SEVERANCE AGREEMENT AND RELEASE

This SEVERANCE AGREEMENT AND RELEASE (this “Agreement”) is made between (i) JEFFREY W. PRITCHARD (“Employee”) and (ii) CAPITAL GOLD CORPORATION, a Delaware corporation (the “Company”).  Employee and the Company are referred to collectively as the “Parties” and individually as a “Party.”

WHEREAS, as further discussed below, Employee’s employment with the Company will end effective as of September 15, 2009;

WHEREAS, the Parties wish to resolve fully and finally any potential disputes regarding Employee’s employment with the Company and any other potential disputes between the Parties; and

WHEREAS, in order to accomplish this end, the Parties are willing to enter into this Agreement.

NOW THEREFORE, in consideration of the mutual promises and undertakings contained herein, the sufficiency of which is acknowledged by the Parties, the Parties to this Agreement agree as follows:

1.            Separation, Effective Date and Resignation as a Company Director .

(a)           Employee’s employment with the Company ends effective as of September 15, 2009.  This Agreement shall become effective (the “Effective Date”) on the eighth day after Employee’s execution of this Agreement, provided that employee has not revoked Employee’s acceptance pursuant to Section 6(g) below.

(b)           Employee, in consideration of the Severance Payments (as defined in Section 2(a) below), resigns as a director of the Company, effective on the Effective Date.

(c)           Employee, in consideration of the Severance Payments (as defined in Section 2(a) below), waives the 30 days notice requirement of Section 4(e) of the Employment Agreement and accepts a termination date effective as of September 15, 2009.

2.            Severance Payments and other matters .

(a)           After the expiration of the Effective Date, and on the express condition that Employee has not revoked this Agreement, the Company will pay Employee severance payments in an amount and in the manner set forth on Schedule A attached hereto and, by this reference, incorporated herein, less applicable withholdings and deductions (“Severance Payments”).  It is understood that the Severance Payments supersede and satisfy any such Severance Payment benefits due Employee pursuant to  Section 4 of Employee’s Employment Agreement effective January 1, 2009 with the Company (the “Employment Agreement”).  The Severance Payments will be mailed to Employee or direct deposited to an account designated by Employee pursuant to Schedule A.

(b)           Reporting of and withholding on any Severance Payment under this Section 2 for tax purposes shall be at the discretion of the Company in conformance with applicable tax laws.  If a claim is made against the Company for any additional tax or withholding in connection with or arising out of the Severance Payments pursuant to Section 2(a), Employee shall pay any such claim within thirty (30) days of being notified by the Company and agrees to indemnify the Company and hold it harmless against such claims, including but not limited to any taxes, attorneys’ fees, penalties or interest, which are or become due from the Company.

(c)           Employee agrees that Section 4(i)(iii) of the Employment Agreement is hereby terminated and that Employee shall have no rights thereunder and shall not seek indemnification from the Company should there be an issue or any tax assessed under Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), provided that the Company agrees to report any amount paid or payable to Employee as in compliance with, or not subject to, as applicable, Code Section 409A, in the absence of future guidance from the Internal Revenue Service or court decision to the contrary.

(d)           Employer hereby agrees that Employee shall be entitled to “Change in Control Benefits” as defined in Section 3 of the January 1, 2009 Agreement Regarding Change In Control between Employee and the Company (the “CC Agreement”) in the event that the Company enters into a transaction with [* * *] on or before December 31, 2009 and such transaction would be deemed a “Change in Control” as defined in the CC Agreement.  This subsection does not otherwise amend, change or revive any rights of Employee under the CC Agreement.

3.            General Release .

(a)           Employee, for himself and for his affiliates, successors, heirs, subrogees, assigns, principals, agents, partners, employees, associates, attorneys, and representatives, voluntarily, knowingly and intentionally releases and discharges the Company and its predecessors, successors, parents, subsidiaries, affiliates, and assigns and each of their respective officers, directors, principals, shareholders, agents, attorneys, board members, and employees from any and all claims, actions, liabilities, demands, rights, damages, costs, expenses, and attorneys’ fees (including but not limited to any claim of entitlement for attorneys’ fees under any contract, statute, or rule of law allowing a prevailing party or plaintiff to recover attorneys’ fees), of every kind and description from the beginning of time through the Effective Date (the “Released Claims”).

(b)           The Released Claims include but are not be limited to those which arise out of, relate to, or are based upon: (i) Employee’s employment with the Company or the termination thereof; (ii) statements, acts, or omissions by the Parties whether in their individual or representative capacities; (iii) express or implied agreements between the Parties (except as provided herein) and claims under any severance plan; (iv) any stock or stock option grant, agreement, or plan; (v) all federal, state, and municipal statutes, ordinances, and regulations, including, but not limited to, claims of discrimination based on race, national origin, sex, disability, whistleblower status, public policy, or any other characteristic of Employee under the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, the Americans with Disabilities Act, the Fair Labor Standards Act, the Equal Pay Act, Title VII of the Civil Rights Act of 1964 (as amended), the Employee Retirement Income Security Act of 1974, the Rehabilitation Act of 1973, the Worker Adjustment and Retraining Notification Act, or any other federal, state, or municipal law prohibiting discrimination or termination for any reason; (vi) state and federal common law; and (vii) any claim which was or could have been raised by Employee, including any claim that this Agreement was fraudulently induced.

4.            Unknown Facts .  This Agreement includes claims of every nature and kind, known or unknown, suspected or unsuspected.  Employee hereby acknowledges that he may hereafter discover facts different from, or in addition to, those which he now knows or believes to be true with respect to this Agreement, and he agrees that this Agr