CONSENT AND FIRST AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
Exhibit 10.6
EXECUTION VERSION
CONSENT AND FIRST AMENDMENT TO
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
THIS CONSENT AND FIRST AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT (the
“Amendment”), dated as of March 26, 2010, is made and entered into by and among ROYAL GOLD,
INC., a corporation organized and existing under the laws of the State of Delaware, as a borrower
(“Royal Gold”) and HIGH DESERT MINERAL RESOURCES, INC., a corporation organized and
existing under the laws of the State of Delaware, as a borrower (“High Desert”, with each
of Royal Gold and High Desert individually referred to herein as a “Borrower” and
collectively referred to herein as the “Borrowers”), RG MEXICO, INC., a corporation
organized and existing under the laws of Delaware, as a guarantor (the “Guarantor”), HSBC
BANK USA, NATIONAL ASSOCIATION, a national banking association organized and existing under the
laws of the United States (“HSBC Bank”), as a lender, SCOTIABANC INC., as a lender
(“Scotiabanc” and together with HSBC Bank, collectively the “Lenders”), HSBC Bank,
as administrative agent for the Lenders (in such capacity, the “Administrative Agent”), THE
BANK OF NOVA SCOTIA, as sole syndication agent (“BNS”) and HSBC SECURITIES (USA) INC., as
sole lead arranger (“HSBC Securities”).
Recitals
A. The Borrowers, the Guarantor, the Administrative Agent and the Lenders, BNS and HSBC
Securities are parties to the Third Amended and Restated Credit Agreement, dated as of October 30,
2008, (as amended, restated, supplemented or otherwise modified from time to time, the
“Revolving Credit Agreement”).
B. Royal Gold and High Desert are also parties to that certain Term Loan Facility Agreement,
dated as of January 20, 2010 (the “Original Term Loan Credit Agreement”), by and among
Royal Gold, as the borrower (the “Term Loan Borrower”), High Desert, as a guarantor, Royal
Gold Chile Limitada, a limited liability partnership organized and existing under the laws of
Chile, as a guarantor (“RG Chile”), RGLD Gold Canada, Inc., a corporation organized and
existing under the laws of the Province of British Columbia, as a guarantor (“RG Canada”),
and those additional guarantors from time to time party thereto, as guarantors (together with High
Desert, RG Chile and RG Canada, collectively, the “Term Loan Guarantors”), HSBC Bank, as a
lender (“Original Term Lender”), HSBC Bank, as administrative agent thereunder (in such
capacity, the “Term Administrative Agent”), and HSBC Securities, as the sole lead arranger.
C. The Term Loan Borrower, the Term Loan Guarantors, the Original Term Lender, the Term
Administrative Agent and the other parties thereto have agreed to amend and restate the Original
Term Loan Credit Agreement to, among other things, join BNS as a lender thereunder (BNS together
with the Original Term Lender, the “Term Lenders”), advance additional funds, amend the
financial covenants, extend the Maturity Date (as defined therein), amend the rate of interest
applicable to the funds advance thereunder and change the rate of amortization, among other changes
(the Original Term Loan Credit Agreement, as so amended and restated and as it may be further
amended, restated, supplemented or otherwise modified from time to time, the “Term Loan Credit
Agreement”).
D. In connection with the Original Term Loan Credit Agreement, which obligation continues
under the Term Loan Credit Agreement, each of Royal Gold and High Desert (as the direct parents of
RG Chile, the “Partners”) agreed, among other things, to (i) pledge its equity interests in
RG Chile to the Term Administrative Agent for the benefit of the Term Lenders (the
“Pledge”) and (ii) to cause RG Chile to amend its bylaws to facilitate foreclosure on such
equity interests by the Term Administrative Agent in connection with its exercise of remedies under
the Term Loan Credit Agreement, if any (the “Bylaw Amendment”), which Bylaws Amendment is
prohibited under Section 7.10 of the Revolving Credit Agreement.
E. Borrowers have therefore requested that Lenders, and the Lenders have agreed in accordance
with Section 10.1 of the Revolving Credit Agreement, to (i) amend the Revolving Credit
Agreement to conform the financial covenants and certain other provisions to the corresponding
provisions of the Term Loan Credit Agreements and (ii) consent to the Bylaw Amendment to avoid any
Default or Event of Default that would have arisen upon the adoption of the Bylaw Amendment but for
the consent provided hereunder.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual agreements, representations
and warranties herein set forth and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this Amendment agree as follows:
1. Defined Terms. Capitalized terms used but not defined in this Amendment shall have
the meanings given thereto in the Revolving Credit Agreement.
2. Amendments to the Revolving Credit Agreement.
(a) Section 6.16(d) of the Revolving Credit Agreement is hereby amended by deleting it
in its entirety and replacing it with the following:
(d) Current Ratio. The Current Ratio shall be (i) for the periods
ending December 31, 2008 through December 31, 2009, greater than or equal to 1.5 to
1.0, (ii) for the periods ending March 31, 2010 and June 30, 2010, greater than or
equal to 1.0 to 1.0; and (iv) at all times thereafter, greater than or equal to 1.5
to 1.0.
(b) Section 7.5 of the Revolving Credit Agreement is hereby amended by deleting it in
its entirety and replacing it with the following:
Section 7.5 Dissolution or Sale of Assets. Each of the Credit
Parties will not, nor will it permit any Subsidiary to (whether in one transaction
or in a series of transactions and whether directly or indirectly): (a) dissolve,
liquidate or wind up its affairs, except for the dissolution, liquidation or winding
up of the affairs of any Subsidiary that is not itself a Credit Party as such
Subsidiary has no material assets; provided that the Credit Parties have
provided advance written notice thereof to the Administrative Agent; or (b) sell,
assign, transfer, lease to a third party or otherwise dispose of its business or
assets as a whole or in an amount which constitutes a substantial portion thereof,
except with respect to any
Subsidiary that is not itself a Credit Party that has no
material assets, which shall be permitted so long as no Default or Event of Default
has occurred and is continuing, or would otherwise occur as a result of such action;
provided that the Credit Parties have provided advance written notice
thereof to the Administrative Agent; or (c) sell, assign, transfer, lease to a third
party or otherwise dispose of any material property or asset, including any Royalty
Interest or Non-Credit Party Royalty Interest, equity interests of any Subsidiary
that is not itself a Credit Party or any portion of the foregoing; or (d) agree to
do any of the foregoing at a future time; except, in the case of clause (c), a
Credit Party or Subsidiary that is not itself a Credit Party shall be permitted to
undertake the following actions so long as no Default or Event of Default has
occurred and is continuing, or would occur as a result of such action:
(i) the sale, assignment, lease, transfer or other disposition in the
ordinary course of business of (A) inventory or property that has become
obsolete or worn out or no longer used in the conduct of business, (B)
Non-Credit Party Royalty Interests and Royalty Interests (other than
Material Royalties) in respect of Metals other than precious Metals, (C)
Non-Credit Party Royalty Interests and Royalty Interests (other than
Material Royalties) in respect of precious Metals in an aggregate amount not
to exceed Five Million Dollars ($5,000,000) in the aggregate in any calendar
year, (D) the proceeds of the Loan in accordance with Section 3.8,
(E) the assets set forth on Schedule 7.5, or (f) other assets not
constituting Royalty Interests or Non-Credit Party Royalty Interests in an
aggregate amount not to exceed One Million Dollars ($1,000,000) in any
calendar year;
(ii) the swap or exchange of any Non-Credit Party Royalty Interest or
Royalty Interest not constituting a Material Royalty for another Non-Credit
Party Royalty Interest or Royalty Interest of at least reasonably equivalent
value, as determined by the Board of Directors of Royal Gold and approved in
writing by the Administrative Agent (or, to the extent that the Non-Credit
Party Royalty Interest or Royalty Interest to be acquired is less than
reasonably equivalent value, such swap or exchange shall be permitted if the
net disposition amount would be permitted pursuant to the immediately
preceding clause (i)); or the sale, assignment, lease or transfer of
property or assets, other than a Material Royalty, to a Credit Party.
(c) Schedules 7.1 and 7.2 to the Revolving Credit Agreement are hereby deleted and replaced in
their entirety by the corresponding schedules attached hereto as Exhibit A and Schedule 7.5, also
attached hereto as Exhibit A is hereby added to the schedules to the Revolving Credit Agreement.
3. Consent. The Lenders hereby consent to the Bylaw Amendment and agree to waive
compliance with Section 7.10 of the Revolving Credit Agreement in connection with the Bylaw
Amendment to avoid any Default or Event of Default that would have arisen thereunder but for this
consent. This consent is expressly limited to the extent described herein and shall not
be construed to be a consent to or a waiver of any terms, provisions, covenants, warranties or
agreements contained in the Revolving Credit Agreement or in any of the other Credit Documents,
except as expressly provided herein. The Lenders reserve the right to exercise any rights and
remedies available to them in connection with any other present or future defaults with respect to
the Revolving Credit Agreement or any other provision of any Credit Document.
4. Representations and Warranties. Each Credit Party hereby jointly and severally
represents and warrants that (i) the representations and warranties contained in the Revolving
Credit Agreement the other Credit Documents are true and correct in all material respects on and as
of the date hereof, after giving effect to the terms of this Amendment, (ii) this Amendment and
each other Instrument delivered by a Credit Party in connection herewith has been duly authorized,
executed and delivered by each Credit Party, (iii) the execution, delivery and performance of this
Amendment are within the corporate power and authority of the each Credit Party and have been duly
authorized by appropriate corporate action and proceedings, (iv) this Amendment and each other
Instrument delivered in connection herewith constitutes the legal, valid, and binding obligation of
each Credit Party which is party thereto enforceable against such Credit Party in accordance with
its terms except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, or
similar laws affecting the rights of creditors generally and general principles of equity, (v) no
consent, approval, authorization or order of, or filing, registration or qualification with, any
court or Governmental Authority or third party is required in connection with the execution,
delivery and performance of this Amendment and the other Instruments delivered in connection
herewith, (vi) the Liens under the Security Documents are valid and subsisting and secure the
Credit Parties’ obligations under the Credit Documents, and (vii) no Default or Event of Default
has occurred and is continuing or will occur as a result of the consummation of the transactions
contemplated hereby.
5. Conditions Precedent. This Amendment shall become effective as of the date hereof
upon satisfaction of the following conditions precedent:
(a) The Administrative Agent has received multiple original counterparts, as requested by the
Administrative Agent, of this Amendment duly and validly executed and delivered by Responsible
Officers of the Parties hereto.
(b) The Administrative Agent shall have received a certificate of a Responsible Officer of the
Borrowers demonstrating compliance with the financial covenants contained in Section 6.16
of the Revolving Credit Agreement by calculation thereof as of the end of the most recently
completed fiscal quarter.
(c) The Administrative Agent shall have received evidence reasonably satisfactory to the
Lenders that this Amendment has been approved and entered into pursuant to approval by the Board of
Directors of each Borrower.
(d) The Administrative Agent shall have received such other Instruments, certificates,
information and opinions as the Lender may reasonably request, in each case, in form and substance
reasonably satisfactory to the Lender.
6. Miscellaneous.
(a) This Amendment and all other Instruments executed and delivered by any Credit Party in
connection with this Amendment are and shall be deemed to be Credit Documents for all purposes.
All references to the Revolving Credit Agreement in each of the Credit Documents and in any other
document or instrument shall hereafter be deemed to refer to the Revolving Credit Agreement as
amended hereby.
(b) Each of the Credit Parties does hereby adopt, ratify, and confirm the Revolving Credit
Agreement, as amended hereby, and acknowledges and agrees that the Revolving Credit Agreement, as
amended hereby, and all other Credit Documents are and remain in full force and effect, and each
Borrower and each Guarantor acknowledge and agree that its respective liabilities under the
Revolving Credit Agreement and the other Credit Documents are not impaired in any respect by this
Amendment or the amendments, consents or waivers granted hereunder.
(c) The Administrative Agent and the Lenders hereby expressly reserve all of their rights,
remedies, and claims under the Credit Documents. The execution, delivery and effectiveness of this
Amendment shall not operate or be deemed to operate as a waiver of any rights, powers or remedies
of the Lender under the Revolving Credit Agreement or any other Credit Document or constitute a
waiver of any provision thereof.
(d) This Amendment shall be governed by and construed in accordance with the laws of the State
of New York, excluding that body of law relating to conflict of laws.
(e) This Agreement may be executed by one or more of the parties to this Agreement on any
number of separate counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. A set of the copies of this Agreement signed by all the
parties shall be lodged with each Borrower and the Administrative Agent. This Amendment may be
validly executed and delivered by facsimile, e-mail or other electronic transmission, and a
signature by facsimile, e-mail or other electronic transmission shall be as effective and binding
as an original signature.
(f) This Amendment shall be binding upon and inure to the benefit of each Party, and their
respective successors and assigns permitted by the Revolving Credit Agreement.
(g) The Borrowers shall pay all reasonable costs, fees and expenses paid or incurred by the
Lenders and the Administrative Agent incident to this Amendment, including, without limitation, the
reasonable fees and expenses of counsel in connection with the negotiation, preparation, delivery
and execution of this Amendment and any related documents.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and
delivered by its proper and duly authorized officers as of the day and year first above written.
| BORROWERS: | ROYAL GOLD, INC. |
|||
| By: | /s/ Xxxxxx Xxxxxx | |||
| Name: | Xxxxxx Xxxxxx | |||
| Title: | Chief Financial Officer and Treasurer | |||
| HIGH DESERT MINERAL RESOURCES, INC. |
||||
| By: | /s/ Xxxxxx Xxxxxx | |||
| Name: | Xxxxxx Xxxxxx | |||
| Title: | Vice President and Treasurer | |||
GUARANTOR:
| RG MEXICO, INC. |
||||
| By: | /s/ Xxxxx Xxxxx | |||
| Name: | Xxxxx Xxxxx | |||
| Title: | Secretary | |||
[signature pages continue]
Signature Page to Waiver and First Amendment to
Third Amended and Restated Credit Agreement
Third Amended and Restated Credit Agreement
ADMINISTRATIVE AGENT AND LENDER:
| HSBC BANK USA, NATIONAL ASSOCIATION as Administrative Agent and as a Lender |
||||
| By: | /s/ Xxxxxxx X. Edge, III | |||
| Name: | Xxxxxxx X. Edge, III | |||
| Title: | Managing Director | |||
[signature pages continue]
Signature Page to Waiver and First Amendment to
Third Amended and Restated Credit Agreement
Third Amended and Restated Credit Agreement
LENDER:
| SCOTIABANC INC. as a Lender |
||||
| By: | /s/ X.X. Xxxx | |||
| Name: | X.X. Xxxx | |||
| Title: | Managing Director | |||
[end of signature pages]
Signature Page to Waiver and First Amendment to
Third Amended and Restated Credit Agreement
Third Amended and Restated Credit Agreement
