EXHIBIT 10.26
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U.S. GOLD CORPORATION
INCENTIVE STOCK OPTION AGREEMENT
THIS INCENTIVE STOCK OPTION AGREEMENT (the "Agreement") is made and entered
into as of August 8, 2002 (the "Date of Grant"), by and between U.S. Gold
Corporation, a Colorado corporation (the "Company"), and XXXXXXX X. PASS (the
"Optionee").
WITNESSETH:
WHEREAS, on August 8, 2002, the Board of Directors determined that the
Optionee should receive an Incentive Stock Option to purchase shares of the
Company's Common Stock under the Company's 2002 Stock Option and Stock Grant
Plan (the "Plan") in order to provide the Optionee with an opportunity for
investment in the Company and additional incentive to pursue the success of the
Company, said option to be for the number of shares, at the price per share and
on the terms set forth in this Agreement; and
WHEREAS, Optionee desires to receive an option on the terms and conditions
set forth in this Agreement.
NOW, THEREFORE, the parties agree as follows:
1. GRANT OF INCENTIVE STOCK OPTION. The Company hereby grants to Optionee,
as a matter of separate agreement and not in lieu of salary or any other
compensation for service, the right and option (the "Option") to purchase all or
any part of an aggregate of 375,000 shares of reserved authorized and unissued
$.10 par value Common Stock of the Company (the "Option Shares") pursuant to the
terms and conditions set forth in this Agreement. This Option can not be
exercised as provided herein, in whole or in part, until and unless the Plan and
this Option are approved by the shareholders of the Company at a duly called and
held meeting of shareholders.
2. OPTION PRICE. At any time when shares are to be purchased pursuant to
the Option, the purchase price for each Option Share shall be $0.32 (the "Option
Price").
3. OPTION PERIOD. The Option period shall commence as of the Date of Grant
and shall terminate ten years from the Date of Grant, unless terminated earlier
as provided in this Agreement. If an Optionee, for any reason, other than the
Optionee's death, ceases to be employed by either the Company or a Subsidiary of
the Company, any Option held by the Optionee at the time he ceases to be an
employee may be exercised within 180 days after the date of such cessation, but
only to the extent that the Option was exercisable according to its terms on the
date of such cessation. After such 180 day period, any unexercised portion of an
Option shall expire. Any Option held by an Optionee at the time of his death may
be exercised by his estate, subject to any limitation otherwise applicable to
such Option, only within twelve months of his death or such longer period as the
Board of Directors of the Company may determine.
This Option is exercisable by Optionee, cumulatively, over time, only as
follows:
(a) 125,000 shares on or after February 9, 2003.
(b) An additional 125,000 shares on or after January 2, 2004.
(c) An additional 125,000 shares on or after January 2, 2005.
4. EXERCISE OF OPTION.
As noted above, the Plan and the Option must be approved by the
shareholders of the Company prior to any exercise of the Option. The Option can
only be exercised, in whole or in part, as determined by the Board of Directors
with written notice to Optionee, from reserved shares of authorized and unissued
Option Shares subsequent to such approval by shareholders of the Company.
(a) The Option may be exercised by delivering to the Company:
(i) a Notice and Agreement of Exercise of Option, substantially
in the form attached hereto as Exhibit A, specifying the
number of Option Shares with respect to which the Option is
exercised, and the method of payment, and
(ii) payment of the total purchase price of the shares upon
Exercise, to the extent permitted by applicable statutes and
regulations: (i) in cash (including check, bank draft or
money order); (ii) by such other forms of payment as are
acceptable to the Committee in its sole discretion, (iii)
whole shares of the Company's Common Stock, (iv) the
withholding of shares of Common Stock issuable upon such
exercise of the Option; or (v) any combination of the
foregoing methods of payment. Without limiting the
foregoing, if a Optionee elects to have shares of Common
Stock issuable upon exercise of an Option withheld to pay
all or any part of the amounts payable in connection with
such exercise including provision for payment of or
provision for payment of any applicable withholding or
similar taxes, then the Committee shall have the sole
discretion to approve or disapprove such election at the
time of any Exercise.
(b) Promptly upon receipt of the Notice of Agreement and Exercise and
the full payment of the Option Price by the Optionee the Company
shall deliver to the Optionee a properly executed certificate or
certificates representing the Option Shares being purchased.
5. SECURITIES LAWS REQUIREMENTS. No Option Shares shall be issued unless
and until, in the opinion of the Company, any applicable registration
requirements of the Securities Act of 1933, any applicable listing requirements
of any securities exchange on which stock of the same class is listed, and any
other requirements of law or any regulatory bodies having jurisdiction over such
issuance and delivery have been fully complied with. Pursuant to the terms of
the Notice and Agreement of Exercise that shall be delivered to the Company upon
each exercise of the Option, the Optionee shall acknowledge, represent, warrant
and agree as follows:
(a) All Option Shares shall be acquired solely for the account of the
Optionee for investment purposes only and with no view to their
resale or other distribution of any kind;
(b) No Option Share shall be sold or otherwise distributed in
violation of the Securities Act of 1933 or any other applicable
federal or state securities laws;
(c) If the Optionee is subject to reporting requirements under
Section 16(a) of the Securities Exchange Act of 1934 (the
"Exchange Act"), he shall:
(i) be aware that the actual accrual of any right under the
Option to purchase Option Shares is an event that requires
reporting on Form 4 under Section 16(a) of the Exchange Act.
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(ii) be aware that any sale by him or his immediate family of the
Company's Common Stock within six months before or after the
granting of any Option may create liability for him under
Section 16(b) of the Exchange Act,
(iii) consult with his counsel regarding the application of
Section 16(b) of the Exchange Act prior to any exercise of
the Option, and prior to any sale of the Company's Common
Stock,
(iv) assist the Company with the filing of a Form 3, 4 or 5 with
the Securities and Exchange Commission, and
(v) timely file all reports required under the federal
securities laws, and
(d) The Optionee shall report all sales of Option shares to the
Company in writing on a form prescribed by the Company, including
pre-notification in certain cases as provided in Section 6 below.
The forgoing restrictions or notices thereof may be placed on the
certificates representing the Option Shares purchased pursuant to the Option and
the Company may refuse to issue the certificates or to transfer the shares on
its books unless it is satisfied that no violation of such restrictions will
occur.
6. TAXATION RELATED ISSUES AND REPORTING OBLIGATIONS. The Optionee is aware
that the taxation issues related to Incentive Stock Options may be complicated
and Optionee agrees to and shall seek personal tax advice regarding such issues.
Prior to making a disposition (as defined in Section 424(c) of the Code) of any
shares of Common Stock acquired pursuant to the Exercise of this Option before
the expiration of two (2) years after its date of grant and before the
expiration of one (1) year after its date of exercise and the date on which such
shares of Common Stock were transferred to the Optionee pursuant to exercise of
the Option, the Optionee shall send written notice to the Company of the
proposed date of such disposition, the number of shares to be disposed of, the
amount of proceeds to be received from such disposition and any other
information relating to such disposition that the Company may reasonably
request. The right of a Optionee to make any such disposition shall be
conditioned on the receipt by the Company of all amounts necessary to satisfy
any Federal, state or local withholding and employment related tax requirements
attributable to such disposition. The Committee may, in its sole discretion,
endorse the certificates representing such Option shares with a legend
restricting transfer (and to cause a stop transfer order to be entered with the
Company's transfer agent) until such time as the Company receives the amounts
necessary to satisfy such withholding and employment-related tax requirements or
until the later of the expiration of 2 years from the date of grant of such
Incentive Stock Option and 1 year from its date of exercise and the date on
which such shares were transferred to the Participant pursuant to the exercise
of the Option.
7. TRANSFERABILITY OF OPTION. The Option shall not be transferable except
by will or the laws of descent and distribution, and any attempt to do so shall
void the Option.
8. ADJUSTMENT BY STOCK SPLIT, STOCK DIVIDEND, ETC. If at any time the
Company increases or decreases the number of its outstanding shares of Common
Stock, or changes in any way the rights and privileges of such shares, by means
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of the payment of a stock dividend or the making of any other distribution on
such shares payable in its Common Stock, or through a stock split or subdivision
of shares, or a consolidation or combination of shares, or through a
reclassification or recapitalization involving its Common Stock, the numbers,
rights, and privileges of the shares of Common Stock included in the Option
shall be increased, decreased or changed in like manner as if such shares had
been issued and outstanding, fully paid and nonassessable at the time of such
occurrence.
9. MERGER OR CONSOLIDATION.
(a) EFFECT OF TRANSACTION. Upon the occurrence of any of the
following events, if the notice requirements by Paragraph 8(b)
has been given, the Option shall automatically terminate and be
of no further force or effect whatsoever:
(i) the merger or consolidation of the Company with one or more
other corporations, regardless of which entity survives the
transaction;
(ii) the dissolution or liquidation of the Company;
(iii) the appointment of a receiver for all, or substantially
all, of the Company's assets or business;
(iv) the appointment of a trustee for the Company after a
petition has been filed for the Company's reorganization
under applicable statutes; or
(v) the sale, lease or exchange of all, or substantially all, of
the Company's assets and business.
(b) NOTICE OF SUCH OCCURRENCE. At least 15 days' prior written notice
of any event described in Paragraph 8 (a), except the
transactions described in Subparagraphs 8 (a) (iii) and (iv) as
to which no notice shall be required, shall, at the Company's
option, be given by the Company to the Optionee. After receipt of
such notice, the Optionee may at any time before the occurrence
of the event requiring the giving of notice exercise the
unexercised portion of the Option as to all the shares covered
thereby. Such notice shall be deemed to have been given when
delivered personally to the Optionee or pursuant to the
provisions of Paragraph 11 of this Agreement. If no such notice
shall be given with respect to a transaction described in
Subparagraphs 8(a) (i), (ii) or (v), the provisions of Paragraph
8(a) shall not apply and the Option shall not terminate upon the
occurrence of such transaction.
10. COMMON STOCK TO BE RECEIVED UPON EXERCISE. Optionee understands that
the Company is under no obligation to register the Option Shares under the
Securities Act of 1933, as amended (the "Act") and that in the absence of any
such registration, the Option Shares cannot be sold unless they are sold
pursuant to an exemption from registration under the Act. The Company is under
no obligation to comply, or to assist the Optionee in complying with any
exemption from such registration requirement, including supplying the Optionee
with any information necessary to permit routine sales of the Stock under Rule
144 of the Securities and Exchange Commission. Optionee also understands that
with respect to Rule 144, routine sales of securities made in reliance upon such
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Rule can only be made in limited amounts in accordance with the terms and
conditions of the Rule, and that in cases in which the Rule is inapplicable,
compliance with either Regulation A or another disclosure exemption under the
Act will be required. Thus, the Option Shares will have to be held indefinitely
in the absence of registration under the Act or an exemption from registration.
Furthermore, the Optionee fully understands that the Option Shares have not
been registered under the Act and that they will be issued in reliance upon an
exemption which is available only if Optionee acquires such shares for
investment and not with a view to distribution. Optionee is familiar with the
phrase "acquired for investment and not with a view to distribution" as it
relates to the Act and the special meaning given to such term in various release
of the Securities and Exchange Commission.
11. PRIVILEGE OF OWNERSHIP. Optionee shall not have any of the rights of a
shareholder with respect to the shares covered by the Option except to the
extent that one or more certificates for such shares shall be delivered to him
upon exercise of the Option.
12. NOTICES. Any notices required or permitted to be given under this
Agreement shall be in writing and they shall be deemed to be given upon receipt
by sender of sender's return receipt for acknowledgement of delivery of said
notice by postage prepaid registered mail. Such notice shall be addressed to the
party to be notified as shown below:
Company: U.S. Gold Corporation
0000 Xxxxxxx Xx., Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000-0000
Optionee: At the address listed below his name on the last page
of this Agreement.
Any party may change its address for purposes of this paragraph by giving the
other parties written notice of the new address in the manner set forth above.
13. GENERAL PROVISIONS. This instrument: (a) contains the entire agreement
among the parties, (b) may not be mended nor may any rights hereunder be waived
except by an instrument in writing signed by the parties sought to be charged
with such amendment or waiver, (c) shall be constructed in accordance with, and
governed by, the laws of the State of Colorado, (d) shall be binding upon and
shall inure to the benefit of the parties and their respective personal
representatives and assigns, except as above set forth and (e) shall be subject
to the provisions of the Plan, which Plan provisions shall govern if they
conflict herein and any variations thereof shall be deemed to refer to the
masculine, feminine or neuter, singular or plural as the identity of the parties
hereto may require.
IN WITNESS WHEREOF, the parties have executed this Agreement on the dates
set forth below, to be effective as of the date and year first above written.
U.S. GOLD CORPORATION
Date: August 8, 2002 By: /s/ Xxxxxxx X. Xxxx
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Xxxxxxx X. Xxxx, President and
Chairman of the Board
OPTIONEE:
Date: August 8, 2002 By: /s/ Xxxxxxx X. Pass
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