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## DIVERSIFIED ROYALTY CORP . 

Notes toConsolidatedFinancial Statements 

(Unaudited) 

(Expressed in Canadian dollars) 

Year ended December 31, 2014 

## 9. Long-term liability(continued): 

<img src='content_image/195375.jpg'>

The tenure payments are made on a monthly basis in the amount of $6,583 ($79,000 annually). The tenure agreement expires on December 31, 2022. The carrying value of the liability is the present value of the future payments discount ed by an assumed rate of 1.34% based upon the current long-term Canadian bond rate which is reviewed and updated annually as required. 

## 10. Borrowings: 

(a) Term bank loan: 

On September 26, 2014, concurrent with the Franworks Acquisition, the FW LP borrowed $15,000,000 from a banking syndicate. The facility bears interest at published three-month Canadian dollar Banker’s Acceptance Rate (the ”BA Rate”) plus 4.15% per annum, requires monthly interest only payments and is secured by a general security agree ment over theassets of theFW LP, an assignment of the royalty earned under the License and Royalty Agreement and a guarantee fromthe Company. The maturity date of the facility is September 26, 2017. The facility is subject to certain financial covenan ts, including a covenant to maintain a funded debt to normalized EBITDA ratio of not more than 1.6:1.0. As at December 31, 2014, the Company and the FW LP are in compliance with all financial covenants associated with this facility. 

The term loan ispresented net of $195,267 in deferred financing charges at December 31, 2014. 

(b) Operating line of credit: 

On September 26, 2014, concurrent with the Franworks Acquisition, the FW LP obtained a $2,000,000 demand operating facility from a banking syndicate . This facility bears interest at BA Rate plus 4.50% and is secured by a general security agreement over the assets of the FW LP, an assignment of the royalty earned under the License and Royalty Agreement and a guarantee fromthe Company. As at December 31, 2014, the entire $2,000,000 remains available for use. 

