UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE DECEMBER 22, 2008.
EXHIBIT
4.1
UNLESS
PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT
TRADE THE SECURITY BEFORE DECEMBER 22, 2008.
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
|
Compensation
Option Certificate
No.:
CO-2008/003
|
No.
of Common Shares under
Compensation
Options: 1,020,000
|
For
value
received, Apollo Gold Corporation (the "Corporation")
hereby
grants to ▇▇▇▇▇▇▇ SECURITIES INC., ▇▇▇▇-▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇ (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 1,020,000 common shares of the Corporation
(the "Common
Shares")
at an
exercise price of $0.50 per Common Share (the "Exercise
Price")
at any
time and from time to time up to 4:00 p.m. (Toronto time) on February 21,
2010 (the
"Expiry
Time"),
upon
and subject to the terms and conditions set forth herein.
|
1.
|
Definitions
|
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:
|
(a)
|
"AMEX"
means the American Stock Exchange;
|
|
(b)
|
"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;
|
|
(c)
|
"Compensation
Options"
means the compensation options to purchase Common Shares, having
the
attributes and issued pursuant to the terms and provisions set out
hereunder;
|
|
(d)
|
"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;
|
|
(e)
|
"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;
|
|
(f)
|
"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;
|
|
(g)
|
"person"
is to be interpreted broadly and includes an individual, corporation,
partnership, sole proprietorship, unincorporated syndicate, unincorporated
organization, trust, trustee, executor, administrator or other legal
representative, unincorporated organization or organization or any
group
or combination thereof and pronouns have a similar extended
meaning;
|
|
(h)
|
"Subscription
Form"
means the form of subscription annexed hereto as Schedule
"A";
|
|
(i)
|
"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
|
|
(j)
|
"TSX"
means the Toronto Stock Exchange.
|
2
|
2.
|
Expiry
Time
|
After
the
Expiry Time, all rights under this Compensation Option Certificate and any
outstanding Compensation 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 Compensation Options evidenced hereby shall be void and of no value or
effect.
|
3.
|
Exercise
Procedure
|
|
(a)
|
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.
|
|
(b)
|
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.
|
|
4.
|
Entitlement
to Certificates
|
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.
|
5.
|
Assignment
or Transfer of Compensation
Options
|
The
Compensation 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 Compensation 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.
|
6.
|
Partial
Exercise and Exchanges
|
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 Compensation
Options to purchase Common Shares to which it continues to be entitled pursuant
to this Compensation Option Certificate.
3
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 Compensation Options under the Compensation
Option Certificate so surrendered.
|
7.
|
No
Fractional Common
Shares
|
Notwithstanding
any adjustment provided for in Section 11 hereof, the Corporation shall not
be
required upon the exercise of any Compensation 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.
|
8.
|
Not
a Shareholder
|
Nothing
in this Compensation Option Certificate or in the holding of the Compensation
Options evidenced hereby shall be construed as conferring upon the Holder any
right or interest whatsoever as a shareholder of the Corporation.
|
9.
|
No
Obligation to Purchase
|
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.
|
10.
|
Covenants
|
|
(a)
|
The
Corporation covenants that: (i) so long as any Compensation 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.
|
|
(b)
|
While
any Compensation 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.
|
|
(c)
|
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
Compensation Options in its registration statement
(the "Registration
Statement")
filed in connection with the flow-through shares issued on the date
of
this Compensation Option Certificate, and, subject to the terms and
conditions of the registration rights agreement, each dated August
21,
2008 (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.
|
4
|
(d)
|
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.
|
|
11.
|
Adjustment
to Exercise Price
|
The
rights of the Holder, including the number of Common Shares issuable upon the
exercise of each Compensation 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:
|
(1)
|
If
and whenever at any time after the date hereof the
Corporation:
|
|
(a)
|
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;
|
|
(b)
|
makes
a distribution on its outstanding Common Shares payable in Common
Shares
or securities exchangeable for or convertible into Common
Shares;
|
|
(c)
|
subdivides
its outstanding Common Shares into a greater number of shares;
or
|
|
(d)
|
consolidates
its outstanding Common Shares into a small number of
shares;
|
(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).
|
(2)
|
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:
|
5
|
(a)
|
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
|
|
(b)
|
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;
|
(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:
|
(i)
|
the
numerator of which is the aggregate
of:
|
|
A.
|
the
number of Common Shares outstanding as of the record date for the
Rights
Offering; and
|
|
B.
|
a
number determined by dividing the product of the Per Share Cost
and:
|
|
(I)
|
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
|
|
(II)
|
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,
|
by
the
Current Market Price of the Common Shares as of the record date for the Rights
Offering; and
|
(ii)
|
the
denominator of which is:
|
|
A.
|
in
the case described in subparagraph 11(2)(i)(B)(I), the number of
Common
Shares outstanding; or
|
6
|
B.
|
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.
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:
|
(i)
|
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
|
|
(ii)
|
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.
|
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 Compensation 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 Compensation 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.
7
|
(3)
|
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:
|
|
(i)
|
shares
of the Corporation of any class other than Common
Shares;
|
|
(ii)
|
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);
|
|
(iii)
|
evidence
of indebtedness; or
|
|
(iv)
|
any
property or other assets,
|
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:
|
(i)
|
the
numerator of which is:
|
|
A.
|
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
|
|
B.
|
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
|
|
(ii)
|
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.
|
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.
8
|
(4)
|
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 Compensation 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 Compensation 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.
|
|
(5)
|
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:
|
|
(a)
|
an
event referred to in subsection
11(1);
|
|
(b)
|
the
fixing by the Corporation of a record date for an event referred
to in
subsection 11(2); or
|
|
(c)
|
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,
|
9
then
the
number of Common
Shares purchasable upon the subsequent exercise of the Compensation Options
represented by this Compensation Option Certificate shall be simultaneously
adjusted by multiplying the number of Common
Shares purchasable upon the exercise of the Compensation 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 Compensation 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 Compensation 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.
|
(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 Compensation
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 Compensation 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 Compensation 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).
|
10
|
(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.
|
|
(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.
|
|
(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.
|
|
(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.
|
|
(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.
|
|
(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.
|
|
(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.
|
11
|
(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.
|
|
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
Option 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.
|
|
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 Compensation 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 Securites
|
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 in all other respects complied with the
terms
of Regulation S of the United States Securities Act of 1933, as amended (the
"U.S.
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.
|
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:
13
|
(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.
|
|
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 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.
14
|
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 DECEMBER 22, 2008."
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.
|
(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.
15
|
(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."
|
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
16
|
(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.
[SIGNATURE
PAGE FOLLOWS]
17
IN
WITNESS WHEREOF, the
Corporation has caused this Compensation Option Certificate to be signed by
its
duly authorized officer this
21st
day of
August,
2008.
18