Unassociated Document
SCHEDULE
14A
(Rule
14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a)
of
the
Securities Exchange Act of 1934
Filed
by
the Registrant x
Filed
by
a Party other than the Registrant o
Check
the
appropriate box:
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission Only (as Permitted by Rule
14a-6(e)(2))
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x
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Definitive
Proxy Statement
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o
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Definitive
Additional Materials
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o
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Solicitation
Material Pursuant to Rule 14a-11(c) or rule
14a-12
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Capital
Gold Corporation
(Name
of
Registrant as Specified in its Charter)
(Name
of
Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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Title
of each class of securities to which transaction applies:
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2)
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Aggregate
number of securities to which transaction applies:
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3)
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Per
unit price or other underlying value of transaction computed pursuant
to
Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is
calculated and state how it was determined):
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4)
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maximum aggregate value of transaction:
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0-11(a)(2) and identify the filing for which the offsetting fee was
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previously. Identify the previous filing by registration statement
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Form,
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CAPITAL
GOLD CORPORATION
76
Beaver Street, 14th Floor
New
York, NY 10005
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD ON JANUARY 20, 2009
To
the
Stockholders of Capital Gold Corporation:
You
are
cordially invited to attend the Annual Meeting of Stockholders of Capital Gold
Corporation (the “Company”), a Delaware corporation, to be held at Bayard’s, One
Hanover Square, New York, New York 10004, on Tuesday, January 20, 2009, at
2:00
p.m. local time, for the following purposes:
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1.
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To
elect eight members to the Board of Directors of the Company to serve
until their respective successors are elected and qualified (“Proposal No.
1”);
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2.
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To
ratify the selection by our audit committee of Wolinetz, Lafazan
&
Company, P.C., independent registered public accountants, to audit
the
financial statements of the Company for the year ending July 31,
2009
(“Proposal No. 2”);
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3.
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To
amend our 2006 Equity Incentive Plan to increase the number of shares
of
common stock authorized for issuance under the Plan from 10,000,000
to
20,000,000 shares (“Proposal No. 3”); and
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4.
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To
transact such other matters as may properly come before the meeting
or any
adjournment thereof.
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Only
stockholders of record at the close of business on December 4, 2008 are entitled
to notice of and to vote at the meeting.
A
proxy
statement and proxy are enclosed. If you are unable to attend the meeting in
person you are urged to sign, date and return the enclosed proxy promptly in
the
self addressed stamped envelope provided. If you attend the meeting in person,
you may withdraw your proxy and vote your shares.
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By
Order of the Board of Directors
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Jeffrey
W. Pritchard, Secretary
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New
York,
New York
December
10, 2008
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YOUR
VOTE IS IMPORTANT
We
urge you to promptly vote your shares
by
completing, signing, dating and returning
your
proxy card in the enclosed
envelope.
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PROXY
STATEMENT
CAPITAL
GOLD CORPORATION
76
Beaver Street
14th
Floor
New
York, NY 10005
INTRODUCTION
This
proxy statement is furnished in connection with the solicitation of proxies
for
use at the Annual Meeting of stockholders of Capital Gold Corporation (“Capital
Gold,” the “Company,” “We” or “Us”) to be held on Tuesday, January 20, 2009, and
at any adjournments. The accompanying proxy is solicited by our Board of
Directors and is revocable by the stockholder by notifying our Corporate
Secretary at any time before it is voted, or by voting in person at the Annual
Meeting. This proxy statement and accompanying proxy are being distributed
to
stockholders beginning on or about December 10, 2008. Our principal executive
offices are located at 76 Beaver Street, 14th Floor, New York, NY 10005,
telephone (212) 344-2785.
OUTSTANDING
SHARES AND VOTING RIGHTS
RECORD
DATE; OUTSTANDING SHARES; VOTES REQUIRED
Only
stockholders of record at the close of business on December 4, 2008, the record
date, are entitled to receive notice of, and vote at the Annual Meeting. As
of
the record date, the number and class of stock outstanding and entitled to
vote
at the meeting was 193,124,826 shares of common stock, par value $.0001 per
share. Each share of common stock is entitled to one vote on all matters. No
other class of securities will be entitled to vote at the meeting. There are
no
cumulative voting rights.
The
eight
nominees receiving the highest number of votes cast by the holders of common
stock represented and voting at the meeting (a plurality of votes cast) will
be
elected as our directors and constitute our entire Board of directors. The
affirmative vote of at least a majority of the shares represented and voting
at
the annual meeting at which a quorum is present is necessary for approval of
Proposal No. 2 and Proposal No. 3.
REVOCABILITY
OF PROXIES
If
you
attend the meeting, you may vote in person, regardless of whether you have
submitted a proxy. Any person giving a proxy in the form accompanying this
proxy
statement has the power to revoke it at any time before it is voted. It may
be
revoked by filing, with our corporate secretary of Capital Gold at its principal
offices, 76 Beaver Street, 14th Floor, New York, NY 10005, a written notice
of
revocation or a duly executed proxy bearing a later date, or it may be revoked
by attending the meeting and voting in person.
VOTING
AND SOLICITATION
Every
stockholder of record is entitled, for each share held, to one vote on each
proposal or item that comes before the meeting. There are no cumulative voting
rights. By submitting your proxy, you authorize Gifford A. Dieterle and Jeffrey
W. Pritchard and each of them to represent you and vote your shares at the
meeting in accordance with your instructions. Messrs. Dieterle and Pritchard
and
each of them may also vote your shares to adjourn the meeting from time to
time
and will be authorized to vote your shares at any adjournment or postponement
of
the meeting.
Capital
Gold has borne the cost of preparing, assembling and mailing this proxy
solicitation material. The total cost estimated to be spent and the total
expenditures to date for, in furtherance of, or in connection with the
solicitation of stockholders is approximately $30,000. We may reimburse
brokerage firms and other persons representing beneficial owners of shares
for
their expenses in forwarding soliciting materials to beneficial owners. Proxies
may be solicited by certain of our directors, officers and employees, without
additional compensation, personally, by telephone or by facsimile.
ADJOURNED
MEETING
The
chair
of the meeting may adjourn the meeting from time to time to reconvene at the
same or some other time, date and place. Notice need not be given of any such
adjournment meeting if the time, date and place thereof are announced at the
meeting at which the adjournment is taken. If the time, date and place of the
adjournment meeting are not announced at the meeting which the adjournment
is
taken, then our Secretary shall give written notice of the time, date and place
of the adjournment meeting not less than ten (10) days prior to the date of
the
adjournment meeting. Notice of the adjournment meeting also shall be given
if
the meeting is adjourned in a single adjournment to a date more than 30 days
after the original date fixed for the meeting or if a new record date for the
adjourned meeting is fixed.
TABULATION
OF VOTES
The
votes
will be tabulated and certified by our transfer agent.
VOTING
BY STREET NAME HOLDERS
If
you
are the beneficial owner of shares held in “street name” by a broker, the
broker, as the record holder of the shares, is required to vote those shares
in
accordance with your instructions. If you do not give instructions to the
broker, the broker will nevertheless be entitled to vote the shares with respect
to “discretionary” items but will not be permitted to vote the shares with
respect to “non-discretionary” items (in which case, the shares will be treated
as “broker non-votes”).
QUORUM;
ABSTENTIONS; BROKER NON-VOTES
The
required quorum for the transaction of business at the Annual Meeting is a
majority of the shares of common stock entitled to vote at the Annual Meeting,
in person or by proxy. Shares that are voted "FOR," "AGAINST" or "WITHHELD
FROM"
a matter are treated as being present at the meeting for purposes of
establishing a quorum and are also treated as shares represented and voting
the
votes cast at the Annual Meeting with respect to such matter.
Proxies
marked “abstain” will be counted as shares present for the purpose of
determining the presence of a quorum. For purposes of determining the outcome
of
a proposal, abstentions will have the same effect as a vote against the proposal
(other than the election of directors).
Broker
“non-votes” occur when a nominee holding shares for a beneficial owner does not
vote on a particular proposal because the nominee does not have discretionary
voting power for that particular item and has not received voting instructions
from the beneficial owner. Broker “non-votes” will be counted as shares present
for purposes of determining the presence of a quorum. However, broker
“non-votes” will not be counted for purposes of determining the number of votes
cast with respect to the particular proposal on which the broker has expressly
not voted. Where a proposal requires the vote of a majority of the shares
entitled to vote rather than a majority of the votes present and voting at
a
meeting, the general effect of a broker “non-vote” is a vote against the
proposal. No proposals at this meeting will require the vote of a majority
of
the shares entitled to vote.
PROPOSALS
TO STOCKHOLDERS
PROPOSAL
1
ELECTION
OF DIRECTORS
We
currently have eight directors, Gifford A. Dieterle, John Brownlie, Jeffrey
W.
Pritchard, Robert Roningen, Roger A. Newel, Ian A. Shaw, John Postle and Mark
T.
Nesbitt, whose terms each expire at the upcoming annual meeting. Our Board
of
Directors has nominated all of the current directors for election as directors.
Set
forth
below is the biographical information of the nominees and Director:
GIFFORD
A. DIETERLE, age 76, is our President, Treasurer and Chairman of the Board
of
Directors. Mr. Dieterle was appointed President in September 1997 and has been
an officer and Chairman since 1981. He has a M.S. in Geology obtained from
New
York University. From 1977 until July 1993, he was Chairman, Treasurer, and
Executive Vice-President of Franklin Consolidated Mining Company. From 1965
to
1987, he was lecturer in geology at the City University of N.Y. (Hunter
Division).
JOHN
BROWNLIE, age 59, is our Chief Operating Officer and a Director, has worked
for
us since May 2006 and has been a Director since February 2007. He is in charge
of supervising the construction, start-up and operation of the mine. Mr.
Brownlie provided team management for mining projects requiring technical,
administrative, political and cultural experience over his 28 year mining
career. From 2000 to 2006, Mr. Brownlie was a consultant providing mining and
mineral related services to various companies including SRK, Oxus Mining plc
and
Cemco Inc. From 1995 to 2000, he was the General Manager for the
Zarafshan-Newmont Joint Venture in Uzbekistan, a one-million tonne per month
heap leach plant which produced over 400,000 ounces of gold per year. From
1988
to 1995, Mr. Brownlie served as the Chief Engineer and General Manager for
Monarch Resources in Venezuela, at both the El Callao Revemin Mill and La
Camorra gold projects. Before that, was a resident of South Africa and
associated with numerous mineral projects across Africa. He is also a mechanical
engineer and fluent in Spanish. Mr. Brownlie is also a director of Palladon
Ventures, a publicly traded mineral-related company.
JEFFREY
W. PRITCHARD, age 50, is our Executive Vice President, Secretary and a Director
and has worked for us since 1996. He has been a Director since January 2000.
Mr.
Pritchard has been in the marketing/public relations field since receiving
a
Bachelor’s degree from the State University of New York in 1979. Mr. Pritchard
has served as the Director of Marketing for the New Jersey Devils (1987-1990)
and as the Director of Sales for the New York Islanders (1985-1987). He also
was
an Executive Vice President with Long Island based Performance Network, a
marketing and publishing concern from 1990 through 1995.
ROBERT
RONINGEN, age 73, is our Senior Vice President and a Director. He has been
a
Director since September 1993. He has been engaged in the practice of law as
a
sole practitioner and is a self-employed consultant geophysicist in Duluth,
Minnesota. Mr. Roningen served as our Secretary until February 2007. From 1988
to August 1993, he was an officer and director of Franklin Consolidated Mining
Company, Inc. He graduated from the University of Minnesota in 1957 with a
B.A.
in geology and in 1962 with a degree in Law.
ROGER
A.
NEWELL, age 65, is a Director. He worked for us from 2000 to September 2007
and
has been a Director since August 2000. He was our Vice President - Development
until September 2007. Since October 2007, Mr. Newell has been an Executive
Vice
President of Kilimanjaro Mining Company Ltd., a private Nevada based company
involved in uranium and gold exploration in Tanzania, Africa. Since June 2008,
he has served as the Chairman, CEO and President of Lake Victoria Mining
Company, a U.S. public company with exploration property in Tanzania, Africa.
From 1974 through 1977, he was a geologist with Kennecott Copper Corporation.
From 1977 through 1989, he served as Exploration Manager/Senior Geologist for
the Newmont Mining Corporation and, from 1989 through 1995, was the Exploration
Manager for Gold Fields Mining Company. He was Vice President Development,
for
Western Exploration Company from 1997 through 2000. Since 1995, he has been
a
senior consultant in the Minerals Advisory Group LLC, Tucson, Arizona, a company
that provides technical and engineering advice to clients regarding mineral
projects. He has been self-employed as a geologist since 2001. He is a Fellow
in
the Society of Economic Geologists and a Past President of that Society’s
Foundation. He has a M.Sc. from the Colorado School of Mines and a Ph.D. in
mining and mineral exploration from Stanford University.
IAN
A.
SHAW, age 68, is a member of our Board of Directors and the Board’s Audit and
Compensation Committees. He has been a Director since March 2006. Mr. Shaw
has
over 33 years of experience in the mining industry. He has been Managing
Director of Shaw & Associates since 1993. Shaw & Associates is a
corporate services consulting firm specializing in corporate finance, regulatory
reporting and compliance with clients that are typically public companies in
the
resource industry. In the course of providing consulting services he has
accepted positions as an officer or director with number of his clients. He
recently held the position of Director, since 1994, of Metallica Resources
Inc.,
a TSX listed corporation with a gold mine in Mexico, and exploration properties
in Chile and Alaska. Positions he currently holds include Director of Pelangio
Exploration, Inc., since 2008, a TSX listed corporation with an interest in
gold
exploration properties in Canada and Ghana; Director of PDX Resources, Inc.
(formerly Pelangio Mines, Inc.), since 2008, a TSX listed company with an
investment in a company which holds a gold property in Canada; Vice President,
Finance and CFO, since May 2005, of Unor Inc., a TSX listed company with uranium
exploration properties in Canada; and Chief Financial Officer, since January
2007, of Olivut Resources Ltd., a TSX listed corporation with diamond
exploration properties in Canada. Mr. Shaw is a Chartered Accountant and
received a B. Comm. from Trinity College at the University of Toronto in
1964.
JOHN
POSTLE, age 67, is a member of our Board of Directors and the Board’s Audit and
Compensation Committees. He has been a Director since March 2006. He is a
Consulting Mining Engineer associated with Scott Wilson Roscoe Postle Associates
Inc. In 1985 he was a founding partner of Roscoe Postle Associates Inc. which
later merged with Scott Wilson Group Plc. Mr. Postle provides mining consulting
services to a number of international financial institutions, corporations,
utilities and law firms. He worked for Cominco Ltd (1965-1970), Falconbridge
Ltd
(1970-1975) and D.S. Robertson and Associates (1976-1985) and has worked at
a
number of open pit and underground mining operations in both operating and
planning capacities. Mr. Postle is a Past Chairman of the Mineral Economics
Committee of the Canadian Institute of Mining, Metallurgy and Petroleum (“CIM”),
and was appointed a Distinguished Lecturer of the CIM in 1991. In 1997, he
was
awarded the CIM Robert Elver Mineral Economics Award. He is currently Chairman
of a CIM Standing Committee on Ore Reserve Definitions. Mr. Postle is a director
of Strait Gold Corporation, a Canadian publicly traded company, and serves
as a
member of that company’s audit and disclosure committees. Mr. Postle has a
B.A.Sc. Degree in Mining Engineering from the University of British Columbia
in
1965 and a M.Sc. Degree in Earth Sciences from Stanford University in
1968.
MARK
T.
NESBITT, age 63, is a member of our Board of Directors and the Board’s Audit and
Compensation Committees. He has been a Director since March 2006. Since 1988,
he
has been a natural resources attorney in Denver, Colorado specializing in
domestic and international mining transactions, agreements, negotiations, title
due diligence, corporate and general business counsel. Mr. Nesbitt has been
an
Adjunct Professor at the University of Denver School of Law's since 2001, is
an
active member of the Rocky Mountain Mineral Law Foundation, having served as
a
Trustee from 1987 to 1993, and from 2003 to 2006, Co-chairman of the Mining
Sessions at the Foundation’s international natural resource institute in Buenos
Aires, Argentina in 2007, Co-chairman of the Foundation's Mining Law and
Investment in Latin America institute in Lima, Peru in 2003, and Chairman of
the
same institute in 2003, and Chairman of the Foundation's first Land and
Permitting Special Institute in 1994. He also has served continuously over
the
years on the Foundation's Special Institutes Committee, Long Range Planning
Committee, and numerous other committees. Mr. Nesbitt is a member of the
International, American, Colorado and Denver Bar Associations, Rocky Mountain
Mineral Law Foundation, International Mining Professionals Society (Treasurer
since 2000), and the Colorado Mining Association. He is also a former Director
of the Colorado Mining Association and past President of the Rocky Mountain
Association of Mineral Landmen. He received a B.S. degree in Geology from
Washington State University in 1968 and a J.D. from Gonzaga University School
of
Law in 1975.
THE
BOARD OF DIRECTORS DEEMS PROPOSAL 1 TO BE IN THE BEST INTERESTS OF THE COMPANY
AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE “FOR” EACH OF THE EIGHT NOMINEES FOR
DIRECTOR.
MEETINGS
AND COMMITTEES OF THE BOARD
Our
Board
of Directors is responsible for the management and direction of our company
and
for establishing broad corporate policies.
A
primary responsibility of the Board is to provide effective governance
over our
affairs for the benefit of our stockholders. In all actions taken by the Board,
the Directors are expected to exercise their business judgment in what they
reasonably believe to be the best interests of our company. In discharging
that
obligation, Directors may rely on the honesty and integrity of our senior
executives and our outside advisors and auditors.
The
Board
of Directors and the Audit Committee of the Board meet periodically throughout
the year to receive and discuss operating and financial reports presented by
our
executive officers as reports by experts and other advisors. The Board held
five
meetings during the fiscal year ended July 31, 2008 in person and
telephonically, and acted by unanimous written consent on three occasions.
All
directors attended 75% or more of the aggregate meetings.
In
fiscal
2008, the Audit Committee, consisting of all of the non-employee members of
the
Board of Directors, met on four occasions. All committee members were present
at
the meetings. Representatives of our auditor were in attendance at one meeting
without management present.
Our
Board
of Directors has no standing nominating committee because this function is
handled by the Board of Directors. Nominees to the Board of Directors are
selected by the Board of Directors based on current business and industry
knowledge as well as general business knowledge. There
are
no formal procedures for stockholders to nominate persons to serve as
directors.
Audit
Committee and Audit Committee Expert.
The
Audit
Committee of our Board of Directors consists of Ian A. Shaw, Committee Chairman,
John Postle and Mark T. Nesbitt. The Board of Directors has determined that
all
three members are independent directors as (i) defined in Rule 10A-3(b)(1)(ii)
under the Securities Exchange Act of 1934 (the “Exchange Act”) and (ii) under
Section 121B(2)(a) of the NYSE Alternext US Company Guide (although our
securities are not listed on the NYSE Alternext US, formerly the American Stock
Exchange, or any other national exchange).
We
believe Messrs. Shaw, Postle and Nesbitt to be independent of management and
free of any relationship that would interfere with their exercise of independent
judgment as members of this committee. The principal functions of the Audit
Committee are to (i) assist the Board in fulfilling its oversight responsibility
relating to the annual independent audit of our consolidated financial
statements, the engagement of the independent registered public accounting
firm
and the evaluation of the independent registered public accounting firm’s
qualifications, independence and performance (ii) prepare the reports or
statements as may be required by the securities laws, (iii) assist the Board
in
fulfilling its oversight responsibility relating to the integrity of our
financial statements and financial reporting process and our system of internal
accounting and financial controls, (iv) discuss the financial statements and
reports with management, including any significant adjustments, management
judgments and estimates, new accounting policies and disagreements with
management, and (vi) review disclosures by independent accountants concerning
relationships with us and the performance of our independent
accountants. Our
Audit
Committee’s charter is available on our website at www.capitalgoldcorp.com,
where it may be found under the Corporate Info; Corporate Governance
tab.
Audit
Committee Report.
The
primary responsibility of the Audit Committee (the “Committee”) is to assist the
Board of Directors in discharging its oversight responsibilities with respect
to
financial matters and compliance with laws and regulations. The primary methods
used by the Committee to fulfill its responsibility with respect to financial
matters are:
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·
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To
appoint, evaluate, and, as the Committee may deem appropriate, terminate
and replace Capital Gold’s independent registered public
accountants;
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·
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To
monitor the independence of Capital Gold’s independent registered public
accountants;
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·
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To
determine the compensation of Capital Gold’s independent registered public
accountants;
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·
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To
pre-approve any audit services, and any non-audit services permitted
under
applicable law, to be performed by Capital Gold’s independent registered
public accountants;
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·
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To
review Capital Gold’s risk exposures, the adequacy of related controls and
policies with respect to risk assessment and risk
management;
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·
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To
monitor the integrity of Capital Gold’s financial reporting processes and
systems of control regarding finance, accounting, legal compliance
and
information systems;
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·
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To
facilitate and maintain an open avenue of communication among the
Board of
Directors, management and Capital Gold’s independent registered public
accountants.
|
In
discharging its responsibilities relating to internal controls, accounting
and
financial reporting policies and auditing practices, the Committee discussed
with Capital Gold’s independent registered public accountants, Wolinetz, Lafazan
& Company, P.C., the overall scope and process for its audit. The Committee
has met with Wolinetz, Lafazan & Company, P.C., with and without management
present, to discuss the results of its examinations and the overall quality
of
Capital Gold’s financial reporting.
The
Committee has discussed with Wolinetz, Lafazan & Company, P.C. its judgments
about the quality, in addition to the acceptability, of the Capital Gold’s
accounting principles as applied in Capital Gold’s financial reporting, as
required by Statement on Auditing Standards No. 90 “Communications with Audit
Committees.”
The
Committee also has received a letter from Wolinetz, Lafazan & Company, P.C.
that is required by applicable requirements of the Public Company Accounting
Oversight Board regarding the independent accountant's communications with
the
audit committee concerning independence, and has discussed with Wolinetz,
Lafazan & Company, P.C. their independence.
The
Committee has met and held discussions with management. The Committee has
reviewed and discussed with management Capital Gold’s audited consolidated
financial statements as of and for the fiscal years ended July 31, 2008 and
2007.
Based
on
the reviews and discussions referred to above, the Committee recommended to
the
Board of Directors that the audited financial statements referred to above
be
included in Capital Gold’s Annual Report for the year ended July 31,
2008.
This
report is respectfully submitted by the members of the Audit Committee of the
Board of Directors.
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Ian
A. Shaw, Chairman
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John
Postle
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Mark
T. Nesbitt
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Compensation
Committee.
Our
Compensation Committee consisting of Messrs. Shaw, Postle and Nesbitt, our
independent directors. The principal functions of the Compensation Committee
are
to advise and make recommendations to our Board of Directors regarding matters
relating to the compensation of directors, officers and senior management.
Our
Compensation Committee’s charter is available on our website at
www.capitalgoldcorp.com, where it may be found under the Corporate Info;
Corporate Governance tab.
The
Compensation Committee met three times telephonically in fiscal 2008. All
committee members were present at the meetings.
Communication
with the Board of Directors
Interested
parties wishing to contact the Board of Directors of the Company may do so
by
writing to the following address: Board of Directors, 76
Beaver
Street, 14th Floor, New York, NY 10005, Attn: Jeffrey W. Pritchard,
Secretary.
All
letters received will be categorized and processed by Mr. Pritchard and then
forwarded to the Company’s Board or Directors.
Code
of Ethics and Business Conduct
We
adopted a Code of Ethics that applies to our officers, directors and employees,
including our principal executive officer, principal financial officer and
principal accounting officer. The Code of Ethics is publicly available on our
website at www.capitalgoldcorp.com, where it may be found under the Corporate
Info; Corporate Governance tab. You also may obtain a copy of this code by
written request to our Office Manager at 76
Beaver
Street, 14th Floor, New York, NY 10005.
Our
Board of Directors is required to approve any substantive amendments to this
code of ethics or grant any waiver, including any implicit waiver, from a
provision of the code to our chief executive officer, principal financial
officer or principal accounting officer and we will disclose the nature of
such
amendment or waiver in a report on Form 8-K within four business days.
Director
Attendance at Annual Meetings of Stockholders
Directors
are encouraged, but not required, to attend the Annual Meeting of
Stockholders.
PROPOSAL
2
RATIFICATION
OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
The
Board
of Directors, upon the recommendation of the Audit Committee, has appointed
the
firm of
Wolinetz, Lafazan & Company, P.C.
(“WL”)
as our independent registered public accountants for the fiscal year ending
July
31, 2009 subject to ratification by the stockholders.
WL
audited our financial statements for the years ended July 31, 2008 and 2007.
All
audit
and professional services provided by WL will be approved in advance by the
Audit Committee to assure such services do not impair the auditor's independence
from us. The total aggregate fees billed by WL were $125,000 and $140,000 for
the fiscal years ended July 31, 2008 and 2007, respectively. The following
table
shows the detailed fees billed to us by WL for professional services rendered
during these fiscal years.
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Amount
($000’s)
|
|
Description
of Fees
|
2008
|
2007
|
|
Audit
Fees
|
$115
|
$130
|
|
Audit-Related
Fees
|
-
|
-
|
|
Tax
Fees
|
10
|
10
|
|
All
Other Fees
|
-
|
-
|
| |
|
|
|
Total
|
$125
|
$140
|
Audit
Fees
Represents
fees for professional services provided for the audit of our annual financial
statements, services that are performed to comply with generally accepted
auditing standards, and review of our financial statements included in our
quarterly reports and services in connection with statutory and regulatory
filings.
Audit-Related
Fees
Represents
the fees for assurance and related services that are reasonably related to
the
performance of the audit or review of our financial statements. The Board of
Directors considers WL to be well qualified to serve as our independent public
accountants.
The
Audit
Committee will pre-approve all auditing services and the terms thereof (which
may include providing comfort letters in connection with securities
underwriting) and non-audit services (other than non-audit services prohibited
under Section 10A(g) of the Exchange Act or the applicable rules of the SEC
or
the Public Company Accounting Oversight Board) to be provided to us by the
independent auditor; provided, however, the pre-approval requirement is waived
with respect to the provisions of non-audit services for us if the "de minimus"
provisions of Section 10A(i)(1)(B) of the Exchange Act are satisfied. This
authority to pre-approve non-audit services may be delegated to one or more
members of the Audit Committee, who shall present all decisions to pre-approve
an activity to the full Audit Committee at its first meeting following such
decision. The Audit Committee may review and approve the scope and staffing
of
the independent auditors' annual audit plan.
Tax
Fees
This
represents professional services rendered for tax compliance, tax advice and
tax
planning.
All
Other
Fees
WL
was
paid no other fees for professional services during the fiscal years ended
July
31, 2008 and 2007.
The
Board
of Directors considers WL to be well qualified to serve as our independent
public accountants.
Representatives
of WL will be available telephonically at the annual meeting, will have the
opportunity to make a statement if they desire to do so and are expected to
be
available to respond to appropriate questions.
Required
Vote and Recommendation
The
affirmative vote of at least a majority of the shares represented and voting
at
the Annual Meeting is necessary for approval of Proposal 2.
THE
BOARD OF DIRECTORS DEEMS PROPOSAL 2 TO BE IN THE BEST INTERESTS OF THE COMPANY
AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL
THEREOF.
PROPOSAL
3
AMENDMENT
OF OUR 2006 EQUITY INCENTIVE PLAN TO INCREASE THE
NUMBER
OF SHARES OF COMMON STOCK AUTHORIZED FOR ISSUANCE
UNDER
THE PLAN FROM 10,000,000 TO 20,000,000 SHARES
Our
2006
Equity Incentive Plan (the “Plan”) was approved by stockholders back in February
2007. A maximum of 10,000,000 shares of our common stock are reserved for
issuance under the Plan. To date, we have issued an aggregate of 6,972,500
shares and options for the purchase of shares, leaving only 3,027,500 shares
available for future issuance under the Plan. Our Board believes that the number
of shares reserved for issuance under the Plan needs to be increased to
20,000,000 shares.
The
following general description of certain features of the Plan is qualified
in
its entirety by reference to the Plan, which is attached as Annex A. Capitalized
terms not otherwise defined herein have the meanings ascribed to them in the
Plan. Please note that the only change to the Plan, if approved by stockholders,
will be the above-referenced increase in the number of shares reserved for
issuance under the Plan.
The
Plan
authorizes the grant of non-qualified and incentive stock options, stock
appreciation rights and restricted stock awards (each, an “Award”). Unless
sooner terminated, the Plan will continue in effect for a period of 10 years
from its effective date.
The
Plan
is administered by our Board of Directors which has delegated the administration
to our Compensation Committee. The Plan provides for Awards to be made to such
of our employees, directors and consultants and our affiliates as the Board
may
select.
Stock
options awarded under the Plan may vest and be exercisable at such times (not
later than 10 years after the date of grant) and at such exercise prices (not
less than Fair Market Value at the date of grant) as our Board may determine.
The
Plan
also
provides that, should the expiry date of any vested option fall on, or within
nine business days immediately following a black-out period self-imposed by
us
on the holder, the term of such option will automatically be extended to a
date
which expires 10 business days following the end of such black-out period.
Unless
otherwise determined by our Board, stock options shall not be transferable
except by will or by the laws of descent and distribution. The Board may provide
for options to become immediately exercisable upon a "change in control," which
is defined in the Plan to occur in the event one or more persons acting
individually or as a group:
| |
(i)
|
acquires
sufficient additional stock to constitute more than 50% of (A) the
total
Fair Market Value of all common stock issued and outstanding or (B)
the
total voting power of all shares of capital stock authorized to vote
for
the election of directors;
|
| |
(ii)
|
acquires,
in a 12-month period, 35% or more of the voting power of all shares
of
capital stock authorized to vote for the election of directors, or
alternatively a majority of the members of the board is replaced
during
any 12-month period by directors whose appointment was not endorsed
by a
majority of the members of the board; or
|
| |
(iii)
|
acquires,
during a 12-month period, more than 40% of the total gross Fair Market
Value of all of ours assets.
|
The
exercise price of an option must be paid in cash. No options may be granted
under the Plan after the tenth anniversary of its effective date. Unless the
Board determines otherwise, the options will be transferable only by will or
the
laws of descent and distribution.
Unless
otherwise provided in an option agreement, in the event an optionholder’s
continuous service terminates (other than upon the optionholder’s death,
disability, retirement or as a result of a Change of Control), all options
held
by the optionholder shall immediately terminate; provided, however, that an
option agreement may provide that if an optionholder’s continuous service is
terminated for reasons other than for cause, all vested options held by such
person shall continue to be exercisable until the earlier of the expiration
date
of such option or 180 days after the date of such termination. All such
vested options not exercised within the period described in the preceding
sentence shall terminate.
The
following limits apply to grants of Awards under the Plan: (i) the maximum
number of shares of common stock which may be reserved for issuance to all
directors, officers and ten percent stockholders, in the aggregate, under the
Plan, together with any other security-based compensation arrangement, shall
not, at any time, exceed 10% of the outstanding shares of common stock on a
non-diluted basis; and (ii) the maximum number of shares of common stock which
may be issued to all directors, officers and ten percent stockholders, in the
aggregate, under the Plan, together with any other security-based compensation
arrangement, within any one year period, shall not exceed ten percent (10%)
of
the outstanding shares of common stock on a non-diluted basis.
Stock
appreciation rights (“SARS”) awarded under the Plan may be granted:
| |
(i)
|
in
connection and simultaneously with the grant of another Award;
|
| |
(ii)
|
with
respect to a previously granted Award; or
|
| |
(iii)
|
independent
of another Award. SARS to receive in shares of common stock the excess
of
the Fair Market Value of common stock on the date the rights are
surrendered over the Fair Market Value of common stock on the date
of
grant may be granted to any Employee, Director or Consultant selected
by
the Board.
|
The
Board
may, in its discretion and on such terms as it deems appropriate, require as
a
condition of the grant of a SAR that the Participant surrender for cancellation
some or all of the Awards previously granted to such person under the Plan
or
otherwise. A SAR, the grant of which is conditioned upon such surrender, may
have an exercise price lower (or higher) than the exercise price of the
surrendered Award, may contain such other terms as the Board deems appropriate,
and shall be exercisable in accordance with its terms, without regard to the
number of shares, price, exercise period or any other term or condition of
such
surrendered Award upon sale of the common stock.
Restricted
stock awarded under the Plan may be granted on such terms and conditions as
the
Board may determine. The terms and conditions of restricted stock Award
Agreements may change from time to time, and the terms and conditions of
separate restricted stock Award Agreements need not be identical. Each
restricted stock Award Agreement:
| |
(i)
|
may
be awarded in consideration for past services actually rendered,
or for
future services to be rendered, to us or an Affiliate for its benefit;
|
| |
(ii)
|
may
be subject to a vesting schedule to be determined by the Board, or
be
fully vested at the time of grant;
|
| |
(iii)
|
shall
provide that, unless otherwise provided in the restricted stock Award
Agreement, in the event a Participant’s continuous service to us
terminates for cause prior to a vesting date set forth in the restricted
stock Award Agreement, any unvested restricted stock Award shall
be
forfeited; and
|
| |
(iv)
|
unless
otherwise provided for therein, shall not be
transferable.
|
The
following is a brief summary of certain of the U.S. federal income tax
consequences of certain transactions under the Plan based on federal income
tax
laws in effect as of the date of this proxy. This summary applies to the Plan
as
normally operated and is not intended to provide or supplement tax advice to
eligible employees. The summary contains general statements based on current
U.S. federal income tax statutes, regulations and currently available
interpretations thereof. This summary is not intended to be exhaustive and
does
not describe state, local or foreign tax consequences or the effect, if any,
of
gift, estate and inheritance taxes.
Under
current federal laws, in general, recipients of grants of nonqualified stock
options and restricted stock awards under the Plan are taxed upon their actual
or constructive receipt of common stock with respect to such awards or grants
(i.e., upon exercise of nonqualified stock options and upon vesting of the
restricted stock). Subject to Section 162(m) of the Code and certain reporting
requirements, we would receive an income tax deduction with respect to the
amount of ordinary income recognized by the participant. Under Sections 421
and
422 of the Code, recipients of incentive stock options are generally not taxed
on their receipt of common stock upon the exercise of incentive stock options,
if they hold the common stock for specified minimum holding periods; therefore,
we would not receive an income tax deduction unless a participant failed to
satisfy the minimum holding periods. Assuming the required holding periods
are
met, an incentive stock option recipient would recognize a capital
gain.
The
Plan
is also structured to comply with the requirements imposed by Section 162(m)
of
the Code and related regulations in order to preserve, to the extent
practicable, our tax deduction for awards made under our Plan to covered
employees. Section 162(m) of the Code generally denies an employer a deduction
for compensation in excess of $1,000,000 paid to covered employees of a publicly
held corporation (generally the named executive officers), unless the
compensation is exempt from the $1,000,000 limitation because it is
performance-based compensation.
Participants
may elect, under Section 83(b) of the Code, within 30 days of a grant of
restricted stock, to recognize taxable ordinary income on the date of grant,
rather than on the date of vesting. If a participant makes an election under
Section 83(b), the holding period will commence on the date of grant, the
participant's tax basis will equal the fair market value of the shares on the
grant date (determined without regard to restrictions), and we will be entitled
to a deduction equal to the amount that is taxable as ordinary income to the
participant.
The
Plan
provides the Board with the general power to amend the Plan, or any portion
thereof at any time in any respect without the approval of our stockholders,
provided
however, that the stockholders must approve any amendment which increases the
fixed maximum percentage of shares of common stock issuable pursuant to the
Plan, reduces the exercise price of an Award held by a
director, officer or ten percent stockholder
or
extends the term of an Award held by a
director, officer or ten percent stockholder. Accordingly,
for example, the Board may amend the terms of the Plan without seeking
stockholder approval as follows:
| |
(a)
|
amendments
of a “housekeeping” or ministerial nature including, without limiting the
generality of the foregoing, any amendment for the purpose of curing
any
ambiguity, error or omission in the Plan or to correct or supplement
any
provision of the Plan that is inconsistent with any other provision
of the
Plan;
|
| |
(b)
|
amendments
necessary to comply with the provisions of applicable law (including,
without limitation, the rules, regulations and policies of the TSX
or any
other stock exchange upon which the common stock is listed);
|
| |
(c)
|
amendments
respecting administration of the Plan;
|
| |
(d)
|
any
amendment to the vesting provisions of the Plan or any Award;
|
| |
(e)
|
any
amendment to the early termination provisions of the Plan or any
Award,
whether or not such Award is held by a
director, officer or ten percent stockholder,
provided such amendment does not entail an extension beyond the original
expiry date;
|
| |
(f)
|
the
addition of any form of financial assistance by the Company for the
acquisition by all or certain categories of participants under the
Plan,
and
the subsequent amendment of any such provision which is more favorable
to
participants;
|
| |
(g)
|
the
addition or modification of a cashless exercise feature, payable
in cash
or shares, which provides for a full deduction of the number of underlying
shares from the Plan reserve;
|
| |
(h)
|
amendments
necessary to suspend or terminate the Plan; and
|
| |
(i)
|
any
other amendment, whether fundamental or otherwise, not requiring
shareholder approval under applicable law (including, without limitation,
the rules, regulations and policies of the TSX or any other stock
exchange
upon which the common stock is listed).
|
Notwithstanding
the foregoing, stockholder approval may still be necessary to satisfy the
requirements of Section 422 of the Code, Rule 16b-3 of the Exchange Act or
any
applicable stock exchange listing requirements. The Board may, in its sole
discretion, although not required under the terms of the Plan, submit any
amendment to the Plan for stockholder approval, including, but not limited
to,
amendments to the Plan intended to satisfy the requirements of Section 162(m)
of
the Code and the regulations thereunder regarding the exclusion of
performance-based compensation from the limit on corporate deductibility of
compensation paid to certain executive officers. The Board may amend the Plan
in
any respect it deems necessary or advisable to provide eligible Employees with
the maximum benefits provided or to be provided under the provisions of the
Code
and the regulations promulgated thereunder relating to Incentive Stock Options
and/or to bring the Plan and/or Incentive Stock Options granted under it into
compliance therewith. Rights under any Award granted before amendment of the
Plan cannot be impaired by any amendment of the Plan unless the Participant
consents in writing. The Board is empowered to amend the terms of any one or
more Awards; provided, however, that the rights under any Award shall not be
impaired by any such amendment unless the applicable Participant consents in
writing and further provided that the Board cannot amend the exercise price
of
an option, the Fair Market Value of an Award or extend the term of an option
or
Award without obtaining the approval of the stockholders if required by the
rules of the TSX or any stock exchange upon which the common stock is
listed.
During
the fiscal year ended July 31, 2008, the following options and shares were
granted under the Plan to the following persons: 350,000 shares and 500,000
options to Gifford A. Dieterle, our Chief Executive Officer; 350,000 shares
and
500,000 options to John Brownlie, our Chief Operating Officer; 350,000 shares
and 500,000 options to Jeffrey Pritchard, our Executive Vice President;
1,525,000 shares and 2,350,000 options to our executive officers as a group;
65,000 shares and 650,000 options to our non-executive directors as a group;
and
20,000 shares and 615,000 options to non-executive officer employees and
consultants as a group. All of the above options are exercisable for periods
ranging from two to seven years from issuance and have exercise prices ranging
from $0.38 to $0.63 per share (market price). We cannot determine at this time
the benefits or amounts that will be received by any individual or group
pursuant to the Plan in the future.
The
last
reported sales price per share of our common stock as reported by the OTC
Bulletin Board on December 4, 2008, was $0.35. On December 4, 2008, the last
price of our common stock on the TSX was $0. 44
CDN
(approximately $0.34 USD).
Required
Vote and Recommendation
The
affirmative vote of at least a majority of the shares represented and voting
at
the Annual Meeting is necessary for approval of Proposal 3.
THE
BOARD OF DIRECTORS DEEMS PROPOSAL 3 TO BE IN THE BEST INTERESTS OF THE COMPANY
AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE “FOR” APPROVAL
THEREOF.
INFORMATION
CONCERNING EXECUTIVE OFFICERS
The
following sets forth biographical information about our executive officers
and
key personnel:
|
Name
|
Age
|
Position
|
| |
|
|
|
Gifford
A. Dieterle
|
76
|
President,
Treasurer &
Chairman
of the Board
|
|
John
Brownlie
|
59
|
Chief
Operating Officer
|
|
Jeffrey
W. Pritchard
|
50
|
Executive
Vice President
and
Secretary
|
|
Christopher
M. Chipman
|
36
|
Chief
Financial Officer
|
|
Robert
Roningen
|
73
|
Senior
Vice President
|
|
J.
Scott Hazlitt
|
56
|
Vice
President - Mine Development
|
For
biographical information about Gifford A. Dieterle, John Brownlie, Jeffrey
W.
Pritchard and Robert Roningen, please see the discussion under the heading
“Proposal 1 Election of Directors” above.
CHRISTOPHER
M. CHIPMAN, Chief Financial Officer. Mr. Chipman has been our Chief Financial
Officer since March 1, 2006. Since November 2000, Mr. Chipman has been a
managing member of Chipman & Chipman, LLC, a consulting firm that assists
public companies with the preparation of periodic reports required to be filed
with the Securities and Exchange Commission and compliance with Section 404
of
the Sarbanes Oxley Act of 2002. The firm also provides outsourced financial
resources to clients assisting in financial reporting, forecasting and
accounting services. Mr. Chipman is a CPA and, from 1996 to 1998, he was a
senior accountant with the accounting firm of Grant Thornton LLP. Mr. Chipman
was the Controller of Frontline Solutions, Inc., a software company (March
2000
to November 2000); a Senior Financial Analyst for GlaxoSmithKline (1998-2000);
and an Audit Examiner for Wachovia Corporation (1994-1996). He received a B.A.
in Economics from Ursinus College in 1994. He is a member of the American and
Pennsylvania Institute of Certified Public Accountants.
J.
SCOTT
HAZLITT, Vice President - Mine Development, has been in the mining business
since 1974. Since 2001, he has focused on development of our El Chanate
concessions. Currently, he is involved in mine expansion plans and corporate
development. He has worked primarily in reserves, feasibility, development
and mine operations. Mr. Hazlitt was a field geologist for ARCO Syncrude
Division at their CB oil Shale project in 1974 and 1975. He was a contract
geologist for Pioneer Uravan and others from 1975 to 1977. He was a mine
geologist for Cotter Corporation in 1978 and 1979, and was a mine geologist
for
ASARCO from 1979 to 1984. He served as Vice President of Exploration for Mallon
Minerals from 1984 to 1988. From 1988 to 1992, Mr. Hazlitt was a project
geologist and Mine Superintendent for the Lincoln development project. From
1992
to 1995, he was self-employed as a consulting mining geologist in California
and
Nevada. He was Mine Operations Chief Geologist for Getchell Gold from 1995
to
1999. His work experience has included precious metals, base metals, uranium,
and oil shale. Mr. Hazlitt served as mine manager at our Hopemore Mine in
Leadville, Colorado starting in November 1999. His highest educational degree
is
Master of Science from Colorado State University. He is a registered geologist
in the state of California.
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
Objectives
and Philosophy of Executive Compensation
The
primary objectives of the Compensation Committee with respect to executive
compensation are to attract and retain the most talented and dedicated
executives possible, to tie annual and long-term cash and stock incentives
to
achievement of measurable performance objectives, and to align executives'
incentives with stockholder value creation. To achieve these objectives, the
compensation committee expects to implement and maintain compensation plans
that
tie a substantial portion of executives' overall compensation to the experience
level of the executive or employee, the complexity and amount of responsibility
of the employee’s job, key strategic financial and operational goals such as the
establishment and maintenance of key strategic relationships, the development
and operation of our mining projects, the identification and possible
development of additional mining properties and the performance of our common
stock price. The compensation committee evaluates individual executive
performance with the goal of setting compensation at levels the compensation
committee believes are comparable with executives in other companies of similar
size and stage of development operating in the mining industry while taking
into
account our relative performance and our own strategic goals. It is our general
practice to grant equity-based awards to executives and employees.
Our
compensation plan was developed by utilizing an independent compensation and
benefits consultant who utilizes publicly available compensation data for
national and regional companies in the mining industry. We believe that the
practices of this group of companies will provide us with appropriate
compensation benchmarks, because these companies have similar organizational
structures and tend to compete with us for executives and other employees.
For
benchmarking executive compensation, we typically will review the compensation
data provided by these independent consultants and provide recommendations
to
the board of directors.
Elements
of Executive Compensation
Executive
compensation consists of the following elements:
Regular
Compensation
Regular
compensation for our executives will be established based on the scope of their
responsibilities, taking into account competitive market compensation paid
by
other companies for similar positions. Generally, we believe that executive
base
salaries should be targeted near the median of the range of salaries for
executives in similar positions with similar responsibilities at comparable
companies, in line with our compensation philosophy. Regular compensation will
be reviewed annually, and adjusted from time to time to realign salaries with
market levels after taking into account individual responsibilities, performance
and experience. This review will occur in the fourth fiscal quarter of each
year.
Compensation
to new executives is based entirely upon similar factors to those discussed
above for regular employees and executives and timing is determined solely
by
needs of our company, some of which can be completely unforeseen, such as
resignations or terminations for cause.
Post-termination
compensation is fixed in the employment agreement of each executive, and
generally, post-termination payments are not offered to non-executive
employees.
Annual
Bonus
Our
compensation program includes eligibility for an annual performance-based cash
and/or equity- based bonus (See “2006 Equity Incentive Plan” below) in the case
of all executives and certain non-executive employees. The amount of the cash
and/or equity-based bonus will depend on the level of achievement of the
financial and operational goals and for achieving individual annual performance
objectives. These objectives will vary depending on the individual executive,
but will relate generally to strategic factors such as establishment and
maintenance of key strategic relationships, the development and operation of
our
mining projects, the identification and possible development of additional
mining properties, and to financial factors such as raising capital and
improving our results of operations. Bonuses, if awarded, will generally be
determined at the sole discretion of the Board of Directors as recommended
by
the compensation committee.
All
employees, whether executives or key employees, as well as administrative staff,
will be granted bonus compensation at the same time. All efforts are made by
senior management, the compensation committee and the Board of Directors to
avoid issuances of stock as compensation that would create even the appearance
of being timed to the release of material non-public information.
2006
Equity Incentive Plan
The
2006
Equity Incentive Plan (the “Plan”) is intended to attract and retain individuals
of experience and ability, to provide incentive to our employees, consultants,
and non-employee directors, to encourage employee and director proprietary
interests in us, and to encourage employees to remain in our employ. For more
information about the Plan, please see “Proposal 3 - Amendment Of Our 2006
Equity Incentive Plan To Increase The Number Of Shares Of Common Stock
Authorized For Issuance Under The Plan From 10,000,000 To 20,000,000 Shares”
above.
Although
non-cash compensation is utilized by us to prevent placing strains on liquidity,
care is taken by management to avoid materially diluting investors.
Employment
and Engagement Agreements
We
entered into employment agreements, effective July 31, 2006, with the following
executive officers: Gifford A. Dieterle, President and Treasurer, Roger A.
Newell, Vice President of Development, Jack V. Everett, Vice President of
Exploration, and Jeffrey W. Pritchard, Vice President of Investor Relations.
On
December 5, 2006, effective January 1, 2007, we entered into an employment
agreement with J. Scott Hazlitt, Vice President of Mine
Development.
On
June
6, 2007, Jack V. Everett resigned as Vice President of Exploration and a
Director of our company and entered into a consulting agreement with us to
provide mining and mineral exploration consultation services.
On
September 10, 2007, Roger A. Newell resigned as Vice President of Development.
He will continue to serve as a member of our Board of Directors.
The
agreements run for a period of three years and automatically renew for
successive one-year periods unless we or the executive provides the other party
with written notice of their intent not to renew at least 30 days prior to
the
expiration of the then current employment period.
Mr.
Dieterle is entitled to a base annual salary of at least $180,000, Mr. Hazlitt
is entitled to a base annual salary of at least $125,000 and each of the other
executives is entitled to a base annual salary of at least $120,000. Each
executive is entitled to a bonus or salary increase in the sole discretion
of
the board of directors. In addition, Messrs. Dieterle, Newell, Everett and
Pritchard each received two year options to purchase an aggregate of 250,000
shares of our common stock at an exercise price of $0.32 per share (the closing
price on July 31, 2006). These options have all been exercised. As discussed
below, these agreements have been amended to provide for salary
increases.
We
have
the right to terminate any executive’s employment for cause or on 30 days’ prior
written notice without cause or in the event of the executive’s disability (as
defined in the agreements). The agreements automatically terminate upon an
executive’s death. “Cause” is defined in the agreements as (1) a failure or
refusal to perform the services required under the agreement; (2) a material
breach by executive of any of the terms of the agreement; or (3) executive’s
conviction of a crime that either results in imprisonment or involves
embezzlement, dishonesty, or activities injurious to our reputation. In the
event that we terminate an executive’s employment without cause or due to the
disability of the executive, the executive will be entitled to a lump sum
severance payment equal to one month’s salary, in the case of termination for
disability, and up to 12 month’s salary (depending upon years of service), in
the case of termination without cause.
Each
executive has the right to terminate his employment agreement on 60 days’ prior
written notice or, in the event of a material breach by us of any of the terms
of the agreement, upon 30 days’ prior written notice. In the event of a claim of
material breach by us of the agreement, the executive must specify the breach
and its failure to either (i) cure or diligently commence to cure the breach
within the 30 day notice period, or (ii) dispute in good faith the existence
of
the material breach. In the event that an agreement terminates due to our
breach, the executive is entitled to severance payments in equal monthly
installments beginning
in the month following the executive’s termination equal to three month’ salary
plus one additional month’s salary for each year of service to us. Severance
payments cannot exceed 12
month’s salary.
In
conjunction with the employment agreements, our Board of Directors deeming
it
essential to the best interests of its stockholders to foster the continuous
engagement of key management personnel and recognizing that, as is the case
with
many publicly held corporations, a change of control might occur and that such
possibility, and the uncertainty and questions which it might raise among
management, might result in the departure or distraction of management personnel
to the detriment of the company and its stockholders, determined to reinforce
and encourage the continued attention and dedication of members of our
management to their engagement without distraction in the face of potentially
disturbing circumstances arising from the possibility of a change in control
of
the company, it entered into identical agreements regarding change in control
with the executives. Each of the agreements regarding change in control
continues through December 31, 2009 (December 31, 2010 for Mr. Hazlitt) and
extends automatically to the third anniversary thereof unless we give notice
to
the executive prior to the date of such extension that the agreement term will
not be extended. Notwithstanding the foregoing, if a change in control occurs
during the term of the agreements, the term of the agreements will continue
through the second anniversary of the date on which the change in control
occurred. Each of the agreements entitles the executive to change of control
benefits, as defined in the agreements and summarized below, upon his
termination of employment with us during a potential change in control, as
defined in the agreements, or after a change in control, as defined in the
agreements, when his termination is caused (1) by us for any reason other than
permanent disability or cause, as defined in the agreement (2) by the executive
for good reason as defined in the agreements or, (3) by the executive for any
reason during the 30 day period commencing on the first date which is six months
after the date of the change in control. Each executive would receive a lump
sum
cash payment of three times his base salary and three times his bonus award
for
the prior year, as well as outplacement benefits. In addition, the exercise
price of all options would decrease to $0.01 per share. Each agreement also
provides that the executive is entitled to a payment to make him whole for
any
federal excise tax imposed on change of control or severance payments received
by him.
On
September 14, 2007, we entered into a Second Amended Engagement Agreement (the
“Agreement”) with Christopher Chipman, our Chief Financial Officer, effective
May 1, 2007. The Agreement supersedes and replaces Mr. Chipman’s prior agreement
that expired on August 31, 2007. He receives a monthly fee of $14,583. The
Agreement expires on August 31, 2009 and automatically renews for successive
one-year periods, unless either party gives at least 30 days prior notice to
the
other party of its intent not to renew. Mr. Chipman can terminate the Agreement
on 60 days prior notice. We can terminate the Agreement without cause on 30
days
prior notice and for cause (as defined in the Agreement). The Agreement also
terminates upon Mr. Chipman’s disability (as defined in the Agreement) or death.
In the event that we terminate the Agreement without cause, Mr. Chipman will
be
entitled to a cash termination payment equal to his Annual Fee in effect upon
the date of termination, payable in equal monthly installments beginning in
the
month following his termination. In the event the Agreement is terminated by
Mr.
Chipman at his election or due to his death or disability, Mr. Chipman will
be
entitled to the fees otherwise due and payable to him through the last day
of
the month in which such termination occurs. In conjunction with Agreement,
we
entered into a change of control agreement similar to the agreements entered
into with our other executive officers. In connection with the original
engagement agreement with Mr. Chipman in March 2006, Mr. Chipman received a
two
year option to purchase an aggregate of 50,000 shares of our common stock at
an
exercise price of $.34 per share. This option has been exercised in
full.
On
May
12, 2006, we entered into an employment agreement with John Brownlie, pursuant
to which Mr. Brownlie originally served as Vice President Operations. Mr.
Brownlie became our Chief Operating Officer in February 2007. Mr. Brownlie
serves as Vice President Operations. Mr. Brownlie receives a base annual salary
of $150,000 and is entitled to annual bonuses. Upon his employment, he received
options to purchase an aggregate of 200,000 shares of our common stock at an
exercise price of $.32 per share. 50,000 options vested immediately and the
balance vest upon our achieving "Economic Completion" as that term is defined
in
the Standard Bank Credit Facility (when we have commenced mining operations
and
has been operating at anticipated capacity for 60 to 90 days). The term of
the
options is two years from the date of vesting. The agreement runs for an initial
two year period, and automatically renews thereafter for additional one year
periods unless terminated by either party within 30 days of a renewal date.
We
can terminate the agreement for cause or upon 30 days notice without cause.
Mr.
Brownlie can terminate the agreement upon 60 days notice without cause or,
if
there is a breach of the agreement by us that is not timely cured, upon 30
days
notice. In the event that we terminates him without cause or he terminates
due
to our breach, he will be entitled to certain severance payments. We utilized
the Black-Scholes method to fair value the 200,000 options received by Mr.
Brownlie. We recorded approximately $70,000 as deferred compensation expense
as
of the date of the agreement and recorded the vested portion or $17,500 as
stock
based compensation expense for the year ended July 31, 2006.
On
August
29, 2007, at the recommendation of the compensation committee, the Board
increased the salaries of our executive officers to be commensurate with
industry standards and amended their respective agreements accordingly. The
new
salaries were as follows: Gifford A. Dieterle, President, Treasurer and
Chairman of the Board, $250,000; John Brownlie, Chief Operating Officer,
$225,000; Christopher Chipman, Chief Financial Officer, $175,000 (consulting
fee); Jeffrey W. Pritchard, Vice President - Investor Relations and Secretary,
$195,000; Roger A. Newell, Vice President - Development, $135,000; and J. Scott
Hazlitt, Vice President - Mine Development, $135,000. The salary increase for
Mr. Brownlie and the consulting fee increase for Mr. Chipman were retroactive
to
May 1, 2007 and the salary increase for Mr. Pritchard is retroactive to August
1, 2007.
On
July
17, 2008, at the recommendation of the compensation committee of our Board
of
Directors, our executive officers were awarded salary increases effective August
1, 2008. The new salaries were as follows: Gifford A. Dieterle, President,
Treasurer and Chairman of the Board, $287,500; John Brownlie, Chief Operating
Officer, $258,750; Christopher Chipman, Chief Financial Officer, $201,250
(consulting fee); Jeffrey W. Pritchard, Vice President - Investor Relations
and
Secretary, $224,250; and J. Scott Hazlitt, Vice President - Mine Development,
$155,250.
On
October 28, 2008, we entered into an Engagement Agreement with John Brownlie,
our Chief Operating Officer. The agreement supersedes a May 12, 2006 employment
agreement between us and Mr. Brownlie. Pursuant to the Engagement Agreement,
Mr.
Brownlie serves as our Chief Operating Officer and receives a base annual fee
of
at least $258,750 and is entitled to annual bonuses. The Engagement Agreement
runs through August 31, 2009, and automatically renews thereafter for additional
one year periods unless terminated by either party within 30 days of a renewal
date. We can terminate the agreement for cause or upon 30 days notice without
cause. Mr. Brownlie can terminate the agreement upon 60 days notice without
cause or, if there is a breach of the agreement by us that is not timely cured,
upon 30 days notice. In the event that we terminate him without cause or he
terminates due to our breach, he will be entitled to certain severance payments.
We previously entered into a change of control agreement with Mr. Brownlie
similar to the agreements entered into with our other executive officers.
On
November 1, 2008, we entered into an Engagement Agreement with J. Scott Hazlitt,
our Vice President of Mine Development. The agreement supersedes a December
5,
2006 employment agreement between us and Mr. Hazlitt. Pursuant to the Engagement
Agreement, Mr. Brownlie serves as our Vice President of Mine Development and
receives a base annual fee of at least $155,250 and is entitled to annual
bonuses. The Engagement Agreement runs through August 31, 2009, and
automatically renews thereafter for additional one year periods unless
terminated by either party within 30 days of a renewal date. We can terminate
the agreement for cause or upon 30 days notice without cause. Mr. Hazlitt can
terminate the agreement upon 60 days notice without cause or, if there is a
breach of the agreement by us that is not timely cured, upon 30 days notice.
In
the event that we terminate him without cause or he terminates due to our
breach, he will be entitled to certain severance payments. We previously entered
into a change of control agreement with Mr. Hazlitt similar to the agreements
entered into with our other executive officers.
Compensation
of Directors
During
the fiscal year ended July 31, 2007, our Independent Directors each received
a
fee of $1,000 per month. Robert Roningen, director, received a fee of $2,000
per
month for legal and consulting services during the fiscal year ended July 31,
2007. Non-independent directors were not otherwise compensated for acting in
their capacity as Directors. Directors are reimbursed for their accountable
expenses incurred in attending meetings and conducting their duties. On August
29, 2007, we increased directors’ compensation to our independent directors and
to Robert Roningen and Roger Newell by $1,000 per month.
Conclusion
Our
compensation policies are designed to retain and motivate our senior executive
officers and to ultimately reward them for outstanding individual and corporate
performance.
Summary
Compensation Table
The
following tables set forth the total compensation paid to or earned by our
named
executive officers, as that term is defined in Item 402(a)(3) of Regulation
S-K
as of our fiscal years ended July 31, 2008 and 2007, respectively (000’s):
| |
|
|
|
|
|
|
|
|
|
|
Name
&
Principal
Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
(2)
|
Option
Awards
(1)
|
Non-Equity
Incentive
Plan
Compen-
sation
|
Non-
qualified
Deferred
Compen-
sation
Earnings
|
All
Other
Compen-
sation
($)
|
Total
($)
|
|
Gifford
A. Dieterle,
Director,
Chairman, Treasurer and CEO
|
2008
|
$
244
|
$
325
|
$
102
|
$
60
|
$
-
|
$
-
|
$
-
|
$
731
|
|
John
Brownlie, Director and COO
|
2008
|
$
275
|
$
318
|
$
102
|
$
112
|
$
-
|
$
-
|
$
-
|
$
816
|
|
Jeffrey
Pritchard, Executive Vice President
|
2008
|
$
189
|
$
284
|
$
102
|
$
60
|
$
-
|
$
-
|
$
-
|
$
634
|
|
Notes:
|
|
(1) Based
on Black Scholes Pricing Model of valuing options.
|
|
(2) Issuance
of shares based on the fair market value of the our common stock
on the
date of grant.
|
|
Name
&
Principal
Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
(2)
|
Option
Awards
(1)
|
Non-Equity
Incentive
Plan
Compen-
sation
|
Non-
qualified
Deferred
Compen-
sation
Earnings
|
All
Other
Compen-
sation
($)
|
Total
($)
|
|
Gifford
A. Dieterle,
Director,
Chairman, Treasurer and CEO
|
2007
|
$
180
|
$
-
|
$
-
|
$
-
|
$
-
|
$
-
|
$
-
|
$
180
|
|
John
Brownlie, Director and COO
|
2007
|
$
150
|
$
-
|
$
225
|
$
34
|
$
-
|
$
-
|
$
-
|
$
409
|
|
Christopher
M. Chipman, CFO
|
2007
|
$
118
|
$
-
|
$
-
|
$
79
|
$
-
|
$
-
|
$
-
|
$
197
|
|
Notes:
|
|
(1) Based
on Black Scholes Pricing Model of valuing options. Total fair value
of
option awards granted in 2007 was $113,000.
|
|
(2) Issuance
of shares based on the fair market value of our common stock on the
date
of grant.
|
Outstanding
Equity Awards At Fiscal Year-End (000’s
except share data)
The
following tables provide information concerning unexercised options for each
of
our named executive officers, as that term is defined in Item 402(a)(3) of
Regulation S-K as of our fiscal year ended July 31, 2008:
2008
Table
|
Name
and Principal
Position
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
Equity
Incentive
Plan
Awards:
Number
of
Securities
Underlying
Unexercised
Unearned
Options
|
Option
Exercise
Price
|
Option
Expiration
Date
|
|
Gifford
A. Dieterle,
Director,
Chairman, Treasurer and CEO
|
150,000
|
350,000
|
350,000
|
$0.63
|
12/20/14
|
|
John
Brownlie, Director and COO
|
150,000
|
350,000
|
350,000
|
$0.63
|
12/20/14
|
|
Jeffrey
Pritchard, Executive Vice President
|
150,000
|
350,000
|
350,000
|
$0.63
|
12/20/14
|
Option
Exercises and Stock Vested
| |
Option
Awards
|
Stock
Awards
|
|
Name
(a)
|
Number
of Shares Acquired on Exercise (#)
(b)
|
Value
Realized on Exercise ($)
(c)
|
Number
of Shares Acquired on Vesting (#)
(d)
|
Value
of Realized on Vesting ($)
(e)
|
|
Gifford
A. Dieterle,
Director,
Chairman, Treasurer and CEO
|
250,000
|
$
83
|
151,142
|
$
103
|
|
John
Brownlie, Director and COO
|
200,000
|
$
72
|
151,142
|
$
103
|
|
Jeffrey
Pritchard, Executive Vice President
|
250,000
|
$
88
|
151,142
|
$
103
|
Please
also see “Certain Relationships and Related Transactions” below.
Compensation
Committee Interlocks and Insider Participation
Our
Compensation Committee of the Board of Directors, consisting of Ian Shaw, the
Committee Chairman, John Postle and Mark T. Nesbitt, are all independent
directors. There are no interlocking relationships.
COMPENSATION
COMMITTEE REPORT
Our
Committee has reviewed and discussed the Compensation Discussion and Analysis
contained in this Proxy Statement with management. Based on our Committee’s
review of and the discussions with management with respect to the Compensation
Discussion and Analysis, our Committee recommended to the board of directors
that the Compensation Discussion and Analysis be included in our Annual Report
on Form 10-K for the fiscal year ended July 31, 2008 for filing with the
SEC.
COMPENSATION
COMMITTEE
Ian
Shaw,
Committee Chairman
John
Postle
Mark
T.
Nesbitt
The
foregoing Compensation Committee report shall not be deemed incorporated by
reference into any filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, and shall not otherwise be deemed filed under
these acts,
except to the extent we incorporate by reference into such filings.
Director
Compensation
The
following tables sets forth the compensation paid to our directors for the
fiscal year ended July 31, 2008 (000’s).
2008
Table
|
Name
|
Fees
Earned
or
Paid
in
Cash
($)
|
Stock
Awards
($)
|
Option
Awards
($)
(1)
|
Non-Equity
Incentive
Plan
Compensation
($)
|
Nonqualified
Deferred
Compensation
Earnings
($)
|
All
Other
Compensation
($)
|
Total
($)
|
|
Ian
A. Shaw, Director
|
$
24
|
$
11
|
$
3
|
$
-
|
$
-
|
$
-
|
$
38
|
|
John
Postle, Director
|
$
24
|
$
11
|
$
3
|
$
-
|
$
-
|
$
-
|
$
38
|
|
Mark
T. Nesbitt, Director
|
$
24
|
$
11
|
$
3
|
$
-
|
$
-
|
$
-
|
$
38
|
|
Roger
Newell, Director
|
$
12
|
$
7
|
$
2
|
$
-
|
$
-
|
$
-
|
$
21
|
|
Robert
Roningen, Director
|
$
12
|
$
7
|
$
2
|
$
-
|
$
-
|
$
24
|
$
45
|
(1)
Based
on Black Scholes Pricing Model of valuing options.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
In
August
2002, we purchased marketable equity securities of a related company. We
recorded approximately $6,000 and $9,000 in expense reimbursements including
office rent from this entity for the year ended July 31, 2008 and 2007,
respectively.
We
utilize a Mexican corporation 100% owned by two of our officers/Directors and
stockholders for mining support services. These services include but are not
limited to the payment of mining salaries and related costs. The Mexican
Corporation bills us for these services at cost. Mining expenses charged by
the
Mexican Corporation and eliminated upon consolidation amounted to approximately
$3,775 and $702 for the year ended July 31, 2008 and 2007,
respectively.
During
the years ended July 31, 2008 and 2007, we paid Jack Everett, a former officer
and director, consulting fees of $100,000 and $0, respectively. In addition,
this individual earned wages of $120,000 during the year ended July 31, 2007.
Also, during the year ended July 31, 2008 and 2007, we paid a director legal
and
consulting fees of $35,000 and $24,000, respectively.
On
December 20, 2007, at the recommendation of the Compensation Committee of the
Board of Directors, our executive officers, directors and employees were granted
1,095,000 restricted shares under our 2006 Equity Incentive Plan. The restricted
shares granted vest equally over three years from the date of grant. In
addition, our executive officers were granted 3,150,000 stock options under
our
2006 Equity Incentive Plan. The stock options have a term of seven years and
vest as follows: 20% vested upon issuance and the balance vest 20% annually
thereafter. The exercise price of the stock options is $0.63 per share (per
the
Plan, the closing price on the Toronto Stock Exchange on the trading day
immediately prior to the day of determination converted to U.S. Dollars). In
the
event of a termination of continuous service (other than as a result of a change
of control, as defined in the Plan, unvested stock options shall terminate
and,
with regard to vested stock options, the exercise period shall be the lesser
of
the original expiration date or one year from the date continuous service
terminates. Upon the happening of a change of control, all unvested stock
options and unvested restricted stock grants immediately vest.
On
July
17, 2008, at the recommendation of the Compensation Committee of the Board
of
Directors, our executive officers and directors were granted 515,000 shares
under our 2006 Equity Incentive Plan. The restricted shares granted vested
immediately.
We
have
employment and consulting agreements with our executive officers. Please see
“Employment and Engagement Agreements” in “Executive Compensation” above. For
information about the independence of our directors please see “Audit Committee
and Audit Committee Expert” in Meetings And Committees Of The Board”
above.
COMPLIANCE
WITH SECTION 16(a) OF
THE
SECURITIES EXCHANGE ACT OF 1934
To
our
knowledge, during the fiscal year ended July 31, 2008, based solely on a review
of such materials as are required by the Securities and Exchange Commission,
no
officer, director or beneficial holder of more than ten percent of our issued
and outstanding shares of Common Stock failed to timely file with the Securities
and Exchange Commission any form or report required to be so filed pursuant
to
Section 16(a) of the Securities Exchange Act of 1934, except that Mr. Roningen
filed forms 4 late with regard to six transactions, Mr. Brownlie filed forms
4
late with regard to two transactions and Messrs. Dieterle, Pritchard, Chipman,
Hazlitt, Shaw, Postle and Nesbit each filed a form 4 late with regard to one
transaction.
PRINCIPAL
STOCKHOLDERS
The
following table sets forth as of December 4, 2008, the number and percentage
of
outstanding shares of common stock beneficially owned by:
| |
·
|
Each
person, individually or as a group, known to us to be deemed the
beneficial owners of five percent or more of our issued and outstanding
Common Stock;
|
| |
·
|
each
of our Directors and the Named Executives;
and
|
| |
·
|
all
of our officers and Directors as a group.
|
As
of the
foregoing date, there were no other persons, individually or as a group, known
to us to be deemed the beneficial owners of five percent or more of the issued
and outstanding Common Stock.
This
table is based upon information supplied by Schedules 13D and 13G, if any,
filed
with the Securities and Exchange Commission, and information obtained from
our
directors and named executives. For purposes of this table, a person or group
of
persons is deemed to have “beneficial ownership” of any shares of Common Stock
which such person has the right to acquire within 60 days of December 4, 2008.
For purposes of computing the percentage of outstanding shares of Common Stock
held by each person or group of persons named in the table, any security which
such person or persons has or have the right to acquire within such date is
deemed to be outstanding but is not deemed to be outstanding for the purpose
of
computing the percentage ownership of any other person. Except as indicated
in
the footnotes to this table and pursuant to applicable community property laws,
we believe, based on information supplied by such persons, that the persons
named in this table have sole voting and investment power with respect to all
shares Common Stock which they beneficially own. Unless otherwise noted, the
address of each of the principal stockholders is care of us at 76 Beaver Street,
14th
floor,
New York, NY10005.
|
Name
and Address
|
Amount
& Nature
|
|
|
of
Beneficial
|
of
Beneficial
|
Approximate
|
|
Owner
|
Ownership
|
Percentage(1)
|
|
Gifford
A. Dieterle*
|
3,612,455(2)
|
1.9%
|
| |
|
|
|
Robert
Roningen*
|
1,828,750(3)
|
**
|
|
2955
Strand Road
|
|
|
|
Duluth,
MN 55804
|
|
|
| |
|
|
|
Jeffrey
W. Pritchard*
|
1,856,354(2)
|
1.0%
|
| |
|
|
|
Christopher
Chipman*
|
1,500,000(2)
|
**
|
|
4014
Redwing Lane
|
|
|
|
Audubon,
PA 19407
|
|
|
| |
|
|
|
Roger
A Newell*
|
1,537,273(2)
|
**
|
|
1781
South Larkspur Drive
|
|
|
|
Golden,
CO 80401
|
|
|
| |
|
|
|
John
Brownlie*
|
|
|
|
6040
Puma Ridge
|
|
|
|
Littleton,
CO 80124
|
1,599,500(2)
|
**
|
| |
|
|
|
Scott
Hazlitt*
|
1,500,000(2)
|
**
|
|
9428
W. Highway 50
|
|
|
|
Salida.
CO 81201
|
|
|
| |
|
|
|
Ian
A. Shaw*
|
265,000(2)
|
**
|
|
98
Crimson Millway
|
|
|
|
Toronto,
Ontario M2LIT6
|
|
|
|
Canada
|
|
|
| |
|
|
|
John
Postle*
|
265,000(2)
|
**
|
|
2169
Constance Drive
|
|
|
|
Oakville
Ontario
|
|
|
|
Canada
L6j 5l2
|
|
|
| |
|
|
|
Mark
T. Nesbitt*
|
306,666(2)(4)
|
**
|
|
1580
Lincoln St., Ste. 700
|
|
|
|
Denver
CO 80203-1501
|
|
|
| |
|
|
|
SPGP
|
11,250,000(6)
|
5.8%
|
|
17,
Avenue Matignon
|
|
|
|
75008
Paris, France
|
|
|
| |
|
|
|
Standard
Bank PLC
|
15,750,000
|
8.2%
|
|
320
Park Avenue
|
|
|
|
New
York, NY 10022
|
|
|
| |
|
|
|
Van
Eck International Investors
|
10,000,000(5)
|
5.2%
|
|
Gold
Fund
|
|
|
|
99
Park Avenue
|
|
|
|
New
York, NY 10016
|
|
|
|
and
|
|
|
|
Van
Eck Long/Short Gold
|
|
|
|
Portfolio
Ltd.
|
|
|
|
Ogier
Fiduciary Services
|
|
|
|
PO
box 1234
|
|
|
|
Queensgate
House
|
|
|
|
South
Church Street
|
|
|
|
Georgetown
|
|
|
|
Grand
Cayman, Cayman Islands
|
|
|
| |
|
|
|
All
Officers and
|
|
|
|
Directors
as a
|
|
|
|
Group
(10 persons)
|
14,120,998(2)(3)(4)
|
7.2%
|
*
Officer
and/or Director of Capital Gold.
** Less
than
1%.
| (1) |
Based
upon 193,124,826 shares issued and outstanding as of December 4,
2008.
|
| (2) |
For
Messrs. Dieterle, Roningen, Pritchard, Chipman, Newell, Brownlie,
Hazlitt,
Shaw, Postle and Nesbitt includes, respectively, 500,000 shares,
100,000
shares, 500,000 shares, 1,100,000 shares, 100,000 shares, 750,000
share,
350,000 shares, 250,000 shares, 250,000 shares and 250,000 shares
issuable
upon exercise of options.
|
| (3) |
Represents
shares owned by Mr. Roningen’s wife. All of the foregoing shares are
pledged as collateral for payment of a bank
note.
|
| (4) |
Includes
shares owned jointly with his wife.
|
| (5) |
Represents
shares owned by the listed stockholders. Separately, the stockholders
do
not beneficially own in excess of 5% of our outstanding shares of
Common
Stock. However, both stockholders have identified Joseph Foster as
a
natural person with voting and investment control over shares of
our
common stock beneficially owned by the stockholders. Mr. Foster is
the
portfolio manager for Van Eck Associates Corporation and Van Eck
Absolute
Return Advisers Corp., the investment advisors for, respectively,
Van Eck
International Investors Gold Fund and Van Eck Long/Short Gold Portfolio
Ltd.
|
| (6) |
We
have been advised that Xavier Roulet, is a natural person with voting
and investment control over shares of our common stock beneficially
owned
by SPGP.
|
DEADLINE
FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals
of stockholders to be considered for inclusion in the Proxy Statement and proxy
card for the Company’s 2009 Annual Meeting of Stockholders must be received by
the Company’s Secretary, at Capital Gold Corporation, 76 Beaver Street, 14th
Floor, New York, NY 10005 no later than August 8, 2009.
Pursuant
to our Amended and Restated By-laws, all stockholder proposals may be brought
before an annual meeting of stockholders only upon timely notice thereof in
writing having been given to the Secretary of the company. To be timely, a
stockholder’s notice, for all stockholder proposals shall be delivered to the
Secretary at our principal executive offices not less than ninety (90) nor
more
than one hundred twenty (120) days prior to the date of the meeting; provided,
however, that in the event that the annual meeting date is publicly disclosed
less than one hundred twenty (120) days prior to the date of the meeting, the
stockholders’ notice, in order to be timely, must be so received not later than
the close of business on the tenth (10th) day following the day on which such
notice of the date of the annual meeting was publicly disclosed. All such
stockholders must be stockholders of record on both the date such stockholders
provide notice of their proposals and on the record date for the determination
of stockholders entitled to vote at such meeting. In addition, all stockholder
proposals must contain all of the information required under our Amended and
Restated By-laws, a copy of which is available upon written request, at no
charge, from the Secretary at our New York office. The Company reserves the
right to reject, rule out of order, or take other appropriate action with
respect to any proposal that does not comply with these and other applicable
requirements.
GENERAL
Unless
contrary instructions are indicated on the proxy, all shares of common stock
represented by valid proxies received pursuant to this solicitation (and not
revoked before they are voted) will be voted FOR all director nominees and
FOR
Proposal No. 2 and Proposal No. 3.
The
Board
of Directors knows of no business other than that set forth above to be
transacted at the meeting, but if other matters requiring a vote of the
stockholders arise, the persons designated as proxies will vote the shares
of
common stock represented by the proxies in accordance with their judgment on
such matters. If a stockholder specifies a different choice on the proxy, his
or
her shares of common stock will be voted in accordance with the specification
so
made.
Annual
Report on Form 10-K
A
copy of
our Annual Report on Form 10-K for the fiscal year ended July 31, 2008,
including financial statements, is enclosed with this proxy. Exhibits and any
amendments to our Form 10-K, as filed with the SEC, may be obtained without
charge upon written request to: Corporate Secretary, Capital Gold Corporation,
76 Beaver Street, 14th Floor, New York, NY 10005. You can also get copies of
our
filings made with the SEC, including the Annual Report on Form 10-K, by visiting
the SEC’s web site at www.sec.gov.
IT
IS
IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WE URGE YOU TO FILL IN, SIGN AND
RETURN THE ACCOMPANYING FORM OF PROXY IN THE PREPAID ENVELOPE PROVIDED, NO
MATTER HOW LARGE OR SMALL YOUR HOLDINGS MAY BE.
| |
|
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|
|
By
Order of the Board of Directors,
|
| |
|
|
|
|
|
Jeffrey
W. Pritchard, Secretary
|
Annex
A
CAPITAL
GOLD CORPORATION
2006
Equity Incentive Plan
(As
Amended January 2009)
PURPOSES.
Background.
This
2006
Equity Incentive Plan was adopted on December 13, 2006 and approved by the
Company’s stockholders on February 21, 2007.
Eligible
Award Recipients.
The
persons eligible to receive Awards are the Employees, Directors and Consultants
of the Company and its Affiliates.
Available
Awards.
The
purpose of the Plan is to provide a means by which eligible recipients may
be
given an opportunity to benefit from increases in value of the Common Stock
through the granting of the following: (i) Incentive Stock Options,
(ii) Nonqualified Stock Options, (iii) rights to acquire restricted stock,
and (iv) stock appreciation rights.
General
Purpose.
The
Company, by means of the Plan, seeks to retain the services of the group of
persons eligible to receive Awards, to secure and retain the services of new
members of this group and to provide incentives for such persons to exert
maximum efforts for the success of the Company and its Affiliates.
DEFINITIONS.
“Affiliate”
means
any entity that controls, is controlled by, or is under common control with
the
Company.
“Award”
means
any right granted under the Plan, including an Option, a right to acquire
restricted Common Stock, and a stock appreciation right.
“Award
Agreement”
means a
written agreement between the Company and a holder of an Award (other than
an
Option) evidencing the terms and conditions of an individual Award grant.
“Board”
means
the board of directors of the Company.
“Code”
means
the Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder.
“Committee”
means a
pre-existing or newly formed committee of members of the Board appointed by
the
Board in accordance with subsection 3(c).
“Common
Stock” means
the
shares of the Company’s common stock par value $0.0001 and other rights with
respect to such shares.
“Company”
means
Capital Gold Corporation, a Delaware corporation.
“Consultant”
means
any person, including an advisor, (i) engaged by the Company or an
Affiliate to render consulting or advisory services for an initial, renewable
or
extended period of twelve months or more and who is compensated for such
services or (ii) who is a member of the board of directors of an
Affiliate.
“Continuous
Service”
means
that the Participant’s service with the Company or an Affiliate, whether as an
Employee, Director or Consultant, is not interrupted or terminated. Unless
otherwise provided in an Award Agreement or Option Agreement, as applicable,
the
Participant’s Continuous Service shall not be deemed to have terminated merely
because of a change in the capacity in which the Participant renders service
to
the Company or an Affiliate as an Employee, Consultant or Director or a change
in the entity for which the Participant renders such service, provided that
there is no interruption or termination of the Participant’s service to the
Company or an Affiliate as an Employee, Director or Consultant. For example,
a
change in status from an Employee of the Company to a Consultant of an Affiliate
shall not constitute an interruption of Continuous Service. The Board, in its
sole discretion, may determine whether Continuous Service shall be considered
interrupted in the case of any leave of absence, including sick leave, military
leave or any other personal leave.
“Covered
Employee”
means
the Company’s chief executive officer and the four (4) other highest
compensated officers of the Company for whom total compensation is required
to
be reported to stockholders under the Exchange Act, as determined for purposes
of Section 162(m) of the Code.
“Director”
means a
member of the Board of the Company.
“Disability”
means
the Participant’s inability, due to illness, accident, injury, physical or
mental incapacity or other disability, to carry out effectively the duties
and
obligations to the Company and its Affiliates performed by such person
immediately prior to such disability for a period of at
least
six (6) months, as determined in the good faith judgment of the Board.
“Dollars”
or
“$”
means
United States dollars.
“Employee”
means
any person employed by the Company or an Affiliate. Service as a Director or
payment of a director’s fee by the Company or an Affiliate alone shall not be
sufficient to constitute “employment” by the Company or an
Affiliate.
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended.
“Fair
Market Value”
means,
as of any date, the value of the Common Stock determined as
follows:
If
the
Common Stock is listed on the Toronto Stock Exchange and is not listed on any
other established stock exchange in the United States, or traded on the Nasdaq
National Market or the Nasdaq SmallCap Market, the Fair Market Value of the
Common Stock shall be the closing price on the Toronto Stock Exchange of the
Common Stock on the trading day immediately prior to the day of determination
converted to Dollars using the noon rate of exchange of the Federal Reserve
Bank
of New York on the day immediately prior to such determination; and (B) if
the
Common Stock is listed on the Toronto Stock Exchange and also is listed on
any
other established stock exchange in the United States, or traded on the Nasdaq
National Market or the Nasdaq SmallCap Market, the Fair Market Value of the
Common Stock shall be the closing sales price for such stock (or the closing
bid, if no sales were reported) as quoted on such exchange or market on the
last
market trading day prior to the day of determination, as reported by such
exchange or market with the greatest volume of trading in Common Stock on the
day prior to the determination date.
In
the
absence of such markets, if the Common Stock is quoted on the OTC Bulletin
Board, the Fair Market Value of the Common Stock shall be the average of the
closing bid price per share of the Common Stock for the three trading days
ending on the last trading day prior to the day of determination, as reported
by
the OTC Bulletin Board.
If
the
Common Stock is not quoted on the OTC Bulletin Board but is reported on the
“Pink Sheets” published by the Pink Sheets LLC (or a similar organization or
agency succeeding to its functions of reporting prices), the Fair Market Value
of the Common Stock shall be the average of the reported closing bid price
per
share of the Common Stock for the three trading days ending on the last trading
day prior to the day of determination, as reported by the Pink Sheets (or such
other organization or agency).
In
the
absence of such markets for the Common Stock, the Fair Market Value shall be
determined in good faith by the Board.
“Incentive
Stock Option”
means an
option designated as an incentive stock option in an Option Agreement and that
is granted in accordance with the requirements of, and that conforms to the
applicable provisions of, Section 422 of the Code.
“Independent
Director” means
(i) a Director who satisfies the definition of Independent Director or
similar definition under the applicable stock exchange or Nasdaq rules and
regulations upon which the Common Stock is traded from time to time and
(ii) a Director who either (A) is not a current employee of the Company or
an “affiliated corporation” (within the meaning of Treasury Regulations
promulgated under Section 162(m) of the Code), is not a former employee of
the
Company or an “affiliated corporation” receiving compensation for prior services
(other than benefits under a tax qualified pension plan), was not an officer
of
the Company or an “affiliated corporation” at any time and is not currently
receiving direct or indirect remuneration from the Company or an “affiliated
corporation” for services in any capacity other than as a Director or (B) is
otherwise considered an “outside director” for purposes of Section 162(m) of the
Code.
“Nonqualified
Stock Option”
means an
option that is not designated in an Option Agreement as an Incentive Stock
Option or was not granted in accordance with the requirements of, and does
not
conform to the applicable provisions of, Section 422 of the
Code.
“Officer”
means a
person who is an officer of the Company within the meaning of Section 16 of
the Exchange Act and the rules and regulations promulgated
thereunder.
“Option”
means an
Incentive Stock Option or a Nonqualified Stock Option granted pursuant to the
Plan.
“Option
Agreement”
means a
written agreement between the Company and an Optionholder evidencing the terms
and conditions of an individual Option grant.
“Optionholder”
means a
person to whom an Option is granted pursuant to the Plan or, if applicable,
such
other person who holds an outstanding Option.
“Participant”
means a
person to whom an Award is granted pursuant to the Plan or, if applicable,
such
other person who holds an outstanding Award.
“Plan”
means
this Capital Gold Corporation 2006 Equity Incentive Plan.
“Rule
16b-3”
means
Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3,
as
in effect from time to time.
“Securities
Act”
means
the Securities Act of 1933, as amended.
“Ten
Percent Stockholder”
means a
person who owns (or is deemed to own pursuant to Section 424(d) of the Code)
stock possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or any parent corporation or any
subsidiary corporation, both as defined in Section 424 of the Code.
ADMINISTRATION.
Administration
by Board.
The
Board shall administer the Plan unless and until the Board delegates
administration to a Committee, as provided in subsection 3(c). The Board may,
at
any time and for any reason in its sole discretion, rescind some or all of
such
delegation.
Powers
of Board.
The
Board shall have the power, subject to, and within the limitations of, the
express provisions of the Plan:
To
determine from time to time which of the persons eligible under the Plan shall
be granted Awards; when and how each Award shall be granted; what type or
combination of types of Award shall be granted; the provisions of each Award
granted (which need not be identical), including the time or times when a person
shall be permitted to receive Common Stock pursuant to an Award; and the number
of shares of Common Stock with respect to which an Award shall be granted to
each such person.
To
construe and interpret the Plan, Awards granted under it, Option Agreements
and
Award Agreements, and to establish, amend and revoke rules and regulations
for
their administration. The Board, in the exercise of this power, may correct
any
defect, omission or inconsistency in the Plan or in any Option Agreement or
Award Agreement, in a manner and to the extent it shall deem necessary or
expedient to make the Plan fully effective.
To
amend
the Plan, an Award, an Award Agreement or an Option Agreement as provided in
Section 12, provided
that
the
Board shall not amend the exercise price of an option, the Fair Market Value
of
an Award or extend the term of an Option or Award without obtaining the approval
of the stockholders if required by the rules of any stock exchange upon which
the Common Stock is listed.
Generally,
to exercise such powers and to perform such acts as the Board deems necessary
or
expedient to promote the best interests of the Company which are not in conflict
with the provisions of the Plan.
Delegation
to Committee.
General.
The
Board may delegate administration of the Plan and its powers and duties
thereunder to a Committee or Committees, and the term “Committee”
shall
apply to any person or persons to whom such authority has been delegated. Upon
such delegation, the Committee shall have the powers theretofore possessed
by
the Board, including the power to delegate to a subcommittee any of the
administrative powers the Committee is authorized to exercise (and references
in
this Plan to the Board shall thereafter be deemed to include the Committee
or
subcommittee), subject, however, to such resolutions, not inconsistent with
the
provisions of the Plan, as may be adopted from time to time by the Board. In
its
absolute discretion, the Board may at any time and from time to time exercise
any and all rights and duties of the Committee under this Plan, except
respecting matters under Rule 16b-3 of the Exchange Act or Section 162(m) of
the
Code, or any rules or regulations issued thereunder, which are required to
be
determined in the sole discretion of the Committee.
Committee
Composition.
A
Committee shall consist solely of two or more Independent Directors. Within
the
scope of its authority, the Board or the Committee may (1) delegate to a
committee of one or more members of the Board who are not Independent Directors
the authority to grant Awards to eligible persons who are either (a) not then
Covered Employees and are not expected to be Covered Employees at the time
of
recognition of income resulting from such Award or (b) not persons with
respect to whom the Company wishes to comply with Section 162(m) of the Code,
and/or (2) delegate to a committee of one or more members of the Board who
are
not Independent Directors or to the Company’s Chief Executive Officer the
authority to grant Awards to eligible persons who are not then subject to
Section 16 of the Exchange Act.
Effect
of Board’s Decision; No Liability.
All
determinations, interpretations and constructions made by the Board in good
faith shall not be subject to review by any person and shall be final, binding
and conclusive on all persons. No member of the Board or the Committee or any
person to whom duties hereunder have been delegated shall be liable for any
action, interpretation or determination made in good faith, and such persons
shall be entitled to full indemnification and reimbursement consistent with
applicable law and in the manner provided in the Company’s Articles of
Incorporation and Bylaws, as the same may be amended from time to time, or
as
otherwise provided in any agreement between any such member and the
Company.
STOCK
SUBJECT TO THE PLAN.
Stock
Reserve.
Subject
to the provisions of Section 11 relating to adjustments upon changes in Common
Stock, the shares of Common Stock that may be issued pursuant to
Awards shall
not
exceed in the aggregate 20,000,000 shares
of
Common Stock.
Reversion
of Stock to the Stock Reserve.
If any
Award shall for any reason expire or otherwise terminate, in whole or in part,
without having been exercised in full, the shares of Common Stock not acquired
under such Award shall revert to and again become available for issuance under
the Plan.
Source
of Stock.
The
Common Stock subject to the Plan may be unissued stock or reacquired stock,
bought on the market or otherwise.
ELIGIBILITY.
Eligibility
for Specific Awards.
Incentive Stock Options may be granted only to Employees. Awards other than
Incentive Stock Options may be granted to Employees, Directors and
Consultants.
Ten
Percent Stockholders.
A Ten
Percent Stockholder shall not be granted an Incentive Stock Option unless the
exercise price of such Option is at least one hundred ten percent (110%) of
the
Fair Market Value of the Common Stock at the date of grant and the Option is
not
exercisable after the expiration of five (5) years from the date of grant.
Limitations
on Awards. The
following limits apply to grants of Awards under this Plan: (i) the maximum
number of shares of Common Stock which may be reserved for issuance to all
directors, officers and Ten Percent Stockholders, in the aggregate, under this
Plan, together with any other security-based compensation arrangement, shall
not, at any time, exceed 10% of the outstanding shares of Common Stock on a
non-diluted basis; and (ii) the maximum number of shares of Common Stock
which
may
be issued to all directors, officers and Ten Percent Stockholders, in the
aggregate, under this Plan, together with any other security-based compensation
arrangement, within any one year period, shall not exceed ten percent (10%)
of
the outstanding shares of Common Stock on a non-diluted basis.
Consultants.
A
Consultant shall not be eligible for the grant of an Award if, at the time
of
grant, a Form S-8 Registration Statement under the Securities Act (“Form
S-8”)
is not
available to register a resale of the Company’s securities issued to such
Consultant because of the nature of the services that the Consultant is
providing to the Company, or because the Consultant is not a natural person,
or
as otherwise provided by the rules governing the use of Form S-8, unless the
Board determines both (i) that such grant (A) shall be registered in another
manner under the Securities Act (e.g.,
on a
Form S-3 Registration Statement) or (B) does not require registration under
the
Securities Act in order to comply with the requirements of the Securities Act,
if applicable, and (ii) that such grant complies with the securities laws of
all
other relevant jurisdictions.
Form
S-8
generally is available to consultants and advisors only if (i) they are natural
persons; (ii) they provide bona fide services to the issuer, its parents, its
majority-owned subsidiaries or majority-owned subsidiaries of the issuer's
parent; and (iii) the services are not in connection with the offer or sale
of
securities in a capital-raising transaction, and do not directly or indirectly
promote or maintain a market for the issuer's securities.
OPTION
PROVISIONS.
Each
Option Agreement shall be subject to the terms and conditions of this Plan.
Each
Option and Option Agreement shall be in such form and shall contain such terms
and conditions as the Board shall deem appropriate. All Options shall be
separately designated Incentive Stock Options or Nonqualified Stock Options
at
the time of grant, and, if certificates are issued, a separate certificate
or
certificates will be issued for the shares of Common Stock purchased on exercise
of each type of Option. The provisions of separate Options need not be
identical.
Provisions
Applicable to All Options.
Consideration.
The
purchase price of the shares of Common Stock acquired pursuant to an Option
shall be paid in cash in Dollars at the time the Option is exercised.
Vesting
Generally.
An
Option may (A) vest, and therefore become exercisable, in periodic installments
that may, but need not, be equal, or (B) be fully vested at the time of grant.
The Option may be subject to such other terms and conditions on the time or
times when it may be exercised (which may be based on performance or other
criteria) as the Board or Committee may deem appropriate. The vesting
provisions, if any, of individual Options may vary. The provisions of this
subsection 6(a)(ii) are subject to any Option Agreement provisions governing
the
minimum number of Common Stock as to which an Option may be exercised.
Termination
of Continuous Service.
Unless
otherwise provided in the Option Agreement, in the event an Optionholder’s
Continuous Service terminates (other than upon the Optionholder’s death,
Disability, retirement or as a result of a Change of Control), all Options
held
by the Optionholder shall immediately terminate; provided,
however,
that an
Option Agreement may provide that if an Optionholder’s Continuous Service is
terminated for reasons other than for cause, all vested Options held by such
person shall continue to be exercisable until the earlier of the expiration
date
of such Option or 180 days after the date of such termination. All such
vested Options not exercised within the period described in the preceding
sentence shall terminate.
Disability
or Death of Optionholder.
Unless
otherwise provided in the Option Agreement, in the event of an Optionholder’s
Disability or death, all unvested Options shall immediately terminate, and
all
vested Options held by such person shall continue to be exercisable for
12 months after the date of such Disability or death. All such vested
Options not exercised within such 12-month period shall terminate.
Retirement.
Unless
otherwise provided in the Option Agreement, in the event of the Optionholder’s
retirement, all unvested Options shall automatically vest on the date of such
retirement and all Options shall be exercisable for the earlier of 24 months
after such retirement date or the expiration date of such Options. All such
Options not exercised within the period described in the preceding sentence
shall terminate.
Provisions
Applicable to Incentive Stock Options.
Term.
Subject
to the provisions of subsection 5(b) regarding Ten Percent Stockholders, no
Incentive Stock Option shall be exercisable after the expiration of ten (10)
years from the date it was granted. Further, no grant of an Incentive Stock
Option shall be made under this Plan more than ten (10) years after the date
the
Plan is approved by the stockholders of the Company. Should the expiry
date of any vested Incentive Stock Option fall on, or within nine business
days
immediately following a black-out period self-imposed by the Company on the
Optionholder, the term of such Incentive Stock Option will automatically be
extended to a date which expires 10 business days following the end of such
black-out period.
Exercise
Price of an Incentive Stock Option.
Subject
to the provisions of subsection 5(b) regarding Ten Percent Stockholders, the
exercise price of each Incentive Stock Option shall be not less than one hundred
percent (100%) of the Fair Market Value of the Common Stock subject to the
Option on the date the Option is granted.
Transferability
of an Incentive Stock Option.
An
Incentive Stock Option shall not be transferable except by will or by the laws
of descent and distribution and shall be exercisable during the lifetime of
the
Optionholder only by the Optionholder.
Incentive
Stock Option $100,000 Limitation.
Notwithstanding any other provision of the Plan or an Option Agreement, the
aggregate Fair Market Value of the Common Stock with respect to which Incentive
Stock Options are exercisable for the first time by an Optionholder in any
calendar year, under the Plan or any other option plan of the Company or its
Affiliates, shall not exceed $100,000. For this purpose, the Fair Market Value
of the Common Stock shall be determined as of the time an Option is granted.
The
Options or portions thereof which exceed such limit (according to the order
in
which they were granted) shall be treated as Nonqualified Stock
Options.
Provisions
Applicable to Nonqualified Stock Options.
Term.
Should
the expiry date of any vested Nonqualified Stock Option fall on, or within
nine
business days immediately following a black-out period self-imposed by the
Company on the Optionholder, the term of such Nonqualified Stock Option will
automatically be extended to a date which expires 10 business days following
the
end of such black-out period.
Exercise
Price of a Nonqualified Stock Option.
The
exercise price of each Nonqualified Stock Option shall be not less than one
hundred percent (100%) of the Fair Market Value of the Common Stock subject
to
the Option on the date the Option is granted.
Transferability
of a Nonqualified Stock Option.
A
Nonqualified Stock Option shall be transferable, if at all, to the extent
provided in the Option Agreement. If the Option Agreement does not provide
for
transferability, then the Nonqualified Stock Option shall not be transferable
except by will or by the laws of descent and distribution and shall be
exercisable during the lifetime of the Optionholder only by the
Optionholder.
PROVISIONS
OF AWARDS OTHER THAN OPTIONS.
Restricted
Stock Awards.
Each
restricted stock Award Agreement shall be in such form and shall contain such
restrictions, terms and conditions, if any, as the Board shall deem appropriate
and shall be subject to the terms and conditions of this Plan. The terms and
conditions of restricted stock Award Agreements may change from time to time,
and the terms and conditions of separate restricted stock Award Agreements
need
not be identical, but each restricted stock Award Agreement shall include
(through incorporation of provisions hereof by reference in the agreement or
otherwise) the substance of each of the following provisions:
Consideration.
A
restricted stock Award may be awarded in consideration for past services
actually rendered, or for future services to be rendered, to the Company or
an
Affiliate for its benefit.
Vesting.
Common
Stock awarded under the restricted stock Award Agreement may (A) be subject
to a
vesting schedule to be determined by the Board, or (B) be fully vested at the
time of grant.
Termination
of Participant’s Continuous Service.
Unless
otherwise provided in the restricted stock Award Agreement, in the event a
Participant’s Continuous Service terminates prior to a vesting date set forth in
the restricted stock Award Agreement, any unvested restricted stock Award shall
be forfeited and automatically transferred to and reacquired by the Company
at
no cost to the Company, and neither the Participant nor his or her heirs,
executors, administrators or successors shall have any right or interest in
the
restricted stock Award. Notwithstanding the foregoing, unless otherwise provided
in the restricted stock Award agreement, in the event a Participant’s Continuous
Service terminates as a result of (A) being terminated by the Company for
reasons other than for cause, (B) death, (C) Disability,
(D) retirement, or (E) a Change of Control (subject to the provisions
of Section 11(c) hereof), then any unvested restricted stock Award shall
vest immediately upon such date.
Transferability.
Rights
to acquire Common Stock under the restricted stock Award Agreement shall be
transferable by the Participant only upon such terms and conditions as are
set
forth in the restricted stock Award Agreement, as the Board shall determine
in
its discretion, so long as Common Stock awarded under the restricted stock
Award
Agreement remain subject to the terms of the restricted stock Award
Agreement.
Grant
of Stock Appreciation Rights.
Stock
appreciation rights to receive in shares of Common Stock the excess of the
Fair
Market Value of Common Stock on the date the rights are surrendered over the
Fair Market Value of Common Stock on the date of grant may be granted to any
Employee, Director or Consultant selected by the Board. A stock appreciation
right may be granted (i) in connection and simultaneously with the grant of
another Award, (ii) with respect to a previously granted Award, or
(iii) independent of another Award. A stock appreciation right shall be
subject to such terms and conditions not inconsistent with this Plan as the
Board shall impose and shall be evidenced by a written stock appreciation right
agreement, which shall be executed by the Participant and an authorized officer
of the Company. The Board, in its discretion, may determine whether a stock
appreciation right is to qualify as performance-based compensation as described
in Section 162(m)(4)(C) of the Code and stock appreciation right agreements
evidencing stock appreciation rights intended to so qualify shall contain such
terms and conditions as may be necessary to meet the applicable provisions
of
Section 162(m) of the Code. The Board may, in its discretion and on such terms
as it deems appropriate, require as a condition of the grant of a stock
appreciation right that the Participant surrender for cancellation some or
all
of the Awards previously granted to such person under this Plan or otherwise.
A
stock appreciation right, the grant of which is conditioned upon such surrender,
may have an exercise price lower (or higher) than the exercise price of the
surrendered Award, may contain such other terms as the Board deems appropriate,
and shall be exercisable in accordance with its terms, without regard to the
number of shares, price, exercise period or any other term or condition of
such
surrendered Award.
AVAILABILITY
OF STOCK.
Subject
to
the restrictions set forth in Section 4(a), during the terms of the Awards,
the
Company shall keep available at all times the number of shares of Common Stock
required to satisfy such Awards.
USE
OF PROCEEDS FROM STOCK.
Proceeds
from the sale of Common Stock pursuant to Awards shall constitute general funds
of the Company.
MISCELLANEOUS.
Exercise
of Awards.
Awards
shall be exercisable at such times, or upon the occurrence of such event or
events as the Board shall determine at or subsequent to grant. Awards may be
exercised in whole or in part. Common Stock purchased upon the exercise of
an
Award shall be paid for in full at the time of such purchase.
Acceleration
of Exercisability and Vesting.
The
Board shall have the power to accelerate the time at which an Award may first
be
exercised or the time during which an Award or any part thereof will vest in
accordance with the Plan, notwithstanding the provisions in the Award stating
the time at which it may first be exercised or the time during which it will
vest.
Stockholder
Rights.
Options.
Unless
otherwise provided in and upon the terms and conditions in the Option Agreement,
no Participant shall be deemed to be the holder of, or to have any of the rights
of a holder with respect to, any Common Stock subject to an Option unless and
until such Participant has satisfied all requirements for exercise of, and
has
exercised, the Option pursuant to its terms.
Restricted
Stock. Unless
otherwise provided in and upon the terms and conditions in the restricted stock
Award Agreement, a Participant shall have the right to receive all dividends
and
other distributions paid or made respecting such restricted stock, provided,
however, no unvested restricted stock shall have any voting rights of a
stockholder respecting such unvested restricted stock unless and until such
unvested restricted stock become vested.
No
Employment or other Service Rights.
Nothing
in the Plan or any instrument executed or Award granted pursuant thereto shall
confer upon any Participant any right to continue to serve the Company or an
Affiliate in the capacity in effect at the time the Award was granted, or any
other capacity, or shall affect the right of the Company or an Affiliate to
terminate with or without notice and with or without cause (i) the employment
of
an Employee, (ii) the service of a Consultant to the Company or an Affiliate
or
(iii) the service of a Director of the Company or an Affiliate.
Withholding
Obligations.
If the
Company has or will have a legal obligation to withhold the taxes related to
the
grant, vesting or exercise of the Award, such Award may not be granted, vested
or exercised in whole or in part, unless such tax obligation is first satisfied
in a manner satisfactory to the Company. To the extent provided by the terms
of
an Award Agreement or Option Agreement, the Participant may satisfy any federal,
state or local tax withholding obligation relating to the exercise or
acquisition of Common Stock under an Award by any of the following means (in
addition to the Company’s right to withhold from any compensation paid to the
Participant by the Company) or by a combination of such means: (i) tendering
a
cash payment in Dollars; (ii) authorizing the Company to withhold Common Stock
from the Common Stock otherwise issuable to the Participant as a result of
the
exercise or acquisition of Common Stock under the Award, provided, however,
that
no shares of Common Stock are withheld with a value exceeding the minimum amount
of tax required to be withheld by law; or (iii) delivering to the Company owned
and unencumbered Common Stock.
Listing
and Qualification of Stock.
This
Plan and the grant and exercise of Awards hereunder, and the obligation of
the
Company to sell and deliver Common Stock under such Awards, shall be subject
to
all applicable United States federal and state laws, rules and regulations,
and
any other laws applicable to the Company, and to such approvals by any
government or regulatory agency as may be required. The Company, in its
discretion, may postpone the issuance or delivery of Common Stock upon any
exercise of an Award until completion of any stock exchange listing, or the
receipt of any required approval from any stock exchange or other qualification
of such Common Stock under any United States federal or state law rule or
regulation as the Company may consider appropriate, and may require any
individual to whom an Award is granted, such individual’s beneficiary or legal
representative, as applicable, to make such representations and furnish such
information as the Board may consider necessary, desirable or advisable in
connection with the issuance or delivery of the Common Stock in compliance
with
applicable laws, rules and regulations.
Non-Uniform
Determinations.
The
Board’s determinations under this Plan (including, without limitation,
determinations of the persons to receive Awards, the form, term, provisions,
amount and timing of the grant of such Awards and of the agreements evidencing
the same) need not be uniform and may be made by it selectively among persons
who receive, or are eligible to receive, Awards under this Plan, whether or
not
such persons are similarly situated.
ADJUSTMENTS
UPON CHANGES IN STOCK.
Capitalization
Adjustments.
If any
change is made in the Common Stock subject to the Plan, or subject to any Award,
without the receipt of consideration by the Company (through
merger, consolidation, reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of stock, exchange of stock, change in corporate structure
or other transaction), the Plan will be appropriately adjusted in the class(es)
and maximum number of securities subject to the Plan pursuant to subsection
4(a)
and the maximum number of securities subject to award to any person pursuant
to
subsection 5(c), and the outstanding Awards will be appropriately adjusted
in
the class(es) and number of securities and price per stock of Common Stock
subject to such outstanding Awards. The Board shall make such adjustments,
and
its determination shall be final, binding and conclusive. (The conversion of
any
convertible securities of the Company shall not be treated as a transaction
“without receipt of consideration” by the Company.)
Dissolution
or Liquidation.
In the
event of a dissolution or liquidation of the Company, then all outstanding
Awards shall terminate immediately prior to such event.
Asset
Sale, Merger, Consolidation or Reverse Merger.
In the
event of a Change of Control (as defined below), any unvested Awards shall
vest
immediately prior to the closing of the Change of Control, and the Board
shall
have the power and discretion to provide for the Participant’s election
alternatives regarding the terms and conditions for the exercise of, or
modification of, any outstanding Awards granted hereunder, provided, however,
such alternatives shall not affect the then current exercise provisions without
such Participant’s consent. The Board may provide that Awards granted hereunder
must be exercised in connection with the closing of such transaction, and that
if not so exercised such Awards will expire. Any such determinations by the
Board may be made generally with respect to all Participants, or may be made
on
a case-by-case basis with respect to particular Participants. For the purpose
of
this Plan, a “Change of Control” shall have occurred in the event one or more
persons acting individually or as a group (i) acquires sufficient additional
stock to constitute more than 50% of (A) the total Fair Market Value of all
Common Stock issued and outstanding or (B) the total voting power of all shares
of capital stock authorized to vote for the election of directors; (ii)
acquires, in a 12-month period, 35% or more of the voting power of all shares
of
capital stock authorized to vote for the election of directors, or alternatively
a majority of the members of the board is replaced during any 12-month period
by
directors whose appointment was not endorsed by a majority of the members of
the
board; or (iii) acquires, during a 12-month period, more than 40% of the total
gross fair market value of all of the Company’s assets. Notwithstanding the
foregoing, the provisions of this Section 11(c) shall not apply to (i) any
transaction involving any stockholder that individually or as a group owns
more
than fifty percent (50%) of the outstanding Common Stock on the date this Plan
is approved by the Company’s stockholders, until such time as such stockholder
first owns less than forty percent (40%) of the total outstanding Common Stock,
or (ii) any transaction undertaken for the purpose of reincorporating the
Company under the laws of another jurisdiction, if such transaction does not
materially affect the beneficial ownership of the Company's capital
stock.
AMENDMENT
OF THE PLAN AND AWARDS.
Amendment
of Plan. The
Board
at any time, and from time to time, may amend the Plan, or any portion thereof
in any respect without the approval by the stockholders, provided however,
that
the stockholders must approve any amendment which increases the fixed maximum
percentage of shares of Common Stock issuable under this Plan, reduces the
exercise price of an Award held by a Director, Officer or Ten Percent
Stockholder or extends the term of an Award held by a Director, Officer or
Ten
Percent Stockholder. Notwithstanding the foregoing, no amendment shall be
effective unless approved by the stockholders of the Company to the extent
stockholder approval is necessary to satisfy the requirements of Section 422
of
the Code, Rule 16b-3 or any applicable Toronto Stock Exchange, Nasdaq, or other
applicable securities exchange listing requirements.
Stockholder
Approval.
The
Board may, in its sole discretion, submit any other amendment to the Plan for
stockholder approval, including, but not limited to, amendments to the Plan
intended to satisfy the requirements of Section 162(m) of the Code and the
regulations thereunder regarding the exclusion of performance-based compensation
from the limit on corporate deductibility of compensation paid to certain
executive officers.
Contemplated
Amendments.
It is
expressly contemplated that the Board may amend the Plan in any respect the
Board deems necessary or advisable to provide eligible Employees with the
maximum benefits provided or to be provided under the provisions of the Code
and
the regulations promulgated thereunder relating to Incentive Stock Options
and/or to bring the Plan and/or Incentive Stock Options granted under it into
compliance therewith.
No
Impairment of Rights.
Rights
under any Award granted before amendment of the Plan shall not be impaired
by
any amendment of the Plan unless the Participant consents in
writing.
Amendment
of Awards.
Subject
to Section 3(b)(iii), the Board at any time, and from time to time, may amend
the terms of any one or more Awards; provided, however, that the rights under
any Award shall not be impaired by any such amendment unless the applicable
Participant consents in writing.
TERMINATION
OR SUSPENSION OF THE PLAN.
Plan
Term.
The
Board may suspend or terminate the Plan at any time. Unless sooner terminated,
the Plan shall terminate on the day before the tenth (10th) anniversary of
the
date the Plan is adopted by the stockholders of the Company. No Awards may
be
granted under the Plan while the Plan is suspended or after it is
terminated.
No
Impairment of Rights.
Suspension or termination of the Plan shall not impair rights and obligations
under any Award granted while the Plan is in effect except with the written
consent of the Participant.
Savings
Clause.
This
Plan is intended to comply in all aspects with applicable laws and regulations.
In case any one more of the provisions of this Plan shall be held invalid,
illegal or unenforceable in any respect under applicable law or regulation,
the
validity, legality and enforceability of the remaining provisions shall not
in
any way be affected or impaired thereby and the invalid, illegal or
unenforceable provision shall be deemed null and void; however, to the extent
permissible by law, any provision which could be deemed null and void shall
first be construed, interpreted or revised retroactively to permit this Plan
to
be construed in compliance with all applicable laws so as to foster the intent
of this Plan.
EFFECTIVE
DATE OF THE PLAN.
The
Plan
shall become effective as determined by the Board, but no Award shall be
exercised (or, in the case of a restricted stock Award, shall be granted) unless
and until the Plan has been approved by the stockholders of the Company, which
approval shall be within twelve (12) months before or after the date the Plan
is
adopted by the Board.
CHOICE
OF LAW.
The
law
of the State of New York shall govern all questions concerning the construction,
validity and interpretation of this Plan, without regard to such state’s
conflict of laws rules.
CAPITAL
GOLD CORPORATION
ANNUAL
MEETING OF STOCKHOLDERS
January
20, 2009
THIS
PROXY IS SOLICTED ON BEHALF OF THE BOARD OF DIRECTORS
The
undersigned hereby appoints Gifford A. Dieterle and Jeffrey W. Pritchard and
each of them, with full power of substitution, as proxies to represent the
undersigned at the Annual Meeting of Stockholders to be held at
Bayard’s, One Hanover Square, New York, New York 10004 on Tuesday, January 20,
2009, at 2:00 p.m. local time and
at
any adjournment thereof, and to vote all of the shares of common stock of
Capital Gold Corporation (the “Company”) the undersigned would be entitled to
vote if personally present, upon the following matters:
Please
mark box in blue or black ink.
1. Proposal
1- Election
of Directors.
Nominees:
Gifford
A. Dieterle, John Brownlie, Jeffrey W. Pritchard, Robert Roningen, Roger A.
Newell, Ian A. Shaw, John Postle and Mark T. Nesbitt.
o
For all nominees
(except as marked to the contrary below) o
Authority
Withheld as to all Nominees
(INSTRUCTION:
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH
THE NOMINEE’S NAME)
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Gifford
A. Dieterle
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John
Brownlie
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Jeffrey
W. Pritchard
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Robert
Roningen
|
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Roger
A. Newell
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Ian
A. Shaw
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John
Postle
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Mark
T. Nesbitt.
|
2. Proposal
2-Ratification
of the selection of Wolinetz, Lafazan & Company, P.C., as independent
auditors of the Company for the year ending July 31, 2009.
|
o
For
|
o
Against
|
o
Abstain
|
3. Proposal
3-
Amendment
of the Company’s 2006 Equity Incentive Plan to increase the number of shares of
common stock authorized for issuance under the Plan from 10,000,000 to
20,000,000 shares.
|
o
For
|
o
Against
|
o
Abstain
|
In
their
discretion, the proxies are authorized to vote upon such other business as
may
properly come before the meeting.
THIS
PROXY WILL BE VOTED AS DIRECTED, OR, IF NO DIRECTION IS INDICATED, WILL BE
VOTED
“FOR” THE ELECTION OF GIFFORD A. DIETERLE, JOHN BROWNLIE, JEFFREY W. PRITCHARD,
ROBERT RONINGEN, ROGER A. NEWELL, IAN A. SHAW, JOHN POSTLE AND MARK T. NESBITT
AS DIRECTORS, AND “FOR” PROPOSAL NO. 2 AND PROPOSAL NO. 3 AND, IN THE DISCRETION
OF THE PROXIES, ON ALL OTHER MATTERS PROPERLY BROUGHT BEFORE THE ANNUAL MEETING.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS.
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Please
date, sign as name appears at left, and return promptly. If the stock
is
registered in the name of two or more persons, each should sign.
When
signing as Corporate Officer, Partner, Executor, Administrator, Trustee,
or Guardian, please give full title. Please note any change in your
address alongside the address as it appears in the
Proxy.
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Dated:
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(Print
Name)
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SIGN,
DATE AND RETURN PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE