(Front)
PROXY PROXY
ROYAL GOLD, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Stanley Dempsey and John W. Goth, 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 8, 1999, at the
Annual Meeting of Stockholders of Royal Gold, Inc. (the "Meeting") to be held
at the Oxford Hotel, Oxford Theater Room, 1637 Wazee Street, Denver,
Colorado, on November 16, 1999, at 9:30 A.M., or at any postponement or
adjournment thereof.
1. PROPOSAL to elect, as Class III directors for a term of three years (term
to expire in 2002) 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
S. Oden Howell, Jr. Edwin W. Peiker, Jr. Donald Worth
INSTRUCTION: To withhold authority to vote for any single nominee, draw a
line through the nominee's name above.
2. PROPOSAL to amend the Company's Equity Incentive Plan to increase the
number of shares of Common Stock reserved for issuance upon the exercise
of options granted under such Plan.
FOR AGAINST ABSTAIN
3. PROPOSAL to ratify the appointment of PricewaterhouseCoopers as
independent auditors of the Company for the fiscal year ended
June 30, 2000.
FOR AGAINST ABSTAIN
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 and 3.
The undersigned acknowledges receipt of this Proxy and a copy of the Notice of
Annual Meeting and Proxy Statement, dated October 13, 1999.
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.
-1-
ROYAL GOLD, INC.
1660 Wynkoop Street, Suite 1000
Denver, Colorado 80202
303/573-1660 (Phone)
303/595-9385 (Fax)
[email protected] (E-mail)
www.royalgold.com (Web site)
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held November 16, 1999
* * * *
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 Oxford Hotel, Oxford Theater Room,
1637 Wazee Street, Denver, Colorado, on Tuesday, November 16, 1999,
at 9:30 A.M., Mountain Standard Time, for the following purposes:
1. To elect three Class III directors to serve until the
2002 Annual Meeting of Stockholders or until each such
director's successor is elected and qualified;
2. To amend the Company's Equity Incentive Plan to increase,
from 800,000 to 1,300,000, the number of shares of Common
Stock reserved for issuance upon the exercise of options
granted under such Plan.
3. To ratify the appointment of PricewaterhouseCoopers as
independent auditors of the Company for the fiscal year
ended June 30, 2000; and
4. To transact any other business that may properly come
before the meeting and any postponements or adjournments
thereof.
Only stockholders of record at the close of business on
October 8, 1999, will be entitled to notice of and to vote at the
meeting and any postponements or adjournments of the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/
Karen P. Gross
Vice President & Corporate Secretary
Denver, Colorado
October 13, 1999
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.
-1-
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
ROYAL GOLD, INC.
1660 Wynkoop Street
Suite 1000
Denver, Colorado 80202
303/573-1660
303/595-9385 (Fax)
[email protected] (E-mail)
www.royalgold.com (Web site)
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 9:30 A.M. on Tuesday, November 16, 1999, at the Oxford
Hotel, Oxford Theater Room, 1637 Wazee Street, Denver, Colorado.
This Proxy Statement, the enclosed Proxy and the Company's Annual
Report for the fiscal year ended June 30, 1999, are being mailed to
Stockholders on or about October 13, 1999.
Only holders of shares of the Common Stock ($.01 par value) of
the Company ("Common Stock") of record at the close of business on
October 8, 1999, will be entitled to notice of, and to vote at, the
Meeting and at any and all postponements and adjournments thereof.
If the enclosed Proxy is properly executed and received by the
Company by 10:00 a.m., Mountain Standard Time, on November 16,
1999, 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 such Proxies 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 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 AND OUTSTANDING STOCK
All voting rights are vested exclusively in the holders of the
Common Stock. As of the record date, October 8, 1999, there were
issued and outstanding 17,778,814 shares of Common Stock, each of
which entitles the holder thereof to one vote on 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. Abstentions will be counted as present for purposes
of determining whether there is a quorum. 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.
-1-
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows the beneficial ownership, as of
August 31, 1999, of the 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, and by all of the Company's directors and
executive officers as a group.
Number of Shares of Common Stock
Name and Address Beneficially Owned Percent
of Beneficial Subject to of
Owner Shares Options(a) Total(b) Class
Stanley Dempsey (c) 568,733 430,050 998,783 5.6%
Royal Gold, Inc.
1660 Wynkoop Street
Suite 1000
Denver, Colorado 80202
Edwin W. Peiker, Jr. (d) 421,678 25,000 446,678 2.5%
555 Ord Drive
Boulder, CO 80302
John W. Goth 24,500 25,000 49,500 *
14142 Denver West Parkway
Suite 170
Golden, CO 80401
Pierre Gousseland 42,500 25,000 67,500 *
4 Lafayette Court, #1B
Greenwich, CT 06830
James W. Stuckert 1,709,350 25,000 1,734,350 9.7%
Hilliard, Lyons, Inc.
P.O. Box 32760
Louisville, Kentucky 40232
Merritt E. Marcus 421,243 25,000 446,243 2.5%
Marcus Paint Co.
235 East Market Street
Louisville, KY 40202
S. Oden Howell, Jr. 566,680 25,000 591,680 3.3%
Howell & Howell Painting
Contractors, Inc.
P.O. Box 36097
Louisville, KY 40233
Peter B. Babin(e) 240,900 210,120 451,020 2.5%
Royal Gold, Inc.
1660 Wynkoop Street
Suite 1000
Denver, CO 80202
Donald Worth 0 0 0 *
2679 Bayview Avenue
New York, Ontario M2L 1C1
Canada
-2-
Thomas A. Loucks 468,078 85,920 553,998 3.1%
Royal Gold, Inc.
1660 Wynkoop Street
Suite 1000
Denver, CO 80202
Karen P. Gross 68,650 94,525 163,175 *
Royal Gold, Inc.
1660 Wynkoop Street
Suite 1000
Denver, CO 80202
Donald Baker 5,200 47,575 52,775 *
Royal Gold, Inc.
1660 Wynkoop Street
Suite 1000
Denver, CO 80202
All Directors & 4,537,512 1,018,190 5,555,702 31.2%
Officers as a
Group (12 persons)
Societe Generale - Orvalor 1,363,000 0 1,363,000 7.7%
Rese/Ges/OPC
92972 Paris-Ladefense CE DEX
__________________
* Less than 1% ownership of the Company's Common Stock.
(a) See "Compensation of Directors and Executive Officers --
Option Exercises and Year End-Values."
(b) The amounts shown in the table reflect all shares
beneficially owned, including shares subject to outstanding
stock options that are exercisable within sixty (60) days of
the date of this Proxy Statement.
(c) The amount shown in the table includes 295,882 shares
beneficially owned by Mr. Dempsey's immediate family. Mr.
Dempsey disclaims beneficial ownership of these 295,882
shares of Common Stock.
(d) The amount shown in the table includes 20,100 shares benefi-
cially owned by Mr. Peiker's immediate family. Mr. Peiker
disclaims beneficial ownership of these 20,100 shares of
Common Stock.
(e) The amount shown in the table includes 40,850 shares
beneficially owned by Mr. Babin's immediate family. Mr.
Babin disclaims beneficial ownership of these 40,850 shares
of Common Stock.
-3-
PROPOSAL 1.
ELECTION OF CLASS III 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, Babin and Goth; the Class II
directors are Messrs. Stuckert, Marcus and Gousseland; and the
Class III directors are Messrs. Howell, Peiker and Worth.
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 S. Oden Howell, Edwin W.
Peiker, and Donald Worth as Class III directors of the Company. If
any of the nominees for election as a Class III director should
refuse or be unable to serve (an event that is not anticipated),
the Proxy will be voted for such person who is designated by the
Board of Directors to replace such nominee. Each Class III
director elected at the Meeting shall serve until the 2002 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."
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 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.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS
A VOTE "FOR" THE DIRECTOR NOMINEES.
-4-
DIRECTORS AND OFFICERS
Set forth below are the names, position with the Company,
periods of service and experience of the directors and officers of
the Company. The persons who are nominated for election as
directors at the Meeting are indicated with an asterisk.
Stanley Dempsey
Age 60; Chairman of the Board of Directors and Chief Executive
Officer of the Company since August 1984. Class I director; Term
expires 2000.
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 Behre Dolbear & Company, Inc.,
and Hazen Research, Inc., and is also a member of the board of
directors of various mining-related associations.
Peter B. Babin
Age 45; President of the Company since December 10, 1996. Class I
director since October 1997. Term expires 2000.
Executive Vice President of the Company from January 1, 1995 to
December 10, 1996. Senior Vice President from July 1, 1993 to
January 1, 1995. 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.
John W. Goth
Age 71 Class I director since August 1988; Term expires 2000
Executive Director of the Denver Gold Group and Chairman of the
Minerals Information Institute. A consultant to the mining industry
since 1985. Mr. Goth was formerly a senior executive of AMAX, Inc.
and director of Magma Copper Corporation. He is currently a
director of U.S. Gold Corporation, Qualchem, Inc. and Behre Dolbear
& Company. (1) (2)
-5-
Pierre Gousseland
Age 77 Class II Director since June 1992; Term expires 2001
Financial Consultant. From 1977 until January 1986, Mr. Gousseland
was Chairman and Chief Executive Officer of AMAX, Inc. He is
presently a Director of Guyanor Ressources S.A. Formerly, Director
of the French American Banking Corporation of New York, the
American International Group, Inc., Union Miniere, S.A. (Belgium),
Degussa AG (Germany), IBM World Trade Europe/Middle East Africa
Corporation, Pancontinental Mining Europe GmbH (Germany), and Sauer
Group Investments Ltd. Mr. Gousseland has served on the Chase
Manhattan International and Creditanstaldt International (Vienna,
Austria) Advisory Boards, and is past president of the French-
American Chamber of Commerce in the United States. (2)
Merritt E. Marcus
Age 65; Class II director since December 1992. Term expires 2001.
President and Chief Executive Officer of Marcus Paint Company, a
manufacturer of industrial coatings, and Performance Powders, LLC,
a manufacturer of industrial powder coatings. Mr. Marcus has
served several terms as a director of the National Paint and
Coatings Association.
James W. Stuckert
Age 61; Class II director since September 1989; Term expires 2001.
Chairman and Chief Executive Officer of Hilliard, Lyons, Inc.,
Louisville, Kentucky. Mr. Stuckert is also a Director of Hilliard,
Lyons, Inc. and Thomas Transportation. He joined Hilliard, Lyons
in 1962 and served in several capacities prior to being named
Chairman in December 1995. Mr. Stuckert is a Board of Governor
Member of the Security Industries Association. (1) (2)
*S. Oden Howell, Jr.
Age 59; Class III director since December 1993. Term expires 1999.
Consultant to H&N Constructors, Inc., a contractor specializing in
remodeling and rehabilitation of government facilities. Mr.
Howell is Secretary/Treasurer of Howell & Howell Painting
Contractors, Inc. and owner of Kessinger Service Industries, LLC.
Inc. From 1972 until 1988, Mr. Howell was Secretary/Treasurer of
Howell & Howell, Inc.
-6-
*Edwin W. Peiker, Jr.
Age 68; Class III director since May 1987. Term expires 1999.
President and Chief Operating Officer of the Company from April
1988 until February 1992. Vice President of 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)
*Donald Worth
Age 67. Class III director since April 1999. Term expires 1999.
Mr. Worth has been involved in the mining industry since 1949. He
formerly was a mining specialist and a vice president of Canadian
Imperial Bank of Commerce (Canada). Mr. Worth is a director of
Canarc Resource Corporation, Cominco Ltd., Founders Capital
Corporation, and Tiomin Resources Inc. He is also a trustee of
Labrador Iron Ore Royalty Income Fund, and is involved with several
professional associations both in Canada and the United States.
Karen P. Gross
Age 45.
Vice President of the Company since June 1994 and Corporate Secre-
tary since 1989. From 1987 until 1989, Ms. Gross was the Assistant
Secretary to the Company and Executive Assistant.
Thomas A. Loucks
Age 50
Executive Vice President 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.
-7-
Donald J. Baker
Age 50
Vice President of the Company since November 1998. From January
1997, until 1999, Mr. Baker was Manager of Corporate Development.
From 1994 until 1997, he was a consultant to the Company. Mr.
Baker was previously employed with Climax Molybdenum Company and
Homestake Mining Company.
___________
(1) Member of Audit Committee.
(2) Member of Compensation Committee.
MEETINGS AND COMMITTEES OF THE BOARD
During the fiscal year ended June 30, 1999, the Board of
Directors held four regular meetings, and on five 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,
1999, the Audit Committee consisted of James W. Stuckert, John W.
Goth, and Edwin W. Peiker, Jr. The Audit Committee held one
meeting during the fiscal year. The function of the Audit
Committee is to aid the directors in undertaking and fulfilling
their responsibilities for financial reporting to the stockholders;
to review internal financial procedures and reports; to recommend
changes in the method of reporting to ensure timely and accurate
reporting of financial data; to review audit principles in
conjunction with the Company's independent auditors; to provide
better avenues of communication between the Board of Directors,
management and the external auditors and internal accounting
personnel; and to recommend the appointment of the Company's
independent auditors.
During the year ended June 30, 1999, the Compensation
Committee consisted of John W. Goth, James W. Stuckert and Pierre
Gousseland. The Compensation Committee met three times during the
last fiscal year. The Compensation Committee assumes the crucial
role of implementing compensation plans for top executives, as well
as directors. The Committee forges the key link between the Board
and management that balances the interests of shareholders and
those of management. The Compensation Committee's function is to
review new or modified programs in the areas of executive salary,
incentive compensation, and stock plans; and review and make
recommendations to the Company's Board of Directors concerning the
levels 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 of another entity, one of
whose executive officers served on the Compensation Committee or as
a director of the Company.
COMPLIANCE WITH SECTION 16(a) OF THE
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 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, 1999.
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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 any
other executive officer of the Company, for the fiscal year ended
June 30, 1999.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
Name and Year Other
Principal Ended Annual
Position June 30 Salary($) Bonus($) Compensation ($)
Stanley Dempsey 1999 250,000 60,000 -
Chairman & Chief 1998 240,000 110,000 -
Executive Officer 1997 215,000 100,000 -
Peter B. Babin 1999 185,000 50,000 -
President 1998 175,000 80,000 -
1997 160,000 65,000 -
Thomas A. Loucks 1999 120,000 10,000 -
Executive Vice 1998 120,000 45,000 -
President 1997 114,000 35,000 -
Karen P. Gross 1999 105,000 25,000 -
Vice President 1998 100,000 30,000 -
& Corporate 1997 90,000 27,000 -
Secretary
Donald Baker 1999 (1) 95,000 40,000 -
Vice President
LONG-TERM COMPENSATION
Awards Payouts
------------------ --------
Name and Year Restricted LTIP All Other
Principal Ended Stock Options/ Payouts Compensation
Position June 30 Awards SARs (#) ($) ($)
Stanley Dempsey 1999 - 50,000 - 24,861 (2)
Chairman & Chief 1998 - 164,250 - 29,487
Executive Officer 1997 - 50,000 - 25,562
Peter B. Babin 1999 - 30,000 - 22,783 (3)
President 1998 - 105,120 - 23,027
1997 - 30,000 - 19,718
Thomas A. Loucks 1999 - 10,000 - 10,884 (4)
Executive Vice 1998 - 75,920 - 11,685
President 1997 - 20,000 - 11,650
Karen P. Gross 1999 - 20,000 - 11,460 (5)
Vice President 1998 - 67,525 - 11,477
& Corporate 1997 - 20,000 - 9,732
Secretary
Donald Baker 1999 (1) - 25,000 - 10,383 (6)
(1) Prior to 1999, Mr. Baker was not an officer of the Company.
(2) The Company's SARSEP payments made to Mr. Dempsey in fiscal
1999, 1998, and 1997, were $19,000, $22,325, and $20,400,
respectively, and the Company's payment of group term life
insurance and long-term disability insurance premiums paid in
fiscal 1999, 1998, and 1997 were $5,861, $7,162, and $7,162,
respectively.
(3) The Company's SARSEP payments made to Mr. Babin in fiscal
1999, 1998, and 1997 were $16,450, $17,854, and $14,679,
respectively, and the Company's payment of group term life
insurance and long-term disability insurance premiums paid in
fiscal 1999, 1998, and 1997 were $6,333, $5,172, and $5,039,
respectively.
(4) The Company's SARSEP payments made to Mr. Loucks in fiscal
1999, 1998, and 1997 were $9,100, $10,395, and $10,360,
respectively, and the Company's payment of group term life
insurance and long-term disability insurance premiums paid in
fiscal 1999, 1998, and 1997 were $1,784, $1,290, and $1,290,
respectively.
(5) The Company's SARSEP payments made to Ms. Gross in fiscal
1999, 1998, and 1997 were $9,100, $9,878, and $9,731,
respectively, and the Company's payment of group term life
insurance and long-term disability insurance premiums paid in
fiscal 1999, 1998, and 1997 were $2,360, $1,599, and $1,542,
respectively.
(6) The Company's SARSEP payment made to Mr. Baker in fiscal 1999
was $9,450, and the Company's payment of group term life
insurance premium paid in fiscal 1999 was $933.
-9-
Option Grants in Last Fiscal Year
During the fiscal year ended June 30, 1999, officers of the
Company were awarded a total of 135,000 stock options, no stock
appreciation rights were awarded to any of the officers of the
Company, and no existing options held by any of the officers of the
Company were repriced by the Company.
The following table sets forth certain information on option
grants in fiscal 1999 to the named executive officers.
Number of % of Total
Securities Options Exercise
Underlying Granted to Price
Options Employees in ($/share) Expiration
Name Granted (#) Fiscal Year (1) (2) Date
- --------------- ----------- --------------- --------- --------------
Stanley Dempsey 50,000 28.7% $4.594 Nov. 17, 2008
Peter B. Babin 30,000 17.2% $4.594 Nov. 17, 2008
Thomas A. Loucks 10,000 5.7% $4.594 Nov. 17, 2008
Karen P. Gross 20,000 11.5% $4.594 Nov. 17, 2008
Donald Baker 25,000 14.4% $4.594 Nov. 17, 2008
Potential Realizable Value at Assumed
Annual Rates of Stock Price Appreciation
for Option Term (3) ($)
-----------------------------------------
Name 5% 10%
- --------------- ---------- -------
Stanley Dempsey 144,449 366,063
Peter B. Babin 86,670 219,638
Thomas A. Loucks 28,890 73,212
Karen P. Gross 57,780 146,425
Donald Baker 72,225 183,031
(1) The percentage of total options granted is stated for the
entire number of options granted to each employee.
(2) The exercise price for all options listed is $4.594, which
was the fair market value of the Company's common stock on
the date of grant.
(3) The potential realizable values are stated for the entire
number of options granted to each employee. Actual gains, if
any, on stock option exercises are dependent on the future
performance of the common stock (as well as the option
holder's continued employment through the vesting period).
The amounts reflected in this table may not necessarily be
achieved.
-10-
Aggregated Option/SAR Exercised in Last Fiscal Year and FY-End
Option Values
The table below sets forth information regarding the deemed
value of options exercised by officers during the year ended June
30, 1999, and the deemed value of options held by such persons at
June 30, 1999. At June 30, 1999, and at the date of this Proxy
Statement, 15,000 shares of Common Stock acquired by officers of
the Company as a result of the exercise of stock options as set
forth below were sold; all other shares acquired as a result of the
exercise of such stock options continue to be held by such
officers.
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
Shares at FY-End (#)(1) at FY-End ($)(2)
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized($) Unexercisable Unexercisable
- --------------- ----------- ----------- ---------------- ----------------
Stanley Dempsey 40,000 $132,180(3) 380,050/50,000 $957,720/0
Peter B. Babin 70,000 $236,495(4) 180,120/30,000 $332,850/0
Thomas A. Loucks 149,720 $579,902(5) 75,920/10,000 $ 0/0
Karen P. Gross 17,000 $ 60,571(6) 74,525/20,000 $ 31,066/0
Donald Baker 0 $ 0 22,575/25,000 $ 0/0
(1) Of the total of 860,690 options, 94,848 Non-Incentive Stock
Options ("NSOs") are exercisable through December 6, 1999, at
$5.375/share; 66,138 NSOs are exercisable through December 7,
2000, at $5.375/share; 297,800 Incentive Stock Options
("ISOs")are exercisable through December 21, 2001, at
$0.125/share; 21,944 ISOs are exercisable through December 6,
2004, at $5.375/share; 20,328 ISOs are exercisable through
December 7, 2005, at $5.375/share, 79,228 NSOs are
exercisable through December 10, 2006, at $5.375/share;
15,395 ISOs are exercisable through December 10, 2006, at
$5.375/share; 99,656 NSOs are exercisable through October 3,
2007 at $5.375/share; 35,353 ISOs are exercisable through
October 3, 2007 at $5.375/share; 90,100 ISOs are exercisable
through November 17, 2008, at $4.594/share; and 39,900 NSOs
are exercisable through November 17, 2008, at $4.594/share.
(2) Value calculated based on closing "sale" price as reported on
The Nasdaq National Market ("NASDAQ"), on the last day of our
fiscal year, June 30, 1999, of $4.563/share.
(3) Based on the difference between the exercise price and the
closing "sale" price as reported on NASDAQ, on the dates of
exercise.
(4) Based on the difference between the exercise price and the
closing "sale" price as reported on NASDAQ, on the dates of
exercise.
(5) Based on the difference between the exercise price and th
closing "sale" price as reported on NASDAQ, on the dates of
exercise.
(6) Based on the difference between the exercise price and the
closing "sale" price as reported on NASDAQ, on the date of
exercise.
-11-
Compensation To Directors
During fiscal 1999, each non-employee director of the Company
received an annual fee of $12,000 for service as a director.
Pursuant to the Company's Equity Incentive Plan, each non-
employee director of the Company is granted annually an NSO to
purchase 5,000 shares of Common Stock at an exercise price equal to
the fair market value of the Company's Common Stock on the date of
grant. Accordingly, on November 17, 1998, each non-employee
director of the Company was granted 5,000 NSOs, at an exercise
price of $4.594 per share. Such options have a ten year term and
are exercisable immediately with respect to 2,500 shares and after
12 months with respect to the other 2,500 shares.
Employment Contracts
Officers of the Company (Messrs. Dempsey, Babin, Loucks and
Ms. Gross) are 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 1999. Pursuant to each of the employment contracts,
salary and benefits are to be continued for 12 months following
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 upon: (1) the acquisition, directly or indirectly, by
any person or related group of persons, of beneficial ownership of
securities possessing more than thirty percent (30%) of the total
combined voting power of the Company's outstanding securities; (2)
a change in the composition of the Board over a period of eighteen
(18) consecutive months or less such that fifty percent (50%) or
more of the Board members cease to be directors who either (A) have
been directors continuously since the beginning of such period, or
(B) have been unanimously elected or nominated by the Board for
election as directors during such period; (iii) a stockholder-
approved merger or consolidation to which the Company is a party
and in which (A) the Company is not the surviving entity, or (B)
securities possessing more than thirty percent (30%) of the total
combined voting power of the Company's outstanding securities are
transferred to a person or persons different from the persons
holding those securities immediately prior to such transaction; or
(iv) the sale, transfer or other disposition of all or
substantially all of the Company's assets in complete liquidation
or dissolution of the Company.
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 Compensation Committee evaluates the performance
of management and recommends to the full Board of Directors the
compensation level for all officers and key employees. The
Compensation Committee also administers the Company's Equity
Incentive Plan and determines the amount of stock options granted
to officers and key employees. 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 by offering
compensation packages believed to be appropriate in light of
compensation in the industry, 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 comparable with those paid by the mining industry and
bonuses when individual performance or other circumstances warrant
special recognition, in the view of the Committee.
-12-
The Committee is responsible for considering various 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 views of the Company's
Chairman and Chief Executive Officer. Before or 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
options.
In making recommendations concerning executive compensation,
the Committee reviews individual executive compensation, 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 June meeting.
The Committee also reviews and approves stock option awards,
under the Company's Equity Incentive 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
such employees' 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. Incentive
Stock Options vest in one year and have a 10-year term. Non-
Incentive Stock Options typically vest on the first anniversary of
the date of grant and have a 10-year term.
During the fiscal year ended June 30, 1999, options to
acquire 130,000 shares were awarded to officers of the Company and
options to acquire 39,000 shares were awarded to employees of the
Company who are not officers or directors.
Chief Executive Officer. In evaluating the performance and
setting the compensation of the Chairman and Chief Executive
Officer, the Committee took into account the base salaries of chief
executive officers of other mining companies, including those
companies that are listed in the Cumulative Total Shareholder
Return Chart, and the assessment of Mr. Dempsey's individual
performance, including his leadership with respect to the
development of long-term business strategies for the Company to
improve its economic value. The Committee also took into account
the longevity of Mr. Dempsey's service to the Company and its
belief that Mr. Dempsey is an excellent representative of the
Company to the public by virtue of his stature in the community and
the industry in which the Company operates.
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, the Committee
felt that bonuses should be awarded for the Chairman as well as the
other officers of the Company. Therefore, in fiscal 1999, a bonus
of $60,000 was awarded to the Chairman, and bonuses totaling
$125,000 were awarded to the other officers. A salary increase of
$10,000 was given to the Chairman and small increases were given to
the other officers of the Company in fiscal 1999.
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 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 Company's SEP Plan.
-13-
Performance Graph
The following graph compares the cumulative total 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
6/30 06/30 06/30 06/30 06/30 06/30
1994 1995 1996 1997 1998 1999
Royal Gold $100 $100 $160 $105 $ 62 $ 56
S&P 500 Index $100 $126 $159 $214 $278 $342
S&P Gold Mining $100 $105 $111 $ 87 $ 66 $ 60
Mining Index
Royal Gold Price $8.13 $8.13 $13.00 $8.50 $5.00 $4.56
(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
(Barrick Gold Corporation, Battle Mountain Gold Company,
Homestake Mining Company, Newmont Gold Company, and Placer
Dome Inc.).
(iii) The material in this chart is not "soliciting material," is
not deemed "filed" with the Commission, and is not to be
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.
-14-
PROPOSAL 2.
PROPOSAL TO AMEND THE EQUITY INCENTIVE PLAN
TO INCREASE THE NUMBER OF SHARES AVAILABLE UNDER THE PLAN
Introduction. At the Annual Meeting held in December 1996,
the Stockholders approved the Equity Incentive Plan ("the Plan").
At present there are no shares available for the grant of options
or other awards under the Plan. The purpose of the Plan is to
attract and retain directors, officers, other employees, and
consultants of the Company and to provide such persons with
incentives to continue in the long-term service of the Company
and to create in such persons a more direct interest in the
future success of the operations of the Company by relating
incentive compensation to increases in stockholder value. The
Equity Incentive Plan replaced all previous plans the Company had
in effect at the time, namely the Employee Stock Option Plan for
key employees and the Directors Stock Option Plan for directors
of the Company. The Equity Incentive Plan expires on November 6,
2006. Except as otherwise indicated, all references herein to
the Plan are to the Plan as amended by this Proposal.
Plan Administration. The Plan is administered by the Board
or a committee of non-employee directors designated by the Board
(the "Committee"). Subject to the terms of the Plan and
applicable law, the Board or the Committee (i) determines the
persons to whom awards are granted, the types of awards granted,
the number of shares to be covered by, or with respect to which
payments, rights, or other matters are to be calculated in
connection with, awards granted, and the terms and conditions of
any award under the Plan, and (ii) interprets and administers the
Plan.
Awards Available under the Plan; Eligibility. Awards
granted under the Plan may consist of options to purchase Common
Stock, stock appreciation rights ("SARs") (rights to receive an
amount equal to the excess of the fair market value of a certain
number of option shares on the date of exercise of the SAR over
the exercise price of the related option, in lieu of exercising
the related option to purchase such shares), and supplemental
cash bonuses (reimbursing the recipient for tax liabilities
associated with the exercise of an option or SAR). Except for
awards under the Automatic Stock Option Program for non-employee
directors and ISOs, all awards are discretionary and may be
granted to any employee, non-employee director or consultant of
the Company or any subsidiary. As of September 30, 1999, the
Company and the participating subsidiaries had approximately 12
employees, 7 non-employee directors and 1 consultant. Stock
options granted under the Plan may be incentive stock options
("ISOs") intended to meet the requirements of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), or
options that are not intended to be ISOs ("NSOs"). ISOs may be
granted only to persons who are employees of the Company or a
subsidiary. NSOs may be granted to employees, non-employee
directors or consultants. Under the Plan as amended pursuant to
this Proposal, there will be 1,300,000 shares of Common Stock
available for awards under the Plan. Currently, all 800,000
shares authorized for issuance under the Plan are subject to
existing awards, leaving no shares available for new awards.
The following is a description of the permissible terms of
awards under the Amended Plan. Individual awards may be more
restrictive as to any or all of the permissible terms described
below.
Exercise or Grant Price. The Board or the Committee
establishes the exercise price of the options and the
grant price of SARs at the time such award is granted.
For an ISO, the exercise price per share must not be less
than the fair market value of a share of Common Stock on
the date of grant. If an employee owns or is deemed to
own more than 10% of the combined voting power of all
classes of stock of the Company, any ISOs granted to such
employee must have an exercise price of at least 110% of
the fair market value of the shares on the date of grant.
At October 8, 1999, the closing price of the Company's
Common Stock on NASDAQ was $5.25 per share.
Consideration for Awards; Payment. Payment for shares or
other securities to be delivered pursuant to the Plan may
be made by such method or methods and in such form or
forms as the Board or the Committee determines, including
cash, shares, or any combination thereof. The Board or
the Committee may pay a SAR, upon exercise, in cash,
-15-
Common Stock or a combination thereof. Awards may be
granted for no cash consideration or for such minimal
cash consideration as may be required by applicable law.
Vesting; Term. The Board or the Committee determines any
vesting period for options or SARs, except that (i) for
automatic grants of options to non-employee directors (as
described below under "Automatic Grants to Non-Employee
Directors"), the vesting period with respect to fifty
percent (50%) of each grant is twelve months after the
date of grant, and (ii) SARs may not be exercised unless
the stock subject to the related option has a fair market
value exceeding the applicable exercise price. The Board
or the Committee also determines the expiration date of
each award, except that the term of options must not
exceed ten years after the date of grant and the term of
any ISO granted to a person holding more than ten percent
of the Common Stock on the grant date may not be more
than five years from the date of grant. Upon a change of
control, the vesting of all awards outstanding under the
Plan accelerates and each award becomes fully
exerciseable.
Restrictions on Transferability. Awards other than ISOs
are transferable only to the extent provided in any award
agreement. ISOs may not be sold, pledged, assigned,
hypothecated, transferred or disposed of in any manner
other than by will or by the laws of descent or
distribution, except that a beneficiary of the ISO upon
the grantee's death may be designated. In addition, the
ISOs may be exercised during the lifetime of the grantee
only by the grantee.
Automatic Grants to Non-Employee Directors. Each non-
employee director of the Company is automatically
granted, after serving a full fiscal year on the Board,
and after each fiscal year for which he or she serves
thereafter, NSOs to purchase 5,000 shares of Common
Stock.
Adjustment Provisions. If the Board or the Committee
determines that any dividend or other distribution,
recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up,
spin-off, combination, repurchase, or exchange of shares
or other securities of the Company, issuance of warrants
or other rights to purchase shares or other securities of
the Company or other similar corporate transaction or
event affects the shares such that an adjustment is
determined by the Board or Committee to be appropriate in
order to prevent dilution or enlargement of the benefits
or potential benefits intended to be made available under
the Plan, then the Board or Committee will, in such
manner as it deems equitable, adjust any or all of the
number of shares or the kind of equity securities of the
Company (or number and kind of other securities or
property) with respect to which awards may be granted or
which are subject to outstanding awards and the grant or
exercise price with respect to any award or provide for a
cash payment to holders of outstanding awards, subject
to the terms of the Plan.
Termination of Employment. Both ISOs and NSOs are
exercisable by the holder only during the holder's
employment or service and within three months thereafter
for ISOs (except in the event of death, in which case the
employee's estate may exercise the options within twelve
months thereafter) and within twelve months thereafter
for NSOs.
Plan Amendments. The Board may amend the Plan at any time
or may terminate it without approval of the stockholders, except
that stockholder approval is required for any (1) amendment which
increases the number of shares for which awards may be granted,
and (2) changes in the designation of the class of persons
eligible to receive awards under the 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.
Except as described under "Automatic Grants to Non-Employee
Directors" above, the participants in the Plan are selected by
the Board or the Committee and management in their discretion.
Thus, except for the non-employee directors qualifying for
Automatic Stock Option Program Grants, it is not possible to
indicate the number or names of positions or participants who may
-16-
receive awards under the Plan and no allocation or other
determination has been made as to the types or amounts of awards
that may be made. During 1998, (i) options to purchase 174,000
shares were granted to employees, including options to purchase
135,000 shares granted to current executive officers as a group;
(ii) no SARs were granted to employees or to the current
executive officers; and (iii) supplemental bonus awards totaling
$245,750 were granted to employees, including $185,000 granted to
current executive officers. During 1998, options to purchase
5,000 shares were granted to directors who are not executive
officers. The nominees for directors pursuant to Proposal 1
herein were non-employee directors during 1998 and received
standard option grants under the Automatic Stock Option Program.
For additional information on awards in 1998 to the named
executive officers, refer to the tables on pages 11 and 12. No
associate of any such persons (other than Company employees)
received any awards during 1998 and no other person received five
percent of such awards.
Federal Income Tax Consequences of the Amended Plan. The
following is a general summary of the federal income tax
consequences that may apply to recipients of options, SARs, or
supplemental bonus awards under the Plan. Because the
application of tax laws may vary according to individual
circumstances, a participant should seek professional tax advice
concerning the tax consequences to him or her of participating in
the Plan, including the potential application and effect of
state, local and foreign tax laws and estate and gift tax
considerations.
Incentive Stock Options. A participant who is granted
an ISO recognizes no taxable income when the ISO is
granted. Generally, no taxable income is recognized upon
exercise of an ISO unless the alternative minimum tax
applies as described below. However, a participant who
exercises an ISO recognizes a taxable gain or loss when
the participant sells his or her shares. Any gain or loss
recognized on the sale of shares acquired upon exercise
of an ISO is taxed as long-term capital gain or loss if
the shares have been held for more than one year after
the option was exercised and for more than two years
after the option was granted. For most participants,
long-term capital gain will be taxed at a rate of 20%.
If a participant is entitled to long-term capital gain
treatment upon a sale of the stock, the Company will not
be entitled to any deduction with respect to the ISO
shares. If the participant disposes of the shares before
the required holding periods have elapsed (a
"disqualifying disposition"), the participant is taxed as
though he or she had exercised an NSO, except that the
compensation income on exercise of the option is
recognized in the year of the disqualifying disposition
and generally may not exceed the excess of the amount
realized in the sale of the stock over the option price.
Effect of Alternative Minimum Tax. The difference
between the option price and the fair market value of the
shares on the date of exercise of an ISO will be a tax
preference item for alternative minimum tax ("AMT")
purposes and may give rise to an AMT liability for
certain taxpayers. AMT is payable if and to the extent
that it exceeds the taxpayer's regular tax liability.
Subject to certain limitations, any AMT paid may be
credited against a taxpayer's regular tax liability in
subsequent tax years. In addition, special rules may
apply with respect to (i) certain subsequent sales of the
shares in a disqualifying disposition, and (ii) certain
basis adjustments in computing the alternative minimum
taxable income on a subsequent sale of the shares.
Non-Statutory Stock Options. The tax treatment of NSOs
differs significantly from the tax treatment of ISOs. A
participant generally recognizes no taxable income as the
result of the grant of an NSO. Upon exercise of an NSO,
the participant normally recognizes ordinary income in
the amount of the difference between the option price and
the fair market value of the stock on that date. If the
participant is an employee of the Company, such ordinary
income generally is subject to withholding of income and
employment taxes. Upon the sale of stock acquired by the
exercise of an NSO, any gain or loss, based on the
difference between the sale price and the fair market
value on the date of recognition of income, will be taxed
as a capital gain or loss. A capital gain or loss will
be long-term if the optionee has held the shares more
than twelve months from the date of recognition of
income. For most participants, long-term capital gain
will be taxed at a rate of 20%. The Company should be
entitled to a deduction equal to the amount of ordinary
-17-
income recognized by the optionee as a result of the
exercise of the NSO. If the participant is subject to
Section 16(b) of the Exchange Act, the date for measuring
taxable income potentially may be deferred for up to six
months after the date of exercise unless the optionee
makes an election under Section 83(b) of the Code within
30 days after exercise. If a Section 83(b) election is
made, the participant will be taxed currently upon
exercise of the NSO in an amount equal to the excess, if
any, of the fair market value of the shares at that time
over the option price. Any future appreciation in the
shares will be treated as capital gain upon the sale or
exchange of the shares.
Stock Appreciation Rights and Supplemental Bonuses. A
participant recognizes ordinary income upon the exercise
of an SAR or receipt of a supplemental bonus equal to the
amount or value of the payment received. The Company
generally receives a deduction for amounts it pays in
connection with SARs and supplemental bonuses.
Withholding. The Company's obligation to deliver shares
of Common Stock on the exercise of stock options under
the Plan is subject to the satisfaction of all applicable
federal, state and local income and employment tax
withholding requirements. The Company may withhold any
taxes required by any federal, state, or local law or
regulation in connection with any stock option or other
award under the Plan, including withholding of any
portion of any payment or withholding from other
compensation payable to the participant, unless such
person reimburses the Company for such amount. The Board
may provide holders of NSOs with the right to use shares
of Common Stock in satisfaction of all or part of the
taxes incurred by such holders in connection with the
exercise of such stock options. Such right may be
provided to any such holder by (i) the election to have
the Company withhold, from the shares of Common Stock
otherwise issuable upon the exercise of such NSOs, a
number of shares with an aggregate fair market value
equal to the amount of taxes due as designated by such
holder; or (ii) the election to deliver to the Company,
at the time the NSO is exercised, shares of Common Stock
previously acquired by such holder with an aggregate fair
market value equal to the amount of taxes due as
designated by such holder.
Proposed Amendment. At a Board of Directors meeting held
on September 8, 1999, the Board of Directors approved a
resolution to amend Article VI of the Plan, to increase the
number of shares for which awards may be granted under the Plan
from 800,000 to 1,300,000. There are no shares currently
available for grant under the Plan.
Awards under the Plan are made so that the Company can
attract and retain key employees, provide an economic framework
that will motivate employees to achieve goals consistent with the
Company's business strategy, reward performance that benefits all
Stockholders, and provide a compensation package that recognizes
individual results and contribution 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 reserved for issuance of awards under the Plan be
increased by an additional 500,000 shares.
The Stockholders are asked to approve an amendment to
Article VI of the Equity Incentive Plan to increase the number of
shares of Common Stock subject to such Plan by 500,000, from
800,000 to 1,300,000 shares.
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 Equity Incentive Plan
proposal. The Board of Directors believes that this increase in
the number of shares to be subject to options available under the
Plan is in the best interest of the Company and its Stockholders
and recommends its approval.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A
VOTE "FOR" THE AMENDMENT TO THE COMPANY'S EQUITY
INCENTIVE PLAN
-18-
PROPOSAL 3.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors recommends that the Stockholders
ratify the appointment of PricewaterhouseCoopers LLP, independent
certified public accountants, to audit the consolidated financial
statements of the Company for the fiscal year ended June 30,
2000.
The ratification of the appointment of
PricewaterhouseCoopers 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 PricewaterhouseCoopers are expected 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 PRICEWATERHOUSECOOPERS
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 2000
Annual Meeting of Stockholders must be received by the Company at
its principal executive office in Denver, Colorado, by March 18,
2000, if such proposals are to be considered timely and included
in the proxy materials for the 2000 Annual Meeting of
Stockholders. The inclusion of any Stockholder proposal in the
proxy materials for the 2000 Annual Meeting of Stockholders will
be subject to applicable rules of the Securities and Exchange
Commission.
Proxies for the 2000 Annual Meeting of Stockholders will
confer discretionary authority to vote with respect to all
matters of which the Company does not receive notice by August
31, 2000.
BY ORDER OF THE BOARD OF DIRECTORS
/s/
Karen P. Gross
Vice President & Corporate Secretary
Denver, Colorado
October 13, 1999
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 including financial statements and any required
financial statement schedules, as filed with the Securities and
Exchange Commission for the fiscal year ended June 30, 1999.
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, or send your request by e-mail to [email protected].
-19-
APPENDIX A
ROYAL GOLD, INC.
EQUITY INCENTIVE PLAN
ARTICLE I
PURPOSE
The purpose of the Royal Gold, Inc. Equity Incentive Plan
(the "Plan") is to attract and retain directors, officers, other
employees, and consultants of Royal Gold, Inc. and its
Subsidiaries and to provide such persons with incentives to
continue in the long-term service of the Company and to create in
such persons a more direct interest in the future success of the
operations of the Company by relating incentive compensation to
increases in stockholder value.
ARTICLE II
STRUCTURE OF THE PLAN
The Plan is divided into four separate programs:
A. The Discretionary Stock Option Grant Program under
which eligible persons may, at the discretion of the Board, be
granted Stock Options;
B. The Automatic Stock Option Grant Program under which
eligible non-employee Board members shall automatically receive
an annual grant of 5,000 Stock Options;
C. The Stock Appreciation Rights Program under which
eligible persons may, at the discretion of the Board, be granted
rights to receive payment, in cash, Common Stock, or a
combination thereof, of the redemption value of a specified
number of shares of Common Stock then purchasable under a Stock
Option; and
D. The Supplemental Bonus Program under which eligible
persons may, at the discretion of the Board, be granted a right
to receive payment, in cash, shares of Common Stock, or a
combination thereof, of a specified amount.
ARTICLE III
DEFINITIONS
As used in this Plan:
"10% Stockholder" shall mean the owner of stock (as
determined under Section 424(d) of the Code) possessing more than
ten percent (10%) of the total combined voting power of all
classes of stock of the Company or any Subsidiary.
"Award" shall mean a grant made under this Plan in the form
of Stock Options, Stock Appreciation Rights or Supplemental
Bonuses.
"Board" shall mean the Company's Board of Directors.
"Change in Control" shall mean a change in ownership or
control of the Company effected through any of the following
transactions:
(i) the acquisition, directly or indirectly by any
person or related group of persons, of beneficial ownership
(within the meaning of Rule 13d-3 of the Exchange Act) of
securities possessing more than thirty percent (30%) of the
total combined voting power of the Company's outstanding
securities;
(ii) a change in the composition of the Board over a
period of eighteen (18) consecutive months or less such
that fifty percent (50%) or more of the Board members cease
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to be directors who either (A) have been directors
continuously since the beginning of such period or (B) have
been unanimously elected or nominated by the Board for
election as directors during such period;
(iii) a stockholder-approved merger or
consolidation to which the Company is a party and in which
(A) the Company is not the surviving entity or
(B) securities possessing more than thirty percent (30%) of
the total combined voting power of the Company's
outstanding securities are transferred to a person or
persons different from the persons holding those securities
immediately prior to such transaction; or
(iv) the sale, transfer or other disposition of all or
substantially all of the Company's assets in complete
liquidation or dissolution of the Corporation.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Committee" shall mean any committee consisting of one or
more directors of the Company appointed by the Board to take
action with respect to this Plan.
"Common Stock" shall mean the Company's common stock, $.01
par value.
"Company" shall mean Royal Gold, Inc.
"Date of Grant" shall mean the date specified by the Board
on which a grant of an Award shall become effective, which shall
not be earlier than the date on which the Board takes action with
respect thereto.
"Employee" shall mean an individual who is in the employ of
the Company or any Subsidiary.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
"Fair Market Value" of a share of Common Stock shall mean
the average of the representative closing bid and asked prices,
as quoted through Nasdaq, for the date in question, or, if the
Common Stock is listed on the Nasdaq National Market System or a
national stock exchange, the officially-quoted closing price on
the Nasdaq National Market System or such exchange for the date
in question. In the event the Common Stock is not traded
publicly, the Fair Market Value of a share of Common Stock shall
be determined, in good faith, by the Board after such
consultation with outside legal, accounting and other experts as
the Board may deem advisable, and the Board shall maintain a
written record of its method of determining such value.
"Incentive Stock Option" shall mean shall mean a Stock
Option that (i) qualifies as an "incentive stock option" under
Section 422 of the Code or any successor provision and (ii) is
intended to be an incentive stock option.
"Non-Employee Director" shall mean a director of the
Company who meets the definition of (i) a "non-employee director"
set forth in SEC Rule 16b-3, as amended, or any successor rule
and (ii) an "outside director" set forth in Treasury
Regulation 1.162-27, as amended, or any successor rule.
"Non-Statutory Option" shall mean a Stock Option that
(i) does not qualify as an "incentive stock option" under Section
422 of the Code or any successor provision or (ii) is not
intended to be an incentive stock option.
"Optionee" shall mean the person so designated in an
agreement evidencing an outstanding Stock Option.
"Option Price" shall mean the purchase price payable by a
Participant upon the exercise of a Stock Option.
"Participant" shall mean a person who is selected by the
Board to receive benefits under this Plan and (i) is at that time
a director, officer or other Employee of the Company or any
Subsidiary, (ii) is at that time a consultant or other
independent advisor who provides services to the Company or a
Subsidiary, or (iii) has agreed to commence serving in any
capacity set forth in (i) or (ii) of this definition.
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"Plan" shall mean the Company's Equity Incentive Plan as
set forth herein.
"Plan Effective Date" shall mean November 6, 1996, the date
on which this Plan was approved by the Company's Board.
"Redemption Value" shall mean the amount, if any, by which
the Fair Market Value of one share of Common Stock on the date on
which the Stock Option is exercised exceeds the Option Price for
such share.
"SEC" shall mean the U.S. Securities and Exchange
Commission and any successor thereto.
"Stock Option" shall mean a right granted under the Plan to
a Participant to purchase Common Stock at a stated price for a
specified period of time.
"Stock Appreciation Right" shall mean a right to receive
payment, in shares of Common Stock, cash or a combination of
shares of Common Stock and cash, of the Redemption Value of a
specified number of shares of Common Stock then purchasable under
a Stock Option.
"Subsidiary" shall mean a corporation, partnership, joint
venture, unincorporated association or other entity in which the
Company has a direct or indirect ownership or other equity
interest; provided, however, for purposes of determining whether
any person may be a Participant for purposes of any grant of
Incentive Stock Options, "Subsidiary" means any subsidiary
corporation of the Company as defined in Section 424(f) of the
Code.
"Supplemental Bonus" shall mean the right to receive
payment, in shares of Common Stock, cash, or a combination of
shares of Common Stock and cash, of an amount determined pursuant
to Article X of this Plan.
ARTICLE IV
ADMINISTRATION OF THE PLAN
A. Delegation to the Committee. This Plan shall be
administered by the Board, which may from time to time delegate
all or any part of its authority under this Plan to a Committee.
To the extent of such delegation, references in this Plan to the
Board shall also refer to a Committee. Members of a Committee
shall serve for such period of time as the Board may determine
and may be removed by the Board at any time. The action of a
majority of the members of a Committee present at any meeting, or
acts unanimously approved in writing, shall be the acts of the
Committee.
B. Powers of the Board and the Committee. The Board and,
to the extent of the Board's delegation of all or part of its
authority under this Plan to a Committee, the Committee shall
have full power and authority, subject to the provisions of this
Plan, to establish such rules and regulations as it may deem
appropriate for proper administration of this Plan and to make
such determinations under, and issue interpretations of, the
provisions of this Plan and any outstanding Awards as it may deem
necessary or advisable. In addition, the Board and, to the
extent of the Board's delegation of all or part of its authority
under this Plan to the Committee, the Committee shall have full
power and authority to administer and interpret the Plan and make
modifications as it may deem appropriate to conform the Plan and
all actions pursuant to the Plan to any regulation or to any
change in any law or regulation applicable to this Plan.
C. Actions of the Committee. All actions taken and all
interpretations and determinations made by the Board in good
faith (including determinations of Fair Market Value) shall be
final and binding upon all Participants, the Company and all
other interested persons. No director or member of the Committee
shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan, and
all directors and members of the Committee shall, in addition to
their rights as directors, be fully protected by the Company with
respect to any such action, determination or interpretation.
D. Awards to Officers and Directors. Any Committee
approving any Award to an officer or director of the Company, as
defined in SEC Rule 16b-3 or any successor rule, shall be
composed entirely of two or more Non-Employee Directors;
provided, however, that if such Committee is not composed as
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such, the Board shall have the right to take such action with
respect to any Award to an officer or director as it deems
necessary or advisable to comply with SEC Rule 16b-3 and any
related rules, including but not limited to seeking shareholder
ratification of such Award or imposing a six-month period prior
to sale of the Award or any shares of Common Stock underlying the
Award.
ARTICLE V
ELIGIBILITY
A. Discretionary Stock Option Grant Program, Stock
Appreciation Rights Program and Supplemental Bonus Program. The
persons eligible to participate in the Discretionary Stock Option
Grant Program, the Stock Appreciation Rights Program and the
Supplemental Bonus Program are as follows:
1. Employees of the Company or a Subsidiary;
2. Members of the Board who are not Employees of the
Company or a Subsidiary; and
3. Consultants and other independent advisors who provide
services to the Company or a Subsidiary.
B. Automatic Stock Option Grant Program. Only members of
the Board who are not Employees of the Company are eligible for
the Automatic Stock Option Grant Program.
C. Selection of Participants. The Board shall from time
to time determine the Participants to whom Awards shall be
granted pursuant to the Discretionary Stock Option Grant Program,
the Stock Appreciation Rights Program and the Supplemental Bonus
Program.
ARTICLE VI
SHARES AVAILABLE UNDER THE PLAN
A. Maximum Number. The number of shares of Common Stock
issued or transferred and covered by outstanding awards granted
under this Plan shall not in the aggregate exceed 1,300,000
shares of Common Stock, which may be Common Stock of original
issuance or Common Stock held in treasury or a combination
thereof. The Company shall at all times during the term of the
Plan and while any Stock Options are outstanding retain as
authorized and unissued Common Stock, or as treasury Common
Stock, at least the number of shares of Common Stock required
under the provisions of this Plan, or otherwise assure itself of
its ability to perform its obligations hereunder.
B. Unused and Forfeited Stock. Any shares of Common
Stock that are subject to an Award under this Plan that are not
used because the terms and conditions of the Award are not met,
including any shares of Common Stock that are subject to a Stock
Option that expires or is terminated for any reason, any shares
of Common Stock that are used for full or partial payment of the
Option Price of shares of Common Stock with respect to which a
Stock Option is exercised and any shares of Common Stock withheld
by the Company in satisfaction of the withholding taxes incurred
in connection with the exercise of a Stock Option shall
automatically become available for use under this Plan.
Notwithstanding the foregoing, with respect to any shares of
Common Stock withheld by the Company in satisfaction of the
withholding taxes incurred with the exercise of Incentive Stock
Options, the number of shares of Common Stock available for
issuance under this Plan shall be reduced by the number of shares
so withheld.
C. Capital Changes. If any change is made to the Common
Stock by reason of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or
other change affecting the outstanding Common Stock as a class
without the Company's receipt of consideration, appropriate
adjustments shall be made to (a) the maximum number and/or class
of securities issuable under the Plan, (b) the number and/or
class of securities for which any one person may be granted
Awards under this Plan per calendar year, (c) the number and/or
class of securities for which grants are subsequently to be made
pursuant to Article VI of this Plan, and (d) the number and/or
class of securities and the Option Price per share in effect
under each outstanding option under this Plan. Such adjustments
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to the outstanding options are to be effected in a manner that
shall preclude the enlargement or dilution of rights and benefits
under such options. The adjustments determined by the Board
shall be final, binding and conclusive.
ARTICLE VII
DISCRETIONARY STOCK OPTION GRANT PROGRAM
A. Discretionary Grant of Stock Options to Participants.
The Board may from time to time authorize grants to Participants
of options to purchase shares of Common Stock upon such terms and
conditions as the Board may determine in accordance with the
following provisions:
1. Each grant shall specify the number of shares of
Common Stock to which it pertains;
2. Each grant shall specify the Option Price per share;
3. Each grant shall specify the form of consideration to
be paid in satisfaction of the Option Price and the
manner of payment of such consideration, which may
include (i) cash in the form of currency or check or
other cash equivalent acceptable to the Company, (ii)
nonforfeitable shares of Common Stock, which are
already owned by the Optionee and have a Fair Market
Value at the time of exercise that is equal to the
Option Price, (iii) a recourse promissory note in
favor of the Company, (iv) any other legal
consideration that the Board may deem appropriate and
(v) any combination of the foregoing;
4. Any grant may provide for deferred payment of the
Option Price from the proceeds of sale through a
broker of some or all of the shares of Common Stock to
which the exercise relates;
5. Any grant may provide that shares of Common Stock
issuable upon the exercise of a Stock Option shall be
subject to restrictions whereby the Company has the
right or obligation to repurchase all or a portion of
such shares if the Participant's service to the
Company is terminated before a specified time, or if
certain other events occur or conditions are not met;
6. Successive grants may be made to the same Participant
regardless of whether any Stock Options previously
granted to the Participant remain unexercised;
7. Each grant shall specify the period or periods of
continuous service by the Optionee to the Company or
any Subsidiary that are necessary before the Stock
Option or installments thereof shall become
exercisable;
8. All Stock Options that meet the requirements of the
Code for incentive stock options shall be Incentive
Stock Options unless (i) the option agreement clearly
designates the Stock Options granted thereunder, or a
specified portion thereof, as a Non-Statutory Option,
or (ii) a grant of Incentive Stock Options to the
Participant would be prohibited under the Code or
other applicable law;
9. No Stock Option granted pursuant to this Section may
be exercised more than 10 years from the Date of
Grant; and
10. Each grant shall be evidenced by an agreement, which
shall be executed on behalf of the Company by any
officer thereof and delivered to and accepted by the
Optionee and shall contain such terms and provisions
as the Board may determine consistent with this Plan.
B. Special Terms Applicable to Incentive Stock Options.
The following additional terms shall be applicable to all
Incentive Stock Options granted pursuant to this Plan. Stock
Options that are specifically designated as Non-Statutory Options
shall not be subject to the terms of this Section.
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1. Incentive Stock Options shall be granted only to
Employees of the Company or a Subsidiary;
2. The Option Price per share shall not be less than the
Fair Market Value per share of Common Stock on the
Date of Grant;
3. The aggregate Fair Market Value of the shares of
Common Stock (determined as of the respective Date(s)
of Grant) with respect to which Incentive Stock
Options granted to any Employee under the Plan (or any
other plan of the Company or a Subsidiary) are
exercisable for the first time during any one calendar
year shall not exceed the sum of One Hundred Thousand
Dollars ($100,000). To the extent the Employee holds
two (2) or more such Stock Options that become
exercisable for the first time in the same calendar
year, the foregoing limitation on the treatment of
such Stock Options as Incentive Stock Options shall be
applied on the basis of the order in which such Stock
Options are granted; and
4. If any Employee to whom an Incentive Stock Option is
granted is a 10% Stockholder, then the Option Price
per share shall not be less than one hundred ten
percent (110%) of the Fair Market Value per share of
Common Stock on the Date of Grant, and the option term
shall not exceed five (5) years measured from the Date
of Grant.
ARTICLE VIII
AUTOMATIC STOCK OPTION GRANT PROGRAM
A. Automatic Grant of Stock Options to Certain Directors.
Each director of the Company who is not an Employee and serves
as a director for a full fiscal year shall be granted in
consideration for such director's service for that year a Non-
Statutory Option to purchase 5,000 shares of Common Stock. Each
such Non-Statutory Option shall be granted upon such terms and
conditions as the Board may determine in accordance with the
following provisions:
1. Each Stock Option granted pursuant to this Article
shall be granted within thirty (30) days following the
date of the annual meeting of the Company's
stockholders for the relevant fiscal year.
2. Each grant shall specify the Option Price per share,
which Option Price shall be the Fair Market Value per
share of Common Stock on the Date of Grant;
3. Each grant shall specify the form of consideration to
be paid in satisfaction of the Option Price and the
manner of payment of such consideration, which may
include (i) cash in the form of currency or check or
other cash equivalent acceptable to the Company, (ii)
nonforfeitable shares of Common Stock, which are
already owned by the Optionee and have a Fair Market
Value at the time of exercise that is equal to the
Option Price, (iii) a recourse promissory note in
favor of the Company, (iv) any other legal
consideration that the Board may deem appropriate and
(v) any combination of the foregoing;
4. Any grant may provide for deferred payment of the
Option Price from the proceeds of sale through a
broker of some or all of the shares of Common Stock to
which the exercise relates;
5. Successive grants shall be made to the same director
regardless of whether any Stock Options previously
granted to the director remain unexercised;
6. Each Stock Option granted pursuant to this Article
shall be exercisable (i) immediately as to fifty
percent (50%) of the shares covered thereby, and
(ii) after twelve months from the Date of Grant as to
the remaining shares.
7. No Stock Option granted pursuant to this Section may
be exercised more than 10 years from the Date of
Grant; and
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8. Each grant shall be evidenced by an agreement, which
shall be executed on behalf of the Company by any
officer thereof and delivered to and accepted by the
Optionee and shall contain such terms and provisions
as the Board may determine consistent with this Plan.
ARTICLE IX
STOCK APPRECIATION RIGHTS PROGRAM
A. Grant of Appreciation Rights. The Board may, from
time to time, grant Stock Appreciation Rights to a Participant
with respect to not more than the number of shares of Common
Stock that are, or may become, purchasable under any Stock Option
held by the Participant. The Committee may, in its sole
discretion, specify the terms and conditions of such rights,
including without limitation the date or dates upon which such
rights shall expire and become void and unexercisable; provided,
however, that in no event shall such rights expire and become
void and unexercisable later than the time when the related Stock
Option is exercised, expires or terminates. Each Participant to
whom Stock Appreciation Rights are granted shall be given written
notice advising him of the grant of such rights and specifying
the terms and conditions of the rights, which shall be subject to
all the provisions of this Plan.
B. Exercise of Stock Appreciation Rights. Subject to
Section IX.C, and in lieu of purchasing shares of Common Stock
upon the exercise of a Stock Option held by a Participant, a
Participant may elect to exercise the Stock Appreciation Rights,
if any, such Participant has been granted and receive payment of
the Redemption Value of all, or any portion, of the number of
shares of Common Stock subject to such Stock Option with respect
to which such Participant has been granted Stock Appreciation
Rights; provided, however that the Stock Appreciation Rights may
be exercised only when the Fair Market Value of the Common Stock
subject to such Stock Option exceeds the Option Price of the
Stock Option. A Participant shall exercise his Stock
Appreciation Rights by delivering a written notice to the Board
specifying the number of shares with respect to which he
exercises Stock Appreciation Rights and agreeing to surrender the
right to purchase an equivalent number of shares of Common Stock
subject to his Stock Option. If a Participant exercises Stock
Appreciation Rights, payment of his Stock Appreciation Rights
shall be made in accordance with Section IX.C. on or before the
90th day after the date of exercise of the Stock Appreciation
Rights.
C. Form of Payment. If a Participant elects to exercise
Stock Appreciation Rights as provided in Section IX.B., the Board
may, in its sole discretion, elect to pay any part of all of the
Redemption Value of the shares with respect to which the
Participant has exercised Stock Appreciation Rights in (i) cash,
(ii) shares of Common Stock, or (iii) any combination of cash and
shares of Common Stock. The Board's election pursuant to this
Section IX.C. shall be made by giving written notice to the
Participant within said 90-day period, which notice shall specify
the portion which the Board elects to pay in cash, shares of
Common Stock or a combination thereof. In the event any portion
is to be paid in shares of Common Stock, the number of shares to
be delivered shall be determined by dividing the amount that the
Board elects to pay in shares of Common Stock by the Fair Market
Value of one share of Common Stock on the date of exercise of the
Stock Appreciation Rights. Any fractional share resulting from
any such calculation shall be disregarded. Said shares, together
with any cash payable to the Participant, shall be delivered
within said 90-day period.
ARTICLE X
SUPPLEMENTAL BONUS PROGRAM
The Board, either at the time of grant or at any time prior
to exercise of any Non-Statutory Option or Stock Appreciation
Right relating thereto, may provide for a Supplemental Bonus from
the Company or a Subsidiary in connection with a specified number
of shares of Common Stock then purchasable, or which may become
purchasable, under such Non-Statutory Option, or a specified
number of related Stock Appreciation Rights that may be or become
exercisable. Such Supplemental Bonus shall be payable in cash
upon the exercise of the Non-Statutory Option or related Stock
Appreciation Rights with regard to which such Supplemental Bonus
was granted. A Supplemental Bonus shall not exceed the amount
necessary to reimburse the Participant for the income tax
liability incurred by him upon the exercise of the Non-Statutory
Option or upon the exercise of such related Stock Appreciation
Rights, calculated using the maximum combined federal and
applicable state income tax rates then in effect and taking into
account the tax liability arising from the Participant's receipt
of the Supplemental Bonus.
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ARTICLE XI
TERMINATION OF SERVICE
A. Incentive Stock Options. The following provisions
shall govern the exercise of any Incentive Stock Options held by
any Employee whose employment is terminated:
1. If the Optionee's employment with the Company is
terminated for any reason other than such Optionee's
death or disability, all Incentive Stock Options held
by the Optionee shall be exercisable, to the extent
that such Stock Options were exercisable on the date
the Optionee's employment terminated, for a period of
three (3) months following such termination of
employment.
2. If the Optionee's employment with the Company is
terminated because of such Optionee's death or
disability within the meaning of Section 22(e)(3) of
the Code, all Incentive Stock Options held by the
Optionee shall become immediately exercisable and
shall be exercisable for a period of twelve (12)
months following such termination of employment.
3. In no event may any Incentive Stock Option remain
exercisable after the expiration of the term of the
Stock Option. Upon the expiration of any three (3) or
twelve (12) month exercise period, as applicable, or,
if earlier, upon the expiration of the term of the
Stock Option, the Stock Option shall terminate and
shall cease to be outstanding for any shares for which
the Stock Option has not been exercised.
B. Non-Statutory Options. The following provisions shall
govern the exercise of any Non-Statutory Options:
1. If the Optionee's employment, service on the Board, or
consultancy is terminated for any reason other than
such Optionee's death or disability, all Non-Statutory
Options held by the Optionee shall be exercisable, to
the extent such Stock Options were exercisable on the
date of such termination, for a period of twelve (12)
months following such termination.
2. If the Optionee's employment, service on the Board, or
consultancy is terminated because of such Optionee's
death or disability, all Non-Statutory Options held by
the Optionee shall become immediately exercisable and
shall be exercisable for a period of twelve (12)
months following such termination.
3. In no event may any Non-Statutory Option remain
exercisable after the expiration of the term of the
Stock Option. Upon the expiration of any twelve (12)
month exercise period or, if earlier, upon the
expiration of the term of the Stock Option, the Stock
Option shall terminate and shall cease to be
outstanding for any shares for which the Stock Option
has not been exercised for a period of twelve (12)
months following such termination.
ARTICLE XII
TRANSFERABILITY OF STOCK OPTIONS
During the lifetime of the Optionee, Incentive Stock
Options shall be exercisable only by the Optionee and shall not
be assignable or transferable; provided, however, that in the
event of the Optionee's death, any Stock Option may be exercised
by the personal representative of the Optionee's estate, or by
the person(s) to whom the option is transferred pursuant to the
Optionee's will or in accordance with the laws of descent and
distribution. Upon the prior written consent of the Board and
subject to any conditions associated with such consent, a Non-
Statutory Option may be assigned in whole or in part during the
Optionee's lifetime to one or more members of the Optionee's
immediate family or to a trust established exclusively for one or
more such family members. In addition, the Board, in its sole
discretion, may allow a Non-Statutory Option to be assigned in
other circumstances deemed appropriate. The terms applicable to
the assigned portion shall be the same as those in effect for the
Stock Option immediately prior to such assignment and shall be
set forth in such documents issued to the assignee as the Board
may deem appropriate.
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ARTICLE XIII
STOCKHOLDER RIGHTS
The holder of a Stock Option shall have no stockholder
rights with respect to the shares subject to the Stock Option
until such person shall have exercised the Stock Option, paid the
Option Price and become a holder of record of the purchased
shares of Common Stock.
ARTICLE XIV
ACCELERATION OF VESTING
The Board may, at any time in its sole discretion,
accelerate the vesting of any Award made pursuant to this Plan by
giving written notice to the Participant. Upon receipt of such
notice, the Participant and the Company shall amend the agreement
relating to the Award to reflect the new vesting schedule. The
acceleration of the exercise period of an Award shall not affect
the expiration date of such Award.
ARTICLE XV
CHANGE IN CONTROL
In the event of a Change in Control of the Company, all
Awards outstanding under the Plan as of the day before the
consummation of such Change in Control shall automatically
accelerate for all purposes under this Plan so that each such
Award shall become fully exercisable with respect to the total
number of shares subject to such Award and may be exercised for
any or all of those shares as fully-vested shares of Common Stock
as of such date without regard to the conditions expressed in the
agreements relating to such Awards.
ARTICLE XVI
CANCELLATION AND REGRANT OF OPTIONS
The Board shall have the authority to effect, at any and
from time to time, with the consent of the affected Optionees,
the cancellation of any or all outstanding Stock Options and/or
any Stock Appreciation Rights and grant in substitution new Stock
Options and/or Stock Appreciation Rights covering the same or
different number of shares of Common Stock with an Option Price
set, in accordance with Article VII, on the new Date of Grant.
ARTICLE XVII
FINANCING
The Board may, in its sole discretion, authorize the
Company to make a loan to a Participant in connection with the
exercise of a Stock Option, and may authorize the Company to
arrange or guaranty loans to a Participant by a third party in
connection with the exercise of a Stock Option.
ARTICLE XVIII
TAX WITHHOLDING
A. Tax Withholding. The Company's obligation to deliver
shares of Common Stock upon the exercise of Stock Options under
the Plan shall be subject to the satisfaction of all applicable
federal, state and local income and employment tax withholding
requirements.
B. Surrender of Shares. The Board may, in its
discretion, provide any or all holders of Non-Statutory Options
under the Discretionary Stock Option Grant Program with the right
to use shares of Common Stock in satisfaction of all or part of
the taxes incurred by such holders in connection with the
exercise of such Stock Options. Such right may be provided to
any such holder in either or both of the following formats:
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1. The election to have the Company withhold, from the
shares of Common Stock otherwise issuable upon the
exercise of such Non-Statutory Option, a portion of
those shares with an aggregate Fair Market Value less
than or equal to the amount of taxes due as designated
by such holder; or
2. The election to deliver to the Company, at the time
the Non-Statutory Option is exercised, one or more
shares of Common Stock previously acquired by such
holder with an aggregate Fair Market Value less than
or equal to the amount of taxes due as designated by
such holder.
ARTICLE XIX
EFFECTIVE DATE AND TERM OF THE PLAN
This Plan shall become effective on the Plan Effective
Date. This Plan shall terminate upon the earliest of (i) ten
(10) years after the Plan Effective Date, (ii) the date on which
all shares available for issuance under the Plan have been
issued, or (iii) the termination of all outstanding Awards in
connection with a Change in Control. Upon such plan termination,
all outstanding Awards shall thereafter continue to have force
and effect in accordance with the provisions of the documents
evidencing such Awards.
ARTICLE XX
AMENDMENT OF THE PLAN
A. The Board shall have complete and exclusive power and
authority to amend or modify the Plan in any or all respects
unless and only to the extent that stockholder approval of such
amendments or modifications is required under applicable law. No
such amendment or modification shall adversely affect the rights
and obligations with respect to Awards outstanding under the Plan
at the time of such amendment or modification unless the
Participant consents to such amendment or modification.
B. Stock Options in excess of the number of shares of
Common Stock then available for issuance may be granted under
this Plan, provided any excess shares actually issued under this
Plan shall be held in escrow until such further action, necessary
to approve a sufficient increase in the number of shares
available for issuance under the Plan, is taken. If such further
action is not obtained within 12 months after the date the first
such excess issuances are made, then (i) any unexercised options
granted on the basis of such excess shares shall terminate and
cease to be outstanding, and (ii) the Company shall promptly
refund to the Optionees the exercise price paid for any excess
shares issued under the Plan and held in escrow, together with
interest for the period the shares were held in escrow, and such
shares shall thereupon be automatically cancelled and cease to be
outstanding. If stockholder approval of a sufficient increase in
the number of shares subject to the Plan does not occur within 12
months of the grant of any Stock Option intended to be an
Incentive Stock Option which is granted pursuant to this Section
XX.B. such Stock Option shall be deemed to be a Non-Statutory
Option.
ARTICLE XXI
REGULATORY APPROVALS
The implementation of the Plan, the granting of any Award
under the Plan and the issuance of any shares of Common Stock
under any Award shall be subject to the Company's procurement of
all approvals and permits required by regulatory authorities
having jurisdiction over the Plan, the Awards granted pursuant to
the Plan and the shares of Common Stock issued pursuant to any
Award under the Plan. No Stock Option shall be exercisable, no
shares of Common Stock or other assets shall be issued or
delivered under the Plan, and no transfer of any Non-Statutory
Option shall be approved by the Board, unless and until there
shall have been compliance with (i) all applicable requirements
of Federal and state securities laws, including the filing and
effectiveness of a registration statement on Form S-8 under the
Securities Act of 1933, as amended, covering the shares of Common
Stock issuable under the Plan, and (ii) all applicable listing
requirements of the NASDAQ National Market.
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ARTICLE XXII
NO EMPLOYMENT/SERVICE RIGHTS
Nothing in this Plan shall confer upon any Participant any
right to continue in service for any period or specific duration
or interfere with or otherwise restrict in any way the rights of
the Company (or any Subsidiary employing or retaining such
person) or of the Participant, which rights are hereby expressly
reserved by each, to terminate such person's service at any time
for any reason, with or without cause.
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