Document:

exv10w1

 

Exhibit 10.1

FIRST AMENDMENT TO FUNDING AGREEMENT

     THIS FIRST AMENDMENT TO FUNDING AGREEMENT (this “Amendment”), dated as of February 8,
2006, is by and between Société des Mines de Taparko, also known as SOMITA, SA, a société anonyme
formed under the laws of the Republic of Burkina Faso (“Somita”), and Royal Gold, Inc., a
Delaware corporation (“Royal Gold”).

Recitals

     A. As of December 1, 2005, Somita and Royal Gold entered into that certain Funding Agreement
(the “Funding Agreement”), whereby Royal Gold agreed to provide Somita with funding in the
amount of US$35,000,000 (the “Maximum Amount”) for additional costs of development of the
Taparko/Bouroum gold mine project in Burkina Faso. Capitalized terms used but not otherwise
defined herein shall have the meaning given such terms in the Funding Agreement.

     B. Prior to the date of this Amendment, Royal Gold has provided Somita the amount of
US$6,414,000 under the First Tranche pursuant to the terms and conditions of the Funding Agreement.

     C. The conditions to disbursement of the Second Tranche in Section 3.2 of the Funding
Agreement (the “Second Tranche Conditions”) have not yet been satisfied.

     D. Somita now desires to obtain additional funding from Royal Gold under the First Tranche in
the amount of US$3,000,000 (the “Additional First Tranche Amount”) for additional costs of
development of the Taparko/Bouroum gold mine project.

     E. Royal Gold is agreeable to provide the Additional First Tranche Amount to Somita on the
terms and conditions set forth herein and in the Funding Agreement.

     F. In accordance with the request of Somita, Royal Gold has agreed to deposit the Additional
First Tranche Amount in a bank account controlled by High River Gold Mines Ltd., a corporation
formed under the laws of Canada (“HRG”), and the ultimate parent of High River Gold Mines (West
Africa) Ltd., a corporation formed under the laws of the Cayman Islands, which is the current
holder of 90% of the issued and outstanding equity in Somita, for distribution as set forth herein.

     G. Pursuant to Section 8.1(a) of the Funding Agreement, no amendment to the Funding Agreement
is valid or effective against Somita or Royal Gold unless such amendment is in writing and signed
by Somita and Royal Gold.

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Agreement

     IN CONSIDERATION of the foregoing and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Somita and Royal Gold agree as follows:

1. Amendments to Funding Agreement

          (a) The definition of “First Tranche” in Section 1.1 of the Funding Agreement is hereby
amended and restated in its entirety to read as follows:

“First Tranche” means the initial Tranche of the Funding in the
amount of $9,414,000, which tranche may be funded by Royal Gold in one or
more disbursements at any time from the Closing Date until February 28,
2006.

          (b) The definition of “Funding Documents” in Section 1.1 of the Funding
Agreement shall be deemed to include this Amendment and the Consent of Guarantor attached
as Exhibit B hereto.

     (c) Section 4.16 of the Funding Agreement is hereby amended by replacing
“$59,747,000” with “$73,047,000”.

     (d) Sections 4.16 and 5.1 of the Funding Agreement are hereby amended by
replacing “May 31, 2007” with “September 30, 2007”.

     (e) Section 7.1(b) of the Funding Agreement is hereby amended by replacing
“August 31, 2007” with “December 31, 2007”.

     (f) The second paragraph of Schedule V to the Funding Agreement is hereby deleted
in its entirety and replaced with the following:

The total funding by Royal Gold under the First Tranche will be $9,414,000
and will be paid to Somita for (i) repayment of intercompany loans made by
HRG to Somita prior to the date of the Agreement and (ii) development and
operation of the Project pursuant to the Development Plan.

     (g) Each of Schedule V to the Funding Agreement and Schedule VI to the Funding
Agreement is hereby amended by, in each case, deleting the table contained in such schedule
in its entirety and replacing such table with the table attached hereto as Exhibit
A.

     2. Conditions Precedent. The obligations of Royal Gold under this Amendment with
respect to the disbursement of the Additional First Tranche Amount are subject to the satisfaction
of the following conditions:

          (a) Somita shall have executed and delivered this Amendment;

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          (b) Somita shall have executed and delivered an officer’s certificate, in form and substance
satisfactory to Royal Gold; and

          (c) HRG shall have executed and delivered a Consent of Guarantor in the form attached hereto
as Exhibit B.

     3. Additional Documents; HRG as Agent.

          (a) Somita shall execute and deliver to Royal Gold at any time and from time to time such
additional documents as Royal Gold may request in order to disburse the Additional First Tranche
Amount to Somita or to confirm and carry out other transactions contemplated hereby.

          (b) Somita hereby authorizes HRG to receive the Additional First Tranche Amount from Royal
Gold on behalf of Somita and to distribute such amount as follows:

               (i) US$1,000,000 to HRG in repayment of intercompany loans from HRG to Somita existing prior
to the date of the Funding Agreement; and

               (ii) US$2,000,000 to Somita for development and operation of the Project pursuant to the
Development Plan.

     4. Representations, Warranties and Covenants of Somita. Somita represents, warrants
and covenants to Royal Gold, as of the date of this Amendment, as follows:

          (a) All representations, warranties and covenants made by any Responsible Party in this
Amendment, the Funding Agreement and any other Funding Document are true and accurate on and as of
the date of this Amendment as if such representations, warranties and covenants had been made as of
the date of this Amendment, except to the extent that such representation, warranty or covenant was
made as of a specific date or updated, modified or supplemented as of a subsequent date with the
consent of Royal Gold.

          (b) No Default exists on and as of the date of this Amendment.

          (c) No Material Adverse Effect, nor any event or circumstance that could have a Material
Adverse Effect, has occurred at any time from the date of the Funding Agreement to the date of this
Amendment.

          (d) The disbursement of funds by Royal Gold to Somita pursuant to the Funding Agreement as
contemplated by this Amendment is not prohibited by any Law and does not subject Royal Gold to any
penalty or other onerous condition under or pursuant to any such Law.

          (e) All Tranches disbursed prior to the date hereof have been or are being used for the
purposes of the Project in accordance with Section 2.3 of the Funding Agreement.

          (f) The Additional First Tranche Amount requested in connection with this Amendment shall be
used for the purposes of repayment of intercompany loans from HRG to

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Somita existing prior to the
date of the Funding Agreement and development and operation of the Project pursuant to the
Development Plan, which purposes are in accordance with Section 2.3 of the Funding Agreement.

          (g) Somita has duly taken all action necessary to authorize the execution and delivery by it
of the Amendment and to authorize the consummation of the transactions contemplated hereby and the
performance of its obligations hereunder

     5. Continuation of the Funding Agreement; No Other Changes.

          (a) Except as specified in this Amendment, the provisions of the Funding Agreement are
ratified and confirmed in all respects and shall remain in full force and effect, including,
without limitation, Section 3.4 of the Funding Agreement, and if there is a conflict between the
terms of this Amendment and those of the Funding Agreement, the terms of this Amendment shall
control.

          (b) Royal Gold and Somita agree that Royal Gold shall have no obligation to fund the Second
Tranche if the Second Tranche Conditions are not satisfied by February 28, 2006.

          (c) Nothing in this Amendment shall be interpreted to increase the total amount that Royal
Gold has committed to fund under the terms of the Funding Agreement above the Maximum Amount.

     6. Miscellaneous.

          (a) This Amendment shall be governed by and construed under the laws of the State of Colorado
and shall be binding upon and inure to the benefit of the parties hereto and their successors and
permissible assigns.

          (b) This Amendment may be executed in two or more counterparts, each of which shall be deemed
an original and all of which together shall constitute one instrument.

          (c) This Amendment and all documents to be executed and delivered hereunder may be delivered
in the form of a facsimile copy, subsequently confirmed by delivery of the originally executed
document.

          (d) This Amendment constitutes the entire agreement between Somita and Royal Gold concerning
the subject matter of this Amendment. This Amendment may not be amended or modified orally, but
only by a written agreement executed by Somita and Royal Gold.

          (e) If any provision of this Amendment shall be held invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions of this Amendment shall not be
impaired thereby.

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          (f) The section headings herein are for convenience only and shall not affect the construction
hereof.

          (g) Execution of this Amendment is not intended to and shall not constitute a waiver by Royal
Gold of any Event of Default under any of the Funding Documents.

Execution Page Follows

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     EXECUTED by Royal Gold and Somita as of the date first set forth above.

	 	 	 	 	 	 	 
	 

	 	SOCIÉTÉ
	 	DES MINES DE TAPARKO	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ David Mosher
 

	 	 
	 

	 	 	 	David Mosher	 	 
	 

	 	 	 	Director	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Daniel Vanin	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Daniel Vanin	 	 
	 

	 	 	 	Director	 	 
	 
	 	 	 	 	 	 
	 

	 	ROYAL
	 	GOLD, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Donald J. Baker	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Donald J. Baker	 	 
	 

	 	Title:
	 	 Vice President Corporate Development	 	 

[Signature page to First Amendment to Funding Agreement]

 

 

EXHIBIT A

Amended Tranche Funding Schedule

 

 

EXHIBIT B

Form of Consent of Guarantorexv10w1

 

Exhibit 10.1

SECURED PROMISSORY NOTE

	 	 	 
	$«Amount»

	 	Greenwood Village, Colorado
	 

	 	October 6, 2004

     FOR VALUE RECEIVED, A SMART MOVE L.L.C., a Colorado limited liability company, 5350 S. Roslyn
Street, Suite 300, Greenwood Village, Colorado 80111, and its successors and assigns, (the “Maker”)
promises to pay to the order of «Name» at «Address», «City», «State» «Zip» (the “Holder”) or at
such other place as Holder may from time to time designate in writing, the principal sum of «F9»
Dollars ($«Amount».00) in lawful money of the United States of America, together with interest on
so such thereof as is from time to time outstanding at the rate hereinafter provided, and payable
as hereinafter provided.

     1. Interest Rate. The unpaid balance of this Note shall bear interest at the rate of
twelve percent (12%) per annum, simple interest.

     2. Payment/Maturity Date. Interest on the Note shall be paid semi-annually, on the
first day of the months of April and October, beginning on April 1, 2005, and continuing until
twenty-four (24) months from the date of the Note. Beginning on
the first day of the 
twenty-fifth
month (i.e., November 1, 2006), the Company will pay principal and interest on the note in sixty
(60) monthly payments, until the total outstanding principal balance hereof, together with accrued
and unpaid interest, shall be paid.

     3. Default Interest and Attorney Fees. Upon declaration of a default hereunder, the
balance of the principal remaining unpaid, interest accrued thereon, and all other costs, and fees
shall bear interest at the rate of eighteen percent (18%) per annum from the date of default. In
the event of default, the Maker and all other parties liable hereon agree to pay all costs of
collection, including reasonable attorneys’ fees.

     4. Security Agreement. This Note is subject to a Security Agreement of even date
between the Maker and the Holder.

     5. Interest Calculation. Daily interest shall be calculated on a 365-day year and the
actual number of days in each month.

     6. Conversion.. Holder may convert the balance of the Note and all accrued interest
into common shares of the Company at any time. The conversion price shall be $5.00 share.

     7. Prepayment. This Note may be prepaid, in whole only, at any time without premium
or penalty. The Company may exercise its right to prepay all or a portion of the outstanding
principal balance by sending to Holder ten (10) days’ prior written notice of such prepayment.

     8. Costs of Collection. Maker agrees that if, and as often as, this Note is placed in
the hands of an attorney for collection or to defend or enforce any of Holder’s rights hereunder or
under any instrument securing payment of this Note, Maker shall pay to Holder its reasonable
attorneys’ fees and all court costs and other expenses incurred in connection therewith, regardless
of whether a lawsuit is ever commenced or whether, if commenced, the same proceeds to judgment or
not. Such costs and expenses shall include, without limitation, all costs, reasonable attorneys’
fees, and expenses incurred by Holder in connection with any insolvency, bankruptcy,
reorganization, foreclosure, deed in lieu of foreclosure or similar proceedings involving Maker or
any endorser, surety, guarantor, or other person liable for this Note which in any way affect the
exercise by Holder of its rights and remedies under this Note, or any other document or instrument
securing, evidencing, or relating to the indebtedness evidenced by this Note.

     9. Default. At the option of Holder, the unpaid principal balance of this Note and
all accrued interest thereon shall become immediately due, payable, and collectible, without notice
or demand, upon the occurrence at any time of any of the following events, each of which shall be
deemed to be an event of default hereunder.

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     (a) Maker’s failure to make any payment of principal, interest, or other charges on or
before the date on which such payment becomes due and payable under this Note;

     (b) Maker’s breach or violation of any agreement or covenant contained in this Note, or
in any other document or instrument securing, evidencing, or relating to the indebtedness
evidenced by this Note;

     (c) Dissolution, liquidation or termination of Maker.

     10. Application of Payments. Any payment made against the indebtedness evidenced by
this Note shall be applied against the following items in the following order: (1) costs of
collection, including reasonable attorneys’ fees incurred or paid and all costs, expenses, default
interest, late charges and other expenses incurred by Holder and reimbursable to Holder pursuant to
this Note (as described herein); (2) default interest accrued to the date of said payment; (3)
ordinary interest accrued to the date of said payment; and (4) finally, outstanding principal.

     11. Assignment of Note. This Note may not be assigned by Maker or Holder.

     12. Non-Waiver. No delay or omission on the part of Holder in exercising any rights
or remedy hereunder shall operate as a waiver of such right or remedy or of any other right or
remedy under this Note. A waiver on any one or more occasion shall not be construed as a bar to or
waiver of any such right and/or remedy on any future occasion.

     13. Maximum Interest. In no event whatsoever shall the amount paid, or agreed to be
paid, to Holder for the use, forbearance, or retention of the money to be loaned hereunder
(“Interest”) exceed the maximum amount permissible under applicable law. If the performance or
fulfillment of any provision hereof, or any agreement between Maker and Holder shall result in
Interest exceeding the limit for Interest prescribed by law, then the amount of such Interest shall
be reduced to such limit. If, from any circumstance whatsoever, Holder should receive as Interest
an amount which would exceed the highest lawful rate, the amount which would be excessive Interest
shall be applied to the reduction of the principal balance owing hereunder (or, at the option of
Holder, be paid over to Maker) and not to the payment of Interest.

     14. Purpose of Loan. Maker certifies that the loan evidenced by this Note is obtained
for business or commercial purposes and that the proceeds thereof will not be used primarily for
personal, family, household or agricultural purposes.

     15. Waiver of Presentment. Maker and the endorsers, sureties, guarantors and all
persons who may become liable for all or any part of this obligation shall be jointly and severally
liable for such obligation and hereby jointly and severally waive presentment and demand for
payment, notice of dishonor, protest and notice of protest, and any and all lack of diligence or
delays in collection or enforcement hereof. Said parties consent to any modification or extension
of time (whether one or more) of payment hereof, the release of all or any part of the security for
the payment hereof, and the release of any party liable for payment of this obligation. Any
modification, extension, or release may be without notice to any such party and shall not discharge
said party’s liability hereunder.

     16. Governing Law. As an additional consideration for the extension of credit, Maker
and each endorser, surety, guarantor, and any other person who may become liable for all or any
part of this obligation understand and agree that the loan evidenced by this Note is made in the
State of Colorado and the provisions hereof will be construed in accordance with the laws of the
State of Colorado, and such parties further agree that in the event of default this Note may be
enforced in any court of competent jurisdiction in the State of Colorado, and they do hereby submit
to the jurisdiction of such court regardless of their residence or where this Note or any
endorsement hereof may be executed.

     17. Binding Effect. The term “Maker” as used herein shall include the original Maker
of this Note and any party who may subsequently become liable for the payment hereof as an assumer
with the consent of the Holder, provided that Holder may, at its option, consider the original
Maker of this Note alone as Maker unless Holder has consented in writing to the substitution of
another party as Maker.

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     18. Relationship of Parties. Nothing herein contained shall create or be deemed or
construed to create a joint venture or partnership between Maker and Holder, Holder is acting
hereunder as a lender only.

     19. Severability. Invalidation of any of the provisions of this Note or of any
paragraph, sentence, clause, phrase, or word herein, or the application thereof in any given
circumstance, shall not affect the validity of the remainder of this Note.

     20. Amendment. This Note may not be amended, modified, or changed, except only by an
instrument in writing signed by both of the parties.

     21. Time of the Essence. Time is of the essence for the performance of each and every
obligation of Maker hereunder.

     IN WITNESS WHEREOF, the undersigned has executed this Note this 6th day of October,
2004.

	 	 	 	 	 
	 	A SMART MOVE L.L.C.

a Colorado Limited Liability Company

 	 
	 	By:  	/s/ Chris Sapyta	 
	 	 	          Manager 	 
	 	 	 	 
	 

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