UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
July 31, 2006
CAPITAL GOLD CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 0-13078 13-3180530
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(State or other juris- (Commission (I.R.S. Employer
diction of incorporation) File Number) (Identification No.)
76 Beaver Street, New York, NY 10005
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 344-2785
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(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Section 1 - Registrant's Business and Operations
Item 1.01 Entry into a Material Definitive Agreement.
Amendment of Mining Contract
On August 2, 2006, we amended the November 24, 2005 Mining Contract
between our subsidiary, Minera Santa Rita S.A. de C.V. ("MSR"), and Sinergia
Obras Civiles y Mineras, S.A. de C.V. ("Sinergia"). Pursuant to the amendment,
MSR's right to deliver the Notice to Proceed to Sinergia is extended to November
1, 2006. Provided that this Notice is delivered to Sinergia on or before that
date, with a specified date of commencement of the Work (as defined in the
contract) not later than February 1, 2007, the mining rates set forth in
Appendix A of the contract still apply; subject to adjustment for the rate of
inflation between September 23, 2005 and the date of commencement of the Work.
We also agreed to advance $200,000 of the $520,000 payable when the Work
commences under Section 5.8 of the contract.
Employment Agreements
Effective July 31, 2006, the last day of our fiscal year, we entered
into employment agreements with the following executive officers: Gifford A.
Dieterle, our President and Treasurer, Roger A. Newell, our Vice President of
Development, Jack V. Everett, our Vice President of Exploration, and Jeffrey W.
Pritchard, our Vice President of Investor Relations.
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 our or his 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
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 our board of directors. In addition, each of the executives
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).
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 us
or 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 our 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 our 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 our company and our 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 our company, we entered into identical agreements regarding change in
control with the executives. Each of the agreements regarding change in control
continues through December 31, 2009 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
outplacement benefits. 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.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CAPITAL GOLD CORPORATION
August 2, 2006 By: /s/ Gifford A. Dieterle
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Gifford A. Dieterle, President