Document:

Exhibit
      10.1

    

    THIS
      PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT RELATES TO AN OFFERING OF SECURITIES
      IN
      AN OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT U.S. PERSONS (AS DEFINED HEREIN)
      PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
      AMENDED (THE “1933 ACT”). 

     

    NONE
      OF THE SECURITIES TO WHICH THIS PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT (THE
      “SUBSCRIPTION AGREEMENT”) RELATES HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR
      ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY BE OFFERED
      OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR TO U.S. PERSONS (AS
      DEFINED HEREIN) EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER
      THE 1933 ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933
      ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
      TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN
      ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING
      TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN ACCORDANCE
      WITH THE 1933 ACT.

     

    CONFIDENTIAL

    PRIVATE
      PLACEMENT SUBSCRIPTION AGREEMENT

    (Offshore
      Subscribers)

    

    
      	
              TO:

            	
              TraceGuard
                Technologies, Inc. (the “Company”)

            
	 	
              330
                Madison Avenue

            
	 	
              New
                York

            
	 	
              NY
                10017

            

    

     

    Purchase
      of Shares and Warrants 

     

    1. Subscription

     

    1.1 The
      undersigned (the “Subscriber”) hereby irrevocably subscribes for and agrees to
      purchase from the Company (the “Offering”), on the basis of the representations
      and warranties and subject to the terms and conditions set forth in this
      agreement (the “Subscription Agreement”), _____ Units at the price of US$0.40
      per Unit (the “Subscription Price”), for a total purchase price of US$_____,
      each “Unit” consisting of one share of the Company's common stock (a “Share”),
      and one warrant (a “Warrant”) exercisable for three years from the applicable
      Payment Date (as defined below) to purchase one additional Share (a “Warrant
      Share”) at a price of US$0.70 per Share, for the aggregate total purchase price
      of US$______ (the “Subscription Proceeds”). 

     

    1.2 As
      set
      forth in Section 2.1 herein, Subscriber shall pay the Subscription Proceeds
      to
      the Company in three instalments with each instalment equal to 33.3%, 33.3%,
      and
      33.3% respectively of the Subscription Proceeds. In connection therewith, and
      within 14 Business Days of such Payment Date, the Company shall deliver to
      Subscriber a number of Units equal to the aggregate Units purchased hereunder,
      for each instalment.

     

    1.3 Upon
      acceptance of this Subscription Agreement by the Company, Subscriber
      acknowledges and agrees that Subscriber shall purchase the Units purchased
      hereunder pursuant to the terms of this Subscription Agreement. Subscriber
      covenants to make the applicable payment on each Payment Date.

    

    2. Payment

     

    2.1 The
      Subscriber shall pay the Subscription Proceeds to the Company in equal
      instalments in the following manner: (1) on or before January 20, 2008, the
      Subscriber shall pay to the Company 33.3% of the Subscription Proceeds, (the
      “First Payment Date); (2) on the one month anniversary of the First Payment
      Date, the Subscriber shall pay to the Company 33.3% of the Subscription Proceeds
      (the date of such payment, the “Second Payment Date”); and (3) on the two month
      anniversary of the First Payment Date, the Subscriber shall pay to the Company
      33.3% of the Subscription Proceeds (the date of such payment, the “Third Payment
      Date,” and, collectively with the First Payment Date and the Second Payment
      Date, each such date, a “Payment Date”).

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    2.2 Upon
      the
      First, Second and Third Payment Date the undersigned agrees to pay each
      instalment of the Subscription Proceeds by wire transfer to:

    

    
      	
              Name:
                

            	
              TraceGuard
                Technologies Inc.

            
	
              Bank:
                

            	 

	
              Account:
                

            	 

	
              SWIFT/ABA:
                

            	 

    

     

    2.3 The
      Subscriber acknowledges and agrees that this Subscription Agreement, the
      Subscription Proceeds and any other documents delivered in connection herewith
      will be held on behalf of the Company until acceptance or rejection. In the
      event that this Subscription Agreement is not accepted by the Company for
      whatever reason, which the Company expressly reserves the right to do, within
      30
      days of the delivery of an executed Subscription Agreement by the Subscriber,
      this Subscription Agreement, the Subscription Proceeds (without interest
      thereon) and any other documents delivered in connection herewith will be
      returned to the Subscriber at the address of the Subscriber as set forth in
      this
      Subscription Agreement.

    

    3. Documents
      Required from Subscriber

     

    3.1 The
      Subscriber must complete, sign and return to the Company an executed copy of
      this Subscription Agreement.

     

    3.2 The
      Subscriber shall complete, sign and return to the Company as soon as possible,
      on request by the Company, any documents, questionnaires, notices and
      undertakings as may be required by regulatory authorities, and applicable
      law.

    

    4. Closing

     

    4.1 If
      the
      Subscription Agreement and the Subscription are accepted by the Company, the
      closing of each instalment of the offering of the Units (the “Closing”) shall
      occur on each applicable Payment Date. 

     

    5. Acknowledgements
      of Subscriber

     

    5.1 The
      Subscriber acknowledges and agrees that:

     

    
      	 	
              (a)

            	
              none
                of the Shares, Warrants or Warrant Shares have been registered under
                the
                Securities Act of 1933, as amended (“1933 Act”), or under any state
                securities or “blue sky” laws of any state of the United States, and,
                unless so registered, may not be sold or transferred except in accordance
                with the provisions of Regulation S, promulgated under the 1933 Act
                (“Regulation S”), pursuant to an effective registration statement under
                the 1933 Act, or pursuant to an exemption from, or in a transaction
                not
                subject to, the registration requirements of the 1933 Act and in
                each case
                in accordance with applicable state and local securities
                laws;

            
	 	 	 
	 	
              (b)

            	
              the
                Subscriber acknowledges that the Company has not undertaken, and
                will have
                no obligation, to register any of the Shares, Warrants or Warrant
                Shares
                under the 1933 Act;

            
	 	 	 
	 	
              (c)

            	
              the
                decision to execute this Subscription Agreement and acquire the Units
                hereunder has not been based upon any oral or written representation
                as to
                fact or otherwise made by or on behalf of the Company, and such decision
                is based entirely upon a review of the information filed by the Company
                with the Unites States Securities and Exchange Commission (the “SEC
                Filings”);

            

    

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

    
      	 	
              (d)

            	
              no
                securities commission or similar regulatory authority has reviewed
                or
                passed on the merits of the Units;

            
	 	 	 
	 	
              (e)

            	
              there
                are risks associated with an investment in the Units, as described
                in the
                SEC Filings;

            
	 	 	 
	 	
              (f)

            	
              the
                Subscriber has not acquired the Units as a result of, and will not
                itself,
                directly or indirectly, engage in any “directed selling efforts” (as
                defined in Regulation S) in the United States in respect of the Units
                which would include any activities undertaken for the purpose of,
                or that
                could reasonably be expected to have the effect of, conditioning
                the
                market in the United States for the resale of the Units; provided,
                however, that the Subscriber may sell or otherwise dispose of the
                Units
                pursuant to registration thereof under the 1933 Act, pursuant to
                Regulation S, or under an exemption from such registration
                requirements;

            
	 	 	 
	 	
              (g)

            	
              the
                Subscriber and the Subscriber's advisor(s) have had a reasonable
                opportunity to ask questions of and receive answers from the Company
                in
                connection with the purchase of the Units hereunder, and to obtain
                additional information, to the extent possessed or obtainable without
                unreasonable effort or expense, necessary to verify the accuracy
                of the
                information about the Company;

            
	 	 	 
	 	
              (h)

            	
              the
                Subscriber will indemnify and hold harmless the Company and, where
                applicable, its directors, officers, employees, agents, advisors
                and
                shareholders, from and against any and all loss, liability, claim,
                damage
                and expense whatsoever (including, but not limited to, any and all
                fees,
                costs and expenses whatsoever reasonably incurred in investigating,
                preparing or defending against any claim, lawsuit, administrative
                proceeding or investigation whether commenced or threatened) arising
                out
                of or based upon any representation or warranty of the Subscriber
                contained herein or in any document furnished by the Subscriber to
                the
                Company in connection herewith being untrue in any material respect
                or any
                breach or failure by the Subscriber to comply with any covenant or
                agreement made by the Subscriber to the Company in connection
                therewith;

            
	 	 	 
	 	
              (i)

            	
              the
                Shares are not listed on any stock exchange or automated dealer quotation
                system (other than the U.S. Over the Counter Bulletin Board (“OTC BB”))
                and no representation has been made to the Subscriber that any of
                the
                Shares will become listed on any stock exchange or automated dealer
                quotation system (other than OTC BB);

            
	 	 	 
	 	
              (j)

            	
              the
                Company will refuse to register any transfer of the Units not made
                in
                accordance with the provisions of Regulation S, pursuant to an effective
                registration statement under the 1933 Act or pursuant to an available
                exemption from the registration requirements of the 1933 Act and
                in
                accordance with applicable state and local securities
                laws;

            
	 	 	 
	 	
              (k)

            	
              the
                statutory and regulatory basis for the exemption claimed for the
                offer of
                the Units, although in technical compliance with Regulation S, would
                not
                be available if the offering is part of a plan or scheme to evade
                the
                registration provisions of the 1933 Act or any applicable state and
                provincial securities laws;

            
	 	 	 
	 	
              (l)

            	
              the
                Subscriber has been advised by the Company to consult the Subscriber's
                own
                legal, tax and other advisors with respect to the merits and risks
                of an
                investment in the Units and with respect to applicable resale
                restrictions, and the Subscriber is solely responsible (and the Company
                is
                not in any way responsible) for compliance with:

            
	 	 	 
	 	 	
              (i)

            	
              any
                applicable laws of the jurisdiction in which the Subscriber is resident
                in
                connection with the distribution of the Units hereunder,
                and

            
	 	 	 	 
	 	 	
              (ii)

            	
              applicable
                resale restrictions; and

            
	 	 	 	 
	 	
              (m)

            	
              this
                Subscription Agreement is not enforceable by the Subscriber unless
                it has
                been accepted by the Company.

            

    

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    6. Representations,
      Warranties and Covenants of the Subscriber

     

    6.1 The
      Subscriber hereby represents and warrants to and covenants with the Company
      (which representations, warranties and covenants shall survive the Closing)
      that:

     

    
      	 	
              (a)

            	
              the
                Subscriber has the legal capacity and competence to enter into and
                execute
                this Subscription Agreement and to take all actions required pursuant
                hereto;

            
	 	 	 
	 	
              (b)

            	
              the
                entering into of this Subscription Agreement and the transactions
                contemplated hereby do not result in the violation of any of the
                terms and
                provisions of any law applicable to the Subscriber or of any agreement,
                written or oral, to which the Subscriber may be a party or by which
                the
                Subscriber is or may be bound;

            
	 	 	 
	 	
              (c)

            	
              the
                Subscriber has duly executed and delivered this Subscription Agreement
                and
                it constitutes a valid and binding agreement of the Subscriber enforceable
                against the Subscriber in accordance with its terms;

            
	 	 	 
	 	
              (d)

            	
              the
                Subscriber is acquiring the Units for such Subscriber's own account
                and/or
                benefit for investment and not as a nominee and not with a view to
                the
                distribution thereof.

            
	 	 	 
	 	
              (e)

            	
              the
                Subscriber is not acquiring the Units for the account or benefit
                of,
                directly or indirectly, any U.S. Person;

            
	 	 	 
	 	
              (f)

            	
              the
                Subscriber is not a U.S. Person (as defined in Regulation
                S);

            
	 	 	 
	 	
              (g)

            	
              the
                Subscriber is resident in the jurisdiction set out under the heading
“Name
                and Address of Subscriber” on the signature page of this Subscription
                Agreement;

            
	 	 	 
	 	
              (h)

            	
              the
                sale of the Units to the Subscriber as contemplated in this Subscription
                Agreement complies with or is exempt from the applicable securities
                legislation of the jurisdiction of residence of the
                Subscriber;

            
	 	 	 
	 	
              (i)

            	
              the
                Subscriber is acquiring the Units for investment only and not with
                a view
                to resale or distribution and, in particular, it has no intention
                to
                distribute either directly or indirectly any of the Units in the
                United
                States or to U.S. Persons;

            
	 	 	 
	 	
              (j)

            	
              the
                Subscriber is outside the United States at the time of the offer
                and sale
                of the Units and when receiving and executing this Subscription Agreement
                and is acquiring the Units as principal for the Subscriber's own
                account,
                for investment purposes only, and not with a view to, or for, resale,
                distribution or fractionalisation thereof, in whole or in part, and
                no
                other person has a direct or indirect beneficial interest in such
                Units;

            
	 	 	 
	 	
              (k)

            	
              the
                Subscriber is not an underwriter of, or dealer in, the common shares
                of
                the Company, nor is the Subscriber participating, pursuant to a
                contractual agreement or otherwise, in the distribution of the
                Units;

            
	 	 	 
	 	
              (l)

            	
              the
                Subscriber (i) is able to fend for him/her/itself in the Subscription;
                (ii) has such knowledge and experience in business matters as to
                be
                capable of evaluating the merits and risks of its prospective investment
                in the Units; and (iii) has the ability to bear the economic risks
                of its
                prospective investment and can afford the complete loss of such
                investment;

            
	 	 	 
	 	
              (m)

            	
              the
                Subscriber is not aware of any public solicitation or advertisement
                of an
                offer in connection with any of the Units; and

            
	 	 	 
	 	
              (n)

            	
              no
                person has made to the Subscriber any written or oral
                representations:

            

    

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    
      	 	 	
              (i)

            	
              that
                any person will resell or repurchase any of the Units;

            
	 	 	 	 
	 	 	
              (ii)

            	
              that
                any person will refund the purchase price of any of the
                Units;

            
	 	 	 	 
	 	 	
              (iii)

            	
              as
                to the future price or value of any of the Units; or

            
	 	 	 	 
	 	 	
              (iv)

            	
              that
                any of the Shares will be listed and posted for trading on any stock
                exchange or automated dealer quotation system or that application
                has been
                made to list and post any of the Shares of the Company on any stock
                exchange or automated dealer quotation system; except that the Company’s
                common shares are currently approved for trading on OTC
                BB.

            
	 	 	 	 
	 	
              (o)

            	
              The
                Subscriber will not engage in hedging transactions with respect to
                the
                Units unless in compliance with the 1933
                Act.

            

    

    

    7. Acknowledgement
      and Waiver

     

    7.1 The
      Subscriber has acknowledged that the decision to purchase the Units was solely
      made on the basis of information contained in the SEC Filings, which is publicly
      available and filed on EDGAR. The Subscriber hereby waives, to the fullest
      extent permitted by law, any rights of withdrawal, rescission or compensation
      for damages to which the Subscriber might be entitled in connection with the
      distribution of the Units.

    

    8. Legending
      of Subject Units

     

    8.1 The
      Subscriber hereby acknowledges that upon the issuance thereof, and until such
      time as the same is no longer required under the applicable securities laws
      and
      regulations, the certificates representing any of the Shares, Warrants and
      Warrant Shares will bear a legend in substantially the following
      form:

     

    
      
        “THE
          SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN AN OFFSHORE
          TRANSACTION TO PERSONS WHO ARE NOT U.S. PERSONS (AS DEFINED IN REGULATION
          S
          PROMULGATED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”))
          PURSUANT TO REGULATION S. ACCORDINGLY, THE SECURITIES REPRESENTED BY THIS
          CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE ACT, OR ANY U.S. STATE SECURITIES
          LAWS, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE
          DISPOSED OF (I) EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION
          S, (II)
          PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR (III)
          PURSUANT
          TO AN EXEMPTION FROM THE ACT WHICH IS CONFIRMED IN AN OPINION OF COMPANY
          COUNSEL. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED
          BY THIS CERTIFICATE MAY NOT BE CONDUCTED UNLESS IN ACCORDANCE WITH THE
          ACT.”

      

    

     

    8.2 The
      Subscriber hereby acknowledges and agrees to the Company making a notation
      on
      its records or giving instructions to the registrar and transfer agent of the
      Company in order to implement the restrictions on transfer set forth and
      described in this Subscription Agreement. 

    

    9. Anti-Dilution
      Protection

     

    9.1 In
      the
      event the Company issues Shares for cash consideration pursuant to a financing
      primarily for capital raising purposes during the Anti-Dilution Protection
      Period (as defined below) for a per share price that is less than the
      Subscription Price in effect immediately prior to such sale, then, and in each
      such case, the Subscription Price shall be adjusted, as of the close of business
      on the date of such sale, to the amount obtained by multiplying such
      Subscription Price by a fraction, the numerator of which shall be the sum of
      (x)
      the total number of Shares outstanding (exclusive of any treasury shares)
      immediately prior to such sale multiplied by the Subscription Price on the
      date
      of such sale plus (y) the consideration received by the Company upon such sale,
      and the denominator of which shall be the product of (A) the total number of
      Shares outstanding (exclusive of treasury shares) immediately after such sale
      multiplied by (B) the Subscription Price on the date of such sale. Such adjusted
      Subscription Price shall hereinafter be referred to as the “Adjusted
      Subscription Price”. For purposes of this Section 9, if the Company issues debt
      securities or preferred stock, in each case convertible into Shares with a
      conversion price less than the Subscription Price, the number of Shares issuable
      upon the conversion of such debt securities or preferred stock shall be deemed
      to have been issued at such conversion price on the date of issuance of such
      debt securities or preferred stock and the Subscription Price shall be adjusted
      in accordance with the provisions hereof.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    9.2 The
      Company shall within ten (10) Business Days after the close of such sale, issue
      to each Subscriber a number of Shares equal to (a) the Subscription Proceeds
      divided by the Adjusted Subscription Price, minus (b) the Subscription Proceeds
      divided by the Subscription Price in effect immediately prior to such sale.
      For
      purposes of clarity, in connection with the Adjusted Subscription Price and
      additional issuances of Shares in connection therewith, the Company shall in
      no
      event be obligated to issue additional Warrants to the Subscriber.

     

    9.3 For
      purposes of this Section 9, the term “Anti-Dilution Protection Period” means a
      period of twelve (12) months after the date of this Agreement.

     

    9.4 For
      sake
      of clarity, a financing for cash to a strategic investor shall not be deemed
      to
      be subject to Section 9. Any issuance for property, services, intangible rights,
      or other non-cash consideration shall not be deemed to be subject to Section
      9.

    

    10. Additional
      Investment Right

     

    10.1
      At
      any
      time on or prior to February 20, 2008, and upon written notice from Subscriber
      to the Company, Subscriber shall have the right, but not the obligation, to
      purchase from the Company a number of Units equal to 100% of the Units purchased
      hereunder. Such additional purchase of Units by the Subscriber shall occur
      pursuant to a Private Placement Subscription Agreement with terms identical
      (including with respect to Payment Dates) to the terms set forth in this
      Subscription Agreement, mutatis
      mutandis,
      which
      Private Placement Subscription Agreement shall be provided by the Company to
      Subscriber as soon as possible using commercially reasonable
      efforts.

    

    11. Costs

     

    11.1 The
      Subscriber acknowledges and agrees that all costs and expenses incurred by
      the
      Subscriber (including any fees and disbursements of any special counsel retained
      by the Subscriber) relating to the purchase of the Units shall be borne by
      the
      Subscriber.

    

    12. Governing
      Law

     

    12.1 This
      Subscription Agreement is governed by the laws of the state of Nevada. The
      Subscriber, in its personal or corporate capacity and, if applicable, on behalf
      of each beneficial purchaser for whom it is acting, irrevocably consents to
      the
      jurisdiction of the courts of the state of New York to resolve any disputes
      arising hereunder.

    

    13. Survival

     

    13.1 This
      Subscription Agreement, including without limitation the representations,
      warranties and covenants contained herein, shall survive and continue in full
      force and effect and be binding upon the parties hereto notwithstanding the
      completion of the purchase of the Units by the Subscriber pursuant
      hereto.

    

    14. Assignment

     

    14.1 This
      Subscription Agreement is not transferable or assignable.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    15. Severability

     

    15.1 The
      invalidity or unenforceability of any particular provision of this Subscription
      Agreement shall not affect or limit the validity or enforceability of the
      remaining provisions of this Subscription Agreement.

    

    16. Entire
      Agreement

     

    16.1 Except
      as
      expressly provided in this Subscription Agreement and in the agreements,
      instruments and other documents contemplated or provided for herein, this
      Subscription Agreement contains the entire agreement between the parties with
      respect to the sale of the Units and there are no other terms, conditions,
      representations or warranties, whether expressed, implied, oral or written,
      by
      statute or common law, by the Company or by anyone else.

    

    17. Notices

    

    17.1
      All
      notices and other communications hereunder shall be in writing and shall be
      deemed to have been duly given if mailed or transmitted by any standard form
      of
      telecommunication. Notices to the Subscriber shall be directed to the address
      on
      the signature page of this Subscription Agreement and all notices to the Company
      shall be delivered by facsimile to: TraceGuard Technologies, Inc., 330 Madison
      Avenue New York, NY 10017, Attention: David Ben-Yair, Chief Financial Officer,
      facsimile number: 011-972-57-797-5364, with a copy to Moses & Singer LLP,
      405 Lexington Avenue, 12th
      Floor,
      New York, NY 10174, Attention: Allan Grauberd, Esq., facsimile number (917)
      206-4381.

     

    18. Counterparts
      and Electronic Means

     

    18.1 This
      Subscription Agreement may be executed in any number of counterparts, each
      of
      which, when so executed and delivered, shall constitute an original and all
      of
      which together shall constitute one instrument. Delivery of an executed copy
      of
      this Subscription Agreement by electronic facsimile transmission or other means
      of electronic communication capable of producing a printed copy will be deemed
      to be execution and delivery of this Subscription Agreement as of the date
      hereinafter set forth.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    IN
      WITNESS WHEREOF
      the
      Subscriber has duly executed this Subscription Agreement as of the date of
      acceptance by the Company.

     

    
      	 

	
              (Name
                of Subscriber – Please type or print)

            
	 
	 

	
              (Signature
                and, if applicable, Office)

            
	 
	 

	
              (Address
                of Subscriber)

            
	 
	 

	
              (City,
                State or Province, Postal Code of Subscriber)

            
	 
	 

	
              (Country
                of Subscriber)

            

 

    A
      C C E P T A N C E

     

    The
      above-mentioned Subscription Agreement in respect of the Units is hereby
      accepted by __________________.

     

    DATED
      at
      the __ day of December, 2007.

     

    TRACEGUARD
      TECHNOLOGIES, INC.

     

    
      	
              Per:

            	 

	 	
              David
                Ben Yair, Chief Financial Officer

            

    

     

    
      
         

      

      
        8Exhibit
      10.1

    

    SECOND
      AMENDMENT TO EXECUTIVE

    EMPLOYMENT
      AGREEMENT

    

    WHEREAS,
      effective May 1, 2006, CAPITAL GOLD CORPORATION, a Delaware corporation
      (“Employer”), and JOHN BROWNLIE, a Colorado resident (“Executive”), entered into
      an Executive Employment Agreement (the “Agreement”); 

    

    WHEREAS,
      effective August 29, 2007, Section 3(a) of the Agreement was amended;
      and

    

    WHEREAS,
      on
      November 13,
      2007,
      the Company’s Board of Directors, including all members of the Board’s
      Compensation Committee, determined to amend the Agreement, inter alia, to
      reflect the Executive’s promotion to Chief Operating Officer on February 7,
      2007, and to provide Executive with the same benefits and protections provided
      to the other executive officers of the Company in the event of a change in
      control of the Company;

    

    NOW,
      THEREFORE, to effectuate the foregoing changes, Employer and Executive agree:
      

    

    1. Section
      1
      of the Agreement is amended and, as amended, reads as follows:

    

    “1. Employment.
      Upon
      and subject to the terms provided herein, Employer agrees to employ Executive,
      and Executive hereby agrees to be employed by Employer, as Employer’s Chief
      Operating Officer, or other substantially similar position. Executive shall
      report to the President and Chief Executive Officer or such other supervisor
      as
      designated by the President and Chief Executive Officer of Employer. Executive
      shall perform such tasks commensurate with this position as may from time to
      time be assigned by Employer. In this regard, unless and until Executive is
      notified otherwise by Employer, Executive’s duties shall include, among other
      things, serving as the President of Minera Santa Rita, S.A. de C.V., a
      subsidiary of Employer incorporated in Mexico. Executive shall devote all
      business time, labor, skill, undivided attention and best ability to the
      performance of Executive’s duties hereunder in a manner which will faithfully
      and diligently further the business and interests of Employer. During the term
      of employment, Executive shall not directly or indirectly pursue any other
      business activity without the prior written consent of Executive’s supervisor,
      with the exception of passive personal investments not in breach of any other
      term or provision hereof. Executive agrees to travel to whatever extent is
      reasonably necessary in the conduct of Employer’s business, at Employer’s
      expense and pursuant to Employer’s standard policies and
      procedures.”

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    2. Section
      4
      of the Agreement is amended by amending subsection (e)(1) thereof and by adding
      a new subsection (i) thereto. As amended, Subsections (e)(1) and (i) of Section
      4 of the Agreement read as following:

    

    “4. Termination
      of Employment.
      Notwithstanding any other provision of this Agreement, Executive’s employment
      may be terminated as follows:

    ...

     

    (e) Without
      Cause. This
      Agreement may be terminated by Employer without Cause at any time, such
      termination to be effective thirty (30) days after Executive’s receipt of
      written notice from Employer; provided that
      Employer
      pays Executive each of the following:

     

    (1) Employer
      shall pay Executive severance payments in an amount equal to Executive’s base
      salary for twelve (12) months (the “Cash Severance Payments”). Such Cash
      Severance Payments shall be paid in equal monthly installments to Executive
      beginning
      in the month following Executive’s termination.
      In any
      event, Employer shall pay to Executive all accrued base salary, all accrued
      vacation time and any reasonable and necessary business expenses incurred by
      Executive in connection with his duties, all to the date of termination and
      payable in a lump sum,
      less
      applicable deductions and withholdings,
      as soon
      as administratively practicable following Executive’s termination. 

     

    ...

    

    (i) Termination
      Upon a Change of Control.
      In the
      event of a Termination Upon a Change of Control as defined in the Agreement
      Regarding Change In Control (“Change In Control Agreement”) attached hereto as
Exhibit A,
      Employer’s obligation to Executive shall be as set forth in the Change In
      Control Agreement.”

    

    3. All
      other
      terms of the Agreement remain the same.

    

    IN
      WITNESS WHEREOF, the parties have executed this amendment to the Agreement
      effective November 13, 2007. 

     

    
      	 	 	 
	 	
              EMPLOYER
                :

               

              CAPITAL
                GOLD CORPORATION

            
	 
 	 
 	 
 
	 	By:  	/s/ Gifford
              A. Dieterle
	 	
              
Gifford
              A. Dieterle, President
	 	 

      	 	 	 
	 	EXECUTIVE:
	 	 
	 	/s/ John Brownlie
	 	
              
John
              Brownlie
	 	 

    

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    EXHIBIT
      A

     

    AGREEMENT
      REGARDING

    CHANGE
      IN CONTROL

    

    THIS
      AGREEMENT (“Agreement”), is made and entered into as of the 13
      day of
      November, 2007 (the “Effective Date”) by and between Capital Gold Corporation
      (the “Company”) and John Brownlie (the “Executive”) 

    

    WITNESSETH
      THAT:

    

    WHEREAS,
      the Company considers it essential to the best interests of its stockholders
      to
      foster the continuous engagement of key management personnel, and the Board
      of
      Directors of the Company (the “Board”) recognizes that, as is the case with many
      publicly held corporations, a change in control might occur and that such
      possibility, and the uncertainty and questions which it may raise among
      management, may result in the departure or distraction of management personnel
      to the detriment of the Company and its stockholders; and

    

    WHEREAS,
      the Board has determined that appropriate steps should be taken to reinforce
      and
      encourage the continued attention and dedication of members of the Company’s
      management, including the Executive, to their engagement without distraction
      in
      the face of potentially disturbing circumstances arising from the possibility
      of
      a change in control of the Company;

    

    NOW,
      THEREFORE, to induce the Executive to remain engaged by the Company and in
      consideration of the premises and mutual covenants set forth herein, IT IS
      HEREBY AGREED by and between the parties as follows:

    

    1. AGREEMENT
      TERM. The initial “Agreement Term” shall begin on the Effective Date and shall
      continue through December 31, 2009. As of December 31, 2009, and as of each
      December 31 thereafter, the Agreement Term shall extend automatically to the
      third anniversary thereof unless the Company gives 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 (as defined in Section
      7
      below), occurs during the Agreement Term, the Agreement Term shall continue
      through and terminate on the second anniversary of the date on which the Change
      in Control occurs.

     

    
      
         

      

      
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    2.
       ENTITLEMENT
      TO CHANGE IN CONTROL BENEFITS. The Executive shall be entitled to the Change
      in
      Control Benefits described in Section 3 hereof if the Executive’s engagement by
      the Company is terminated during the Agreement Term but after a Change in
      Control (i) by the Company for any reason other than Permanent Disability or
      Cause, (ii) by the Executive for Good Reason or (iii) 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. For purposes of this
      Agreement:

    

    (a) A
      termination of the Executive’s engagement shall be treated as a termination by
      reason of “Permanent Disability” only if, due to a mental or physical
      disability, the Executive is absent from the performance of services for the
      Company for a period of at least twelve consecutive months and fails to return
      to the performance of services within 30 days after receipt of a written demand
      by the Company to do so.

    

    (b) The
      term
“Cause” shall mean the willful engaging by the Executive in illegal conduct or
      gross misconduct which is demonstrably and materially injurious to the Company.
      For purposes of this Agreement, no act, or failure to act, on the Executive’s
      part shall be deemed “willful” unless done, or omitted to be done, by the
      Executive not in good faith and without reasonable belief that the Executive’s
      action or omission was in the best interest of the Company. Notwithstanding
      the
      foregoing, the Executive shall not be deemed to have been terminated for Cause
      unless and until the Company delivers to the Executive a copy of a resolution
      duly adopted by the affirmative vote of not less than three-quarters of the
      entire membership of the Board at a meeting of the Board called and held for
      such purpose (after reasonable notice to the Executive and an opportunity for
      the Executive, together with counsel, to be heard before the Board) finding
      that, in the good faith opinion of the Board, the Executive was guilty of
      conduct set forth above and specifying the particulars thereof in
      detail.

    

    (c) The
      term
“Good Reason” shall mean the occurrence of any of the following circumstances
      without the Executive’s express written consent: 

    

    (i)
      a
      significant adverse change in the nature, scope or status of the Executive’s
      position, authorities or services from those in effect immediately prior to
      the
      Change in Control, including, without limitation, if the Executive was,
      immediately prior to the Change in Control, an executive officer of a public
      company, the Executive ceasing to be an executive officer of a public
      company;

    

    (ii)
      the
      failure by the Company to pay the Executive any portion of the Executive’s
      current compensation, or to pay the Executive any portion of any installment
      of
      deferred compensation under any deferred compensation program of the Company,
      within seven days of the date such compensation is due; 

    

    (iii)
      a
      reduction in the Executive’s annual base compensation (or a material change in
      the frequency of payment) as in effect immediately prior to the Change in
      Control as the same may be increased from time to time;

    

    (iv) the
      failure by the Company to award the Executive an annual bonus in any year which
      is at least equal to the annual bonus awarded to the Executive for the year
      immediately preceding the year of the Change in Control;

    

    (v) the
      failure by the Company to award the Executive equity-based incentive
      compensation (such as stock options, shares of restricted stock, or other
      equity-based compensation) on a periodic basis consistent with the Company’s
      practices with respect to timing, value and terms prior to the Change in
      Control;

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    (vi) the
      failure of the Company to award the Executive incentive compensation of any
      nature based on attained milestones when such milestones are attained.

    

    (vii) the
      failure of the Company to obtain a satisfactory agreement from any successor
      to
      the Company to assume and agree to perform this Agreement as contemplated by
      Section 14.

    

    For
      purposes of any determination regarding the existence of Good Reason, any good
      faith determination by the Executive that Good Reason exists shall be
      conclusive.

    

    3. 
      CHANGE
      IN CONTROL BENEFITS. In the event of a termination of engagement entitling
      the
      Executive to benefits in accordance with Section 2, the Executive shall receive
      the following:

    

    (a) The
      Executive shall be entitled to a lump sum payment in cash no later than twenty
      business days after the Executive’s date of termination equal to the sum
      of:

    

    (i) an
      amount
      equal to three times the Executive’s base salary in effect on the date of the
      Change in Control or, or if greater, as in effect immediately prior to the
      date
      of termination; plus

    

    (ii) an
      amount
      equal to three times the Executive’s bonus award for the year immediately
      preceding the year of the Change in Control. 

    

    The
      amount payable under this paragraph (d) shall be inclusive of the amounts,
      if
      any, to which the Executive would otherwise be entitled or by law and shall
      be
      in addition to (and not inclusive of) any amount payable under any written
      agreement(s) directly between the Executive and the Company or any of its
      subsidiaries. 

    

    (b) The
      exercise price of all of the Company options owned by the Executive shall
      decrease to $0.01 per share.

    

    (c) The
      Company shall provide the Executive with outplacement services and tax and
      financial counseling suitable to the Executive’s position through the third
      anniversary of the date of the Executive’s termination of engagement, or, if
      earlier, the date on which the Executive becomes employed by another
      employer.

    

    4. MITIGATION.
      The Executive shall not be required to mitigate the amount of any payment
      provided for in this Agreement by seeking other engagement or otherwise. The
      Company shall not be entitled to set off against the amounts payable to the
      Executive under this Agreement any amounts owed to the Company by the Executive,
      any amounts earned by the Executive in other engagement after the Executive’s
      termination of engagement with the Company, or any amounts which might have
      been
      earned by the Executive in other engagement had the Executive sought such other
      engagement.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    5. MAKE-WHOLE
      PAYMENTS. If any payment or benefit to which the Executive (or any person on
      account of the Executive) is entitled, whether under this Agreement or
      otherwise, in connection with a Change in Control or the Executive’s termination
      of engagement (a “Payment”) constitutes a “parachute payment” within the meaning
      of section 280G of the Internal Revenue Code of 1986, as amended (the “Code”),
      and as a result thereof the Executive is subject to a tax under section 4999
      of
      the Code, or any successor thereto, (an “Excise Tax”), the Company shall pay to
      the Executive an additional amount (the “Make-Whole Amount”) which is intended
      to make the Executive whole for such Excise Tax. The Make-Whole Amount shall
      be
      equal to (i) the amount of the Excise Tax, plus (ii) the aggregate amount of
      any
      interest, penalties, fines or additions to any tax which are imposed in
      connection with the imposition of such Excise Tax, plus (iii) all income, excise
      and other applicable taxes imposed on the Executive under the laws of any
      Federal, state or local government or taxing authority by reason of the payments
      required under clauses (i) and (ii) and this clause (iii). 

    

    (a) For
      purposes of determining the Make-Whole Amount, the Executive shall be deemed
      to
      be taxed at the highest marginal rate under all applicable local, state, federal
      and foreign income tax laws for the year in which the Make-Whole Amount is
      paid.
      The Make-Whole Amount payable with respect to an Excise Tax shall be paid by
      the
      Company coincident with the Payment with respect to which such Excise Tax
      relates.

    

    (b)
       All
      calculations under this Section 5 shall be made initially by the Company and
      the
      Company shall provide prompt written notice thereof to the Executive to enable
      the Executive to timely file all applicable tax returns. Upon request of the
      Executive, the Company shall provide the Executive with sufficient tax and
      compensation data to enable the Executive or the Executive’s tax advisor to
      independently make the calculations described in subparagraph (a) above and
      the
      Company shall reimburse the Executive for reasonable fees and expenses incurred
      for any such verification.

    

    (c) If
      the
      Executive gives written notice to the Company of any objection to the results
      of
      the Company’s calculations within 60 days of the Executive’s receipt of written
      notice thereof, the dispute shall be referred for determination to independent
      tax counsel selected by the Company and reasonably acceptable to the Executive
      (“Tax Counsel”). The Company shall pay all fees and expenses of such Tax
      Counsel. Pending such determination by Tax Counsel, the Company shall pay the
      Executive the Make-Whole Amount as determined by it in good faith. The Company
      shall pay the Executive any additional amount determined by Tax Counsel to
      be
      due under this Section 5 (together with interest thereon at a rate equal to
      120%
      of the Federal short-term rate determined under section 1274(d) of the Code)
      promptly after such determination.

    

    (d) The
      determination by Tax Counsel shall be conclusive and binding upon all parties
      unless the Internal Revenue Service, a court of competent jurisdiction, or
      such
      other duly empowered governmental body or agency (a “Tax Authority”) determines
      that the Executive owes a greater or lesser amount of Excise Tax with respect
      to
      any Payment than the amount determined by Tax Counsel. 

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    (e) If
      a
      Taxing Authority makes a claim against the Executive which, if successful,
      would
      require the Company to make a payment under this Section 5, the Executive agrees
      to contest the claim with counsel reasonably satisfactory to the Company, on
      request of the Company subject to the following conditions:

    

    (i)
      The
      Executive shall notify the Company of any such claim within 10 days of becoming
      aware thereof. In the event that the Company desires the claim to be contested,
      it shall promptly (but in no event more than 30 days after the notice from
      the
      Executive or such shorter time as the Taxing Authority may specify for
      responding to such claim) request the Executive to contest the claim. The
      Executive shall not make any payment of any tax which is the subject of the
      claim before the Executive has given the notice or during the 30-day period
      thereafter unless the Executive receives written instructions from the Company
      to make such payment together with an advance of funds sufficient to make the
      requested payment plus any amounts payable under this Section 5 determined
      as if
      such advance were an Excise Tax, in which case the Executive will act promptly
      in accordance with such instructions.

    

    (ii)
      If
      the Company so requests, the Executive will contest the claim by either paying
      the tax claimed and suing for a refund in the appropriate court or contesting
      the claim in the United States Tax Court or other appropriate court, as directed
      by the Company; PROVIDED, HOWEVER, that any request by the Company for the
      Executive to pay the tax shall be accompanied by an advance from the Company
      to
      the Executive of funds sufficient to make the requested payment plus any amounts
      payable under this Section 5 determined as if such advance were an Excise Tax.
      If directed by the Company in writing the Executive will take all action
      necessary to compromise or settle the claim, but in no event will the Executive
      compromise or settle the claim or cease to contest the claim without the written
      consent of the Company; PROVIDED, HOWEVER, that the Executive may take any
      such
      action if the Executive waives in writing the Executive’s right to a payment
      under this Section 5 for any amounts payable in connection with such claim.
      The
      Executive agrees to cooperate in good faith with the Company in contesting
      the
      claim and to comply with any reasonable request from the Company concerning
      the
      contest of the claim, including the pursuit of administrative remedies, the
      appropriate forum for any judicial proceedings, and the legal basis for
      contesting the claim. Upon request of the Company, the Executive shall take
      appropriate appeals of any judgment or decision that would require the Company
      make a payment under this Section 5. Provided that Executive is in compliance
      with the provisions this section, the Company shall be liable for and indemnify
      the Executive against any loss in connection with, and all costs and expenses,
      including attorneys’ fees, which may be incurred as a result of, contesting the
      claim, and shall provide to the Executive within 30 days after each written
      request therefor by the Executive cash advances or reimbursement for all such
      costs and expenses actually incurred or reasonably expected to be incurred
      by
      the Executive as a result of contesting the claim.

     

    (f) Should
      a
      Tax Authority finally determine that an additional Excise Tax is owed, then
      the
      Company shall pay an additional Make-Whole Amount to the Executive in a manner
      consistent with this Section 5 with respect to any additional Excise Tax and
      any
      assessed interest, fines, or penalties. If any Excise Tax as calculated by
      the
      Company or Tax Counsel, as the case may be, is finally determined by a Tax
      Authority to exceed the amount required to be paid under applicable law, then
      the Executive shall repay such excess to the Company within 30 days of such
      determination; provided that such repayment shall be reduced by the amount
      of
      any taxes paid by the Executive on such excess which is not offset by the tax
      benefit attributable to the repayment.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    6. TERMINATION
      DURING POTENTIAL CHANGE IN CONTROL. If a Potential Change in Control (as defined
      in Section 8) occurs during the Agreement Term, and the Company terminates
      the
      Executive’s engagement for reasons other than Permanent Disability or Cause
      during such Potential Change in Control, the Executive shall be entitled to
      receive the benefits that the Executive would have received under Section 3,
      such benefits to be calculated based upon the Executive’s compensation prior to
      the actual termination of engagement but paid within 20 business days of the
      date of such termination. 

    

    7.
       CHANGE
      IN
      CONTROL. For purposes of this Agreement, a “Change in Control” shall be deemed
      to have occurred on the earliest of the following dates:

    

    (a) the
      date
      any Person is or becomes the Beneficial Owner, directly or indirectly, of
      securities of the Company representing 30% or more of the combined voting power
      of the Company’s then outstanding securities, excluding any Person who becomes
      such a Beneficial Owner in connection with a transaction described in clause
      (i)
      of paragraph (c) below; or 

    

    (b)
       the
      date
      on which the following individuals cease for any reason to constitute a majority
      of the number of directors then serving: individuals who, on the date hereof,
      constitute the Board and any new director (other than a director whose initial
      assumption of office is in connection with an actual or threatened election
      contest, including but not limited to a consent solicitation, relating to the
      election of directors of the Company) whose appointment or election by the
      Board
      or nomination for election by the Company’s stockholders was approved or
      recommended by a vote of at least two-thirds (2/3) of the directors then still
      in office who either were directors on the date hereof or whose appointment,
      election or nomination for election was previously so approved or recommended;
      or 

    

    (c)
       the
      date
      on which there is consummated a merger or consolidation of the Company or any
      direct or indirect subsidiary of the Company with any other corporation or
      other
      entity, other than (i) a merger or consolidation (A) immediately following
      which
      the individuals who comprise the Board immediately prior thereto constitute
      at
      least a majority of the board of directors of the Company, the entity surviving
      such merger or consolidation or, if the Company or the entity surviving such
      merger or consolidation is then a subsidiary, the ultimate parent thereof and
      (B) which results in the voting securities of the Company outstanding
      immediately prior to such merger or consolidation continuing to represent
      (either by remaining outstanding or by being converted into voting securities
      of
      the surviving entity or any parent thereof), in combination with the ownership
      of any trustee or other fiduciary holding securities under an employee benefit
      plan of the Company or any subsidiary of the Company, at least 50% of the
      combined voting power of the securities of the Company or such surviving entity
      or any parent thereof outstanding immediately after such merger or
      consolidation, or (ii) a merger or consolidation effected to implement a
      recapitalization of the Company (or similar transaction) in which no Person
      is
      or becomes the Beneficial Owner, directly or indirectly, of securities of the
      Company representing 30% or more of the combined voting power of the Company’s
      then outstanding securities; or

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    (d)
       the
      date
      on which the stockholders of the Company approve a plan of complete liquidation
      or dissolution of the Company or there is consummated an agreement for the
      sale
      or disposition by the Company of all or substantially all of the Company’s
      assets, other than a sale or disposition by the Company of all or substantially
      all of the Company’s assets to an entity, at least 50% of the combined voting
      power of the voting securities of which are owned by stockholders of the
      Company, in combination with the ownership of any trustee or other fiduciary
      holding securities under an employee benefit plan of the Company or any
      subsidiary of the Company, in substantially the same proportions as their
      ownership of the Company immediately prior to such sale.

    

    Notwithstanding
      the foregoing, a “Change in Control” shall not be deemed to have occurred by
      virtue of the consummation of any transaction or series of integrated
      transactions immediately following which the record holders of the common stock
      of the Company immediately prior to such transaction or series of transactions
      continue to have substantially the same proportionate ownership in an entity
      which owns all or substantially all of the assets of the Company immediately
      following such transaction or series of transactions. 

    

    For
      purposes of this Agreement: “Affiliate” shall have the meaning set forth in Rule
      12b-2 promulgated under Section 12 of the Exchange Act; “Beneficial Owner” shall
      have the meaning set forth in Rule 13d-3 under the Exchange Act; “Exchange Act”
shall mean the Securities Exchange Act of 1934, as amended from time to time;
      and “Person” shall have the meaning given in Section 3(a)(9) of the Exchange
      Act, as modified and used in Sections 13(d) and 14(d) thereof, except that
      such
      term shall not include (i) the Company or any of its subsidiaries, (ii) a
      trustee or other fiduciary holding securities under an employee benefit plan
      of
      the Company or any of its Affiliates, (iii) an underwriter temporarily holding
      securities pursuant to an offering of such securities, or (iv) a corporation
      owned, directly or indirectly, by the stockholders of the Company in
      substantially the same proportions as their ownership of stock of the
      Company.

    

    8.
       POTENTIAL
      CHANGE IN CONTROL. A “Potential Change in Control” shall exist during any period
      in which the circumstances described in paragraphs (a), (b), (c) or (d), below,
      exist (provided, however, that a Potential Change in Control shall cease to
      exist not later than the occurrence of a Change in Control): 

    

    (a) The
      Company enters into an agreement, the consummation of which would result in
      the
      occurrence of a Change in Control, provided that a Potential Change in Control
      described in this paragraph (a) shall cease to exist upon the expiration or
      other termination of all such agreements; 

    

    (b) Any
      Person (without regard to the exclusions set forth in subsections (i) through
      (iv) of such definition) publicly announces an intention to take or to consider
      taking actions the consummation of which would constitute a Change in Control;
      provided that a Potential Change in Control described in this paragraph (b)
      shall cease to exist upon the withdrawal of such intention, or upon a
      determination by the Board that there is no reasonable chance that such actions
      would be consummated;

     

    
      
         

      

      
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    (c)
       Any
      Person becomes the Beneficial Owner, directly or indirectly, of securities
      of
      the Company representing 20% or more of either the then outstanding shares
      of
      common stock of the Company or the combined voting power of the Company’s then
      outstanding securities; 

    

    (d)
       The
      Board
      adopts a resolution to the effect that, for purposes of this Agreement, a
      Potential Change in Control exists; provided that a Potential Change in Control
      described in this paragraph (d) shall cease to exist upon a determination by
      the
      Board that the reasons that gave rise to the resolution providing for the
      existence of a Potential Change in Control have expired or no longer exist.
      

    

    9.
       NONALIENATION.
      The interests of the Executive under this Agreement are not subject in any
      manner to anticipation, alienation, sale, transfer, assignment, pledge,
      encumbrance, attachment, or garnishment by creditors of the Executive or the
      Executive’s beneficiary.

    

    10. AMENDMENT.
      This Agreement may be amended or canceled only by mutual agreement of the
      parties in writing without the consent of any other person. So long as the
      Executive lives, no person, other than the parties hereto, shall have any rights
      under or interest in this Agreement or the subject matter hereof.

    

    11.
       APPLICABLE
      LAW. The provisions of this Agreement shall be construed in accordance with
      the
      laws of the State of New York, without regard to the conflict of law provisions
      of any state.

     

    12.
       SEVERABILITY.
      The invalidity or unenforceability of any provision of this Agreement will
      not
      affect the validity or enforceability of any other provision of this Agreement,
      and this Agreement will be construed as if such invalid or unenforceable
      provision were omitted (but only to the extent that such provision cannot be
      appropriately reformed or modified).

    

    13.
       WAIVER
      OF
      BREACH. No waiver by any party hereto of a breach of any provision of this
      Agreement by any other party, or of compliance with any condition or provision
      of this Agreement to be performed by such other party, will operate or be
      construed as a waiver of any subsequent breach by such other party of any
      similar or dissimilar provisions and conditions at the same or any prior or
      subsequent time. The failure of any party hereto to take any action by reason
      of
      such breach will not deprive such party of the right to take action at any
      time
      while such breach continues.

    

    14.
       SUCCESSORS,
      ASSUMPTION OF CONTRACT. This Agreement shall be binding upon and inure to the
      benefit of the Company and any successor of the Company. The Company will
      require any successor (whether direct or indirect, by purchase, merger,
      consolidation or otherwise) to all or substantially all of the business and/or
      assets of the Company to expressly assume and agree to perform this Agreement
      in
      the same manner and to the same extent that the Company would be required to
      perform it if no succession had taken place. This Agreement is personal to
      the
      Executive and may not be assigned by the Executive without the written consent
      of the Company. However, to the extent that rights or benefits under this
      Agreement otherwise survive the Executive’s death, the Executive’s heirs and
      estate shall succeed to such rights and benefits pursuant to the Executive’s
      will or the laws of descent and distribution; provided that the Executive shall
      have the right at any time and from time to time, by notice delivered to the
      Company, to designate or to change the beneficiary or beneficiaries with respect
      to such benefits. 

     

    
      
         

      

      
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    15.
       NOTICES.
      Notices and all other communications provided for in this Agreement shall be
      in
      writing and shall be delivered personally or sent by registered or certified
      mail, return receipt requested, postage prepaid (provided that international
      mail shall be sent via overnight or two-day delivery), or sent by facsimile
      or
      prepaid overnight courier to the parties at the addresses set forth below.
      Such
      notices, demands, claims and other communications shall be deemed
      given:

    

    (a) in
      the
      case of delivery by overnight service with guaranteed next day delivery, the
      next day or the day designated for delivery; 

    

    (b) in
      the
      case of certified or registered U.S. mail, five days after deposit in the U.S.
      mail; or 

    

    (c) in
      the
      case of facsimile, the date upon which the transmitting party received
      confirmation of receipt by facsimile, telephone or otherwise; 

    

    provided,
      however, that in no event shall any such communications be deemed to be given
      later than the date they are actually received. Communications that are to
      be
      delivered by the U.S. mail or by overnight service or two-day delivery service
      are to be delivered to the addresses set forth below:

    

    to
      the
      Company:

    

    Capital
      Gold Corporation

    76
      Beaver
      Street

    26th
      Floor

    New
      York,
      NY 10005

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    with
      a
      copy (which shall not constitute notice) to:

    

      Chief
      Financial Officer

      Capital
      Gold Corporation

    76
      Beaver
      Street

    26th
      Floor

    New
      York,
      NY 10005

    

    or
      to the
      Executive:

    

    John
      Brownlie

    6040
      Puma
      Ridge

    Littleton,
      Colorado 80124

    

    Each
      party, by written notice furnished to the other party, may modify the applicable
      delivery address, except that notice of change of address shall be effective
      only upon receipt.

    

    16. LEGAL
      AND
      ENFORCEMENT COSTS. The provisions of this Section 16 shall apply if it becomes
      necessary or desirable for the Executive to retain legal counsel or incur other
      costs and expenses in connection with enforcing any and all rights under this
      Agreement or any other compensation plan maintained by the Company;

    

    (a) The
      Executive shall be entitled to recover from the Company reasonable attorneys’
fees, costs and expenses incurred in connection with such enforcement or
      defense.

    

    (b) Payments
      required under this Section 16 shall be made by the Company to the Executive
      (or
      directly to the Executive’s attorney) promptly following submission to the
      Company of appropriate documentation evidencing the incurrence of such
      attorneys’ fees, costs, and expenses.

    

    (c) The
      Executive shall be entitled to select legal counsel; provided, however, that
      such right of selection shall not affect the requirement that any costs and
      expenses reimbursable under this Section 16 be reasonable.

    

    (d) The
      Executive’s rights to payments under this Section 16 shall not be affected by
      the final outcome of any dispute with the Company.

    

    17.
       SURVIVAL
      OF AGREEMENT. Except as otherwise expressly provided in this Agreement, the
      rights and obligations of the parties to this Agreement shall survive the
      termination of the Executive’s engagement with the Company. 

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    18.
       ENTIRE
      AGREEMENT. Except as otherwise provided herein, this Agreement constitutes
      the
      entire agreement between the parties concerning the subject matter hereof and
      supersedes all prior or contemporaneous agreements, between the parties relating
      to the subject matter hereof; provided, however, that nothing in this Agreement
      shall be construed to limit any policy or agreement that is otherwise applicable
      relating to confidentiality, rights to inventions, copyrightable material,
      business and/or technical information, trade secrets, solicitation of employees,
      interference with relationships with other businesses, competition, and other
      similar policies or agreement for the protection of the business and operations
      of the Company and the subsidiaries.

     

    19.
       COUNTERPARTS.
      This Agreement may be executed in two or more counterparts, any one of which
      shall be deemed the original without reference to the others.

    

    IN
      WITNESS THEREOF, the Executive has hereunto set his hand, and the Company has
      caused these presents to be executed in its name and on its behalf, and its
      corporate seal to be hereunto affixed on this 13th
      day of
      November, 2007, all as of the Effective Date.

    

    /s/
      John
      Brownlie                                       
   

    John
      Brownlie

    

    CAPITAL
      GOLD CORPORATION

    

    By:   /s/
      Gifford A.
      Dieterle                               

    Gifford
      A. Dieterle, President

    

    

    ATTEST:

    

    /s/
      Jeffrey W.
      Pritchard                            
   

    Jeffrey
      W. Pritchard, Secretary

    

    
      
         

      

      
        13

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