Lock-Up Agreement
Exhibit 10.2
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August 2, 2010
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Capital
Gold Corporation
00 Xxxxxx
Xxxxxx, 00xx
Xxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Ladies
and Gentlemen:
This
letter agreement (this “Agreement”) relates to the
shares of common stock (the “Closing Stock Consideration”)
of Capital Gold Corporation, a Delaware corporation (the “Company”), issued to the
former shareholders of Nayarit Gold Inc. (“Nayarit”) in connection with
Business Combination Agreement, dated February 10, 2010, as amended (the “Definitive
Agreement”).
As of the date hereof the undersigned
beneficially owns and controls an aggregate of _______ common shares of Nayarit,
which in accordance with the terms of the Definitive Agreement, shall be
exchangeable into _______ shares of common stock of the Company (the
“Shares”) and options to purchase an aggregate
of _______ common shares of Nayarit, which in accordance with the terms of the
Definitive Agreement, shall be exchangeable into options to purchase
_______ shares of common stock of the Company (the “Underlying
Shares”, together with the
Shares, the “Locked-Up
Shares”), each on the basis
of 0.134048 shares of common stock of the Company for each one common share of
Nayarit.
In order
to induce the Company to consummate the transactions contemplated by the
Definitive Agreement, the undersigned hereby agrees that, during the Lock-Up
Period (which is defined herein) the undersigned: (a) will not, directly or
indirectly, on his, her or its own behalf, or on behalf of entities, family
members or trusts affiliated with or controlled by him, offer, sell, agree to
offer or sell, solicit offers to purchase, grant any call option or purchase any
put option with respect to, pledge, borrow or otherwise dispose of the Locked-Up
Shares, and (b) will not establish or increase any “put equivalent position” or
liquidate or decrease any “call equivalent position” with respect to any of the
Locked-Up Shares (in each case within the meaning of Section 16 of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder), or otherwise enter into any swap, derivative or other
transaction or arrangement that transfers to another, in whole or in part, any
economic consequence of ownership of the Locked-Up Shares, whether or not such
transaction is to be settled by delivery of Locked-Up Shares, other securities,
cash or other consideration. For purposes of this agreement, “Lock-Up Period” shall mean a
period of six (6) months from the Closing Date (as defined in the Definitive
Agreement).
The
undersigned hereby authorizes the Company during the Lock-Up Period to cause any
transfer agent for the Closing Stock Consideration to decline to transfer, and
to note stop transfer restrictions on the stock register and other records
relating to, the Locked-Up Shares and to note stop transfer restrictions on the
stock register and other records relating to the Locked-Up Shares.
The
undersigned hereby further agrees that during the Lock-Up Period the undersigned
will not: (x) file or participate in the filing with the Securities and Exchange
Commission of any registration statement, or circulate or participate in the
circulation of any preliminary or final prospectus or other disclosure document
with respect to any proposed offering or sale of the Closing Stock
Consideration, and (y) exercise any rights the undersigned may have to require
registration with the Securities and Exchange Commission of any proposed
offering or sale of the Closing Stock Consideration.
1
Notwithstanding
the foregoing, and subject to the conditions below, the undersigned may transfer
the Locked-Up Shares in the transactions described in clauses (i) through (vi)
below without the prior written consent of the Company, provided that (1) the
Company receives a signed lock-up agreement for the balance of the Lock-Up
Period from each donee, trustee, distributee, or transferee, as the case may be,
(2) any such transfer shall not involve a disposition for value, (3) such
transfers are not required to be reported in any public report or filing with
the Securities and Exchange Commission, or otherwise during the Lock-Up Period,
and (4) the undersigned does not otherwise voluntarily effect any public filing
or report regarding such transfers during the lock-up period:
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(i)
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as
a bona fide gift or gifts; or
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(ii)
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to
any trust for the direct or indirect benefit of the undersigned or the
immediate family of the undersigned;
or
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(iii)
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as
a distribution to members, partners or stockholders of the undersigned;
or
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(iv)
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to
the undersigned’s affiliates or to any investment fund or other entity
controlled or managed by the undersigned, provided that such affiliate,
investment fund or other entity controlled or managed by the undersigned
shall not be formed for the sole purpose of transferring, for value or
otherwise, the Locked-Up Shares; or
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(v)
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to
any beneficiary of the undersigned pursuant to a will or other
testamentary document or applicable laws of descent;
or
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(vi)
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to
any corporation, partnership, limited liability company or other entity
all of the beneficial ownership interests of which are held by the
undersigned or immediate family of the undersigned,
or
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(vii)
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pursuant
to a bona fide third party take-over bid, merger, plan of arrangement or
other transaction where an offer is made to all holders of shares of
common stock of the Company in order to allow the undersigned
to have the same ability to participate as any other holder of shares of
common stock of the Company.
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For
purposes of this Agreement, “immediate family” shall mean any relationship by
blood, marriage or adoption, not more remote than first cousin.
Furthermore,
notwithstanding the foregoing, during the Lock-Up Period, the undersigned may sell shares of common stock of the Company purchased by the
undersigned on the open market following the consummation of the Definitive
Agreement if and only if
(i) such sales are not required to be reported in any public report or filing
with the Securities
Exchange Commission or
otherwise, and (ii) the undersigned does not
otherwise voluntarily effect any public filing or report regarding such
sales.
The
undersigned hereby represents and warrants to the Company that the undersigned
has full power and authority to enter into this Agreement and that this
Agreement constitutes the legal, valid and binding obligation of the
undersigned, enforceable in accordance with its terms. Upon request,
the undersigned will execute any additional documents necessary in connection
with enforcement hereof. Any obligations of the undersigned shall be
binding upon the successors and assigns of the undersigned from the date first
above written.
This
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware, without regard to the conflicts of laws principles
thereof. Delivery of a signed copy of this letter by facsimile
transmission shall be effective as delivery of the original hereof.
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Very
truly yours,
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| [Name] |
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