sc13d

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, V4aNbFAPzR3G9fEQCiY+xxKhPj4gqgcWjNn55oZ/7vsTfGf2QBHNv+eWLUn9fbgK OMFFgxOCYUbTvzeYzQ5otw== 0001035704-07-000215.txt : 20070315 0001035704-07-000215.hdr.sgml : 20070315 20070315171446 ACCESSION NUMBER: 0001035704-07-000215 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20070315 DATE AS OF CHANGE: 20070315 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: Battle Mountain Gold Exploration Corp. CENTRAL INDEX KEY: 0001162177 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] IRS NUMBER: 861066675 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-80164 FILM NUMBER: 07697276 BUSINESS ADDRESS: STREET 1: SIXTH FLOOR, SUITE 9 STREET 2: ONE EAST LIBERTY STREET CITY: RENO STATE: NV ZIP: 89504 BUSINESS PHONE: 7756866081 MAIL ADDRESS: STREET 1: SIXTH FLOOR, SUITE 9 STREET 2: ONE EAST LIBERTY STREET CITY: RENO STATE: NV ZIP: 89504 FORMER COMPANY: FORMER CONFORMED NAME: HUDSON VENTURES INC DATE OF NAME CHANGE: 20011113 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: ROYAL GOLD INC CENTRAL INDEX KEY: 0000085535 STANDARD INDUSTRIAL CLASSIFICATION: MINERAL ROYALTY TRADERS [6795] IRS NUMBER: 840835164 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 1660 WYNKOOP STREET STREET 2: SUITE 1000 CITY: DENVER STATE: CO ZIP: 80202-1132 BUSINESS PHONE: 303-573-1660 MAIL ADDRESS: STREET 1: 1660 WYNKOOP STREET STREET 2: SUITE 1000 CITY: DENVER STATE: CO ZIP: 80202-1132 FORMER COMPANY: FORMER CONFORMED NAME: ROYAL GOLD INC /DE/ DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: ROYAL RESOURCES CORP DATE OF NAME CHANGE: 19870517 FORMER COMPANY: FORMER CONFORMED NAME: ROYAL RESOURCES EXPLORATION INC DATE OF NAME CHANGE: 19810716 SC 13D 1 d44652sc13d.htm SCHEDULE 13D sc13d


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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934

BATTLE MOUNTAIN GOLD EXPLORATION CORP.

(Name of Issuer)

Common Stock, par value $0.001 per share

(Title of Class of Securities)

07159T100

(CUSIP Number)

Tony Jensen
President and Chief Executive Officer
Royal Gold, Inc.
1660 Wynkoop Street, Suite 1000
Denver, Colorado 80202
(303) 573-1660

With copies to:

Bruce C. Kirchhoff
Vice President and General Counsel
Royal Gold, Inc.
1660 Wynkoop Street, Suite 1000
Denver, Colorado 80202
(303) 573-1660

Paul Hilton, Esq.
Hogan & Hartson L.L.P.
1200 Seventeenth Street, Suite 1500
Denver, CO 80202
(303) 899-7300

(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)

March 5, 2007

(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.

* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

(Continued on following pages)
(Page 1 of 9 Pages)


CUSIP No.		07159T100		Page		2		of		9

NAMES OF REPORTING PERSONS:

Royal Gold, Inc.

I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY):

84-0835164

CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS):

(a) o

(b) o Not Applicable

SEC USE ONLY:

SOURCE OF FUNDS (SEE INSTRUCTIONS):

CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e):

CITIZENSHIP OR PLACE OF ORGANIZATION:

United States of America

SOLE VOTING POWER:

NUMBER OF

-0- shares

SHARED VOTING POWER:

BENEFICIALLY

OWNED BY

33,357,132 shares¹

EACH

SOLE DISPOSITIVE POWER:

REPORTING

PERSON

-0- shares

WITH

SHARED DISPOSITIVE POWER:

33,357,132 shares¹

AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:

33,357,132 shares ¹

CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS):

PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):

46.4%²

TYPE OF REPORTING PERSON (SEE INSTRUCTIONS):


¹		Includes 12,102,940 shares of common stock held by IAMGOLD Corporation and 4,480,000 shares of common stock issuable to IAMGOLD Corporation upon conversion of a debenture in the principal amount of $2,000,000 and accrued interest. Also includes 16,774,192 shares of common stock beneficially owned by Mark Kucher, which includes 3,160,000, 1,000,000, 3,400,000 and 40,000 shares of common stock owned by Bug River Trading Corp., British Swiss Investment Corp., Warrior Resources Corp. and Mr. Kucher’s spouse, respectively, and also includes an option to purchase 800,000 shares of common stock at $0.40 per share that vested April 15, 2005 and warrants to purchase up to 2,512,096 shares of common stock at $0.31 per share. Does not include shares of common stock, if any, that may become available for acquisition by Royal Gold in connection with a contemplated convertible bridge loan to be made by Royal Gold to Battle Mountain Gold Exploration Corp. that remains subject to execution of definitive loan documentation. See “Item 5 — Interest in Securities of Issuer” for further information.

²		Based on 64,070,442 shares of common stock issued and outstanding as of January 18, 2007, which number is based on information provided by Battle Mountain Gold Exploration Corp.

Page 3 of 9

Item 1. Security and Issuer.

This statement on Schedule 13D (this “Schedule 13D”) relates to the common stock, par value $0.001 per share (the “Common Stock”), of Battle Mountain Gold Exploration Corp., a Nevada corporation (“Battle Mountain”). The address of the principal offices of Battle Mountain is Suite 600, 1 East Liberty Street, Reno, Nevada 89504.

Item 2. Identity and Background.

This Schedule 13D is being filed by Royal Gold Inc., a Delaware corporation (“Royal Gold”). Royal Gold is a company engaged in the business of acquiring and managing precious metals royalties. The address of the principal executive office of Royal Gold is 1660 Wynkoop Street, Suite 1000, Denver, Colorado 80202.

The name, citizenship, principal occupation or employment and business address of each of the directors and executive officers of Royal Gold is set forth on Schedule A hereto.

During the last five years neither Royal Gold, nor to the knowledge of Royal Gold, any person named in Schedule A (i) has been convicted in a criminal proceeding (excluding traffic violations and similar misdemeanors) or (ii) was a party to any civil proceeding of a judicial or administrative body of competent jurisdiction, and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

Item 3. Source and Amount of Funds or Other Consideration.

In connection with the Letter Agreement described in Item 4, Royal Gold entered into Option and Support Agreements (“Support Agreements”) each dated as of March 5, 2007 with Mark D. Kucher (“Kucher”) and IAMGOLD Corporation, a Canadian corporation (“IAMGOLD” and together with Kucher, the “Stockholders”). Royal Gold may be deemed to have acquired beneficial ownership of the shares of Common Stock subject of this Schedule 13D by reason of Royal Gold entering into the Support Agreements. No payments were made by or on behalf of Royal Gold in connection with the execution of the Support Agreements. The Support Agreements are incorporated by reference to Exhibit 99.1 and Exhibit 99.2 hereto.

Item 4. Purpose of the Transaction.

The purpose of Royal Gold entering into the Support Agreements is to support its proposal to acquire 100% of the equity interests in Battle Mountain. The Support Agreements were entered in connection with Royal Gold entering into a letter agreement making a proposal to acquire Battle Mountain accepted February 28, 2007 (the “Letter Agreement”), which provides, among other things, for an exclusive 45 day period for Royal Gold and Battle Mountain to negotiate definitive documentation (the “Definitive Documentation”) for the acquisition of 100% of the Common Stock of Battle Mountain by Royal Gold for 1,570,507 shares of Royal Gold common stock (the “Acquisition”) by means of a merger. Pursuant to the

Page 4 of 9

Letter Agreement, Battle Mountain agrees to a 45 day exclusive period to refrain from soliciting any competing transaction (“Competing Transaction”), declaring or paying any dividends, incurring additional debt or issuing additional securities. Battle Mountain also agreed to pay a break-up fee equal to $2.5 million, plus fees and expenses, to Royal Gold in the event Battle Mountain enters into an agreement with respect to a Competing Transaction with another party within twelve months of the expiration of the Letter Agreement. The Letter Agreement also provides for a reciprocal break-up fee equal to $1.0 million, plus fees and expenses, payable in the event that either Royal Gold or Battle Mountain breaches the Letter Agreement. The summary of the Letter Agreement contained in this Schedule 13D is qualified in its entirety by reference to the Letter Agreement, which is incorporated by reference to Exhibit 99.3 hereto.

Pursuant to the terms of the Support Agreements, the Stockholders have agreed to vote, and granted Royal Gold an irrevocable proxy to vote, their shares of Common Stock (i) in favor of the Acquisition and the Definitive Documentation and (ii) against any action, agreement, transaction or proposal that is made in opposition to, or is in competition or inconsistent with the Acquisition or the Definitive Documentation, relates to a Competing Transaction or that could otherwise prevent, impede or delay the consummation of the Acquisition. Pursuant to the Support Agreements, the Stockholders agree to refrain from initiating, soliciting or encouraging any inquiries or the making of any proposal that constitutes or reasonably may be expected to lead to a Competing Transaction and to advise Royal Gold of any such inquiries or proposals of which such Stockholder becomes aware.

In addition, each Stockholder agrees that it will not (i) tender into any tender or exchange offer or otherwise directly or indirectly transfer its Common Stock or (ii) grant any proxies with respect to such Common Stock, deposit such Common Stock into a voting trust, enter into a voting agreement with respect to such Common Stock or otherwise restrict the ability of such Stockholder freely to exercise all voting rights with respect to such Common Stock.

The voting and transfer restrictions on IAMGOLD will terminate in the event Royal Gold has been notified of a written and publicly announced acquisition proposal that the Board of Directors of Battle Mountain concludes is more favorable to Battle Mountain’s shareholders than the Acquisition or a written offer pursuant to which IAMGOLD will receive a per share purchase price at least 7.5% higher than the per share consideration specified in the Letter Agreement or Definitive Documentation (a “Superior Proposal”).

Pursuant to the Support Agreement with Kucher, Kucher granted Royal Gold an irrevocable option to purchase his Common Stock at an exercise price per share of 0.016925 shares of Royal Gold common stock. Royal Gold’s option to purchase Kucher’s shares will terminate upon the twelve-month anniversary of the Support Agreement. Pursuant to the Support Agreement with IAMGOLD, IAMGOLD granted Royal Gold an irrevocable option to purchase its Common Stock at an option price per share equal to the greater of (i) 0.016925 shares of Royal Gold common stock, (ii) the per share consideration offered pursuant to a Superior Proposal and (iii) the highest price paid by Royal Gold to any other shareholder of Battle Mountain at any time during the ninety days prior to the date that the shareholders of Battle Mountain approve the Acquisition and the Definitive Documentation. Royal Gold’s option to purchase IAMGOLD’s shares will terminate, unless previously exercised, upon the earlier of (i) September 5, 2007, (ii) five business days after Royal Gold is notified of a Superior Proposal and (iii) the date on which the Support Agreement with IAMGOLD terminates.

Page 5 of 9

The Support Agreement with Kucher will terminate in the event that Definitive Documentation is terminated, in accordance with its terms, or the Letter Agreement is terminated other than by reason of execution of the Definitive Documentation, provided however, Royal Gold’s option to purchase Kucher’s shares will survive until the twelve month anniversary of the date of the Support Agreement. The Support Agreement with IAMGOLD will terminate upon the termination of the Definitive Documentation, consummation of the Acquisition or if the Acquisition has not been completed on or prior to October 1, 2007, provided however, Royal Gold’s option to purchase IAMGOLD’s shares will survive if it delivered an exercise notice prior to the termination of the Support Agreement until the option exercise is consummated or otherwise terminated.

The summaries of the Support Agreements contained in this Schedule 13D are qualified in their entirety by reference to the Support Agreements, each of which is incorporated by reference to Exhibit 99.1 and Exhibit 99.2 hereto.

Item 5. Interest in Securities of the Issuer.

(a) Under the definition of “beneficial ownership” as set forth in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as a result of the provisions set forth in the Support Agreements, Royal Gold may be deemed to have acquired beneficial ownership of 33,357,132 shares of Common Stock, constituting approximately 46.4% of the outstanding shares of Common Stock and all of the Common Stock subject of this Schedule 13D. This number does not include shares of Common Stock, if any, that may become available for acquisition by Royal Gold in connection with a contemplated convertible bridge loan to be made by Royal Gold to Battle Mountain that remains subject to the execution of definitive loan documentation. On February 28, 2007, Royal Gold entered into a term sheet with Battle Mountain to provide Battle Mountain up to $20 million in bridge financing. Under the term sheet, it is contemplated that advances under the loan, if any, will be subject to a number of conditions, including the execution of definitive documentation for the Acquisition and acquisition by Battle Mountain of certain royalty interests. Under the term sheet, it is also contemplated that the loan will provide Royal Gold with the right to convert principal, interest and other expenses, if any, into Common Stock at a conversion price per share of $0.60.

By virtue of their relationship with Royal Gold, the persons listed in Schedule A hereto may be deemed to beneficially own the Common Stock subject of this Schedule 13D. Neither the filing of this Schedule 13D nor any of its contents shall be deemed to constitute an admission that any person named in Item 2 above or Schedule A hereto is the beneficial owner of the Common Stock subject of this Schedule 13D for purposes of Section 13(d) of the Exchange Act or for any other purpose, and such beneficial ownership is expressly disclaimed.

(b) Royal Gold does not have the sole power to vote or to direct the vote, or sole power to dispose or to direct the disposition of, any of the Common Stock subject of this Schedule 13D. Royal Gold has shared power to vote and to direct the vote, and has or may be deemed to have shared power to dispose of or direct the disposition of, the Common Stock subject of this Schedule 13D as a result of the arrangements set forth in the Support Agreements described in Item 4.

Page 6 of 9

(c) Neither Royal Gold nor, to the knowledge of Royal Gold, any person named on Schedule A hereto has effected any transaction during the past 60 days in any shares of the Common Stock.

(d) Other than each Stockholder with respect to the Common Stock of which it is a record owner or beneficial owner, Royal Gold does not know of any other person who has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the Common Stock subject of this Schedule 13D.

(e) Not applicable.

Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer.

Except for the arrangements described in Items 3, 4 and 5 of this Schedule 13D to the knowledge of Royal Gold, there are no contracts, arrangements, understandings or relationships among the persons named in Item 2 and between such persons and any person with respect to any securities of Battle Mountain, including but not limited to transfer or voting of any of the securities, finder’s fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or losses, or the giving or withholding of proxies.

Item 7. Material to be Filed as Exhibits.

The following documents are filed as exhibits to this Schedule 13D:


Exhibit No.		Description
99.1		Option and Support Agreement by and between Royal Gold, Inc. and Mark D. Kucher dated as of March 5, 2007

99.2		Option and Support Agreement by and between Royal Gold, Inc. and IAMGOLD Corporation dated as of March 5, 2007

99.3		Letter Agreement by Royal Gold, Inc. and accepted by Battle Mountain Gold Exploration Corp. dated as of February 28, 2007

Page 7 of 9

Schedule A

Directors and Executive Officers of Royal Gold

The name, principal occupation and business address of each director and executive officer of Royal Gold are set forth below. All of the persons listed below are citizens of the United States of America.


Name and Position		Present Principal Occupation and Residence or Business Address
Stanley Dempsey Executive Chairman		Executive Chairman 1660 Wynkoop Street Suite 1000 Denver, Colorado 80202

Edwin W. Peiker, Jr. Director		Retired 1660 Wynkoop Street Suite 1000 Denver, Colorado 80202

John W. Goth Director		Non-executive Director of Denver Gold Group, Director of Behre Dolbear 1660 Wynkoop Street Suite 1000 Denver, Colorado 80202

James W. Stuckert Director		Senior Executive of Hilliard, Lyon, Inc. 1660 Wynkoop Street Suite 1000 Denver, Colorado 80202

Merritt E. Marcus Director		Retired 1660 Wynkoop Street Suite 1000 Denver, Colorado 80202

S. Oden Howell, Jr. Director		President of Howell & Howell Contractors, Owner of Kessinger Service Industries, LLC 1660 Wynkoop Street Suite 1000 Denver, Colorado 80202

Donald Worth Director		Director of Sentry Select Capital Corporation, Director of Cornerstone Capital Resources, Inc. and Director of Tiomin Resources, Inc. 1660 Wynkoop Street Suite 1000 Denver, Colorado 80202

Tony Jensen President, Chief Executive Officer and Director		President, Chief Executive Officer and Director 1660 Wynkoop Street Suite 1000 Denver, CO 80202

Karen P. Gross Vice President & Corporate Secretary		Vice President & Corporate Secretary 1660 Wynkoop Street Suite 1000 Denver, CO 80202

William H. Heissenbuttel Vice President, Corporate Development		Vice President, Corporate Development 1660 Wynkoop Street Suite 1000 Denver, CO 80202

Stefan Wenger Chief Financial Officer		Chief Financial Officer 1660 Wynkoop Street Suite 1000 Denver, CO 80202

Bruce C. Kirchhoff Vice President and General Counsel		Vice President and General Counsel 1660 Wynkoop Street Suite 1000 Denver, CO 80202

Page 8 of 9

SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Dated: March 15, 2007


ROYAL GOLD, INC.
By:	/s/ Bruce C. Kirchhoff
	Name:	Bruce C. Kirchhoff
	Title:	Vice President and General Counsel

Page 9 of 9

EXHIBIT INDEX


Exhibit No.		Description
99.1		Option and Support Agreement by and between Royal Gold, Inc. and Mark D. Kucher dated as of March 5, 2007

99.2		Option and Support Agreement by and between Royal Gold, Inc. and IAMGOLD Corporation dated as of March 5, 2007

99.3		Letter Agreement by Royal Gold, Inc. and accepted by Battle Mountain Gold Exploration Corp. dated as of February 28, 2007

EX-99.1 2 d44652exv99w1.htm OPTION AND SUPPORT AGREEMENT exv99w1

Exhibit 99.1

OPTION AND SUPPORT AGREEMENT

This Option and Support Agreement (this “Agreement”) is dated as of March 5, 2007, among Royal Gold, Inc., a Delaware corporation (“Acquirer”), and the shareholders of Battle Mountain Gold Exploration Corp., a Nevada corporation (“BMG”), executing this Agreement on the signature page hereto (each, a “Shareholder” and collectively, the “Shareholders”).

RECITALS

A. Acquirer and BMG have entered into a letter agreement (the “Letter Agreement”), which provides, among other things, that the parties will endeavor to negotiate definitive documentation (the “Definitive Documentation”) for the acquisition of BMG by Acquirer (the “Acquisition”).

B. As of the date hereof, each Shareholder is the record and Beneficial Owner (as defined below) of that number of BMG Common Shares (as defined below) set forth below such Shareholder’s name on the signature page hereto.

C. As a condition to Acquirer’s willingness to enter into and perform its obligations under the Letter Agreement and pursue the Acquisition, each Shareholder has agreed to enter into this Agreement.

NOW THEREFORE, the parties hereto agree as follows:

I. CERTAIN DEFINITIONS

1.1. Other Definitions. For the purposes of this Agreement:

“Beneficial Owner” or “Beneficial Ownership” with respect to any securities means having “beneficial ownership” of such securities (as determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended).

“Transfer” means, with respect to a security, the sale, grant, assignment, transfer, pledge, hypothecation, encumbrance, assignment, constructive sale, or other disposition of such security or the Beneficial Ownership thereof (including by operation of law), or the entry into of any contract, agreement or other obligation to effect any of the foregoing, including, for purposes of this Agreement, the transfer or sharing of any voting power of such security.

“BMG Common Share” means a share of common stock, par value $.001 per share, of BMG, including for purposes of this Agreement all shares or other voting securities into which a BMG Common Share may be reclassified, sub-divided, consolidated or converted and any rights and benefits arising therefrom (including any dividends or distributions of securities which may be declared in respect of BMG Common Shares).

II. OPTION AND SUPPORT OBLIGATIONS OF THE STOCKHOLDER

2.1. Agreement to Vote. Each Shareholder irrevocably and unconditionally agrees that from and after the date hereof, at any meeting (whether annual or special, and at each

adjourned or postponed meeting) of shareholders of BMG, however called, or in connection with any written consent of BMG’s shareholders, each Shareholder will (x) appear at each such meeting or otherwise cause all of its Owned Shares to be counted as present thereat for purposes of calculating a quorum, and respond to each request by BMG for written consent, if any, and (y) vote (or consent), or cause to be voted (or validly execute and return and cause consent to be granted with respect to), all of such Shareholder’s BMG Common Shares Beneficially Owned by such Shareholder as of the applicable record date (including any BMG Common Shares that such Shareholder may acquire after the date hereof, “Owned Shares”) and all other voting securities of or equity interests in BMG: (i) in favor of the Acquisition, the Letter Agreement and the adoption of the Definitive Documentation (whether or not recommended by the Board of Directors of BMG), and (ii) against any action, agreement, transaction or proposal that (A) is made in opposition to, or is in competition or inconsistent with, the Acquisition or the Definitive Documentation, (B) relates to an alternative Acquisition Transaction (as defined in the Letter Agreement) or (C) could otherwise prevent, impede or delay the consummation of the Acquisition or the other transactions contemplated by the Letter Agreement or the Definitive Documentation.

2.2. Proxies. Each Shareholder hereby revokes any and all previous proxies granted with respect to its Owned Shares. By entering into this Agreement, each Shareholder hereby grants a proxy appointing Acquirer and each of its designees, and each of them individually, as such Shareholder’s attorney-in-fact and proxy, with full power of substitution, for and in such Shareholder’s name, to be counted as present, vote, consent, dissent or withhold consent or otherwise to act on behalf of the Shareholder with respect to its Owned Shares in favor of the Acquisition and Definitive Documentation and otherwise in the manner contemplated by, and to give effect to, Section 2.1. The proxy granted by each Shareholder pursuant to this Section 2.2 is irrevocable and coupled with an interest, and is granted in order to secure such Shareholder’s performance under this Agreement and also in consideration of Acquirer and entering into the Letter Agreement and the Definitive Documentation. If any Shareholder fails for any reason to be counted as present, consent or vote such Shareholder’s Owned Shares in accordance with the requirements of Section 2.1 above (or anticipatorily breaches such section), then Acquirer shall have the right to cause to be present, consent or vote such Shareholder’s Owned Shares in accordance with the provisions of Section 2.1. The proxy granted by each Shareholder hereunder shall terminate upon termination of this Agreement in accordance with its terms.

2.3. Restrictions on Transfer. Except as provided for herein, each Shareholder agrees from and after the date hereof not to (a) tender into any tender or exchange offer or otherwise directly or indirectly Transfer any Owned Shares (or any rights, options or warrants to acquire BMG Common Shares), or (b) grant any proxies with respect to such Shareholder’s Owned Shares, deposit such Shareholder’s Owned Shares into a voting trust, enter into a voting agreement with respect to any of such Shareholder’s Owned Shares or otherwise restrict the ability of such Shareholder freely to exercise all voting rights with respect thereto. Any action attempted to be taken in violation of the preceding sentence will be null and void. Each Shareholder further agrees to authorize and request BMG to notify BMG’s transfer agent that there is a stop transfer order with respect to all of the Owned Shares and that this Agreement places limits on the voting of the Owned Shares. If so requested by Acquirer, each Shareholder agrees that the certificates representing Owned Shares shall bear a legend stating that they are subject to this Agreement and to the irrevocable proxy granted in Section 2.2 of this Agreement.

- 2 -

2.4. No Solicitation. Each Shareholder agrees that it shall not, directly or indirectly, initiate, solicit, facilitate or encourage (including by way of furnishing information or assistance), or take any other action to facilitate, any inquiries or the making of any proposal that constitutes, or reasonably may be expected to lead to, any Acquisition Transaction, or enter into or maintain discussions or negotiate with any person in furtherance of or relating to such inquiries or to obtain an Acquisition Transaction, or agree to, or enter into any agreement regarding or endorse any Acquisition Transaction. Each Shareholder shall promptly (and in any event, within 24 hours of becoming aware of an inquiry or proposal) advise Acquirer in writing of any such inquiries or proposals of which such Shareholder becomes aware. Each Shareholder will immediately cease and cause to be terminated any existing activities, discussions or negotiations with any parties conducted prior to the date of this Agreement with respect to any of the foregoing. Notwithstanding anything in this Section 2.4 to the contrary, the foregoing shall not restrict or limit the ability of any Person who is a director of BMG to take any action in his or her capacity as a director of BMG to the extent expressly permitted by the Letter Agreement or the Definitive Documentation.

2.5 Option. Each Shareholder hereby grants Acquirer an irrevocable option (the “Option”) to purchase all of the Owned Shares, in the manner set forth below, at an exercise price per share of 0.016925 shares of Royal Gold common stock, par value $0.01 per share (“Acquirer Common Stock”) for each Owned Share, subject to adjustment as provided below (the “Option Price”). Such Acquirer Common Stock constituting the Option Price shall be registered under United States securities laws. Acquirer may exercise the Option, in whole or in part, at any time, or from time to time following the date hereof until the 12-month anniversary of the date hereof. In the event Acquirer wishes to exercise the Option, Acquirer shall deliver written notice (the “Exercise Notice”) to the Shareholder specifying its intention to exercise the Option, the total number of Owned Shares it wishes to purchase and a date and time for the closing of such purchase (an “Option Closing”) not less than three nor more than 30 days after the date such Exercise Notice is given; provided, however, that if any waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder applicable to the Acquisition or the purchase of the Owned Shares pursuant to the Option shall not have expired or terminated by the date specified in the Exercise Notice for the Option Closing, then the Option Closing shall occur within one business day following such expiration or termination. Any Option Closing shall be held at the offices of Hogan & Hartson L.L.P., One Tabor Center, 1200 Seventeenth Street, Suite 1500, Denver, CO 80202. At any Option Closing hereunder, upon receipt of payment of the Option Price, the Shareholder will deliver to Acquirer or its designee a certificate or certificates representing the number of validly issued, fully paid and non-assessable Owned Shares so purchased, in the denominations and registered in such names designated to the Shareholder in writing by Acquirer, along with all appropriate and effective instruments of transfer. For avoidance of doubt, in the event of any change in the number of outstanding BMG Common Shares by reason of any stock dividend, stock split, recapitalization, merger, rights offering, share exchange or other change in the corporate or capital structure of BMG, Acquirer shall receive, and the Shareholders shall deliver, upon exercise of the Option, the stock or other securities, cash or property to which Acquirer would have been entitled if it had exercised the Option and had been a holder of record of BMG Common Stock on the record date fixed for determination of holders of BMG Common Shares entitled to receive such stock or other securities, cash or property and the Option Price shall be adjusted appropriately.

- 3 -

2.6 Resale of Acquirer Common Stock. In connection with any underwritten public offering of Acquirer Common Stock, each Shareholder agrees that such Shareholder shall execute a customary “lock-up” agreement in the form and for the term requested by the underwriter(s) for such offering. Each Shareholder further agrees not to sell, in any one trading day, any shares of Acquirer Common Stock in excess of 15% of the average trading volume of the Acquirer Common Stock on the NASDAQ Global Select Market over any 30-trading day period.

III. REPRESENTATIONS AND WARRANTIES

3.1. Representations and Warranties of Shareholders. Each Shareholder, severally and not jointly, represents and warrants to Acquirer, as of the date of this Agreement, that (i) this Agreement has been duly authorized, executed and delivered by such Shareholder and constitutes the valid and binding agreement of such Shareholder, enforceable against such Shareholder in accordance with its terms; (ii) such Shareholder is the record and beneficial owner of the Owned Shares set forth below such Shareholder’s name on the signature page hereto (and any Owned Shares acquired by such Shareholder after the date hereof), with sole voting and dispositive power over such Owned Shares; (iii) such Owned Shares are the only voting securities or interests in BMG owned (beneficially or of record) by such Shareholder; (iv) such Owned Shares are owned by such Shareholder free and clear of all liens, charges, encumbrances, agreements and commitments of every kind, other than as expressly set forth herein; and (v) neither the execution or delivery of this Agreement nor the consummation by such Shareholder of the transactions contemplated hereby will violate any provisions of any law or order, injunction, decree or judgment applicable to such Shareholder or any contract, agreement or other commitment to which such Shareholder is a party or by which such Shareholder or any of such Shareholder’s properties or assets (including such Owned Shares) is bound, other than such violations of contracts, agreements or commitments as would not prevent, impede or delay the performance by Shareholder of his or its obligations hereunder or impose any liability or obligation on BMG or Acquirer or any subsidiaries or affiliates thereof.

IV. ADDITIONAL COVENANTS OF SHAREHOLDERS

4.1. Waiver of Dissenters’ Rights. Notwithstanding any provision in the Definitive Documentation to contrary, each Shareholder hereby waives, and shall cause the record holders (if different from such Shareholder) of any Owned Shares Beneficially Owned by such Shareholder to waive, dissenters’ rights, if any, that such Shareholder or such record holder may have under applicable law in connection with the Acquisition and the transactions contemplated by the Definitive Documentation.

4.2. Disclosure. Each Shareholder hereby authorizes Acquirer and BMG to publish and disclose in any announcement or disclosure required by United States or Canadian securities laws or applicable stock exchange rules and in any proxy statement prepared in connection with the Acquisition such Shareholder’s identity and ownership of the Owned Shares and the nature of such Shareholder’s obligation under this Agreement.

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4.3. Non-Interference; Further Assurances. Each Shareholder agrees that such Shareholder shall not take any action that would make any representation or warranty of such Shareholder contained herein untrue or incorrect or have the effect of preventing, impeding, interfering with or adversely affecting the performance by such Shareholder of its obligations under this Agreement. Each Shareholder agrees to execute and deliver such additional documents and to take such further actions as necessary or reasonably requested by Acquirer to confirm and assure the rights and obligations set forth in this Agreement or to consummate the transactions contemplated by this Agreement. If requested by Acquirer, each Shareholder agrees to execute a letter to Acquirer representing that such Shareholder has complied with such Shareholder’s obligations hereunder as of the date of such letter.

V. GENERAL

5.1. Notices. All notices shall be in writing and shall be deemed given (i) when delivered personally, (ii) when telecopied (which is confirmed) or (iii) when dispatched by a nationally recognized overnight courier service to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): (a) if to a Shareholder, to the address set forth below such Shareholder’s name on the signature page hereto, and (b) if to Acquirer, to the address set forth below the Acquirer’s name on the signature page hereto, or to such other Persons, addresses or facsimile numbers as may be designated in writing to each other party hereto by the Person entitled to receive such communication as provided above.

5.2. No Third Party Beneficiaries. This Agreement is not intended to confer any rights or remedies upon any Person other than the parties to this Agreement.

5.3. Governing Law. This Agreement and any controversies arising with respect hereto shall be construed in accordance with and governed by the law of the State of Colorado (without regard to principles of conflict of laws that would apply the law of another jurisdiction).

5.4. Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void, unenforceable or against its regulatory policy, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. Upon such determination that any term, provision, covenant or restriction of this Agreement is invalid, void, unenforceable or against regulatory policy, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible.

5.5. Assignment. The provisions of this Agreement shall be binding upon, inure to the benefit of and be enforceable by the parties hereto and their respective successors and assigns; provided, however, that no Shareholder may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the prior written consent of Acquirer and any attempted assignment without such consent shall be null and void without effect; and provided, further, that Acquirer may assign its respective rights or obligations hereunder to any direct or indirect wholly-owned subsidiary of Acquirer (or any successor thereto) without the prior written consent of the parties hereto.

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5.6. Interpretation. For the purposes of this Agreement, (i) words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other gender as the context requires, (ii) the terms “hereof”, “herein”, and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including any exhibits and schedules hereto) and not to any particular provision of this Agreement, and Article, Section, paragraph references are to the Articles, Sections, paragraphs to this Agreement unless otherwise specified, (iii) the word “including” and words of similar import when used in this Agreement shall mean “including, without limitation,” unless the context otherwise requires or unless otherwise specified, (iv) the word “or” shall not be exclusive, (v) provisions shall apply, when appropriate, to successive events and transactions, (vi) unless otherwise specified, all references to any period of days shall be deemed to be to the relevant number of calendar days. The Article, Section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting or causing any instrument to be drafted. References to a Person will refer to its predecessors and successors and permitted assigns.

5.7. Amendments. This Agreement may not be amended except by written agreement signed by Acquirer and by each Shareholder.

5.8. Extension; Waiver. Acquirer may (a) extend the time for the performance of any of the obligations of a Shareholder, (b) waive any inaccuracies in the representations and warranties of any Shareholder contained in this Agreement or in any document delivered under this Agreement, or (c) unless prohibited by applicable Laws, waive compliance by any Shareholder with any of the covenants or conditions contained in this Agreement. Any agreement on the part of a party to any extension or waiver will be valid only if set forth in an instrument in writing signed by such party. The failure of any part to assert any of its rights under this Agreement or otherwise will not constitute a waiver of such rights.

5.9. Fees and Expenses. Each party is responsible for its own fees and expenses (including the fees and expenses of financial consultants, investment bankers, accountants and counsel) in connection with the entry into of this Agreement and the consummation of the transactions contemplated hereby, except as otherwise provided in the Letter Agreement or the Definitive Documentation.

5.10. Entire Agreement. This Agreement constitutes the entire agreement and supersedes all other prior agreements, understandings, representations and warranties, both written and oral, among the parties to this Agreement with respect to the subject matter of this Agreement.

5.11. Remedies Cumulative. Except as otherwise provided in this Agreement, any and all remedies expressly conferred upon a party to this Agreement will be cumulative with, and not exclusive of, any other remedy contained in this Agreement, at law or in equity. The exercise by a party to this Agreement of any one remedy will not preclude the exercise by it of any other remedy.

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5.12. Counterparts; Execution. This Agreement may be executed in any number of counterparts, all of which are one and the same agreement. This Agreement may be executed by facsimile signature by any party and such signature is deemed binding for all purposes hereof, without delivery of an original signature being thereafter required.

5.13. Effectiveness and Termination. This Agreement will become effective when Acquirer has received a counterpart signed by the other party. In the event the Definitive Agreement (as defined in the Letter Agreement) is terminated or the Letter Agreement expires (other than as a result of the execution of a Definitive Agreement) in accordance with its terms, this Agreement shall automatically terminate and be of no further force and effect. Upon such termination, none of the parties hereto shall have any further obligations or liabilities hereunder except (A) for any rights any party may have in respect of any breach hereof by any other party of its or his obligations hereunder, and (B) that the Option and related provisions (Sections 2.5 and 2.6) shall survive for duration of the Option.

5.14. Specific Performance. The parties agree that the remedies at law for any breach or threatened breach, including monetary damages, are inadequate compensation for any loss and that any defense in any action for specific performance that a remedy at law would be adequate is waived. Accordingly, in the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the party or parties who are or are to be thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief of its rights under this Agreement, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative. Any requirements for the securing or posting of any bond with such remedy are waived.

5.15. Submission to Jurisdiction. The parties to this Agreement (a) irrevocably submit to the personal jurisdiction of the state and federal courts of the United States of America located in the State of Colorado and (b) waive any claim of improper venue or any claim that those courts are an inconvenient forum. The parties to this Agreement agree that mailing of process or other papers in connection with any such action or proceeding in the manner provided in Section 5.1 or in such other manner as may be permitted by applicable laws, will be valid and sufficient service thereof.

5.16. Waiver of Jury Trial. Each party acknowledges and agrees that any controversy which may arise under this Agreement is likely to involve complicated and difficult issues and, therefore, each such party irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any action arising out of or relating to this Agreement or the transactions contemplated by this Agreement. Each party to this Agreement certifies and acknowledges that (a) no representative of any other party has represented, expressly or otherwise, that such other party would not seek to enforce the foregoing waiver in the event of an action, (b) such party has considered the implications of this waiver, (c) such party makes this waiver voluntarily, and (d) such party has been induced to enter into this Agreement by, among other things, the mutual waivers and certifications in this Section 5.16.

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IN WITNESS WHEREOF, each party hereto has caused this Agreement to be signed as of the date first above written.


ROYAL GOLD, INC.
By:	/s/ Tony Jensen
	Name:	Tony Jensen
	Title:	President and Chief Executive Officer


		Notice Address: 1660 Wynkoop Street Suite 1000 Denver, Colorado 80202-1132 Attn: President and Chief Executive Officer

(Shareholder signature pages follow)


		SHAREHOLDERS

		Name:		Mark D. Kucher
		Signatory:		/s/ Mark D. Kucher

		Title, if applicable:		President

		Owned Shares:


		Notice Address:
		One East Liberty Street
		Sixth Floor, Suite 9
		Reno, Nevada 89504

EX-99.2 3 d44652exv99w2.htm OPTION AND SUPPORT AGREEMENT exv99w2

Exhibit 99.2

OPTION AND SUPPORT AGREEMENT

RECITALS

A. Acquirer and BMG have entered into a letter agreement dated February 28, 2007 (the “Letter Agreement”), a copy of which is attached hereto as Exhibit A, which provides, among other things, that the parties will endeavor to negotiate definitive documentation on the principal terms set forth in the Letter Agreement (the “Definitive Documentation”) for the acquisition of BMG by Acquirer (the “Acquisition”).

NOW THEREFORE, the parties hereto agree as follows:

I. CERTAIN DEFINITIONS

1.1. Other Definitions. For the purposes of this Agreement:

“Acquisition Agreement” means the Letter Agreement, until such time as the Definitive Documentation has been executed by the parties thereto, at which time, “Acquisition Agreement” shall mean the Letter Agreement and the Definitive Documentation.

II. OPTION AND SUPPORT OBLIGATIONS OF THE STOCKHOLDER

2.1. Agreement to Vote. Each Shareholder irrevocably and unconditionally agrees that from and after the date hereof, at any meeting (whether annual or special, and at each adjourned or postponed meeting) of shareholders of BMG, however called, or in connection with any written consent of BMG’s shareholders, each Shareholder will (x) appear at each such meeting or otherwise cause all of its Owned Shares to be counted as present thereat for purposes of calculating a quorum, and respond to each request by BMG for written consent, if any, and (y) vote (or consent), or cause to be voted (or validly execute and return and cause consent to be granted with respect to), all of such Shareholder’s BMG Common Shares Beneficially Owned by such Shareholder as of the applicable record date (including any BMG Common Shares that such Shareholder may acquire after the date hereof by conversion of BMG’s 6% subordinated exchangeable debentures due April 25, 2008 (the “Debentures”) or otherwise, “Owned Shares”) and all other voting securities of or equity interests in BMG (provided that the Shareholder shall not be required to convert any Debentures in order to vote the underlying BMG shares and provided further that the Acquirer shall cause the Definitive Documentation to permit the Shareholder to convert the Debentures in connection with Acquisition): (i) in favor of the Acquisition and the adoption of the Acquisition Agreement (whether or not recommended by the Board of Directors of BMG), and (ii) against any action, agreement, transaction or proposal that (A) is made in opposition to, or is in competition or inconsistent with, the Acquisition or the Acquisition Agreement that is consistent with the Acquisition Agreement, (B) relates to an alternative Acquisition Transaction (which for all purposes of this Agreement, shall be as defined in the Letter Agreement) or (C) could otherwise prevent, impede or delay the consummation of the Acquisition or the other transactions contemplated by the Acquisition Agreement; provided, however, that the obligations in this Section 2.1 and Sections 2.2-2.4 shall terminate 48 hours after BMG or the Shareholder notifies the Acquirer in writing that it has determined that an Acquisition Proposal is a Superior Proposal; and provided further, that the Shareholder’s obligations under this Section 2.1 shall be subject to satisfaction of the following conditions: (i) the per share consideration payable pursuant to the Acquisition Agreement to Shareholder in respect of its Owned Shares shall not be less than the greater of the following amounts: (X) .016925 shares of Royal Gold common stock par value $0.01 per share (“Acquirer Common Stock”) registered under United States securities laws at the time of their issuance to the Shareholder (the “Exchange Amount”); or (Y) the highest price paid by Acquirer to any other shareholder of BMG at any time during the ninety (90) days prior to the date that the shareholders of BMG approve the Acquisition and the Acquisition Agreement; (ii) the Acquisition shall be consummated by no later than October 1, 2007; and (iii) the Definitive Documentation shall be consistent with the principal terms set forth in the Letter Agreement. For purposes of this Agreement, “Superior Proposal” means either of the following: (i) a Superior Proposal, as defined in the Acquisition Agreement, or if not so defined, a bona fide written and publicly announced Acquisition Proposal that the Board of Directors of BMG concludes in good faith is more favorable to the shareholders of BMG than the transaction contemplated by the Acquisition Agreement and in respect of which BMG has notified the Acquirer at least 48 hours prior written notice that it intends to withdraw or modify in any manner adverse to Acquirer any recommendation made to BMG’s shareholders in favor of the Acquisition or the Acquisition Agreement or that it does not intend to recommend the Acquisition Transaction, as applicable; or (ii) a bona fide written offer from an arm’s length third party (not

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received in violation of Section 2.4) pursuant to which the Shareholder will receive a per share purchase price at least 7.5% higher than the per share consideration specified in the Acquisition Agreement.

2.2. Proxies. Each Shareholder hereby revokes any and all previous proxies granted with respect to its Owned Shares. By entering into this Agreement, each Shareholder hereby grants a proxy appointing Acquirer and each of its designees, and each of them individually, as such Shareholder’s attorney-in-fact and proxy, with full power of substitution, for and in such Shareholder’s name, to be counted as present, vote, consent, dissent or withhold consent or otherwise to act on behalf of the Shareholder with respect to its Owned Shares in favor of the Acquisition and Acquisition Agreement and otherwise in the manner contemplated by, and to give effect to, Section 2.1. The proxy granted by each Shareholder pursuant to this Section 2.2 is irrevocable and coupled with an interest, and is granted in order to secure such Shareholder’s performance under this Agreement and also in consideration of Acquirer and entering into the Acquisition Agreement. If any Shareholder fails for any reason to be counted as present, consent or vote such Shareholder’s Owned Shares in accordance with the requirements of Section 2.1 above (or anticipatorily breaches such section), then Acquirer shall have the right to cause to be present, consent or vote such Shareholder’s Owned Shares in accordance with the provisions of Section 2.1.

2.4. No Solicitation. The Shareholder agrees that it shall not, directly or indirectly, initiate, solicit, facilitate or encourage (including by way of furnishing information or assistance, or take any other action to facilitate, any inquiries or the making of any proposal that constitutes , or reasonably may be expected to lead to, an Acquisition Transaction, (an “Acquisition Proposal”) or enter into or maintain discussions or negotiate with any person in furtherance of or relating to such inquiries or to obtain an Acquisition Transaction, or agree to, enter into any agreement regarding or endorse any Acquisition Transaction. The Shareholder shall promptly advise Acquirer in writing of any such inquiries or proposals of which a senior officer of the Shareholder becomes aware. The Shareholder will immediately cease and cause to be terminated any existing activities, discussions or negotiations with any parties conducted prior to the date of this Agreement with respect to any of the foregoing.

2.5 Option. The Shareholder hereby grants Acquirer an irrevocable option (the “Option”) to purchase all of the Owned Shares, in the manner set forth below, at an exercise price per share (the “Option Price”) equal to the greater of: (i) the Exchange Amount; (ii) the per share consideration offered pursuant to the Superior Proposal, if applicable; and (iii) the highest price paid by Acquirer to any other shareholder of BMG at any time during the ninety (90) days prior to the date that the shareholders of BMG approve the Acquisition and the Acquisition

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Agreement. In the event that the Acquirer wishes to exercise the Option, Acquirer shall deliver written notice (the “Exercise Notice”) to the Shareholder specifying its intention to exercise the Option and setting forth the date and time for the closing of such purchase (an “Option Closing”) not less than three nor more than 30 days after the date such Exercise Notice is given; provided, however, that if any waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder applicable to the Acquisition or the purchase of the Owned Shares pursuant to the Option shall not have expired or terminated by the date specified in the Exercise Notice for the Option Closing, then the Option Closing shall occur within one business day following such expiration or termination. Any Option Closing shall be held at the offices of Hogan & Hartson L.L.P., One Tabor Center, 1200 Seventeenth Street, Suite 1500, Denver, CO 80202. At any Option Closing hereunder, upon receipt of payment of the Option Price, the Shareholder will deliver to Acquirer or its designee a certificate or certificates representing the number of validly issued, fully paid and non-assessable Owned Shares so purchased, in the denominations and registered in such names designated to the Shareholder in writing by Acquirer, along with all appropriate and effective instruments of transfer. For avoidance of doubt, in the event of any change in the number of outstanding BMG Common Shares by reason of any stock dividend, stock split, recapitalization, merger, rights offering, share exchange or other change in the corporate or capital structure of BMG, Acquirer shall receive, and the Shareholders shall deliver, upon exercise of the Option, the stock or other securities, cash or property to which Acquirer would have been entitled if it had exercised the Option and had been a holder of record of BMG Common Stock on the record date fixed for determination of holders of BMG Common Shares entitled to receive such stock or other securities, cash or property and the Option Price shall be adjusted appropriately. The Option shall expire upon the earliest of the following dates: (i) the date that is six (6) months after the date hereof; (ii) the date that is five (5) business days after the date on which the Acquirer is notified by BMG or the Shareholder in writing that it has determined that an Acquisition Proposal is a Superior Proposal (or if fewer than five (5) business days remain before any meeting of shareholders of BMG where the Acquisition or a Superior Proposal is to be voted on, then the date preceeding the date of that meeting), provided, however, that in no event shall the Shareholder vote such shares in favor of a Superior Proposal until the expiration of the Option; (iii) the date on which this Agreement is terminated, unless in each of cases (i-iii), an Exercise Notice was delivered to the Shareholder prior to the expiration of the Option.

2.6 Resale of Acquirer Common Stock. In connection with any underwritten public offering of Acquirer Common Stock, and so long as the Shareholder owns 100,000 or more Acquirer Common Stock, the Shareholder agrees that such Shareholder shall execute a customary “lock-up” agreement in the form and for the term requested by the underwriter(s) for such offering. Each Shareholder further agrees not to sell, in any one trading day, any Acquirer Common Stock in excess of 25% of the average daily trading volume of the Acquirer Common Stock on the NASDAQ Global Select Market during the 20 day period immediately preceding the date on which such trade occurs; provided, however, that the foregoing restriction shall not apply to any transaction in which the Shareholder sells any such Acquirer Common Stock pursuant to a block trade.

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III. REPRESENTATIONS AND WARRANTIES

3.1. Representations and Warranties of Shareholders. Each Shareholder, severally and not jointly, represents and warrants to Acquirer, as of the date of this Agreement, that (i) this Agreement has been duly authorized, executed and delivered by such Shareholder and constitutes the valid and binding agreement of such Shareholder, enforceable against such Shareholder in accordance with its terms; (ii) such Shareholder is the record and beneficial owner of the Owned Shares set forth below such Shareholder’s name on the signature page hereto (which for purposes of this Section 3.1 and the signature pages hereto shall exclude any BMG Common Shares issuable upon conversion of the Debentures and any other Owned Shares acquired by such Shareholder after the date hereof), with sole voting and dispositive power over such Owned Shares; (iii) such Owned Shares are the only voting securities or interests in BMG owned (beneficially or of record) by such Shareholder; (iv) such Owned Shares are owned by such Shareholder free and clear of all liens, charges, encumbrances, agreements and commitments of every kind, other than as expressly set forth herein; and (v) neither the execution or delivery of this Agreement nor the consummation by such Shareholder of the transactions contemplated hereby will violate any provisions of any law or order, injunction, decree or judgment applicable to such Shareholder or any contract, agreement or other commitment to which such Shareholder is a party or by which such Shareholder or any of such Shareholder’s properties or assets (including such Owned Shares) is bound, other than such violations of contracts, agreements or commitments as would not prevent, impede or delay the performance by Shareholder of his or its obligations hereunder or impose any liability or obligation on BMG or Acquirer or any subsidiaries or affiliates thereof.

3.2. Representations and Warranties of Acquirer. Acquirer represents and warrants to each Shareholder, as of the date of this Agreement, that (i) this Agreement has been duly authorized, executed and delivered by the Acquirer and constitutes the valid and binding agreement of the Acquirer, enforceable against the Acquirer in accordance with its terms; and (ii) neither the execution or delivery of this Agreement nor the consummation by Acquirer of the transactions contemplated hereby will violate any provisions of any law or order, injunction, decree or judgment applicable to Acquirer or any contract, agreement or other commitment to which Acquirer is a party or by which Acquirer or any of Acquirer’s properties or assets is bound, other than such violations of contracts, agreements or commitments as would not prevent, impede or delay the performance by Acquirer of its obligations hereunder or impose any liability or obligation on Acquirer or any subsidiaries or affiliates thereof.

IV. ADDITIONAL COVENANTS

4.1. Waiver of Dissenters’ Rights. Notwithstanding any provision in the Acquisition Agreement to contrary, each Shareholder hereby waives, and shall cause the record holders (if different from such Shareholder) of any Owned Shares Beneficially Owned by such Shareholder to waive, dissenters’ rights, if any, that such Shareholder or such record holder may have under applicable law in connection with the Acquisition and the transactions contemplated by the Acquisition Agreement.

4.2. Disclosure. In the event that the Acquirer desires to make any announcement or public disclosure of any information relating to this Agreement or the Acquisition that identifies

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the Shareholder, and the announcement or disclosure of the identity or other information about the Shareholder is required by United States or Canadian securities laws or applicable stock exchange rules, the Shareholder shall have the right to review and comment on such disclosure prior to Acquirer’s announcement or disclosure of such information. In the event that the Acquirer desires to make any announcement or public disclosure of any information relating to this Agreement or the Acquisition that identifies the Shareholder, and the announcement or disclosure of the identity or other information about the Shareholder is not otherwise required by United States or Canadian securities laws or applicable stock exchange rules, the Shareholder shall have the right to review and approve such disclosure prior to Acquirer’s announcement or disclosure of such information.

4.3. Non-Interference; Further Assurances. Each Shareholder agrees that, except as otherwise expressly permitted hereunder, such Shareholder shall not take any action that would make any representation or warranty of such Shareholder contained herein untrue or incorrect or have the effect of preventing, impeding, interfering with or adversely affecting the performance by such Shareholder of its obligations under this Agreement in any material respect. Each Shareholder agrees to execute and deliver such additional documents and to take such further actions as necessary or reasonably requested by Acquirer to confirm and assure the rights and obligations set forth in this Agreement or to consummate the transactions contemplated by this Agreement. If requested by Acquirer prior to the consummation of the transactions contemplated by the Acquisition Agreement, each Shareholder agrees to execute a letter to Acquirer representing that such Shareholder has complied with such Shareholder’s obligations hereunder as of the date of such letter.

4.4 Acquirer Common Stock. Acquirer agrees that all shares of Acquirer Common Stock constituting the Option Price issuable hereunder and all shares of Acquirer Common Stock issuable in connection with the Acquisition shall not be subject to resale restrictions (other than as set forth in Section 2.6) and shall be registered under United States securities laws at the time of their issuance to the Shareholder.

V. GENERAL

5.2. No Third Party Beneficiaries. This Agreement is not intended to confer any rights or remedies upon any Person other than the parties to this Agreement.

5.3. Governing Law. This Agreement and any controversies arising with respect hereto shall be construed in accordance with and governed by the law of the State of New York (without regard to principles of conflict of laws that would apply the law of another jurisdiction).

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5.7. Amendments. This Agreement may not be amended except by written agreement signed by Acquirer and by each Shareholder.

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5.13. Effectiveness and Termination. This Agreement will become effective when each party hereto has executed and delivered a copy hereof to the other party. This Agreement shall terminate immediately (i) upon the termination of the Acquisition Agreement in accordance with its terms; (ii) upon the consummation of the Acquisition; or (iii) if the Acquisition has not been completed on or prior to October 1, 2007. Upon the termination of this Agreement, none of the parties hereto shall have any further obligations or liabilities hereunder except for (A) any rights any party may have in respect of any breach hereof by another party hereto, and (B) if the Acquirer has delivered an Exercise Notice prior to the date on which such termination is effective, the rights and obligations of the parties in respect of the exercise of such Option (including any representations, warranties and covenants applicable thereto) shall continue until the date of such Option Closing or until such Option is otherwise terminated, and (C) the rights and obligations pursuant to Section 2.6 and Section 4.2.

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papers in connection with any such action or proceeding in the manner provided in Section 5.1 or in such other manner as may be permitted by applicable laws, will be valid and sufficient service thereof.

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IN WITNESS WHEREOF, each party hereto has caused this Agreement to be signed as of the date first above written.


ROYAL GOLD, INC.
By:	/s/ Tony Jensen
	Name:	Tony Jensen
	Title:	President and Chief Executive Officer


		Notice Address: 1660 Wynkoop Street Suite 1000 Denver, Colorado 80202-1132 Attn: Tony Jensen

(Shareholder signature pages follow)


		SHAREHOLDERS

		Name:		IAMGOLD Corporation
		Signatory:		/s/ Grant Edey

		Title, if applicable:		CFO

		Owned Shares:		12102940 + CONV. DEB


		Notice Address:

EX-99.3 4 d44652exv99w3.htm LETTER AGREEMENT exv99w3

Exhibit 99.3

1660 Wynkoop St., Suite 1000
Denver, Colorado 80202-1132
(303) 573-1660
FAX (303) 595-9385
www.royalgold.com
Email: royalgold@royalgold.com

February 28, 2007

Private and Confidential

Battle Mountain Gold Exploration Corp.
One East Liberty Street
Sixth Floor, Suite 9
Reno, Nevada 89504
Attn: Mark D. Kucher

Dear Mr. Kucher:

Following our prior discussions in which I advised you that Royal Gold, Inc., (“Buyer”) wishes to pursue an acquisition (the “Transaction”) of the business and operations of Battle Mountain Gold Exploration Corp. (“Battle Mountain”), we are providing this letter to provide Battle Mountain with a proposal for a Transaction as outlined below (the “Proposal”). By signing this Proposal, Battle Mountain and Buyer represent that their respective boards of directors have approved this Proposal, this letter and the agreements referenced in paragraph 3 below. This Proposal is subject to our satisfactory completion of the confirmatory due diligence outlined below, receipt of a satisfactory fairness opinion by Buyer’s board of directors, and completion of legal documentation. Assuming we receive our diligence requests and are granted access to requested personnel and assets in a timely manner, we are confident that we will complete our confirmatory due diligence and be in a position to sign a purchase agreement within 45 days following your acceptance of this Proposal.

The principal terms and conditions of the proposed Transaction are as follows:

1. The Acquisition

(a) Merger Agreement. The Transaction will be subject to the terms of a merger agreement (“Definitive Agreement”) in customary form that is acceptable to both Buyer and Battle Mountain. The parties agree to structure the transaction as a stock for stock merger.

(b) Consideration. The purchase price will be payable at Closing with 1,570,507 shares of Buyer’s common stock in exchange for all shares of Battle Mountain

(on a fully-diluted basis). Buyer’s common stock will have been registered with the United States Securities and Exchange Commission (“SEC”) and approved for listing on NASDAQ and the Toronto Stock Exchange.

(c) Closing. The closing of the Transaction (“Closing”) would take place on October 1, 2007, or such other date as the parties mutually agree in writing.

2. Definitive Agreement.

The Transaction would take place pursuant to the terms of a Definitive Agreement which will be in customary form and satisfactory to the parties thereto and their respective counsel. Among other things, the Definitive Agreement will contain:

(a) Representations and Warranties of Battle Mountain. Customary representations and warranties regarding Battle Mountain covering among other things: (i) the accuracy of all financial statements in accordance with GAAP submitted to Buyer, and all reports filed with the SEC since December 31, 2003 are accurate in all material respects and comply with all applicable legal requirements; (ii) the absence of undisclosed liabilities; (iii) the absence of any material adverse change since September 30, 2006; (iv) Battle Mountain’s title to its assets, free of all liens and encumbrances; (v) compliance with all laws and governmental regulations applicable to Battle Mountain’s business and operations, including, without limitation, all laws and regulations relating to environmental and labor matters; and (vi) the absence of undisclosed claims, litigation, infringement and contract defaults.

(b) Representations and Warranties of Buyer. Customary representations and warranties of Buyer.

(c) Interim Operations. Customary covenants prohibiting Battle Mountain from engaging in transactions outside the ordinary course of its business prior to the Closing without Buyer’s prior written consent, including prohibitions on the declaration and payment of dividends, the incurrence of additional debt, or the issuance of additional securities (including without limitation taking any additional amounts out of the existing escrow in connection with the sale of common stock). Battle Mountain will also agree to obtain stockholder approval of the Definitive Agreement by written consent of stockholders in lieu of a meeting by the requisite vote to approve the Transaction simultaneously with the execution of the Definitive Agreement.

(d) “No-Shop” and Break-Up Fee Provisions. “No-shop” and break-up fee provisions consistent with those in this letter.

(e) Closing Conditions. Customary conditions to the obligations of the parties to complete the Transaction at the Closing, which shall include, but not be limited to, the following conditions to Buyer’s obligation to complete the Transaction: (i) the absence of any material adverse change in the business, assets, properties, liabilities or condition of Battle Mountain prior to the Closing; (ii) the accuracy of the parties’ representations and warranties; (iii) receipt of all necessary clearance, consents and approvals of governmental agencies and third parties, including any required stockholder approval by Battle Mountain; and (iv) receipt of satisfactory title opinions concerning Battle Mountain’s royalty properties and satisfactory completion of any due diligence review identified in paragraph 4 below which is not finalized prior to execution of the Definitive Agreement.

(f) Non-Competition. Customary covenants by Mark D. Kucher and David Atkinson not to compete with the business and operations of Buyer for a period of three years from the later of the date of Closing or the date of payout under their respective existing employment agreements.

3. Option and Voting Agreements. This Proposal is subject to Buyer being able to reach a satisfactory agreement with Mark D. Kucher regarding a 12-month option to acquire his shares in Battle Mountain for the same per share consideration contemplated by this Proposal and an agreement to vote in favor of and support this Transaction.

4. Due Diligence Review.

(a)

As discussed above, Buyer’s willingness to proceed with the Transaction is subject to the satisfactory completion of a review by Buyer of the business, technical, financial and legal affairs of Battle Mountain. Such review shall include, but not be limited to:

	(i)		Completion of commercial, tax and financial due diligence;

	(ii)		Review of all of such geological, metallurgical, and other technical data and information, including operations, reserve information and exploration data, as is (A) under Battle Mountain’s control, or (B) made available to Buyer by the operators of Battle Mountain’s royalty properties (which data and information shall be provided to Battle Mountain in the event that Buyer does not proceed with the Transaction), the condition of the assets, and related matters;

	(iii)		Completion of legal due diligence, including review of Battle Mountain’s corporate books and records, all contracts and agreements of Battle

			Mountain, including but not limited to all agreements relating to royalty interests and other interests in lands, leases, employment contracts, marketing contracts, loan and credit agreements, and other agreements, and review of surface and mineral titles; and

	(iv)		Interviews with management personnel and the operators of Battle Mountain’s royalty properties.

(b)

Battle Mountain acknowledges that the additional royalty on the Dolores property (“Dolores Royalty”) and the interests (“Interest A”) described in Section 1 of Schedule A to the February 21, 2007 Nondisclosure Agreement between the parties, as amended by letter agreement dated February 24, 2007 (“Nondisclosure Agreement”), each of which Battle Mountain expects to acquire within 35 days following the date of this letter, are each assets that have a value material to Buyer’s determination of the consideration to be paid in the Transaction.

	(i)		Buyer shall have no obligation to proceed with the Transaction, and Buyer shall be entitled to receive all break-up fees and all other fees and expenses described in paragraph 6(a) below if Battle Mountain has not completed its acquisition of the Dolores Royalty prior to the expiration of this letter.

	(ii)		Buyer shall have no obligation to proceed with the Transaction, and Buyer shall be entitled to receive the fees and expenses, but not the break-up fees, described in paragraph 6(a) below if Battle Mountain has not completed its acquisition of Interest A prior to the expiration of this letter.

	(c)		Battle Mountain also agrees to use its immediate and best commercial efforts to enter into a binding definitive agreement, acceptable to Buyer, to acquire the interests (“Interest B”) described in Section 4 of Schedule A to the Nondisclosure Agreement. The purchase price to be paid at Closing will not increase or decrease based on Battle Mountain’s success, or lack of success, in entering into such definitive agreement.

	(d)		Battle Mountain agrees to cooperate in facilitating Buyer’s completion of due diligence, including without limitation obtaining access to Battle Mountain’s royalty properties and their operators, obtaining access to due diligence information developed by Battle Mountain’s lenders, and assisting with such other matters as Buyer reasonably may request. Buyer acknowledges that the operator of the Dolores project may not agree to give Buyer access to that project.

5. No Solicitation of Competing Proposals; Other Prohibitions. During the period beginning on the date Battle Mountain counter-signs this letter and ending on the expiration of this letter, Battle Mountain will not (and will not cause or permit any of its subsidiaries, affiliates, officers, directors, employees, agents and representatives to) (i) solicit, initiate or encourage the submission of any proposal or offer from any person, corporation, partnership or other entity or group (other than Buyer or its affiliates) regarding any acquisition of Battle Mountain, any merger or consolidation with or involving Battle Mountain, or any acquisition of any material portion of the assets, capital stock or business of Battle Mountain (an “Acquisition Transaction”), including by way of providing information to, or negotiating with, third parties; (ii) declare or pay any dividends; (iii) incur additional debt; or (iv) issue additional securities (including without limitation taking any additional amounts out of the existing escrow in connection with the sale of common stock).

Battle Mountain shall immediately advise Buyer in writing of the receipt by Battle Mountain, or by any of its affiliates or any of its officers, directors, employees, agents or representatives, of any offers or proposals relating to an Acquisition Transaction, which notice shall include the terms of such Acquisition Transaction and copies of any written materials containing or relating to such proposals.

6. Break-Up Fees.

(a) In the event that either party shall breach any provision of this letter, the breaching party shall pay to the non-breaching party a break-up fee of $1,000,000 plus reimbursement of the non-breaching party’s fees and expenses (including, without limitation, legal, accounting, and technical fees and expenses) incurred in connection with this Proposal and the proposed Transaction.

(b) In the event that within 12 months of the expiration of this letter, Battle Mountain enters into a definitive agreement with respect to an alternative Acquisition Transaction, then Battle Mountain shall pay to Buyer an additional break-up fee of $2,500,000 plus reimbursement of Buyer’s fees and expenses (including, without limitation, legal and accounting) incurred in connection with this Proposal and the proposed Transaction to the extent not already paid to Buyer under paragraph 6(a). This paragraph 6(b) shall not apply if Buyer terminates this letter, or if Buyer and Battle Mountain mutually agree in writing to terminate this letter.

7. Press Releases, Etc. The parties will consult with each other as to the timing and content of any announcements, press releases or public statements concerning the proposed Transaction. Notwithstanding any other agreement between the parties, including the Nondisclosure Agreement, the parties agree that they may make any disclosure relating to this letter and the

Transaction to the extent that such disclosure is necessary and advisable in order to comply with any law, rule or regulation applicable to such party.

8. Effect of this Agreement. This letter is a statement of the intentions of the parties and, except for the provisions of paragraphs 4(b), 4(c), 4(d), 5, 6, 7, 10, 11 and this paragraph 8 (which are intended to be binding legal agreements), is not intended to be a legally binding agreement or to create rights in favor of either party with respect to the proposed Transaction or the other transactions contemplated hereby. The obligations of the parties to consummate the transactions contemplated hereby shall be subject in all respects to the negotiation, execution and delivery of the Definitive Agreement referred to above and to the satisfaction of the conditions contained therein, and neither of the parties hereto shall have any liability to the other except for any breach of paragraphs 4(b), 4(c), 4(d), 5, 6, 7 or this paragraph 8 if we fail for any reason to execute a Definitive Agreement. In the event that the parties do not execute a Definitive Agreement, except as provided in paragraph 6 hereof, each party will bear its own fees and expenses incurred in connection with this Proposal and the proposed Transaction including all legal, accounting and financial advisory fees and expenses. This letter constitutes the entire agreement and supersedes all other prior agreements, understandings, representations and warranties, both written and oral, among the parties to this letter with respect to the subject matter hereof.

9. Bridge Facility. Buyer agrees to negotiate with Battle Mountain to provide Battle Mountain a bridge loan facility of up to $20,000,000 bearing interest at LIBOR plus 3% which shall be secured by Battle Mountain’s assets in a manner satisfactory to Buyer. The entire outstanding principal and accrued interest shall be convertible at any time at the election of Buyer into Battle Mountain common stock at $0.60 per common share. The definitive loan agreement shall provide that proceeds of the loan may be used only for (i) repayment of the Macquarie Bank bridge facility in amounts up to $4,300,000; (ii) acquisition of the Dolores Royalty referenced in paragraph 4(b) above for amounts up to $9,450,000; (iii) acquisition of Interest A referenced in paragraph 4(b) above for amounts up to $5,000,000; and (iv) acquisition of Interest B referenced in paragraph 4(c) above for amounts up to $3,500,000. In the event that Interest A is not acquired as provided therein, the principal amount of the bridge loan facility to be negotiated would be reduced to $10,000,000. In the event such negotiations are successful, the parties shall execute a binding bridge loan term sheet on or before 5:00 PM PST on February 28, 2007, and shall use their best commercial efforts to execute the definitive loan agreement and related documentation for such bridge facility on or prior to March 9, 2007. If the binding bridge loan term sheet is not executed by both parties prior to the February 28, 2007 deadline, then this letter shall terminate and, in the absence of bad faith or breach of paragraph 5 above, neither party shall have any duty or obligation to the other, including any obligation to pay any fees or expenses pursuant to paragraph 6 above. In the event that a binding bridge loan term sheet is timely executed, but the definitive loan agreement and related documentation are not executed prior to March 22, 2007, then Buyer nonetheless shall fund in accordance with the

binding bridge loan term sheet and the parties shall continue to work diligently toward a closing on the definitive loan agreement documentation.

10. Governing Law. This letter, the rights and obligations of the parties hereto, and any claims or disputes relating thereto, shall be governed by and construed in accordance with the laws of the State of Colorado.

11. Expiration. This letter shall expire and be of no further force and effect on the first to occur of (i) 45 days following the date Battle Mountain counter-signs this letter, (ii) the execution of a Definitive Agreement, (iii) the date, if any, that Buyer advises Battle Mountain in writing that it no longer has an interest in pursuing the Transaction; or (iv) this letter terminates in accordance with paragraph 9 above, except for the provisions of paragraphs 4(b), 6, 7, 8 and 10 which shall survive the expiration of this letter.

If Battle Mountain is prepared to proceed on the basis of this letter, please execute the enclosed copy in the space indicated below and return it to the undersigned. The terms of this proposal will expire unless it is accepted by 5:00 PM PST on February 28, 2007.


	Very truly yours, ROYAL GOLD, INC.
	By:	/s/ Tony Jensen
		Tony Jensen
		President and Chief Executive Officer

AGREED TO AND ACCEPTED:
BATTLE MOUNTAIN GOLD EXPLORATION CORP.


By:		/s/ Mark D. Kucher Mark D. Kucher
		Chairman
Date: February 28, 2007

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