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ROYAL GOLD, INC.
1660 Wynkoop Street, Suite 1000
Denver, Colorado 80202
303/573-1660
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held December 7, 1995
* * * *
To the Stockholders of ROYAL GOLD, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of the
Stockholders of Royal Gold, Inc. (the "Company"), a Delaware
corporation, will be held at the University Club, Directors Room,
1673 Sherman Street, Denver, Colorado, on Thursday, December 7, 1995, at
1:30 p.m., Mountain Standard Time, for the following purposes:
1. To elect three Class II directors to serve until the
1998 Annual Meeting of Stockholders or until each such
director's successor is elected and qualified;
2. To adopt an amendment to the Company's Certificate of
Incorporation to increase the authorized shares of
Common Stock from 30,000,000 to 40,000,000.
3. To amend the Company's Directors' Stock Option Plan to
increase, from 2,500 to 5,000, the number of options for
shares of Common Stock granted to each outside director,
on a yearly basis, under such Plan;
4. To ratify the appointment of Coopers & Lybrand as
independent auditors of the Company for the fiscal year
ended June 30, 1996; and
5. To transact any other business that may properly come
before the meeting and any adjournments thereof.
Only stockholders of record at the close of business on
October 20, 1995, will be entitled to notice of and to vote at
the meeting and any adjournment of the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Karen P. Gross
Vice President & Corporate Secretary
Denver, Colorado
October 30, 1995
WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING, PLEASE COMPLETE,
SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE. THE
PROMPT RETURN OF YOUR COMPLETED PROXY WILL ASSIST THE COMPANY IN
OBTAINING A QUORUM OF STOCKHOLDERS FOR THE ANNUAL MEETING. YOU
ARE ALSO ENTITLED TO REVOKE YOUR PROXY AT ANY TIME PRIOR TO THE
MEETING, OR TO CHANGE YOUR VOTE BY SUBSEQUENT PROXY, OR TO VOTE
IN PERSON AT THE MEETING.
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PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
ROYAL GOLD, INC.
1660 Wynkoop Street
Suite 1000
Denver, Colorado 80202
303/573-1660
SOLICITATION AND REVOCATION OF PROXIES
This Proxy Statement is furnished to the Stockholders of
Royal Gold, Inc. (the "Company" or "Royal Gold"), a Delaware
corporation, in connection with the solicitation, by and on
behalf of the Board of Directors of the Company, of proxies to be
voted at the Annual Meeting of the Stockholders of the Company
(the "Meeting") to be held at 1:30 p.m. on Thursday, December 7,
1995, at the University Club, Directors Room, 1673 Sherman
Street, Denver, Colorado. This Proxy Statement, the enclosed
Proxy and the Company's Annual Report for the fiscal year ended
June 30, 1995, are being mailed to Stockholders on or about
November 6, 1995.
Only holders of shares of the Common Stock ($.01 par value)
("Common Stock") of the Company of record at the close of
business on October 20, 1995, will be entitled to notice of, and
to vote at, the Meeting and at any and all adjournments thereof.
If the enclosed Proxy is properly executed and received by
the Company by 5:00 p.m. on December 6, 1995, the shares
represented by the Proxy will be voted at the Meeting in
accordance with the instructions indicated thereon. If no choice
is indicated, the shares will be voted FOR each of the proposals
identified herein. Stockholders who execute Proxies retain the
right to revoke them at any time before they are voted by filing
with the Secretary of the Company either an instrument revoking
the Proxy or a duly executed Proxy bearing a later date. Proxies
may also be revoked by any Stockholder present at the Meeting who
desires to vote his or her shares in person.
Solicitation of Proxies may be made by directors, officers
or employees of the Company, without additional compensation, by
telephone, facsimile, or personal interview as well as by mail.
The Company will request banks and brokers to solicit their
customers who beneficially own Common Stock of the Company listed
in the name of the nominees and will reimburse said banks and
brokers for the reasonable out-of-pocket expense of such
solicitation. Costs of solicitation will be borne by the
Company.
VOTING RIGHTS
All voting rights are vested exclusively in the holders of
the Company's Common Stock. As of the record date, October 20,
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1995, there were issued and outstanding 14,701,954 shares of
Common Stock, each of which entitles the holder thereof to one
vote in all matters which may come before the Meeting. A
majority of the issued and outstanding shares of Common Stock,
whether represented in person or by Proxy, shall constitute a
quorum at any meeting of the Stockholders. The affirmative vote
of sixty percent (60%) of the shares that are represented at a
meeting at which a quorum is present shall be the act of the
Stockholders. In the election of directors, each Stockholder
eligible to vote may vote the number of shares of Common Stock
held for as many persons as there are directors to be elected,
but cumulative voting is not permitted. Under Delaware law,
holders of Common Stock are not entitled to appraisal or
dissenters' rights with respect to the matters to be considered
at the meeting.
STOCK OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table shows the beneficial ownership, as of
October 20, 1995, of the Company's Common Stock by each director,
by each executive officer, by any person who is known to the
Company to be the beneficial owner of more than 5% of the issued
and outstanding shares of Common Stock of the Company and by all
of the Company's directors and executive officers as a group.
Name and Address Number of Shares of Common Stock Percent
of Beneficial Beneficially Subject to: of
Owners Owned Options (b) Warrants (c) Total (a) Class
Stanley Dempsey (d) 474,767 410,000 40,000 924,767 6.3
Royal Gold, Inc.
1660 Wynkoop Street
Suite 1000
Denver, Colorado 80202
Edwin W. Peiker, Jr. (e) 450,178 12,500* 40,000 502,678 3.4
Royal Gold, Inc.
1660 Wynkoop Street
Suite 1000
Denver, Colorado 80202
John W. Goth 15,000 10,000* -0- 25,000 **
1536 Cole Boulevard
Suite 320
Golden, Colorado 80401
Pierre Gousseland 32,500 5,000* -0- 37,500 **
4 Lafayette Court
Suite 1B
Greenwich, Connecticut 06836
James W. Stuckert 1,535,874 10,000* 105,000 1,650,874 11.2
Hilliard, Lyons, Inc.
P.O. Box 32760
Louisville, Kentucky 40232
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Name and Address Number of Shares of Common Stock Percent
of Beneficial Beneficially Subject to: of
Owners Owned Options (b) Warrants (c) Total (a) Class
Merritt E. Marcus 346,243 12,500* 70,000 428,743 2.9
Marcus Paint Company
235 East Market Street
Louisville, Kentucky 40202
S. Oden Howell, Jr. 530,680 10,000* 40,000 580,680 3.9
H&N Constructors, Inc.
2603 Grassland Drive
Louisville, Kentucky 40299
Thomas A. Loucks 132,278 315,720 67,500 515,498 3.5
Royal Gold, Inc.
1660 Wynkoop Street
Suite 1000
Denver, Colorado 80202
Peter B. Babin 125,250 264,000 13,000 402,250 2.7
Royal Gold, Inc.
1660 Wynkoop Street
Suite 1000
Denver, Colorado 80202
Karen P. Gross 19,650 78,500 -0- 98,150 **
Royal Gold, Inc.
1660 Wynkoop Street
Suite 1000
Denver, Colorado 80202
All Directors &
Officers as a
Group (10 persons) 3,662,420 1,128,220 375,500 5,166,140 35.1
Cortez Gold Mines 500,000 -0- 600,000 1,100,000 7.5
c/o Placer Dome U.S. Inc.
One California Avenue
Suite 2500
San Francisco, CA 94111
Societe Generale 1,725,000 -0- -0- 1,725,000 11.7
37, rue du Rocher
75008 Paris, France
_________________
* On December 6, 1994, the outside directors were each granted
5,000 stock options, but 2,500 of the options in each such
grant are subject to stockholder approval (see Proposal 3).
All such options, including the options subject to
stockholder approval, are represented in this table.
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** Less than 1% ownership of the Company's Common Stock.
(a) The amounts shown in the table reflect all shares
beneficially owned, including shares subject to outstanding
warrants and stock options that are exercisable within sixty
(60) days of the date of this Proxy Statement.
(b) See "Compensation of Directors and Executive Officers --
Option Exercises and Year-End Values."
(c) The warrants have a weighted average exercise price of $2.35.
(d) The amount shown in the table reflects shares beneficially
owned by Mr. Dempsey and members of his immediate family.
Members of Mr. Dempsey's family beneficially own 134,000
shares of Common Stock. Mr. Dempsey disclaims beneficial
ownership of these 134,000 shares of Common Stock.
(e) The amount shown in the table reflects shares beneficially
owned by Mr. Peiker and members of his immediate family.
Members of Mr. Peiker's family beneficially own 15,600
shares of Common Stock. Mr. Peiker disclaims beneficial
ownership of these 15,600 shares of Common Stock.
PROPOSAL 1.
ELECTION OF CLASS II DIRECTORS
The Company's Board of Directors consists of three classes
of directors, with each class of directors serving for a three-
year term ending in a successive year. The Company's current
Class I directors are Messrs. Dempsey and Goth; the Class II
directors are Messrs. Stuckert, Marcus and Gousseland; and the
Class III directors are Messrs. Peiker and Howell. The proposed
nominees for Class II directors are Messrs. Gousseland, Marcus
and Stuckert.
If the enclosed Proxy is duly executed and timely received
for the Meeting, and if no contrary specification is made as
provided therein, it is the intention of the persons named
therein to vote the shares represented thereby FOR Pierre
Gousseland, Merritt Marcus, and James W. Stuckert as Class II
directors of the Company. If any of the nominees for election as
a Class II director should refuse or be unable to serve (an event
that is not anticipated), the Proxy will be voted for such person
who shall be designated by the Board of Directors to replace such
nominee. Each Class II director elected at the Meeting shall
serve until the 1998 Annual Meeting, or until his successor is
elected and qualified.
Information concerning the nominees for election as
directors is set forth below under "Directors and Officers."
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There is no family relationship between any nominee and any other
director or executive officer of the Company.
The Board of Directors of the Company unanimously
recommends a vote FOR the director nominees.
DIRECTORS AND OFFICERS
Set forth below are the names, periods of service and past
experience of the directors and officers of the Company. The
persons who are nominated for election as a director at the
Meeting are indicated with an asterisk.
Principal Class of
Occupation During Continuously Director/
Name of Last 5 Years and a Director Term
Individual Age Position with Company Since Expires
Stanley Dempsey 56 Chairman and Chief August 1984 I/1997
Executive Officer of the
Company since April 4,
1988. President and
Chief Operating Officer
of the Company from July
1, 1987 to April 4,
1988. From 1984 through
June 1986, Mr. Dempsey
was a partner in the law
firm of Arnold & Porter.
During the same period,
he was a principal in
Denver Mining Finance
Company. From 1960
through 1987, Mr.
Dempsey was employed by
AMAX, Inc. serving in
various managerial and
executive capacities.
Mr. Dempsey currently
serves as a director of
Dakota Mining
Corporation, Behre
Dolbear & Company, Inc.,
and Hazen Research, Inc.
and is also a member of
the board of directors
of various mining-
related associations.
Edwin W. Peiker, 64 Director. President and May 1987 III/1996
Jr. Chief Operating Officer
of the Company from
April 1988 until
February 1992. Vice
President of
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Principal Class of
Occupation During Continuously Director/
Name of Last 5 Years and a Director Term
Individual Age Position with Company Since Expires
Engineering of the
Company from May 1987 to
April 4, 1988. Principal
in Denver Mining Finance
Company from 1984 until
1986. From 1983 to 1986,
Mr. Peiker was engaged
in mineral consulting
activities. During the
period 1966-1983, Mr.
Peiker served in a
variety of positions
with the Climax
Molybdenum division of
AMAX, Inc. involved in
exploration activities
worldwide. (1) (2)
John W. Goth 68 Director. Director of August 1988 I/1997
Development of the
Minerals Information
Institute and a
consultant to the mining
industry since 1985.
Mr. Goth was formerly a
senior executive of
AMAX, Inc. Mr. Goth is
a director of Magma
Copper Corporation, U.S.
Gold, and U.S. Zeolites.
(1) (2)
*James W. Stuckert 57 Director. President and September 1989 II/1995
Vice Chairman of
Hilliard, Lyons, Inc. of
Louisville, Kentucky,
since August 1995. From
1963-1995, Executive
Vice President of
Hilliard, Lyons, Inc.
Mr. Stuckert is a
Director of DataBeam
Corporation, McBar
Medical Industries, and
Lawson United Corp.(1)
(2)
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Principal Class of
Occupation During Continuously Director/
Name of Last 5 Years and a Director Term
Individual Age Position with Company Since Expires
S. Oden Howell 55 Director. Secretary/ December 1993 III/1996
Treasurer of H&N
Constructors, Inc., a
contractor specializing
in remodeling and
rehabilitation of
government facilities.
From 1972 until 1988,
Mr. Howell was Secretary/
Treasurer of Howell &
Howell, Inc. He is
currently a Director of
Florafax International,
Inc.
Pierre Gousseland 73 Director. Financial June 1992 II/1995
Consultant. From 1977
until January 1986, Mr.
Gousseland was Chairman
and Chief Executive
Officer of AMAX, Inc.
Director of Guyanor
Resources S.A. and Latin
American Gold, Inc.
Formerly, Director of
the French American
Banking Corporation of
New York, the American
International Group,
Inc., Union Miniere
(Belgium), Degussa AG
(Germany) and IBM World
Trade Europe/Middle East
Africa Corporation. Mr.
Gousseland has served on
the Chase Manhattan and
Creditanstaldt (Vienna,
Austria) International
Advisory Boards, and is
past president of the
French-American Chamber
of Commerce in the
United States. (2)
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Principal Class of
Occupation During Continuously Director/
Name o Last 5 Years and a Director Term
Individual Age Position with Company Since Expires
Merritt E. Marcus 61 Director. President December 1992 II/1995
of Marcus Paint Company,
a producer of industrial
coatings. Mr. Marcus
has served several terms
as a director of the
National Paint and
Coatings Association.
Thomas A. Loucks 46 Executive Vice President N/A
and Treasurer of the
Company since 1991.
From August 1988 until
1991, Mr. Loucks was
Vice President,
Corporate Development of
the Company. From
August 1985 until August
1988, Mr. Loucks was a
Business Development
Analyst with Newmont
Mining Company. Mr.
Loucks is a Director of
the Society of Economic
Geologists, Inc., the
Society of Economic
Geologists Foundation,
Inc., and the Economic
Geology Publishing
Company.
Peter B. Babin 41 Executive Vice President N/A
of the Company. Since
July 1, 1993, Senior
Vice President. From
1989 until 1993, Mr.
Babin was a consultant
to the Company. From
1986 through 1989, Mr.
Babin was Senior Vice
President and General
Counsel of Medserv
Corporation, a provider
of ancillary health care
services.
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Principal Class of
Occupation During Continuously Director/
Name of Last 5 Years and a Director Term
Individual Age Position with Company Since Expires
Karen P. Gross 41 Vice President of the N/A
the Company since June
1994 and Corporate
Secretary since 1989.
From 1987 until 1989,
Ms. Gross was the
Assistant Secretary to
the Company and
Executive Assistant.
___________
(1) Member of Audit Committee.
(2) Member of Compensation Committee.
MEETINGS AND COMMITTEES OF THE BOARD
During the fiscal year ended June 30, 1995, the Board of
Directors held four regular meetings and on two separate
occasions action was taken by unanimous consent. Each director
attended (in person or by telephone) at least 75% of the
aggregate number of meetings of the Board and of the Committee(s)
of the Board on which he served.
The Board of Directors has a standing Audit Committee and a
standing Compensation Committee. During the year ended June 30,
1995, the Audit Committee consisted of James W. Stuckert, John W.
Goth, and Edwin W. Peiker, Jr. The Audit Committee held three
meetings during the fiscal year. The function of the Audit
Committee is to review internal financial procedures and reports,
to recommend changes in the method of reporting to ensure timely
and accurate reporting of financial data, and to review audit
principles in conjunction with the Company's independent
auditors.
During the year ended June 30, 1995, the Compensation
Committee consisted of John W. Goth, James W. Stuckert and Pierre
Gousseland. The Compensation Committee met twice during the last
fiscal year. The Compensation Committee's function is to review
and make recommendations to the Company's Board of Directors
concerning the level and form of compensation paid to the
officers and key employees of the Company.
None of the members of the Compensation Committee is or has been
an officer or employee of the Company and none of the executive
officers of the Company has served as a member of the
compensation committee or as a director or another entity, one of
whose executive officers served on the Compensation Committee or
as a director of the Company.
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COMPLIANCE WITH SECTION 16(a)OF SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires the Company's officers and directors, and
persons who own more than 10% of a registered class of the
Company's equity securities, to file reports of ownership and
changes in ownership to the Securities and Exchange Commission.
Officers, directors and greater than 10% stockholders are
required by the regulations of the Securities and Exchange
Commission to furnish the Company with copies of all Section
16(a) reports they file. Based solely on its review of copies of
such reports received by it and written representations from
certain reporting persons that no other reports were required for
those persons, the Company believes that all filing requirements
applicable to its officers, directors and greater than 10%
stockholders were complied with for the fiscal year ended June
30, 1995, except that one share purchase transaction by Messrs.
Babin and Loucks and Ms. Gross were not contemporaneously reported on
timely-filed Form 4s; all such transactions were subsequently
reported on Form 5 and are reflected in this Proxy.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following table reflects all compensation awarded or
paid to or earned by the Chief Executive Officer of the Company
and other executive officers of the Company for the fiscal year
ended June 30, 1995.
SUMMARY COMPENSATION TABLE
Annual Compensation
Name and Year Other
Principal Ended Annual
Position June 30 Salary ($) Bonus ($) Compensation
Stanley Dempsey 1995 160,000 75,000 (5) -
Chairman & Chief 1994 130,000 50,000 -
Executive 1993 130,000 - -
Officer
Thomas A. Loucks 1995 105,000 40,000 -
Executive Vice 1994 80,000 30,000 -
President 1993 80,000 - -
Karen P. Gross 1995 60,000 20,000 -
Vice President 1994 36,000 10,000 -
& Corporate 1993 34,200 - -
Secretary
Peter B. Babin 1995 105,000 40,000 -
Executive Vice 1994 80,000 20,000 28,000
President (4) 1993 - - 27,000
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Long Term Compensation
Awards Payouts
Name and Year Restricted All Other
Principal Ended Stock Options/ LTIP Compensation
Position June 30 Awards SARs (#) Payouts($) ($) (1) (2) (3)
Stanley Dempsey 1995 - 60,000 - 5,338
Chairman & Chief 1994 - - - 5,338
Executive 1993 - 531,470 - 1,326
Officer
Thomas A. Loucks 1995 - 39,000 - 1,086
Executive Vice 1994 - - - 1,086
President 1993 - 305,000 - 311
Karen P. Gross 1995 - 22,500 - 1,204
Vice President 1994 - - - 1,204
& Corporate 1993 - 92,50 - 126
Secretary
Peter B. Babin 1995 - 39,000 - 2,489
Executive Vice 1994 - - - 2,284
President (4) 1993 - 275,000 - -
(1) Each of the named individuals is currently employed pursuant
to an employment agreement that provides for salary and
benefits continuation for one full year following
involuntary termination of employment, or for one full year
following voluntary termination of employment after a
"change in control" event.
(2) Amounts stated in column reflect dollar value of group term
life insurance premiums paid on behalf of named individuals,
to provide death benefit equivalent to 100% of annual
salary; and value of long-term disability insurance premiums
paid on behalf of named individuals.
(3) Amounts stated in column for fiscal year 1993 do not reflect
the value of long-term disability insurance premiums.
(4) From December 1990 through June 30, 1993, Mr. Babin was an
unsalaried vice president of the Company's subsidiary,
Denver Mining Finance Company. Amounts shown in the "Other
Annual Compensation" column reflect consulting fees paid
during the stated periods for services rendered to the
Company or its subsidiaries. Effective July 1, 1993, Mr.
Babin was employed as Senior Vice President, at an annual
salary of $80,000.
(5) Mr. Dempsey applied $40,000 of his bonus to the repayment of
the loan he received from the Company in 1993, as explained
in the section "Certain Transactions."
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Option Grants or Repricings in Last Fiscal Year
During the fiscal year ended June 30, 1995, officers of the
Company were awarded a total of 160,500 stock options, no stock
appreciation rights were awarded to any of the officers of the
Company, and no existing options held by any of the officers of
the Company were repriced by the Company.
The following table sets forth certain information on option
grants in fiscal 1995 to the named executive officers.
Individual Grants
Number of % of Total
Securities Options
Underlying Granted to Exercise
Options Employees in Price Expiration
Name Granted (#) Fiscal Year ($/Share) Date
Stanley Dempsey 60,000 32.6% $7.875 Dec. 6, 2004
Thomas A. Loucks 39,000 21.2% $7.875 Dec. 6, 2004
Karen P. Gross 22,500 12.2% $7.875 Dec. 6, 2004
Peter B. Babin 39,000 21.2% $7.875 Dec. 6, 2004
Potential Realizable Value at
Assumed Annual Rates of Stock Price
Appreciation for Option Term
Name 0% 5% 10%
Stanley Dempsey 0 297,153 753,043
Thomas A. Loucks 0 193,149 489,478
Karen P. Gross 0 11,433 282,392
Peter B. Babin 0 193,149 489,478
Option Exercises and Year-End Values
The table below sets forth information regarding the deemed
value of options exercised by officers during the year ended June
30, 1995, and the deemed value of options held by such persons at
June 30, 1995. At June 30, 1995, and at the date of this Proxy
Statement, no shares of Common Stock acquired by officers of the
Company as a result of the prior exercise of stock options were
sold; all remaining shares acquired as a result of the exercise
of stock options continue to be held by such officers.
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Value of
Number of Unexercised
Shares Options Held In-the-Money
Acquired Value Options Held Options Held
Name Exercise (#) "Realized" ($) at FY-End (#) at FY-End ($)
Stanley Dempsey - $ - 410,000 (1) $3,331,250 (2)
Thomas A. Loucks 15,000 101,250 (3) 315,720 (1) 2,565,225 (2)
Karen P. Gross 16,000 110,000 (4) 78,500 (1) 637,812 (2)
Peter B. Babin 15,000 103,125 (5) 264,000 (1) 2,145,000 (2)
(1) Of the total of 1,068,220 options, 907,720 are currently
exercisable through December 21, 2001, at $0.125/share, and
160,500 are exercisable through December 6, 2004, at $7.875/share.
(2) Value calculated based on closing "bid" price as reported on
NASDAQ, at June 30, 1995, of $8.125/share.
(3) Based on difference between exercise price ($0.125/share)
and closing "bid" prices as reported on NASDAQ on the dates
of exercise (January 10, 1995, 10,000 shares at
$6.875/share; June 14, 1995, 5,000 shares at $6.50/share).
(4) Based on difference between exercise price ($0.125/share)
and closing "bid" price as reported on NASDAQ on the date of
exercise (January 10, 1995, at $6.875/share).
(5) Based on difference between exercise price ($0.125/share)
and closing "bid" price as reported on NASDAQ on the date of
exercise (January 10, 1995, at $6.875/share).
Long-Term Incentive Plan Awards
The Company does not currently have in effect any long-term
incentive plan, apart from the Company's various stock option
programs.
Compensation To Directors
Each non-employee director of the Company receives an annual
fee of $6,000 for service as a director, and fees of $500 for
each meeting of the Board that any such director attended.
Employment Contracts
Each officer of the Company identified in the Summary
Compensation Table is employed pursuant to an employment contract
providing for salary at current salary levels. Each of the
employment contracts is renewable, for a term of 12 months, in
February 1996. Pursuant to each of the employment contracts,
salary and benefits are to be continued for 12 months following
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such employee's involuntary termination, or following such
employee's voluntary termination after a "change in control"
event. A change in control event, as defined in the employment
contracts, will occur if: (1) continuing directors no longer
constitute at least two-thirds of the directors constituting the
Board; (2) any person or group becomes the beneficial owner,
directly or indirectly, of 40% or more of the Company's
outstanding Common Stock; (3) approval by the Company's
Stockholders of the merger or consolidation of the Company with
any other corporation, unless the continuing directors in office
immediately prior to such event constitute at least two-thirds of
the directors constituting the board of directors of the
surviving corporation; or (4) at least two-thirds of the
continuing directors in office immediately prior to any other
action taken or proposed by the Company's Stockholders or by the
Board determines that such action constitutes a change of control
of the Company and such action is taken.
Board Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors (the
"Committee") is responsible for setting and administering the
policies that govern the compensation for the executive officers
of the Company. The Committee is comprised of three outside
directors appointed annually by the Board of Directors.
The primary objectives of the Company's executive
compensation program are: to attract and retain key executives
who are critical to the long-term success of the Company, to
provide an economic framework that will motivate executives to
achieve goals consistent with the Company's business strategy, to
reward performance that benefits all Stockholders, and to provide
a compensation package that recognizes individual results and
contributions to the overall success of the Company.
The Committee's policy objectives are to pay base salaries
that are competitive with those paid by comparable companies in
the mining industry and bonuses when individual performance or
other circumstances warrant special recognition.
The Committee is responsible for considering specific
information when reviewing salary levels, as outlined in the
Company's Business Plan, and when making recommendations to the
full Board. When reviewing individual performance of officers of
the Company, the Committee also takes into account the view of
the Company's Chairman and Chief Executive Officer. At the end
of each year, the Committee evaluates each individual officer's
performance in order to determine whether to recommend the
payment of bonuses and/or options and, if so, the amount of each
such bonus and/or option.
In making recommendations concerning executive compensation,
the Committee reviews individual executive compensation,
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individual performance, corporate performance, stock price
appreciation, and total return to Stockholders for the Company.
The salary levels of the Company's executives and officers are
usually established by the Board of Directors at its meeting
following the Annual Meeting of Stockholders.
The Committee also reviews and approves stock option awards,
under the Company's Employee Stock Option Plan. The purpose of
stock option awards is to provide key employees with an incentive
to continue as employees of the Company over a long term, and to
align their long range interests with those of the Stockholders
by providing the opportunity of having an equity interest in the
Company, i.e., to receive compensation based on an increase in
the Company's Common Stock price. The Committee grants stock
option awards based on salary, level of responsibility and
performance. All stock options are granted with an exercise
price equal to the market price of the Common Stock on the date
of grant. Stock options vest in one year and have a 10 year
term. During the year ended June 30, 1995, options to acquire
160,500 shares were awarded to officers of the Company and
options to acquire 23,750 shares were awarded to employees of the
Company who are not officers and/or directors.
Chief Executive Officer. In evaluating the performance and
setting the compensation of the Chairman and Chief Executive
Officer, the Committee meets without the Chairman and Chief
Executive Officer being present. In fiscal 1995, the Committee
took particular note of the continued strong performance of the
Company. The Committee believes that the Chairman and Chief
Executive Officer, as well as the other officers of the Company,
are strongly motivated and are dedicated to the growth of the
Company and to increasing stockholder value. Because of the
leadership provided by the Chairman and other officers of the
Company, and the appreciation of the Company's share price and
market capitalization during the past fiscal year, the Committee
felt that bonuses should be awarded and salaries increased for
the officers of the Company. Therefore in fiscal 1995, bonuses
totaling $175,000 were awarded. Salaries were increased for
certain officers of the Company effective July 1, 1995.
This Report has been provided by the Compensation Committee:
John W. Goth, Chairman, James W. Stuckert, and Pierre Gousseland
Pension Plans
In fiscal 1994, the Company established a variation of a
Simplified Employee Pension ("SEP") Plan, known as a Salary
Reduction/Simplified Employee Pension Plan ("SARSEP").
Management chose this Plan because of regulatory compliance
simplicity, avoidance of significant administrative expense,
availability of substantial tax-advantaged investment
opportunities, and relative freedom from significant vesting or
other limitations. Under this Plan, the Company may contribute
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to a designated IRA account, on an annual basis, up to 15% of
each employee-participant's base compensation. Each such
contribution would, within limits, be a deductible expense to the
Company; would be free of federal income taxation as to the
employee; and would be subject to continuing investment, on a
tax-deferred basis, until assets are actually distributed to the
employee. All employees of Royal Gold are eligible to
participate in the Plan.
On June 25, 1994, the Board of Directors approved the
distribution of up to $40,000, in the aggregate, to the accounts
of all employee-participants in the SEP Plan.
Performance Graph
The following graph compares the cumulative total
stockholder return on Royal Gold's Common Stock with the
cumulative total return of two other stock market indices:
Standard and Poor's 500 Index and Standard and Poor's Gold Mining
Index.
CUMULATIVE TOTAL SHAREHOLDER RETURN CHART
The following table indicates the data points:
6/30/90 6/30/91 6/30/92 6/30/93 6/30/94 6/30/95
Royal Gold $100 $ 38 $ 75 $413 $813 $825
S&P 500 Index (iii) $100 $107 $122 $140 $140 $177
S&P Gold Mining
Index (ii) $100 $ 89 $ 81 $124 $119 $124
X axis = years
Y axis = dollar amount
(i) S & P 500 Index. Represents the return an investor would
have secured (assuming reinvestment of all dividends) on
the basis of an investment of $100 in the 500 equity
issues that make up the Standard and Poor's 500 Index.
(ii) S & P Gold Mining Index. Represents the return an
investor would have secured (assuming reinvestment of all
dividends) on the basis of an investment of $100 in the
five equity issues that make up the Standard and Poor's
Gold Mining Index (Echo Bay Mines Ltd., Homestake Mining
Company, Newmont Gold Company, Placer Dome Inc. and Santa
Fe Pacific Gold Corporation).
(iii) The material in this chart is not "soliciting material,"
is not deemed "filed" with the Commission and is not to be
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incorporated by reference in any filing of the Company
under the Securities Act or the Exchange Act, whether made
before or after the date hereof and irrespective of any
general incorporation language in any such filing.
CERTAIN TRANSACTIONS
In October 1993, the Compensation Committee recommended, and
the Board of Directors determined, to award Mr. Dempsey a bonus
of $25,000 and authorized the Company to extend a loan to Mr.
Dempsey in the amount of $75,000. The proceeds of the bonus and
loan were used to defray an alternative minimum tax incurred by
Mr. Dempsey in connection with his exercise of an incentive stock
option in December 1992. The loan accrued interest at the market
rate of 4% and was payable in December 1994. On December 6,
1994, the Board of Directors approved the recommendation of the
Compensation Committee that Mr. Dempsey receive a bonus of
$75,000, and that $40,000 of such bonus be applied against the
outstanding loan balance. The remaining balance of the loan, in
the amount of $35,000 plus interest, has been extended to
December 31, 1995.
PROPOSAL 2
PROPOSAL TO AMEND THE COMPANY'S
CERTIFICATE OF INCORPORATION TO
AUTHORIZE ADDITIONAL COMMON STOCK
On September 30, 1995, the Board of Directors of the Company
voted unanimously to adopt a resolution recommending that the
Stockholders approve an amendment to the Company's Certificate of
Incorporation to increase the number of shares of Common Stock,
par value $.01 per share, which the Company is authorized to
issue from 30,000,000 shares to 40,000,000 shares. This
resolution is similar to the resolution passed at the Company's
Board of Directors meeting held on September 1, 1987, that
increased the number of authorized shares from 20,000,000 to
30,000,000. The Board of Directors views this amendment as
necessary to provide additional financial flexibility to the
Company, through the availability of additional shares of Common
Stock for possible issuance in connection with future
acquisitions of properties or businesses, future financing needs,
future employee and director stock incentives, and general
corporate purposes. The Board of Directors believes there is an
increased level of opportunity available to the Company for the
expansion of its business through acquisitions using its shares
of Common Stock. The Company has not entered into any agreement,
arrangement, undertaking or understanding, written or oral, for
the issuance of any of the additional shares to be authorized.
Stockholders have no preemptive rights to purchase any additional
shares except pursuant to stock option plans as described above.
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If approved by the Stockholders, such additional authorized
shares would be available for issuance at the discretion of the
Board of Directors (subject to applicable legal requirements)
without the delay and expense incident to the holding of a
special meeting of Stockholders to consider any specific
issuance.
As of October 20, 1995, the Company had 12,903,562 shares of
Common Stock authorized but unissued and not reserved for issuance,
and 10,000,000 authorized but unissued shares of Preferred Stock.
These 12,903,562 unissued shares, together with the 10,000,000 additional
authorized shares of Common Stock that are subject of this
proposal, might be considered as having the effect of
discouraging an attempt by another person or entity to acquire
control of the Company through acquisition of shares, with a view
to imposing a merger or sale of all or any part of the Company's
assets or a similar transaction that was not approved by the
Company's Board of Directors. This proposal is not being made in
response to any specific effort to accumulate the Company's
securities or to obtain control of the Company by means of a
merger, tender offer, solicitation and opposition to management
or otherwise. As stated above, the purpose of the amendment is
to provide additional financial flexibility to the Company.
Other than the provision for election of a portion of the Board
of Directors in any year (a "staggered board") and the possible
anti-takeover effects of the Preferred Stock described above,
neither the Company's Certificate of Incorporation nor By-Laws
contains provisions having a specific anti-takeover effect. The
employment agreements with certain of the Company's officers may
be viewed as having an anti-takeover effect. This proposal is
not part of a plan by management to adopt a series of such anti-
takeover amendments.
It is not possible to state the actual effect of the
proposed amendment upon the rights of existing Stockholders
unless and until the Board of Directors determines to issue all
or part of such shares. However, such effects might include (a)
dilution of the per share equity interest of Stockholders, (b)
dilution of the per share voting power of Stockholders, or (c) a
reduction of existing Stockholders' interests in the sharing in
the assets of the Company, in the event of liquidation.
Vote Required for Approval and Recommendation. The
affirmative vote of sixty percent (60%) of the shares that are
represented at a meeting at which a quorum is present shall be
the act of the Stockholders and is required to adopt the proposed
amendment to the Certificate of Incorporation.
The Board of Directors of the Company unanimously recommends
a vote FOR the proposal to increase the authorized number of
shares of Common Stock.
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PROPOSAL 3
PROPOSAL TO AMEND THE DIRECTORS' STOCK OPTION PLAN
TO INCREASE THE NUMBER OF SHARES OPTIONED DURING
EACH FISCAL YEAR UNDER THE PLAN
Introduction. At the Annual Meeting held in December 1989,
the Stockholders approved a stock option plan for the Company's
non-employee directors (the "Directors' Plan"). The purpose of
the Directors' Plan is to encourage and provide incentives for
the highest level of performance by the Company's non-employee
directors. Only directors who are not also employees of the
Company or any of its subsidiaries are eligible to participate in
the Directors' Plan. As of October 20, 1995, the Company has six
(6) non-employee directors. (Directors' Plan attached hereto as
Appendix 1.)
An aggregate of 200,000 shares of Common Stock are reserved
under the Directors' Plan, of which 5,000 initial shares were
granted to each non-employee director and 2,500 shares are to be
granted once during each fiscal year. Except for limitations
upon the duration, vesting, exercise price and method of exercise
of directors' options, the form of options, including other terms
and provisions thereof, shall be determined by the Board of
Directors or a committee consisting of such board members or
other persons as may be appointed by the Board. While not
required by the terms of the Directors' Plan, it is anticipated
that all options will be granted at the first meeting of the
Board of Directors following each Annual Meeting of Stockholders.
Each option granted must be for a period of five (5) years
from the date of grant. The option exercise price must be equal
to 100% of the fair market value of the Common Stock on the date
of grant of the option. The option price may be paid in cash or
by surrendering to the Company outstanding Common Stock of the
Company already owned by the optionee, valued at fair market
value. Each option may be exercised immediately as to 50% of the
shares covered thereby, and are exercisable as to the remaining
shares subject to the Option after 12 months from the date of
grant; provided however, that options may be exercised only
during the periods beginning the third business day following the
date in which the Company issues a news release containing the
operating results of a fiscal quarter or fiscal year and ending
on the twelfth business day following such date. Options under
the Directors' Plan may be exercised in full immediately in the
event of the death of the optionee. Upon a liquidation or
dissolution of the Company, a reorganization or merger pursuant
to which the Company does not survive, a sale of substantially
all of the Company's assets or upon a change in the composition
of the Board of Director (not approved by a majority of the
Directors in office at the time of the change) resulting in a
change of control of the Company, the Directors' Plan and each
option will terminate, but each outstanding unexercised option
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will become vested and may be exercised in full 30 days prior to
the effective date of any such transaction or event.
If the optionee resigns or is removed as a director for
reasons other than as set forth above, he may exercise the option
within three months after such resignation or removal but only to
the extent it was exercisable on such date and only if the
termination did not result from a violation of the director's
normal duties. In the event of death while, or within three
months after, serving as a Director, the option may be completely
exercised by the person to whom the optionee's rights under the
option pass by will or the laws of descent and distribution.
Options are not transferable by the optionee, other than by will
or the laws of descent and distribution.
The Directors' Plan provides that the total number of option
shares covered by such Plan, the number of shares covered by each
option and the exercise price per share may be proportionately
adjusted by the Board or the Committee in the event of a stock
split, reverse stock split, stock dividend or similar capital
adjustment effected without receipt of consideration by the
Company.
The Board of Directors may amend the Directors' Plan at any
time or may terminate it without approval of the stockholders;
provided, however, that stockholder approval is required for any
amendment which increases the number of shares for which options
may be granted, changes the designation of the class of persons
eligible to participate or changes in any material respect the
limitations or provisions of the options subject to the
Directors' Plan. However, no action by the Board of Directors or
stockholders may alter or impair any option previously granted
without the consent of the optionee.
Options granted under the Directors' Plan will be treated as
NSOs under the Internal Revenue Code. Upon exercise of options
granted under the Directors' Plan, an optionee will be required
to report income, for federal income tax purposes, in the amount
of the excess, if any, of the market value of the shares over the
exercise price, except that, if the optionee is still a director,
or otherwise subject to Section 16(b) of the Securities Exchange
Act of 1934, and has not elected to use the above method, the
reportable income will be the excess, if any, of the market value
for the shares six months after the date of exercise over the
exercise price. The Company may deduct the amount of the income
reported from the exercise when it becomes reportable.
Proposed Amendment. At a Board of Directors meeting held on
December 6, 1994, the Board of Directors approved a resolution to
amend Section 6 of the Directors' Plan, to increase the number of
shares for which options may be granted for each full fiscal year
served under the Directors' Plan from 2,500 to 5,000.
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Stock options are awarded to outside directors so that the
Company can attract and retain key directors, so as to achieve
goals consistent with the Company's business strategy and to
accomplish results that contribute to the overall success of the
Company.
In order to maintain the above-mentioned goals of the
Company, the Board of Directors is requesting that the number of
shares that are optioned to each non-employee director for each
full fiscal year of the Company served, under the Directors'
Plan, be increased by an additional 2,500 shares.
The Stockholders are asked to approve an amendment to
Section 6 of the Directors' Plan to increase the number of shares
of Common Stock granted to outside directors for each full
fiscal year served, by 2,500, from 2,500 to 5,000.
Vote Required for Approval and Recommendation. The
affirmative vote of sixty percent (60%) of the shares that are
represented at a meeting at which a quorum is present is required
for approval of the Amendment to the Directors' Plan proposal.
The Board of Directors believes that this increase in the number
of shares to be optioned to outside directors under the
Directors' Plan is in the best interest of the Company.
The Board of Directors unanimously recommends a vote FOR the
proposal to increase, to 5,000 shares, the annual grant of
options under the Directors' Plan.
PROPOSAL 4
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
On September 30, 1995, the Board of Directors of the
Company, upon recommendation from its Audit Committee, determined
that the Company would engage Coopers & Lybrand, rather than
Williams, Richey & Co., as the principal accountants to audit the
Company's financial statements for its fiscal year ending June
30, 1996. The primary reason for the Company's change in
auditors is because of the Company's international exploration
programs and its need for non-auditing advice relating to such
programs and other matters. In addition to audit services,
Coopers & Lybrand will render certain non-audit services to the
Company, including tax advice.
During the Company's past three fiscal years, and during the
interim period up to the date of dismissal, there were no
disputes, disagreements, or discrepancies between the Company and
Williams, Richey & Co. on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or
procedure and no adverse opinion or exception in reports by Williams,
Richey & Co. over the past two years.
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The Board of Directors unanimously recommends that the
Stockholders ratify the appointment of Coopers & Lybrand,
independent certified public accountants, to audit the
consolidated financial statements of the Company for the fiscal
year ended June 30, 1996.
The ratification of the appointment of Coopers & Lybrand is
being submitted to the Stockholders because the Board of
Directors believes this to be a good corporate practice. Should
the Stockholders fail to ratify this appointment, the Board of
Directors will review the matter.
Representatives of both Coopers & Lybrand and Williams,
Richey & Co. have been invited to attend the Annual Meeting of
Stockholders. They will have an opportunity to make a statement,
if they so desire, and will have an opportunity to respond to
appropriate questions from the Stockholders.
The Board of Directors unanimously recommends a vote FOR the
ratification of the appointment of Coopers & Lybrand as
independent auditors of the Company.
OTHER MATTERS
The Board of Directors knows of no other matters to be
brought before the Meeting. However, if other matters should
come before the Meeting, it is the intention of each person named
in the Proxy to vote such Proxy in accordance with his judgment
on such matters.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1996
Annual Meeting of Stockholders must be received by the Company at
its principal executive office in Denver, Colorado, by July 1,
1996, if such proposals are to be included in the proxy materials
for the 1996 Annual Meeting of Stockholders. The inclusion of
any Stockholder proposal in the proxy materials for the 1996
Annual Meeting of Stockholders will be subject to applicable
rules of the Securities and Exchange Commission.
BY ORDER OF THE BOARD OF DIRECTORS
Karen P. Gross
Vice President & Corporate Secretary
Denver, Colorado
October 30, 1995
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Upon the written request of any record holder or beneficial owner
of Common Stock entitled to vote at the Annual Meeting, the
Company will provide, without charge, a copy of its Annual Report
on Form 10-K, as filed with the Securities and Exchange
Commission for the fiscal year ended June 30, 1995. Requests for
a copy of such Annual Report should be mailed to Karen P. Gross,
Vice President & Corporate Secretary, Royal Gold, Inc., 1660
Wynkoop Street, Suite 1000, Denver, Colorado 80202-1132.
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PROXY CARD
(Front)
PROXY PROXY
ROYAL GOLD, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Stanley Dempsey and Edwin W.
Peiker, Jr., or either of them, as attorneys, agents and proxies
(the "Proxies"), each with full power of substitution to vote, as
designated below, all the shares of Common Stock of Royal Gold,
Inc. held of record by the undersigned on October 20, 1995, at
the Annual Meeting of Stockholders of Royal Gold, Inc., (the
"Meeting") to be held at the University Club, Directors Room,
1673 Sherman Street, Denver, Colorado, on December 7, 1995,
at 1:30 p.m., or at any adjournment thereof.
1. PROPOSAL to elect, as Class II directors for a term of three
years (term to expire in 1998) or until each such Director's
successor is elected and qualified, each of the following
nominees:
FOR / / THE NOMINEES BELOW (except as marked to the
contrary)
WITHHOLD AUTHORITY / / to vote for the nominees below
Pierre Gousseland Merritt Marcus James W. Stuckert
INSTRUCTION: To withhold authority to vote for any single
nominee, draw a line through the nominee's name
above.
2. PROPOSAL to adopt an amendment to the Company's Certificate
of Incorporation to increase the authorized shares of Common
Stock from 30,000,000 to 40,000,000.
FOR / / AGAINST / / ABSTAIN / /
3. PROPOSAL to amend the Company's Directors' Stock Option Plan
to increase, from 2,500 to 5,000, the number of options for
shares of Common Stock granted to each outside director, on a
yearly basis, under such Plan.
FOR / / AGAINST / / ABSTAIN / /
4. PROPOSAL to ratify the appointment of Coopers & Lybrand as
independent auditors of the Company for the fiscal year
ended June 30, 1996.
FOR / / AGAINST / / ABSTAIN / /
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In their discretion, the Proxies are also authorized to vote
all of the shares of the undersigned upon such other
business as may properly come before the Meeting.
Management and Directors are not currently aware of any
other matters to be presented at the Meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION
IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3 and 4.
The undersigned acknowledges receipt of this Proxy and a copy of
the Notice of Annual Meeting and Proxy Statement dated
October 30, 1995.
Dated ___________________________________________
__________________________________________________
(Signature)
__________________________________________________
(Signature if Held Jointly)
Please sign exactly as name appears on this Proxy.
When shares are held by joint tenants, both should
sign. When signing as attorney, executor,
administrator, trustee or guardian, please give
full title as such. If a corporation, please sign
in full corporate name by president or other
authorized officer. If a partnership, please sign
in partnership name by authorized person.
Please mark, sign, date and return this Proxy
promptly.
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APPENDIX 1
DIRECTORS' STOCK OPTION PLAN
1. PURPOSE.
The purpose of this Directors' Stock Option Plan (the
"Plan") is to assist Royal Gold, Inc. in attracting, motivating
and retaining qualified non-employee directors by providing means
whereby such persons will be given an opportunity to acquire a
proprietary interest in the Company's future growth by purchasing
shares of Common Stock.
2. DEFINITIONS.
When used in this Plan, unless the context otherwise
requires:
(a) "Board of Directors" or "Board" shall mean the Board of
Directors of Royal Gold, Inc., as constituted at any time.
(b) "Committee" shall mean the Committee as hereinafter
described in Section 3 hereof.
(c) "Company" shall mean Royal Gold, Inc.
(d) "Directors' Options" shall mean options to purchase
shares of the Company's Common Stock which may be granted each
fiscal year by the Company to each person serving as a director
of the Company who is not also an employee of the Company or any
of its subsidiary corporations.
(e) "Fair Market Value" shall mean the closing price of
Royal Gold, Inc.'s Common Stock, as traded on the NASDAQ National
Market System (or, if such shares are then listed on any national
securities exchange, the closing price on such exchange) on the
date as of which such value is being determined. If the Common
Stock is not traded on NASDAQ National Market System or any
national securities exchange, Fair Market Value shall be
determined by the Board on the basis of the best available market
value information.
(f) "Options" shall mean the Directors' Options issued
pursuant to the Plan.
(g) "Plan" shall mean the Directors' Stock Option Plan of
the Company authorized and adopted by the Board of Directors at
its meeting held on October 20, 1989, and as amended from time-
to-time.
(h) "Share" shall mean a share of Common Stock, par value
$.01, of the Company.
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(i) "Subsidiary" shall mean any corporation in which the
Company owns, directly or indirectly, stock possessing fifty
percent (50%) or more of the total combined voting power of all
classes of stock.
3. ADMINISTRATION.
The Plan shall be administered by the Board of Directors or
by a Committee which shall consist of such members of the Board
of Directors of the Company or such other persons as may be
appointed by the Board of Directors. The Board and, if any, the
Committee, shall have full power and authority to construe,
interpret and administer the Plan and to make determinations
which shall be final, conclusive and binding upon all persons
including, but not limited to, the Company, the stockholders, and
any person having an interest in any Options. If a member of the
Committee, for any reason, shall cease to serve, the vacancy may
be filled by the Board of Directors. Any member of the Committee
may be removed at any time, with or without cause, by the Board
of Directors.
4. ELIGIBILITY.
Options may be granted only to non-employee directors of the
Company; employees of the Company or any of its subsidiary
corporations are not eligible to receive Options under the Plan.
5. SHARES SUBJECT TO THE PLAN.
Subject to the provisions of Section 12 (relating to
adjustments upon changes in shares), the Shares which may be sold
pursuant to Directors' Options granted under the Plan shall not
exceed in the aggregate 200,000 shares of the Company's
authorized Common Stock, par value $.01. If any Option under the
Plan shall for any reason terminate or expire without having been
exercised in full, the Shares not purchased under such Option
shall again be available under the Plan.
6. ANNUAL OPTION GRANTS.
The number of Shares to be optioned to each non-employee
director shall be fixed at 5,000 Option Shares for each such
director now serving as such and thereafter 2,500 Option Shares
for each full fiscal year of the Company served. The initial
annual grant shall be made on the date of approval of the Plan by
the stockholders of the Company. Except for the limitations upon
the duration, vesting, exercise price and method of exercise of
Directors' Options as hereinafter set forth, the form of Option,
including other terms and provisions thereof, shall be determined
from time-to-time by the Board of Directors or the Committee, and
each Option issued may contain terms and provisions different
from other Options granted to the same or other Option
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recipients. An Option Agreement, signed by an officer of the
Company, shall be issued to each person to whom an Option is
granted.
7. PRICE.
The purchase price per Share for the Shares to be purchased
pursuant to the exercise of any Option shall be fixed by the
Board of Directors or the Committee at the time of grant of the
Option, but shall always equal 100% of the Fair Market Value of
the Shares on the date such Option is granted.
8. DURATION OF OPTIONS.
All Directors' Options issued under the Plan shall have a
duration of five (5) years from the date of grant, regardless of
any termination of the Plan prior to the exercise of such
Options.
9. NON-TRANSFERABILITY OF OPTIONS.
Options shall not be transferable by the holder thereof
otherwise than by will or the laws of descent and distribution to
the extent provided herein, and Options may be exercised or
surrendered during the holder's lifetime only by the holder
thereof.
10. EXERCISE OF OPTIONS.
(a) Except in the event of death, in which case they may be
exercised in full immediately, and except as provided in Section
12 below, Directors' Options may be exercised only as follows:
Immediately as to 50% of the shares covered
thereby, and are exercisable as to the
remaining shares subject to the Option after
12 months from the date of grant; provided,
however, options may be exercised only during
the periods beginning on the third business
day following the date on which the Company
issues a news release containing the
operating results of a fiscal quarter or
fiscal year and ending on the twelfth
business day following such date.
(b) An Option shall be exercised by the delivery of a duly
signed notice in writing to such effect, together with the full
purchase price. Payment of the purchase price shall be made in
cash or outstanding Common Stock of the Company already owned by
the optionee (valued at fair market value). Option Agreements
under the Plan may contain a provision to the effect that all
federal and state taxes required to be withheld or collected from
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an Optionee upon exercise of an Option may be satisfied by the
withholding of a sufficient number of exercised Option shares
which, valued at fair market value on the date of exercise, would
be equal to the total withholding obligation of Optionee.
11. TERMINATION
If a holder of a Director's Option shall resign or be
removed as a director, the Option of such holder shall terminate,
except that, subject to the limitation stated in the last
sentence of this Section 11, (i) if his director's status with
the Company is terminated for any reason other than his death, he
may at any time within three (3) months after such termination
exercise his Option but only to the extent that it was
exercisable by him on the date of termination and only if his
status was not terminated because of a violation of his normal
duties; and (ii) if he dies while serving as a director of the
Company, or within three (3) months after termination of such
status, his Option may be exercised by the person or persons to
whom his rights under the Option shall pass by will or by the
laws of descent and distribution, without regard to the vesting
provisions included in the Option. In no event may an Option be
exercised to any extent by anyone after the expiration of its
term.
12. CHANGES IN CAPITALIZATION: SPLITS, LIQUIDATIONS, MERGERS
AND REORGANIZATIONS.
(a) The aggregate number of shares of Common Stock for
which Options may be granted to eligible persons under the Plan,
the number of shares of Common Stock covered by each outstanding
Option and the price per share thereof in each such Option may be
proportionately adjusted by the Board of Directors or the
Committee for any increase or decrease in the number of issued
shares of Common Stock of the Company resulting from a stock
split, a reverse stock split, a subdivision or consolidation of
shares or other similar capital adjustment, the payment of a
stock dividend or any other increase or decrease in such shares
effected without receipt of consideration by the Company. Any
such determination by the Board of Directors of the Company shall
be conclusive.
(b) Upon the dissolution or liquidation of the Company or
upon any reorganization, merger, consolidation pursuant to which
the Company does not survive (except for a re-incorporation of
the Company in another state), or sale of all or substantially
all of the assets of the Company, or upon a change in the
composition of the Board of Directors (not approved by a majority
of the directors in office at the time of such change) which
results in a change in "control" of the Company (for purposes of
this subsection "control" is defined in Rule 405 promulgated by
the Securities and Exchange Commission under the Securities Act
4
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of 1933, as amended) each outstanding Option shall terminate;
provided that in such event each outstanding unexercised Option
shall become fully vested under the Plan and shall be immediately
exercisable as of thirty (30) days prior to the effective date of
such dissolution, liquidation, reorganization, merger,
consolidation, sale of assets or change in control, and each
Optionee may exercise, in whole or in part, any unexpired Option
or Options held for at least six (6) months at the time of
exercise. The grant of an Option under the Plan shall have no
effect on the ability of the Company to change or adjust its
capital structure or to merge, consolidate, dissolve, liquidate
or to sell or transfer all or any part of its business or assets.
13. ISSUANCE OF SHARES AND COMPLIANCE WITH SECURITIES ACT.
The Company may postpone the issuance and delivery of Shares
upon any exercise of an Option until (a) the admission of such
Shares to listing on any stock exchange on which Shares of the
Company of the same class are then listed; and (b) the Shares
under any state or federal law, rule or regulation as the Company
shall determine to be necessary or advisable. Any person
exercising an Option shall make such representations and furnish
such information as may, in the opinion of counsel for the
Company, be appropriate to permit the Company to issue the Shares
in compliance with the provisions of the Securities Act of 1933,
as amended.
14. AMENDMENT AND TERMINATION OF THE PLAN.
(a) Except as hereinafter provided, the Board of Directors
or the Committee may at any time withdraw or from time-to-time
amend the Plan and the terms and conditions of any Options not
theretofore issued, and the Board of Directors or the Committee,
with the consent of the affected holder of an Option, may at any
time amend the terms and conditions of such Options as have been
theretofore granted. Notwithstanding the foregoing, any
amendment to the Plan by the Board of Directors or Committee
which would (i) increase the number of Shares issuable under
Options; (ii) change the class of persons to whom Options may be
granted; or (iii) change in any material respect the limitations
or provisions pertaining to Options shall be subject to the
approval of the holders of a majority of the shares of the
Company present at any meeting of stockholders and entitled to
vote thereat either prior to or within one year after such
amendment.
(b) The determination of the Board of Directors or the
Committee as to any questions which may arise with respect to the
interpretation of the provisions of the Plan and Options granted
hereunder shall be final and conclusive.
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(c) The Board of Directors or the Committee may authorize
and establish such rules, regulations and revisions thereof, not
inconsistent with the provisions of the Plan, as it may deem
advisable to make the Plan and Options effective or provide for
their administration, and may take such other action with regard
to the Plan and Options as it shall deem desirable to effectuate
their purpose.
(d) The Plan shall remain in effect until such time as it
is terminated by the Board of Directors of the Company. No such
termination shall affect Options granted prior thereto.
15. EFFECTIVE DATE OF THE PLAN.
The Plan was adopted on October 20, 1989, and is subject to
approval of the holders of a majority of the shares of the
Company represented at any meeting of stockholders and entitled
to vote thereat. Options may not be granted under the Plan prior
to such stockholder approval.
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