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LOAN AGREEMENT
between
ROYAL GOLD, INC.
and
HSBC BANK USA
Dated as of December 18, 2000
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS...................................................1
1.1 Definitions............................................1
1.2 Accounting Principles..................................9
ARTICLE II LOAN FACILITY; FEES...........................................10
2.1 The Loan...............................................10
2.2 Promissory Note........................................10
2.3 Interest...............................................11
2.4 Repayment of the Loan..................................11
2.5 Permanent Reduction of Maximum Credit Amount...........11
2.6 Fees...................................................12
2.7 Extension of Scheduled Maturity Date...................13
2.8 Miscellaneous..........................................13
2.9 Taxes..................................................14
2.10 Illegality; Capital Requirements; Increased Costs;
Indemnity for Breakage Costs...........................15
2.11 Borrowing Base Determination...........................16
ARTICLE III COLLATERAL SECURITY...........................................17
3.1 Collateral Agreements..................................17
3.2 Perfection and Maintenance of Collateral Agreement
Liens..................................................17
3.3 Debt Service Reserve Account...........................17
ARTICLE IV CONDITIONS PRECEDENT..........................................18
4.1 Conditions Precedent to the Initial Advance............18
4.2 Conditions Precedent to All Advances...................19
ARTICLE V REPRESENTATIONS AND WARRANTIES................................20
5.1 Due Organization, Good Standing and Authority..........20
5.2 Due Authorization; Non-contravention...................20
5.3 No Approvals...........................................21
5.4 Validity...............................................21
5.5 Financial Statements...................................21
5.6 Litigation.............................................21
5.7 Disclosure.............................................21
5.8 Title to Royalty Interests; Liens......................21
5.9 Royalty Agreements.....................................22
5.10 Project Permits........................................22
5.11 Payment of Taxes.......................................22
5.12 Agreements.............................................22
5.13 Compliance with Laws...................................22
5.14 Events of Default......................................23
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ARTICLE VI AFFIRMATIVE COVENANTS.........................................23
6.1 Notice to the Lender...................................23
6.2 Financial Statements, Monthly Reports and Information..24
6.3 Maintenance of Existence...............................24
6.4 Compliance with Laws...................................24
6.5 Payment of Indebtedness................................24
6.6 Taxes..................................................25
6.7 Books and Records; Right to Inspection.................25
6.8 Insurance..............................................25
6.9 Maintenance of Liens...................................25
6.10 Defend Title...........................................26
6.11 Compliance with ERISA..................................26
6.12 Financial Covenants....................................26
6.13 Delivery of Royalty Interest Proceeds..................26
6.14 Maintenance of Credit Balances in the Debt Service
Reserve Account........................................27
6.15 Further Assurances.....................................27
ARTICLE VII NEGATIVE COVENANTS............................................27
7.1 Indebtedness...........................................27
7.2 Liens..................................................27
7.3 Liquidation; Merger....................................27
7.4 Asset Sales............................................28
7.5 Guarantees/Assumptions.................................28
7.6 Change in Business.....................................28
7.7 Changes in Constating Documents or Capital Structure...28
7.8 Gold Sales.............................................28
7.9 Modification of Material Agreements....................28
7.10 Maintenance of Royalty Interests.......................28
7.11 Acquisition of Royalty Interests.......................28
7.12 Restrictive and Inconsistent Agreements................29
7.13 Amount Outstanding.....................................29
ARTICLE VIII EVENTS OF DEFAULT.............................................29
8.1 Events of Default......................................29
8.2 Remedies Upon Event of Default.........................31
ARTICLE IX MISCELLANEOUS.................................................32
9.1 Notices................................................32
9.2 Amendments, etc........................................32
9.3 No Waiver; Cumulative Remedies.........................32
9.4 Costs and Expenses.....................................32
9.5 Application of Debt Service Reserve Account; Right of
Set-off................................................33
9.6 Usury Savings; Limitation on Interest..................33
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9.7 Binding Effect; Assignment of Rights...................34
9.8 Consent to Jurisdiction................................35
9.9 Governing Law..........................................35
9.10 Counterparts...........................................35
9.11 Confidentiality; Public Announcements..................36
9.12 Entire Agreement.......................................36
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SCHEDULES
Schedule 1.1(a) Projects; Project Managers
Schedule 1.1(b) Royalty Agreements
Schedule 1.1(c) Royalty Interests
Schedule 5.6 Litigation
Schedule 5.7 Disclosures
Schedule 5.9 Royalty Agreement Disclosures
Schedule 5.10 Project Permit Exceptions
Schedule 5.12 Material Agreements
Schedule 5.13 Compliance with Laws
Schedule 6.8 Insurance
EXHIBITS
Exhibit A Form of Request for Advance
Exhibit B Form of Borrower's Omnibus Certificate
Exhibit C Form of Promissory Note
Exhibit D Form of Mortgage
Exhibit E Form of Proceeds Agreement
Exhibit F-1 Form of Opinion of Borrower's Counsel
Exhibit F-2 Form of Security Opinion
Exhibit G Form of Royalty Payment Agreement
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LOAN AGREEMENT
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This LOAN AGREEMENT is entered into as of December 18, 2000, between ROYAL
GOLD, INC., a corporation incorporated under the laws of the State of Delaware
(the "Borrower"), and HSBC BANK USA, a bank organized under the laws of the
State of New York (the "Lender").
Recitals
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A. The Borrower presently holds royalty interests in various mining
properties, including royalty interests in production from certain unpatented
mining claims comprising the Pipeline/South Pipeline Gold Project operated by
the Xxxxxx Joint Venture and located in Lander County, Nevada.
B. The Borrower wishes to borrow from the Lender, and, subject to
satisfaction of conditions set forth herein, the Lender is willing to lend to
the Borrower up to $10,000,000, subject to borrowing base limitations, on a
revolving loan basis and otherwise to be on the terms and conditions set forth
in this Agreement.
C. The loans contemplated hereby will be secured by liens upon all
interests of the Borrower in the royalty on the Pipeline Project Properties
defined below as the GSR #3 Royalty, its share of production therefrom, and in
the proceeds thereof, as provided in this Agreement, together with liens on the
property interests and related production acquired with the proceeds of the
Loan and as otherwise set forth herein or in the Collateral Agreements
(defined below).
Agreement
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NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. When used in this Agreement the following terms
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have the following meanings:
"Advance" means an advance of a Loan by the Lender to the Borrower in
accordance with Section 2.1.
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"Agreement" means this Loan Agreement, as it may be amended, supplemented
or otherwise modified in accordance herewith and in effect from time to time.
"Amount Cancelled" means the aggregate amount from time to time by which
the Maximum Credit Amount has been reduced by the Borrower in accordance with
Section 2.5(a) prior to December 31, 2001.
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"Amount Outstanding" means the total principal amount of the Loans
outstanding on any date of determination (which shall be a Business Day), from
time to time.
"Authorized Officer" means any officer of the Borrower who has been duly
authorized to act on behalf of the Borrower with respect to the applicable
matters by appropriate resolution of the board of directors of the Borrower,
and any other person duly authorized in writing by any such officer by notice
to the Lender.
"Availability Period" means the period commencing on the date on which all
conditions precedent to the Advance are satisfied pursuant to Section 4.1 and
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ending on the first to occur of (a) December 31, 2004 and (b) the Maturity
Date.
"Borrower" means Royal Gold, Inc., a corporation incorporated under the
laws of the State of Delaware.
"Borrowing Base" means, as of any date of determination, an amount
calculated by the Lender that is equal to (x) sixty-two and one-half percent
(62.5%) multiplied by (y) Projected Facility Term Revenue. The Lender's
calculation of the Borrowing Base shall be conclusively presumed to be correct
save for manifest error.
"Borrowing Base Gold Price" shall equal the lesser of (x) $250 per Ounce
of Gold or (y) the then prevailing open market bid price in Dollars per Ounce
of Gold maintained by the Lender on any date of determination.
"Borrowing Period" shall have the meaning given thereto in Section 2.3(b).
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"Borrower's Account" means a demand deposit account of the Borrower with
the Lender, Account Number 66C-003556.
"Borrowing Rate" means an interest rate per annum equal to the sum of
LIBOR plus the Interest Margin.
"Business Day" means any day on which the banks in New York, New York and
Denver, Colorado are open for business.
"Cancellation Fee" has the meaning set forth in Section 2.6(c) hereof.
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"Cash Equivalent" means, at any time:
(a) any Government Security;
(b) commercial paper, maturing not more than nine months from
the date of issue, which is (i) rated at least A-1 by
Standard & Poor's Rating Group and P-1 by Xxxxx'x Investors
Service, Inc., (ii) issued by a corporation or company
other than the Borrower and (iii) in certificated form; or
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(c) any negotiable certificate of deposit or banker's acceptance,
maturing not more than one year after the purchase thereof,
which is issued (or, in the case of a banker's acceptance,
accepted) by a commercial banking institution organized under
the laws of an Organization for Economic Cooperation and
Development member country that has combined capital and
surplus and undivided profits of not less than
$1,000,000,000;
which in any case is purchased with funds standing to the credit of any
account of the Borrower.
"Closing Date" means the date hereof.
"Code" means the Internal Revenue Code of 1986, and the rules and
regulations thereunder, each as amended or modified from time to time.
"Collateral" means all property, assets, rights and interests of the
Borrower subject or intended to be subject from time to time to any lien or
security interest pursuant to the Collateral Agreements, consisting of (i) the
GSR #3 Royalty, (ii) all additional Royalties or other property interests
acquired in whole or in part with proceeds of the Loans, (iii) all rights and
interests of the Borrower related to the interests described in clauses (i)
and (ii) whether now owned or hereafter acquired, and (iv) the Debt Service
Reserve Account.
"Collateral Agreements" means the Mortgage, the Proceeds Agreement, and
each other Instrument delivered from time to time to secure the Borrower's
obligations under this Agreement and under the Collateral Agreements or to
perfect such interest, as any of the foregoing may be amended, modified or
extended in accordance with their respective terms.
"Commitment Fee" has the meaning set forth in Section 2.6(b) hereof.
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"Xxxxxx Royalty Agreement" means, collectively, (1) the Royalty Agreement
dated as of April 1, 1999 by and among The Xxxxxx Joint Venture, a joint
venture formed under and governed by the laws of Nevada and comprised of
Placer Xxxxxx Inc., a Delaware corporation, and Kennecott Explorations
(Australia) Ltd., a Delaware corporation; Placer Dome U.S. Inc., a California
corporation; the Borrower, and Royal Crescent Valley Inc., a Nevada
corporation; (2) the First Amended Memorandum of Grant of Royalty dated as of
April 1, 1999 by and among the same Persons as are identified in (1) above;
(3) the Second Amended Memorandum of Grant of Royalty dated as of December 8,
2000, and (4) all amendments, modifications, extensions and renewals of the
Instruments identified in (1), (2) and (3) above in accordance with the terms
thereof.
"Date of Default" has the meaning set forth in Section 8.2(a) hereof.
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"Debt" means as to any Person: (a) indebtedness, present or future,
actual or contingent, of such Person for borrowed money or other assets or for
the deferred purchase price of property or services (other than obligations
under agreements for the purchase of goods and services in the normal course
of business which are not more than 60 days past due); (b) obligations of such
Person under capital leases, conditional sale agreements or any other financing
transaction; and (c) obligations of such Person under any direct or indirect
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guaranty in respect of, and obligations (contingent or otherwise) to purchase
or otherwise acquire, or otherwise to assure a creditor against loss in respect
of, indebtedness or obligations of any other Person of the kinds referred to in
clause (a) or (b) above.
"Debt Service Reserve Account" means a demand deposit account of the
Borrower located at and controlled by the Lender and in which the Lender has a
security interest as provided for in Section 3.3 which shall initially be
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Account Number 66C-003556.
"Default Rate" means an interest rate per annum equal to the prevailing
Borrowing Rate plus two and one-half percent (2.5%).
"Dollar(s)" or "$" means, unless otherwise expressly provided, United
States dollars.
"Environmental Laws" means federal, state, local and foreign laws or
regulations, codes, orders, decrees, judgments or injunctions issued,
promulgated, approved or entered thereunder applicable to the Projects, the
Project Properties, the Products or any of the Borrower's other assets and
relating to pollution or protection of the environment, including, without
limitation, laws relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants, chemicals, or industrial, toxic or
hazardous substances or wastes into the environment (including, without
limitation, ambient air, surface water, ground water, land surface or
subsurface strata) or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, chemicals or industrial, toxic or hazardous
substances or wastes; expressly including all applicable Federal and State of
Nevada, county or municipal environmental laws.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
the rules and regulations thereunder, each as amended or modified from time to
time.
"ERISA Affiliate" means any Person who together with the Company or any
of its Subsidiaries are treated as a single employer within the meaning of
Section 414(b), (c), (m) or (o) of the Code or Section 4001(b) of ERISA.
"Establishment Fee" shall have the meaning specified in Section 2.6(a)
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hereof.
"Event of Default" means those events specified in Section 8.1 hereof.
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"Gold" means gold of minimum 0.995 fineness in gold bars conforming in all
respects with the requirements for good delivery on the London Bullion Market.
"Government Security" means, at any time, any security maturing not more
than one year after the purchase thereof, issued by the United States Treasury
that is maintained in book entry form on the records of a Federal Reserve Bank
in the United States.
"GSR #1 Royalty" means the sliding-scale gross smelter returns royalty
over seventy-nine mining and millsite claims that encompass all of the
currently-known reserves at the Pipeline Project established pursuant to the
Xxxxxx Royalty Agreement, which sliding-scale royalty ranges from 0.40% when
the price of Gold is less than $210 per Ounce up to 5.00% when the price of
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Gold is more than $470 per Ounce; when the price of Gold is between
$270-$309.99 per Ounce, the sliding-scale royalty is equal to 2.25%.
"GSR #3 Royalty" means the gross smelter returns royalty over
approximately four hundred sixty-one mining and millsite claims, including
the seventy-nine mining and millsite claims that encompass all of the
currently-known reserves at the Pipeline Project established pursuant to the
GSR #3 Royalty Deeds, which is currently equal to 0.48% and will escalate to
0.7125% after 3.7 million Ounces of Gold are produced from the Pipeline
Project.
"GSR #3 Royalty Deeds" means the nine Special Warranty Deeds that are more
particularly identified on Schedule 1.1(b) and 1.1(c).
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"Hedging Agreement" means any agreement, facility or other Instrument or
transaction relating to forward contracts or hedging, (including, without
limitation, forward sales, spot deferred sales, options, swaps, price fixing
commitments and other price protection mechanisms or derivatives) for the
management of and/or protection from gold or other Product price risk, entered
into by the Borrower with the Lender or with a counterparty reasonably
acceptable to the Lender, with respect to the sale of Products.
"Instrument" means any contract, agreement, indenture, mortgage, document,
writing or other instrument (whether formal agreement, letter or otherwise)
under which any obligation is evidenced, assumed or undertaken, or any Lien
(or right or interest therein) is granted or perfected.
"Interest Margin" means one and one-half percent (1.5%) per annum.
"Lender" means HSBC Bank USA, a bank organized under the laws of the State
of New York.
"LIBOR" means the rate per annum (rounded upwards if necessary to the
nearest whole one-sixteenth of one percent (1/16%)) equal to (a) the average of
the offered rates as of 11:00 a.m., London time, on the date of determination
appearing on the display designated as page "LIBO" on the Xxxxxx Monitor Money
Rates Service (or such other page as may replace the LIBO page on that service
for the purpose of displaying London interbank offered rates of major banks)
for Dollar deposits for the relevant period of time, or (b) if fewer than two
offered rates appear on the display referred to in clause (a) above, the rate
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determined by the Lender (which determination shall be conclusive in the
absence of manifest error) to be the average of the rates at which banks are
offered Dollar deposits for the relevant period of time in the interbank
Eurodollar market at about 11:00 a.m., London time.
"Lien" means, as to any Person, any mortgage, lien, pledge, hypothecation,
charge, assignment, security interest, preferential purchase right or other
encumbrance in or on, or any interest or title of any vendor, lessor, lender or
other secured party to, or of such Person under any conditional sale or other
title retention agreement or capital lease with respect to, any property or
asset owned or held by such Person, or the signing or filing of a financing
statement or other instrument or document for filing which names such Person
as debtor, or the signing of any security agreement, pledge or other instrument
authorizing any other party as the secured party thereunder to file any
financing statement or other instrument. A Person shall be deemed to be the
owner of any assets that it has placed in trust for the benefit of the holders
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of its indebtedness which indebtedness is deemed to be extinguished under
generally accepted accounting principles in the United States, but for which
such Person remains legally liable, and such trust shall be deemed to be a
Lien.
"Loan" and "Loans" means the funds Advanced from time to time by the
Lender to the Borrower pursuant to this Agreement.
"Loan Documents" means this Agreement, the Note, each Request for
Advance, the Metals Options Agreement, the Collateral Agreements, the Royalty
Payment Agreements and all other Instruments contemplated hereby or executed in
connection herewith, and all amendments, modifications and extensions of any of
the foregoing in accordance with their terms.
"London Bullion Market" means the market in London known as the "London
Bullion Market" and on which members of the London Bullion Market Association,
amongst others, quote prices for the buying and selling of Gold and Silver.
"London Gold Fixing" means a p.m. gold price fixing meeting among the gold
fixing members for the time being of the London Bullion Market.
"London Gold Fixing Price" means the price per ounce of Gold established
at a London Gold Fixing.
"Material Adverse Effect" means a material adverse effect on the business
or financial condition of the Borrower or on the Borrower's ability to perform
any of its material obligations under any of the Loan Documents. In
determining whether any individual event would result in a Material Adverse
Effect, notwithstanding that such event does not itself have such effect, a
Material Adverse Effect shall be deemed to have occurred if the cumulative
effect of such event and all other then-existing events would result in a
Material Adverse Effect.
"Maturity Date" means the date on which the Loans are payable in full by
the Borrower, being the first to occur of (a) any date on which the Lender
accelerates the due date of any of the Loans by reason of an Event of Default
pursuant to Section 8.1, or (b) the Scheduled Maturity Date.
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"Maximum Availability" means the lesser of the Maximum Credit Amount and
the Borrowing Base.
"Maximum Credit Amount" shall mean $10,000,000 on the date hereof, and
thereafter shall mean the lesser of the amounts to which it has been reduced
from time to time pursuant to Section 2.5(a).
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"Metals Options Agreement" means the ISDA Agreement between the Lender and
the Borrower dated as of December 18, 2000, as it may be modified or amended in
accordance with its terms.
"Mortgage" means the Mortgage, Deed of Trust, Pledge, Security Agreement
and Financing Statement made by the Borrower for the benefit of the Lender,
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which Instrument is substantially in the form of Exhibit D hereto, as the same
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may be amended, modified or supplemented from time to time in accordance with
its terms.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is making,
or is accruing an obligation to make, or has accrued, an obligation to make
contributions within the preceding six (6) years.
"Net Worth" means the Borrower's consolidated tangible net worth
determined in accordance with the same United States generally accepted
accounting principles as were used in the preparation of the Borrower's
financial statements referred to in Sections 5.5 and 6.2 hereof.
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"Note" means the Promissory Note in the form of Exhibit C attached hereto
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issued by the Borrower and payable to the order of the Lender.
"Obligations" means all obligations of the Borrower with respect to the
repayment of principal, interest, fees and other amounts when due hereunder and
the performance of all obligations (monetary or otherwise) of the Borrower
arising under or in connection with this Agreement and each other Loan
Document, whether direct or indirect, absolute or contingent, due or to become
due, now existing or hereafter arising and however arising.
"Ounce" means a fine ounce xxxx weight.
"Other Taxes" has the meaning set forth in Section 2.9 hereof.
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"PBGC" means the Pension Benefit Guaranty Corporation or any successor
agency.
"Person" means an individual, partnership, corporation, limited liability
company, trust, unincorporated association, joint venture, governmental agency
or other entity of whatever nature.
"Pipeline Project" means the Project relating to the Pipeline Project
Properties.
"Pipeline Project Properties" means the unpatented mining and millsite
claims located in Lander County, Nevada identified as the "Reserve Claims" in
the Xxxxxx Royalty Agreement and subject to the terms and conditions of the
Xxxxxx Royalty Agreement, together with all relocations, modifications or
amendments thereof, all patented mining claims which may be issued based
thereon, and all lands subject thereto.
"Plans" means any Employee Benefit Plan, other than a Multiemployer Plan,
which is subject to the provisions of Title IV of ERISA or Section 412 of the
Code and which (a) is maintained for the employees of the Borrower or any ERISA
Affiliates or (b) has at any time within the preceding six (6) years been
maintained for the employees of the Borrower or any of its current or former
ERISA Affiliates.
"Potential Event of Default" means any event which with the giving of
notice or lapse of time or both, based on reasonable projections, would become
an Event of Default.
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"Proceeding" has the meaning set forth in Section 9.8(a) hereof.
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"Proceeds Agreement" means the Proceeds Agreement by and among the
Borrower, the Lender and Xxxxxxx Xxxxxxx or any other purchaser from the
Borrower of any portion of its share of mineral production from the Project
Properties, which Instrument is substantially in the form of Exhibit E hereto,
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as the same may be amended, modified or supplemented from time to time in
accordance with its terms.
"Products" means without limitation all ore, minerals, concentrate, dore
bar and refined Gold, silver or other metals produced on behalf of the Borrower
and the Royalty Interests from the Project Properties.
"Projects" means all of the mining projects in which the Borrower has or
acquires a Royalty Interest, including, without limitation, the Pipeline
Project, with the Projects in effect on the date hereof described with greater
particularity on Schedule 1.1(a) hereto.
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"Project Managers" means the operator or manager of each Project, with the
Project Managers for each Project in effect on the date hereof set forth in
Schedule 1.1(a) hereto.
"Project Properties" means all of the real property rights or interests,
now owned or hereafter acquired, included in each of the Projects which are
burdened with a Royalty Interest, including all unpatented mining claims which
are identified in any Royalty Agreement, together with all relocations,
modifications or amendments thereof, all patented mining claims which may be
issued based thereon, and all lands subject thereto.
"Projected Facility Term Revenue" means an amount calculated by the Lender
by multiplying the Royalty Ounces by the Borrowing Base Gold Price. The
Lender's calculation of Projected Facility Term Revenue shall be conclusively
presumed to be correct save for manifest error.
"Reserve Amount" shall have the meaning given thereto in Section 3.3.
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"Request for Advance" means the irrevocable request by the Borrower for an
Advance of a Loan, in the form set forth in Exhibit A hereto, signed by an
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Authorized Officer of the Borrower.
"Requirements of Law" means, as to any Person, any law, statute, code,
treaty, ordinance, order, rule or regulation, decree, injunction, franchise,
permit, certificate, license or authorization, or determination of an
arbitrator or a court or other governmental agency, in each case applicable to
or binding upon such Person or any of its properties or to which such Person
or any of its properties is subject, and specifically including, without
limitation, Environmental Laws.
"Royalties" means any share of mineral production free of the costs of
production, including, without limitation overriding royalties,
non-participating royalties, production payments, net profit interests and all
other mineral royalties of every type and characterization which constitute
real property interests.
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"Royalty Agreements" means, collectively, (i) the Xxxxxx Royalty
Agreement, (ii) each of the other royalty agreements set forth on Schedule
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1.1(b) hereto, (iii) any other agreement with or for the benefit of the
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Borrower pursuant to which the Borrower receives or is entitled to receive any
Royalties, whether now or hereafter in existence which is acquired by the
Borrower in whole or in part with proceeds of the Loans, and (iv) all
amendments, modifications, extensions and renewals of the Instruments
identified in (i), (ii) and (iii) above in accordance with the terms thereof.
"Royalty Interests" means all Royalties now owned or hereafter acquired by
or for the benefit of the Borrower in or relating to all of the Projects, as
set forth with greater particularity in Schedule 1.1(c) hereto, and all
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Products received or receivable with respect thereto, now held or hereafter
acquired by the Borrower, whether pursuant to Royalty Agreements or otherwise.
"Royalty Ounces" means, at any date of determination, the aggregate ounces
of Product projected to be payable to the Borrower (in cash or in kind) through
the Scheduled Maturity Date with respect to the GSR #1 Royalty, the GSR #3
Royalty and each other Royalty hereafter purchased or acquired by the Borrower
using proceeds of the Loan based on commercially reasonable projections of
production from the Pipeline Project and each other applicable property.
Calculations of Royalty Ounces for the GSR #1 Royalty and the GSR #3 Royalty
shall be based on the reserve reports set forth in the then current mine plan
for the Xxxxxx Joint Venture. Calculations of Royalty Ounces for Royalty
Interests from Projects either not in production at the Closing Date or
acquired by the Borrower after the Closing Date shall be based on the reserve
report set forth in the applicable then-current mine plan for such Project,
unless the Lender, in its sole discretion, elects to audit the information
contained in the reserve report set forth in the applicable mine plan for such
Project, develop its own conclusions based on its independent analysis of such
information and estimate the Royalty Ounces for such Project, in which event
the Lender's determination shall be conclusive. Calculations of Royalty Ounces
shall include all reasonable deductions for shipping, smelting, contractual and
other standard deductions.
"Royalty Payment Agreements" means the letter agreements substantially in
the form of Exhibit G hereto.
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"Scheduled Maturity Date" means June 30, 2005, unless otherwise extended
by the Lender in its sole discretion upon the request of the Borrower in
accordance with Section 2.7.
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"Title Opinion" means a legal opinion from counsel to the Borrower
pertaining to the GSR #1 Royalty and the GSR #3 Royalty, in form and substance
acceptable to the Lender.
1.2 Accounting Principles. All accounting terms not otherwise defined
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herein shall be construed, all financial computations required under this
Agreement shall be made, and all financial information required under this
Agreement shall be prepared, in accordance with generally accepted accounting
principles in effect in the United States applied on a consistent basis
(except where such inconsistencies are disclosed in the notes to the audited
financial statements provided to the Lender under Section 6.2), except as
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specifically provided herein.
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ARTICLE II
LOAN FACILITY; FEES
2.1 The Loan.
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(a) General. The Lender agrees, on the terms and conditions
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hereinafter set forth, to Advance Loans to the Borrower from time to time
during the Availability Period, as requested by the Borrower; provided, that
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the aggregate Amount Outstanding (after giving effect to any amount requested)
shall not exceed the Maximum Availability. Subject to the terms and conditions
hereof, the Borrower may borrow, repay and reborrow funds hereunder until
termination of the Availability Period.
(b) Loan Advance; Request for Advance. Not less than three Business
---------------------------------
Days prior to the desired date of an Advance of a Loan, the Borrower shall
submit to the Lender a Request for Advance. The Request for Advance will
specify (i) the amount of the Advance, which shall be in an aggregate principal
amount of $500,000 or a whole multiple of $500,000 in excess thereof, (ii) the
Borrowing Period for such Advance and (iii) the Business Day on which the
Advance is requested to be made. Subject to the Borrower's satisfaction of the
conditions precedent set forth in Article IV, and on the terms and conditions
----------
stated herein, no later than five Business Days after the Lender's receipt of
a Request for Advance, the Lender shall Advance the Loan to the Borrower's
Account on the Business Day specified by the Borrower in the Request for
Advance. The Request for Advance shall be irrevocable and binding on the
Borrower and in respect of the Loan amount specified therein, the Borrower
shall indemnify the Lender against any loss or expense incurred by the Lender
as a result of any failure to fulfill on or before the date specified for such
Loan the applicable conditions set forth in Article IV hereof, including,
----------
without limitation, any loss (including loss of anticipated profits) or expense
incurred by reason of the liquidation or reemployment of funds or deposits
acquired or borrowed by the Lender to fund the Loan to be made by the Lender
when the Loan, as a result of such failure, is not made on such date. A
certificate as to such amounts sufficient to compensate the Lender under such
indemnification obligation submitted by the Lender to the Borrower shall, in
the absence of manifest error, be presumed to be correct and binding for all
purposes.
(c) Use of Proceeds. The Borrower will utilize the proceeds of the
---------------
Loans exclusively to purchase or otherwise acquire cash flowing Royalties or
other mineral properties or mineral interests approved in advance by and on
terms and conditions reasonably acceptable to the Lender, which approval shall
not be unreasonably withheld.
2.2 Promissory Note. The Loans shall be evidenced by the Note,
---------------
representing the obligation of the Borrower to repay the Amount Outstanding
of the Loans, together with interest as set forth herein. The Borrower
authorizes the Lender to endorse the date and amount of the Advance and each
repayment on the schedule annexed to and constituting a part of the Note, which
endorsement shall constitute prima facie evidence of the accuracy of the
----- -----
information endorsed, in the absence of manifest error. The failure so to
record any such amount or any error in so recording any such amount shall not,
however, limit or otherwise affect the obligations of the Borrower hereunder
or under the Note to repay the Amount Outstanding of the Loans together with
all interest accruing thereon and fees accruing with respect thereto.
-10-
2.3 Interest
--------
(a) General. The Borrower shall pay interest on the Amount
-------
Outstanding calculated on a 360-day year basis. Except as provided in Section
-------
2.8(b), interest shall accrue at the Borrowing Rate and shall be payable by the
------
Borrower at the end of each Borrowing Period (defined below) except that, with
respect to a Borrowing Period of 90 days or more which extends beyond the last
day of a calendar quarter, on such last day of the calendar quarter.
(b) Borrowing Periods. The Borrower may select borrowing periods
-----------------
(a "Borrowing Period") for each Loan of 30, 60, 90 or of a longer period of
days if available (or of such other period of days agreed to by the Lender)
on a 360-day year basis; provided, however, that the Borrower may not select
-------- -------
a Borrowing Period if the Lender determines that Dollar deposits are not being
offered in the London interbank Dollar market for such Borrowing Period in
accordance with customary practice (in which event the Borrower must select
another Borrowing Period which does not present such problems). The Borrower
will select the initial Borrowing Period for each Loan by giving the Lender
notice thereof in the Request for Advance. After the Advance the Borrower may
select Borrowing Periods by giving notice to the Lender at least three Business
Days prior to the expiration of a Borrowing Period then in effect. If at any
time the Borrower fails to give timely notice of its selection, then the
Borrower shall be deemed to have selected a Borrowing Period of 30 days. The
Lender shall not be required to maintain more than four different Borrowing
Periods hereunder at any one time.
2.4 Repayment of the Loan.
---------------------
(a) Principal Payments. The Borrower agrees to repay the Loans as
------------------
provided herein. The Borrower shall repay the outstanding principal amount of
the Loans as amortized by the Lender on a monthly basis from the date of
Advance through the Scheduled Maturity Date. Subject to the other terms hereof
pertaining to mandatory repayment of the Loans, the Borrower shall repay the
Loans in full, together with accrued interest thereon, on the Maturity Date.
(b) Voluntary Repayments. The Borrower may repay any Amount
--------------------
Outstanding of the Loans in integral multiples of $250,000 at the end of any
Borrowing Period, without penalty or premium (except as provided in Section
-------
2.6(c) below) by providing the Lender not less than five Business Days' prior
------
written notice. Upon the giving of such notice, which shall be irrevocable,
the amount to be repaid, as set forth in said notice, together with interest
thereon, shall be due and payable on the date set forth therein.
(c) Priority of Prepayments. All payments made pursuant to this
-----------------------
Section 2.4 shall be applied first to accrued, outstanding and unpaid fees
-----------
and expenses (including costs and expenses identified in Section 9.4), then
-----------
to any accrued and unpaid interest on the Loan as of the end of the most
recent Borrowing Period, then to principal.
2.5 Permanent Reduction of Maximum Credit Amount.
--------------------------------------------
(a) Voluntary Reduction. The Borrower shall have the right at any
-------------------
time and from time to time, upon at least five (5) Business Days prior written
-11-
notice from the Borrower to the Lender, to permanently reduce the Maximum
Credit Amount by an aggregate principal amount not less than $1,000,000, plus
any whole multiples of $1,000,000 in excess thereof or any amount in excess
thereof which would reduce the Maximum Credit Amount to the Amount Outstanding.
(b) Commitment Reduction Repayment. Upon the giving of notice set
------------------------------
forth in Section 2.5(a), which shall be irrevocable, each permanent reduction
in the Maximum Credit Amount permitted pursuant to this Section 2.5 and any
amounts due as a result thereof shall be due and payable on the date set
forth therein by a payment of principal sufficient to eliminate any excess of
the Amount Outstanding over the Maximum Credit Amount as so reduced, together
with the Cancellation Fee then due, if any.
2.6 Fees.
----
(a) Establishment Fee. The Borrower agrees to pay the Lender a fee
-----------------
(the "Establishment Fee") in the amount of $50,000 concurrently with Borrower's
execution hereof. No portion of the Establishment Fee will be refundable by
the Lender to the Borrower under any circumstances, including an election by
the Borrower not to submit a Request for Advance hereunder or the failure of
the Borrower to satisfy, or the failure of the Lender to waive satisfaction of,
the conditions to any Advance set forth in Article IV hereof.
----------
(b) Commitment Fee. The Borrower agrees to pay to the Lender a fee
--------------
(the "Commitment Fee") in an amount determined daily during the period
beginning on the Closing Date and ending on the Maturity Date at the rate of
three-quarters of one percent (0.75%) per annum of the difference between the
Amount Outstanding and the Maximum Availability. The Commitment Fee will be
payable in arrears to the Lender on the fifth Business Day of each calendar
quarter following conclusion of the calendar quarter in which the Commitment
Fee is accrued.
(c) Cancellation Fee. In the event that the Borrower elects to
----------------
terminate the credit facility provided for herein (which right, absent an Event
of Default, is reserved to the Borrower in its sole discretion) or reduces the
Maximum Credit Amount in accordance with Section 2.5(a), on or prior to
--------------
December 31, 2001, the Borrower shall pay to the Lender a fee (the
"Cancellation Fee") equal to 0.083% per month of the Amount Cancelled in
addition to all other amounts payable hereunder with respect thereto for the
period from the date of cancellation through December 31, 2001. The
Cancellation Fee will be payable to the Lender on or prior to the effective
date on which the Borrower terminates this Credit Agreement or reduces the
Maximum Credit Amount.
(d) Agent's Fee. In the event that the Lender assigns or grants
-----------
participations in the Loans, or any part thereof, and the Loan Documents, then,
in order to compensate the Lender for structuring and managing any such
syndication or participation of the Loans and for its obligations hereunder,
the Borrower agrees to pay to the Lender, for its account, an agent's fee in
the amount of $10,000 per annum payable on the date that the Lender makes such
assignment or grants a participation and on each anniversary of such date
during the term hereof.
-12-
2.7 Extension of Scheduled Maturity Date.
------------------------------------
(a) First Request for Extension. So long as no Potential Event of
---------------------------
Default or Event of Default has occurred, the Borrower may irrevocably request
in writing that the Lender extend the Scheduled Maturity Date from June 30,
2005 to June 30, 2006 (the "First Request for Extension"), which such request
shall be made not later than December 31, 2004. Upon receipt of the First
Request for Extension, the Lender shall have ninety days to consider and
approve or reject in its sole discretion the Borrower's First Request for
Extension.
(b) Second Request for Extension. So long as no Potential Event of
----------------------------
Default or Event of Default has occurred and so long as the Borrower has
requested and the Lender has approved an extension of the Scheduled Maturity
Date to June 30, 2006, the Borrower may irrevocably request in writing that
the Lender extend the Scheduled Maturity Date from June 30, 2006 to June 30,
2007 (the "Second Request for Extension"), which such request shall be made
not later than December 31, 2005. Upon receipt of the Second Request for
Extension, the Lender shall have ninety days to consider and approve or reject
in its sole discretion the Borrower's Second Request for Extension.
(c) Terms and Conditions Binding. If the Lender agrees to extend
----------------------------
the Scheduled Maturity Date pursuant to a First Request for Extension or a
Second Request for Extension, this Agreement shall continue with full force
and effect upon the same terms and conditions as those set forth herein (except
as amended, supplemented or modified in accordance with the terms hereof) until
the Maturity Date (with the Scheduled Maturity Date as extended in accordance
herewith).
(d) Miscellaneous Terms. Each Request for Extension shall be
-------------------
irrevocable and binding on the Borrower. The failure of the Borrower to make
any Request for Extension within the time period specified therefor shall
thereby terminate the Borrower's option to make such a Request for Extension.
The failure of the Borrower to make the First Request for Extension within the
time period set forth therefor shall thereby terminate its ability to make the
Second Request for Extension.
2.8 Miscellaneous.
-------------
(a) Same-day Funds. All payments by the Borrower to the Lender
--------------
hereunder and under any other Loan Document, whether for principal, interest,
fees, expenses or other amounts, shall be made without set-off, recoupment,
deduction or counterclaim in immediately available funds to such account as
the Lender shall specify from time to time by not later than 12:00 p.m. Eastern
time on the date when due.
(b) Penalty Interest.
----------------
(i) The Borrower shall pay to the Lender, on demand, interest
on any amount which is not paid by the Borrower when due at the Default
Rate.
(ii) Without prejudice to the rights of the Lender under the
foregoing provisions of this Section 2.8(b), the Borrower shall indemnify
--------------
the Lender against any loss or expense which it may sustain or incur as a
result of the failure by the Borrower to pay when due any Amount
Outstanding of the Loan, to the extent that any such loss or expense is
-13-
not recovered pursuant to such foregoing provisions. A certificate or
other notice of the Lender setting forth the basis for the determination
of the interest due on overdue principal and of the amounts necessary to
indemnify the Lender in respect of such loss or expense, submitted to the
Borrower by the Lender, shall constitute prima facie evidence of the
accuracy of the information contained therein in the absence of manifest
error and, absent notice from the Borrower of such error, shall be
conclusive and binding for all purposes.
(c) Lender's Counsel's Fees. On the Closing Date, the Borrower
-----------------------
shall pay to the Lender such amount as invoiced to the Lender by the Lender's
counsel, Xxxxx Xxxxxx & Xxxxxx LLP, for such firm's fees and charges incurred
through such date in connection with the transactions contemplated by the Loan
Documents. Alternatively, with such counsel's consent, payment may be made by
the Borrower directly to such counsel. The Lender's counsel's fees subsequent
to such date shall be governed by Section 9.4 hereof.
-----------
(d) Lender's Other Expenses. On the Closing Date, the Borrower
-----------------------
shall pay the Lender all of the Lender's costs incurred to date (as reasonably
detailed in advance) in connection with the transactions contemplated by the
Loan Documents in accordance with Section 9.4 hereof and thereafter the
-----------
Borrower shall pay the Lender all of the Lender's subsequent and additional
costs in connection with the transactions contemplated by the Loan Documents
within 30 days of receipt from the Lender of a reasonably detailed invoice
therefor in accordance with Section 9.4 hereof.
-----------
2.9 Taxes.
-----
(a) Other Taxes. The Borrower agrees to pay any present or future
-----------
stamp or documentary taxes or any other excise, mortgage, or property taxes,
charges or similar levies (exclusive of income taxes) which arise from any
payment made hereunder or under the Note or from the execution, delivery,
recordation or registration of, or otherwise with respect to, this Agreement
or the Note or the Collateral Agreements or any other Loan Documents
(hereinafter referred to as "Other Taxes"). The Borrower will indemnify the
Lender for and hold it harmless from the full amount of Other Taxes (including,
without limitation, any Other Taxes imposed by any jurisdiction on amounts
payable under this Section 2.9) paid by the Lender or any liability (including
-----------
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Other Taxes were correctly or legally asserted; provided,
--------
however, that the Borrower shall have the right to contest in good faith any
-------
such tax levied upon the Lender. This indemnification shall be made within
thirty days from the date the Lender makes written demand therefor, unless the
Borrower is contesting the tax in good faith, in which event the foregoing
indemnification shall not be triggered until the final determination of such
contest or proceeding and the exhaustion of all applicable appeals.
(b) Withholding Tax; Gross-up. All payments to be made by the
-------------------------
Borrower to any Person hereunder shall be made free and clear of and without
deduction for or on account of any present or future taxes, duties,
assessments or governmental charges of whatever nature imposed or levied by
or on behalf of any governmental authority having the power to tax; provided,
--------
however, that if the Borrower is required to make such a payment subject to
-------
the deduction or withholding of such tax, duty, assessment or governmental
charge (exclusive of income taxes), then the sum payable by the Borrower in
respect of which such deduction or withholding is required to be made shall
be increased to the extent necessary to ensure that, after the making of such
deduction or withholding, the Person receiving the payment receives a net sum
-14-
equal to the sum which it would have received and so retained had no such
deduction or withholding been made or required to be made.
(c) Survival. Without prejudice to the survival of any other
--------
agreement of the Borrower hereunder, the agreements and obligations of the
Borrower contained in this Section 2.9 shall survive the payment in full of
-----------
the Loan.
2.10 Illegality; Capital Requirements; Increased Costs; Indemnity for
----------------------------------------------------------------
Breakage Costs.
--------------
(a) Illegality. If after the date hereof, the introduction of, or
----------
any change in, any applicable law or any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof,
or compliance by the Lender with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency, shall make it unlawful or impossible for the Lender to honor its
obligations hereunder to make or maintain the Loan based on a LIBOR rate, the
Lender shall promptly give notice thereof to Borrower. Thereafter, subject
to paragraph (e) below, until the Lender notifies Borrower that such
-------------
circumstances no longer exist (which notification shall be given within thirty
(30) days after the Lender obtains actual knowledge that such circumstances no
longer exist), (i) the obligations of the Lender to make the Loan based on a
LIBOR rate shall be suspended and thereafter Borrower may borrow only at an
annual rate equal to the Lender's prime rate plus a margin of one and one half
percent (1.5%) (the "Prime Borrowing Rate"), and (ii) if the Lender may not
lawfully continue to maintain the Loan based on a LIBOR rate to the end of the
then current Borrowing Period applicable thereto, shall immediately be
converted to a Loan based on the Prime Borrowing Rate for the remainder of
such Borrowing Period.
(b) Capital Requirements. If, subsequent to the date of this
--------------------
Agreement, either (i) the establishment of, or any change in, or in the
interpretation of, any applicable Requirement of Law or (ii) compliance
with any guideline or request from any central bank or comparable agency or
other governmental authority (whether or not having the force of law), has
or would have the effect of reducing the rate of return on the capital of,
or would affect the amount of capital required to be maintained by, the
Lender or any corporation controlling the Lender in connection with the Loan
or its commitment to extend the Loan thereunder, below the rate which the
Lender or such other corporation could have achieved but for such establishment
or introduction, change or compliance, then within fifteen (15) Business Days
after written demand of the Lender, subject to paragraph (e) below, Borrower
-------------
shall pay to the Lender from time to time as specified by the Lender additional
amounts sufficient to compensate the Lender or other corporation for such
reduction. A certificate as to such amounts shall be submitted to the Borrower
by the Lender as soon as practicable following an event covered by this Section
-------
2.10(b), and shall, in the absence of manifest error, be presumed to be correct
-------
and binding for all purposes.
(c) Increased Costs. If, after the date hereof, the establishment
---------------
or introduction of, or any change in, any applicable Requirement of Law, or in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Lender with any request or
directive (whether or not having the force of law) of such authority, central
bank or comparable agency:
-15-
(i) shall subject the Lender to any tax, duty or other charge
with respect to the Loan or the Note, or shall change the basis of
taxation of payments to the Lender of the principal of or interest on the
Loan or the Note, or any other amounts due under this Agreement in respect
thereof (except for changes in the rate of tax on the overall net income
of the Lender imposed by the jurisdiction in which the Lender is organized
or is or should be qualified); and
(ii) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors of
the Federal Reserve System), special deposit, insurance or capital or
similar requirement against assets of, deposits with or for the account
of, or credit extended by the Lender or shall impose on the Lender or the
foreign exchange and interbank markets any other condition affecting the
Loan or the Note;
and the result of any of the foregoing is to increase the costs to the Lender
of maintaining the Loan or to reduce the yield or amount of any sum received or
receivable by the Lender under this Agreement or under the Note in respect of
the Loan, then the Lender shall promptly notify Borrower of such fact and
demand compensation therefor and, subject to paragraph (e) below, within
-------------
fifteen (15) days after such notice by the Lender, the Borrower shall pay to
the Lender such additional amount or amounts as will compensate the Lender for
such increased cost or reduction. The Lender will promptly notify Borrower of
any event of which it has knowledge which will entitle the Lender to
compensation pursuant to this Section 2.9(c). A certificate of the Lender
--------------
setting forth the basis for determining such additional amount or amounts
necessary to compensate the Lender shall be conclusively presumed to be correct
save for manifest error.
(d) Indemnity for Breakage Costs. Borrower hereby indemnifies the
----------------------------
Lender against any loss or expense which may arise or be attributable to the
Lender's obtaining, liquidating or employing deposits or other funds acquired
to effect, fund or maintain the Loan (i) due to any failure of Borrower to
borrow on a date specified therefor in the Request for Advance or (ii) due to
any payment or prepayment of the Loan on a date other than the last day of the
Borrowing Period therefor. The Lender's calculations of any such loss or
expense shall be furnished to Borrower and shall be conclusive, absent manifest
error.
(e) Cancellation of Commitment as a Result of Increased Costs. If
---------------------------------------------------------
Borrower has received a notice of increased costs under paragraphs (a), (b) or
-------------- ---
(c) above, in lieu of paying such increased amounts Borrower may provide notice
---
to the Lender that it elects to prepay the Loan, in which case the Borrower
shall pay to the Lender any loss or expense of the Lender due to the prepayment
of the Loan on a date other than the last day of the Borrowing Period therefor,
but the Borrower shall not owe the Cancellation Fee.
2.11 Borrowing Base Determination. The Lender, in its commercially
----------------------------
reasonable discretion, shall determine the Borrowing Base during the term
hereof. Upon the Borrower's acquisition of Royalties or other cash-flowing
mineral property interests using the proceeds of Loans, in whole or in part,
in accordance with this Agreement, then the Lender, upon receipt of all plans,
reports, financial statements or other information requested by the Lender
with respect to such acquisition shall promptly re-determine the Borrowing
-16-
Base. The Lender may make a re-determination of the Borrowing Base at any
time and from time to time. The Lender shall promptly notify the Borrower
after each determination of the Borrowing Base.
ARTICLE III
COLLATERAL SECURITY
3.1 Collateral Agreements. All of the Borrower's Obligations shall
---------------------
be secured by the Collateral Agreements.
3.2 Perfection and Maintenance of Collateral Agreement Liens. The
--------------------------------------------------------
Borrower hereby authorizes the Lender to file such UCC Financing Statements
in such jurisdictions as it determines to be desirable and to take such other
actions as it determines to be necessary or desirable to perfect and maintain
the perfection of first priority Liens in the Debt Service Reserve Account and
all other Collateral identified in the Collateral Agreements. The Borrower
agrees to cooperate with the Lender in completing all such recording and
filing, to promptly execute such other Instruments, and to promptly take all
such other actions, as the Lender may reasonably determine to be necessary or
appropriate to confirm, perfect and maintain the perfection of such Liens.
Prior to any Advance of a Loan hereunder, the Mortgage shall have been filed
and recorded in the appropriate records of the Lander County, Nevada Clerk and
Recorder and such other jurisdictions necessary to perfect the Liens granted
therein.
3.3 Debt Service Reserve Account. Prior to the initial Advance of a Loan
----------------------------
hereunder, the Borrower will establish with the Lender, as the Borrower's
account, which will be subject to the custody and control of the Lender and
constitute part of the Collateral, the Debt Service Reserve Account.
Commencing prior to the initial Advance of a Loan hereunder, the Borrower shall
promptly deposit or cause to be deposited in the Debt Service Reserve Account
all cash amounts received by the Borrower from or with respect to (i) all
existing Royalty Interests, and (ii) all Royalty Interests purchased or
otherwise acquired using Loan proceeds after the date of this Agreement. The
balance in the Debt Service Reserve Account at all times shall be not less
than an amount equal to the aggregate of any payments of principal, interest,
fees and expenses payable with respect to the Loans and the Loan Documents and
due at any time during the then current calendar quarter and the next
succeeding calendar quarter (the "Reserve Amount"). The Borrower hereby grants
to the Lender a continuing security interest in and lien upon the Debt Service
Reserve Account, all cash balances from time to time credited to the Debt
Service Reserve Account and any and all proceeds of any thereof, whether now
or hereafter existing or arising. So long as no Potential Event of Default or
Event of Default has occurred and is continuing, the Lender will promptly
disburse to the Borrower, in accordance with written instructions provided by
the Borrower to the Lender (which instructions the Borrower may revise upon
five days written notice to the Lender), any credit balances in the Debt
Service Reserve Account which are in excess of the Reserve Amount from time to
time.
-17-
ARTICLE IV
CONDITIONS PRECEDENT
4.1 Conditions Precedent to the Initial Advance. The obligation of the
-------------------------------------------
Lender to make the initial Advance of a Loan is subject to satisfaction (or
waiver by the Lender in its sole discretion) of each of the following
conditions precedent.
(a) Receipt of Instruments. The Lender or its counsel shall have
----------------------
received each of the following Instruments:
(i) this Agreement, duly executed by an Authorized Officer
of the Borrower;
(ii) the Note, duly executed by an Authorized Officer of the
Borrower;
(iii) the Mortgage, the Proceeds Agreement and each of the
other Collateral Agreements, together with UCC Form 1 Financing
Statements relating thereto, duly executed by an Authorized Officer of
the Borrower and by all other Persons parties thereto;
(iv) an Omnibus Certificate of the Borrower, substantially
in the form of Exhibit B hereto, duly executed by an Authorized Officer
---------
of the Borrower;
(v) a legal opinion from legal counsel for the Borrower,
reasonably acceptable to the Lender, substantially in the form of Exhibit
-------
F-1 hereto;
---
(vi) the Title Opinion from Nevada legal counsel to the
Borrower, reasonably acceptable to the Lender;
(vii) a supplemental legal opinion from Nevada legal counsel
to the Borrower reasonably acceptable to the Lender, confirming the
perfection in favor of the Lender of enforceable first priority Liens on
the GSR #3 Royalty and on the other property rights and interests of the
Borrower subject to the Collateral Agreements, substantially in the form
of Exhibit F-2 hereto;
-----------
(viii) a certificate from the Secretary of State of Delaware
confirming the good standing of the Borrower in that State;
(ix) certificates from the Secretaries of State of Colorado
and Nevada confirming the good standing of the Borrower in each of such
States;
(x) the Metals Options Agreement, duly executed by an
Authorized Officer of the Borrower;
(xi) Royalty Payment Agreements and Proceeds Agreements duly
executed by an Authorized Officer of the Borrower and each other Person a
party thereto; and
-18-
(xii) such other approvals, opinions or documents as the
Lender may reasonably request.
(b) Additional Conditions. Each of the following shall be correct:
---------------------
(i) since the date of the financial statements of the
Borrower most recently delivered to the Lender (referred to in Section
-------
5.5), there has been no adverse change in the financial condition,
---
operations or business of the Borrower which would constitute a Material
Adverse Effect;
(ii) there is no pending or overtly threatened action or
proceeding affecting the Borrower, the Royalty Interests, the Pipeline
Project Properties or the Pipeline Project before any court, governmental
agency or arbitrator, which could be reasonably expected to have a
Material Adverse Effect;
(iii) the Borrower shall have performed and complied with all
agreements, conditions and Obligations herein and in the other Loan
Documents required to be performed and complied with on or prior to the
date of the Advance;
(iv) there shall exist no Event of Default or Potential Event
of Default;
(v) all representations and warranties made by the Borrower
herein and in any other Loan Document or other certificate or Instrument
delivered in connection herewith shall be true and correct on the date of
the Advance;
(vi) all Instruments that are necessary to perfect the
security interests of the Lender in the Collateral described in the
Collateral Agreements shall have been received by the Lender and the
Lender shall have received evidence reasonably satisfactory to the Lender
that upon filing and recording such Instruments, the security interests
represented thereby will constitute valid and perfected Liens subject
only to Permitted Liens;
(vii) the Borrower shall have established the Debt Service
Reserve Account and there shall be a current credit balance therein of
not less than the Reserve Amount.
4.2 Conditions Precedent to All Advances. The obligation of the Lender
------------------------------------
to make each Advance of Loans (including the initial Advance) is subject to
satisfaction (or waiver by the Lender in its sole discretion) of each of the
following conditions precedent:
(a) the Lender shall have received a Request for Advance, duly
executed by an Authorized Officer;
(b) the Lender shall have received evidence reasonably acceptable
to it that upon acquisition of the property interests to be acquired with the
proceeds of the Advance, the Borrower will acquire good and marketable title
to such property interests free of Liens and that, upon the closing of such
acquisition by the Borrower, first, prior and enforceable Liens in favor of
the Lender will have been perfected in such property interests and all mineral
production therefrom;
-19-
(c) on the date of such Advance, the Lender shall have received such
approvals, opinions or documents as the Lender may reasonably request;
(d) such Advance shall not cause the Amount Outstanding to exceed
the Maximum Availability;
(e) there shall exist no Potential Event of Default or Event of
Default;
(f) each of the conditions precedent to the initial Advance set
forth in Section 4.1 is and remains satisfied; and
-----------
(g) all representations and warranties made by the Borrower shall
be true and correct on the date of such Advance except for those changes
disclosed to the Lender in writing and acceptable to the Lender in its sole
discretion.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into this Agreement, the Borrower
represents and warrants to the Lender that:
5.1 Due Organization, Good Standing and Authority. The Borrower is duly
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organized, validly existing and in good standing under the laws of Delaware
and is qualified to do business in Colorado and Nevada and every other
jurisdiction where necessary in light of its business and properties. The
Borrower has full power, authority and legal right (a) to own or lease its
assets and properties and to conduct its business as now being conducted, and
(b) to incur its obligations under this Agreement and each other agreement,
document and instrument executed or to be executed by it pursuant hereto or
in connection herewith and to perform the terms hereof and thereof applicable
to it.
5.2 Due Authorization; Non-contravention. The execution and delivery by
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the Borrower of this Agreement and the other Loan Documents, and the
performance of all transactions contemplated hereby and thereby, and the
fulfillment of and compliance with the respective terms of this Agreement and
the other Loan Documents by the Borrower are within the Borrower's powers, have
been duly authorized by all necessary action corporate or otherwise and do not
and will not (a) conflict with or result in a breach of the terms, conditions
or provisions of, (b) constitute a default under, (c) result in the creation
of any Lien (except pursuant to the Loan Documents) upon capital stock or
assets pursuant to, (d) give any third party any right to accelerate any
obligation under, (e) result in a violation of, or (f) require any
authorization, consent, approval, exemption or other action by or notice to any
court or administrative or governmental body pursuant to (i) the Articles of
Incorporation or Bylaws of the Borrower, (ii) any law, statute, rule or
regulation applicable to the Borrower or its properties, or (iii) any
agreement, instrument, order, judgment or decree to which the Borrower is
subject or by which its properties are bound.
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5.3 No Approvals. No authorization or approval or other action by, and
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no notice to or filing with, any governmental authority or regulatory body is
required for the due execution, delivery and performance by the Borrower of
this Agreement, or any other Loan Document, except for filings necessary to
perfect Liens pursuant to the Loan Documents.
5.4 Validity. This Agreement is, and the other Loan Documents, when
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delivered hereunder will be, legal, valid and binding obligations of the
Borrower enforceable against the Borrower in accordance with their respective
terms subject to bankruptcy and insolvency laws affecting rights of creditors
generally and rules of equity.
5.5 Financial Statements. The audited consolidated financial statements
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of the Borrower for the twelve-month period ending June 30, 2000 and the
unaudited financial statements of the Borrower for the three-month period
ending September 30, 2000, which have been furnished to the Lender, have been
prepared in accordance with generally accepted accounting principles in the
United States consistently applied (except as disclosed in the notes thereto)
and present fairly and fully the financial position and results of operations
of the Borrower as of the latest date and for the periods specified therein.
Subsequent to the respective dates as of which information is given in such
financial statements there has been no change resulting in a Material Adverse
Effect.
5.6 Litigation. Except as set forth in Schedule 5.6 hereto, Borrower is
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not a party to any action, suit or proceeding at law or in equity, by or before
any governmental or regulatory authority, court, arbitral tribunal or other
body now pending (or, to the knowledge of the Borrower, threatened in writing)
against or affecting the Borrower, the Royalty Interests, the Project
Properties or any Project or which may have a Material Adverse Effect, or which
may affect the legality, validity or enforceability of this Agreement or any
other Loan Document. Except as set forth in Schedule 5.6, to the knowledge of
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the Borrower, without duty of further inquiry, there is no action, suit or
proceeding at law or in equity, by or before any governmental or regulatory
authority, court, arbitral, tribunal or other body now pending or threatened
against or, with direct and specific application, affecting, the Borrower, the
Royalty Interests, the Project Properties or any Project which may have a
Material Adverse Effect, or which may affect the legality, validity or
enforceability of this Agreement or any other Loan Document.
5.7 Disclosure. Except as set forth in Schedule 5.7 hereto, this
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Agreement, the other Loan Documents and the schedules, attachments, written
statements, documents, certificates or other items prepared by the Borrower and
provided to the Lender do not contain any untrue statements of a material fact
or omit a material fact necessary to make the statements contained herein or
therein not misleading. The Borrower represents and warrants that there is no
fact which it has not disclosed to the Lender in writing and of which any of
its officers or directors are aware which could reasonably be anticipated to
constitute a Material Adverse Effect.
5.8 Title to Royalty Interests; Liens. Schedule 1.1(a) and Schedule
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1.1(c), respectively, set forth a complete and accurate listing and description
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of each of the Projects and the Royalty Interests as of the date hereof. The
Borrower has good and marketable title to the Royalty Interests free and clear
of any claims or rights of title and free and clear of all Liens except (a)
Liens established pursuant to the Collateral Agreements, (b) Liens for taxes
not yet due and payable, (c) inchoate Liens established by statute arising in
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the ordinary course of business securing obligations that are not overdue for
a period of more than 20 days and (d) Liens and title defects reflected in the
Title Opinion.
5.9 Royalty Agreements. Schedule 1.1(b) sets forth a complete and
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accurate list of all Royalty Agreements of the Borrower in effect as of the
Closing Date; each Royalty Agreement is a legal, valid and binding obligation
of the Borrower, and to the Borrower's knowledge, each other party thereto.
Other than as set forth in Schedule 5.9, each such Royalty Agreement is, and
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after giving effect to the transactions contemplated by the Loan Documents will
be, in full force and effect in accordance with the terms thereof. The
Borrower has delivered or made available to the Lender a true and complete copy
of each Royalty Agreement required to be listed on Schedule 1.1(b). The
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Borrower is not in breach of or in default under any Royalty Agreement. The
Borrower has not alleged that any Royalty Agreement counterparty has breached
or defaulted under any Royalty Agreement. To the Borrower's knowledge, no
counterparty to any Royalty Agreement is in breach of or in default of any
Royalty Agreement.
5.10 Project Permits. To the knowledge of the Borrower, without duty of
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further inquiry, except as set forth in Schedule 5.10, and except for matters
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that do not or would not have a material adverse effect on such Projects, the
Project Managers of each of the Projects have obtained all material licenses,
operating and reclamation bonds, permits and approvals from all governmental
commissions, boards and other agencies required to operate such Projects as
currently being operated in accordance with the then effective mine plan
therefor, and such Project Managers are operating the Projects in material
compliance therewith.
5.11 Payment of Taxes. The Borrower has filed, or caused to be filed, all
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federal, state and local tax returns which to the knowledge of the Borrower are
required to be filed and has paid or caused to be paid all taxes as shown on
such returns or any assessment received by the Borrower to the extent that such
taxes or assessments have become due, except such as may be diligently
contested in good faith and by appropriate proceedings or as to which a bona
fide dispute may exist and for which adequate reserves are being maintained.
The Borrower has established reserves which are reasonably believed by the
officers and representatives of the Borrower to be adequate for the payment of
such taxes.
5.12 Agreements. Except as set forth in Schedule 5.12 hereto, the
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Borrower is not a party to any material agreement or instrument or subject to
any charter or other corporate restriction which has a Material Adverse Effect.
The Borrower is not in default in the performance, observance or fulfillment
of any of the obligations, covenants or conditions contained in the Royalty
Agreements or any other agreement or instrument to which it is a party, the
effect of which would constitute a Material Adverse Effect.
5.13 Compliance with Laws. Except as set forth in Schedule 5.13 hereto,
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(a) the Borrower has complied in all material respects with all Requirements
of Law, and (b) with respect to the Project Properties and operations thereon
and the Projects, to the knowledge of the Borrower, without duty of further
inquiry, the Project Managers have complied in all material respects with and
the Projects and Project Properties are in material compliance with all
Requirements of Law relating to the operation of each Project, and the Borrower
is not aware of any investigation (other than a routine inspection) underway by
any local, state or federal agency with respect to enforcement of such
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Requirements of Law. The Borrower has no knowledge (except as disclosed to the
Lender in Schedule 5.13) of any past or existing violations of any such laws,
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ordinances or regulations or notices thereof issued by any governmental
authority with respect to the Borrower that would constitute a Material Adverse
Effect, and the Borrower has no knowledge (except as disclosed to the Lender in
Schedule 5.13) of any past or existing violations of any Requirements of Law or
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notices thereof issued by any governmental authority with respect to any
Project or any Project Property that would have a material adverse effect on
such Project, Project Property or any Royalty Interest.
5.14 Events of Default. No event has occurred and is continuing, or
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would result from the incurring of obligations by the Borrower under this
Agreement, which constitutes an Event of Default or a Potential Event of
Default.
ARTICLE VI
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees from the date hereof, so long as any
portion of the Loans remain outstanding and unpaid, in whole or in part, or
any other amount is owing to the Lender under this Agreement or any other Loan
Document that, unless the Lender shall otherwise consent in writing:
6.1 Notice to the Lender. The Borrower will promptly give notice to the
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Lender as soon as it becomes aware of:
(a) Any Event of Default or Potential Event of Default;
(b) Any default under, breach of or event which, with notice or
lapse of time or both, would become a material default under or breach of any
other Loan Document;
(c) Any loss or damage to the Collateral in excess of $100,000,
exclusive of diminution in value caused solely by changes in the price of Gold
from time to time;
(d) Any additional interests in the Project Properties acquired by
the Borrower which are not included in the Collateral;
(e) Every default or other adverse claim, demand or litigation made
by any Person which would, if successful, constitute a Material Adverse Effect,
or with respect to any Royalty Interest or any other Collateral could have a
material adverse effect on such Royalty Interest or Collateral;
(f) Every notice, and the contents thereof, received by the Borrower
in relation to any renewal of any rights with respect to, or having a material
adverse effect upon any Royalty Interest or Project including (without
limitation) notices pertaining to the loss of or a failure to obtain or a
failure to be able to renew such interest in a material part of such Project,
together with a copy of such notice if in writing;
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(g) Every press release issued by the Borrower together with a copy
of such press release, and any other occurrence, matter, event or thing (other
than changes in the price of Gold) constituting a Material Adverse Effect,
together with a reasonably detailed explanation of such other occurrence,
matter, event or and thing; and
(h) Each material memorandum, letter or report received by the
Borrower from any Project Manager concerning any Royalty Interest or Project,
including (to the extent received by the Borrower and not subject to
confidentiality restrictions that prevent the Borrower from disclosure thereof)
the annual strategic business plan for the Pipeline Project and all reserve,
mine plan and/or operating reports for the Projects or the Project Properties,
together with a copy of such plans and reports.
6.2 Financial Statements, Monthly Reports and Information.
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(a) As soon as practicable (and in any event not later than 90 days
after each fiscal year and 60 days after each fiscal quarter), the Borrower
shall furnish the Lender annual (audited) and quarterly (unaudited)
consolidated financial statements, which shall include all of the information
contained in the statements heretofore furnished to the Lender and referred to
in Section 5.5 hereof, together with a certificate of an Authorized Officer of
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the Borrower to the effect that such financial statements have been prepared
in accordance with generally accepted accounting principles in the United
States consistently applied and present fairly the financial position and
results of the operations of the Borrower as of the respective dates and for
the respective periods specified therein.
(b) Within 60 days after each fiscal quarter, the Borrower shall
cause an Authorized Officer of the Borrower to deliver to the Lender a
certificate as to the Borrower's compliance with the financial covenants
provided in Section 6.12 hereof.
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(c) The Borrower shall deliver to the Lender such other information
(in form reasonably acceptable to the Lender) regarding the conditions or
operations, financial or otherwise, of the Borrower, the Royalty Interests,
the Projects, the Project Properties or any of Borrower's other properties or
activities as the Lender may reasonably request from time to time to the extent
such information is in the possession or control of the Borrower and not
subject to confidentiality restrictions that prevent the Borrower's disclosure
thereof.
6.3 Maintenance of Existence. The Borrower will preserve and maintain
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its legal existence and all of its rights, privileges and franchises necessary
for the proper conduct of its business and will qualify and remain qualified
to do business in Nevada and Colorado and in each jurisdiction where necessary
in light of its business and properties.
6.4 Compliance with Laws. The Borrower shall comply with all
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Requirements of Law, including, without limitation, any Environmental Law
(except any noncompliance or violation which, in the judgment of the Lender,
could not reasonably be expected to constitute a Material Adverse Effect).
6.5 Payment of Indebtedness. The Borrower will pay, discharge or
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otherwise satisfy at or before maturity or before they become delinquent, as
the case may be, all of its Debts and other material obligations of whatever
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nature, except for any Debts or other material obligations which are being
contested in good faith and by appropriate proceedings if (a) reserves in
conformity with generally accepted accounting principles with respect thereto
are maintained on its books, and (b) such contest does not involve any material
risk of the sale, forfeiture or loss of any part of the Collateral.
6.6 Taxes. The Borrower shall pay and discharge all federal, state and
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local taxes imposed on it or on any of its property prior to the date on which
penalties attach thereto, and all lawful claims which, if unpaid, might become
a Lien upon the Collateral. The Borrower shall have the right, however, to
contest in good faith the validity or amount of any such taxes by proper
proceedings timely instituted, and may permit the taxes so contested to remain
unpaid during the period of such contest if: (a) it diligently prosecutes such
contest, (b) it sets aside on its books adequate reserves in conformity with
generally accepted accounting principles with respect to the contested items,
(c) during the period of such contest, the enforcement of any contested item is
effectively stayed, (d) such contest does not involve any material risk of the
sale, forfeiture or loss of any part of the Collateral and provided such
non-payment is permitted by the appropriate taxing legislation. The Borrower
will promptly pay or cause to be paid any valid final judgment enforcing any
such taxes and cause the same to be satisfied of record.
6.7 Books and Records; Right to Inspection. The Borrower shall keep
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proper books of record in accordance with generally accepted accounting
principles and permit representatives of the Lender to examine the books of
record and accounts and to discuss the affairs, finances and accounts of the
Borrower with the Borrower's principal officers, engineers, technical staff
and independent accountants, all at such reasonable times during business
hours and at such intervals as the Lender may desire; provided, however, that
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the Lender shall provide the Borrower with at least five Business Days' notice
of any visit and shall use commercially reasonable efforts not to disrupt the
Borrower's business during any such visits. Upon any request by the Lender to
visit and inspect any Project Property, the Borrower will use commercially
reasonable efforts to make arrangements with the Project Manager for such a
visit to and inspection of such Project Property by the Lender or its
representatives.
6.8 Insurance. The Borrower shall maintain insurance coverage, with
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responsible and reputable insurance companies or associations, in respect of
its properties, assets, and business against such risks and in such amounts as
are customarily maintained in accordance with good industry practice for a
company in the Borrower's business and as may be required by Requirements of
Law. Such insurance policies shall name the Lender as an additional insured
or loss payee, as appropriate, and shall provide that the policies cannot be
cancelled, allowed to lapse or terminate by the insurer without at least ten
(10) days prior written notice to the Lender. Attached as Schedule 6.8 hereto
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is a detailed list and description of all such insurance maintained by or for
the benefit of the Borrower as of the Closing Date, in form reasonably
satisfactory to the Lender. From time to time after the Closing Date the
Borrower shall deliver to the Lender upon its request a detailed list of the
insurance then in effect, stating the names of the insurance companies, the
amounts and rates of the insurance.
6.9 Maintenance of Liens. The Borrower will take all action required or
desirable to maintain and preserve the Lender's Liens on the Collateral and the
first priority thereof. The Borrower, at no cost to the Lender, shall from
time to time execute, deliver, file and record, and the Borrower authorizes the
Lender to file and record, any and all further Instruments (including financing
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statements, continuation statements and similar statements with respect to any
of the Collateral Agreements) reasonably requested by the Lender for such
purposes, including such as may be necessary to include within the Collateral
(a) any additional real property interests or personal property pertaining to
the Project Properties which are acquired by the Borrower utilizing Loan
proceeds, (b) any increase in the GSR #3 Royalty or (c) any Royalty Interests
acquired by the Borrower during the term hereof with Loan proceeds.
6.10 Defend Title. The Borrower shall, at its own cost and expense,
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warrant and defend the title to the Royalty Interests and the other Collateral
against the claims and demands of all Persons whomsoever, except as permitted
in writing by the Lender and except for matters disclosed in the Title Opinion
and not objected to by the Lender.
6.11 Compliance with ERISA. The Borrower will (a) comply with all
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applicable provisions of ERISA and the regulations and published
interpretations thereunder with respect to all Plans, (b) not take any action
or fail to take any action the result of which could be a liability to the
PBGC or to a Multiemployer Plan, (c) not participate in any prohibited
transaction that would result in any civil penalty under ERISA or tax under
the Code, (d) operate each Plan in such a manner that will not incur any tax
liability under Section 4980B of the Code or any liability to any qualified
beneficiary as defined in Section 4980B of the Code and (e) furnish to the
Lender upon the Lender's request such additional information about any Plan as
may be reasonably requested by the Lender.
6.12 Financial Covenants.
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(a) Tangible Net Worth. The Borrower shall at all times maintain
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a Net Worth of at least $10,000,000.
(b) Current Ratio. The Borrower shall not permit the ratio of its
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(x) consolidated assets properly classified as current assets under United
States generally accepted accounting principles, to (y) consolidated
liabilities properly classified as current liabilities under United States
generally accepted accounting principles, at any time, to be less than 1.5 to
1.0.
(c) Minimum Cash Balance. The Borrower shall at all times maintain
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a minimum balance of cash and Cash Equivalents in demand deposit accounts of
$500,000.
(d) Royalty Ounces. The Borrower will have at all times not less
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than 55,000 Royalty Ounces of Gold.
6.13 Delivery of Royalty Interest Proceeds.
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(a) Delivery and Sale of Gold. The Borrower shall cause all
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Products produced from the Project Properties to which the Borrower is entitled
pursuant to the Royalty Interests to be delivered by the Project Managers
directly to the Lender's account for the credit of the Borrower at Xxxxxxx
Xxxxxxx in Salt Lake City, Utah, or such other locations approved by the
Lender. The Borrower hereby irrevocably agrees to sell all such Products to
the Lender forthwith upon receipt thereof at Xxxxxxx Matthey, or such other
locations approved by the Lender, with such Products to be sold, at the
discretion of the Borrower, at either the then prevailing open market bid
price maintained by the
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Lender or at the price of the London Gold Fixing for such date, with the
proceeds of such sales to be deposited into the Debt Service Reserve Account
immediately following trade settlement.
(b) Delivery of Cash Royalties. The Borrower shall cause all cash
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to which the Borrower is entitled pursuant to the Royalty Interests to be
deposited by the Project Managers directly to the Debt Service Reserve Account.
6.14 Maintenance of Credit Balances in the Debt Service Reserve Account.
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The Borrower will maintain at all times in the Debt Service Reserve Account a
credit balance which is not less than the Reserve Amount.
6.15 Further Assurances. The Borrower shall execute, acknowledge and
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deliver to the Lender such other and further documents and Instruments and do
or cause to be done such other acts as the Lender reasonably determines to be
necessary or desirable to effect the intent of the parties to this Agreement
or otherwise to protect and preserve the interests of the Lender hereunder,
promptly upon request of the Lender.
ARTICLE VII
NEGATIVE COVENANTS
From the date hereof, so long as any portion of the Loans remain
outstanding and unpaid, in whole or in part, or any other amount is owing to
the Lender under this Agreement, or any other Loan Document without the prior
written consent of the Lender, the Borrower unconditionally covenants and
agrees that it will not:
7.1 Indebtedness. Incur any Debt except for (a) the Loans, (b) items of
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accrued taxes prior to the date on which such items are due and payable, (c)
capital lease or rental arrangements if the payments thereon, in the aggregate,
do not exceed $250,000 in any fiscal year and (d) trade payables incurred in
the ordinary course of business which are not evidenced by a promissory note or
other evidence of indebtedness and which are not the subject of a genuine
dispute or are not more than ninety (90) days past due.
7.2 Liens. Directly or indirectly, create, incur, assume or suffer to
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exist any Lien upon any of its property, assets, income or profits, including,
without limitation, the Royalty Interests, the Deposit Reserve Account or any
Collateral, whether now owned or hereafter acquired, or enter into any
agreement or option with respect to any of the foregoing, except for Liens for
taxes not yet due and payable and inchoate Liens established by statute arising
in the ordinary course of business securing obligations that are not overdue
for a period of more than twenty days.
7.3 Liquidation; Merger. Liquidate or dissolve, or, without the prior
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written consent of the Lender, not unreasonably withheld, enter into any
consolidation or merger, or enter into any partnership, joint venture or other
combination where such combination involves a contribution by the Borrower of
all or a substantial portion of its assets, or sell, lease or dispose of its
business or assets as a whole or in an amount which constitutes a substantial
portion thereof.
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7.4 Asset Sales. Without the Lender's prior written consent not to be
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unreasonably withheld, convey, sell, lease, assign, transfer or otherwise
dispose of any material portion of its property, business or assets, including,
without limitation, the Royalty Interests or any portion thereof, individually
or in the aggregate, whether now owned or hereafter acquired, except for
conveyances, sales, leases, assignments and transfers of property or assets,
other than Collateral, entered into in the ordinary course of business, which
do not exceed $250,000 in the aggregate per year.
7.5 Guarantees/Assumptions. Directly or indirectly, assume, guarantee,
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endorse or otherwise become directly or contingently liable (including, without
limitation, liable by way of agreement, contingent or otherwise, to purchase,
to provide funds for payment, to supply funds to or otherwise invest in the
debtor or otherwise to assure the creditor against loss) in connection with any
Debt of any other Person, except guarantees by endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business.
7.6 Change in Business. Engage in any business activities or operations
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substantially different from the business of ownership of non-executory
interests in mining properties.
7.7 Changes in Constating Documents or Capital Structure. Without the
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Lender's prior written consent not to be unreasonably withheld, amend or
otherwise modify its articles of incorporation, bylaws or capital structure.
7.8 Gold Sales. Enter into any agreement or any Instrument for any sale,
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assignment, transfer or delivery of Gold or other Products except as provided
in Section 6.13.
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7.9 Modification of Material Agreements. Without the Lender's prior
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written consent not to be unreasonably withheld, allow any modification or
amendment to any Royalty Agreement or other agreement or Instrument material
to the Borrower or allow any modification or amendment to any confidentiality
agreements or provisions to which the Borrower is a party or otherwise subject.
Without the Lender's prior written consent not to be unreasonably withheld, the
Borrower shall not enter into or allow itself to become subject to any new
confidentiality agreement or provision governing information from any existing
Royalty Interest or the Project or properties underlying such Royalty Interest
or any Royalty Interest or the Project or properties underlying such Royalty
Interest acquired after the date hereof with Loan proceeds.
7.10 Maintenance of Royalty Interests. Without the Lender's prior written
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consent not to be unreasonably withheld, enter into any agreement or
undertaking, or otherwise act to sell, assign, transfer or create or suffer the
creation of rights of any Person other than the Borrower or the Lender in or
with respect to the Royalty Interests or Products or Gold accruing to the
account of the Borrower pursuant thereto.
7.11 Acquisition of Royalty Interests. After the Closing Date, buy,
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purchase or otherwise acquire any Royalty, any other mineral property interest,
or any interest therein using Loan proceeds or enter into any agreement or
option to purchase or acquire any Royalty, any other mineral property interest
or any interest therein using Loan proceeds without the prior written consent
of the Lender not to be unreasonably withheld after the Borrower has provided
to the Lender all information on the terms and conditions of the proposed
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Royalty or any such other mineral property interest and on the underlying
Project as reasonably requested by the Lender to assess such proposed
acquisition.
7.12 Restrictive and Inconsistent Agreements. The Borrower will not enter
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into any agreement, Instrument or undertaking or incur or suffer any obligation
prohibiting or inconsistent with the performance by the Borrower of the
Obligations or its obligations under any Royalty Agreement.
7.13 Amount Outstanding. Allow the Amount Outstanding to be greater than
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the Maximum Availability at any time.
ARTICLE VIII
EVENTS OF DEFAULT
8.1 Events of Default. The occurrence of any one or more of the
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following events (whether or not in the control of the Borrower) shall
constitute an Event of Default:
(a) Nonpayment. The Borrower shall fail to make, on or before the
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due date, in the manner required, any payment of principal, interest, costs,
fees or any other sums due under this Agreement.
(b) Covenant Defaults. The Borrower shall fail to observe or
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perform any of its covenants contained in this Agreement, other than the
covenants referred to in paragraph (a) above, and the Borrower shall have not
remedied such default within 10 days after written notice of such default has
been given by the Lender to the Borrower.
(c) Representation or Warranty. Any representation, warranty or
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statement made or deemed to be made by the Borrower herein or in any other
Loan Document given hereunder shall prove to have been untrue in any material
respect as of the time made or deemed made.
(d) Cross-Default. A default shall occur under any Loan Document,
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any Royalty Agreement or any agreement pertaining to Debt permitted hereunder;
or a Close-Out Event shall occur under (and as defined in) the Metals Options
Agreement; or the Borrower shall fail to pay any Debt with a value in excess
of Fifty Thousand Dollars ($50,000) (excluding Debt evidenced by the Note) of
the Borrower, or any interest or premium thereon, when due (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise)
and such failure shall continue after the applicable grace period, if any,
specified in the Instrument relating to such Debt; or any other default under
any Instrument relating to any such Debt, or any other event, shall occur and
shall continue after the applicable grace period, if any, specified in such
Instrument, if the effect of such default or event is to accelerate, or to
permit the acceleration of, the maturity of such Debt; or any such Debt shall
be declared to be due and payable, or required to be prepaid (other than by a
regularly scheduled required prepayment), prior to the stated maturity thereof.
(e) Insolvency. The Borrower shall generally not pay its debts as
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such debts become due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of creditors; or
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(i) the Borrower shall commence any case, proceeding or other action (A) under
any existing or future law of any jurisdiction, domestic or foreign, relating
to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have
an order for relief entered with respect to it, or seeking to adjudicate it as
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
wind-up, liquidation, dissolution, composition or other relief with respect to
it or its debts, or (B) seeking appointment of a receiver, trustee, custodian
or other similar official for it or for all or any substantial part of its
assets, or (ii) there shall be commenced against the Borrower any such case,
proceeding or other action referred to in clause (i) above which (A) results
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in the entry of an order for relief or any such adjudication or appointment or
(B) remains undismissed, undischarged or unbonded for a period of 60 days; or
the Borrower shall take any other action to authorize any of the actions set
forth in this paragraph (f).
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(f) Involuntary Liens. Any involuntary Lien or Liens for amounts
-----------------
then due in the aggregate sum of Fifty Thousand Dollars ($50,000) or more, of
any kind or character shall attach to any assets or property of the Borrower
if such Lien or Liens are not discharged or bonded pending proceedings to
release such Lien or Liens within sixty (60) days after the date of attachment
or unless such Lien or Liens are being contested in good faith.
(g) Judgments. Any judgment or order for the payment of money in
---------
excess of One Hundred Thousand Dollars ($100,000) shall be rendered against the
Borrower and there shall be a period of 30 consecutive days during which such
judgment or order shall not have been discharged or a stay of enforcement of
such judgment or order, by reason of a pending appeal or otherwise, shall not
be in effect.
(h) Condemnation. Any of the Royalty Interests are taken by power
------------
of expropriation or eminent domain or sold under threat of such taking, or
possession of any material portion of the Project Properties is taken through
exercise of such power.
(i) Regulatory Action. Any governmental regulatory authority shall
-----------------
take any action with respect to any of the Borrower or any Project or the
Collateral which would result in a Material Adverse Effect on the Borrower,
unless such action is set aside, dismissed or withdrawn within ninety (90) days
of its institution or such action is being contested in good faith and its
effect is stayed during such contest.
(j) Title to Royalty Interests and Mining Properties. There shall
------------------------------------------------
exist a defect or deficiency in title to the Royalty Interests or the Project
Properties (other than as identified in the Title Opinion) which results in a
Material Adverse Effect, and the Borrower shall have not remedied such default
within 10 days after written notice of default has been given by the Lender to
the Borrower.
(k) Collateral Security. Any of the Liens established or purported
-------------------
to be established by the Collateral Agreements shall fail to be first priority
perfected Liens in the Collateral, or the Borrower shall so state in writing,
and the Borrower shall have not remedied such default within 10 days after
written notice of default has been given by the Lender to the Borrower.
(l) Adverse Changes to the Pipeline Project. Any event or change
---------------------------------------
occurs with respect to the Pipeline Project, including, without limitation,
the abandonment or termination or the taking by power of expropriation or
-30-
eminent domain of all or any material portion thereof, which has a Material
Adverse Effect.
(m) Amount Outstanding in Excess of Maximum Availability. The
----------------------------------------------------
Amount Outstanding shall exceed the Maximum Availability at any time, as the
Maximum Availability is determined from time to time.
(n) Redirection of Royalties. Any payment of cash, Products,
------------------------
proceeds or other amounts owing to the Borrower with respect to the Royalty
Interests shall be paid to any Person other than as required hereby.
(o) Debt Service Reserve Account. The Borrower shall fail to
maintain in existence the Debt Service Reserve Account or shall fail to
maintain therein at all times the Reserve Amount, and the Borrower shall not
have remedied such default within 60 days after written notice of default has
been given by the Lender to the Borrower.
8.2 Remedies Upon Event of Default.
------------------------------
(a) Upon the occurrence of an Event of Default specified in Section
-------
8.1(e) hereof or, in the case of any other Event of Default, upon notice by the
-----
Lender to the Borrower of the Lender's election to declare the Borrower in
default, the obligations of the Lender hereunder including, without intending
any limitation, the Lender's obligation to lend shall terminate. The date on
which such notice is sent or, in the case of an Event of Default specified in
Section 8.1(e) hereof, the date of such Event of Default, shall be the "Date of
-------------
Default."
(b) On the Date of Default, (i) there shall immediately be due and
payable to the Lender an amount equal to the total principal Amount Outstanding
of the Loan plus interest, fees, expenses, and all other amounts owed by the
Borrower pursuant to this Agreement and the other Loan Documents shall
immediately become due and payable, and (ii) the commitment of the Lender to
Advance Loans hereunder shall terminate.
(c) Upon the occurrence of an Event of Default, all of the remedies
provided to the Lender in all of the Collateral Agreements shall immediately
become available to the Lender and the Lender shall have all other rights and
remedies available at law or in equity. The enumeration of the rights and
remedies of the Lender set forth in this Agreement and the other Loan Documents
is not intended to be exhaustive and the exercise by the Lender of any right or
remedy shall not preclude the exercise of any other rights and remedies, all of
which shall be cumulative and shall be in addition to any other right or remedy
given hereunder or under the other Loan Documents or that may now or hereafter
exist at law or in equity or by suit or otherwise.
(d) Except as expressly provided above in this Section 8.2,
-----------
presentment, demand, protest and all other notices of any kind are hereby
expressly waived. From and after the Date of Default, interest shall accrue
at the Default Rate and shall be payable on demand.
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ARTICLE IX
MISCELLANEOUS
9.1 Notices. All notices, requests, demands, consents or other
-------
communications in connection with or pursuant to this Agreement shall be in
writing and shall be delivered by hand or sent by registered or certified mail
or by facsimile (such facsimile followed by a registered or certified letter)
addressed to the parties as set forth below (or to such other address as the
parties may designate by notice):
If to the Lender:
HSBC Bank USA
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxx
Facsimile No.: (000) 000-0000
If to the Borrower:
Royal Gold, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxx
Facsimile No.: (000) 000-0000
A notice delivered by hand to a party shall be deemed received when delivered.
A notice sent by mail shall be deemed received on the fifth Business Day after
mailing. A notice sent by facsimile shall be deemed received upon receipt of
the relevant confirmation or answer back. Notices received after 4:00 p.m.
local time shall be deemed received on the following day.
9.2 Amendments, etc. No amendment or waiver of any provision of this
---------------
Agreement or the Note, nor consent to any departure by the Borrower therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Lender, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
9.3 No Waiver; Cumulative Remedies. No failure on the part of the Lender
------------------------------
to exercise, and no delay in exercising, any right hereunder or under any Note
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
9.4 Costs and Expenses.
------------------
(a) The Borrower agrees to pay on demand all costs and expenses in
connection with the preparation, negotiation, execution, delivery, registration
and administration of this Agreement, the Note and the other Loan Documents and
any amendments to any thereof including, without limitation, the reasonable
fees and out-of-pocket expenses of counsel and of technical advisors and
-32-
consultants for the Lender with respect thereto and with respect to advising
the Lender as to its rights and responsibilities under this Agreement. The
Borrower further agrees to pay on demand all losses, costs and expenses, if any
(including reasonable counsel fees and expenses), in connection with the
preservation of any rights of the Lender under, or the enforcement of, or legal
advice in respect of the rights or responsibilities of the Lender under, this
Agreement, the Note and the other Loan Documents, including, without
limitation, losses, costs and expenses sustained by the Lender as a result of
any failure by the Borrower to perform or observe its obligations contained
herein or in the Note held by the Lender or in connection with any refinancing
or restructuring of the Loan in the nature of a "workout."
(b) If, due to acceleration of the maturity of the Note pursuant to
Article VIII hereof or due to any other reason, the Lender receives payments
of principal of any Loan other than on the last day of a Borrowing Period
relating to such Loan, the Borrower shall, upon demand by the Lender, pay to
the Lender any amounts required to compensate the Lender for any additional
losses, costs or expenses which it may reasonably incur as a result of such
payment, including, without limitation, any loss (including loss of anticipated
profits) cost or expense incurred by reason of the liquidation or reemployment
of deposits or other funds acquired by the Lender to fund or maintain such
Loan.
9.5 Application of Debt Service Reserve Account; Right of Set-off. Upon
-------------------------------------------------------------
the occurrence and during the continuance of any Event of Default, the Lender
is hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to apply the credit balances of the Debt Service Reserve
Account and to set-off and apply any and all deposits or other obligations
(general or special, time or demand, provisional or final) at any time held
and other indebtedness at any time owing by the Lender (including any
in-the-money positions under the Metals Options Agreement) to or for the credit
or the account of the Borrower against any and all of the obligations
of the Borrower now or hereafter existing under this Agreement, the Note and
the other Loan Documents and the Metals Options Agreement held by the Lender,
irrespective of whether or not the Lender shall have made any demand under this
Agreement or otherwise and although such obligations may be unmatured. The
Lender agrees promptly to notify the Borrower after any such set-off and
application made by the Lender, provided that the failure to give such notice
shall not affect the validity of such set-off and application. The rights of
the Lender under this Section are in addition to other rights and remedies
(including, without limitation, other rights to set-off) which the Lender may
have.
9.6 Usury Savings; Limitation on Interest. It is the intention of the
-------------------------------------
parties hereto to contract in strict compliance with applicable usury law from
time to time in effect. In furtherance thereof the parties stipulate and agree
that none of the terms and provisions contained herein and in the other Loan
Documents shall ever be construed to create a contract for the use, forbearance
or detention of money, or a contract to pay interest, in excess of the maximum
amount of interest permitted to be charged by applicable law from time to time
in effect. Neither the Borrower nor any future guarantors or other parties
hereafter becoming liable for payment of the Borrower's indebtedness to the
Lender shall ever be required to pay interest thereon in excess of the maximum
interest that may be lawfully charged or contracted for under applicable law
from time to time in effect, and the provisions of this Section 9.6 shall
-----------
control over all other provisions hereof or of the other Loan Documents which
may be in conflict or apparent conflict herewith. If the maturity of the
Borrower's indebtedness to the Lender or any part thereof shall be accelerated
-33-
for any reason, any amounts held to constitute interest, which are then
unearned and have theretofore been collected by the Lender or any other holder
of such indebtedness, shall be applied to reduce the principal balance thereof
then outstanding. In the event that the Lender or any other holder of the
Borrower's indebtedness to the Lender shall collect monies that are deemed to
constitute interest which would otherwise increase the effective interest on
the Borrower's indebtedness to the Lender or any part thereof to an amount in
excess of that permitted to be charged by applicable law then in effect, all
such sums deemed to constitute interest in excess of such legal limit shall be
either immediately returned to the Borrower or other payor thereof upon such
determination or applied as a credit against the then unpaid principal of the
Borrower's indebtedness, at the option of the Lender or other holder. In
determining whether or not the interest paid or payable under any specific
contingency exceeds the maximum amount permitted under applicable law, the
Borrower (and any other payor thereof) and the Lender shall, to the greatest
extent permitted under applicable law (a) characterize any non-principal
payment as an expense, fee or premium rather than as interest, (b) exclude
voluntary prepayments and the effects thereof, and (c) amortize, prorate,
allocate or spread the total amount of interest throughout the entire
contemplated term of the instruments evidencing the Borrower's indebtedness to
the Lender in accordance with the amounts outstanding from time to time
thereunder and the maximum legal rate of interest from time to time in effect
under applicable law in order to lawfully charge the maximum amount of interest
permitted under applicable law. Upon any such determination, to the extent
permitted by law, the Lender or other holder shall not be subject to any
penalty provided for charging, receiving or contracting for interest in excess
of any such maximum legal rate, regardless of when or the circumstances under
which such refund or application was made.
9.7 Binding Effect; Assignment of Rights. This Agreement shall become
------------------------------------
effective when it shall have been executed by the parties hereto and thereafter
shall be binding upon and inure to the benefit of the Borrower and the Lender
and their respective successors, transferees and assigns; provided that the
--------
Borrower shall not have the right to transfer or assign any of its rights or
obligations hereunder or any interest herein without the prior written consent
of the Lender. The Lender may at any time, without the consent of the
Borrower, assign or transfer by way of assignment or novation to any branch or
affiliate of the Lender or to any financial institution all or any part of, or
any interest in the Lender's rights and benefits and obligations hereunder and
under the Note issued to it hereunder or the other Loan Documents; provided
--------
that such transfer or assignment does not diminish the rights or increase the
obligations of the Borrower, and to the extent of such assignment such assignee
shall have the same rights and benefits vis-a-vis the Borrower as it would have
had if it were the Lender hereunder, and all references in this Agreement to
the Lender shall thereafter be construed as a reference to the Lender and its
transferee or transferees or, in the case of a transfer of all of its rights,
benefits and obligations, to its transferee or transferees alone. For the
purposes hereof, the Lender may disclose to a potential transferee such
information about the Borrower, its businesses, assets and financial condition
as the Lender shall consider appropriate. Nothing contained herein shall be
construed to prevent the Lender from granting by way of sub-participation
(being a right to share in the financial effects of this Agreement without any
rights against the Borrower) or risk participation in all or any of its rights
and benefits hereunder to any person without the consent of the Borrower;
provided that such transfer or assignment does not diminish the rights or
--------
increase the obligations of the Borrower, and that such transfer is done in
compliance with applicable laws; provided, further, that upon any such
--------
assignment the Lender will act as agent and will be the sole party with whom
the Borrower is required to have dealings when no Event of Default is
outstanding.
-34-
9.8 Consent to Jurisdiction.
-----------------------
(a) THE BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF
ANY STATE OR FEDERAL COURT SITTING IN NEW YORK, NEW YORK OVER ANY SUIT, ACTION
OR PROCEEDING (A "PROCEEDING") ARISING OUT OF OR RELATING TO THIS AGREEMENT,
THE NOTE OR THE COLLATERAL AGREEMENTS AND THE BORROWER HEREBY IRREVOCABLY
AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH PROCEEDING MAY BE HEARD AND
DETERMINED IN SUCH STATE COURT OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH
FEDERAL COURT. THE BORROWER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM OR IMPROPER
VENUE TO THE MAINTENANCE OF ANY SUCH PROCEEDING. THE BORROWER IRREVOCABLY
CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH PROCEEDING BY THE
MAILING OF COPIES OF SUCH PROCESS TO THE BORROWER AT ITS ADDRESS REFERRED TO
IN SECTION 9.1 HEREOF. THE BORROWER AGREES THAT A FINAL JUDGMENT IN ANY SUCH
-----------
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE EXECUTED UPON AND ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
(b) NOTHING IN THIS SECTION 9.8 SHALL AFFECT THE RIGHT OF THE LENDER
-----------
TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT
OF THE LENDER TO BRING ANY SUIT, ACTION OR PROCEEDING AGAINST THE BORROWER OR
ITS PROPERTY IN THE COURTS OF OTHER JURISDICTIONS. THE TAKING OF ANY
PROCEEDINGS IN ANY ONE OR MORE JURISDICTIONS SHALL NOT PRECLUDE THE TAKING OF
ANY PROCEEDINGS IN ANY OTHER JURISDICTION.
(c) THE BORROWER AND THE LENDER HEREBY IRREVOCABLY WAIVE ALL RIGHT
TO TRIAL BY JURY IN ANY PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING
TO THIS AGREEMENT, THE NOTE, THE COLLATERAL AGREEMENTS AND ANY OTHER LOAN
DOCUMENTS REFERRED TO HEREIN OR THE OBLIGATIONS UNDER ANY THEREOF.
9.9 Governing Law. THIS AGREEMENT, AND ANY INSTRUMENT OR AGREEMENT
-------------
REQUIRED HEREUNDER, UNLESS OTHERWISE SPECIFICALLY PROVIDED HEREIN OR THEREIN,
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK, PROVIDED, HOWEVER, THAT THE MORTGAGE SHALL BE GOVERNED BY AND
-------- -------
CONSTRUED UNDER THE LAWS OF THE STATE OF NEVADA AND ANY FINANCING STATEMENTS
FILED PURSUANT HERETO SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF
THE STATE IN WHICH THEY ARE FILED.
9.10 Counterparts. This Agreement may be executed in counterparts, each
------------
of which shall be deemed to be an original and all of such counterparts
together shall constitute one and the same instrument.
-35-
9.11 Confidentiality; Public Announcements.
-------------------------------------
(a) The Lender agrees to use best efforts to ensure that any
information concerning the Borrower, the Royalty Interests or the Projects
obtained by the Lender or any of the Lender's authorized agents or
representatives which is not contained in a report or other document filed
with a securities commission or regulatory authority, distributed by the
Borrower to its shareholders or otherwise available to the public generally
(other than by the Lender's breach of these confidentiality obligations) will,
to the extent permitted by law and except as may be required by valid subpoena
(including rules and regulations of the United States Securities Exchange
Commission), any governmental authority having jurisdiction over the Lender or
other external reporting requirements, be treated confidentiality by the
Lender's employees, agents or representatives who have a reasonable need to
know such information. These confidentiality obligations shall survive the
term of this Agreement by one year.
(b) Public announcements or reports by the Borrower of information
relating to this Agreement or the Lender's financing provided for herein
(whether given to stock exchanges or otherwise) shall be made only on the basis
of agreed texts approved by the Lender in advance of issuance, except to the
extent required by Requirements of Law, applicable court order or rules of an
applicable stock exchange.
9.12 Entire Agreement. This Agreement and the Exhibits hereto, the other
----------------
Loan Documents and the Metals Options Agreement, constitute the entire
agreement between the Lender and the Borrower with respect to the various
commitments by the Lender to the Borrower and indebtedness of the Borrower to
the Lender to be incurred under this Agreement; and no other agreements,
promises, representations and warranties (express or implied), except those
expressly set forth herein have been relied upon by the Borrower or have been
made by the Lender.
[ REMAINDER OF THIS PAGE INTENTIONALLY BLANK ]
-36-
IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to
be duly executed and delivered by its respective duly authorized officers as
of the day and year first above written.
LENDER:
HSBC BANK USA
By:
-----------------------------------
Xxxxxxx X. Edge, III
Senior Vice President
By:
-----------------------------------
Xxxxxxx X. Xxxx
Vice President
BORROWER:
ROYAL GOLD, INC.
By:
------------------------------------
Xxxxxxx Xxxxxxx
Chairman and Chief Executive Officer
-37-
-----------------------------------------------------
MORTGAGE, DEED OF TRUST, SECURITY AGREEMENT,
PLEDGE AND FINANCING STATEMENT
FROM
ROYAL GOLD, INC., as Trustor
TO
XXXXXXX TITLE OF NORTHEASTERN NEVADA, as Trustee
AND
HSBC BANK USA, as Beneficiary
DATED AS OF DECEMBER 18, 2000
---------------------------
---------------------------
THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS.
THIS INSTRUMENT SECURES FUTURE ADVANCES.
---------------------------
---------------------------
THIS DOCUMENT WAS PREPARED BY
AND WHEN RECORDED AND/OR FILED
SHOULD BE RETURNED TO:
Xxxx X. Xxxxxx, Esq.
Xxxxx Xxxxxx & Xxxxxx llp
0000 Xxxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
--------------
MORTGAGE, DEED OF TRUST, SECURITY AGREEMENT,
PLEDGE AND FINANCING STATEMENT
This Mortgage, Deed of Trust, Security Agreement, Pledge and Financing
Statement is entered into by and among Royal Gold, Inc. (herein called
"Trustor"), a Delaware corporation, whose address is 0000 Xxxxxxx Xxxxxx,
Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000-0000 (herein called "Trustor"), Xxxxxxx
Title of Northeastern Nevada, (herein called "Trustee"), and HSBC Bank USA
(herein called "Beneficiary"), a bank organized under the laws of the State
of New York, whose address is 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
The parties hereto agree as follows:
ARTICLE 1 - DEFINITIONS
Section 1.1 Defined Terms. For the purposes of this instrument:
-------------
"Collateral" includes Personalty Collateral and Realty Collateral as
hereinafter defined.
"Debt Service Reserve Account" means a demand deposit account of Trustor
at the offices of the Beneficiary in New York, New York, Account Number
66C-003556, and all other accounts which may be maintained from time to time
by Trustor in accordance with the Loan Agreement.
"Dollars" mean lawful money of the United States of America.
"Effective Date" means December 18, 2000.
"Obligations" means the aggregate of:
(i) all amounts payable pursuant to a promissory note, dated December 18,
2000, payable in full on or before June 30, 2005, executed by Trustor, payable
to the order of the Beneficiary, in the principal face amount of Ten Million
Dollars ($10,000,000) (referred to herein as the "Note"), executed and
delivered pursuant to that certain Loan Agreement, dated as of December 18,
2000 between the Trustor and the Beneficiary (referred to as the "Loan
Agreement");
(ii) any and all other or additional indebtedness or liabilities for
which Trustor is now or may become liable to Beneficiary in any manner,
whether under this instrument, the Loan Agreement or any other Loan Document
(as defined in the Loan Agreement), either primarily or secondarily,
absolutely or contingently, directly or indirectly, jointly, severally, or
jointly and severally, and whether matured or unmatured, and whether or not
created after payment in full of the Obligations if this instrument shall not
have been released of record by Beneficiary;
-2-
(iii) all sums advanced and costs and expenses incurred by the Trustee
or the Beneficiary, including without limitation all legal, accounting,
engineering, management, consulting or like fees, made and incurred in
connection with the Obligations described in paragraphs (i) and (ii) above or
any part thereof, any renewal, extension or modification of, or substitution
for, the foregoing Obligations or any part thereof, or the acquisition,
perfection or maintenance and preservation of the security therefor, whether
such advances, costs or expenses shall have been made and incurred at the
request of Trustee, Beneficiary or Trustor; and
(iv) any and all extensions and renewals of, substitutions for, or
modifications or amendments of any of the foregoing Obligations or any part
thereof.
"Personalty Collateral" means all of Trustor's interest now owned or
hereafter acquired in and to: (i) all Products attributable to the Royalty
Interests, (ii) all Production Sales Contracts, (iii) all Royalty Agreements,
(iv) all Refinery Accounts, (v) the Debt Service Reserve Account, and (vi) all
accounts, contract rights and general intangibles now existing or hereafter
arising in connection with the exploration for, production, processing,
treatment, storage, transportation, manufacture or sale of Products
attributable to the Royalty Interests.
"Proceeds" includes whatever is received upon the sale, exchange,
collection or other disposition of the Collateral and insurance payable or
damages or other payments by reason of loss or damage to the Collateral, and
all additions thereto, substitutions and replacements thereof or accessions
thereto.
"Production Sales Contract" means each contract now in effect or hereafter
entered into by Trustor or Trustor's predecessors in title for the sale,
purchase, exchange or processing of Products attributable to the Royalty
Interests.
"Products" means without limitation all ore, minerals, concentrate, dore,
bar, and refined gold, silver or other metals.
"Realty Collateral" means all of Trustor's interest, whether now owned or
hereafter acquired with proceeds of the Loan, in and to the Royalty Interests,
including, but not limited to, the interests of Trustor described or specified
in Parts I and II of Exhibit A hereto.
------- -- ---------
"Refinery Accounts" means accounts, and the credit balances in Dollars or
Products therein, of Trustor at any refinery or processing facility to which
Products attributable to the Royalty Interests are delivered, expressly
including all accounts of Trustor presently in effect at Xxxxxxx Xxxxxxx in
Salt Lake City, Utah.
"Royalty Agreements" means the agreements identified in Part III of
--------
Exhibit A which create, define or otherwise pertain to the Royalty Interests,
---------
as of the Effective Date, and all other agreements to which Trustor is a party
which pertain to the Royalty Interests.
"Royalty Interests" means the royalty interests and estates and other
interests of Trustor identified in Part I of Exhibit A attached hereto and made
------ ---------
a part hereof, in the lands described in Part II of Exhibit A, whether now
------- ---------
owned or hereafter acquired, or any other Royalty Interest acquired with the
-3-
proceeds of the Loan, by operation of law or otherwise, together with all of
Trustor's interests of any nature whatsoever now or hereafter incident or
appurtenant thereto, including, but not limited to, fee mineral and surface
interests in said lands, all unsevered and unextracted Products in, under or
attributable to Trustor's interests in the royalty interest and estates and
other interests of Trustor identified in Part I of Exhibit A hereto, in the
------ ---------
lands described in Part II of Exhibit A and in any other royalty interests,
------- ---------
estates and other interests in lands acquired with the proceeds of Loans, and
all rights of way, surface leases, and easements affecting the foregoing
interests of Trustor or useful or appropriate in exploring and/or producing,
processing, treating, handling, storing, transporting or marketing Products
therefrom.
ARTICLE 2 - CREATION OF SECURITY
Section 2.1 Grant. In consideration of the Beneficiary's advancing or
-----
extending the funds or credit constituting the Obligations, and in
consideration of the mutual covenants contained herein, and for the purpose of
securing payment of the Obligations, Trustor hereby grants, bargains, sells,
warrants, mortgages, assigns, transfers and conveys the Realty Collateral to
the Trustee, with power of sale subject to the terms thereof, for the benefit
of Beneficiary; to have and to hold the Realty Collateral, together with all
and singular the rights, privileges, contracts, and appurtenances now or
hereafter at any time before the foreclosure or release hereof, in any way
appertaining or belonging thereto, unto the Trustee and to its substitutes or
successors, forever, in trust, upon the terms and conditions herein set forth;
and Trustor hereby binds and obligates itself and its successors and assigns,
to warrant and to defend, all and singular, title to the Collateral unto the
Trustee, its substitutes or successors, forever, against the claims of any and
all persons whomsoever claiming any part thereof.
Section 2.2 Creation of Security Interest. In addition to the grant
-----------------------------
contained in Section 2.1, and for the same consideration and purpose, Trustor
-----------
hereby grants to the Beneficiary, a first and prior security interest in all
Personalty Collateral, now owned or hereafter acquired by Trustor, and in all
Proceeds. Trustor, without limiting the foregoing provisions of this Section
-------
2.2, stipulates that the grant made by this Section 2.2 includes a grant of a
--- -----------
security interest in Products extracted from or attributable to the Royalty
Interests and in the Proceeds resulting from sale of such Products, such
security interest to attach to such Products as extracted and to the accounts
resulting from such sales.
Section 2.3 Pledge. Trustor hereby makes a common law pledge to the
------
Beneficiary of the Debt Service Reserve Account and the Refinery Accounts,
and the credit balances therein from time to time.
Section 2.4 Proceeds. The security interest of Beneficiary hereunder in
--------
the Proceeds shall not be construed to mean that Beneficiary consents to the
sale or other disposition of any part of the Collateral other than Products
extracted from or attributable to the Royalty Interests and sold in the
ordinary course of business.
Section 2.5 Substitution of Beneficiary for Trustor. This instrument
---------------------------------------
shall be effective, at the Beneficiary's option and as allowed by applicable
law, as a mortgage as well as a deed of trust, and every grant herein to the
Trustee of interests, powers, rights and remedies shall likewise be a grant of
-4-
the same interests, powers, rights and remedies to the Beneficiary, as
mortgagee. Subject to applicable law, Beneficiary shall in all instances, and
in its sole discretion, elect whether this instrument shall be effective as a
mortgage or as a deed of trust.
Section 2.6 Continuing Status of Lien, Security Interest and Pledge.
-------------------------------------------------------
The Loan Agreement and the Note provide for a revolving loan or loans from the
Beneficiary to the Trustor pursuant to which, for the period specified in the
Loan Agreement and in the Note, and subject to the terms and conditions of the
Loan Agreement, the Trustor may borrow, repay and reborrow funds from the
Beneficiary. So long as the commitment of the Beneficiary under the Loan
Agreement to advance funds to the Trustor remains in effect, the lien on the
Realty Collateral and the security interest in and pledge relating to the
Personalty Collateral created hereby shall remain in effect with the priority
date established by the recording or filing hereof, notwithstanding the fact
that from time to time the outstanding balance of the loans to the
Trustor under the Loan Agreement may be zero.
ARTICLE 3 - ASSIGNMENT OF PRODUCTION PROCEEDS
Section 3.1 Assignment. As further security for the payment of the
----------
Obligations, the Trustor hereby assigns to the Beneficiary, effective upon an
Event of Default, all Products (and the Proceeds therefrom) which are extracted
from or attributable to the Royalty Interests and, effective automatically upon
an Event of Default, the Trustor hereby transfers, assigns, warrants and
conveys to Beneficiary all Products (and the Proceeds therefrom) which are
extracted from or attributable to the Royalty Interests. Upon the occurrence
of an Event of Default, all persons producing, purchasing and receiving such
Products or the Proceeds therefrom are authorized and directed to treat
Beneficiary as the person entitled in Trustor's place and stead to receive the
same; and further, those persons will be fully protected in so treating
Beneficiary and will be under no obligation to see to the application by
Beneficiary of any Proceeds received by it. Trustor agrees that, if, after the
occurrence of an Event of Default, any Proceeds from such Products are paid to
Trustor, such proceeds shall constitute trust funds in the hands of Trustor,
shall be segregated from all other funds of Trustor and separately held by
Trustor, and shall be forthwith paid over by Trustor to Beneficiary in
accordance with the Loan Agreement. Upon the occurrence of an Event of
Default, Trustor shall, if and when requested by Beneficiary, execute and file
with any production purchaser a transfer order or other instrument declaring
Beneficiary to be entitled to the Proceeds of severed Products and instructing
such purchaser to pay such Proceeds to Beneficiary. After the occurrence of an
Event of Default, should any purchaser fail to make payment promptly to
Beneficiary of the proceeds derived from the sale thereof, Beneficiary shall
have the right, subject only to any contractual rights of such purchaser or any
operator, to designate another purchaser to purchase and take such Products,
without liability of any kind on Beneficiary in making such selection so long
as ordinary care is used in respect thereof.
Section 3.2 Trustor's Payment Duties. Nothing contained herein will
------------------------
limit Trustor's duty to make payment on the Obligations when the Proceeds
received by Beneficiary pursuant to this Article 3 are insufficient to pay the
costs, interest, principal and any other portion of the Obligations then owing,
and the receipt of Proceeds by Beneficiary will be in addition to all other
security now or hereafter existing to secure payment of the Obligations.
-5-
Section 3.3 Liability of Beneficiary. Beneficiary has no obligation to
------------------------
enforce collection of any Proceeds and is hereby released from all
responsibility in connection therewith, except the responsibility to account to
Trustor for Proceeds actually received.
Section 3.4 Indemnification. Trustor agrees to indemnify Beneficiary
---------------
against and hold Beneficiary harmless from all claims, actions, liabilities,
losses, judgments, attorneys' fees, costs and expenses and other charges of any
description whatsoever (all of which are hereafter referred to in this Section
-------
3.4 as "Claims") made against or sustained or incurred by Beneficiary as a
---
consequence of the assertion, either before or after the payment in full of the
Obligations, that Beneficiary received Products or Proceeds pursuant to this
instrument. Beneficiary will have the right to employ attorneys and to defend
against any Claims and unless furnished with satisfactory indemnity, after
notice to Trustor, Beneficiary will have the right to pay or compromise and
adjust all Claims in its sole reasonable discretion. Trustor shall indemnify
and pay to Beneficiary all amounts paid by Beneficiary in compromise or
adjustment of any of the Claims or amounts adjudged against Beneficiary in
respect of any of the Claims. The liabilities of Trustor as set forth in this
Section 3.4 will constitute Obligations and will survive the termination of
-----------
this instrument.
ARTICLE 4 - TRUSTOR'S WARRANTIES AND COVENANTS
Section 4.1 Payment of Obligations. Trustor covenants that it will pay
----------------------
all Obligations when due and otherwise faithfully and strictly perform all
obligations of Trustor under the Note, the Loan Agreement and any other
instrument or document executed and delivered in connection with the
Obligations. If any part of the Obligations is not evidenced by a writing
specifying a due date, Trustor agrees to pay the same upon demand. All
Obligations are payable to Beneficiary as provided in the Loan Agreement.
Section 4.2 Warranties and Covenants.
------------------------
(a) Trustor warrants and covenants that:
(i) no approval or consent of any regulatory or
administrative commission or authority or of any other governmental body
or any other party is necessary to authorize the execution and delivery of
this instrument or of any other written instrument constituting or
evidencing the Obligations, or to authorize the observance or performance
by Trustor of the covenants contained in the instruments constituting or
evidencing the Obligations, or to authorize the observance or performance
by Trustor of the covenants contained in this instrument or in the other
written instruments constituting or evidencing the Obligations or to
enable the Beneficiary to exercise its rights hereunder;
(ii) Trustor is not obligated, by virtue of a prepayment
arrangement under any Production Sales Contract containing a "take a pay"
clause or any other prepayment arrangement, to deliver Products produced
from the Royalty Interests at some future time without then or thereafter
receiving full payment therefor; and Trustor, without Beneficiary's prior
written consent, shall not hereafter make any such prepayment arrange-
-6-
ments, other than by a customary "take or pay" clause contained in a
Production Sales Contract; and
(iii) it has not (since 1987) used any corporate name or
done business under a name other than Royal Gold, Inc., and that it will
not do so, or relocate its chief executive office outside of the State of
Colorado without at least thirty days' prior notice to the Beneficiary.
(b) Trustor warrants and shall forever defend the Collateral
against every person whomsoever lawfully claiming the same or any part thereof,
and Trustor shall maintain and preserve the lien and security interest herein
created until this instrument has been terminated as provided herein.
Section 4.3 Operation of Property Burdened with Royalty Interests. As
-----------------------------------------------------
long as this instrument has not been terminated, Trustor shall, at Trustor's
own expense, use commercially reasonable efforts, consistent with its status as
a non-executory, royalty interest holder and consistent with Trustor's rights
and obligations under the Royalty Agreements, to cause the operator(s) of the
properties subject to the Royalty Interests to:
(a) comply fully with all of the terms and conditions of all
leases and other instruments of title and all rights-of-way, easements and
privileges necessary for the proper operation of such leases and instruments,
and otherwise do all things necessary to keep Trustor's rights and
Beneficiary's interest in the Collateral unimpaired;
(b) not abandon any property which is producing or capable of
commercial production or forfeit, surrender or release any lease, sublease,
operating agreement or other agreement or instrument comprising or affecting
the Royalty Interests without Beneficiary's prior written consent, which
consent shall not be withheld unreasonably;
(c) cause the properties subject to the Royalty Interests to be
maintained, developed and operated in a good and workmanlike manner as a
prudent operator would in accordance with generally accepted practices,
applicable operating agreements and all applicable federal, state and local
laws, rules, regulations and orders; and
(d) promptly pay or cause to be paid when due and owing all
rentals and royalties payable in respect of the properties subject to the
Royalty Interests; all expenses incurred in or arising from the operation or
development of such properties; and all taxes, assessments and governmental
charges imposed upon such properties.
Section 4.4 Recording and Filing. Trustor shall pay all costs of Filing
--------------------
registering and recording this and every other instrument in addition or
supplemental hereto and all financing statements Beneficiary may require, in
such offices and places and at such times and as often as may be, in the
judgment of Beneficiary, necessary to preserve, protect and renew the lien and
security interest herein created as a first lien and prior security interest
on and in the Collateral and otherwise do and perform all matters or things
necessary or expedient to be done or observed by reason of any law or
regulation of any State or of the United States or of any other competent
authority for the purpose of effectively creating, maintaining and preserving
-7-
the lien and security interest created herein and on the Collateral and the
priority thereof. Trustor shall also pay the costs of obtaining reports from
appropriate filing officers concerning financing statement filings in respect
of any of the Collateral in which a security interest is granted herein.
Section 4.5 Trustee's or Beneficiary's Right to Perform Trustor's
-----------------------------------------------------
Obligations. Trustor agrees that, if Trustor fails to perform any act which
-----------
Trustor is required to perform under this instrument, Beneficiary or the
Trustee or any receiver appointed hereunder may, but shall not be obligated
to, perform or cause to be performed such act, and any expense incurred by
Beneficiary or the Trustee in so doing shall be a demand obligation owing by
Trustor to Beneficiary, shall bear interest at an annual rate equal to the
maximum interest rate provided in the Note until paid and shall be a part of
the Obligations, and Beneficiary, the Trustee or any receiver shall be
subrogated to all of the rights of the party receiving the benefit of such
performance. The undertaking of such performance by Beneficiary, the Trustee
or any receiver as aforesaid shall not obligate such person to continue such
performance or to engage in such performance or performance of any other act
in the future, shall not relieve Trustor from the observance or performance of
any covenant, warranty or agreement contained in this instrument or constitute
a waiver of default hereunder and shall not affect the right of Beneficiary to
accelerate the payment of all indebtedness and other sums secured hereby or to
resort to any other of its rights or remedies hereunder or under applicable
law. In the event the Beneficiary, the Trustee or any receiver appointed
hereunder undertakes any such action, no such party shall have any liability
to the Trustor in the absence of a showing of gross negligence or willful
misconduct of such party, and in all events no party other than the acting
party shall be liable to Trustor.
ARTICLE 5 - DEFAULT
Section 5.1 Events of Default. The term "Event of Default" shall have
-----------------
the meaning given thereto in the Loan Agreement, but shall also include the
occurrence or the existence of any of the following conditions:
(a) failure by Trustor to keep, punctually perform or observe any
of the covenants, obligations or prohibitions contained herein, in any other
written instrument evidencing any of the Obligations or in any other agreement
with Beneficiary (whether now existing or entered into hereafter) following
notice, if required, and the expiration of applicable cure periods, if any; or
(b) the assertion (except by the owner of an encumbrance
expressly excepted from Trustor's warranty of title herein) of any claim of
priority over this instrument, by title, lien or otherwise, unless Trustor
within 30 days after such assertion either causes the assertion to be withdrawn
or provides Beneficiary with such security as Beneficiary may require to
protect Beneficiary against all loss, damage, or expense, including attorneys'
fees, which Beneficiary may incur in the event such assertion is upheld.
Section 5.2 Acceleration Upon Default. Upon the occurrence of any Event
-------------------------
of Default, or at any time thereafter, Beneficiary may, at its option, by
notice to Trustor, declare the entire unpaid principal of and the interest
-8-
accrued on the Obligations to be due and payable forthwith without any further
notice, presentment or demand of any kind, all of which are hereby expressly
waived.
Section 5.3 Possession and Operation of Property. Upon the occurrence
------------------------------------
of any Event of Default, or at any time thereafter, and in addition to all
other rights therein conferred on the Trustee or the Beneficiary, the Trustee,
the Beneficiary or any person, firm or corporation designated by Beneficiary,
will have the right and power, but will not be obligated, to have an audit
performed, at Trustor's expense, of the books and records of Trustor, and to
enter upon and take possession of all or any part of the Collateral, to exclude
Trustor therefrom, and to hold, use, administer and manage the same to the
extent that Trustor could do so. The Trustee, the Beneficiary or any person,
firm or corporation designated by the Beneficiary, may manage the Collateral,
or any portion thereof, without any liability to Trustor in connection with
such management except with respect to gross negligence or willful misconduct;
and the Trustee, the Beneficiary or any person, firm or corporation designated
by Beneficiary will have the right to collect, receive and receipt for all
Products produced and sold from the Royalty Interests, and to exercise every
power, right and privilege of Trustor with respect to the Collateral.
Providing there has been no foreclosure sale, when and if the expenses of the
management of the Collateral have been paid and the Obligations paid in full,
the remaining Collateral shall be returned to the Trustor.
Section 5.4 Ancillary Rights. Upon the occurrence of an Event of
----------------
Default, or at any time thereafter, and in addition to all other rights of
Beneficiary hereunder, Beneficiary may, without notice, demand or declaration
of default, all of which are hereby expressly waived by Trustor, proceed by a
suit or suits in equity or at law (i) for the seizure and sale of the
Collateral or any part thereof, (ii) for the specific performance of any
covenant or agreement herein contained or in aid of the execution of any power
herein granted, (iii) for the foreclosure or sale of the Collateral or any part
thereof under the judgment or decree of any court of competent jurisdiction,
(iv) without regard to the solvency or insolvency of any person, and without
regard to the value of the Collateral, and without notice to Trustor (notice
being hereby expressly waived), for the ex parte appointment of a receiver to
-- -----
serve without bond pending any foreclosure or sale hereunder, or (v) for the
enforcement of any other appropriate legal or equitable remedy.
ARTICLE 6 - BENEFICIARY'S RIGHTS AS TO REALTY COLLATERAL
UPON DEFAULT
Section 6.1 Judicial Foreclosure. This instrument shall be effective as
--------------------
a mortgage as well as a deed of trust and upon the occurrence of an Event of
Default, or at any time thereafter, in lieu of the exercise of the non-judicial
power of sale hereafter given, Beneficiary may, subject to any mandatory
requirement of applicable law, proceed by suit to foreclose its lien hereunder
and to sell or have sold the Realty Collateral or any part thereof at one or
more sales, as an entirety or in parcels, at such place or places and
otherwise, in such manner and upon such notice as may be required by law, or,
in the absence of any such requirement, as Beneficiary may deem appropriate,
and Beneficiary shall thereafter make or cause to be made a conveyance to the
purchaser or purchasers thereof. Beneficiary may postpone the sale of the real
property included in the Collateral or any part thereof by public announcement
at the time and place of such sale, and from time to time thereafter may
further postpone such sale by public announcement made at the time of sale
-9-
fixed by the preceding postponement. Sale of a part of the real property
included in the Collateral will not exhaust the power of sale, and sales
may be made from time to time until all such property is sold or the
Obligations are paid in full.
Section 6.2 Non-Judicial Foreclosure. If the Note or other Obligations
------------------------
are not paid when due, whether by acceleration or otherwise, the Trustee is
hereby authorized and empowered, and it shall be its duty, upon request of
Beneficiary, and to the extent permitted by applicable law, to sell any part
of the Realty Collateral at one or more sales, as an entirety or in parcels,
at such place or places and otherwise in such manner and upon such notice as
may be required by applicable law, or in the absence of any such requirement,
as Trustee and/or Beneficiary may deem appropriate, and to make conveyance to
the purchaser or purchasers thereof. Any sale shall be made to the highest
bidder for cash at the door of the county courthouse of, or in such other place
as may be required or permitted by applicable law in, the county in the state
where the Realty Collateral or any part thereof is situated; provided that and
--------
if the Realty Collateral lies in more than one county, such part of the Realty
Collateral may be sold at the courthouse door of any one of such counties, and
the notice so posted shall designate in which county such property shall be
sold. Any such sale shall be made at public outcry, on the day of any month,
during the hours of such day and after such written notices thereof have been
publicly posted in such places and for such time periods and after all persons
entitled to notice thereof have been sent such notice, all as required by
applicable law in effect at the time of such sale. The affidavit of any person
having knowledge of the facts to the effect that such a service was completed
shall be prima facie evidence of the fact of service. The Trustor agrees that
----- -----
no notice of any sale, other than as required by applicable law, need be given
by the Trustor, the Beneficiary or any other person. The Trustor hereby
designates as its address for the purposes of such notice the address set out
on page two hereof; and agrees that such address shall be changed only by
depositing notice of such change enclosed in a postpaid wrapper in a post
office or official depository under the care and custody of the United States
Postal Service, certified mail, postage prepaid, return receipt requested,
addressed to the Beneficiary or other holder of the Obligations at the address
for the Beneficiary set out herein (or to such other address as the Beneficiary
or other holder of the Obligations may have designated by notice given as above
provided to the Trustor and such other debtors). Any such notice or change of
address of the Trustor or other debtors or of the Beneficiary or of other
holder of the Obligations shall be effective upon receipt. The Trustor
authorizes and empowers the Trustee to sell the Realty Collateral in lots or
parcels or in its entirety as the Trustee shall deem expedient; and to execute
and deliver to the purchaser or purchasers thereof good and sufficient deeds
of conveyance thereto by fee simple title, with evidence of general warranty by
the Trustee, and the title of such purchaser or purchasers when so made by the
Trustee, the Trustor binds itself to warrant and forever defend. Where
portions of the Realty Collateral lie in different counties, sales in such
counties may be conducted in any order that the Trustee may deem expedient;
and one or more such sales may be conducted in the same month, or in successive
or different months as the Trustor may deem expedient.
ARTICLE 7 - BENEFICIARY'S RIGHTS AS TO PERSONALTY AND FIXTURE
COLLATERAL UPON DEFAULT
Section 7.1 Personalty Collateral. Upon the occurrence of an Event of
---------------------
Default, or at any time thereafter, Beneficiary may, without notice to Trustor,
-10-
exercise its rights to declare all of the Obligations to be immediately due
and payable, in which case Beneficiary will have all rights and remedies
granted by law, and particularly by the Uniform Commercial Code, including,
but not limited to, the right to take possession of the Personalty Collateral,
and for this purpose Beneficiary may enter upon any premises on which any or
all of the Personalty Collateral is situated and take possession of and operate
the Personalty Collateral or remove it therefrom. Beneficiary may require
Trustor to assemble the Personalty Collateral and make it available to
Beneficiary or the Trustee at a place to be designated by Beneficiary which is
reasonably convenient to all parties. Unless the Personalty Collateral is
perishable or threatens to decline speedily in value or is of a type
customarily sold on a recognized market, Beneficiary will give Trustor
reasonable notice of the time and place of any public sale or of the time after
which any private sale or other disposition of the Personalty Collateral is to
be made. This requirement of sending reasonable notice will be met if the
notice is mailed, postage prepaid, to Trustor at the address designated above
at least five days before the time of the sale or disposition.
Section 7.2 Sale with Realty Collateral. In the event of foreclosure,
---------------------------
whether judicial or nonjudicial, at Beneficiary's option it may proceed under
the Uniform Commercial Code as to the Personalty Collateral or it may proceed
as to both Realty Collateral and Personalty Collateral in accordance with its
rights and remedies in respect of the Realty Collateral.
Section 7.3 Private Sale. If Beneficiary in good faith believes that the
------------
Securities Act of 1933 or any other State or Federal law prohibits or restricts
the customary manner of sale or distribution of any of the Personalty
Collateral, or if Beneficiary determines that there is any other restraint or
restriction limiting the timely sale or distribution of any such property in
accordance with the customary manner of sale or distribution, Beneficiary may
sell or may cause the Trustee to sell such property privately or in any other
manner it deems advisable at such price or prices as it determines in its sole
discretion and without any liability whatsoever to Trustor in connection
therewith. Trustor recognizes and agrees that such prohibition or restriction
may cause such property to have less value than it otherwise would have and
that, consequently, such sale or disposition by Beneficiary may result in a
lower sales price than if the sale were otherwise held.
ARTICLE 8 - OTHER PROVISIONS CONCERNING FORECLOSURE
Section 8.1 Possession and Delivery of Collateral. It shall not be
-------------------------------------
necessary for Beneficiary or the Trustee to have physically present or
constructively in its possession any of the Collateral at any foreclosure sale,
and Trustor shall deliver to the purchasers at such sale on the date of sale
the Collateral purchased by such purchasers at such sale, and if it should be
impossible or impracticable for any of such purchasers to take actual delivery
of the Collateral, then the title and right of possession to the Collateral
shall pass to the purchaser at such sale as completely as if the same had been
actually present and delivered.
Section 8.2 Beneficiary as Purchaser. Beneficiary will have the right
------------------------
to become the purchaser at any foreclosure sale, and it will have the right to
credit upon the amount of the bid the amount payable to it out of the net
proceeds of sale.
-11-
Section 8.3 Recitals Conclusive; Warranty Deed; Ratification. Recitals
------------------------------------------------
contained in any conveyance to any purchaser at any sale made hereunder will
conclusively establish the truth and accuracy of the matters therein stated,
including, without limiting the generality of the foregoing, nonpayment of the
unpaid principal sum of, and the interest accrued on, the written instruments
constituting part or all of the Obligations after the same have become due and
payable, nonpayment of any other of the Obligations or advertisement and
conduct of the sale in the manner provided herein, and appointment of any
successor Trustee hereunder. Trustor ratifies and confirms all legal acts that
Beneficiary and/or Trustee may do in carrying out the provisions of this
instrument.
Section 8.4 Effect of Sale. Any sale or sales of the Collateral or any
--------------
part thereof will operate to divest all right, title, interest, claim and
demand whatsoever, either at law or in equity, of Trustor in and to the
premises and the property sold, and will be a perpetual bar, both at law and
in equity, against Trustor, Trustor's successors or assigns and against any and
all persons claiming or who shall thereafter claim all or any of the property
sold from, through or under Trustor, or Trustor's successors or assigns.
Subject to applicable rights of redemption under applicable law, the purchaser
or purchasers at the foreclosure sale will receive immediate possession of the
property purchased; and if Trustor retains possession of the Realty Collateral,
or any part thereof, subsequent to sale, Trustor will be considered a tenant at
sufferance of the purchaser or purchasers, and if Trustor remains in such
possession after demand of the purchaser or purchasers to remove, Trustor will
be guilty of forcible detainer and will be subject to eviction and removal,
forcible or otherwise, with or without process of law, and without any right to
damages arising out of such removal.
Section 8.5 Application of Proceeds. The proceeds of any sale of the
-----------------------
Collateral or any part thereof will be applied as follows:
(a) first, to the payment of all expenses incurred by the Trustee
and Beneficiary in connection therewith, including, without limiting the
generality of the foregoing, court costs, legal fees and expenses, fees of
accountants, engineers, consultants, agents or managers and expenses of any
entry or taking of possession, holding, valuing, preparing for sale,
advertising, selling and conveying;
(b) second, to the payment of the Obligations; and
(c) third, any surplus thereafter remaining to Trustor or
Trustor's successors or assigns, as their interests may be established to
Beneficiary's reasonable satisfaction.
Section 8.6 Deficiency. Trustor will remain liable for any deficiency
----------
owing to Beneficiary after application of the net proceeds of any foreclosure
sale.
Section 8.7 Trustor's Waiver of Appraisement, Marshaling, Etc. Trustor
-------------------------------------------------
agrees that Trustor will not at any time insist upon or plead or in any manner
whatsoever claim the benefit of any appraisement, valuation, stay, extension or
redemption law now or hereafter in force, in order to prevent or hinder the
enforcement or foreclosure of this instrument, the absolute sale of the
Collateral or the possession thereof by any purchaser at any sale made pursuant
to this instrument or pursuant to the decree of any court of competent
jurisdiction. Trustor, for Trustor and all who may claim through or under
Trustor, hereby waives the benefit of all such laws and to the extent that
-12-
Trustor may lawfully do so under applicable state law, waives any and all right
to have the Realty Collateral marshaled upon any foreclosure of the lien hereof
or sold in inverse order of alienation and, Trustor agrees that the Trustor may
sell the Realty Collateral as an entirety.
ARTICLE 9 - MISCELLANEOUS
Section 9.1 Discharge of Purchaser. Upon any sale made under the powers
----------------------
of sale herein granted and conferred, the receipt of Beneficiary will be
sufficient discharge to the purchaser or purchasers at any sale for the
purchase money, and such purchaser or purchasers and the heirs, devisees,
personal representatives, successors and assigns thereof will not, after paying
such purchase money and receiving such receipt of Beneficiary, be obliged to
see to the application thereof or be in anywise answerable for any loss,
misapplication or nonapplication thereof.
Section 9.2 Indebtedness of Obligations Absolute. Nothing herein
------------------------------------
contained shall be construed as limiting Beneficiary to the collection of any
indebtedness of Trustor to Beneficiary only out of the income, revenue, rents,
issues and profits from the Collateral or as obligating Beneficiary to delay or
withhold action upon any default which may be occasioned by failure of such
income or revenue to be sufficient to retire the principal or interest when due
on the indebtedness secured hereby. It is expressly understood between
Beneficiary and Trustor that any indebtedness of Trustor to Beneficiary secured
hereby shall constitute an absolute, unconditional obligation of Trustor to pay
as provided herein or therein in accordance with the terms of the instrument
evidencing such indebtedness in the amount therein specified at the maturity
date or at the respective maturity dates of the installments thereof, whether
by acceleration or otherwise.
Section 9.3 Defense of Claims. Trustee will promptly notify the Trustor
-----------------
and Beneficiary in writing of the commencement of any legal proceedings
affecting Beneficiary's interest in the Collateral, or any part thereof, and
shall take such action, employing attorneys acceptable to Beneficiary, as may
be necessary to preserve Trustor's, the Trustee's and Beneficiary's rights
affected thereby; and should Trustor fail or refuse to take any such action,
the Trustee or Beneficiary may take the action on behalf of and in the name of
Trustor and at Trustor's expense. Moreover, Beneficiary or the Trustee on
behalf of Beneficiary may take independent action in connection therewith as
they may in their discretion deem proper, and Trustor hereby agrees to make
reimbursement for all sums advanced and all expenses incurred in such actions
plus interest at a rate equal to the maximum interest rate provided in the Loan
Agreement.
Section 9.4 Termination. If all the Obligations are paid in full and
-----------
the covenants herein contained are well and truly performed, and if Trustor and
Beneficiary intend at such time that this instrument not secure any obligation
of Trustor thereafter arising, then the Beneficiary shall, upon the request of
Trustor and at Trustor's cost and expense, deliver to Trustor proper
instruments executed by the Beneficiary evidencing the release of this
instrument. Until such delivery, this instrument shall remain and continue in
full force and effect.
Section 9.5 Renewals, Amendments and Other Security. Renewals and
---------------------------------------
extensions of the Obligations may be given at any time, amendments may be made
to the agreements with third parties relating to any part of the Obligations
or the Collateral, and Beneficiary may take or hold other security for the
-13-
Obligations without notice to or consent of Trustor. The Trustor or
Beneficiary may resort first to other security or any part thereof, or first to
the security herein given or any part thereof, or from time to time to either
or both, even to the partial or complete abandonment of either security, and
such action will not be a waiver of any rights conferred by this instrument.
Section 9.6 Successor Trustees. The Trustee may resign in writing
------------------
addressed to Beneficiary or be removed at any time with or without cause by an
instrument in writing duly executed by Beneficiary. In case of the resignation
or removal of the Trustee, a successor Trustee may be appointed by Beneficiary
by instrument of substitution complying with any applicable requirements of
law, and in the absence of any such requirement, without other formality than
an appointment and designation in writing. Any appointment and designation
will be full evidence of the right and authority to make the same and of all
facts therein recited. Upon the making of any appointment and designation, all
the estate and title of the Trustee in all of the Realty Collateral will vest
in the named successor Trustee, and the successor will thereupon succeed to all
the rights, powers, privileges, immunities and duties hereby conferred upon the
Trustee. All references herein to the Trustee will be deemed to refer to the
Trustee from time to time acting hereunder.
Section 9.7 Limitations on Interest. No provision of the Note, Loan
-----------------------
Agreement or other instrument constituting or evidencing any of the Obligations
or any other agreement between the parties shall require the payment or permit
the collection of interest in excess of the maximum nonusurious rate which
Trustor may agree to pay under applicable laws. The intention of the parties
being to conform strictly to applicable usury laws now in force, the interest
on the principal amount of the Note and the interest on other amounts due under
and/or secured by this instrument shall be held to be subject to reduction to
the amount allowed under said applicable usury laws as now or hereafter
construed by the courts having jurisdiction, and any excess interest paid shall
be credited to Trustor.
Section 9.8 Effect of Instrument. This instrument shall be deemed and
--------------------
construed to be, and may be enforced as, an assignment, chattel mortgage or
security agreement, common law pledge, contract, deed of trust, financing
statement, real estate mortgage, and as any one or more of them if appropriate
under applicable state law. This instrument shall be effective as a financing
statement covering minerals or the like and accounts subject to Section
9-103(5) (or corresponding provision) of the Uniform Commercial Code as enacted
in the appropriate jurisdiction and is to be filed for record in the Office of
the County Clerk or other appropriate office of each county where any part of
the collateral is situated. A carbon, photographic, or other reproduction of
this Mortgage or of any financing statement relating to this Mortgage shall be
sufficient as a financing statement.
Section 9.9 Unenforceable or Inapplicable Provisions. If any provision
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hereof or of any of the written instruments constituting part or all of the
Obligations is invalid or unenforceable in any jurisdiction, whether with
respect to all parties hereto or with respect to less than all of such parties,
the other provisions hereof and of the written instruments will remain in full
force and effect in that jurisdiction with respect to the parties as to which
such provision is valid and enforceable, and the remaining provisions hereof
will be liberally construed in favor of Beneficiary in order to carry out the
provisions hereof. The invalidity of any provision of this instrument in any
jurisdiction will not affect the validity or enforceability of any provision in
any other jurisdiction.
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Section 9.10 Rights Cumulative. Each and every right, power and remedy
-----------------
given to Beneficiary herein or in any other written instrument relating to the
Obligations will be cumulative and not exclusive; and each and every right,
power and remedy whether specifically given herein or otherwise existing may be
exercised from time to time and as often and in such order as may be deemed
expedient by Beneficiary, and the exercise, or the beginning of the exercise,
of any such right, power or remedy will not be deemed a waiver of the right to
exercise, at the same time or thereafter, any other right, power or remedy. A
waiver by Beneficiary of any right or remedy hereunder or under applicable law
on any occasion will not be a bar to the exercise of any right or remedy on any
subsequent occasion.
Section 9.11 Non-Waiver. No act, delay, omission or course of dealing
----------
between Beneficiary and Trustor will be a waiver of any of Beneficiary's rights
or remedies hereunder or under applicable law. No waiver, change or
modification in whole or in part of this instrument or any other written
instrument will be effective unless in a writing signed by Beneficiary.
Section 9.12 Beneficiary's Expenses. Trustor agrees to pay in full all
----------------------
expenses and reasonable attorneys' fees of Beneficiary which may have been or
may be incurred by Beneficiary in connection with the collection of the
Obligations and the enforcement of any of Trustor's obligations hereunder and
under any documents executed in connection with the Obligations.
Section 9.13 Indemnification. Trustor shall indemnify Beneficiary and
---------------
the Trustee and hold each of them harmless against, and neither Beneficiary
nor the Trustee shall be liable for, any loss, cost or damage, including
without limitation attorneys', consultants' or management fees, resulting from
exercise by Beneficiary or the Trustee of any right, power or remedy conferred
upon it by this instrument or any other instrument pertaining hereto, or from
the attempt or failure of Beneficiary or the Trustee to exercise any such
right, power or remedy; and notwithstanding any provision hereof to the
contrary, the foregoing indemnity shall in all respects continue and remain in
full force and effect even though all indebtedness and other sums secured
hereby may be fully paid and the lien of this instrument released.
Section 9.14 Partial Releases. In the event Trustor sells for monetary
----------------
consideration or otherwise any portion of the Royalty Interests, as permitted
by the Loan Agreement, Beneficiary and Trustee shall release the lien of this
instrument with respect to the portion sold, at the request of Trustor. No
release from the lien of this instrument of any part of the Collateral by
Beneficiary shall in anywise alter, vary or diminish the force, effect or lien
of this instrument on the balance or remainder of the Collateral.
Section 9.15 Subrogation. This instrument is made with full substitution
and subrogation of Beneficiary and Trustee in and to all covenants and
warranties by others heretofore given or made in respect of the Collateral or
any part thereof.
Section 9.16 Notice. All notices and deliveries of information hereunder
------
shall be deemed to have been duly given if actually delivered or mailed by
registered or certified mail, postage prepaid, addressed to the parties hereto
at the addresses set forth above on page 1; if by mail, then as of the date of
such mailing. Each party may, by written notice so delivered to the others,
change the address to which delivery shall thereafter be made.
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Section 9.17 Successors. This instrument shall bind and inure to the
benefit of the respective successors and assigns of the parties.
Section 9.18 Interpretation.
--------------
(a) Article and section headings used in this instrument are
intended for convenience only and shall be given no significance whatever in
interpreting and construing the provisions of this instrument.
(b) As used in this instrument, "Beneficiary" and "Trustee"
include their respective successors and assigns. Unless context otherwise
requires, words in the singular number include the plural and in the plural
number include the singular. Words of the masculine gender include the
feminine and neuter gender and words of the neuter gender may refer to any
gender.
Section 9.19 Inconsistencies with Related Documents. To the extent, if
--------------------------------------
any, the provisions hereof are inconsistent with the provisions of the Loan
Agreement, such inconsistencies shall be resolved by giving controlling effect
to the Loan Agreement.
Section 9.20 Counterparts. This instrument may be executed in any number
------------
of counterparts, each of which will for all purposes be deemed to be an
original, and all of which are identical except that to facilitate recordation,
in particular counterparts hereof, portions of Exhibit A hereto which describe
properties situated in counties other than the county in which the counterpart
is to be recorded have been omitted.
Section 9.21 Governing Law. This Mortgage, insofar as it pertains to
Royalty Interests and Personalty Collateral located in the State of Nevada
shall be governed by the laws of Nevada. This Mortgage, insofar as it
constitutes a common law pledge with respect to the Debt Service Reserve
Account, shall be governed by the laws of New York. With respect to all other
Collateral, this Mortgage shall be governed by the laws of the state in which
the collateral is located.
Executed as of the Effective Date.
TRUSTOR:
ROYAL GOLD, INC.
By:
---------------------------------------
Xxxxxxx Xxxxxxx,
Chairman and Chief Executive Officer
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ATTEST:
[Corporate Seal]
_____________________________
_____________________________
(Name and Title)
STATE OF COLORADO )
CITY AND ) ss.
COUNTY OF DENVER )
On December 18, 2000 personally appeared before me, a notary public,
Xxxxxxx Xxxxxxx, the Chairman and Chief Executive Officer of Royal Gold, Inc.,
a Delaware corporation, who acknowledged that he executed the above instrument.
Witness my hand and official seal.
My commission expires
------------------------------------
------------------------------------
Notary Public
[Seal]
-17-
HSBC BANK USA
By:
---------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
STATE OF COLORADO )
CITY AND ) ss.
COUNTY OF DENVER )
On , 2000 personally appeared before me, a
-----------------------
notary public, , a ,
---------------------------------- --------------------------
of HSBC Bank USA, a New York banking corporation, who acknowledged that he
executed the above
Witness my hand and official seal.
My commission expires
-----------------------------------
-----------------------------------
Notary Public
[Seal]
EXHIBIT A
---------
To Mortgage, Deed of Trust, Security Agreement,
Pledge and Financing Statement of
December 18, 2000.
Part I Royalty Interests.
-----------------
A-1
[To come]
Part II Properties Burdened with Royalty Interests.
------------------------------------------
[To come]
Part III Royalty Agreements.
------------------
[To come]
A-2
PROMISSORY NOTE
---------------
US$10,000,000 December 18, 2000
FOR VALUE RECEIVED, the undersigned, ROYAL GOLD, INC., a corporation
organized and existing under the laws of Delaware (the "Maker") hereby promises
to pay to the order of HSBC BANK USA ("HSBC"), or other holder hereof (with
HSBC and any other holder hereof sometimes referred to herein as "Holder"), at
the place and times provided in the Loan Agreement (defined below), the
principal sum of Ten Million Dollars US$10,000,000) or, if less, the principal
amount of all Loans made by the Lender from time to time or otherwise
outstanding pursuant to the Loan Agreement dated as of December 18, 2000
between the Maker and HSBC (as amended, restated, supplemented or otherwise
modified in accordance with its terms, the "Loan Agreement"). Subject to the
Loan Agreement, the Maker may borrow, voluntarily repay and reborrow amounts
hereunder during the availability period. Capitalized terms used in this Note
and not defined herein shall have the meanings assigned thereto in the Loan
Agreement.
This Note evidences the obligation of the Maker to repay all sums Advanced
by HSBC to Maker as Loans pursuant to the Loan Agreement.
The Maker further agrees to pay and deliver to Holder, when and as
provided in the Loan Agreement, interest on the outstanding principal amount
hereof at the rate and at the times specified in the Loan Agreement. The
unpaid principal amount of this Note from time to time outstanding is subject
to mandatory repayment from time to time as provided in the Loan Agreement.
All payments of principal and interest on this Note shall be payable in lawful
currency of the United States of America in immediately available funds as
specified in the Loan Agreement.
This Note is made by the Maker pursuant to, and is subject to, all of the
terms and conditions of the Loan Agreement. Reference is hereby made to the
Loan Agreement and the documents delivered in connection therewith for a
statement of the prepayment rights and obligations of the Maker, a description
of the collateral in which Liens have been granted by the Maker to secure the
payment and performance of the Maker hereunder, the nature and extent of such
Liens, and for a statement of the terms and conditions under which the due
date of this Note may be accelerated.
In addition to, and not in limitation of, the foregoing and the provisions
of the Loan Agreement, the Maker further agrees, subject only to any limitation
imposed by applicable law, to pay all expenses, including reasonable attorneys'
fees and legal expenses, incurred by any Holder hereof in endeavoring to collect
any amounts due and payable hereunder which are not paid and delivered or
otherwise satisfied when due, whether by acceleration or otherwise.
The Maker, for itself and for all endorsers hereof, hereby waives all
requirements as to diligence, notice, demand, presentment for payment, protest
and notice of dishonor.
This Note and the rights of Maker and any Holders hereof are governed by
the laws of the State of New York.
IN WITNESS WHEREOF, the Maker has executed and delivered this Note as of
the date first above written.
ROYAL GOLD, INC.
By: /s/ Xxxxxxx Xxxxxxx
--------------------------------------
Xxxxxxx Xxxxxxx,
Chairman and Chief Executive Officer
