Document:

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 

 

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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.

 

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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 “Substitute Award” means any Award granted upon assumption of, or in substitution for, outstanding awards previously granted under a compensatory plan by a business entity acquired or to be acquired by the Company or an Affiliate or with which the Company or an Affiliate has combined or will combine.

 

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

 

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2.43 “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.

 

2.44 “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 

 

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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. Subject to Section 3.5, 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.

 

3.4                               Forfeiture; Recoupment

 

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 

 

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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.

 

Any Award granted pursuant to the Plan shall be subject to mandatory repayment by the Grantee to the Company to the extent the Grantee is, or in the future becomes, subject to (a) any Company “clawback” or recoupment policy that is adopted to comply with the requirements of any Applicable Law, rule or regulation, or otherwise, or (b) any law, rule or regulation which imposes mandatory recoupment, under circumstances set forth in such law, rule or regulation.

 

3.5                               No Repricing

 

Except in connection with a corporate transaction involving the Company (including, without limitation, any stock dividend, distribution (whether in the form of cash, shares of Stock, other securities or other property), stock split, extraordinary cash dividend, recapitalization, change in control, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of shares of Stock or other securities or similar transaction), the Company may not, without obtaining stockholder approval: (a) amend the terms of outstanding Options or SARs to reduce the exercise price of such outstanding Options or SARs; (b) cancel outstanding Options or SARs in exchange for or substitution of Options or SARs with an exercise price that is less than the exercise price of the original Options or SARs; or (c) cancel outstanding Options or SARs with an exercise price above the current stock price in exchange for cash or other securities.

 

3.6.                            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.

 

3.7.                            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.

 

3.8.                            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), 

 

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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 as of the Effective Date. After the Effective Date, no grants will be made 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. The number of shares of Stock subject to an Award of SARs shall be counted against the share issuance limit set forth in this Section 4 as one share of Stock for every one share of Stock subject to such Award regardless of the number of shares of Stock actually issued to settle such SARs upon the exercise thereof. 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.

 

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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 of greater than one year 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.

 

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

 

Subject to Section 3.5, 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, or for an award granted under another plan of the Company, an Affiliate, or any business entity that has been a party to a transaction with the Company or an Affiliate, 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).

 

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. Except in the case of Substitute Awards, 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, provided that no Option shall be granted to persons who are entitled to overtime under applicable state or federal laws, that will vest or be exercisable within a six month period starting on the Grant Date. 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.

 

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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.

 

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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.

 

8.12                        Notice of Disqualifying Disposition

 

If any Grantee shall make any disposition of shares of Stock issued pursuant to the exercise of an Incentive Stock Option under the circumstances provided in Code Section 421(b) (relating to certain dispositions), such Grantee shall notify the Company of such disposition within ten (10) days thereof.

 

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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 shall be no less than the Fair Market Value of a share of Stock on the date of grant. 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.

 

10.3.                     Restricted Stock Certificates.

 

The Company may 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 

 

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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. Such cash payments or additional Stock Units paid in connection with Stock Units which vest or are earned based upon the achievement of performance goals shall not vest unless such performance goals for such Stock Units are achieved, and if such performance goals are not achieved, the Grantee of such Stock Units shall not receive any such cash payments or additional Stock Units.

 

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.

 

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10.7.                     Purchase of Restricted Stock and Shares of Stock Subject to Stock Units.

 

The Grantee of an Award of Restricted Stock or vested Stock Units shall be required, to the extent required by applicable law, to purchase the Restricted Stock or the shares of Stock subject to such vested Stock Units 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 such vested Stock Units or (ii) the Purchase Price, if any, specified in the Award Agreement relating to such Restricted Stock or such vested Stock  Units. 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 Restricted Stock or Stock Units settled in shares of Stock shall lapse, and, unless otherwise provided in the applicable Award Agreement, a book-entry or direct registration (including transaction advices) or a share certificate evidencing ownership of such shares of Stock shall, consistent with Section 3.8, be issued, free of all such restrictions, to the Grantee thereof or such Grantee’s beneficiary or estate, as the case may be. Neither the Grantee, nor the Grantee’s beneficiary or estate, shall have any further rights with regard to a Stock Unit once the shares of Stock represented by such Stock Unit have been delivered in accordance with this Section 10.8.

 

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 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.

 

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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, provided that no Dividend Equivalent Rights may be granted in connection with, or related to, an Award of Options or SARs. 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.

 

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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.  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.

 

The Committee may provide in any Performance or Annual Incentive Award that any evaluation of performance may include or exclude any of the following events that occur during a performance period: (a) asset write-downs; (b) litigation or claims, judgments or settlements; (c) the effect of changes in tax laws, accounting principles or other laws or provisions affecting reported results; (d) any reorganization or restructuring events or programs; (e) extraordinary, non-core, non-operating or non-recurring items; (f) acquisitions or divestitures; and (g) foreign exchange gains and losses. To the extent such inclusions or exclusions affect Awards to Covered Employees that are intended to qualify as “performance-based compensation” under Code 

 

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Section 162(m), such inclusions or exclusions shall be prescribed in a form that meets the requirements of Code Section 162(m) for deductibility.

 

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 the earlier of (a) 90 days after the beginning of any performance period applicable to such Performance or Annual Incentive Awards, and (b) the date on which twenty-five percent (25%) of any performance period applicable to such award has expired, 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 

 

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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 

 

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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 such rights to exercise, vesting, payment or benefit shall be reduced.  To the extent required to comply with Code Section 409A, the Company shall accomplish such reduction by first reducing or eliminating any cash payments (with the payments to be made furthest in the future being reduced first), then by reducing or eliminating any accelerated vesting of Options or SARs, then by reducing or eliminating any accelerated vesting of Restricted Stock or Stock Units, then by reducing or eliminating any other remaining Parachute Payments.

 

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 

 

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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 shall, 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 

 

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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 or both 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.

 

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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.

 

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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.

 

24

 

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.

 

25Exhibit 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.

 

 

	
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 
    

 

2

 

	
 
    	
 
    	
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 
    

 

3

 

	
 
    	
 
    	
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
    

 

4

 

	
 
    	
 
    	
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.
    

 

5

 

	
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.
    

 

6

 

	
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
    

 

7

 

	
 
    	
 
    	
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.

 

8

 

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.:           -        -

 

9

 

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

 

10

 

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
    	
 
    	
 
    

 

11

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