Document:

Unassociated Document

    
       Exhibit
10.6

       

    

    ADVISORY
AGREEMENT

     

    This
Advisory Agreement (“Agreement”)
is made and entered into as of the 11th day of December, 2009 (“Effective
Date”), by and among SummerHaven Investment Management, LLC (“SHIM”), a
Delaware limited liability company with its principal place of business at 1266
East Main Street, Soundview Plaza, Fourth Floor, Stamford, CT 06902, and United
States Commodity Funds LLC (“USCF”), a
Delaware limited liability company with its principal place of business at 1320
Harbor Bay Parkway, Suite 145, Alameda, California 94502.

    

    WHEREAS, USCF desires to
retain SHIM to provide certain consulting services in connection with the
operation of TBD (the “Fund”)
that will be registered as a Delaware series trust and offer its units to the
public, which units will be traded on a national securities exchange;
and

     

    WHEREAS, pursuant to a
Licensing Agreement with SHIM, dated December 11, 2009 (the “Licensing
Agreement”), USCF sublicensed from SHIM the use of certain names and
marks (“Service
Marks”), including that of a commodity index that is owned, calculated,
maintained and published by SummerHaven Index Management, LLC (“SHIX”) and
licensed to SHIM (the “Index”),
as set forth in Exhibit A (as such Exhibit may be amended from time to time to
incorporate new or additional Service Marks or Indices), and the use of the
Index, in each case in connection with the Fund, the units of which will be
traded on a national securities exchange (the date on which the Fund commences
trading, the “Launch
Date”; and

     

    WHEREAS, SHIM is willing to
provide such advisory services under the terms of this Agreement.

     

    NOW, THEREFORE, in
consideration of the foregoing, and in reliance upon the mutual promises
contained in this Agreement, the parties, intending to be legally bound, agree
as follows:

     

    
      	
              1.

            	
              CONSULTING
      SERVICES

            

    

     

    During
the term of this Agreement, SHIM shall provide to USCF and the Fund, as
applicable, advisory services with respect to the Index, including but not
limited to general consultation regarding the calculation and maintenance of the
Index, anticipated changes to the Index and the nature of the Index’s current or
anticipated component securities.  In addition, SHIM shall (a) provide
general consultation regarding the markets for and trading in commodity
interests, (b) provide such information and data as may reasonably be requested
by USCF regarding the principals of SHIM and the Index for inclusion in
regulatory filings and marketing materials for the Fund, and (c) make reasonably
available upon adequate notice speakers for Fund marketing events and persons to
be interviewed by the press who can describe the Index and its calculation and
maintenance (the “Services”).  SHIM
will have discretionary authority with respect to the purchase, sale or holding
of commodity interests by the Fund and will provide advice regarding whether
specific commodity interests should be purchased by the Fund in accordance with
the procedures to be agreed to between SHIM and USCF.  SHIM represents
that its other engagements or activities are not of a nature or magnitude so as
to have a material adverse effect on its ability to provide Services under this
Article 1.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    USCF
acknowledges and agrees that SHIM and its principals are required to devote only
such time as may be reasonably required with respect to the
Services.  Other than as set forth below, SHIM and its affiliates,
including their respective partners, directors, members, stockholders, officers
and employees (together, “SHIM’s
Affiliates”) will not be precluded from engaging directly or indirectly
in any other business or activity, including, but not limited to, exercising
investment advisory and management responsibility and buying, selling or
otherwise dealing with securities, commodities or other investments for their
own accounts, for the accounts of family members, for the accounts of other
funds and for the accounts of individual and institutional
clients.  SHIM and its affiliates may also serve as the general
partner or investment manager of other funds, client accounts and proprietary
accounts (collectively, its “Clients”).  Other than set forth below,
SHIM and its affiliates will perform, among other things, investment advisory
and management services for Clients other than the Fund and in that connection
to give advice and take action in the performance of their duties to those
Clients which may differ from the timing and nature of action taken with respect
to the Fund.  The Investment Manager will make all investment
decisions relating to the Fund and its other Clients in a manner consistent with
its fiduciary obligations to act in good faith in what it considers to be the
Fund’s and its Client’s best interests.  Notwithstanding the
foregoing, SHIM and SHIM’s Affiliates shall not engage in management,
investment, or commodity trading activities, as the general partner, managing
member, investment adviser, commodity trading advisor or otherwise for a
commodity exchange-traded fund (as defined below) that bases its return by
reference to the Index or another Substantially Similar Commodity Index (as
defined below), for as long as they are parties to this Agreement, and for three
(3) months following the termination of this Agreement but only if a termination
has occurred by SHIM under Section 3(a) or 3(d)(ii) hereto or by USCF under
Section 3(b) hereto.  “Substantially Similar Commodity Index” shall
mean an index with all of the following criteria: (i) it is created by SHIX or
any of its affiliates; (ii) it is broadly diversified; (iii) it is long only;
(iv) the index components are selected from a group of at least 22 commodities;
and (v) the components of the index at all times consist of at least 10
commodities.  “Commodity exchange-traded fund” shall mean a fund open
to the public and traded on a U.S. or foreign securities exchange whose net
asset value is calculated daily and which trades throughout the trading day, and
which does not invest in securities.

     

    
      	
              2. 

            	
              FEES

            

    

     

    For the
Services provided hereunder, USCF and/or the Fund will pay SHIM an advisory fee
as set forth in the fee schedule attached as Exhibit B to this
Agreement.

     

    
      	
              3. 

            	
              TERM
      AND TERMINATION

            

    

     

    (a)  This
Agreement shall commence on the Effective Date and remain in effect for a period
of two (2) years therefrom (“Initial
Term”), unless earlier terminated by either USCF or SHIM in accordance
with this Article 3.  After the Initial Term, this Agreement shall
continue for successive one-year periods unless terminated by either such party
as of the end of an annual period by providing at least ninety (90) days written
notice of such termination  prior to the end of the annual period,
except as otherwise provided in this Article 3.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    (b)  If
a party (the “Breaching
Party”) is in material breach of any terms of this Agreement, either USCF
or SHIM, as the case may be, may so notify the Breaching Party in writing,
specifying the nature of the breach in reasonable detail.  The
Breaching Party shall have thirty (30) calendar days from delivery of that
notice to correct the breach; provided that if the breach is not cured within
the identified time period, the other party may terminate this Agreement at any
time after the thirty (30) days’ written notice to the Breaching Party with
another thirty (30) days’ written notice.  Either USCF or SHIM may
terminate this Agreement upon thirty (30) days’ written notice to such other
party if SHIM or USCF, as the case may be, is dissolved or its existence is
terminated; becomes insolvent or bankrupt or admits in writing its inability to
pay its debts as they mature, or makes an assignment for the benefit of
creditors; makes a voluntary assignment or transfer of all or substantially all
of its property; has a custodian, trustee, or receiver appointed for it, or for
all or substantially all of its property; has bankruptcy, reorganization,
arrangements, insolvency or liquidation proceedings, or other proceedings for
relief under any bankruptcy or similar law for the relief of debtors, instituted
by or against it, and, if instituted against it, any of the foregoing is allowed
or consented to by the other party or is not dismissed within
sixty (60) days after such institution.

     

    (c)  USCF
may terminate this Agreement upon written notice to SHIM if (i) USCF is informed
of the final adoption of any legislation or regulation that materially impairs
USCF’s ability to market, promote, or issue, redeem or list on an exchange,
shares of the Fund, (ii) any material litigation or regulatory proceeding
regarding the Fund is commenced which requires that the Fund cease existence,
and no successor Fund is commenced with similar investment
objectives,  (iii) USCF elects to terminate the public offering or
other distribution of the Fund and the Fund is dissolved, (iv) both K. Geert
Rouwenhorst and Gary B. Gorton cease to serve as a partner or senior advisor to
SHIM, or (v) there is a Change of Control of SHIM. “Change of Control
of SHIM” means the occurrence of any of the following: (1) the sale,
lease, transfer, conveyance or other disposition, in one or a series of related
transactions, of all or substantially all the assets of SHIM, or (2) the sale,
lease, transfer, conveyance or other disposition by the members of SHIM (as of
the Effective Date) of more than 50% of the outstanding equity of
SHIM.

     

    (d)  SHIM
may terminate this Agreement upon written notice to USCF if (i) SHIM is informed
of the final adoption of any legislation or regulation that materially impairs
SHIM’s ability to perform Services under this Agreement, (ii) SHIM determines in
its sole reasonable discretion that it and/or its affiliates could imminently
become subject to position limits in one or more commodities that could
reasonably expect to impair their ability to perform advisory, management or
other services to an of SHIM’s or any affiliate’s clients, (iii) any material
litigation or regulatory proceeding regarding the Fund is commenced, or (iv)
there is a Change of Control of USCF.  “Change of Control
of USCF” means the occurrence of any of the following: (1) the sale,
lease, transfer, conveyance or other disposition, in one or a series of related
transactions, of all or substantially all the assets of USCF, or (2) the sale,
lease, transfer, conveyance or other disposition by the members of USCF (as of
the Effective Date) of more than 50% of the outstanding equity of
USCF.

     

    (e)  No
fees under Article 2 of this Agreement will be payable to SHIM by USCF after
termination of this Agreement as set forth in this Article 3 except any
outstanding fees.  The fee for the month in which this Agreement is
terminated will be pro rated based on the number of days in the month during
which the Agreement was in effect.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    
      	
              4. 

            	
              INDEMNIFICATION

            

    

     

    (a) USCF shall indemnify,
defend and hold SHIM and its affiliates, members, directors, officers,
shareholders, employees, representatives, agents, attorneys, successors and
assigns (collectively, the “SHIM Indemnified
Parties”)
harmless from and against any and all claims, liabilities, obligations,
judgments, causes of action, costs and expenses (including reasonable attorneys’
fees) (collectively, “Losses”)
arising out of any material breach of this Agreement by USCF or any disclosure
in the Registration Statement of the Fund (except disclosure about SHIM or the
Index that has been specifically approved by SHIM), and out of USCF’s use of the
Index or the Service Marks (including, without limitation, in connection with
the marketing, promotion and sale of the Fund and its units) other than a case
in which SHIM is obligated to indemnify USCF under Article 4(b) and except to
the extent Losses are the result of any grossly negligent act or omission of a
SHIM Indemnified Party.

     

    (b) SHIM shall indemnify,
defend and hold USCF and its affiliates, members, directors, officers,
shareholders, employees, representatives, agents, attorneys, successors and
assigns (collectively, the “USCF Indemnified
Parties”)
harmless from and against any and all Losses arising out of (i) any material
breach of this Agreement by SHIM, (ii) any disclosure in the Registration
Statement of the Fund about SHIM or the Index that has been specifically
approved by SHIM, or (iii) the gross negligence, recklessness or willful
misconduct of SHIM in providing Services under this Agreement.

     

    (c)
Except as otherwise expressly provided herein, in no event shall either USCF or
SHIM be liable for any indirect, incidental, special or consequential damages,
even if the party or an authorized representative thereof has been advised of
the possibility of such damages.  The federal securities laws impose
liabilities under certain circumstances on persons who act in good faith; thus,
nothing in this Agreement shall in any way constitute a waiver or limitation on
any rights which a party may have under the federal securities
laws.

     

    (d)
Promptly after receipt by any Indemnified Party of notice of the commencement of
any action, the Indemnified Party shall, if indemnification is to be sought
against the other party (the “Indemnifying
Party”) under this Article 4, notify the Indemnifying Party in writing of
the commencement thereof, but the omission to notify the Indemnifying Party
shall relieve the Indemnifying Party from liability hereunder only to the extent
that such omission results in the forfeiture by the Indemnifying Party of rights
or defenses with respect to such action.  In any action or proceeding,
following provision of proper notice by the Indemnified Party of the existence
of such action, the Indemnified Party shall be entitled to participate in any
such action and to assume the defense thereof, with counsel of its choice, and
after notice from the Indemnifying Party to such Indemnified Party of its
election to assume the defense of the action, the Indemnifying Party shall not
be liable to such Indemnified Party hereunder for any attorneys’ fees
subsequently incurred by the Indemnified Party.  The Indemnified party
shall cooperate in the defense of settlement of claims so
assumed.  The Indemnifying Party shall not be liable hereunder for the
settlement by the Indemnified Party for any claim or demand unless it has
previously approved the settlement or it has been notified of such claim or
demand and has failed to provide a defense in accordance with the provisions
hereof.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    
      	
              5. 

            	
              REPRESENTATIONS
      AND WARRANTIES

            

    

     

    (a)  Each
party represents and warrants that it has full power and authority to enter into
and perform its obligations under this Agreement.

     

    (b)  USCF
represents and warrants that: (i) both USCF and the Fund shall not commit any
material violation of any applicable law or regulation, including but not
limited to banking, commodities and securities laws, and (ii) it will use its
best efforts to obtain exemptions from position limits with respect to the Index
and the Fund.

     

    (c)  SHIM
represents and warrants that both SHIM and SHIX shall not commit any material
violation of any applicable law or regulation, including but not limited to
banking, commodities and securities laws.

     

    
      	
              6. 

            	
              CONFIDENTIAL
      INFORMATION

            

    

     

    (a) By virtue of this
Agreement, either USCF or SHIM may have access to information that is
confidential to the other party including, without limitation, all business,
technical, financial, customer and/or any other proprietary information of a
party, products, processes, tools, services, technical knowledge and any other
information and/or materials clearly marked as confidential or information
identified as confidential at the time of disclosure or summarized as
confidential in a written memorandum delivered to the recipient within thirty
(30) calendar days of disclosure, including, without limitation, all information
concerning the Index, whether or not so marked (collectively, “Confidential
Information”).  Notwithstanding the foregoing, a party’s
Confidential Information shall not include information which: (i) is or becomes
a part of the public domain through no act or omission of the other party; (ii)
was in the other party’s lawful possession prior to the disclosure and had not
been obtained by the other party either directly or indirectly from the
disclosing party; (iii) is lawfully disclosed to the other party by a third
party without restriction on disclosure; or (iv) is independently developed by
the other party without reference to any Confidential Information.  In
addition, the obligations of this Article 6 do not apply to confidential
information that is required to be disclosed pursuant to a duly authorized
subpoena, court order, or government authority, provided that to the extent
permitted by law the party subject to same shall provide immediate written
notice to the other party upon receipt of subpoena, order, or other disclosure
requirement prior to such disclosure and allow such other party the opportunity
to intervene in the action in order to attempt to enjoin such subpoena, order,
or other disclosure requirement.  Such Confidential Information shall
remain confidential for all other purposes.

     

    (b) USCF and SHIM agree to
secure and protect the Confidential Information of each other in a manner
consistent with the maintenance of the other party’s rights therein, using at
least as great a degree of care as each party uses to maintain the
confidentiality of its own confidential information of a similar nature, but in
no event using less than its reasonable efforts.  Neither USCF nor
SHIM shall sell, transfer, publish, disclose, or otherwise make available any
portion of the Confidential Information of the other party to third parties,
except as necessary to perform its obligations under this Agreement or as
expressly authorized in this Agreement.  Each party represents that it
has, and agrees to maintain, an appropriate agreement with each third party who
may have access to Confidential Information sufficient to enable such party to
comply with all of the terms of this Agreement.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    (c)  USCF
and SHIM agree that the unauthorized use by any party of the other party’s
Confidential Information will diminish the value of such Confidential
Information and will cause substantial and irreparable damage to the party whose
Confidential Information was improperly disclosed, and that the remedies
generally available at law may be inadequate.  Accordingly, USCF and
SHIM agree that a breach of this Article 6 shall entitle SHIM (in the case of a
breach by USCF) or USCF (in the case of a breach by SHIM) to seek equitable
relief to protect its interest herein, including injunctive relief, as well as
money damages.  The parties agree that the obligations under this
Article shall survive termination or expiration of this Agreement.

     

    (d)  Each
party shall be free to use for itself and for others in any manner the general
knowledge, skill or experience acquired by it in connection with this
Agreement.

     

    
      	
              7. 

            	
              GENERAL

            

    

     

    (a) RIA; CTA.  SHIM is
registered as an investment adviser with the U.S. Securities and Exchange
Commission and as a commodity trading advisor with the U.S. Commodity Futures
Trading Commission, and is a member of the National Futures
Association.  SHIM has provided Part II of its current Form ADV to
USCF and will provide any revised Part II (or equivalent disclosure document)
within a reasonable time after the revisions are made.

     

    (b) Binding Arbitration.  Any controversy or
claim arising out of or relating to this Agreement for the breach hereof which
cannot be settled by the parties and does not request or require injunctive
relief, shall be settled by binding arbitration in accordance with the
commercial arbitration rules of the American Arbitration Association (“AAA”) in
New York, NY, except to the extent inconsistent with the rules set forth
herein.  The parties shall endeavor to appoint a single arbitrator,
and failing that, USCF and SHIM may each select one arbitrator with knowledge of
the types of Services provided for under this Agreement.  Selection
shall be completed within twenty (20) days of the receipt of a demand for
arbitration.  If either party fails to select an arbitrator within
such twenty (20) day period, the one selected shall act as sole
arbitrator.  If two arbitrators have been selected, the two
arbitrators selected shall select a third within fifteen (15) days after their
selection.  If they fail to do so, the third arbitrator shall be
selected by the AAA.  The award of any arbitration shall be final,
conclusive and binding on the parties hereto.  The arbitrators may
award any legal or equitable remedy.  The arbitration award may
include an award of attorneys’ fees to the prevailing party.  Judgment
upon any arbitration award may be entered and enforced in any court of competent
jurisdiction.

     

    (c) Captions Not
Determinative.  Titles and paragraph
headings herein are for convenient reference only and are not part of this
Agreement.

     

    (d)  Independent Contractors.  USCF and SHIM are
independent contractors to one another.  Nothing in this Agreement
shall be construed to create a partnership, joint venture or agency relationship
between USCF, on the one hand, and SHIM, on the other hand.

     

    (e)  Force Majeure.  No party shall be in
default or otherwise liable for any delay in or failure of its performance under
this Agreement where such delay or failure arises by reason of any act of God,
or any government or any governmental body, any act of war or terrorism, the
elements, strikes or labor disputes, or other similar or dissimilar cause beyond
the control of such party.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    (f)  Notice.  All notices, including
notices of address changes, required to be sent hereunder shall be in writing
and shall be deemed to have been given when mailed by registered or certified
mail, postage prepaid to the appropriate address below:

     

    If
to SHIM:

     

    SummerHaven
Investment Management, LLC

    Soundview
Plaza

    Fourth
Floor

    1286 East
Main Street

    Stamford,
CT 06902

    Telephone
No.: (203) 352-2700

    Telecopier
No.: (203) 352-2701

    

    If
to USCF:

    

    United
States Commodity Funds LLC

    1320
Harbor Bay Parkway

    Suite
145

    Alameda,
California 94502

    Attn:
Nicholas D. Gerber

    Telephone
No.: (510) 522-3336

    Telecopier
No.: (510) 522-3334

    

     

    (g)  Severability.  In
the event that any provision of this Agreement is held invalid by a court with
jurisdiction over the parties, such provision shall be deemed to be restated to
be enforceable, in a manner which reflects, as nearly as possible, the intent
and economic effect of the invalid provision in accordance with applicable
law.  The remainder of this Agreement shall remain in full force and
effect.

     

    (h)  Waiver.  The waiver
by any party of any default or breach of this Agreement shall not constitute a
waiver of any other or subsequent default or breach.

     

    (i)  Modification.  No
representation or promise hereafter made, nor any modification or amendment of
this Agreement, shall be binding unless in writing and executed by duly
authorized agents of all parties affected by the modification or
amendment.

     

    (j)  Counterparts.  This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original,
but which together shall constitute one and the same document.

     

    (k)  Assignment.  USCF may not assign
this Agreement or any of the rights or obligations granted hereunder without
SHIM’s prior
written consent, and SHIM may not assign this Agreement or any of the rights or
obligations granted hereunder (except to an affiliate under common
control)  without USCF’s prior written consent.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    (l)  Governing Law.  This Agreement shall be
governed by and construed solely and exclusively in accordance with the laws of
the State of New York, without reference to its conflicts of law
principles.

     

    (m)  Survival.  The
terms of Articles 4 and 6 shall survive the expiration or termination of this
Agreement.

     

    (n)  Authority.  The
person signing this Agreement on behalf of each party has been properly
authorized and empowered to execute agreements such as this Agreement on behalf
of such party.

     

    (o)  Entire
Agreement.  This Agreement and any Exhibits constitute the
complete agreement between the parties and supersede all previous or
contemporaneous agreements, proposals, understandings, and representations,
written or oral, with respect to the subject matter addressed
herein.

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    IN WITNESS WHEREOF, the
parties have entered into this Consulting Services Agreement, and intend to be
legally bound by it, as of the Effective Date.

     

     

    
      
        	 	 	

                SUMMERHAVEN
      INVESTMENT MANAGEMENT, LLC

              
	Attest:	 	
              	 
	 	 	 	 	 
	
                
                  Ashraf R.
Rizvi

                

              	 	By	
                /s/ Ashraf R.
    Rizvi

              	 
	
                 

              	 	 	
                Partner

              	 
	
                 

              	 	 	
                 

              	 

      

       

       

      
        
          	 	 	UNITED
      STATES COMMODITY FUNDS LLC
	Attest:	 	
                	 
	 	 	 	 	 
	
                  
                    Howard Mah

                  

                	 	By	
                  /s/ Howard Mah

                	 
	
                   

                	 	 	
                  Management
      Director

                	 
	
                   

                	 	 	
                   

                	 

        

         

      

    

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    EXHIBIT
A

     

    Index:

     

    SummerHaven
Dynamic Commodity Index, as described in the final prospectus to be filed by the
Fund in its initial public offering or as otherwise agreed by USCF and
SHIM

     

     

    Service
Marks:

     

    SDCI

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    Exhibit
B

     

    Fee
Schedule

     

    USCF
and/or the Fund will pay a monthly advisory fee (the “Fee”) to SHIM equal to the
product of "A" minus "B", with that result multiplied by 0.5, minus "C",
where:

    

    "A"
equals the amount of all management, advisory, or other fees currently
payable by the Fund to USCF during the measured monthly period as measured in
basis points, and,

    

    "B"
equals the higher of either 10 basis points or 10 basis points plus
the amount, expressed in basis points, that USCF pays ALPS Fund Services for
distribution and marketing services that exceeds 2 basis points on an annualized
basis, and,

    

    "C"
equals 6 basis points.

      

    USCF
and/or the Fund will pay the advisory fee as a percentage of the average daily
assets of the Fund to SHIM, which shall be paid on a monthly
basis.  The advisory fee for each month will be calculated as the sum
of daily calculated advisory fees according to the following
formula:

    

    Daily
Advisory Fee = (Total Assets of the Fund x  ((A-B) x .5) -
..C%,  divided by 365.

    

    On days
that the units of the Fund are not traded, the Total Assets for the respective
advisory fees will be those determined on the previous day on which the Fund’s
units were traded.

    

    The Fee
shall be paid to SHIM within 5 business days of the end of each calendar
month.

     

    
      
         

      

      
        11Unassociated Document

    EXHIBIT 10.1

    

    

    AMENDMENT
NO. 3 TO

    AMENDED
AND RESTATED EMPLOYMENT AGREEMENT

    

     

    This
Amendment No. 3 (the “Third Amendment”) to the Amended and Restated Employment
Agreement dated May 21, 2003 (the “Employment Agreement”) as further amended
pursuant to Amendment No. 1 dated January 23, 2006 and Amendment No. 2 dated
March 20, 2009 is entered into as of June 18, 2010 (the “Effective Date”) by and
among Apollo Gold Corporation, a Yukon territory Corporation (“Parent”) and its
wholly-owned subsidiary, Apollo Gold Inc., a Delaware corporation (jointly and
severally with Parent, the “Employer”), and R. David Russell (“Executive”).
Capitalized terms used and not otherwise defined herein shall have the
respective meanings set forth in the Employment Agreement, as
amended.

     

    RECITALS

    

    WHEREAS, the Employer desires
that the Executive continue to be employed by the Employer and the Executive is
willing to continue to be employed by the Employer;

     

    WHEREAS, Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”), places certain
restrictions, among other things, as to the timing of distributions from
nonqualified deferred compensation plans and arrangements, including severance
payments;

    

    WHEREAS, the Employer and
Executive have at all times administered and construed each provision of the
Employment Agreement consistent with the requirements of Section 409A, including
the short-term deferral exception to Section 409A;

     

    WHEREAS, the Employer and
Executive desire to clarify certain ambiguous terms and conditions of the
Employment Agreement to confirm that those terms and conditions that are not
grandfathered from the requirements of Section 409A of the Code pursuant to
Treasury Regulation 1.409A-6 comply with the documentary requirements of the
final Section 409A Treasury Regulations, including the short-term deferral
exception of Section 409A of the Code and Treasury Regulation 1.409A-1(b)(4),
and to continue Executive’s employment with the Employer in accordance with
those clarified terms and conditions.

     

    NOW, THEREFORE, in
consideration of the mutual promises set forth herein, the parties hereto hereby
agree as follows:

    

    1. Section
3(a) is hereby amended to add the following new sentence at the end of Section
3(a):

     

    “Any
bonus awarded to the Executive shall be paid in accordance with the Company’s
customary practices, but in no event later than the 15th day of the third
calendar month following the close of the calendar year for which such bonus is
earned.”

     

    2. Section 5
of the Employment Agreement is hereby amended in its entirety to read as
follows:

     

    “The Executive shall be reimbursed by
the Company for business expenses incurred as a result of his work on behalf of
the Company.  The Company shall reimburse the Executive for such
expenses upon presentation of supporting documentation satisfactory to the
Company in accordance with the tax principles applicable in Canada (at times
when the Executive is resident in Canada) or in accordance with the tax
principles applicable in the United States (at times when the Executive is
resident in the United States) for such reimbursement and the Company’s
established reimbursement policies, as those policies may be modified from time
to time in the Company’s discretion.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    The
following provisions shall be in effect for any reimbursements to which the
Executive otherwise becomes entitled under this Agreement, including (without
limitation) the reimbursements provided under this Section 5 and the allowances
provided in Section 3(d) and Section 3(f), in order to assure that such
reimbursements are effected in compliance with the applicable requirements of
Section 409A of the Code:

     

    (i)           The
amount of reimbursements to which the Executive may become entitled in any one
calendar year shall not affect the amount of expenses eligible for reimbursement
hereunder in any other calendar year;

     

    (ii)           The
Executive’s right to reimbursement cannot be liquidated or exchanged for any
other benefit or payment; and

     

    (iii)           In
no event will any expense be reimbursed after the close of the calendar year
following the calendar year in which that expense is incurred.”

     

    3. Section
6(e) of the Employment Agreement is hereby amended in its entirety to read as
follows:

     

    “In the event of a Change of Control,
the Executive’s employment shall be deemed to have been terminated without cause
(whether or not the Executive’s employment actually terminates at the time of
the Change of Control) and the Executive shall become entitled to receive the
following payments and benefits:

     

    (i)           Any
stock options granted to the Executive but not vested shall be deemed to have
immediately vested as of the date of the Change of Control;

     

    (ii)           The
Company shall pay to the Executive a lump-sum cash payment in an amount equal to
(a) three times the Executive’s base salary (at the annual rate in effect on the
effective date of the Change of Control) plus (b) 50% of the Executive’s bonus
entitlement, times three.  Such payment shall be paid to the Executive
within thirty days following the effective date of the Change of Control;
and

     

    (iii)           The
Executive shall be entitled to a lump-sum cash payment, in a dollar amount equal
to (a) thirty-six times the Company’s monthly cost of health care coverage for
the Executive and his spouse and eligible dependents under the Company’s
employee group health plan at the level of coverage in effect for Executive and
his spouse and eligible dependents at the time of the Change of Control, plus
(b) three times the Executive’s annual automobile allowance pursuant to Section
3(d), plus (c) three times the Executive’s annual social/sports club dues
allowance pursuant to section 3(f).  Such payment shall be paid to the
Executive within thirty days following the effective date of the Change of
Control.

     

    In no event shall the Executive become
entitled to a payment pursuant to this Section 6(e) and pursuant to Section 6(f)
of the Employment Agreement.  In the event of a Change of Control in
which the Executive’s employment with the Company continues following the
effective date of the Change of Control, Section 6(f) of the Employment
Agreement shall terminate, and no payment will be made pursuant to such
section.

     

    4. Section
6(f) of the Employment Agreement is hereby amended in its entirety to read as
follows:

     

    “The
Executive’s employment may be terminated without cause by majority vote of the
Board.  In the event that the Executive’s employment is terminated
pursuant to this section 6(f), in compensation for the Executive’s loss of
employment, the Executive shall become entitled to receive the following
benefits and payments, and the Executive shall not have the duty to mitigate
damages:

     

    (i)           Any
stock options granted to the Executive but not vested shall be deemed to have
immediately vested as of the Executive’s termination date;

     

    (ii)           The
Company shall pay to the Executive a lump-sum cash payment in an amount equal to
(a) three times the Executive’s base salary (at the annual rate in effect at the
time the Executive’s employment is terminated) plus (b) 50% of the Executive’s
bonus entitlement, times three.  Such payment shall be paid to the
Executive within thirty days following the date of his Separation from Service
(as such term is defined in Section 19); and

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (iii)           The
Executive shall be entitled to a lump-sum cash payment, in a dollar amount equal
to (a) thirty-six times the monthly cost of COBRA continued health care coverage
for the Executive and his spouse and eligible dependents under the Company’s
employee group health plan at the level of coverage in effect for Executive and
his spouse and eligible dependents at the time of his termination and calculated
on the basis of cost of such COBRA coverage at that time, plus (b) three times
the Executive’s annual automobile allowance pursuant to Section 3(d), plus (c)
three times the Executive’s annual social/sports club dues allowance pursuant to
section 3(f) .  Such payment shall be paid to the Executive within
thirty days following the date of the Executive’s Separation from Service (as
such term is defined in Section 19).”

     

    5. The
following new Section 19 is hereby added to the Employment
Agreement:

     

    “19.  Code
Section 409A.

     

    The
parties intend that the provisions of this Agreement either (i) are
grandfathered from the requirements of Section 409A of the Code or (ii) comply
with the requirements of the short-term deferral exception of Section 409A of
the Code and Treasury Regulations Section
1.409A-1(b)(4).  Accordingly, to the extent there is any ambiguity as
to whether one or more provisions of this Agreement would otherwise contravene
the requirements or limitations of Code Section 409A applicable to the
grandfather rules or the short-term deferral exception, then those provisions
shall be interpreted and applied in a manner that does not result in a violation
of the requirements or limitations of Code Section 409A and the Treasury
Regulations thereunder that apply to such rules or such exception.”

     

    If and to
the extent this Agreement may be deemed to create an arrangement subject to the
requirements of Section 409A, then no amounts which become payable by reason of
the Executive’s cessation of service shall actually be issued or distributed to
the Executive prior to the earlier of
(i) the first day of the seventh (7th) month following the date of his
Separation from Service due to such cessation of service or (ii) the date of the
Executive’s death, if the Executive is deemed at the time of such Separation
from Service to be a specified employee under Section 1.409A-1(i) of the
Treasury Regulations issued under Code Section 409A, as determined by the
Company in accordance with consistent and uniform standards applied to all other
Code Section 409A arrangements of the Company, and such delayed commencement is
otherwise required in order to avoid a prohibited distribution under Code
Section 409A(a)(2).  The deferred payments shall be paid in a lump sum
on the first day of the seventh (7th) month following the date of the
Executive’s Separation from Service or, if earlier, the first day of the month
immediately following the date the Company receives proof of the Executive’s
death.

     

    For
purposes of this Agreement, the term “Separation from Service” shall have the
meaning ascribed to such term under Code Section 409A and the Treasury
Regulations issued thereunder.”

     

    6. Except as
modified by this Third Amendment, all the terms and provisions of the Employment
Agreement, as amended shall continue in full force and effect.

     

    IN WITNESS WHEREOF, the
parties hereto have executed this Third Amendment as of the date first above
written.

     

    
      
        
          
            
              
                	 	APOLLO GOLD
      CORPORATION	 
	 	 	 	 
	
                      	
                        By:
      

                      	/s/ Melvyn
      Williams	 
	 	 	Title:   Sr. VP & CFO	 
	 	 	 	 
	 	 	 	 

              

            

          

        

      

    

    
      
        
          
            
              
                
                  	 	APOLLO GOLD,
    INC.	 
	 	 	 	 
	
                        	
                          By:
      

                        	/s/ Melvyn
      Williams	 
	 	 	Title:   Sr. VP & CFO	 
	 	 	 	 

                

              

            

          

        

      

      
        
          
            
              
                
                  
                    	
                          	
                            By:
      

                          	/s/ R.
      D. Russell	 
	 	 	R. DAVID
    RUSSELL

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