Delaware
|
1040
|
13-3180530
|
(State
or other jurisdiction of
incorporation
or organization)
|
(Primary
Standard Industrial
Classification
Code Number)
|
(I.R.S.
Employer
Identification
No.)
|
Barry
I. Grossman, Esq.
Sarah
E. Williams, Esq.
Kathleen
L. Cerveny, Esq.
Ellenoff
Grossman & Schole LLP
150
East 42nd Street
New
York, NY 10017
(212)
370-1300
(212)
370-7889 — Facsimile
|
Jonathan
H. Gardner, Esq.
Kavinoky
Cook LLP
726
Exchange Street, Suite 800
Buffalo,
New York 14210
(716)
845-6000
(716)
845-6474 – Facsimile
|
Large
accelerated filer ¨
|
Accelerated
filer x
|
Non-accelerated
filer ¨
|
Smaller
reporting company ¨
|
(Do
not check if a smaller reporting
company)
|
Proposed
Maximum
|
Proposed
Maximum
|
Amount
of
|
||||||||||||||
Title
of Each Class of
|
Amount
to be
|
Offering
|
Aggregate
|
Registration
|
||||||||||||
Securities to be Registered
|
Registered(1)
|
Price Per Security
|
Offering Price
|
Fee(2)
|
||||||||||||
Shares
of common stock, par value $0.0001 per share
|
12,099,135 | $ | 3.335 | (3) | $ | 40,350,616 | $ | 2,877.00 | ||||||||
Shares
of common stock underlying Warrants exercisable for one share of common
stock par value $0.0001 per share
|
4,830,938 | $ | 5.15 | (4) | $ | 24,879,331 | $ | 1,773.90 | ||||||||
Shares
of common stock underlying Options exercisable for one share of common
stock par value $0.0001 per share
|
1,218,403 | $ | 4.77 | (4) | $ | 5,811,783 | $ | 414.39 | ||||||||
Total
|
18,148,476 | — | $ | 71,041,730 | $ | 5,065.29 |
John
Brownlie
|
Colin
Sutherland
|
|
President
|
President
and Chief Executive Officer
|
|
Capital
Gold Corporation
|
Nayarit
Gold Inc.
|
BY
ORDER OF THE BOARD OF DIRECTORS,
|
Christopher
Chipman
|
Secretary
|
BY
ORDER OF THE BOARD OF DIRECTORS,
|
Colin
Sutherland
|
President
and Chief Executive
Officer
|
The
information in this proxy statement/prospectus is not complete and may be
changed. We may not issue these securities until the
registration statement filed with the Securities and Exchange Commission
is effective. This proxy statement/prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any jurisdiction where the offer or sale is not
permitted.
|
Page
|
|
QUESTIONS
AND ANSWERS FOR ALL STOCKHOLDERS ABOUT THE BUSINESS COMBINATION
PROPOSALS
|
1
|
QUESTIONS
AND ANSWERS FOR CAPITAL GOLD STOCKHOLDERS
|
5
|
QUESTIONS
AND ANSWERS FOR NAYARIT STOCKHOLDERS
|
6
|
SUMMARY
|
8
|
Information
About The Parties To The Business Combination
|
8
|
Capital
Gold Corporation
|
8
|
Nayarit
Gold, Inc.
|
8
|
Summary
Of The Business Combination
|
8
|
The
Business Combination Agreement
|
8
|
Risks
Associated with Capital Gold and the Business Combination
|
9
|
Vote
of Stockholders Required
|
9
|
Recommendations
of the Respective Boards of Directors
|
9
|
Interests
of Directors and Executive Officers
|
9
|
Conditions
to the Completion of the Business Combination
|
9
|
Completion
and Effectiveness of the Business Combination
|
10
|
Restrictions
on Solicitation of Alternative Transactions by Nayarit
|
10
|
Termination
of the Business Combination Agreement and Payment of Certain Termination
Fees
|
10
|
Material
U.S. Federal Income Tax Consequences of the Business
Combination
|
10
|
Material
Canadian Federal Income Tax Consequences
|
10
|
Accounting
Treatment of the Amalgamation
|
12
|
Nayarit
Stockholders’ Dissenter Rights
|
12
|
Regulatory
Approvals
|
12
|
Board
of Directors and Management of Capital Gold Following the Business
Combination
|
12
|
Reasons
for Approval of the Business Combination
|
13
|
SELECTED
HISTORICAL FINANCIAL INFORMATION OF CAPITAL GOLD
|
14
|
SELECTED
HISTORICAL FINANCIAL INFORMATION OF NAYARIT
|
15
|
COMPARATIVE
PER SHARE DATA
|
16
|
RISK
FACTORS
|
18
|
Risks
Related to the Business Combination and the Combined
Entity
|
18
|
Risks
Related to Capital Gold
|
22
|
Risks
Related to Ownership of Capital Gold Stock
|
27
|
THE
BUSINESS COMBINATION
|
30
|
Overview
and Structure of the Business Combination
|
30
|
Closing
and Effective Time of Amalgamation
|
31
|
Conditions
to Closing of the Amalgamation
|
31
|
Accounting
Treatment of the Amalgamation
|
31
|
Regulatory
Approvals
|
31
|
Representations
and Warranties of Capital Gold and Nayarit in the Business Combination
Agreement
|
33
|
Covenants
of the Parties
|
33
|
Non-Solicitation
|
33
|
Indemnifications
Provisions
|
34
|
Termination
|
34
|
Effect
of Termination
|
34
|
Break
Fee
|
35
|
COMPARISON
OF RIGHTS OF NAYARIT STOCKHOLDERS AND CAPITAL GOLD
STOCKHOLDERS
|
36
|
Authorized
Capital
|
36
|
Number
and Election of Directors
|
36
|
Removal
of Directors
|
36
|
Filling
Vacancies on the Board of Directors
|
36
|
Stockholder
Meetings and Provisions for Notices; Proxies
|
37
|
Quorum
and Voting by Stockholders
|
37
|
Stockholder
Action Without a Meeting
|
37
|
Amendment
of Certificate or Articles of Incorporation
|
38
|
Amendment
of Bylaws
|
38
|
Anti-Takeover
Statutes
|
38
|
Limitation
of Liability and Indemnification of Directors and Officers
|
39
|
Appraisal/Dissenters
Rights
|
39
|
Dividends
|
40
|
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMNTS
|
41
|
SPECIAL
MEETING OF STOCKHOLDERS OF CAPITAL GOLD
|
42
|
General
|
42
|
Date,
Time and Place
|
42
|
Purpose
of the Special Meeting of Stockholders
|
42
|
Recommendation
of Capital Gold’s Board of Directors to Stockholders
|
42
|
Record
Date; Who is Entitled to Vote
|
42
|
Quorum
and Required Vote for Stockholder Proposals
|
42
|
Abstentions
and Broker Non-Votes
|
43
|
Voting
Your Shares of Common Stock
|
43
|
Revoking
Your Proxy
|
43
|
No
Additional Matters May Be Presented at the Special Meeting
|
43
|
Who
Can Answer Your Questions About Voting Your Capital Gold
Shares
|
44
|
Appraisal
Rights
|
44
|
Proxy
Solicitation Costs
|
44
|
Vote
of Management of Capital Gold
|
44
|
PROPOSALS
TO BE CONSIDERED BY CAPITAL GOLD STOCKHOLDERS
|
45
|
The
Business Combination Proposal
|
45
|
General
Description of the Business Combination
|
45
|
Background
of the Business Combination
|
45
|
Capital
Gold’s Board of Directors’ Reasons for Approval of the Business
Combination
|
46
|
Terms
of the Business Combination Agreement
|
48
|
Certain
Benefits of the Directors and Officers and Others in the Business
Combination
|
48
|
Contact
Information for Capital Gold
|
48
|
Required
Vote
|
48
|
Recommendation
of Capital Gold’s Board of Directors
|
49
|
The
Stockholder Adjournment Proposal
|
50
|
Purpose
|
50
|
Consequences
if the Stockholder Adjournment Proposal is Not Approved
|
50
|
Required
Vote
|
50
|
Recommendation
of Capital Gold’s Board of Directors
|
50
|
SPECIAL
MEETING OF STOCKHOLDERS OF NAYARIT
|
51
|
General
|
51
|
Date,
Time and Place
|
51
|
Purpose
of the Special Meeting of Stockholders
|
51
|
Recommendation
of Nayarit’s Board of Directors to Stockholders
|
51
|
Nayarit
Stockholders’ Dissenter Rights
|
52
|
Canadian
Federal Income Tax Consequences for Holders of Nayarit Shares, Nayarit
Warrants and Nayarit Options
|
54
|
Certain
Material U.S. Federal Income Tax Considerations
|
56
|
U.S.
Information Reporting
|
57
|
Solicitation
of Proxies
|
57
|
Voting
Common Shares
|
57
|
Registered
Stockholders
|
58
|
Non-Registered/Beneficial
Stockholders
|
58
|
Appointment
of Proxy Holders
|
58
|
Revocability
of Proxies
|
58
|
Voting
Shares and Principal Stockholders
|
59
|
Additional
Information
|
59
|
Board
of Directors Approval
|
59
|
PROPOSAL
TO BE CONSIDERED BY NAYARIT STOCKHOLDERS
|
60
|
The
Business Combination Proposal
|
60
|
General
Description of the Business Combination
|
60
|
Background
of the Business Combination
|
61
|
Nayarit’s
Board of Directors’ Reasons for Approval of the Business
Combination
|
61
|
Terms
of the Business Combination Agreement
|
63
|
Fairness
Opinion of Blair Franklin Capital Partners Inc.
|
63
|
Certain
Benefits of the Directors and Officers and Others in the Business
Combination
|
64
|
Required
Vote
|
64
|
Recommendation
of Nayarit’s Board of Directors
|
64
|
UNAUDITED
PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
|
65
|
INFORMATION
ABOUT CAPITAL GOLD
|
73
|
Sonora,
Mexico Concessions
|
73
|
Properties
|
73
|
Other
Properties
|
80
|
Competition
|
80
|
Employees
|
80
|
Legal
Proceedings
|
81
|
Capital
Gold’s Management’s Discussion and Analysis of Financial Condition and
Results of Operations for Years ended July 31, 2009, 2008 and
2007
|
81
|
Overview
|
81
|
Results
of Operations
|
82
|
Liquidity
and Capital Resources
|
87
|
Recently
Issued Accounting Pronouncements
|
90
|
Capital
Gold’s Management’s Discussion and Analysis of Financial Condition and
Results of Operations for Six Months ended January 31,
2010
|
98
|
Receipt
of Technical Report for Updated Reserves at El Chanate
|
98
|
El
Oso Project-Saric Properties-Sonora, Mexico
|
100
|
Results
of Operations
|
101
|
Liquidity
and Capital Resources
|
105
|
Management
of Capital Gold
|
112
|
Directors
and Executive Officers
|
112
|
Board
Leadership Structure and Role in Risk Oversight
|
114
|
Committees
|
115
|
Corporate
Governance
|
118
|
Compliance
with Section 16(a) of the Exchange Act
|
118
|
Compensation
of Directors
|
118
|
Executive
Compensation of Capital Gold
|
119
|
Compensation
Discussion and Analysis
|
119
|
Compensation
Committee Report
|
133
|
Audit
Committee Report
|
133
|
Beneficial
Ownership of Capital Gold’s Securities
|
134
|
Interest
of Capital Gold’s Stockholders in the Transaction
|
136
|
Certain
Relationships and Related Transactions of Capital Gold
|
136
|
Description
of Securities of Capital Gold
|
136
|
Common
Stock
|
137
|
Anti-Takeover
Provisions
|
137
|
Transfer
Agent and Warrant Agent
|
138
|
Price
Range of Capital Gold Shares and Dividend Policy
|
138
|
INFORMATION
ABOUT NAYARIT
|
140
|
Name
and Incorporation
|
140
|
Intercorporate
Relationships
|
140
|
Description
of Business
|
140
|
Property
Description and
Location
|
140
|
Dividends
or Distributions
|
151
|
Selected
Financial Information
|
151
|
Nayarit’s
Management’s Discussion and Analysis of Financial Condition and Results of
Operations for the Year ended September 30, 2009
|
151
|
Results
of Operations
|
151
|
Capital
Resources
|
152
|
Off-Balance
Sheet Arrangements
|
152
|
Transactions
with Related Parties
|
152
|
Proposed
Transactions
|
152
|
Critical
Accounting Estimates
|
152
|
Changes
in Accounting Policies and Pronouncements
|
152
|
Future
Accounting Changes – Canadian
GAAP
|
153
|
Recently
Issued Accounting Pronouncements – U.S. GAAP
|
154
|
Management’s
Responsibility for Financial Statements
|
155
|
Risks
and Uncertainties
|
155
|
Outstanding
Shares
|
155
|
Description
of Securities
|
155
|
Directors
and Officers
|
159
|
Committees
of the Board of Directors
|
161
|
Corporate
Cease Trade Orders or Bankruptcies
|
162
|
Individual
Bankruptcies
|
162
|
Penalties
or Sanctions
|
162
|
Executive
Compensation
|
162
|
Director
Compensation
|
168
|
Indebtedness
of Directors and Executive Officers
|
170
|
Statement
of Corporate Governance Practices
|
170
|
Form
58-101 – Corporate Governance Disclosure (TSX Issuers)
|
171
|
Legal
Proceedings and Regulatory Actions
|
175
|
Conflicts
of Interest
|
175
|
Interest
of Certain Persons in Matters to be Acted Upon
|
176
|
Interest
of Informed Persons in Material Transactions
|
176
|
Non-Arm’s
Length Party Transactions
|
176
|
Registrar
and Transfer Agent
|
177
|
Material
Contracts
|
177
|
Experts
and Interests of Experts
|
177
|
Other
Material Facts
|
177
|
Approvals
|
177
|
MANAGEMENT
OF CAPITAL GOLD FOLLOWING THE BUSINESS COMBINATION
|
178
|
Directors
and Executive Officers
|
178
|
Committees
of the Board of Directors
|
178
|
Code
of Conduct and Ethics
|
180
|
Director
Compensation
|
180
|
Executive
Compensation
|
180
|
Employment
Agreements
|
180
|
Corporate
Headquarters
|
180
|
GLOSSARY
OF TERMS
|
181
|
Technical
Terms
|
181
|
Additional
Definitions
|
181
|
LEGAL
MATTERS
|
183
|
EXPERTS
|
183
|
OTHER
MATTERS
|
183
|
DEADLINE
FOR RECEIPT OF CAPITAL GOLD STOCKHOLDER PROPOSALS
|
183
|
DELIVERY
OF MATERIALS TO STOCKHOLDERS WITH SHARED ADDRESSES
|
184
|
WHERE
YOU CAN FIND MORE INFORMATION
|
184
|
INDEX
TO FINANCIAL STATEMENTS
|
F-1
|
ANNEX
I – BUSINESS COMBINATION AGREEMENT
|
I-1
|
ANNEX
II – RIGHTS OF DISSENTING STOCKHOLDERS OF
NAYARIT
|
II-1
|
ANNEX
III – FAIRNESS OPINION OF BLAIR FRANKLIN CAPITAL PARTNERS
INC.
|
III-1
|
Q.
Why am I receiving this joint proxy statement/prospectus?
|
A. Capital
Gold and Nayarit have agreed to a Business Combination under the terms of
a Business Combination Agreement that is described in this joint proxy
statement/prospectus. In order to complete the Business
Combination the stockholders of both Capital Gold and Nayarit must approve
the Business Combination Agreement.
|
|
Q.
Why is the Business Combination between Capital Gold and Nayarit being
proposed?
|
A. Both
Capital Gold and Nayarit believe that the combined company will create
more value than either company could achieve individually. The combined
company will have greater assets in Mexico with significant exploration
potential, revenues from Capital Gold’s producing mine and greater
management depth. As such, management of both companies believe that the
combined company will be better positioned to attract additional
investment and that the stock of Capital Gold may receive greater investor
attention as Capital Gold progresses to become a mid-tier precious metals
producer in Latin America.
Stockholders
are encouraged to review their respective management’s reasons for the
Business Combination in “Proposals to be Considered by
Capital Gold Stockholders—The Business Combination Proposal” and
“Proposal to be
Considered by Nayarit Stockholders—The Business Combination
Proposal,” herein.
|
|
Q.
What will a Nayarit stockholder receive in exchange for Nayarit
common stock pursuant to the Business Combination?
|
A. All of
the Nayarit shares of common stock (the “Nayarit Common Shares”) issued
and outstanding immediately prior to the consummation of the Business
Combination Agreement (other than Nayarit Common Shares held by dissenting
stockholders of Nayarit) shall become exchangeable into the common stock
of Capital Gold on the basis of 0.134048 shares of Capital Gold common
stock for each one (1) Nayarit Common Share. See “The Business
Combination.”
|
|
Q.
What will a Nayarit option holder receive in exchange for Nayarit options
pursuant to the Business Combination?
|
A. Upon
completion of the merger, each option to purchase Nayarit Common Shares
outstanding immediately prior to the effective time of the merger will
become an option to purchase, on the same terms, 0.134048 shares of
Capital Gold common stock for each Nayarit Common Share for which the
option was exercisable. See “The Business
Combination.”
|
|
Q.
What will a Nayarit warrant holder receive in exchange for Nayarit
warrants pursuant to the Business Combination?
|
A. Upon
completion of the merger, each warrant to purchase Nayarit Common Shares
outstanding immediately prior to the effective time of the merger will
become an option to purchase, on the same terms, 0.134048 shares of
Capital Gold common stock for each Nayarit Common Share for which the
warrant was exercisable. See “The Business
Combination.”
|
Q.
Who will be the directors of Capital Gold following the Business
Combination?
|
A. Upon the
consummation of the Business Combination, the board of directors will
consist of John Brownlie, Stephen Cooper, John Cutler, Leonard Sojka, each
a current director of Capital Gold, and Colin Sutherland, a nominee of
Nayarit.
|
|
Q.
When do you expect the Business Combination to be
completed?
|
A. Capital
Gold and Nayarit are working to complete the Business Combination as
promptly as possible. The completion of the Business Combination, however,
is subject to the satisfaction of a number of
conditions. Assuming the timely satisfaction of these
conditions, Capital Gold and Nayarit hope to complete the merger in the
second calendar quarter of 2010.
|
|
Q.
What stockholder approvals are needed to complete the Business
Combination?
|
A. Holders
of a majority of the shares of Capital Gold common stock voted at the
Capital Gold special meeting must approve the Business Combination
Agreement and the issuance of Capital Gold common stock in connection with
the Business Combination.
Holders
of a special two-thirds majority of the outstanding Nayarit Common Shares
present or represented by proxy at the Nayarit special meeting must
approve the Business Combination Agreement.
|
|
Q.
How does the board of directors of Capital Gold recommend I vote on the
proposal?
|
A. The board
of directors of Capital Gold recommends that stockholders vote in favor of
the Business Combination Proposal.
|
|
Q.
How does the board of directors of Nayarit recommend I vote on the
proposal?
|
A. The board
of directors of Nayarit recommends that stockholders vote in favor of the
applicable Business Combination Proposal.
|
|
Q.
How will the officers and directors of Capital Gold and Nayarit
vote?
|
A. The
officers and directors of each of Capital Gold and Nayarit have indicated
that they intend to vote any shares held by them in favor of the
respective Business Combination Proposals.
|
|
Q.
Is there a penalty if the Business Combination Proposal is not
approved?
|
A. The
Business Combination provides that a “break fee” of $1 million (the “Break
Fee”) will be payable in the event that the Business Combination is not
consummated because (i) either Capital Gold or Nayarit fails to consummate
the Business Combination as a result of the decision by one of their
boards of directors to change its recommendation to its stockholders to
approve the Business Combination; (ii) if Nayarit accepts an acquisition
proposal from a third party for its stock or material assets; (iii) if
Capital Gold’s or Nayarit’s action or inaction, through no fault of the
other party, results in the termination of the Business Combination
Agreement, or (iv) if the required stockholder approval is not obtained,
then the party that failed to consummate the Business Combination would be
obligated to pay the other party the Break Fee. See “The Business Combination—Break
Fee.”
|
|
Q.
What do I need to do now?
|
A. After
carefully reading and considering the information contained in and
incorporated into this proxy statement/prospectus, please submit your
proxy card according to the instructions on the enclosed proxy card as
soon as possible. Unless you submit the applicable proxy card or attend
the relevant special meeting and vote in person, your shares will not be
represented or voted at the applicable special meeting.
|
Q.
How do I vote?
|
A. If you
hold your shares in “street name,” which means your shares are held of
record by a broker, bank or nominee, you should contact your broker, bank
or nominee to ensure that votes related to the shares you beneficially own
are properly counted. In this regard, you must provide the record holder
of your shares with instructions on how to vote your shares. If you wish
to attend the Capital Gold Special Meeting or the Nayarit Special Meeting
and vote in person, you must obtain a proxy from your broker, bank or
nominee to vote your shares at the relevant special meeting.
|
|
Q.
What will happen if I sign and return my proxy card without indicating how
I wish to vote?
|
A. Signed
and dated proxies received by Capital Gold or Nayarit without an
indication of how the stockholder intends to vote on a proposal will be
voted in favor of the relevant Business Combination Proposal and, in the
case of Capital Gold, for the Stockholder Adjournment
Proposal.
|
|
Q.
If my shares are held in “street name,” will my broker, bank or
nominee automatically vote my shares for me?
|
A. No. Your
broker, bank or nominee cannot vote your shares with respect to
non-discretionary matters unless you provide instructions on how to vote
in accordance with the information and procedures provided to you by your
broker, bank or nominee. Capital Gold and Nayarit believe the Business
Combination Proposals presented to their respective stockholders will be
considered non-discretionary and therefore your broker, bank or nominee
cannot vote your shares without your instructions.
With
respect to Capital Gold stockholders only, if you do not provide
instructions with your proxy or sign your proxy card your bank or broker
may deliver a proxy card expressly indicating that it is NOT voting your
shares; this indication that a bank or broker is not voting your shares is
referred to as a “broker non-vote.” Broker non-votes will be counted for
purposes of determining whether a quorum is present, but will not count
for purpose of determining the number of votes cast at the Capital Gold
Special Meeting. Your bank, broker or other nominee can vote your shares
only if you provide instructions on how to vote. You should instruct your
broker to vote your shares in accordance with directions you
provide.
|
|
Q.
May I change my vote after I have mailed my signed proxy
card?
|
A. Yes. You
may change your vote by sending a later-dated, signed proxy card to your
company’s corporate secretary at the address set forth below so that it is
received by your company’s secretary prior to your company’s Special
Meeting, or attend your company’s Special Meeting in person and vote. You
also may revoke your proxy by sending a notice of revocation to your
company’s Secretary, which must be received prior to your company’s
Special Meeting or, in the case of Nayarit, provide the instrument of
revocation to the chairman of the Nayarit Special Meeting at the time of
that meeting.
|
|
Q.
What should I do if I receive more than one set of voting
materials?
|
A. You may
receive more than one set of voting materials, including multiple copies
of this joint proxy statement/prospectus and multiple proxy cards or
voting instruction cards. For example, if you hold your shares in more
than one brokerage account, you will receive a separate voting instruction
card for each brokerage account in which you hold shares. If you are a
holder of record and your shares are registered in more than one name, you
will receive more than one proxy card. If you hold shares of Capital Gold
and Nayarit, you will receive a set of voting materials from both
companies.
|
Q.
Who can help answer my questions about the Business
Combination?
|
A. If you have
questions about the Business Combination or if you need additional copies
of this joint proxy statement/prospectus or the enclosed proxy card you
should contact the following persons:
Capital
Gold stockholders should contact:
Christopher
Chipman, Secretary
Capital
Gold Corporation
76
Beaver Street, 14th Floor
New
York, New York 10005.
Tel:
(212) 344-2785
Fax:
(212) 344-4537
or
Nayarit
stockholders should contact:
Colin
Sutherland
Nayarit
Gold Inc.
76
Temple Terrace
Suite
150
Lower
Sackville, Nova Scotia
B4C
0A7
Tel: (902)
252-3833
Fax: (902)
252-3836
|
Q.
Why is Capital Gold proposing the merger?
|
A. Capital
Gold believes that the proposed Business Combination will provide
substantial benefits to Capital Gold stockholders. The Capital Gold board
of directors believes the Business Combination provides stockholders with
liquidity, capital raising and strategic and growth opportunities that
would not have been readily available to Capital Gold on a stand-alone
basis. To review the Capital Gold reasons for the transaction in greater
detail, see “Proposals
to be Considered by Capital Gold Stockholders – The Business Combination
Proposal – Capital Gold’s Board of Directors’ Reasons for Approval of the
Business Combination.”
|
|
Q.
What percentage of Capital Gold will the current Capital Gold stockholders
own immediately following the Business Combination?
|
A. Upon the
consummation of the Business Combination, the current Capital Gold
stockholders will hold approximately 80.03% of the issued and outstanding
shares of Capital Gold common stock on a non-diluted
basis.
|
|
Q.
What will happen if I abstain from voting at the Capital Gold Special
Meeting?
|
A. If you
are a Capital Gold stockholder and you do not submit a proxy card or vote
at the Capital Gold Special Meeting of Stockholders, your shares will not
be counted as present for purposes of determining a quorum and will have
no effect on the outcome of the proposal to approve the issuance of
Capital Gold common stock in the Business Combination. If you
submit a proxy card and affirmatively elect to abstain from voting, your
proxy will be counted for purposes of determining the presence of a quorum
but will not be voted at the special meeting. As a result, your abstention
will have the same effect as a vote against the issuance of Capital Gold
common stock in the Business Combination.
|
|
Q.
As a stockholder of Capital Gold, do I have appraisal rights if I object
to the Business Combination?
|
A. No
appraisal rights are available to stockholders of Capital Gold under the
DGCL in connection with the proposals set forth herein.
|
|
Q.
If I am not going to attend the Capital Gold Special Meeting in person,
should I return my proxy card instead?
|
A. Yes.
Whether or not you plan to attend the Capital Gold Special Meeting, after
carefully reading and considering the information contained in this proxy
statement, please complete and sign your proxy card. Then return the proxy
card in the enclosed return envelope provided in this package as soon as
possible, to ensure your shares are represented at the special
meeting.
|
Q.
Why is Nayarit proposing the merger?
|
A. Nayarit
believes that the proposed merger will provide substantial benefits to
Nayarit stockholders. The Nayarit board of directors believes the merger
provides stockholders with liquidity and will make capital and strategic
and growth opportunities available to Nayarit that would not be available
on a stand-alone basis. To review the Nayarit reasons for the transaction
in greater detail, see “Proposal to be Considered by
Nayarit Stockholders – The Business Combination Proposal – Nayarit’s Board
of Directors Reasons for Approval of the Business
Combination.”
|
|
Q.
What percentage of Capital Gold will the former Nayarit stockholders own
immediately following the Business Combination?
|
A. Upon the
consummation of the Business Combination, Nayarit stockholders will hold
approximately 19.97% of the issued and outstanding shares of Capital Gold
common stock on a non-diluted basis.
|
|
Q.
If I am not going to attend the Nayarit Special Meeting in person, should
I return my proxy card instead?
|
A. Yes.
Whether or not you plan to attend the Nayarit Special Meeting, after
carefully reading and considering the information contained in this proxy
statement, please complete and sign your proxy card. Then return the proxy
card in the enclosed return envelope provided in this package as soon as
possible, to ensure your shares are represented at the special
meeting.
Nayarit
stockholders should return their completed proxy cards to:
Computershare
Trust Company of Canada
1969
Upper Water Street
Purdy’s
Wharf II
Suite
2008
Halifax,
Nova Scotia B3J 3R7
|
|
Q.
Will Nayarit stockholders be taxed on the Capital Gold securities that
they receive in exchange for their Nayarit securities?
|
A. For U.S.
federal income tax purposes, the Business Combination is intended to
qualify as a “reorganization” within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the
“Code”). Assuming it is so treated, Nayarit stockholders who
are U.S. persons should not recognize gain or loss as a result of their
receipt of Capital Gold securities that they receive in exchange for their
Nayarit securities. See “The Business
Combination—Material U.S. Federal Income Tax Consequences of the Business
Combination.”
|
|
Q.
As a stockholder of Nayarit, do I have dissenters rights if I object to
the Business Combination?
|
A.
Stockholders of Nayarit have certain dissenters rights under the
Ontario Business Corporations Act. See “Special Meeting of
Stockholders of Nayarit – Nayarit Stockholders’ Dissenter Rights”
herein.
|
|
Q.
What will happen if I abstain from voting at the Nayarit Special
Meeting?
|
A. If you
are a Nayarit stockholder and you do not submit a proxy card or vote at
the special meeting of Nayarit stockholders, your shares will not be
counted as present for purposes of determining a quorum and will not be
voted at the special meeting.
|
|
Q.
What are the federal income tax consequences of exercising my dissenters’
rights?
|
A. For
U.S. federal income tax purposes, Nayarit stockholders who exercise their
dissenters’ rights and receive cash for their Nayarit shares should treat
such receipt as a taxable disposition of such shares. See
“The Business
Combination—Material U.S. Federal Income Tax Consequences of the Business
Combination.”
|
Q.
Should I send in my stock certificates now?
|
A. No. You
should not send in your stock certificates at this time. Promptly after
the effective time of the Business Combination, Nayarit securityholders
will receive transmittal materials with instructions for surrendering the
Nayarit securities. You should follow the instructions in the post-closing
letter of transmittal regarding how and when to surrender your
certificates.
|
·
|
Exploration and
Development. The Business Combination will enhance the
combined company’s ability to grow and secure additional capital resources
to continue exploration and development of Nayarit’s Orion Project and
Capital Gold’s El Chanate Project, enhancing long term value for
stockholders.
|
·
|
Visibility as a Mid-Tier
Producer. The combined company has the potential to be
recognized as a significant mid-tier producer in Latin America, with the
possibility that further growth opportunities will
follow.
|
·
|
Strong Management
Team. The combination of Capital Gold’s and Nayarit’s
management will create a management team with complementary skills in
exploration, business and projected development and
operations.
|
·
|
Potential
synergies. The fact that Nayarit’s and Capital Gold’s
respective assets and operations in Mexico are a strategic fit and
complementary.
|
·
|
Market exposure. Nayarit’s
investor following in Canada together with Capital Gold’s following as an
NYSE AMEX listed issuer will provide enhanced market exposure to the
combined company.
|
·
|
Stockholder liquidity.
Increased market capitalization and a broader stockholder base
resulting from the merger should improve trading liquidity for
stockholders.
|
·
|
Fixed exchange rate. The exchange rate is
fixed, and as a result, the Capital Gold shares issued on consummation of
the Business Combination Agreement may have a market value different than
at the time of the announcement of the Business
Combination.
|
·
|
Conditions to
closing.
The Business Combination Agreement is subject to several conditions
and because there can be no certainty that these conditions may be
satisfied or waived, the Business Combination may not be successfully
completed, which could negatively impact upon both
companies.
|
·
|
Termination rights. The
Business Combination Agreement may be terminated by either Capital Gold or
Nayarit in certain circumstances in which case the market prices for the
Capital Gold or Nayarit shares may be adversely
affected.
|
·
|
Limitations on other
opportunities. The
Business Combination Agreement significantly limits the ability of either
party to pursue other Business Combination opportunities until the
transaction is completed.
|
For
the Six Months Ended
January
31,
|
Fiscal
Year Ended July 31
|
|||||||||||||||||||||||||||
2010
|
2009
|
2009
|
2008
|
2007
|
2006
|
2005
|
||||||||||||||||||||||
(unaudited)
|
||||||||||||||||||||||||||||
Statement
of Operations data:
|
||||||||||||||||||||||||||||
Revenues
(1)
|
$ | 24,955 | $ | 20,544 | $ | 42,757 | $ | 33,104 | $ | - | $ | - | $ | - | ||||||||||||||
Net
Income (loss)
|
$ | 5,884 | $ | 5,133 | $ | 10,407 | $ | 6,364 | $ | (7,472 | ) | $ | (4,805 | ) | $ | (2,006 | ) | |||||||||||
Income
(loss) per share – Basic (2)
|
$ | 0.12 | $ | 0.11 | $ | 0.22 | $ | 0.15 | $ | (0.20 | ) | $ | (0.17 | ) | $ | (0.11 | ) | |||||||||||
Income
(loss) per share – Diluted(2)(3)
|
$ | 0.12 | $ | 0.10 | $ | 0.21 | $ | 0.13 | $ | - | $ | - | $ | - | ||||||||||||||
Weighted
average shares outstanding – Basic
|
48,505,818 | 48,278,255 | 48,315116 | 43,760,000 | 37,452,816 | 28,051,118 | 18,780,980 | |||||||||||||||||||||
Weighted
average shares outstanding – Diluted(3)
|
49,861,776 | 49,729,966 | 49,882,770 | 48,867,282 | 37,452,816 | 28,051,118 | 18,780,980 | |||||||||||||||||||||
Balance
Sheet data:
|
||||||||||||||||||||||||||||
Cash
and cash equivalents
|
$ | 4,943 | $ | 8,848 | $ | 6,448 | $ | 10,992 | $ | 2,225 | $ | 2,741 | $ | 4,282 | ||||||||||||||
Inventories
|
$ | 28,109 | $ | 14,720 | $ | 21,405 | $ | 13,113 | $ | 3,171 | $ | — | $ | -- | ||||||||||||||
Property
and equipment, net
|
$ | 24,725 | $ | 22,537 | $ | 22,417 | $ | 20,918 | $ | 18,000 | $ | 1,036 | $ | 651 | ||||||||||||||
Total
assets
|
$ | 63,636 | $ | 50,965 | $ | 54,601 | $ | 48,879 | $ | 27,551 | $ | 9,546 | $ | 5,552 | ||||||||||||||
Reclamation
and remediation liability
|
$ | 1,854 | $ | 1,215 | $ | 1,594 | $ | 1,666 | $ | 1,249 | $ | - | $ | - | ||||||||||||||
Long-term
debt
|
$ | 2,600 | $ | 6,200 | $ | 4,400 | $ | 8,375 | $ | 12,500 | $ | - | $ | - | ||||||||||||||
Total
debt
|
$ | 6,200 | $ | 10,250 | $ | 8,000 | $ | 12,500 | $ | 12,500 | $ | - | $ | - | ||||||||||||||
Total
stockholders’ equity
|
$ | 45,250 | $ | 50,965 | $ | 37,882 | $ | 28,197 | $ | 11,986 | $ | 8,930 | $ | 5,269 |
For
the Three Months
Ended
December 31
|
Fiscal
Year Ended September 30
|
|||||||||||||||||||||||||||
2009
|
2008
|
2009
|
2008
|
2007
|
2006
|
2005
|
||||||||||||||||||||||
(unaudited)
|
||||||||||||||||||||||||||||
Statement
of Operations data:
|
||||||||||||||||||||||||||||
Revenues
(1)
|
- | - | - | - | - | - | - | |||||||||||||||||||||
Net
Loss
|
$ | (902,099 | ) | $ | (2,515,466 | ) | $ | 8,136,340 | $ | (8,264,093 | ) | $ | (5,366,349 | ) | $ | (3,840,011 | ) | $ | (1,830,354 | ) | ||||||||
Loss
per share – Basic (2)
|
$ | (0.01 | ) | $ | (0.04 | ) | $ | (0.10 | ) | $ | (0.16 | ) | $ | (0.13 | ) | $ | (0.12 | ) | $ | (0.11 | ) | |||||||
Loss
per share – Diluted(2)
|
$ | (0.01 | ) | $ | (0.04 | ) | $ | (0.10 | ) | $ | (0.16 | ) | $ | (0.13 | ) | $ | (0.12 | ) | $ | (0.11 | ) | |||||||
Weighted
Average Shares Outstanding – Basic(2)
|
89,688,896 | 68,001,769 | 79,126,397 | 50,758,673 | 39,978,939 | 30,929,315 | 15,423,436 | |||||||||||||||||||||
Weighted
Average Shares Outstanding – Diluted(2)
|
89,688,896 | 68,001,769 | 79,126,397 | 50,758,673 | 39,978,939 | 30,929,315 | 15,423,436 | |||||||||||||||||||||
Balance
Sheet data:
|
||||||||||||||||||||||||||||
Cash
and cash equivalents
|
$ | 1,349,955 | $ | 1,290,471 | $ | 2,285,722 | $ | 5,161,202 | $ | 1,374,629 | $ | 145,991 | $ | 701,230 | ||||||||||||||
Total
Assets
|
$ | 6,815,777 | $ | 4,194,006 | $ | 7,039,826 | $ | 7,113,098 | $ | 2,075,125 | $ | 2,151,531 | $ | 909,256 | ||||||||||||||
Reclamation
and Remediation Liability
|
- | - | - | - | - | - | - | |||||||||||||||||||||
Long-term
Debt
|
- | - | - | - | - | - | - | |||||||||||||||||||||
Total
debt
|
- | - | - | - | - | - | - | |||||||||||||||||||||
Total
stockholders’ equity
|
$ | 6,412,878 | $ | 3,549,294 | $ | 6,691,074 | $ | 6,192,924 | $ | 1,756,708 | $ | 2,007,996 | $ | 839,955 |
Comparative
per Share Date
|
As
of and for the Six
Months
Ended
January
31, 2010
(unaudited)
|
As
of and for the
Twelve
Months Ended
July
31, 2009
|
||||||
Capital
Gold - Historical
|
||||||||
Historical
per common share:
|
||||||||
Earnings
per share (basic)
|
$ | 0.12 | $ | 0.22 | ||||
Earnings
per share (diluted)
|
$ | 0.12 | $ | 0.21 | ||||
Book
value per share (1)
|
$ | 0.93 | $ | 0.78 | ||||
Unaudited
Pro Forma Combined (2)
|
||||||||
Unaudited pro
forma per common share(1)
|
||||||||
Earnings
per share (basic)
|
$ | 0.07 | $ | 0.04 | ||||
Earnings
per share (diluted)
|
$ | 0.07 | $ | 0.03 | ||||
Book
value per share(1)
|
$ | 1.42 | $ | N/A | (4) |
Comparative
per Share Date
|
As
of and for the Three
Months
Ended December
31,
2009
|
As
of and for the Twelve
Months
Ended September
30,
2009
|
||||||
Nayarit
– Historical
|
||||||||
Historical
per common share:
|
||||||||
Loss
per share (basic)
|
$ | (0.01 | ) | $ | (0.10 | ) | ||
Loss
per share (diluted)
|
$ | (0.01 | ) | $ | (0.10 | ) | ||
Book
value per share(1)
|
$ | 0.07 | $ | 0.07 | ||||
Unaudited
Pro Forma Combined (2)(3)
|
||||||||
Unaudited pro
forma per common share:
|
||||||||
Earnings
per share (basic)
|
$ | 0.07 | $ | 0.03 | ||||
Earnings
per share (diluted)
|
$ | 0.07 | $ | 0.03 | ||||
Book
value per share
|
$ | 1.42 | N/A | (4) |
|
·
|
changes
in Nayarit’s and Capital Gold’s respective businesses, operations and
prospects, or the market assessments
thereof;
|
|
·
|
market
assessments of the likelihood that the Business Combination will be
completed, including related considerations regarding regulatory approvals
of the Business Combination; and
|
|
·
|
general
market and economic conditions and other factors generally affecting the
price of each of Capital Gold’s and Nayarit’s common
stock.
|
|
·
|
Capital
Gold does not achieve the perceived benefits of the transaction as
rapidly, or to the extent anticipated by, financial or industry analysts;
or
|
|
·
|
the
effect of the Business Combination on Capital Gold’s financial results is
not consistent with the expectations of financial or industry
analysts.
|
|
·
|
industrial and commercial demand
for gold,
|
|
·
|
the level of interest
rates,
|
|
·
|
the rate of
inflation,
|
|
·
|
central bank
sales,
|
|
·
|
world supply of gold
and
|
|
·
|
stability of exchange
rates.
|
|
·
|
labor
disputes,
|
|
·
|
invalidity of governmental
orders,
|
|
·
|
uncertain or unpredictable
political, legal and economic
environments,
|
|
·
|
war and civil
disturbances,
|
|
·
|
changes in laws or
policies,
|
|
·
|
taxation,
|
|
·
|
delays in obtaining or the
inability to obtain necessary governmental
permits,
|
|
·
|
governmental seizure of land or
mining claims,
|
|
·
|
limitations on
ownership,
|
|
·
|
limitations on the repatriation
of earnings,
|
|
·
|
increased financial
costs,
|
|
·
|
import and export regulations,
including restrictions on the export of gold,
and
|
|
·
|
foreign exchange
controls.
|
|
·
|
ownership of
assets,
|
|
·
|
land
tenure,
|
|
·
|
mining
policies,
|
|
·
|
monetary
policies,
|
|
·
|
taxation,
|
|
·
|
rates of
exchange,
|
|
·
|
environmental
regulations,
|
|
·
|
labor
relations,
|
|
·
|
repatriation of income
and/or
|
|
·
|
return of
capital.
|
|
·
|
stricter standards and
enforcement,
|
|
·
|
increased fines and penalties for
non-compliance,
|
|
·
|
more stringent environmental
assessments of proposed projects
and
|
|
·
|
a heightened degree of
responsibility for companies and their officers, directors and
employees.
|
|
·
|
environmental
hazards,
|
|
·
|
industrial
accidents,
|
|
·
|
metallurgical and other
processing,
|
|
·
|
acts of God,
and/or
|
|
·
|
mechanical equipment and facility
performance problems.
|
|
·
|
damage to, or destruction of,
mineral properties or production
facilities,
|
|
·
|
personal injury or
death,
|
|
·
|
environmental
damage,
|
|
·
|
delays in
mining,
|
|
·
|
monetary losses,
and/or
|
|
·
|
possible legal
liability.
|
|
·
|
the location of economic ore
bodies,
|
|
·
|
development of appropriate
metallurgical processes,
|
|
·
|
receipt of necessary governmental
approvals, and
|
|
·
|
construction of mining and
processing facilities at any site chosen for
mining.
|
|
·
|
the
commercial viability of a mineral deposit is dependent on a number of
factors including:
|
|
·
|
the
price of gold,
|
|
·
|
the
particular attributes of the deposit, such as
its
|
|
o
|
size
|
|
o
|
Grade,
and
|
|
o
|
Proximity
to infrastructure,
|
|
·
|
financing
costs,
|
|
·
|
taxation,
|
|
·
|
royalties,
|
|
·
|
land
use,
|
|
·
|
water
use,
|
|
·
|
power
use,
|
|
·
|
importing
and exporting gold, and
|
|
·
|
environmental
protection.
|
|
·
|
a
limited availability for market quotations for Capital Gold’s common
stock;
|
|
·
|
reduced
liquidity with respect to Capital Gold’s common
stock;
|
|
·
|
a
determination that Capital Gold’s common stock is a “penny stock,” which
will require brokers trading in the common stock to adhere to more
stringent rules and possibly result in a reduced level of trading activity
in the secondary trading market for Capital Gold’s common
stock;
|
|
·
|
limited
amount of news and analyst coverage for Capital Gold’s common stock;
and
|
|
·
|
a
decreased ability to issue additional securities or obtain additional
financing in the future.
|
|
·
|
the
Company does not achieve the perceived benefits of the Business
Combination as rapidly, or to the extent anticipated by, financial or
industry analysts; or
|
|
·
|
the
effect of the Business Combination on Capital Gold’s financial results is
not consistent with the expectations of financial or industry
analysts.
|
|
·
|
representation
and warranties of the parties as to, among other things, the organization,
corporate power and authority, authorization and validity of the Business
Combination Agreement and, as relevant, other agreements contemplated
therein, the receipt of any necessary consents, approvals and permits, the
accuracy of certain information, and other
matters;
|
|
·
|
conditions
to be satisfied or waived on or before the Business Combination Closing
Date, to each party’s obligation to consummate the Business Combination on
the Business Combination Closing
Date;
|
|
·
|
covenants
regarding conduct of business prior to the Business Combination Closing
Date and other matters; and
|
|
·
|
circumstances
under which the Business Combination Agreement may be terminated prior to
closing of the Business Combination on the Business Combination Closing
Date.
|
|
·
|
The
form of Amalgamation Agreement between Nayarit and “MergerSub” as defined
below to form AmalgSub (as defined below) as a wholly owned subsidiary of
Capital Gold; and
|
|
·
|
Lock
Up Agreements between Capital Gold and each of Colin Sutherland and
Bradley Langille pursuant to which they each agree not to sell or
otherwise dispose of Capital Gold shares and securities received by them
as stockholders and option holders of
Nayarit.
|
|
(i)
|
Capital
Gold’s stockholders have approved the Business Combination Agreement and
the issuance of the Amalgamation
Consideration;
|
|
(ii)
|
Nayarit’s
stockholders have approved the Business Combination
Agreement;
|
|
(iii)
|
If
applicable, the required waiting period under any domestic or foreign
anti-trust laws has expired or been
terminated;
|
|
(iv)
|
All
governmental authority approvals and third party consents required in
connection with the transactions contemplated by the Business Combination
Agreement have been obtained or
made;
|
|
(v)
|
A
registration statement with respect to the Amalgamation Consideration
shall have been declared effective by the SEC and no stop order suspending
the effectiveness of such registration statement is in
effect;
|
|
(vi)
|
No
governmental authority has enacted, issued, promulgated, enforced or
entered any law or order that has the effect of making the Amalgamation
illegal or otherwise preventing or prohibiting consummation of the
Amalgamation;
|
|
(vii)
|
Final
versions of Capital Gold’s disclosure schedules and Nayarit’s disclosure
schedules have been delivered and are final, true, correct and complete;
and
|
|
(viii)
|
No
pending action exists against any of the parties to the Business
Combination Agreement, or against any of their respective officers,
directors, assets or properties, which could be reasonably be expected to
have a material adverse effect.
|
|
(i)
|
The
accuracy in all respects on the date of the Business Combination Agreement
and the Effective Time of all of the representations and warranties of
Nayarit;
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|
(ii)
|
The
performance in all material respects of all covenants and obligations
required to be performed by or complied with by Nayarit at or prior to the
Effective Time;
|
|
(iii)
|
The
delivery to Capital Gold by Nayarit of an officer’s certificate evidencing
the accuracy of the representations or warranties made by Nayarit and its
subsidiaries and certifying the performance of the covenants or
obligations required to be performed by
Nayarit;
|
|
(iv)
|
The
delivery to Capital Gold by Nayarit of a secretary’s certificate
certifying the resolutions of the board of directors of Nayarit
authorizing the execution of the Business Combination Agreement and the
transaction contemplated thereby;
|
|
(v)
|
No
material adverse effect with respect to Nayarit’s business shall have
occurred since the date of the Business Combination
Agreement;
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(vi)
|
The
receipt by Capital Gold of a satisfactory opinion from legal counsel to
Nayarit;
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(vii)
|
The
receipt by Capital Gold of a satisfactory title opinion from mining
counsel to Nayarit;
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(viii)
|
The
receipt of lockup agreements from Colin Sutherland and Bradley
Langille;
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(ix)
|
The filing by
Nayarit with the Canadian System for Electronic Document Analysis
and Retrieval (“SEDAR”) all financial statements that are required
pursuant to applicable Canadian
laws;
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(x)
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Holders
of no more than 5% of the Nayarit common shares vote against the
Amalgamation and exercise dissent rights under the
OBCA;
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|
(xi)
|
The
receipt by Capital Gold of a final report from SRK Consulting concerning
Nayarit’s assets and properties and such final report shall not be
materially different from the preliminary SRK Consulting report provided
to Capital Gold;
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(xii)
|
The
resignation of the respective directors and officers of Nayarit and its
subsidiaries except for those directors and officers continuing in their
capacities after the Effective
Time;
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(xiii)
|
All
convertible securities of Nayarit and options to purchase Nayarit common
shares outstanding prior to the Effective Time shall provide for the
issuance of Capital Gold common stock on the exchange basis set forth in
the Business Combination Agreement;
|
|
(xiv)
|
The
receipt by Capital Gold of a fairness opinion with respect to the
transactions contemplated by the Business Combination Agreement from the
advisors to Capital Gold, if deemed necessary by the board of directors of
Capital Gold;
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|
(xv)
|
The
receipt by Nayarit of a fairness opinion with respect to the
transactions contemplated by the Business Combination Agreement from the
advisors to Nayarit;
|
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(xvi)
|
The
termination of the employment agreements between Nayarit and each of Colin
Sutherland and Bradley Langille without payment by Nayarit of any change
of control payments; and
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|
(xvii)
|
The
receipt by Capital Gold of a certificate from SRK Consulting certifying
Nayarit’s representations and warranties regarding Nayarit’s mining
properties and assets.
|
|
(i)
|
The
accuracy in all respects on the date of the Business Combination Agreement
and the Effective Time of all of representations and warranties of Capital
Gold;
|
|
(ii)
|
The
performance in all material respects of all covenants and obligations
required to be performed by or complied with by Capital Gold at or prior
to the Effective Time;
|
|
(iii)
|
The
delivery to Nayarit by Capital Gold of an officer’s certificate evidencing
the accuracy of the representations or warranties made by Capital Gold and
certifying the performance of the covenants or obligations required to be
performed by Capital Gold;
|
|
(iv)
|
The
delivery to Nayarit by Capital Gold of a secretary’s certificate
certifying the resolutions of the board of directors of Capital Gold
authorizing the execution of the Business Combination Agreement and the
transaction contemplated thereby;
|
|
(v)
|
No
material adverse effect with respect to Capital Gold’s business shall have
occurred since the date of the Business Combination
Agreement;
|
|
(vi)
|
The
receipt by Nayarit of a satisfactory opinion from legal counsel to Capital
Gold;
|
|
(vii)
|
The
resignation of the directors and officers of Capital Gold except for those
directors and officers continuing in their capacities after the Effective
Time;
|
|
(viii)
|
Capital
Gold has entered into an agreement with an exchange agent with respect to
the exchange of the certificates evidencing Nayarit Common Shares for the
Amalgamation Consideration;
|
|
(ix)
|
The
receipt by Nayarit of a satisfactory title opinion from mining counsel to
Capital Gold; and
|
|
(x)
|
The
receipt of a lockup agreement from John
Brownlie.
|
|
(i)
|
conduct
their respective business in all material respects in the ordinary course
of business consistent with past
practice;
|
|
(ii)
|
use
commercially reasonable efforts to preserve intact, in all material
respects, their respective business organizations, to keep available the
services of their respective and their respective subsidiaries’ managers,
directors, officers, key employees and
consultants;
|
|
(iii)
|
keep
all of their respective mineral rights, permits and contracts in good
standing and in full force and effect;
and
|
(iv)
|
comply
with all laws in the conduct of their respective
business.
|
|
(i)
|
by mutual written consent of
Capital Gold and Nayarit, as duly authorized by their respective board of
directors;
|
|
(ii)
|
by either Capital Gold and
Nayarit if (A) the closing conditions in the Business Combination
Agreement have not been satisfied by the other party by 120 days after the
date of the Business Combination Agreement (the “Completion Deadline”); or
(B) any governmental authority shall have enacted, issued,
promulgated, enforced or entered any order or law that has the effect of
enjoining or otherwise preventing or prohibiting the Amalgamation (unless
the foregoing was the result of the prospective terminating party’s breach
of the Business Combination Agreement, in which case the prospective
terminating party may not terminate pursuant to this
provision);
|
(iii)
|
by
Capital Gold if (A) there has been a material breach of any
representation, warranty, covenant or agreement on the part of Nayarit, or
any representation or warranty of Nayarit shall have become untrue or
inaccurate, which breach or untrue representation or warranty is incapable
of being cured prior to the closing or is not cured within 20 days of
notice of such breach or inaccuracy, or (B) any of the conditions to
closing are unsatisfied by Nayarit by the Completion Deadline, provided,
however that Capital Gold may not terminate pursuant to this provision if
it has materially breached the Business Combination Agreement and such
breach caused the closing conditions not to be satisfied;
or
|
(iv)
|
by Nayarit if (A) there has
been a material breach of any representation, warranty, covenant or
agreement on the part of Capital Gold, or any representation or warranty
of Capital Gold shall have become untrue or inaccurate, which breach or
untrue representation or warranty is incapable of being cured prior to the
closing or is not cured within 20 days of notice of such breach or
inaccuracy, or (B) any of the conditions to closing are unsatisfied
by Capital Gold by the Completion Deadline, provided, however Nayarit may
not terminate pursuant to this provision if it has materially breached the
Business Combination Agreement and such breach caused the closing
conditions not to be
satisfied.
|
|
·
|
prior
to the stockholder becoming an interested stockholder, the board of
directors of the corporation approved the Business Combination or the
transaction which resulted in the stockholder becoming an interested
stockholder;
|
|
·
|
the
interested stockholder owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced (excluding
shares held by directors who are also officers and shares held by certain
employee stock plans) in which such stockholder became an interested
stockholder; or
|
|
·
|
the
Business Combination is approved by the board of directors and authorized
at an annual or special meeting of stockholders by the affirmative vote of
at least 66 2/3% of the outstanding voting stock which is not owned by the
interested stockholder.
|
|
·
|
he
acted honestly and in good faith with a view to the best interests of
Nayarit; and
|
|
·
|
in
the case of a criminal or administrative action or proceeding that is
enforced by a monetary penalty, he had reasonable grounds for believing
that his conduct was lawful.
|
|
·
|
ability
to complete the Business
Combination;
|
|
·
|
the
benefits of the Business
Combination;
|
|
·
|
potential
of exploration assets in Mexico;
|
|
·
|
adverse
capital and credit market conditions and their impact on our liquidity,
access to capital and cost of
capital;
|
|
·
|
changes
in the combined company’s financial strength and the effect of such
changes on our future results of operations and financial
condition;
|
|
·
|
general
economic conditions or a prolonged economic downturn affecting the mining
industry;
|
|
·
|
fluctuations
in U.S. or foreign currency exchange rates, interest rates, or securities
and real estate markets;
|
|
·
|
the
stability of and actions by governments and economies in the markets in
which both companies operate;
|
|
·
|
competitive
factors and competitors’ responses to our
initiatives;
|
|
·
|
the
threat of natural disasters, catastrophes, terrorist attacks, epidemics or
pandemics anywhere in the world where Capital Gold operates or
does business; and
|
|
·
|
other
risks and uncertainties described under the caption “Risk Factors” and in
other filings with the SEC in the case of Capital Gold, and with the
Ontario Securities Commission in the case of
Nayarit.
|
|
·
|
You
can vote by signing and returning the enclosed proxy card. If you vote by
proxy card, your “proxy,” whose name is listed on the proxy card, will
vote your shares as you instruct on the proxy card. If you sign and return
the proxy card but do not give instructions on how to vote your shares,
your shares will be voted, as recommended by the Capital Gold Board of
Directors, “FOR” the Business Combination Proposal” and “FOR” the
Stockholder Adjournment Proposal.
|
|
·
|
You
can attend the Capital Gold Special Meeting and vote in person. Capital
Gold will give you a ballot when you arrive. However, if your shares are
held in the name of your broker, bank or another nominee, you must get a
proxy from the broker, bank or other nominee in order to vote your shares,
at the Capital Gold Special Meeting. That is the only way Capital Gold can
be sure that the broker, bank or nominee has not already voted your
shares.
|
|
·
|
You
may send another proxy card with a later
date;
|
|
·
|
You
may notify Christopher Chipman, Capital Gold’s Secretary, in writing
before the Capital Gold Special Meeting, that you have revoked your proxy;
or
|
|
·
|
You
may attend the Capital Gold Special Meeting, revoke your proxy, and vote
in person, as indicated above.
|
|
·
|
holders
of no more than 5% of the Nayarit shares vote against the Amalgamation and
exercised dissent rights under the
OBCA;
|
|
·
|
the
SEC has declared effective Capital Gold’s registration statement of which
this proxy statement/prospectus is a part;
and
|
|
·
|
the
other conditions specified in the Business Combination Agreement have been
satisfied or waived.
|
·
|
Exploration and
Development. The Business Combination will enhance the
combined company’s ability to grow and secure additional capital resources
to continue exploration and development of Nayarit’s Orion Project and
Capital Gold’s El Chanate Project, enhancing long term value for
stockholders;
|
·
|
Visibility as a Mid-Tier
Producer. The combined company has the potential
to be recognized as a significant mid-tier producer in Latin America, with
the possibility that further growth opportunities will
follow;
|
·
|
Strong Management
Team. The combination of Capital Gold and Nayarit’s
management will create a management team with complementary skills in
exploration, business and projected development and
operations;
|
·
|
Potential
synergies. The strategic fit and complementary nature of
Nayarit and Capital Gold’s respective assets and operations in
Mexico;
|
·
|
Market
exposure. Nayarit’s investor following in Canada
together with Capital Gold’s following as an NYSE AMEX listed issuer will
provide enhanced market exposure to the combined company;
and
|
·
|
Stockholder
liquidity. Increased market capitalization and a broader
stockholder base resulting from the merger should improve trading
liquidity for stockholders.
|
·
|
Uncertain regulatory
environment. The potential for scrutiny or increased
regulation by the Government of
Mexico;
|
·
|
Interests of officers and
directors. Interests in the Business Combination that
certain officers and directors of Capital
Gold may have which are different from, or in addition to, the interests
of the Capital Gold stockholders generally, including the matters
described under “Proposals to be Considered by
Capital Gold Stockholders— The Business Combination Proposal—Certain
Benefits of the Directors and Officers and Others in the
Transaction”;
|
·
|
Limitations on indemnification.
The limitations on indemnification set forth in the Business
Combination Agreement described in “The Business
Combination”;
|
·
|
Dilution to interests of
stockholders. Control of Nayarit’s current stockholders
of a significant percentage of Capital Gold’s issued shares after the
Business Combination;
|
·
|
Regulatory issues. The
impact of changes in or additional licensing or other regulations
affecting operations in Mexico and the mining industry
generally;
|
·
|
Fixed exchange
rate. The exchange rate is fixed, and as a result, the
Capital Gold shares issued on consummation of the Business Combination
Agreement may have a market value different than at the time of the
announcement of the Business
Combination;
|
·
|
Conditions to
closing. The Business Combination Agreement is subject
to several conditions and because there can be no certainty that these
conditions may be satisfied or waived, the Business Combination may not be
successfully completed, which could negatively impact upon both
companies;
|
·
|
Termination
rights. The Business Combination Agreement may be
terminated by either Capital Gold or Nayarit in certain circumstances in
which case the market prices for the Capital Gold or Nayarit shares may be
adversely affected; and
|
·
|
Limitations on other
opportunities. The Business Combination Agreement
significantly limits the ability of either party to pursue other Business
Combination opportunities until the transaction is
completed.
|
·
|
It
is currently anticipated that Messrs. Brownlie, Cooper, Cutler, Sojka,
each a current director of Capital Gold, and Colin Sutherland, a nominee
of Nayarit, will serve as directors of Capital Gold following the Business
Combination and that John Brownlie will continue to serve as President and
Chief Operating Officer of Capital Gold and Bradley Langille and Colin
Sutherland will join Capital Gold as senior
officers.
|
·
|
For
a period of thirty-six (36) months following the Effective Time of the
Business Combination, Capital Gold and Nayarit have agreed that they shall
cause their nominees on the Board of Directors to execute and deliver an
undertaking whereby such nominees agree to: (i) nominate the foregoing
individuals for re-election at each annual meeting of the stockholders of
Capital Gold; and (ii) cause any successors chosen by such nominees to
comply with the foregoing provision at each annual meeting of the
stockholders of Capital Gold.
|
·
|
As
a condition to closing the Business Combination, Capital Gold and Nayarit
have agreed that the employment agreements between Nayarit, on one hand,
and each of Colin Sutherland and Bradley Langille, on the other hand,
shall either have been (i) terminated prior to the Effective Date in
accordance with the terms thereof, including payment of all termination
payments prescribed therein (except for any payments relating to the
change of control of Nayarit), or (ii) terminated with no payment of
change of control benefits in consideration for the execution of a new
employment agreement with Capital Gold on terms comparable to the other
senior officers of Capital Gold.
|
Stockholders
of Nayarit should also review the Nayarit Supplement dated March __,
2010
(the
“Nayarit Supplement”) that is enclosed with this joint proxy
statement/prospectus.
|