Conditional Agreement Not to Exercise Stock Options Between U.S. Gold Corporation and John W. Goth (December 6, 2002)

Summary

U.S. Gold Corporation and John W. Goth, a non-executive director, agree that Mr. Goth will temporarily not exercise his right to purchase 92,000 shares under a previous stock option agreement. This allows the company to use those shares for other critical funding needs. In return, the company promises to make efforts to restore Mr. Goth’s ability to exercise his options in the future or otherwise compensate him for any lost value. The agreement is governed by Colorado law and replaces any prior related agreements.

EX-10.7 9 usex10-7.txt AGREEMENT Exhibit 10.7 Conditional Agreement Not To Exercise Stock Options Under Stock Option Agreement Dated January 20, 1999 Pursuant to Non-Qualified Stock Option and Stock Grant Plan This Agreement is made effective as of December 6, 2002 by and between U.S. Gold Corporation (the "Corporation") and John W. Goth ("Option Holder") a non-executive director of the Corporation. WHEREAS, Option Holder and Corporation entered into that certain Stock Option Agreement dated January 20, 1999 (the "SOA") under Corporation's Non- Qualified Stock Option and Stock Grant Plan (the "Plan") covering an aggregate of 200,000 shares of Common Stock of Corporation at an exercise price of $0.16 per share and with expiration date thereunder of January 21, 2004, and WHEREAS, Corporation had previously reserved sufficient numbers of shares of authorized but unissued Common Stock of the Corporation under the Plan to provide for the exercise of the shares of Common Stock under the SOA as well as other outstanding stock option agreements, and WHEREAS, Corporation required funding critical to its operations and for the near-term protection of its assets and therefore negotiated for the sale and has closed certain private transactions with third parties (the "Purchasers") covering the sale of Common Stock of the Corporation, and WHEREAS, in order for the Corporation to have sufficient numbers of authorized and unissued shares of Common Stock not otherwise reserved for use under the Plan to sell to such Purchasers, the Option Holder agreed to temporarily and conditionally forgo the right to exercise a portion of the options to purchase Common Stock under his SOA in consideration for the commitments and representations of the Corporation contained herein, in order that the Corporation could remove those number of shares of Common Stock from the classification of "reserved shares" under the Plan and for the Corporation to then be able to sell such number of shares of Common Stock to Purchasers, all as subject to the terms of this Agreement. NOW THEREFORE the Corporation and Option Holder agree as follows: A. Option Holder commits and agrees to Corporation as follows: 1. Option Holder agrees not to exercise an aggregate of 92,000 shares of Common Stock under his SOA until and unless the Corporation reserves sufficient number of shares of Common Stock from its authorized but unissued numbers of shares of Common Stock, in whole or in part, to allow such exercise by Option Holder of the full number or any lesser number of shares of Common Stock, if the Corporation is able to reserve some but not all of the required by and subject to such SOA. 2. This agreement in no way limits the ability of Option Holder to exercise any or all of his option shares under his SOA which are currently or in the future become covered by reserved numbers of shares of Common Stock of the Corporation under the Plan and under the SOA. B. In consideration for the agreement of Option Holder hereunder, the Corporation agrees and commits to Option Holder as follows: 1. The Corporation will use its best efforts to make available and to reserve sufficient numbers of authorized but unissued shares of Common Stock of the Corporation under the Plan to allow exercise of all shares of Common Stock subject to outstanding stock option agreements including the SOA with Option Holder. This includes, but is not limited to, the approval by the shareholders of the Corporation of any increase to the authorized number of Common Stock equity of the Corporation as well as the acquisition of treasury shares by the Corporation which could otherwise be used for reservation of Common Stock under the Plan and the SOA. 2. If the Corporation is unable to reserve sufficient numbers of authorized but unissued shares of Common Stock under the Plan for all outstanding stock option agreements including the SOA to the Option Holder, then the Corporation commits to otherwise keep the Option Holder whole in terms the intrinsic economic value of in-the- money stock option shares subject to the limitation on exercise contained in this Agreement as that number may be reduced from time to time by additional reserved shares being replaced thereby making a portion of the option shares under the SOA exercisable. This Agreement shall be governed by and construed in accordance with the laws of the State of Colorado. This Agreement supersedes any and all other agreements, whether oral or in writing, between the parties with respect to the subject matter. Each party to this Agreement acknowledges that no representations, inducements, promises, or agreements, orally or otherwise, have been made by the other party, or anyone acting on behalf of any party, that are not embodied in this Agreement, and that no agreement, statement, or promise not contained in this Agreement shall be valid or binding. IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of December 6, 2002. Option Holder: /S/ John W. Goth John W. Goth Corporation: /S/ William W. Reid William W. Reid, President, Chief Executive Officer and Chairman of the Board of Directors