Exhibit 10.2

 

Option No.:                 

 

ROYAL GOLD, INC.

2004 OMNIBUS LONG-TERM INCENTIVE PLAN

 

INCENTIVE STOCK OPTION AGREEMENT

 

Royal Gold, Inc., a Delaware corporation (the “Company”), hereby grants an
option to purchase shares of its common stock, $.01 par value, (the “Stock”) to
the optionee named below.  The terms and conditions of the option are set forth
in this cover sheet, in the attachment, and in the Company’s 2004 Omnibus
Long-Term Incentive Plan (the “Plan”).

 

Grant Date:

 

 

 

Name of Optionee:

 

 

 

Optionee’s Social Security Number:

 

 

 

Number of Shares Covered by Option:

 

 

 

Option Price per Share:

(At least 100% of Fair Market Value)

 

By signing this cover sheet, you agree to all of the terms and conditions
described in the attached Agreement and in the Plan, a copy of which is
available upon request to the Corporate Secretary.  You acknowledge that you
have carefully reviewed the Plan, and agree that the Plan will control in the
event any provision of this Agreement should appear to be inconsistent.

 

Optionee:

 

 

 

(Signature)

 

 

 

 

Company:

 

 

 

(Signature)

 

 

 

 

Title:

President and Chief Executive Officer

 

 

Attachment

 

This is not a stock certificate or a negotiable instrument.

 

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Incentive Stock Option

 

This option is intended to be an incentive stock option under Section 422 of the
Internal Revenue Code and will be interpreted accordingly. If you cease to be an
employee of the Company, its parent or a Subsidiary (“Employee”) but continue to
provide Service, this option will be deemed a nonstatutory stock option three
months after you cease to be an Employee. In addition, to the extent that all or
part of this option exceeds the $100,000 rule of Section 422(d) of the Internal
Revenue Code, this option or the lesser excess part will be deemed to be a
nonstatutory stock option.

 

 

 

Vesting

 

This option is only exercisable before it expires and then only with respect to
the vested portion of the option. Subject to the preceding sentence, you may
exercise this option, in whole or in part, to purchase a whole number of vested
shares not less than 100 shares, unless the number of shares purchased is the
total number available for purchase under the option, by following the
procedures set forth in the Plan and below in this Agreement.

 

 

 

 

 

Your right to purchase shares of Stock under this option vests as to one-third
(1/3) of the total number of shares covered by this option, as shown on the
cover sheet, on each of the first, second and third anniversaries of the Grant
Date, provided you then continue in Service. The resulting aggregate number of
vested shares will be rounded to the nearest whole number, and you cannot vest
in more than the number of shares covered by this option.

 

 

 

 

 

No additional vesting shall occur after your Service has terminated for any
reason.

 

 

 

Termination after

Long-Term Service

 

 

Notwithstanding the foregoing vesting rules, if you incur a termination of
Service by the Company other than for “Cause” (as defined in the Employment
Agreement), at any time after you have provided fifteen (15) years of Service to
the Company, you shall be one hundred percent (100%) vested in this option as of
the date of such termination of Service.

 

 

 

Termination without

Cause, Good Reason

or Non-Renewal of

Employment Agreement

 

Notwithstanding the foregoing vesting rules, if (i) the Company terminates your
Service or your Employment Agreement without “Cause” (as defined in your
Employment Agreement) during the the term of your Employment Agreement, (ii) you
terminate your Service or your Employment Agreement for “Good Reason” (as

 

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defined in your Employment Agreement) during the term of your Employment
Agreement, or (iii) your Service is terminated upon the Company’s election not
to renew the term for one of the four successive one-year renewal terms pursuant
to Section 2 of your Employment Agreement, then, after the Company’s receipt of
the Severance and Release Documents (as defined in your Employment Agreement)
you shall be 100% vested in this option as of the date of the Company’s receipt
of such Severance and Release Documents.

 

 

 

 

 

As used herein, the term “Employment Agreement” shall mean that certain
Employment Agreement between you and the Company dated           , as the same
may be amended after the date hereof.

 

 

 

Term

 

Your option will expire in any event at the close of business at Company
headquarters on the day of the 10th anniversary of the Grant Date, as shown on
the cover sheet. Your option will expire earlier if your Service terminates, as
described below.

 

 

 

Regular Termination

 

If your Service terminates for any reason, other than death, Disability or
Cause, then your option will expire at the close of business at Company
headquarters on the 90th day after your termination date.

 

 

 

Termination for Cause

 

If your Service is terminated for Cause, then you shall immediately forfeit all
rights to your option and the option shall immediately expire.

 

 

 

Death

 

If your Service terminates because of your death, then your option will expire
at the close of business at Company headquarters on the date twelve (12) months
after the date of death. During that twelve month period, your estate or heirs
may exercise the vested portion of your option.

 

 

 

 

 

In addition, if you die during the 90-day period described in connection with a
regular termination (i.e., a termination of your Service not on account of your
death, Disability or Cause), and a vested portion of your option has not yet
been exercised, then your option will instead expire on the date twelve (12)
months after your termination date. In such a case, during the period following
your death up to the date twelve (12) months after your termination date, your
estate or heirs may exercise the vested portion of your option.

 

 

 

Disability

 

If your Service terminates because of your Disability, then your option will
expire at the close of business at Company

 

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headquarters on the date twelve (12) months after your termination date.

 

 

 

Leaves of Absence

 

For purposes of this option, your Service does not terminate when you go on a
bona fide employee leave of absence that was approved by the Company in writing,
if the terms of the leave provide for continued Service crediting, or when
continued Service crediting is required by applicable law. However, your Service
will be treated as terminating 90 days after you went on employee leave, unless
your right to return to active work is guaranteed by law or by a contract. Your
Service terminates in any event when the approved leave ends unless you
immediately return to active employee work.

 

 

 

 

 

The Company determines, in its sole discretion, which leaves count for this
purpose, and when your Service terminates for all purposes under the Plan.

 

 

 

Notice of Exercise

 

When you wish to exercise this option, you must notify the Company by filing the
proper “Notice of Exercise” form at the address given on the form. Your notice
must specify how many shares you wish to purchase (in a parcel of at least 100
shares generally). Your notice must also specify how your shares of Stock should
be registered (in your name only or in your and your spouse’s names as joint
tenants with right of survivorship). The notice will be effective when it is
received by the Company.

 

 

 

 

 

If someone else wants to exercise this option after your death, that person must
prove to the Company’s satisfaction that he or she is entitled to do so.

 

 

 

Form of Payment

 

When you submit your notice of exercise, you must include payment of the option
price for the shares you are purchasing. Payment may be made in one (or a
combination) of the following forms:

 

 

 

 

 

·                                          Cash, your personal check, a
cashier’s check, a money order, wire transfer or another cash equivalent
acceptable to the Company.

 

 

 

 

 

·                                          Shares of Stock which are already
owned by you. The value of the shares, determined as of the effective date of
the option exercise, will be applied to the option price.

 

 

 

 

 

·                                          By delivery (on a form prescribed by
the Company) of an irrevocable direction to a licensed securities broker
acceptable to

 

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the Company (a “Qualified Broker”) to sell Stock and to deliver all or part of
the sale proceeds to the Company in payment of the aggregate option price and
any withholding taxes (the “Net Exercise”).

 

 

 

Withholding Taxes

 

You will not be allowed to exercise this option unless you make acceptable
arrangements to pay any withholding or other taxes that may be due as a result
of the option exercise or sale of Stock acquired under this option. In the event
that the Company determines that any federal, state, local or foreign tax or
withholding payment is required relating to the exercise or sale of shares
arising from this grant, the Company shall have the right to: (i) require such
payments from you; (ii) withhold such amounts from other payments due to you
from the Company or any Affiliate; or (iii) cause an immediate forfeiture of
shares of Stock subject to the option granted pursuant to this Agreement in an
amount equal to the withholding or other taxes due.

 

 

 

Transfer of Option

 

During your lifetime, only you (or, in the event of your legal incapacity or
incompetency, your guardian or legal representative) may exercise the option.
You cannot transfer or assign this option. For instance, you may not sell this
option or use it as security for a loan. If you attempt to do any of these
things, this option will immediately become invalid. You may, however, dispose
of this option in your will or it may be transferred upon your death by the laws
of descent and distribution.

 

 

 

 

 

Regardless of any marital property settlement agreement, the Company is not
obligated to honor a notice of exercise from your spouse, nor is the Company
obligated to recognize your spouse’s interest in your option in any other way.

 

 

 

Retention Rights

 

Neither your option nor this Agreement give you the right to be retained by the
Company (or any parent, Subsidiaries or Affiliates) in any capacity. The Company
(and any parent, Subsidiaries or Affiliates) reserve the right to terminate your
Service at any time and for any reason.

 

 

 

Shareholder Rights

 

You, or your estate or heirs, have no rights as a shareholder of the Company
until a certificate for your option’s shares has been issued (or an appropriate
book entry has been made). No adjustments are made for dividends or other rights
if the applicable record date occurs before your stock certificate is issued (or
an appropriate book entry has been made), except as described in the Plan.

 

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Forfeiture of Rights

 

If you should take actions in competition with the Company, the Company shall
have the right to cause a forfeiture of your rights, including, but not limited
to, the right to cause: (i) a forfeiture of any outstanding option, and (ii)
with respect to the period commencing twelve (12) months prior to your
termination of Service with the Company and ending twelve (12) months following
such termination of Service (A) a forfeiture of any gain recognized by you upon
the exercise of an option or (B) a forfeiture of any Stock acquired by you upon
the exercise of an option (but the Company will pay you the option price without
interest). Unless otherwise specified in an employment or other agreement
between the Company and you, you take actions in competition with the Company if
you directly or indirectly, own, manage, operate, join or control, or
participate in the ownership, management, operation or control of, or are a
proprietor, director, officer, stockholder, member, partner or an employee or
agent of, or a consultant to any business, firm, corporation, partnership or
other entity that is in the business of creating, financing, acquiring,
investing in and managing precious metal royalties, precious metal streams and
similar interests. Under the prior sentence, ownership of less than 1% of the
securities of a public company shall not be treated as an action in competition
with the Company.

 

 

 

Adjustments

 

In the event of a stock split, a stock dividend or a similar change in the
Stock, the number of shares covered by this option and the option price per
share shall be adjusted (and rounded down to the nearest whole number) if
required pursuant to the Plan. Your option shall be subject to the terms of the
agreement of merger, liquidation or reorganization in the event the Company is
subject to such corporate activity.

 

 

 

Applicable Law

 

This Agreement will be interpreted and enforced under the laws of the State of
Delaware, other than any conflicts or choice of law rule or principle that might
otherwise refer construction or interpretation of this Agreement to the
substantive law of another jurisdiction.

 

 

 

The Plan

 

The text of the Plan is incorporated in this Agreement by reference. Certain
capitalized terms used in this Agreement are defined in the Plan, and have the
meaning set forth in the Plan.

 

 

 

 

 

This Agreement and the Plan constitute the entire understanding between you and
the Company regarding this option. Any prior agreements, commitments or
negotiations concerning this option are superseded.

 

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Other Agreements

 

You agree, as a condition of the grant of this option, that in connection with
the exercise of the option, you will execute such document(s) as necessary to
become a party to any shareholder agreement or voting trust as the Company may
require.

 

 

 

Data Privacy

 

In order to administer the Plan, the Company may process personal data about
you. Such data includes but is not limited to the information provided in this
Agreement and any changes thereto, other appropriate personal and financial data
about you such as home address and business addresses and other contact
information, payroll information and any other information that might be deemed
appropriate by the Company to facilitate the administration of the Plan.

 

 

 

 

 

By accepting this option, you give explicit consent to the Company to process
any such personal data. You also give explicit consent to the Company to
transfer any such personal data outside the country in which you work or are
employed, including, with respect to non-U.S. resident optionees, to the United
States, to transferees who shall include the Company and other persons who are
designated by the Company to administer the Plan.

 

 

 

Consent to Electronic

Delivery

 

 

The Company may choose to deliver certain statutory materials relating to the
Plan in electronic form. By accepting this option grant you agree that the
Company may deliver the Plan prospectus and the Company’s annual report to you
in an electronic format. If at any time you would prefer to receive paper copies
of these documents, as you are entitled to, the Company would be pleased to
provide copies. Please contact the Secretary at 303-573-1660 to request paper
copies of these documents.

 

 

 

Certain Dispositions

 

If you sell or otherwise dispose of Stock acquired pursuant to the exercise of
this option sooner than the one year anniversary of the date you acquired the
Stock, then you agree to notify the Company in writing of the date of sale or
disposition, the number of share of Stock sold or disposed of and the sale price
per share within 30 days of such sale or disposition.

 

 

 

Stock Ownership

Requirements

 

 

You are required to continue to hold an aggregate of fifty percent (50%) of the
shares of Stock acquired by you pursuant to this option grant together with all
other shares of Stock acquired by you pursuant to any other option grant made
under the Plan (such 50% to be determined after reducing the shares of Stock
covered by this grant and all other option grants made to you under the Plan

 

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by the number shares of Stock equal in value to the amount required to be
withheld to pay taxes in connection with the exercise of this option and such
other option grants) until the number of shares of Stock owned by you equals or
exceeds         . If the number of shares of Stock owned by you exceeds
        , you may dispose of the shares of Stock acquired pursuant to this
option grant as long as you continue to own at least            shares of Stock
after the disposition.

 

 

 

Market Stand-off

 

 

Agreement

 

In connection with any underwritten public offering by the Company of its equity
securities pursuant to an effective registration statement filed under the
Securities Act, you agree not to sell, make any short sale of, loan,
hypothecate, pledge, grant any option for the purchase of, or otherwise dispose
or transfer for value or agree to engage in any of the foregoing transactions
with respect to any shares of Stock without the prior written consent of the
Company or its underwriters, for such period of time after the effective date of
such registration statement as may be requested by the Company or the
underwriters (not to exceed 180 days in length).

 

By signing the cover sheet of this Agreement, you acknowledge that you have
received, read and understand the Plan and this Agreement, and agree to abide by
and be bound their terms and conditions.

 

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NOTICE OF EXERCISE

ROYAL GOLD, INC.

2004 OMNIBUS LONG-TERM INCENTIVE PLAN

INCENTIVE STOCK

 

Royal Gold, Inc.

1660 Wynkoop Street, Suite 1000

Denver, CO  80202

 

Attention:  Corporate Secretary

 

1.                                      Exercise of Option.  Effective as of
today,                                 ,             , the undersigned
(“Purchaser”) hereby elects to purchase                              shares of
Common Stock (the “Shares”) of Royal Gold, Inc. (the “Company”) under and
pursuant to the 2004 Omnibus Long-Term Incentive Plan (the “Plan”) and the
Incentive Stock Option Agreement dated                    (the “Option
Agreement”).  The purchase price for the Shares shall be            per share,
as required by the Option Agreement.

 

2.                                      Delivery of Payment.  Purchaser herewith
delivers to the Company the full purchase price for the Shares as follows. 
(Check all that apply and complete as appropriate.  The total payment must equal
the purchase price of the Shares.)

 

o                                                cash in the amount of
$                    .

 

o                                                check in the amount of
$                    .

 

o                                                wire transfer in the amount of
$                    .

 

o                                                by surrender of shares owned
with a value of $                     represented by certificate number
                    .

 

o                                                Net Exercise through a
Qualified Broker (as defined under “Form of Payment” in the Option Agreement).

 

3.                                      Share Registration.  The Shares are to
be registered (Check one only):

 

o                                                in Purchaser’s name, or

 

o                                                in Purchaser’s name and the
name of Purchaser’s spouse, as joint tenants with right of survivorship

 

Purchaser’s spouse’s name:

 

Spouse’s Social Security No.:           -        -

 

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4.                                      Share Delivery.  If the Shares are to be
delivered to your account at a brokerage firm, then please provide the following
information (the Shares will not be delivered in “street name” under any
circumstances).  If you leave this area blank, the Shares will be delivered in
certificate form to your address on record:

 

Broker name:

Broker address:

 

 

Contact name:

 

 

 

Contact number: (          )           -

 

 

 

DTC number:

 

 

5.                                      Representations of Purchaser.  Purchaser
acknowledges that Purchaser has received, read and understood the Plan and the
Option Agreement and agrees to abide by and be bound by their terms and
conditions.

 

6.                                      Rights as Shareholder.  Until the
issuance (as evidenced by the appropriate entry on the books of the Company or
of a duly authorized transfer agent of the Company) of the Shares, no right to
vote or receive dividends or any other rights as a shareholder shall exist with
respect to the Shares, notwithstanding the exercise of the Option.  The Shares
so acquired shall be issued to the Purchaser as soon as practicable after
exercise of the Option.  No adjustment will be made for a dividend or other
right for which the record date is prior to the date of issuance, except as
provided in the Plan.

 

7.                                      Market Stand-off Agreement.  In
connection with any underwritten public offering by the Company of its equity
securities pursuant to an effective registration statement filed under the
Securities Act, Purchaser agrees not to sell, make any short sale of, loan,
hypothecate, pledge, grant any option for the purchase of, or otherwise dispose
or transfer for value or agree to engage in any of the foregoing transactions
with respect to any shares of Stock without the prior written consent of the
Company or its underwriters, for such period of time after the effective date of
such registration statement as may be requested by the Company or the
underwriters (not to exceed 180 days in length).

 

8.                                      Stock Ownership Requirements.  You are
required to continue to hold fifty percent (50%) of the Shares acquired pursuant
to the Option Agreement (such 50% to be determined after reducing the Shares
covered by the Option Agreement by the number of shares of Stock equal in value
to the amount required to be withheld to pay taxes in connection with the
purchase under this Notice) until the number of Shares owned by you equals or
exceeds           .

 

9.                                      Stop-Transfer Notices.  Purchaser agrees
that, in order to ensure compliance with the restrictions referred to herein,
the Company may issue appropriate “stop transfer” instructions to its transfer
agent, if any, and that, if the Company transfers its own securities, it may
make appropriate notations to the same effect in its own records.

 

10.                               Tax Consultation.  Purchaser understands that
Purchaser may suffer adverse tax consequences as a result of Purchaser’s
purchase or disposition of the Shares.  Purchaser represents that Purchaser has
consulted with any tax consultants Purchaser

 

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deems advisable in connection with the purchase or disposition of the Shares and
that Purchaser is not relying on the Company for any tax advice.

 

11.                               Entire Agreement.  The Plan and the Option
Agreement are incorporated herein by reference.  This Agreement, the Plan and
the Option Agreement constitute the entire agreement of the parties with respect
to the subject matter hereof and supersede in their entirety all prior
undertakings and agreements of the Company and Purchaser with respect to the
subject matter hereof, and may not be modified adversely to the Purchaser’s
interest except by means of a writing signed by the Company and Purchaser.

 

 

Agreed and Accepted:

 

 

 

 

 

 

 

 

Purchaser’s Signature

 

 

 

 

 

Purchaser’s Social Security No.:         -      -

 

 

 

 

 

Purchaser’s Address:

 

 

 

 

 

 

Company’s Use:

 

 

 

 

 

 

 

Vesting Requirement Verified  o

Date Received

 

 

 

 

 

 

 

Holding Requirement Verified  o

Official’s Initials

 

 

 

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