UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE NOVEMBER 16, 2009.
EXHIBIT
4.2
UNLESS PERMITTED UNDER SECURITIES
LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE
NOVEMBER 16, 2009.
THIS SECURITY HAS NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE ''SECURITIES
ACT''), AND ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE
FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) AGREES
THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY,
EXCEPT (A) TO THE ISSUER; (B) TO PERSONS OTHER THAN U.S. PERSONS OUTSIDE THE
UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; (C)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 ADOPTED UNDER
THE SECURITIES ACT OR ANOTHER AVAILABLE EXEMPTION UNDER THE SECURITIES ACT (IF
AVAILABLE); OR (D) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, AND (2) AGREES THAT IT WILL, PRIOR TO ANY TRANSFER OF THIS
SECURITY PURSUANT TO SUBPARAGRAPH (B) OR (C) ABOVE, FURNISH TO THE ISSUER OR
ISSUER'S COUNSEL SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS MAY
BE REQUIRED BY THE ISSUER TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT
TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS ''UNITED STATES''
AND ''U.S. PERSON'' HAVE THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE
SECURITIES ACT. IN ANY CASE, THE HOLDER HEREOF WILL NOT, DIRECTLY OR INDIRECTLY,
ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD TO THIS SECURITY, EXCEPT AS
PERMITTED BY THE SECURITIES ACT.
THE OPTIONS REPRESENTED BY THIS
COMPENSATION OPTION CERTIFICATE HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE SECURITIES ACT. THE SECURITIES TO BE ISSUED UPON EXERCISE OF SUCH OPTIONS
WILL NOT BE INITIALLY REGISTERED AND MAY OR MAY NOT LATER BECOME REGISTERED FOR
RESALE UNDER THE SECURITIES ACT. NEITHER ANY OPTION REPRESENTED BY
THIS COMPENSATION OPTION CERTIFICATE NOR ANY SECURITIES ISSUED UPON EXERCISE OF
SUCH OPTION MAY BE EXERCISED BY OR ON BEHALF OF ANY U.S. PERSON, AS SUCH TERM IS
DEFINED IN REGULATION S PROMULGATED PURSUANT TO THE SECURITIES ACT, UNLESS
REGISTERED UNDER THE SECURITIES ACT OR AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE.
COMPENSATION OPTION TO PURCHASE COMMON
SHARES OF
APOLLO GOLD
CORPORATION
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Compensation Option Certificate
No.:
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CO-2009/02 |
No. of Common Shares under Option:
274,166
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For value received, Apollo Gold
Corporation (the "Corporation") hereby grants to Blackmont Capital
Inc., Brookfield Place, ▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇ (the "Holder"), the right and option, subject to the
terms and conditions set forth in this compensation option certificate (the
"Compensation Option
Certificate"), to purchase
from the Corporation, up to 274,166 common shares of the Corporation (the
"Common
Shares") at an exercise
price of $0.45 per Common Share (the "Exercise
Price") at any time and
from time to time up to 4:00 p.m. (Toronto time) on July 15, 2011 (the "Expiry
Time"), upon and subject to
the terms and conditions set forth herein.
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1.
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Definitions
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In this Compensation Option Certificate,
unless there is something in the subject matter or context inconsistent
therewith, the following terms shall have the following meanings
respectively:
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(a)
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"AMEX" means the NYSE Amex
LLC;
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(b)
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"Business
Day" means any day
other than a Saturday, Sunday, statutory or civic holiday or a day on
which the principal banking institutions are closed in the City of
Toronto, Ontario or the State of
Colorado;
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(c)
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"Current Market
Price" of the Common
Shares at any date means the price per Common Share equal to the weighted
average price at which the Common Shares have traded on the TSX or, if the
Common Shares are not then listed on the TSX, on such other Canadian stock
exchange on which the Common Shares trade as may be selected by the
directors of the Corporation for such purpose or, if the Common Shares are
not then listed on any Canadian stock exchange, in the over-the-counter
market, during the period of any twenty consecutive trading days ending
not more than five (5) Business Days before such date; provided that the
weighted average price shall be determined by dividing the aggregate sale
price of all Common Shares sold on the said exchange or market, as the
case may be, during the said twenty consecutive trading days by the total
number of Common Shares so sold; and provided further that if the Common
Shares are not then listed on any Canadian stock exchange or traded in the
over-the counter market, then the Current Market Price shall be determined
by such firm of independent chartered accountants as may be selected by
the directors of the
Corporation;
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(d)
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"Equity
Shares" means the
Common Shares and any shares of any other class or series of the
Corporation which may from time to time be authorized for issue if by
their terms such shares confer on the holders thereof the right to
participate in the distribution of assets upon the voluntary or
involuntary liquidation, dissolution or winding up of the Corporation
beyond a fixed sum or a fixed sum plus accrued
dividends;
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(e)
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"Holder" means the registered holder of
this Compensation Option Certificate or any additional Compensation Option
Certificates issued by the Corporation pursuant to the terms
hereof;
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(f)
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"Options" means the compensation options
to purchase Common Shares, having the attributes and issued pursuant to
the terms and provisions set out
hereunder;
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(g)
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"person" is to be interpreted broadly and
includes an individual, corporation, partnership, unincorporated
syndicate, unincorporated organization, trust, trustee, executor,
administrator or other legal representative or any group or combination
thereof;
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(h)
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"Subscription
Form" means the form
of subscription annexed hereto as Schedule
"A";
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(i)
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"Trading
Day" means any day on
which the Common Shares are listed and posted for trading on the TSX and
such exchange is open for business or, if not listed and posted for
trading on such exchange, on such stock exchange or quotation system on
which the Common Shares are then listed and posted (or quoted) for trading
and which is open for business, and, in each case, no cease trading or
similar order is in effect with respect to the Common Shares;
and
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(j)
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"TSX" means the Toronto Stock
Exchange.
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2.
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Expiry
Time
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After the Expiry Time, all rights under
this Compensation Option Certificate and any outstanding Options evidenced
hereby, in respect of which the right of subscription and purchase herein
provided for shall not have been exercised, shall wholly cease and terminate and
this Compensation Option Certificate and the Options evidenced hereby shall be
void and of no value or effect.
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3.
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Exercise
Procedure
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(a)
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The Holder may exercise its right
of purchase hereunder in whole or in part at any time at or prior to the
Expiry Time by surrendering or delivering to the Corporation prior to the
Expiry Time at its principal office in Colorado: (i) this Compensation
Option Certificate together with the Subscription Form duly completed and
executed by the Holder or its legal representative or attorney, duly
appointed by an instrument in writing in form and manner satisfactory to
the Corporation; and (ii) cash or a certified cheque, money order or bank
draft payable to or to the order of the Corporation in an amount equal to
the Exercise Price multiplied by the number of Common Shares for which
subscription is being made.
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(b)
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Any Compensation Option
Certificate, Subscription Form and cash, certified cheque, money order or
bank draft referred to in the foregoing subsection 3(a) shall be deemed to
be surrendered only upon delivery thereof to the Corporation at its
principal office in the manner provided in Section 29
hereof.
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4.
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Entitlement
to Certificates
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Upon delivery and payment as provided
for in Section 3 above, the Corporation shall cause to be issued to the Holder
the Common Shares subscribed for and the Holder shall become a shareholder of
the Corporation in respect of such Common Shares purchased with effect from the
date of such delivery and payment and shall be entitled to delivery of a
certificate or certificates evidencing such Common Shares. The Corporation shall
cause such certificate or certificates to be issued and delivered to the Holder
at the address or addresses specified in the Subscription Form as soon as
practicable, but in any event, not later than seven (7) Business Days following
such delivery and payment.
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5.
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Assignment
or Transfer of Compensation
Options
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The Options evidenced hereby may be
assigned or transferred by the Holder or exercised by or for the benefit of any
person other than the Holder. The Options evidenced hereby may not be
exercised in the United States or by or on behalf of a U.S. Person or person in
the United States. "United States" and "U.S. Person" are as defined
in Regulation S under the United States Securities Act of 1933, as
amended.
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6.
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Partial
Exercise and Exchanges
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The Holder may subscribe for and
purchase a number of Common Shares which is less than the number it is entitled
to purchase pursuant to this Compensation Option Certificate. In the event of
any such subscription and purchase prior to the Expiry Time, the Holder shall
also be entitled to receive, without charge, a new Compensation Option
Certificate in respect of the balance of the Options to purchase Common Shares
to which it continues to be entitled pursuant to this Compensation Option
Certificate.
This Compensation Option Certificate is
also exchangeable, without charge, from time to time, upon surrender hereof by
the Holder to the Corporation, for a new Compensation Option Certificate or
certificates of like tenor representing in the aggregate the same number of
Options under the Compensation Option Certificate so
surrendered.
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7.
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No
Fractional Common Shares
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Notwithstanding any adjustment provided
for in Section 11 hereof, the Corporation shall not be required upon the
exercise of any Options to issue fractional Common Shares in satisfaction of its
obligations hereunder and the Holder understands and agrees that it will not be
entitled to any cash payment or other form of compensation in respect of a
fractional Common Share that might otherwise have been
issued.
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8.
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Not
a Shareholder
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Nothing in this Compensation Option
Certificate or in the holding of the Options evidenced hereby shall be construed
as conferring upon the Holder any right or interest whatsoever as a shareholder
of the Corporation.
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9.
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No
Obligation to Purchase
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Nothing herein contained or done
pursuant hereto shall obligate the Holder to purchase or pay for, or the
Corporation to issue, any Common Shares except those Common Shares in respect of
which the Holder shall have exercised its right to purchase in the manner
provided hereunder.
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10.
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Covenants
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(a)
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The Corporation covenants that:
(i) so long as any Options evidenced hereby remain outstanding, it shall
reserve and there shall remain unissued out of its authorized capital a
sufficient number of Common Shares to satisfy the right of purchase
provided for herein; and (ii) all Common Shares which shall be issued upon
the exercise of the right to purchase provided for herein, upon payment of
the Exercise Price therefor, shall be issued as fully paid and
non-assessable and free from all taxes, liens and charges with respect to
the issue thereof, other than which may arise by virtue of the Holder's
personal circumstances.
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(b)
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While any Options evidenced hereby
remain outstanding, the Corporation shall comply with the securities
legislation applicable to it in order that the Corporation continue as a
reporting issuer, or analogous entity, not in default of any requirements
of such legislation.
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(c)
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The Corporation shall, at its
expense, expeditiously use its commercially reasonable best efforts to
obtain the listing on the TSX and the AMEX of the Common Shares issuable
upon the exercise of the right to purchase provided for herein. The
Corporation shall, at its expense, include the registration of the resale
of the Common Shares underlying the Options in its registration statement
(the "Registration
Statement") filed in
connection with the flow-through shares and common shares issued on the
date of this Compensation Option Certificate, and, subject to the terms
and conditions of the registration rights agreement, each dated July 15,
2009 (the "Registration
Rights Agreement"),
between the Corporation and the subscriber counterparty thereto, shall use
its commercially reasonable efforts to register the resale of the Common
Shares underlying the Options in the United States as soon as possible so
that the legend referred to in Section 27 (d) may be removed. The
Corporation and the Holder agree to be bound by the terms of the
Registration Rights Agreement as if they were original parties thereto,
and the Holder agrees to complete and execute the Notice and Questionnaire
prior to the Corporation including the Common Shares in the Registration
Statement.
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(d)
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The Corporation shall use its
commercially reasonable best efforts to do or cause to be done all things
necessary to preserve and maintain its corporate
existence.
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11.
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Adjustment
to Exercise Price
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The rights of the Holder, including the
number of Common Shares issuable upon the exercise of each Option represented
hereby, will be adjusted from time to time upon the occurrence of the events and
in the manner provided in, and in accordance with the provisions of, this
Section.
The Exercise Price in effect at any time
is subject to adjustment from time to time in the events and in the manner
provided as follows:
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(1)
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If and whenever at any time after
the date hereof the
Corporation:
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(a)
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issues Common Shares or securities
exchangeable for or convertible into Common Shares to all or substantially
all the holders of the Common Shares as a stock
dividend;
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(b)
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makes a distribution on its
outstanding Common Shares payable in Common Shares or securities
exchangeable for or convertible into Common
Shares;
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(c)
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subdivides its outstanding Common
Shares into a greater number of shares;
or
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(d)
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consolidates its outstanding
Common Shares into a small number of
shares;
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(any of such events being called a
"Common
Share Reorganization"),
then the Exercise Price will be adjusted effective immediately after the
effective date or record date for the happening of a Common Share
Reorganization, as the case may be, at which the holders of Common Shares are
determined for the purpose of the Common Share Reorganization by multiplying the
Exercise Price in effect immediately prior to such effective date or record date
by a fraction, the numerator of which is the number of Common Shares outstanding
on such effective date or record date before giving effect to such Common Share
Reorganization and the denominator of which is the number of Common Shares
outstanding immediately after giving effect to such Common Share Reorganization
(including, in the case where securities exchangeable for or convertible into
Common Shares are distributed, the number of Common Shares that would have been
outstanding had all such securities been exchanged for or converted into Common
Shares on such effective date or record date).
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(2)
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If and whenever, at any time after
the date hereof, the Corporation fixes a record date for the issue of
rights, options or warrants to the holders of all or substantially all of
its outstanding Common Shares under which such holders are entitled to
subscribe for or purchase Common Shares or securities exchangeable for or
convertible into Common Shares,
where:
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(a)
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the right to subscribe for or
purchase Common Shares or the right to exchange securities for or convert
securities into Common Shares, expires not more than 45 days after the
date of such issue (the period from the record date to the date of expiry
being herein in this Section 11(2) called the "Rights
Period");
and
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(b)
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the cost per Common Share during
the Rights Period (inclusive of any cost of acquisition of securities
exchangeable for or convertible into Common Shares in addition to any
direct cost of Common Shares) (in this Section 11(2) called the
"Per Share
Cost") is less than
95% of the Current Market Price of the Common Shares on the record
date;
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(any of such events being called a
"Rights
Offering"), then the
Exercise Price will be adjusted effective immediately after the end of the
Rights Period to a price determined by multiplying the Exercise Price in effect
immediately prior to the end of the Rights Period by a
fraction:
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(i)
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the numerator of which is the
aggregate of:
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A.
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the number of Common Shares
outstanding as of the record date for the Rights Offering;
and
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B.
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a number determined by dividing
the product of the Per Share Cost
and:
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(I)
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where the event giving rise to the
application of this subsection 11(2) was the issue of rights, options or
warrants to the holders of Common Shares under which such holders are
entitled to subscribe for or purchase additional Common Shares, the number
of Common Shares so subscribed for or purchased during the Rights Period;
or
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(II)
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where the event giving rise to the
application of this subsection 11(2) was the issue of rights, options or
warrants to the holders of Common Shares under which such holders are
entitled to subscribe for or purchase securities exchangeable for or
convertible into Common Shares, the number of Common Shares for which
those securities so subscribed for or purchased during the Rights Period
could have been exchanged or into which they could have been converted
during the Rights Period,
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by the Current Market Price of the
Common Shares as of the record date for the Rights Offering;
and
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(ii)
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the denominator of which
is:
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A.
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in the case described in
subparagraph 11(2)(i)(B)(I), the number of Common Shares outstanding;
or
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B.
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in the case described in
subparagraph 11(2)(i)(B)(II), the number of Common Shares that would be
outstanding if all the Common Shares described in subparagraph
11(2)(i)(B)(II) had been issued, as at the end of the Rights
Period.
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Any Common Shares owned by or held for
the account of the Corporation or any subsidiary or affiliate (as such terms are
defined in the Securities
Act (Ontario)) of the
Corporation will be deemed not to be outstanding for the purpose of any such
computations.
If by the terms of the rights, options
or warrants referred to in this Section 11(2), there is more than one purchase,
conversion or exchange price per Common Share, the aggregate price of the total
number of additional Common Shares offered for subscription or purchase, or the
aggregate conversion or exchange price of the convertible securities so offered,
will be calculated for purposes of the adjustment on the basis
of:
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(i)
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the lowest purchase, conversion or
exchange price per Common Share, as the case may be, if such price is
applicable to all Common Shares which are subject to the rights, options
or warrants; and
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(ii)
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the average purchase, conversion
or exchange price per Common Share, as the case may be, if the applicable
price is determined by reference to that number of Common Shares
acquired.
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To the extent that any adjustment in the
Exercise Price occurs pursuant to this Section 11(2) as a result of the fixing
by the Corporation of a record date for the distribution of rights, options or
warrants referred to in this Section 11(2), the Exercise Price will be
readjusted immediately after the expiration of any relevant exchange, conversion
or exercise right to the Exercise Price which would then be in effect based upon
the number of Common Shares actually issued and remaining issuable after such
expiration and will be further readjusted in such manner upon expiration of any
further such right.
If the Holder has exercised this
Compensation Option Certificate in accordance herewith during the period
beginning after the record date for a Rights Offering and ending on the last day
of the Rights Period thereunder, the Holder will, in addition to the Common
Shares to which it is otherwise entitled upon such exercise, be entitled to that
number of additional Common Shares equal to the difference, if any, between (x)
the result obtained when the Exercise Price in effect immediately prior to the
end of such Rights Offering pursuant to this subsection is multiplied by the
number of Common Shares received upon the exercise of the Options represented by
this Compensation Option Certificate during such period, and the resulting
product is divided by the Exercise Price as adjusted for such Rights Offering
pursuant to this subsection provided that the provisions of Section 7 will be
applicable to any fractional interest in a Common Share to which such Holder
might otherwise be entitled and (y) the number of Common Shares received upon
the exercise of the Options represented by this Compensation Option Certificate
during such period. Such additional Common Shares will be deemed to have been
issued to the Holder immediately following the end of the Rights Period and a
certificate for such additional Common Shares will be delivered to such Holder
within ten (10) Business Days following the end of the Rights
Period.
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(3)
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If and whenever at any time after
the date hereof, the Corporation fixes a record date for the issue or the
distribution to the holders of all or substantially all its Common Shares
of:
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(i)
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shares of the Corporation of any
class other than Common
Shares;
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(ii)
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rights, options or warrants to
acquire shares or securities exchangeable for or convertible into shares
or property or other assets of the Corporation (other than a right to
subscribe for or purchase Common Shares or a right to exchange securities
for or convert securities into Common Shares which expires not more than
45 days after the date of such issue and the cost per Common Share during
such period (inclusive of any cost of acquisition of securities
exchangeable for or convertible into Common Shares in addition to any
direct cost of Common Shares) is at least 95% of the Current Market Price
of the Common Shares on the record
date);
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(iii)
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evidence of indebtedness;
or
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(iv)
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any property or other
assets,
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and if such issuance or distribution
does not constitute a Common Share Reorganization or a Rights Offering (any of
such non-excluded events being called a "Special
Distribution"), the
Exercise Price will be adjusted effective immediately after such record date to
a price determined by multiplying the Exercise Price in effect on such record
date by a fraction:
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(i)
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the numerator of which
is:
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A.
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the product of the number of
Common Shares outstanding on such record date and the Current Market Price
of the Common Shares on such record date;
less
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B.
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the aggregate fair market value
(as determined by action by the auditors of the Corporation) to the
holders of the Common Shares of such securities or property or other
assets so issued or distributed in the Special Distribution;
and
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(ii)
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the denominator of which is the
number of Common Shares outstanding on such record date multiplied by the
Current Market Price of the Common Shares on such record
date.
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Any Common Shares owned by or held for
the account of the Corporation or any subsidiary or affiliate (as such terms are
defined in the Securities
Act (Ontario)) of the
Corporation will be deemed not to be outstanding for the purpose of any such
computation.
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(4)
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If and whenever at any time after
the date hereof there is a Common Share Reorganization, a Rights Offering,
a Special Distribution, a reclassification of the Common Shares
outstanding at any time or change of the Common Shares into other shares
or into other securities (other than a Common Share Reorganization), or a
consolidation, amalgamation or merger of the Corporation with or into any
other corporation or other entity (other than a consolidation,
amalgamation or merger which does not result in any reclassification of
the outstanding Common Shares or a change of the Common Shares into other
shares), or a transfer of the undertaking or assets of the Corporation as
an entirety or substantially as an entirety to another corporation or
other entity (any of such events being called a "Capital
Reorganization"), the
Holder, upon exercising the Options represented by this Compensation
Option Certificate after the effective date of such Capital
Reorganization, will be entitled to receive in lieu of the number of
Common Shares to which such Holder was theretofore entitled upon such
exercise, the aggregate number of Common Shares, other securities or other
property which such Holder would have been entitled to receive as a result
of such Capital Reorganization if, on the effective date thereof, the
Holder had been the registered holder of the number of Common Shares to
which such Holder was therefore entitled upon exercise of the Options
represented by this Compensation Option Certificate. If determined
appropriate by action of the directors of the Corporation, appropriate
adjustments will be made as a result of any such Capital Reorganization in
the application of the provisions set forth in this Section 11(4) with
respect to the rights and interests thereafter of the Holder to the end
that the provisions set forth in this Section 11(4) will thereafter
correspondingly be made applicable as nearly as may reasonably be in
relation to any shares, other securities or other property thereafter
deliverable upon the exercise hereof. Any such adjustment must be made by
and set forth in an amendment to this Compensation Option Certificate
approved by action by the directors of the Corporation and will for all
purposes be conclusively deemed to be an appropriate
adjustment.
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(5)
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If at any time after the date
hereof and prior to the Expiry Time any adjustment in the Exercise Price
shall occur as a result of:
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(a)
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an event referred to in subsection
11(1);
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(b)
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the fixing by the Corporation of a
record date for an event referred to in subsection 11(2);
or
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(c)
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the fixing by the Corporation of a
record date for an event referred to in subsection 11(3) if such event
constitutes the issue or distribution to the holders of all or
substantially all of its outstanding Common Shares of: (A) Equity Shares,
or (B) securities exchangeable for or convertible into Equity Shares at an
exchange or conversion price per Equity Share less than 95% of the Current
Market Price on such record date, or (C) rights, options or warrants to
acquire Equity Shares at an exercise, exchange or conversion price per
Equity Share less than 95% of the Current Market Price on such record
date,
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then the number of Common Shares
purchasable upon the subsequent exercise of the Options represented by this
Compensation Option Certificate shall be simultaneously adjusted by multiplying
the number of Common Shares purchasable upon the exercise of the Options
represented by this Compensation Option Certificate immediately prior to such
adjustment by a fraction which shall be the reciprocal of the fraction employed
in the adjustment of the Exercise Price. To the extent any adjustment in
subscription rights occurs pursuant to this subsection 11(5) as a result of a
distribution of exchangeable or convertible securities other than Equity Shares
referred to in subsection 11(1) or as a result of the fixing by the Corporation
of a record date for the distribution of rights, options or warrants referred to
in subsection 11(2), the number of Common Shares purchasable upon exercise
of the Options represented by this Compensation Option Certificate shall be
readjusted immediately after the expiration of any relevant exchange, conversion
or exercise right to the number of Common Shares actually issued and remaining
issuable immediately after such expiration and shall be further readjusted in
such manner upon expiration of any further such right. To the extent that any
adjustment in subscription rights occurs pursuant to this subsection 11(5) as a
result of the fixing by the Corporation of a record date for the distribution of
exchangeable or convertible securities other than Equity Shares or rights,
options or warrants referred to in subsection 11(3), the number of Common Shares
purchasable upon exercise of the Options represented by this Compensation Option
Certificate shall be readjusted immediately after the expiration of any relevant
exchange, conversion or exercise right to the number which would be purchasable
pursuant to this subsection 11(5) if the fair market value of such securities or
such rights, options or warrants had been determined for purposes of the
adjustment pursuant to this subsection 11(5) on the basis of the number of
Equity Shares issued and remaining issuable immediately after such expiration
and shall be further readjusted in such manner upon expiration of any further
such right.
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(6)
|
If at any time any adjustment or
readjustment in the Exercise Price shall occur pursuant to the provisions
of this Section 11, then the number of Common Shares purchasable upon the
subsequent exercise of the Options shall be simultaneously adjusted or
readjusted, as the case may be, by multiplying the number of Common Shares
purchasable upon the exercise of the Options immediately prior to such
adjustment or readjustment by a fraction which shall be the reciprocal of
the fraction used in the adjustment or readjustment of the Exercise
Price.
|
|
12.
|
Rules
Regarding Calculation of
Adjustments
|
The following rules and procedures shall
be applicable to adjustments made pursuant to Section 11
herein:
|
|
(1)
|
The adjustments provided for in
Section 11 are cumulative and will, in the case of adjustments to the
Exercise Price, be computed to the nearest one-tenth of one cent and will
be made successively whenever an event referred to therein occurs, subject
to the following subsections of this Section
12.
|
|
|
(2)
|
No adjustment in the Exercise
Price is required to be made unless such adjustment would result in a
change of at least 1% in the prevailing Exercise Price; provided, however,
that any adjustment which, except for the provisions of this subsection,
would otherwise have been required to be made, will be carried forward and
taken into account in any subsequent
adjustments.
|
|
|
(3)
|
No adjustment in the Exercise
Price will be made in respect of any event described in Section 11, other
than the events referred to in clauses 11(1)(c) and (d), if the Holder is
entitled to participate in such event on the same terms, mutatis
mutandis, as if the
Holder had exercised the Options evidenced hereby prior to or on the
effective date or record date of such event. Any participation by a Holder
pursuant to this Section 12(3) is subject to the prior approval of the TSX
(or such other stock exchange or quotation system on which the Common
Shares are then listed and posted (or quoted) for trading, as
applicable).
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(4)
|
No adjustment in the Exercise
Price will be made under Section 11 in respect of the issue from time to
time of Common Shares issuable from time to time as dividends paid in the
ordinary course to holders of Common Shares who exercise an option or
election to receive substantially equivalent dividends in Common Shares in
lieu of receiving a cash dividend and any such issue will be deemed not to
be a Common Share
Reorganization.
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10
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|
(5)
|
If at any time a dispute arises
with respect to adjustments provided for in Section 11, such dispute will
be conclusively determined by the auditors of the Corporation or if they
are unable or unwilling to act, by such other firm of independent
chartered accountants as may be selected by the directors of the
Corporation and approved by the Holder, acting reasonably, and any such
determination, absent manifest error, will be binding upon the
Corporation, the Holder and shareholders of the Corporation. The
Corporation will provide such auditors or accountants with access to all
necessary records of the
Corporation.
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(6)
|
In case the Corporation, after the
date of issue of this Compensation Option Certificate, takes any action
affecting the Common Shares, other than an action described in Section 11,
which in the opinion of the directors of the Corporation would materially
affect the rights of the Holder, the Exercise Price will be adjusted in
such manner, if any, and at such time, by action by the directors of the
Corporation but subject in all cases to any necessary regulatory approval,
including approval of the TSX. Failure of the taking of action by the
directors of the Corporation so as to provide for an adjustment on or
prior to the effective date of any action by the Corporation affecting the
Common Shares will be conclusive evidence that the board of directors of
the Corporation has determined that it is equitable to make no adjustment
in the circumstances.
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(7)
|
If the Corporation sets a record
date to determine the holders of the Common Shares for the purpose of
entitling them to receive any dividend or distribution or sets a record
date to take any other action and, thereafter and before the distribution
to such shareholders of any such dividend or distribution or the taking of
any other action, decides not to implement its plan or pay or deliver such
dividend or distribution or take such other action, then no adjustment in
the Exercise Price will be required by reason of the setting of such
record date.
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(8)
|
In the absence of a resolution of
the directors of the Corporation fixing a record date for a Special
Distribution or Rights Offering, the Corporation will be deemed to have
fixed as the record date therefor the date on which the Special
Distribution or Rights Offering is
effected.
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(9)
|
As a condition precedent to the
taking of any action which would require any adjustment to the Options
evidenced hereby, including the Exercise Price, the Corporation must take
any corporate action which may be necessary in order that the Corporation
shall have unissued and reserved in its authorized capital and may validly
and legally issue as fully paid and non-assessable all of the shares or
other securities which the Holder is entitled to receive on the full
exercise thereof in accordance with the provisions
hereof.
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|
(10)
|
The Corporation will from time to
time, within 10 Business Days after the occurrence of any event which
requires an adjustment or readjustment as provided in Section 11, give
notice to the Holder specifying the event requiring such adjustment or
readjustment and the results thereof, including the resulting Exercise
Price.
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(11)
|
Any adjustment to the Exercise
Price under the terms of this Compensation Option Certificate shall be
subject to the prior approval of the TSX and such other stock exchange or
quotation system on which the Common Shares are then listed and posted (or
quoted) for trading, as
applicable.
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11
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13.
|
Consolidation
and Amalgamation
|
|
|
(1)
|
The Corporation shall not enter
into any transaction whereby all or substantially all of its undertaking,
property and assets would become the property of any other corporation or
entity (herein called a "successor
corporation") whether
by way of reorganization, reconstruction, consolidation, amalgamation,
merger, transfer, sale, disposition or otherwise, unless prior to or
contemporaneously with the consummation of such transaction the
Corporation and the successor corporation shall have executed such
instruments and done such things as, in the opinion of counsel to the
Corporation, are necessary or advisable to establish that upon the
consummation of such
transaction:
|
|
|
(i)
|
the successor corporation will
have assumed all the covenants and obligations of the Corporation under
this Compensation Option Certificate;
and
|
|
|
(ii)
|
this Compensation Option
Certificate will be a valid and binding obligation of the successor
corporation entitling the Holder, as against the successor corporation, to
all the rights of the Holder under this Compensation Warrant
Certificate.
|
|
|
(2)
|
Whenever the conditions of
subsection 13(1) shall have been duly observed and performed, the
successor corporation shall possess and from time to time may exercise
each and every right and power of the Corporation under this Compensation
Option Certificate in the name of the Corporation or otherwise and any act
or proceeding by any provision hereof required to be done or performed by
any director or officer of the Corporation may be done and performed with
like force and effect by the like directors or officers of the successor
corporation.
|
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14.
|
Representations
and Warranties
|
The Corporation hereby represents and
warrants with and to the Holder that the Corporation is duly authorized and has
the corporate and lawful power and authority to create and issue the Options
evidenced hereby and the Common Shares issuable upon the exercise hereof, and to
perform its obligations hereunder and that this Compensation Option Certificate
represents a valid, legal and binding obligation of the Corporation enforceable
in accordance with its terms subject to bankruptcy, insolvency and other laws of
general application affecting the rights of creditors and equitable remedies
being in the discretion of the court.
|
15.
|
Acquisition
of the Securities
|
The Holder hereby represents, warrants
and certifies to the Corporation that the securities represented by this
Compensation Option Certificate, and the Common Shares issuable upon exercise
thereof, are being acquired solely for its own account and not as a nominee for
any other party and not with a view toward the resale or distribution thereof
and that it will not offer, sell or otherwise dispose of the Compensation Option
Certificate or the Common Shares issuable upon exercise thereof except under
circumstances which will not result in a violation of any applicable securities
laws in Canada, the United States and other applicable securities laws or the
rules of the TSX or AMEX. In addition, the Holder hereby represents,
warrants and certifies to the Corporation that the Holder: (i) at the time of
receipt of this Compensation Option Certificate is not in the United States;
(ii) is not a U.S. Person and is not receiving this Compensation Option
Certificate for the account or benefit of a U.S. Person; (iii) did not execute
or deliver this Option Compensation Certificate while within the United States;
(iv) has not and will not engage in any hedging transaction with respect to the
Options or the Common Shares, except as permitted by the United States
Securities Act of 1933, as amended (the "U.S. Securities
Act"); and (v) has in all
other respects complied with the terms of Regulation S of the US Securities Act
or any successor rule or regulation of the United States Securities and Exchange
Commission as presently in effect.
12
|
16.
|
If
Share Transfer Books Closed
|
The Corporation shall not be required to
deliver certificates for Common Shares while the share transfer books of the
Corporation are properly closed prior to any meeting of shareholders, for the
payment of dividends or for any other purpose and in the event of the surrender
of any Compensation Option Certificate in accordance with the provisions hereof
and the making of any subscription and payment for Common Shares called for
thereby during any such period, delivery of certificates for Common Shares may
be postponed for not more than five (5) Business Days after the date of the
re-opening of said share transfer books. Any such postponement of delivery of
certificates shall be without prejudice to the right of the Holder, if the
Holder has surrendered the same and made payment during such period, to receive
certificates for the Common Shares called for after the share transfer books
have been re-opened.
|
17.
|
Stolen,
Lost, Mutilated or Destroyed
Certificate
|
If this Compensation Option Certificate
is stolen, lost, mutilated or destroyed, the Corporation shall, on such terms as
it shall in its discretion impose, issue and countersign a new Compensation
Option Certificate of like denomination, tenor and date as the certificate so
stolen, lost, mutilated or destroyed.
|
18.
|
Governing
Law
|
This Compensation Option Certificate
shall be governed by and construed in accordance with the laws of the Province
of Ontario and the federal laws of Canada applicable therein, regardless of the
laws that might otherwise govern under applicable principles of conflicts of
laws thereof, except to the extent mandatorily governed by the law of another
jurisdiction. Each of the Holder and the Corporation: (i) irrevocably consents
to the exclusive jurisdiction and venue of the Courts of Ontario in connection
with any matter or dispute based upon or arising out of this Compensation Option
Certificate or the matters contemplated herein; (ii) agrees that process may be
served upon them in any manner authorized by the laws of the Province of Ontario
for such persons; and (iii) waives and covenants not to assert or plead any
objection which they might otherwise have to such jurisdiction, venue and such
process.
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19.
|
Severability
|
If any one or more of the provisions or
parts thereof contained in this Compensation Option Certificate should be or
become invalid, illegal or unenforceable in any respect in any jurisdiction, the
remaining provisions or parts thereof contained herein shall be and shall be
conclusively deemed to be, as to such jurisdiction, severable therefrom
and:
|
|
(a)
|
the validity, legality or
enforceability of such remaining provisions or parts thereof shall not in
any way be affected or impaired by the severance of the provisions or
parts thereof severed; and
|
|
|
(b)
|
the invalidity, illegality or
unenforceability of any provision or part thereof contained in this
Compensation Option Certificate in any jurisdiction shall not affect or
impair such provision or part thereof or any other provisions of this
Compensation Option Certificate in any other
jurisdiction.
|
13
|
20.
|
Headings
|
The headings of the sections,
subsections, clauses and subclauses of this Compensation Option Certificate have
been inserted for convenience and reference only and do not define, limit, alter
or enlarge the meaning of any provision of this Compensation Option
Certificate.
|
21.
|
Compensation
Options Rank Pari Passu
|
All Options shall rank pari
passu, whatever may be the
actual date of issue of the same.
|
22.
|
Numbering
of Articles, etc.
|
Unless otherwise stated, a reference
herein to a numbered or lettered section, subsection, clause, subclause or
schedule refers to the section, subsection, clause, subclause or schedule
bearing that number or letter in this Compensation Option
Certificate.
|
23.
|
Number
and Gender
|
Whenever used in this Compensation
Option Certificate, words importing the singular number only shall include the
plural and vice
versa and words importing
gender shall include all genders.
|
24.
|
Day
Not a Business Day
|
In the event that any day on or before
which any action is required to be taken hereunder is not a Business Day then
such action shall be required to be taken on or before the requisite time on the
next day that is a Business Day.
|
25.
|
TSX
and AMEX Approvals
|
Notwithstanding anything to the contrary
in this Compensation Option Certificate, no supplement or amendment to the terms
of this Compensation Option Certificate may be made without the prior written
approval of the TSX and AMEX and such other stock exchange or quotation system
on which the Common Shares are then listed and posted (or quoted) for trading,
as applicable.
|
26.
|
Binding
Effect
|
This Compensation Option Certificate and
all of its provisions shall enure to the benefit of the Holder and its
successors and shall be binding upon the Corporation and its
successors.
|
27.
|
Legends
|
|
(a)
|
The Holder acknowledges that any
certificate representing Common Shares issued upon the exercise of this
Compensation Option Certificate prior to the date which is four months and
one day after the date hereof will bear the following
legend:
|
"UNLESS PERMITTED UNDER SECURITIES
LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE
NOVEMBER 16, 2009."
provided that at any time subsequent to
the date which is four months and one day after the date hereof any certificate
representing such Common Shares may be exchanged for a certificate bearing no
such legends. The Corporation hereby covenants and agrees that it
will use the best efforts thereof to deliver or to cause to be delivered a
certificate or certificates representing such Common Shares bearing no such
legends within three Business Days after receipt of the legended
certificate.
14
|
(b)
|
The Holder acknowledges that the
certificates representing the Common Shares and all certificates issued in
exchange or substitution thereof, will bear a legend in substantially the
following form as long as the legend referred to in subsection 27(a)
remains on such certificate:
|
|
|
"THE SECURITIES REPRESENTED BY
THIS CERTIFICATE ARE LISTED ON THE TORONTO STOCK EXCHANGE; HOWEVER, THE
SAID SECURITIES CAN NOT BE TRADED THROUGH THE FACILITIES OF SUCH EXCHANGE
SINCE THEY ARE NOT FREELY TRANSFERABLE, AND CONSEQUENTLY ANY CERTIFICATE
REPRESENTING SUCH SECURITIES IS NOT "GOOD DELIVERY" IN SETTLEMENT OF
TRANSACTIONS ON THE TORONTO STOCK
EXCHANGE."
|
|
(c)
|
The Holder further acknowledges
that any certificate representing Common Shares issued upon the exercise
of this Compensation Option Certificate and all certificates issued in
exchange or substitution thereof will bear the following
legend:
|
|
|
"UNTIL THE SEPARATION TIME (AS
DEFINED IN THE RIGHTS AGREEMENT REFERRED TO BELOW), THIS CERTIFICATE ALSO
EVIDENCES AND ENTITLES THE HOLDER HEREOF TO CERTAIN RIGHTS AS SET FORTH IN
A SHAREHOLDER RIGHTS PLAN AGREEMENT, DATED AS OF THE 17TH DAY OF JANUARY,
2007 (THE "RIGHTS AGREEMENT"), BETWEEN THE CORPORATION AND CIBC MELLON
TRUST COMPANY, AS RIGHTS AGENT, THE TERMS OF WHICH ARE HEREBY INCORPORATED
HEREIN BY REFERENCE AND A COPY OF WHICH MAY BE INSPECTED DURING NORMAL
BUSINESS HOURS AT THE PRINCIPAL EXECUTIVE OFFICES OF THE
CORPORATION. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE
RIGHTS AGREEMENT, SUCH RIGHTS MAY BE TERMINATED, MAY EXPIRE, MAY BECOME
VOID (IF, IN CERTAIN CASES, THEY ARE "BENEFICIALLY OWNED" BY AN "ACQUIRING
PERSON", AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT, WHETHER
CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR ANY SUBSEQUENT HOLDER) OR
MAY BE EVIDENCED BY SEPARATE CERTIFICATES AND MAY NO LONGER BE EVIDENCED
BY THIS CERTIFICATE. THE CORPORATION WILL MAIL OR ARRANGE FOR
THE MAILING OF A COPY OF THE RIGHTS AGREEMENT TO THE HOLDER OF THIS
CERTIFICATE WITHOUT CHARGE AS SOON AS IS PRACTICABLE AFTER THE RECEIPT OF
A WRITTEN REQUEST THEREFOR."
|
|
(d)
|
In addition, the Holder
acknowledges that any certificate representing Common Shares issued upon
the exercise of this Compensation Option Certificate will bear the
following legend:
|
|
|
"THIS SECURITY HAS NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
''SECURITIES ACT''), AND ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS
SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER
(1) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THE SECURITY
EVIDENCED HEREBY, EXCEPT (A) TO THE ISSUER; (B) TO PERSONS OTHER THAN U.S.
PERSONS OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER
THE SECURITIES ACT; (C) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 ADOPTED UNDER THE SECURITIES ACT OR ANOTHER AVAILABLE
EXEMPTION UNDER THE SECURITIES ACT (IF AVAILABLE); OR (D) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (2) AGREES
THAT IT WILL, PRIOR TO ANY TRANSFER OF THIS SECURITY PURSUANT TO
SUBPARAGRAPH (B) OR (C) ABOVE, FURNISH TO THE ISSUER OR ISSUER'S COUNSEL
SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS MAY BE
REQUIRED BY THE ISSUER TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS
''UNITED STATES'' AND ''U.S. PERSON'' HAVE THE MEANING GIVEN TO THEM BY
REGULATION S UNDER THE SECURITIES ACT. IN ANY CASE, THE HOLDER HEREOF WILL
NOT, DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD
TO THIS SECURITY, EXCEPT AS PERMITTED BY THE SECURITIES
ACT."
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15
|
28.
|
Currency
|
All references herein to monetary
amounts are references to lawful money of Canada, unless otherwise specified
herein.
|
29.
|
Notice
|
Any notice, document or other
communication required or permitted by this Compensation Option Certificate to
be given by the Holder or the Corporation shall be in writing and is
sufficiently given if delivered personally, or if delivered or if transmitted by
any form of recorded telecommunication tested prior to transmission, to such
person addressed as follows:
|
|
(a)
|
if to the
Holder:
|
to the address on the face page
hereof
|
|
(b)
|
if to the
Corporation:
|
Apollo Gold
Corporation
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇
Greenwood Village, Colorado,
80111-3220
|
|
Attention:
|
Chief Financial
Officer
|
|
|
Telephone
No.:
|
(▇▇▇)
▇▇▇-▇▇▇▇
|
|
|
Facsimile
No.:
|
(▇▇▇)
▇▇▇-▇▇▇▇
|
Notice so delivered shall be deemed to
have been given on the Business Day that it is received. Notices
transmitted by a form of recorded telecommunication shall be deemed given on the
day of transmission. The Holder or the Corporation may from time to
time notify the other in the manner provided herein of any change of address or
facsimile number which thereafter, until changed by like notice, shall be the
address or facsimile number of such person for all purposes
hereof.
|
30.
|
Time
of Essence
|
Time shall be of the essence
hereof.
16
IN WITNESS
WHEREOF, the Corporation has caused this
Compensation Option Certificate to be signed by its duly authorized officer
this 15th day of July, 2009.
17