EXHIBIT 10.12
XTRA-GOLD RESOURCES CORP.
May 1, 2006
Dr. Michael J. Byron
2459 Sanfrancisco Street
Sudbury ON P3A 2G8
Dear Dr. Byron:
RE: GRANT OF NONQUALIFIED STOCK OPTIONS
We are pleased to advise you that on May 1, 2006, the board of
directors of Xtra-Gold Resources Corp. ("XTRA-GOLD") authorized the award to you
(sometimes hereinafter referred to as the "OPTIONEE") of an option to purchase
540,000 shares of our common stock at a par value $.001 per share (the
"OPTIONS"), upon the following terms and conditions:
1. The Options are granted to you in accordance with and subject to the
terms and conditions of Xtra-Gold's 2005 Equity Compensation Plan (the "PLAN").
2. The Options are nonqualified stock options.
3. The Options have a three (3) year term (the "OPTION PERIOD") and are
exercisable, on a pro rata basis as set forth in paragraph 7 hereunder,
commencing on June 1, 2006, in accordance with the vesting schedule set out
hereunder and shall terminate at 5:00 p.m. (Eastern Standard Time) on May 1,
2009 (the "EXPIRY DATE").
4. The price at which the Options may be exercised is $0.70 per share.
5. The Options are transferable to a nominee as may be designated by
you from time to time and may be exercised, in whole or in part, during the
exercise period, as set forth herein or otherwise in accordance with the terms
and conditions of the Plan.
6. The exercise price and number of underlying shares issuable upon
exercise of the Options (the "OPTION SHARES") are subject to adjustment in
accordance with the Plan in the event of stock splits, dividends,
reorganizations and similar corporate events.
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TORONTO HEAD OFFICE
6 KERSDALE AVENUE TORONTO, ONTARIO, CANADA M5R 1J9
PHONE: (519) 59-1818 E-MAIL: TEDMCKECHNIE@ROGERS.COM
PHONE: (416) 981-3055 WEB SITE: WWW.XTRAGOLD.COM
Dr. Michael J. Byron - 2 - May 1, 2006
7. The Options are to vest pro rata over the Option Period on a monthly
basis in accordance with the following schedule:
PRO RATA PORTION
OF THE OPTIONS VESTING PERIOD
15,000 on the 1st day of each month of the
Option Period following the date of grant
8. (a) Any portion of the Options that have vested and have not been
exercised in a particular month shall accrue to the benefit of
the Optionee (the "Accrued Options") and in connection
therewith, you shall have the right to exercise the Accrued
Options for a period of time as may be set out in the Option
Plan referred to in (h) hereunder or in accordance with
securities laws governing Xtra-Gold, but in no event shall the
Accrued Options be exercised later than the earlier of (a) the
Expiry Date; and (b) the exercise date contemplated in
subparagraphs 8.(b), (c), (d), (e) and (f) hereunder.
(b) In the event of termination as a result of your voluntary
resignation, all Accrued Options must be exercised within 90
days from the date of your resignation, failing which the
Accrued Options will be cancelled.
(c) In the event of your death during the Option Period, all
Accrued Options must be exercised by your estate within one
year from the date of your death, failing which the Accrued
Options will be cancelled.
(d) In the event that you or Byron Geological Inc. are terminated
by Xtra-Gold, without cause, then in such event Xtra-Gold
agrees that you may retain 100% of the Accrued Options and
100% of the unvested Options (the "UNVESTED OPTIONS");
provided, however that the Options referred to in this
subparagraph must be exercised no later than 90 days following
such termination, failing which such Options will be
cancelled.
(e) In the event that you or Byron Geological Inc. are terminated
by Xtra-Gold, with cause, then in such event Xtra-Gold agrees
that you may retain 100% of the Accrued Options; provided,
however that the Accrued Options must be exercised no later
than 90 days following such termination, failing which such
Accrued Options will be cancelled. All Unvested Options will
be cancelled immediately upon your termination, with cause.
Dr. Michael J. Byron - 3 - May 1, 2006
(f) In the event of (A) a change of control of Xtra-Gold, whether
by an unrelated third party of Xtra-Gold or by a control block
of Xtra-Gold stockholders; or (B) the sale of 51% or more of
the assets of Xtra-Gold, all Options granted to you shall vest
in which event, you will have the right to exercise such
Options within 90 days following the completion of any event
contemplated in this subparagraph. For clarity purposes, the
assets of Xtra-Gold include the assets of its subsidiaries.
For further clarity purposes, a "change of control" shall mean
the purchase by and/or issuance to an unrelated third party of
such number of shares in Xtra as constitutes a majority of
issued and outstanding shares entitled to vote in an election
of Xtra's Board.
(g) The share certificate or certificates issued as a result of
the exercise of Options from time to time shall bear a
restrictive legend with respect to the resale of the shares
issued in connection therewith. In particular, until such time
that a registration statement has been filed by Xtra-Gold and
effective with the U.S. Securities and Exchange Commission:
(i) the Option Shares cannot be otherwise resold unless held
for two years, in accordance with Rule 144(k); or
alternatively (ii) if Xtra-Gold is a reporting company, then
the applicable hold period shall be one year from the date of
the issuance of Option Shares in accordance with Rule 144.
(h) Xtra-Gold implemented and adopted a 2005 equity compensation
plan (the "OPTION PLAN") which implementation and adoption was
been approved in writing by the Board in June 2005. Xtra-Gold
did not obtain shareholder approval.
(i) The Options shall at all times be subject to the terms of the
Option Agreement and the Option Plan.
9. Neither the Options nor the Option Shares have been registered under
the Securities Act of 1933, as amended (the "ACT"), and the Option Shares may
not be sold, assigned, pledged, transferred or otherwise disposed of absent
registration under the Act or the availability of an applicable exemption from
registration. However, it is the intention of Xtra-Gold to qualify the Option
Shares under a registration statement. All certificates evidencing the Option
Shares will contain a legend describing this restriction on resale of the Option
Shares. There is no assurance that there will be a public market into which you
may sell the Option Shares or that you will be able to sell your Option Shares
at a profit or at all.
Dr. Michael J. Byron - 4 - May 1, 2006
10. In order to exercise the vested Options, you must provide us with
written notice that you are exercising all or a portion of such Options. The
written notice must specify the number of Option Shares that you are exercising
your Options for, and must be accompanied by the exercise price described in
paragraph 4 above. Your Option Shares will be issued to you within approximately
one week following our receipt of your exercise notice and cleared funds
evidencing the exercise price.
11. No rights or privileges of a stockholder of Xtra-Gold are conferred
by reason of the grant of the Options to you. You will have no rights of a
stockholder until you have delivered your exercise notice to us and we have
received the exercise price of the Options in cleared funds and have delivered a
share certificate or certificates to you evidencing the shares arising out of
such exercise.
12. You understand that the Plan contains important information about
your Options and your rights with respect to the Options. The Plan includes (a)
terms relating to your right to exercise the Options; (b) important restrictions
on your ability to transfer the Options or Option Shares; and (c) early
termination of the Options following the occurrence of certain events, including
the termination of your relationship with us. By signing below, you acknowledge
your receipt of a copy of the Plan. By acceptance of your Options by way of
execution of this Agreement, you agree to abide by the terms and conditions of
this Agreement and the Plan.
13. We are a young company and are subject to all of the risks and
uncertainties of a young company. We may never operate profitably. The exercise
of your Options is a speculative investment and there is no assurance that you
will realize a profit on the exercise of your Options.
14. The Options will become effective upon your acknowledgment of the
terms and conditions of this Agreement and your delivery to us of a signed
counterpart of this Agreement.
15. This Agreement and Plan contain all of the terms and conditions of
your Options and supercedes all prior agreements or understandings relating to
your Options. This Agreement shall be governed by the laws of the State of
Florida without regard to the conflicts of laws provisions thereof. This
Agreement may not be amended orally.
We appreciate your continued support and contributions and are hopeful
that your Options will provide financial benefits to you in the future.
Yours very truly,
XTRA-GOLD RESOURCES CORP.
By: /s/ William Edward (Ted) McKechnie
WEMcK/rkm William Edward (Ted) McKechnie,
Enclosure Chairman and Chief Executive Officer
AGREED TO AND ACCEPTED this 1st day of May, 2006.
/s/ DR. MICHAEL J. BYRON
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DR. MICHAEL J. BYRON