Document:

exv10w1

 

Exhibit 10.1

$15,750,000

TERM LOAN AGREEMENT

dated as of

March 1, 2007

Between

ROYAL GOLD CHILE LIMITADA

and

HSBC BANK USA, NATIONAL ASSOCIATION

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page
	 
	ARTICLE 1 DEFINITION
	 	 	1	 
	SECTION 1.01 Definitions
	 	 	1	 
	SECTION 1.02 Accounting Terms and Determinations
	 	 	5	 
	 
	 	 	 	 
	ARTICLE 2 Term Loans
	 	 	6	 
	SECTION 2.01 Term Loans
	 	 	6	 
	SECTION 2.02 Method of Borrowing
	 	 	6	 
	SECTION 2.03 Note
	 	 	6	 
	SECTION 2.04 Maturity of Loans; Termination of Commitment
	 	 	7	 
	SECTION 2.05 Interest Rates
	 	 	7	 
	SECTION 2.06 Optional Prepayment; Termination of Commitment; Extension of Termination Date
	 	 	8	 
	SECTION 2.07 Method of Electing Interest Rates
	 	 	9	 
	SECTION 2.08 General Provisions as to Payments
	 	 	10	 
	SECTION 2.09 Funding Losses
	 	 	10	 
	SECTION 2.10 Unused Line Fee
	 	 	11	 
	SECTION 2.11 Computation of Interest and Fees
	 	 	11	 
	 
	 	 	 	 
	ARTICLE 3 CONDITIONS
	 	 	11	 
	SECTION 3.01 Closing
	 	 	11	 
	SECTION 3.02 Loans
	 	 	12	 
	 
	 	 	 	 
	ARTICLE 4 REPRESENTATIONS AND WARRANTIES
	 	 	13	 
	SECTION 4.01 Existence and Power
	 	 	13	 
	SECTION 4.02 Authorization; No Contravention
	 	 	13	 
	SECTION 4.03 Binding Effect
	 	 	13	 
	SECTION 4.04 Financial Information
	 	 	13	 
	SECTION 4.05 Litigation
	 	 	14	 
	SECTION 4.06 Compliance with Law
	 	 	14	 
	SECTION 4.07 Taxes
	 	 	14	 
	SECTION 4.08 Solvency
	 	 	14	 
	SECTION 4.09 Credit Arrangements
	 	 	14	 
	SECTION 4.10 Subsidiaries and Affiliates
	 	 	14	 
	SECTION 4.11 Regulatory Restrictions on Borrowing/Guarantee
	 	 	15	 
	SECTION 4.12 Full Disclosure
	 	 	15	 
	 
	 	 	 	 
	ARTICLE 5 COVENANTS
	 	 	15	 
	SECTION 5.01 Information
	 	 	15	 
	SECTION 5.02 Payment of Obligations
	 	 	16	 
	SECTION 5.03 Maintenance of Existence
	 	 	16	 
	SECTION 5.04 Compliance with Laws
	 	 	16	 
	SECTION 5.05 Inspection of Property, Books and Records
	 	 	16	 
	SECTION 5.06 Merger and Sales of Assets
	 	 	16	 
	SECTION 5.07 Use of Proceeds
	 	 	17	 
	SECTION 5.08 Negative Pledge
	 	 	17	 
	SECTION 5.09 Limitation on Debt
	 	 	17	 
	SECTION 5.10 Lines of Business
	 	 	17	 
	SECTION 5.11 Fiscal Year
	 	 	17	 
	SECTION 5.12 Amendment of Charter Documents
	 	 	17	 
	 
	 	 	 	 
	ARTICLE 6 DEFAULTS
	 	 	18	 
	SECTION 6.01 Events of Default
	 	 	18	 
	 
	 	 	 	 
	ARTICLE 7 CHANGES IN CIRCUMSTANCE
	 	 	19	 
	SECTION 7.01 Basis for Determining Interest Rate Inadequate or Unfair
	 	 	19	 

 

	 	 	 	 	 
	 	 	Page
	 
	SECTION 7.02 Illegality
	 	 	20	 
	SECTION 7.03 Increased Cost and Reduced Return
	 	 	20	 
	SECTION 7.04 Taxes
	 	 	21	 
	SECTION 7.05 Base Rate Loans Substituted for Affected EuroDollar Loans
	 	 	22	 
	 
	 	 	 	 
	ARTICLE 8 MISCELLANEOUS
	 	 	22	 
	SECTION 8.01 Notices
	 	 	22	 
	SECTION 8.02 No Waivers
	 	 	23	 
	SECTION 8.03 Expenses; Indemnification
	 	 	23	 
	SECTION 8.04 Amendments and Waivers
	 	 	23	 
	SECTION 8.05 Successors and Assigns
	 	 	23	 
	SECTION 8.06 Continuing Obligation
	 	 	23	 
	SECTION 8.07 Governing Law; Submission to Jurisdiction; etc.
	 	 	23	 
	SECTION 8.08 Currency
	 	 	25	 
	SECTION 8.09 Counterparts; Integration; Effectiveness
	 	 	25	 
	SECTION 8.10 WAIVER OF JURY TRIAL
	 	 	25	 

iii

 

     TERM LOAN AGREEMENT (this “Agreement”) dated as of March 1, 2007 among ROYAL GOLD CHILE
LIMITADA, a Chilean limited liability company, and HSBC Bank USA, National Association.

     The parties hereto agree as follows:

ARTICLE 1

DEFINITION

          SECTION 1.01 Definitions. The following terms, as used herein, have the following meanings:

     “Adjusted London Interbank Offered Rate” has the meaning set forth in Section 2.05(b).

     “Affiliate” means (i) any Person that directly, or indirectly, through one or more
intermediaries, controls the Borrower (a “Controlling Person”) or (ii) any Person which is
controlled by or is under common control with a Controlling Person. As used herein, the term
“control” means possession, directly or indirectly, of the power to vote 25% or more of any class
of voting securities of a Person or to direct or cause the direction of the management or policies
of a Person, whether through the ownership of voting securities, by contract or otherwise.

     “Applicable Lending Office” means, (i) in the case of its Base Rate Loans, the Bank’s Domestic
Lending Office and (ii) in the case of its EuroDollar Loans, its EuroDollar Lending Office.

     “Asset Sale” means any sale or other disposition (excluding any lease or license and any such
transaction effected by way of merger or consolidation) by the Borrower of any asset, but excluding
dispositions of inventory, cash, cash equivalents and other cash management investments and
obsolete, unused or unnecessary equipment, in each case in the ordinary course of business.

     “Availability Period” means the period from and including the Closing Date through April 30,
2007.

     “Bank” means HSBC Bank USA, National Association, its successors and assigns.

     “Base Rate” means, for any day, a rate per annum equal to the Reference Rate for such day.

     “Base Rate Loan” means a Loan which bears interest at the Base Rate pursuant to the applicable
Notice of Borrowing or Notice of Interest Rate Election or the provisions of Article 7.

     “Borrower” means Royal Gold Chile Limitada, a Chilean limited liability company.

     “Borrowing” means a borrowing hereunder consisting of Loans made to the Borrower on the same
day pursuant to Article 2, all of which Loans are of the same type (subject to Article 7).

 

A Borrowing is a “Base Rate Borrowing” if such Loans are Base Rate Loans or a “EuroDollar
Borrowing” if such Loans are EuroDollar Loans.

     “Business Day” means any day except a Saturday, Sunday or other day on which commercial banks
in New York City are authorized by law to close.

     “Closing Date” means March 1, 2007.

     “Collateral Account” means that certain securities account pledged to the Bank by Guarantor
under the Security Agreement to secure Guarantor’s obligations under the Royal Guarantee.

     “Commitment” shall mean $15,750,000, subject to reduction pursuant to Section 2.06(b).

     “Control Agreement” means that certain Account Control Agreement, among Bank, Borrower and
HSBC Securities, Inc., with respect to Collateral Account.

     “Debt” means as to any Person: (i) indebtedness, present or future, actual or contingent, of
such Person for borrowed money or other assets or for the deferred purchase price of property or
services (other than obligations under agreements for the purchase of goods and services in the
normal course of business which are not more than 60 days past due); (ii) obligations of such
Person under capital leases, conditional sale agreements or any other financing transaction; and
(iii) obligations of such Person under any direct or indirect Guarantee in respect of, and
obligations (contingent or otherwise) to purchase or otherwise acquire, or otherwise to assure a
creditor against loss in respect of, indebtedness or obligations of any other Person of the kinds
referred to in clause (i) or (ii) above.

     “Default” means any condition or event which constitutes an Event of Default or which with the
giving of notice or lapse of time or both would, unless cured or waived, become an Event of
Default.

     “Dollars” means the lawful currency of the United States.

     “Dollar Constraint” shall have the meaning set forth in Section 8.08.

     “Domestic Lending Office” means, as to the Bank, its office located at its address set forth
below its name on the signature page hereof as its Domestic Lending Office or such other office as
the Bank may hereafter designate as its Domestic Lending Office by notice to the Borrower.

     “EuroDollar Business Day” means any Business Day on which commercial banks are open for
international business (including dealings in dollar deposits) in London.

     “EuroDollar Lending Office” means, as to the Bank, its office, branch or affiliate located at
its address set forth below its name on the signature page thereof as its EuroDollar Lending Office
or such other office, branch or affiliate of the Bank as it may hereafter designate as its
EuroDollar Lending Office by notice to the Borrower.

2

 

     “EuroDollar Loan” means (i) a Loan which bears interest at a EuroDollar Rate pursuant to the
applicable Notice of Borrowing or Notice of Interest Rate Election or (ii) an overdue amount which
was a EuroDollar Loan immediately before it became overdue.

     “EuroDollar Margin” means 0.25%.

     “EuroDollar Rate” means a rate of interest determined pursuant to Section 2.05(b) on the basis
of an Adjusted London Interbank Offered Rate.

     “EuroDollar Reserve Percentage” has the meaning set forth in Section 2.05(b).

     “Event of Default” has the meaning set forth in Section 6.01.

     “Financing Documents” means this Agreement, the Note, the Security Agreement, the Control
Agreement and the Royal Guarantee.

     “Group of Loans” means at any time a group of Loans consisting of (i) all Loans which are Base
Rate Loans at such time or (ii) all EuroDollar Loans having the same Interest Period at such time,
provided that, if a Loan is converted to or made as a Base Rate Loan pursuant to Article 7, such
Loan shall be included in the same Group or Groups of Loans from time to time as it would have been
in if it had not been so converted or made.

     “Guarantee” by any Person means any obligation, contingent or otherwise, of such Person
directly or indirectly guaranteeing any Debt or other obligation for the payment of money of any
other Person and, without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (i) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Debt or other obligation for the payment of money
(whether arising by virtue of partnership arrangements, by agreement to purchase assets, goods,
securities or services, or to maintain financial statement conditions or otherwise) or (ii) entered
into for the purpose of assuring in any other manner the holder of such Debt or other obligation of
the payment thereof or to protect such holder against loss in respect thereof (in whole or in
part), provided that the term Guarantee shall not include endorsements for collection or deposit in
the ordinary course of business. The term “Guarantee” used as a verb has a corresponding meaning.

     “Guarantor” shall mean Royal Gold, Inc., a Delaware corporation.

     “Indemnitee” has the meaning set forth in Section 8.03(b).

     “Interest Period” means with respect to each EuroDollar Loan, the period commencing on the
date of borrowing specified in the applicable Notice of Borrowing or on the date specified in the
applicable Notice of Interest Rate Election and ending one, two or three months thereafter, or such
longer period, to the extent available from the Bank; provided that:

     (i) any Interest Period which would otherwise end on a day which is not a
EuroDollar Business Day shall be extended to the next succeeding EuroDollar Business
Day unless such EuroDollar Business Day falls in another

3

 

calendar month, in which case such Interest Period shall end on the next
preceding EuroDollar Business Day;

     (ii) any Interest Period which begins on the last EuroDollar 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, subject to clause
(iii) below, end on the last EuroDollar Business Day of a calendar month;

     (iii) no more than an aggregate of twelve (12) Interest Periods shall be in
effect at any one time; and

     (iv) any Interest Period which would otherwise end after the Termination Date
(as then in effect) shall end on the Termination Date.

     “Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest
or encumbrance of any kind, or any other type of preferential arrangement that has the practical
effect of creating a security interest, in respect of such asset.

     “Loan” means a Base Rate Loan or a EuroDollar Loan and “Loans” means Base Rate Loans or
EuroDollar Loans or any combination of the foregoing.

     “London Interbank Offered Rate” has the meaning set forth in Section 2.05(b).

     “Note” means the note of the Borrower, substantially in the form of Exhibit A to this
Agreement, evidencing the obligation of the Borrower to repay the Loans pursuant to the terms and
conditions of this Agreement and the Note.

     “Notice of Borrowing” has the meaning set forth in Section 2.02.

     “Notice of Interest Rate Election” has the meaning set forth in Section 2.07.

     “Parent” means, with respect to the Bank, any Person controlling the Bank.

     “Person” means an individual, a corporation, a limited liability company, a partnership, an
association, a trust or any other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.

     “Reference Rate” means the rate of interest established by the Bank from time to time at its
principal domestic office as its reference lending rate for domestic commercial loans.

     “Regulation U” means Regulation U of the Board of Governors of the Federal Reserve System, as
in effect from time to time.

     “Request for Extension” means a notice given by the Borrower under Section 2.06(c) irrevocably
requesting to extend the Termination Date for an additional and consecutive 366-day period,
commencing on the last day of the then current Termination Date.

4

 

     “Royal Guarantee” shall mean the Guarantee in the form of Exhibit B, made by Guarantor in
favor of the Bank.

     “Royalty Interests” means any interest in or share of mineral production (including precious
metals), including, without limitation, overriding royalties, non-participating royalties,
production payments, net profit interests and other types of mineral royalties.

     “Security Agreement” shall mean the Security Agreement in the form of Exhibit C, made by
Guarantor in favor of the Bank.

     “Subsidiary” means, as to any Person, any corporation or other entity of which securities or
other ownership interests having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are at the time directly or indirectly
owned by such Person.

     “Termination Date” means March 1, 2012, which date may be extended pursuant to and in
accordance with Section 2.06(c) below.

     “United States” means the United States of America.

          SECTION 1.02 Accounting Terms and Determinations. 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 United States generally accepted accounting principles, applied on a basis
consistent (except for changes concurred in by the Borrower’s independent public accountants) with
the most recent financial statements of the Borrower delivered to the Bank.

5

 

ARTICLE 2

TERM LOANS

          SECTION 2.01 Term Loans. (a) During the Availability Period, the Bank agrees, on the terms
and conditions set forth in this Agreement, to make Loans to the Borrower from time to time such
that the aggregate principal amount of Loans by the Bank at any one time outstanding shall not
exceed the lesser of (i) the Commitment, and (ii) the balance of the Collateral Account. Each
Borrowing under this Section shall be in an aggregate principal amount of $1,000,000 or any larger
multiple of $250,000.

               (b) The Borrower will immediately prepay the Loans at any time if the aggregate principal
amount of all Loans exceeds the Commitment, to the full extent of such excess. Any such
prepayments shall be applied first to Base Rate Loans and then to EuroDollar Loans.

          SECTION 2.02 Method of Borrowing. (a) The Borrower shall give the Bank notice (a “Notice of
Borrowing”) not later than 11:00 A.M. (New York City time) on (x) the date of each Base Rate
Borrowing and (y) the third EuroDollar Business Day before each EuroDollar Borrowing, specifying:

     (i) the date of such Borrowing, which shall be a Business Day in the case of a
Base Rate Borrowing or a EuroDollar Business Day in the case of a EuroDollar
Borrowing;

     (ii) the aggregate amount of such Borrowing;

     (iii) the proposed use of such Borrowing;

     (iv) whether the Loans comprising such Borrowing are to bear interest initially
at the Base Rate or the EuroDollar Rate; and

     (v) in the case of a EuroDollar Borrowing, the duration of the initial Interest
Period applicable thereto, subject to the provisions of the definition of Interest
Period.

          (b) Upon receipt of a Notice of Borrowing, such Notice of Borrowing shall not thereafter be
revocable by the Borrower.

          (c) In no event shall more than twelve (12) Interest Periods be in effect at any one time.

          SECTION 2.03 Note. (a) The Borrower shall deliver to the Bank a Note in the form attached
hereto as Exhibit A (the “Note”), duly executed by Borrower.

          (b) The Bank shall record on its books and records the date, amount and type of each Loan made
by it and the date and amount of each payment of principal made by the

6

 

Borrower with respect thereto, and may, if the Bank so elects in connection with any transfer
or enforcement of the Note, endorse on the schedule forming a part thereof appropriate notations to
evidence the foregoing information with respect to each such Loan then outstanding; provided that
the failure of the Bank to make any such recordation or endorsement shall not affect the
obligations of the Borrower hereunder or under the Note. The Bank is hereby irrevocably authorized
by the Borrower so to endorse the Note and to attach to and make a part of the Note a continuation
of any such schedule as and when required.

          SECTION 2.04 Maturity of Loans; Termination of Commitment. Subject to the provisions of
Section 6.01, all Loans shall mature, and the principal amounts thereof shall be due and payable,
on the Termination Date. Subject to the provisions of Sections 2.06 and 6.01, the Commitment shall
terminate on the last day of the Availability Period.

          SECTION 2.05 Interest Rates. (a) Each Base Rate Loan shall bear interest on the
outstanding principal amount thereof for each day from the date such Loan is made until it becomes
due, at a rate per annum equal to the Base Rate for such day. Such interest shall be payable
quarterly in arrears on the last day of March, June, September and December of each year, on the
Termination Date, and with respect to the principal amount of any Base Rate Loan converted to a
EuroDollar Loan, on the date such Base Rate Loan is so converted. Upon the occurrence and during
the continuance of an Event of Default, the principal of, and all accrued and unpaid interest on,
all Base Rate Loans, fees or other obligations of the Borrower and Guarantor under the Financing
Documents, other than EuroDollar Loans, shall bear interest, from the date such Event of Default
occurred until the date such Event of Default is cured, at a rate per annum equal to the sum of 2%
plus the rate otherwise applicable to Base Rate Loans.

          (b) Each EuroDollar Loan shall bear interest on the outstanding principal amount thereof for
each day during each Interest Period applicable thereto, at a rate per annum equal to the sum of
the EuroDollar Margin for such day plus the Adjusted London Interbank Offered Rate applicable to
such Interest Period. Such interest shall be payable for each Interest Period on the last day
thereof.

     The “Adjusted London Interbank Offered Rate” applicable to any Interest Period means a rate
per annum equal to the quotient obtained (rounded upward, if necessary, to the next higher 1/100 of
1%) by dividing (i) the applicable London Interbank Offered Rate by (ii) 1.00 minus the EuroDollar
Reserve Percentage.

     The “London Interbank Offered Rate” applicable to any Interest Period means the rate per annum
equal to the London Interbank Offered Rate shown on the display designated as “LIBO” to subscribers
of the Reuters Monitor Money Rates Service, or any successor page thereto, as at 11:00 AM (London
time) rounded upward to the nearest 1/16 of 1%, two EuroDollar Business Days prior to the first day
of such Interest Period for a term comparable to such Interest Period, for deposits of Dollars in
an amount equal to the amount of the relevant EuroDollar Loan. If for any reason such rate is not
available, the term “Eurodollar Rate” shall mean, for any Eurodollar Rate Borrowing 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 approximately 11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period for a term

7

 

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%), and provided further, that if no rate
is specified on Reuters Screen LIBO Page for a term comparable to a proposed applicable Interest
Period, the term “Eurodollar Rate” shall mean a rate per annum determined by the Bank and agreed to
by the Borrower.

     “EuroDollar Reserve Percentage” means for any day, that percentage (expressed as a decimal)
which is in effect on such day, as prescribed by the Board of Governors of the Federal Reserve
System (or any successor) for determining the maximum reserve requirement for a member bank of the
Federal Reserve System in New York City with deposits exceeding five billion dollars in respect of
“Eurocurrency liabilities” (or in respect of any other category of liabilities which includes
deposits by reference to which the interest rate on EuroDollar Loans is determined or any category
of extensions of credit or other assets which includes loans by a non-United States office of the
Bank to United States residents). The adjusted London Interbank Offered Rate shall be adjusted
automatically on and as of the effective date of any change in the EuroDollar Reserve Percentage.

               (c) Upon the occurrence and during the continuance of an Event of Default, the principal of,
and all accrued and unpaid interest on, all EuroDollar Loans, shall bear interest from the date
such Event of Default occurred until the date such Event of Default is cured, at a rate per annum
equal to the sum of 2% plus the EuroDollar Margin, plus the Adjusted London Interbank Offered Rate
applicable to such Loan at the date such payment was due.

               (d) The Bank shall determine each interest rate applicable to the Loans hereunder and shall
give prompt notice to the Borrower of each rate of interest so determined, and its determination
thereof shall be conclusive in the absence of demonstrable error.

          SECTION 2.06 Optional Prepayment; Termination of Commitment; Extension of Termination Date.
(a) Subject in the case of any EuroDollar Borrowing to Section 2.09, the Borrower may, upon at
least one Business Day’s notice to the Bank, prepay any Group of Base Rate Loans or upon at least
three EuroDollar Business Day’s notice to the Bank, prepay any Group of EuroDollar Loans, in each
case in whole at any time, or from time to time in part in amounts aggregating $1,000,000 or any
larger multiple of $250,000, by paying the principal amount to be prepaid together with accrued
interest thereon to the date of prepayment. Each such optional prepayment shall be applied to
prepay the Loans included in such Group.

          (b) Subject in the case of any EuroDollar Borrowing to Section 2.09, the Borrower may, without
any penalty or premium, upon at least thirty days written notice to the Bank, terminate the
Commitment in whole, or from time to time permanently reduce the Commitment in part, and prepay all
outstanding Loans in excess of the Commitment after giving effect to such termination or reduction.
Such notice shall specify the date of such termination or reduction and shall be irrevocable and
binding upon the Borrower. Any such reduction to the Commitment shall be in the minimum principal
amount of $1,000,000 or any larger multiple of $250,000, and shall reduce permanently the amount of
the Commitment then in effect.

8

 

          (c) On or before the date that is at least 60 days prior to the then current Termination Date,
the Borrower may, by sending a Request for Extension to the Bank, which shall certify that no
Default or Event of Default has occurred, irrevocably request that the then current Termination
Date be extended for an additional 366 days. Such Request for Extension may be given no more than
twenty times. Upon receipt by the Bank of a Request for Extension, and provided that no Default or
Event of Default has occurred, the Bank may in its sole discretion upon written notice provided by
the Bank to the Borrower within 30 days of its actual receipt of the Request for Extension, consent
to or refuse such Request for Extension. The Bank shall not unreasonably withhold its consent to a
Request for Extension.

          (d) If (i) the Borrower fails to give a timely Request for Extension as provided in Section
2.06(c) above, (ii) the Bank fails to respond to such Request for Extension as provided in Section
2.06(c) above, or (iii) the Bank notifies the Borrower of its rejection of the Request for
Extension, then all Loans shall be due and payable on the then current Termination Date.

          SECTION 2.07 Method of Electing Interest Rates. (a) The Loans included in each Borrowing
shall bear interest initially at the type of rate specified by the Borrower in the applicable
Notice of Borrowing. Thereafter, the Borrower may from time to time elect to change or continue
the type of interest rate borne by each Group of Loans (subject in each case to the provisions of
Article 7), as follows:

     (i) if such Loans are Base Rate Loans, the Borrower may elect to convert such
Loans to EuroDollar Loans as of any EuroDollar Business Day; and

     (ii) if such Loans are EuroDollar Loans, the Borrower may elect to convert such
Loans to Base Rate Loans or elect to continue such Loans as EuroDollar Loans for an
additional Interest Period, subject to Section 2.09 in the case of any such
conversion or continuation effective on any day other than the last day of the then
current Interest Period applicable to such Loans.

     Each such election shall be made by delivering a notice (a “Notice of Interest Rate Election”)
to the Bank not later than 11:00 A.M. (New York City time) on the third EuroDollar Business Day
before the conversion or continuation selected in such notice is to be effective. A Notice of
Interest Rate Election may, if it so specifies, apply to only a portion of the aggregate principal
amount of the relevant Group of Loans; provided that (i) such portion is allocated ratably among
the Loans comprising such Group and (ii) the portion to which such Notice applies, and the
remaining portion to which it does not apply, are each $1,000,000 or any larger multiple of
$250,000.

          (b) Each Notice of Interest Rate Election shall specify:

     (i) the Group of Loans (or portion thereof) to which such notice applies; and

     (ii) the date on which the conversion or continuation selected in such notice
is to be effective, which shall comply with the applicable clause of subsection (a)
above;

9

 

     (iii) if the Loans comprising such Group are to be converted, the new type of
Loans and, if the Loans being converted are to be EuroDollar Loans, the duration of
the next succeeding Interest Period applicable thereto; and

     (iv) if such Loans are to be continued as EuroDollar Loans for an additional
Interest Period, the duration of such additional Interest Period.

               (c) Upon receipt of a Notice of Interest Rate Election from the Borrower pursuant to
subsection (a) above, such notice shall not thereafter be revocable by the Borrower.

               (d) If Borrower fails to timely provide a Notice of Interest Rate Election with respect to a
EuroDollar Loan with an Interest Period ending prior to the Termination Date, Borrower shall be
deemed to have timely delivered to the Bank a Notice of Interest Rate Election (a “Deemed Notice”)
with respect to such Loan, specifying that such Loan shall be continued as a EuroDollar Loan for an
additional Interest Period of the same duration as the current Interest Period applicable to such
Loan, provided, however, that if the Interest Period of such Loan, following its continuation,
would end after the Termination Date, such Deemed Notice shall instead be deemed to have specified
that such Loan shall be converted to a Base Rate Loan on the day following the last day of the
Interest Period (prior to such conversion).

          SECTION 2.08 General Provisions as to Payments. The Borrower shall make each payment of
principal of and interest on, the Loans and interest thereon and of fees hereunder, in Dollars not
later than 12:00 Noon (New York City time) on the date when due, in Federal or other funds
immediately available in New York City, to the Bank at its address set forth below its name on the
signature page hereof. Whenever any payment of principal of or interest on, the Base Rate Loans or
interest thereon or of fees shall be due on a day which is not a Business Day, the date for payment
thereof shall be extended to the next succeeding Business Day. Whenever any payment of principal
of or interest on, the EuroDollar Loans shall be due on a day which is not a EuroDollar Business
Day, the date for payment thereof shall be extended to the next succeeding EuroDollar Business Day
unless such EuroDollar Business Day falls in another calendar month, in which case the date for
payment thereof shall be the next preceding EuroDollar Business Day. If the date for any payment
of principal is extended by operation of law or otherwise, interest thereon shall be payable for
such extended time.

          SECTION 2.09 Funding Losses. If the Borrower makes any payment of principal with respect to
any EuroDollar Loan or any EuroDollar Loan is converted (pursuant to Article 2, 6 or 7 or
otherwise) on any day other than the last day of an Interest Period applicable thereto, or if the
Borrower fails to borrow, prepay, convert or continue any EuroDollar Loans after notice has been
given to the Bank in accordance with Sections 2.02, 2.06 or 2.07 the Borrower shall reimburse the
Bank within 15 days after demand for any resulting loss or expense incurred by it (or by an
existing or prospective participant in the related Loan), including (without limitation) any loss
incurred in obtaining, liquidating or employing deposits from third parties, but excluding loss of
margin for the period after any such payment or conversion or failure to borrow, prepay, convert or
continue, provided that the Bank shall have delivered to the Borrower a certificate as to the
amount of such loss or expense, which certificate shall be conclusive in the absence of
demonstrable error.

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          SECTION 2.10 Unused Line Fee. The Borrower agrees to pay to the Bank an unused line fee on
the average daily unused portion of the Commitment from the date of this Agreement until the end of
the Availability Period at a rate per annum equal to 0.10% of such average daily unused portion of
the Commitment.

          SECTION 2.11 Computation of Interest and Fees. All interest and fees hereunder shall be
computed on the basis of a year of 360 days and paid for the actual number of days elapsed
(including the first day but excluding, in the case of interest, the last day).

ARTICLE 3

CONDITIONS

          SECTION 3.01 Closing. The closing and making of the initial Loan is subject to Section 2.01
and the satisfaction of the following conditions precedent:

               (a) The Bank shall have received evidence satisfactory to it of the authority of (i) the
Borrower to enter into the Agreement and the transactions contemplated thereby, and to execute,
deliver and perform the Agreement, the Note and the other Financing Documents to which it is a
party, and (ii) the Guarantor to enter into the Financing Documents to which it is a party, and to
execute, deliver and perform the Financing Documents to which it is a party;

               (b) The Note shall have been duly executed by the Borrower and delivered to the Bank;

               (c) The Guarantor shall have delivered to the Bank a duly executed copy of the Royal
Guarantee, the Security Agreement, the Control Agreement, and any other instruments and documents
as the Bank may have reasonably required to perfect its lien on the Collateral Account, and the
Bank shall have a valid and enforceable first priority lien and security interest in the Collateral
Account;

               (d) The Borrower shall have paid to the Bank a closing fee in the amount of $25,000, which
shall be non-refundable and deemed fully earned upon the making of the initial Loans hereunder;

               (e) The Bank shall have received from Borrower’s Chilean counsel, Urenda, Rencoret, Orrego y
Dörr, and from Guarantor’s United States counsel, Hogan & Hartson LLP, their respective favorable
opinions addressed to the Bank and dated the Closing Date, with respect to the Borrower and the
Guarantor, as the case may be, and covering such other matters incident to the transactions therein
contemplated as the Bank may have reasonably requested;

               (f) The Bank shall have received from the Borrower: (A) a certificate of its managing
partner, dated the Closing Date, certifying as to (1) Borrower’s organizational documents; (2)
resolutions of its managing partner authorizing the execution, delivery and performance of the
Agreement and the other Financing Documents to which it is a party; (3) the full force and effect
of such resolutions on the Closing Date; and (4) the incumbency and signatures of the persons
executing the Financing Documents on behalf of the Borrower; and (B) such additional supporting
documents as the Bank may reasonably request;

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               (g) The Bank shall have received the following from the Guarantor: (A) a certificate of its
Secretary, dated the Closing Date, certifying as to (1) copies of Certificate of Incorporation and
bylaws, as amended through the Closing Date; (2) resolutions of its Board of Directors authorizing
the execution, delivery and performance of the Financing Documents to which it is a party; (3) the
full force and effect of such resolutions on the Closing Date; and (4) the incumbency and signature
of each of the officers of Guarantor executing the Financing Documents; (B) a good standing
certificate from the jurisdiction of its formation; and (C) such additional supporting documents as
the Bank may reasonably request;

               (h) All representations and warranties in the Agreement and each other Financing Document or
made in any certificate or financial statement furnished to the Bank pursuant thereto by or on
behalf of the Borrower or Guarantor shall have been true and correct in all material respects;

               (i) Immediately after giving effect to the initial Loan, the balance of the Collateral Account
shall have been at least equal to the principal amount of such Loan; and

               (j) The Bank shall have received a certificate from the Chief Financial Officer of Borrower’s
managing partner and the Chief Financial Officer of the Guarantor (who may be the same person)
certifying as to the matters set forth in clause (h) of this Section 3.01 as of the Closing Date
after giving effect to the making of the initial Loans.

          SECTION 3.02 Loans. The making of Loans following the Closing Date shall be subject to
Section 2.01 and the satisfaction of the following additional conditions:

               (a) receipt by the Bank of a Notice of Borrowing as required by Section 2.02;

               (b) the fact that, immediately after giving effect to such Loan, the sum of the aggregate
outstanding principal amount of the Loans will not exceed the lesser of (i) the Commitment, and
(ii) the balance of the Collateral Account;

               (c) the fact that, immediately after giving effect to such Loan, no Default shall have
occurred and be continuing;

               (d) the fact that the representations and warranties of the Borrower contained in this
Agreement and of the Borrower and Guarantor in any other Financing Document shall be true in all
material respects on and as of the date of and after giving effect to such Loan; and

               (e) There shall exist no Default or Event of Default under this Agreement or any other
Financing Document.

Each Notice of Borrowing given under Section 2.02 hereunder shall be deemed to be a representation
and warranty by the Borrower on the date thereof that the facts specified in clauses (b), (c), (d)
and (e) of this Section 3.02 are true and correct as of the date of the proposed Borrowing after
giving effect to such proposed Borrowing.

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ARTICLE 4

REPRESENTATIONS AND WARRANTIES

     The Borrower represents and warrants that:

          SECTION 4.01 Existence and Power. The Borrower is a Chilean limited liability company duly
organized, validly existing and in good standing under the laws of Chile, and has all powers and
all governmental licenses, authorizations, consents and approvals required to carry on its business
as presently conducted. The Guarantor is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, and has all powers and all material
governmental licenses, authorizations, consents and approvals required to carry on its business as
now conducted and is qualified to do business and is in good standing under the laws of each other
jurisdiction where the nature of its business or the ownership of property so requires, except
where the failure to so qualify does not have a material adverse effect on the business, financial
condition or results of operations of the Guarantor.

          SECTION 4.02 Authorization; No Contravention. The execution, delivery and performance by the
Borrower and Guarantor of the Financing Documents to which each is a party are within the powers of
the Borrower and the Guarantor, respectively, have been duly authorized by all necessary action,
and other than as set forth on Schedule 4.02, require no action by or in respect of or filing with,
any governmental body, agency or official and do not contravene, or constitute a default under, any
provision of applicable law or regulation or of the certificate formation or limited liability
company of the Borrower or Guarantor, as applicable, or of any agreement, judgment, injunction,
order, decree or other instrument binding upon the Borrower or Guarantor, or result in the creation
or imposition of any Lien on any asset of the Borrower or Guarantor, other than in favor of the
Bank.

          SECTION 4.03 Binding Effect. This Agreement constitutes a valid and binding agreement of the
Borrower, and each Financing Document constitutes a valid and binding agreement of each Person or
party thereto, and the Note, when executed and delivered in accordance with this Agreement, will
constitute a valid and binding obligation of the Borrower, in each case enforceable in accordance
with its terms, except as the same may be limited by bankruptcy, insolvency or similar laws
affecting creditors’ rights generally and by general principles of equity.

          SECTION 4.04 Financial Information. The Guarantor has heretofore furnished to the Bank (i) an
audited consolidated balance sheet as of June 30, 2006 and the related audited consolidated
statements of income and cash flows for the fiscal year then ended of the Guarantor, and (ii) an
unaudited consolidated balance sheet as of December 31, 2006 and the related consolidated
statements of income and cash flows for the nine month period then ended. Such financial
statements are complete and correct and present fairly, in all material respects, the financial
condition, stated in Dollars, of the Guarantor as of the respective dates thereof and the results
of operations and cash flows for the periods ended on said dates, all in accordance with United
States generally accepted accounting principles and practices applied on a consistent basis. There
has been no material adverse change in the business, financial position or results of operations of
the Guarantor from that set forth in said financial statements as at said dates.

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          SECTION 4.05 Litigation. Except as set forth on Schedule 4.05, there is no action, suit or
proceeding pending against, or to the knowledge of the Borrower threatened against or affecting,
the Borrower or the Guarantor before any court or arbitrator or any governmental body, agency or
official in which there is a reasonable possibility of an adverse decision which could (taking into
account available insurance coverage) materially adversely affect the business, financial position
or results of operations of the Borrower or the Guarantor, or which in any manner draws into
question the validity or enforceability of this Agreement or any of the Financing Documents.

          SECTION 4.06 Compliance with Law. The Borrower is in compliance, in all material respects,
with all applicable requirements of the applicable laws, rules and regulations of Chile and each,
state, provincial, municipal or other governmental department, agency or authority, domestic or
foreign which are material to its business, and will be in such compliance after giving effect to
the transactions contemplated hereby.

          SECTION 4.07 Taxes. Each of the Borrower and the Guarantor has filed all income tax returns
and all other material tax returns which are required to be filed by it and has paid all taxes due
pursuant to such returns or pursuant to any assessment received by the Borrower or the Guarantor,
respectively, except where the same is being contested in good faith and by appropriate proceeding
and appropriate reserves have been maintained in accordance with generally accepted accounting
principles. The charges, accruals and reserves on the books of the Borrower and the Guarantor,
respectively, in respect of taxes or other governmental charges are, in the opinion of the
Borrower, adequate.

          SECTION 4.08 Solvency. Each of the Borrower and the Guarantor is Solvent prior to and after
giving effect to the consummation of the transactions contemplated by this Agreement. (For the
purposes hereof, a Person is “Solvent” if (i) the fair market value of all of its property is in
excess of the total amount of its debts (including contingent liabilities); (ii) it is able to pay
its debts as they mature; (iii) it does not have unreasonably small capital for the business in
which it is engaged or for any business or transaction in which it is about to engage; and (iv) it
is not “insolvent” as such term is defined in Section 101 (32) of the Federal Bankruptcy Code.)

          SECTION 4.09 Credit Arrangements. Schedule 4.09 sets forth a complete and correct list of all
credit agreements, indentures, guaranties, capital leases and other investments, agreements and
arrangements in effect on the Closing Date providing for or relating to extensions of credit to the
Borrower and (including agreements and arrangements for the issuance of letters of credit or for
acceptance financing) in respect of which the Borrower is in any manner directly or contingently
obligated to make aggregate payments of $100,000 or more; and the maximum principal or face amounts
of the credit in question, outstanding and which can be outstanding, are correctly stated, and all
Liens of any nature given or agreed to be given as security therefor are correctly described or
indicated in such Schedule.

          SECTION 4.10 Subsidiaries and Affiliates. The Borrower has no Subsidiaries. The entire
capital of Borrower is owned ninety-nine percent (99%) by Guarantor, and one percent (1%) by High
Desert Mineral Resources, Inc. Schedule 4.10 sets forth a correct and complete list of each of the
Borrower’s Affiliates as of the Closing Date, showing as to each

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Affiliate (other than Guarantor) its name, the jurisdiction of its organization (if an entity)
and its relationship with the Borrower.

          SECTION 4.11 Regulatory Restrictions on Borrowing/Guarantee. The Borrower is not subject to
any regulatory scheme which restricts its ability to incur debt, and the Guarantor is not subject
to any regulatory scheme which restricts its ability to guarantee the debt of the Borrower.

          SECTION 4.12 Full Disclosure. All material factual information heretofore furnished by the
Borrower or Guarantor to the Bank for purposes of or in connection with this Agreement or any
transaction contemplated hereby is, and all such information hereafter furnished by the Borrower
and the Guarantor to the Bank will be, true, complete and accurate in all material respects (it
being understood and agreed that with respect to projections, such projections are not a
representation or warranty of future performance). All such information heretofore furnished, does
not, as of the date hereof contain any untrue statement of material fact or omit to state any
material fact necessary to make the statements herein or therein, in light of the circumstances
under which they were made, not misleading.

ARTICLE 5

COVENANTS

     The Borrower agrees that, so long as the Availability Period has not expired or any amount is
outstanding under the Note:

          SECTION 5.01 Information. The Borrower will deliver to the Bank:

               (a) with respect to the Borrower, as soon as available and in any event within 90 days after
the end of each fiscal year beginning with its fiscal year ending December 31, 2007, an audited
balance sheet of the Borrower as of the end of such fiscal year and the related statements of
income and cash flow for such fiscal year, accompanied by the figures for the previous years in
each case;

               (b) with respect to the Borrower, as soon as available and in any event within 60 days after
the end of each of the first three quarters of each fiscal year, beginning with its fiscal quarter
ending March 31, 2007, an unaudited balance sheet of the Borrower as of the end of such quarter and
the related statements of income and cash flow for such quarter and for the portion of the fiscal
year ended at the end of such quarter, accompanied by the figures for the corresponding quarter and
corresponding portion of the previous year;

               (c) simultaneously with the delivery of each set of financial statements referred to in
clauses (a) and (b) above, a certificate as to fairness of presentation, generally accepted
accounting principles and consistency (subject to normal year end adjustments) on behalf of the
Borrower executed by the chief financial officer of Borrower’s managing partner;

               (d) within five days after any of the chairman, the president, the executive vice president or
the chief financial officer of the Borrower or its managing partner obtains knowledge of any
Default, if such Default is then continuing, a certificate of the chief financial officer or the
chief accounting officer of the Borrower or its managing partner setting forth the

15

 

details thereof and the action which the Borrower is taking or proposes to take with respect
thereto;

               (e) at the request of the Bank, as soon as available and in any event not less than 90 days
after the first day of each fiscal year of the Borrower, forecasts prepared by management of the
Borrower, including statements of income and cash flow of the Borrower, on a quarterly and annual
basis for such fiscal year and on an annual basis for the next fiscal year of the Borrower;

               (f) promptly upon receipt thereof, copies of any reports submitted to the Borrower by its
accountants in connection with any examination of the financial statements of the Borrower made by
such accountants; and

               (g) from time to time such additional information regarding the financial position or business
of the Borrower as the Bank may reasonably request.

          SECTION 5.02 Payment of Obligations. The Borrower will pay and discharge at or before
maturity, all of its material obligations and liabilities (including, without limitation, tax
liabilities and claims of materialmen, warehousemen and the like which if unpaid would by law give
rise to a Lien on the Borrower’s assets), except where the same may be contested in good faith by
appropriate proceedings, and will maintain in accordance with generally accepted accounting
principles, appropriate reserves for the accrual of any of the same.

          SECTION 5.03 Maintenance of Existence. The Borrower will preserve, renew and keep in full
force and effect its existence and rights, privileges and franchises necessary or desirable in the
normal conduct of business.

          SECTION 5.04 Compliance with Laws. The Borrower will comply, in all material respects with
all applicable laws, ordinances, rules, regulations, and requirements of governmental authorities
except where the necessity of compliance therewith is contested in good faith by appropriate
proceedings or where the failure to so comply, individually or in the aggregate, would not have a
material adverse effect on the business, financial position or results of operations of the
Borrower, and Borrower shall timely make all filings and deliver all notices referred to in
Schedule 4.02 in accordance with applicable law.

          SECTION 5.05 Inspection of Property, Books and Records. The Borrower will keep proper books
of record and account in which full, true and correct entries shall be made of all dealings and
transactions in relation to its business and activities; and will permit representatives of the
Bank to examine and make abstracts from any of its books and records and to discuss its affairs,
finances and accounts with its officers, employees and independent public accountants, all at such
reasonable times and as often as may reasonably be desired.

          SECTION 5.06 Merger and Sales of Assets. The Borrower will not consolidate or merge with or
into any other Person, provided that the Borrower may merge with another Person if the Borrower is
the Person surviving such merger and immediately after giving effect to such merger, no Default
shall have occurred and be continuing. The Borrower will continue to be a wholly-owned Subsidiary
of Guarantor, and, without the Bank’s prior written consent, which consent shall not be
unreasonably withheld, the Borrower will not make any Asset Sale.

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          SECTION 5.07 Use of Proceeds. The proceeds of the Loans made under this Agreement will be
used by the Borrower solely for the acquisition of Royalty Interests and for general corporate
purposes in the ordinary course of business. None of such proceeds will be used, directly or
indirectly, for the purpose, whether immediate, incidental or ultimate, of buying or carrying any
“margin stock” within the meaning of Regulation U.

          SECTION 5.08 Negative Pledge. The Borrower will not create, assume or suffer to exist any
Lien on any asset now owned or hereafter acquired by it, except:

               (a) Liens for taxes not yet payable or being contested in good faith and by appropriate
proceedings and adequate reserves have been maintained in accordance with generally accepted
accounting principles;

               (b) Statutory liens incurred in the ordinary course of business;

               (c) attachments, appeal bonds, judgments and other similar Liens arising in connection with
court proceedings, for sums not exceeding $1,000,000 in the aggregate;

               (d) easements, rights of way, restrictions, minor defects in title and other similar Liens
that do not interfere in any material respect with the ordinary conduct of the business of the
Borrower; and

               (e) any Lien to which the Bank has consented in writing.

          SECTION 5.09 Limitation on Debt. The Borrower will not incur or at any time become liable
with respect to any Debt except:

               (a) Debt under this Agreement;

               (b) Debt secured by Liens permitted by Section 5.08;

               (c) Debt not to exceed $10,000,000 in the aggregate incurred in connection with Borrower’s
future acquisition of Royalty Interests,

               (d) Debt in excess of that permitted by 5.09(c) incurred in connection with Borrower’s future
acquisition of Royalty Interests, but only with Bank’s prior written consent, such consent not to
unreasonably be withheld or delayed; and

               (e) Other Debt to which the Bank has consented in writing.

          SECTION 5.10 Lines of Business. The Borrower will not engage in any line or lines of business
activity other than the holding of Royalty Interests.

          SECTION 5.11 Fiscal Year. The Borrower will not change the ending of its fiscal year from
December 31.

          SECTION 5.12 Amendment of Charter Documents. The Borrower will not amend, modify or otherwise
change its bylaws or other organizational documents, except for such

17

 

amendments, modifications or changes that either individually or in the aggregate, could not
reasonably be expected to have a material adverse effect on the business, financial condition or
results of operation of the Borrower.

ARTICLE 6

DEFAULTS

          SECTION 6.01 Events of Default. If one or more of the following events (“Events of Default”)
shall have occurred and be continuing:

               (a) the Borrower shall fail to pay when due any principal of any Loan or any interest or fees
payable hereunder or under any Financing Document;

               (b) the Borrower or Guarantor shall fail to observe or perform any covenant or agreement
contained in this Agreement or any Financing Document;

               (c) any material representation, warranty, certification or statement made by the Borrower or
Guarantor in any Financing Document shall prove to have been incorrect in any material respect when
made (or deemed made);

               (d) any event or condition shall occur which results in the acceleration of the maturity of
any Debt in excess of $500,000 or enables (or with the giving of notice or lapse of time or both,
would enable) the holder of such Debt or any Person acting on such holder’s behalf to accelerate
the maturity thereof;

               (e) the Borrower or Guarantor shall commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment
of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial
part of its property, or shall consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other proceeding commenced against it, or
shall make a general assignment for the benefit of creditors, or shall take any action to authorize
any of the foregoing;

               (f) an involuntary case or other proceeding shall be commenced against the Borrower or
Guarantor seeking liquidation, reorganization or other relief with respect to it or its debts under
any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 30 days; or an order for relief shall be entered against
the Borrower or Guarantor under the federal bankruptcy laws as now or hereafter in effect;

               (g) any judgment or order for the payment of money in excess of $500,000 shall be rendered
against the Borrower or Guarantor and such judgment or order shall continue unsatisfied or unstayed
for a period of 30 days if such judgment or order is for an amount in excess of $500,000;

18

 

               (h) the Borrower shall cease to be a wholly-owned Subsidiary of the Guarantor;

               (i) the sum of the aggregate outstanding principal amount of the Loans shall exceed the
outstanding principal balance of the Collateral Account;

               (j) the Bank shall at any time cease to have a first priority, validly perfected Lien in the
Collateral Account; or

               (k) there shall have been a material adverse effect on the business, operations or financial
condition of the Borrower or the Guarantor;

then, and in any such event, the Bank may, by notice to the Borrower, terminate the Commitment and
declare the Loans (together with accrued interest thereon) to be, and the Loan shall thereupon
become, immediately due and payable without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower; provided that in the case of any of the
Events of Default specified in clause 6.01(e) or 6.01(f) above with respect to the Borrower,
without any notice to the Borrower or any other act by the Bank, the Commitment shall thereupon
terminate and the Loans (together with accrued interest thereon) shall become immediately due and
payable without presentment, demand, protest or other notice of any kind, all of which are hereby
waived by the Borrower.

ARTICLE 7

CHANGES IN CIRCUMSTANCE

          SECTION 7.01 Basis for Determining Interest Rate Inadequate or Unfair. If on or prior to the
first day of any Interest Period for any EuroDollar Loan:

               (a) the Bank determines (which determination shall be conclusive) that by reason of
circumstances affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the EuroDollar Rate for such Interest Period, or

               (b) the Bank determines (which determination shall be conclusive) that the Adjusted London
Interbank Offered Rate will not adequately and fairly reflect the cost to the Bank of funding its
EuroDollar Loans for such Interest Period,

the Bank shall forthwith give notice thereof to the Borrower, whereupon until the Bank notifies the
Borrower that the circumstances giving rise to such suspension no longer exist (which notice shall
be given forthwith upon receipt by the Bank of notice of such determination), (i) the ability of
the Borrower to request EuroDollar Loans, or to continue or convert outstanding Loans as or into
EuroDollar Loans, shall be suspended, and (ii) each outstanding EuroDollar Loan shall be converted
into a Base Rate Loan on the last day of the then current Interest Period applicable thereto.
Unless the Borrower notifies the Bank at least two Business Days before the date of any EuroDollar
Borrowing for which a Notice of Borrowing has previously been given (which has not been followed by
a notification from the Bank as aforesaid) that it elects not to borrow on such date, such
Borrowing shall instead be made as a Base Rate Borrowing.

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          SECTION 7.02 Illegality. If after the date of this Agreement, the adoption of any applicable
law, rule or regulation, or any change in any applicable law, rule or regulation, or any change in
the interpretation or administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof or compliance by the
Bank (or its EuroDollar Lending Office) with any request or directive (whether or not having the
force of law) of any such authority, central bank or comparable agency shall make it unlawful or
impossible for the Bank (or its EuroDollar Lending Office) to make, maintain or fund its EuroDollar
Loans, the Bank shall forthwith give notice thereof to the Borrower, whereupon until the Bank
notifies the Borrower that the circumstances giving rise to such suspension no longer exist, the
ability of the Borrower to request EuroDollar Loans or to convert outstanding Loans into EuroDollar
Loans shall be suspended. If such notice is given, each EuroDollar Loan then outstanding shall be
converted to a Base Rate Loan either (a) on the last day of the then current Interest Period
applicable to such EuroDollar Loan if the Bank may lawfully continue to maintain and fund such Loan
to such day or (b) immediately if the Bank shall determine that it may not lawfully continue to
maintain and fund such Loan to such day.

          SECTION 7.03 Increased Cost and Reduced Return. (a) If after the date hereof the adoption of
any applicable law, rule or regulation, or any change in any applicable law, rule or regulation, or
any change in the interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration thereof or compliance
by the Bank (or its Applicable Lending Office) with any request or directive (whether or not having
the force of law) of any such authority, central bank or comparable agency shall impose, modify or
deem applicable any reserve (including, without limitation, any such requirement imposed by the
Board of Governors of the Federal Reserve System, but excluding any such requirement included in an
applicable EuroDollar Reserve Percentage in the case of a EuroDollar Loan), special deposit,
insurance assessment or similar requirement against assets of deposits with or for the account of
or credit extended by, the Bank (or its Applicable Lending Office) or shall impose on the Bank (or
its Applicable Lending Office) or the London interbank market or other relevant market any other
condition affecting its EuroDollar Loans, the Note or its ability to make EuroDollar Loans and the
result of any of the foregoing is to increase the cost to the Bank (or its Applicable Lending
Office) of making or maintaining any EuroDollar Loan, or to reduce the amount of any sum received
or receivable by the Bank (or its Applicable Lending Office) under this Agreement or under the
Note, by an amount reasonably deemed by the Bank to be material, then, provided that the Bank has
provided the Borrower with written notice, which includes a brief description of the change giving
rise to such increased cost or reduction and an explanation as to how such increased cost or
reduction was determined, the Borrower shall pay to the Bank upon demand such additional amount or
amounts as will compensate the Bank for such increased cost or reduction incurred by the Bank
following the date of such notice.

               (b) If the Bank shall have determined that, after the date hereof the adoption of any
applicable law, rule or regulation regarding capital adequacy, or any change in any such law, rule
or regulation, or any change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or administration
thereof or any request or directive regarding capital adequacy (whether or not having the force of
law) of any such authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on capital of the Bank (or its Parent) as a

20

 

consequence of the Bank’s obligations hereunder to a level below that which the Bank (or its
Parent) could have achieved but for such adoption, change, request or directive (taking into
consideration its policies with respect to capital adequacy) by an amount reasonably deemed by the
Bank to be material, then from time to time, assuming the Bank was not compensated for such
reduction pursuant to Section 7.03(a) above, provided that the Bank has provided the Borrower with
written notice which includes a brief description of the change giving rise to such reduction and
an explanation as to how such reduction was determined, the Borrower shall pay to the Bank such
additional amount or amounts as will compensate the Bank (or its Parent) for such reduction
incurred by the Bank following the date of such notice.

               (c) The Bank will designate a different Lending Office if such designation will avoid the need
for, or reduce the amount of such compensation pursuant to this Section and will not, in the
reasonable judgment of the Bank, be otherwise disadvantageous to the Bank. A certificate of the
Bank claiming compensation under this section and setting forth the additional amount or amounts to
be paid to it hereunder shall be conclusive in the absence of demonstrable error. In determining
such amount, the Bank may use any reasonable averaging and attribution methods.

          SECTION 7.04 Taxes. (a) For the purposes of this Section 7.04, the following terms have the
following meanings:

     “Taxes” means any and all present or future taxes, duties, levies, imposts, deductions,
charges or withholdings with respect to any payment by the Borrower pursuant to this Agreement or
under the Note, and all liabilities with respect thereto, excluding (i) in the case of the Bank,
taxes imposed on its income, and franchise or similar taxes imposed on it, by a jurisdiction under
the laws of which the Bank is organized or in which its principal executive office is located or,
in the case of the Bank, in which its Applicable Lending Office is located and (ii) in the case of
the Bank, any United States withholding tax imposed on such payments.

     “Other Taxes” means any present or future stamp or documentary taxes and any other excise or
property taxes, or similar charges or levies, which arise from any payment made pursuant to this
Agreement or under the Note or from the execution or delivery of or otherwise with respect to, this
Agreement or the Note.

               (b) Any and all payments by the Borrower to or for the account of the Bank hereunder or under
the Note shall be made without deduction for any Taxes or Other Taxes; provided that, if the
Borrower shall be required by law to deduct any Taxes or Other Taxes from any such payments, (i)
the sum payable shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section) the Bank receives
an amount equal to the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions, (iii) the Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable law, and (iv) the
Borrower shall furnish to the Bank, at its address referred to in Section 8.01, the original or a
certified copy of a receipt evidencing payment thereof.

               (c) The Borrower agrees to indemnify the Bank for the full amount of Taxes or Other Taxes
(including, without limitation, any Taxes or Other Taxes imposed or asserted by

21

 

any jurisdiction on amounts payable under this Section) paid by the Bank and any liability
(including penalties, interest and expenses) arising therefrom or with respect thereto. This
indemnification shall be paid within 15 days after the Bank makes demand therefor.

               (d) If the Borrower is required to pay additional amounts to or for the account of the Bank
pursuant to this Section, then the Bank will change the jurisdiction of its Applicable Lending
Office if in the reasonable judgment of the Bank, such change (i) will eliminate or reduce any such
additional payment which may thereafter accrue and (ii) is not otherwise disadvantageous (other
than in any insignificant respect) to the Bank.

          SECTION 7.05 Base Rate Loans Substituted for Affected EuroDollar Loans. If (i) the ability of
the Borrower to request, or convert outstanding Loans to, EuroDollar Loans has been suspended
pursuant to Section 7.02 or (ii) the Bank has demanded compensation under Section 7.03 or 7.04 with
respect to its EuroDollar Loans and the Borrower shall, by at least five EuroDollar Business Days’
prior notice to the Bank, have elected that the provisions of this section shall apply to the Bank,
then, unless and until the Bank notifies the Borrower that the circumstances giving rise to such
suspension or demand for compensation no longer exist:

               (a) all Loans which would otherwise be made by the Bank as (or continued as or converted into)
EuroDollar Loans, as the case may be, shall instead be Base Rate Loans; and

               (b) after each of its EuroDollar Loans has been repaid (or converted to a Base Rate Loan), all
payments of principal which would otherwise be applied to repay such EuroDollar Loans shall be
applied to repay its Base Rate Loans instead. If the Bank notifies the Borrower that the
circumstances giving rise to such notice no longer apply, the principal amount of each such Base
Rate Loan shall be converted into a EuroDollar Loan on the first day of the next succeeding
Interest Period specified by the Bank.

ARTICLE 8

MISCELLANEOUS

          SECTION 8.01 Notices. All notices, requests and other communications to any party hereunder
shall be in writing (including bank wire, facsimile transmission or similar writing) and shall be
given to such party: (a) in the case of the Borrower or the Bank, at its address or facsimile
number set forth on the signature pages hereof, or (b) in the case of any party, such other address
or facsimile number as such party may hereafter specify for the purpose by notice to the Bank and
the Borrower. A copy of each such notice to the Borrower also shall be sent in the manner set
forth herein to the Guarantor at: Royal Gold, Inc, 1660 Wynkoop Street, Denver, Colorado 80202,
Attn: Chief Financial Officer, fax: (303) 595-9385. Each such notice, request or other
communication shall be effective (i) if given by facsimile transmission, when transmitted to the
facsimile number specified on the signature pages hereof and confirmation of receipt is received,
(ii) if given by mail, six Business Days after such communication is deposited in the mails with
first class postage prepaid, addressed as aforesaid, (iii) if sent by recognized overnight courier,
on the third Business Day after delivery to such courier, or (iv) if given by any other means, when
delivered at the address specified on the signature pages hereof; provided that notices to the Bank
under Article 2 or Article 7 shall not be effective until received.

22

 

          SECTION 8.02 No Waivers. No failure or delay by the Bank in exercising any right, power or
privilege hereunder or under the Note shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein provided shall be cumulative and
not exclusive of any rights or remedies provided by law.

          SECTION 8.03 Expenses; Indemnification. (a) The Borrower shall pay (i) all out-of-pocket
expenses of the Bank, including the fees and disbursements of its counsel, in connection with the
preparation of this Agreement and the other Financing Documents, any waiver or consent hereunder or
thereunder or any amendment hereof or thereof or any Default hereunder, and (ii) if any Default or
Event of Default occurs and is continuing or demand has been made, all out-of-pocket expenses
incurred by the Bank, including the reasonable fees and disbursements of counsel, in connection
with such Default or Event of Default, or demand, and collection, bankruptcy, insolvency and other
enforcement proceedings resulting therefrom.

               (b) The Borrower agrees to indemnify the Bank, its affiliates and the respective directors,
officers, agents and employees of the foregoing (each an “Indemnitee”) and hold each Indemnitee
harmless from and against any and all liabilities, losses, damages, costs and expenses of any kind
(including, without limitation, the reasonable counsel fees and disbursements incurred by an
Indemnitee in any proceedings between such Indemnitee and the Borrower or between such Indemnitee
and any third party or otherwise), which may be incurred by such Indemnitee in connection with any
investigative, administrative or judicial proceeding (whether or not such Indemnitee shall be
designated a party thereto) brought or threatened relating to or arising out of this Agreement or
any actual or proposed use of proceeds of Loans hereunder; provided that no Indemnitee shall have
the right to be indemnified hereunder for such Indemnitee’s own gross negligence or willful
misconduct as determined by a court of competent jurisdiction.

          SECTION 8.04 Amendments and Waivers. Any provision of this Agreement or the Note may be
amended or waived if but only if such amendment or waiver is in writing and is signed by the
Borrower and the Bank.

          SECTION 8.05 Successors and Assigns. The provisions of this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors and assigns, except
that the Borrower may not assign or otherwise transfer any of its rights under this Agreement
without the prior written consent of the Bank. The Bank may assign, or sell participations in, its
right, title and interest in the Loans and in the Financing Documents, at any time or from time to
time hereafter, in whole or in parts, without notice to or consent of the Borrower. If any
assignment is made in part, the Borrower may continue to send notices solely to the Bank as
provided herein.

          SECTION 8.06 Continuing Obligation. Notwithstanding the occurrence and continuance of an
Event of Default or the occurrence of the Termination Date, the Borrower’s obligations and
agreements hereunder shall continue until all obligations, direct or contingent, have been
satisfied.

          SECTION 8.07 Governing Law; Submission to Jurisdiction; etc.

23

 

               (a) This Agreement and the Note shall be governed by and construed in accordance with the
internal laws of the State of New York without giving effect to conflict of law principles. The
Borrower hereby irrevocably and unconditionally submits, for itself and its property (i) to the
exclusive jurisdiction of any New York State court or federal court of the United States sitting in
New York City, and any appellate court from any thereof, in any action or proceeding arising out of
or relating to this Agreement or any of the other Financing Documents to which it is a party, and
(ii) to the nonexclusive jurisdiction of any New York State court or federal court of the United
States sitting in New York City, and any appellate court from any thereof, and any court sitting in
Chile, for the recognition or enforcement of any such judgment, and the Borrower hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or proceeding may be (i)
heard and determined in any such New York State court or, to the fullest extent permitted by law,
in such federal court and (ii) enforced in any such court or any court sitting in Chile. The
Borrower hereby irrevocably appoints Guarantor as its agent to receive on behalf of itself and its
property services of copies of the summons and complaint and any other process which may be served
in any such action or proceeding. Such service may be made by mailing or delivering a copy of such
process to the Borrower in care of Guarantor at its address set forth in Section 8.01, and the
Borrower hereby irrevocably authorizes and directs Guarantor to accept such service on its behalf.
As an alternative method of service, the Borrower also irrevocably consents to the service of any
and all process in any such action or proceeding by the air mailing of copies of such process to
the Borrower, at its then effective notice address pursuant to Section 8.01.

               (b) The Borrower irrevocably and unconditionally waives, to the fullest extent it may legally
and effectively do so, any objection that it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or any of the other
Financing Document to which it is a party in any New York State or federal court sitting in New
York City. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted
by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any
such court.

               (c) To the extent that the Borrower has or hereafter may acquire any immunity from
jurisdiction of any court or from any legal process (whether through service or notice, attachment
prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself
or its property, the Borrower hereby acknowledges and agrees that the activities contemplated by
the provisions of this Agreement and the other Financing Documents to which it is a party are
commercial in nature, rather than governmental or public, and, therefore, irrevocably and
unconditionally waives, to the extent permitted under applicable law, such immunity in respect of
its obligations under the Financing Documents to which it is a party and, without limiting the
generality of the foregoing, agrees that the waivers set forth in this Section 8.07(c) shall have
the fullest scope permitted under the Foreign Sovereign Immunities Act of 1976 of the United States
and are intended to be irrevocable for purposes of such Act. Without prejudice to the foregoing,
in any action, suit, proceeding, cross claim or counterclaim in respect of or arising out of this
Agreement whether in contract or tort, to the extent that the Borrower has or hereafter acquires
any immunity from jurisdiction of any court or from any legal process (whether from service of
notice, attachment in aid of execution, attachment prior to judgment, execution or otherwise) with
respect to itself or its property, the Borrower hereby irrevocably waives such immunity in respect
of its obligations under this Agreement, including,

24

 

without limitation, a waiver of immunity from the jurisdiction of courts of the United States
or of courts of the states of the United States pursuant to 28 U.S.C. § 1605(a)(1), a waiver of
immunity from attachment in aid of execution or from execution pursuant to 28 U.S.C. §§ 1610(a)(1)
and (b)(1), a waiver of immunity from attachment prior to judgment pursuant to 28 U.S.C. § 1610(d),
and a waiver of any and all immunities provided by the International Organizations Immunities Act.

          SECTION 8.08 Currency. This Agreement is being executed as part of an international loan
transaction in which the specification of Dollars and payment at the offices of the Bank as
provided herein (the “specified place of payment”), is of the essence, and Dollars shall be the
currency of account in all events. All amounts due under this Agreement and the other Financing
Documents shall be payable to the Bank in Dollars in immediately available funds in the specified
place of payment and no alternative method of payment shall be permitted, notwithstanding any
Dollar Constraint or any other contingency or force majeure. For purposes hereof “Dollar
Constraint” shall mean any law, regulation, directive or communication imposed or issued by the
government of Chile, or any other competent authority in Chile imposing foreign exchange controls
or other restrictions which has the effect of prohibiting, preventing or delaying the remittance of
Dollars to the Bank. The payment obligations of the Borrower under this Agreement stated to be
payable in Dollars shall not be discharged by an amount paid in another currency or in another
place, whether pursuant to a judgment or otherwise, to the extent that the amount so paid on
conversion to Dollars and transferred to the specified place of payment under normal banking
procedures does not yield the amount of Dollars in the specified place of payment due hereunder.
If for the purpose of obtaining judgment in any court it is necessary to convert a sum due
hereunder in Dollars into another currency (the “second currency”), the rate of exchange which
shall be applied shall be that at which in accordance with normal banking procedures the Bank could
purchase Dollars with the second currency on the Business Day next preceding that on which judgment
is rendered. The obligation of the Borrower in respect of any such sum due from it to the Bank
hereunder shall, notwithstanding the rate of exchange actually applied in rendering such judgment,
be discharged only to the extent that on the Business Day following receipt by the Bank of any sum
adjudged to be due hereunder in the second currency the Bank may in accordance with normal banking
procedures purchase and transfer to the specified place of payment Dollars with the amount of the
second currency so adjudged to be due; and the Borrower, hereby, as a separate obligation and
notwithstanding any such judgment, agrees to indemnify the Bank against, and to pay the Bank on
demand, in Dollars, any difference between the sum originally due to the Bank in Dollars and the
amount of Dollars so purchased and transferred.

          SECTION 8.09 Counterparts; Integration; Effectiveness. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument. This Agreement constitutes the entire
agreement and understanding among the parties hereto and supersedes any and all prior agreements
and understandings, oral or written, relating to the subject matter hereof. This Agreement shall
become effective upon receipt by the Bank of counterparts hereof signed by each of the parties
hereto.

          SECTION 8.10 WAIVER OF JURY TRIAL. EACH OF THE BORROWER AND THE BANK HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY

25

 

JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.

26

 

     IN WITNESS WHEREOF this Agreement to be duly executed by their respective authorized officers
as of the day and year first above written.

	 	 	 	 	 	 	 
	 	 	BORROWER	 	 
	 
	 	 	 	 	 	 
	 	 	ROYAL GOLD CHILE LIMITADA	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Tony Jensen	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Tony Jensen	 	 
	 

	 	Title:
	 	Legal Representative	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Stefan Wenger	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Stefan Wenger	 	 
	 

	 	Title:
	 	Legal Representative	 	 
	 
	 	 	 	 	 	 
	 	 	Av. Américo Vespucio Sur 80, piso 11	 	 
	 	 	CP 758 1050 Las Condes	 	 
	 	 	Santiago, CHILE	 	 
	 
	 	 	 	 	 	 
	 	 	LENDER	 	 
	 
	 	 	 	 	 	 
	 	 	HSBC BANK USA, NATIONAL ASSOCIATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ P.E. Kavanagh	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	P.E. Kavanagh	 	 
	 

	 	Title:
	 	Senior Vice President, CB Resources and
Energy Group	 	 
	 	 	Domestic Lending Office	 	 
	 	 	452 Fifth Avenue	 	 
	 	 	New York, NY 10018	 	 
	 	 	Attn.: Ted Kavanagh	 	 
	 	 	Facsimile: (212) 525-6581	 	 
	 
	 	 	 	 	 	 
	 	 	EuroDollar Lending Office:	 	 
	 	 	452 Fifth Avenue	 	 
	 	 	New York, New York	 	 

27

 

NOTE

	 	 	 
	$15,750,000

	 	New York, New York
	 

	 	March 1, 2007

     For value received, ROYAL GOLD CHILE LIMITADA, a Chilean limited liability company (the
“Borrower”), promises to pay to the order of HSBC Bank USA, NATIONAL ASSOCIATION (the “Bank”), the
principal sum of FIFTEEN MILLION SEVEN HUNDRED AND FIFTY THOUSAND DOLLARS ($15,750,000), or so
much thereof as shall be advanced by the Bank to the Borrower as Loans pursuant to the Agreement
referred to below and not be repaid, on the maturity date provided for in the Agreement. The
Borrower promises to pay interest on the unpaid principal amount of each such Loan on the dates and
at the rate or rates provided for in the Credit Agreement. All such payments of principal and
interest shall be made in lawful money of the United States in Federal or other immediately
available funds at the office of the Bank at 452 Fifth Avenue, New York, New York 10018.

     All Loans made by the Bank, the respective types thereof and all repayments of the principal
thereof shall be recorded by the Bank and, if the Bank so elects in connection with any transfer or
enforcement hereof appropriate notations to evidence the foregoing information with respect to each
such Loan then outstanding may be endorsed by the Bank on the schedule attached hereto, or on a
continuation of such schedule attached to and made a part hereof provided that the failure of the
Bank to make any such recordation or endorsement shall not affect the obligations of the Borrower
hereunder or under the Credit Agreement.

     This note is the Note referred to in the Term Loan Agreement dated as of March 1, 2007 between
the Borrower and the Bank (as the same may be amended from time to time, the “Agreement”). Terms
defined in the Agreement are used herein with the same meanings. Reference is made to the
Agreement for provisions for the payment and prepayment hereof, the acceleration of the maturity
hereof and the rights and remedies of the Bank hereunder.

	 	 	 	 	 
	 	ROYAL GOLD CHILE LIMITADA

 	 
	 	By:  	/s/ Tony Jensen
 	 
	 	Name:  	Tony Jensen 	 	 
	 	Title:  	Legal Representative 	 	 
	 
	 	 	 
	 	By:  	/s/ Stefan Wenger
 	 
	 	Name:  	Stefan Wenger 	 
	 	Title:  	Legal Representative 	 	 
	 

28exv10w2

 

Exhibit 10.2

GUARANTEE

Dated: as of March 1, 2007

SECTION 1. Definitions. The following terms have the following meanings unless
otherwise specified herein:

“Bankruptcy Code” shall mean the United States Bankruptcy Code, and any amendments thereto
(Title 11, United States Code).

“Borrower” shall mean Royal Gold Chile Limitada, a Chilean limited liability company.

“Business Day” shall mean any day except a Saturday, Sunday or other day on which
commercial banks in New York City are authorized by law to close.

“Claims” shall mean each “claim” as that term is defined under Section 101(5) of Bankruptcy
Code.

“Collateral” shall mean any property which directly or indirectly secures payment or
performance of any of the Liabilities or Obligations.

“Dollars” shall mean the lawful currency of the United States.

“Guarantor” shall mean Royal Gold, Inc., a Delaware corporation.

“Guarantee” shall mean this Guarantee.

“Lender” shall mean HSBC Bank USA, National Association, its successors and assigns, and
any Person acting as agent or nominee for HSBC Bank USA, National Association and any corporation
or other entity which is owned or controlled directly or indirectly by, or is under common control
with HSBC Bank USA, National Association , and/or HSBC Holdings plc.

“Liabilities” shall mean any and all indebtedness, obligations (whether monetary or
non-monetary) and liabilities of Guarantor to Lender under this Guarantee, and all Claims thereon.

“Loan Agreement” shall mean that certain Term Loan Agreement, of even date herewith, among
Borrower and HSBC Bank USA, National Association.

“Obligations” shall mean any and all indebtedness, obligations and liabilities of the
Borrower to Lender under the Loan Agreement and related promissory note, and all Claims of Lender
against the Borrower, now existing or hereafter arising under the Loan Agreement and related
promissory note, in each case, whether absolute or contingent, secured or unsecured, matured or not
matured, monetary or non-monetary, arising out of contract or tort, liquidated or unliquidated,
arising by operation of law or otherwise and all extensions, renewals, refundings, replacements and
modifications of any of the foregoing.

“Person” shall mean any natural person, corporation, limited liability company,
partnership, trust, government or other association or legal entity.

“United States” means the United States of America.

SECTION 2. Scope of Guarantee. In consideration of any extension of credit or
other financial accommodation heretofore, now or hereafter made by Lender to or for the account of
the Borrower, whether voluntary or obligatory, Guarantor hereby absolutely, irrevocably and
unconditionally guarantees, as primary obligor and not merely as surety, to Lender the prompt and
complete payment and performance when due (whether at stated maturity, upon demand, by required
prepayment, acceleration, or otherwise) of

 

all Obligations and the performance of each of the Borrower’s covenants and obligations under all
loan agreements, documents and instruments evidencing or relating to any Obligations or under which
any Obligations may have been issued, created, assumed, suffered involuntarily, or guaranteed, and
the prompt and complete payment of all fees and expenses incurred in collecting or enforcing the
same, including fees and reasonable expenses of legal counsel, as more fully set forth below, all
of which conclusively shall be deemed to have been incurred in reliance upon this Guarantee, as if
each of the foregoing were the direct and primary legal responsibility of Guarantor and not the
Borrower.

SECTION 3. Reinstatement. If after receipt of any payment of, or of Collateral
applied (or intended to be applied) to the payment of, all or any part of the Obligations, Lender
is for any reason compelled to surrender or voluntarily surrenders, such payment or Collateral to
any person, (a) because such payment or application of Collateral is or may be avoided,
invalidated, declared fraudulent, set aside, determined to be void or voidable as a preference,
fraudulent conveyance, impermissible setoff or a diversion of trust funds; or (b) for any other
reason, including without limitation (i) any judgment, decree or order of any Court or
administrative body having jurisdiction over Lender or any of its property, or (ii) any settlement
or compromise of any such claim effected by Lender with any such claimant (including the Borrower),
then the Obligations or part thereof intended to be satisfied shall be reinstated and continue and
this Guarantee shall continue in full force as if such payment or Collateral had not been received
by Lender, notwithstanding any revocation thereof or the cancellation of any note or other
instrument evidencing any Obligation or otherwise; and Guarantor shall be liable to pay to Lender,
and hereby does indemnify Lender and hold Lender harmless for, the amount of such payment or
Collateral so surrendered and all expenses (including all attorneys’ fees, court costs and expenses
attributable thereto) incurred by Lender in the defense of any claim made against Lender that any
payment or Collateral received by Lender in respect of all or any part of the Obligations must be
surrendered. The provisions of this Section 3 shall survive the termination of this Guarantee, and
any satisfaction and discharge of the Borrower by virtue of any payment, court order or any federal
or state law.

SECTION 4. Waiver. Guarantor hereby waives (a) notice of acceptance of this
Guarantee and all notice of the creation, extension or accrual of any of the Obligations; (b)
promptness, diligence, presentment, demand for payment, notice of dishonor, and protest; (c)
notice of any other nature whatsoever, except for notices specifically provided for in this
Guarantee or which may not be waived under applicable law; (d) any requirement that Lender take any
action whatsoever against the Borrower or any other party or file any claim in the event of
Bankruptcy of the Borrower; or (e) failure to protect, preserve or resort to any Collateral or to
exercise or enforce Lender’s rights under any other guaranties of or security for the Obligations;
and Guarantor further agrees that this Guarantee will not be discharged (subject to the provisions
contained in Section 10) except by complete performance of all Obligations of the Borrower and the
Liabilities of Guarantor hereunder.

SECTION 5. Consent. Guarantor hereby consents that from time to time, and without
further notice to or consent of Guarantor, Lender may take any or all of the following actions
without diminishing, releasing or otherwise affecting the liability of Guarantor to pay and perform
under this Guarantee: (a) extend, renew, modify, compromise, settle or release the Obligations
(including without limitation any increase or decrease in the interest rate); (b) release or
compromise any liability of any party or parties with respect to Obligations; (c) release its
security interest in any or all of the Collateral or exchange, surrender, or otherwise deal with
the Collateral as Lender may determine; or (d) exercise or refrain from exercising any right or
remedy of Lender against any person or property.

SECTION 6. Guarantee Absolute. The Guarantor acknowledges that this Guarantee and
the Guarantor’s obligations under this Guarantee are and shall at all times continue to be absolute
and unconditional in all respects, and shall at all times be valid and enforceable irrespective of
any other agreements or circumstances of any nature whatsoever which might otherwise constitute a
defense to this Guarantee and the obligations of the Guarantor under this Guarantee or the
obligations of any other person or party (including, without limitation, the Borrower) relating to
this Guarantee, the Liabilities or the Obligations irrespective of any lack of validity, regularity
or enforceability of the Obligations or any note, instrument or agreement evidencing the same or
relating thereto, the acceptance of additional guarantees or collateral or the termination, by
operation of law or otherwise, of the liability of anyone with respect to the

2

 

Obligations, or any other circumstance which might otherwise constitute a defense available to, or
a discharge of, the Borrower.

SECTION 7. WAIVER OF SUBROGATION. NOTWITHSTANDING ANY PAYMENT OR PAYMENTS MADE BY
GUARANTOR HEREUNDER, OR ANY SETOFF BY LENDER OR APPLICATION BY LENDER OF ANY COLLATERAL OR OF ANY
CREDITS OR CLAIMS, GUARANTOR WILL NOT ASSERT OR EXERCISE ANY RIGHTS OF LENDER OR GUARANTOR AGAINST
THE BORROWER TO RECOVER THE AMOUNT OF ANY PAYMENT MADE BY GUARANTOR TO LENDER, BY SETOFF,
APPLICATION OF ANY COLLATERAL OR OTHERWISE, HEREUNDER OR UNDER ANY OTHER GUARANTEE OR OTHER
AGREEMENT BY WAY OF SUBROGATION, REIMBURSEMENT, CONTRIBUTION, INDEMNITY, OR OTHERWISE ARISING BY
CONTRACT OR OPERATION OF LAW, AND GUARANTOR SHALL HAVE NO RIGHT OF RECOURSE TO OR ANY CLAIM AGAINST
ANY ASSETS OR PROPERTY OF THE BORROWER, ALL OF SUCH RIGHTS BEING HEREIN EXPRESSLY WAIVED BY
GUARANTOR UNLESS AND UNTIL ALL OF THE OBLIGATIONS OF THE BORROWER HAVE BEEN SATISFIED IN FULL. If
there is more than one Guarantor, each Guarantor agrees not to seek contribution from any other
Guarantor until all the Obligations shall have been paid in full. If any amount shall nevertheless
be paid to a Guarantor by Borrower or another Guarantor such amount shall be held in trust for the
benefit of Lender and shall forthwith be paid to Lender to be credited and applied to the
Obligations, whether matured or unmatured. The provisions of this Section 7 shall survive the
termination of this Guarantee, and any satisfaction and discharge of the Borrower by virtue of any
payment, court order or any federal or state law.

SECTION 8. Expenses. Guarantor hereby agrees to pay any and all expenses incurred
by Lender in enforcing any rights under this Guarantee or in defending any of its rights or any
amounts received hereunder. Without limiting the foregoing, Guarantor agrees that whenever any
attorney is used by Lender to obtain payment hereunder, to advise it as to its rights, to
adjudicate the rights of the parties hereunder or for the defense of any of its rights or amounts
received hereunder, Lender shall be entitled to recover all reasonable attorneys’ fees, court
costs, and expenses attributable thereto.

SECTION 9. Binding Effect. Except to the extent it may be terminated in
accordance with Section 10, this Guarantee shall remain in full force and effect and shall be
binding upon Guarantor, its successors and assigns, in accordance with its terms, notwithstanding
any increase, decrease or change in the partners of Guarantor, if it should be a partnership, or
the merger, consolidation, or reorganization of Guarantor, if it be a corporation or limited
liability company, or any other change concerning the form, structure or substance of any such
entity.

SECTION 10. Continuing Guarantee; Termination. This Guarantee is a continuing
guarantee, which shall remain in effect until notice of termination in writing from Guarantor is
actually received by Lender at Lender’s address set forth below. Such termination will be effective
only with respect to all Obligations incurred or contracted by the Borrower or acquired by Lender
after the date on which such notice is so received, but this Guarantee shall remain in full force
and effect as to all Obligations existing at the date of receipt of such notice, including all
renewals, compromises, modifications, extensions and other amendments relating thereto, all
interest thereon and collection expenses therefor, until full payment of such Obligations to
Lender.

SECTION 11. Obligations Deemed to Become Due. If the Borrower or Guarantor makes an
assignment for the benefit of creditors or a trustee or receiver is appointed for the Borrower or
Guarantor or for any of its respective property; or any proceeding by or against the Borrower or
Guarantor (or any other guarantor), under any bankruptcy, reorganization, arrangement of debt,
insolvency, readjustment of debt, receivership, liquidation or dissolution law or statute is
commenced; or Guarantor fails to furnish to Lender such financial information concerning Guarantor
as Lender may from time to time reasonably request, as the case may be, then all Obligations,
regardless of their terms, for the purposes of this Guarantee, together with all Liabilities, shall
be immediately due and payable, notwithstanding the absence of any default by the Borrower under
any of the Obligations.

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SECTION 12. Assignment. Lender may, without notice, assign the Obligations, in
whole or in part, and each successive assignee of the Obligations so assigned may enforce this
Guarantee for its own benefit with respect to the Obligations so assigned.

SECTION 13. Notices. Each notice or other communication hereunder shall be in
writing, shall be sent by messenger, by certified or registered first class mail, return receipt
requested, by Federal Express, Express Mail or other recognized overnight delivery service or by
facsimile transmitter or tested telex (if such facsimile or telex number is noted as provided
herein), and shall be effective if by hand, upon delivery, if by such overnight delivery service,
one (1) day after dispatch, and if mailed by first class mail as above-provided, five (5) days
after mailing, and shall be sent as follows:

                        If to the Guarantor, to the address, facsimile, or tested telex number set forth below its
signature or such other address, facsimile or tested telex number as it may designate, by written
notice to Lender as herein provided or such other address, facsimile or tested telex number as may
appear in the records of Lender.

                        If to Lender, to the following address:

HSBC Bank USA, National Association

452 Fifth Avenue

New York, New York 10018

Attention: Ted Kavanagh

Fax: (212) 525-6581

or such other address as it may designate, by written notice to the Guarantor as herein provided.

SECTION 14. Other Guarantees; Amendments. The execution and delivery hereafter to
Lender by Guarantor of a new instrument of guarantee shall not terminate, supersede or cancel this
instrument, unless expressly provided therein, and this instrument shall not terminate, supersede
or cancel any instrument of guarantee previously delivered to Lender by Guarantor, and all rights
and remedies of Lender hereunder or under any instrument of guarantee hereafter or heretofore
executed and delivered to Lender by Guarantor shall be cumulative and may be exercised singly or
concurrently. This Guarantee may be amended only by a writing executed by Guarantor and a duly
authorized officer of Lender; provided, that Lender is authorized to fill in any blank
spaces and to otherwise complete this Guarantee and correct any patent errors herein.
Notwithstanding anything to the contrary set forth above, this Guarantee supersedes and replaces in
its entirety all guarantees executed by Guarantor in favor of Lender prior to the date hereof.

SECTION 15. No Waiver; Cumulative Remedies. No delay on the part of Lender in
exercising any of its options, powers or rights, or partial or single exercise thereof, shall
constitute a waiver thereof. NO WAIVER OF ANY PROVISION OF THIS GUARANTEE IS EFFECTIVE UNLESS MADE
IN WRITING AND EXECUTED BY A DULY AUTHORIZED OFFICER OF LENDER. All rights and remedies hereunder
are cumulative and may be exercised singly or concurrently.

SECTION 16. Statute of Limitations. Any acknowledgment, new promise, payment of
principal or interest or other act by the Borrower or others with respect to the Obligations shall
be deemed to be made as agent of Guarantor, and shall, if the statute of limitations in favor of
Guarantor against Lender shall have commenced to run, toll the running of such statute of
limitations, and if such statute of limitations shall have expired, prevent the operation of such
statute.

SECTION 17. GOVERNING LAW; CONSENT TO JURISDICTION; SERVICE OF PROCESS. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES. GUARANTOR AGREES THAT ANY ACTION,
SUIT OR PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS AGREEMENT MAY BE INITIATED AND PROSECUTED
IN ANY COURT IN THE STATE OR FEDERAL COURTS, AS THE CASE MAY BE, LOCATED IN NEW YORK COUNTY, NEW
YORK. GUARANTOR

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CONSENTS AND SUBMITS TO THE EXERCISE OF NON-EXCLUSIVE JURISDICTION OVER ITS PERSON BY ANY SUCH
COURT HAVING JURISDICTION OVER THE SUBJECT MATTER, AND CONSENTS TO THE SERVICE OF PROCESS IN ANY
SUCH ACTION OR PROCEEDING BROUGHT IN NEW YORK BY THE DELIVERY OF SUCH PROCESS TO GUARANTOR AT ITS
ADDRESS REFERRED TO IN SECTION 13 HEREOF. GUARANTOR HEREBY AGREES THAT THE FAILURE OF GUARANTOR TO
ACTUALLY RECEIVE SUCH COPY BY UNITED STATES REGISTERED MAIL SHALL NOT IMPAIR OR AFFECT THE VALIDITY
OF SUCH SERVICE OR ANY JUDGMENT RENDERED IN ANY ACTION OR PROCEEDING BASED THEREON. NOTHING IN
THIS SECTION 17 SHALL AFFECT THE RIGHT OF THE LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW. GUARANTOR AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL
BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER
MANNER PROVIDED BY LAW.

SECTION 18. Payments Free and Clear of All Taxes. Each payment to be made
hereunder shall be free and clear of, and without deductions for or on account of any present or
future taxes, imposts, charges, levies, compulsory loans or other withholdings or deductions
whatsoever. If Guarantor shall be required by applicable law to make any such deduction from any
payment hereunder, (i) the sum payable shall be increased as may be necessary so that after making
all required deductions (including deductions applicable to additional sums payable under this
paragraph) Lender receives an amount equal to the sum it would have received had no deductions been
made, (ii) Guarantor shall make such deductions, and (iii) Guarantor shall pay the full amount
deducted to the relevant taxation authority or other authority in accordance with applicable law.
In addition, Guarantor agrees to pay, if necessary, all stamp, documentary, or similar taxes or any
other excise or property taxes, charges or similar levies which arise from any payment made
hereunder or from the execution, delivery or registration of, or otherwise with respect to, this
instrument.

SECTION 19 Currency. This Agreement is being executed as part of an international
loan transaction in which the specification of Dollars and payment at the offices of Lender at the
address specified in Section 13 above (the “specified place of payment”), is of the
essence, and Dollars shall be the currency of account in all events. All amounts due under this
Agreement shall be payable to Lender in the United States, as set forth above, in Dollars in
immediately available funds in the specified place of payment and no alternative method of payment
shall be permitted, notwithstanding any Dollar Constraint or any other contingency or force
majeure. For purposes hereof, “Dollar Constraint” shall mean any law, regulation,
directive or communication imposed or issued by the government of Chile or any other competent
authority in Chile imposing foreign exchange controls or other restrictions which has the effect of
prohibiting, preventing or delaying the remittance of Dollars to Lender. The payment obligations
of Guarantor under this Agreement stated to be payable in Dollars shall not be discharged by an
amount paid in another currency or in another place, whether pursuant to a judgment or otherwise,
to the extent that the amount so paid on conversion to Dollars and transferred to the specified
place of payment under normal banking procedures does not yield the amount of Dollars in the
specified place of payment due hereunder. If for the purpose of obtaining judgment in any court it
is necessary to convert a sum due hereunder in Dollars into another currency (the “second
currency”), the rate of exchange which shall be applied shall be that at which in accordance
with normal banking procedures Lender could purchase Dollars with the second currency on the
Business Day next preceding that on which judgment is rendered. The obligation of Guarantor in
respect of any such sum due from it to Lender hereunder shall, notwithstanding the rate of exchange
actually applied in rendering such judgment, be discharged only to the extent that on the Business
Day following receipt by Lender of any sum adjudged to be due hereunder in the second currency
Lender may in accordance with normal banking procedures purchase and transfer to the specified
place of payment Dollars with the amount of the second currency so adjudged to be due; and
Guarantor, hereby, as a separate obligation and notwithstanding any such judgment, agrees to
indemnify Lender against, and to pay Lender on demand, in Dollars, any difference between the sum
originally due to Lender in Dollars and the amount of Dollars so purchased and transferred.

SECTION 20. Severability. If any one or more of the provisions contained in this
Guarantee or any document executed in connection herewith shall be invalid, illegal or
unenforceable in any respect under

5

 

any applicable law, the validity, legality and enforceability of the remaining provisions contained
herein shall not (to the full extent permitted by law) in any way be affected or impaired.

SECTION 21. Headings. The descriptive headings used in this Guarantee are for
convenience only and shall not be deemed to affect the meaning or construction of any provision
hereof.

SECTION 22. WAIVER OF CERTAIN OTHER RIGHTS. GUARANTOR HEREBY WAIVES THE RIGHT TO
INTERPOSE ANY DEFENSE, SET-OFF, COUNTERCLAIM OR CROSS-CLAIM OF ANY NATURE OR DESCRIPTION, ANY
OBJECTION BASED ON FORUM NON CONVENIENS OR VENUE, AND ANY CLAIM FOR CONSEQUENTIAL, PUNITIVE OR
SPECIAL DAMAGES.

SECTION 23. REPRESENTATIONS AND WARRANTIES OF GUARANTOR.

                  Guarantor represents and warrants to Lender that:

                  (i) Validity; Due Authorization. Guarantor (i) is a corporation duly
organized, validly existing and in good standing under the General Corporation Law of the
State of Delaware; (ii) is duly qualified and in good standing in every jurisdiction in
which it presently engages in business and in which such qualification is required; (iii)
has the power, authority and legal right to own, lease and enjoy undisturbed the assets of
its business and engage in its business as now conducted; and (iv) has the power, authority
and legal right to enter into and execute this Guarantee.

                  (ii) Financial Statements. The financial statements of Guarantor previously
delivered to Lender are the most recently available financial statements and are complete
and correct and present fairly the financial condition of Guarantor and there has been no
material adverse change in the financial condition of Guarantor since the date of such
financial statements.

                  (iii) Other Agreements. Neither the execution, delivery and performance of
this Guarantee, nor the consummation of the transactions contemplated herein, nor
compliance with the terms, conditions and provisions hereof will violate, conflict with or
result in the breach of any of the terms, conditions or provisions of the charter documents
of Guarantor, or of any indenture or other agreement to which Guarantor is now a party or
otherwise bound or to which any of its properties or other assets is subject, or any law,
statute, order, rule or regulation of any government instrumentality applicable to any of
them or by which its property is bound nor will it result in the creation or imposition of
any lien except for those being created in favor of Lender.

                  (iv) Litigation. There are no pending or threatened actions, suits or
proceedings against or affecting Guarantor by or before any court, commission, bureau or
other governmental agency or instrumentality, which, individually or in the aggregate, if
determined adversely to Guarantor, would have a material adverse effect on the business,
properties, operations, or condition, financial or otherwise, of Guarantor.

                  (v) Solvency. Guarantor is Solvent prior to and after giving effect to the
consummation of the transactions contemplated by this Guarantee. (For the purposes hereof,
Guarantor is “Solvent” if (i) the fair market value of all of its property is in excess of
the total amount of its debts (including contingent liabilities); (ii) it is able to pay
its debts as they mature; (iii) it does not have unreasonably small capital for the
business in which it is engaged or for any business or transaction in which it is about to
engage; and (iv) it is not “insolvent” as such term is defined in Section 101 (32) of the
Bankruptcy Code.)

6

 

SECTION 24. WAIVER OF TRIAL BY JURY. EACH OF LENDER AND GUARANTOR HEREBY WAIVES
TRIAL BY JURY IN ANY ACTION, PROCEEDING, CROSS-CLAIM OR COUNTERCLAIM BROUGHT BY OR AGAINST IT ON
ANY MATTERS WHATSOEVER, IN CONTRACT OR IN TORT, ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS
GUARANTEE OR THE OBLIGATIONS.

                        IN WITNESS WHEREOF, the Guarantor has executed this Guarantee.

[SEAL]

	 	 	 	 	 	 	 
	Chief Executive Office and Address for Notice:	 	ROYAL GOLD, INC.	 	 
	 
	 	 	 	 	 	 
	1660 Wynkoop Street

	 	By:
	 	/s/ Tony Jensen	 	 
	 

	 	 	 	 	 	 
	Suite 1600

	 	Name:
	 	Tony Jensen	 	 
	Denver, Colorado 80202-1132

	 	Title:
	 	President and Chief Executive Officer	 	 
	 
	Attn: Chief Financial Officer
	 	 	 	 	 	 
	Fax: (303) 595 9385
	 	 	 	 	 	 

City and County of Denver

State of Colorado

     On this 1st_ day of March, 2007, before me personally appeared Tony
Jensen, to me known, and known to me to be the President and Chief Executive Officer of
Royal Gold, Inc., the corporation which executed the foregoing instrument, and the said person duly
acknowledged to me that it executed said instrument for and on behalf of and with the authority of
the said corporation for the uses and purposes therein mentioned.

	 	 	 	 	 	 	 
	 

	 	 	 	Karen Passavanti Gross
	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Notary Public	 	 

My Commission Expires: 07-02-2007

7

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