Exhibit
10.1


 


ROYAL GOLD, INC.


 


2004 OMNIBUS LONG-TERM INCENTIVE
PLAN

Adopted on November 10, 2004, as amended


 


Royal
Gold, Inc., a Delaware corporation (the “Company”), sets forth herein the
terms of its 2004 Omnibus Long-Term Incentive Plan (the “Plan”), as follows:


 


	
  1.

  	
  PURPOSE

  



 


The
Plan is intended to enhance the Company’s and its Affiliates’ (as defined
herein) ability to attract and retain highly qualified officers, directors, key
employees, and other persons, and to motivate such officers, directors, key
employees, and other persons to serve the Company and its Affiliates and to
expend maximum effort to improve the business results and earnings of the
Company, by providing to such persons an opportunity to acquire or increase a
direct proprietary interest in the operations and future success of the
Company. To this end, the Plan provides for the grant of stock options, stock
appreciation rights, restricted stock, stock units, unrestricted stock,
dividend equivalent rights and cash awards. Any of these awards may, but need
not, be made as performance incentives to reward attainment of annual or
long-term performance goals in accordance with the terms hereof. Stock options
granted under the Plan may be non-qualified stock options or incentive stock
options, as provided herein.


 


	
  2. 

  	
  DEFINITIONS

  



 


For
purposes of interpreting the Plan and related documents (including Award
Agreements), the following definitions shall apply:


 


2.1
“Affiliate” means, with respect to
the Company, any company or other trade or business that controls, is
controlled by or is under common control with the Company within the meaning of
Rule 405 of Regulation C under the Securities Act, including, without
limitation, any Subsidiary.


 


2.2
“Annual Incentive Award” means an
Award made subject to attainment of performance goals (as described in Section 14) over a performance period
of up to one year (the fiscal year, unless otherwise specified by the
Committee).


 


2.3
“Award” means a grant of an
Option, Stock Appreciation Right, Restricted Stock, Unrestricted Stock, Stock
Unit, Dividend Equivalent Rights, or cash award under the Plan.


 


2.4
“Award Agreement” means the
written agreement between the Company and a Grantee that evidences and sets out
the terms and conditions of an Award.


 


2.5
“Benefit Arrangement” shall have
the meaning set forth in Section 15
hereof.


 


2.6
“Board” means the Board of
Directors of the Company.


 


2.7
“Cause” means, as determined by
the Board and unless otherwise provided in an applicable agreement with the
Company or an Affiliate, (i) gross negligence or willful misconduct in
connection with the performance of duties; (ii) conviction of a criminal
offense (other than minor traffic offenses); or (iii) material breach of
any term of any employment, consulting or other services, confidentiality,
intellectual property or non-competition agreements, if any, between the
Service Provider and the Company or an Affiliate.


 


2.8
“Code” means the Internal Revenue
Code of 1986, as now in effect or as hereafter amended.


 

















 


2.9
“Committee” means a committee of,
and designated from time to time by resolution of, the Board, which shall be
constituted as provided in Section 3.2.


 


2.10
“Company” means Royal Gold, Inc.


 


2.11
“Corporate Transaction” means (i) the
dissolution or liquidation of the Company or a merger, consolidation, or
reorganization of the Company with one or more other entities in which the
Company is not the surviving entity, (ii) a sale of substantially all of
the assets of the Company to another person or entity, or (iii) any
transaction (including without limitation a merger or reorganization in which
the Company is the surviving entity) which results in any person or entity
(other than persons who are stockholders or Affiliates immediately prior to the
transaction) owning 50% or more of the combined voting power of all classes of
stock of the Company.


 


2.12
“Covered Employee” means a Grantee
who is a Covered Employee within the meaning of Section 162(m)(3) of
the Code.


 


2.13
“Disability” means the Grantee is
unable to perform each of the essential duties of such Grantee’s position by
reason of a medically determinable physical or mental impairment which is
potentially permanent in character or which can be expected to last for a
continuous period of not less than 12 months; provided, however, that, with
respect to rules regarding expiration of an Incentive Stock Option
following termination of the Grantee’s Service, Disability shall mean the
Grantee is unable to engage in any substantial gainful activity by reason of a
medically determinable physical or mental impairment which can be expected to
result in death or which has lasted or can be expected to last for a continuous
period of not less than 12 months.


 


2.14
“Dividend Equivalent Right” means
a right, granted to a Grantee under Section 13 hereof, to receive cash,
Stock, other Awards or other property equal in value to dividends paid with
respect to a specified number of shares of Stock, or other periodic payments.


 


2.15
“Effective Date” means November 17,
2010, the date the Plan, as amended, is approved by the stockholders of the
Company.


 


2.16
“Exchange Act” means the
Securities Exchange Act of 1934, as now in effect or as hereafter amended.


 


2.17
“Fair Market Value” means the
value of a share of Stock, determined as follows: if on the Grant Date or other
determination date the Stock is listed on an established national or regional
stock exchange, is admitted to quotation on The Nasdaq Stock Market, Inc.
or is publicly traded on an established securities market, the Fair Market
Value of a share of Stock shall be the closing price of the Stock on such
exchange or in such market (if there is more than one such exchange or market
the Board shall determine the appropriate exchange or market) on the Grant Date
or such other determination date (or if there is no such reported closing
price, the Fair Market Value shall be the mean between the highest bid and
lowest asked prices or between the high and low sale prices on such trading
day) or, if no sale of Stock is reported for such trading day, on the next
preceding day on which any sale shall have been reported. If the Stock is not
listed on such an exchange, quoted on such system or traded on such a market,
Fair Market Value shall be the value of the Stock as determined by the Board in
good faith.


 


2.18
“Family Member” means a person who
is a spouse, former spouse, child, stepchild, grandchild, parent, stepparent,
grandparent, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother, sister, brother-in-law, or sister-in-law, including
adoptive 


 

















 


relationships,
of the Grantee, any person sharing the Grantee’s household (other than a tenant
or employee), a trust in which any one or more of these persons have more than
fifty percent of the beneficial interest, a foundation in which any one or more
of these persons (or the Grantee) control the management of assets, and any
other entity in which one or more of these persons (or the Grantee) own more
than fifty percent of the voting interests.


 


2.19
“Grant Date” means, as determined
by the Board, the latest to occur of (i) the date as of which the Board
approves an Award, (ii) the date on which the recipient of an Award first
becomes eligible to receive an Award under Section 6
hereof, or (iii) such other date as may be specified by the
Board.


 


2.20
“Grantee” means a person who
receives or holds an Award under the Plan.


 


2.21
“Incentive Stock Option” means an “incentive
stock option” within the meaning of Section 422 of the Code, or the
corresponding provision of any subsequently enacted tax statute, as amended
from time to time.


 


2.22
“Non-qualified Stock Option” means
an Option that is not an Incentive Stock Option.


 


2.23
“Option” means an option to
purchase one or more shares of Stock pursuant to the Plan.


 


2.24
“Option Price” means the exercise
price for each share of Stock subject to an Option.


 


2.25
“Option Proceeds” means, with
respect to an Option, the sum of (i) the Option Price paid in cash, if
any, to purchase shares of Stock under such Option, plus (ii) the value of
all Federal, state, and local deductions to which the Company is entitled with
respect to the exercise of such Option determined using the highest Federal tax
rate applicable to corporations and a blended tax rate for state and local
taxes based on the jurisdictions in which the Company does business and giving
effect to the deduction of state and local taxes for Federal tax purposes.


 


2.26
“Other Agreement” shall have the
meaning set forth in Section 15
hereof.


 


2.27
“Outside Director” means a member
of the Board who is not an officer or employee of the Company.


 


2.28
“Performance Award” means an Award
made subject to the attainment of performance goals (as described in Section 14) over a performance period
of up to ten (10) years.


 


2.29
“Plan” means this Royal Gold, Inc.
2004 Omnibus Long-Term Incentive Plan.


 


2.30
“Purchase Price” means the
purchase price for each share of Stock pursuant to a grant of Restricted Stock
or Unrestricted Stock.


 


2.31
“Reporting Person” means a person
who is required to file reports under Section 16(a) of the Exchange
Act.


 


2.32
“Restricted Stock” means shares of
Stock, awarded to a Grantee pursuant to Section 10
hereof.


 


2.33
“SAR Exercise Price” means the per
share exercise price of an SAR granted to a Grantee under Section 9 hereof.


 


2.34
“Securities Act” means the
Securities Act of 1933, as now in effect or as hereafter amended.


 


2.35
“Service” means service as a
Service Provider to the Company or an Affiliate. Unless otherwise stated in the
applicable Award Agreement, a Grantee’s change in position or duties 


 

















 


shall
not result in interrupted or terminated Service, so long as such Grantee
continues to be a Service Provider to the Company or an Affiliate. Subject to
the preceding sentence, whether a termination of Service shall have occurred
for purposes of the Plan shall be determined by the Board, which determination
shall be final, binding and conclusive.


 


2.36
“Service Provider” means an
employee, officer or director of the Company or an Affiliate, or a consultant
or adviser currently providing services to the Company or an Affiliate.


 


2.37
“Stock” means the common stock,
par value $.01 per share, of the Company.


 


2.38
“Stock Appreciation Right” or “SAR” means a right granted to a Grantee
under Section 9 hereof.


 


2.39
“Stock Unit” means a bookkeeping
entry representing the equivalent of shares of Stock, awarded to a Grantee
pursuant to Section 10 hereof.


 


2.40
“Subsidiary” means any “subsidiary
corporation” of the Company within the meaning of Section 424(f) of
the Code.


 


2.41
“Termination Date” means the date
upon which an Option shall terminate or expire, as set forth in Section 8.3 hereof.


 


2.42
“Ten Percent Stockholder” means an
individual who owns more than ten percent (10%) of the total combined voting power
of all classes of outstanding stock of the Company, its parent or any of its
Subsidiaries. In determining stock ownership, the attribution rules of Section 424(d) of
the Code shall be applied.


 


2.43
“Unrestricted Stock” means an
Award pursuant to Section 11 hereof.


 


	
  3. 

  	
  ADMINISTRATION OF THE PLAN

  



 


3.1. Board.


 


The
Board shall have such powers and authorities related to the administration of
the Plan as are consistent with the Company’s certificate of incorporation and
by-laws and applicable law. The Board shall have full power and authority to
take all actions and to make all determinations required or provided for under
the Plan, any Award or any Award Agreement, and shall have full power and
authority to take all such other actions and make all such other determinations
not inconsistent with the specific terms and provisions of the Plan that the
Board deems to be necessary or appropriate to the administration of the Plan,
any Award or any Award Agreement. All such actions and determinations shall be
by the affirmative vote of a majority of the members of the Board present at a
meeting or by unanimous consent of the Board executed in writing in accordance
with the Company’s certificate of incorporation and by-laws and applicable law.
The interpretation and construction by the Board of any provision of the Plan,
any Award or any Award Agreement shall be final, binding and conclusive.


 


3.2. Committee.


 


The
Board from time to time may delegate to the Committee such powers and
authorities related to the administration and implementation of the Plan, as
set forth in Section 3.1 above
and other applicable provisions, as the Board shall determine, consistent with
the certificate of incorporation and by-laws of the Company and applicable law.


 

















 


(i) Except
as provided in Subsection (ii) and except as the Board may otherwise
determine, the Committee, if any, appointed by the Board to administer the Plan
shall consist of two or more Outside Directors of the Company who: (a) qualify
as “outside directors” within the meaning of Section 162(m) of the
Code and who (b) meet such other requirements as may be established from
time to time by the Securities and Exchange Commission for plans intended to
qualify for exemption under Rule 16b-3 (or its successor) under the Exchange
Act and who comply with the independence requirements of the stock exchange on
which the Common Stock is listed.


 


(ii) The
Board may also appoint one or more separate committees of the Board, each
composed of one or more directors of the Company who need not be Outside
Directors, who may administer the Plan with respect to employees or other
Service Providers who are not officers or directors of the Company, may grant
Awards under the Plan to such employees or other Service Providers, and may
determine all terms of such Awards.


 


In
the event that the Plan, any Award or any Award Agreement entered into
hereunder provides for any action to be taken by or determination to be made by
the Board, such action may be taken or such determination may be made by the
Committee if the power and authority to do so has been delegated to the
Committee by the Board as provided for in this Section. Unless otherwise
expressly determined by the Board, any such action or determination by the
Committee shall be final, binding and conclusive. To the extent permitted by
law, the Committee may delegate its authority under the Plan to a member of the
Board.


 


3.3. Terms of Awards.


 


Subject
to the other terms and conditions of the Plan, the Board shall have full and
final authority to:


 


(i) designate
Grantees,


 


(ii) determine
the type or types of Awards to be made to a Grantee,


 


(iii) determine
the number of shares of Stock to be subject to an Award,


 


(iv) establish
the terms and conditions of each Award (including, but not limited to, the
exercise price of any Option, the nature and duration of any restriction or
condition (or provision for lapse thereof) relating to the vesting, exercise,
transfer, or forfeiture of an Award or the shares of Stock subject thereto, and
any terms or conditions that may be necessary to qualify Options as Incentive
Stock Options),


 


(v) prescribe
the form of each Award Agreement evidencing an Award, and


 


(vi) amend,
modify, or supplement the terms of any outstanding Award. Such authority
specifically includes the authority, in order to effectuate the purposes of the
Plan but without amending the Plan, to modify Awards to eligible individuals
who are foreign nationals or are individuals who are employed outside the
United States to recognize differences in local law, tax policy, or custom.


 


As
a condition to any subsequent Award, the Board shall have the right, at its
discretion, to require Grantees to return to the Company Awards previously made
under the Plan. Subject to the terms and conditions of the Plan, any such new
Award shall be upon such terms and conditions as are specified by the Board at
the time the new Award is made. The Board shall have the right, in its
discretion, to make Awards in substitution or exchange for any other award
under another plan of the Company, any Affiliate, or any business entity to be
acquired by the 


 

















 


Company
or an Affiliate. The Company may retain the right in an Award Agreement to
cause a forfeiture of the gain realized by a Grantee on account of actions
taken by the Grantee in violation or breach of or in conflict with any
employment agreement, non-competition agreement, any agreement prohibiting
solicitation of employees or clients of the Company or any Affiliate thereof or
any confidentiality obligation with respect to the Company or any Affiliate
thereof or otherwise in competition with the Company or any Affiliate thereof,
to the extent specified in such Award Agreement applicable to the Grantee.
Furthermore, the Company may annul an Award if the Grantee is an employee of
the Company or an Affiliate thereof and is terminated for Cause as defined in
the applicable Award Agreement or the Plan, as applicable. The grant of any
Award shall be contingent upon the Grantee executing the appropriate Award
Agreement.


 


Notwithstanding
anything in the Plan to the contrary, the Board shall not have the authority,
without shareholder approval, (a) to accept the surrender of any
outstanding Option or SAR when the Fair Market Value of a share of Stock is
less than the exercise price of such outstanding Option or SAR and grant new
Options, SAR or other Awards in substitution for such surrendered Option or pay
cash in connection with such surrender, (b) to reduce the exercise price
of any outstanding Option or SAR, or (c) to take any other action that
would be treated as a repricing of Options or SARs under the rules of the
primary stock exchange on which the Stock is listed; provided, that appropriate
adjustments shall be made to outstanding Options or SARs pursuant to Section 17.


 


3.4. Deferral Arrangement.


 


The
Board may permit or require the deferral of any award payment into a deferred
compensation arrangement, subject to such rules and procedures as it may
establish, which may include provisions for the payment or crediting of interest
or dividend equivalents, including converting such credits into deferred Stock
equivalents and restricting deferrals to comply with hardship distribution rules affecting
401(k) plans. Any such deferrals shall be made in compliance with Code Section 409A.


 


3.5. No Liability.


 


No
member of the Board or of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Award or Award
Agreement.


 


3.6. Book Entry.


 


Notwithstanding
any other provision of this Plan to the contrary, the Company may elect to
satisfy any requirement under this Plan for the delivery of stock certificates
through the use of book-entry.


 


	
  4. 

  	
  STOCK SUBJECT TO THE PLAN

  



 


Stock
issued or to be issued under the Plan shall be authorized but unissued shares;
or, to the extent permitted by applicable law, issued shares that have been
reacquired by the Company. Subject to adjustment as provided in Section 17 hereof, the number of
shares of Stock available for issuance under the Plan shall be the sum of two
million six hundred thousand (2,600,000), and any shares of Stock available for
grant (including shares which become available due to forfeitures of
outstanding awards) under the Company’s Equity Incentive Plan. Notwithstanding
the preceding sentence and also subject to adjustment as provided in Section 17 hereof, the 


 

















 


aggregate
number of shares of Stock which cumulatively may be available for issuance
pursuant to Awards other than Awards of Options or SARs shall not exceed eight
hundred thousand (800,000), and the aggregate number of shares of Stock that
may be issued under the Plan as incentive stock options shall not exceed two
million six hundred thousand (2,600,000). If any shares covered by an Award are
not purchased or are forfeited, or if an Award otherwise terminates without
delivery of any Stock subject thereto, then the number of shares of Stock
counted against the aggregate number of shares available under the Plan with
respect to such Award shall, to the extent of any such forfeiture or
termination, again be available for making Awards under the Plan. If the Option
Price of any Option granted under the Plan, or if pursuant to Section 18.3 the withholding
obligation of any Grantee with respect to an Option or other Award, is satisfied
by tendering shares of Stock to the Company (by either actual delivery or by
attestation) or by withholding shares of Stock, the number of shares of Stock
issued net of the shares of Stock tendered or withheld shall be deemed
delivered for purposes of determining the maximum number of shares of Stock
available for delivery under the Plan. The number of shares of Stock reserved
under this Section 4 shall be
increased by the number of any shares of Stock that are repurchased by the
Company with Option Proceeds in respect of the exercise of an Option; provided,
however, that the number of shares of Stock contributed to the number of shares
reserved under this Section 4 in
respect of the use of Option Proceeds for repurchase shall not be greater than:
(A) the amount of such Option Proceeds divided by, (B) the Fair
Market Value on the date of exercise of the applicable Option. The Board shall
have the right to substitute or assume Awards in connection with mergers,
reorganizations, separations, or other transactions to which Section 424(a) of
the Code applies, provided such substitutions and assumptions are permitted by Section 424
of the Code and the regulations promulgated thereunder. The number of shares of
Stock reserved pursuant to Section 4 may
be increased by the corresponding number of Awards assumed and, in the case of
a substitution, by the net increase in the number of shares of Stock subject to
Awards before and after the substitution.


 


	
  5. 

  	
  EFFECTIVE DATE, DURATION AND AMENDMENTS  

  



 


5.1. Effective Date.


 


The
Plan shall be effective as of the Effective Date, subject to approval of the
Plan by the Company’s stockholders within one year of the Effective Date. Upon
approval of the Plan by the stockholders of the Company as set forth above, all
Awards made under the Plan on or after the Effective Date shall be fully
effective as if the stockholders of the Company had approved the Plan on the
Effective Date. If the stockholders fail to approve the Plan within one year
after the Effective Date, any Awards made hereunder shall be null and void and
of no effect.


 


5.2. Term.


 


The
Plan shall terminate automatically ten (10) years after the Effective Date
and may be terminated on any earlier date as provided in Section 5.3.


 


5.3. Amendment and Termination of the Plan.


 


The
Board may, at any time and from time to time, amend, suspend, or terminate the
Plan as to any shares of Stock as to which Awards have not been made. An
amendment shall be contingent on approval of the Company’s stockholders to the
extent stated by the Board, required by applicable law or required by
applicable stock exchange listing requirements.


 

















 


	
  6. 

  	
  AWARD ELIGIBILITY AND LIMITATIONS  

  



 


6.1. Service Providers and Other Persons.


 


Subject
to this Section 6, Awards may
be made under the Plan to: (i) any Service Provider to the Company or of
any Affiliate, including any Service Provider who is an officer or director of
the Company, or of any Affiliate, as the Board shall determine and designate
from time to time, (ii) any Outside Director, and (iii) any other
individual whose participation in the Plan is determined to be in the best
interests of the Company by the Board.


 


6.2. Successive Awards.


 


An
eligible person may receive more than one Award, subject to such restrictions
as are provided herein.


 


6.3. Limitation on Shares of Stock Subject to Awards and Cash
Awards.


 


During
any time when the Company has a class of equity security registered under Section 12
of the Exchange Act:


 


(i) the
maximum number of shares of Stock subject to Options or SARs that can be
awarded under the Plan to any person eligible for an Award under Section 6 hereof is one hundred
thousand (100,000) per calendar year;


 


(ii) the
maximum number of shares that can be awarded under the Plan, other than
pursuant to an Option or SARs, to any person eligible for an Award under Section 6 hereof is one hundred
thousand (100,000) per calendar year; and


 


(iii) the
maximum amount that may be earned as an cash Annual Incentive Award or other
cash Award in any calendar year by any one Grantee shall be $1,000,000, and the
maximum amount that may be earned as a cash or cash denominated Performance
Award or other cash Award in respect of a performance period by any one Grantee
shall be $2,000,000.


 


The
preceding limitations in this Section 6.3
are subject to adjustment as provided in Section 17 hereof.


 


6.4. Stand-Alone, Additional, Tandem, and Substitute Awards.


 


Subject
to Section 3.3, Awards granted under
the Plan may, in the discretion of the Board, be granted either alone or in
addition to, in tandem with, or in substitution or exchange for, any other
Award or any award granted under another plan of the Company, any Affiliate, or
any business entity to be acquired by the Company or an Affiliate, or any other
right of a Grantee to receive payment from the Company or any Affiliate.  Such additional, tandem, and substitute or
exchange Awards may be granted at any time. If an Award is granted in
substitution or exchange for another Award, the Board shall require the
surrender of such other Award in consideration for the grant of the new Award.
In addition, Awards may be granted in lieu of cash compensation, including in
lieu of cash amounts payable under other plans of the Company or any Affiliate,
in which the value of Stock subject to the Award is equivalent in value to the
cash compensation (for example, Stock Units or Restricted Stock), or in which
the Option Price, grant price or purchase price of the Award in the nature of a
right that may be exercised is equal to the Fair Market Value of the underlying
Stock minus the value of the cash compensation surrendered (for 


 

















 


example,
Options granted with an Option Price “discounted” by the amount of the cash
compensation surrendered).


 


	
  7. 

  	
  AWARD AGREEMENT

  



 


Each
Award granted pursuant to the Plan shall be evidenced by an Award Agreement, in
such form or forms as the Board shall from time to time determine. Award
Agreements granted from time to time or at the same time need not contain
similar provisions but shall be consistent with the terms of the Plan. Each
Award Agreement evidencing an Award of Options shall specify whether such
Options are intended to be Non-qualified Stock Options or Incentive Stock
Options, and in the absence of such specification such options shall be deemed
Non-qualified Stock Options.


 


	
  8. 

  	
  TERMS AND CONDITIONS OF OPTIONS  

  



 


8.1. Option Price.


 


The
Option Price of each Option shall be fixed by the Board and stated in the Award
Agreement evidencing such Option. The Option Price of each Option shall be at
least the Fair Market Value on the Grant Date of a share of Stock; provided, however, that in the event that
a Grantee is a Ten Percent Stockholder, the Option Price of an Option granted
to such Grantee that is intended to be an Incentive Stock Option shall be not
less than 110 percent of the Fair Market Value of a share of Stock on the Grant
Date. In no case shall the Option Price of any Option be less than the par
value of a share of Stock.


 


8.2. Vesting.


 


Subject
to Sections 8.3 and 17.3 hereof, each Option granted under the
Plan shall become exercisable at such times and under such conditions as shall
be determined by the Board and stated in the Award Agreement. For purposes of
this Section 8.2, fractional
numbers of shares of Stock subject to an Option shall be rounded down to the
next nearest whole number. No Option shall be exercisable in whole or in part
prior to the date the Plan is approved by the Stockholders of the Company as
provided in Section 5.1 hereof.


 


8.3. Term.


 


Each
Option granted under the Plan shall terminate, and all rights to purchase
shares of Stock thereunder shall cease, upon the expiration of ten years from
the date such Option is granted, or under such circumstances and on such date
prior thereto as is set forth in the Plan or as may be fixed by the Board and
stated in the Award Agreement relating to such Option (the “Termination Date”);
provided, however, that in the
event that the Grantee is a Ten Percent Stockholder, an Option granted to such
Grantee that is intended to be an Incentive Stock Option shall not be
exercisable after the expiration of five years from its Grant Date.


 


8.4. Termination of Service.


 


Each
Award Agreement shall set forth the extent to which the Grantee shall have the
right to exercise the Option following termination of the Grantee’s Service.
Such provisions shall be determined in the sole discretion of the Board, need
not be uniform among all Options issued pursuant to the Plan, and may reflect
distinctions based on the reasons for termination of Service.


 

















 


8.5. Limitations on Exercise of
Option.


 


Notwithstanding
any other provision of the Plan, in no event may any Option be exercised, in
whole or in part, prior to the date the Plan is approved by the stockholders of
the Company as provided herein or after the occurrence of an event referred to
in Section 17 hereof which
results in termination of the Option.


 


8.6. Method of Exercise.


 


An
Option that is exercisable may be exercised by the Grantee’s delivery to the
Company of written notice of exercise on any business day, at the Company’s
principal office, on the form specified by the Company. Such notice shall
specify the number of shares of Stock with respect to which the Option is being
exercised and shall be accompanied by payment in full of the Option Price of
the shares for which the Option is being exercised plus the amount (if any) of
federal and/or other taxes which the Company may, in its judgment, be required
to withhold with respect to an Award. The minimum number of shares of Stock
with respect to which an Option may be exercised, in whole or in part, at any
time shall be the lesser of (i) 100 shares or such lesser number set forth
in the applicable Award Agreement and (ii) the maximum number of shares
available for purchase under the Option at the time of exercise.


 


8.7. Rights of Holders of Options.


 


Unless
otherwise stated in the applicable Award Agreement, an individual holding or
exercising an Option shall have none of the rights of a stockholder (for
example, the right to receive cash or dividend payments or distributions
attributable to the subject shares of Stock or to direct the voting of the
subject shares of Stock ) until the shares of Stock covered thereby are fully
paid and issued to him. Except as provided in Section 17
hereof, no adjustment shall be made for dividends, distributions or
other rights for which the record date is prior to the date of such issuance.


 


8.8. Delivery of Stock Certificates.


 


Promptly
after the exercise of an Option by a Grantee and the payment in full of the
Option Price, such Grantee shall be entitled to the issuance of a stock
certificate or certificates evidencing his or her ownership of the shares of
Stock subject to the Option.


 


8.9. Transferability of Options.


 


Except
as provided in Section 8.10,
during the lifetime of a Grantee, only the Grantee (or, in the event of legal
incapacity or incompetency, the Grantee’s guardian or legal representative) may
exercise an Option. Except as provided in Section 8.10,
no Option shall be assignable or transferable by the Grantee to whom it is
granted, other than by will or the laws of descent and distribution.


 


8.10. Family Transfers.


 


If
authorized in the applicable Award Agreement, a Grantee may transfer, not for
value, all or part of an Option which is not an Incentive Stock Option to any
Family Member. For the purpose of this Section 8.10,
a “not for value” transfer is a transfer which is (i) a gift, (ii) a
transfer under a domestic relations order in settlement of marital property
rights; or (iii) a transfer to an entity in which more than fifty percent
of the voting interests are owned by Family Members (or the Grantee) in
exchange for an interest in that entity. Following a transfer under this Section 8.10, any such Option shall
continue to be subject to the same terms and conditions as were applicable
immediately prior to transfer. Subsequent transfers of transferred Options are
prohibited except to Family Members of the original Grantee in accordance with
this Section 8.10 or by will
or the


 
















 


laws
of descent and distribution. The events of termination of Service of Section 8.4 hereof shall continue to
be applied with respect to the original Grantee, following which the Option
shall be exercisable by the transferee only to the extent, and for the periods
specified, in Section 8.4.


 


8.11. Limitations on Incentive Stock Options.


 


An
Option shall constitute an Incentive Stock Option only (i) if the Grantee
of such Option is an employee of the Company or any Subsidiary of the Company; (ii) to
the extent specifically provided in the related Award Agreement; and (iii) to
the extent that the aggregate Fair Market Value (determined at the time the
Option is granted) of the shares of Stock with respect to which all Incentive
Stock Options held by such Grantee become exercisable for the first time during
any calendar year (under the Plan and all other plans of the Grantee’s employer
and its Affiliates) does not exceed $100,000. This limitation shall be applied
by taking Options into account in the order in which they were granted.


 


	
  9. 

  	
  TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS  

  



 


9.1. Right to Payment.


 


An
SAR shall confer on the Grantee to whom it is granted a right to receive, upon
exercise thereof, the excess of (A) the Fair Market Value of one share of
Stock on the date of exercise over (B) the grant price of the SAR as
determined by the Board. The Award Agreement for an SAR shall specify the grant
price of the SAR, which may be fixed at the Fair Market Value of a share of
Stock on the date of grant or may vary in accordance with a predetermined
formula while the SAR is outstanding. SARs may be granted in conjunction with
all or part of an Option granted under the Plan or at any subsequent time
during the term of such Option, in conjunction with all or part of any other
Award or without regard to any Option or other Award.


 


9.2. Other Terms.


 


The
Board shall determine at the date of grant or thereafter, the time or times at
which and the circumstances under which an SAR may be exercised in whole or in
part (including based on achievement of performance goals and/or future service
requirements), the time or times at which SARs shall cease to be or become
exercisable following termination of Service or upon other conditions, the
method of exercise, method of settlement, form of consideration payable in
settlement, method by or forms in which Stock will be delivered or deemed to be
delivered to Grantees, whether or not an SAR shall be in tandem or in
combination with any other Award, and any other terms and conditions of any
SAR.


 


	
  10. 

  	
  TERMS AND CONDITIONS OF RESTRICTED STOCK AND STOCK UNITS  

  



 


10.1. Grant of Restricted Stock or Stock Units.


 


Awards
of Restricted Stock or Stock Units may be made for no consideration (other than
par value of the shares which is deemed paid by Services already rendered).


 


10.2. Restrictions.


 


At
the time a grant of Restricted Stock or Stock Units is made, the Board may, in
its sole discretion, establish a period of time (a “restricted period”)
applicable to such Restricted Stock or Stock Units. Each Award of Restricted
Stock or Stock Units may be subject to a different 


 

















 


restricted
period. The Board may, in its sole discretion, at the time a grant of
Restricted Stock or Stock Units is made, prescribe restrictions in addition to
or other than the expiration of the restricted period, including the
satisfaction of corporate or individual performance objectives, which may be
applicable to all or any portion of the Restricted Stock or Stock Units in
accordance with Section 14.1 and
14.2. Notwithstanding the
foregoing and except in the case of accelerated vesting for Grantees whose age
plus years of Service total at least sixty-five (65), (i) Restricted Stock
that vests solely by the passage of time shall not vest in full in less than
three (3) years from the Grant Date and (ii) Restricted Stock for
which vesting may be accelerated by achieving performance targets shall not
vest in full in less than one (1) year from the Grant Date. Neither
Restricted Stock nor Stock Units may be sold, transferred, assigned, pledged or
otherwise encumbered or disposed of during the restricted period or prior to
the satisfaction of any other restrictions prescribed by the Board with respect
to such Restricted Stock or Stock Units.


 


10.3. Restricted Stock Certificates.


 


The
Company shall issue, in the name of each Grantee to whom Restricted Stock has
been granted, stock certificates representing the total number of shares of
Restricted Stock granted to the Grantee, as soon as reasonably practicable after
the Grant Date. The Board may provide in an Award Agreement that either (i) the
Secretary of the Company shall hold such certificates for the Grantee’s benefit
until such time as the Restricted Stock is forfeited to the Company or the
restrictions lapse, or (ii) such certificates shall be delivered to the
Grantee, provided, however, that such certificates shall bear a legend or
legends that comply with the applicable securities laws and regulations and
makes appropriate reference to the restrictions imposed under the Plan and the
Award Agreement.


 


10.4. Rights of Holders of Restricted Stock.


 


Unless
the Board otherwise provides in an Award Agreement, holders of Restricted Stock
shall have the right to vote such Stock and the right to receive any dividends
declared or paid with respect to such Stock. The Board may provide that any
dividends paid on Restricted Stock must be reinvested in shares of Stock, which
may or may not be subject to the same vesting conditions and restrictions
applicable to such Restricted Stock. All distributions, if any, received by a
Grantee with respect to Restricted Stock as a result of any stock split, stock
dividend, combination of shares, or other similar transaction shall be subject
to the restrictions applicable to the original Grant.


 


10.5. Rights of Holders of Stock Units.


 


10.5.1. Voting and Dividend Rights.


 


Unless
the Board otherwise provides in an Award Agreement, holders of Stock Units
shall have no rights as stockholders of the Company. The Board may provide in
an Award Agreement evidencing a grant of Stock Units that the holder of such
Stock Units shall be entitled to receive, upon the Company’s payment of a cash
dividend on its outstanding Stock, a cash payment for each Stock Unit held
equal to the per-share dividend paid on the Stock. Such Award Agreement may
also provide that such cash payment will be deemed reinvested in additional
Stock Units at a price per unit equal to the Fair Market Value of a share of
Stock on the date that such dividend is paid.


 

















 


10.5.2. Creditor’s Rights.


 


A
holder of Stock Units shall have no rights other than those of a general
creditor of the Company. Stock Units represent an unfunded and unsecured
obligation of the Company, subject to the terms and conditions of the
applicable Award Agreement.


 


10.6. Termination of Service.


 


Unless
the Board otherwise provides in an Award Agreement or in writing after the
Award Agreement is issued, upon the termination of a Grantee’s Service, any
Restricted Stock or Stock Units held by such Grantee that have not vested, or
with respect to which all applicable restrictions and conditions have not
lapsed, shall immediately be deemed forfeited. Upon forfeiture of Restricted
Stock or Stock Units, the Grantee shall have no further rights with respect to
such Award, including but not limited to any right to vote Restricted Stock or
any right to receive dividends with respect to shares of Restricted Stock or
Stock Units.


 


10.7. Purchase of Restricted Stock.


 


The
Grantee shall be required, to the extent required by applicable law, to
purchase the Restricted Stock from the Company at a Purchase Price equal to the
greater of (i) the aggregate par value of the shares of Stock represented
by such Restricted Stock or (ii) the Purchase Price, if any, specified in
the Award Agreement relating to such Restricted Stock. The Purchase Price shall
be payable in a form described in Section 12
or, in the discretion of the Board, in consideration for past
Services rendered to the Company or an Affiliate.


 


10.8. Delivery of Stock.


 


Upon
the expiration or termination of any restricted period and the satisfaction of
any other conditions prescribed by the Board, the restrictions applicable to
shares of Restricted Stock or Stock Units settled in Stock shall lapse, and,
unless otherwise provided in the Award Agreement, a stock certificate for such
shares shall be delivered, free of all such restrictions, to the Grantee or the
Grantee’s beneficiary or estate, as the case may be.


 


	
  11. 

  	
  TERMS AND CONDITIONS OF UNRESTRICTED STOCK AWARDS  

  



 


The
Board may, in its sole discretion, grant (or sell at par value or such other
higher purchase price determined by the Board) an Unrestricted Stock Award to
any Grantee pursuant to which such Grantee may receive shares of Stock free of
any restrictions (“Unrestricted Stock”) under the Plan. Unrestricted Stock
Awards may be granted or sold as described in the preceding sentence in respect
of past services and other valid consideration, or in lieu of, or in addition
to, any cash compensation due to such Grantee.


 


	
  12. 

  	
  FORM OF PAYMENT FOR OPTIONS AND RESTRICTED STOCK  

  



 


12.1. General Rule.


 


Payment
of the Option Price for the shares purchased pursuant to the exercise of an
Option or the Purchase Price for Restricted Stock shall be made in cash or in
cash equivalents acceptable to the Company.


 

















 


12.2. Surrender of Stock.


 


To
the extent the Award Agreement so provides, payment of the Option Price for
shares purchased pursuant to the exercise of an Option or the Purchase Price
for Restricted Stock may be made all or in part through the tender to the
Company of shares of Stock, which shares, if acquired from the Company and if
so required by the Company, shall have been held for at least six months at the
time of tender and which shall be valued, for purposes of determining the
extent to which the Option Price or Purchase Price has been paid thereby, at
their Fair Market Value on the date of exercise or surrender.


 


12.3. Cashless Exercise.


 


With
respect to an Option only (and not with respect to Restricted Stock), to the
extent permitted by law and to the extent the Award Agreement so provides,
payment of the Option Price for shares purchased pursuant to the exercise of an
Option may be made all or in part by delivery (on a form acceptable to the
Board) of an irrevocable direction to a licensed securities broker acceptable
to the Company to sell shares of Stock and to deliver all or part of the sales
proceeds to the Company in payment of the Option Price and any withholding
taxes described in Section 18.3.


 


12.4. Other Forms of Payment.


 


To
the extent the Award Agreement so provides, payment of the Option Price for
shares purchased pursuant to exercise of an Option or the Purchase Price for
Restricted Stock may be made in any other form that is consistent with applicable
laws, regulations and rules.


 


	
  13. 

  	
  TERMS AND CONDITIONS OF DIVIDEND EQUIVALENT RIGHTS  

  



 


13.1. Dividend Equivalent Rights.


 


A
Dividend Equivalent Right is an Award entitling the recipient to receive
credits based on cash distributions that would have been paid on the shares of
Stock specified in the Dividend Equivalent Right (or other award to which it
relates) if such shares had been issued to and held by the recipient. A
Dividend Equivalent Right may be granted hereunder to any Grantee as a
component of another Award or as a freestanding award. The terms and conditions
of Dividend Equivalent Rights shall be specified in the grant. Dividend
equivalents credited to the holder of a Dividend Equivalent Right may be paid
currently or may be deemed to be reinvested in additional shares of Stock,
which may thereafter accrue additional equivalents. Any such reinvestment shall
be at Fair Market Value on the date of reinvestment. Dividend Equivalent Rights
may be settled in cash or Stock or a combination thereof, in a single
installment or installments, all determined in the sole discretion of the
Board. A Dividend Equivalent Right granted as a component of another Award may
provide that such Dividend Equivalent Right shall be settled upon exercise,
settlement, or payment of, or lapse of restrictions on, such other award, and
that such Dividend Equivalent Right shall expire or be forfeited or annulled
under the same conditions as such other award. A Dividend Equivalent Right
granted as a component of another Award may also contain terms and conditions
different from such other award.


 

















 


13.2. Termination of Service.


 


Except
as may otherwise be provided by the Board either in the Award Agreement or in
writing after the Award Agreement is issued, a Grantee’s rights in all Dividend
Equivalent Rights or interest equivalents shall automatically terminate upon
the Grantee’s termination of Service for any reason.


 


	
  14. 

  	
  TERMS AND CONDITIONS OF PERFORMANCE AND ANNUAL INCENTIVE
  AWARDS  

  



 


14.1. Performance Conditions.


 


The
right of a Grantee to exercise or receive a grant or settlement of any Award,
and the timing thereof, may be subject to such performance conditions as may be
specified by the Board. The Board may use such business criteria and other
measures of performance as it may deem appropriate in establishing any
performance conditions, and may exercise its discretion to reduce the amounts
payable under any Award subject to performance conditions, except as limited
under Sections 14.2 hereof in the case of a Performance Award or Annual
Incentive Award intended to qualify under Code Section 162(m). If and to
the extent required under Code Section 162(m), any power or authority
relating to a Performance Award or Annual Incentive Award intended to qualify
under Code Section 162(m), shall be exercised by the Committee and not the
Board.


 


14.2. Performance or Annual Incentive Awards Granted to
Designated Covered Employees.


 


If
and to the extent that the Committee determines that a Performance or Annual
Incentive Award to be granted to a Grantee who is designated by the Committee
as likely to be a Covered Employee should qualify as “performance-based
compensation” for purposes of Code Section 162(m), the grant, exercise
and/or settlement of such Performance or Annual Incentive Award shall be
contingent upon achievement of pre-established performance goals and other
terms set forth in this Section 14.2.


 


14.2.1. Performance Goals Generally.


 


The
performance goals for such Performance or Annual Incentive Awards shall consist
of one or more business criteria and a targeted level or levels of performance
with respect to each of such criteria, as specified by the Committee consistent
with this Section 14.2.
Performance goals shall be objective and shall otherwise meet the requirements
of Code Section 162(m) and regulations thereunder including the
requirement that the level or levels of performance targeted by the Committee
result in the achievement of performance goals being “substantially uncertain.”
The Committee may determine that such Performance or Annual Incentive Awards
shall be granted, exercised and/or settled upon achievement of any one
performance goal or that two or more of the performance goals must be achieved
as a condition to grant, exercise and/or settlement of such Performance or
Annual Incentive Awards. Performance goals may differ for Performance or Annual
Incentive Awards granted to any one Grantee or to different Grantees.


 


14.2.2. Business Criteria.


 


One
or more of the following business criteria for the Company, on a consolidated
basis, and/or specified subsidiaries or business units of the Company (except
with respect to the total stockholder return and earnings per share criteria),
shall be used exclusively by the Committee in establishing performance goals
for such Performance or Annual Incentive Awards: (1) total 


 

















 


stockholder
return; (2) such total stockholder return as compared to total return (on
a comparable basis) of a publicly available index such as, but not limited to,
the Standard & Poor’s 500 Stock Index; (3) net income; (4) pretax
earnings; (5) earnings before interest expense, taxes, depreciation and
amortization; (6) pretax operating earnings after interest expense and
before bonuses, service fees, and extraordinary or special items; (7) operating
margin; (8) earnings per share; (9) return on equity; (10) return
on capital; (11) return on investment; (12) operating earnings; (13) working
capital; (14) ratio of debt to stockholders’ equity; (15) revenue; (16) free
cash flow and free cash flow per share; and (17) royalty ounces in reserve.
Business criteria may be measured on an absolute basis or on a relative basis
(i.e., performance relative to peer companies) and on a GAAP or non-GAAP basis.


 


14.2.3. Timing For Establishing Performance Goals.


 


Performance
goals shall be established not later than 90 days after the beginning of any
performance period applicable to such Performance or Annual Incentive Awards,
or at such other date as may be required or permitted for “performance-based
compensation” under Code Section 162(m).


 


14.2.4. Performance or Annual Incentive Award Pool.


 


The
Committee may establish a Performance or Annual Incentive Award pool, which
shall be an unfunded pool, for purposes of measuring Company performance in
connection with Performance or Annual Incentive Awards.


 


14.2.5. Settlement of Performance or Annual Incentive Awards;
Other Terms.


 


Settlement
of such Performance or Annual Incentive Awards shall be in cash, Stock, other
Awards or other property, in the discretion of the Committee. The Committee
may, in its discretion, reduce the amount of a settlement otherwise to be made
in connection with such Performance or Annual Incentive Awards. The Committee
shall specify the circumstances in which such Performance or Annual Incentive Awards
shall be paid or forfeited in the event of termination of Service by the
Grantee prior to the end of a performance period or settlement of Performance
Awards.


 


14.3. Written Determinations.


 


All
determinations by the Committee as to the establishment of performance goals,
the amount of any Performance Award pool or potential individual Performance
Awards and as to the achievement of performance goals relating to Performance
Awards, and the amount of any Annual Incentive Award pool or potential individual
Annual Incentive Awards and the amount of final Annual Incentive Awards, shall
be made in writing in the case of any Award intended to qualify under Code Section 162(m).
To the extent required to comply with Code Section 162(m), the Committee
may delegate any responsibility relating to such Performance Awards or Annual
Incentive Awards.


 


14.4. Status of Section 14.2 Awards Under Code Section 162(m).


 


It
is the intent of the Company that Performance Awards and Annual Incentive
Awards under Section 14.2 hereof granted to persons who are designated by
the Committee as likely to be Covered Employees within the meaning of Code Section 162(m) and
regulations thereunder shall, if so designated by the Committee, constitute “qualified
performance-based compensation” within the meaning of Code Section 162(m) and
regulations thereunder. Accordingly, the terms of Section 14.2, including
the definitions of Covered Employee and other terms used therein, 


 

















 


shall
be interpreted in a manner consistent with Code Section 162(m) and
regulations thereunder. The foregoing notwithstanding, because the Committee
cannot determine with certainty whether a given Grantee will be a Covered
Employee with respect to a fiscal year that has not yet been completed, the
term Covered Employee as used herein shall mean only a person designated by the
Committee, at the time of grant of Performance Awards or an Annual Incentive
Award, as likely to be a Covered Employee with respect to that fiscal year. If
any provision of the Plan or any agreement relating to such Performance Awards
or Annual Incentive Awards does not comply or is inconsistent with the
requirements of Code Section 162(m) or regulations thereunder, such
provision shall be construed or deemed amended to the extent necessary to conform
to such requirements.


 


	
  15. 

  	
  PARACHUTE LIMITATIONS

  



 


Notwithstanding
any other provision of this Plan or of any other agreement, contract, or
understanding heretofore or hereafter entered into by a Grantee with the
Company or any Affiliate, except an agreement, contract, or understanding
hereafter entered into that expressly modifies or excludes application of this
paragraph (an “Other Agreement”), and notwithstanding any formal or informal
plan or other arrangement for the direct or indirect provision of compensation
to the Grantee (including groups or classes of Grantees or beneficiaries of
which the Grantee is a member), whether or not such compensation is deferred,
is in cash, or is in the form of a benefit to or for the Grantee (a “Benefit
Arrangement”), if the Grantee is a “disqualified individual,” as defined in Section 280G(c) of
the Code, any Option, Restricted Stock or Stock Unit held by that Grantee and
any right to receive any payment or other benefit under this Plan shall not
become exercisable or vested (i) to the extent that such right to
exercise, vesting, payment, or benefit, taking into account all other rights,
payments, or benefits to or for the Grantee under this Plan, all Other
Agreements, and all Benefit Arrangements, would cause any payment or benefit to
the Grantee under this Plan to be considered a “parachute payment” within the
meaning of Section 280G(b)(2) of the Code as then in effect (a “Parachute
Payment”) and (ii) if, as a
result of receiving a Parachute Payment, the aggregate after-tax amounts
received by the Grantee from the Company under this Plan, all Other Agreements,
and all Benefit Arrangements would be less than the maximum after-tax amount
that could be received by the Grantee without causing any such payment or benefit
to be considered a Parachute Payment. In the event that the receipt of any such
right to exercise, vesting, payment, or benefit under this Plan, in conjunction
with all other rights, payments, or benefits to or for the Grantee under any
Other Agreement or any Benefit Arrangement would cause the Grantee to be
considered to have received a Parachute Payment under this Plan that would have
the effect of decreasing the after-tax amount received by the Grantee as
described in clause (ii) of the preceding sentence, then the Grantee shall
have the right, in the Grantee’s sole discretion, to designate those rights,
payments, or benefits under this Plan, any Other Agreements, and any Benefit
Arrangements that should be reduced or eliminated so as to avoid having the
payment or benefit to the Grantee under this Plan be deemed to be a Parachute
Payment, provided, however, that in order to comply with Code Section 409A,
the reduction or elimination will be performed in the order in which each
dollar of value subject to an Award reduces the Parachute Payment to the
greatest extent.


 

















 


	
  16. 

  	
  REQUIREMENTS OF LAW

  



 


16.1. General.


 


The
Company shall not be required to sell or issue any shares of Stock under any
Award if the sale or issuance of such shares would constitute a violation by
the Grantee, any other individual exercising an Option, or the Company of any
provision of any law or regulation of any governmental authority, including
without limitation any federal or state securities laws or regulations. If at
any time the Company shall determine, in its discretion, that the listing,
registration or qualification of any shares subject to an Award upon any
securities exchange or under any governmental regulatory body is necessary or
desirable as a condition of, or in connection with, the issuance or purchase of
shares hereunder, no shares of Stock may be issued or sold to the Grantee or
any other individual exercising an Option pursuant to such Award unless such
listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Company, and
any delay caused thereby shall in no way affect the date of termination of the
Award. Specifically, in connection with the Securities Act, upon the exercise
of any Option or the delivery of any shares of Stock underlying an Award,
unless a registration statement under such Act is in effect with respect to the
shares of Stock covered by such Award, the Company shall not be required to
sell or issue such shares unless the Board has received evidence satisfactory
to it that the Grantee or any other individual exercising an Option may acquire
such shares pursuant to an exemption from registration under the Securities
Act. Any determination in this connection by the Board shall be final, binding,
and conclusive. The Company may, but shall in no event be obligated to,
register any securities covered hereby pursuant to the Securities Act. The
Company shall not be obligated to take any affirmative action in order to cause
the exercise of an Option or the issuance of shares of Stock pursuant to the
Plan to comply with any law or regulation of any governmental authority. As to
any jurisdiction that expressly imposes the requirement that an Option shall
not be exercisable until the shares of Stock covered by such Option are
registered or are exempt from registration, the exercise of such Option (under
circumstances in which the laws of such jurisdiction apply) shall be deemed
conditioned upon the effectiveness of such registration or the availability of
such an exemption.


 


16.2. Rule 16b-3.


 


During
any time when the Company has a class of equity security registered under Section 12
of the Exchange Act, it is the intent of the Company that Awards pursuant to
the Plan and the exercise of Options granted hereunder will qualify for the
exemption provided by Rule 16b-3 under the Exchange Act. To the extent
that any provision of the Plan or action by the Board does not comply with the
requirements of Rule 16b-3, it shall be deemed inoperative to the extent
permitted by law and deemed advisable by the Board, and shall not affect the
validity of the Plan. In the event that Rule 16b-3 is revised or replaced,
the Board may exercise its discretion to modify this Plan in any respect
necessary to satisfy the requirements of, or to take advantage of any features
of, the revised exemption or its replacement.


 

















 


	
  17. 

  	
  EFFECT OF CHANGES IN CAPITALIZATION  

  



 


17.1. Changes in Stock.


 


If
the number of outstanding shares of Stock is increased or decreased or the
shares of Stock are changed into or exchanged for a different number or kind of
shares or other securities of the Company on account of any recapitalization,
reclassification, stock split, reverse split, combination of shares, exchange
of shares, stock dividend or other distribution payable in capital stock, or
other increase or decrease in such shares effected without receipt of
consideration by the Company occurring after the Effective Date, the number and
kinds of shares for which grants of Options and other Awards may be made under
the Plan shall be adjusted proportionately and accordingly by the Company. In
addition, the number and kind of shares for which Awards are outstanding shall
be adjusted proportionately and accordingly so that the proportionate interest
of the Grantee immediately following such event shall, to the extent
practicable, be the same as immediately before such event. Any such adjustment
in outstanding Options or SARs shall not change the aggregate Option Price or
SAR Exercise Price payable with respect to shares that are subject to the
unexercised portion of an outstanding Option or SAR, as applicable, but shall
include a corresponding proportionate adjustment in the Option Price or SAR
Exercise Price per share. The conversion of any convertible securities of the
Company shall not be treated as an increase in shares effected without receipt
of consideration. Notwithstanding the foregoing, in the event of any
distribution to the Company’s stockholders of securities of any other entity or
other assets (including an extraordinary cash dividend but excluding a
non-extraordinary dividend payable in cash or in stock of the Company) without
receipt of consideration by the Company, the Company may, in such manner as the
Company deems appropriate, adjust (i) the number and kind of shares
subject to outstanding Awards and/or (ii) the exercise price of
outstanding Options and Stock Appreciation Rights to reflect such distribution.


 


17.2. Reorganization in Which the Company Is the Surviving
Entity Which does not Constitute a Corporate Transaction.


 


Subject
to Section 17.3 hereof, if
the Company shall be the surviving entity in any reorganization, merger, or
consolidation of the Company with one or more other entities which does not
constitute a Corporate Transaction, any Option or SAR theretofore granted
pursuant to the Plan shall pertain to and apply to the securities to which a
holder of the number of shares of Stock subject to such Option or SAR would
have been entitled immediately following such reorganization, merger, or
consolidation, with a corresponding proportionate adjustment of the Option
Price or SAR Exercise Price per share so that the aggregate Option Price or SAR
Exercise Price thereafter shall be the same as the aggregate Option Price or
SAR Exercise Price of the shares remaining subject to the Option or SAR
immediately prior to such reorganization, merger, or consolidation. Subject to
any contrary language in an Award Agreement evidencing an Award, any
restrictions applicable to such Award shall apply as well to any replacement
shares received by the Grantee as a result of the reorganization, merger or
consolidation. In the event of a transaction described in this Section 17.2,
Stock Units shall be adjusted so as to apply to the securities that a holder of
the number of shares of Stock subject to the Stock Units would have been
entitled to receive immediately following such transaction.


 


17.3. Corporate Transaction.


 


Subject
to the exceptions set forth in the last sentence of this Section 17.3 and the last sentence of Section 17.4:


 

















 


(i) upon
the occurrence of a Corporate Transaction, all outstanding shares of Restricted
Stock and all Stock Units shall be deemed to have vested, and all restrictions
and conditions applicable to such shares of Restricted Stock shall be deemed to
have lapsed and the shares of stock subject to such Stock Units shall be
delivered, immediately prior to the occurrence of such Corporate Transaction,
and


 


(ii) either
of the following two actions shall be taken:


 


(A) fifteen
days prior to the scheduled consummation of a Corporate Transaction, all
Options and SARs outstanding hereunder shall become immediately exercisable and
shall remain exercisable for a period of fifteen days, or


 


(B) the
Board may elect, in its sole discretion, to cancel any outstanding Awards of
Options, Restricted Stock, Stock Units and/or SARs and pay or deliver, or cause
to be paid or delivered, to the holder thereof an amount in cash or securities
having a value (as determined by the Board acting in good faith), in the case
of Restricted Stock or Stock Units, equal to the formula or fixed price per
share paid to holders of shares of Stock and, in the case of Options or SARs,
equal to the product of the number of shares of Stock subject to the Option or
SAR (the “Award Shares”) multiplied by the amount, if any, by which (I) the
formula or fixed price per share paid to holders of shares of Stock pursuant to
such transaction exceeds (II) the Option Price or SAR Exercise Price
applicable to such Award Shares.


 


With
respect to the Company’s establishment of an exercise window, (i) any
exercise of an Option or SAR during such fifteen-day period shall be
conditioned upon the consummation of the event and shall be effective only
immediately before the consummation of the event, and (ii) upon
consummation of any Corporate Transaction the Plan, and all outstanding but
unexercised Options and SARs shall terminate. The Board shall send written
notice of an event that will result in such a termination to all individuals
who hold Options and SARs not later than the time at which the Company gives
notice thereof to its stockholders.


 


This
Section 17.3 shall not apply
to any Corporate Transaction to the extent that provision is made in writing in
connection with such Corporate Transaction for the assumption or continuation
of the Options, SARs, Restricted Stock and Stock Units theretofore granted, or
for the substitution for such Options, SARs, Restricted Stock and Stock Units
for new common stock options and stock appreciation rights and new common stock
restricted stock and stock units relating to the stock of a successor entity,
or a parent or subsidiary thereof, with appropriate adjustments as to the
number of shares (disregarding any consideration that is not common stock) and
option and stock appreciation right exercise prices, in which event the Plan,
Options, SARs, Restricted Stock and Stock Units theretofore granted shall
continue in the manner and under the terms so provided.


 


17.4. Adjustments.


 


Adjustments
under this Section 17 related
to shares of Stock or securities of the Company shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive. No
fractional shares or other securities shall be issued pursuant to any such
adjustment, and any fractions resulting from any such adjustment shall be
eliminated in each case by rounding downward to the nearest whole share. The
Board shall determine the effect of a Corporate Transaction upon Awards other
than Options, SARs, Stock Units and Restricted Stock, and such effect shall be
set forth in the appropriate Award Agreement. The Board may provide in the
Award Agreements at the time of grant, or any time thereafter with the consent
of the Grantee, 


 

















 


for
different provisions to apply to an Award in place of those described in Sections 17.1, 17.2 and 17.3.


 


17.5. No Limitations on Company.


 


The
making of Awards pursuant to the Plan shall not affect or limit in any way the
right or power of the Company to make adjustments, reclassifications,
reorganizations, or changes of its capital or business structure or to merge,
consolidate, dissolve, or liquidate, or to sell or transfer all or any part of
its business or assets.


 


	
  18. 

  	
  GENERAL PROVISIONS

  



 


18.1. Disclaimer of Rights.


 


No
provision in the Plan or in any Award or Award Agreement shall be construed to
confer upon any individual the right to remain in the employ or service of the
Company or any Affiliate, or to interfere in any way with any contractual or
other right or authority of the Company either to increase or decrease the
compensation or other payments to any individual at any time, or to terminate
any employment or other relationship between any individual and the Company. In
addition, notwithstanding anything contained in the Plan to the contrary,
unless otherwise stated in the applicable Award Agreement, no Award granted
under the Plan shall be affected by any change of duties or position of the
Grantee, so long as such Grantee continues to be a director, officer,
consultant or employee of the Company or an Affiliate. The obligation of the
Company to pay any benefits pursuant to this Plan shall be interpreted as a
contractual obligation to pay only those amounts described herein, in the
manner and under the conditions prescribed herein. The Plan shall in no way be
interpreted to require the Company to transfer any amounts to a third party
trustee or otherwise hold any amounts in trust or escrow for payment to any
Grantee or beneficiary under the terms of the Plan.


 


18.2. Nonexclusivity of the Plan.


 


Neither
the adoption of the Plan nor the submission of the Plan to the stockholders of
the Company for approval shall be construed as creating any limitations upon
the right and authority of the Board to adopt such other incentive compensation
arrangements (which arrangements may be applicable either generally to a class
or classes of individuals or specifically to a particular individual or
particular individuals) as the Board in its discretion determines desirable,
including, without limitation, the granting of stock options otherwise than
under the Plan.


 


18.3. Withholding Taxes.


 


The
Company or an Affiliate, as the case may be, shall have the right to deduct
from payments of any kind otherwise due to a Grantee any federal, state, or
local taxes of any kind required by law to be withheld with respect to the
vesting of or other lapse of restrictions applicable to an Award or upon the
issuance of any shares of Stock upon the exercise of an Option or pursuant to
an Award. At the time of such vesting, lapse, or exercise, the Grantee shall
pay to the Company or the Affiliate, as the case may be, any amount that the
Company or the Affiliate may reasonably determine to be necessary to satisfy
such withholding obligation. Subject to the prior approval of the Company or
the Affiliate, which may be withheld by the Company or the Affiliate, as the
case may be, in its sole discretion, the Grantee may elect to satisfy such
obligations, in whole or in part, (i) by causing the Company or the
Affiliate to withhold shares of Stock otherwise 


 

















 


issuable
to the Grantee or (ii) by delivering to the Company or the Affiliate
shares of Stock already owned by the Grantee. The shares of Stock so delivered
or withheld shall have an aggregate Fair Market Value equal to such withholding
obligations. In no case shall the shares withheld or delivered exceed the
minimum required federal, state, and FICA statutory withholding rates. The Fair
Market Value of the shares of Stock used to satisfy such withholding obligation
shall be determined by the Company or the Affiliate as of the date that the
amount of tax to be withheld is to be determined. A Grantee who has made an
election pursuant to this Section 18.3
may satisfy his or her withholding obligation only with shares of Stock that
are not subject to any repurchase, forfeiture, unfulfilled vesting, or other
similar requirements.


 


18.4. Captions.


 


The
use of captions in this Plan or any Award Agreement is for the convenience of
reference only and shall not affect the meaning of any provision of the Plan or
such Award Agreement.


 


18.5. Other Provisions.


 


Each
Award granted under the Plan may contain such other terms and conditions not
inconsistent with the Plan as may be determined by the Board, in its sole
discretion.


 


18.6. Number and Gender.


 


With
respect to words used in this Plan, the singular form shall include the plural
form, the masculine gender shall include the feminine gender, etc., as the
context requires.


 


18.7. Severability.


 


If
any provision of the Plan or any Award Agreement shall be determined to be
illegal or unenforceable by any court of law in any jurisdiction, the remaining
provisions hereof and thereof shall be severable and enforceable in accordance
with their terms, and all provisions shall remain enforceable in any other
jurisdiction.


 


18.8. Governing Law.


 


The
validity and construction of this Plan and the instruments evidencing the Award
hereunder shall be governed by 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 Plan and the instruments
evidencing the Awards granted hereunder to the substantive laws of any other
jurisdiction.


 


Section 18.9. Section 409A


 


The
Board intends to comply with Code Section 409A, or an exemption to Code Section 409A,
with regard to Grants hereunder that constitute nonqualified deferred
compensation within the meaning of Code Section 409A. To the extent that
the Board determines that a Grantee would be subject to the additional 20% tax
imposed on certain nonqualified deferred compensation plans pursuant to Code Section 409A
as a result of any provision of any Grant granted under this Plan, such
provision shall be deemed amended to the minimum extent necessary to avoid
application of such additional tax. The nature of any such amendment shall be
determined by the Board.