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## DIVERSIFIED ROYALTY CORP . 

Notes toConsolidatedFinancial Statements (Unaudited) (Expressed in Canadian dollars) 

Year ended December 31, 2014 

## 11. Share capital: 

At December 31, 2014 the authorized share capital of the Company consists of an unlimited number of common shares. 

The issued share capital of the Company is as follows: 

<img src='content_image/167780.jpg'>

In November 2014, the Company completed a bought deal in which it issued 14,375,000 common shares for gross proceeds of $ 34,500,000, and incurred total share issuance costs of $1,562,068, net of tax benefits of $548,835. 

At the annual meeting of the Company on June 30, 2014, the shareholders approved a resolution to reduce the stated capital to $50,000,000. This approval resulted in a reduction of share capital of $47,155,660 and a corresponding reduction in accumulated deficit. 

## 12. Share-based payment: 

During the year ended December 31, 2014, the Comp any introduced a restricted share unit (“RSU”) plan available to both employees and non -employees as part of the Company’s long-term incentive plan (the “Plan”) where the maximum number of common shares issued under the Plan will be 10% of the issued and outstanding common sharesof the Companyat thetime of grant.The Company’s Board of Directors has discretion as to the number of RSUs granted, as well as in determining the vesting period and expiry dates. On each vesting date, the RSU participant may el ect in an election notice to settle its vested RSUs in cash, in the Company’s shares issued from treasury, or a combination thereof based on the fair market value of the Company’s shares as at such date. The holder of an award of RSU has no rights as a s hareholder until a common share is issued in settlement of vested restricted stock units.  RSUs have accompanying dividend-equivalent rights and, therefore, additional RSUs are issued to reflect dividends declared on the common shares. The Company hasissued 250,000 restricted share units to the President and CEO during the year ended December 31, 2014(year ended December 31, 2013- nil) at a grant date fair value of $2.35 totaling $587,000.The RSUs vest in their entirety on the third anniversary of the grant  date. 

