Unassociated Document
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
___________
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date of
report: August 5, 2010
CAPITAL
GOLD CORPORATION
(Exact
name of registrant as specified in Charter)
|
Delaware
|
001-34618
|
13-3180530
|
|
(State
of other Jurisdiction of
incorporation)
|
(Commission
file no.)
|
(IRS
employer identification no.)
|
|
76
Beaver Street, 14th
Floor
New
York, New York
|
10005
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Registrant's
telephone number, including area code: (212) 344-2785
(Former
Name or Former Address, if Changed Since Last Report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
|
o
|
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|
|
o
|
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
o
|
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
|
|
o
|
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
|
ADDITIONAL INFORMATION AND
FORWARD-LOOKING STATEMENTS
CAPITAL
GOLD CORPORATION (“CAPITAL GOLD” OR THE “COMPANY”) CLAIMS THE PROTECTION OF THE
SAFE HARBOR FOR “FORWARD-LOOKING STATEMENTS” WITHIN THE MEANING OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995, AS AMENDED. FORWARD-LOOKING STATEMENTS
ARE STATEMENTS THAT ARE NOT HISTORICAL FACTS. SUCH FORWARD-LOOKING STATEMENTS,
BASED UPON THE CURRENT BELIEFS AND EXPECTATIONS OF MANAGEMENT OF CAPITAL GOLD
REGARDING, AMONG OTHER THINGS, CAPITAL GOLD’S BUSINESS COMBINATION DISCUSSED
HEREIN AND THE BUSINESS OF NAYARIT GOLD INC. (“NAYARIT”) AND ITS SUBSIDIARIES,
ARE SUBJECT TO RISKS AND UNCERTAINTIES, WHICH COULD CAUSE ACTUAL RESULTS TO
DIFFER FROM THE FORWARD-LOOKING STATEMENTS. THE FOLLOWING FACTORS, AMONG OTHERS,
COULD CAUSE ACTUAL RESULTS TO DIFFER FROM THOSE SET FORTH IN THE FORWARD-LOOKING
STATEMENTS: (1) DIFFICULTIES ENCOUNTERED IN INTEGRATING THE MERGED
COMPANIES; (2) OFFICERS AND DIRECTORS ALLOCATING THEIR TIME TO OTHER
BUSINESSES AND POTENTIALLY HAVING CONFLICTS OF INTEREST WITH THE COMPANY’S
BUSINESS; (3) SUCCESS IN RETAINING OR RECRUITING, OR CHANGES REQUIRED IN,
THE COMPANY’S OFFICERS, KEY EMPLOYEES OR DIRECTORS FOLLOWING THE BUSINESS
COMBINATION (AS DEFINED BELOW); (4) THE POTENTIAL LIQUIDITY AND TRADING OF
THE COMPANY’S PUBLIC SECURITIES; (5) THE COMPANY’S REVENUES AND OPERATING
PERFORMANCE; (6) CHANGES IN OVERALL ECONOMIC CONDITIONS; (7) THE
RESULTS OF ANTICIPATED BUSINESS DEVELOPMENT ACTIVITIES OF THE COMPANY FOLLOWING
THE BUSINESS COMBINATION; AND (8) OTHER RISKS REFERENCED FROM TIME TO TIME
IN THE COMPANY’S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION (THE “SEC”)
AND THOSE FACTORS LISTED UNDER “RISK FACTORS” IN THE
DEFINITIVE PROXY STATEMENT/PROSPECTUS DATED AS OF JUNE 8, 2010 AND FILED WITH
THE SEC. THE INFORMATION SET FORTH HEREIN SHOULD BE READ IN LIGHT OF SUCH RISKS.
THE COMPANY DOES NOT ASSUME ANY OBLIGATION TO UPDATE THE INFORMATION CONTAINED
IN THIS REPORT.
NEITHER
THE INFORMATION ON CAPITAL GOLD’S WEBSITE NOR NAYARIT’S WEBSITE IS AND
SHALL NOT BE DEEMED TO BE, A PART OF THIS CURRENT REPORT OR INCORPORATED IN
FILINGS CAPITAL GOLD MAKES WITH THE SEC.
|
Item 1.01.
|
Entry
into a Material Definitive
Agreement.
|
The
Company is a party to that certain Business Combination Agreement (the
“Agreement”), dated as of February 10, 2010, as amended by Amendment No. 1
to the Agreement, dated as of April 29, 2010 and the Extension Agreement
dated as of July 6, 2010, by and among Capital Gold Corporation (“Capital
Gold”), Nayarit Gold Inc. (“Nayarit”), John Brownlie, Colin Sutherland and Brad
Langille, pursuant to which, on August 2, 2010, Nayarit became a
wholly-owned subsidiary of Capital Gold (the “Business
Combination”).
The
Agreement, the amendment thereto and the Extension Agreement are filed as
Exhibits 2.1, 2.2 and 2.3, respectively, to this current report on Form
8-K.
Employment
Agreements
In
connection with the consummation of the Business Combination, the Company
entered into a separate employment agreement with Mr. Colin Sutherland (the
“Employment Agreement”). The Employment Agreement has an initial one year term,
which automatically renews unless either party gives 60 days written notice
prior to the expiration of the term. Either party may terminate the employment
relationship at any time, subject to possible severance payments as set forth
below.
Pursuant
to the Employment Agreement, Mr. Sutherland is entitled to receive an annual
base salary of $225,500. The Employment Agreement also provides for the award of
an annual discretionary bonus.
Pursuant
to the Employment Agreement, the Company will be obligated to make severance
payments to Mr. Sutherland if the employment relationship is terminated by the
Company without Cause (as defined in the Employment Agreement) or by the
employee for a material breach by the Company of any of the terms of the
Employment Agreement. The Employment Agreement provides for the
payment of severance to Mr. Sutherland in the following amounts: (a) a lump sum
equal to one year of base salary if the Company terminates without cause or
employee terminates for material breach by the Company, provided at least one
year has elapsed since the date of employee’s original employment; (b) a lump
sum equal to eighteen months of base salary if the Company terminates without
cause, provided at least five years has elapsed since the date of employee’s
original employment; (c) a lump sum equal to three months of base salary in the
event the Company does not renew the Employment Agreement pursuant to notice
prior to the expiration of the term.
The
preceding summary of the material provisions of the Employment Agreement with
Mr. Sutherland is qualified in its entirety by reference to the complete text of
the employment agreement with Mr. Sutherland, a copy of which is filed as
Exhibit 10.1, to this current report on Form 8-K.
Lock-Up
Agreements
In
connection with the consummation of the Business Combination, each of Messrs.
Sutherland and Langille entered into a lock-up agreement with the Company
(together, the “Lock-Up Agreements”) pursuant to which all of the Company’s
common stock received by Messrs. Sutherland and Langille pursuant to the
Business Combination and the shares of the Company’s common stock underlying the
convertible securities held by Messrs. Sutherland and Langille will be released
from the lock-up on the date that is six months following the closing of the
Business Combination.
The
preceding summary of the material provisions of the Lock-Up Agreements is
qualified in its entirety by reference to the complete text of the Lock-Up
Agreements, a form of which is filed as Exhibit 10.2 to this current report on
Form 8-K.
|
Item 2.01.
|
Completion
of Acquisition.
|
The
Business Combination was consummated on August 2, 2010. As a result of the
Business Combination, Nayarit became a wholly-owned subsidiary of the
Company.
In
connection with the Business Combination, each outstanding share of Nayarit
common stock was converted into 0.134048 shares of Capital Gold common stock,
with cash to be paid in lieu of any fractional share. Capital Gold
issued 12,454,354 shares of its common stock in the Business Combination to
Nayarit's current stockholders and has reserved for issuance an additional
1,621,981 and 903,483 shares of Capital Gold common stock upon the exercise of
former Nayarit warrants and options, respectively. Based on the
number of outstanding shares of Nayarit common stock and Capital Gold common
stock, after the consummation of the Business Combination, the stockholders of
Nayarit own approximately 20.4% of Capital Gold on a non-diluted
basis.
Business
A
description of Nayarit’s business is included in the definitive proxy
statement/prospectus (the “Proxy Statement/Prospectus”) included in the
Company’s Registration Statement on Form S-4, declared effective by the SEC on
June 8, 2010 under “Information About Nayarit – Description of Business”
beginning on page 140, which information is incorporated herein by
reference.
Risk
Factors
The risks
associated with the Business Combination are described under “Risk Factors—Risks
Related to the Business Combination and the Combined Entity” beginning on page
18 of the Proxy Statement/Prospectus, which information is incorporated herein
by reference.
Financial
Information
Certain
financial information related to the business of Capital Gold and Nayarit is set
forth under “Capital Gold’s Management’s Discussion and Analysis of Financial
Condition and Results of Operations” beginning on page 81 of the Proxy
Statement/Prospectus and “Nayarit’s Management’s Discussion and Analysis of
Financial Condition and Results of Operations” beginning on page 151 of the
Proxy Statement/Prospectus, which information is incorporated herein by
reference.
Properties
Information
regarding the properties of the Company and Nayarit is set forth under
“Information About Capital Gold-Properties” and “Information About Capital
Gold-Other Properties” beginning on page 73 of the Proxy Statement/Prospectus
and “Information of Nayarit-Property Description and Location” beginning on page
140 of the Proxy Statement/Prospectus, which information is incorporated herein
by reference.
Security
Ownership of Certain Beneficial Owners and Management
The
following table sets forth information known to the Company regarding the
beneficial ownership of the Company’s common stock immediately following the
consummation of the Business Combination by:
|
|
•
|
|
each
person known by the Company to be the beneficial owner of more than 5% of
the outstanding shares of the Company’s common stock on August 2,
2010;
|
|
|
•
|
|
each
of the Company’s executive officers and directors;
and
|
|
|
•
|
|
all
executive officers and directors of the Company as a
group.
|
Unless
otherwise indicated, the Company believes that all persons named in the table
below have sole voting and investment power with respect to all shares of common
stock beneficially owned by them.
|
|
|
|
|
Name and Address of Beneficial
Owner
|
|
|
Amount and
Nature of
Beneficial
Ownership
|
|
Approximate
Percentage of
Beneficial
Ownership
|
|
|
|
|
|
|
|
|
|
|
Sprott Asset Management,
LP (2)
|
|
|
|
8,071,025
|
|
13.1
|
%
|
|
Suite 2700, South
Tower
|
|
|
|
|
|
|
|
|
Royal Bank
Plaza
|
|
|
|
|
|
|
|
|
Toronto, ON M5J
2J1
|
|
|
|
|
|
|
|
|
Canada
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Van
Eck Associates Corporation (3)
|
|
|
|
3,944,000
|
|
6.4
|
%
|
|
335 Madison Ave., 19 th Flr
|
|
|
|
|
|
|
|
|
New York, NY
10017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Colin
Sutherland*
|
|
|
|
242,318
|
|
**
|
|
|
146 Skye
Cr
|
|
|
|
|
|
|
|
|
Hammonds
Plains, Nova Scotia
|
|
|
|
|
|
|
|
|
B4B1W8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christopher M.
Chipman*
|
|
|
|
337,500
|
|
**
|
|
|
826 Fayette
Street
|
|
|
|
|
|
|
|
|
Conshohocken, PA
19428
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott
Hazlitt*
|
|
|
|
462,500
|
|
**
|
|
|
9428 W. Highway
50
|
|
|
|
|
|
|
|
|
Salida, CO
81201
|
|
|
|
|
|
|
|
|
Leonard J.
Sojka*
|
|
|
|
56,585
|
|
**
|
|
|
1460 Spring Valley
Road
|
|
|
|
|
|
|
|
|
Golden Valley, MN
55422
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John W.
Cutler*
|
|
|
|
68,950
|
|
**
|
|
|
4190 Lively
Lane
|
|
|
|
|
|
|
|
|
Dallas, TX
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen M.
Cooper*
|
|
|
|
51,815
|
|
**
|
|
|
10475 Park Meadows
Drive
|
|
|
|
|
|
|
|
|
Suite 600
|
|
|
|
|
|
|
|
|
Lone Tree, CO
80124
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Officers and Directors as a
Group (6 persons)
|
%
|
|
|
1,219,668
|
|
2.0
|
%
|
* Officer
and/or Director of Capital Gold Corporation
** Less
than 1%
|
(1)
|
Based upon 61,223,853 shares
issued and outstanding as of August 2, 2010.
|
|
|
|
|
(2)
|
Includes
3,014,489 shares of common stock held by Sprott Canadian Equity Fund, of
which Reporting Person is Investment Manager. Includes warrants to
purchase 180,960 shares of common
stock.
|
|
(3)
|
Represents shares held within
mutual funds and other client accounts managed by Van Eck Associates
Corporation, none of which owns more than 5% of Capital Gold’s outstanding
shares of Common Stock.
|
|
(4)
|
For Messrs. Sutherland, Chipman
and Hazlitt includes, respectively, 226,072, 212,500 shares and 175,000
shares issuable upon exercise of options. For Messrs. Sojka, Cutler and
Cooper includes 50,000 shares each issuable upon exercise of
options.
|
Directors and Executive
Officers
Information
regarding the directors and executive officers of the Company following the
consummation of the Business Combination is set forth under “Management of
Capital Gold Following the Business Combination” beginning on page 178 of the
Proxy Statement/Prospectus, which information is incorporated herein by
reference; provided, however, Mr. Bradley Langille was not appointed as a senior
executive officer of the Company.
To the
extent applicable, the information regarding the directors and executive
officers of the Company following the consummation of the Business Combination
set forth under Item 5.02 of this current report on Form 8-K is also
incorporated herein by reference.
Executive
Compensation
Information
regarding director and executive officer compensation of Capital Gold prior to
the completion of the Business Combination is set forth under “Management of
Capital Gold—Compensation of Directors” beginning on page 118 of the Proxy
Statement/Prospectus and “Executive Compensation of Capital Gold” beginning on
page 119 of the Proxy Statement/Prospectus, which information is incorporated
herein by reference.
Information
regarding the compensation of the Company’s directors and executive officers
after the completion of the Business Combination is set forth under “Management
of Capital Gold Following the Business Combination —Director Compensation” on
page 180 of the Proxy Statement/Prospectus and “Management of Capital Gold
Following the Business Combination —Executive Compensation” on page 180 of the
Proxy Statement/Prospectus, which information is incorporated herein by
reference.
The
description of the Employment Agreements set forth under Item 1.01 of this
current report on Form 8-K is incorporated herein by reference.
Certain
Relationships and Related Transactions, and Director Independence
Information
regarding certain relationships and related transactions of Nayarit and Capital
Gold is set forth under “Transactions with Related Parties” on page 152 of the
Proxy Statement/Prospectus and “Certain Relationships and Related Transactions”
beginning on page 136 of the Proxy Statement/Prospectus, which information is
incorporated herein by reference. Information regarding director independence is
set forth under “Management of the Capital Gold Following the Business
Combination” beginning on page 178 of the Proxy Statement/Prospectus, which
information is incorporated herein by reference.
Legal
Proceedings
Information
regarding the legal proceedings of Nayarit and Capital Gold is set forth under
“Information About Capital Gold—Legal Proceedings” on page 81 of the Proxy
Statement/Prospectus and under “Legal Proceedings and Regulatory Actions” on
page 175 of the Proxy Statement/Prospectus, which information is incorporated
herein by reference.
Market
Price of and Dividends on the Registrant’s Common Equity and Related Stockholder
Matters
Information
regarding the historical market price regarding Capital Gold’s securities and
Nayarit’s securities is set forth under “Price Range of Capital Gold Shares and
Dividend Policy” on page 138 of the Proxy Statement/Prospectus and “Price Range
of Nayarit Shares and Dividend Policy” on page151 of the Proxy
Statement/Prospectus, which information is incorporated herein by
reference.
Recent
Sales of Unregistered Securities
Not
Applicable.
Description
of Company’s Securities
A
description of the Company’s common stock and other securities of the Company is
set forth under “Description of Securities of Capital Gold” beginning on page
136 of the Proxy Statement/Prospectus, which information is incorporated herein
by reference.
Indemnification
of Directors and Officers
Information
regarding the indemnification of directors and officers of the Company is set
forth under Item 20. Indemnification of Officers and Directors on page II-1 of
the Proxy Statement/Prospectus, which information is incorporated herein by
reference.
Financial
Statements and Exhibits
Information
concerning the financial information of the Company and Nayarit set forth under
Item 9.01 of this current report on Form 8-K is incorporated herein by
reference.
|
Item 5.02.
|
Departure
of Directors and Certain Officers; Election of Directors; Appointment of
Certain Officers; Compensatory Arrangement of
Officers.
|
Effective
immediately upon consummation of the Business Combination, Colin Sutherland was
appointed as President of the Company and as a member of the Board of Directors
(the “Board”) of the Company.
The
biographical information of Mr. Sutherland is incorporated herein by reference
from the section entitled “Directors and Officers” beginning on page 159 of the
Proxy Statement/Prospectus. To the extent applicable, the information under
“Transactions with Related Parties” on page 152 of the Proxy
Statement/Prospectus is incorporated herein by reference. To the extent
applicable, the description of the Employment Agreement set forth under
Item 1.01 of this current report on Form 8-K is incorporated herein by
reference.
Pursuant
to the terms of the Agreement, Nayarit has the right to designate one individual
and Capital Gold has the right to designate one individual to serve on the
Company’s Board. Effective immediately upon consummation of the Business
Combination, Mr. Sutherland was appointed as a member of the Company’s
Board.
On August
4, 2010, Mr. Leonard Sojka resigned as a member of the Board of Directors of the
Company. Mr. Sojka did not resign from the Company’s Board of
Directors as a result of any disagreements with the Company on any matter
relating to the Company’s operations, policies or practices. Mr.
Sojka’s resignation was announced in a press release issued on August 5, 2010, a
copy of which is attached hereto as Exhibit 99.2.
On
August 2, 2010, Capital Gold and Nayarit issued a press release announcing
the consummation of the Business Combination, a copy of which is furnished as
Exhibit 99.1 to this current report on Form 8-K.
On August
5, 2010, Capital Gold issued a press release announcing that the Company has
produced 15,287 ounces of gold in the fourth fiscal quarter of 2010, ended July
31, 2010, at its El Chanate open pit mine in Sonora, Mexico, which represents a
40% increase over the fiscal quarter ended July 31, 2009. A copy of the press
release is attached hereto as Exhibit 99.2.
The
information set forth in this Item 8.01, including the text of the press
releases, attached as Exhibit 99.1 and Exhibit 99.2 hereto, is being
furnished and shall not be deemed “filed” for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, or otherwise subject to the
liabilities of such section. Such information shall not be incorporated by
reference into any registration statement or other document pursuant to the
Securities Act of 1933, as amended.
|
Item 9.01.
|
Financial
Statements and Exhibits.
|
|
(a)
|
FINANCIAL
STATEMENTS OF BUSINESS ACQUIRED.
|
The
financial statements required pursuant to Item 9.01(a) of Form 8-K are not being
filed herewith. Such financial statements will be filed by amendment not later
than 71 calendar days after the date the Current Report on Form 8-K reporting
the closing of the acquisition is required to be filed, or October 18, 2010,
pursuant to Item 9.01(a)(4) of Form 8-K.
|
(b)
|
PRO
FORMA FINANCIAL INFORMATION.
|
The pro
forma financial information required to be filed pursuant to Item 9.01(b) of
Form 8-K is not being filed herewith. Such pro forma financial information will
be filed by amendment not later than 71 calendar days after the Current Report
on Form 8-K reporting the closing of the acquisition is required to be filed, or
October 18, 2010, pursuant to Item 9.01(b)(2) of Form 8-K.
(d) EXHIBITS
|
|
|
|
|
2.1
|
|
Business
Combination Agreement by and between Capital Gold Corporation and Nayarit
Gold Inc. dated as of February 10, 2010 (1)+
|
|
|
|
|
2.2
|
|
Amendment
No. 1 to Business Combination Agreement, dated April 29, 2010, by and
between Capital Gold Corporation and Nayarit Gold Inc.
(1)
|
|
|
|
|
2.3
|
|
Extension
Agreement dated July 6, 2010 (2)
|
|
|
|
|
|
10.1
|
|
Executive
Employment Agreement between the Company and Colin
Sutherland*
|
|
|
|
|
10.2
|
|
Form
of Lock-up Agreement by and between Capital Gold Corporation and certain
stockholders of Capital Gold Corporation*
|
|
|
|
|
99.1
|
|
Press
release dated August 2, 2010*
|
|
+
|
Schedules
to this exhibit have been omitted pursuant to Item 601(b)(2) of
Regulation S-K. The Registrant hereby agrees to furnish a copy of any
omitted schedules to the Commission upon
request.
|
|
(1)
|
Incorporated
by reference to the Company’s Registration Statement on Form S-4 (File
No. 333-165866) declared effective by the SEC on June 8,
2010
|
|
(2)
|
Incorporated
by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K
filed with the SEC on July 7, 2010
|
SIGNATURES
Pursuant to the requirements of the
Securities Exchange Act of 1934, the Registrant has duly caused this Report to
be signed on its behalf by the undersigned hereunto duly
authorized.
| |
CAPITAL GOLD
CORPORATION |
|
| |
|
|
|
|
|
By:
|
/s/
Colin Sutherland |
|
| |
|
Name:
Colin Sutherland |
|
| |
|
Title:
President |
|
Dated: August 5,
2010