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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 26, 2010
ROYAL GOLD, INC.
(Exact Name of Registrant as Specified in its Charter)
 	 	 	 	 	
Delaware	 	001-13357	 	84-0835164	
(State or other Jurisdiction
of Incorporation)	 	(Commission File Number)	 	(I.R.S. Employer
Identification No.)	
 	 	 	
1660 Wynkoop Street, Suite 1000, Denver, CO
(Address of Principal Executive Offices)	 	80202-1132
(Zip Code)	
Registrant’s telephone number, including area code: 303-573-1660
N/A
(Former name or former address, if changed from last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

   

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Item 1.01. Entry into a Material Definitive Agreement	
Item 2.02 Results of Operations and Financial Condition	
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant	
Item 9.01 | Financial Statements and Exhibits	
SIGNATURE	
	EXHIBIT INDEX	
EX-10.1	
EX-10.2	
EX-10.3	
EX-10.4	
EX-10.5	
EX-10.6	
EX-23.1	
EX-99.1	

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Item 1.01.	 	Entry into a Material Definitive Agreement.	
Amendment and Restatement of Term Loan
On March 26, 2010, Royal Gold, Inc. (“Royal Gold” or the “Company”) entered into an Amended and Restated Term Loan Facility Agreement (the “Amended Term Loan”) with HSBC Bank USA, National Association (“HSBC”), which amends and restates the Term Loan Facility Agreement, dated January 20, 2010, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed January 22, 2010. The Term Loan was funded in conjunction with the closing of the Plan of Arrangement between Royal Gold and International Royalty Corporation (“IRC”) on February 22, 2010, whereby Royal Gold acquired IRC. The modifications implemented in the Amended Term Loan include: 1) an increase in the principal balance available from US$100 million to US$130 million; 2) an extension of the final maturity date from 18 to 36 months from the initial funding date of February 17, 2010; 3) increases in the applicable LIBOR margin (currently set at 2.25%) by 0.50% every 6 months, commencing 18 months after the initial funding date until maturity; 4) a reduction in the amortization rate from 10% of the initial funded amount per quarter to 5% of the fully funded principal amount per quarter; and 5) changes to the financial covenants such that the current ratio shall be greater than or equal to 1.0 to 1.0 through the period ending June 30, 2010 and at all times thereafter greater than or equal to 1.5 to 1.0. The Bank of Nova Scotia (“Scotia”) joined the Amended Term Loan as a “Lender” with a commitment of US$50 million.
Royal Gold used the additional Term Loan proceeds of US$30 million to redeem the outstanding senior secured debentures of IRC totaling C$30 million (approximately US$29.4 million) that mature on February 22, 2011, and bear interest at a rate of 5.5% per annum.
The foregoing description of the Term Loan is qualified in its entirety by reference to the Amended and Restated Term Loan Facility Agreement filed herewith as Exhibit 10.1 and incorporated into this Item 1.01 by reference. Copies of the related Amended and Restated Promissory Notes, amended to reflect the changes implemented in the Amended Term Loan, are filed herewith as Exhibits 10.2 and 10.3 and are incorporated into this Item 1.01 by reference. Copies of the related amendments to (i) the Pledge, Security and Subordination Agreement by Royal Gold in favor of HSBC originally filed as Exhibit 10.2 to the Company’s Form 8-K filed January 22, 2010, and (ii) the General Security Agreement by RGLD Gold Canada, Inc. in favor of HSBC originally filed as Exhibit 10.3 to the Company’s Form 8-K filed January 22, 2010, are filed herewith as Exhibits 10.4 and 10.5, respectively, and are incorporated into this Item 1.01 by reference. The press release filed herewith as Exhibit 99.1 is also incorporated into this Item 1.01 by reference.
Amendment to Revolving Credit Facility
In addition to entering into the Amended Term Loan, on March 26, 2010, the Company, HSBC and Scotiabank Inc. entered into a Consent and First Amendment to the Third Amended
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and Restated Credit Agreement (the “Revolving Credit Facility Amendment”), which amends the Company’s US$125 million revolving credit facility under the Third Amended and Restated Credit Agreement, dated as of October 30, 2008, which was filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on February 6, 2009. The Revolving Credit Facility Amendment amends the current ratio requirement and certain other provisions to match those of the Amended Term Loan.
The foregoing description of the Revolving Credit Facility Amendment is qualified in its entirety by reference to the First Amendment to Third Amended and Restated Credit Agreement filed herewith as Exhibit 10.6 and incorporated into this Item 1.01 by reference.

Item 2.02	 	Results of Operations and Financial Condition	
Royal Gold is providing supplemental financial information in Item 9.01(a) hereof comprising the audited consolidated financial statements of IRC for the years ended December 31, 2009 and 2008.

Item 2.03	 	Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant	
The information included in Item 1.01 of this Current Report on Form 8-K is incorporated into this Item 2.03 by reference.

Item 9.01	 	Financial Statements and Exhibits.	
(a) Financial Statements of Business Acquired
Audited Consolidated Financial Statements of International Royalty Corporation and its Subsidiaries
The consolidated balance sheets of IRC as at December 31, 2009 and 2008, and the consolidated statements of operations and comprehensive income (loss), shareholders’ equity and cash flows for each of the years in the three year period ended December 31, 2009, and the effectiveness of internal controls over financial reporting of IRC as of December 31, 2009, and the auditors’ report contained therein.
(b) Pro Forma Financial Information
None.
(c) Shell Company Transaction
None.
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(d) Exhibits

10.1	 	Amended and Restated Term Loan Facility Agreement, dated as of March 26, 2010, among Royal Gold, Inc., as a Borrower, Royal Gold Chile Limitada, as a Guarantor, RGLD Gold Canada, Inc., as a Guarantor, High Desert Mineral Resources, Inc., as a Guarantor, the other Guarantors from time to time party thereto, HSBC Bank USA, National Association, as Administrative Agent and a Lender, Bank of Nova Scotia, as Sole Syndication Agent and a Lender and HSBC Securities (USA) Inc., as Sole Lead Arranger	
 		
10.2	 	Amended and Restated Promissory Note, dated March 26, 2010, by Royal Gold, Inc. to HSBC Bank USA, National Association	
 		
10.3	 	Amended and Restated Promissory Note, dated March 26, 2010, by Royal Gold, Inc. to The Bank of Nova Scotia	
 		
10.4	 	Amendment to Pledge, Security and Subordination Agreement, dated March 26, 2010, by Royal Gold in favor of HSBC Bank USA, National Association	
 		
10.5	 	Amendment to General Security Agreement, dated March 26, 2010, by RGLD Gold Canada, Inc. in favor of HSBC Bank USA, National Association	
 		
10.6	 	Consent and First Amendment to Third Amended and Restated Credit Agreement, dated March 26, 2010, among Royal Gold, Inc., as a Borrower, High Desert Mineral Resources, Inc., as a Borrower, RG Mexico, Inc., as a Guarantor, HSBC Bank USA, National Association, as Administrative Agent and a Lender, Scotiabanc Inc., as a Lender, Bank of Nova Scotia, as Sole Syndication Agent and HSBC Securities (USA) Inc., as Sole Lead Arranger	
 		
23.1	 	Consent of PricewaterhouseCoopers LLP	
 		
99.1	 	Press Release dated March 29, 2010	
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International Royalty Corporation
Consolidated Financial Statements
December 31, 2009 and 2008
(expressed in thousands of U.S. dollars)
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MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING — CANADA
Management is responsible for the preparation and fair presentation of the consolidated financial statements and other financial information relating to International Royalty Corporation (the “Company” or “IRC”) included in this annual report. The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in Canada and necessarily include amounts based on estimates and judgments of management. In this regard, management has developed and maintains a system of accounting and reporting which provides for the necessary internal controls to ensure that transactions are authorized, assets are safeguarded and proper records are maintained.
PricewaterhouseCoopers LLP, our independent auditors, are engaged to express a professional opinion on the consolidated financial statements. Their examination is conducted in accordance with Public Company Accounting Oversight Board (“PCAOB”) standards and generally accepted Canadian auditing standards and includes tests and other procedures which allow the auditors to report whether the consolidated financial statements prepared by management are presented fairly, in all material respects, in accordance with generally accepted Canadian accounting principles.
The Board of Directors is responsible for ensuring that management fulfils its responsibilities for financial reporting and for reviewing and approving the consolidated financial statements.
The Board of Directors meets with the independent auditors to discuss the results of their audit and their audit report. The Board of Directors has approved the Company’s consolidated financial statements.
(signed) Tony Jensen
President and Chief Executive Officer
(signed) Stefan Wenger
Chief Financial Officer and Treasurer
March 23, 2010
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MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The management of International Royalty Corporation is responsible for establishing and maintaining adequate internal control over financial reporting. The Securities and Exchange Act of 1934 in Rule 13a-15(f ) and 15d-15(f ) defines this as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and includes those policies and procedures that:
• Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transaction and dispositions of the assets of the Company;
• Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and
• Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use or disposition of the Company’s assets that may have a material effect on the consolidated financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2009. In making this assessment, the Company’s management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework.
Based upon our assessment and those criteria, management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2009 and 2008.
The effectiveness of the Company’s internal control over financial reporting as of December 31, 2009 and 2008 has been audited by PricewaterhouseCoopers LLP, our independent auditors, as stated in their report which appears herein.
(signed) Tony Jensen
President and Chief Executive Officer
(signed) Stefan Wenger
Chief Financial Officer and Treasurer
March 23, 2010
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 	 	 	 	PricewaterhouseCoopers LLP	
 	 	 	 	Chartered Accountants	
 	 	 	 	PricewaterhouseCoopers Place	
 	 	 	 	250 Howe Street, Suite 700	
March 23, 2010	 	 	 	Vancouver, British Columbia	
 	 	 	 	Canada V6C 3S7	
 	 	 	 	Telephone +1 604 806 7000	
 	 	 	 	Facsimile +1 604 806 7806	
Independent Auditors’ Report
To the Shareholder of International Royalty Corporation
We have completed integrated audits of International Royalty Corporation’s (the “Company’s”) 2009 and 2008 consolidated financial statements and of its internal control over financial reporting as at December 31, 2009. Our opinions, based on our audits, are presented below.
Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of International Royalty Corporation as at December 31, 2009 and December 31, 2008, and the related consolidated statements of operations and comprehensive income (loss), shareholder’s equity and cash flows for each of the years in the three year period ended December 31, 2009. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits of the Company’s financial statements in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. A financial statement audit also includes assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as at December 31, 2009 and December 31, 2008 and the results of its operations and its cash flows for each of the years in the three year period ended December 31, 2009 in accordance with Canadian generally accepted accounting principles.
Internal Control over Financial Reporting
We have also audited International Royalty Corporation’s internal control over financial reporting as at December 31, 2009, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
“PricewaterhouseCoopers” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership, or, as the context requires, the PricewaterhouseCoopers global network or other member firms of the network, each of which is a separate and independent legal entity.
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We conducted our audit of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. An audit of internal control over financial reporting includes obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we consider necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as at December 31, 2009 based on criteria established in Internal Control — Integrated Framework issued by the COSO.
(signed) PricewaterhouserCoopers, LLP
Chartered Accountants
Vancouver, B.C.
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International Royalty Corporation
Consolidated Balance Sheets
As at December 31, 2009 and 2008
(expressed in thousands of U.S. dollars)
 	 	 	 	 	 	 	 	 	
 	 	2009	 	 	2008	 	
 	 	$	 	 	$	 	
Assets	 	 	 	 	 	 	 	 	
Current assets	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	 	55,457	 	 	 	3,444	 	
Restricted cash (note 3)	 	 	433	 	 	 	371	 	
Royalties receivable, net of allowance of $48 (2009) and $45 (2008)	 	 	4,831	 	 	 	7,476	 	
Prepaid expenses and other current assets	 	 	157	 	 	 	195	 	
 	 	 	 	 	 	 	
 	 	 	60,878	 	 	 	11,486	 	
Royalty interests in mineral properties, net (note 3)	 	 	347,533	 	 	 	355,093	 	
Investments (note 4)	 	 	6,291	 	 	 	6,207	 	
Furniture and equipment, net	 	 	100	 	 	 	145	 	
Foreign currency contract (note 7)	 	 	3,445	 	 	 	—	 	
Other long-term assets (notes 5 and 10)	 	 	2,828	 	 	 	3,639	 	
 	 	 	 	 	
 	 	 	421,075	 	 	 	376,570	 	
 	 	 	 	 	
Liabilities	 	 	 	 	 	 	 	 	
Current liabilities	 	 	 	 	 	 	 	 	
Accounts payable and accrued liabilities	 	 	2,792	 	 	 	1,693	 	
Other liabilities — current portion (note 11)	 	 	148	 	 	 	—	 	
Income taxes	 	 	4,807	 	 	 	7,753	 	
Future income taxes (note 8)	 	 	1,302	 	 	 	4,226	 	
 	 	 	 	 	
 	 	 	9,049	 	 	 	13,672	 	
Revolving credit facility (note 6)	 	 	—	 	 	 	3,000	 	
Senior secured debentures (note 7)	 	 	26,948	 	 	 	21,662	 	
Foreign currency contract (note 7)	 	 	—	 	 	 	493	 	
Other liabilities (notes 10 and 11)	 	 	3,771	 	 	 	—	 	
Future income taxes (note 8)	 	 	44,011	 	 	 	40,463	 	
 	 	 	 	 	
 	 	 	83,779	 	 	 	79,290	 	
 	 	 	 	 	
Shareholders’ Equity (note 9)	 	 	 	 	 	 	 	 	
Common shares	 	 	 	 	 	 	 	 	
Authorized — unlimited common shares without par value	 	 	 	 	 	 	 	 	
Issued — 94,702,023 (2008 - 78,480,356) common shares	 	 	324,936	 	 	 	275,464	 	
Contributed Surplus	 	 	10,580	 	 	 	9,896	 	
Retained earnings	 	 	1,715	 	 	 	11,920	 	
Accumulated other comprehensive income	 	 	65	 	 	 	—	 	
 	 	 	 	 	
 	 	 	337,296	 	 	 	297,280	 	
 	 	 	 	 	
 	 	 	421,075	 	 	 	376,570	 	
 	 	 	 	 	
Nature of operations (note 1)
Commitments and contingencies (note 3)
Subsequent events (notes 3, 6, 9 and 18)
Approved by the Board of Directors
 	 	 	 	 	 	 	 	 	
(signed) Tony Jensen	 	Director	 	 	 	(signed) Bruce Kirchhoff	 	Director	
 	 	 	 	 	 	 	 	 	
See accompanying notes to the consolidated financial statements
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International Royalty Corporation
Consolidated Statements of Operations and Comprehensive Income (Loss)
(expressed in thousands of U.S. dollars)
 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Year ended December 31,	 	
 	 	2009	 	 	2008	 	 	2007	 	
 	 	$	 	 	$	 	 	$	 	
Revenues	 	 	 	 	 	 	 	 	 	 	 	 	
Royalty revenues	 	 	25,511	 	 	 	41,719	 	 	 	49,857	 	
Other (note 4)	 	 	—	 	 	 	—	 	 	 	849	 	
 	 	 	 	
 	 	 	25,511	 	 	 	41,719	 	 	 	50,706	 	
 	 	 	 	
Expenses	 	 	 	 	 	 	 	 	 	 	 	 	
Amortization (note 3)	 	 	12,169	 	 	 	14,676	 	 	 	10,996	 	
Business development	 	 	2,272	 	 	 	1,739	 	 	 	2,585	 	
General and administrative	 	 	5,695	 	 	 	6,700	 	 	 	6,325	 	
Impairment of royalty interests in mineral properties (note 3)	 	 	—	 	 	 	6,909	 	 	 	2,142	 	
Impairment of investments (note 4)	 	 	—	 	 	 	833	 	 	 	—	 	
Impairment of long-term assets	 	 	—	 	 	 	839	 	 	 	—	 	
Royalty taxes	 	 	3,911	 	 	 	7,661	 	 	 	9,532	 	
 	 	 	 	
 	 	 	24,047	 	 	 	39,357	 	 	 	31,580	 	
 	 	 	 	
Earnings from operations	 	 	1,464	 	 	 	2,362	 	 	 	19,126	 	
 	 	 	 	
Other income (expense)	 	 	 	 	 	 	 	 	 	 	 	 	
Purchase transaction costs (note 11)	 	 	(6,263	)	 	 	—	 	 	 	—	 	
Interest expense (note 12)	 	 	(3,713	)	 	 	(3,155	)	 	 	(3,750	)	
Interest income	 	 	92	 	 	 	399	 	 	 	494	 	
Foreign currency gain (loss)	 	 	(4,200	)	 	 	5,053	 	 	 	(6,206	)	
Unrealized gain (loss) on fair market value of foreign currency contract (note 7)	 	 	3,938	 	 	 	(493	)	 	 	—	 	
 	 	 	 	
 	 	 	(10,146	)	 	 	1,804	 	 	 	(9,462	)	
 	 	 	 	
Earnings (loss) before income taxes	 	 	(8,682	)	 	 	4,166	 	 	 	9,664	 	
Income taxes (note 8)	 	 	 	 	 	 	 	 	 	 	 	 	
Current income tax benefit (expense)	 	 	2,898	 	 	 	(8,647	)	 	 	(8,812	)	
Future income tax (expense) benefit	 	 	(957	)	 	 	7,617	 	 	 	10,381	 	
 	 	 	 	
 	 	 	1,941	 	 	 	(1,030	)	 	 	1,569	 	
 	 	 	 	
Net earnings (loss)	 	 	(6,741	)	 	 	3,136	 	 	 	11,233	 	
Other comprehensive income (loss)	 	 	 	 	 	 	 	 	 	 	 	 	
Change in the value on available-for-sale investments, net of tax expense of $11 (2009), tax benefit of $30 (2008) and tax expense of $30 (2007)	 	 	65	 	 	 	(173	)	 	 	173	 	
 	 	 	 	
Total earnings (loss) and comprehensive income (loss)	 	 	(6,676	)	 	 	2,963	 	 	 	11,406	 	
 	 	 	 	
Basic and diluted earnings (loss) per share	 	 	(0.08	)	 	 	0.04	 	 	 	0.16	 	
 	 	 	 	
Basic weighted average shares outstanding	 	 	85,936,648	 	 	 	78,479,954	 	 	 	68,249,204	 	
 	 	 	 	
Diluted weighted average shares outstanding	 	 	85,936,648	 	 	 	78,590,395	 	 	 	70,056,532	 	
 	 	 	 	
See accompanying notes to the consolidated financial statements
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International Royalty Corporation
Consolidated Statements of Shareholders’ Equity
(expressed in thousands of U.S. dollars, except number of shares amounts)
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Accumulated other	 	 	Total shareholders’	 	
 	 	Common shares	 	 	Contributed surplus	 	 	Retained earnings	 	 	comprehensive income	 	 	equity	 	
 	 	Number	 	 	Amount $	 	 	$	 	 	$	 	 	$	 	 	$	 	
Balance at December 31, 2006	 	 	58,008,448	 	 	 	166,173	 	 	 	5,985	 	 	 	2,325	 	 	 	—	 	 	 	174,483	 	
Warrants exercised	 	 	1,694,408	 	 	 	6,973	 	 	 	(315	)	 	 	—	 	 	 	—	 	 	 	6,658	 	
Unit offering, net of expenses and tax impact	 	 	8,334,000	 	 	 	34,831	 	 	 	1,565	 	 	 	—	 	 	 	—	 	 	 	36,396	 	
Exercise of stock options	 	 	40,000	 	 	 	227	 	 	 	(65	)	 	 	—	 	 	 	—	 	 	 	162	 	
Offering, net of expenses and tax impact	 	 	10,400,000	 	 	 	67,246	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	67,246	 	
Stock options	 	 	—	 	 	 	—	 	 	 	1,355	 	 	 	—	 	 	 	—	 	 	 	1,355	 	
Dividends	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(2,027	)	 	 	—	 	 	 	(2,027	)	
Net earnings	 	 	—	 	 	 	—	 	 	 	—	 	 	 	11,233	 	 	 	—	 	 	 	11,233	 	
Other comprehensive income	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	173	 	 	 	173	 	

Balance at December 31, 2007	 	 	78,476,856	 	 	 	275,450	 	 	 	8,525	 	 	 	11,531	 	 	 	173	 	 	 	295,679	 	
Exercise of stock options	 	 	3,500	 	 	 	14	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	14	 	
Stock options	 	 	—	 	 	 	—	 	 	 	1,371	 	 	 	—	 	 	 	—	 	 	 	1,371	 	
Dividends	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(2,747	)	 	 	—	 	 	 	(2,747	)	
Net earnings	 	 	—	 	 	 	—	 	 	 	—	 	 	 	3,136	 	 	 	—	 	 	 	3,136	 	
Other comprehensive loss	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(173	)	 	 	(173	)	

Balance at December 31, 2008	 	 	78,480,356	 	 	 	275,464	 	 	 	9,896	 	 	 	11,920	 	 	 	—	 	 	 	297,280	 	
Bought deal financing, net of offering costs and taxes	 	 	14,100,000	 	 	 	42,881	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	42,881	 	
Exercise of overallotment option, net of offering costs	 	 	2,115,000	 	 	 	6,580	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	6,580	 	
Exercise of stock options	 	 	6,667	 	 	 	11	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	11	 	
Stock options	 	 	—	 	 	 	—	 	 	 	684	 	 	 	—	 	 	 	—	 	 	 	684	 	
Dividends	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(3,464	)	 	 	—	 	 	 	(3,464	)	
Net loss	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(6,741	)	 	 	—	 	 	 	(6,741	)	
Other comprehensive income	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	65	 	 	 	65	 	

Balance at December 31, 2009	 	 	94,702,023	 	 	 	324,936	 	 	 	10,580	 	 	 	1,715	 	 	 	65	 	 	 	337,296	 	
 	 	 	
See accompanying notes to the consolidated financial statements.
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Table of Contents

International Royalty Corporation
Consolidated Statements of Cash Flows
(expressed in thousands of U.S. dollars)
 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Year ended December 31,	 	
 	 	2009	 	 	2008	 	 	2007	 	
 	 	$	 	 	$	 	 	$	 	
Cash flows provided by operating activities	 	 	 	 	 	 	 	 	 	 	 	 	
Net earnings (loss) for the year	 	 	(6,741	)	 	 	3,136	 	 	 	11,233	 	
Items not affecting cash	 	 	 	 	 	 	 	 	 	 	 	 	
Depreciation and amortization	 	 	12,216	 	 	 	14,716	 	 	 	11,037	 	
Impairment of royalty interests in mineral properties	 	 	—	 	 	 	6,909	 	 	 	2,142	 	
Impairment of long-term assets and investments	 	 	—	 	 	 	1,672	 	 	 	—	 	
Amortization of deferred debenture costs	 	 	313	 	 	 	278	 	 	 	249	 	
Accretion of debenture discount	 	 	926	 	 	 	822	 	 	 	736	 	
Non-cash interest on other liabilities	 	 	558	 	 	 	—	 	 	 	—	 	
Future income tax	 	 	957	 	 	 	(7,617	)	 	 	(10,381	)	
Non-cash foreign currency (gain) loss	 	 	3,781	 	 	 	(4,292	)	 	 	3,506	 	
Non-cash foreign currency contract	 	 	(3,938	)	 	 	493	 	 	 	—	 	
Non-cash transaction costs	 	 	4,495	 	 	 	—	 	 	 	—	 	
Stock-based compensation	 	 	684	 	 	 	1,371	 	 	 	1,355	 	
Other	 	 	—	 	 	 	(9	)	 	 	(849	)	
Changes in non-cash working capital	 	 	 	 	 	 	 	 	 	 	 	 	
Decrease (increase) in royalties receivable	 	 	2,862	 	 	 	2,734	 	 	 	(2,496	)	
Decrease in prepaid expenses and other assets	 	 	66	 	 	 	37	 	 	 	122	 	
Increase (decrease) in accounts payable and accrued liabilities	 	 	79	 	 	 	(103	)	 	 	23	 	
Increase (decrease) in income taxes payable	 	 	(2,898	)	 	 	(2,101	)	 	 	9,854	 	
 	 	 	 	
 	 	 	13,360	 	 	 	18,046	 	 	 	26,531	 	

Cash flows used in investing activities	 	 	 	 	 	 	 	 	 	 	 	 	
Acquisition of royalty interests in mineral properties	 	 	(5,022	)	 	 	(25,304	)	 	 	(119,191	)	
Proceeds from the sale of royalty interests in mineral properties	 	 	—	 	 	 	—	 	 	 	6,000	 	
Refund of stamp duty paid on royalty interests	 	 	413	 	 	 	—	 	 	 	—	 	
Cash acquired in acquisition (note 11)	 	 	199	 	 	 	—	 	 	 	—	 	
Purchase of furniture and equipment	 	 	(2	)	 	 	(67	)	 	 	(8	)	
Other long-term assets relating to royalty acquisition	 	 	—	 	 	 	—	 	 	 	(17,878	)	
Increase in equity investments	 	 	(8	)	 	 	—	 	 	 	(157	)	
Proceeds from advances to CFT	 	 	456	 	 	 	—	 	 	 	—	 	
(Increase) decrease in other long-term assets	 	 	194	 	 	 	(2,240	)	 	 	(55	)	
Decrease in other liabilities	 	 	(585	)	 	 	—	 	 	 	—	 	
Restricted cash	 	 	—	 	 	 	—	 	 	 	(544	)	
 	 	 	 	
 	 	 	(4,355	)	 	 	(27,611	)	 	 	(131,833	)	

Cash flows provided by financing activities	 	 	 	 	 	 	 	 	 	 	 	 	
Net proceeds from issuance of common shares	 	 	49,461	 	 	 	—	 	 	 	101,675	 	
Net borrowings (payments) from the revolving credit facility	 	 	(3,000	)	 	 	3,000	 	 	 	—	 	
Proceeds from exercise of stock options and warrants	 	 	11	 	 	 	14	 	 	 	6,821	 	
Payment of dividends	 	 	(3,464	)	 	 	(2,747	)	 	 	(2,027	)	
 	 	 	 	
 	 	 	43,008	 	 	 	267	 	 	 	106,469	 	

Increase (decrease) in cash and cash equivalents	 	 	52,013	 	 	 	(9,298	)	 	 	1,167	 	
Cash and cash equivalents — beginning of year	 	 	3,444	 	 	 	12,742	 	 	 	11,575	 	
 	 	 	 	
Cash and cash equivalents — end of year	 	 	55,457	 	 	 	3,444	 	 	 	12,742	 	
 	 	 	 	
Supplemental cash flow information (note 15)
See accompanying notes to the consolidated financial statements.
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Table of Contents
International Royalty Corporation
 Notes to Consolidated Financial Statements
December 31, 2009 and 2008
(expressed in U.S. dollars)
(figures in tables in thousands of dollars)

1	 	Nature of operations	

 	 	International Royalty Corporation (“IRC” or the “Company”) was incorporated under the laws of Yukon, Canada on May 7, 2003 and was continued under the Canada Business Corporations Act on November 12, 2004. It was formed for the purpose of acquiring and creating natural resource royalties with a specific emphasis on mineral royalties.	
 		
 	 	During 2009, 2008 and 2007, approximately 75, 91 and 95 percent, respectively, of the Company’s revenues were generated from the Voisey’s Bay Royalty (note 3). The Company is economically dependent upon the operator of the Voisey’s Bay property and the expected revenues therefrom.	

2	 	Summary of significant accounting policies	

 	 	Basis of consolidation and presentation	
 		
 	 	The consolidated financial statements include the accounts of IRC and all of its wholly-owned subsidiaries. The material subsidiaries include IRC (U.S.) Management Inc., Archean Resources Ltd. (“Archean”) and IRC Nevada Inc. All intercompany balances and transactions have been eliminated upon consolidation. The consolidated financial statements and notes thereto are prepared in accordance with accounting principles generally accepted in Canada and are expressed in United States dollars, unless otherwise noted. As described in note 13, accounting principles generally accepted in Canada differ in certain respects from accounting principles in the United States.	
 		
 	 	Use of estimates	
 		
 	 	The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. The Company’s most significant estimates include assessing the recoverability of the carrying value of royalty interests in mineral properties and investments, the calculation of the fair value of stock-based compensation and warrants and the calculation of future income taxes. Actual results could differ from those estimates by a material amount.	
 		
 	 	Management’s estimate of mineral prices, operators’ estimates of proven and probable reserves related to royalty properties and operators’ estimates of operating, capital and reclamation costs, upon which the Company relies, are subject to significant risks and uncertainties. These estimates affect amortization of royalty interests in mineral properties and the assessment of the recoverability of the royalty interest in mineral properties. Although management has made its best assessment of these factors based upon current conditions, it is possible that changes could occur, which could materially affect the amounts contained in these consolidated financial statements.	
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International Royalty Corporation
Notes to Consolidated Financial Statements
December 31, 2009 and 2008
(expressed in U.S. dollars)
(figures in tables in thousands of dollars)

 	 	Cash and cash equivalents	
 		
 	 	Cash and cash equivalents consist of cash on deposit and short-term money market securities and investment deposits, with maturity dates of less than three months at the time of acquisition and which are readily convertible into cash.	
 		
 	 	Cash and cash equivalents are designated as “held for trading” and are measured at fair value.	
 		
 	 	Royalty interests	
 		
 	 	Royalty interests include acquired royalty interests in production stage, development stage, feasibility stage, and exploration stage properties. The royalty interests are recorded at cost and capitalized as tangible assets, unless such interests are considered to be a financial asset or a derivative instrument.	
 		
 	 	Acquisition costs of production stage royalty interests are amortized using the units of production method over the life of the mineral property, which is determined using available estimates of proven and probable reserves. Acquisition costs of royalty interests on development, feasibility and exploration stage mineral properties are not amortized. At such time as the associated mineral interests are placed into production, the cost basis is amortized using the units of production method over available estimates of proven and probable reserves. Amortization rates are adjusted on a prospective basis for all changes to estimates of proven and probable reserves.	
 		
 	 	Furniture and equipment	
 		
 	 	The Company initially records furniture and equipment at cost and provides for depreciation over their estimated useful lives ranging from three to seven years, using the straight-line method. Upon retirement or disposition of furniture and equipment, related gains or losses are recorded in operations.	
 		
 	 	Investments	
 		
 	 	Investments classified as available-for-sale are reported at fair market value (or marked to market) based on quoted market prices with unrealized gains or losses excluded from earnings and reported as other comprehensive income or loss. Investments in equities classified as available-for-sale that do not have a quoted market price in an active market are measured at cost. Investments classified as held-to-maturity are measured at amortized cost using the effective interest method. If a decline in fair value is determined to be other than temporary, an impairment is recognized and the related loss is charged to operations.	
 		
 	 	Impairment of long-lived assets	
 		
 	 	The Company evaluates its long-lived assets for impairment when events or circumstances indicate that the related carrying amounts may not be recoverable. The recoverability of the carrying value of royalty interests in production and development stage mineral properties is evaluated based upon estimated future undiscounted net cash flows from each royalty interest property using available estimates of proven and probable reserves.	
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International Royalty Corporation
Notes to Consolidated Financial Statements
December 31, 2009 and 2008
(expressed in U.S. dollars)
(figures in tables in thousands of dollars)

 	 	The Company evaluates the recoverability of the carrying value of royalty interests in feasibility and exploration stage mineral properties in the event of significant decreases in the price of the underlying mineral, and whenever new information regarding the mineral property is obtained from the operator that could affect the future recoverability of the royalty interest, such as updated drilling results, operator decisions to cease further expenditures or the expiration of claims, licenses or permits. The recoverability is evaluated based upon estimated future undiscounted net cash flows from each royalty interest property using available public information on estimates of proven and probable reserves or other available information.	
 		
 	 	Impairments in the carrying value of each royalty interest are measured and recorded to the extent that the carrying value in each royalty interest exceeds its estimated fair value, which is calculated using future discounted cash flows.	
 		
 	 	Financial Instruments	
 		
 	 	The Company’s cash and cash equivalents and restricted cash are classified as held-for-trading, royalties receivable and advances to CFT have been classified as loans and receivables and accounts payable and accrued liabilities have been classified as other financial liabilities.	
 		
 	 	The Company’s investment in Genoa has been classified as available-for-sale, and accordingly was initially recorded at its fair market value. There is no quoted market price in an active market for the investment in Genoa, and accordingly, this investment is measured at cost. The investment in New Horizon Uranium Corporation has been classified as available-for-sale and has been recorded at fair market value.	
 		
 	 	The Senior Secured Debentures and the Revolving Credit Facility have been classified as other financial liabilities and have been recorded at amortized cost. The fair value of the Senior Secured Debentures as of December 31, 2009 and 2008 was approximately $27,400,000 and $22,400,000, respectively.	
 		
 	 	The foreign currency contract has been classified as held-for-trading and has been recorded at its fair value.	
 		
 	 	The Company reviews all assets, including financial instruments, for impairment when events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.	
 		
 	 	Financing charges	
 		
 	 	Financing charges related to the issuance of the Senior Secured Debentures have been recorded as a reduction of the carrying value of the Senior Secured Debentures, which are being accreted to their maturity value through charges to interest expense over the term of the Debentures using the effective yield method (see below).	
 		
 	 	Senior Secured Debentures	
 		
 	 	Proceeds from the Unit Offering were allocated into debt and equity components based upon their respective fair market values. The carrying value of the Senior Secured Debentures is being accreted to their maturity value through charges to interest expense over the expected life of the Debentures based on the effective yield method.	
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International Royalty Corporation
Notes to Consolidated Financial Statements
December 31, 2009 and 2008
(expressed in U.S. dollars)
(figures in tables in thousands of dollars)

 	 	Derivative financial instruments	
 		
 	 	Derivative instruments are utilized by the Company to manage market risk against the volatility in foreign exchange rates. The Company’s policy is not to utilize derivative instruments for speculative purposes. The Company may choose to designate derivative instruments as hedges. No hedge accounting has been applied by the Company to date.	
 		
 	 	All derivative instruments are recorded on the balance sheet at fair value. Freestanding derivative instruments are classified as held-for-trading financial instruments. Gains and losses on these instruments are recorded in other expenses in the consolidated statements of earnings in the period they occur.	
 		
 	 	Fair value of the derivatives is based on quoted market prices where available. The fair values of forward contracts are based on forward market prices. If a forward price is not available for a forward contract, a forward price is estimated using an existing forward price adjusted for quality or location.	
 		
 	 	Stock options	
 		
 	 	The Company determines the fair value of awards to employees using the Black-Scholes valuation model. The fair value of the stock options is recognized as compensation expense over the vesting period of the related option. On January 14, 2010, due to the Company entering into a Plan of Arrangement (note 18) with Royal Gold, Inc. to acquire 100% of the outstanding common stock of IRC, the change in control provision in the stock option plan was triggered and all the options vested and the previously unrecognized compensation expense will be recognized in 2010.	
 		
 	 	Revenue	
 		
 	 	Royalty revenue is recognized when management can estimate the payable production from mine operations, when the underlying price is determinable and when collection is reasonably assured pursuant to the terms of the royalty agreements.	
 		
 	 	Royalty taxes	
 		
 	 	Voisey’s Bay royalty revenues are subject to the Mining and Mineral Rights Tax Act of Newfoundland and Labrador of 20%, which is recognized at the time of revenue recognition. Since the Company is ultimately obligated to pay this tax, the revenues received are reported gross, before the Mineral Rights Tax.	
 		
 	 	Translation of foreign currencies	
 		
 	 	The United States dollar is the functional currency of IRC and its subsidiaries.	
 		
 	 	Monetary assets and liabilities are translated at the exchange rate in effect at the balance sheet date and non-monetary assets and liabilities at the exchange rates in effect at the time of acquisition or issue. Revenues and expenses are translated at rates approximating exchange rates in effect at the time of the transactions. Exchange gains or losses arising on translation are included in income or loss for the year.	
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Table of Contents
International Royalty Corporation
Notes to Consolidated Financial Statements
December 31, 2009 and 2008
(expressed in U.S. dollars)
(figures in tables in thousands of dollars)

 	 	Income taxes	
 		
 	 	Income taxes are accounted for using the liability method. Temporary differences arising from the difference between the tax basis of an asset or liability and its carrying amount on the balance sheet are used to calculate future income tax liabilities or assets. Future income tax liabilities or assets are calculated using the tax rates anticipated to apply in the periods that the temporary differences are expected to reverse. Future income tax assets are evaluated and, if realization is not considered more likely than not, a valuation allowance is provided.	
 		
 	 	Comprehensive Income	
 		
 	 	The Company has adopted CICA Section 1530 — Comprehensive Income. Comprehensive income is the change in the Company’s net assets that results from transactions, events and circumstances from sources other than the Company’s shareholders and includes items that would not normally be included in net earnings such as unrealized gains or losses on available-for-sale investments, which are not included in net earnings until realized. If an unrealized loss has been determined to be other than temporary, the amount is reversed out of other comprehensive income and is included in earnings.	
 		
 	 	Earnings per share	
 		
 	 	Basic earnings per share is computed by dividing the net income or loss by the weighted average number of common shares outstanding during each period. Diluted earnings per share reflects the effect of all potentially dilutive common stock equivalents.	
 		
 	 	Variable interest entities	
 		
 	 	The Company accounts for variable interest entities (“VIE”) in accordance with CICA Accounting Guide 15, “Consolidation of Variable Interest Entities” (“AcG 15”). AcG 15 prescribes the application of consolidation principles for entities that meet the definition of a VIE. An enterprise holding other than a voting interest in a VIE, could, subject to certain conditions, be required to consolidate the VIE, if it is considered its primary beneficiary whereby it would absorb the majority of the VIE’s expected losses, receive the majority of its expected residual returns, or both.	
 		
 	 	Changes in accounting pronouncements	
 		
 	 	Effective January 1, 2009, the Company adopted Canadian Institute of Chartered Accountants’ (“CICA”) new Handbook Section 3064, Goodwill and Intangible Assets. These requirements have been incorporated into the consolidated financial statements.	
 		
  	 	Section 3064 replaced Section 3062, Goodwill and Intangible Assets, and Section 3450, Research and Development Costs, and establishes revised standards for the recognition, measurement, presentation and disclosure of goodwill and intangible assets. On adoption of the new Standard, EIC 27, Revenues and Expenditures During the Pre-operating Period, was withdrawn and so various pre-production and start-up costs are required to be expenses as incurred. No material adjustments were required upon adoption of this new standard.	
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International Royalty Corporation
Notes to Consolidated Financial Statements
December 31, 2009 and 2008
(expressed in U.S. dollars)
(figures in tables in thousands of dollars)

 	 	During 2009, the CICA amended Handbook Section 3862, Financial Instruments — Disclosures, to require enhanced disclosures about the relative reliability of the data that an entity uses to measure the fair values of its financial instruments. Additional disclosures as required by this amendment include the classification of financial instruments measured at fair value at one of three levels according to the relative reliability of the inputs used in estimating fair values. These disclosures have been included in note 12.	
 		
 	 	Future changes in accounting pronouncements	
 		
 	 	The CICA has issued three new inter-related accounting standards, Handbook Section 1582, Business Combinations, Section 1601, Consolidated Financial Statements, and Section 1602, Non-controlling Interests. Prospective application of these new Sections is mandatory for annual reporting periods beginning on or after January 1, 2011, with earlier adoption permitted. The CICA requires all three Sections to be adopted concurrently. The Company expects to adopt these standards as of January 1, 2011.	
 		
  	 	Section 1582 will replace CICA Handbook Section 1581, Business Combinations, and will bring the accounting for business combinations under Canadian GAAP in line with the accounting under Internal Financial Accounting Standards (“IFRS”).	
 		
 	 	Section 1601 and 1602 replace CICA Handbook Section 1600, Consolidated Financial Statements. Adoption of these Sections also reduced the differences between Canadian GAAP and IFRS.	
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International Royalty Corporation
Notes to Consolidated Financial Statements
December 31, 2009 and 2008

(expressed in U.S. dollars)
(figures in tables in thousands of dollars)

3	 	Royalty interests and measurement uncertainties	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	December 31, 2009	 	
 	 	 	 	 	 	 	 	 	 	Accumulated	 	 	 	 	
 	 	Cost	 	 	Impairments	 	 	amortization	 	 	Net	 	
 	 	$	 	 	$	 	 	$	 	 	$	 	
 	 	 	
Production stage	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Voisey’s Bay	 	 	225,726	 	 	 	—	 	 	 	(39,425	)	 	 	186,301	 	
Las Cruces	 	 	42,203	 	 	 	—	 	 	 	(201	)	 	 	42,002	 	
Avebury	 	 	6,394	 	 	 	—	 	 	 	(394	)	 	 	6,000	 	
Johnson Camp	 	 	5,022	 	 	 	—	 	 	 	(101	)	 	 	4,921	 	
Gwalia	 	 	3,403	 	 	 	—	 	 	 	(225	)	 	 	3,178	 	
Southern Cross	 	 	2,441	 	 	 	—	 	 	 	(1,651	)	 	 	790	 	
Skyline	 	 	2,288	 	 	 	—	 	 	 	(896	)	 	 	1,392	 	
Williams Mine	 	 	2,168	 	 	 	—	 	 	 	(1,530	)	 	 	638	 	
Meekatharra – Yaloginda	 	 	640	 	 	 	—	 	 	 	(172	)	 	 	468	 	
Other	 	 	79	 	 	 	—	 	 	 	(33	)	 	 	46	 	

 	 	 	290,364	 	 	 	—	 	 	 	(44,628	)	 	 	245,736	 	

Development stage	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Pascua	 	 	56,513	 	 	 	—	 	 	 	—	 	 	 	56,513	 	
Wolverine	 	 	19,819	 	 	 	—	 	 	 	—	 	 	 	19,819	 	
South Laverton	 	 	875	 	 	 	—	 	 	 	—	 	 	 	875	 	
Belahouro (Inata)	 	 	817	 	 	 	—	 	 	 	—	 	 	 	817	 	
Belcourt	 	 	527	 	 	 	—	 	 	 	—	 	 	 	527	 	
Tambor	 	 	30	 	 	 	—	 	 	 	—	 	 	 	30	 	

 	 	 	78,581	 	 	 	—	 	 	 	—	 	 	 	78,581	 	

Exploration / Feasibility stage	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Pinson	 	 	6,977	 	 	 	—	 	 	 	—	 	 	 	6,977	 	
Bell Creek	 	 	4,029	 	 	 	—	 	 	 	—	 	 	 	4,029	 	
Aviat One	 	 	2,211	 	 	 	—	 	 	 	—	 	 	 	2,211	 	
High Lake	 	 	2,007	 	 	 	—	 	 	 	—	 	 	 	2,007	 	
Horizon	 	 	1,530	 	 	 	—	 	 	 	—	 	 	 	1,530	 	
Tarmoola	 	 	1,426	 	 	 	—	 	 	 	—	 	 	 	1,426	 	
Gold Hill	 	 	670	 	 	 	—	 	 	 	—	 	 	 	670	 	
Merlin Orbit	 	 	504	 	 	 	—	 	 	 	—	 	 	 	504	 	
Other	 	 	3,862	 	 	 	—	 	 	 	—	 	 	 	3,862	 	

 	 	 	23,216	 	 	 	—	 	 	 	—	 	 	 	23,216	 	

 	 	 	392,161	 	 	 	—	 	 	 	(44,628	)	 	 	347,533	 	
 	 	 	
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International Royalty Corporation
Notes to Consolidated Financial Statements
December 31, 2009 and 2008

(expressed in U.S. dollars)
(figures in tables in thousands of dollars)
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	December 31, 2008	 	
 	 	 	 	 	 	 	 	 	 	Accumulated	 	 	 	 	
 	 	Cost	 	 	Impairments	 	 	amortization	 	 	Net	 	
 	 	$	 	 	$	 	 	$	 	 	$	 	
 	 	 	
Production stage	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Voisey’s Bay	 	 	225,726	 	 	 	—	 	 	 	(28,762	)	 	 	196,964	 	
Avebury	 	 	12,490	 	 	 	(6,096	)	 	 	(394	)	 	 	6,000	 	
Gwalia	 	 	3,546	 	 	 	—	 	 	 	(36	)	 	 	3,510	 	
Southern Cross	 	 	2,544	 	 	 	—	 	 	 	(1,467	)	 	 	1,077	 	
Skyline	 	 	2,288	 	 	 	—	 	 	 	(250	)	 	 	2,038	 	
Williams Mine	 	 	2,168	 	 	 	—	 	 	 	(1,358	)	 	 	810	 	
Meekatharra – Yaloginda	 	 	697	 	 	 	—	 	 	 	(171	)	 	 	526	 	
Other	 	 	79	 	 	 	—	 	 	 	(21	)	 	 	58	 	

 	 	 	249,538	 	 	 	(6,096	)	 	 	(32,459	)	 	 	210,983	 	

Development stage	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Pascua	 	 	56,513	 	 	 	—	 	 	 	—	 	 	 	56,513	 	
Las Cruces	 	 	42,203	 	 	 	—	 	 	 	—	 	 	 	42,203	 	
Wolverine	 	 	19,819	 	 	 	—	 	 	 	—	 	 	 	19,819	 	
Belahouro	 	 	817	 	 	 	—	 	 	 	—	 	 	 	817	 	
Belcourt	 	 	527	 	 	 	—	 	 	 	—	 	 	 	527	 	

 	 	 	119,879	 	 	 	—	 	 	 	—	 	 	 	119,879	 	

Exploration / Feasibility stage	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Pinson	 	 	6,977	 	 	 	—	 	 	 	—	 	 	 	6,977	 	
Bell Creek	 	 	4,029	 	 	 	—	 	 	 	—	 	 	 	4,029	 	
Aviat One	 	 	2,211	 	 	 	—	 	 	 	—	 	 	 	2,211	 	
High Lake	 	 	2,007	 	 	 	—	 	 	 	—	 	 	 	2,007	 	
Horizon	 	 	1,530	 	 	 	—	 	 	 	—	 	 	 	1,530	 	
Tarmoola	 	 	1,486	 	 	 	—	 	 	 	—	 	 	 	1,486	 	
South Laverton	 	 	912	 	 	 	—	 	 	 	—	 	 	 	912	 	
Gold Hill	 	 	670	 	 	 	—	 	 	 	—	 	 	 	670	 	
Merlin Orbit	 	 	504	 	 	 	—	 	 	 	—	 	 	 	504	 	
Other	 	 	4,718	 	 	 	(813	)	 	 	—	 	 	 	3,905	 	

 	 	 	25,044	 	 	 	(813	)	 	 	—	 	 	 	24,231	 	

 	 	 	394,461	 	 	 	(6,909	)	 	 	(32,459	)	 	 	355,093	 	

 	 	During the years ended December 31, 2009, 2008 and 2007, the Company recorded $12,169,000, $14,676,000 and $10,996,000, respectively, in amortization expense.	
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International Royalty Corporation
Notes to Consolidated Financial Statements
December 31, 2009 and 2008

(expressed in U.S. dollars)
(figures in tables in thousands of dollars)

 	 	Royalty Acquisitions	

 	 	Johnson Camp	

 	 	On March 31, 2009, the Company acquired from Nord Resources Corporation a royalty on the producing Johnson Camp copper mine located in Cochise County, Arizona for cash consideration of $4.95 million, plus acquisition costs of $72,000. The Johnson Camp royalty is a 2.50% NSR on the project. Beginning after January 1, 2010, the royalty rate for any given year can be adjusted slightly upward if certain annual production targets are not met, and downward if excess production allows previous short-falls to be recovered. However, the cumulative rate on copper production can never fall below the original 2.50% NSR on the project. The royalty rate on any metals other than copper can be reduced to 1.25%, if cumulative copper production from the mine exceeds 250 million pounds within twelve years.	

 	 	Refund of Stamp Duty	

 	 	During 2006, the Company paid stamp duty to the government of Western Australia as part of the acquisition of its Western Australia royalty interests. The original cost of the stamp duty was capitalized as part of the costs of the royalties. The Company appealed the costs and in January 2009, received a refund of $413,000. The refund was recorded as a reduction of the original cost and was allocated among the royalty interests acquired.	

 	 	Pinson Royalty Interests	

 	 	On October 9, 2008, the Company acquired three additional royalties on the Pinson gold project in Nevada, United States. The Company paid $2.8 million in cash for a 16.842% share of the variable (0.5% to 5.0%) net smelter returns (“NSR”) Rayrock royalty and a 40% share of the Cordilleran 3.0% and 5.0% NSR royalties (“Cordex”). With this purchase, the Company owns 97.9% of the Rayrock royalty and 100% of the Cordex royalties.	

 	 	Skyline Coal Royalty Interest	

 	 	On September 11, 2008, the Company acquired an overriding royalty interest on the Skyline Coal Mine located in Utah, United States. The acquisition cost as of the June 1, 2008 effective date of the transaction was $2.6 million; royalty revenues received and receivable totaling $341,192 from June 1, 2008 through September 11, 2008 were treated as a reduction to the purchase price. The royalty acquired represents a 77.424% interest in the underlying 1.825% overriding royalty, providing an effective 1.413% royalty to the Company.	

 	 	Atna Resources Royalty Interests	

 	 	On September 4, 2008, the Company entered into a definitive purchase and sale agreement to acquire four mineral royalties from Atna Resources Ltd. (“Atna”) for $20.0 million in cash. The portfolio includes a NSR interest in all precious metals produced from the development-stage Wolverine massive sulphide project in the Yukon. The Wolverine royalty is a sliding-scale, NSR on all silver and gold production. The royalty rate is a step function based on the price of silver. At silver prices below $5.00 per ounce, there is no royalty payment; at silver prices between $5.00 and $7.50 per ounce, the rate is 3.778%; and at prices above $7.50 per ounce, the rate is 9.445%.	
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International Royalty Corporation
Notes to Consolidated Financial Statements
December 31, 2009 and 2008

(expressed in U.S. dollars)
(figures in tables in thousands of dollars)

 	 	The portfolio also included 1) a 3.0% NSR royalty on the feasibility-stage McDonald-Keep Cool epithermal gold deposit in Montana, United States (the royalty applies to the exploration lands surrounding the current McDonald deposit as well as approximately two-thirds of the entire Keep Cool deposit); 2) a 0.4% NSR royalty on the exploration-stage Minera Hispaniola copper and gold project in the Dominican Republic; and 3) a 2.5% NSR royalty on the exploration-stage Mina Cancha precious metals project in Argentina.	

 	 	This transaction closed in two parts. The acquisition of the Wolverine, McDonald and Minera Hispaniola royalties closed on September 4, 2008 and $19.9 million in cash was paid to Atna. The acquisition of the Mina Cancha royalty closed on October 9, 2008, upon resolution of an outstanding right of first refusal, and $100,000 in cash was paid to Atna.	

 	 	Pending Royalty Acquisitions	

 	 	Fawcett	

 	 	On December 7, 2004, the Company signed a letter agreement with David Fawcett (superseded by a royalty purchase agreement dated February 22, 2005) to acquire 20.3% of a 1.0% royalty interest on four coal licenses in British Columbia for total consideration of CA$312,500 in cash and CA$937,500 in Common Shares valued at the offering price of the IPO of CA$4.30. Pursuant to an agreement dated February 22, 2005, the cash and 218,023 Common Shares were placed in escrow pending receipt of executed royalty assignment agreements from the property owner, Western Canadian Coal Corp. (“Western”). The cash has been recorded as restricted cash as of December 31, 2009 and 2008, and will be transferred to royalty interests in mineral properties upon closing of the transaction. The value of the Common Shares has been included in other long-term assets at December 31, 2009 and 2008, and will be transferred to royalty interests in mineral properties upon closing of the transaction. Should the transaction not close, the cash will revert back to the Company and the shares will be retired.	

 	 	On March 21, 2005, Western filed a petition with the Supreme Court of British Columbia to have the underlying royalty sharing agreement set aside. On February 24, 2006, the Supreme Court of British Columbia upheld the underlying royalty sharing agreement between David Fawcett and Western. On March 24, 2006, Western filed a notice to appeal the decision. On October 23, 2006, Western announced that it was unilaterally discontinuing the appeal but would be taking the position that based on the circumstances in which the 1.0% royalty was entered into, that any payment on the 1.0% royalty over the sum of $500,000 would constitute the payment of interest in excess of 60% and would be illegal under Section 347 of the Criminal Code of Canada. Accordingly, Western indicated that it would make no payments on the 1.0% royalty over and above $500,000. If correct, this would restrict the payments on that portion of the royalty to be assigned by Fawcett to the Company to $101,500. Fawcett has commenced proceedings challenging this position and seeking a declaration that the 1.0% royalty is not subject to Section 347 of the Criminal Code.	

 	 	After several procedural efforts by Western to dismiss the action, an administrative hearing before the Supreme Court of British Columbia was conducted during September 2008.	
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International Royalty Corporation
Notes to Consolidated Financial Statements
December 31, 2009 and 2008

(expressed in U.S. dollars)
(figures in tables in thousands of dollars)

 	 	On April 1, 2009, the Supreme Court of British Columbia announced its judgment in favour of David Fawcett, declaring that the 1.0% royalty is not subject to Section 347 of the Criminal Code. On April 30, 2009, Western filed a Notice of Appeal with the British Columbia Court of Appeals regarding the Supreme Court’s decision. On July 31, 2009, Western submitted its formal factum and David Fawcett submitted his factum in reply in September 2009. The Court of Appeals held its formal hearing on December 16, 2009, and released its decision on February 11, 2010. While the Court confirmed the validity of the royalty interest held by Mr. Fawcett’s co-litigant, Kevin James, it ruled that only 38.5% of the interest held by Mr. Fawcett constituted a true royalty interest, the remainder constituting payments related to a loan made by Mr. Fawcett and accordingly was subject to interest limitations specified by Provincial statue. IRC is evaluating completion of the acquisition in light of the Court of Appeals decision.	

 	 	Impairments and Measurement Uncertainty	

 	 	Based upon the Company’s assessment, there were no impairments during 2009.	

 	 	During the year ended December 31, 2008, as a result of management’s assessment, the Company impaired royalties on five diamond exploration properties in Canada (Aviat Pipe Two, Dirty Shovel, Melville Regional, Quilliq and Fury Scarpa and Gem) totaling $813,000 due to the expiration of exploration permits at the end of statutory time limits.	

 	 	The Company recorded a partial impairment of the Avebury nickel project in Western Australia of $6.1 million after evaluating a new reserve report provided by the operator indicating lower reserves and resources, the operator’s decision to suspend operations and put the mine on care and maintenance due to declining nickel prices and certain other financial indicators regarding the operator’s financial condition. The Company updated its calculation of the net present value of future cash flows based upon the new reserve report using a range of nickel prices from $3.50 per pound ($1.00 below the nickel price at December 31, 2008) to $7.15 per pound (our assessment at December 31, 2008 of analysts’ median long-term estimate for nickel prices). Considering a range of discounts rate from 6.0% to 10.0%, it was determined that the value of the investment in Avebury was $6.0 million. Significant changes in the underlying assumptions in management’s cash flow analysis could have a material impact on the Company.	

 	 	During the year ended December 31, 2008, the Company recorded impairments of royalty interests in mineral properties totaling $6.9 million.	
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International Royalty Corporation
Notes to Consolidated Financial Statements
December 31, 2009 and 2008

(expressed in U.S. dollars)
(figures in tables in thousands of dollars)

4	 	Investments	

 	 	Investments as of December 31, 2009 and 2008 consisted of:	
 	 	 	 	 	 	 	 	 	
 	 	December 31,	 	
 	 	2009	 	 	2008	 	
 	 	$	 	 	$	 	
 	 	 	
Preferred Rocks of Genoa Holding Company, LLC	 	 	6,053	 	 	 	6,053	 	
Investment in New Horizon Uranium Corporation	 	 	93	 	 	 	15	 	
Other	 	 	145	 	 	 	139	 	

 	 	 	6,291	 	 	 	6,207	 	

 	 	Preferred Rocks of Genoa Holding Company, LLC (“Genoa”)	

 	 	The Company’s investment in Genoa has been classified as available-for-sale, and accordingly was initially recorded at its fair market value, which approximated cost. There is no quoted market price in an active market for the investment in Genoa, and accordingly, this investment is measured at cost.	

 	 	New Horizon Uranium Corporation	

 	 	In October 2005, the Company agreed to loan $200,000 to New Horizon Uranium Corporation (“NHU”), and since that time has provided financial and management services to NHU to assist NHU in the financing of its operations. In consideration for these services, NHU agreed to give the Company 2,150,000 shares of NHU in the event of a successful public listing of its             shares, and to pay the Company a royalty of $0.75/lb on all future production of Uranium by NHU. On April 12, 2007, NHU completed a reverse take-over of Crossroads Exploration Inc., which is traded on the TSX Venture Exchange (now New Horizon Uranium Corporation). Upon completion of the reverse take-over, NHU issued the 2,150,000 shares and re-paid the loan to the Company. This transaction was recorded as a gain on the Company’s books in the second quarter of 2007 in the amount of the initial value of the shares of $849,000 as of April 12, 2007.	

 	 	The investment in NHU has been classified as available-for-sale and accordingly was initially recorded at fair market value. From April 12, 2008 through December 31, 2008, the Company recorded the unrealized gain (loss) on the investment as other comprehensive income (loss), net of income taxes. On December 31, 2008, the Company determined that the decline in fair market value of the investment in NHU was other than temporary and the accumulated other comprehensive loss of $833,000 was recognized as an impairment of investments in the consolidated statement of operations. Future changes to the fair market value of the Company’s investment in NHU will be recorded as other comprehensive income, net of taxes, until the Company disposes of any of its investment, unless the decline is determined to be other than temporary.	
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International Royalty Corporation
Notes to Consolidated Financial Statements
December 31, 2009 and 2008

(expressed in U.S. dollars)
(figures in tables in thousands of dollars)

5	 	Other long-term assets	

 	 	Other assets as of December 31, 2009 and 2008 consisted of:	
 	 	 	 	 	 	 	 	 	
 	 	December 31,	 	
 	 	2009	 	 	2008	 	
 	 	$	 	 	$	 	
 	 	 	
Advances to CFT Capital Limited	 	 	1,599	 	 	 	1,944	 	
Deferred amounts directly relating to potential acquisition	 	 	—	 	 	 	832	 	
Deferred amounts relating to pending royalty acquisitions (note 3)	 	 	938	 	 	 	854	 	
Other	 	 	291	 	 	 	9	 	

 	 	 	2,828	 	 	 	3,639	 	

 	 	Advances to CFT Capital Limited (“CFT”) represent gross amounts of $2.0 million loaned to CFT for the acquisition of McWatters Mining, Inc. (“McWatters”) (Note 11). As of April 9, 2009 (date of closing), these advances are repayable over five years with interest at 1.0%. During the year ended December 31, 2009, the Company received $456,000 in repayments of the advances from CFT. The Company estimated the fair value of the remaining outstanding advances to be $1.6 million using the present value of the expected future cash flows with a discount rate of 12%.	

 	 	The Company determined that deferred costs relating the McWatters transaction (Note 11) were direct and incremental in nature. These costs were capitalized as part of the acquisition and written off as part of the purchase price allocation. These costs are included as costs related to the acquisition of McWatters (note 11).	

6	 	Revolving Credit Facility	

 	 	The Company entered into a credit agreement with The Bank of Nova Scotia establishing a revolving credit facility (the “Revolving Facility”) in favour of the Company in the amount of up to $40 million. The Revolving Facility is used to provide funds for general corporate purposes, including acquisitions of royalties on mining properties. The Revolving Facility matures July 15, 2010.	

 	 	The Revolving Facility is available in multiple currencies through prime rate, base rate and LIBOR advances and through bankers’ acceptances, priced at the applicable rate plus an applicable margin that ranges from 2% to 3%. The Company pays a standby fee that ranges from 0.9% to 1.2% per annum on the undrawn amount of the Revolving Facility.	
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International Royalty Corporation
Notes to Consolidated Financial Statements
December 31, 2009 and 2008

(expressed in U.S. dollars)
(figures in tables in thousands of dollars)

 	 	The Revolving Facility is subject to customary terms and conditions for borrowers of this nature, including limits on incurring additional indebtedness, granting liens or selling assets without the consent of the lenders. The Company is also required to maintain certain financial ratios as well as a minimum tangible net worth. Pursuant to the Revolving Facility, the Company granted a second charge over substantially all of its current and future assets. Archean and IRC Nevada Inc. guaranteed the indebtedness of the Company under the Revolving Facility. IRC Nevada Inc. provided a first charge over all of its assets pursuant to a general security agreement and Archean provided a second charge over all of its assets (except for its equity interest in Voisey’s Bay Holding Corporation which was not pledged) pursuant to a general security agreement.	

 	 	On February 19, in conjunction with the plan of arrangement (note 18), the Company terminated the Revolving Facility.	

7	 	Senior Secured Debentures	

 	 	On February 22, 2005, the Company completed a Unit Offering for gross proceeds of CA$30 million. The Unit Offering consisted of CA$30 million of 5.5% Senior Secured Debentures (the “Debentures”) due February 22, 2011 and 1,395,360 Common Shares. The obligations of the Company under the Debentures are collateralized by a general security agreement over all of the assets of the Company.	

 	 	Interest on the Debentures is payable semi-annually, on February 28 and August 31. Interest paid by the Company for the years ended December 31, 2009, 2008 and 2007 was approximately $1,414,000, $1,616,000, and $1,479,000, respectively.	

 	 	The proceeds received from the Debentures were reduced by the fair value of the Common Shares issued of $4.9 million. Details of the balance are as follows:	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	December 31, 2009	 	 	December 31, 2008	 	
 	 	CA$	 	 	US$	 	 	CA$	 	 	US$	 	
 	 	 	
Senior Secured Debentures payable	 	 	30,000	 	 	 	28,596	 	 	 	30,000	 	 	 	24,549	 	
Unaccreted discount	 	 	(1,516	)	 	 	(1,231	)	 	 	(2,655	)	 	 	(2,157	)	
Unaccreted financing charges (note 2)	 	 	(513	)	 	 	(417	)	 	 	(898	)	 	 	(730	)	

 	 	 	27,971	 	 	 	26,948	 	 	 	26,447	 	 	 	21,662	 	

 	 	The Company’s contractual obligation for future principal payments is one lump sum payment of $28,596,000 (CA$30,000,000) to be made on February 22, 2011. The obligation is denominated in CA$. The Debentures as of December 31, 2009 were converted to US$ equivalents using an exchange rate of CA$1.00 to US$0.9532, the exchange rate as of December 31, 2009. The Debentures as of December 31, 2008 were converted to US$ equivalents using an exchange rate of CA$1.00 to US$0.8183, the exchange rate as of December 31, 2008.	
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International Royalty Corporation
Notes to Consolidated Financial Statements
December 31, 2009 and 2008

(expressed in U.S. dollars)
(figures in tables in thousands of dollars)

 	 	Foreign Currency Contract	

 	 	On November 25, 2008, the Company entered into an agreement with a bank to fix the exchange rate to repay the principal balance of the Senior Secured Debentures at CA$1.00 to US$0.834725, based on the settlement date of February 22, 2011. The fair value of the contract as of December 31, 2009 and 2008 was $3,445,000 and $(493,000), respectively.	

 	 	The foreign currency contract liability is a derivative and thus, has been classified as “held-for-trading” and was recorded at fair value on the date of acquisition and then marked-to-market at the balance sheet date. The change in fair value of the foreign currency contract liability has been recognized as an unrealized gain (loss) on fair market value of foreign currency contract on the consolidated statements of operations.	

8	 	Income taxes	

 	 	Income tax expense varies from the amount that would be computed by applying the combined federal and provincial income tax rate of 29.00% (29.50% in 2008 and 32.12% in 2007) to earnings before income taxes as follows:	
 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Year ended December 31,	 	
 	 	2009	 	 	2008	 	 	2007	 	
 	 	$	 	 	$	 	 	$	 	
 	 	 	
Earnings (loss) before income taxes	 	 	(8,682	)	 	 	4,166	 	 	 	9,664	 	

Expected income tax expense (recovery)	 	 	(2,518	)	 	 	1,229	 	 	 	3,104	 	
Tax effect of:	 	 	 	 	 	 	 	 	 	 	 	 	
Change in income tax rates	 	 	113	 	 	 	162	 	 	 	(7,042	)	
Stock-based compensation	 	 	198	 	 	 	405	 	 	 	435	 	
Expiration of unexercised warrants	 	 	(189	)	 	 	189	 	 	 	—	 	
Non-deductible McWatters transaction costs	 	 	1,709	 	 	 	—	 	 	 	—	 	
Canadian functional currency election	 	 	(2,024	)	 	 	—	 	 	 	—	 	
Impairment of long-term assets	 	 	—	 	 	 	124	 	 	 	—	 	
Non-deductible royalty taxes	 	 	—	 	 	 	(101	)	 	 	—	 	
Foreign accrual property income	 	 	—	 	 	 	45	 	 	 	—	 	
Foreign currency	 	 	573	 	 	 	(1,491	)	 	 	1,993	 	
Other	 	 	197	 	 	 	468	 	 	 	(59	)	

 	 	 	(1,941	)	 	 	1,030	 	 	 	(1,569	)	
 	 	 	
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Table of Contents

International Royalty Corporation
Notes to Consolidated Financial Statements
December 31, 2009 and 2008
(expressed in U.S. dollars)
(figures in tables in thousands of dollars)

 	 	At December 31, 2009, the Company has unused net operating losses (excluding McWatters) for Canadian and United States entities which expire as follows:	
 	 	 	 	 	 	 	 	 	
 	 	CA$	 	 	US$	 	
2010	 	 	698	 	 	 	—	 	
2011	 	 	—	 	 	 	—	 	
2012	 	 	—	 	 	 	—	 	
2013	 	 	—	 	 	 	—	 	
2014	 	 	1,102	 	 	 	—	 	
2015 and thereafter	 	 	35,620	 	 	 	5,415,342	 	

 	 	The Company has recorded a future income tax liability as a component of the cost of the Archean acquisition (Voisey’s Bay Royalty) and the Hunter Portfolio to reflect the fact that the Company has no amortizable basis in these assets for Canadian income tax purposes. Recording of the future income tax liability has been reduced by a corresponding recognition of tax benefits related to the Company’s tax net operating losses, and certain expenses of the IPO and the Unit Offering. Future tax (assets) liabilities include the following components:	
 	 	 	 	 	 	 	 	 	
 	 	December 31,	 	
 	 	2009	 	 	2008	 	
 	 	$	 	 	$	 	
 	 	 	
Royalty interests in mineral properties	 	 	54,505	 	 	 	56,663	 	
Deferred income	 	 	1,302	 	 	 	4,141	 	
Share issue costs	 	 	(1,784	)	 	 	(1,975	)	
Deferred gain on Genoa transaction (note 4)	 	 	(783	)	 	 	(783	)	
Net operating loss carry-forward	 	 	(9,355	)	 	 	(13,594	)	
Foreign currency contract	 	 	913	 	 	 	(131	)	
Other	 	 	515	 	 	 	368	 	

 	 	 	45,313	 	 	 	44,689	 	

 	 	Functional Currency Election	

 	 	In March 2009, the Canadian government enacted new legislation which will allow qualifying taxpayers the ability to file their 2008 and subsequent Canadian tax returns using a functional currency which is other than the Canadian dollar. As a result of the legislation becoming substantively enacted for financial reporting purposes in 2009, foreign currency losses of approximately $1.8 million previously recognized in 2008 were reversed in March 2009 and have been recorded as a foreign currency gain on the consolidated statement of operations for the year ended December 31, 2009.	
 		
 	 	Also, as a result of this new legislation, the Company translated its non-monetary assets to a U.S. value using the foreign currency exchange rate of CA$1.00 to US$1.012, the rate provided for by the new legislation. The use of this rate to lock in the U.S. dollar value of the assets created a permanent benefit in the tax basis of certain of the company’s assets. This change in tax basis created a future tax benefit of $2.0 million, which has been reflected in the consolidated statement of operations for the year ended December 31, 2009.	
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Table of Contents

International Royalty Corporation
Notes to Consolidated Financial Statements
December 31, 2009 and 2008
(expressed in U.S. dollars)
(figures in tables in thousands of dollars)

 	 	McWatters Acquisition of Tax Attributes	

 	 	On April 9, 2009, the Company completed its acquisition of McWatters Mining, Inc. (“McWatters”) (Note 11). As of December 31, 2009, McWatters has estimated accumulated non-capital losses carried forward for federal purposes totalling approximately $66.4 million which are available to reduce future taxable income.	
 		
 	 	The non-capital losses expire as follows:	
 	 	 	 	 	
 	 	$	
2010	 	$	14,050,534	 	
2014	 	 	5,824,480	 	
2015	 	 	43,830,604	 	
2026	 	 	1,239,629	 	
2027	 	 	1,063,767	 	
2028	 	 	411,280	 	

Balance at December 31, 2009	 	$	66,420,294	 	

 	 	As of December 31, 2009, McWatters has accumulated research and development expenses of approximately $1.3 million and research and development federal tax credits to be carried forward of approximately $466,000. These tax credits will expire between 2019 and 2022.	
 		
 	 	McWatters also has accumulated capital losses of approximately $433,000, Canadian exploration expenses of approximately $4.8 million, Canadian development expenses of approximately $17.1 million and limited partnership losses from its subsidiary of approximately $10.4 million as of December 31, 2009. The limited partnership losses are available to reduce future taxable income within the parameters of the Federal and Quebec tax legislation, without limit of time. In order to use the limited partnership losses, the partnership will have to generate taxable income.	
 		
 	 	Due to the complexity inherent in the interpretation of the Income Tax Act (Canada), it is possible that some or all of the McWatters non-capital losses may not be deductible for tax purposes and accordingly, the potential tax benefits of the McWatters non-capital losses and the tax balances have not been recognized in these consolidated financial statements.	
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International Royalty Corporation
Notes to Consolidated Financial Statements
December 31, 2009 and 2008
(expressed in U.S. dollars)
(figures in tables in thousands of dollars)

9	 	Shareholders’ equity	

 	 	Activity in Common Shares was as follows:	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	2009	 	 	2008	 	 	2007	 	
 	 	Shares	 	 	Amount	 	 	Shares	 	 	Amount	 	 	Shares	 	 	Amount	 	
 	 	 	 	 	 	$	 	 	 	 	 	 	$	 	 	 	 	 	 	$	 	
 	 	 	
Outstanding — Beginning of year	 	 	78,480,356	 	 	 	275,464	 	 	 	78,476,856	 	 	 	275,450	 	 	 	58,008,448	 	 	 	166,173	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Shares issued in connection with the unit offering (net of issuance costs)	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	8,334,000	 	 	 	34,831	 	
Shares issued in connection with the offering (net of issuance costs)	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	10,400,000	 	 	 	67,246	 	
Shares issued for bought deal financing (net of issuance costs)	 	 	14,100,000	 	 	 	42,881	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
Shares issued upon exercise of overallotment option (net of issuance costs)	 	 	2,115,000	 	 	 	6,580	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
Exercise of warrants issued in connection with unit offering	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	751,630	 	 	 	4,710	 	
Exercise of financing warrants	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	469,042	 	 	 	1,207	 	
Exercise of compensation warrants	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	89,736	 	 	 	68	 	
Exercise of Williams mine warrants	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	384,000	 	 	 	988	 	
Exercise of stock options	 	 	6,667	 	 	 	11	 	 	 	3,500	 	 	 	14	 	 	 	40,000	 	 	 	227	 	
Other activity	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	

Balance — End of year	 	 	94,702,023	 	 	 	324,936	 	 	 	78,480,356	 	 	 	275,464	 	 	 	78,476,856	 	 	 	275,450	 	

 	 	Activity in accumulated other comprehensive income was as follows:	
 	 	 	 	 	
(in thousands of US$)	 	Amount	 	
Balance at December 31, 2008	 	$	—	 	
Other comprehensive gain, net of tax expense of $11	 	 	65	 	

Balance at December 31, 2009	 	$	65	 	
 	 	 	 	
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International Royalty Corporation
Notes to Consolidated Financial Statements
December 31, 2009 and 2008
(expressed in U.S. dollars)
(figures in tables in thousands of dollars)

 	 	A summary of accumulated other comprehensive income and retained earnings was as follows:	
 	 	 	 	 	 	 	 	 	
 	 	December 31,	 	 	December 31,	 	
(in thousands of US$)	 	2009	 	 	2008	 	
Beginning balance	 	$	—	 	 	$	173	 	
Unrealized gains (losses) on available-for-sale investments	 	 	76	 	 	 	(203	)	
Future tax effect on unrealized gains (losses)	 	 	(11	)	 	 	30	 	
 	 	 	
Total accumulated other comprehensive income (loss)	 	 	65	 	 	 	—	 	
Retained earnings	 	 	1,715	 	 	 	11,920	 	
 	 	 	
Ending balance	 	$	1,780	 	 	$	11,920	 	

 	 	Bought Deal Financing	

 	 	On July 15, 2009, the Company completed an offering of 14,100,000 common shares at a price of CA$3.55 per common share for total gross proceeds of $44,728,000 (CA$50,055,000). The Company also granted to the underwriters an over-allotment option of up to 2,115,000 common shares which were fully subscribed on July 24, 2009 at a price of CA$3.55 per share for gross proceeds of $6,926,000 (CA$7,508,000). Closing of the over-allotment option brought total gross proceeds from the offering to $51,654,000 (CA$57,563,000), and net proceeds to approximately $49,461,000 (CA$55,118,000). IRC paid share issuance costs of $2,193,000 (CA$2,445,000) related to the offering. The total number of common shares outstanding after the offering was 94,695,356 shares.	

 	 	Stock options	

 	 	On June 8, 2004, the Board of Directors of the Company adopted a stock option plan (the “Plan”) pursuant to which the Company may grant incentive stock options to directors, officers, employees of and consultants to the Company and any affiliate of the Company, at the Board of Director’s discretion. The exercise price and vesting period of any option granted is fixed by the Board of Directors of the Company when such option is granted. The plan was updated and approved by the shareholders in May 2008.	

 	 	All options are non-transferable. The term of the options is at the discretion of the Board of Directors, but may not exceed 10 years from the grant date. The options expire on the earlier of the expiry date or the date which is 90 days following the day on which the option holder ceases to be a director, officer, employee of or consultant to the Company and any affiliate of the Company. The options will be adjusted in the event of a share consolidation or subdivision or other similar change to the Company’s share capital. The aggregate number of Common Shares in respect of which options have been granted and remain outstanding under the Plan shall not at any time exceed 10% of the then issued and outstanding Common Shares, or exceed 5% of such amount to any one optionee.	

 	 	During 2009, the Company received proceeds from the exercise of 6,667 stock options totalling $11,000. During 2008, the Company received proceeds from the exercise of 3,500 stock options totalling $14,000.	
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International Royalty Corporation
Notes to Consolidated Financial Statements
December 31, 2009 and 2008
(expressed in U.S. dollars)
(figures in tables in thousands of dollars)

 	 	The following table presents the composition of options outstanding and exercisable as of December 31:	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	2009	 	 	2008	 	
 	 	Options	 	 	Price*	 	 	Options	 	 	Price*	 	
Outstanding, beginning of year	 	 	6,195,000	 	 	 	4.24	 	 	 	5,574,000	 	 	 	4.47	 	
Granted	 	 	—	 	 	 	—	 	 	 	625,000	 	 	 	2.29	 	
Forfeited/cancelled	 	 	(325,000	)	 	 	4.56	 	 	 	—	 	 	 	—	 	
Exercised	 	 	(6,667	)	 	 	1.50	 	 	 	(3,500	)	 	 	3.75	 	

Outstanding, end of year	 	 	5,863,333	 	 	 	4.23	 	 	 	6,195,500	 	 	 	4.24	 	

			
*	 	Price reflects the weighted average exercise price in Canadian dollars.	

 	 	There were no stock options issued in 2009.	
 		
 	 	The Company uses the fair value based method of accounting for all stock-based compensation awards using the Black-Scholes Option Pricing Model. The Company recognized stock-based compensation expense of $684,000 in 2009, $1,371,000 in 2008 and $1,355,000 in 2007 which is recorded in general and administrative expense.	
 	 	 	 	 	 	 	 	 	
 	 	December 31,	 	
 	 	2009	 	 	2008	 	
Valuation assumptions:	 	 	 	 	 	 	 	 	
Risk free interest rate	 	 	n/a	 	 	 	3.8	%	
Expected dividend yield	 	 	n/a	 	 	 	1.0	%	
Expected price volatility of the Company’s Common Shares	 	 	n/a	 	 	 	49	%	
Expected life of the option	 	 	n/a	 	 	3.5 years	
 	 	 	 	 	 	 	 	 	
Options granted	 	 	n/a	 	 	 	625,000	 	
Weighted average exercise price	 	 	n/a	 	 	CA$2.29	
Vesting period	 	 	n/a	 	 	3 years	
Weighted average fair value per stock option	 	 	n/a	 	 	$	0.77	 	

 	 	Option pricing models require the input of highly subjective assumptions including the expected price volatility. Changes in the subjective input assumptions can materially affect the fair value estimate, and therefore, the existing models do not necessarily provide a reliable measure of the fair value of the Company’s stock options.	
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International Royalty Corporation
Notes to Consolidated Financial Statements
December 31, 2009 and 2008
(expressed in U.S. dollars)
(figures in tables in thousands of dollars)

 	 	The following summarizes stock options outstanding as of December 31, 2009:	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Exercise price	 	Number	 	 	Remaining	 	 	Number	 	
CA$	 	outstanding	 	 	contractual life	 	 	exercisable	 	
 	
1.50	 	 	493,333	 	 	3.9 years	 	 	160,000	 	
3.67	 	 	50,000	 	 	0.5 years	 	 	50,000	 	
3.75	 	 	899,500	 	 	0.9 years	 	 	899,500	 	
3.97	 	 	100,000	 	 	0.3 years	 	 	100,000	 	
4.27	 	 	50,000	 	 	1.8 years	 	 	50,000	 	
4.30	 	 	2,410,000	 	 	0.1 years	 	 	2,410,000	 	
4.80	 	 	200,000	 	 	0.2 years	 	 	200,000	 	
4.80	 	 	1,024,000	 	 	1.9 years	 	 	1,024,000	 	
5.24	 	 	100,000	 	 	3.2 years	 	 	33,333	 	
5.81	 	 	512,000	 	 	2.9 years	 	 	341,334	 	
6.25	 	 	25,000	 	 	3.2 years	 	 	8,333	 	

 	 	 	5,863,833	 	 	 	 	 	 	 	5,276,500	 	

 	 	On January 14, 2010, due to the Company entering into a Plan of Arrangement (note 18) with Royal Gold, Inc. to acquire 100% of the outstanding common stock of IRC, the change in control provision in the stock option plan was triggered, all options became vested and the unrecognized compensation expense was recognized.	
 		
 	 	Subsequent to December 31, 2009, 5,863,833 options were exercised for gross proceeds totalling approximately CA$24.8 million.	

10	 	Related party transactions	

 	 	Effective April 9, 2009, the date of the acquisition of McWatters (notes 5 and 11), CFT Capital Limited (“CFT”) became a related party as both are under the same management. Thus, all amounts due to or from CFT are deemed to be related party transactions.	
 		
 	 	These amounts are recorded at the exchange amount, which is the amount of consideration established and agreed to by the related parties. These expenses are included in general and administrative expenses and interest expense on the statement of operations.	
 		
 	 	Effective January 31, 2008, an officer and director of the Company (the “Officer”) resigned his employment and stepped down from the Board of Directors in order to pursue other business opportunities. The Officer was retained as a consultant to the Company through 2008. As part of his resignation agreement, the officer guaranteed the repayment of a promissory note from South American Metals. In September 2008, the Company determined collection of the note receivable from South American Metals was uncertain and has provided for impairment of its investment of $839,000. The Company is currently pursuing collection of the advances.	
 		
 	 	There were no amounts due from or to related parties at December 31, 2008.	
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International Royalty Corporation
Notes to Consolidated Financial Statements
December 31, 2009 and 2008
(expressed in U.S. dollars)
(figures in tables in thousands of dollars)

11	 	Acquisition of McWatters Mining, Inc.	

 	 	On April 9, 2009, the Company acquired all of the outstanding common shares of McWatters Mining, Inc. (“McWatters”) representing a 45% voting interest. A class of voting preferred shares created under a Plan of Arrangement and issued to all former common shareholders of McWatters is entitled to 55% of the votes and an amount not exceeding CA$1.0 million of cumulative dividends and redemption amounts. All income in excess of CA$1.0 million will accrue to the common shares, all of which are owned by IRC. The value of the future cash payments of $605,000 has been recorded in other liabilities in the consolidated balance sheet using a discount rate of 12%. The Company has accounted for this transaction as a purchase of assets.	
 		
 	 	McWatters was reorganized effective on June 2, 2008, and pursuant to a proposal with its creditors, substantially all of its unsecured creditor claims were acquired by CFT Capital, Inc. (“CFT”), and the balance of such claims have been settled. At the date of acquisition, McWatters had remaining liabilities of CA$7.3 million which will be payable out of 6.0% of available taxable income of McWatters. During the year ended December 31, 2009, McWatters made payments of $585,000 to CFT. The Company has estimated the fair value of the remaining future cash payments to be $3.3 million using a discount of 12% which has been recorded as other liabilities in the consolidated balance sheet	
 		
 	 	The following is a summary of the other liabilities recorded in connection with the McWatters transaction:	
 	 	 	 	 	 	 	 	 	
 	 	December 31,	 	 	April 9, 2009	 	
(in thousands of US$)	 	2009	 	 	(date of closing)	 	
Due to Class A Preferred Shareholders — current portion	 	$	148	 	 	$	142	 	
Due to Class A Preferred Shareholders	 	 	457	 	 	 	547	 	
Due to CFT	 	 	3,314	 	 	 	3,257	 	
 	 	 	
Ending balance	 	$	3,919	 	 	$	3,946	 	

 	 	The following is a summary of the McWatters transaction costs recorded as other expense as of December 31, 2009:	
 	 	 	 	 	
 	 	December 31,	 	
(in thousands of US$)	 	2009	 	
Deferred acquisition costs	 	$	1,768	 	
Net retained deficit acquired	 	 	548	 	
Net present value of amounts due to Class A Preferred Shareholders	 	 	690	 	
Net present value of amounts due to CFT	 	 	3,257	 	

Ending balance	 	$	6,263	 	

 	 	For financial statements purposes, IRC has consolidated the balance sheet and results of operations of McWatters from the date of acquisition in its consolidated financial statements.	
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International Royalty Corporation
Notes to Consolidated Financial Statements
December 31, 2009 and 2008
(expressed in U.S. dollars)
(figures in tables in thousands of dollars)

12	 	Financial instruments	
     Fair value

 	 	Effective January 1, 2007, all financial instruments have been classified into one of five categories: held-for-trading assets or liabilities, held-to-maturity investments, loans and receivables, available-for-sale financial assets or other financial liabilities. Held-for-trading financial instruments are measured at fair value and all gains and losses are included in net income in the period in which they arise. Available-for-sale financial instruments are measured at fair value with revaluation gains and losses included in accumulated other comprehensive income until the instruments are derecognized or impaired. Loans and receivable, investments held-to-maturity and other financial liabilities are measured at amortized cost using the effective interest method.	
 		
 	 	The Company’s cash and cash equivalents and restricted cash are classified as held-for-trading, royalties receivable and advances to CFT have been classified as loans and receivables and accounts payable and accrued liabilities and other liabilities have been classified as other financial liabilities.	
 		
 	 	The Company’s investment in Genoa has been classified as available-for-sale, and accordingly was initially recorded at its fair market value. There is no quoted market price in an active market for the investment in Genoa, and accordingly, this investment is measured at cost. The investment in New Horizon Uranium Corporation has been classified as available-for-sale and has been recorded at fair market value.	
 		
 	 	The Senior Secured Debentures and the Revolving Credit Facility have been classified as other financial liabilities and have been recorded at amortized cost. The fair value of the Senior Secured Debentures as of December 31, 2009 and 2008 was approximately $27,400,000 and $22,400,000, respectively.	
 		
 	 	The foreign currency contract has been classified as held-for-trading and has been recorded at its fair value.	
 		
 	 	CICA Handbook Section 3862, Financial Instruments — Disclosures, requires classification of items within a hierarchy. The three levels of the fair value hierarchy are:	
     Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities;
     Level 2 — Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly;
     Level 3 — Inputs that are not based on observable market data.
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International Royalty Corporation
Notes to Consolidated Financial Statements
December 31, 2009 and 2008
(expressed in U.S. dollars)
(figures in tables in thousands of dollars)

 	 	The following table summarizes the Company’s financial instruments at December 31, and shows the level within the fair value hierarchy in which they have been classified (for financial instruments measured at fair value):	
 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Fair Value	 	 	 	 	 	 	 	
(in thousands of US$)	 	Hierarchy Level	 	 	2009	 	 	2008	 	
Financial Assets	 	 	 	 	 	 	 	 	 	 	 	 	
Held for Trading	 	 	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	Level 1	 	$	55,457	 	 	$	3,444	 	
Restricted cash	 	Level 1	 	 	433	 	 	 	371	 	
Foreign currency contract	 	Level 2	 	 	3,445	 	 	 	—	 	
Available-for-sale	 	 	 	 	 	 	 	 	 	 	 	 	
Investment in New Horizon Uranium Corporation	 	Level 1	 	 	93	 	 	 	15	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Financial Liabilities	 	 	 	 	 	 	 	 	 	 	 	 	
Held for Trading	 	 	 	 	 	 	 	 	 	 	 	 	
Foreign currency contract	 	Level 2	 	$	—	 	 	$	493	 	

 	 	Interest expense	
 		
 	 	Details of interest expense were as follows:	
 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	December 31,	 	
(in thousands of US$)	 	2009	 	 	2008	 	 	2007	 	
Accretion of debenture discount and financing charges	 	$	1,239	 	 	$	1,100	 	 	$	984	 	
Cash interest expense	 	 	1,517	 	 	 	1,662	 	 	 	1,805	 	
Commitment and standby fees	 	 	399	 	 	 	393	 	 	 	961	 	
Accretion of McWatters liabilities	 	 	558	 	 	 	—	 	 	 	—	 	

 	 	$	3,713	 	 	$	3,155	 	 	$	3,750	 	

13	 	Reconciliation of Canadian and United States Generally Accepted Accounting Principles	

 	 	Canadian generally accepted accounting principles (Canadian GAAP) varies in certain significant respects from the principles and practices generally accepted in the United States (US GAAP). As required by the United States Securities and Exchange Commission (the “SEC”), the effect of these principal differences on the Company’s consolidated financial statements is quantified below and described in the accompanying notes.	
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Table of Contents
International Royalty Corporation
Notes to Consolidated Financial Statements
December 31, 2009 and 2008
(expressed in U.S. dollars)
(figures in tables in thousands of dollars)

 	 	Adjustments to the statement of operations are as follows:	
 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Year ended December 31,	 	
Expressed in thousands of U.S. dollars, except	 	2009	 	 	2008	 	 	2007	 	
per share amounts	 	$	 	 	$	 	 	$	 	
Earnings (loss) for the year under Canadian GAAP	 	 	(6,741	)	 	 	3,136	 	 	 	11,233	 	
Derivative mark-to-market adjustments (a)	 	 	—	 	 	 	400	 	 	 	201	 	

Earnings (loss) for the year under US GAAP	 	 	(6,741	)	 	 	3,536	 	 	 	11,434	 	

Earnings (loss) per common share	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	 	(0.08	)	 	 	0.05	 	 	 	0.17	 	
Diluted	 	 	(0.08	)	 	 	0.04	 	 	 	0.16	 	

As of December 31, 2009 and 2008, there were no adjustments to the balance sheet.	
 		
a)	 	Share purchase warrants	

 	 	As disclosed under recent accounting pronouncements below, EITF 07-5 provides guidance on the U.S. GAAP accounting for the Company’s warrants. The Company had recorded a liability of $400,000 in 2007 relating to outstanding warrants, which reversed in 2008 as the warrants expired unexercised.	

 	 	During 2008, all outstanding warrants expired unexercised.	
 		
b)	 	Recent accounting pronouncements	
 		
 	 	U.S. GAAP Standards	

 	 	Accounting Standards Recently Adopted	

 	 	In June 2009, the Financial Accounting Standards Board (“FASB) issued Statement of Financial Accounting Standard (“SFAS”) No. 165, “Subsequent Events” (ASC Topic 855). ASC Topic 855 establishes the criteria for subsequent events, including: (a) the period after the balance sheet date during which management of a reporting entity shall evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements; (b) the circumstances under which an entity shall recognize events or transactions occurring after the balance sheet date in its financial statements; and (c) the disclosures that an entity shall make about events or transactions that occurred after the balance sheet date. The implementation of this statement did not have a material impact on our consolidated financial position and results of operations.	
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International Royalty Corporation
Notes to Consolidated Financial Statements
December 31, 2009 and 2008
(expressed in U.S. dollars)
(figures in tables in thousands of dollars)

 	 	In December 2007, the FASB issued Statement No. 141 (revised 2007), “Business Combinations,” (“SFAS 141R”) (effective in 2009), which significantly changes the ways companies account for business combinations and will generally require more assets acquired and liabilities assumed to be measured at their acquisition date fair value. Under SFAS 141R, legal fees and other transaction-related costs are expensed as incurred and are no longer included in goodwill as a cost of acquiring the business. SFAS 141R also requires, among other things, acquirers to estimate the acquisition date fair value of any contingent consideration and to recognize any subsequent changes in the fair value of contingent consideration in earnings. In addition, restructuring costs the acquirer expected, but was not obligated to incur, will be recognized separately from the business acquisition.	

 	 	In December 2007, the FASB issued Statement No. 160, “Non-controlling Interests in Consolidated Financial Statements, an amendment of ARB No. 51” (“SFAS 160”), which is effective in the year 2009. SFAS 160 requires all entities to report non-controlling interests in subsidiaries as a separate component of equity in the consolidated financial statements. SFAS 160 establishes a single method of accounting for changes in a parent’s ownership interest in a subsidiary that do not result in deconsolidation. Companies will no longer recognize a gain or loss on partial disposals of a subsidiary where control is retained. In addition, in partial acquisitions, where control is obtained, the acquiring company will recognize and measure at fair value 100 percent of the assets and liabilities, including goodwill, as if the entire target company had been acquired. The implementation of this statement did not have a material impact on our consolidated financial position and results of operations.	

 	 	In September 2006, the FASB issued Statement No. 157, Fair Value Measurements (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures regarding fair value measurements. It is applicable whenever another standard requires or permits assets or liabilities to be measured at fair value, but it does not expand the use of fair value to any new circumstances. The implementation of this statement in 2009 for non-financial assets and liabilities did not have a material impact on our consolidated financial position and results of operations.	

 	 	Accounting Standards Not Yet Adopted	

 	 	In June 2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R).” SFAS No. 167 amends the guidance within ASC Topic 810, “Consolidations,” by adding previously considered qualifying special purpose entities (the concept of these entities was eliminated by SFAS No. 166). In addition, companies must perform an analysis to determine whether the company’s variable interest or interests give it a controlling financial interest in a variable interest entity. Companies must also reassess on an ongoing basis whether the company is the primary beneficiary of a variable interest entity. SFAS 167 is effective for fiscal years and interim periods beginning after November 15, 2009, and will be applicable to the Company beginning on January 1, 2010. The Company does not expect the adoption of this statement to have a material impact on its consolidated financial statements.	
 39 

Table of Contents
International Royalty Corporation
Notes to Consolidated Financial Statements
December 31, 2009 and 2008
(expressed in U.S. dollars)
(figures in tables in thousands of dollars)

14	 	Segment information	

 	 	The Company operates in one industry segment, with all revenue from mineral royalties. The Company’s royalty revenue and royalty interests in mineral properties, net are geographically distributed as shown in the following tables. Please refer to note 3 for a further breakdown of the royalty interests in mineral properties.	
 	 	 	 	 	 	 	 	 	
 	 	December 31,	 	
Royalty interests in mineral properties, net	 	2009	 	 	2008	 	
Canada	 	 	215,016	 	 	 	225,852	 	
Chile	 	 	56,513	 	 	 	56,513	 	
Spain	 	 	42,002	 	 	 	42,203	 	
Australia	 	 	17,709	 	 	 	18,495	 	
United States	 	 	14,516	 	 	 	10,253	 	
Other	 	 	1,777	 	 	 	1,777	 	

 	 	 	347,533	 	 	 	355,093	 	

Royalty Revenue	 	2009	 	 	2008	 	 	2007	 	
Canada	 	 	19,685	 	 	 	38,482	 	 	 	48,020	 	
Australia	 	 	3,531	 	 	 	2,699	 	 	 	1,758	 	
United States	 	 	1,867	 	 	 	538	 	 	 	79	 	
Spain	 	 	428	 	 	 	—	 	 	 	—	 	

 	 	 	25,511	 	 	 	41,719	 	 	 	49,857	 	

15	 	Supplemental cash flow information	
 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	December 31,	 	 	 	 	
 	 	2009	 	 	2008	 	 	2007	 	
(in thousands of US$)	 	$	 	 	$	 	 	$	 	
Cash paid for interest	 	 	1,916	 	 	 	2,067	 	 	 	2,766	 	

Cash paid for taxes	 	 	185	 	 	 	7,426	 	 	 	—	 	
 	 	 	 	
 40 

Table of Contents
International Royalty Corporation
Notes to Consolidated Financial Statements
December 31, 2009 and 2008
(expressed in U.S. dollars)
(figures in tables in thousands of dollars)

 	 	Cash and cash equivalents as of December 31 consists of the following:	
 	 	 	 	 	 	 	 	 	
 	 	2009	 	 	2008	 	
(in thousands of US$)	 	$	 	 	$	 	
Cash in bank	 	 	4,455	 	 	 	644	 	
Short-term deposits	 	 	51,002	 	 	 	2,800	 	

 	 	 	55,457	 	 	 	3,444	 	

 	 	The effective interest rate on short-term deposits outstanding was 0.1% and has an average maturity of 7 days.	

16	 	Management of capital	

 	 	The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to pursue the development of its royalty interests in mineral properties portfolio, and to maintain a flexible capital structure which optimizes the costs of capital at an acceptable risk.	

 	 	In the management of capital, the Company includes the components of shareholders’ equity, Senior Secured Debentures, revolving credit facility and investments.	

 	 	Total capital as of December 31, 2009 and 2008 is as follows:	
 	 	 	 	 	 	 	 	 	
 	 	2009	 	 	2008	 	
Stockholders’ equity	 	$	337,296	 	 	$	297,280	 	
Senior Secured Debentures	 	 	26,948	 	 	 	21,662	 	
Revolving credit facility	 	 	—	 	 	 	3,000	 	
Cash and cash equivalents	 	 	(55,457	)	 	 	(3,444	)	

 	 	 	308,787	 	 	 	318,498	 	

 	 	The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares, issue new debt, acquire or dispose of assets or adjust the amount of cash and cash equivalents.	

 	 	In order to facilitate the management of its capital requirements, the Company prepares annual expenditure budgets that are updated as necessary depending on various factors, including successful capital deployment and general industry conditions. The annual budget is approved by the Board of Directors.	

 	 	The Company’s investment policy is to invest its cash in highly liquid short-term interest-bearing investments with maturities 90 days or less from the original date of acquisition, selected with regards to the expected timing of expenditures from continuing operations.	
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Table of Contents
International Royalty Corporation
Notes to Consolidated Financial Statements
December 31, 2009 and 2008
(expressed in U.S. dollars)
(figures in tables in thousands of dollars)

 	 	The Company expects its current capital resources will be sufficient to carry its business development plans and operations through its current operating period.	

 	 	The Company maintains a Revolving Credit Facility in order to provide additional liquidity. The Revolving Credit Facility is subject to customary terms and conditions for borrowers of this nature, including limits on incurring additional indebtedness, granting liens or selling assets without the consent of the lenders. Pursuant to the Revolving Credit Facility, the Company granted a second charge over substantially all of its current and future assets. Archean and IRC Nevada Inc. guaranteed the indebtedness of the Company under the Revolving Facility. IRC Nevada Inc. provided a first charge over all of its assets pursuant to a general security agreement and Archean provided a second charge over all of its assets (except for its equity interest in Voisey’s Bay Holding Corporation which was not pledged) pursuant to a general security agreement. The Company is also required to maintain certain financial ratios (such as gross debt ratio, interest coverage ratio, Debt to Voisey’s Bay revenue ratio and a Adjusted Indebtedness to Paid-Up Capital ratio) as well as a minimum tangible net worth. The Company was in compliance with all required financial ratios as of December 31, 2009 and 2008.	

 	 	On February 19, in conjunction with the plan of arrangement (note 18), the Company terminated the Revolving Facility.	

17	 	Management of financial risk	

 	 	The Company is exposed to certain financial risks, including currency risk, credit risk, liquidity risk, interest risk and commodity price risk.	
 		
 	 	Currency risk	

 	 	The Company is exposed to the financial risk related to the fluctuation of foreign exchange rates. The Company owns royalty interests on mineral properties in various countries throughout the world and revenues and expenses are incurred in foreign currencies such as Canadian dollars, Australian dollars and Euros. A significant change in currency exchange rates could have a significant impact on the Company’s results of operations, financial position or cash flows. Bank accounts are maintained in the local currency of several countries in order to minimize the impact of exchange rate fluctuations. As of December 31, 2009, the Company has U.S dollar cash and cash equivalents in the United States, Canada, Australia and Spain of $866,000, $54,110,000, $58,000 and $423,000, respectively. As of December 31, 2008, the Company has U.S dollar cash and cash equivalents in the United States, Canada and Australia of $2,887,000, $35,000 and $521,000, respectively.	

 	 	The Company’s Senior Secured Debentures are denominated in Canadian dollars which exposes the Company to fluctuations in foreign currency rates. On November 25, 2008, the Company entered into an agreement with a bank to fix the exchange rate to repay the principal balance of the Senior Secured Debentures at CA$1.00 to US$0.834725. The Company has recorded the difference in the value of the Debentures at December 31, 2009 and 2008 using the contract exchange rate at February 22, 2011 (the date of settlement) and the value of the Debentures at the December 31, 2009 and 2008 forward rate totalling $3,445,000 and $(493,000), respectively, resulting in a derivative asset (liability). The foreign currency contract asset (liability) is a derivative and thus, has been classified as “held-for-trading” and was recorded at fair value on the date of acquisition and then	
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Table of Contents
International Royalty Corporation
Notes to Consolidated Financial Statements
December 31, 2009 and 2008
(expressed in U.S. dollars)
(figures in tables in thousands of dollars)

 	 	marked-to-market at December 31, 2009 and 2008. The change in fair value of the foreign currency contract asset (liability) has been recognized as an unrealized gain (loss) on fair market value of foreign currency contract on the consolidated statements of operations.	

 	 	In March 2009, the Canadian government enacted new legislation which will allow qualifying taxpayers the ability to file their 2008 and subsequent Canadian tax returns using a functional currency which is other than the Canadian dollar. As a result of the legislation becoming substantively enacted for financial reporting purposes in 2009, foreign currency losses of approximately $1.8 million previously recognized in 2008 were reversed in March 2009 and have been recorded as a foreign currency gain on the consolidated statement of operations for the year ended December 31, 2009.	

 	 	Also, as a result of this new legislation, the Company translated its non-monetary income tax assets to a U.S. value using the foreign currency exchange rate of CA$1.00 to US$1.012, the rate provided for by the new legislation. The use of this rate to lock in the U.S. dollar value of the assets created a permanent benefit in the tax basis of certain of the company’s assets.	
 		
 	 	Credit risk	

 	 	Credit risk is the risk that a contracting party will not complete its obligations under a financial instrument and cause the Company to incur a financial loss.	

 	 	The Company’s cash and cash equivalents are held through large financial institutions which management believes have no known liquidity problems.	

 	 	The Company’s royalties receivable consist primarily of royalty payments due in accordance with contract agreements with large international mining companies. The Company monitors the public filings and websites in order to assess the financial position of the mining companies. In the current market and credit environment, management believes that substantially all of its royalty payments are collectible.	

 	 	Advances to CFT consist of amounts advanced to an unrelated third party in connection with the acquisition of McWatters (note 5). These advances are to be repaid in five annual instalments with interest at 1.0% upon the closing of the transaction. The Company believes the credit risk associated with the advances to CFT is low as these amounts will be realized in conjunction with the terms of the agreement.	
 		
 	 	Liquidity risk	

 	 	Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages liquidity risk through the management of its capital structure and financial leverage as outlined in Note 16 to the consolidated financial statements.	

 	 	Accounts payable and accrued liabilities are due within the current operating period.	

 	 	The Company’s Senior Secured Debentures are due in one lump sum payment on February 22, 2011.	
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Table of Contents
International Royalty Corporation
Notes to Consolidated Financial Statements
December 31, 2009 and 2008
(expressed in U.S. dollars)
(figures in tables in thousands of dollars)

 	 	The Company’s Revolving Credit Facility is due in monthly instalments of interest only with the principal balance due on July 15, 2010. The Company periodically borrows funds to take advantage of acquisition opportunities or to meet its operating cash flow needs.	

 	 	The Company’s foreign currency contract is with a large financial institution with no known liquidity problems.	
 		
 	 	Interest rate risk	

 	 	Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. An increase of 1.0% in market interest rates on cash and cash equivalents would result in an increase of approximately $550,000. A decrease of 0.12% in market interest rates on cash and cash equivalents would result in a decrease of approximately $66,000.	

 	 	The risk that the Company will realize a loss as a result of a decline in the fair value of the investments included in cash and cash equivalents is limited because these investments, although available for sale, are generally held to maturity.	
 		
 	 	Commodity price risk	

 	 	The Company is exposed to price risk with respect to commodity prices. The Company closely monitors commodity prices to determine the appropriate course of action, if any, to be taken by the Company.	
18 Subsequent Events

 	 	On February 22, 2010, the Company completed a plan of arrangement (the “Arrangement”) with Royal Gold, Inc. (“Royal”) in which Royal acquired all of the outstanding common share of IRC. Pursuant to the Arrangement, IRC was delisted from the Toronto Stock Exchange and the New York Stock Exchange.	

 	 	The Company incurred approximately $1.0 million and $6.9 million in transaction costs during 2009 and 2010, respectively, related primarily to professional fees. As part of the Arrangement, in 2010 the Company paid to certain employees, including management, approximately $10.6 million in severance payments in accordance with the employees’ contracts.	

 	 	On February 19, in conjunction with the plan of arrangement, the Company terminated the Revolving Facility.	
 44 

Table of Contents

SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 	 	 	 	 	
 	Royal Gold, Inc.
(Registrant)
 	 	
Date: April 1, 2010 	By:  	/s/ Karen Gross  	 	
 	 	Karen Gross  	 	
 	 	Vice President & Corporate Secretary  	 	
 45 

Table of Contents

EXHIBIT INDEX
 	 	 	
Exhibit No.	 	Description	
 	 	 	
10.1	 	Amended and Restated Term Loan Facility Agreement, dated as of March 26, 2010, among Royal Gold, Inc., as a Borrower, Royal Gold Chile Limitada, as a Guarantor, RGLD Gold Canada, Inc., as a Guarantor, High Desert Mineral Resources, Inc., as a Guarantor, the other Guarantors from time to time party thereto, HSBC Bank USA, National Association, as Administrative Agent and a Lender, Bank of Nova Scotia, as Sole Syndication Agent and a Lender and HSBC Securities (USA) Inc., as Sole Lead Arranger	
 	 	 	
10.2	 	Amended and Restated Promissory Note, dated March 26, 2010, by Royal Gold, Inc. to HSBC Bank USA, National Association	
 	 	 	
10.3	 	Amended and Restated Promissory Note, dated March 26, 2010, by Royal Gold, Inc. to The Bank of Nova Scotia	
 	 	 	
10.4	 	Amendment to Pledge, Security and Subordination Agreement, dated March 26, 2010, by Royal Gold in favor of HSBC Bank USA, National Association	
 	 	 	
10.5	 	Amendment to General Security Agreement, dated March 26, 2010, by RGLD Gold Canada, Inc. in favor of HSBC Bank USA, National Association	
 	 	 	
10.6	 	Consent and First Amendment to Third Amended and Restated Credit Agreement, dated March 26, 2010, among Royal Gold, Inc., as a Borrower, High Desert Mineral Resources, Inc., as a Borrower, RG Mexico, Inc., as a Guarantor, HSBC Bank USA, National Association, as Administrative Agent and a Lender, Scotiabanc Inc., as a Lender, Bank of Nova Scotia, as Sole Syndication Agent and HSBC Securities (USA) Inc., as Sole Lead Arranger	
 	 	 	
23.1	 	Consent of PricewaterhouseCoopers LLP	
 	 	 	
99.1	 	Press Release dated March 29, 2010	
 46 

Exhibit 10.1
EXECUTION VERSION
$130,000,000
AMENDED AND RESTATED TERM LOAN FACILITY AGREEMENT
among
ROYAL GOLD, INC. ,
as a Borrower
ROYAL GOLD CHILE LIMITADA ,
as a Guarantor
RGLD GOLD CANADA, INC. ,
as a Guarantor
HIGH DESERT MINERAL RESOURCES, INC. ,
as a Guarantor
THE OTHER GUARANTORS
FROM TIME TO TIME PARTY HERETO ,
as Guarantors,
HSBC BANK USA, NATIONAL ASSOCIATION,
as a Lender
THE BANK OF NOVA SCOTIA,
as a Lender
AND SUCH OTHER LENDERS
AS MAY BECOME A PARTY HERETO FROM TIME TO TIME ,
as Lenders,
HSBC BANK USA, NATIONAL ASSOCIATION,
as Administrative Agent,
HSBC SECURITIES (USA) INC.,
as Sole Lead Arranger
and
THE BANK OF NOVA SCOTIA,
as Sole Syndication Agent
Dated as of March 26, 2010

 

TABLE OF CONTENTS
 	 	 	 	 	 	 	
 	 	 	 	Page	 	
ARTICLE I DEFINITIONS	 	 	2	 	
 	 	 	 	 	 	 	
Section 1.1	 	Defined Terms	 	 	2	 	
Section 1.2	 	Other Definitional Provisions; Time References	 	 	24	 	
Section 1.3	 	Accounting Terms	 	 	24	 	
Section 1.4	 	Québec Matters	 	 	24	 	
 	 	 	 	 	 	 	
ARTICLE II THE LOAN; AMOUNT AND TERMS	 	 	25	 	
 	 	 	 	 	 	 	
Section 2.1	 	Term Loan	 	 	25	 	
Section 2.2	 	Evidence of Indebtedness	 	 	26	 	
Section 2.3	 	Repayment and Prepayment	 	 	27	 	
Section 2.4	 	Fees	 	 	28	 	
Section 2.5	 	Computation of Interest and Fees	 	 	28	 	
Section 2.6	 	Pro Rata Treatment and Payments	 	 	29	 	
Section 2.7	 	Non-Receipt of Funds by the Administrative Agent	 	 	31	 	
Section 2.8	 	Inability to Determine Interest Rate; Base Rate Loan	 	 	31	 	
Section 2.9	 	Illegality	 	 	31	 	
Section 2.10	 	Requirements of Law	 	 	32	 	
Section 2.11	 	Indemnity	 	 	33	 	
Section 2.12	 	Taxes	 	 	34	 	
Section 2.13	 	Judgment Currency Conversion .	 	 	35	 	
Section 2.14	 	Amendment and Restatement	 	 	36	 	
 	 	 	 	 	 	 	
ARTICLE III REPRESENTATIONS AND WARRANTIES	 	 	36	 	
 	 	 	 	 	 	 	
Section 3.1	 	Corporate Existence; Compliance with Law	 	 	37	 	
Section 3.2	 	Corporate Power; Authorization; Enforceable Obligations	 	 	37	 	
Section 3.3	 	Financial Condition; No Material Adverse Effect	 	 	37	 	
Section 3.4	 	Compliance with Laws; No Conflict; No Default	 	 	38	 	
Section 3.5	 	No Material Litigation	 	 	39	 	
Section 3.6	 	Employee Benefit Plans and Canadian Pension Plans	 	 	39	 	
Section 3.7	 	Environmental Matters	 	 	40	 	
Section 3.8	 	Purpose of Loan	 	 	40	 	
Section 3.9	 	Subsidiaries	 	 	40	 	
Section 3.10	 	Ownership; Insurance	 	 	40	 	
Section 3.11	 	Title to Royalty Interests; Liens	 	 	41	 	
Section 3.12	 	Royalty Agreements	 	 	41	 	
Section 3.13	 	Indebtedness	 	 	41	 	
Section 3.14	 	Taxes	 	 	41	 	
Section 3.15	 	No Burdensome Restrictions	 	 	42	 	
Section 3.16	 	Limitations on Incurrence of Indebtedness	 	 	42	 	
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TABLE OF CONTENTS
 	 	 	 	 	 	 	
 	 	 	 	Page	 	
Section 3.17	 	Accuracy and Completeness of Information	 	 	42	 	
Section 3.18	 	Events of Default	 	 	42	 	
Section 3.19	 	Material Contracts	 	 	42	 	
 	 	 	 	 	 	 	
ARTICLE IV COLLATERAL SECURITY	 	 	43	 	
 	 	 	 	 	 	 	
Section 4.1	 	Security Documents	 	 	43	 	
Section 4.2	 	No Limitation on Application of Security Interest	 	 	43	 	
Section 4.3	 	Maintenance of Security Over Material Royalties	 	 	43	 	
Section 4.4	 	Perfection and Maintenance of Liens	 	 	43	 	
Section 4.5	 	Release of RGLD Canada Security Documents	 	 	43	 	
 	 	 	 	 	 	 	
ARTICLE V CONDITIONS PRECEDENT	 	 	44	 	
 	 	 	 	 	 	 	
Section 5.1	 	Conditions to Funding the Supplemental Loan	 	 	44	 	
 	 	 	 	 	 	 	
ARTICLE VI AFFIRMATIVE COVENANTS	 	 	46	 	
 	 	 	 	 	 	 	
Section 6.1	 	Financial Statements and Information	 	 	46	 	
Section 6.2	 	Notices	 	 	47	 	
Section 6.3	 	Payment of Taxes and Other Obligations	 	 	49	 	
Section 6.4	 	Payment of Indebtedness	 	 	49	 	
Section 6.5	 	Conduct of Business and Maintenance of Existence	 	 	50	 	
Section 6.6	 	Maintenance of Royalty Interests and Defend Title	 	 	50	 	
Section 6.7	 	Maintenance of Liens	 	 	50	 	
Section 6.8	 	Maintenance and Perfection of Pledged Assets	 	 	50	 	
Section 6.9	 	Insurance	 	 	50	 	
Section 6.10	 	Inspection of Property; Books and Records; Discussions	 	 	50	 	
Section 6.11	 	Compliance with Law	 	 	51	 	
Section 6.12	 	Environmental Laws	 	 	51	 	
Section 6.13	 	Compliance with Employment Laws	 	 	52	 	
Section 6.14	 	Further Assurances	 	 	52	 	
Section 6.15	 	Financial Covenants	 	 	52	 	
Section 6.16	 	Chilean Security Documents	 	 	52	 	
Section 6.17	 	Repayment of Debentures and Release of Associated Liens	 	 	53	 	
 	 	 	 	 	 	 	
ARTICLE VII NEGATIVE COVENANTS	 	 	53	 	
 	 	 	 	 	 	 	
Section 7.1	 	Indebtedness	 	 	53	 	
Section 7.2	 	Liens	 	 	54	 	
Section 7.3	 	Guaranty Obligations	 	 	55	 	
Section 7.4	 	Nature of Business	 	 	55	 	
Section 7.5	 	Dissolution or Sale of Assets	 	 	55	 	
Section 7.6	 	Mergers	 	 	56	 	
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TABLE OF CONTENTS
 	 	 	 	 	 	 	
 	 	 	 	Page	 	
Section 7.7	 	Advances and Loan	 	 	56	 	
Section 7.8	 	Transactions with Affiliates	 	 	57	 	
Section 7.9	 	Organizational Documents	 	 	57	 	
Section 7.10	 	Modification of Material Agreements	 	 	57	 	
Section 7.11	 	Limitation on Restricted Actions	 	 	57	 	
Section 7.12	 	Maintenance of Material Royalties	 	 	58	 	
Section 7.13	 	Canadian Pension Plans	 	 	58	 	
Section 7.14	 	No Further Negative Pledges	 	 	59	 	
Section 7.15	 	No Prepayment of Permitted Subordinated Indebtedness	 	 	59	 	
Section 7.16	 	Restrictive and Inconsistent Agreements	 	 	59	 	
 	 	 	 	 	 	 	
ARTICLE VIII EVENTS OF DEFAULT	 	 	59	 	
 	 	 	 	 	 	 	
Section 8.1	 	Events of Default	 	 	59	 	
Section 8.2	 	Acceleration; Remedies	 	 	62	 	
 	 	 	 	 	 	 	
ARTICLE IX THE AGENT	 	 	62	 	
 	 	 	 	 	 	 	
Section 9.1	 	Appointment	 	 	62	 	
Section 9.2	 	Delegation of Duties	 	 	63	 	
Section 9.3	 	Exculpatory Provisions	 	 	63	 	
Section 9.4	 	Reliance by Administrative Agent	 	 	63	 	
Section 9.5	 	Notice of Default	 	 	64	 	
Section 9.6	 	Non-Reliance on Administrative Agent and Other Lenders	 	 	64	 	
Section 9.7	 	Indemnification	 	 	64	 	
Section 9.8	 	Administrative Agent in Its Individual Capacity	 	 	65	 	
Section 9.9	 	Successor Administrative Agent	 	 	65	 	
Section 9.10	 	Nature of Duties	 	 	65	 	
Section 9.11	 	Quebec Security	 	 	66	 	
 	 	 	 	 	 	 	
ARTICLE X MISCELLANEOUS	 	 	66	 	
 	 	 	 	 	 	 	
Section 10.1	 	Amendments, Waivers and Release of Collateral	 	 	66	 	
Section 10.2	 	Substitution of Lenders	 	 	68	 	
Section 10.3	 	Notices	 	 	68	 	
Section 10.4	 	No Waiver; Cumulative Remedies	 	 	69	 	
Section 10.5	 	Survival of Representations and Warranties	 	 	70	 	
Section 10.6	 	Payment of Expenses and Taxes; Indemnification	 	 	70	 	
Section 10.7	 	Successors and Assigns; Participations; Purchasing Lenders	 	 	71	 	
Section 10.8	 	Adjustments; Set-off	 	 	73	 	
Section 10.9	 	Table of Contents and Section Headings	 	 	74	 	
Section 10.10	 	Counterparts	 	 	74	 	
Section 10.11	 	Effectiveness	 	 	74	 	
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TABLE OF CONTENTS
 	 	 	 	 	 	 	
 	 	 	 	Page	 	
Section 10.12	 	Severability	 	 	74	 	
Section 10.13	 	Integration	 	 	74	 	
Section 10.14	 	Consent to Jurisdiction	 	 	75	 	
Section 10.15	 	Governing Law	 	 	75	 	
Section 10.16	 	Confidentiality	 	 	76	 	
Section 10.17	 	Acknowledgments	 	 	76	 	
Section 10.18	 	USA Patriot Act	 	 	77	 	
Section 10.19	 	Joint and Several Liability	 	 	77	 	
Section 10.20	 	Proceeds of Crime	 	 	77	 	
 	 	 	 	 	 	 	
ARTICLE XI GUARANTY	 	 	78	 	
 	 	 	 	 	 	 	
Section 11.1	 	The Guaranty	 	 	78	 	
Section 11.2	 	Bankruptcy	 	 	78	 	
Section 11.3	 	Continuing Guaranty	 	 	79	 	
Section 11.4	 	Nature of Liability	 	 	79	 	
Section 11.5	 	Independent Obligation	 	 	79	 	
Section 11.6	 	Authorization	 	 	79	 	
Section 11.7	 	Reliance	 	 	80	 	
Section 11.8	 	Stay of Acceleration	 	 	80	 	
Section 11.9	 	Waiver	 	 	80	 	
Section 11.10	 	Confirmation of Payment	 	 	81	 	
 iv 

 

SCHEDULES
 	 	 	
Schedule 1.1(a)	 	Material Royalties	
Schedule 1.1(b)	 	Lenders’ Administrative Details Schedule	
Schedule 1.1(c)	 	Royalty Interests (Non-Material Royalties)	
Schedule 1.1(d)	 	Liens	
Schedule 3.4(b)	 	Project Governmental Approvals	
Schedule 3.4(c)	 	Compliance Exceptions	
Schedule 3.5	 	Litigation	
Schedule 3.9	 	Subsidiaries	
Schedule 3.12	 	Royalty Agreement Exceptions	
Schedule 3.19	 	Material Contract Exceptions	
Schedule 6.9	 	Insurance	
Schedule 7.1	 	Existing Indebtedness	
Schedule 7.5	 	Permitted Dispositions	
Schedule 7.7	 	Debt Investments	
EXHIBITS
 	 	 	
Exhibit A	 	Form of Assignment Agreement	
Exhibit B	 	Form of Joinder Agreement	
Exhibit C	 	Form of Promissory Note	
Exhibit D	 	Form of Notice of Borrowing	
Exhibit E	 	Form of Pledge Agreement	
Exhibit F	 	Form of Security Agreement	
Exhibit G	 	Form of Secretary’s Certificate	
Exhibit H	 	Form of Officer’s Certificate	
Exhibit I	 	Form of Quarterly Compliance Certificate	
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AMENDED AND RESTATED TERM LOAN FACILITY AGREEMENT
     This AMENDED AND RESTATED TERM LOAN FACILITY AGREEMENT (together with all amendments, restatements, amendments and restatements, modifications, revisions, increases, supplements, extensions, continuations, replacements or refinancings from time to time in accordance with the terms hereof, the “ Agreement ”) dated as of March 26, 2010 (the “ Execution Date ”), is by and among ROYAL GOLD, INC., a corporation organized and existing under the laws of the State of Delaware, as a borrower (“ Royal Gold ” or “ Borrower ”), 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 (“ RGLD Canada ”), HIGH DESERT MINERAL RESOURCES, INC., a corporation organized and existing under the laws of the State of Delaware, as a guarantor (“ High Desert ”), those additional guarantors from time to time party hereto, as guarantors (the “ Additional Guarantors ”) (with each of RG Chile, RGLD Canada, High Desert, and the Additional Guarantors individually referred to herein as a “ Guarantor ” and collectively referred to herein as the “ Guarantors ”), HSBC BANK USA, NATIONAL ASSOCIATION, a national banking association organized under the laws of the United States (“ HSBC Bank ”), as a lender, THE BANK OF NOVA SCOTIA, a bank organized and existing under the laws of Canada (“ Scotia ”), as a lender, and those banks and financial institutions identified as a “Lender” on the signature pages hereto and such other banks or financial institutions as may from time to time become parties to this Agreement, as lenders (the “ Additional Lenders ”) (with each of HSBC Bank, Scotia and the Additional Lenders individually referred to herein as a “ Lender ” and collectively the “ Lenders ”), HSBC Bank, as administrative agent for the Lenders hereunder (in such capacity, the “ Administrative Agent ”), HSBC SECURITIES (USA) Inc., a corporation organized under the laws of the United States (“ HSBC Securities ”), as the sole lead arranger (in such capacity, the “ Sole Lead Arranger ”).
Recitals
     A. The Borrower, the Guarantors, the Lenders, the Administrative Agent and the Sole Lead Arranger entered into that certain Term Loan Facility Agreement dated as of January 20, 2010 (the “ Existing Credit Agreement ”) whereby the Lenders made available to the Borrower a term loan in the amount of One Hundred Million Dollars ($100,000,000) (the “ Existing Committed Amount ”), the proceeds of which were used by the Borrower to fund the acquisition of all of the issued and outstanding common shares of International Royalty Corporation, a corporation organized and existing under the laws of Canada (“ IRC ”) pursuant to the terms and conditions set forth in that certain Arrangement Agreement, including the Plan of Arrangement (the “ Plan of Arrangement ”) dated December 17, 2009 by and between Royal Gold and IRC (the “ Arrangement ”).
     B. On February 17, 2010 (the “ Initial Funding Date ”), the Borrower borrowed one hundred percent (100%) of the Existing Committed Amount to fund the Arrangement (the “ Initial Loan ”) and used such proceeds to consummate the Arrangement on February 22, 2010.

 

     C. The Borrower and the Lenders now desire to (i) extend the maturity date of the Existing Credit Agreement, (ii) increase the Committed Amount to One Hundred Thirty Million Dollars ($130,000,000), and (iii) to otherwise amend, restate, modify and continue the Existing Credit Agreement as provided in this Agreement.
     D. This Agreement and the Obligations are secured by certain real and personal property and assets owned by the Credit Parties, including royalties and equity interests, all as further described herein and in the Security Documents. Each of the Guarantors shall unconditionally and irrevocably guaranty the payment and performance of all obligations hereunder and under the other Credit Documents.
     E. Effective as of the Execution Date, the Existing Credit Agreement is amended, continued and restated in its entirety as set forth in this Agreement.
Agreement
     NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
      Section 1.1 Defined Terms.
     As used in this Agreement, terms defined in the preamble to this Agreement have the meanings therein indicated, and the following terms have the following meanings:
     “ Additional Guarantors ” shall have the meaning set forth in the preamble to this Agreement.
     “ Additional Lenders ” shall have the meaning set forth in the preamble to this Agreement and includes any successors in such capacity.
     “ Administrative Agent ” shall have the meaning set forth in the preamble to this Agreement and includes any successors in such capacity.
     “ Advance ” means the advance by a Lender to the Borrower of a Loan in an amount equal to the amount of its Commitment Percentage of the Committed Amount.
     “ Affected Lender ” shall have the meaning set forth in Section 10.2 .
     “ Affiliate ” shall mean as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, a Person shall be deemed to be “controlled by” a Person if such Person possesses, directly or indirectly, power either (a) to vote 10% or more of the securities having ordinary voting power for the election of directors of such Person or (b) to direct or cause the direction of the management and policies of such Person whether by contract or otherwise. Notwithstanding
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the foregoing, no Agent or Lender shall be deemed an Affiliate of a Borrower solely by reason of the relationship created by the Credit Documents.
     “ Agent ” or “ the Administrative Agent ” shall mean a reference to the Administrative Agent and the Syndication Agent, collectively or individually, as such reference requires.
     “ Agreement ” or “ Credit Agreement ” shall mean this Amended and Restated Credit Agreement, as amended, restated, amended and restated, modified, revised, increased, supplemented, extended, continued, replaced from time to time in accordance with its terms together with all Schedules and Exhibits hereto.
     “ AML Legislation ” has the meaning set out in Section 10.20 .
     “ Andacollo Royalty ” shall mean that certain Royalty identified as the Andacollo Royalty on Schedule 1.1(a) and as described in detail therein.
     “ Applicable Percentage ” equals:
 	 	 	 	 	
Period	 	Applicable Percentage	
Initial Funding Date — August 16, 2011	 	 	2.25	%	
August 17, 2011 — February 16, 2012	 	 	2.75	%	
February 17, 2012 — August 16, 2012	 	 	3.25	%	
August 17, 2012 — February 17, 2013	 	 	3.75	%	
     “ Applicable Rate ” shall mean an interest rate per annum equal to the sum of the LIBOR Rate plus the Applicable Percentage.
     “ Applicable Reserve Percentage ” shall mean for any day, the percentage (expressed as a decimal and rounded upwards, if necessary, to the next higher 1/100th of 1%) which is in effect for such day as prescribed by any banking authority or other applicable Governmental Authority (or any successor) to which any Lender is subject for determining the maximum reserve requirement (including without limitation any basic, supplemental or emergency reserves) for purposes of making a Loan at the LIBOR Rate or any other category of deposits or liabilities by reference to which the LIBOR Rate is determined. The Applicable Reserve Percentage shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.
     “ Approved Bank ” shall mean (a) any commercial bank of recognized standing having capital and surplus in excess of Two Hundred Fifty Million Dollars ($250,000,000) or (b) any bank whose short-term commercial paper rating from S&P is at least A-1 or the equivalent thereof, or from Moody’s is at least P-1 or the equivalent thereof, or from Dominion Bond Rating Service Limited is at least R-1 or the equivalent thereof.
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     “ Approved Fund ” shall mean any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender, or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
     “ Arrangement ” shall have the meaning set forth in the Recitals to this Agreement.
     “ Assignment Agreement ” shall mean an Assignment Agreement, substantially in the form of Exhibit A .
     “ Bankruptcy Code ” shall mean the Bankruptcy Code in Title 11 of the United States Code, as amended, modified, succeeded or replaced from time to time.
     “ Bankruptcy Laws ” shall mean the Bankruptcy Code, the Canadian Insolvency Legislation, the Chilean Bankruptcy Legislation and all other Requirements of Law pertaining or applicable to bankruptcy, insolvency, debtor relief, debtor protection, liquidation, reorganization, arrangement, receivership, moratorium, assignment for the benefit of creditors or other similar laws applicable in the United States, Chile, Canada or other applicable jurisdictions as in effect from time to time.
     “ Base Rate ” shall mean, for any day, a rate per annum equal to the greater of (a) the Prime Rate in effect on such day; (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%; or (c) the Lenders’ actual cost of funds in effect on such day, as determined by each Lender in its sole discretion and provided to the Administrative Agent. For purposes hereof: “ Prime Rate ” shall mean, at any time, the rate of interest per annum publicly announced from time to time by the Administrative Agent as its prime rate. Each change in the Prime Rate shall be effective as of the opening of business on the day such change in the Prime Rate occurs. The parties hereto acknowledge that the rate announced publicly by the Administrative Agent as its Prime Rate is an index or base rate and shall not necessarily be its lowest or best rate charged to its customers or other banks; and “ Federal Funds Effective Rate ” shall mean, for any day, the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published on the next succeeding Business Day, the average of the quotations for the day of such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it. If for any reason the Administrative Agent shall have determined (which determination shall be conclusive in the absence of manifest error) that it is unable to ascertain the Federal Funds Effective Rate, for any reason, including the inability or failure of the Administrative Agent to obtain sufficient quotations in accordance with the terms thereof, the Base Rate shall be determined without regard to clause (b) of the first sentence of this definition, as appropriate, until the circumstances giving rise to such inability no longer exist. Any change in the Base Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or in the actual cost of funds shall be effective on the opening of business on the date of such change.
     “ Base Rate Loan ” shall mean a Loan bearing interest at a rate per annum equal to the sum of (i) the Base Rate, plus (ii) the Applicable Percentage; the applicable Base Rate shall be re-determined by the Administrative Agent on each day that a change in the Base Rate occurs.
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     “ Borrower ” shall have the meaning set forth in the preamble to this Agreement.
     “ Business Day ” shall mean a day other than a Saturday, Sunday or other day on which commercial banks in Denver, Colorado, New York, New York and Toronto, Ontario are authorized or required by law to close.
     “ Canadian Credit Party ” means any Credit Party incorporated or otherwise organized under the laws of Canada or any province or territory thereof.
     “ Canadian Income Tax Act ” means the Income Tax Act (Canada), as amended from time to time.
     “ Canadian Insolvency Legislation ” shall mean the Bankruptcy and Insolvency Act (Canada), the Companies’ Creditors Arrangement Act (Canada), as amended from time to time, and all other Requirements of Law pertaining or applicable to bankruptcy, insolvency, debtor relief, debtor protection, winding up, liquidation, reorganization, arrangement, receivership, moratorium, relief of debts, assignment for the benefit of creditors or other similar laws applicable in Canada or any other applicable jurisdictions as in effect from time to time.
     “ Canadian Pension Plan ” shall mean a “registered pension plan”, as that term is defined in subsection 248(1) of the Canadian Income Tax Act, which is or was sponsored, administered or contributed to, or required to be contributed to by, any Credit Party or under which any Credit Party has any actual or potential liability.
     “ Canadian Pledge Agreement ” shall mean that certain Pledge, Security and Subordination Agreement dated as of January 20, 2010 made by the Borrower in favor of the Administrative Agent, together with all amendments, restatements, amendments and restatements, modifications, revisions, increases, supplements, extensions, continuations, replacements or refinancings from time to time in accordance with the terms thereof.
     “ Canadian Pledge Amendment ” shall mean that certain amendment to the Canadian Pledge Agreement dated as of the Execution Date.
     “ Canadian Security Agreement ” shall mean that certain General Security Agreement made as of January 20, 2010 by RGLD Canada in favor of the Administrative Agent, together with all amendments, restatements, amendments and restatements, modifications, revisions, increases, supplements, extensions, continuations, replacements or refinancings from time to time in accordance with the terms thereof.
     “ Canadian Security Amendment ” shall mean that certain amendment to the Canadian Security Agreement dated as of the Execution Date.
     “ Capital Expenditure ” shall mean, for any period, all capital expenditures of the Credit Parties and their Subsidiaries on a Consolidated basis for such period, as determined in accordance with GAAP and reflected on the Consolidated balance sheet of the Borrower.
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     “ Capital Lease ” shall mean any lease of property, real or personal, the obligations with respect to which are required to be capitalized on a balance sheet of the lessee in accordance with GAAP.
     “ Capital Lease Obligations ” shall mean the capitalized lease obligations relating to a Capital Lease determined in accordance with GAAP.
     “ Capital Stock ” shall mean (i) in the case of a corporation, capital stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of capital stock, (iii) in the case of a partnership, partnership interests (whether general or limited), (iv) in the case of a limited liability company, membership interests or social interests and (v) any other right, interest, participation or classification similar to the foregoing that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.
     “ Cash Equivalents ” shall mean (i) securities issued or directly and fully guaranteed or insured by Canada or the United States of America or any agency or instrumentality thereof having maturities of not more than twelve (12) months from the date of acquisition (“ Government Obligations ”), (ii) Canadian dollar denominated or Dollar denominated time deposits, certificates of deposit, Eurodollar time deposits and Eurodollar certificates of deposit of an Approved Bank, in each case with maturities of not more than three hundred sixty four (364) days from the date of acquisition, (iii) commercial paper and variable or fixed rate notes issued by any Approved Bank (or by the parent company thereof), or any variable rate notes issued by, or guaranteed by any domestic corporation rated by two out of three of the following ratings agencies as A-1 (or the equivalent thereof) or better by S&P, or P-1 (or the equivalent thereof) or better by Moody’s, or R-1 (or the equivalent thereof) or better by Dominion Bond Rating Service Limited, and maturing within six (6) months of the date of acquisition, (iv) repurchase agreements with a bank or trust company (including a Lender) or a recognized securities dealer having capital and surplus in excess of Five Hundred Million Dollars ($500,000,000) for direct obligations issued by or fully guaranteed by Canada or the United States of America, (v) obligations of any province of Canada or state of the United States or any political subdivision thereof for which the payment of the principal, interest and redemption price shall have been arranged by irrevocably deposited government obligations maturing as to principal and interest at times and in amounts sufficient to provide such payment, (vi) auction preferred stock rated by two (2) out of three (3) of the following ratings agencies in the highest short-term credit rating category by S&P, Moody’s or Dominion Bond Rating Service Limited and (vii) shares of money market mutual or similar funds that (A) invest exclusively in assets satisfying the requirements of clauses (i) through (vi) of this definition or (B) comply with Rule 2a-7 of the Investment Company Act of 1940.
     “ Change of Control ” shall mean the occurrence of any of the following events: (a) any “person” or “group” (within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act becomes the “beneficial owner” (as defined in Rule l3d-3 under the Securities Exchange Act) of more than twenty five percent (25%) of then outstanding Voting Stock of a Borrower, measured by voting power rather than the number of shares, or (b) Continuing Directors shall cease for any reason to constitute a majority of the members of the board of directors of a Borrower then in office, or (c) the Borrower or the Guarantors shall cease to
 6 

 

directly or indirectly own and control the Capital Stock that each of them has pledged to the Administrative Agent pursuant to a Pledge Agreement.
     “ Chilean Bankruptcy Legislation ” shall mean Chapter IV of the Chilean Commercial Code (Article 1 through Article 263) and Law N° 18.175 of Superintendency of Bankruptcy (“ Superintendencia de Quiebras ”), as amended from time to time, and all other Requirements of Law pertaining or applicable to bankruptcy, insolvency, debtor relief, debtor protection, winding up, liquidation, reorganization, arrangement, receivership, moratorium, relief of debts, assignment for the benefit of creditors or other similar laws applicable in Chile or any other applicable jurisdictions as in effect from time to time.
     “ Chilean Security Documents ” shall mean each Pledge Agreement delivered to the Administrative Agent in respect of the ownership interests in RG Chile, each Security Agreement delivered to the Administrative Agent by RG Chile with respect to the Pascua-Lama, El Toqui, and Andacollo Royalties and any other property subject thereto; the fianza y codeuda solidaria agreement to be executed in Chile by public deed in order to declare the joint and several liability of RG Chile in accordance with Section 10.19 , and each other Security Document associated with the foregoing.
     “ Collateral ” shall mean a collective reference to the collateral which is identified in, and at any time will be, or is intended to be, subject to or covered by, a Security Document and any other property or assets of a Credit Party, whether tangible or intangible, whether real or personal and whether now or hereafter acquired, that may from time to time secure the Obligations, including the Material Royalties.
     “ Collateral Requirement ” shall have the meaning set forth in Section 4.3 .
     “ COMEX ” shall mean the division of the New York Mercantile Exchange on which commodities, futures and options are traded, which was formerly known as the Commodity Exchange.
     “ Commitment ” shall mean, with respect to each Lender, the commitment of such Lender to make a portion of the Loan in an aggregate principal amount at any time outstanding up to an amount equal to such Lender’s Commitment Percentage of the Committed Amount.
     “ Commitment Date ” shall mean December 16, 2009.
     “ Commitment Percentage ” shall mean, for each Lender, the percentage identified as its Commitment Percentage on the Lenders’ Administrative Details Schedule or in the Assignment Agreement pursuant to which such Lender became a Lender hereunder, as such percentage may be modified in connection with any assignment made in accordance with the provisions of Section 10.7(c) .
     “ Committed Amount ” shall mean the principal amount of the Loan to be made by the Lenders hereunder, subject to the terms and conditions herein, at any time, with such Committed Amount at the Execution Date being equal to One Hundred Thirty Million Dollars ($130,000,000).
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     “ Consolidated ” or “ consolidated ” shall mean, with reference to any term defined herein, such term as applied to the accounts of Royal Gold and its Subsidiaries, consolidated in accordance with GAAP.
     “ Consolidated EBITDA ” shall mean, for any period, Consolidated Net Income of Royal Gold and its Subsidiaries determined in accordance with GAAP for such period plus (a) without duplication and to the extent deducted in determining such Consolidated Net Income, the sum of (i) Consolidated Interest Expense for such period, (ii) consolidated income tax expense for such period, (iii) all amounts attributable to depreciation, amortization, depletion and non-cash reclamation for such period, and (iv) any extraordinary or non-recurring charges or non-cash charges, including non-cash charges resulting from requirements to mark-to-market derivative obligations (including commodity-linked securities) for such period (provided that any cash payment made with respect to any such non-cash charge shall be subtracted in computing Consolidated EBITDA for the period in which such cash payment is made), and minus (b) without duplication and to the extent included in determining such Consolidated Net Income, any extraordinary or non-recurring gains or non-cash gains for such period, all determined on a consolidated basis in accordance with GAAP.
     “ Consolidated Interest Expense ” shall mean, for any period, the interest expense (including imputed interest expense in respect of Capital Lease Obligations) of Royal Gold and its Subsidiaries determined on a consolidated basis in accordance with GAAP.
     “ Consolidated Net Income ” shall mean, for any period, the consolidated net income (or deficit) of Royal Gold and its Subsidiaries, after deduction of all expenses, taxes, and other proper charges, determined in accordance with GAAP.
     “ Consolidated Net Worth ” shall mean, at any time, the value of all Consolidated tangible assets of Royal Gold and its Subsidiaries which would be shown on a Consolidated balance sheet prepared as of such time in accordance with GAAP, excluding all intangible assets, minus the sum of (x) all amounts which would be shown on such balance sheets as minority interests in any such Subsidiary, plus (y) all Consolidated liabilities of Royal Gold and its Subsidiaries which would be shown on such balance sheet prepared as of such time in accordance with GAAP.
     “ Consolidated Total Indebtedness ” shall mean, without duplication, in relation to Royal Gold and its Subsidiaries, (A) the sum of (a) all obligations for borrowed money, (b) all obligations evidenced by bonds, debentures, notes or similar instruments, (c) all obligations under conditional sale or other title retention agreements relating to property acquired and under all purchase money obligations, (d) all obligations in respect of the deferred purchase price of property or services, (e) all other obligations secured by any lien on property owned or acquired, whether or not the obligations secured thereby have been assumed limited to the fair market value of the property secured thereby, (f) all guarantees of the obligations of others, (g) all Capital Lease Obligations, (h) all obligations, contingent or otherwise, as an account party (including reimbursement obligations to the issuer) in respect of letters of credit and letters of guarantee which support or secure obligations of others, (i) the aggregate of all negative mark to market amounts in respect of hedge obligations (netted against the aggregate of all positive mark to market amounts in respect of hedge obligations), (k) all obligations in respect of prepaid production arrangements, prepaid forward sale arrangements or derivative contracts in respect of
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which Royal Gold and its Subsidiaries receive upfront payments in consideration of an obligation to deliver product or commodities (or make cash payments based on the value of product or commodities) at a future time, and (l) all obligations, contingent or otherwise, in respect of bankers’ acceptances; provided , that , for all purposes herein, Consolidated Total Indebtedness, with respect to Royal Gold and its Subsidiaries, shall mean all Consolidated Total Indebtedness of Royal Gold and its Subsidiaries on a Consolidated basis; provided , further , that Consolidated Total Indebtedness shall not include Indebtedness among the Credit Parties to the extent such Indebtedness would be eliminated on a Consolidated basis.
     “ Continuing Directors ” shall mean during any period of twenty four (24) consecutive months commencing after the Execution Date, individuals who at the beginning of such twenty four (24) month period were directors of a Borrower (together with any new director whose election by such Borrower’s board of directors was approved by, or whose nomination for election by such Borrower’s shareholders was recommended by, a vote of at least a majority of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously approved or recommended as described in this parenthetical).
     “ Copper ” shall mean high grade copper upon which the COMEX spot price is based.
     “ Credit Documents ” shall mean this Agreement, the Note, the Security Documents, any Assignment Agreement, any Joinder Agreement, the Existing Credit Documents, and all other agreements, documents, certificates and Instruments delivered to the Administrative Agent or any Lender by any Credit Party in connection herewith or therewith, together with all amendments, restatements, amendments and restatements, modifications, revisions, increases, supplements, extensions, continuations, replacements or refinancings from time to time in accordance with the terms thereof, as well as any other document or agreement which the Lenders and the Borrower agree is a Credit Document.
     “ Credit Party ” or “ Credit Parties ” shall mean any of the Borrower or the Guarantors, individually or collectively, as appropriate.
     “ Current Ratio ” shall mean, at any date, the ratio of (a) the current assets of Royal Gold and its Subsidiaries determined on a Consolidated basis in accordance with GAAP, to (b) the current liabilities of Royal Gold and its Subsidiaries determined on a Consolidated basis in accordance with GAAP.
     “ Debentures ” means the “Debentures” as defined in the Indenture.
     “ Debt Investments ” shall have the meaning set forth Section 7.7 .
     “ Default ” shall mean any of the events specified in Section 8.1 , whether or not any requirement for the giving of notice or the lapse of time, or both, or any other condition, has been satisfied.
     “ Default Rate ” shall mean an interest rate equal to the sum of the Applicable Rate plus two and one-half percent (2.5%) per annum.
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     “ Defaulting Lender ” shall mean, at any time, any Lender that, at such time (a) has failed to make its Advance required pursuant to the terms of this Agreement or any Assignment Agreement in accordance with the terms thereof, (b) has failed to pay to the Administrative Agent or any Lender an amount owed by such Lender pursuant to the terms of this Agreement, or (c) has been deemed insolvent or has become subject to a bankruptcy or insolvency proceeding or to a receiver, trustee or similar official.
     “ Dollars ” and “ $ ” shall mean dollars in lawful currency of the United States of America.
     “ Eligible Assignee ” shall mean (a) a Lender, (b) an Affiliate of a Lender, and (c) any other Person (other than a natural person) approved by (i) the Administrative Agent and (ii) unless an Event of Default has occurred and is continuing, the Borrower (each such approval not to be unreasonably withheld or delayed); provided that notwithstanding the foregoing, Eligible Assignee shall not include any Credit Party or any Affiliate or Subsidiary thereof.
     “ Employee Benefit Plan ” shall mean any pension plan or other similar employee benefit plan regulated by or within the meaning of ERISA, Decree Law 3.500 of the Republic of Chile and any other similar legislation pursuant to which any Credit Party establishes a pension for or otherwise makes contributions in respect of its employees, but does not include a Canadian Pension Plan.
     “ Environmental Laws ” shall mean any and all applicable Requirements of Law regulating or relating to pollution or protection of human health or the environment, as now or hereafter in effect, including Requirements of Law regulating or relating to emissions, discharges, releases or threatened releases of Materials of Environmental Concern, pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes into the environment (including 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, and the applicable World Bank Guidelines and Criteria and International Finance Corporation Guidelines, each as in effect from time to time.
     “ ERISA ” shall mean 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 ” shall mean any Person who together with a Borrower 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.
     “ Event of Default ” shall mean any of the events specified in Section 8.1 .
     “ Execution Date ” has the meaning set forth in the preamble to this Agreement.
     “ Existing Credit Agreement ” shall have the meaning set forth in the Recitals to this Agreement.
     “ Existing Credit Documents ” shall mean the Existing Credit Agreement, the Original Note, the Existing Security Documents, the Intercreditor Agreement, the Fee Letter and all other
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agreements, documents, certificates and Instruments delivered to the Administrative Agent or any Lender by any Credit Party in connection with the Existing Credit Agreement, together with all amendments, restatements, amendments and restatements, modifications, revisions, increases, supplements, extensions, continuations, replacements or refinancings from time to time in accordance with the terms thereof, as well as any other document or agreement which the Lenders and the Borrower agree is an Existing Credit Document.
     “ Existing Security Documents ” shall mean the RGLD Canada Security Documents, the Subordination Agreement, and any other agreement, assignment, document, power-of-attorney, public deed, or other Instrument executed and delivered in connection with (i) the granting, attachment, formalization and perfection of the Administrative Agent’s security interests and Liens arising thereunder, including UCC financing statements, PPSA financing statements and other similar registrations, filings or instruments, (ii) the pledge or subordination of Indebtedness to or in favor of the Administrative Agent arising thereunder or (iii) any other mortgage, deed, security, subordination, guaranty or support agreement or arrangement with respect to the Obligations executed in connection with the Existing Credit Agreement or any Existing Credit Document, together with all amendments, restatements, amendments and restatements, modifications, revisions, supplements, extensions, continuations, and replacements thereof in accordance with its terms (specifically including, but not limited to, any PPSA extensions necessary or desirable to reflect the Supplemental Loan and the amendments made hereunder); provided , however , no such Security Agreement, Pledge Agreement, Subordination Agreement, nor any other agreement, assignment, document, power-of-attorney, public deed, or other Instrument shall constitute an Existing Security Document if it has been terminated in accordance with the requirements of this Agreement.
     “ Expropriation Event ” shall mean the appropriation, confiscation, expropriation, cancellation, seizure or nationalization (by Requirement of Law, intervention, court order, condemnation, exercise of eminent domain or other action or form of taking) of ownership or control of a Credit Party or any of its Subsidiaries or of any Project or any substantial portion thereof, or any substantial portion of the rights related thereto, or any substantial portion of the economic value thereof, or which prevents or materially interferes with the ability of a Person to own or operate the property subject to such action, including by the imposition of any Tax, fee, charge or royalty.
     “ Fee Letter ” shall mean the letter from HSBC Securities dated December 16, 2009, and any other agreements among the parties pertaining to the payment of fees to the Administrative Agent or the Lenders, as each may be amended, modified or otherwise supplemented.
     “ Fund ” shall mean any Person (other than a natural person) that is engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its activities.
     “ Funding Date ” shall mean the date the conditions to funding set forth in Section 5.1 have been satisfied and the Lenders advance the remaining proceeds of the Loan to the Borrower.
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     “ GAAP ” shall mean generally accepted accounting principles in effect in the United States applied on a consistent basis, subject , however , to the provisions of Section 1.3 for the purpose of determination of compliance with the financial covenants set out in Section 6.15 .
     “ Gold ” shall mean gold of minimum purity of at least 0.995 fineness conforming in all respects with the requirements for good delivery on the London Bullion Market.
     “ Governmental Approvals ” shall mean any authorization, license, permit, consent, approval, lease, ruling, certification, exemption, filing, variance, decree, sanction, publication, declaration or registration, or other action whether written or oral, of, by, from or on behalf of any Governmental Authority.
     “ Governmental Authority ” shall mean the government of any nation, and any provincial, territorial, divisional, state, county, regional, city or other political subdivision thereof, and any tribal, aboriginal or native government, and any entity, court, arbitrator or board of arbitrators, agency, department, commission, board, bureau, regulatory authority or other instrumentality of any of them exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government or Requirements of Law, and any securities exchange or securities regulatory authority to which a Credit Party is subject.
     “ Guarantor ” shall mean RG Chile, RGLD Canada until such time as RGLD Canada is released from its obligations under the Credit Documents in accordance with the requirements of this Agreement, High Desert, and any other Person that executes a Joinder Agreement, together with their successors and permitted assigns.
     “ Guaranty ” shall mean the guaranty of the Guarantors set forth in Article XI .
     “ Guaranty Obligations ” shall mean, with respect to any Person, without duplication, any obligations of such Person (other than endorsements in the ordinary course of business of negotiable instruments for deposit or collection) guaranteeing or intended to guarantee any Indebtedness of any other Person in any manner, whether direct or indirect, and including without limitation any obligation in respect of Indebtedness, whether or not contingent, (i) to purchase any such Indebtedness or any property constituting security therefor, (ii) to advance or provide funds or other support for the payment or purchase of any such Indebtedness or to maintain working capital, solvency or other balance sheet condition of such other Person (including without limitation keep well agreements, maintenance agreements, comfort letters or similar agreements or arrangements) for the benefit of any holder of Indebtedness of such other Person, (iii) to lease or purchase Property, securities or services primarily for the purpose of assuring the holder of such Indebtedness, or (iv) to otherwise assure or hold harmless the holder of such Indebtedness against loss in respect thereof. The amount of any Guaranty Obligation hereunder shall (subject to any limitations set forth therein) be deemed to be an amount equal to the lesser of (a) the outstanding principal amount (or maximum principal amount, if larger) of the Indebtedness in respect of which such Guaranty Obligation is made and (b) the maximum amount for which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such Guaranty Obligation.
     “ Hedging Agreement ” shall mean, with respect to any Person, any agreement or transaction entered into to protect such Person against fluctuations in the price of gold, silver or
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other metals, interest rates, currency, raw materials, fuel or commodity values, including any forward sales, spot deferred sales, options, swaps, price fixing commitment, interest rate swap, cap or collar agreement or similar arrangement between such Person and one or more counterparties, any foreign currency exchange agreement, currency protection agreements, commodity purchase or option agreements or other interest or exchange rate or commodity price hedging agreements or other similar agreements or arrangements.
     “ High Desert ” shall have the meaning given thereto in the Preamble.
     “ HSBC Bank ” shall have the meaning set forth in the preamble to this Agreement and includes any successors in such capacity.
     “ HSBC Securities ” shall have the meaning set forth in the preamble to this Agreement and includes any successors in such capacity.
     “ Indebtedness ” shall mean, with respect to any Person, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes, indentures or similar instruments, or upon which interest payments are customarily made, (c) all obligations of such Person under conditional sale or other title retention agreements relating to property purchased by such Person (other than customary reservations or retentions of title under agreements with suppliers entered into in the ordinary course of business), (d) all obligations of such Person issued or assumed as the deferred purchase price of property or services purchased by such Person (other than trade debt incurred in the ordinary course of business and due within six (6) months of the incurrence thereof) which would appear as liabilities on a balance sheet of such Person, (e) all obligations of such Person under take-or-pay or similar arrangements or under commodities agreements, (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on, or payable out of the proceeds of production from, property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed, (g) all Guaranty Obligations of such Person with respect to Indebtedness of another Person, (h) the principal portion of all Capital Lease Obligations of such Person, (i) all net payment obligations of such Person under Hedging Agreements, (j) the maximum amount of all letters of credit issued or bankers’ acceptances facilities created for the account of such Person and, without duplication, all drafts drawn thereunder (to the extent unreimbursed), (k) all preferred Capital Stock issued by such Person and which by the terms thereof could be (at the request of the holders thereof or otherwise) subject to mandatory sinking fund payments, redemption or other acceleration, (l) the principal balance outstanding under any synthetic lease, tax retention operating lease, off-balance sheet loan or similar off-balance sheet financing product and (m) the Indebtedness of any partnership or unincorporated joint venture in which such Person is a general partner or a joint venturer; provided however that Indebtedness shall not include Indebtedness among the Credit Parties to the extent such Indebtedness would be eliminated on a Consolidated basis.
     “ Indenture ” shall mean the Trust Indenture made as of February 22, 2005 among IRC, Archean Resources Ltd., a corporation incorporated under the laws of Newfoundland and Labrador, and CIBC Mellon Trust Company, a trust company existing under the laws of Canada.
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     “ Information ” shall have the meaning set forth in Section 10.16 .
     “ Initial Funding Date ” shall have the meaning set forth in the Recitals to this Agreement.
     “ Initial Loan ” shall have the meaning set forth in the Recitals to this Agreement.
     “ Insolvency Proceeding ” shall mean any proceeding seeking to adjudicate a Person an insolvent, seeking a receiving order against under any Bankruptcy Law, or seeking liquidation, dissolution, winding-up, reorganization, compromise, arrangement, adjustment, protection, moratorium, relief or composition of such Person or its debts or a stay of proceedings of such Person’s creditors generally (or any class of creditors) or any other relief, under any federal, state provincial or foreign law now or hereafter in effect relating to bankruptcy, winding-up, insolvency, reorganization, receivership, plans of arrangement or relief or protection of debtors (including the Bankruptcy and Insolvency Act (Canada), the Companies’ Creditors Arrangement Act (Canada), the Bankruptcy Code and any similar legislation in any jurisdiction) or at common law or in equity.
     “ Instrument ” shall mean 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.
     “ Intercreditor Agreement ” shall mean that certain Intercreditor Agreement dated as of January 20, 2010 among the Borrower, the Guarantors and the Lenders, and the “Borrowers” and the “Lenders” each as defined in the Revolving Credit Agreement.
     “ Interest Coverage Ratio ” shall mean, on any date, the ratio of (a) Consolidated EBITDA to (b) Consolidated Interest Expense, in each case, for the four (4) most recently completed fiscal quarters most recently ended on or prior to such date.
     “ Interest Payment Date ” shall mean (a) with respect to an Interest Period of three (3) months or less, the last day of such Interest Period, or (b) with respect to an Interest Period longer than three (3) months, the day that is three (3) months after the first day of such Interest Period and the last day of such Interest Period.
     “ Interest Period ” shall mean, with respect to the Loan on and after the Funding Date,
     (i) the period commencing on the Funding Date and ending one (1), two (2), three (3) or six (6) months thereafter, as selected by the Borrower in the Notice of Borrowing;
     (ii) thereafter each period commencing on the last day of the immediately preceding Interest Period and ending one (1), two (2) or three (3) months thereafter, or of a longer period of days if available and agreed to by the Lenders, as selected by the Borrower by irrevocable notice to the Administrative Agent not less than three (3) Business Days prior to the last day of the then current Interest Period with respect thereto;
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      provided that the foregoing provisions are subject to the following:
     (A) if any Interest Period would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Business Day;
     (B) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the relevant calendar month;
     (C) if the Borrower shall fail to give notice as provided above, the Borrower shall be deemed to have selected an Interest Period of one (1) month; and
     (D) no Interest Period shall extend beyond the Maturity Date.
     “ Investment ” shall mean all investments, in cash or by delivery of property made, directly or indirectly in or to any Person, whether by acquisition of shares of Capital Stock, property, assets, indebtedness or other obligations or securities or by loan, credit advance, capital contribution or otherwise.
     “ IRC ” shall have the meaning set forth in the Recitals to this Agreement.
     “ Joinder Agreement ” shall mean a Joinder Agreement substantially in the form of Exhibit B , executed and delivered by a new or additional Guarantor.
     “ Lender ” shall have the meaning set forth in the preamble to this Agreement.
     “ Lenders’ Administrative Details Schedule ” shall mean, with respect to any Lender, Schedule 1.1(b) (as revised or updated by any Lender from time to time) containing such Lender’s contact information for purposes of notices provided under this Credit Agreement and account details for purposes of payments made to such Lender under this Credit Agreement.
     “ Leverage Ratio ” shall mean, on any date, the ratio of (a) Consolidated Total Indebtedness as of such date to (b) Consolidated EBITDA for the period of four (4) consecutive fiscal quarters most recently ended on or prior to such date.
     “ LIBOR ” shall mean, for a Loan for any Interest Period therefor, a rate of interest per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the rate per annum appearing on Telerate Page 3750 (or any successor page) as the London interbank offered rate for deposits in Dollars at approximately 11:00 A.M. (London time) two (2) Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period. If for any reason such rate is not available, the term “LIBOR” shall mean, for a Loan for any Interest Period therefor, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the London interbank offered rate for deposits in Dollars at
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approximately 11:00 A.M. (London time) two (2) Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period; provided , however , if more than one rate is specified on Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of all such rates (rounded upwards, if necessary, to the nearest 1/100 of 1%). If, for any reason, neither of such rates is available, then “LIBOR” shall mean the rate per annum at which, as determined by the Administrative Agent, Dollars in an amount comparable to a Loan then requested are being offered to leading banks at approximately 11:00 A.M. London time, two (2) Business Days prior to the commencement of the applicable Interest Period for settlement in immediately available funds by leading banks in the London interbank market for a period equal to the Interest Period selected.
     “ LIBOR Lending Office ” shall mean, initially, the office of each Lender designated as such Lender’s LIBOR Lending Office shown on the Lenders’ Administrative Details Schedule; and thereafter, such other office of such Lender as such Lender may from time to time specify to the Administrative Agent and the Borrower as the office of such Lender at which such Lender’s Commitment Percentage of a Loan is to be made.
     “ LIBOR Rate ” shall mean a rate per annum (rounded upwards, if necessary, to the next higher 1/100th of 1%) determined by the Administrative Agent pursuant to the following formula:
 	 	 	 	 	 	 	 	 	
 	 	LIBOR Rate 	 	=	 	LIBOR
 
1.00 — Applicable Reserve Percentage	 	 	
     “ Lien ” shall mean any mortgage, deed of trust, pledge, charge, hypothecation, assignment for security purposes, deposit arrangement for security purposes, preferential right, option, encumbrance, lien (statutory or other), or other security interest or collateral arrangement, or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement and any Capital Lease having substantially the same economic effect as any of the foregoing).
     “ Lien Release Date ” shall mean the day that is thirty (30) days from the Funding Date.
     “ LIBOR Rate Loan ” shall mean a Loan bearing interest at a rate per annum equal to the Applicable Rate.
     “ Loan ” shall have the meaning set forth in Section 2.1 .
     “ Material Adverse Effect ” shall mean an effect or change, resulting or occurring from any event or occurrence of any nature whatsoever, whether individually or in the aggregate, which is materially adverse to (a) the business, assets, operations, property or condition (financial or otherwise) of the Credit Parties and their Subsidiaries taken as a whole, (b) the ability of the Credit Parties, taken as a whole, to make any payment or otherwise perform their obligations under this Agreement, any of the Note or any other Credit Document when such payments and obligations are required to be performed, (c) any Material Royalty, or (d) the validity or enforceability of this Agreement, the Note or any of the other Credit Documents or the rights or
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remedies of the Administrative Agent or the Lenders hereunder or thereunder or the perfection or priority of any Lien in favor of the Administrative Agent.
     “ Material Contract ” shall mean any contract or agreement to which any Credit Party or any of its Subsidiaries is a party as to which the breach, nonperformance, cancellation or failure to renew by any party thereto could reasonably be expected to have a Material Adverse Effect, including each Royalty Agreement relating to a Material Royalty.
     “ Material Royalties ” shall mean each of (i) the following Royalties owned, or to be owned, by RG Chile: Pascua-Lama, El Toqui, and Andacollo; and (ii) the following Royalties owned by RGLD Canada: Holt McDermott and Malartic, until such time as the Holt McDermott and Malartic Royalties no longer constitute Collateral, as described in Section 4.5 ; each of such Material Royalties is further described on Schedule 1.1(a) hereto.
     “ Materials of Environmental Concern ” shall mean any gasoline or petroleum (including crude oil or any fraction thereof) or petroleum products or any hazardous or toxic substances, materials or wastes, pollutants, contaminants or other materials or substances defined or regulated in or under any Environmental Law, including asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
     “ Maturity Date ” shall mean the first to occur of (a) February 17, 2013 or (b) any date on which the due date of the Loan is accelerated by reason of an Event of Default pursuant to Section 8.2 .
     “ Metals ” shall mean Gold, Silver, Copper, lead, zinc, molybdenum, nickel, and all other metals, minerals, ores and similar substances.
     “ Moody’s ” shall mean Moody’s Investors Service, Inc.
     “ Non-Credit Party ” shall mean a Subsidiary of a Credit Party that is not itself a Credit Party.
     “ Non-Credit Party Royalty Interest ” shall mean all Royalties now owned or hereafter acquired by or for the benefit of a Non-Credit Party.
     “ Note ” shall mean each amended and restated promissory note made by the Borrower evidencing the Loan provided pursuant hereto, substantially in the form of Exhibit C , as any such promissory note may be amended, restated, amended and restated, modified, revised, increased, supplemented, extended, continued or replaced from time to time.
     “ Notice of Borrowing ” shall mean a request for a Loan borrowing pursuant to Section 2.1(b) pursuant to a Notice of Borrowing in the form attached as Exhibit D .
     “ Obligations ” shall mean all of the obligations, indebtedness, liabilities, duties, covenants and agreements of the Borrower and the other Credit Parties to each Lender and the Administrative Agent, whenever arising and whether joint, several, or joint and several, established by or arising under or in connection with this Agreement, each Note, any of the other Credit Documents, any Hedging Agreement with a Lender (or an Affiliate of a Lender), or any
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account (including cash management accounts) or other cash management services provided by a Lender (or an Affiliate of a Lender), including, in each case, the payment of principal, interest, fees, expenses, reimbursements and indemnification obligations and all other amounts and the performance of all other obligations.
     “ Operating Lease ” shall mean, as applied to any Person, any lease (including, without limitation, leases which may be terminated by the lessee at any time) of any property (whether real, personal or mixed) which is not a Capital Lease other than any such lease in which that Person is the lessor.
     “ Original Note ” means that certain Promissory Note dated January 20, 2010 made by the Borrower in favor of the Administrative Agent in the principal amount of the Existing Committed Amount.
     “ Ounce ” shall mean a fine ounce troy weight.
     “ Outside Redemption Date ” means the date that is ten (10) days after the Funding Date.
     “ Participant ” shall have the meaning set forth in Section 10.7(b) .
     “ Patriot Act ” shall have the meaning set forth in Section 10.18 .
     “ Permitted Bylaw Amendments ” shall mean the amendments to the bylaws of RG Chile as requested by the Administrative Agent in connection with the Chilean Security Documents.
     “ Permitted Liens ” shall mean:
     (i) Liens created by or otherwise existing, under or in connection with this Agreement or the other Credit Documents;
     (ii) prior to the Lien Release Date, Liens existing as of the Execution Date to secure the Indenture, as such Liens are described on Schedule 1.1(d) ; provided that no such Lien shall at any time be extended to cover property or assets other than the property or assets subject thereto on the Execution Date;
     (iii) Purchase Money Liens securing purchase money indebtedness (and refinancings thereof) to the extent permitted under Section 7.1(c) ;
     (iv) Liens for Taxes, assessments, charges or other governmental levies not yet due or as to which the period of grace (not to exceed thirty (30) days), if any, related thereto has not expired or which are being diligently contested in good faith by appropriate proceedings, provided that adequate reserves with respect thereto are maintained on the books of the Borrower or their Subsidiaries, as the case may be, in conformity with GAAP;
     (v) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s inchoate, unperfected or other like Liens arising in the ordinary course of business which are not overdue for a period of more than twenty (20) days or which are being diligently
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contested in good faith by appropriate proceedings; provided that a reserve, bond or other appropriate provision shall have been made therefore to the reasonable satisfaction of the Administrative Agent;
     (vi) pledges or deposits in connection with workers’ compensation, unemployment insurance and other social security legislation and deposits securing liability to insurance carriers under insurance or self-insurance arrangements;
     (vii) any interest or title of a lessor under any lease entered into by any Credit Party or any Subsidiary in the ordinary course of its business and covering only the assets so leased;
     (viii) deposits and bonds to secure the performance of bids, trade contracts (other than for Consolidated Total Indebtedness), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;
     (ix) Liens existing on the Execution Date and set forth on Schedule 1.1(d) ; provided that (a) no such Lien shall at any time be extended to cover property or assets other than the property or assets subject thereto on the Execution Date and (b) the principal amount of the Indebtedness secured by such Liens shall not be increased, extended, renewed, refunded or refinanced;
     (x) Liens pursuant to the Revolving Credit Agreement made in favor of HSBC Bank or any other “Lender” thereto;
     (xi) easements, rights-of-way, zoning restrictions, minor defects or irregularities in title and other similar encumbrances which do not individually or in the aggregate interfere in any material respect with the occupation, value or use of the property to which such Lien is attached or with such Person’s activities or operations on such property;
     (xii) any Lien with respect to judgments, orders or awards to the extent such judgments, orders or awards secured thereby shall not, either individually or in the aggregate, result in an Event of Default under Section 8.1(g) ;
     (xiii) rights of setoff or bankers’ Liens upon deposits of cash or broker’s Liens upon securities accounts in favor of financial institutions, banks or other depository institutions; and
     (xiv) any Lien with respect to interests in pre-feasibility, feasibility or development stage properties not currently producing Metals; provided that such Liens do not secure Indebtedness.
     “ Permitted Subordinated Indebtedness ” shall have the meaning set forth in Section 7.1(i) .
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     “ Person ” shall mean an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature.
     “ Plan of Arrangement ” shall have the meaning set forth in the Recitals to this Agreement.
     “ Pledge Agreements ” shall mean (i) the Canadian Pledge Agreement, (ii) the Canadian Pledge Amendment, (iii) each other pledge agreement given by a Credit Party for the benefit of the Administrative Agent, substantially in the form of Exhibit E hereto, and (iv) any other pledge agreement, document, agreement, arrangement or Instrument executed by a Credit Party to secure the Obligations, in each case, together with all amendments, restatements, amendments and restatements, modifications, revisions, supplements, extensions, continuations, and replacements thereof in accordance with its terms.
     “ Principal Repayment Date ” shall have the meaning set forth in Section 2.3(a) .
     “ Products ” shall mean, without limitation, all ore, minerals, concentrate, doré bar and refined Metals produced on behalf of, or payable to, a Credit Party pursuant to a Royalty Interest from a Project Property.
     “ Project ” shall mean each mine, mining project and properties, including Project Properties, in which a Credit Party has or acquires a Royalty Interest. As of the Execution Date, the Projects include those set forth on Schedule 1.1(c) hereto.
     “ Project Managers ” shall mean the operator or manager of each Project, with the Project Manager for each Project in existence on the date hereof set forth on Schedule 1.1(c) hereto.
     “ Project Properties ” shall mean all real property right, title or interests, now owned or hereafter acquired, included in each of the Projects, which are burdened with a Royalty Interest, including all fee property, concessions, unpatented mining claims and other real property interests which are identified in any Royalty Agreement, together with all relocations, modifications, additions or amendments thereof, and all lands subject thereto.
     “ Property ” shall mean all real estate, surface and subsurface rights and interests, minerals, mineral leases, mineral rights, lands, concessions, licenses, exploration or exploitation rights, claims, water rights and other property right, title and interest, howsoever characterized or designated, that are owned, leased, operated, held or controlled, directly or indirectly, by any Borrower or any of their Subsidiaries, including all such rights and interests associated with the Projects, together with all rights, titles and interests hereafter acquired.
     “ Purchase Money Lien ” shall mean a Lien taken or reserved in personal property to secure payment of all or part of its purchase price, provided that such Lien (i) secures an amount not exceeding the purchase price of such personal property, (ii) extends only to such personal property and its proceeds, and (iii) is granted prior to or within 30 days after the purchase of such personal property.
     “ Purchasing Lenders ” shall have the meaning set forth in Section 10.7(c) .
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     “ Required Lenders ” shall mean (a) for so long as any one Lender and its Affiliates control fifty percent (50%) or more of the Commitment Percentage, those Lenders holding in the aggregate greater than 66.667% of the outstanding Loan; and (b) at any time that no Lender and its Affiliates controls fifty percent (50%) or more of the Commitment Percentage, those Lenders holding in the aggregate greater than 50.1% of the outstanding Loan; provided , however , that if any Lender shall be a Defaulting Lender at such time, then there shall be excluded from the determination of Required Lenders the principal balance of the Obligations owing to such Defaulting Lender.
     “ Requirement of Law ” shall mean each law, statute, code, ordinance, treaty, order, rule, regulation, judgment, ruling, decree, injunction, franchise, permit, certificate, license, authorization, regulation, approval or other direction of any Governmental Authority (including securities laws and regulations and the rules of any securities exchange), in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject, and as to any Person, the Certificate of Incorporation and By-laws or other organizational or governing documents of such Person.
     “ Responsible Officer ” shall mean, as to (a) a Borrower, any of the President, the Chief Executive Officer or the Chief Financial Officer or (b) any other Credit Party, any duly authorized officer thereof.
     “ Revolving Credit Agreement ” shall mean the Third Amended and Restated Credit Agreement dated as of October 30, 2008, by and among Royal Gold, as a borrower, High Desert Mineral Resources, Inc., a corporation incorporated under the laws of the State of Delaware and a wholly-owned subsidiary of Royal Gold, as a borrower, those subsidiaries of a borrower identified as a “ Guarantor ” on the signature pages thereto and such other subsidiaries of a borrower as may from time to time become a party thereto, as guarantors, those banks and financial institutions identified as a “Lender” on the signature pages thereto and such other banks or financial institutions as may from time to time become parties thereto, as lenders, HSBC Bank, as administrative agent for the lenders thereunder, HSBC Securities, as the sole lead arranger and The Bank of Nova Scotia, as the sole syndication agent, together with all amendments, restatements, amendments and restatements, modifications, revisions, increases, supplements, extensions, continuations, replacements or refinancings from time to time in accordance with its terms.
     “ Revolving Amendment ” shall mean the Consent and First Amendment to the Third Amended and Restated Credit Agreement amending the Revolving Credit Agreement and granting certain waivers as further described therein.
     “ RG Barbados Subordinated Loan ” shall mean the loan from RG Finance (Barbados) to RG Chile, in the principal amount of $275,000,000, which has been subordinated to the Obligations pursuant to the Subordination Agreement.
     “ RG Chile ” shall have the meaning set forth in the Preamble.
     “ RGLD Canada ” shall mean RGLD Gold Canada, Inc., a corporation organized and existing under the laws of British Columbia, Canada.
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     “ RGLD Canada Intercompany Loan ” shall mean the loan from Royal Gold to RGLD Canada, in the principal amount of $57,000,000.
     “ RGLD Canada Security Documents ” shall mean the Canadian Security Agreement and the Canadian Pledge Agreement, and each other Security Document associated with the foregoing, in each case until any of the foregoing has been terminated as contemplated in Section 4.5 .
     “ Royal Gold ” shall have the meaning set forth in the Preamble.
     “ Royalties ” shall mean any share of mineral production, including, gross smelter return royalties, net smelter return royalties, overriding royalties, non-participating royalties, production payments, net profit interests and all other mineral royalties of every type and characterization, whether constituting a real property or a personal property interest.
     “ Royalty Agreements ” shall mean, collectively, each of the agreements with or for the benefit of a Credit Party relating to a Royalty Interest, whether now or hereafter in existence, together with all amendments, restatements, amendments and restatements, modifications, revisions, supplements, extensions, continuations, and replacements thereof in accordance with its terms.
     “ Royalty Interests ” shall mean all Royalties now owned or hereafter acquired by or for the benefit of a Credit Party, in or relating to a Project, with the Material Royalties in existence as of the Execution Date described on Schedule 1.1(a) hereto and all other Royalties (other than the Material Royalties) in existence and held by a Credit Party as of the Execution Date described on Schedule 1.1(c) hereto, and all Metals received or receivable with respect thereto, now held or hereafter acquired by a Credit Party, whether pursuant to a Royalty Agreement or otherwise.
     “ S&P ” shall mean Standard & Poor’s Ratings Group, a division of The McGraw Hill Companies, Inc.
     “ Scotia ” shall have the meaning set forth in the preamble to this Agreement and includes any successors in such capacity.
     “ Securities Exchange Act ” shall mean the Securities Exchange Act of 1934, together with any amendment thereto or replacement thereof and any rules or regulations promulgated thereunder.
     “ Security Agreements ” shall mean (i) the Canadian Security Agreement, (ii) the Canadian Security Amendment; (iii) each other security agreement (or other equivalent Instrument, howsoever designated) given by a Credit Party for the benefit of the Administrative Agent, substantially in the form of Exhibit F hereto, covering and extending to all assets of such Credit Party, and (iv) each other Instrument whereby a Credit Party subordinates its rights to receive payment of any amounts from any other Credit Party to the complete payment in full of the Obligations, and any other security agreement or other Instrument by which the Administrative Agent obtains a Lien in or on any personal property or assets of a Credit Party to
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secure the Obligations, together with all amendments, restatements, modifications, supplements, extensions and restatements thereof in accordance with its terms.
     “ Security Documents ” shall mean the Security Agreements, the Pledge Agreements, the Existing Security Documents, the Chilean Security Documents, and any other agreement, assignment, document, power-of-attorney, public deed, or other Instrument executed and delivered in connection with (i) the granting, attachment, formalization and perfection of the Administrative Agent’s security interests and Liens arising thereunder, including UCC financing statements, PPSA financing statements and other similar registrations, filings or instruments, (ii) the pledge or subordination of Indebtedness to or in favor of the Administrative Agent, or (iii) any other mortgage, deed, security, subordination, guaranty or support agreement or arrangement with respect to the Obligations or any Credit Document, together with all amendments, restatements, amendments and restatements, modifications, revisions, supplements, extensions, continuations, and replacements thereof in accordance with its terms; provided , however , no such Security Agreement, Pledge Agreement, Subordination Agreement, nor any other agreement, assignment, document, power-of-attorney, public deed, or other Instrument shall constitute a Security Document if it has been terminated in accordance with the requirements of this Agreement.
     “ Silver ” shall mean silver of minimum purity of at least 0.999 fineness conforming in all respects with the requirements for good delivery on the London Bullion Market.
     “ Subordination Agreement ” the Subordination Agreement dated January 20, 2010 among RG Chile, RG Finance (Barbados), and the Administrative Agent regarding the subordination of the indebtedness arising or existing under the RG Barbados Subordinated Loan to the Obligations, on terms and conditions satisfactory to the Administrative Agent.
     “ Subsidiary ” shall mean, as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person. For purposes of clarity, as of the Execution Date, Crescent Valley Partners, L.P. shall be deemed a Subsidiary of Royal Gold. Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of a Borrower.
     “ Taxes ” shall mean all present and future taxes, levies, duties, imposts, deductions, charges, withholdings and other similar levies and liabilities of whatever nature, including stamp, sales, use, documentary, value added, excise, registration, property and income taxes.
     “ Transfer Effective Date ” shall have the meaning set forth in each Assignment Agreement.
     “ Voting Stock ” shall mean, with respect to any Person, Capital Stock issued by such Person the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election
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of directors (or persons performing similar functions) of such Person, even though the right so to vote has been suspended by the happening of such a contingency.
      Section 1.2 Other Definitional Provisions; Time References.
     (a) Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in the Note or other Credit Documents or any certificate or other document made or delivered pursuant hereto.
     (b) The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, subsection, Schedule and Exhibit references are to this Agreement unless otherwise specified.
     (c) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.
     (d) The word “including” means “including without limitation” or “including, but not limited to,” and does not create or denote a limitation.
     (e) Unless otherwise expressly indicated, each time reference in any Credit Document shall be to New York time.
      Section 1.3 Accounting Terms . Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared in accordance with GAAP applied on a basis consistent with the most recent audited consolidated financial statements of the Borrower delivered to the Administrative Agent; provided that, if the Borrower shall notify the Administrative Agent that they wish to amend any covenant in Section 6.15 (or the definitions used therein) to eliminate the effect of any change in GAAP on the operation of such covenant (or if the Administrative Agent notifies the Borrower that the Required Lenders wish to amend Section 6.15 or any definition used therein for such purpose), then compliance with such covenant shall be determined on the basis of GAAP in effect immediately before the relevant change in GAAP became effective, until either such notice is withdrawn or such covenant is amended in a manner satisfactory to the Borrower and the Required Lenders.
     The Borrower shall deliver to the Administrative Agent at the same time as the delivery of any annual or quarterly financial statements given in accordance with the provisions of Section 6.1 , (a) a description in reasonable detail of any material change in the application of accounting principles employed in the preparation of such financial statements from those applied in the most recently preceding quarterly or annual financial statements as to which no objection shall have been made in accordance with the provisions above and (b) a reasonable estimate of the effect on the financial statements on account of such changes in application.
      Section 1.4 Québec Matters. For purposes of any assets, liabilities or entities located in the Province of Québec and for all other purposes pursuant to which the interpretation or construction of this Agreement may be subject to the laws of the Province of Québec or a court or tribunal exercising jurisdiction in the Province of Québec, (a) “personal property” shall
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include “movable property”, (b) “real property” or “real estate” shall include “immovable property”, (c) “tangible property” shall include “corporeal property”, (d) “intangible property” shall include “incorporeal property”, (e) “security interest”, “mortgage” and “lien” shall include a “hypothec”, “right of retention”, “prior claim” and a resolutory clause, (f) all references to filing, perfection, priority, remedies, registering or recording under the Uniform Commercial Code or a Personal Property Security Act shall include publication under the Civil Code of Québec, (g) all references to “perfection” of or “perfected” liens or security interest shall include a reference to an “opposable” or “set up” lien or security interest as against third parties, (h) any “right of offset”, “right of setoff” or similar expression shall include a “right of compensation”, (i) “goods” shall include “corporeal movable property” other than chattel paper, documents of title, instruments, money and securities, (j) an “agent” shall include a “mandatary”, (k) “construction liens” shall include “legal hypothecs”; (l) “joint and several” shall include “solidary”; (m) “gross negligence or wilful misconduct” shall be deemed to be “intentional or gross fault”; (n) “beneficial ownership” shall include “ownership on behalf of another as mandatary”; (o) “easement” shall include “servitude”; (p) “priority” shall include “prior claim”; (q) “survey” shall include “certificate of location and plan”; (r) “state” shall include “province”; (s) “fee simple title” shall include “absolute ownership”; (t) “accounts” shall include “claims”. The parties hereto confirm that it is their wish that this Agreement and any other document executed in connection with the transactions contemplated herein be drawn up in the English language only and that all other documents contemplated thereunder or relating thereto, including notices, may also be drawn up in the English language only. Les parties aux présentes confirment que c’est leur volonté que cette convention et les autres documents de crédit soient rédigés en langue anglaise seulement et que tous les documents, y compris tous avis, envisagés par cette convention et les autres documents peuvent être rédigés en langue anglaise seulement.
ARTICLE II
THE LOAN; AMOUNT AND TERMS
      Section 2.1 Term Loan.
     (a)  Loan . Each Lender severally agrees, on the terms and conditions set forth in this Agreement, to loan to the Borrower funds in an aggregate amount equal to One Hundred Thirty Million Dollars ($130,000,000) or such lesser amount as shall have been actually advanced on and as of the Funding Date (the “ Loan ”) and, individually, in an amount equal to such Lender’s Commitment Percentage of the Committed Amount.
     (b)  Notice of Borrowing . The Borrower shall request the Loan by delivering a written Notice of Borrowing (or telephone notice promptly confirmed in writing by delivery of a written Notice of Borrowing, which delivery may be by facsimile) to the Administrative Agent not later than 11:00 a.m. on the third (3 rd ) Business Day prior to the Funding Date. The Notice of Borrowing shall be irrevocable and shall specify (A) that the additional proceeds of the Loan are requested, (B) the Funding Date, and (C) the Interest Period. If the Borrower shall fail to specify an Interest Period in the Notice of Borrowing, then such notice shall be deemed to be a request for an Interest Period of one (1) month. The Administrative Agent shall give notice to each Lender promptly upon receipt of each Notice of Borrowing, the contents thereof and each such Lender’s share thereof.
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     (c)  Advance . Each Lender agrees to make an Advance to the Borrower in the amount equal to such Lender’s Commitment Percentage of the Committed Amount to be advanced on the Funding Date as specified in the Notice of Borrowing. Principal payments made after the Funding Date may not be reborrowed.
     (d)  Funding . Each Lender will make an amount equal to such Lender’s Commitment Percentage of the Committed Amount available to the Administrative Agent for the account of the Borrower at the office of the Administrative Agent specified in the Lenders’ Administrative Details Schedule, or at such other office as the Administrative Agent may designate in writing, by 1:00 p.m. on the Funding Date in Dollars and in funds immediately available to the Administrative Agent. Such borrowing will then be made available to the Borrower by the Administrative Agent by crediting the account of the Borrower on the books of such office with the Committed Amount and in like funds as received by the Administrative Agent.
     (e)  Interest .
     (i) Applicable Rate . Except as set forth in Section 2.1(e)(ii) hereof, the Loan shall continue to bear interest on the outstanding principal amount thereof from the Funding Date until such Loan is paid in full, at the Applicable Rate. Each Borrower covenants and agrees to promptly pay interest on the Loan on each Interest Payment Date, with such interest payable in arrears.
     (ii) Default Rate . Upon the occurrence, and during the continuance, of an Event of Default, the principal of and, to the extent permitted by law, interest on the Loan and any other amounts owing hereunder or under the other Credit Documents shall bear interest, payable on demand, at the Default Rate.
      Section 2.2 Evidence of Indebtedness.
     (a)  Accounts and Records . The Loan shall be evidenced by one (1) or more accounts or records maintained by the Administrative Agent in the ordinary course of business. The accounts or records maintained by the Lender shall be conclusive absent manifest error of the amount of the Loan made by the Lenders to the Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Obligations.
     (b)  Note . The Borrower agrees that, in addition to such accounts or records set forth in Section 2.2(a) , to evidence their obligation to repay the Loan made hereunder, with interest accrued thereon, it shall issue and deliver to the Administrative Agent on the Funding Date the Note in the aggregate principal amount of the principal amount of the Loan. The Administrative Agent may attach schedules to the Note and endorse thereon the date, amount and maturity of the Loan and payments with respect thereto. In the event that any amount hereunder or under the Note is not paid by the Borrower when due (whether at the stated maturity, by acceleration or otherwise), the Administrative Agent may take all such actions as it sees fit to recover such amount, including, without limitation, the commencement and maintenance of proceedings.
     (c)  Effect of Account Entries . Entries made in good faith by the Administrative Agent in its account or accounts pursuant to Section 2.2(a) , shall be prima facie evidence of the
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amount of principal and interest due and payable or to become due and payable from the Borrower to the Lenders, under this Agreement and the other Credit Documents, absent manifest error; provided that the failure of the Lender to make an entry, or any finding that an entry is incorrect, in such account or accounts shall not limit or otherwise affect the obligations of the Borrower under this Agreement and the other Credit Documents.
      Section 2.3 Repayment and Prepayment.
     (a)  Repayment . On each date set forth below (each, a “ Principal Repayment Date ”), the Borrower shall repay to the Lender the respective amounts set forth opposite such Principal Repayment Date as follows:
 	 	 	 	 	
Principal	 	 	
Repayment Date	 	Amount	
May 17, 2010	 	$	6,500,000	 	
August 17, 2010	 	$	6,500,000	 	
November 17, 2010	 	$	6,500,000	 	
February 17, 2011	 	$	6,500,000	 	
May 17, 2011	 	$	6,500,000	 	
August 17, 2011	 	$	6,500,000	 	
November 17, 2011	 	$	6,500,000	 	
February 17, 2012	 	$	6,500,000	 	
May 17, 2012	 	$	6,500,000	 	
August 17, 2012	 	$	6,500,000	 	
November 17, 2012	 	$	6,500,000	 	
February 17, 2013	 	$	58,500,000	 	
provided , however, that the final principal repayment installment of the Loan shall be repaid on or before the Maturity Date and in any event shall be in an amount equal to the aggregate principal amount of the Loan outstanding on such date. Each Borrower covenants and agrees to pay the Loan in accordance with the terms of this Agreement and the Note.
     (b)  Optional Prepayments . The Borrower shall have the right to prepay the Loan in whole or in part from time to time; provided, however, that each partial prepayment of the Loan shall be in a minimum principal amount of One Million Dollars ($1,000,000) and integral multiples of Five Hundred Thousand Dollars ($500,000) in excess thereof or, if less, the unpaid balance thereof. The Borrower shall give three (3) Business Days’ irrevocable notice of prepayment to the Administrative Agent (which shall notify the Lenders thereof as soon as practicable). Each prepayment pursuant to this Section 2.3(b) shall be applied to the outstanding Loan as the Borrower may elect. All prepayments under this Section 2.3(b) shall be subject to Section 2.11 , but otherwise without premium or penalty. Interest on the principal amount prepaid shall be payable on the next occurring Interest Payment Date that would have occurred had such Loan not been prepaid or, at the request of the Administrative Agent, interest on the principal amount prepaid shall be payable on any date that a prepayment is made hereunder through the date of prepayment.
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      Section 2.4 Fees.
     (a)  Commitment Fee . In consideration of the Commitment, the Borrower shall pay to the Lenders such fees as are required by the Lenders and agreed to by the Borrower.
     (b)  Finality of Fees . All fees hereunder are fully earned and payable when due and are non-refundable.
      Section 2.5 Computation of Interest and Fees.
     (a) Interest payable hereunder and all other fees and other amounts payable hereunder shall be calculated on the basis of a three hundred sixty (360) day year for the actual days elapsed. The Administrative Agent shall as soon as practicable notify the Borrower and the Lenders of each determination of a LIBOR Rate on the Business Day of the determination thereof.
     (b) Each determination of an interest rate by the Administrative Agent pursuant to any provision of this Agreement shall be conclusive and binding on the Borrower and the Lenders in the absence of manifest error. The Administrative Agent shall, at the request of the Borrower, deliver to the Borrower a statement showing the computations used by the Administrative Agent in determining any interest rate.
     (c) It is the intent of the Lenders and the Credit Parties to conform to and contract in strict compliance with applicable usury law from time to time in effect. All agreements between the Lenders and the Credit Parties are hereby limited by the provisions of this paragraph which shall override and control all such agreements, whether now existing or hereafter arising and whether written or oral. In no way, nor in any event or contingency (including but not limited to prepayment or acceleration of the maturity of any Obligation), shall the interest taken, reserved, contracted for, charged, or received under this Agreement, under the Note or otherwise, exceed the maximum nonusurious amount permissible under any Requirement of Law. If, from any possible construction of any of the Credit Documents or any other document, interest would otherwise be payable in excess of the maximum nonusurious amount, any such construction shall be subject to the provisions of this paragraph and such interest shall be automatically reduced to the maximum nonusurious amount permitted under any Requirement of Law, without the necessity of execution of any amendment or new document. If any Lender shall ever receive anything of value which is characterized as interest on the Loan under any Requirement of Law and which would, apart from this provision, be in excess of the maximum nonusurious amount, an amount equal to the amount which would have been excessive interest shall, without penalty, be applied to the reduction of the principal amount owing on the Loan and not to the payment of interest, or refunded to the Borrower or the other payor thereof if and to the extent such amount which would have been excessive exceeds such unpaid principal amount of the Loan. The right to demand payment of the Loan or any other Indebtedness evidenced by any of the Credit Documents does not include the right to receive any interest which has not otherwise accrued on the date of such demand, and the Lenders do not intend to charge or receive any unearned interest in the event of such demand. All interest paid or agreed to be paid to the Lenders with respect to the Loan shall, to the extent permitted by any Requirement of Law, be amortized, prorated, allocated, and spread throughout the full stated term (including any renewal or
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extension) of the Loan so that the amount of interest on account of such indebtedness does not exceed the maximum nonusurious amount permitted by any Requirement of Law.
     (d) For the purposes of the Interest Act (Canada) and disclosure thereunder, whenever any interest or any fee to be paid hereunder or in connection herewith is to be calculated on the basis of a 360-day or 365-day year, the yearly rate of interest to which the rate used in such calculation is equivalent is the rate so used multiplied by the actual number of days in the calendar year in which the same is to be ascertained and divided by 360 or 365, as applicable. The rates of interest under this Agreement are nominal rates, and not effective rates or yields. The principle of deemed reinvestment of interest does not apply to any interest calculation under this Agreement.
     (e) Any provision of this Agreement that would oblige a Canadian Credit Party to pay any fine, penalty or rate of interest on any arrears of principal or interest secured by a mortgage on real property or hypothec on immovables that has the effect of increasing the charge on arrears beyond the rate of interest payable on principal money not in arrears shall not apply to such Canadian Credit Party, which shall be required to pay interest on money in arrears at the same rate of interest payable on principal money not in arrears.
     (f) If any provision of this Agreement would oblige a Canadian Credit Party to make any payment of interest or other amount payable to any Secured Party in an amount or calculated at a rate which would be prohibited by law or would result in a receipt by that Secured Party of “interest” at a “criminal rate” (as such terms are construed under the Criminal Code (Canada)), then, notwithstanding such provision, such amount or rate shall be deemed to have been adjusted with retroactive effect to the maximum amount or rate of interest, as the case may be, as would not be so prohibited by applicable law or so result in a receipt by that Secured Party of “interest” at a “criminal rate”, such adjustment to be effected, to the extent necessary (but only to the extent necessary), as follows:
     (i) first, by reducing the amount or rate of interest; and
     (ii) thereafter, by reducing any fees, commissions, costs, expenses, premiums and other amounts required to be paid which would constitute interest for purposes of section 347 of the Criminal Code (Canada).
      Section 2.6 Pro Rata Treatment and Payments.
     (a)  Pro Rata Treatment . Each payment (other than prepayments made pursuant to Section 2.3(b) ) of principal or interest under this Agreement or the Note shall be applied pro rata, first, to any fees and expenses then due and owing by the Borrower hereunder, second, to interest then due and owing hereunder and under the Note and, third, to principal then due and owing hereunder and under the Note. Each payment on account of any fees and expenses hereunder shall be made pro rata in accordance with the respective amounts due and owing. Each optional prepayment of the Loan shall be applied in accordance with Section 2.3(b) . Prepayments made pursuant to Section 2.9 shall be applied in accordance with such section. All payments (including prepayments) to be made by the Borrower on account of principal, interest and fees shall be made without defense, set-off or counterclaim and shall be made to the Administrative
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Agent for the account of the Lenders at the Administrative Agent’s office specified on the Lenders’ Administrative Details Schedule in Dollars and in immediately available funds not later than 12:00 Noon on the date when due. The Administrative Agent shall distribute such payments to the Lenders entitled thereto promptly upon receipt in like funds as received. If any payment hereunder (other than payments on the Loan) becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day, and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension. If any payment on the Loan becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day unless the result of such extension would be to extend such payment into another calendar month, in which event such payment shall be made on the immediately preceding Business Day.
     (b)  Allocation of Payments After Event of Default . Notwithstanding any other provisions of this Agreement to the contrary, after the exercise of remedies by the Administrative Agent or the Lenders pursuant to Section 8.2 (or after the Loan (with accrued interest thereon) and all other amounts under the Credit Documents shall automatically become due and payable in accordance with the terms of such Section), all amounts collected or received by the Administrative Agent or any Lender on account of the Obligations or any other amounts outstanding under any of the Credit Documents or in respect of the Collateral shall be paid over or delivered as follows:
     FIRST, to the payment of all out-of-pocket costs and expenses (including without limitation reasonable attorneys’ fees) of the Administrative Agent in connection with enforcing the rights of the Lenders under the Credit Documents and any protective advances made by the Administrative Agent with respect to the Collateral under or pursuant to the terms of the Security Documents;
     SECOND, to payment of any fees owed to the Administrative Agent;
     THIRD, to the payment of all out-of-pocket costs and expenses (including without limitation, reasonable attorneys’ and consultants’ fees) of each of the Lenders in connection with enforcing its rights under the Credit Documents or otherwise with respect to the Obligations owing to such Lender;
     FOURTH, to the payment of all of the Obligations consisting of interest and any accrued fees not paid under the foregoing;
     FIFTH, to the payment of the outstanding principal amount of the Obligations and any breakage, termination or other payments due on the Obligations, and any interest accrued thereon together with all Obligations arising under any Hedging Agreement with a Lender (or an Affiliate of a Lender) or any account (including cash management accounts) or other cash management services provided by a Lender (or an Affiliate of a Lender);
     SIXTH, to all other Obligations and all other obligations which shall have become due and payable under the Credit Documents or otherwise and not repaid pursuant to clauses “FIRST” through “FIFTH” above; and
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     SEVENTH, to the payment of the surplus, if any, to whomever may be lawfully entitled to receive such surplus.
In carrying out the foregoing, amounts received shall be applied in the numerical order provided until exhausted prior to application to the next succeeding category.
      Section 2.7 Non-Receipt of Funds by the Administrative Agent.
     (a) Unless the Administrative Agent shall have been notified in writing by the Borrower, prior to the date on which any payment is due from it hereunder (which notice shall be effective upon receipt) that the Borrower does not intend to make such payment, the Administrative Agent may assume that the Borrower has made such payment when due, and the Administrative Agent may in reliance upon such assumption (but shall not be required to) make available to each Lender on such payment date an amount equal to the portion of such assumed payment to which such Lender is entitled hereunder, and if the Borrower has not in fact made such payment to the Administrative Agent, such Lender shall, on demand, repay to the Administrative Agent the amount made available to such Lender. If such amount is repaid to the Administrative Agent on a date after the date such amount was made available to such Lender, such Lender shall pay to the Administrative Agent on demand interest on such amount in respect of each day from the date such amount was made available by the Administrative Agent to such Lender to the date such amount is recovered by the Administrative Agent at a per annum rate equal to the LIBOR Rate.
     (b) A certificate of the Administrative Agent submitted to the Borrower or any Lender with respect to any amount owing under this Section 2.7 shall be conclusive in the absence of manifest error.
      Section 2.8 Inability to Determine Interest Rate; Base Rate Loan. Notwithstanding any other provision of this Agreement, if (i) the Administrative Agent shall reasonably determine (which determination shall be conclusive and binding absent manifest error) that, by reason of circumstances affecting the relevant market, reasonable and adequate means do not exist for ascertaining LIBOR for such Interest Period, including that LIBOR quotations are unavailable or insufficient in number or (ii) the Required Lenders shall reasonably determine (which determination shall be conclusive and binding absent manifest error) that the LIBOR Rate does not adequately and fairly reflect the cost to such Lenders of funding the Loan during such Interest Period, the Administrative Agent shall forthwith give telephone notice of such determination, confirmed in writing, to the Borrower and the Lenders at least two (2) Business Days prior to the first day of such Interest Period. Until any such notice has been withdrawn by the Administrative Agent, the outstanding Loan shall be converted into a Base Rate Loan (i) on the last day of the then-current Interest Period if the Lenders may lawfully continue to maintain the Loan as a LIBOR Rate Loan to such day, or (ii) immediately if the Administrative Agent or any Lender shall determine that any Lender may not lawfully continue to maintain its Committed Percentage of the Loan as a LIBOR Rate Loan to such day.
      Section 2.9 Illegality. Notwithstanding any other provision of this Agreement, if the adoption of or any change in any Requirement of Law or in the interpretation or application thereof by the relevant Governmental Authority to any Lender shall make it unlawful for such
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Lender or its LIBOR Lending Office to make or maintain its Committed Percentage of the Loan as a LIBOR Rate Loan as contemplated by this Agreement or to obtain in the interbank eurodollar market through its LIBOR Lending Office the funds with which to make such Loan, (a) such Lender shall promptly notify the Administrative Agent and the Borrower thereof, and (b) the commitment of such Lender hereunder to make a LIBOR Rate Loan or continue its Committed Percentage of the Loan as a LIBOR Rate Loan as such shall forthwith be suspended until the Administrative Agent shall give notice that the condition or situation which gave rise to the suspension shall no longer exist. The Borrower hereby agrees to promptly pay any Lender, upon its demand, any additional amounts necessary to compensate such Lender for actual and direct costs (but not including anticipated profits) reasonably incurred by such Lender in making any repayment in accordance with this Section 2.9 including, but not limited to, any interest or fees payable by such Lender to lenders of funds obtained by it in order to make or maintain its Commitment Percentage of the Loan as a LIBOR Rate Loan hereunder. A certificate as to any additional amounts payable pursuant to this Section 2.9 submitted by such Lender, through the Administrative Agent, to the Borrower shall be conclusive in the absence of manifest error. Each Lender agrees to use reasonable efforts (including reasonable efforts to change its LIBOR Lending Office) to avoid or to minimize any amounts which may otherwise be payable pursuant to this Section 2.9 ; provided , however , that such efforts shall not cause the imposition on such Lender of any additional costs or legal or regulatory burdens deemed by such Lender in its sole discretion to be material.
      Section 2.10 Requirements of Law.
     (a) If the adoption of or any change in any Requirement of Law or in the interpretation or application thereof or compliance by any Lender with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority made subsequent to the date hereof:
     (i) shall subject such Lender to any tax of any kind whatsoever with respect to any LIBOR Rate Loans made by it, or change the basis of taxation of payments to such Lender in respect thereof (except for tax on the overall net income of such Lender or franchise taxes imposed on it in lieu of net income taxes and changes in the rate of such taxes);
     (ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of such Lender which is not otherwise included in the determination of the LIBOR Rate hereunder; or
     (iii) shall impose on such Lender any other condition not otherwise expressly excluded above;
and the result of any of the foregoing is to increase the cost to such Lender of making or maintaining its Committed Percentage of the Loan as a LIBOR Rate Loan or to reduce any amount receivable hereunder or under the Note or the Loan, then, in any such case, the Borrower shall promptly pay such Lender, within fifteen (15) days after its demand, any additional
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amounts necessary to compensate such Lender for such additional cost or reduced amount receivable which such Lender reasonably deems to be material as determined by such Lender with respect to maintaining its Committed Percentage of the Loan as a LIBOR Rate Loan. A certificate as to any additional amounts payable pursuant to this Section 2.10 submitted by such Lender, through the Administrative Agent, to the Borrower shall be conclusive in the absence of manifest error. Each Lender agrees to use reasonable efforts (including reasonable efforts to change its LIBOR Lending Office, as the case may be) to avoid or to minimize any amounts which might otherwise be payable pursuant to this paragraph of this Section 2.10 ; provided , however , that such efforts shall not cause the imposition on such Lender of any additional costs or other disadvantages deemed by such Lender to be material.
     (b) If any Lender shall have reasonably determined that the adoption of or any change in any Requirement of Law regarding capital adequacy or in the interpretation or application thereof or compliance by such Lender or any corporation controlling such Lender with any request or directive regarding capital adequacy (whether or not having the force of law) from any central bank or Governmental Authority made subsequent to the date hereof does or shall have the effect of reducing the rate of return on such Lender’s or such corporation’s capital as a consequence of its obligations hereunder to a level below that which such Lender or such corporation could have achieved but for such adoption, change or compliance (taking into consideration such Lender’s or such corporation’s policies with respect to capital adequacy) by an amount reasonably deemed by such Lender to be material, then from time to time, within fifteen (15) days after demand by such Lender, the Borrower shall pay to such Lender such additional amount as shall be certified by such Lender as being required to compensate it for such reduction. Such a certificate as to any additional amounts payable under this Section 2.10 submitted by a Lender (which certificate shall include a description of the basis for the computation), through the Administrative Agent, to the Borrower shall be conclusive absent manifest error.
     (c) The agreements in this Section 2.10 shall survive the termination of this Agreement and payment of the Note and all other amounts payable hereunder.
      Section 2.11 Indemnity. The Borrower hereby agrees to indemnify each Lender and to hold such Lender harmless from any liabilities, claims, costs, charges, funding loss or expense which such Lender may sustain or incur as a consequence of (a) default by the Borrower in payment of the principal amount of or interest on the Loan by such Lender in accordance with the terms hereof, (b) default by the Borrower in accepting a borrowing after the Borrower have given a notice in accordance with the terms hereof, (c) default by the Borrower in making any prepayment after the Borrower has given a notice in accordance with the terms hereof, and/or (d) any payment or prepayment of the Loan, or the extension thereof, on a day which is not the last day of the Interest Period with respect thereto, in each case including, but not limited to, any such loss, expense, cost or liability arising from interest, fees, costs or charges payable by such Lender to lenders of funds obtained by it in order to maintain its Committed Percentage of the Loan hereunder. A certificate as to any additional amounts payable pursuant to this Section 2.11 submitted by any Lender, through the Administrative Agent, to the Borrower shall be conclusive in the absence of manifest error. The agreements in this Section 2.11 shall survive termination of this Agreement and payment of the Note and all other amounts payable hereunder.
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      Section 2.12 Taxes.
     (a) All payments made by the Borrower hereunder or under the Note shall be made free and clear of, and without deduction or withholding for, any present or future Taxes, levies, imposts, duties, fees, assessments or other charges of whatever nature now or hereafter imposed by any Governmental Authority or by any political subdivision or taxing authority thereof or therein with respect to such payments (but excluding any Tax imposed on or measured by the net income or profits of a Lender or franchise taxes imposed on it in lieu of net income taxes, in each case pursuant to the laws of the jurisdiction in which it is organized or the jurisdiction in which the principal office or applicable lending office of such Lender is located or any subdivision thereof or therein) and all interest, penalties or similar liabilities with respect thereto. If any Taxes are so levied or imposed, the Borrower agrees to pay the full amount of such Taxes, and such additional amounts as may be necessary so that every payment of all amounts due under this Agreement or under the Note, after withholding or deduction for or on account of any Taxes, will not be less than the amount provided for herein or in the Note. The Borrower will furnish to the Administrative Agent as soon as practicable after the date the payment of any Taxes is due pursuant to applicable law certified copies (to the extent reasonably available and required by law) of tax receipts evidencing such payment by the Borrower. The Borrower agrees to indemnify and hold harmless each Lender, and reimburse such Lender upon its written request, for the amount of any Taxes so levied or imposed and paid by such Lender.
     (b) Each Lender agrees to use reasonable efforts (including reasonable efforts to change its LIBOR Lending Office, as the case may be) to avoid or to minimize any amounts which might otherwise be payable pursuant to this Section 2.12 ; provided , however , that such efforts shall not cause the imposition on such Lender of any additional costs or other disadvantages deemed by such Lender in its sole discretion to be material.
     (c) If the Borrower pays any additional amount pursuant to this Section 2.12 with respect to a Lender, such Lender shall use reasonable efforts to obtain a refund of tax or credit against its tax liabilities on account of such payment; provided that such Lender shall have no obligation to use such reasonable efforts if either (i) it is in an excess foreign tax credit position or (ii) it believes in good faith, in its sole discretion, that claiming a refund or credit would cause adverse tax consequences to it. In the event that such Lender receives such a refund or credit, such Lender shall pay to the Borrower an amount that such Lender reasonably determines is equal to the net tax benefit obtained by such Lender as a result of such payment by the Borrower. In the event that no refund or credit is obtained with respect to the Borrower’s payments to such Lender pursuant to this Section 2.12 , then such Lender shall upon request provide a certification that such Lender has not received a refund or credit for such payments. Nothing contained in this Section 2.12(c) shall require a Lender to disclose or detail the basis of its calculation of the amount of any tax benefit or any other amount or the basis of its determination referred to in the proviso to the first sentence of this Section 2.12(c) to the Borrower or any other party.
     (d) Each Lender that is not a “United States person” (as such term is defined in Section 7701(a)(30) of the Code) (a “ Foreign Lender ”) shall submit to Borrower and Administrative Agent on or before the date such financial institution becomes a party hereto, two (2) duly signed completed copies of either IRS Form W-8BEN or any successor thereto (relating to such Foreign Lender and entitling it to an exemption from, or reduction of, withholding tax on
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all payments to be made to such Foreign Lender by Borrower pursuant to this Agreement) or IRS Form W-8ECI or any successor thereto (relating to all payments to be made to such Foreign Lender by Borrower pursuant to this Agreement) or such other evidence satisfactory to Borrower and Administrative Agent that such Foreign Lender is entitled to an exemption from, or reduction of, United States withholding tax. Thereafter and from time to time, each such Foreign Lender shall: (i) promptly submit to Administrative Agent such additional duly completed and signed copies of one of such forms (or such successor forms as shall be adopted from time to time by the relevant United States taxing authorities) as may then be available under then current United States laws and regulations to avoid, or such evidence as is satisfactory to Borrower and Administrative Agent of any available exemption from or reduction of, United States withholding taxes in respect of all payments to be made to such Foreign Lender by Borrower pursuant to this Agreement; (ii) promptly notify Administrative Agent of any change in circumstances that would modify or render invalid any claimed exemption or reduction; and (iii) take such steps as shall not be materially disadvantageous to it, in the reasonable judgment of such Foreign Lender, and as may be reasonably necessary (including the re-designation of its lending office) to avoid any requirement of applicable laws that Borrower make any deduction or withholding for taxes from amounts payable to such Foreign Lender. If any Foreign Lender fails to deliver the forms or other documentation referred to in this subsection, then the Borrower shall not be required to pay any additional amount to such Foreign Lender under Section 2.12(a) with respect to any withholding tax imposed by Sections 1441 and 1442 of the Code; provided that if such Foreign Lender shall have satisfied the requirement of this Section 2.12(d) on the date such Foreign Lender became a Lender, nothing in this Section 2.12(d) shall relieve the Borrower of its obligations to pay any amounts pursuant to Section 2.12(a) in the event that, as a result of any change in any applicable law, treaty or governmental rule, regulation or order, or any change in the interpretation, administration or application thereof, such Foreign Lender is no longer properly entitled to deliver forms, certificates or other evidence at a subsequent date establishing the fact that such Foreign Lender or is not subject to withholding.
     (e) The agreements in this Section 2.12 shall survive the termination of this Agreement and the payment of the Note and all other amounts payable hereunder.
      Section 2.13 Judgment Currency Conversion . If, for the purposes of obtaining judgment in any court in any jurisdiction with respect to this Agreement or any other Credit Document, it becomes necessary to convert into a particular currency (the “Judgment Currency”) any amount due under this Agreement or under any other Credit Document in any currency other than the Judgment Currency (the “Currency Due”), then conversion shall be made at the rate of exchange prevailing on the Business Day before the day on which judgment is given. For this purpose “rate of exchange” means the rate at which the Administrative Agent is able, on the relevant date, to purchase the Currency Due with the Judgment Currency in accordance with its normal practice at its head office. In the event that there is a change in the rate of exchange prevailing between the Business Day before the day on which the judgment is given and the date of receipt by the Administrative Agent of the amount due, the Borrower will, on the date of receipt by the Administrative Agent, pay such additional amounts, if any, or be entitled to receive reimbursement of such amount, if any, as may be necessary to ensure that the amount received by the Administrative Agent on such date is the amount in the Judgment Currency which when converted at the rate of exchange prevailing on the date of receipt by the Administrative Agent is the amount then due under this Agreement or such other Credit
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Document in the Currency Due. If the amount of the Currency Due which the Administrative Agent is so able to purchase is less than the amount of the Currency Due originally due to it, the Borrower shall indemnify and save the Administrative Agent and the Lenders harmless from and against all loss or damage arising as a result of such deficiency. This indemnity shall constitute an obligation separate and independent from the other obligations contained in this Agreement and the other Credit Documents, shall give rise to a separate and independent cause of action, shall apply irrespective of any indulgence granted by the Administrative Agent from time to time and shall continue in full force and effect notwithstanding any judgment or order for a liquidated sum in respect of an amount due under this Agreement or any other Credit Document or under any judgment or order.
      Section 2.14 Amendment and Restatement. This Agreement amends, restates and continues the Existing Credit Agreement, and this Agreement and each Note and all Instruments, agreements, and documents executed in connection herewith, constitute an amendment, renewal, continuance and restatement of all Indebtedness and Obligations of the Borrower and the Guarantors evidenced by the Existing Credit Agreement and the Original Note. All promissory notes, instruments, documents, and agreements entered into in connection with the Existing Credit Agreement or the Original Note shall remain in full force and effect, except to the extent expressly modified in accordance with their respective terms. It is expressly understood and agreed by the parties hereto that this Agreement is in no way intended to constitute, and does not constitute, a release, repayment, satisfaction, discharge or novation of the obligations and liabilities existing under the Existing Credit Agreement or the Original Note or a release, termination, novation or impairment of any Lien or Existing Credit Document. All Liens created pursuant to the Existing Credit Documents shall extend and apply to this Agreement and each Note issued hereunder and the full payment and performance of all Obligations, in each case for the benefit of the Lenders. All such Liens created pursuant to the Existing Credit Documents are hereby expressly continued, ratified and confirmed by the Borrower and the Guarantors. The amendment and restatement hereby of the Existing Credit Agreement, or the concurrent amendment and restatement of any other Existing Credit Document, shall not constitute a waiver of any conditions or requirements set forth herein or therein, whether or not performed, fulfilled or required to be performed or fulfilled prior to the date hereof, nor does it constitute consent to any prior or existing default, event of default or breach of any provision hereof or of any other Existing Credit Document. All references to the Existing Credit Agreement in any Existing Credit Document shall be deemed to refer to this Agreement. If any inconsistency exists between this Agreement and the Existing Credit Agreement, the terms of this Agreement shall prevail. Nothing contained in this Agreement or any other document or instrument executed contemporaneously herewith shall be deemed to satisfy or discharge the Indebtedness or Obligations arising under this Agreement or any Note (this being an amendment and restatement only).
ARTICLE III
REPRESENTATIONS AND WARRANTIES
     To induce the Lenders to enter into this Agreement and to make the Loan herein provided for, the Credit Parties hereby represent and warrant to the Administrative Agent and to each Lender that:
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      Section 3.1 Corporate Existence; Compliance with Law. Each of the Credit Parties (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (b) has the requisite corporate power, authority and right to acquire, lease, own and operate, as applicable, all its property and to conduct the business in which it is currently engaged, (c) is duly qualified to conduct business and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification, except to the extent that the failure to so qualify or be in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect and (d) is in compliance with all Requirements of Law except to the extent that the failure to comply therewith could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
      Section 3.2 Corporate Power; Authorization; Enforceable Obligations. Each of the Credit Parties has full corporate power, authority and right to execute, deliver and perform the Credit Documents to which it is party and has taken all necessary limited liability company or corporate action to authorize the execution, delivery and performance by it of the Credit Documents to which it is party. No consent or authorization of, filing with, notice to or other act by or in respect of, any Governmental Authority or any other Person is required in connection with the borrowings hereunder or with the execution, delivery or performance of any Credit Document by the Credit Parties (other than those which have been obtained) or with the validity or enforceability of any Credit Document against the Credit Parties (except such filings as are necessary in connection with the perfection of the Liens created by such Credit Documents). Each Credit Document to which it is a party has been duly executed and delivered on behalf of each of the Credit Parties. Each Credit Document to which it is a party constitutes a legal, valid and binding obligation of each of the Credit Parties, enforceable against such Credit Party in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).
      Section 3.3 Financial Condition; No Material Adverse Effect.
     (a) The audited Consolidated financial statements of Royal Gold for the twelve-month period ending June 30, 2009, and the related Consolidated statements of income and of cash flows for the fiscal year ended on such date, all of which have been furnished to the Administrative Agent, have been prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein and fairly present the financial condition of Royal Gold and its Consolidated Subsidiaries as of the date or dates thereof and results of operations for the periods covered thereby. Such financial statements and the notes thereto disclose all material liabilities, direct or contingent, of Royal Gold and its Consolidated Subsidiaries that are required to be disclosed under GAAP.
     (b) Subsequent to the respective dates as of which information is given in such financial statements, there has been no change or event that, individually or in the aggregate, has had or could reasonably be expected to have a Material Adverse Effect.
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      Section 3.4 Compliance with Laws; No Conflict; No Default.
     (a) The (i) execution, delivery and performance by each Credit Party of the Credit Documents to which such Credit Party is a party, in accordance with their respective terms, the borrowings hereunder and the transactions contemplated hereby, and (ii) execution, delivery and performance of the Plan of Arrangement by each Credit Party or Subsidiary thereof that is a party thereto and the consummation of the Arrangement and the other transactions contemplated thereby, in each case, do not and will not, by the passage of time, the giving of notice or otherwise, (A) violate any Requirement of Law applicable to such Credit Party, (B) conflict with, result in a breach of or constitute a default under the articles of incorporation, bylaws, articles of organization, operating agreement or other organizational documents of such Credit Party or any material indenture, agreement or other instrument to which such Person is a party or by which any of its properties may be bound or any Governmental Approval of such Person, except to the extent that such conflict, breach or default with respect to any such indenture, agreement or instrument could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, or (C) result in or require the creation or imposition of any Lien upon or with respect to any property now owned or hereafter acquired by such Person other than Liens arising under the Credit Documents.
     (b) Each Credit Party (i) has all Governmental Approvals required by law for it to conduct its business in all material respects, and (ii) is in compliance with each Governmental Approval applicable to it and in compliance with all other Requirements of Law relating to it or any of its respective properties, in each case except to the extent the failure to obtain such Governmental Approval or failure to comply with such Governmental Approval or Requirement of Law could not reasonably be expected to have a Material Adverse Effect. Except as set forth in Schedule 3.4(b) and except for matters that do not have or would not reasonably be expected to have a Material Adverse Effect, to the knowledge of the Credit Parties, the Project Managers of each of the Projects have obtained all material Governmental Approvals required to operate such Projects as currently being operated in accordance with the then-effective mine plan therefore and are operating such Projects in material compliance therewith.
     (c) Except as set forth in Schedule 3.4(c) hereto, (i) each Credit Party has complied in all material respects with all Requirements of Law, (ii) to the knowledge of each Credit Party, each Project is in compliance with all Requirements of Law relating to the operation of such Project, in each case except to the extent that the failure to obtain a Governmental Approval or the failure to comply with such Governmental Approval or Requirement of Law has not had, and would not reasonably be expected to have, a Material Adverse Effect, and (iii) to the knowledge of each Credit Party, no investigation is currently being conducted by any local, state or federal agency with respect to enforcement of Requirements of Law that would reasonably be expected to have a Material Adverse Effect. Except as disclosed in Schedule 3.4(c) , no Credit Party has knowledge of any existing violation of Requirements of Law or notices thereof issued by any Governmental Authority, with respect to a Credit Party or a Project, that has had or would reasonably be expected to have a Material Adverse Effect.
     (d) None of the Credit Parties is in default under or with respect to any of its Material Contracts, or any judgment, order or decree to which it is a party, in any respect that has had or
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could reasonably be expected to have a Material Adverse Effect. No Default or Event of Default has occurred and is continuing.
      Section 3.5 No Material Litigation. Except as set forth in Schedule 3.5 hereto, no Credit Party is a party to any action, suit or proceeding at law or in equity, by or before any Governmental Authority (or, to the knowledge of any Credit Party, threatened in writing) against or affecting any Credit Party, any Royalty Interest, or any Project that has had, or would reasonably be expected to have a Material Adverse Effect, or which may affect the legality, validity or enforceability of this Agreement or any other Credit Document. Except as set forth in Schedule 3.5 , to the knowledge of each Credit Party, there is no action, suit or proceeding at law or in equity, by or before any Governmental Authority now pending or threatened against or, with direct and specific application, affecting, any Credit Party, the Royalty Interests or any Project, which has had, or would reasonably be expected to have, a Material Adverse Effect, or which may affect the legality, validity or enforceability of this Agreement or any other Credit Document, and no judgments are outstanding which could reasonably be expected to have a Material Adverse Effect.
      Section 3.6 Employee Benefit Plans and Canadian Pension Plans.
     (a)  Employee Benefit Plans . Each Employee Benefit Plan established or maintained by the Borrower or any other Credit Party complies, and has been maintained and administered, in all material respects in accordance with applicable Requirements of Law. Each Employee Benefit Plan is fully funded on a going concern basis in accordance with its terms and applicable Requirements of Law, and the present value of all accrued benefits under any such plans do not exceed the value of the assets of such plans allocable to such accrued benefits by an amount that could reasonably be expected to have a Material Adverse Effect. No material liability exists with respect to any Employee Benefit Plan that has been terminated.
     (b)  Canadian Pension Plans . Each of the Canadian Pension Plans (if any) is duly registered under the Canadian Income Tax Act and any other applicable Laws which require registration, has been administered in accordance with the Canadian Income Tax Act and such other applicable Laws and no event has occurred which could reasonably be expected to cause the loss of such registered status, except to the extent that any failure to do so could not reasonably be expected to have a Material Adverse Effect. All material obligations of each of the Credit Parties (including fiduciary, funding, investment and administration obligations) required to be performed in connection with the Canadian Pension Plans and the funding agreements therefor have been performed on a timely basis, except to the extent that any failure to do so could not reasonably be expected to have a Material Adverse Effect. There are no outstanding disputes concerning the assets of the Canadian Pension Plans. No promises of benefit improvements under the Canadian Pension Plans have been made except where such improvement could not reasonably be expected to have a Material Adverse Effect. All contributions or premiums required to be made or paid by each of the Credit Parties to the Canadian Pension Plans have been made on a timely basis in accordance with the terms of such plans and all applicable Laws. There have been no improper withdrawals or applications of the assets of the Canadian Pension Plans. None of the Canadian Pension Plans contain or have ever contained a “defined benefit provision”, as that term is defined in subsection 147.1(1) of the Canadian Income Tax Act. Each of the Canadian Pension Plans is fully funded on a solvency
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basis and going concern basis (using actuarial methods and assumptions which are consistent with the valuations last filed with the applicable Governmental Authorities and which are consistent with GAAP).
      Section 3.7 Environmental Matters.
     (a) To the knowledge of the Credit Parties, the Projects are owned, leased, developed, operated or otherwise utilized in compliance with all applicable Environmental Laws and Governmental Approvals, in each case except to the extent that the failure to comply with such Environmental Laws or Governmental Approvals has not had, and would not reasonably be expected to have, a Material Adverse Effect.
     (b) No Credit Party has received any written or actual notice of violation, alleged violation, non-compliance, notice of investigation, liability or potential liability regarding Materials of Environmental Concern, compliance with Environmental Laws or other environmental matters with regard to any of the Projects, in each case, except as those that have not had, and would not reasonably be expected to have, a Material Adverse Effect, nor does any Credit Party have knowledge that any such notice will be received or is being threatened.
     (c) No judicial proceeding or governmental or administrative action under any Environmental Law is pending or, to the knowledge of any Credit Party threatened, against any Credit Party, or to the knowledge of any Credit Party is pending against any Project that has had, or would reasonably be expected to have, a Material Adverse Effect. To the knowledge of the Credit Parties, there are no consent decrees or other clean-up orders, mitigation orders, compliance orders, remediation orders, decrees, consent orders, administrative orders or other orders, or other administrative or judicial requirements outstanding under any Environmental Law with respect to any Project that have had, or would reasonably be expected to have, a Material Adverse Effect.
      Section 3.8 Purpose of Loan. The proceeds of the Loan shall be used by the Borrower to fund the Arrangement, fund the redemption of the Debentures and pay any fees and expenses in connection therewith and herewith.
      Section 3.9 Subsidiaries. Set forth on Schedule 3.9 is a complete and accurate list of all Subsidiaries of the Credit Parties as of the Execution Date. Information on the attached Schedule includes jurisdiction of incorporation or organization; the number of authorized shares of each class of Capital Stock or other equity interests; the number of outstanding shares of each class of Capital Stock or other equity interests, the owner thereof and the percentage of such ownership; and the number and effect, of all outstanding options, warrants, rights of conversion or purchase and similar rights. The outstanding Capital Stock and other equity interests of all such Subsidiaries is validly issued, fully paid and non-assessable and is owned free and clear of all Liens (other than Permitted Liens).
      Section 3.10 Ownership; Insurance.
     (a) Each of the Credit Parties has good, legal and valid title to (or in the case of any leased premises, easement properties or licensed property, valid leasehold, easement or license
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interests, which are in full force and effect, in) its real property and good title to, or a valid leasehold interest in, its personal property.
     (b) Each of the Credit Parties has and maintains in full force and effect adequate insurance in accordance with Section 6.9 hereof and which insurance is described in full as of the Execution Date on Schedule 6.9.
      Section 3.11 Title to Royalty Interests; Liens. Schedule 1.1(a) sets forth, as of the Execution Date, a complete and accurate listing and description of each Material Royalty, including the Project and the Royalty Interest associated therewith. Schedule 1.1(c) sets forth, as of the Execution Date, a complete and accurate listing of each of the Royalty Interests, other than the Material Royalties. Each Credit Party has good and marketable title to the Material Royalties owned by it, free and clear of any claims or rights of title and free and clear of all Liens except for Permitted Liens; and each Credit Party has good title to the Royalty Interests (other than the Material Royalties) owned by it, free and clear of any claims or rights of title and free and clear of all Liens except for Permitted Liens.
      Section 3.12 Royalty Agreements. Schedule 1.1(a) sets forth a complete and accurate list of all Royalty Agreements of each Credit Party relating to a Material Royalty and in effect as of the Execution Date. Each Royalty Agreement relating to a Material Royalty is (i) a legal, valid and binding obligation of the Credit Party that is a party thereto, and to each Credit Party’s knowledge, each other party thereto, and (ii) other than as set forth in Schedule 3.12 , each such Royalty Agreement is, and after giving effect to the transactions contemplated by the Credit Documents will be, in full force and effect in accordance with the terms thereof. To the extent requested by the Administrative Agent, the Borrower has delivered or made available to the Administrative Agent a true and complete copy of each Royalty Agreement listed on Schedule 1.1(a) . No Credit Party is in breach of or in default under any Royalty Agreement relating to a Material Royalty. As of the Execution Date and since the date thereof, other than as set forth on Schedule 3.12 , no Credit Party has made any unresolved allegation that any counterparty to a Material Contract has breached or defaulted under any such agreement in a material respect, except for allegations of breach or default that a Credit Party has diligently pursued and resolved within thirty (30) days of obtaining knowledge thereof and which has not had, and would not reasonably be likely to have, a Material Adverse Effect during such period of time. To the knowledge of each Credit Party, other than as set forth on Schedule 3.12 , no counterparty to any Material Contract is in material breach of or in material default of any such Material Contract, except for allegations of breach or default that a Credit Party is diligently pursuing and will resolve within thirty (30) days of obtaining knowledge thereof and which breach or default has not had, and would not reasonably be likely to have, a Material Adverse Effect.
      Section 3.13 Indebtedness. Except as otherwise permitted under Section 7.1 , the Credit Parties and their Subsidiaries have no Indebtedness.
      Section 3.14 Taxes. Each of the Credit Parties and their Subsidiaries has filed, or caused to be filed, all Tax returns (federal, provincial, state, local, foreign or otherwise) required to be filed and has paid (a) all amounts of Taxes shown thereon to be due (including interest and penalties) and (b) all other Taxes, fees, assessments and other governmental charges (including
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mortgage recording taxes, documentary stamp taxes and intangibles taxes) owing by it, except, in each case, for such Taxes (i) which are not yet delinquent, (ii) that are being contested in good faith and by proper proceedings, and against which adequate reserves are being maintained in accordance with GAAP, or (iii) that arise and become due in jurisdictions outside of the United States, Canada or Mexico and which are not material either individually or in the aggregate. Each Credit Party has established reserves which are reasonably believed by the officers and representatives of such Credit Party to be adequate for the payment of such taxes. None of the Credit Parties is aware of any proposed Taxes or Tax assessments against it or any of its Subsidiaries which could reasonably be expected to have a Material Adverse Effect.
      Section 3.15 No Burdensome Restrictions. None of the Credit Parties or any of its Subsidiaries is a party to any agreement or Instrument or subject to any other obligation or any charter or corporate restriction or any provision of any applicable Requirement of Law which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.
      Section 3.16 Limitations on Incurrence of Indebtedness. No Credit Party is subject to any Requirement of Law limiting its ability to borrow money or to incur or perform the Obligations or to grant Liens with respect to the Collateral as set forth in the Security Documents.
      Section 3.17 Accuracy and Completeness of Information. No factual information heretofore, contemporaneously or hereafter furnished by or on behalf of any Credit Party or any of its Subsidiaries to the Administrative Agent or any Lender for purposes of or in connection with this Agreement or any other Credit Document contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained therein, in light of the circumstances when made, not materially misleading; provided, however, that projections contained therein are not to be viewed as factual and that actual results during the periods covered thereby may differ from the results set forth in such projections by a material amount. There is no fact now known to any Credit Party or any of its Subsidiaries which has, or could reasonably be expected to have, a Material Adverse Effect.
      Section 3.18 Events of Default. No event has occurred and is continuing, or would result from the incurring of the Obligations by the Borrower under this Agreement, that, individually or in the aggregate, constitute, or could be reasonably expected to constitute, a Default or Event of Default.
      Section 3.19 Material Contracts. Except as set forth in Schedule 3.19 hereto, no Credit Party is a party to any material agreement or Instrument or subject to any charter or other corporate restriction that has had or could reasonably be expected to have a Material Adverse Effect. Each Material Contract of the Credit Parties is, and after giving effect to the transactions contemplated by the Credit Documents will be, in full force and effect in accordance with the terms thereof and no Borrower or Subsidiary thereof has violated in any respect any such Material Contract, the effect of which has had or could reasonably be expected to have a Material Adverse Effect.
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ARTICLE IV
COLLATERAL SECURITY
      Section 4.1 Security Documents. As security for the prompt, complete and irrevocable payment and performance of the Obligations, each of the Credit Parties shall, contemporaneously with or prior to the execution of this Agreement, grant, execute and deliver, the Security Documents, other than the Chilean Security Documents. The Credit Parties agree to finalize, execute and deliver the Chilean Security Documents in accordance with Section 6.16. The Security Documents create, or in the case of the Chilean Security Documents upon their delivery they will create, valid security interests in, and Liens on, the Collateral purported to be covered thereby, which security interests and Liens are, or upon the filing of the appropriate perfection or other administrative action or notices to third parties necessary to perfect such security interests and Liens will be, perfected security interests and Liens, prior to all other Liens, other than Permitted Liens.
      Section 4.2 No Limitation on Application of Security Interest. The Credit Parties agree that notwithstanding any provision of any other Credit Document to the contrary, the Liens created pursuant to the Security Documents shall secure all Obligations. The payment and performance of all Obligations are unconditionally and irrevocably guaranteed by the Guarantors.
      Section 4.3 Maintenance of Security Over Material Royalties. The Credit Parties shall grant, and at all times after the delivery of each applicable Security Document shall maintain, Security Documents satisfactory to the Administrative Agent in its sole discretion over and with respect to the Material Royalties (the “ Collateral Requirement ”), subject to any release of the RGLD Canada Security Documents pursuant to Section 4.5 .
      Section 4.4 Perfection and Maintenance of Liens. Each Credit Party hereby authorizes the Administrative Agent and the other Lenders to file such UCC financing statements, PPSA financing statements and other agreements, documents, registrations, filings or Instruments with such Governmental Authorities in such jurisdictions as it determines to be desirable and to take such other actions as the Administrative Agent or any Lender determine to be necessary or desirable to legalize, authenticate, protect, perfect and maintain the perfection of first priority Liens in the Collateral identified in the Security Documents. The Credit Parties agree to cooperate with the Administrative Agent and the other Lenders in delivering all share certificates and other certificates of Capital Stock pledged pursuant to the Pledge Agreements and in undertaking and completing all recordings, filings, registrations and other actions required in connection with the Security Documents, and each Credit Party further agrees to promptly take all such other actions as the Administrative Agent may reasonably determine to be necessary or appropriate to confirm, perfect, maintain and protect the perfection of the Liens granted by the Security Documents.
      Section 4.5 Release of RGLD Canada Security Documents. Upon the completion of all documents, Instruments, deliveries, and actions set forth in Section 6.16 to the satisfaction of the Administrative Agent in its sole discretion, the Administrative Agent and the Lenders agree that the RGLD Canada Security Documents shall be terminated and RGLD Canada shall be released from its obligations under the Credit Documents as promptly as practicable
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thereafter, and in connection therewith, the Administrative Agent and the Lenders, at the expense of the Credit Parties, shall execute and deliver such terminations, releases and discharges necessary to evidence such release.
ARTICLE V
CONDITIONS PRECEDENT
      Section 5.1 Conditions to Funding the Loan. The obligation of each Lender to Advance its Committed Percentage of the Loan hereunder is subject to the satisfaction of the following conditions precedent on or prior to the date of making such Loan:
     (a)  Execution of Credit Documents . The Administrative Agent shall have received (i) counterparts of this Agreement, (ii) the Note, (iii) counterparts to each Security Document requested by the Administrative Agent (other than the Chilean Security Documents, which shall be delivered to the Administrative Agent as set forth in Section 6.16 ), and (iv) counterparts to each other Credit Document, in each case conforming to the requirements of this Agreement and executed by a duly authorized officer of each party thereto, and in each case in form and substance reasonably satisfactory to the Lenders.
     (b)  Authority Documents . The Administrative Agent shall have received a certificate from the secretary of each Credit Party substantially in the form of Exhibit G attached hereto, together with certified copies of each of the following attachments:
     (i) Articles of Incorporation/Charter Documents . Copies of the articles of incorporation or other charter documents, as applicable, of such Credit Party certified to be true and complete as of a recent date by the appropriate Governmental Authority of the jurisdiction of its incorporation;
     (ii) Bylaws/Operating Agreement . A copy of the bylaws or comparable operating agreement of such Credit Party;
     (iii) Resolutions . Copies of resolutions of the board of directors of such Credit Party approving and adopting the Credit Documents, the transactions contemplated therein and authorizing execution and delivery thereof;
     (iv) Good Standing . Copies of certificates of good standing, existence or its equivalent with respect to such Credit Party certified as of a recent date by the appropriate Governmental Authorities of the state of incorporation or organization and each other state in which the failure to so qualify and be in good standing could reasonably be expected to have a Material Adverse Effect on the business or operations of such Credit Party; and
     (v) Incumbency . Incumbency signatures of appropriate officers of such Credit Party, including each officer executing a Credit Document.
     (c)  Officer’s Certificates . The Administrative Agent shall have received a certificate dated as of the Execution Date executed by a Responsible Officer of each of the Credit Parties,
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substantially in the form of Exhibit H hereto stating that (i) except as set forth on Schedule 3.5 , there is no pending or, to the knowledge of any Credit Party threatened, litigation, investigation, bankruptcy or insolvency, injunction, order or claim affecting or relating to any Credit Party or any of its Subsidiaries, or any Royalty Interest or Project, which has had, or would reasonably be expected to have, a Material Adverse Effect, or which would reasonably be expected to affect the legality, validity or enforceability of this Agreement or the other Credit Documents, that has not been settled, dismissed, vacated, discharged or terminated prior to the date thereof and (ii) immediately after giving effect to this Agreement, the other Credit Documents and all the transactions contemplated therein, (A) no Default or Event of Default exists, (B) all representations and warranties contained herein and in the other Credit Documents are true and correct in all material respects, and (C) the Credit Parties are in compliance with each of the financial covenants set forth in Section 6.15 .
     (d)  Compliance Certificate . The Borrower shall have delivered to the Administrative Agent a certificate of a Responsible Officer of the Borrower demonstrating compliance with the financial covenants contained in Section 6.15 by calculation thereof as of the end of the most recently completed fiscal quarter.
     (e)  Legal Opinions of Counsel . The Administrative Agent shall have received the opinions of legal counsel (including local counsel to the extent required by the Administrative Agent) for the Credit Parties as the Administrative Agent may require, dated the Execution Date and addressed to the Administrative Agent and the Lenders in form and substance reasonably acceptable to the Administrative Agent.
     (f)  Collateral . The Administrative Agent shall have received, in form and substance satisfactory to the Administrative Agent:
     (i) searches of all Lien filings, registrations and records deemed necessary by the Administrative Agent, and copies of any documents, filings and Instruments on file in such jurisdictions;
     (ii) all financing statements, registrations, filings or other Instruments for each appropriate jurisdiction as is necessary or desirable, in the Administrative Agent’s sole discretion, to perfect, or maintain the perfection of, the Administrative Agent’s security interest in the Collateral (other than with respect to the Chilean Security Documents, which shall be delivered to the Administrative Agent in accordance with Section 6.16 );
     (iii) [Intentionally Omitted]; and
     (iv) such other duly executed agreements, consents, notices or Instruments as are necessary, in the Administrative Agent’s sole discretion, to formalize, legalize, protect, perfect and maintain the Administrative Agent’s security interest in the Collateral (other than with respect to the Chilean Security Documents, which shall be delivered to the Administrative Agent in accordance with Section 6.16 ).
     (g)  Liability and Casualty Insurance . The Administrative Agent shall have received copies of insurance policies or certificates of insurance evidencing liability and casualty insurance meeting the requirements set forth herein or in the Security Documents.
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     (h)  Fees . The Lenders shall have received all fees owing pursuant to Section 2.4 .
     (i)  Consents . The Administrative Agent shall have received evidence that all shareholder, board of director and third party consents and approvals (including consents and approvals of any Governmental Authority) necessary in connection with the financings and other transactions contemplated hereby have been obtained.
     (j)  Material Adverse Effect . No material adverse change shall have occurred since June 30, 2009 in the business, properties, operations or financial condition of the Credit Parties and their Subsidiaries taken as a whole.
     (k)  No Default or Event of Default . No Default or Event of Default shall have occurred and be continuing on such date or after giving effect to the Loan.
     (l)  Revolving Amendment . The Administrative Agent shall have received counterparts of the Revolving Amendment executed by a duly authorized officer of each party thereto, and in each case in form and substance reasonably satisfactory to the Administrative Agent and all other agreements, documents, certificates and Instruments to be delivered by any party thereto in connection with therewith.
     (m)  Notice of Borrowing; Satisfaction of all Conditions . The Borrower shall have delivered an executed Notice of Borrowing, and the Borrower shall have certified the satisfaction of all conditions precedent set forth in this Section 5.1 by the delivery of such Notice of Borrowing.
     (n)  Additional Matters . Such other approvals, opinions, documents or Instruments as the Administrative Agent may reasonably request, and all documents and legal matters in connection with the transactions contemplated by this Agreement shall be reasonably satisfactory in form and substance to the Administrative Agent and its counsel.
ARTICLE VI
AFFIRMATIVE COVENANTS
     The Credit Parties hereby covenant and agree that on the Execution Date, and thereafter for so long as this Agreement is in effect and until all the Obligations owing to the Administrative Agent or any Lender hereunder, are irrevocably paid in full, the Credit Parties shall, and shall cause each of their Subsidiaries to:
      Section 6.1 Financial Statements and Information. Furnish to the Administrative Agent:
     (a)  Annual Financial Statements . As soon as available, but in any event within ninety (90) days after the end of each fiscal year, a copy of the Consolidated Royal Gold balance sheet as at the end of such fiscal year and the related Consolidated Royal Gold statements of income and retained earnings and of cash flows for such year, which shall be audited by a firm of independent certified public accountants of recognized standing reasonably acceptable to the Administrative Agent, setting forth in each case in comparative form the figures for the previous
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year, reported on without a “going concern” or like qualification or exception, or qualification indicating that the scope of the audit was inadequate to permit such independent certified public accountants to certify such financial statements without such qualification;
     (b)  Quarterly Financial Statements . As soon as available and in any event within sixty (60) days after the end of each of the first three (3) fiscal quarters of each fiscal year, a copy of the Consolidated Royal Gold balance sheet as at the end of such period and related Consolidated Royal Gold statements of income and retained earnings and of cash flows for such quarterly period and for the portion of the fiscal year ending with such period, in each case setting forth in comparative form consolidated figures for the corresponding period or periods of the preceding fiscal year (subject to normal recurring year-end audit adjustments);
     (c)  Financial Statement Standards . All financial statements shall be complete and correct in all material respects (subject, in the case of interim statements, to normal recurring year-end audit adjustments and the lack of footnotes) and prepared in reasonable detail and, in the case of the annual and quarterly financial statements provided in accordance with subsections (a) and (b) above, in accordance with GAAP applied consistently throughout the periods reflected therein and further accompanied by a description of, and an estimation of the effect on the financial statements on account of, a change, if any, in the application of accounting principles as provided in Section 1.3 ;
     (d)  Officer’s Certificate . At the time of delivery of the financial statements provided for in Sections 6.1(a) and 6.1(b) above, a certificate of a Responsible Officer of each Borrower substantially in the form of Exhibit I , (i) demonstrating compliance with the financial covenants contained in Section 6.15 by calculation thereof as of the end of each such fiscal period, and (ii) stating that no Default or Event of Default exists, or if any Default or Event of Default does exist, specifying the nature and extent thereof and what action the Credit Parties propose to take with respect thereto; and
     (e)  Other Information. Each Credit Party shall deliver to the Administrative Agent such other information (in form reasonably acceptable to the Administrative Agent) regarding the conditions or operations, financial or otherwise, of each Credit Party, the Royalty Interests, the Projects, the Project Properties or any other properties or activities of a Credit Party as the Administrative Agent may reasonably request from time to time to the extent such information is in the possession or control of a Credit Party and not subject to confidentiality restrictions that prevent the Borrower’s disclosure thereof.
      Section 6.2 Notices. Promptly provide written notice to the Administrative Agent (which shall promptly transmit such notice to each Lender) of:
     (a) the occurrence of any Default or Event of Default, which notice shall be provided in any event within two (2) Business Days after any Credit Party knows or has reason to know thereof;
     (b) the occurrence of any default or event of default known to a Credit Party under any Material Contract of any Credit Party or any of its Subsidiaries which could reasonably be
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expected to have a Material Adverse Effect or involve a monetary claim in excess of Two Million Dollars ($2,000,000);
     (c) any litigation, lawsuit, action, claim or dispute, or any investigation or proceeding known to any Credit Party, (i) affecting any Credit Party or any of its Subsidiaries which, if adversely determined, could reasonably be expected to have a Material Adverse Effect or involve a monetary claim in excess of Two Million Dollars ($2,000,000), (ii) affecting or with respect to this Agreement or any other Credit Document or (iii) involving an environmental claim or potential liability of any Credit Party or any of its Subsidiaries under Environmental Laws in excess of Two Million Dollars ($2,000,000);
     (d) any loss or damage to the Collateral in excess of One Million Dollars ($1,000,000), exclusive of diminution in value caused solely by changes in the price of any Metal from time to time;
     (e) the consummation by any Credit Party of any purchase or acquisition transaction involving a Royalty Interest with a value in excess of Ten Million Dollars ($10,000,000), whether a new Royalty Interest or an addition to or increase in an existing Royalty Interest;
     (f) any acquisition of an additional interest in a Project that is subject to a Material Royalty;
     (g) every notice, and the contents thereof, received by a Borrower in relation to any renewal of any rights with respect to, or having a material adverse effect upon any Material Royalty or associated Project, including 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;
     (h) every default or other adverse claim or demand made by any Person which would, if successful, constitute a Material Adverse Effect;
     (i) every press release issued by a Credit Party together with a copy of such press release, and any other occurrence, matter, event or thing (other than changes in the price of Gold or other Metals) constituting a Material Adverse Effect, together with a reasonably detailed explanation of such other occurrence, matter, event or thing;
     (j) each material memorandum, letter or report received by a Credit Party from any Project Manager concerning any Material Royalty or associated Project, including (to the extent received by a Borrower and not subject to confidentiality restrictions that prevent such Credit Party from disclosure thereof) the annual strategic business plan and all reserve, mine plan and/or operating reports received by a Credit Party with respect to a Project that is subject to a Material Royalty, together with a copy of such plans and reports;
     (k) any notice of any material violation of or material noncompliance by any Credit Party or any Subsidiary thereof with any Requirement of Law received by any Credit Party from any Governmental Authority;
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     (l) any amendment or waiver of, or any notice of default or event of default with respect to, the Revolving Credit Agreement;
     (m) promptly after a Responsible Officer of a Credit Party obtains knowledge thereof, any attachment, judgment, Lien, levy or order exceeding Two Million Dollars ($2,000,000) that is, or is reasonably likely to be, assessed against any Credit Party other than Permitted Liens; and
     (n) promptly after a Responsible Officer of a Credit Party obtains knowledge thereof, any other development, occurrence or event (other than changes in the price of Gold or other Metals) which could reasonably be expected to have a Material Adverse Effect.
Each notice pursuant to this Section 6.2 shall be accompanied by a statement of a Responsible Officer setting forth details of the occurrence referred to therein and stating what action the Credit Parties propose to take with respect thereto, if any. In the case of any notice of a Default or Event of Default, the Borrower shall specify that such notice is a Default or Event of Default notice on the face thereof. For so long as the Administrative Agent and the “Administrative Agent” (as defined in the Revolving Credit Agreement) shall be the same financial institution or servicer, a notice under this Section 6.2 shall constitute notice under Section 6.2 of the Revolving Credit Agreement and a notice under Section 6.2 of the Revolving Credit Agreement shall constitute notice under this Section 6.2 .
      Section 6.3 Payment of Taxes and Other Obligations. Each Credit Party and its Subsidiaries shall pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all its Taxes in the United States and Canada, all its material Taxes in all jurisdictions other than the United States and Canada, and all other material obligations and liabilities of whatever nature which, in each of the foregoing cases, if unpaid, could become a Lien upon the Collateral, and any additional costs that are imposed as a result of any failure to so pay, discharge or otherwise satisfy such Taxes, obligations and liabilities. Each Credit Party 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 GAAP 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. Each Credit Party shall promptly pay or cause to be paid any valid final judgment enforcing any such taxes and cause the same to be satisfied of record.
      Section 6.4 Payment of Indebtedness. Except as would not constitute a Default or an Event of Default pursuant to Section 8.1(d) , each Credit Party shall pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all of its Indebtedness and other material obligations of whatever nature, except for any Indebtedness or other material obligations which are being contested in good faith and by appropriate proceedings if (a) reserves in conformity with GAAP 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.
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      Section 6.5 Conduct of Business and Maintenance of Existence. Each Credit Party shall continue to engage in business of the same general type as conducted by it on the Execution Date; preserve, renew and keep in full force and effect its existence and good standing in its jurisdiction of organization and each other jurisdiction where the failure to so qualify could not reasonably be expected to have a Material Adverse Effect; take all reasonable action to maintain all rights, privileges and franchises necessary or desirable in the normal conduct of its business; comply with all Material Contracts except to the extent that failure to comply therewith could not, in the aggregate, reasonably be expected to have a Material Adverse Effect.
      Section 6.6 Maintenance of Royalty Interests and Defend Title. Each Credit Party shall, at its own cost and expense, maintain, warrant and defend the title to the Material Royalties and the other Collateral against the claims and demands of all Persons whomsoever, except as permitted in writing by the Administrative Agent.
      Section 6.7 Maintenance of Liens. Each Credit Party shall take all action required or desirable to maintain and preserve the Liens of the Administrative Agent on the Collateral and, to the extent required under each Security Document, the first priority thereof. Each Credit Party, at no cost to the Administrative Agent or any Lender, shall from time to time execute, deliver, file and record, and each Credit Party authorizes the Administrative Agent to file and record, any and all further Instruments (including financing statements, continuation statements and similar statements with respect to any of the Security Documents) reasonably requested by the Administrative Agent for such purposes, including such as may be necessary to include within the Collateral (a) any additional real property interests or other increase in the Material Royalties and (b) any other or additional Royalty Interests included or added as a Material Royalty.
      Section 6.8 Maintenance and Perfection of Pledged Assets. Each Credit Party shall, and shall cause each of its Subsidiaries to, cause 100% of the Capital Stock of each company pledged as security for the Obligations to be subject at all times to a first priority, perfected Lien in favor of the Administrative Agent pursuant to the terms and conditions of the Security Documents or such other security documents as the Administrative Agent shall reasonably request, including the delivery of all share certificates therefor.
      Section 6.9 Insurance. Maintain with financially sound and reputable insurance companies (i) insurance on all its property (including without limitation its tangible Collateral) insuring against at least such risks as are usually insured against in the same or a similar business and as required by Requirements of Law and (ii) liability insurance covering at least such risks as are usually insured against in the same or a similar business and as required by Requirements of Law; and furnish to the Administrative Agent, upon request, full information as to the insurance carried. The present insurance coverage of the Credit Parties as of the Execution Date is outlined as to carrier, policy number, expiration date, type and amount on Schedule 6.9 . Upon the request of the Administrative Agent from time to time, each Credit Party shall deliver to the Administrative Agent evidence of the insurance then in effect, including a detailed list of such insurance containing the information set forth on Schedule 6.9 .
      Section 6.10 Inspection of Property; Books and Records; Discussions.
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     (a) Keep proper books of records and accounts in which full, true, correct and complete entries shall be made of all dealings and transactions in relation to its businesses and activities, such entries to be in conformity with GAAP and all Requirements of Law.
     (b) Permit, during normal business hours and upon reasonable notice, the Administrative Agent, any Lender or any agent or representative of the foregoing to examine the books of record and accounts, to visit, examine and inspect the properties of the Credit Parties, to examine and make abstracts from any of the books and records of the Credit Parties and their Subsidiaries and to discuss the affairs, finances and accounts of each Credit Party with such Credit Party’s principal officers, engineers, technical staff and independent accountants, at such intervals as the Administrative Agent may desire; provided , however , that (1) the Administrative Agent, the Lenders and their agents and representatives shall provide such Credit Party with at least five (5) Business Days’ notice of any visit and shall use commercially reasonable efforts not to disrupt such Credit Party’s business during any such visits, and (2) so long as no Event of Default shall have occurred and be continuing, the Credit Parties shall not be responsible for the cost and expense of any visit or inspection to a Project or more than one visit or inspection per calendar year in the aggregate by the Administrative Agent and the Lenders. Upon any request by the Administrative Agent to visit and inspect any Project associated with a Material Royalty, each Credit Party 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 Administrative Agent or its agents or representatives (it being understood that any such inspection or visit shall be (1) at the risk of the Administrative Agent and the Lenders, as applicable, and (2) subject to all limitations applicable to inspections of or visits to such Projects by the Credit Parties).
      Section 6.11 Compliance with Law. Each Credit Party shall, and shall cause each of its Subsidiaries to, comply in all respects with all Requirements of Law, including Environmental Laws and Governmental Approvals, applicable to it and its property, except where any noncompliance or violation has not had, and could not reasonably be expected to have, a Material Adverse Effect.
      Section 6.12 Environmental Laws. Defend, indemnify and hold harmless the Administrative Agent and the Lenders, and their respective Affiliates, employees, agents, consultants, representatives, officers, managers and directors, from and against any and all claims, demands, penalties, fines, liabilities, settlements, damages, costs and expenses of whatever kind or nature, known or unknown, contingent or otherwise, arising out of, or in any way relating to or associated with the violation of, noncompliance with or investigation, liability, claim, lawsuit, failure or action under, any Environmental Law applicable to the operations of the Credit Parties or any of their Subsidiaries or to the Properties or the Projects, or any orders, requirements, remediation, reclamation, settlements, response or demands of Governmental Authorities related thereto, or with respect to the release, presence, handling or disposal of Materials of Environmental Concern at any Property or Project, including reasonable attorney’s and consultant’s fees, investigation and laboratory fees, response costs, court costs and litigation expenses, except to the extent that any of the foregoing arise out of (i) the gross negligence or willful misconduct of the party seeking indemnification therefor as determined by a court of competent jurisdiction in a final and non-appealable judgment or (ii) any other loan facility or other interest in the Properties or the Projects not attributable to this Agreement or the other Credit Documents. The agreements in this paragraph shall survive repayment of the Obligations.
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      Section 6.13 Compliance with Employment Laws. Each Credit Party shall (a) comply with all applicable provisions of ERISA and the regulations and published interpretations thereunder with respect to all Plans, and with Chilean Decree Law 3.500 when applicable, (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 Administrative Agent upon the Administrative Agent’s request such additional information about any Plan as may be reasonably requested by the Administrative Agent.
      Section 6.14 Further Assurances. Each Credit Party shall execute, acknowledge and deliver to the Administrative Agent such other and further documents and Instruments and do or cause to be done such other acts as the Administrative Agent 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 Administrative Agent and the Lenders hereunder, promptly upon request of the Administrative Agent, including the execution and delivery of any and all documents which are necessary or advisable to create, protect or maintain in favor of the Administrative Agent, for the benefit of the Lenders, Liens on all Collateral of the Credit Parties as may be required by this Agreement or any Security Document that are duly perfected in accordance with all applicable Requirements of Law.
      Section 6.15 Financial Covenants. The Credit Parties shall at all times maintain and comply with the following financial covenants:
     (a)  Leverage Ratio . The Leverage Ratio shall be less than or equal to 3.0 to 1.0.
     (b)  Consolidated Net Worth . A Consolidated Net Worth of not less than an amount equal to (i) 80% multiplied by (ii) the sum of (A) $480,782,000, plus (B) 50% of the cumulative positive quarterly net income for the period beginning July 1, 2008 and ending with the most recently completed fiscal quarter for which financial statements have been provided pursuant to Section 6.1(b) .
     (c)  Interest Coverage Ratio . The Interest Coverage Ratio shall be greater than 3.0 to 1.0.
     (d)  Current Ratio . The Current Ratio shall be (i) for the periods ending March 31, 2010 and June 30, 2010, greater than or equal to 1.0 to 1.0; and (ii) all times thereafter, greater than or equal to 1.5 to 1.0.
      Section 6.16 Chilean Security Documents. The Credit Parties shall use their commercially reasonable efforts to finalize, execute and deliver to the Administrative Agent the Chilean Security Documents, in form and content satisfactory to the Administrative Agent, as promptly as practicable after the Execution Date, including: (i) counterparts of each Pledge Agreement and Security Agreement executed by the appropriate Credit Party as a notarial deed, to be delivered as promptly as practicable and in any event by not later than April 30, 2010; (ii) signed and notarized Security Documents as filed, registered, or recorded with each appropriate
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Governmental Authority as may be required or desirable for the attachment, validity, formalization, perfection or enforceability of such Security Document, together with the delivery of any notices in connection therewith, with delivery of the foregoing to be completed as promptly as practicable and in any event by not later than May 31, 2010; (iii) a signed security legal opinion from legal counsel to the Credit Parties, in form and content acceptable to the Administrative Agent, confirming the completion and perfection in favor of the Administrative Agent of fully registered, enforceable first priority Liens on the Material Royalties owned by RG Chile and on the other property rights and interests of each Credit Party that are subject to the Chilean Security Documents, with delivery of the foregoing to be completed as promptly as practicable and in any event by not later than May 31, 2010; and (iv) such other duly executed and notarized agreements, consents, notices, documents, opinions or Instruments as are necessary, in the Administrative Agent’s sole discretion, to formalize, legalize, protect and perfect the Administrative Agent’s fully enforceable, first priority security interest in the Collateral identified in the Chilean Security Documents, and all documents and legal matters in connection with the Chilean Security Documents shall be satisfactory in form and substance to the Administrative Agent and its counsel, with delivery of the foregoing to be completed as promptly as practicable and in any event by not later than May 31, 2010.
      Section 6.17 Repayment of Debentures and Release of Associated Liens
     As promptly as practicable and in any event by not later than the Outside Redemption Date, the Borrower shall redeem the Debentures and terminate and cancel the Indenture. As promptly as practicable and in any event by not later than the Lien Release Date, all Liens existing to secure the Indenture shall have been cancelled, terminated and released.
ARTICLE VII
NEGATIVE COVENANTS
     The Credit Parties hereby covenant and agree that on the Execution Date, and thereafter for so long as this Agreement is in effect and until all the Obligations owing to the Administrative Agent or any Lender hereunder, are irrevocably paid in full, that:
      Section 7.1 Indebtedness. Each of the Credit Parties will not, nor will it permit any Subsidiary to, contract, create, incur, assume or permit to exist any Indebtedness, except, to the extent that none of the following, individually or in the aggregate, would create or result in a breach of the Leverage Ratio:
     (a) Indebtedness arising or existing under this Agreement and the other Credit Documents;
     (b) Indebtedness existing as of the Execution Date as referenced in the financial statements referenced in Section 3.3 (and set out more specifically in Schedule 7.1 hereto) together with any refinancings or replacements thereof that do not increase the principal amount thereof;
     (c) Indebtedness incurred after the Execution Date consisting of Capital Leases or Indebtedness incurred to provide all or a portion of the purchase price of furniture, fixtures and
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equipment provided that (i) such Indebtedness when incurred shall not exceed the purchase price or cost of construction of such furniture, fixtures and equipment; (ii) no such Indebtedness shall be refinanced for a principal amount in excess of the principal balance outstanding thereon at the time of such refinancing; and (iii) the total amount of all such Indebtedness shall not exceed One Million Dollars ($1,000,000) at any time outstanding and renewals, refinancings or extensions thereof in a principal amount not in excess of that outstanding as of the date of such renewal, refinancing or extension;
     (d) Unsecured intercompany Indebtedness between any Credit Parties, between Subsidiaries of the Credit Parties or between any Credit Party and a Subsidiary thereof, including the RG Barbados Subordinated Loan, so long as the Subordination Agreement remains in effect, and the RGLD Canada Intercompany Loan; provided that any such Indebtedness owing by a Credit Party to a Subsidiary shall be fully subordinated to the Obligations hereunder on terms and conditions satisfactory to the Required Lenders;
     (e) Indebtedness and obligations owing under Hedging Agreements entered into in order to manage existing or anticipated business risks and not for speculative purposes; provided, that at all times no such Hedging Agreement requires a Credit Party or a Subsidiary to post collateral or margin to secure its obligations under such Hedging Agreement;
     (f) Indebtedness in respect of Guaranty Obligations to the extent permitted under Section 7.3 ;
     (g) Unsecured Indebtedness issued and owed by a Credit Party or any Subsidiary in an aggregate amount not to exceed Five Million Dollars ($5,000,000) at any time;
     (h) Indebtedness arising or existing under the Revolving Credit Agreement;
     (i) Indebtedness of any Credit Party that is subordinated to the Obligations; provided, however, that (i) the subordination of such Indebtedness is pursuant to a written subordination agreement satisfactory to the Required Lenders in their sole discretion, (ii) the terms, conditions and amount of any such subordinated Indebtedness shall be satisfactory to the Required Lenders in their sole discretion, (iii) the stated maturity date or mandatory redemption date of such subordinated Indebtedness shall not be prior to the Maturity Date, including as such Maturity Date may be extended pursuant to the terms of this Agreement, and (iv) immediately prior to and immediately after giving pro forma effect to the full amount of such subordinated Indebtedness, no Default or Event of Default shall occur hereunder (“ Permitted Subordinated Indebtedness ”); and
     (j) prior to the Outside Redemption Date, Indebtedness arising or existing under the Indenture; provided that the principal amount outstanding thereunder shall not be increased from the amount outstanding as of the Execution Date and no Credit Party or any Subsidiary of any Credit Party shall become liable or obligated with respect to such Indebtedness (other than those Persons currently obligated thereunder that became a Subsidiary upon the closing of the Arrangement).
      Section 7.2 Liens. Each of the Credit Parties will not, nor will it permit any Subsidiary to, directly or indirectly, contract, create, incur, assume, permit or suffer to exist, or
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agree to grant or create, any Lien with respect to any of its property or assets of any kind (whether real or personal, tangible or intangible), including the Royalty Interests or any Collateral, whether now owned or hereafter acquired, except for Permitted Liens. Notwithstanding the foregoing, if a Credit Party shall grant a Lien on any of its assets in violation of this Section 7.2 , then it shall be deemed to have simultaneously granted an equal and ratable Lien on any such assets in favor of the Administrative Agent for the benefit of the Lenders, to the extent such a Lien has not already been granted to the Administrative Agent.
      Section 7.3 Guaranty Obligations. The Credit Parties will not, directly or indirectly, enter into or otherwise become or be liable in respect of any Guaranty Obligations other than (a) those in favor of the Administrative Agent or the Lenders in connection herewith, and (b) Guaranty Obligations by the Credit Parties and their Subsidiaries with respect to Indebtedness permitted under Section 7.1 (except, as regards Indebtedness under subsection (b) thereof, only if and to the extent such Indebtedness was guaranteed on the Execution Date).
      Section 7.4 Nature of Business. Each of the Credit Parties will not, nor will it permit any Subsidiary to, engage in any business activities or operations substantially different from the business of ownership of non-executory interests in mining properties or capital stock of companies in the mining sector and activities and operations reasonably related thereto; provided, however, that the Credit Parties shall be permitted to enter into exploration agreements with respect to mining properties owned by it and into joint venture agreements or other similar business arrangements pursuant to which its executory or ownership interests are convertible into Royalties.
      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 Non-Credit Party at such time as such Non-Credit Party 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 Non-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 Non-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 Non-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
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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
     (iii) the sale, assignment, lease or transfer of property or assets, other than a Material Royalty, to a Credit Party.
      Section 7.6 Mergers. 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) enter into any transaction of amalgamation, merger, consolidation, partnership, joint venture or other combination where such combination involves a contribution by a Credit Party or a Subsidiary thereof of all or a substantial portion of its assets, except, in each case, for (i) the Arrangement and (ii) the amalgamation, merger or consolidation of a Credit Party or a Subsidiary thereof with and into another Credit Party or the amalgamation, merger or consolidation of any Subsidiary that is not a Credit Party with and into another Subsidiary that is not a Credit Party; provided that if a Borrower is a party thereto, such Borrower will be the surviving corporation, or (b) agree to do any of the foregoing at a future time.
      Section 7.7 Advances and Loan. Each of the Credit Parties will not, nor will it permit any Subsidiary to, lend money or extend credit or make advances (collectively, “ Debt Investments ”) to any Person except for: (a) receivables owing to any Credit Party or any of its Subsidiaries, and advances to suppliers and other extensions of trade credit, in each case if created, acquired or made in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; (b) intercompany Debt Investments permitted pursuant to Section 7.1(d) ; (c) non-cash consideration received in connection with sales of property or assets permitted under Section 7.5 ; (d) Debt Investments existing as of the Execution Date as set forth on Schedule 7.7 ; (e) purchases and investments made in connection with the creation, development, acquisition or other investment in any Non-Credit Party Royalty Interests or Royalty Interest; (f) Debt Investments to employees of the Credit Parties or any Subsidiary to finance travel, entertainment and relocation expenses and other ordinary business purposes; (g) customary deposits in connection with operating leases and good faith deposits made in connection with an acquisition otherwise permitted hereunder; (h) Cash Equivalents; (i) Guaranty Obligations otherwise permitted hereunder; and (j) advances of the proceeds of the Initial Loan and other cash necessary to consummate the Arrangement. For clarity, the requirements of this Section 7.7 shall not limit the ability of the Credit Parties or any Subsidiary thereof to make equity investments in or to invest in Royalty Interests.
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      Section 7.8 Transactions with Affiliates. Each of the Credit Parties will not, nor will it permit any Subsidiary to, enter into any transaction or series of transactions, whether or not in the ordinary course of business, with any officer, director, shareholder or Affiliate that is not a Credit Party or Subsidiary thereof other than on terms and conditions substantially as favorable as would be obtainable in a comparable arm’s-length transaction with a Person other than an officer, director, shareholder or Affiliate, except for (a) dividends and distributions to shareholders otherwise permitted hereunder, (b) expense reimbursement and reasonable salaries and other reasonable director or employee compensation to officers and directors of the Credit Parties and their Subsidiaries, and (c) advances or extensions of credit of the proceeds of the Initial Loan and other cash necessary to consummate the Arrangement.
      Section 7.9 Organizational Documents. Each of the Credit Parties will not, nor will they permit any of its Subsidiaries to, amend, modify or change their articles of incorporation (or corporate charter or other similar organizational document), operating agreement or bylaws (or other similar document) in any material respect, except for the Permitted Bylaw Amendments.
      Section 7.10 Modification of Material Agreements. Each of the Credit Parties will not, nor will it permit any of its Subsidiaries to, without the approval of the Administrative Agent, modify or amend any agreement pertaining to a Material Royalty, any Material Contract or any confidentiality agreements or provisions to which a Credit Party is a party or otherwise subject in connection with a Material Royalty or a Material Contract if such modification or amendment would be adverse to the Lenders in any material respect. With respect to any confidentiality agreement that any Credit Party may execute with respect to (i) any existing agreement pertaining to a Material Royalty or a Project related thereto, or (ii) any Royalty Interest or the Project associated with such Royalty Interest acquired after the date hereof with the proceeds of the Loan, such Credit Party shall use commercially reasonable efforts to include appropriate provisions in such confidentiality agreement authorizing the Credit Parties to provide to the Administrative Agent and the Lenders information obtained by such Credit Party pursuant to such confidentiality agreement.
      Section 7.11 Limitation on Restricted Actions. Each of the Credit Parties will not, nor will it permit any Subsidiary to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any such Person to (a) pay dividends or make any other distributions to any Credit Party on its Capital Stock or with respect to any other interest or participation in, or measured by, its profits, (b) pay any Indebtedness or other obligation owed to any Credit Party, (c) make loans or advances to any Credit Party, (d) sell, lease or transfer any of its properties or assets to any Credit Party, or (e) act as a Guarantor and pledge its assets pursuant to the Credit Documents, except (in respect of any of the matters referred to in clauses (a)-(e) above) for such encumbrances or restrictions existing under or by reason of (i) this Agreement and the other Credit Documents, (ii) applicable Requirements of Law, (iii) pursuant to any document or Instrument governing Indebtedness permitted by Section 7.1(c), (h) or (j) , provided that any such restriction contained therein relates only to the asset or assets constructed or acquired in connection therewith, (iv) any Permitted Lien or any document or Instrument governing any Permitted Lien, provided that any such restriction contained therein relates only to the asset or assets subject to such Permitted Lien, (v) customary restrictions on the assignment of or granting of a Lien on a particular lease, sublease, license or contract set forth in such lease, sublease, license or contract entered into in the
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ordinary course of business, (vi) restrictions on the pledge of interests in or assets of joint ventures contained in the applicable joint venture agreement, (vii) customary restrictions and conditions relating to a disposition of property or assets permitted hereunder pending the consummation of such disposition, and (viii) the Revolving Credit Agreement.
      Section 7.12 Maintenance of Material Royalties. Each of the Credit Parties will not, nor will it permit any Subsidiary to, 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 a Credit Party or the Administrative Agent or the Lenders in or with respect to a Material Royalty or any Metals accruing to the account of a Credit Party pursuant thereto.
      Section 7.13 Canadian Pension Plans. Each Credit Party shall not:
     (a) terminate, or permit any other Credit Party to terminate, any Canadian Pension Plan in a manner, or take any other action with respect to any Canadian Pension Plan which could reasonably be expected to result in any material liability of a Credit Party;
     (b) fail to make, or permit any other Credit Party to fail to make, full payment when due of all amounts which, under the provisions of any Canadian Pension Plan, any agreement relating thereto or applicable Law, the Borrower or any other Credit Party is required to pay as contributions thereto, except where the failure to make such payments could not reasonably be expected to have a Material Adverse Effect,
     (c) permit to exist, or allow any other Credit Party to permit to exist, any accumulated funding deficiency, whether or not waived, with respect to any Canadian Pension Plan in an amount which could reasonably be expected to have a Material Adverse Effect;
     (d) contribute to or assume an obligation to contribute to, or permit any other Credit Party to contribute to or assume an obligation to contribute to, any “multi-employer pension plan” as such term is defined in the Pension Benefits Act (Ontario), unless such contribution is required to be made by a Requirement of Law;
     (e) acquire, or permit any other Credit Party to acquire, an interest in any Person if such Person sponsors, maintains or contributes to, or at any time in the six-year period preceding such acquisition has sponsored, maintained, or contributed to any “multi-employer pension plan” as such term is defined in the Pension Benefits Act (Ontario); provided that, any Credit Party may acquire an interest in any such Person if such Person is acquired as a Permitted Acquisition and no Credit Party has any legal liability to perform such Person’s obligations or assume such Person’s liabilities; or
     (f) permit, or allow any other Credit Party to permit, the actuarial present value of the benefit liabilities (computed on an accumulated benefit obligation basis in accordance with GAAP) under all Canadian Pension Plans in the aggregate to exceed the current value of the assets of all Canadian Pension Plans in the aggregate that are allocable to such benefit liabilities, in each case only to the extent such liabilities and assets relate to benefits to be paid to employees of the Credit Parties, by an amount that could reasonably be expected to cause a Material Adverse Effect.
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      Section 7.14 No Further Negative Pledges. Each of the Credit Parties will not, nor will it permit any Subsidiary to, enter into, assume or become subject to any agreement prohibiting or otherwise restricting the creation or assumption of any Lien upon its properties or assets, whether now owned or hereafter acquired, or requiring the grant of any security to secure obligations under such agreement if security is given for some other obligation, except (a) pursuant to this Agreement and the other Credit Documents, (b) pursuant to any document or Instrument governing Indebtedness incurred pursuant to Section 7.1(c), (h) or (j) , provided that any such restriction contained therein relates only to the asset or assets constructed or acquired in connection therewith, (c) in connection with any Permitted Lien or any document or Instrument governing any Permitted Lien, provided that any such restriction contained therein relates only to the asset or assets subject to such Permitted Lien, (d) customary restrictions on the assignment of or granting of a lien on a particular lease, sublease, license or contract set forth in such lease, sublease, license or contract entered into in the ordinary course of business, (e) restrictions on the pledge of interests in or assets of joint ventures contained in the applicable joint venture agreement, (f) customary restrictions and conditions relating to a disposition of property or assets permitted hereunder pending the consummation of such disposition, and (g) the Revolving Credit Agreement.
      Section 7.15 No Prepayment of Permitted Subordinated Indebtedness. To the extent that any Borrower has incurred Permitted Subordinated Indebtedness in accordance with Section 7.1(i) hereof, such Borrower shall pay such Permitted Subordinated Indebtedness only in accordance with the terms thereof and shall not (i) voluntarily prepay any principal of or interest on any such Permitted Subordinated Indebtedness, (ii) use proceeds from the Loan to make any payment or prepayment of principal of or interest on, or to create a sinking fund payment in respect of, any such Permitted Subordinated Indebtedness, or (iii) pay, prepay, redeem or purchase or deposit funds or property for the payment, prepayment, redemption or purchase of Permitted Subordinated Indebtedness, except, in each case, for regularly scheduled interest payments on the Permitted Subordinated Indebtedness made in compliance with the subordination terms thereof. The Borrower shall not make any payment on any Permitted Subordinated Indebtedness if such payment would violate the subordination provisions thereof or result in a Default or Event of Default hereunder.
      Section 7.16 Restrictive and Inconsistent Agreements. Each of the Credit Parties will not, nor will it permit any Subsidiary to, enter into any agreement, Instrument or undertaking or incur or suffer any obligation prohibiting or inconsistent with the performance by such Credit Party of the Obligations or its obligations under any Royalty Agreement.
ARTICLE VIII
EVENTS OF DEFAULT
      Section 8.1 Events of Default. An Event of Default shall exist upon the occurrence of any of the following specified events (each an “ Event of Default ”):
     (a) Any Borrower shall fail to pay (i) any principal on the Loan when due (whether at maturity, by reason of acceleration or otherwise) in accordance with the terms hereof, or (ii) within five (5) Business Days of the date when due, any interest, costs, fees or any other
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Obligation or other amount payable hereunder or under any Credit Document when due (whether at maturity, by reason of acceleration or otherwise) in accordance with the terms hereof; or any Guarantor shall fail to pay on the Guaranty in respect of any of the foregoing or in respect of any other Guaranty Obligations hereunder; or
     (b) Any representation or warranty of a Credit Party made or deemed made herein, in the Security Documents or in any of the other Credit Documents or which is contained in any certificate, document or financial statement furnished at any time under or in connection with this Agreement provided by a Responsible Officer shall prove to have been incorrect, false or misleading in any material respect on or as of the date made or deemed made; or
     (c) Any Credit Party shall fail to observe, perform or comply with any covenant contained in this Agreement (other than the covenants referred to in paragraph (a) above) and such Credit Party shall have not remedied such default within ten (10) days after written notice of such default has been given by the Administrative Agent to the Borrower; or
     (d) A default shall occur under any Credit Document, any Royalty Agreement pertaining to a Material Royalty or any agreement pertaining to Indebtedness permitted hereunder; or any Credit Party or any Subsidiary thereof shall fail to pay any Indebtedness with a value, individually or in the aggregate, in excess of Two Million Five Hundred Thousand Dollars ($2,500,000) (excluding Indebtedness evidenced by the Note) 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 Indebtedness; or any other default under any Instrument relating to any such Indebtedness, 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 Indebtedness; or any such Indebtedness 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; or, other than as described in this Agreement, any Credit Party shall default or fail to perform under any Credit Document and such Credit Party shall have not remedied such default within ten (10) days after written notice of such default has been given by the Administrative Agent to the Borrower; or
     (e) An “Event of Default” (as defined in the Revolving Credit Agreement) shall occur and be continuing under the Revolving Credit Agreement;
     (f) (i) Any Credit Party or any of its Subsidiaries shall initiate or commence any case, proceeding or other action (A) under any existing or future Bankruptcy Law or at common law or in equity, or otherwise seeking to have it judged bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, compromise, protection, moratorium, relief, stay of proceedings of creditors generally (or any class of creditors), composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or any Credit Party or any of its Subsidiaries shall make a general assignment for the benefit of its creditors; or (ii) any Canadian Credit Party shall commit an act of bankruptcy under the Bankruptcy and Insolvency Act (Canada), or makes an assignment of its property for the general benefit of its creditors under such Act, or makes a proposal (or files a
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notice of its intention to do so) under such Act; or (iii) there shall be commenced against any Credit Party or any of its Subsidiaries any case, proceeding or other action of a nature referred to in clause (i) above (including without limitation any petition or application being filed or made or other proceeding instituted against such Credit Party seeking a receiving order under the Bankruptcy and Insolvency Act (Canada) which (A) results in the entry of an order for relief or any such adjudication or appointment; (B) remains undismissed, undischarged or unbonded for a period of sixty (60) days; or C) in respect of which such Credit Party files an answer admitting the material allegations of a petition filed against it in any such proceeding; or (iv) there shall be commenced against any Credit Party or any of its Subsidiaries any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of their assets which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within sixty (60) days from the entry thereof; or iv) any Credit Party or any of its Subsidiaries shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), (iii), or (iv) above; or (vi) any Credit Party or any of its Subsidiaries shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due; or
     (g) One or more judgments, orders, decrees or arbitration awards shall be entered against any Credit Party or any Subsidiary thereof involving in the aggregate a liability (to the extent not covered by third-party insurance with respect to which coverage has not been disputed by the insurer) of Two Million Five Hundred Thousand Dollars ($2,500,000) or more, and all such judgments, orders, decrees or arbitration awards shall not have been paid and satisfied, vacated, discharged, stayed or bonded pending appeal within thirty (30) days from the entry thereof, or any injunction, temporary restraining order or similar decree shall be issued against any Credit Party, any of its Subsidiaries or any of their respective Properties or Projects that could reasonably be expected to result in a Material Adverse Effect; or
     (h) Any involuntary Lien or Liens for amounts then due in the aggregate sum of Two Hundred Fifty Thousand Dollars ($250,000) or more, of any kind or character (other than Permitted Liens) shall attach to any assets or property of any Credit Party 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; or
     (i) An Expropriation Event occurs with respect to any Material Royalty or a Material Royalty is sold under threat of such taking, or possession of any material portion of a Project Property pertaining to a Material Royalty is taken through exercise of such power; or
     (j) Any Governmental Authority shall commence an investigation or take any action with respect to any Credit Party or any Project or the Collateral, which would result in a Material Adverse Effect on any Credit Party, 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; or
     (k) There shall exist a defect or deficiency in title to any Royalty Interest or the Project Properties (other than Permitted Liens) which results in a Material Adverse Effect, and
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the Credit Parties have not remedied such defect or deficiency within ten (10) days after written notice of default has been given to the Borrower by the Administrative Agent or any Lender; or
     (l) Any Lien established or purported to be established by the Security Documents shall fail to constitute a valid and effective Lien in the Collateral described therein, perfected and with first priority to the extent required by this Agreement or the Security Document related thereto, or any Credit Party shall so state in writing, and the Credit Parties have not remedied such default within ten (10) days after written notice of default has been given to the Borrower by the Administrative Agent or any Lender; or
     (m) There shall occur a Change of Control; or
     (n) A Guaranty or any provision thereof for any reason shall cease to be in full force and effect or any Guarantor or any Person acting by or on behalf of any Guarantor shall deny or disaffirm any Guarantor’s obligations under any Guaranty; or
     (o) Any other Credit Document shall fail to be in full force and effect or to give the Administrative Agent and/or the Lenders the rights, powers and privileges purported to be created thereby in any material respect (except as such documents may be terminated or no longer in force and effect in accordance with the terms thereof, other than those indemnities and provisions which by their terms shall survive).
      Section 8.2 Acceleration; Remedies. Upon the occurrence and during the continuation of an Event of Default, then, (a) if such event is an Event of Default specified in Section 8.1(f) above, automatically the Loan (with accrued interest thereon), and all other Obligations under the Credit Documents shall immediately become due and payable, without notice from the Administrative Agent or any Lender, and (b) if such event is any other Event of Default, any of the following actions may be taken: with the written consent of the Required Lenders, the Administrative Agent may, or upon the written request of the Required Lenders, the Administrative Agent shall, (i) by notice of default to the Borrower, declare the Loan (with accrued interest thereon) and all other Obligations under the Credit Documents to be due and payable forthwith, whereupon the same shall immediately become due and payable, (ii) hire, at the expense of the Credit Parties, one or more Independent Engineers or other consultants, and the Credit Parties agree to cooperate with such engineers and consultants, (iii) exercise any rights or remedies of the Administrative Agent or the Lenders under this Agreement or any other Credit Document, including, without limitation, any rights or remedies with respect to the Collateral, and (iv) exercise any and all rights or remedies available to the Administrative Agent or Lenders under applicable Requirements of Law, whether under law, in equity or otherwise.
ARTICLE IX
THE AGENT
      Section 9.1 Appointment. Each Lender hereby irrevocably designates and appoints HSBC Bank as the Administrative Agent of such Lender under this Agreement, and each such Lender irrevocably authorizes HSBC Bank, as the Administrative Agent for such Lender, to take such action on its behalf under the provisions of this Agreement and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of this
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Agreement, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or otherwise exist against the Administrative Agent.
      Section 9.2 Delegation of Duties. The Administrative Agent may execute any of its duties under this Agreement by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care. Without limiting the foregoing, the Administrative Agent may appoint one of its affiliates as its agent to perform the functions of the Administrative Agent hereunder relating to the advancing of funds to the Borrower and distribution of funds to the Lenders and to perform such other related functions of the Administrative Agent hereunder as are reasonably incidental to such functions.
      Section 9.3 Exculpatory Provisions. Neither the Administrative Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or affiliates shall be (i) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement (except for its or such Person’s own gross negligence or willful misconduct) or (ii) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by the Borrower or any officer thereof contained in this Agreement or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Agreement or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of any of the Credit Documents or for any failure of the Borrower to perform their obligations hereunder or thereunder. The Administrative Agent shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance by the Borrower of any of the agreements contained in, or conditions of, this Agreement, or to inspect the properties, books or records of the Borrower.
      Section 9.4 Reliance by Administrative Agent. The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon the Note, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype message, statement, order or other document or conversation believed by it in good faith to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to the Borrower), independent accountants and other experts selected by the Administrative Agent. The Administrative Agent may deem and treat the payee of the Note as the owner thereof for all purposes unless (a) a written notice of assignment, negotiation or transfer thereof shall have been filed with the Administrative Agent and (b) the Administrative Agent shall have received the written agreement of such assignee to be bound hereby as fully and to the same extent as if such assignee were an original Lender party hereto, in each case in form satisfactory to the Administrative Agent. The Administrative Agent shall be fully justified in failing or refusing to take any action under this Agreement unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of
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taking or continuing to take any such action. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under any of the Credit Documents in accordance with a request of the Required Lenders or all of the Lenders, as may be required under this Agreement, and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Note.
      Section 9.5 Notice of Default. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless the Administrative Agent has received notice from a Lender or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default”. In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give prompt notice thereof to the Lenders. The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders; provided , however , that unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders except to the extent that this Agreement expressly requires that such action be taken, or not taken, only with the consent or upon the authorization of the Required Lenders, or all of the Lenders, as the case may be.
      Section 9.6 Non-Reliance on Administrative Agent and Other Lenders. Each Lender expressly acknowledges that neither the Administrative Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or affiliates has made any representation or warranty to it and that no act by the Administrative Agent hereinafter taken, including any review of the affairs of the Borrower, shall be deemed to constitute any representation or warranty by the Administrative Agent to any Lender. Each Lender represents to the Administrative Agent that it has, independently and without reliance upon the Administrative Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and creditworthiness of the Borrower and made its own decision to make its Commitment Percentage of the Loan hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon the Administrative Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Borrower. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, condition (financial or otherwise), prospects or creditworthiness of the Borrower which may come into the possession of the Administrative Agent or any of its officers, directors, employees, agents, attorneys-in-fact or affiliates.
      Section 9.7 Indemnification. The Lenders agree to indemnify the Administrative Agent in its capacity hereunder (to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so), ratably according to their respective
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Commitment Percentages in effect on the date on which indemnification is sought under this Section 9.7 , from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever which may at any time (including, without limitation, at any time following the payment of the Note) be imposed on, incurred by or asserted against the Administrative Agent in any way relating to or arising out of any Credit Document or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by the Administrative Agent under or in connection with any of the foregoing; provided , however , that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements to the extent resulting from the Administrative Agent’s gross negligence or willful misconduct, as determined by a court of competent jurisdiction. The agreements in this Section 9.7 shall survive the termination of this Agreement and payment of the Note and all other amounts payable hereunder.
      Section 9.8 Administrative Agent in Its Individual Capacity. The Administrative Agent and its affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Borrower as though the Administrative Agent were not the Administrative Agent hereunder. With respect to the Committed Percentage of the Loan made or renewed by it and the Note (with respect to the portion of the Note corresponding to the Administrative Agent’s Committed Percentage of the Loan), the Administrative Agent shall have the same rights and powers under this Agreement as any Lender and may exercise the same as though it were not the Administrative Agent, and the terms “Lender” and “Lenders” shall include the Administrative Agent in its individual capacity.
      Section 9.9 Successor Administrative Agent. The Administrative Agent may resign as Administrative Agent upon thirty (30) days’ prior notice to the Borrower and the Lenders. If the Administrative Agent shall resign as Administrative Agent under this Agreement and the Note, then the Required Lenders shall appoint from among the Lenders a successor agent for the Lenders, which successor agent shall be approved by the Borrower with such approval not to be unreasonably withheld (provided, however if an Event of Default shall exist at such time, no approval of the Borrower shall be required hereunder), whereupon such successor agent shall succeed to the rights, powers and duties of the Administrative Agent, and the term “Administrative Agent” shall mean such successor agent effective upon such appointment and approval, and the former Administrative Agent’s rights, powers and duties as Administrative Agent shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or any of the parties to this Agreement or any holders of the Note. After any retiring Administrative Agent’s resignation as Administrative Agent, the provisions of this Section 9.9 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement.
      Section 9.10 Nature of Duties. Except as otherwise expressly stated herein, any agent (other than the Administrative Agent) listed from time to time on the cover page of this Agreement shall have no obligations, responsibilities or duties under this Agreement or under any other Credit Document other than obligations, responsibilities and duties applicable to all Lenders in their capacity as Lenders; provided, however, that such agents shall be entitled to the same rights, protections, exculpations and indemnifications granted to the Administrative Agent under this Article IX in their capacity as an agent.
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      Section 9.11 Quebec Security .
     (a) For greater certainty each of the Lenders hereby irrevocably constitutes HSBC Bank USA, National Association as the holder of an irrevocable power of attorney ( fondé de pouvoir within the meaning of Article 2692 of the Civil Code of Québec ) in order to hold hypothecs and security granted by any Credit Party on property pursuant to the laws of the Province of Québec in order to secure obligations of any Credit Party under any bond, debenture or similar title of indebtedness, issued by any Credit Party, and hereby agrees that the Administrative Agent, may act as the bondholder and mandatary (i.e. agent) with respect to any shares, capital stock or other securities or any bond, debenture or similar title of indebtedness that may be issued by any Credit Party and pledged in favour of the Administrative Agent, for the benefit of the Lenders. The execution by HSBC Bank USA, National Association, acting as fondé de pouvoir and mandatary, prior to the Credit Agreement of any deeds of hypothec or other security documents is hereby ratified and confirmed.
     (b) Notwithstanding the provisions of Section 32 of An Act respecting the special powers of legal persons (Québec), the Administrative Agent may acquire and be the holder of any bond or debenture issued by any Credit Party (i.e. the fondé de pouvoir may acquire and hold the first bond issued under any deed of hypothec by any Credit Party).
     (c) The constitution of HSBC Bank USA, National Association as fondé de pouvoir , and of the Administrative Agent as bondholder and mandatary with respect to any bond, debenture, shares, capital stock or other securities that may be issued and pledged from time to time to the Administrative Agent for the benefit of the Lenders, shall be deemed to have been ratified and confirmed by each Person accepting an assignment of, a participation in or an arrangement in respect of, all or any portion of any Lenders’ rights and obligations under the Credit Agreement by the execution of an assignment, including a joinder agreement, or other agreement pursuant to which it becomes such assignee or participant, and by each successor Administrative Agent by the execution of an assignment and assumption agreement or other agreement, or by the compliance with other formalities, as the case may be, pursuant to which it becomes a successor Administrative Agent under the Credit Agreement.
     (d) HSBC Bank USA, National Association acting as fondé de pouvoir shall have the same rights, powers, immunities, indemnities and exclusions from liability as are prescribed in favour of the Administrative Agent in the Credit Agreement, which shall apply mutatis mutandis to HSBC Bank USA, National Association acting as fondé de pouvoir .
ARTICLE X
MISCELLANEOUS
      Section 10.1 Amendments, Waivers and Release of Collateral. Neither this Agreement, nor the Note, nor any of the other Credit Documents, nor any terms hereof or thereof may be amended, supplemented, waived or modified except in accordance with the provisions of this Section 10.1 nor may be released except as specifically provided herein or in the Security Documents or in accordance with the provisions of this Section 10.1 . The Required Lenders may, or, with the written consent of the Required Lenders, the Administrative Agent may, from
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time to time, (a) enter into with the Borrower written amendments, supplements or modifications hereto and to the other Credit Documents for the purpose of adding any provisions to this Agreement or the other Credit Documents or changing in any manner the rights of the Lenders or of the Borrower hereunder or thereunder or (b) waive, on such terms and conditions as the Required Lenders may specify in such instrument, any of the requirements of this Agreement or the other Credit Documents or any Default or Event of Default and its consequences; provided , however , that no such waiver and no such amendment, supplement, modification or release shall:
     (i) (A) reduce or increase the amount or extend the scheduled date of maturity of the Loan or Note or any installment thereon or waive any payment default (other than a payment default that has been cured), or (B) reduce the stated rate of any interest or fee payable hereunder (other than interest at the increased post-default rate) or extend the scheduled date of any payment thereof, in each case without the written consent of all Lenders,
     (ii) increase the Committed Amount without the written consent of all Lenders or the amount of any Lender’s Commitment without the written consent of all Lenders directly affected thereby, or
     (iii) amend, modify or waive any provision of this Section 10.1 or change the percentages specified in the definition of Required Lenders, without the written consent of all the Lenders, or
     (iv) amend, modify or waive any provision of Article IX without the written consent of the then Administrative Agent, or
     (v) release a Borrower or any other Credit Party from its obligations under the Credit Documents or any Guarantor from its obligations under the Guaranty, without the written consent of all of the Lenders, or
     (vi) release all of the Collateral or any material portion of the Collateral that would result in the value of the Collateral being less than the Collateral Requirement or amend the definition of Collateral Requirement, in each case, without the written consent of all of the Lenders; or
     (vii) amend, modify or waive any provision of the Credit Documents requiring consent, approval or request of the Required Lenders or all Lenders, without the written consent of all of the Required Lenders or all Lenders, as appropriate, and, provided , further , that no amendment, waiver or consent affecting the rights or duties of the Administrative Agent under any Credit Document shall in any event be effective, unless in writing and signed by the Administrative Agent, as applicable, in addition to the Lenders required hereinabove to take such action.
     Any such waiver, any such amendment, supplement or modification and any such release shall apply equally to each of the Lenders and shall be binding upon the Borrower, the other Credit Parties, the Lenders, the Administrative Agent and all future holders of the Note. In the case of any waiver, the Borrower, the other Credit Parties, the Lenders, and the Administrative Agent shall be restored to their former position and rights hereunder and under the outstanding
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Loan and Note and other Credit Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing; but no such waiver shall extend to any subsequent or other Default or Event of Default, or impair any right consequent thereon.
     Notwithstanding any of the foregoing to the contrary, the consent of the Borrower shall not be required for any amendment, modification or waiver of the provisions of Article IX (other than the provisions of Section 9.9 ); provided , however , that the Administrative Agent will provide written notice to the Borrower of any such amendment, modification or waiver.
     Notwithstanding the fact that the consent of all the Lenders is required in certain circumstances as set forth above, (x) each Lender is entitled to vote as such Lender sees fit on any reorganization plan or similar action under applicable Bankruptcy Law that affects the Loan, and each Lender acknowledges that applicable Bankruptcy Law may supersede the unanimous consent provisions set forth herein and (y) the Required Lenders may consent to allow a Credit Party to use cash collateral in the context of a bankruptcy or insolvency proceeding.
      Section 10.2 Substitution of Lenders. In the event (a) the Borrower receives a claim from any Lender for compensation under Section 2.10 hereof, (b) the Borrower receives notice from any Lender of any illegality pursuant to Section 2.9 hereof, (c) any Lender is in default in any material respect with respect to its obligations under the Credit Documents, or (d) a Lender or Participant fails to consent to an amendment or waiver requested under Section 10.1 or Section 10.7(b) hereof, as applicable, at a time when the Required Lenders or other Participants, as applicable, have approved such amendment or waiver (any such Lender or Participant referred to in clause (a), (b), (c), or (d) above being hereinafter referred to as an “ Affected Lender ”), the Borrower may, so long as no Default or Event of Default has occurred and remains outstanding, in addition to any other rights the Borrower may have hereunder or under applicable law, require, at its expense, any such Affected Lender to assign, at par, without recourse, all of its interest, rights, and obligations hereunder (including all of its Commitments and the Loan and other amounts at any time owing to it hereunder and the other Credit Documents) to an Eligible Assignee specified by the Borrower, provided that (i) such assignment shall not conflict with or violate any law, rule or regulation or order of any court or other governmental authority, (ii) the Borrower shall have paid to the Affected Lender all monies (together with amounts due such Affected Lender hereunder as if the Loan owing to it were prepaid rather than assigned) other than such principal owing to it hereunder, and (iii) the assignment is entered into in accordance with, and subject to the consents required by (other than the consent of the Affected Lender), Section 10.7 hereof (provided any assignment fees and reimbursable expenses due thereunder shall be paid by the Borrower).
      Section 10.3 Notices. Except as otherwise provided in Article II, all notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by facsimile or e-mail), and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made (a) when delivered by hand, (b) when transmitted via telecopy (or other facsimile device) to the number set out herein, (c) the Business Day immediately following the day on which the same has been delivered prepaid (or pursuant to an invoice arrangement) to a reputable national overnight air courier service, (d) the third (3 rd ) Business Day following the day on which the same is sent by certified or registered mail, postage prepaid, or (e) when delivered by e-mail, upon the sender’s receipt of an acknowledgment from the intended recipient (such as
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by the “return receipt requested” function, as available, return e-mail or other written acknowledgment), provided that if such notice, request or demand is not sent during the normal business hours of the recipient, such notice, request or demand shall be deemed to have been sent at the opening of business on the next Business Day for the recipient, in each case, addressed as follows in the case of the Borrower, the other Credit Parties and the Administrative Agent, and, with respect to each Lender, as set forth in the Lenders’ Administrative Details Schedule, or to such other address as may be hereafter notified by the respective parties hereto and any future holders of the Note:
     The Borrower and the other Credit Parties:
c/o Royal Gold, Inc.
1660 Wynkoop Street, Suite 1000
Denver, Colorado 80202-1132
Attention: Chief Financial Officer
Facsimile: (303) 595-9385
E-mail:swenger@royalgold.com
Telephone: (303) 573-1660
with a copy to:
c/o Royal Gold, Inc.
1660 Wynkoop Street, Suite 1000
Denver, Colorado 80202-1132
Attention: General Counsel
Facsimile: (303) 595-9385
E-mail:bkirchhoff@royalgold.com
Telephone: (303) 573-1660
     The Administrative Agent:
HSBC Bank USA, National Association
452 Fifth Avenue
New York, New York 10018
Attention: Mr. Bill Edge
Facsimile: (212) 525-6581
E-mail: bill.edge@us.hsbc.com
Telephone: (212) 525-6481
      Section 10.4 No Waiver; Cumulative Remedies . No failure to exercise and no delay in exercising, on the part of the Administrative Agent or any Lender, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.
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      Section 10.5 Survival of Representations and Warranties . All representations and warranties made hereunder and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the Note and the making of the Loan.
      Section 10.6 Payment of Expenses and Taxes; Indemnification .
     (a) The Borrower agrees to pay within thirty (30) days after receipt of an invoice therefor, all costs and expenses in connection with the preparation, negotiation, execution, delivery, registration and administration of this Agreement, the Note and the other Credit Documents and any amendment, supplement or modification to or extension or restatement of, this Agreement and the other Credit Documents and any other documents prepared in connection herewith or therewith, and the consummation and administration of the transactions contemplated hereby and thereby, including the reasonable fees and out-of-pocket expenses of counsel and of technical advisors and consultants for the Administrative Agent with respect thereto and with respect to advising the Administrative Agent as to its rights and responsibilities under this Agreement; provided, however, that so long as no Event of Default shall have occurred and be continuing, the Borrower’s prior written consent (not to be unreasonably withheld) shall be obtained before the Administrative Agent retains a technical advisor or other technical consultant. 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 Lenders under, or the enforcement of, or legal advice in respect of the rights or responsibilities of the Lenders under, this Agreement, the Note and the other Credit Documents, including losses, costs and expenses sustained by the Lenders as a result of any failure by any Borrower to perform or observe its obligations contained herein or in the Note held by the Lenders or in connection with any refinancing or restructuring of the Loan in the nature of a “workout.” The Borrower further agrees to pay on demand, and to indemnify, and hold each Lender and the Administrative Agent harmless from, any and all recording and filing fees and any and all liabilities with respect to, or resulting from any delay in paying, stamp, excise and other similar taxes, if any, which may be payable or determined to be payable in connection with the execution and delivery of, or consummation or administration of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, the Credit Documents and any such other documents
     (b) Each Credit Party agrees to pay, indemnify, and hold each Lender, the Administrative Agent, their respective Affiliates and their respective directors, partners, managers, principals, officers, employees, agents, consultants and representatives (collectively, the “ Indemnified Parties ”) harmless from and against, any and all other liabilities, obligations, losses, damages, penalties, actions, claims, judgments, awards, fines, settlements, suits, costs, charges, expenses or disbursements of any kind or nature whatsoever (irrespective of whether the Indemnified Party is named as a party to any litigation or proceeding and whether it is joint, several or joint and several) with respect to the execution, delivery, enforcement, performance and administration of any Credit Document, any such other documents, agreements and Instruments or the transactions contemplated thereby, the use, or proposed use, of proceeds of the Loan, or otherwise with respect to any Project or Property or any activity, occurrence or event thereon or associated therewith (all of the foregoing, collectively, a “ Third Party Claim ”), and will reimburse the Indemnified Parties for all costs and expenses (including reasonable
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attorneys’ fees and expenses) on demand as they are incurred in connection with the investigation of, preparation for or defense or prosecution of any pending or threatened Third Party Claim or any action or proceeding arising therefrom; provided , however , that the Borrower shall not have any obligation hereunder to the Administrative Agent or any Lender with respect to Third Party Claims arising from (i) the gross negligence or willful misconduct of the Administrative Agent or any such Lender, as determined by a court of competent jurisdiction in a final and non-appealable judgment or (ii) any other loan facility involving the Administrative Agent or a Lender and a Property or Project that does not involve or is not attributable to a Credit Party, a Credit Party’s interest therein or actions with respect thereto, this Agreement or any other Credit Document; provided , further , that (i) each Indemnified Party shall promptly notify the Borrower in writing upon becoming aware of the initiation of any Third Party Claim against it, (ii) the Borrower shall be entitled to participate in the defense of any such Third Party Claim and, if the Borrower so chooses, to assume the defense, at the Borrower’s expense, of any such Third Party Claim with counsel selected by the Borrower (it being understood that any Indemnified Party shall have the right to participate in such defense and employ counsel separate from the counsel employed by the Borrower, and that such counsel shall be at the expense of such Indemnified Party unless such Indemnified Party shall have been advised by counsel that there may be legal defenses available to it that are inconsistent with or in addition to those available to the Borrower, in which case such counsel shall be at the Borrower’s expense) and (iii) no Indemnified Party shall settle any Third Party Claim without the Borrower’s prior written consent (such consent not to be unreasonably withheld). The agreements in this Section 10.6 shall survive repayment of the Loan, Note and all other amounts payable hereunder.
      Section 10.7 Successors and Assigns; Participations; Purchasing Lenders .
     (a) This Agreement shall be binding upon and inure to the benefit of the Borrower, the Lenders, the Administrative Agent, all future holders of the Note and their respective successors and assigns, except that the Borrower and the Guarantors may not assign or transfer any of their rights or obligations under this Agreement or the other Credit Documents without the prior written consent of all the Lenders.
     (b) Any Lender may, in the ordinary course of its commercial banking business and in accordance with applicable law, at any time sell to one or more banks or other entities (“ Participants ”) participating interests in the Loan owing to such Lender, the Note held by such Lender, any Commitment of such Lender, or any other interest of such Lender hereunder. In the event of any such sale by a Lender of participating interests to a Participant, such Lender’s obligations under this Agreement to the other parties to this Agreement shall remain unchanged, such Lender shall remain solely responsible for the performance thereof, and the Borrower and the Administrative Agent shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. No Lender shall transfer or grant any participation under which the Participant shall have rights to approve any amendment to or waiver of this Agreement or any other Credit Document except to the extent such amendment or waiver would (i) extend the scheduled maturity of the Loan or Note or any installment thereon in which such Participant is participating, or reduce the stated rate or extend the time of payment of interest or fees thereon (except in connection with a waiver of interest at the increased post-default rate) or reduce the principal amount thereof, or increase the amount of the Participant’s participation over the amount thereof then in effect (it being understood that a
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waiver of any Default or Event of Default shall not constitute a change in the terms of such participation, and that an increase in any Commitment or the Loan shall be permitted without consent of any participant if the Participant’s participation is not increased as a result thereof), (ii) release all or substantially all of the Guarantors from their obligations under the Guaranty, (iii) release all or substantially all of the Collateral, or (iv) consent to the assignment or transfer by the Borrower or the Guarantors of any of their rights and obligations under this Agreement. In the case of any such participation, the Participant shall not have any rights under this Agreement or any of the other Credit Documents (the Participant’s rights against such Lender in respect of such participation to be those set forth in the agreement executed by such Lender in favor of the Participant relating thereto) and all amounts payable by the Borrower hereunder shall be determined as if such Lender had not sold such participation; provided , that no Participant shall be entitled to receive any greater amount pursuant to such Sections than the transferor Lender would have been entitled to receive in respect of the amount of the participation transferred by such transferor Lender to such Participant had no such transfer occurred.
     (c) Any Lender may, in the ordinary course of its commercial banking business and in accordance with applicable law, at any time, sell or assign to any Lender or any Affiliate thereof and, with the consent of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower (in each case, which consent shall not be unreasonably withheld), to one or more additional banks or financial institutions or entities (“ Purchasing Lenders ”), all or any part of its rights and obligations under this Agreement and the Note in minimum amounts of Five Million Dollars ($5,000,000) (or, if less, the entire amount of such Lender’s interests and obligations), pursuant to an Assignment Agreement, executed by such Purchasing Lender and such transferor Lender (and, in the case of a Purchasing Lender that is not then a Lender or an affiliate or Approved Fund thereof, the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower), and delivered to the Administrative Agent for its acceptance and recording. Upon such execution, delivery, acceptance and recording, from and after the Transfer Effective Date specified in such Assignment Agreement, (x) the Purchasing Lender thereunder shall be a party hereto and, to the extent provided in such Assignment Agreement, have the rights and obligations of a Lender hereunder with a Commitment as set forth therein, and (y) the transferor Lender thereunder shall, to the extent provided in such Assignment Agreement, be released from its obligations under this Agreement (and, in the case of an Assignment Agreement covering all or the remaining portion of a transferor Lender’s rights and obligations under this Agreement, such transferor Lender shall cease to be a party hereto). Such Assignment Agreement shall be deemed to amend this Agreement to the extent, and only to the extent, necessary to reflect the addition of such Purchasing Lender and the resulting adjustment of Commitment Percentages arising from the purchase by such Purchasing Lender of all or a portion of the rights and obligations of such transferor Lender under this Agreement and the Note.
     (d) The Administrative Agent shall maintain at its address referred to in Section 10.3 a copy of each Assignment Agreement delivered to it and a register for the recordation of the names and addresses of the Lenders and the Commitment of, and principal amount of the Loan owing to, each Lender from time to time. The entries in such register shall be conclusive, in the absence of manifest error, and the Borrower, the Administrative Agent and the Lenders may treat
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each Person whose name is recorded in such register as the owner of the Loan recorded therein for all purposes of this Agreement.
     (e) Upon its receipt of a duly executed Assignment Agreement, together with payment to the Administrative Agent by the transferor Lender or the Purchasing Lender, as agreed between them, of a registration and processing fee in the amount of Three Thousand Five Hundred Dollars ($3,500) for each Purchasing Lender (other than an affiliate of such Lender or an Approved Fund) listed in such Assignment Agreement and the Note subject to such Assignment Agreement, the Administrative Agent shall (i) accept such Assignment Agreement and (ii) give prompt notice of such acceptance and recordation to the Lenders and the Borrower.
     (f) The Borrower authorizes each Lender to disclose to any Participant or Purchasing Lender (each, a “ Transferee ”) and any prospective Transferee any and all financial information in such Lender’s possession concerning the Borrower and its Affiliates which has been delivered to such Lender by or on behalf of the Borrower pursuant to this Agreement or which has been delivered to such Lender by or on behalf of the Borrower in connection with such Lender’s credit evaluation of the Borrower and its Affiliates prior to becoming a party to this Agreement, in each case subject to Section 10.16 .
      Section 10.8 Adjustments; Set-off .
     (a) Each Lender agrees that if any Lender shall at any time receive any payment of all or part of its Commitment Percentage of the Loan, or interest thereon, or receive any Collateral in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in Section 8.1(f) , or otherwise) in a greater proportion than any such payment to or Collateral received by any other Lender, if any, in respect of such other Lender’s Commitment Percentage of the Loan, or interest thereon, such benefited Lender shall purchase for cash from the other Lenders a participating interest in such portion of each such other Lender’s Commitment Percentage of the Loan, or shall provide such other Lenders with the benefits of any such Collateral, or the proceeds thereof, as shall be necessary to cause such benefited Lender to share the excess payment or benefits of such Collateral or proceeds ratably with each of the Lenders; provided , however , that if all or any portion of such excess payment or benefits is thereafter recovered from such benefited Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest. The Borrower agrees that each Lender so purchasing a portion of another Lender’s Loan may exercise all rights of payment (including, without limitation, rights of set-off) with respect to such portion as fully as if such Lender were the direct holder of such portion.
     (b) In addition to any rights and remedies of the Lenders provided by law (including, without limitation, other rights of set-off), each Lender shall have the right, without prior notice to the Borrower or the applicable Credit Party, any such notice being expressly waived by the Credit Parties to the extent permitted by applicable law, upon the occurrence and during the continuance of any Event of Default, to set-off and appropriate and apply any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held by or owing to such Lender or any branch or agency thereof to or for the credit or the account of the Borrower or any other Credit Party, or
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any part thereof in such amounts as such Lender may elect, against and on account of such Lender’s Commitment Percentage of the Loan and other Obligations of the Borrower and the other Credit Parties to the Administrative Agent and the Lenders and claims of every nature and description of the Administrative Agent and the Lenders against the Borrower and the other Credit Parties, in any currency, whether arising hereunder or under any other Credit Document, as such Lender may elect, whether or not the Administrative Agent or the Lenders have made any demand for payment and although such obligations, liabilities and claims may be contingent or unmatured. The aforesaid right of set-off may be exercised by such Lender against the Borrower, any other Credit Party or against any trustee in bankruptcy, debtor in possession, assignee for the benefit of creditors, receiver or execution, judgment or attachment creditor of the Borrower or any other Credit Party, or against anyone else claiming through or against the Borrower, any other Credit Party or any such trustee in bankruptcy, debtor in possession, assignee for the benefit of creditors, receiver, or execution, judgment or attachment creditor, notwithstanding the fact that such right of set-off shall not have been exercised by such Lender prior to the occurrence of any Event of Default. Each Lender agrees promptly to notify the Borrower and the Administrative Agent after any such set-off and application made by such Lender; provided , however , that the failure to give such notice shall not affect the validity of such set-off and application.
      Section 10.9 Table of Contents and Section Headings . The table of contents and the Section and subsection headings herein are intended for convenience only and shall be ignored in construing this Agreement.
      Section 10.10 Counterparts . 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 the Borrower and the Administrative Agent
      Section 10.11 Effectiveness . This Agreement shall become effective on the date on which all of the parties have signed a copy hereof (whether the same or different copies) and shall have delivered the same to the Administrative Agent pursuant to Section 10.3 or, in the case of the Lenders, shall have given to the Administrative Agent written notice (actually received) at such office that the same has been signed and mailed to it.
      Section 10.12 Severability . Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
      Section 10.13 Integration . This Agreement and the Note represent the agreement of the Credit Parties, the Administrative Agent and the Lenders with respect to the subject matter hereof, and there are no promises, undertakings, representations or warranties by the Administrative Agent, the Credit Parties or any Lender relative to the subject matter hereof not expressly set forth or referred to herein or in the Note. This Agreement amends, restates,
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replaces and supersedes all prior agreements and understandings, both written and oral, among the parties, with respect to the subject matter hereof.
      Section 10.14 Consent to Jurisdiction .
     (a) EACH CREDIT PARTY HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE 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 SECURITY DOCUMENTS AND EACH CREDIT PARTY 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. EACH CREDIT PARTY 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. EACH CREDIT PARTY IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO SUCH CREDIT PARTY AT ITS ADDRESS REFERRED TO IN SECTION 10.3 HEREOF. EACH CREDIT PARTY 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 10.14 SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY LENDER TO BRING ANY SUIT, ACTION OR PROCEEDING AGAINST A CREDIT PARTY 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) EACH 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 SECURITY DOCUMENTS AND ANY OTHER CREDIT DOCUMENTS REFERRED TO HEREIN OR THE OBLIGATIONS UNDER ANY THEREOF.
Section 10.15 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 MORTGAGES, IF ANY SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE IN WHICH THEY ARE FILED.
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      Section 10.16 Confidentiality . The Administrative Agent and each Lender agree that they will not disclose without the prior consent of the Borrower any non-public, confidential or proprietary information of or with respect to any Credit Party or any Subsidiary thereof which is furnished pursuant to this Agreement, any other Credit Document or any documents contemplated by or referred to herein or therein (the “ Information ”), except that the Administrative Agent and any Lender may disclose any such Information (a) to its employees, affiliates, agents, representatives, auditors, consultants, engineers or counsel or to another Administrative Agent or Lender each of whom shall have been made aware of this confidentiality requirement and shall have agreed to abide by its provisions, (b) as has become generally available to the public other than by a breach of this Section 10.16 , (c) as may be required or appropriate in any report, statement or testimony submitted to any Governmental Authority having or claiming to have jurisdiction over such Lender or Agent or to the Federal Reserve Board or the Federal Deposit Insurance Corporation or the Office of the Comptroller of the Currency or the National Association of Insurance Commissioners or similar organizations (whether in the United States, Canada or any other jurisdiction) or their successors, (d) as may be required or appropriate in response to any summons or subpoena or any Requirement of Law applicable to such Lender or Agent, (e) to (i) any prospective Participant or assignee in connection with any contemplated transfer pursuant to Section 10.7 or (ii) any actual or prospective counterparty (or its advisors) to any Hedging Agreement relating to the Borrower, provided that such prospective counterparty or transferee shall have been made aware of this Section 10.16 and shall have agreed to be bound by its provisions as if it were a party to this Credit Agreement, (f) to Gold Sheets and other similar bank trade publications; such information to consist of deal terms and other information regarding the credit facilities evidenced by this Credit Agreement customarily found in such publications, (g) in connection with any claim, suit, action or proceeding for the purpose of defending itself, reducing its liability, or protecting or exercising any of its claims, rights, remedies or interests under or in connection with the Credit Documents, or (h) any nationally recognized rating agency that requires access to information about a Lender’s investment portfolio in connection with ratings issued with respect to such Lender; provided , however , that in the case of any disclosure pursuant to clause (d), the Administrative Agent or Lender shall give the Borrower at least (10) ten days prior written notice (unless less time is permitted by the applicable proceeding) before disclosing any of the Information in any such proceeding and, in making such disclosure, the Administrative Agent or any Lender, as applicable, shall disclose only that portion thereof required to be disclosed and shall take all reasonable efforts to preserve the confidentiality thereof.
      Section 10.17 Acknowledgments . Each of the parties hereto hereby acknowledges that:
     (a) it has been advised by counsel in the negotiation, execution and delivery of each Credit Document;
     (b) neither the Administrative Agent nor any Lender has any fiduciary relationship with or duty to the Borrower or any other Credit Party arising out of or in connection with this Agreement and the relationship between the Administrative Agent and Lenders, on one hand, and the Borrower and the other Credit Parties, on the other hand, in connection herewith is solely that of debtor and creditor; and
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     (c) no joint venture or partnership exists among the Lenders or the Administrative Agent, or among the Borrower or the other Credit Parties and the Lenders or the Administrative Agent.
      Section 10.18 USA Patriot Act . Each Lender that is subject to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “ Patriot Act ”) hereby notifies the Credit Parties that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies each Credit Party, which information includes the name and address of such Credit Party and other information that will allow each such Lender to identify the Credit Party in accordance with the Act.
      Section 10.19 Joint and Several Liability . The Credit Parties are engaged in related businesses and integrated to such an extent that the financial strength and flexibility of each Credit Party has a direct, tangible and immediate impact on the success of the other Credit Parties. If at any time another Person shall be joined as a “Borrower” it is acknowledged and agreed that (i) such Person is a co-borrower hereunder and shall be jointly and severally, with the other Borrower, directly and primarily liable for the payment and performance of the Note and the Obligations, regardless of which Borrower actually receives any proceeds of the Loan or the amount of such proceeds received, (ii) each of the Borrowers shall have the obligation of a co-maker and shall be a primary obligor with respect to the Loan, the Note and the other Obligations, it being agreed that the Loan to each Borrower inure to the benefit of both Borrowers, and (iii) the Administrative Agent and each Lender are relying on such joint and several liability of the Borrowers (if at any time there shall be more than one (1) Borrower) in entering into this Agreement and extending the Loan. Each Borrower and each Guarantor hereby unconditionally and irrevocably agrees that upon default in the payment when due of any principal, interest, fee or other amount hereunder, it will forthwith pay the same, without notice of demand. The Administrative Agent and the Lenders shall be entitled to rely upon any notice, request or communication received by it from any one Borrower on behalf of both Borrowers, and shall be entitled to treat its giving of any notice hereunder pursuant to Section 10.3 hereof as notice to each and all Credit Parties.
      Section 10.20 Proceeds of Crime .
     (a) The Borrower acknowledges that, pursuant to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada) and other applicable anti-money laundering, anti-terrorist financing, government sanction and “know your client” Laws, whether within Canada or elsewhere (collectively, including any guidelines or orders thereunder, “AML Legislation”), the Lenders and the Administrative Agent may be required to obtain, verify and record information regarding the Borrower, its directors, authorized signing officers, direct or indirect shareholders or other Persons in control of the Borrower, and the transactions contemplated hereby. The Borrower shall promptly provide all such information, including supporting documentation and other evidence, as may be reasonably requested by any Lender or the Administrative Agent, or any prospective assign or participant of a Lender or the Administrative Agent, in order to comply with any applicable AML Legislation, whether now or hereafter in existence.
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     (b) If the Administrative Agent has ascertained the identity of the Borrower or any authorized signatories of the Borrower for the purposes of applicable AML Legislation, then the Administrative Agent:
     (i) shall be deemed to have done so as an agent for each Lender, and this Agreement shall constitute a “written agreement” in such regard between each Lender and the Administrative Agent within the meaning of applicable AML Legislation; and
     (ii) shall provide to each Lender copies of all information obtained in such regard without any representation or warranty as to its accuracy or completeness.
Notwithstanding the preceding sentence and except as may otherwise be agreed in writing, each of the Lenders agrees that the Administrative Agent has no obligation to ascertain the identity of the Borrower or any authorized signatories of the Borrower on behalf of any Lender, or to confirm the completeness or accuracy of any information it obtains from the Borrower or any such authorized signatory in doing so.
ARTICLE XI
GUARANTY
      Section 11.1 The Guaranty . In order to induce the Lenders to enter into this Credit Agreement and the Note and to extend credit hereunder and thereunder and in recognition of the direct benefits to be received by the Guarantors from the Loan hereunder, each of the Guarantors hereby agrees with the Administrative Agent and the Lenders as follows: each Guarantor hereby unconditionally and irrevocably jointly and severally guarantees as primary obligor and not merely as surety the full and prompt payment when due, whether upon maturity, by acceleration or otherwise, of any and all Obligations. If any or all of the indebtedness becomes due and payable hereunder or under any other Credit Document, each Guarantor unconditionally promises to pay such indebtedness to the Administrative Agent and the Lenders, or their respective order, on demand, together with any and all reasonable costs, fees and expenses which may be incurred by the Administrative Agent or the Lenders in collecting any of the Obligations.
     Notwithstanding any provision to the contrary contained herein or in any other of the Credit Documents, to the extent the obligations of a Guarantor shall be adjudicated to be invalid or unenforceable for any reason (including, because of any applicable Requirement of Law relating to fraudulent conveyances or transfers or similar principles) then the obligations of each such Guarantor hereunder shall be limited to the maximum amount that is permissible under applicable Requirements of Law, including Bankruptcy Laws.
      Section 11.2 Bankruptcy . Additionally, each of the Guarantors unconditionally and irrevocably guarantees jointly and severally the payment of any and all Obligations of the Borrower to the Administrative Agent and the Lenders whether or not due or payable by the Borrower upon the occurrence of any of the events specified in Section 8.1(f) , and unconditionally promises to pay such Obligations to the Administrative Agent for the account of the Lenders, or order, on demand, in lawful money of the United States. Each of the Guarantors further agrees that to the extent that the Borrower or a Guarantor shall make a payment or a transfer of an interest in any property to the Administrative Agent or any Lender, which payment
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or transfer or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, or otherwise is avoided, and/or required to be repaid to the Borrower or a Guarantor, the estate of the Borrower or a Guarantor, a trustee, receiver or any other party under any Bankruptcy Law, common law or equitable cause or other Requirement of Law, then to the extent of such avoidance or repayment, the obligation or part thereof intended to be satisfied shall be revived and continued in full force and effect as if said payment had not been made.
      Section 11.3 Continuing Guaranty . This guaranty is a continuing guaranty and shall: (i) remain in full force and effect until the later of (x) the irrevocable payment in full of the Obligations and all other amounts payable by the Guarantor, and (y) the Commitment has been terminated; (ii) be binding on each Guarantor, its successors and assigns; and (iii) inure to the benefit of and be enforceable by the Administrative Agent, the Lenders and their successors, pledges, transferees and assigns. Without limiting the generality of the foregoing, any Lender may pledge, assign or otherwise transfer all or any portion of its rights and obligations under any Credit Document to any other Person, and such Person shall thereupon become vested with all the benefits in respect thereof granted to such Person herein or otherwise.
      Section 11.4 Nature of Liability . The liability of each Guarantor hereunder is exclusive and independent of any security for or other guaranty of the Obligations of the Borrower whether executed by any such Guarantor, any other guarantor or by any other party, and no Guarantor’s liability hereunder shall be affected or impaired by (a) any direction as to application of payment by the Borrower or by any other party, or (b) any other continuing or other guaranty, undertaking or maximum liability of a guarantor or of any other party as to the Obligations of the Borrower, or (c) any payment on or in reduction of any such other guaranty or undertaking, or (d) any dissolution, termination or increase, decrease or change in personnel by the Borrower, or (e) any payment made to the Administrative Agent or the Lenders on the Obligations which the Administrative Agent or such Lenders repay to the Borrower pursuant to court order in any bankruptcy, reorganization, arrangement, moratorium or other debtor relief proceeding, and each of the Guarantors waives any right to the deferral or modification of its obligations hereunder by reason of any such proceeding.
      Section 11.5 Independent Obligation . The obligations of each Guarantor hereunder are independent of the obligations of any other Guarantor or the Borrower, and a separate action or actions may be brought and prosecuted against each Guarantor whether or not action is brought against any other Guarantor or the Borrower and whether or not any other Guarantor or the Borrower is joined in any such action or actions.
      Section 11.6 Authorization . Each of the Guarantors authorizes the Administrative Agent and each Lender without notice or demand (except as shall be required by applicable statute and cannot be waived), and without affecting or impairing its liability hereunder, from time to time to (a) amend, modify, renew, restate, compromise, extend, continue, increase, accelerate or otherwise change the time for payment of, or otherwise change the terms of the Obligations or any part thereof in accordance with this Credit Agreement and any other Credit Document, as applicable, including any increase or decrease of the rate of interest thereon, (b) take and hold security from any Guarantor or any other party for the payment of this Guaranty or the Obligations and exchange, enforce, waive and release any such security, (c) apply such security and direct the order or manner of sale thereof as the Administrative Agent
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and the Lenders in their discretion may determine and (d) release or substitute any one or more endorsers, Guarantors, the Borrower or other obligors.
      Section 11.7 Reliance . It is not necessary for the Administrative Agent or the Lenders to inquire into the capacity or powers of any Borrower or the officers, directors, members, partners or agents acting or purporting to act on its behalf, and any Obligations made or created in reliance upon the professed exercise of such powers shall be guaranteed hereunder.
      Section 11.8 Stay of Acceleration . If acceleration of the time for payment, or the liability of a Borrower to make payment, of any amount specified to be payable by such Borrower in respect of its Obligations is stayed, prohibited or otherwise affected upon any Insolvency Proceeding or other event affecting such Borrower or payment of any of its Obligations by such Borrower, all such amounts otherwise subject to acceleration or payment shall nonetheless be deemed for all purposes of this Agreement to be and to have become due and payable by such Borrower and shall be payable by each Guarantor under this Agreement immediately forthwith on demand by the Administrative Agent.
      Section 11.9 Waiver.
     (a) Each of the Guarantors waives any right (except as shall be required by applicable statute and cannot be waived) to require the Administrative Agent or any Lender to (i) proceed against the Borrower, any other guarantor or any other party, (ii) proceed against or exhaust any security held from the Borrower, any other guarantor or any other party, or (iii) pursue any other remedy in the Administrative Agent’s or any Lender’s power whatsoever. Each of the Guarantors waives any defense based on or arising out of any defense of any Borrower, any other guarantor or any other party other than payment in full of the Obligations (other than contingent indemnity obligations), including without limitation any defense based on or arising out of the disability of a Borrower, any other guarantor or any other party, or the unenforceability of the Obligations or any part thereof from any cause, or the cessation from any cause of the liability of a Borrower other than payment in full of the Obligations. The Administrative Agent may, at its election, foreclose on any security held by the Administrative Agent by one or more judicial or nonjudicial sales (to the extent such sale is permitted by applicable law), or exercise any other right or remedy the Administrative Agent or any Lender may have against a Borrower or any other party, or any security, without affecting or impairing in any way the liability of any Guarantor hereunder except to the extent the Obligations have been paid in full and the Commitment has been terminated. Each of the Guarantors waives any defense arising out of any such election by the Administrative Agent or any of the Lenders, even though such election operates to impair or extinguish any right of reimbursement or subrogation or other right or remedy of the Guarantors against any Borrower or any other party or any security.
     (b) Each of the Guarantors waives all presentments, demands for performance, protests and notices, including without limitation notices of nonperformance, notice of protest, notices of dishonor, notices of acceptance of this Guaranty, and notices of the existence, creation or incurring of new, additional, restated or continued Obligations. Each Guarantor assumes all responsibility for being and keeping itself informed of each Borrower’s financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Obligations and the nature, scope and extent of the risks which such Guarantor assumes and incurs hereunder,
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and agrees that neither the Administrative Agent nor any Lender shall have any duty to advise such Guarantor of information known to it regarding such circumstances or risks.
     (c) Each Guarantor waives all other acts or omissions to act or delay of any kind by the Administrative Agent, any Lender or any other Person or any other circumstance whatsoever that might, but for the provisions of this paragraph, constitute a legal or equitable discharge of the obligations of any Guaranty, and each Guarantor waives all other defenses available to a guarantor or surety, whether at law or in equity.
     (d) The Borrower and the Guarantors are engaged in related businesses and integrated to such an extent that the financial strength and flexibility of each Borrower has a direct, tangible and immediate impact on the success of each Guarantor. Each Guarantor will derive substantial direct and indirect benefit from the extensions of credit to the Borrower hereunder. Each Guarantor hereby waives any right to revoke this Guaranty, and acknowledges that this Guaranty is continuing in nature and applies to all Obligations, whether existing now or in the future. Each Guarantor knowingly waives certain rights and defenses as set forth in this Agreement in contemplation of the benefits that it will receive.
     (e) Each of the Guarantors hereby agrees it will not exercise any rights of subrogation which it may at any time otherwise have as a result of this Guaranty (whether contractual, under applicable Bankruptcy Law, or otherwise) to the claims of the Administrative Agent or the Lenders against any Borrower or any other guarantor of the Obligations of a Borrower owing to the Administrative Agent or the Lenders and all contractual, statutory or common law rights of reimbursement, contribution or indemnity from any Other Party which it may at any time otherwise have as a result of this Guaranty until such time as the Obligations shall have been paid in full and the Commitment has been terminated. Each of the Guarantors hereby further agrees not to exercise any right to enforce any other remedy which the Administrative Agent or the Lenders now have or may hereafter have against any Other Party, any endorser or any other guarantor of all or any part of the Obligations of a Borrower and any benefit of, and any right to participate in, any security or collateral given to or for the benefit of the Administrative Agent and the Lenders to secure payment of the Obligations of a Borrower until such time as the Obligations (other than contingent indemnity obligations) shall have been paid in full and the Commitment has been terminated.
     (f) Each Guarantor irrevocably renounces to any rights it may have to be released from this Guarantee under Article 2362 of the Civil Code of Québec and agrees to renew its guarantee hereunder at the request of the Administrative Agent by executing such documents as the Administrative Agent may request from time to time; provided , however, nothing in this clause (f) shall prohibit the release of RGLD Canada or the RGLD Canada Security Documents as contemplated in Section 4.5 .
      Section 11.10 Confirmation of Payment . The Administrative Agent and the Lenders will, upon request after payment of the Obligations which are the subject of this Guaranty and termination of the Commitment relating thereto, confirm to the Borrower, the Guarantors or any other Person that such indebtedness and obligations have been paid and the Commitment relating thereto terminated, subject to the provisions of Section 11.2 .
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     At such time as the Obligations which are the subject of this Guaranty have been irrevocably paid in full and the Commitment has been terminated, this Guaranty and all obligations of the Guarantors hereunder shall terminate and be of no further force and effect, all without delivery of any Instrument or performance of any act by any Person.
(remainder of this page intentionally blank)
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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by its proper and duly authorized officers as of the day and year first above written.
 	 	 	 	 	
BORROWER:	ROYAL GOLD, INC.,
a Delaware corporation
 	 	
 	By:  	/s/ Stefan Wenger  	 	
 	 	Name:  	Stefan Wenger 	 	
 	 	Title:  	CFO and Treasurer 	 	
 	
[signature pages continue]
Amended and Restated Term Loan Facility Agreement Signature Page

 

 	 	 	 	 	
GUARANTORS:	ROYAL GOLD CHILE LIMITADA,
a Chilean limited partnership
 	 	
 	By:  	/s/ Tony Jensen  	 	
 	 	Name:  	Tony Jensen 	 	
 	 	Title:  	Representative 	 	

 	By:  	/s/ Stefan Wenger  	 	
 	 	Name:  	Stefan Wenger 	 	
 	 	Title:  	Representative 	 	
 	
 	ROYAL GOLD, INC.,
a Delaware corporation,
in its capacity as partner of Royal Gold Chile Limitada
 	 	
 	By:  	/s/ Stefan Wenger  	 	
 	 	Name:  	Stefan Wenger 	 	
 	 	Title:  	CFO and Treasurer 	 	
 	
 	HIGH DESERT MINERAL RESOURCES, INC.,
a Delaware corporation,
in its capacity as partner of Royal Gold Chile Limitada
 	 	
 	By:  	/s/ Stefan Wenger  	 	
 	 	Name:  	Stefan Wenger 	 	
 	 	Title:  	Vice President and Treasurer 	 	
 	
 	RGLD GOLD CANADA, INC.,
a British Columbia corporation
 	 	
 	By:  	/s/ Bruce C. Kirchhoff  	 	
 	 	Name:  	Bruce C. Kirchhoff 	 	
 	 	Title:  	Vice President 	 	
 	
 	HIGH DESERT MINERAL RESOURCES, INC.,
a Delaware corporation
 	 	
 	By:  	/s/ Karen Gross  	 	
 	 	Name:  	Karen Gross 	 	
 	 	Title:  	Vice President and Secretary 	 	
Amended and Restated Term Loan Facility Agreement Signature Page

 

 	 	 	 	 	
 	 	 	 	 	
ADMINISTRATIVE AGENT AND LENDER:	HSBC BANK USA, NATIONAL
ASSOCIATION
as Administrative Agent and as a Lender
 	 	
 	By:  	/s/ William S. Edge, III  	 	
 	 	Name:  	William S. Edge, III 	 	
 	 	Title:  	Managing Director 	 	
 	
LENDER :	THE BANK OF NOVA SCOTIA
as a Lender
 	 	
 	By:  	/s/ J.F. Todd  	 	
 	 	Name:  	J.F. Todd 	 	
 	 	Title:  	Managing Director 	 	
 	
SOLE LEAD ARRANGER:	HSBC SECURITIES (USA) INC.
as Sole Lead Arranger
 	 	
 	By:  	/s/ William S. Edge, III  	 	
 	 	Name:  	William S. Edge, III 	 	
 	 	Title:  	Managing Director 	 	
 	
Amended and Restated Term Loan Facility Agreement Signature Page

Exhibit 10.2
AMENDED AND RESTATED PROMISSORY NOTE
			
 	 	New York, New York	
US$80,000,000	 	March 26, 2010	
     FOR VALUE RECEIVED, the undersigned, ROYAL GOLD, INC., a corporation organized and existing under the laws of Delaware (“ Maker ”), hereby promises to pay to the order of HSBC BANK USA, NATIONAL ASSOCIATION, a national banking association organized under the laws of the United States (“ HSBC Bank ”), as a lender or other holder hereof (with HSBC Bank and any other holder hereof sometimes referred to herein as “ Holder ”), at the place and times provided in the Amended and Restated Term Loan Facility Agreement dated as of March 26, 2010 among the Maker, as borrower, Royal Gold Chile Limitada, a Chilean limited liability partnership, as a guarantor, RGLD Gold Canada, Inc., a corporation organized and existing under the laws of the Province of British Columbia, as a guarantor, High Desert Mineral Resources, Inc., a corporation organized and existing under the laws of Delaware, as a guarantor, those additional guarantors from time to time party hereto, as guarantors, HSBC Bank, as a lender, The Bank of Nova Scotia, a bank organized and existing under the laws of Canada (“ Scotia ”), as a lender, and those banks and financial institutions identified as “Lender” on the signature page thereto and such other banks or financial institutions as may from time to time become parties thereto, as lenders (the “ Additional Lenders ”) (with each of HSBC Bank, Scotia and the Additional Lenders individually referred to as a “ Lender ” and collectively the “ Lenders ”), HSBC Bank, as administrative agent, and HSBC SECURITIES (USA) INC., as sole lead arranger (as amended, restated, supplemented or otherwise modified in accordance with its terms, the “ Credit Agreement ”) the principal sum of One Hundred Thirty Million Dollars (US$130,000,000), or, if less, the aggregate unpaid principal amount of the Loan under the Credit Agreement. Capitalized terms used in this Note and not defined herein shall have the meanings assigned thereto in the Credit Agreement.
     This Note amends, restates, replaces and continues the Original Note, and this Note and all Instruments, agreements, and documents executed in connection herewith, constitute an amendment, renewal, continuance and restatement of all Indebtedness and Obligations of the Maker and the Guarantors evidenced by the Existing Credit Agreement and the Original Note. All other instruments, documents, and agreements entered into in connection with the Existing Credit Agreement or the Original Note shall remain in full force and effect, except to the extent expressly modified in accordance with their respective terms. It is expressly understood and agreed by the parties hereto that this Note is in no way intended to constitute, and does not constitute, a release, repayment, satisfaction, discharge or novation of the obligations and liabilities existing under the Existing Credit Agreement or the Original Note or a release, termination, novation or impairment of any Lien or Existing Credit Document. All Liens created pursuant to the Existing Credit Documents shall continue to secure the obligations evidenced by this Note and the full payment and performance of all Obligations. All such Liens created pursuant to the Existing Credit Documents are hereby expressly continued, ratified and confirmed by the Maker. All references to the Original Note in any Existing Credit Document shall be deemed to refer to this Note. If any inconsistency exists between this Note and the Original Note, the terms of this Note shall prevail. Nothing contained in this Note or any other document or instrument executed contemporaneously herewith shall be deemed to satisfy or discharge the Indebtedness or Obligations arising under this Note (this being an amendment and

 

restatement only) and all outstanding amounts under the Original Note as of the date hereof shall be carried over and deemed outstanding under this Note.
     This Note evidences the obligation of the Maker to repay all Loans made by the Lenders to the Maker pursuant to the Credit Agreement.
     Maker further agrees to pay and deliver to Holder, when and as provided in the Credit Agreement, interest on the outstanding principal amount hereof at the rate and at the times specified in the Credit 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 Credit Agreement.
     This Note is made by the Maker pursuant to, and is subject to, all of the terms and conditions of the Credit Agreement. Reference is hereby made to the Credit 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 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 Credit Agreement, 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.
     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.
[Signature page to follow.]

 

     IN WITNESS WHEREOF, Maker has executed and delivered this Note as of the date first above written.
 	 	 	 	 	
 	ROYAL GOLD, INC.,
a Delaware corporation
 	 	
 	By:  	/s/ Stefan Wenger  	 	
 	 	Name:  	Stefan Wenger 	 	
 	 	Title:  	CFO and Treasurer 	 	

Exhibit 10.3
AMENDED AND RESTATED PROMISSORY NOTE
			
 	 	Toronto, Ontario	
US$50,000,000	 	March 26, 2010	
     FOR VALUE RECEIVED, the undersigned, ROYAL GOLD, INC., a corporation organized and existing under the laws of Delaware (“ Maker ”), hereby promises to pay to the order of The Bank of Nova Scotia, a bank organized and existing under the laws of Canada (“ Scotia ”), as a lender or other holder hereof (with Scotia and any other holder hereof sometimes referred to herein as “ Holder ”), at the place and times provided in the Amended and Restated Term Loan Facility Agreement dated as of March 26, 2010 among the Maker, as borrower, Royal Gold Chile Limitada, a Chilean limited liability partnership, as a guarantor, RGLD Gold Canada, Inc., a corporation organized and existing under the laws of the Province of British Columbia, as a guarantor, High Desert Mineral Resources, Inc., a corporation organized and existing under the laws of Delaware, as a guarantor, those additional guarantors from time to time party hereto, as guarantors, HSBC Bank USA, National Association, a national banking association organized under the laws of the United States ( “HSBC Bank ”), as a lender, Scotia, as a lender, and those banks and financial institutions identified as “Lender” on the signature page thereto and such other banks or financial institutions as may from time to time become parties thereto, as lenders (the “ Additional Lenders ”) (with each of HSBC Bank, Scotia and the Additional Lenders individually referred to as a “ Lender ” and collectively the “ Lenders ”), HSBC Bank, as administrative agent, and HSBC SECURITIES (USA) INC., as sole lead arranger (as amended, restated, supplemented or otherwise modified in accordance with its terms, the “ Credit Agreement ”) the principal sum of One Hundred Thirty Million Dollars (US$130,000,000), or, if less, the aggregate unpaid principal amount of the Loan under the Credit Agreement. Capitalized terms used in this Note and not defined herein shall have the meanings assigned thereto in the Credit Agreement.
     This Note amends, restates, replaces and continues the Original Note, and this Note and all Instruments, agreements, and documents executed in connection herewith, constitute an amendment, renewal, continuance and restatement of all Indebtedness and Obligations of the Maker and the Guarantors evidenced by the Existing Credit Agreement and the Original Note. All other instruments, documents, and agreements entered into in connection with the Existing Credit Agreement or the Original Note shall remain in full force and effect, except to the extent expressly modified in accordance with their respective terms. It is expressly understood and agreed by the parties hereto that this Note is in no way intended to constitute, and does not constitute, a release, repayment, satisfaction, discharge or novation of the obligations and liabilities existing under the Existing Credit Agreement or the Original Note or a release, termination, novation or impairment of any Lien or Existing Credit Document. All Liens created pursuant to the Existing Credit Documents shall continue to secure the obligations evidenced by this Note and the full payment and performance of all Obligations. All such Liens created pursuant to the Existing Credit Documents are hereby expressly continued, ratified and confirmed by the Maker. All references to the Original Note in any Existing Credit Document shall be deemed to refer to this Note. If any inconsistency exists between this Note and the Original Note, the terms of this Note shall prevail. Nothing contained in this Note or any other document or instrument executed contemporaneously herewith shall be deemed to satisfy or discharge the Indebtedness or Obligations arising under this Note (this being an amendment and

 

restatement only) and all outstanding amounts under the Original Note as of the date hereof shall be carried over and deemed outstanding under this Note.
     This Note evidences the obligation of the Maker to repay all Loans made by the Lenders to the Maker pursuant to the Credit Agreement.
     Maker further agrees to pay and deliver to Holder, when and as provided in the Credit Agreement, interest on the outstanding principal amount hereof at the rate and at the times specified in the Credit 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 Credit Agreement.
     This Note is made by the Maker pursuant to, and is subject to, all of the terms and conditions of the Credit Agreement. Reference is hereby made to the Credit 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 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 Credit Agreement, 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.
     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.
[Signature page to follow.]

 

     IN WITNESS WHEREOF, Maker has executed and delivered this Note as of the date first above written.
 	 	 	 	 	
 	ROYAL GOLD, INC.,
a Delaware corporation
 	 	
 	By:  	/s/ Stefan Wenger  	 	
 	 	Name:  	Stefan Wenger 	 	
 	 	Title:  	CFO and Treasurer 	 	

Exhibit 10.4
EXECUTION VERSION
AMENDMENT TO PLEDGE, SECURITY AND SUBORDINATION AGREEMENT
THIS AMENDING AGREEMENT is made as of March 26, 2010 by ROYAL GOLD, INC., as Debtor;

TO:  	 	Name: HSBC Bank USA, National Association
Address: 452 Fifth Avenue, New York, New York 10018
Attention: Mr. Bill Edge
Facsimile: (212) 525-6581
E-mail: bill.edge@us.hsbc.com	
WHEREAS:

A.	 	Royal Gold, Inc. (the “ Debtor ”), is a party to a pledge, security and subordination agreement (the “ Pledge Agreement ”) dated as of January 20, 2010, made in favour of HSBC Bank USA, National Association (the “ Agent ”) for the benefit of itself and the Lenders (as defined below).	
 		
B.	 	The parties to the Pledge Agreement wish to amend it in accordance with the terms and conditions set out herein.	
NOW THEREFORE for good and valuable consideration, the receipt and adequacy of which is acknowledged, the parties agree as follows:
1. One Agreement. This amending agreement amends the Pledge Agreement. This amending agreement and the Pledge Agreement shall be read, interpreted, construed and have effect as, and shall constitute, one agreement with the same effect as if the amendments made by this amending agreement had been contained in the Pledge Agreement as of the date of this amending agreement.
2. Credit Documents . All references to the Pledge Agreement in each of the Credit Documents shall hereinafter refer to the Pledge Agreement as amended hereby. This amendment and all other Instruments executed and delivered by any Credit Party in connection with this amending agreement are and shall be deemed to be Credit Documents for all purposes.
3. Defined Terms. In this amending agreement, unless something in the subject matter or context is inconsistent:

 	(a)	 	terms defined in the description of the parties or in the recitals hereto have the respective meanings given to them in the description or recitals hereto, as applicable; and	
 		
 	(b)	 	all other capitalized terms have the respective meanings given to them in the Pledge Agreement as amended by this amending agreement.	
Amendment to Pledge Agreement — Royal Gold, Inc.

 

-2-
4. Headings : The headings of the sections of this amending agreement are inserted for convenience of reference only and shall not affect the construction or interpretation of this amending agreement.
5. References. All references to Sections or Schedules, unless otherwise specified, are to Sections or Schedules of the Pledge Agreement.
6. Amendments.
     (a) Recital A of the Pledge Agreement is hereby deleted in its entirety and replaced with the following:

 		 	A. Pursuant to that certain Term Loan Facility Agreement dated as of January 20, 2010 (as amended and restated on March 26, 2010 and as further amended, restated, modified, revised, supplemented, extended, continued or replaced from time to time in accordance with its terms, the “ Loan Agreement ”) by and among Royal Gold, as borrower, Royal Gold Chile Limitada, a Chilean limited liability company, as a guarantor, High Desert Mineral Resources, Inc., a corporation organized and existing under the laws of Delaware, as a guarantor, RGLD Gold Canada, Inc., a corporation organized and existing under the laws of British Columbia, Canada, as a guarantor (“ RGLD Canada ”), HSBC Bank, as a lender, THE BANK OF NOVA SCOTIA (“ Scotia ”), as a lender, and those banks and financial institutions identified as a “Lender” on the signature pages of such Loan Agreement and such other banks or financial institutions as may from time to time become parties to such Loan Agreement, as lenders (the “ Additional Lenders ”) (with each of HSBC Bank, Scotia, and the Additional Lenders individually referred to herein as a “ Lender ” and collectively as “ Lenders ”), the Secured Party, as administrative agent for the Lenders thereunder and HSBC Securities (USA) Inc., a corporation incorporated and existing under the laws of the United States, as the sole lead arranger. Capitalized terms not otherwise defined herein shall have the meanings set forth in the Loan Agreement.	
7. Representations. The Debtor represents and warrants that, as at the date of this amending agreement and assuming that the amendments made to the Pledge Agreement have become effective, no Event of Default has occurred and is continuing and the representations and warranties contained in Section 5 of the Pledge Agreement are true and correct.
8. Confirmation. The parties hereto acknowledge, agree and confirm that, except as otherwise provided for in this amending agreement, the Pledge Agreement shall remain unamended and in full force and effect in accordance with its terms and conditions after giving effect to this amending agreement.
9. Binding Nature : This amending agreement shall enure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns.
Amendment to Pledge Agreement — Royal Gold, Inc.

 

-3-
10. Governing Law : This amending agreement shall be governed by, and interpreted in accordance with, the laws in force in the Province of British Columbia, including the federal laws of Canada applicable therein.
11. Conflicts : If, after the date of this amending agreement, any provision of this amending agreement is inconsistent with any provision of the Pledge Agreement, the relevant provision of this amending agreement shall prevail.
12. Counterpart and Facsimile : This amending agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same instrument. Delivery of an executed signature page to this amending agreement by any party by facsimile or other electronic form of transmission shall be as effective as delivery of a manually executed copy of this amending agreement by such party.
[Signatures on the next following pages]
Amendment to Pledge Agreement — Royal Gold, Inc.

 

      IN WITNESS WHEREOF the undersigned has caused this amending agreement to be duly executed as of the date first written above.
 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	ROYAL GOLD, INC.	 	
 	 	 	 	 	 	 	 	 	 	
Address:	 	1660 Wynkoop Street	 	 	 	By:  	 /s/ Stefan Wenger	 	
 	 	 	 	 	 	 	 	 	 	
 	 	Suite 1000	 	 	 		 	Name:  Stefan Wenger	 	
 	 	Denver, CO	 	 	 		 	Title:    CFO and Treasurer	 	
 	 	80202-1132	 	 	 	 	 	 	 	
Attention:	 	Kevin Rohnstock	 	 	 	 	 	 	 	
Facsimile:	 	303-595-9385	 	 	 	 	 	 	 	
Amendment to Pledge Agreement — Royal Gold, Inc.

Exhibit 10.5
EXECUTION VERSION
AMENDMENT TO GENERAL SECURITY AGREEMENT
THIS AMENDING AGREEMENT is made as of March 26, 2010 by RGLD GOLD CANADA, INC., as Debtor;

TO:  	 	Name: HSBC Bank USA, National Association
Address: 452 Fifth Avenue, New York, New York 10018
Attention: Mr. Bill Edge
Facsimile: (212) 525-6581
E-mail: bill.edge@us.hsbc.com	
WHEREAS:

A.	 	RGLD Gold Canada, Inc. (the “ Debtor ”), is a party to a general security agreement (the “ Security Agreement ”) dated as of January 20, 2010, made in favour of HSBC Bank USA, National Association (the “ Agent ”) for the benefit of itself and the Lenders (as defined below).	

B.	 	The parties to the Security Agreement wish to amend it in accordance with the terms and conditions set out herein.	
NOW THEREFORE for good and valuable consideration, the receipt and adequacy of which is acknowledged, the parties agree as follows:
1. One Agreement. This amending agreement amends the Security Agreement. This amending agreement and the Security Agreement shall be read, interpreted, construed and have effect as, and shall constitute, one agreement with the same effect as if the amendments made by this amending agreement had been contained in the Security Agreement as of the date of this amending agreement.
2. Credit Documents . All references to the Security Agreement in each of the Credit Documents shall hereinafter refer to the Security Agreement as amended hereby. This amendment and all other Instruments executed and delivered by any Credit Party in connection with this amending agreement are and shall be deemed to be Credit Documents for all purposes.
3. Defined Terms. In this amending agreement, unless something in the subject matter or context is inconsistent:

 	(a)	 	terms defined in the description of the parties or in the recitals hereto have the respective meanings given to them in the description or recitals hereto, as applicable; and	
 		
 	(b)	 	all other capitalized terms have the respective meanings given to them in the Security Agreement as amended by this amending agreement.	
Amendment to General Security Agreement — RGLD Gold Canada, Inc.

 

 -2- 

4. Headings : The headings of the sections of this amending agreement are inserted for convenience of reference only and shall not affect the construction or interpretation of this amending agreement.
5. References. All references to Sections or Schedules, unless otherwise specified, are to Sections or Schedules of the Security Agreement.
6. Amendments.
     (a) Recital A of the Security Agreement is hereby deleted in its entirety and replaced with the following:
A. RGLD GOLD CANADA, INC., a corporation incorporated and existing under the laws of British Columbia (the “ Debtor ”) is, or may become, indebted and liable to HSBC BANK USA, NATIONAL ASSOCIATION, a national banking association organized under the laws of the United States, as administrative agent (the “ Agent ”) pursuant to the terms of that certain Term Loan Facility Agreement, dated as of January 20, 2010 by and among ROYAL GOLD, INC., a corporation organized and existing under the laws of the State of Delaware, as a borrower (“ Royal Gold ”), ROYAL GOLD CHILE LIMITADA, a Chilean limited liability company, as a guarantor, HIGH DESERT MINERAL RESOURCES, INC., a corporation organized and existing under the laws of Delaware, as a guarantor, those additional guarantors from time to time party thereto, as guarantors, the Agent, as a lender, THE BANK OF NOVA SCOTIA, a bank organized and existing under the laws of Canada, as a lender (“ Scotia ”), and those banks and financial institutions identified as a “Lender” on the signature pages of such Term Loan Facility Agreement, and such other banks or financial institutions as may from time to time become parties to such agreement, as lenders (the “ Additional Lenders ”) (with each of the Agent (in its capacity as a lender), Scotia (in its capacity as a lender), and the Additional Lenders individually referred to herein as a “ Lender ” and collectively the “ Lenders ”), the Agent, as administrative agent for the Lenders hereunder, HSBC SECURITIES (USA) Inc., a corporation organized under the laws of the United States, as the sole lead arranger (as amended and restated on March 26, 2010 and as further amended, modified, extended, renewed, replaced, restated, supplemented or refinanced from time to time and including any agreement extending the maturity of, refinancing or restructuring all or any portion of, the indebtedness under such agreement or any successor agreements, whether or not with the same Agent, the “ Credit Agreement ”) or otherwise.
7. Representations. The Debtor represents and warrants that, as at the date of this amending agreement and assuming that the amendments made to the Security Agreement have become effective, no Event of Default has occurred and is continuing and the representations and warranties contained in Section 5 of the Security Agreement are true and correct.
Amendment to General Security Agreement — RGLD Gold Canada, Inc.

 

 -3- 
8. Confirmation. The parties hereto acknowledge, agree and confirm that, except as otherwise provided for in this amending agreement, the Security Agreement shall remain unamended and in full force and effect in accordance with its terms and conditions after giving effect to this amending agreement.
9. Binding Nature : This amending agreement shall enure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns.
10. Governing Law : This amending agreement shall be governed by, and interpreted in accordance with, the laws in force in the Province of British Columbia, including the federal laws of Canada applicable therein.
11. Conflicts : If, after the date of this amending agreement, any provision of this amending agreement is inconsistent with any provision of the Security Agreement, the relevant provision of this amending agreement shall prevail.
12. Counterpart and Facsimile : This amending agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same instrument. Delivery of an executed signature page to this amending agreement by any party by facsimile or other electronic form of transmission shall be as effective as delivery of a manually executed copy of this amending agreement by such party.
[Signatures on the next following pages]
Amendment to General Security Agreement — RGLD Gold Canada, Inc.

 

      IN WITNESS WHEREOF the undersigned has caused this amending agreement to be duly executed as of the date first written above.
 	 	 	 	 	 	 	 	 	 	
 	 	 	 	RGLD GOLD CANADA, INC.	
 		
Address:	 	c/o Davis LLP,	 	By:	 	/s/ Stefan Wenger	 	
 	 	666 Burrard Street,	 	 	 	Name:	 	Stefan Wenger	 	
 	 	2800 Park Place, Vancouver	 	 	 	Title:	 	Vice President and Treasurer	 	
 	 	BC V6C 2Z7	 	 	 	 	 	 	 	
Attention:	 	David Stratton	 	 	 	 	 	 	 	
Facsimile:	 	780-428-1066	 	 	 	 	 	 	 	
Amendment to General Security Agreement — RGLD Gold Canada, Inc.

Exhibit 10.6
EXECUTION VERSION
CONSENT AND FIRST AMENDMENT TO
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.
[The remainder of this page intentionally left blank]

 

     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/ Stefan Wenger  	 	
 	 	Name:  	Stefan Wenger 	 	
 	 	Title:  	Chief Financial Officer and Treasurer 	 	
 	
 	HIGH DESERT MINERAL RESOURCES, INC.
 	 	
 	By:  	/s/ Stefan Wenger  	 	
 	 	Name:  	Stefan Wenger 	 	
 	 	Title:  	Vice President and Treasurer 	 	
 	
GUARANTOR :
 	 	 	 	 	
 	RG MEXICO, INC.
 	 	
 	By:  	/s/ Karen Gross  	 	
 	 	Name:  	Karen Gross 	 	
 	 	Title:  	Secretary 	 	
 	
[signature pages continue]
Signature Page to Waiver and First Amendment to
Third Amended and Restated Credit Agreement

 

ADMINISTRATIVE AGENT AND LENDER:
 	 	 	 	 	
 	HSBC BANK USA, NATIONAL
ASSOCIATION
as Administrative Agent and as a Lender
 	 	
 	By:  	/s/ William S. Edge, III  	 	
 	 	Name:  	William S. Edge, III 	 	
 	 	Title:  	Managing Director 	 	
 	
[signature pages continue]
Signature Page to Waiver and First Amendment to
Third Amended and Restated Credit Agreement

 

LENDER:
 	 	 	 	 	
 	SCOTIABANC INC.
as a Lender
 	 	
 	By:  	/s/ J.F. Todd  	 	
 	 	Name:  	J.F. Todd 	 	
 	 	Title:  	Managing Director 	 	
 	
[end of signature pages]
Signature Page to Waiver and First Amendment to
Third Amended and Restated Credit Agreement

Exhibit 23.1
AUDITORS’ CONSENT
We hereby consent to the use in the Form 8-K of Royal Gold, Inc. dated April 1, 2010 (“Current Report”) of our report to the shareholder of International Royalty Corporation (the “Company”) on the consolidated balance sheets of the Company as at December 31, 2009 and 2008 and the consolidated statements of operations and comprehensive income (loss), shareholders’ equity and cash flows for each of the years in the three year period ended December 31, 2009 and the effectiveness of internal controls over financial reporting of the Company as of December 31, 2009. Our report is dated March 23, 2010.
/s/ PricewaterhouseCoopers LLP
Chartered Accountants
Vancouver, British Columbia
April 1, 2010

Exhibit 99.1
			
1660 Wynkoop Street, Suite 1000	 		
Denver Colorado 80202-1132	 		
Phone: (303)573-1660	 		
Fax: (303) 595-9385	 		
Email: info@royalgold.com	 	 	
www.royalgold.com	 	 	

Royal Gold Amends its Term Loan and Retires Debentures
      DENVER, COLORADO . MARCH 29, 2010: ROYAL GOLD, INC. (NASDAQ:RGLD; TSX:RGL) today announced that it amended its term loan facility (“Term Loan”) with HSBC Bank USA, National Association (“HSBC”) and will retire the debentures of International Royalty Corporation (“IRC”). The Term Loan was funded in conjunction with the closing of the Plan of Arrangement between Royal Gold and IRC on February 22, 2010.
     The modifications to the Term Loan include, among other items: 1) an increase in the principal balance available under the Term Loan from US$100 million to US$130 million; 2) an extension of the final maturity date from 18 to 36 months from the initial funding date of February 17, 2010; 3) increases in the applicable LIBOR margin (currently set at 2.25%) by 0.50% every six months, commencing 18 months after the initial funding date until maturity; and 4) a reduction in the amortization rate from 10% of the initial funded amount per quarter to 5% of the fully funded principal amount per quarter. The Bank of Nova Scotia (“Scotia”) joined the Term Loan as a “Lender” with a commitment of US$50 million. The additional Term Loan proceeds of US$30 million will be used to redeem the outstanding 5.5% senior secured debentures of IRC totaling C$30 million (approximately US$29.4 million) which were scheduled to mature on February 22, 2011. In addition to the proposed changes to the Term Loan, HSBC and Scotia have amended certain provisions under the Company’s US$125 million revolving credit facility to match those of the Term Loan.
     Royal Gold is a precious metals royalty company engaged in the acquisition and management of precious metal royalty interests. The Company owns royalties on 193 properties on six continents, including royalties on 31 producing mines and 20 development stage projects. Royal Gold is publicly traded on the NASDAQ Global Select Market under the symbol “RGLD” and on the Toronto Stock Exchange under the symbol “RGL.” The Company’s website is located at www.royalgold.com .
For further information, please contact:
Karen Gross
Vice President and Corporate Secretary
(303) 575-6504
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