Document:

exv10w1xby

 

 Exhibit 10.1(b)

ROYALTY DEED

Dated October 13, 2004

between

GENESIS INC.

and

ROYAL GOLD, INC.

THE TROY MINE

Lincoln County, Montana

i

 

Royalty Deed

Table of Contents

	 	 	 	 	 	 	 
	CAPTION
	 	 	 	PAGE

	SECTION 1

	 	COMMENCEMENT OF ROYALTY PAYMENT OBLIGATIONS
	 	 	1	 
	Section 1.1

	 	Silver
	 	 	1	 
	Section 1.2

	 	Copper
	 	 	1	 
	Section 1.3

	 	Other Minerals
	 	 	1	 
	SECTION 2

	 	ROYALTY PERCENTAGES
	 	 	1	 
	Section 2.1

	 	Phase One Royalty Percentage
	 	 	1	 
	Section 2.2

	 	Phase Two Royalty Percentage
	 	 	2	 
	SECTION 3

	 	GROSS SMELTER RETURNS DEFINED
	 	 	2	 
	Section 3.1

	 	Silver
	 	 	3	 
	Section 3.2

	 	Copper
	 	 	3	 
	Section 3.3

	 	Other Minerals
	 	 	3	 
	Section 3.4

	 	Replacement Indices
	 	 	3	 
	SECTION 4

	 	PAYMENT PROCEDURES; REPORTS
	 	 	3	 
	Section 4.1

	 	Payments of Royalty
	 	 	3	 
	Section 4.2

	 	Financial Reports
	 	 	4	 
	Section 4.3

	 	Objection, Finality of Payments
	 	 	4	 
	SECTION 5

	 	ADDITIONAL RIGHT, OBLIGATIONS AND COVENANTS OF THE PARTIES
	 	 	4	 
	Section 5.1

	 	Commingling of Production
	 	 	4	 
	Section 5.2

	 	Geological and Other Data and Reports
	 	 	5	 
	Section 5.3

	 	Inspection
	 	 	5	 
	Section 5.4

	 	Confidentiality
	 	 	6	 
	Section 5.5

	 	Area of Interest
	 	 	6	 
	Section 5.6

	 	Abandonment of Properties
	 	 	6	 
	SECTION 6

	 	GENERAL PROVISIONS
	 	 	7	 
	Section 6.1

	 	Assignment
	 	 	7	 
	Section 6.2

	 	Notices
	 	 	7	 
	Section 6.3

	 	Amendments and Waiver
	 	 	7	 
	Section 6.4

	 	Relationship of the Parties
	 	 	8	 
	Section 6.5

	 	Further Instruments
	 	 	8	 

  i

 

 

Royalty Deed

Table of Contents

	 	 	 	 	 	 	 
	CAPTION
	 	 	 	PAGE

	Section 6.6

	 	Binding Effect
	 	 	8	 
	Section 6.7

	 	Covenants Run with the Land; Priority
	 	 	8	 
	Section 6.8

	 	Governing Law
	 	 	8	 
	Section 6.9

	 	Resolution of Technical and Market Issues
	 	 	8	 
	Section 6.10

	 	Rule Against Perpetuities
	 	 	9	 
	Section 6.11

	 	Memorandum of Deed for Recordation
	 	 	9	 

	 	 	 
	SCHEDULES
	 	 
	Schedule 1

	 	Description of Properties
	Schedule 2

	 	Area of Interest

ii

 

 

ROYALTY DEED

GENESIS INC., a Montana corporation (“Grantor”), by means of this Royalty Deed
(“Deed”), effective as of the 13th day of October, 2004 (the “Effective Date”),
in consideration of the payment to it by ROYAL GOLD, INC., a Delaware
corporation (“Grantee”) of the sum of Two Hundred Fifty Thousand United States
Dollars (US$250,000), the receipt and adequacy of which are acknowledged by
Grantor, does hereby convey, grant, bargain, sell, transfer and assign to
Grantee, its successors and assigns, a royalty interest (“Royalty”) in silver,
copper and all other minerals of every kind or character (collectively,
“Minerals”) found in, on or under any of the properties described in Schedule 1
hereto (“Properties”). The specific terms of this Royalty are set forth below.

	1.	 	Commencement of Royalty Payment Obligations. Grantor’s obligation to pay
the Royalty with respect to specific Minerals shall commence on the
“Commencement Dates”, as set forth below in this Section 1, and shall
apply to all Minerals that are extracted, produced and sold, including any
Minerals that may be recovered as a result of reprocessing of tailings,
dumps or other materials wherever located, if such materials were
originally mined and removed from the Properties (collectively,
“Production”).

	 	1.1	 	Silver: The Royalty on silver shall commence after a cumulative
total of 11,035,714 troy ounces of silver have been sold subsequent to
the Effective Date (the “Silver Royalty Commencement Date”).
	 
	 	1.2	 	Copper: The Royalty on copper shall commence after a cumulative
total of 42,674 tonnes of copper have been sold subsequent to the
Effective Date (the “Copper Royalty Commencement Date”).
	 
	 	1.3	 	Other Minerals: The Royalty on any Mineral other than silver and
copper shall
commence after a cumulative total of 100% of the expected
recoverable reserves of that Mineral, as determined by Grantor and
Grantee to exist as of the Effective Date, have been sold subsequent to
the Effective Date (the “Other Mineral Royalty Commencement Date”).

	2.	 	Royalty Percentages.

	 	2.1	 	Phase One Royalty Percentage: The Royalty shall be equal to Six and
One-Tenths Percent (6.1%) (the “Phase One Royalty”) of Gross Smelter
Returns, as defined in Section 3, with respect to the following
quantities of Minerals sold after their respective Royalty Commencement
Dates:

1

 

(a) Silver: 1,655,357 troy ounces;

(b) Copper: 6,401 tonnes; and

(c) Other Minerals: All Production in excess of one hundred
percent (100%), up to and including one hundred fifteen percent
(115%), of the expected recoverable reserves of those Minerals, as
determined by Grantor and Grantee to exist as of the Effective Date.

	 	2.2	 	Phase Two Royalty Percentage: The Royalty for each Mineral shall be
reduced to two percent (2%) (the “Phase Two Royalty”) of Gross Smelter
Returns after the quantity of that Mineral set forth in Section 2.1 has
been sold and all Phase One Royalties for that Mineral have been paid.
The Phase Two Royalty shall be a perpetual royalty on all Production of
a Mineral after all payments of the Phase One Royalty for that Mineral
have been made.

	3.	 	Gross Smelter Returns Defined. As used in this Deed, “Gross Smelter
Returns” means the revenues attributed to Production, with no deduction
for any costs paid by or charged to Grantor, including but not limited to
the Montana Metalliferous Mines Tax and Resource Indemnity Trust and
Groundwater Assessment Tax. Those revenues shall be determined on a
calendar month basis, and paid on a calendar quarter basis, by multiplying
the ounces, pounds or tonnes, as the case may be, of Mineral that was sold
during that month, as determined pursuant to (i) and (ii) below of this
Section 3, by the deemed average monthly sales price of each type of
Mineral, as determined pursuant to Sections 3.1, 3.2 or 3.3 below. For
the term of the Memorandum of Agreement (“MOA”) that currently is in
effect and the term of the “Final Agreement” (as defined in the MOA):

	 	(i)	 	the quantity of ounces, pounds or tonnes of Mineral sold
shall be equal to the metal content for which Grantor is paid
pursuant to the MOA or Final Agreement, as applicable, and
subsequently adjusted upward or downward in accordance with the
quantity adjustments made between Grantor and Trafigura AG pursuant
to the MOA or Final Agreement; and
	 
	 	(ii)	 	the Mineral shall be deemed to have been sold when “Title”
to the “Concentrates” (as defined in the MOA) is transferred from
Grantor to the “Buyer” (as defined in the MOA); provided, however,
if Grantor stockpiles or warehouses any Concentrates for more than
ninety (90) days, Grantor shall be deemed, for purposes of this
Deed, to have sold those Concentrates in the calendar month in which
the ninetieth (90th) day falls, in which event Grantor shall make a
provisional payment of Royalty to Grantee based upon Grantor’s good
faith estimate of the quantities of Minerals in those Concentrates,
and a final upward or downward adjustment shall be made when Grantor
and the Buyer make their final settlement for those Concentrates.

2

 

	 	 	 	If the MOA or Final Agreement, as applicable, terminates or no longer
is in effect while any Royalty under this Deed is payable to Grantee,
Grantor and Grantee shall negotiate in good faith to reach agreement on a
new basis for determining such quantity. If Grantor and Grantee cannot
reach agreement on such basis within thirty (30) days after such
termination, as the case may be, either party may submit the matter for
resolution pursuant to the procedures set forth in Section 6.9. In that
proceeding, each party shall submit a proposed basis for determining the
quantity of Mineral sold for the balance of the Royalty, and the arbitrators
shall be obligated to select one of those proposals. The standard to be
applied by the arbitrators shall be which of the two proposals contains
procedures to be used for quantity determinations that are most consistent
with those made pursuant to the MOA or Final Agreement, as applicable.

	 	3.1	 	Silver: The average monthly price for silver shall be calculated by
dividing the sum of all of the daily London Fix spot prices (expressed
in United States dollars) for silver reported for the month by Platt’s
Metals Week, by the number of days during that month for which such
prices were reported.
	 
	 	3.2	 	Copper: The average monthly price for copper shall be calculated by
dividing the sum of all of the daily per-tonne London Metal Exchange
spot prices (expressed in United States dollars) reported for the month
by Platt’s Metals Week, by the number of days during that month for
which such prices were reported.
	 
	 	3.3	 	Other Minerals: The average monthly price for Minerals other than
silver and copper shall be calculated by dividing the sum of all of the
daily spot prices for the final refined product of such Minerals
reported for the month by Platt’s Metals Week, by the number of days
during that month for which such prices were reported.
	 
	 	3.4	 	Replacement Indices: If either the London Metal Exchange or Platt’s
Metals Week cease reporting spot prices for any Mineral described
above, those references, with respect to that Mineral, shall be
replaced with references to spot prices of that Mineral in the most
nearly comparable established market and/or publication selected by the
parties’ mutual agreement. If the parties cannot reach agreement on a
mutually satisfactory market measure or publication within thirty (30)
days after cessation of the applicable report, then either party may
submit the issue for resolution pursuant to the procedures set forth in
Section 6.9.

	 	4.	 	Payment Procedures; Reports.

	 	4.1	 	Payments of Royalty: Payments of the Royalty shall be made on
a calendar quarter basis, within ten (10) business days after the
end of each calendar quarter, by check or wire transfer, at the
election of Grantee, to the address set forth in Section 6.2.

3

 

	 	4.2	 	Financial Reports: Subject to the confidentiality
requirements of Section 5.4, Grantee shall have the right to be
supplied monthly with duplicate settlement sheets from any refinery,
mill, smelter or other purchaser of Production, whether or not
Production has been sold, and shall contain sufficient information
as to the value, pricing and amounts of intermediate product and
final product sold for Grantor’s account so that Grantee will have
access to all information and data that are reasonably necessary and
appropriate for it to determine the amount of Royalty due it under
this Deed.
	 
	 	4.3	 	Objection, Finality of Payments: Grantee, at its sole
election and expense, shall have the right to perform, not more
frequently than once annually following the close of each calendar
year, an audit by any authorized representative of Grantee of
Grantor’s accounts relating to the Royalty. Any such inspection
shall be for a reasonable length of time during regular business
hours, at a mutually convenient time, upon at least ten (10)
business days’ prior written notice by Grantee. All Royalty payments
made in any calendar year shall be considered final and in full
accord and satisfaction of all obligations of Grantor, unless
Grantee gives written notice describing and setting forth a specific
objection to the calculation thereof within one (1) year following
the end of that calendar year. Grantor shall account for any agreed
upon deficit or excess in Royalty payments made to Grantee by
adjusting the next monthly statement and payment following
completion of such audit to account for such deficit or excess.

	 	5.	 	Additional Rights, Obligations and Covenants of the Parties.

	 	5.1	 	Commingling of Production: Subject to the limitations,
conditions and requirements of this Section 5.1, Grantor shall have
the right to mix or commingle, either underground, at the surface,
or at a processing plant or any other treatment facilities, any
Production from the Properties with ores or material derived from
other lands or properties that are owned, lease or controlled by
Grantor. Before commingling, Grantor shall weigh, measure, sample
and analyze the respective ores and materials in accordance with
sound mining and metallurgical practices such that the Royalty can
be reasonable and accurately determined. As products are produced
from the commingled ores, Grantor shall calculate from
representative samples the average percentage recovery of products
produced from the commingled ores during each month. In obtaining
representative samples and calculating the average grade of
commingled ores and average percentage of recovery, Grantor may use
procedures that are in accordance with best practices in the mining
and metallurgical industry. The records relating to commingled ores
shall be made available for inspection by Grantee, at Grantee’s sole
expense, at all reasonable times and shall be retained by Grantor
for a period of one (1) year after the calendar year in which the
commingling occurred. Notwithstanding the foregoing provisions of
this Section 5.1, Grantor shall not commingle Production from the
Properties with ores or minerals derived from

4

 

	 	 	 	other lands or properties if such commingling has a reasonable
likelihood of reducing the recovery rate of metals from that
Production below what the recovery rate would have been without
commingling. Any disputes concerning commingling procedures or
results or the applicability of the prohibition in the preceding
sentence shall be resolved pursuant to the procedure set forth in
Section 6.9.
	 
	 	5.2	 	Geological and Other Data and Reports: From and after the
date of execution of this Deed, Grantor shall deliver to Grantee not
less frequently that quarterly, or otherwise shall make available,
the following data and information relating to operations conducted
on or for the benefit of the Properties:

	 	(a)	 	The monthly operations and exploration report
prepared by Grantor for operations on the Properties;
	 
	 	(b)	 	The annual reserve report for the Properties
prepared by Grantor, along with any updates, as and when any of
the same have been finalized and approved by Grantor;
	 
	 	(c)	 	Grantor’s life of mine plan relating to the
Properties;
	 
	 	(d)	 	The annual plan and budget prepared by Grantor
relating to the Properties and any amendments thereto, as and
when any of the same have been finalized and approved by
Grantor; and
	 
	 	(e)	 	Any additional material engineering or economic
studies or analyses prepared by Grantor and relating to the
Properties as and when any of the same have been finalized and
approved by Grantor.

	 	5.3	 	Inspection: Grantee and its authorized agents who are
experienced in mining operations, at Grantee’s sole risk and
expense, shall have the right, exercisable at reasonable intervals
and during regular business hours, at a mutually convenient time,
and in a reasonable manner conforming to Grantor’s safety rules and
regulations and so as not to interfere with Grantor’s operations, to
go upon the Properties for the purposes of inspecting same. Grantee
shall furnish Grantor with prior written notice of the time and
place of any inspection by Grantee pursuant to this Section 5.3.
Grantee shall defend, indemnify and hold Grantor harmless from and
against all costs incurred (including reasonable attorneys’ fees and
the costs of defending any such claims) based on claims for damages,
including injury or damage to other persons or property, arising out
of any death, personal injury or property damage sustained by
Grantee, its agents or employees, while in or upon the Properties,
unless such death, injury or damage results from Grantor’s gross
negligence or willful misconduct.

5

 

	 	5.4	 	Confidentiality: Grantee shall not, without the prior written
consent of Grantor, disclose to any third party (excluding, however,
any representative, affiliate, agent, consultant or contractor of
Grantee who has a bona fide need to be informed) any information
concerning operations, including exploration, on the Properties
which is not generally available to the public; provided, however,
that upon not less than five (5) days’ prior written notice to
Grantor setting forth the nature and content of the proposed
disclosure, Grantee may disclose information or data pertaining to
the Properties to: (a) any third party to whom Grantee in good faith
anticipates selling or assigning all or a part of its interest
hereunder, or (b) any lender or underwriter from whom Grantee is
seeking to obtain funds. Grantee shall require those parties to keep
the information so provided confidential. If either Grantor or
Grantee determines in good faith that a disclosure is required for
compliance with applicable laws, rules, regulations or orders of any
government agency or stock exchange having jurisdiction, that party
shall provide as much prior notice to the other party of the nature
and contents of the proposed disclosure, for the review and comment
of the other party, as is reasonably possible under the
circumstances.
	 
	 	5.5	 	Area of Interest: As further consideration for this Deed, if,
as of the Effective Date Grantor owns, or after the Effective Date
Grantor acquires, any mining claims, lands, leases or mineral
interests within the area described in Schedule 2 hereto (the “Area
of Interest”), such property shall be deemed to be part of the
Properties and subject to all of the terms and conditions of this
Deed, including the obligation to pay Grantee the Royalty.
	 
	 	5.6	 	Abandonment of Properties: Grantor may elect at any time to
terminate or abandon its interests in any and all unpatented mining
claims included in the Properties at any time as it may in its sole
discretion deem appropriate, subject only to the provisions of this
Section 5.6. In the event that Grantor wishes to abandon any or all
of those unpatented claims, it shall provide Grantee with not less
than forty-five (45) days prior notice of its intention to do so and
offer to transfer such claims to Grantee. At any time during the
forty-five (45) day period, Grantee may notify Grantor that it
elects to accept transfer of such claims. In that event, Grantor
shall transfer those claims to Grantee by quitclaim deed. If Grantor
fails to pay any real estate taxes on any of the Properties and such
failure results in a tax delinquency notice, it shall, within thirty
(30) days after receipt of that notice, either cure such delinquency
or transfer the Properties to Grantee by quitclaim deed; provided,
however, if Grantor in good faith disputes such delinquency notice,
it shall not be required to cure the alleged delinquency or transfer
the properties to Grantee unless and until the dispute has been
finally resolved, either by agreement between the taxing authority
and Grantor, or a final administrative or judicial decision from
which all appeals have been exhausted or waived. Grantee’s rights
under this Section 5.6 shall be subordinate to the prior rights of
Asarco Incorporated and Kennecott Montana Company to receive
reconveyances of the Properties if Grantor elects to terminate of
abandon same, unless those parties waive or

6

 

	 	 	 	elect not to exercise those rights or agree to subordinate their
rights to those of Grantee under this Section 5.6.

	6.	 	General Provisions.

	 	6.1	 	Assignment: Either party may assign its interests under this
Deed freely, in whole or in part; provided, however, that any
transfer or conveyance by either party of any interest in the
Royalty or in the Properties shall be expressly made subject to, and
the assignee or transferee shall commit in writing to be bound by,
all of the terms and conditions and covenants of this Deed.

	 	6.2	 	Notices: Any notice, election, report or other correspondence
required or permitted hereunder shall be in writing and (i)
delivered personally; or (ii) sent by registered or certified United
States mail, postage prepaid, return receipt requested; or (iii)
sent by reputable overnight courier; (iv) sent by facsimile, with
confirmation of delivery requested. All such notices shall be
addressed to the party to whom directed as follows:

If to Grantor:

Genesis Inc., c/o Revett Silver Company

11115 E. Montgomery

Suite G

Spokane Valley, Washington 99206

Attention: President

Facsimile Number: 509-891-8901

If to Grantee:

Royal Gold, Inc.

1660 Wynkoop St.

Suite 1000

Denver, Colorado 80202-1132

Attention: President

Facsimile Number: 303-595-9385

Either party may, from time-to-time, change its address for
future notices hereunder by notice in accordance with this Section
6.2.

	 	6.3	 	Amendments and Waiver: No modifications or waivers of the
terms and conditions of this Deed shall be binding upon either party
unless in writing, dated subsequent to the date of this Deed, and
executed by an authorized representative of each party. No waiver by
either party of a breach of any of the provisions of this Deed shall
be construed as a waiver of any subsequent breach, whether of the
same or of a different character.

7

 

	 	6.4	 	Relationship of the Parties: The relationship of the parties
hereto is contractual only. The Royalty shall not grant to Grantee
any rights to participate or influence management or decision-making
regarding operations on the Properties, nor shall it obligate the
Grantee to assume any responsibilities for costs of Grantor’s
operations on the Properties or any liabilities resulting there
from.
	 
	 	6.5	 	Further Instruments: The parties hereto agree that they will
execute any and all instruments as may be necessary or required to
carry out and effectuate any and all of the provisions of this Deed.
	 
	 	6.6	 	Binding Effect: This Deed shall be binding upon, and shall
inure to the benefit of, the parties hereto and their respective
successors and assigns.
	 
	 	6.7	 	Covenants Run with the Land; Priority: The Royalty granted to
Grantee by this Deed shall be in the nature of an interest in real
property which shall run with the land. The contractual provisions
of this Deed shall continue for so long as Grantee, its successors
and assigns retain any interest in the Properties or in any of the
lands covered by any of the unpatented mining claims included within
the Properties as of the date of this Deed, or in any lands made
subject to this Deed within the Area of Interest pursuant to Section
5.5. This Royalty shall have priority over, and in no event shall be
subordinated to, any project or other financing that Grantor may
obtain with respect to the Properties after the Effective Date of
this Deed, unless Grantee specifically so provides in writing.
	 
	 	6.8	 	Governing Law: This Deed is made under and shall be
interpreted and enforced in accordance with the laws of the State of
Montana, without regard to those principles of conflicts of laws
that might otherwise require the application of the laws of another
jurisdiction.
	 
	 	6.9	 	Resolution of Technical and Market Issues: The parties
acknowledge that technical issues such as but not limited to those
relating to commingling, measurements of tonnage, grade and
recoveries, and indices for deemed sales prices may arise in the
future based upon changes of circumstances which the parties are not
able to anticipate at the time of the execution of this Deed.
Grantor and Grantee each agree to negotiate in good faith to attempt
to resolve any such disputes. If the parties are unable to resolve
any such issue which involves a claim for payment or the assertion
or a cost or liability by either party of an amount not more than
Two Hundred Fifty Thousand Dollars ($250,000), and the resolution of
such dispute will not otherwise result in this Deed being declared
void, rescinded or otherwise unenforceable by either party, such
dispute shall be resolved by binding arbitration. The arbitration
shall be conducted in accordance with the commercial arbitration
rules of the American Arbitration Association, except (a) the
parties agree that they each shall choose one arbitrator experienced
in the technical or market area

8

 

	 	 	 	involved in the dispute and that the two arbitrators so named shall
choose a third arbitrator to compile the panel of three (3)
arbitrators; (b) the parties shall be entitled to reasonable
discovery prior to the arbitration hearing, as determined by the
arbitrators; (c) the arbitrators shall be entitled, in their
reasonable discretion, to make equitable decisions to govern the
parties’ future conduct with respect to such technical or market
matters; and (d) the arbitrators shall be entitled, in their
reasonable discretion, to award costs of arbitration and attorneys’
fees to the prevailing party.
	 
	 	6.10	 	Rule Against Perpetuities: Any right or interest granted under
this Deed (including but not limited to Grantor’s obligations under
Sections 5.5 and 5.6) that would violate any applicable Rule Against
Perpetuities or any similar rule of law, shall terminate twenty-one
(21) years after the death of the last survivor of the children and
grandchildren of Robert F. Kennedy who are alive on the Effective
Date.
	 
	 	6.11	 	Memorandum of Deed for Recordation: This Deed shall not be
recorded or filed in the county records of Montana or in the Montana
State Office of the Bureau of Land Management. Grantor and Grantee
shall execute and record in the appropriate Montana county records
and file in the Montana State Office of the Bureau of Land Management
a short form of this Deed for the purpose of providing constructive
notice of the parties’ respective rights and obligations hereunder
with respect to the Properties.

     WHEREFORE, the Grantor and Grantee have executed this Deed to be effective
as
of the date first above written.

	 	 	 	 	 
	 	GENESIS INC.

 	 
	 	By:  	/s/ William Orchow
 	 
	 
	 	Print Name: William Orchow
 	 
	 	Title: President & CEO 	 
	 

	 	 	 	 	 
	 	ROYAL GOLD, INC.

 	 
	 	By:  	/s/ Tony A. Jensen
 	 
	 
	 	Print Name: Tony A. Jensen
 	 
	 	Title: President & COO 	 

9exv10w1xcy

 

	 	 	 	 	 

Exhibit 10.1(c)

AGREEMENT

THIS AGREEMENT (“Agreement”) is made and entered into effective as of October
13, 2004, by and between REVETT SILVER COMPANY, a Montana corporation
(“Revett”), and ROYAL GOLD, INC., a Delaware corporation (“Royal Gold”).

Recitals

	 	A.	 	Revett, through one or more of its wholly-owned subsidiaries,
including but not limited to RC Resources, Inc., a Montana corporation
(“RC Resources”, which, together with any other Revett subsidiaries
that now or hereafter own interests in the Properties [defined below],
shall be described herein collectively as the “Subsidiaries” and
individually as a “Subsidiary”), owns certain mining properties in
Sanders County, Montana, as described more specifically in Exhibit A
hereto (collectively, the “Properties”).
	 
	 	B.	 	Revett and another of its wholly-owned subsidiaries, Genesis Inc.
(“Genesis”), are parties to a certain Promissory Note (the “Note”) in
the principal amount of $5,000,000, dated February 21, 2000, as amended
by Third Amendment dated February 1, 2003 (the “Third Amendment”), from
Genesis and Revett (previously known as Sterling Mining Company),
collectively as “Maker”, to Kennecott Montana Company (“Kennecott”,
with Kennecott and any subsequent holder of the Note referred to herein
and in the Note as “Payee”), as “Lender”.
	 
	 	C.	 	The Note is secured by a Mortgage, Security Agreement and Financing
Statement, dated February 21, 2000 (the “Mortgage”), from Genesis, as
“Mortgagor” and as predecessor to the Subsidiaries as owner of the
Properties. The Mortgage encumbers certain of the Properties and
certain other properties of Genesis.
	 
	 	D.	 	Royal Gold wishes to purchase from Revett, and Revett wishes to
sell to Royal Gold, certain shares of Revett common stock, with the
right and option of Royal Gold to convert those shares into a royalty
on the Properties, as provided in this Agreement.
	 
	 	E.	 	Royal Gold wishes to receive from Revett, and Revett wishes to
grant to Royal Gold, the exclusive right and option, but not the
obligation, to cure any defaults by Revett, Genesis or the Subsidiaries
under the Note or Mortgage and, in the event that the Payee commences
any foreclosure proceeding pursuant to the Mortgage, to assume the
Payee’s position under the Note and Mortgage or, alternatively, to
enter into a replacement promissory note and security instrument, as
provided herein.

NOW, THEREFORE, in consideration of the mutual benefits to be derived by the
parties hereto pursuant to this Agreement, Revett and Royal Gold hereby agree
as follows:

1

 

ARTICLE I

AGREEMENT TO SELL AND PURCHASE SHARES; CONVERSION RIGHT

	1.1	 	Agreement to Sell and Purchase Shares. On or before October 15, 2004 (the
“Closing Date”), Royal Gold shall purchase from Revett, and Revett shall
issue and sell to Royal Gold, 1,333,333 shares of previously unissued
common stock of Revett (the “Shares”), for a Purchase Price of One Million
United States Dollars (US$1,000,000) (the “Closing”). At the Closing,
Revett shall deliver to Royal Gold a certificate or certificates
registered in the name of Royal Gold representing the Shares, and Royal
Gold shall pay the Purchase Price to Revett by wire transfer to Revett’s
account at a bank designated by Revett.
	 
	1.2	 	Option to Convert Shares to NSR Royalty. Royal Gold shall have the right
to convert (“Conversion Right”) the Shares to a perpetual,
non-participating one percent (1%) net smelter return (“NSR”) royalty, as
described in Exhibit B hereto (the “Royalty”), on the Properties and other
lands, if any, owned or acquired by Revett or the Subsidiaries within the
Area of Interest described in Exhibit C hereto, at any time during the
period from the Closing Date until sixty (60) days after the later of: (i)
Royal Gold having been presented with a positive bankable feasibility
study (i.e., a study that is in a form and of a scope generally acceptable
to reputable financial institutions that provide financing to the mining
industry) with respect to the Properties; or (ii) Revett’s Board of
Directors having approved commencement of construction of a mine (the
“Mine”) on those Properties. The following conditions and limitations
shall apply to the Conversion Right and the Royalty:

	 	(a)	 	The Conversion Right shall be personal to Royal Gold. If Royal
Gold transfers the Shares to another party, the Conversion Right shall
terminate.

	 
	 	(b)	 	The Royalty shall be subordinate to security interests that secure
initial third party financing of the construction of the Mine, if and
to the extent that the party providing that financing requires such
subordination. This subordination to which the Royalty may be subjected
shall not prohibit or limit payments due under the Royalty unless and
until a default under the financing agreement occurs and is declared by
the financing party. In the absence of such default and declaration,
payments due under the Royalty shall have priority over any cash sweep
or cash reserve requirements under the financing agreement.

	1.3	 	Royal Gold Opportunity to Present Financing Proposal and Right of First
Refusal to Provide Financing. At such time, if any, that either Revett or
any Subsidiary receives and wishes to accept a reasonably detailed term
sheet or other form of proposal for financing of construction of the Mine,
the party receiving the proposal shall give Royal Gold a copy of that
proposal, and Royal Gold shall have twenty (20) business days thereafter
in which to present to Revett a competing proposal for such financing.
Further, if at any time either Revett or any Subsidiary receives and
wishes to accept a reasonably detailed term sheet or other form of
proposal involving either: (i) a royalty, production payment or other
similar transaction that is calculated on the basis

1

 

	 	 	of a percentage of production or revenues from the Mine, or (ii) royalty
financing for the construction of the Mine; it shall provide Royal Gold with
a copy of that proposal, and Royal Gold shall have a right of first refusal
to provide financing on terms as or more favorable than those contained in
the proposal. That right shall be exercisable by Royal Gold for a period of
twenty (20) business days after its receipt of the copy of the proposal. If
Royal Gold declines either to present a financing proposal or to exercise
its right of first refusal, as the case may be, Revett and the Subsidiaries
shall have the right for a period of ninety (90) days after that declination
to close the transaction but only if the final terms of the transaction to
be closed are not materially different from the terms of the proposal
presented to Royal Gold. If the transaction is not closed within that ninety
(90) day period, or if the terms of the transaction to be closed are
materially different from those presented to Royal Gold, then Royal Gold’s
rights under this Section 1.3 shall be reinstated .
	 
	1.4	 	Royal Gold Option to Cure Defaults under the Note or Mortgage. Revett
hereby agrees that if it, Genesis or any of the Subsidiaries receive a
notice from the Payee that requests an interest payment under the Note, as
provided in the Third Amendment, Revett shall so inform Royal Gold in
writing and provide Royal Gold with a copy of that notice within two (2)
business days after Revett’s, Genesis’ or a Subsidiary’s receipt,
whichever is earliest, of same. Revett shall exercise its best efforts to
make or cause Genesis or a Subsidiary to make payment of that interest
payment on or before two (2) days prior to its due date. If they fail to
do so, Revett shall so notify Royal Gold in writing on or before that
interest payment due date, in which event Royal Gold shall have the
exclusive right and option, but not the obligation, to make such payment.
If Revett, Genesis or any of the Subsidiaries default under any of their
other obligations under the Note, or if Genesis or a Subsidiary defaults
under any of their obligations under the Mortgage, and any of them
receives a notice of default from the Payee pursuant to either the Note or
Mortgage, Revett shall so inform Royal Gold in writing and provide Royal
Gold with a copy of the default notice after its, Genesis’ or the
Subsidiary’s receipt of same. Revett then shall exercise its best efforts
to cure the default or cause Genesis or a Subsidiary to cure the default
within twenty (20) days after receipt of the default notice. If the
default is not cured within that time period, or if Revett determines that
none of them will be able to cure the default within that time period,
Revett shall so notify Royal Gold by telephone, facsimile and e-mail on or
before the first business day after the twentieth (20th) day, after which
Royal Gold shall have the exclusive right and option, but not the
obligation, to cure the default cited by the Payee in its notice of
default.
	 
	1.5	 	Royal Gold’s Options in the Event of Foreclosure under the Mortgage. If
the Payee initiates a foreclosure proceeding pursuant to the Mortgage,
Royal Gold shall have the exclusive right and option, but not the
obligation, to enter into a transaction with the Payee pursuant to which
Royal Gold would assume the position of the Payee under the Note and
Mortgage. If for any reason Royal Gold is unable to obtain the Payee’s
agreement to Royal Gold’s assumption of Payee’s position, Revett agrees
that Royal Gold shall have the exclusive right and option, but not the
obligation, to

2

 

	 	 	 pay off the remaining balance due under the Note, in which event Revett shall
execute and shall cause Genesis and/or the appropriate Subsidiary or
Subsidiaries to execute a replacement promissory note for the same principal
amount and with the same other provisions as the Note, except as provided
below in this Section 1.5. Revett also shall cause the appropriate
Subsidiary or Subsidiaries to execute a replacement security instrument that
contains the same terms and conditions and encumbers the same properties and
interests as the Mortgage, with the exception that the replacement security
interest shall reflect the revised terms of the replacement note as
described below in this Section 1.5. The Note and Mortgage assumed from
Payeee by Royal Gold or, in the alternative, the replacement note and
security instrument described above, shall be subject to the following
further provisions:

	 	(a)	 	Royal Gold will extend the current Term of the Note through
February 21, 2010, but the Note otherwise shall remain unchanged; and

	 
	 	(b)	 	 For the remaining Term of the Note, Royal Gold shall have the right
to convert all principal and interest due under the Note into either:

	 	(i)	 	a perpetual, non-participating three percent (3%) NSR
royalty, as defined in Exhibit B hereto, in the Properties and
any other lands within the Area of Interest owned or acquired by
Revett, Genesis or any of the Subsidiaries within the Area of
Interest described in Exhibit C hereto; or

	 
	 	(ii)	 	previously unissued common stock of Revett, at a
conversion rate of US$0.75 per share for all unpaid principal
and interest under the Note or replacement note, as applicable,
at the time of conversion.

	1.6	 	Maintenance of Title to Properties and Title Information; Recordable
Instrument. Revett hereby agrees to maintain the unpatented mining claims
within the Properties in good standing and to timely pay all property
taxes applicable to the patented mining claims within the Properties.
Revett promptly shall provide to Royal Gold, upon written request from
Royal Gold, copies of all title information in Revett’s possession and
control regarding the Properties. Revett further agrees to cause Genesis
and/or one or more of the Subsidiaries to execute a recordable instrument
in a form reasonably acceptable to Royal Gold, so as to provide
constructive notice of Royal Gold’s rights under this Agreement to receive
the NSR royalties in the Mine, as described in Sections 1.2 and 1.5 above.
	 
	1.7	 	Royal Gold Piggy-Back Registration and Anti-Dilution Rights with Respect
to Revett Stock. Revett agrees that at such time as it files a
registration statement with either United States or Canadian securities
regulators for a public offering of its common stock, it will include in
such registration the Shares purchased by Royal Gold pursuant to Section
1.1 above, plus all shares of Revett common stock, if any, that have been
acquired by Royal Gold pursuant to Section 1.5(b)(ii) above. Revett also
agrees to provide Royal Gold with the right and option, but not the
obligation, to purchase additional shares of Revett common stock if Revett
sells additional stock (either in a private placement or public offering)
at a price of less than US$0.75 per share. In such case, the price to
Royal Gold shall be equal to the sale price for which

3

 

	 	 	such shares were sold; and the number of shares that Royal Gold shall be
entitled to purchase at that price shall be a number that will maintain
Royal Gold’s percentage ownership of Revett’s issued and outstanding shares
at the same percentage level as it was immediately prior to the sale of the
Revett shares at less than US$0.75 per share.
	 
	1.8	 	Confidentiality and Press Releases. Neither party shall, without the
prior written consent of the other party, disclose to any third party
(excluding, however, any representative, affiliate, agent, consultant or
contractor of the disclosing party who has a bona fide need to be
informed) any information or data concerning operations, including but not
limited to exploration, on the Properties that is not generally available
to the public; provided, however, that upon not less than five (5) days’
prior written notice to the other party setting forth the nature and
content of a proposed disclosure, the disclosing party may disclose
information or data pertaining to the Properties: (a) to any third party
to whom the disclosing party in good faith anticipates selling all or part
of its interest hereunder, or (b) to any lender or underwriter from whom
the disclosing party is borrowing or raising funds secured by or based
upon the Properties, provided that such lender or underwriter executes a
confidentiality agreement in a form that is reasonably acceptable to the
non-disclosing party. If a disclosure is, in the good faith judgment of a
party, required for compliance with applicable laws, rules, regulation or
orders of any governmental agency or stock exchange having jurisdiction
over the disclosing party, that party shall provide as much prior notice
to the other party of the nature and contents of the proposed disclosure,
for the review and comment of the non-disclosing party, as is reasonably
possible in the circumstances.

WHEREFORE, the parties have executed this Agreement to be effective as of the
date first above written.

ROYAL GOLD, INC.

	 	 	 
	By:

	 	/s/ Tony A. Jensen
	

	 	

REVETT SILVER COMPANY

	 	 	 
	By:

	 	/s/ William Orchow
	

	 	

4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00072-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00072-of-00352.parquet"}]]