Document:

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

 

 

TERM LOAN AGREEMENT 

dated as of

 December 31, 2014

among 

GOLDEN QUEEN MINING CO. LTD., as Borrower,

 and 

THE LANDON T. CLAY 2009 IRREVOCABLE TRUST DATED MARCH 6, 2009

and

HARRIS CLAY, as Lenders 

 

	SECTION
      I DEFINITIONS 	1
      
	               
         1.1
      	Definitions
      	1
      
	           
             1.2
      	Rules
      of Interpretation 	10
      
	SECTION
      II DESCRIPTION OF LOAN 	11
      
	           
             2.1
      	The
      Loan 	11
      
	               
         2.2
      	Interest
      Rates and Payments of Interest 	11
      
	           
             2.3
      	Closing
      Fee 	11
      
	               
         2.4
      	Repayment
      of Loan 	12
      
	           
             2.5
      	Prepayments
      	12
      
	               
         2.6
      	Method
      of Payments 	12
      
	           
             2.7
      	Computation
      of Interest and Fees 	13
      
	               
         2.8
      	Taxes
      	13
      
	SECTION
      III CONDITIONS OF LENDING 	13
      
	               
         3.1
      	Closing
      Deliverables 	13
      
	           
             3.2
      	Indebtedness
      	15
      
	               
         3.3
      	Litigation;
      Investigations 	15
      
	           
             3.4
      	Accuracy
      of Representations and Warranties 	15
      
	               
         3.5
      	No
      Default 	15
      
	           
             3.6
      	No
      Change in Law 	15
      
	SECTION
      IV REPRESENTATIONS AND WARRANTIES 	15
      
	           
             4.1
      	Existence,
      Qualification and Power 	15
      
	               
         4.2
      	Authorization;
      No Contravention 	15
      
	           
             4.3
      	Governmental
      Authorization; Other Consents; Corrupt Practices 	16
      
	               
         4.4
      	Binding
      Effect 	16
      
	           
             4.5
      	Financial
      Statements 	16
      
	               
         4.6
      	Litigation
      	17
      
	           
             4.7
      	No
      Default 	17
      
	               
         4.8
      	Ownership
      of Property; Encumbrances 	17
      
	           
             4.9
      	Environmental
      Compliance 	17
      
	               
         4.10
      	 Insurance
      	17
      
	           
             4.11
      	 Taxes
      	17
      
	               
         4.12
      	 Subsidiaries;
      Equity Interests 	18
      
	           
             4.13
      	 Margin
      Regulations; Investment Company Act 	18
      
	               
         4.14
      	 Compliance
      with Laws 	18
      
	           
             4.15
      	 Solvency
      	18
      
	               
         4.16
      	 Compliance
      with OFAC Rules and Regulations 	18
      
	           
             4.17
      	 Foreign
      Assets Control Regulations, Etc 	18
      
	SECTION
      V AFFIRMATIVE COVENANTS 	19
      
	           
             5.1
      	Financial
      Statements 	19
      
	               
         5.2
      	Conduct
      of Business 	20
      

i 

	           
             5.3
      	Taxes
      	20
      
	               
         5.4
      	Inspection
      Rights 	20
      
	           
             5.5
      	Maintenance
      of Books and Records 	20
      
	               
         5.6
      	Use
      of Proceeds 	21
      
	           
             5.7
      	Further
      Assurances 	21
      
	               
         5.8
      	Notification
      Requirements 	21
      
	           
             5.9
      	Environmental
      Compliance 	21
      
	               
         5.10
      	 Subsidiary
      Guaranties 	22
      
	SECTION
      VI NEGATIVE COVENANTS 	22
      
	               
         6.1
      	Indebtedness
      	22
      
	           
             6.2
      	Contingent
      Liabilities 	23
      
	               
         6.3
      	Encumbrances
      	23
      
	           
             6.4
      	Merger;
      Dispositions; Liquidation 	23
      
	               
         6.5
      	Restricted
      Payments 	23
      
	           
             6.6
      	Investments;
      Purchases of Assets 	24
      
	               
         6.7
      	Transactions
      with Affiliates 	24
      
	           
             6.8
      	Fiscal
      Year 	24
      
	SECTION
      VII DEFAULTS 	24
      
	           
             7.1
      	Events
      of Default 	24
      
	               
         7.2
      	Remedies
      upon Event of Default 	26
      
	SECTION
      VIII GENERAL 	27
      
	               
         8.1
      	Notices
      	27
      
	           
             8.2
      	Successors
      and Assigns 	29
      
	               
         8.3
      	Expenses
      	29
      
	           
             8.4
      	Indemnification
      	29
      
	               
         8.5
      	Survival
      of Covenants, Etc 	30
      
	           
             8.6
      	No
      Waivers 	30
      
	               
         8.7
      	Amendments,
      Waivers, etc 	30
      
	           
             8.8
      	Lost
      Note, Etc 	30
      
	               
         8.9
      	Captions;
      Counterparts 	30
      
	           
             8.10
      	 Entire
      Agreement, Etc 	30
      
	               
         8.11
      	 Waiver
      of Jury Trial 	31
      
	           
             8.12
      	 Governing
      Law 	31
      
	               
         8.13
      	 Jurisdiction;
      Consent to Service of Process 	31
      
	           
             8.14
      	 Judgment
      Currency 	32
      
	               
         8.15
      	 Severability
      	32
      

EXHIBITS 

Form of 

	
A-1		
LTC Note	
	
A-2
		
HC Note	

ii 

	
B		
Pledge Agreement	
	
C
		
Subsidiary Guaranty	
	
D		
Consent under GQ California LLC Agreement	
	
E
		
Option Agreement	
	
F		
Registration Rights Agreement	

SCHEDULES 

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

iii 

TERM LOAN AGREEMENT 

            THIS
TERM LOAN AGREEMENT is made as of December 31, 2014, among GOLDEN QUEEN MINING
CO. LTD., a British Columbia corporation, (the “Borrower”), THE LANDON T.
CLAY 2009 IRREVOCABLE TRUST DATED MARCH 6, 2009 (“LTC Lender”) and HARRIS
CLAY (“HC Lender” and, together with LTC Lender, the “Lenders”).

            WHEREAS,
the Borrower has requested that the Lenders extend credit in the form of a term
loan, and the Lenders have indicated their willingness to lend, in the principal
amount of $12,500,000, on the terms and subject to the conditions set forth
herein. 

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

SECTION I 

DEFINITIONS 

           
1.1        Definitions. 

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

           
Affiliate. With reference to any Person, (i) any director or officer of
that Person, or (ii) another Person that directly, or indirectly through one or
more intermediaries, Controls or is Controlled by or is under common Control
with the Person specified. For the purposes hereof, the Lender shall not be
deemed to be an Affiliate of the Borrower.

            Agreement.
This Term Loan Agreement, including the Exhibits and Schedules hereto, as the
same may be supplemented or amended or restated from time to time. 

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

           
Borrower. See the Preamble. 

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

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

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

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

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

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

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

- 2 - 

            Clay
Family Loan Agreements. Collectively, (i) that certain Loan Agreement dated
December 31, 2013 among the Borrower, GQ California, and the Clay Family 2009
Irrevocable Trust, Dated April 14, 2009 evidencing a loan in the original
principal amount of $7,500,000, the promissory note executed in connection
therewith, and all related loan and security documents executed by the Borrower,
GQ California, or their respective Affiliates in connection therewith and the
transactions contemplated thereby and (ii) that certain Loan Agreement dated
December 31, 2013 among the Borrower, GQ California, and Harris Clay evidencing
a loan in the original principal amount of $2,500,000, the promissory note
executed in connection therewith, and all related loan and security documents
executed by the Borrower, GQ California, or their respective Affiliates in
connection therewith and the transactions contemplated thereby. 

           
Clay Family Member. Any Person in the Clay Family. 

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

           
Closing Fee. See Section 2.3. 

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

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

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

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

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

           
Dollars or $. United States dollars. 

- 3 - 

           
Encumbrances. See Section 6.3. 

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

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

           
Event of Default. Any event described in Section 7.1. 

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

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

           
Fixed Rate. 10% per annum. 

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

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

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

- 4 - 

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

           
HC Lender. See the Preamble. 

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

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

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

           
LTC Lender. See the Preamble. 

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

- 5 - 

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

           
Loan Parties. Collectively, the Borrower and each Subsidiary
Guarantor.

          
 Loan. See Section 2.1(a). 

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

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

             
Maturity Date. July 1, 2015. 

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

             
Net Cash Proceeds. With respect to: 

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

- 6 - 

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

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

           
Notes. See Section 2.1(b).

          
 Obligations. The following:

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

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

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

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

- 7 - 

          
Permitted Encumbrances. See Section 6.3. 

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

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

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

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

            Qualified
Investments. As applied to the Borrower, investments in (i) notes, bonds or
other obligations of the United States of America or any agency thereof that as
to principal and interest constitute direct obligations of or are guaranteed by
the United States of America and that have maturity dates not more than one year
from the date of acquisition; (ii) notes, bonds or other obligations of the
Federal Government of Canada or any agency thereof that as to principal and
interest constitute direct obligations of or are guaranteed by the Federal
Government of Canada and that have maturity dates not more than one year from
the date of acquisition; (iii) certificates of deposit, demand deposit accounts
or other deposit instruments or accounts maintained in the ordinary course of
business with banks or trust companies organized under the laws of the United
States or any state thereof that have capital and surplus of at least
$500,000,000 which certificates of deposit and other deposit instruments, if not
payable on demand, have maturities of not more than one year from the date of
acquisition; (iv) certificates of deposit, demand deposit accounts or other
deposit instruments or accounts maintained in the ordinary course of business
with banks or trust companies organized under the laws of Canada or any province
thereof that have capital and surplus of at least $500,000,000 which
certificates of deposit and other deposit instruments, if not payable on demand,
have maturities of not more than one year from the date of acquisition; (iv)
commercial paper issued by any Person that is incorporated under the laws of the
United States of America or any state thereof and rated at least A-2 by S&P
or at least P-2 by Moody’s that is rated not less than P-2 or A-2 or their
equivalents by Moody’s or S&P, respectively, or their successors, and in
each case maturing not more than one year from the date of acquisition; (v)
commercial paper issued by any Person that is incorporated or organized under
the laws of Canada or any Province thereof, which is rated at least A-2 by
S&P or at least P-2 by Moody’s, or any Canadian affiliate of the same rating
agencies, in each case with maturities of not more than one year from the date
acquired; or (vi) any repurchase agreement secured by any one or more of the
foregoing. 

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

- 8 - 

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

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

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

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

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

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

- 9 - 

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

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

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

           
1.2        Rules of Interpretation.

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

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

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

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

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

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

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

- 10 - 

SECTION II 

DESCRIPTION OF LOAN 

           
2.1        The Loan. 

                                 (a)       
Term Loan. Upon the terms and subject to the conditions of this
Agreement, and in reliance upon the representations, warranties and covenants of
the Borrower herein, the Lenders agree to make a term loan (the “Loan”)
to the Borrower on the Closing Date in the principal amount of Twelve Million
Five Hundred Thousand Dollars ($12,500,000). Each of HC Lender and LTC Lender
shall fund its respective portion of the Loan pursuant to the allocations set
forth on Schedule 2.1(a). 

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

           
2.2        Interest Rates and Payments of
Interest. 

                                 (a)       
The Loan shall bear interest at a rate per annum equal to the Fixed Rate. Such
interest shall be payable quarterly in arrears on the first Business Day of each
quarter. 

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

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

            2.3       
Closing Fee. The Borrower shall pay to the Lenders on the Closing Date a
closing fee in the amount of One Million Dollars ($1,000,000) (the “Closing
Fee”). 

- 11 - 

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

           
2.5        Prepayments.

                               
(a)        Mandatory. 

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

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

                                 (b)       
Consent Required. Except as provided in Section 2.5(a), the Borrower may
not, without the prior written consent of the Lenders, at any time prepay the
Loan in whole or in part.

           
2.6        Method of Payments. 

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

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

- 12 - 

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

           
2.8        Taxes.

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

                                 (b)       
Indemnification by the Borrower. The Borrower shall indemnify the
Lenders, within ten days after demand therefor, for the full amount of any Taxes
(including Taxes imposed or asserted on or attributable to amounts payable under
this Section 2.8) paid by the Lenders, as the case may be, and any
penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Taxes were correctly or legally imposed or asserted
by the relevant Governmental Authority. A certificate as to the amount of such
payment or liability delivered to the Borrower by the Lenders shall be
conclusive absent manifest error. 

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

SECTION III 

CONDITIONS OF LENDING 

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

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

- 13 - 

                                
(a)        an executed counterpart of this
Agreement; 

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

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

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

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

                                 (f)       
evidence satisfactory to the Lenders that that certain Consent under the Amended
and Restated Limited Liability Company Agreement of GQ California in the form of
Exhibit D hereto has been executed and delivered by each party thereto;

                                
(g)        evidence satisfactory to the
Lenders that the Option Agreement among the Lenders and LUK Holdco in the form
of Exhibit E has been executed and delivered by each party thereto; 

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

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

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

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

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

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

- 14 - 

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

            3.3       
Litigation; Investigations. No litigation, arbitration, proceeding or
investigation shall be pending or, to the knowledge of the Borrower, threatened
in writing which questions the validity or legality of the transactions
contemplated by any Loan Document or seeks a restraining order, injunction or
damages in connection therewith, or which, in the reasonable judgment of the
Lenders, would reasonably be expected to adversely affect the transactions
contemplated hereby or thereby. 

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

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

            3.6       
No Change in Law. No change shall have occurred in any law or regulation
or interpretation thereof that, in the reasonable opinion of counsel for the
Lenders, would make it illegal or against the formally adopted and published
policy of any Governmental Authority for the Lenders to make the Loan hereunder.

SECTION IV 

REPRESENTATIONS AND WARRANTIES 

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

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

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

- 15 - 

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

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

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

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

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

            4.5       
Financial Statements. The audited financial statements of the Borrower
and its Subsidiaries for the fiscal year of the Borrower ended December 31,
2013, furnished to the Lenders, are true and complete in all material respects,
have been prepared in accordance with GAAP, and fairly present the financial
condition of the Borrower and its Subsidiaries as of the date of such financial
statements and the results of their operations for the period then ending. Since the date of such statements, there has been no material
change in any Company’s accounting procedures. Since the delivery to the Lenders
of the most recently audited financial statements of the Borrower, there has
been no material adverse change in the Borrower or its Subsidiaries’ financial
condition, properties or business, taken as a whole. 

- 16 - 

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

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

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

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

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

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

- 17 - 

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

           
4.13      Margin Regulations; Investment Company
Act.

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

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

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

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

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

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

- 18 - 

SECTION V 

AFFIRMATIVE COVENANTS 

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

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

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

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

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

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

- 19 - 

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

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

           
5.2        Conduct of Business.

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

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

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

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

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

- 20 - 

           
5.6        Use of Proceeds. 

                                 (a)       
The Borrower will use the proceeds of the Loan to (i) repay all outstanding
Indebtedness under the Clay Family Loan Agreements, (ii) pay the Closing Fee,
(iii) pay taxes and expenses associated with the transactions contemplated
hereby and (iv) for general corporate purposes of the Borrower.

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

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

           
5.8        Notification Requirements.
The Borrower shall furnish to the Lenders: 

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

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

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

           
5.9        Environmental Compliance.

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

- 21 - 

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

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

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

SECTION VI 

NEGATIVE COVENANTS 

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

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

                                
(a)        Obligations; 

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

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

                                
(d)        Guarantees permitted under
Section 6.2 hereof; 

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

- 22 - 

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

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

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

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

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

           
6.4        Merger; Dispositions;
Liquidation.

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

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

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

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

- 23 - 

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

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

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

                                
(a)        Qualified Investments; 

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

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

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

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

SECTION VII 

DEFAULTS 

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

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

                                
(b)        Specific Covenants. (i) The
Borrower fails to perform or observe any term, covenant or agreement contained
in any of Sections 5.1(a), (b), or (c), Sections
5.2(b), 5.4, 5.6, 5.7, 5.8, or 5.10, or Section VI, (ii) a Subsidiary Guarantor violates or fails to perform or
observe any term, covenant or agreement contained in the Subsidiary Guaranty, or
(iii) the Borrower or Holdings violates or fails to perform or observe any term,
covenant or agreement contained in the Pledge Agreement; or 

- 24 - 

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

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

                                
(e)        Cross-Default. (i) The
Borrower (A) shall fail to make any payment when due (whether by scheduled
maturity, required prepayment, acceleration, demand, or otherwise) in respect of
any Indebtedness or Guarantee (other than Indebtedness hereunder) having an
aggregate principal amount (including undrawn committed or available amounts and
including amounts owing to all creditors under any combined or syndicated credit
arrangement) of more than $50,000, or (B) shall fail to observe or perform any
other agreement or condition relating to any such Indebtedness or Guarantee or
contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event occurs, the effect of which default or other event
is to cause, or to permit the holder or holders of such Indebtedness or the
beneficiary or beneficiaries of such Guarantee (or a trustee or agent on behalf
of such holder or holders or beneficiary or beneficiaries) to cause, with the
giving of notice if required, such Indebtedness to be demanded or to become due
or to be repurchased, prepaid, defeased or redeemed (automatically or
otherwise), or an offer to repurchase, prepay, defease or redeem such
Indebtedness to be made, prior to its stated maturity, or such Guarantee to
become payable or cash collateral in respect thereof to be demanded; or (ii) the
Borrower shall fail to pay when due (after any applicable period of grace) any
amount payable under one or more agreements for the use of real or personal
property requiring aggregate payments in excess of $100,000 in any twelve month
period, or fails to observe or perform any term, covenant or agreement or
relating to such agreement(s) for the use of real or personal property, and the
result of any such failure is to permit any other party to such agreement(s) to
exercise remedies under or terminate such agreement(s) prior to the expiration
date thereof; or (iii) a default under the Subsidiary Guaranty shall have
occurred and be continuing; or 

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

- 25 - 

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

                                
(h)        Judgments. There is entered
against the Borrower (i) except as disclosed on Schedule 4.6, one or more
final judgments or orders for the payment of money in an aggregate amount (as to
all such judgments and orders) exceeding $50,000 (to the extent not covered by
independent third-party insurance as to which the insurer is rated at least “A”
by A.M. Best Company, has been notified of the potential claim and does not
dispute coverage), or (ii) any one or more non-monetary final judgments that
have, or could reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect and, in either case, (A) enforcement proceedings are
commenced by any creditor upon such judgment or order, or (B) there is a period
of 30 consecutive days while such judgment shall not have been discharged during
which a stay of enforcement of such judgment, by reason of a pending appeal or
otherwise, is not in effect; or 

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

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

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

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

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

provided, however, that upon the occurrence of an
Event of Default specified in Section 7.1(f), the unpaid principal amount
of the Loan and all interest and other amounts as aforesaid shall automatically
become due and payable, without further act of the Lenders. 

- 26 - 

SECTION VIII 

GENERAL 

           
8.1        Notices. 

                                 (a)       
Notices Generally. Subject to Section 8.1(c), all notices,
requests and demands to or upon the respective parties hereto to be effective
shall be in writing (including by facsimile or .pdf), and, unless otherwise
expressly provided herein, shall be deemed to have been duly given or made (a)
when delivered by hand, (b) when transmitted via facsimile to the number set out
herein, (c) when delivered by electronic mail, when delivered, or (d) the second
Business Day following the day on which the same has been delivered prepaid to a
reputable national express air courier service, addressed as follows in the case
of the Borrower and the Lenders, or to such other address as may be hereafter
notified by the respective parties hereto: 

	If to the Borrower: 	Golden Queen Mining Co. Ltd. 
	  	6411 Imperial Avenue 
	  	West Vancouver, British Columbia, Canada V7W
      2J5 
		Attention:     H. Lutz
      Klingmann (President and Andrée St-Germain (Chief Financial Officer)

	  	Email:           
       lklingmann@goldenqueen.com and 
	  	                      
      astgermain@goldenqueen.com
	  	 
	with copies to: 	Morton Law LLP 
	  	1200 - 750 West Pender Street 
	  	Vancouver, British Columbia 
	  	Canada, V6C 2T8 
	  	Attention:    Edward L.
      Mayerhofer, Esq. 
	  	Email:           
      elm@mortonlaw.ca
	  	Fax:              
      (604) 681-9652 
	  	 
	  	and 
	  	 
	  	Dorsey & Whitney LLP 
	  	1400 Wewatta Street, Suite 400 
	  	Denver, CO 80202 
	  	Attention: Kenneth Sam, Esq. 
	  	Email: sam.kenneth@dorsey.com 
	  	Fax:       
             (303) 629-3450 
	  	Facsimile:     (212)
      755-7306 
	  	 
	If to the Lenders: 	c/o East Hill Management Company 
	  	10 Memorial Drive 
	  	Suite 902 
	  	Providence, RI 02903 
	  	Email:            
      thomas.clay@easthillmgt.com 

- 27 - 

	  	Fax:                     
      (401) 490-0749 
	  	 
	with a copy to: 	Sullivan & Worcester LLP 
	  	One Post Office Square 
	  	Boston, MA 02109 
	  	Attention:          
      William A. Levine, Esq. 
	  	Telephone:         
      (617) 338-2921 
	  	Facsimile:             (617)
      338-2880 
	  	E-mail:                   wlevine@sandw.com
    

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

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

- 28 - 

            8.2       
Successors and Assigns. The provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby, except that neither the Borrower nor
any other Loan Party may assign or otherwise transfer any of its rights or
obligations hereunder or the other Loan Documents without the prior written
consent of the Lenders. Each Lender may at any time assign all or a portion of
its rights and obligations under this Agreement. Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby)
any legal or equitable right, remedy or claim under or by reason of this
Agreement. 

            8.3       
Expenses. Whether or not the transactions contemplated herein shall be
consummated, the Borrower shall reimburse the Lenders for all reasonable
out-of-pocket fees, disbursements and expenses (including all reasonable
attorneys’ fees) incurred or expended in connection with the preparation,
negotiation, filing or recording and interpretation of this Agreement and the
other Loan Documents, or any amendment, modification, approval, consent or
waiver hereof or thereof, or in connection with the enforcement of any
Obligations or the satisfaction of any Indebtedness of the Borrower hereunder or
thereunder, or in connection with any litigation, proceeding or dispute in any
way related to the credit hereunder; provided that all of the foregoing
incurred in connection with this Agreement and the transactions contemplated by
Section III hereof shall not exceed $150,000. The Borrower will pay any Taxes
(including any interest and penalties in respect thereof). 

            8.4       
Indemnification. The Borrower agrees to indemnify and hold harmless each
Lender, as well as its shareholders, directors, offices, agents, attorneys,
subsidiaries and Affiliates, from and against all damages, losses, settlement
payments, obligations, liabilities, claims, suits, penalties, assessments,
citations, directives, demands, judgments, actions or causes of action, whether
statutorily created or under the common law, all reasonable out-of-pocket costs
and expenses (including, without limitation, reasonable fees and disbursements
of attorneys, engineers and consultants) and all other liabilities whatsoever
(including, without limitation, liabilities under Environmental Laws) which
shall at any time or times be incurred, suffered, sustained or required to be
paid by any such indemnified Person (except any of the foregoing which result
from the gross negligence or willful misconduct of the indemnified Person) on
account of or in relation to or any way in connection with any of the
arrangements or transactions contemplated by, associated with or ancillary to
this Agreement, the other Loan Documents or any other documents executed or
delivered in connection herewith or therewith, all as the same may be amended
from time to time, whether or not all or part of the transactions contemplated
by, associated with or ancillary to this Agreement, any of the Loan Documents or
any such other documents are ultimately consummated. In any investigation,
proceeding or litigation, or the preparation therefor, each Lender shall select
its own counsel and, in addition to the foregoing indemnity, the Borrower agrees
to pay promptly the reasonable fees and expenses of such counsel. In the event
of the commencement of any such proceeding or litigation, the Borrower shall be
entitled to participate in such proceeding or litigation with counsel of its
choice at its own expense, provided that such counsel shall be reasonably
satisfactory to each Lender. The Borrower authorizes each Lender to charge any
deposit account or Note Record which it may maintain with any of them for any of
the foregoing. The covenants of this Section 8.4 shall survive payment or satisfaction of payment of
all amounts owing with respect to the Notes, any other Loan Document or any
other Obligation. 

- 29 - 

            8.5       
Survival of Covenants, Etc. All covenants, agreements, representations
and warranties made herein, in the other Loan Documents or in any documents or
other papers delivered by or on behalf of the Borrower pursuant hereto shall be
deemed to have been relied upon by the Lenders, notwithstanding any
investigation heretofore or hereafter made by it, and shall survive the making
by the Lenders of the Loan as herein contemplated, and shall continue in full
force and effect so long as any Obligation remains outstanding and unpaid or a
Lender has any obligations hereunder. All statements contained in any
certificate or other writing delivered by or on behalf of the Borrower pursuant
hereto or in connection with the transactions contemplated hereby shall
constitute representations and warranties by the Borrower hereunder. 

            8.6       
No Waivers. No failure or delay by a Lender in exercising any right,
power or privilege hereunder, under the Notes or under any other Loan Document
shall operate as a waiver thereof; nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. No waiver shall extend to or affect any
Obligation not expressly waived or impair any right consequent thereon. No
course of dealing or omission on the part of a Lender in exercising any right
shall operate as a waiver thereof or otherwise be prejudicial thereto. No notice
to or demand upon the Borrower shall entitle the Borrower to other or further
notice or demand in similar or other circumstances, except as otherwise
specifically provided in the Loan Documents. The rights and remedies herein and
in the Notes and the other Loan Documents are cumulative and not exclusive of
any rights or remedies otherwise provided by agreement or law. 

            8.7       
Amendments, Waivers, etc. Neither this Agreement nor the Notes nor any
other Loan Document nor any provision hereof or thereof may be amended, waived,
discharged or terminated except by a written instrument signed by each Lender,
and, in the case of amendments, by the Borrower. 

            8.8       
Lost Note, Etc. Upon receipt of an affidavit of a Lender as to the loss,
theft, destruction or mutilation of a Note and, in the case of any such loss,
theft, destruction or mutilation, upon cancellation of a Note, if available, the
Borrower will issue, in lieu thereof, a replacement Note in the same principal
amount thereof and otherwise of like tenor. 

            8.9       
Captions; Counterparts. The captions in this Agreement are for
convenience of reference only and shall not define or limit the provisions
hereof. This Agreement and any amendment hereof may be executed in several
counterparts and by each party on a separate counterpart, each of which when so
executed and delivered shall be an original, but all of which together shall
constitute one instrument. In proving this Agreement it shall not be necessary
to produce or account for more than one such counterpart signed by the party
against whom enforcement is sought. This Agreement shall become effective when
it shall have been executed by the Lenders and when the Lenders shall have
received counterparts hereof that, when taken together, bear the signatures of
each of the other parties hereto.

            8.10     
Entire Agreement, Etc. The Loan Documents and any other documents
executed in connection herewith or therewith express the entire understanding of
the parties with respect to the transactions contemplated hereby and supersede all prior
agreements with respect to the subject matter hereof.

- 30 - 

            8.11    
 Waiver of Jury Trial. THE BORROWER AND EACH LENDER HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THEIR RIGHT TO A JURY TRIAL WITH
RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH
THIS AGREEMENT, THE NOTES OR ANY OF THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR
OBLIGATIONS HEREUNDER OR THEREUNDER, THE PERFORMANCE OF SUCH RIGHTS AND
OBLIGATIONS OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY INCLUDING, WITHOUT LIMITATION, ANY
COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS OR ACTIONS OF A LENDER
RELATING TO THE ADMINISTRATION OR ENFORCEMENT OF THE LOAN AND THE LOAN
DOCUMENTS, AND AGREE THAT THEY WILL NOT SEEK TO CONSOLIDATE ANY SUCH ACTION WITH
ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.

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

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

            8.12    
 Governing Law. This Agreement and each of the other Loan Documents
are contracts under the laws of the State of New York and shall for all purposes
be construed in accordance with and governed by the laws of said State without
reference to its conflict or choice of laws principles (other than Sections
5-1401 and 5-1402 of the New York General Obligations Law, which shall apply to
this Agreement). 

            8.13    
 Jurisdiction; Consent to Service of Process. (a) The Borrower
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of the Supreme Court of the State of New York
sitting in New York County and of the United States District Court for the
Southern District of New York, and any appellate court from any thereof, in any
action or proceeding arising out of or relating to any Loan Document, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final, non-appealed judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in
this Agreement or any other Loan Document shall affect any right that the
Borrower or the Lenders may otherwise have to bring any action or proceeding
relating to this Agreement or any other Loan Document against any other party
hereto or their properties in the courts of any jurisdiction. 

- 31 - 

                                 (b)       
The Borrower hereby irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection which it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement or any other Loan Document in any court
referred to in paragraph (a) of this Section 8.13. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court. 

                                 (c)       
Each party to this Agreement irrevocably consents to service of process in the
manner provided for notices in Section 8.1. Nothing in this Agreement or
any other Loan Document will affect the right of any party to this Agreement to
serve process in any other manner permitted by law. The Borrower hereby appoints
Holdings as its authorized agent solely to receive for and on its behalf service
of summons or other legal process in any action, suit or proceeding in any court
specified in this Section. 

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

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

            8.15    
 Severability. The provisions of this Agreement are severable and if
any one clause or provision hereof shall be held invalid or unenforceable in
whole or in part in any jurisdiction, then such invalidity or unenforceability shall
affect only such clause or provision, or part thereof, in such jurisdiction, and
shall not in any manner affect such clause or provision in any other
jurisdiction, or any other clause or provision of this Agreement in any
jurisdiction. 

- 32 - 

[Remainder of page intentionally left blank; signature page
follows] 

- 33 - 

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

BORROWER: 

GOLDEN QUEEN MINING CO. LTD. 

 

	 	By: 	/s/ Lutz Klingmann  
	 	 	Name:  Lutz Klingmann
	 	 	Title:    President

 

ACKNOWLEDGED AND AGREED FOR PURPOSES
OF SECTION 8.13: 

GOLDEN QUEEN MINING HOLDINGS, INC.

 

	 	By: 	/s/ Lutz Klingmann  
	 	 	Name:  Lutz Klingmann
	 	 	Title:    President

[Signature page to Term Loan Agreement] 

LENDERS: 

THE LANDON T. CLAY 2009 IRREVOCABLE
TRUST DATED MARCH 6, 2009 

 

	 	By: 	 
    /s/ Thomas M. Clay
	 	 	
      Thomas M. Clay, Trustee 

 

	 	/s/ Harris M. Clay 
	 	Harris Clay 

[Signature page to Term Loan Agreement] 

Schedule 2.1(a) 

Loan Allocation 

	Name of Lender 	Amount Funding 	Percentage Funding 
	LTC Lender 	$9,375,000 	75% 
	HC Lender 	$3,125,000 	25% 
	Total: 	$12,500,000 	100% 

Schedule 4.2 

No Conflict 

None. 

Schedule 4.3 

Governmental Authorizations 

None. 

Schedule 4.6 

Litigation 

None. 

Schedule 4.7 

No Defaults 

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

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

Schedule 4.12 

Subsidiaries; Loan Parties 

	
	Ownership 
Interest 	EIN/Corp. Number 

	Golden Queen Mining Company, LLC, a 
California limited
      liability company 

15772 K Street 
Mojave, California, 93501
      

	50%
      

	Federal Employer
      
Identification Number: 
47-1904841 
California Taxpayer
      
Identification Number: 
026-1672-0 
Secretary Of State
      
Entity Number: 
201425310169 
	Golden Queen Mining Holdings, Inc., a 
California
      corporation 

15772 K Street 
Mojave, California, 93501 	100% 

	CALIFORNIA 
CORPORATE
      
NUMBER: C3698788 

Schedule 6.1(e) 

Existing Indebtedness 

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

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

On January 1, 2014, the Borrower Loan
entered into (i) a Loan Agreement dated December 31, 2013 among the Borrower, GQ
California, and the Clay Family 2009 Irrevocable Trust, Dated April 14, 2009,
evidencing a loan in the original principal amount of $7,500,000, and the
promissory note executed in connection therewith, and (ii) a Loan Agreement
dated December 31, 2013 among the Borrower, GQ California, and Harris Clay,
evidencing a loan in the original principal amount of $2,500,000, and the
promissory note executed in connection therewith. The Loans have a twelve-month
term and bears an annual interest rate of 5%, payable on the maturity date.Golden Queen Mining Co. Ltd. - Exhibit 10.2 - Filed by newsfilecorp.com

GUARANTY 

            This
GUARANTY, dated as of December 31, 2014 (this “Guaranty”) is made by
GOLDEN QUEEN MINING HOLDINGS, INC., a California corporation (“Holdings”
or the “Guarantor”) in favor of THE LANDON T. CLAY 2009 IRREVOCABLE TRUST
DATED MARCH 6, 2009 (“LTC Lender”) and HARRIS CLAY, an individual
(together with LTC Lender, the “Lenders”), pursuant to that certain Term
Loan Agreement dated of even date herewith among Golden Queen Mining Co. Ltd., a
British Columbia corporation (the “Borrower”) and the Lenders (the
“Loan Agreement”). Unless otherwise defined herein, terms defined in the
Loan Agreement are used herein as defined in the Loan Agreement. 

            WHEREAS,
the Guarantor will derive substantial direct and indirect benefits from the
transactions contemplated by the Loan Agreement; 

           
WHEREAS, it is a condition precedent to the making of the Loan by the Lenders
that the Guarantor shall have executed and delivered this Guaranty; 

           
NOW, THEREFORE, in order to induce the Lenders to enter into the Loan Agreement
and to make a term loan to the Borrower upon the terms and subject to the
conditions set forth in the Loan Agreement, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Guarantor agrees as follows: 

           
1.        GUARANTY OF PAYMENT AND
PERFORMANCE. The Guarantor hereby guarantees to the Lenders the full and
punctual payment when due (whether at maturity, by acceleration or otherwise)
and the performance of all Obligations. This Guaranty is an absolute,
unconditional and irrevocable guaranty of the full and punctual payment and
performance of the Obligations and not of their collectability only and is in no
way conditioned upon any requirement that the Lenders first attempt to collect
any of the Obligations from the Borrower or resort to any collateral or other
means of obtaining their payment.

           
2.        GUARANTOR’S AGREEMENT TO
PAY.

                                 (a)       
If an Event of Default shall occur and be continuing under the Loan Agreement,
the obligations of the Guarantor hereunder shall become immediately due, without
notice of any nature, which notice is expressly waived by the Guarantor, and the
Guarantor shall immediately pay to the Lenders on demand the full unpaid balance
of the Obligations.

                                 (b)       
The Guarantor further agrees, as the principal obligor and not as a guarantor
only, to pay to the Lenders, on demand, all costs and expenses (including court
costs and reasonable legal expenses) incurred or expended by the Lenders in
connection with the Obligations, this Guaranty and the enforcement thereof,
together with interest on amounts recoverable under this Guaranty from the time
such amounts become due until payment, at the rate per annum equal to the Fixed
Rate; provided that if such interest exceeds the maximum amount permitted to be
paid under applicable law, then such interest shall be reduced to such maximum
permitted amount. 

                                 (c)       
Payments by the Guarantor hereunder may be required by the Lenders on any number
of occasions. 

            3.       
UNLIMITED GUARANTY. The liability of the Guarantor hereunder shall be
unlimited. 

            4.       
WAIVERS BY GUARANTOR; LENDERS’ FREEDOM TO ACT. The Guarantor agrees that
the Obligations will be paid and performed strictly in accordance with their
respective terms regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of the
Lenders with respect thereto. To the extent permitted by applicable law, the
Guarantor waives presentment, demand, protest, notice of acceptance, notice of
obligations incurred and all other notices of any kind, all defenses which may
be available by virtue of any valuation, stay, moratorium law or other similar
law now or hereafter in effect, any right to require the marshalling of assets
of the Borrower, and all suretyship defenses generally. Without limiting the
generality of the foregoing, the Guarantor, to the extent permitted by
applicable law, agrees to the provisions of any instrument evidencing, securing
or otherwise executed in connection with any Obligation and agrees that the
obligations of the Guarantor hereunder shall not be released or discharged, in
whole or in part, or otherwise affected by (i) the failure of the Lenders to
assert any claim or demand or to enforce any right or remedy against the
Borrower; (ii) any extensions or renewals of any Obligation; (iii) any
rescissions, waivers, amendments or modifications of any of the terms or
provisions of any agreement evidencing, securing or otherwise executed in
connection with any Obligation; (iv) the substitution or release of any entity
primarily or secondarily liable for any Obligation; (v) the adequacy of any
rights the Lenders may have against any collateral or other means of obtaining
repayment of the Obligations; (vi) the impairment of any collateral securing the
Obligations, including without limitation the failure to perfect or preserve any
rights the Lenders might have in such collateral or the substitution, exchange,
surrender, release, loss or destruction of any such collateral; or (vii) any
other act or omission which might in any manner or to any extent vary the risk
of the Guarantor or otherwise operate as a release or discharge of the
Guarantor, all of which may be done without notice to the Guarantor. 

            5.       
UNENFORCEABILITY OF OBLIGATIONS AGAINST BORROWER. If for any reason the
Borrower has no legal existence or is under no legal obligation to discharge any
of the Obligations, or if any of the Obligations have become irrecoverable from
the Borrower by operation of law or for any other reason, this Guaranty shall
nevertheless be binding on the Guarantor to the same extent as if the Guarantor
at all times had been the principal obligor on all such Obligations. In the
event that acceleration of the time for payment of such Obligations is stayed
upon the insolvency, bankruptcy or reorganization of the Borrower, or for any
other reason, all such amounts otherwise subject to acceleration under the terms
of any agreement evidencing, securing or otherwise executed in connection with
any Obligation shall be immediately due and payable by the Guarantor. 

            6.       
WAIVER OF SUBROGATION. Until the payment and performance in full of all
Obligations and any and all obligations of the Borrower to the Lenders, the
Guarantor shall not exercise any rights against the Borrower arising as a result
of payment by the Guarantor hereunder, by way of subrogation or otherwise, and
will not prove any claim in competition with the Lenders in respect of any
payment hereunder in bankruptcy or insolvency proceedings of any nature; the Guarantor will not claim any set-off or
counterclaim against the Borrower in respect of any liability of the Guarantor
to the Borrower; the Guarantor waives any benefit of and any right to
participate in any collateral which may be held by the Lenders; and
notwithstanding any other provision to the contrary contained herein, the
Guarantor hereby irrevocably waives any and all rights it may have at any time
(whether arising directly or indirectly, by operation of law or by contract) to
assert any claim against the Borrower on account of payments made under this
Guaranty, including, without limitation, any and all rights of or claim for
subrogation, contribution, reimbursement, exoneration and indemnity. 

- 2 - 

            7.       
SUBORDINATION. The payment of any amounts due with respect to any
Indebtedness of the Borrower now or hereafter held by the Guarantor is hereby
subordinated to the prior payment in full of the Obligations. The Guarantor
agrees that the Guarantor will not demand, sue for or otherwise attempt to
collect any such Indebtedness of the Borrower to the Guarantor until the
Obligations shall have been paid in full. If, notwithstanding the foregoing
sentence, the Guarantor shall collect, enforce or receive any amounts in respect
of such Indebtedness, such amounts shall be collected, enforced and received by
the Guarantor as trustee for the Lenders and be paid over to the Lenders on
account of the Obligations without affecting in any manner the liability of the
Guarantor under the other provisions of this Guaranty. 

            8.       
FURTHER ASSURANCES. The Guarantor authorizes the Lenders to file any
financing statement deemed by the Lenders to be necessary or desirable to
perfect any security interest granted by the Guarantor to the Lenders, and as
agent for the Guarantor, to sign the name of the Guarantor thereto. The
Guarantor also agrees to do all such things and execute all such documents, as
the Lenders may consider necessary or desirable to give full effect to this
Guaranty and to perfect and preserve the rights and powers of the Lenders
hereunder, and the Guarantor hereby authorizes the Lenders to file such UCC
financing statements and amendments as may be deemed necessary or desirable by
the Lenders. 

            9.       
SUCCESSORS AND ASSIGNS. This Guaranty shall be binding upon the
Guarantor, its successors and assigns, and shall inure to the benefit of and be
enforceable by the Lenders and their successors, transferees and assigns under
the Loan Agreement; provided that the Guarantor shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of the Lenders. 

            10.     
AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of this
Guaranty nor consent to any departure by a Guarantor therefrom shall be
effective unless the same shall be in writing and signed by the Lenders. No
failure on the part of the Lenders to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right. 

            11.    
 NOTICES. All notices hereunder shall be given in the same manner as
set forth in Section 8.1 of the Loan Agreement, provided that the Borrower’s
address for notices shall constitute the Guarantor’s address for notices, and
any notice given to Borrower in accordance with the terms of such Section shall
be deemed to be given to the Guarantor. 

- 3 - 

            12.     
WAIVER OF JURY TRIAL. THE GUARANTOR AND EACH LENDER HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THEIR RIGHT TO A JURY TRIAL WITH RESPECT TO
ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS GUARANTY,
THE NOTES OR ANY OF THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS
HEREUNDER OR THEREUNDER, THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS OR ANY
COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
ACTIONS OF ANY PARTY INCLUDING, WITHOUT LIMITATION, ANY COURSE OF CONDUCT,
COURSE OF DEALINGS, STATEMENTS OR ACTIONS OF A LENDER RELATING TO THE
ADMINISTRATION OR ENFORCEMENT OF THE LOAN AND THE LOAN DOCUMENTS, AND AGREE THAT
THEY WILL NOT SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH
A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.

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

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

            13.     
GOVERNING LAW. This Guaranty and each of the other Loan Documents are
contracts under the laws of the State of New York and shall for all purposes be
construed in accordance with and governed by the laws of said State without
reference to its conflict or choice of laws principles (other than Sections
5-1401 and 5-1402 of the New York General Obligations Law, which shall apply to
this Agreement). 

           
14.      JURISDICTION; CONSENT TO SERVICE OF
PROCESS.

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

- 4 - 

                                 (b)       
The Guarantor hereby irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection which it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Guaranty or any other Loan Document in any court
referred to in Section 15(a). Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court. 

            15.     
MISCELLANEOUS. This Guaranty constitutes the entire agreement of the
Guarantor with respect to the matters set forth herein. The rights and remedies
herein provided are cumulative and not exclusive of any remedies provided by law
or any other agreement, and this Guaranty shall be in addition to any other
guaranty of the Obligations. The invalidity or unenforceability of any one or
more sections of this Guaranty shall not affect the validity or enforceability
of its remaining provisions. Captions are for the ease of reference only and
shall not affect the meaning of the relevant provisions. The meanings of all
defined terms used in this Guaranty shall be equally applicable to the singular
and plural forms of the terms defined. 

            16.    
 ADDITIONAL GUARANTORS. Each Subsidiary of the Borrower that is
required to become a Guarantor pursuant to Section 5.10 of the Loan Agreement
will become a Guarantor (each, an “Additional Guarantor”) hereunder, with
the same force and effect as if it were originally named as a Guarantor herein,
for all purposes of this Agreement upon the execution and delivery by such
Person of a supplement to this Agreement in such form as is reasonably
acceptable to the Lenders (each a “Guaranty Supplement”). Each reference
to “Guarantor” (or any words of like import referring to a Guarantor) in this
Agreement or any other Loan Document shall also mean each Additional Guarantor;
and each reference in this Agreement or any other Loan Document to this
“Guaranty” (or words of like import referring to this Agreement) shall mean this
Agreement as supplemented by each Guaranty Supplement. No consent of any other
Guarantor hereunder will be required for the execution and delivery of any
Guaranty Supplement. The rights and obligations of Holdings or any other
Guarantor hereunder shall remain in full force and effect notwithstanding the
addition of any Additional Guarantor as a party to this Agreement. 

[Remainder of page intentionally left blank; signature page
follows] 

- 5 - 

      
     IN WITNESS WHEREOF, the Guarantor has caused this
Guaranty to be executed and delivered by its duly authorized officer, as of the
date first above written. 

GUARANTOR: 

GOLDEN QUEEN MINING HOLDINGS, INC.

	 	By:	/s/ Lutz
    Klingmann 
    
	 	 	Name:   Lutz Klingmann
	 	 	Title:     President

[Signature page to Guaranty]

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