520 Madison Avenue, 10th Floor 
New York, NY 10022 	Gauss 


	Jonathan Clay 

	c/o East Hill Management Company
      
10 Memorial Boulevard, Suite 902 
Providence, RI 02903 	Gauss 


	H. Lutz Klingmann 


	c/o Golden Queen Mining Co. Ltd.
      
6411 Imperial Avenue 
West Vancouver, British Columbia 
Canada
      V7W 2J5 	GQ Holdco 



	Andrée St-Germain 


	c/o Golden Queen Mining Co. Ltd.
      
6411 Imperial Avenue 
West Vancouver, British Columbia 
Canada
      V7W 2J5 	GQ Holdco 



	Thomas M. Clay 

	c/o East Hill Management Company
      
10 Memorial Boulevard, Suite 902 
Providence, RI 02903 	GQ Holdco 





     7.3 Number and Designation
Rights.

     7.3.1 The Board of Managers shall
initially consist of six (6) Managers. Gauss shall have the right to designate
three (3) Managers. GQ Holdco shall have the right to designate three (3)
Managers; provided, however, that as long as the Clay Family
beneficially owns equity securities representing at least twenty five percent
(25%) of the voting power of Golden Queen, at least one (1) Manager to be
designated by GQ Holdco shall be designated by Auvergne. 

21 




     7.3.2 If GQ Holdco does not
exercise the GQ Top Up Right pursuant to Section 3.4(b) and Gauss
completes the Mandatory Alternative Contribution in accordance with Section
3.4(c), (i) the Board of Managers shall be reduced to five (5) Managers,
(ii) GQ Holdco shall no longer have the right to appoint three (3) Managers but
shall have the right to appoint only two (2) Managers and (iii) GQ Holdco shall
promptly send a written notice to the Board of Managers and to Gauss stating the
name of the Manager to be removed from the Board of Managers (which, for the
avoidance of doubt, shall be a Manager originally designated by GQ Holdco), and,
upon receipt of such notice, such Manager shall be deemed to have resigned from
the Board of Managers; provided, however, that as long as the Clay
Family beneficially owns equity securities representing at least twenty five
percent (25%) of the voting power of Golden Queen, at least one (1) Manager to
be designated by GQ Holdco shall be designated by Auvergne; provided,
further, that, in the event GQ Holdco does not promptly deliver such
written notice, then all three (3) Managers designated by GQ Holdco shall be
deemed to have resigned without prejudice to GQ Holdco’s right to appoint two
(2) Managers. 

     7.3.3 Other than with respect to
the initial Managers set forth in Section 7.2, if it is necessary
pursuant to this Article 7 to appoint replacement Managers, each Member
qualified to so designate one or more Manager(s) pursuant to this Section 7.3
shall designate its Manager(s) by delivering to the Company a written statement
designating its Manager(s) and setting forth the respective business address and
telephone number of each such Manager. The Members, by signing this Agreement,
hereby agree to the designation of the Persons identified above in Section
7.2 hereto as Managers until their successors are designated in accordance
with this Article 7, each such Manager being deemed designated by the
Member set forth opposite such Manager indicated above. A Manager need not be a
Member. 

     7.4 Voting and Act of the
Board; Action without a Meeting.

     7.4.1 Unless otherwise required
by the Act or this Agreement, (i) each Manager shall have one vote and (ii)
except with respect to the actions requiring a Manager Supermajority pursuant to
Section 7.4.2, the act of a majority of the Managers present at a meeting
at which a quorum is present shall be deemed to constitute the act of the Board.
Any action required or permitted to be taken at a meeting of the Board may be
taken without a meeting, without prior notice and without a vote, if a consent
or consents signed in writing, setting forth the action so taken, are signed by
all the Managers, and such writing or writings shall be filed with the records
of the meetings of the Board. Such consent shall be treated for all purposes as
the act of the Board. 

     7.4.2 The Company shall not, and
neither the officers nor any Manager shall cause the Company to, take any of the
following actions without first having obtained the consent of a Manager
Supermajority: 

     (a) appointing or hiring of the
Chief Executive Officer or the Chief Financial Officer, other than the initial
Chief Executive Officer and Chief Financial Officer pursuant to Section
8.1.2; provided, that the Board of Managers may remove or fire any
officer of the Company with the consent of a majority of the Board of Managers
in accordance with Section 7.4.1 and Section 8.9; 

22 




     (b) a decision to proceed with
construction based on any future Feasibility Study for any proposed project with
a cost estimate of more than twenty million U.S. Dollars (US$20,000,000.00);


     (c) selling, exchanging,
transferring, leasing, disposing, surrendering or abandoning all or
substantially all of the assets of the Company; 

     (d) materially changing the
nature or purpose of the Company’s business; 

     (e) entering into any material
transactions with any of the Members or their respective Affiliates, other than
(i) the Expense Reimbursement Letter, (ii) the issuance of Units to Members in
compliance with this Agreement or (iii) transactions entered into on an arm’s
length basis, with the terms and conditions thereof disclosed to the Board and
the other Member prior to the commencement date of any such transaction;
provided, that any such transaction with a Member must be on a basis that
is at least as favorable to the Company as such transaction reasonably available
from any third party or an existing provider; 

     (f) increasing or decreasing the
number of members of the Board of Managers, except as otherwise provided by this
Agreement; 

     (g) amending or modifying the
Articles of Organization or this Agreement; and 

     (h) approving any voluntary
liquidation, dissolution, recapitalization, reorganization or bankruptcy. 

     7.5 Tenure. Except as
otherwise provided by law or by this Agreement, each Manager shall remain in
office until such Manager dies, resigns, or is removed by the Person who
designated such Manager. 

     7.6 Resignation. Any
Manager may resign at any time. Such resignation shall be made in writing and
shall take effect at the time specified therein or, if no time be specified then
at the time of its receipt by the other Managers of the Company;
provided, that, if the Chief Executive Officer is also a Manager, in the
event the Chief Executive Officer is removed from such office for any or no
reason, the Chief Executive Officer shall automatically cease to be a Manager
effective upon removal from such office. The acceptance of a resignation shall
not be necessary to make it effective, unless expressly so provided in the
resignation. 

     7.7 Removal. A Manager may
be replaced or removed at any time, with or without cause, only by the Person
who designated such Manager (unless otherwise expressly set forth herein). 

     7.8 Vacancies. Any vacancy
occurring on the Board of Managers shall be filled by the Member designating
such Manager having the right to elect or appoint such Manager. The Board shall
have and may exercise all their powers notwithstanding the existence of one or
more vacancies in their number, subject to any requirements of law or of this
Agreement as to the number of Managers required for a quorum or for any vote or
other action; provided, however, that the Board may not take any
action without first giving a Member able to designate a Manager to fill a
vacancy at least 48 hours to fill such vacancy. 

23 




     7.9 Meetings. Regular
meetings of the Board of Managers shall be held from time to time as determined
by the Board of Managers. Special meetings of the Board shall be held upon the
call of the Chairman of the Board, the Chief Executive Officer or on the written
request of any Manager delivered to the other Managers. Board meetings shall be
held at the principal office of the Company or at such other place, either
within or without the State of California, as shall be designated by the person
calling the meeting and stated in the notice of the meeting. Managers may
participate in a Board of Managers meeting by means of video or audio
conferencing or similar communications equipment whereby all Managers
participating in the meeting can hear each other. 

     7.10 Notice. Notice of
each meeting of the Board of Managers, in writing or by electronic mail, stating
the place, day and hour of the meeting, shall be given to each Manager at least
48 hours before the time at which the meeting is to be held. The notice or
waiver of notice of any special or regular meeting of the Board of Managers does
not need to specify the business to be transacted or the purpose of the meeting.


     7.11 Waiver. Whenever any
notice is required to be given to a Manager under the provisions of this
Agreement, a waiver thereof in writing signed by the Manager, whether before or
after the time stated therein, shall be deemed equivalent to the giving of such
notice. Attendance of a Manager at any meeting of the Board of Managers shall
constitute waiver of notice of such meeting by the Manager, except where the
Manager attends a meeting for the express purpose of stating its objection to
the transaction of any business because the meeting is not lawfully called or
convened. 

     7.12 Quorum. The presence
at a meeting of a majority of the members of the Board designated by each of
Gauss and GQ Holdco in accordance with Section 7.3 shall constitute a
quorum necessary for the transaction of business at any regular or special
meeting of the Board of Managers; provided, that, if GQ Holdco only has
the right to designate two (2) Managers in accordance with Section 7.3.2,
the presence of both of such Managers shall be required. If less than a quorum
is present, the meeting shall be adjourned from time to time until a quorum
shall be present. 

     7.13 Compensation.
Managers shall serve without compensation from the Company but shall be entitled
to reimbursement for actual expenses incurred in attending meetings of the Board
or in connection with other business of the Company. 

     7.14 Authority of Board of
Managers. Subject to Section 6.5, the Board of Managers shall have
the exclusive power and authority to manage the business and affairs of the
Company and to make all decisions with respect thereto. Except as otherwise
expressly provided in this Agreement, the Board or Persons designated by the
Board, including officers and agents appointed by the Board, shall be the only
Persons authorized to execute documents which shall be binding on the Company.
To the fullest extent permitted by California law, but subject to any specific
provisions hereof granting rights to Members, the Board shall have the power to
perform any acts, statutory or otherwise, with respect to the Company or this
Agreement, which would otherwise be possessed by the Members under California
law, and the Members shall have no power whatsoever with respect to the
management of the business and affairs of the Company. All decisions and other
matters concerning the computation and allocation of items of income, gain, loss, deduction, and credit among the Members, and
accounting procedures not specifically and expressly provided for by the terms
of this Agreement, shall be determined by the Board of Managers. Any
determination made pursuant to this Section 7.14 by the Board of Managers
shall be conclusive and binding on all Members. The power and authority granted
to the Board hereunder shall include all those necessary, convenient or
incidental for the accomplishment of the purposes of the Company. 

24 




     7.15 Reliance by Third
Parties. Any person or entity dealing with the Company or the Members may
rely upon a certificate signed by a Manager as to: (a) the identity of the
Members, (b) the existence or non-existence of any fact or facts which
constitute a condition precedent to acts by Members or are in any other manner
germane to the affairs of the Company, (c) the Persons which are authorized to
execute and deliver any instrument or document of or on behalf of the Company,
(d) the authorization of any action by or on behalf of the Company by the Board
or any officer or agent acting on behalf of the Company or (e) any act or
failure to act by the Company or as to any other matter whatsoever involving the
Company or the Members. 

8. DESIGNATION, RIGHTS, AUTHORITIES, POWERS,
RESPONSIBILITIES 
AND DUTIES OF OFFICERS AND AGENTS 

     8.1 Officers, Agents.

     8.1.1 Subject to Section
7.4.2, the Board of Managers by vote or resolution shall have the power to
appoint officers and agents to act for the Company with such titles, if any, as
the Board deems appropriate and to delegate to such officers or agents such of
the powers as are granted to the Board hereunder, including the power to execute
documents on behalf of the Company, as the Board may in its sole discretion
determine; provided, however, that no such delegation by the Board
shall cause the Persons constituting the Board of Managers to cease to be the
“managers” of the Company within the meaning of the Act. The officers so
appointed may include, among others, persons holding titles such as Chairman,
Chief Executive Officer, President, Chief Financial Officer, Executive Vice
President, Chief Accounting Officer, Vice President and Secretary. Unless the
authority of the officer in question is limited or specified in the document
appointing such officer or in such officer’s employment agreement or is
otherwise specified or limited by the Board, any officer so appointed shall have
the same authority to act for the Company as a corresponding officer of a
California corporation would have to act for a California corporation in the
absence of a specific delegation of authority and as more specifically set forth
in this Article 8; provided, however, that no officer shall
take any action for which the consent of the Board of Managers is required
pursuant to Section 8.11. 

     8.1.2 The initial officers of the
Company shall be as follows: 


	Name 	Title 
	H. Lutz Klingmann 	Chief Executive Officer 
	Andrée St. Germain 	Chief Financial Officer




25 




     8.2 Election. The officers
may be elected by the Board of Managers at their first meeting or at any other
time. At any time or from time to time the Board may delegate to any officer
their power to elect or appoint any other officer or any agents. Officers must
be natural persons. 

     8.3 Tenure. Each officer
shall hold office until its respective successor is chosen and qualified unless
a different period shall have been specified by the terms of its election or
appointment, or in each case until such officer sooner dies, resigns, is removed
or becomes disqualified. Each agent shall retain its authority at the pleasure
of the Board of Managers, or the officer by whom such agent was appointed or by
the officer who then holds agent appointive power. 

     8.4 Chairman of the Board of
Managers, Chief Executive Officer, President and Vice President. The
Chairman of the Board of Managers, if any, shall have such duties and powers as
shall be designated from time to time by the Board of Managers. The Chairman of
the Board of Managers shall be selected, approved and removed by the Board of
Managers. The initial Chairman of the Board of Managers shall be Thomas Clay.
Subject to the terms and conditions of this Agreement, the Chief Executive
Officer shall have direct and general charge and supervision of all business and
administrative operations of the Company and all other such duties,
responsibilities authority and privileges as are set forth in the Chief
Executive Officer’s employment agreement, if any, as amended from time to time,
in addition to those duties, responsibilities, authority and privileges as are
delegated to the Chief Executive Officer by the Board or that a Chief Executive
Officer of a California corporation would have in respect of a California
corporation in the absence of a specific delegation of such duties,
responsibility, authority and privileges. Subject to Section 8.11, the
Chief Executive Officer along with the Chief Financial Officer shall be
responsible for and have the authority and privileges necessary to ensure that
the Company (i) applies for and obtains all necessary permits, licenses and
approvals, (ii) complies with all applicable laws, (iii) timely pays
Governmental Fees, if any, required by applicable law in order to maintain the
unpatented lode mining claims and millsites included within the Properties and
(iv) pays all advance minimum royalties or other payments required to maintain
surface and mineral leases included in the Properties. The Chief Executive
Officer shall also perform such other duties that may be assigned by the Board
to the extent consistent with this Agreement and the Chief Executive Officer’s
employment agreement, if any, as amended from time to time. The President and
any Vice Presidents shall have duties as shall be designated from time to time
by the Chief Executive Officer or by the Board of Managers. 

     8.5 Chief Financial
Officer. Unless the Board of Managers otherwise specifies, the Chief
Financial Officer of the Company shall be in charge of its funds and valuable
papers, and shall have such other duties and powers, including as provided in
Section 8.4 or as may be designated from time to time by the Chief
Executive Officer or the Board of Managers. If no Chief Accounting Officer is
elected, the Chief Financial Officer shall, unless the Board of Managers
otherwise specifies, also have the duties and powers of the Chief Accounting
Officer. 

     8.6 Chief Accounting
Officer. If a Chief Accounting Officer is elected, the Chief Accounting
Officer shall, unless the Board of Managers or the Chief Executive Officer
otherwise specifies, be the chief accounting officer of the Company and be in
charge of its books of account and accounting records, and of its accounting
procedures. The Chief Accounting Officer shall have such other duties and powers as may be designated
from time to time by the Chief Executive Officer or the Board of Managers. 

26 




     8.7 Secretary and Assistant
Secretaries. The Secretary shall record all proceedings of the Members and
the Board of Managers in a book or series of books to be kept therefor and shall
file therein all actions by written consent of the Board. In the absence of the
Secretary from any meeting, an Assistant Secretary, or if no Assistant Secretary
is present, a temporary secretary chosen at the meeting, shall record the
proceedings thereof. The Secretary shall keep or cause to be kept records, which
shall contain the names and record addresses of all Members. The Secretary shall
have such other duties and powers as may from time to time be designated by the
Board of Managers, the Chair of the Board of Managers or the Chief Executive
Officer. Any Assistant Secretaries shall have such duties and powers as shall be
designated from time to time by the Board of Managers, the Chair of the Board of
Managers, the Chief Executive Officer or the Secretary. 

     8.8 Vacancies. If the
office of any officer becomes vacant, the Board of Managers may choose a
successor. Each such successor shall hold office for the unexpired term, and
until its successor is chosen and qualified or in each case until such successor
sooner dies, resigns, is removed or becomes disqualified. 

     8.9 Resignation and
Removal. The Board of Managers may at any time remove any officer either
with or without cause. The Board may at any time terminate or modify the
authority of any agent. Any officer may resign at any time by delivering its
resignation in writing to the Chair of the Board or the Chief Executive Officer
or to a meeting of the Board. Such resignation shall be effective upon receipt
unless specified to be effective at some other time, and without in either case
the necessity of its being accepted unless the resignation shall so state. 

     8.10 Compensation.
Officers shall receive such compensation as may be determined from time to time
by resolution of the Board of Managers or as otherwise provided in a written
employment agreement. 

     8.11 Standard of Care.
Each officer shall discharge such officer’s duties and conduct the business of
the Company in accordance with Section 14.5. 

     8.12 Programs and Budgets.
The officers of the Company shall conduct the Operations in accordance with the
Program and Budget. The initial Program and Budget of the Company is attached as
Exhibit C. 

     (a) Except as otherwise expressly
provided herein, the Operations shall be conducted, expenses shall be incurred,
and assets of the Company shall be acquired only pursuant to Programs and
Budgets adopted by the Board of Managers or as otherwise directed by the Board
of Managers from time to time. Every Program and Budget adopted pursuant to this
Agreement shall provide for the accrual of reasonably anticipated Environmental
Compliance expenses for all the Operations contemplated under such Program and
Budget, including preparation of, and funding for, an Environmental Compliance
plan and to satisfy financial assurance requirements for all Operations
consistent with the requirements of applicable laws or contractual obligations.


27 




     (b) The Chief Executive Officer
and the Chief Financial Officer shall prepare draft Programs and Budgets for
periods of one (1) year or such other period as directed by the Board of
Managers from time to time, and shall submit such Programs and Budgets to the
Board of Managers for review and consideration. All proposed Programs and
Budgets may include Exploration, Feasibility Study, Development, Mining and
Modification components for the Operations, or any combination thereof, and such
Programs and Budgets shall be reviewed and adopted by the Board of Managers.
During the period encompassed by any Program and Budget, and at least two (2)
months prior to its expiration, the Chief Executive Officer and the Chief
Financial Officer shall prepare a proposed Program and Budget for the succeeding
period and submit such Program and Budget to the Board of Managers for review
and consideration. 

     (c) If the Board of Managers
determines that a Program or Budget should include a Modification and the Board
of Managers approves a Feasibility Study, then such Program and Budget shall to
such extent be based on a Feasibility Study prepared by the officers of the
Company, Feasibility Contractors, or both, or prepared under the direction of
the Chief Executive Officer and audited by Feasibility Contractors, as
determined by the Board of Managers. Such Program and Budget, which includes a
Modification, shall be submitted for review and approval by the Board of
Managers within ninety (90) days following receipt by the Chief Executive
Officer of such Feasibility Study. 

     (d) The Chief Executive Officer
shall immediately notify the Board of Managers of any material departure from an
adopted Program and Budget. 

     (e) The Environmental Compliance
Fund shall be maintained by the Company in a separate, interest bearing cash
management account, which may include money market investments and money market
funds, and/or in longer term investments if directed by the Board of Managers.
The Environmental Compliance Fund shall be used solely to pay for Environmental
Compliance and Continuing Obligations, including the committing of such funds,
interests in property, insurance or bond policies, or other security to satisfy
applicable laws regarding financial assurance for the reclamation or restoration
of the Properties. 

     8.13 Certain Actions Requiring
Board of Manager Consent. Notwithstanding any delegation of the Board of
Managers’ authority to any officer pursuant to the foregoing provisions of this
Article 8 and notwithstanding any other provision of this Agreement or
any employment agreement between such officer and the Company, the power to take
the actions set forth in Section 7.4.2 and the following actions shall be
vested exclusively in the Board of Managers, unless the Board of Managers gives
its express written consent:

      (a) adopting or materially
changing Programs and Budgets; 

     (b) approving Feasibility
Studies; 

     (c) approving and entering into
any transaction outside of the ordinary and customary course of business; 

     (d) making unbudgeted capital
expenditures of five hundred thousand U.S. Dollars (US$500,000.00) or more in
any Fiscal Year; 

28 




     (e) approving and entering into
any agreement for the borrowing of money (whether in the public or private
markets) or obtaining credit (other than trade credit in the ordinary and
customary course of business); 

     (f) approving the distribution of
any cash available for distribution to the Members; 

     (g) issuing Units of the Company
to any Person other than the Members pursuant to the terms of this Agreement, or
for any amount other than the Original Unit Price; 

     (h) making unbudgeted
expenditures of five hundred thousand U.S. Dollars (US$500,000.00) or more in
any Fiscal Year that are not related directly to the development of the Soledad
Mountain Project, other than in the ordinary and customary course of business;


     (i) hiring, firing, promoting or
demoting the Chief Executive Officer or the Chief Financial Officer, or entering
into any employment or severance agreement with, or fixing the compensation of,
any executive officer; and

      (j) the disposal or sale of
material properties or assets (whether effected by merger, sale of assets, lease
or equity exchange or otherwise) of the Company other than in the ordinary and
customary course of business or as contemplated in the annual Budget approved by
the Board. 

     8.14 Emergencies.
Notwithstanding anything to the contrary in this Agreement, in the event of an
Emergency, the Chief Executive Officer shall promptly cause the Company to (a)
make all notifications required under applicable law to the appropriate
Governmental Entities, (b) implement Emergency response and mitigation measures
as are required by applicable law or are reasonably deemed to be advisable by
the Chief Executive Officer in his or her sole discretion to respond to or
mitigate the Emergency, (c) commence any required remediation, maintenance or
repair work necessary (i) for the assets and properties of the Company to
operate safely (or be restored to safe operation) and in compliance with
applicable law, (ii) for the Company to be in compliance with all applicable
laws and/or (iii) to otherwise mitigate damage resulting from the Emergency;
provided, that the Chief Executive Officer shall, as soon as practicable
(but in any event within 24 hours) after the occurrence of the event giving rise
to the Emergency, notify the Board of Managers of such Emergency and all actions
taken in response to such Emergency. The Chief Executive Officer’s notification
of the Board of Managers pursuant to the foregoing may be made by any method
deemed appropriate by the Chief Executive Officer under the circumstances. 

9. BOOKS, RECORDS, ACCOUNTING AND
REPORTS 

     9.1 Books and Records. The
books and records of the Company shall reflect all the Company’s transactions
and shall be appropriate and adequate for the Company’s business. The Company
shall maintain at its principal office or such other office as the Board of
Managers shall determine all of the following: 

     (a) a current list of the full
name and last known business or residential address of each Member and Manager;


29 




     (b) information regarding the
amount of cash and a description and statement of the agreed value of any other
property or services contributed by each Member and which each Member has agreed
to contribute in the future, and the date on which each Member became a Member
of the Company; 

     (c) a copy of the Articles of
Organization and this Agreement, including any amendments to either thereof,
together with executed copies of any powers of attorney pursuant to which the
Articles of Organization, this Agreement or any amendments have been executed;


     (d) copies of the Company’s
federal, state and local income tax or information returns and reports; 

     (e) the audited financial
statements of the Company; and 

     (f) the Company’s books and
records. 

     9.2 Delivery to Member,
Inspection; etc. Upon the request of any Member for any reason, the Board of
Managers shall allow the Member and its designated representatives or agents,
upon at least two (2) Business Days prior written notice to the Board of
Managers and during reasonable business hours, to examine all of the Company’s
books and records at the Member’s sole cost and expense. In addition, each
Member shall have the right to obtain from the Company such other information
regarding the Company’s affairs and financial condition as it requests. The
Company and the Board of Managers shall not impose restrictions on the rights of
the Members to obtain information, except for restrictions expressly set forth
in this Agreement. The rights and privileges set forth in this Section
9.2 shall not apply (a) to a Member whose Percentage Interest is less than
twenty percent (20%), and (b) to any assignee of a Member except to the extent
required by the Act. 

     9.3 Reports. 

     (a) In General. The Chief
Financial Officer of the Company shall be responsible for causing the
preparation of financial reports of the Company and the coordination of
financial matters of the Company with the Company’s accountants. 

     (b) Periodic and Financial
Reports. The Company shall prepare, at the expense of the Company, (i) any
information that may be reasonably requested by Gauss (on behalf of LUK Holdco)
to enable LUK and/or Gauss to comply on a timely basis with the accounting and
disclosure requirements of the SEC under the Exchange Act and applicable United
States securities laws in effect from time to time, which information will be
provided promptly upon request therefor and, in any event, within the timeframe
that reasonably enables LUK to timely make any filings thereunder, (ii) any
information that may be reasonably requested by GQ Holdco (on behalf of Golden
Queen) to enable Golden Queen to comply with the accounting and disclosure
requirements of the Toronto Stock Exchange and applicable Canadian Provincial
securities laws, and of the SEC under the Exchange Act and applicable United
States securities laws, in each case, in effect from time to time, which
information will be provided promptly upon request therefor and, in any event,
within the timeframe that reasonably enables Golden Queen to timely make any
filings thereunder and (iii) to the extent reasonably requested by Gauss,
financial statements of Gauss; provided, that, without the necessity of a
request, the Company shall maintain and provide to each Member whose
Percentage Interest is at least equal to twenty percent (20%), the financial
statements listed in clauses (i), (ii) and (iii) below and
supporting financial statement schedules, prepared, in each case, in accordance
with GAAP: 

30 




     (i) as
soon as practicable following the end of each Fiscal Year (and in any event not
later than twenty-one (21) calendar days after the end of such Fiscal Year), a
balance sheet of the Company as of the end of such Fiscal Year and the related
statements of operations, Members’ equity and changes therein, and cash flows
for such Fiscal Year, together with such supporting financial statement
schedules as are contained in LUK’s standard reporting package, in each case, to
the extent the Company was in existence, setting forth in comparative form the
corresponding figures for the immediately preceding Fiscal Year, and in each
case, reviewed by the Company’s independent accountants; 

     (ii) as
soon as practicable following the end of each Fiscal Year (and in any event not
later than fifty (50) calendar days after the end of such Fiscal Year),
financial statements of the Company as of the end of such Fiscal Year, with full
footnote disclosures appropriate for such financial statements, and, to the
extent the Company was in existence, setting forth in comparative form the
corresponding figures for the immediately preceding Fiscal Year, all of which
shall be audited and certified by the Company’s independent accountants; 

     (iii) as
soon as practicable following the end of each of the first three fiscal quarters
of each Fiscal Year (and in any event not later than fifteen (15) calendar days
after the end of such fiscal quarter), unaudited financial statements of the
Company as of the end of such fiscal quarter, together with such supporting
financial statement schedules as are contained in LUK’s standard reporting
package; provided, that such information with respect to the first two
(2) fiscal quarters immediately following the Effective Date shall be delivered
no later than twenty-five (25) calendar days after the end of such fiscal
quarters; 

     (iv) as
soon as reasonably practicable following the end of each of the first eleven
(11) fiscal months of each Fiscal Year (and in any event not later than twelve
(12) calendar days after the end of such fiscal month), unaudited financial
statements and management reports of the Company as of the end of such fiscal
month, together with such supporting financial statement schedules relating to
the Company’s operations as Gauss may request; and 

     (v) as
soon as practicable following any notice from MSHA of any claim, citation,
order, legal action or other event requiring disclaimer under the Exchange Act
or rules of the SEC, any and all information or reports requested by a Member in
order to comply with the Exchange Act or rules of the SEC with respect to such
MSHA action. 

     9.4 Filings. At the
Company’s expense the Board of Managers shall cause the income tax returns for
the Company to be prepared and timely filed with the appropriate authorities and
to have prepared and to furnish to each Member such information with respect to
the Company (including without limitation a Schedule setting
forth such Member’s distributive share of the Company’s income, gain, loss,
deduction and credit as determined for federal income tax purposes) as is
necessary to enable such Member to prepare such Member’s federal and state
income tax returns. The Board of Managers, at the Company’s expense, shall also
cause to be prepared and timely filed, with appropriate federal and state
regulatory and administrative authorities, all reports required to be filed by
the Company with those entities under then current applicable laws, rules and
regulations. 

31 




     9.5 Non-Disclosure.

     9.5.1 Each Member agrees that,
except as otherwise consented to by the Board of Managers, all non-public
information furnished to such Member pursuant to this Agreement or otherwise
regarding the Company or its business that is not generally available to the
public (“Confidential Information”) will be kept confidential and will
not be disclosed by such Member, or by any of such Member’s agents,
representatives or employees, in any manner, in whole or in part, except that
(a) each Member shall be permitted to disclose such Confidential Information to
those of such Member’s agents, representatives and employees who need to be
familiar with such information in connection with such Member’s investment in
the Company and who are charged with an obligation of confidentiality, (b) each
Member shall be permitted to disclose such Confidential Information to such
Member’s partners, equity holders, attorneys, accountants and advisors so long
as they agree to keep such information confidential on the terms set forth
herein, (c) each Member shall be permitted to disclose Confidential Information
to the extent required by applicable law, so long as such Member shall have
first provided the Company a reasonable opportunity to contest the necessity of
disclosing such information and (d) each Member shall be permitted to disclose
Confidential Information to the extent necessary for the enforcement of any
right of such Member arising under this Agreement. Notwithstanding the
foregoing, each Member (and each employee, representative or other agent of the
Member) may disclose to any and all Persons, without limitation of any kind, the
tax treatment and tax structure of the transaction and all materials of any kind
(including opinions or other tax analyses) that are provided to the Member
relating to such tax treatment and tax structure. 

     9.5.2 Each Member agrees that it
shall be liable for any breach or violation of the provisions of Section
9.5.1 by any of its respective Affiliates (other than the Company). The
covenants and undertakings contained in Section 9.5.1 relate to matters
which are of a special, unique and extraordinary character and a violation of
any of the terms of Section 9.5.1 will cause irreparable injury to the
Company, the amount of which will be impossible to estimate or determine and
which cannot be adequately compensated. Accordingly, the remedy at law for any
breach of Section 9.5.1 may be inadequate. Therefore, notwithstanding
anything to the contrary, the Company shall be entitled to an injunction,
restraining order or other equitable relief from any court of competent
jurisdiction in the event of any breach of any provision of Section 9.5.1
without the necessity of proving actual damages or posting any bond whatsoever.
The rights and remedies provided by Section 9.5.1 are cumulative and in
addition to any other rights and remedies which the Company may have hereunder
or at law or in equity.

     9.5.3 Each Member is aware that
(i) each of LUK and Golden Queen is an “issuer” of securities under applicable
securities laws and (ii) that applicable securities laws prohibit any individual
who has received from an issuer or any of its Affiliates (including the Company)
any material, non-public information regarding such issuer or any
of its Affiliates, from purchasing or selling securities of such issuer or from
communicating such information to any other individual under circumstances in
which it is reasonably foreseeable that such individual is likely to purchase or
sell securities of such issuer. As a consequence of its respective investments
in the Company, each Member will from time to time receive confidential
information concerning the Company that will constitute material, non-public
information concerning LUK and Golden Queen. Each Member acknowledges this
prohibition and agrees to advise its respective Affiliates of this prohibition.

32 




10. [INTENTIONALLY LEFT BLANK]


11. TRANSFER OF INTERESTS


     11.1 Restricted Transfer.
Except for Transfers pursuant to Section 11.2 to a Permitted Transferee
or Transfers pursuant to Section 12.1, 12.2 or 12.5, no
Member shall Transfer all or any part of its Units, or the economic or other
rights that comprise such Member’s Interest, unless such Transfer is first
approved by all the other Members, which approval may be granted or withheld in
the sole discretion of the other Members. The Company shall maintain a record of
the ownership of Units which shall, initially, be as set forth on Exhibit
A and which shall be amended from time to time to reflect permitted
Transfers of ownership of Units. Subject to restrictions on the transferability
of Units as set forth herein, Units shall be Transferred by delivery to the
Company of an instruction by the registered owner of a Unit requesting
registration of Transfer of such Units and the recording of such Transfer in the
records of the Company. 

     11.2 Permitted
Transferees. Subject to Sections 11.3 and 11.4, a Member shall
be entitled to Transfer all or any portion of such Member’s Units to a Permitted
Transferee of such Member. In no event shall all or any part of a Unit be
Transferred to a minor or incompetent except in trust or pursuant to the Uniform
Gifts to Minors Act. Members must give prior written notice to the Company and
the Board of any proposed Transfer to a Permitted Transferee specifying the
number of Units to be Transferred, the identity of such proposed Permitted
Transferee, together with such other documentation reasonably requested by the
Board of Managers to ensure compliance with the terms of this Agreement. If,
while a Permitted Transferee holds any Units, such Permitted Transferee ceases
to qualify as a Permitted Transferee in relation to the initial transferring
Member from whom or which such Permitted Transferee or any previous Permitted
Transferee of such initial transferring Member received such Units (an
“Unwinding Event”), then: 

     (a) the relevant initial
transferor Member shall forthwith notify the other Members and the Board of
Managers of the pending occurrence of such Unwinding Event; and

      (b) immediately following
such Unwinding Event, without limiting any other rights or remedies, such
initial transferor Member shall take all actions necessary to effect a Transfer
of all the Units held by the relevant Permitted Transferee either back to such
Member or, pursuant to this Section 11.2, to another Person that
qualifies as a Permitted Transferee of such initial transferring Member. 

33 




     11.3 Transfer
Requirements. No Person to whom any of a Member’s Units are Transferred
(including a Permitted Transferee) shall be admitted to the Company as a Member
(as limited under certain circumstances in accordance with Section 11.8)
unless the following conditions are satisfied or such conditions are waived by
the Board of Managers: 

     (a) a duly executed written
instrument of Transfer is provided to the Board, specifying the Units being
Transferred and setting forth the intention of the Member effecting the Transfer
that the transferee succeed to a portion or all of such Member’s Units; 

     (b) an opinion of responsible
counsel (who may be counsel for the Company), reasonably satisfactory in form
and substance to the Board to the effect that: 

     (i) such
Transfer would not violate the Securities Act or any state securities or blue
sky laws applicable to the Company or the Interest to be Transferred; 

     (ii) such
Transfer would not cause the Company to be considered a publicly traded
partnership under Section 7704(b) of the Code; 

     (iii)
such Transfer would not cause the Company to lose its status as a partnership
for federal income tax purposes; and 

     (iv) such
Transfer would not cause a termination of the Company for federal income tax
purposes; 

     (c) the
Member effecting the Transfer and the transferee execute any other instruments
that the Board of Managers deems reasonably necessary or desirable for admission
of the transferee, including the written acceptance by the transferee of this
Agreement and such transferee’s agreement to be bound by and comply with the
provisions hereof and execution and delivery to the Board of a special power of
attorney as provided in Section 18.3; and 

     (d) the
Member effecting the Transfer or the transferee pays to the Company a transfer
fee in an amount sufficient to cover the reasonable expenses incurred by the
Company in connection with the admission of the transferee. 

     11.4 Consent. Subject to
Section 11.8, each Member hereby agrees that upon satisfaction of the
terms and conditions of this Article 11 with respect to any proposed
Transfer, the Person proposed to be such transferee may be admitted as a Member.


     11.5 Withdrawal of Member.
If a Member Transfers all of its Units pursuant to Section 11.1 and the
transferee of such interest is admitted as a Member pursuant to Section
11.3 (whether or not such Member’s status is limited pursuant to Section
11.8), such transferee shall be admitted to the Company as a Member
effective on the effective date of the Transfer or such other date as may be
specified when the transferee is admitted and, immediately following such
admission, the transferor Member shall cease to be a Member of the Company. Upon
the transferor Member’s withdrawal from the Company, the withdrawing Member
shall not be entitled to any Distributions, or any other rights associated with
an Interest in the Company, from and after the date of such withdrawal or
Transfer. 

34 




     11.6 Noncomplying Transfers
Void. Any Transfer in contravention of this Article 11 shall be void
and of no effect, and shall not bind nor be recognized by the Company. 

     11.7 Amendment of Exhibit
A. In the event of the admission of any transferee as a Member of the
Company, the Board of Managers shall promptly amend Exhibit A to reflect
such Transfer or admission, as the case may be, and it shall deliver promptly to
each Member a copy of such amended Exhibit A. Any revision to Exhibit
A made in accordance with this Section 11.7 shall not be
deemed an amendment to this Agreement for purposes of Article 17 and no
action of any Member shall be required to amend or update Exhibit A hereto. 

     11.8 Transfer of Rights.
Any rights under this Agreement that apply solely to a specific Member shall
only be assigned to a Transferee of all Units of such Member. 

     11.9 Indirect Transfers.
The Transfer restrictions in this Agreement may not be avoided by the holding of
equity securities directly or indirectly through a Person that can itself be
sold to dispose of an interest in Units free of such restrictions. For the
avoidance of doubt, no Member shall directly or indirectly (i) permit the
Transfer of all or any portion of the direct or indirect equity or beneficial
interest in such Member to any Person other than a Permitted Transferee, or (ii)
otherwise seek to avoid the provisions of this Article 11 by issuing, or
permitting the issuance of, any direct or indirect equity or beneficial interest
in such Member, in any such case, in a manner that does not comply with the
Transfer restrictions in this Agreement; provided, however, that
nothing in this Agreement shall prohibit, limit or otherwise restrict the
Transfer of equity or beneficial interests in LUK or Golden Queen;
provided, further, that, nothing in this Article 11 shall
prohibit (i) Transfers of units of Gauss between LUK Holdco (or its Gauss
Permitted Transferees) and Auvergne (or its Gauss Permitted Transferees), (ii)
Transfers of units of Gauss by LUK Holdco to its Gauss Permitted Transferees or
by Auvergne to its Gauss Permitted Transferees, (iii) Transfers of units of
Gauss to any other Person by LUK Holdco (or its Gauss Permitted Transferees) or
Auvergne (or its Gauss Permitted Transferees) (A) to the extent after such
Transfer any third parties other than LUK Holdco (and its Gauss Permitted
Transferees) and Auvergne (and its Gauss Permitted Transferees) would hold less
than a majority of the units of Gauss or (B) to the extent LUK Holdco or
Auvergne complied with the provisions of Section 11.10 of the Gauss LLC
Agreement, (iv) Transfers of shares of GQ Holdco to any other Person by Golden
Queen (or its Permitted Transferees) to the extent after such Transfer Golden
Queen continues to hold a majority of the shares of GQ Holdco, or (v) Transfers
of units of Auvergne in compliance with the Gauss LLC Agreement; and
provided, further, that this Section 11.9 shall not
restrict the Transfer of an Affiliate of a Member and therefore, the indirect
Transfer of the Member’s Interest, if the value of such Member’s Interest
represents less than ten percent (10%) of the assets of such Affiliate. 

12. FIRST OFFER; FORCED SALE


     12.1 Right of First
Offer/Refusal. 

     12.1.1 Right of First
Offer/Refusal. If any Member (for purposes of this Section 12.1, the
“Selling Member”) wishes to Transfer all or any portion of its Units,
whether on its own initiative or in response to a bona fide offer, to any Person
other than a Permitted Transferee, it shall give written notice (the “Notice
of Sale”) to the other Members (the “Non-Selling Members”) of the Units subject to such proposed Transfer
(the “Offered Units”), the proposed offer or sale price (subject to Section 12.1.5), the terms of the proposed Transfer and the name and
address of the proposed transferee (if applicable). 

35 




The receipt of the Notice of
Sale by the Non-Selling Members shall constitute an offer by the Selling Member
to sell the Offered Units to the Non-Selling Members. Such offer, unless revoked
by written notice given by the Selling Member to the Non-Selling Members prior
to acceptance by any of the Non-Selling Members shall remain outstanding for a
period of ninety (90) calendar days after receipt of the Notice of Sale by the
Non-Selling Members (the “Offer Period”). Each Non-Selling Member may
accept such offer with respect to its entire pro rata portion of such
Offered Units, which shall be the amount obtained by multiplying the number of
Offered Units by the ratio obtained by dividing (x) the number of Units of such
Non-Selling Member, by (y) the number of Units held by all the Non-Selling
Members, by giving written notice to the Selling Member (with a copy to the
other Members) (a “Notice of Purchase”) of its intention to purchase its
entire pro rata portion of such Offered Units at the same price and on
the same terms specified in the Notice of Sale. If any Non-Selling Member fails
to deliver a Notice of Purchase with respect to its pro rata amount of
the Offered Units (such Units, the “Excess Units”), any Non-Selling
Member electing to purchase its entire pro rata amount of such Offered
Units (a “Participating Member”) shall be entitled to purchase from the
Selling Member an additional number of Offered Units equal to the product of (i)
the Excess Units and (ii) a fraction, the numerator of which is the Percentage
Interest of such Participating Member, and the denominator of which is equal to
the aggregate Percentage Interest of all Participating Members. 

     12.1.2 Closing. If one or
more Non-Selling Members deliver a Notice of Purchase for all (and not less than
all) of the Offered Units pursuant to this Section 12.1, the closing of
the purchase by such Non-Selling Members of the Offered Units shall take place
as soon as reasonably practicable and in no event later than ninety (90) days
after the date of the last such Notice of Purchase or such longer period of time
as may be required to obtain final regulatory approval, which the Non-Selling
Members and the Selling Member agree to use their respective commercially
reasonable efforts to obtain, at the principal office of the Company, or at such
other time and location as the parties to such purchase may mutually determine
at the same price and on terms identical in all material respects to the terms
as specified in the Notice of Sale. 

     12.1.3 Transfer. If, at
the close of the Offer Period, the Selling Member has not received one or more
Notices of Purchase covering all of the Offered Units, or if payment therefor
has not been made within ninety (90) days (or such longer period of time as may
be required to obtain any final regulatory approvals, which the Non-Selling
Members and such Selling Member agree to use their respective commercially
reasonable efforts to obtain) after receipt of the last Notice of Purchase (or
such longer period as authorized under Section 12.1.2), then, in each
case, the Selling Member shall have ninety (90) days (the conclusion of such
period, the “Final Transfer Date”) in which to Transfer the
Offered Units to the purchaser specified in the Notice of Sale, if one was
specified, at a price not less than 100% of the price specified in the Notice of
Sale and on terms and conditions not materially more favorable to the transferee
than the terms and conditions specified in the Notice of Sale; and
provided, further, that the Selling Member shall comply with the
provisions of Section 12.2 in connection with such Transfer. 

     12.1.4 New Notice of Sale
Required if Reduction in Price. If (a) after the close of the Offer Period
and prior to the consummation of the Transfer permitted by Section
12.1.3, the Selling Member wishes to Transfer the Offered Units at a price
that is lower than 100% of the price stated in the Notice of Sale or on terms
and conditions materially more favorable to the transferee than the price and
other terms and conditions contained in the Notice of Sale or the identity of
the proposed transferee shall change, or (b) the Selling Member shall not have
completed the proposed Transfer on or before the Final Transfer Date, then the
Notice of Sale shall be null and void, and the Selling Member shall be required
to separately comply with the provisions of this Section 12.1 (including
re-offering the Offered Units to the Non-Selling Members on such new terms and
conditions, if applicable.) 

36 




     12.1.5 Remain Subject. Units transferred
  pursuant to this Section 12.1 shall remain subject to the terms of this
  Agreement (including this Section 12.1), and such Transfers shall be
subject to compliance with Section 11.3. 

     12.1.6 Right to Delegate.
  A Non-Selling Member shall have the right to delegate all or part of its rights
  and obligations pursuant to this Section 12.1 to any Permitted Transferee
  of such Non-Selling Member; provided, however, that in the event
  that after any such delegation from such Non-Selling Member to such Permitted
  Transferee, such Permitted Transferee fails to perform its obligations hereunder
  in accordance with the provisions of this Section 12.1, such Non-Selling
  Member shall be responsible to perform and complete such Permitted Transferee’s
  obligations contained in this Section 12.1. 

     12.2 Tag-Along Rights.


     12.2.1 Tag-Along Right. In
connection with any proposed Transfer (for purposes of this Section 12.2,
a “Sale”) by any Member as the seller (for purposes of this Section
12.2, the “Initiating Seller”) of some or all of the Units held by it
(the percentage of such Member’s Units included in such Sale, for purposes of
this Section 12.2, the “Sale Percentage”) to any other Person (for
purposes of this Section 12.2, the “Proposed Transferee”) in a
single transaction or in a series of related transactions after the Initiating
Seller has complied with Section 12.1 and the Non-Selling Members have
not offered to purchase all of the Offered Units, each other Member (being all
Members other than the Initiating Seller) shall have the right (the
“Tag-Along Right”) to include in the Sale a number of Units equal to the
Sale Percentage of the total number of Units held by such other Member (for
purposes of this Section 12.2, each Member so electing being referred to
herein as a “Selling Member”). Any Units purchased from a Selling Member
pursuant to this Section 12.2 shall be purchased at the same price per
Unit and for the same form of consideration, and shall be purchased on the same
terms and conditions, as the Units being transferred by the Initiating Seller.


     12.2.2 Notice of Proposed
Sale. The Initiating Seller shall, not less than 30 days prior to a proposed
Sale to which Section 12.2.1 is applicable, give written notice to each
other Member of such proposed Sale. Such notice (the “Notice of Proposed
Sale”) shall set forth (a) the number of Units proposed to be Transferred
and the Sale Percentage, (b) the name and address of the Proposed Transferee,
(c) the maximum and minimum per Unit purchase price or, if not in cash, proposed
consideration and the other principal terms and conditions of the proposed Sale,
(d) that the Proposed Transferee has been informed of the Tag-Along Right
provided for in Section 12.2.1 and has agreed to purchase Units in
accordance with the terms of this Section 12.2 and (e) that the Initiating Seller has agreed to consummate the
Sale, subject only to any required regulatory approvals, this Section
12.2 and Article 11 of this Agreement. 

37 




     12.2.3 Exercise of Tag Along
Right. The Tag-Along Right may be exercised by a Selling Member by giving
written notice thereof to the Initiating Seller (the “Tag-Along Notice”)
within fifteen (15) days following such Selling Member’s receipt of the Notice
of Proposed Sale to Members (the “Tag-Along Period”). Each Member who
does not deliver a Tag-Along Notice to the Initiating Seller within the
Tag-Along Period shall be deemed to have waived all of such Member’s rights
under this Section 12.2 with respect to inclusion of the Sale Percentage
of such Member’s Units in such proposed Sale, and the Initiating Seller, subject
to the participation of the Selling Members, if any, shall have the right, for a
180-day period after the expiration of the Tag-Along Period (or for such longer
period of time as may be required to obtain any final regulatory approvals,
which the Initiating Seller agrees to use its commercially reasonable efforts to
obtain) to Transfer the Units specified in the Notice of Proposed Sale to the
Proposed Transferee at a per Unit purchase price no greater than the maximum
(and no less than the minimum) per Unit purchase price set forth in the Notice
of Proposed Sale and on other principal terms which are not materially more
favorable to the Initiating Seller and the Selling Members than those set forth
in the Notice of Proposed Sale. 

     12.2.4 Default by Proposed
Transferee. In the event that the Proposed Transferee does not agree to
purchase or the Proposed Transferee does not purchase the portion of each
Selling Member’s Interest specified in any Tag-Along Notice on the same terms
and conditions as specified in the applicable Notice of Proposed Sale, then the
Initiating Seller shall not be permitted to sell its Units to the Proposed
Transferee unless the Initiating Member shall acquire from the Selling Members
such of the Selling Member’s Interest as should have been but was not purchased
by the Proposed Transferee on the same terms and conditions as set forth in
Section 12.2.3. 

     12.2.5 Irrevocable Offer.
The offer of each Selling Member contained in such Selling Member’s Tag-Along
Notice shall be irrevocable, and, to the extent such offer is accepted, such
Selling Member shall be bound and obligated to Transfer in the proposed Sale on
the same terms and conditions, as the Initiating Seller, up to such amount of
Units as such Selling Member shall have specified in such Selling Members
Tag-Along Notice; provided, however, that (a) if the principal
terms of the proposed Sale change with the result that the per Unit purchase
price shall be less than the minimum per Unit purchase price set forth in the
Notice of Proposed Sale to Members or the other principal terms shall be
materially less favorable to the Initiating Seller and the Selling Members than
those set forth in the Notice of Proposed Sale to Members, each Selling Member
shall be permitted to withdraw the offer contained in such Selling Members
Tag-Along Notice and shall be released from such Selling Member’s obligations
thereunder, (b) the Selling Members shall be obligated to sell only the Sale
Percentage of total Units held by the Selling Members equal to the percentage of
total Units being sold by the Initiating Seller and (c) if at the end of the
180th day following the date of the effectiveness of the Notice of Proposed Sale
(or for such longer period of time as may be required to obtain any final
regulatory approvals, which the Initiating Seller agrees to use its commercially
reasonable efforts to obtain) the Initiating Seller has not completed the
proposed Sale, each Selling Member shall be released from the obligations under
such Member’s respective Tag-Along Notice, any related Notice of Proposed Sale
shall be null and void, and it shall be necessary for separate such notice to be
furnished, and the terms and provisions of this Section
12.2 separately to be complied with, in order to consummate such Sale
pursuant to this Section 12.2. 

38 




     12.2.6 Additional
Compliance. If, prior to consummation of a proposed Sale, the terms of the
proposed Sale shall change with the result that the per Unit purchase price
shall be greater than the maximum per Unit purchase price set forth in any
Notice of Proposed Sale or the other principal terms shall be materially more
favorable to the Initiating Seller and the Selling Members than those set forth
in such Notice of Proposed Sale, then, unless all Members have exercised their
Tag-Along Rights, such Notice of Proposed Sale shall be null and void, and it
shall be necessary for a separate such Notice of Proposed Sale to be furnished,
and the terms and provisions of this Section 12.2 separately to be
complied with, in order to consummate such proposed Sale pursuant to this
Section 12.2. 

     12.2.7 Exceptions. The
provisions of this Section 12.2 shall not apply to any proposed Transfer
of Units (i) to a Permitted Transferee of the selling Member pursuant to
Section 11.2 or (ii) to another Member pursuant to Section 12.1.


     12.3 Miscellaneous. The
following provisions shall be applied to any Transfer to which Section
12.2 applies: 12.3.1 Consideration. In the event the consideration to
be paid in exchange for the Units in the proposed Sale pursuant to Section
12.2 includes any securities and the receipt thereof by any Selling Member
would require under applicable law (i) the registration or qualification of such
securities or of any Person as a broker or dealer or agent with respect to such
securities or (ii) the provision to any Selling Member of any information other
than such information as a prudent issuer would generally furnish in an offering
made solely to Accredited Investors, the Initiating Seller shall be obligated
only to use its commercially reasonable efforts to cause such requirements to be
complied with to the extent necessary to permit such Selling Member to receive
such securities, it being understood and agreed that the Initiating Seller shall
not be under any obligation to effect a registration of such securities under
the Securities Act, state securities laws or similar statutes or regulations.
Notwithstanding any provisions of this Section 12.3, if use of
commercially reasonable efforts by the Initiating Seller shall not have resulted
in such requirements being complied with to the extent necessary to permit such
Selling Member to receive such securities, or if regulatory restrictions prevent
a Selling Member from holding such securities and the Initiating Seller, after
using commercially reasonable efforts, is unable to structure the transaction in
a way that meets such regulatory requirements, the Initiating Seller shall cause
to be paid to such Selling Member in lieu thereof, against surrender of the
Interest which would have otherwise been sold by such Selling Member to the
Proposed Transferee in the Sale, an amount in cash equal to the fair market
value (as determined by the Board in good faith) of the securities which such
Selling Member would otherwise receive as of the date of the issuance of such
securities in exchange for such Members’ Units. The obligation of the Initiating
Seller to use commercially reasonable efforts to cause such requirements to have
been complied with to the extent necessary to permit a Selling Member to receive
such securities shall be conditioned on such Selling Member executing such
documents and instruments, and taking such other actions (including without
limitation, if required by the Initiating Seller, agreeing to be represented
during the course of such transaction by a “purchaser representative” (as
defined in Regulation D) in connection with evaluating the merits and risks of
the prospective investment and acknowledging that such Selling Member was so represented),
as the Initiating Seller shall reasonably request in order to permit such
requirements to be complied with. Unless the Selling Member in question shall
have taken all actions reasonably requested by the Initiating Seller in order to
comply with the requirements under Regulation D and applicable U.S. federal and
state securities laws, such Selling Member shall not have the right to require
the payment of cash in lieu of securities under this Section 12.3.1. 

39 




     12.3.2 Cooperation. Each
Selling Member in a Sale pursuant to Section 12.2 whether in its capacity
as such or as a Member, member of the Board of Managers, officer or agent of the
Company, or otherwise, shall to the fullest extent permitted by law take or
cause to be taken all such actions as may be reasonably requested in order
expeditiously to consummate each Sale pursuant to Section 12.2 hereof and
any related transactions, including, without limitation, executing,
acknowledging and delivering consents, assignments, waivers and other documents
or instruments; furnishing information and copies of documents; filing
applications, reports, returns, filings and other documents or instruments with
governmental authorities; and otherwise cooperating with the Initiating Seller
and the Proposed Transferee; provided, however, that the Selling
Members shall be obligated to become liable (severally and not jointly) in
respect of any representations, warranties, covenants, indemnities or otherwise
to the Proposed Transferee solely to the extent provided in the immediately
following sentence. Without limiting the generality of the foregoing, each
Selling Member agrees to execute and deliver such agreements as may be
reasonably specified by the Initiating Seller to which the Initiating Seller
will also be party, including, without limitation, agreements to (a) make
individual representations as to the title to its Interest and the power,
authority and legal right to transfer such Interest to the extent such
agreements are also made by the Initiating Seller and (b) be liable in respect
of any purchase price escrow or adjustment provisions or reduction in purchase
price as may apply to Members generally resulting from representations,
warranties, covenants and indemnities in respect of the Company to the extent
that the Initiating Seller is also liable; provided, however,
that, (i) except with respect to individual representations, warranties,
covenants, indemnities and other agreements of holders of Units, the aggregate
amount of such liability shall not exceed the lesser of (a) such Selling
Member’s pro rata portion of any such liability, in accordance with such Selling
Member’s portion of the total value of Interests included in the Sale or (b) the
proceeds to such Selling Member as a result of such Sale and (ii) with respect
to individual representations, warranties, covenants, indemnities and other
agreements of holders of Interests, the aggregate amount of such liability shall
not exceed the proceeds to such Selling Member as a result of such Sale. 

     12.3.3 Closing. The
closing of a Sale pursuant to Section 12.2 shall take place at such time
and place as the Initiating Seller shall specify by reasonable advance notice to
each Selling Member. It is understood and agreed that the Initiating Seller
shall not have any liability to any other Member arising from, relating to or in
connection with any proposed transaction which has been the subject of a
Tag-Along Notice, whether or not such proposed transaction is consummated, other
than liability for breach of the applicable provisions of this Agreement. 

     12.4 Remain Subject. Units
transferred pursuant to Section 12.2 shall remain subject to the
provisions of this Agreement. 

40 




     12.5 Forced Sale. 

     12.5.1 Majority Member
Election. Notwithstanding any other provision of this Agreement, if at any
time after the Effective Date the Percentage Interest of Gauss (or a Transferee
of 100% of Gauss’s Units in accordance with Section 11.8) or GQ Holdco
(or a Transferee of 100% of GQ Holdco’s Units in accordance with Section
11.8) is less than twenty percent (20%) (such Member, the “Minority
Member”), then, upon the occurrence of such event (the date on which such
event occurs, the “Trigger Date”), Gauss or GQ Holdco, as applicable
(such Member that is not the Minority Member, the “Majority Member”),
shall have the right to elect one of Section 12.5.1(a), (b) or
(c) (none of which shall constitute a termination or dissolution of the
Company) by delivering written notice of such election to the Minority Member
and the Company on or after the Trigger Date; provided, however,
that, if the Majority Member fails to make an election under this Section
12.5.1 prior to the expiration of the sixty (60) day period commencing with
the later of (i) the Trigger Date and (ii) the date on which the Minority Member
gives written notice to the Majority Member that its Percentage Interest is less
than twenty percent (20%) and that therefore the provisions of this Section
12.5 apply, then the Minority Member shall have the right to elect one of
Section 12.5.1(a) or (b) by delivering written notice of such
election to the Majority Member and the Company prior to the expiration of the
thirty (30) day period commencing after the expiration of such sixty (60) day
period, provided, that the failure of the Minority Member to make such an
election within such thirty (30) day period shall be deemed an election,
effective on the expiration of such thirty (30) day period, to be converted into
a Net Smelter Return Royalty in accordance with Section 12.5.1(a):


     (a) convert the Minority Member’s
Interest into a Net Smelter Return Royalty, using a standard industry form of
net smelter return royalty agreement including audit rights, upon which the
Minority Member shall be deemed to have withdrawn from the Company, shall cease
to be a Member of the Company and shall thereafter have no further Interest or
rights under this Agreement; provided, that, in respect of a Percentage
Interest of the Minority Member in the range from zero percent (0%) to twenty
percent (20%), the corresponding Net Smelter Return Royalty shall be a pro rated
percentage in the range from zero percent (0%) to five percent (5%), determined
on a linear basis and rounded to the nearest one-hundredth of a percent;

      (b) purchase all of the
Minority Member’s Units in accordance with the procedures set forth in
Section 12.5.2; or 

     (c) cause the Company to
undertake a sales process (a “Sale Process”) to cause a Qualified Sale in
accordance with the procedures set forth in Section 12.5.3. 

41 




     12.5.2 Buy-Out.

     (a) In the event that the
  Majority Member elects to purchase all of the Minority Member’s Units pursuant
  to Section 12.5.1(b), the Minority Member shall sell, and shall cause all
  of the Minority Member’s Permitted Transferees to sell (and such Permitted
  Transferees shall sell), all of the Units owned by the Minority Member and its
  Permitted Transferees to the Majority Member at a price determined in accordance
  with the procedures set forth in Section 12.5.2(b) unless the Members
  agree on such price within five (5) Business Days after the Majority Member’s election. The closing of the purchase by the
  Majority Member of the Minority Member’s Units shall take place at the principal
  office of the Company on the date chosen by such purchaser, which date shall,
  except as may be reasonably necessary to determine the price of the Units, in no
  event be more than forty five (45) days after the Majority Member’s election
  pursuant to Section 12.5.1(b). At such closing, (i) the Majority Member
  shall pay the Minority Member the aggregate purchase price by wire transfer of
  immediately available funds, and (ii) the Minority Member and its Permitted
  Transferees shall transfer their Units to the Majority Member free and clear of
  any lien or encumbrance, with any documentation reasonably requested by the
  Majority Member and the Company to evidence such transfer. The transfer of the
  Minority Member’s Units and the acceptance of the aggregate purchase price
  therefor by the Minority Member pursuant to this Section 12.5.2 shall be
  deemed a representation and warranty by the Minority Member that: (i) the
  Minority Member has full right, title and interest in and to such Units; (ii)
  the Minority Member has all necessary power and authority and has taken all
  necessary action to sell such Units as contemplated; (iii) such Units are free
  and clear of any and all liens or encumbrances; and (iv) there is no adverse
  claim with respect to such Units. The Minority Member shall cause its Permitted
  Transferees to comply with the terms of this Section 12.5.2 and
  shall be liable for any breaches by any of its Permitted Transferees of the
  terms of this Section 12.5.2. Upon consummation of such purchase, the
  Minority Member and its Permitted Transferees shall be deemed to have withdrawn
  from the Company, shall cease to be a Member of the Company and shall thereafter
  have no further Interest or rights under this Agreement. Each Member hereby
  grants to the Majority Member a power of attorney to execute and deliver in the
  name and on behalf of such Member all such agreements, instruments and other
  documentation (including any written consents of Members) as is required to
  Transfer the Units held by such Minority Member to the Majority Member pursuant
  to Section 12.5.1(b) and in accordance with this Section 12.5.2. 

     (b) If the Members do not reach
agreement on the price of the Minority Member’s Units pursuant to Section
12.5.2(a), the price of such Units shall be the fair market value of such
Units, which shall be determined as
follows:      

     (i) The
Majority Member and the Minority Member shall, within fifteen (15) days
following the Majority Member’s election, designate an Appraiser acceptable to
the Majority Member and the Minority Member to determine the amount that would
be distributed in respect of the Minority Member’s Units if (i) all of the Units
of the Company were sold for cash in an arm’s-length transaction to a single
willing unaffiliated third party, with no party to such sale transaction having
any compulsion to buy or sell in the context of such sale transaction, and (ii)
the proceeds of such sale had been distributed by the Company in complete
liquidation pursuant to the rights and preferences set forth in Section
5.2 (the “Minority Units Price”). If the Majority Member and the
Minority Member cannot agree on the identity of the Appraiser within the fifteen
(15) day determination period, each of the Majority Member and the Minority
Member shall, within three (3) days, provide a list of three (3) such qualified
independent mining valuators, and they shall each alternately strike (with the
person striking first being randomly drawn) names from the combined list until
only one (1) name remains; the remaining name shall be the Appraiser. The
Appraiser’s final determination of the Minority Units Price shall be (i) in
writing and signed by the Appraiser, and (ii)
furnished to the Board of Managers and the Members as soon as practicable after
such matter has been referred to such Appraiser, which shall not be more than
thirty (30) days after its appointment, and (iii) conclusive and binding upon
the Board of Managers and the Members on the date of delivery of such written
determination and shall not be subject to collateral attack for any reason
(other than fraud or manifest error).

42 




     (ii) The
Company shall provide the Appraiser reasonable access to members of management
of the Company and to the books and records of the Company so as to allow the
Appraiser to conduct due diligence examinations in scope and duration as are
customary in valuations of this kind. The fees and expenses of the Appraiser
shall be borne by the Company.

     (iii) In
no event shall the Minority Units Price referred to in this Section
12.5.2(b) be zero (-0-) or less than zero (-0-). 

     12.5.3 Sale Process.

     (a) In the event that the
Majority Member elects to cause a Sale Process, the following procedures shall
be observed: 

     (i) if
requested by the Majority Member, the Board of Managers will promptly engage, on
customary terms (including customary indemnification from the Company), a
nationally recognized investment banking firm selected by the Majority Member to
provide financial advisory services to the Company and the Member in connection
with the Sale Process, and the Company shall pay the fees and expenses of such
investment banking firm; 

     (ii) the
Company, the Board of Managers and all the Members shall, and shall cause their
respective representatives to, cooperate in and take all actions necessary to
facilitate the Sale Process, including, but not limited to, (x) giving
prospective purchasers reasonable access during normal business hours to the
Company’s offices, properties, books and records and copies of such financial
and operating data and other information as such party may reasonably request as
part of its due diligence exercise; provided, however, that the Company
will cause such prospective purchasers to enter into customary confidentiality
agreements prior to providing such access, (y) negotiating definitive documents
in connection with the Sale Process, and (z) the preparation of an offering
memorandum and other marketing materials related to the Company; 

     (iii) the
Company will, if applicable, enter into a definitive agreement with the proposed
purchaser(s) providing for such Qualified Sale, and the Company will make and
agree to representations, warranties, covenants and indemnities and other
similar agreements that are reasonable and customary for negotiated transactions
of the type contemplated by such Qualified Sale; 

     (iv) each
Member shall (x) make such representations, warranties and covenants and enter
into such definitive agreements as are customary for transactions of the nature of the
proposed Qualified Sale, (y) benefit from and be subject to all of the same
provisions of the definitive agreements as are applicable to the Qualified Sale,
(z) be required to bear its proportionate share of any escrows, holdbacks or
adjustments in respect of the purchase price or indemnification obligations;
  provided, that no Member shall be obligated (A) to indemnify, other than
severally indemnify, any Person in connection with such Qualified Sale, (B) to
incur liability to any Person in connection with such Qualified Sale, including
under any indemnity, in excess of the lesser of (1) its pro rata share of
such liability based on the proceeds to be realized by such Member in such
Qualified Sale and (2) the proceeds realized by such Member in such Qualified
Sale, or (C) to make any representations and warranties relating to any other
Member or be liable for any indemnification with respect to such representations
and warranties relating to another Member; 

43 




     (v) the
Company and the Members will reasonably cooperate in the obtaining of all
governmental and third-party approvals and consents reasonably necessary or
desirable to consummate such Qualified Sale; 

     (vi) if
neither the Majority Members nor the Company has received a binding, written
offer from a prospective purchaser acceptable to the Majority Members within six
(6) months after the election by the Majority Members to cause a Sale Process,
then the Sale Process shall terminate and the Majority Members shall have the
right to make an election under Sections 12.5.1(a) or 12.5.1(b)
during the fifteen (15) Business Day period commencing with the date of
termination of the Sale Process; and 

     (vii)
only one Sale Process may be in process at any given time. 

     (b) Each Member hereby grants to
the Majority Members a power of attorney to execute and deliver in the name and
on behalf of such Member all such agreements, instruments and other
documentation (including any written consents of Members) as is required to
Transfer the Units held by such Minority Member in a Qualified Sale pursuant to
Section 12.5.1(c) and in accordance with this Section 12.5.3. 

13. DISSOLUTION OF COMPANY


     13.1 Termination of
Membership. Except as explicitly provided elsewhere herein, no Member shall
resign or withdraw from the Company except that, subject to the restrictions set
forth in Article 11, any Member may Transfer its Interest in the Company
to a transferee and a transferee may become a Member in place of the Member
assigning such Interest. 

     13.2 Events of
Dissolution. The Company shall be dissolved upon the happening of any of the
following events: (a) the entry of a decree of judicial dissolution under
Section 17707.1(d) of the Act, (b) unanimous consent of all the Members or (c)
the disposition of all of the Company’s assets. 

     13.3 Liquidation. Upon
dissolution of the Company for any reason, subject to Section 7.4.2, the
Company shall immediately commence to wind up its affairs. A reasonable period of time shall be allowed for the orderly termination of
the Company’s business, discharge of its liabilities, and distribution or
liquidation of the remaining assets so as to enable the Company to minimize the
normal losses attendant to the liquidation process. After the payment of the
debts and liabilities of the Company and the establishment of reasonable
reserves, any property or assets of the Company, including proceeds from the
liquidation thereof, remaining upon the dissolution and liquidation of the
Company shall be Distributed to the Members in proportion to their respective
Percentage Interest. A full accounting of the assets and liabilities of the
Company shall be taken and a statement thereof shall be furnished to each Member
promptly after the distribution of all of the assets of the Company. Such
accounting and statements shall be prepared under the direction of the Board of
Managers. 

44 




     13.4 No Action for
Dissolution. The Members acknowledge that irreparable damage would be done
to the goodwill and reputation of the Company if any Member should bring an
action in court to dissolve the Company under circumstances where dissolution is
not required by Section 13.2. This Agreement has been drawn carefully to
provide fair treatment of all parties and equitable payment in liquidation of
the Interests of all Members. Accordingly, except where the Board of Managers
has failed to liquidate the Company as required by Section 13.3 and
except as specifically provided in Section 17707.03 of the Act, each Member
hereby waives and renounces its right to initiate legal action to seek
dissolution or to seek the appointment of a receiver or trustee to liquidate the
Company. 

     13.5 No Further Claim.
Upon dissolution, each Member shall have recourse solely to the assets of the
Company for the return of such Member’s capital, and if the Company’s property
remaining after payment or discharge of the debts and liabilities of the
Company, including debts and liabilities owed to one or more of the Members, is
insufficient to return the aggregate Capital Contributions of each Member, such
Member shall have no recourse against the Company, the Board of Managers or any
other Member. 

14. INDEMNIFICATION 

     14.1 General. To the
fullest extent permitted by law, the Company shall indemnify, defend and hold
harmless the Board of Managers and each member of the Board, each Member,
including the TMP in such Member’s capacity as such, and the officers of the
Company (all indemnified persons being referred to as “Indemnified
Persons” for purposes of this Article 14), from any liability, loss
or damage incurred by the Indemnified Person by reason of any act performed or
omitted to be performed by the Indemnified Person in connection with the
business of the Company, from liabilities or obligations of the Company imposed
on such Indemnified Person by virtue of such Indemnified Person’s position with
the Company, including reasonable attorneys’ fees and costs and any amounts
expended in the settlement of any such claims of liability, loss or damage;
provided, however, that if the liability, loss, damage or claim
arises out of any action or inaction of an Indemnified Person, indemnification
under this Section 14.1 shall be available only if the action or inaction
did not constitute fraud or willful misconduct by the Indemnified Person;
provided, further, however, that indemnification under this
Section 14.1 shall be recoverable only from the assets of the Company,
and not from any assets of the Members. The Company shall pay or reimburse
reasonable attorneys’ fees of an Indemnified Person as incurred, provided that
such Indemnified Person executes an undertaking, with appropriate security if
requested by the Board, to repay the amount so paid or reimbursed in the event of a final non-appealable determination by a court of
competent jurisdiction that such Indemnified Person is not entitled to
indemnification under this Article 14. The Company may pay for insurance
covering liability of the Indemnified Persons for negligence in operation of the
Company’s affairs. 

45 




     14.2 Exculpation. No
Indemnified Person (each of which shall be a third-party beneficiary of this
Agreement solely for purposes of this Section 14.2) shall be liable, in damages
or otherwise, to the Company, any Member or any of their Affiliates, for any
loss that arises out of any act performed or omitted to be performed by it, him
or her pursuant to the authority granted by this Agreement if the conduct of the
Indemnified Person did not constitute fraud or willful misconduct by such
Indemnified Person. 

     14.3 Persons Entitled to
Indemnity. Any Person who is within the definition of “Indemnified
Person” at the time of any action or inaction in connection with the
business of the Company shall be entitled to the benefits of this Article 14 as
an “Indemnified Person” with respect thereto, regardless of whether such
Person continues to be within the definition of “Indemnified Person” at
the time of such Indemnified Person’s claim for indemnification or exculpation
hereunder. 

     14.4 Procedure Agreements.
The Company may enter into an agreement with any of the Indemnified Persons,
setting forth procedures consistent with applicable law for implementing the
indemnities provided in this Article 14. 

     14.5 Duties of Board of
Managers and Officers. Without limiting applicability of any other provision
of this Agreement, including without limitation the other provisions of this
Article 14, which shall control notwithstanding anything to the contrary
in this Section 14.5, the following provisions shall be applicable to the
Board of Managers and the officers of the Company:

      (a) The Board of Managers
of the Company shall have the benefit of the business judgment rule to the same
extent as directors of a California corporation. 

      (b) Except as set forth in
Section 14.7.3, the members of the Board of Managers and the officers of
the Company shall have the same duties of care and loyalty as directors and
officers of a California corporation but in no event shall any member of the
Board of Managers or officer be liable for any action or inaction for which
exculpation is provided under Section 14.2. 

     14.6 Interested
Transactions. To the fullest extent permitted by law, no member of the Board
of Managers shall be deemed to have breached its duty of loyalty to the Company
or the Members (and such member of the Board of Managers shall not be liable to
the Company or to the Members for breach of any duty of loyalty or analogous
duty) with respect to any action or inaction in connection with or relating to
any transaction that was approved in accordance with Section 6.6. 

     14.7 Fiduciary and Other
Duties. 

46 




     14.7.1 An Indemnified Person
acting under this Agreement shall not be liable to the Company or to any other
Indemnified Person for his, her or its good faith reliance on the provisions of
this Agreement. The provisions of this Agreement, to the extent that they
restrict the duties (including fiduciary duties) and liabilities of an
Indemnified Person otherwise existing at law or in equity, are agreed by the
parties hereto to replace such other duties and liabilities of such Indemnified
Person. 

     14.7.2 Notwithstanding any other
provision of this Agreement or otherwise applicable law, whenever in this
Agreement an Indemnified Person is permitted or required to make a decision (a)
in his, her or its discretion or under a grant of similar authority, the
Indemnified Person shall be entitled to consider only such interests and factors
as such Indemnified Person desires, including his, her or its own interests, and
shall, to the fullest extent permitted by applicable law, have no duty or
obligation to give any consideration to any interest of or factors affecting the
Company or any other Person, or (b) in his, her or its good faith or under
another express standard, the Indemnified Person shall act under such express
standard and shall not be subject to any other or different standards. 

     14.7.3 Notwithstanding any other
provision of this Agreement or otherwise applicable law, the Members and their
Affiliates may each engage in any other business activities whatsoever and
engage in or possess an interest in other business ventures of any nature or
description, independently or with others, similar or dissimilar to the business
conducted or proposed to be conducted by the Company or any of its Affiliates,
and none of the Company, any of its Affiliates or any other Member (including
such other Member’s Affiliates) shall have any rights in, with respect to, or to
be informed of such other business activities or ventures or the income or
profits derived therefrom. The Members and their Affiliates shall not be
obligated to present any business or investment opportunity to the Company or
its Affiliates even if such opportunity is of a character that, if presented to
the Company or such Affiliates, could be taken by the Company or such
Affiliates, and the Members and their Affiliates shall have the right to take
for their own account (individually or as a partner, member, shareholder,
fiduciary or otherwise) or to recommend to any other Person any such particular
business or investment opportunity.

15. REPRESENTATIONS AND COVENANTS BY THE
MEMBERS 

     Each Member hereby represents and
warrants to, and agrees with, the Board of Managers, the other Members and the
Company as follows: 

     15.1 Investment Intent.
Such Member is acquiring such Member’s Interest with the intent of holding the
same for investment for such Member’s own account and without the intent or a
view of participating directly or indirectly in any distribution of such
Interests within the meaning of the Securities Act or any applicable state
securities laws. 

     15.2 Securities
Regulation. Such Member acknowledges and agrees that such Member’s Interest
is being issued and sold in reliance on the exemption from registration under
the Securities Act and exemptions contained in applicable state securities laws,
and that such Member’s Interest cannot and will not be sold or transferred
except in a transaction that is exempt under the Securities Act and applicable
state securities laws or pursuant to an effective registration statement under the Securities Act and applicable
state securities laws. Such Member understands that such Member has no
contractual right for the registration under the Securities Act of such Member’s
Interest for public sale and that, unless such Member’s Interest is registered
or an exemption from registration is available, such Member’s Interests may be
required to be held indefinitely. 

47 




     15.3 Knowledge and
Experience. Such Member has such knowledge and experience in financial, tax
and business matters as to enable such Member to evaluate the merits and risks
of such Member’s investment in the Company and to make an informed investment
decision with respect thereto. 

     15.4 Economic Risk. Such
Member is able to bear the economic risk of such Member’s investment in such
Member’s Interest. 

     15.5 Binding Agreement.
Such Member has all requisite power and authority to enter into and perform this
Agreement and this Agreement is and will remain such Member’s valid and binding
agreement, enforceable in accordance with its terms (subject, as to the
enforcement of remedies, to any applicable bankruptcy, insolvency or other laws
affecting the enforcement of creditors rights). 

     15.6 Tax Position. A
Member will not take a position on such Member’s federal income tax return, in
any claim for refund or in any administrative or legal proceedings that is
inconsistent with this Agreement or with any information return filed by the
Company unless such Member provides prior written notice to the Company and
consults with and considers in good faith the suggestions of the Company with
respect to such position. 

     15.7 Information. Such
Member has received all documents, books and records pertaining to an investment
in the Company requested by such Member. Such Member has had a reasonable
opportunity to ask questions of and receive answers concerning the Company, and
all such questions have been answered to such Member’s satisfaction. 

     15.8 Licenses and Permits.
Such Member will cooperate in providing such information, in signing such
documents and in taking any other action as may reasonably be requested by the
Company in connection with obtaining any foreign, federal, state or local
license or permit needed to operate its business or the business of any entity
in which the Company invests. 

16. COMPANY REPRESENTATIONS


     In order to induce the Members to
enter into this Agreement and to make the Capital Contributions contemplated
hereby, the Company hereby represents and warrants to each Member as follows:


     16.1 Duly Formed. The
Company was duly converted from a corporation, duly formed as a limited
liability company and is a validly existing limited liability company under the
Act, with all necessary power and authority under the Act to issue the Interests
to be issued to the Members hereunder. All action of the Company necessary to
authorize the effectiveness of this Agreement has been taken. 

48 




     16.2 Valid Issue. When the
Interests are issued to the Members as contemplated by this Agreement and the
Capital Contributions required to be made by the Members are made, the Interests
issued to the Members will be duly and validly issued and no liability for any
additional capital contributions or for any obligations of the Company will
attach thereto. 

17. AMENDMENTS TO AGREEMENT


     17.1 Amendments. This
Agreement may be modified or amended with the prior written consent of the Board
of Managers. Notwithstanding the foregoing provisions of this Section
17.1, (1) this Section 17.1 may not be amended without the written
approval of each Member; and (2) other provisions of this Agreement may not be
amended without the written approval of each Member affected if the amendment
(a) would reduce any such Member’s Interests or would reduce the allocation to
such Member of Profit or Loss, or would reduce the Distributions of cash or
property to such Member from that which is provided or contemplated herein,
unless such amendment treats all Members ratably based on their Interests and
such amendment is being executed to reflect (i) any dilution in such Member’s
Interest resulting from the issuance of Units contemplated by Article 3
or (ii) the acceptance of a new Member pursuant to Article 11; or (b)
would increase such Member’s obligation to make Capital Contributions or
obligation with respect to other liabilities (taking into account and
considering the rights and obligations of such Member prior to such amendment or
modification). Sections 14.1, 14.2 and 14.3 of this
Agreement may not be amended in a manner to reduce or restrict the
indemnification rights provided in Sections 14.1, 14.2 and
14.3 unless the indemnitee has consented; provided,
however, that such indemnification rights with respect to any officer of
the Company may be so amended, on a prospective basis with respect to acts
occurring after the date of such amendment only, upon 30 days prior written
notice to such officer. All proposed amendments to this Agreement will be sent
to each Member within a reasonable period of time prior to being presented for
approval whether by the Board or the Members and also promptly after the
effectiveness thereof. 

     17.2 Amendments by the Board
of Managers. Notwithstanding anything in Section 17.1 to the
contrary, the Board of Managers, without the consent or approval at any time of
any Member (each Member, by executing this Agreement, being deemed to consent to
any such amendment), may amend any provision of this Agreement or the Articles
of Organization, and may execute, swear to, acknowledge, deliver, file and
record all documents required or desirable in connection therewith, to reflect
(i) a change in the name of the Company or the location of the principal place
of business of the Company, (ii) the admission, dilution, substitution,
termination or withdrawal of any Member in accordance with the provisions of
this Agreement, (iii) a change that is necessary to qualify the Company as a
limited liability company or a company in which the Members have limited
liability, (iv) a change that is (A) of an inconsequential nature and does not
adversely affect any Member in any material respect, (B) necessary to clarify
any ambiguity or to correct or supplement any provisions of this Agreement or
(C) required or specifically contemplated by this Agreement, or (v) any
amendment that the Board of Managers deems necessary to comply with any
applicable law, rule, regulation or interpretation. 

49 




     17.3 Corresponding Amendment
of Articles of Organization. The Board of Managers shall cause to be
prepared and filed any amendment to the Articles of Organization that may be
required to be filed under the Act as a consequence of any amendment to this
Agreement.

     17.4 Binding Effect. Any
modification or amendment to this Agreement pursuant to and in accordance with
this Article 17 shall be binding on all Members. 

18. GENERAL 

     18.1 Successors; California
Law; Etc. This Agreement (a) shall be binding upon the executors,
administrators, estates, heirs and legal successors and permitted assigns of the
Members, (b) shall be governed by and construed in accordance with the laws of
the State of California, and (c) may be executed in more than one counterpart,
all of which together shall constitute one agreement, contains the entire
contract among the Members as to the subject matter hereof. The waiver of any of
the provisions, terms or conditions contained in this Agreement shall not be
considered as a waiver of any of the other provisions, terms or conditions
hereof. 

     18.2 Notices, Etc. All
notices and other communications required or permitted hereunder shall be in
writing and shall be deemed effectively given upon personal delivery or receipt
(which may be evidenced by a return receipt if sent by registered mail or by
signature if delivered by courier or delivery service), addressed (a) if to any
Member, at the address of such Member set forth in the records of the Company or
at such other address as such Member shall have furnished to the Company in
writing as the address to which notices are to be sent hereunder and (b) if to
the Company or to the Board of Managers to it at: c/o Golden Queen Mining Co.
Ltd., 6411 Imperial Avenue, West Vancouver, British Columbia, Canada V7W 2J5,
Attention: Chief Executive Officer, with copies (which copies shall not
constitute notice) to: 

	 	Gauss Holdings LLC 
	 	c/o Leucadia National Corporation 
	 	520 Madison Avenue, 10th Floor 
	 	New York, NY 10022 
	 	Attention: General Counsel 
	 	                   Jimmy
      Hallac 
	 	  
	 	and 
	 	  
	 	Auvergne, LLC 
	 	c/o East Hill Management Company 
	 	10 Memorial Boulevard, Suite 902 
	 	Providence, RI 02903 
	 	Attention: Thomas M. Clay. 


     18.3 Execution of
Documents. From time to time after the Effective Date, upon the request of
the Board of Managers, each Member shall perform, or cause to be performed, all
such additional acts, and shall execute and deliver, or cause to be executed and
delivered, all such additional instruments and documents, as may be required to
effectuate the purposes of this Agreement. Each Member, including each new and
substituted Member, by the execution of this Agreement or by agreeing in writing to be bound by this
Agreement, irrevocably constitutes and appoints the Board of Managers or any
Person designated by the Board to act on such Member’s behalf for purposes of
this Section 18.3 as such Member’s true and lawful attorney-in-fact with
full power and authority in such Member’s name and stead to execute, deliver,
swear to, file and record at the appropriate public offices such documents as
may be necessary or appropriate to carry out this Agreement, including: 

50 




     (a) all certificates and other
instruments (specifically including counterparts of this Agreement), and any
amendment thereof, that the Board deems appropriate to qualify or to continue
the Company as a limited liability company in any jurisdiction in which the
Company may conduct business or in which such qualification or continuation is,
in the opinion of the Board, necessary to protect the limited liability of the
Members; 

     (b) all amendments to this
Agreement adopted in accordance with the terms hereof and all instruments that
the Board deems appropriate to reflect a change or modification of the Company
in accordance with the terms of this Agreement; and 

     (c) all conveyances and other
instruments that the Board deems appropriate to reflect the dissolution of the
Company. 

     The appointment by each Member or
any Person designated by the Board to act on its behalf for purposes of this
Section 18.3 as such Member’s attorney-in-fact shall be deemed to be a
power coupled with an interest, in recognition of the fact that each of the
Members under this Agreement will be relying upon the power of the Board to act
as contemplated by this Agreement in any filing and other action by such Manager
or Person on behalf of the Company, and shall survive the bankruptcy,
dissolution, death, adjudication of incompetence or insanity of any Member
giving such power and the transfer or assignment of all or any part of such
Member’s Interests; provided, however, that in the event of a
Transfer by a Member of all of its Interest, the power of attorney given by the
transferor shall survive such assignment only until such time as the transferee
shall have been admitted to the Company as a substituted Member and all required
documents and instruments shall have been duly executed, filed, and recorded to
effect such substitution. 

     18.4 Arbitration. The
Parties hereby irrevocably agree that any legal action or proceeding arising out
of or relating to this Agreement or the transactions contemplated hereby, shall
be resolved by binding arbitration (“Arbitration”) in accordance with the
following procedures: 

     18.4.1 Initiation of the
Arbitration. The party or parties on one side of the dispute(s)
(collectively the “Claimant”) may initiate the Arbitration by sending to
the party or parties on the other side of the dispute(s) (collectively the
“Respondent”) written notice identifying the matter(s) in dispute and
invoking the procedures of this Section 18.4 (the “Demand”). The
Demand shall include a statement setting forth the nature of the dispute(s), the
amount in controversy, if any, and the remedy sought. Within thirty (30) days of
receipt of the Demand, the Respondent shall submit a statement (the
“Answer”), that shall set forth the Respondent’s response(s) to the
Claimant’s claim(s) and any counterclaims asserted by the Respondent, setting
forth the nature and amount of such counterclaim(s), and the remedy sought by
the Respondent. Within ten (10) days following the Answer, the parties shall
meet and confer to try to resolve the dispute(s). 

51 




     18.4.2 Selection of the
Arbitrators. If, after meeting and conferring, the parties are unable to
resolve the dispute(s), the Claimant shall submit the Demand and Answer, along
with the required fees, to the Judicial Arbitration and Mediation Services
(“JAMS”) resolution center in New York, New York. In accordance with the
Arbitration Rules, JAMS will provide a list of at least five (5) arbitrator
candidates, each of whom shall be a former federal district court judge of a
United States District Court. If the parties are unable to agree on an
arbitrator from the list, then, in accordance with the Arbitration Rules, within
seven (7) days of receipt of the list, each Party may strike two (2) names and
shall strike the remaining candidates in order of preference. The remaining
arbitrator candidate with the highest composite ranking shall be appointed as
the arbitrator (the “Arbitrator”). The parties shall use commercially
reasonable efforts to engage the Arbitrator within fifteen (15) days of filing
their dispute with JAMS. 

     18.4.3 Rules of Procedure.
Except as modified in this Section 18.4, the Arbitration proceeding shall
be conducted in accordance with the JAMS Comprehensive Arbitration Rules &
Procedures, effective October 1, 2010 (collectively, the “Arbitration Rules”).


     18.4.4 Discovery. Except
as set forth herein, the Arbitration shall proceed consistent with JAMS’
discovery rules. The parties shall have twenty (20) Business Days following the
date the Arbitrator is engaged (the “Arbitrator Engagement Date”) to
serve not more than ten (10) written document requests and not more than seven
(7) interrogatories (including subparts). Objections to document requests, and
responses to interrogatories, shall be due thirty (30) Business Days after
service on the party(ies) from whom such discovery is sought. The parties shall
complete production of documents not more than sixty (60) days after service of
document requests; provided, however, that, if a party objects to
a document request and a motion to compel production is made, a party shall have
fifteen (15) days after the Arbitrator resolves that motion to compel to produce
any additional documents required by the Arbitrator’s Order. The party(ies) on
each side of the dispute shall have the opportunity to take up to seven (7)
depositions, with each deposition limited to seven hours of testimony. Such
depositions shall be completed within six (6) months of the Arbitrator
Engagement Date. Upon good cause shown by the requesting party(ies), the
Arbitrator can modify the scope of discovery available to the parties and the
discovery schedule set forth herein. 

     18.4.5 The Arbitration
Hearing. At a date that is mutually convenient to the Arbitrator and the
parties, but commencing no later than thirty (30) days following the close of
discovery, the Arbitrator shall commence the arbitration hearing (the
“Arbitration Hearing”). The Arbitration Hearing shall take place in New
York, New York, at a location mutually selected by the parties or, absent
agreement, chosen by the Arbitrator. The Arbitration Hearing need not run for
consecutive days but must be completed within sixty (60) days following
commencement of the Arbitration Hearing. At the Arbitration Hearing, the
Arbitrator is bound to follow the substantive laws of California applicable to
the issues in the case, without regard to conflict of law principles. A failure
to follow such law is grounds for a challenge to the award. Upon a showing of
good cause by the requesting party(ies), the Arbitrator, in the Arbitrator’s
reasonable discretion, shall determine the need to modify the time limits set
forth in this Section 18.4.5. 

52 




     18.4.6 Form of Decision.
The Arbitrator shall render a reasoned award in writing, setting forth the
decision, the basis therefore, and the relief to be granted to the party(ies) on
each side of the dispute (the “Award”), no later than thirty (30) days
following the last day of the Arbitration Hearing. In no event shall the
Arbitrator award punitive damages to any of the parties involved in the dispute.
The Arbitrator’s decision shall be a final and binding determination of the
dispute. Judgment upon the Award may be entered exclusively in the United States
District Court for the Southern District of New York; provided,
however, that if that court lacks jurisdiction, then the decision may be
entered in the Supreme Court of the State of New York, County of New York. 

     18.4.7 Payment of Arbitration
Expenses. The Claimant(s) and the Respondent(s) shall each pay 50% of the
Arbitrator’s fees and expenses while the arbitration is pending. 

     18.4.8 Submission to
Jurisdiction. To the extent any party seeks to challenge or dispute the
scope, jurisdiction, conduct or result of the Arbitration, or requires judicial
intervention in aid or furtherance of the Arbitration, such party(ies) shall
bring such action exclusively in the United States District Court for the
Southern District of New York; provided, however, that, if subject
matter jurisdiction is unavailable in that court, then all such claims shall be
transferred to or otherwise brought, heard and determined exclusively in the
Supreme Court of the State of New York, County of New York. With respect to any
such action, each party irrevocably submits to the exclusive jurisdiction of the
United States District Court for the Southern District of New York (or, if that
court lacks jurisdiction, the Supreme Court of the State of New York, County of
New York), and agrees that it shall not attempt to deny or defeat personal
jurisdiction by motion or other request for leave from such court, shall not
argue that such court is an inconvenient forum, and agrees not to bring any
action or proceeding arising out of or relating to this Agreement or any of the
transactions contemplated by this Agreement in any other court. 

     18.4.9 Attorneys’ Fees and
Costs. The prevailing party in the Arbitration shall be entitled to seek
payment of its reasonable out-of-pocket costs and expenses (including reasonable
and documented fees and disbursements of counsel and other professionals). To
the extent the Arbitrator awards less than all of the relief requested, the
Arbitrator shall award the reasonable out-of-pocket costs and expenses of a
party in proportion to the extent such party prevailed in the Arbitration. If a
party fails to proceed with the Arbitration, unsuccessfully challenges the
Award, or fails to comply with the Award, the party(ies) on the other side of
the dispute shall be entitled to recover its(their) costs of suit including
reasonable attorneys’ fees for having to compel arbitration or defend or enforce
the Award. 

     18.5 Waiver of Jury Trial.
To the extent not prohibited by applicable law which cannot be waived, the
Company and each Member hereby waives, and covenant that they will not assert
(whether as plaintiff, defendant or otherwise), any right to trial by jury in
any forum in respect of any issue, claim, demand, action or cause of action
arising out of or based upon this Agreement or the subject matter hereof,
whether now existing or hereafter arising and whether sounding in tort or
contract or otherwise. 

     18.6 Severability. If any
provision of this Agreement is determined by a court to be invalid or
unenforceable, that determination shall not affect the other provisions hereof,
each of which shall be construed and enforced as if the invalid or unenforceable
portion were not contained herein. Such invalidity or unenforceability shall not
affect any valid and enforceable application thereof, and each such provision
shall be deemed to be effective, operative, made, entered into or taken in the
manner and to the full extent permitted by law. 

53 




     18.7 Table of Contents,
Headings. The table of contents and headings used in this Agreement are used
for administrative convenience only and do not constitute substantive matter to
be considered in construing this Agreement. 

     18.8 No Third Party
Rights. Except for the provisions of Sections 7.15 and 14.2, the
provisions of this Agreement are for the benefit of the Company, the Board of
Managers and the Members and no other Person, including creditors of the
Company, shall have any right or claim against the Company, the Board or any
Member by reason of this Agreement or any provision hereof or be entitled to
enforce any provision of this Agreement. 

     18.9 Obligation of Golden
Queen. So long as GQ Holdco or a Permitted Transferee thereof is a Member,
Golden Queen hereby agrees to cause GQ Holdco to promptly and completely perform
its obligations under this Agreement. The obligation of Golden Queen under this
Section 18.9 is a primary obligation of Golden Queen, and the Company may
proceed directly against Golden Queen without being required to proceed first,
or exhaust its recourse, against GQ Holdco. 

[REMAINDER OF THIS PAGE BLANK] 

54 




THE PARTIES HAVE EXECUTED THIS AGREEMENT AS OF THE EFFECTIVE
DATE. 

GAUSS LLC 

	By: 	 	 
	Name: 	 H. Jimmy
      Hallac 	 
	Title: 	 President 	 
	  	 	 
	  	 	 
	  	 	 
	GOLDEN QUEEN MINING HOLDINGS,
      INC. 	 
	  	 	 
	  	 	 
	By: 	 	 
	Name: 	 	 
	Title: 	 	 
	  	 	 
	  	 	 
	  	 	 
	GOLDEN QUEEN MINING CO. LTD.
    	 
	  	 	 
	  	 	 
	By: 	 	 
	Name: 	 	 
	Title: 	 	 
	  	 	 
	  	 	 
	  	 	 
	GOLDEN QUEEN MINING COMPANY,
      LLC 	 
	  	 	 
	  	 	 
	By: 	 	 
	Name: 	 	 
	Title: 	 	 






Exhibit A 

MEMBERS OF THE COMPANY, CAPITAL CONTRIBUTIONS, ISSUED UNITS
AND
 PERCENTAGE INTEREST 

(as of September 15, 2014) 


	Member 	Units 	Capital Contribution 	Percentage Interest 
	Gauss 	110,000 	US$110,000,000.00 	50% 
	GQ Holdco 	110,000 	US$110,000,000.00 	50% 
	TOTAL 	220,000 	US$220,000,000.00 	100% 



Exhibit A 




Exhibit B 

TAX MATTERS 

This Exhibit B shall govern the relationship of the
Members and the Company with respect to tax matters and the other matters
addressed in this Exhibit B. 

Article 1 – TAX MATTERS PARTNER 

1.1 Designation of Tax Matters Partner. Unless and until
another qualifying Member is designated as the tax matters partner by the Board,
Gauss shall be the tax matters partner (the “TMP”) of the Company as
defined in Section 6231(a)(7) of the Code or any similar provision under state
or local law. The TMP may resign at any time. The Board of Managers shall
designate any successor TMP. The TMP (i) shall be responsible for, make
elections for, and cause the Company’s independent certified public accountants
to prepare and file any tax returns or other required tax forms after notice to
the Board of Managers, (ii) shall have all of the rights, authority and power
provided to a “tax matters partner” in the Code and related Treasury Regulations
and (iii) shall be authorized to represent the Company (at the Company’s
expense) in connection with all examinations of the Company’s affairs by tax
authorities, including resulting administrative and judicial proceedings. The
TMP and the other Members shall use reasonable best efforts to comply with their
responsibilities under this Article 1 of this Exhibit B and under Sections 6221
through 6233 of the Code and the related Treasury Regulations, and in doing so
shall incur no liability to the Company or any Member. The Company shall
indemnify and reimburse the TMP for all expenses (including legal and accounting
fees) incurred as TMP pursuant to this Article 1 of this Exhibit B in connection
with any administrative or judicial proceeding with respect to the tax liability
of any Member attributable to such Member’s respective interest in the Company.


1.2 Information. Each Member shall furnish the TMP with
information (including, but not limited to, the information specified in Section
6230(e) of the Code) reasonably requested by the TMP to provide the Internal
Revenue Service with sufficient information (i) to allow the Company to comply
with any tax reporting, tax withholding or tax payment obligations of the
Company and (ii) to allow proper notice to the Members under Section 6223 of the
Code. The TMP shall keep each Member reasonably informed of all administrative
and judicial proceedings for the adjustment at the partnership level of
partnership items under Section 6223(g) of the Code. The TMP shall, upon receipt
of notice from the IRS, give notice of an administrative proceeding with respect
to the Company to all Members in accordance with, and as if such Members were
each a “notice partner” pursuant to, Section 6231(a)(8) of the Code. 

1.3 Inconsistent Treatment of Tax Item. Each Member
agrees that any action taken by the TMP in connection with audits (or other
administrative or judicial proceedings) of the Company shall be binding upon
such Member and each Member further agrees that such Member shall not treat any
Company item inconsistently on such Member’s income tax return with the
treatment of the item on the Company’s return and that such Member shall not
independently act with respect to tax audits or tax litigation affecting the
Company, unless previously authorized to do so in writing by the TMP, which
authorization may be withheld by the TMP in its sole discretion. Notwithstanding
the foregoing, if an administrative proceeding under Section 6223 of the Code
begins, upon the request of the TMP, each Member who has acted in violation of
the preceding sentence promptly shall notify the TMP of the treatment by such
Member of any partnership item on such Member’s federal income tax return that
is inconsistent with the treatment of such item on the partnership return of the
Company. 

Exhibit B – Page 1 




1.4 Effect of Certain Decisions by the TMP. Any decision
made by the TMP, including, without limitation, whether or not to settle or
contest any tax matter, whether or not to extend the period of limitations for
the assessment or collection of any tax and the choice of forum for such contest
shall be made in the TMP’s sole and absolute discretion; provided, however, that
the TMP shall notify the Board of Managers of any such decision. 

1.5 Survival. The provisions of this Article 1 of this
Exhibit B shall survive the termination of the Company or the termination of any
Member’s interest in the Company, and shall remain binding on the Members for
the period of time necessary to resolve with the Internal Revenue Service or the
Department of the Treasury any and all matters regarding the federal income
taxation of the Company for the applicable tax years. 

Article 2 – PARTNERSHIP TAX STATUS; TAX ELECTIONS 

2.1 Partnership Tax Status. The Members intend to create
a partnership for United States federal, state and local income and franchise
tax purposes, and, unless otherwise agreed by all of the Members, no Member
shall take any action to change the status of the Company as a partnership under
Treasury Regulations Section 301.7701 -3 or similar provision of state or local
law; provided, however, that nothing in this Agreement shall be deemed to create
a partnership for any other purpose. The TMP shall file with the appropriate
office of the Internal Revenue Service a return of partnership income for the
Company (Form 1065), and file with the appropriate offices of state agencies any
required partnership state income tax or informational returns. Each Member
shall furnish to the TMP any information it may have relating to the Company or
Operations as shall be required for the proper preparation of these returns. The
TMP shall furnish to the other Members for their review and comment a copy of
each proposed income tax return (including all schedules and supporting work
papers) at least two weeks before the date the return is filed. The TMP shall
promptly provide to the Members all information reasonably requested by any
Member to calculate estimated tax payments and prepare tax return extensions.


2.2 Tax Elections.

2.2.1 Required Company
Elections. The Company shall make the following elections for all
partnership income tax returns: 

	 	(a) 	
      to use the accrual method of accounting.

	 	 	 
	 	(b) 	
      to use as its taxable year the calendar year ending
      December 31 (and each Member represents for this purpose that its taxable
      year ends on December 31);

	 	 	 
	 	(c) 	
      to defer all development expenses to the extent possible
      under Section 616(b) of the Code or, at the election of the Board of
      Managers, to deduct currently such expenses under Section 616(a) of the
      Code;

	 	 	 
	 	(d) 	
      unless the Members unanimously agree otherwise, to
      compute the allowance for depreciation for all depreciable assets using
      the 150% declining balance method and the shortest life permissible or, at the election of the
      Board of Managers, using the units of production method of
  depreciation;



Exhibit B – Page 2 





	 	(e) 	
      to treat advance royalties as deductions from gross
      income for the year paid or accrued to the extent permitted by
  law;

	 	 	 
	 	(f) 	
      to make an election to adjust the basis of Company
      property with respect to a Member under Section 754 of the Code at the
      request of the Member; and

	 	 	 
	 	(g) 	
      to amortize over the shortest permissible period all
      organizational expenditures and business start-up expenses under Sections
      195 and 709 of the Code.



2.2.2 Other Company Elections.
Except as provided in Section 2.2.1 of this Exhibit B, elections required or
permitted to be made by the Company under the Code or any state tax law shall be
made as determined by the Board of Managers. 

2.2.3 Member Elections. Each
Member shall elect under Section 617(a) of the Code to deduct currently all
exploration expenses. Each Member reserves the right to capitalize its share of
development and exploration expenses of the Company in accordance with Section
59(e) of the Code, provided that a Member’s election to capitalize all or any
portion of these expenses shall not affect the Member’s Capital Account. 

Article 3 – ALLOCATIONS OF PROFITS AND LOSSES FOR TAX
REPORTING PURPOSES 

This Article 3 of this Exhibit B provides for the allocation
for tax reporting purposes among the Members of items of Profit and Loss and any
other tax items. Such allocations shall be made with respect to each Fiscal Year
as of the end of such Fiscal Year in a manner that will give economic effect to
the Distributions made pursuant to Sections 5.2 and 13.3 of the Agreement. The
Members intend for all such allocations to comply with Section 704(b) and 704(c)
of the Code and the Treasury Regulations thereunder and to appropriately reflect
the Members’ rights to Distributions as set forth in Sections 5.2 and 13.3 of
the Agreement, and the Board of Managers shall make such adjustments as may be
necessary to effectuate such intent; provided, however, that any such adjustment
thereto shall affect only Capital Accounts and allocations, and all such
allocations shall not affect any Member’s rights to Distributions as set forth
in this Agreement. 

Article 4 – CAPITAL ACCOUNTS 

4.1 Capital Accounts. The Board of Managers shall
maintain a separate capital account for each Member and such other Member
accounts as may be necessary or desirable to comply with the requirements of
applicable laws (“Capital Accounts”). 

4.2 Liquidation. After the dissolution, and effective
upon the liquidation of the Company, the Board of Managers shall cause the
Capital Accounts of the Members to be restated to reflect any items of Profit or
Loss that would be realized by the Company and allocated to the Members under
Article 3 of this Exhibit B if the assets were sold at the time of liquidation
for their fair market values as determined under Section 4.3 of this Exhibit B.


4.3 Fair Market Values. For purposes of Section 4.2 of
this Exhibit B, the fair market values of any assets as of the time of
determination shall be determined by the Board of Managers. 

Exhibit B – Page 3 




4.4 Modifications. This Article 4 and the other
provisions of this Exhibit B relating to the maintenance of Capital Accounts and
allocations of items of Profit and Loss are intended to comply with Treasury
Regulations Section 1.704 -1(b), and shall be interpreted and applied in a
manner consistent with those Treasury Regulations. If the Board of Managers
determines that it is prudent to modify the manner in which Capital Accounts, or
any debits or credits to Capital Accounts, are computed in order to comply with
those Treasury Regulations, then the Board of Managers may make the prudent
modifications if the modifications are not likely to have a material effect on
the amount distributable to any Member upon liquidation of the Company under
Section 13.3 of the Agreement. 

4.5 Deemed Termination. Notwithstanding Section 4.2 of
this Exhibit B, if a deemed liquidation of the Company results from a deemed
termination under Section 708(b)(1)(B) of the Code, then (i) Section 4.2 of this
Exhibit B and Section 13.3 of the Agreement shall not apply, and (ii) for income
tax purposes only (A) the Company shall be deemed to have contributed its assets
to a new partnership in exchange for an interest in the new partnership, and
then deemed to have immediately distributed its interest in the new partnership
to the purchaser in the transaction causing the deemed liquidation and the
non-transferring Members in proportion to their respective interests in the
Company and in liquidation of the Company, and (B) the new partnership shall
continue under the terms of this Agreement, including this Exhibit B. 

Exhibit B – Page 4 




Exhibit C 

INITIAL PROGRAM AND BUDGET 

(see attached) 

 

Exhibit C