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) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A ADOPTED UNDER THE SECURITIES ACT); (B) IT IS AN ACCREDITED
INVESTOR (AS DEFINED IN REGULATION D UNDER THE SECURITIES ACT); OR (C) IT IS NOT
A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH REGULATION S ADOPTED UNDER THE SECURITIES ACT; (2) AGREES THAT
IT WILL NOT RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY OR THE
DEBENTURES AND WARRANTS ISSUABLE UPON CONVERSION OF SUCH SECURITY, OR THE
UNDERLYING COMMON SHARES, EXCEPT (A) TO THE ISSUER OR A SUBSIDIARY THEREOF; (B)
TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A ADOPTED UNDER
THE SECURITIES ACT (IF AVAILABLE); (C) TO PERSONS OTHER THAN U.S. PERSONS
OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES
ACT; (D) 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 (E) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, AND (3) AGREES THAT IT WILL, PRIOR TO ANY
TRANSFER OF THIS SECURITY FURNISH TO THE ISSUER SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS MAY BE REQUIRED PURSUANT TO THE INDENTURE 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 "OFFSHORE TRANSACTION," "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 OR ANY DEBENTURES AND WARRANTS
ISSUABLE UPON CONVERSION OF SUCH SECURITY, OR THE UNDERLYING COMMON SHARES,
EXCEPT AS PERMITTED BY THE SECURITIES ACT.
THE SECURITIES REPRESENTED BY THIS SPECIAL NOTE CERTIFICATE HAVE NOT BEEN AND
WILL NOT BE REGISTERED UNDER THE 1933 ACT. THE SECURITIES TO BE ISSUED UPON
EXERCISE OF THE SECURITIES REPRESENTED BY THIS SPECIAL NOTE CERTIFICATE WILL NOT
BE INITIALLY REGISTERED AND MAY OR MAY NOT LATER BECOME REGISTERED FOR RESALE
UNDER THE 1933 ACT. NEITHER ANY SECURITIES REPRESENTED BY THIS SPECIAL NOTE
CERTIFICATE NOR ANY SECURITIES ISSUED UPON EXERCISE OF THE SECURITIES
REPRESENTED BY THIS SPECIAL NOTE CERTIFICATE MAY BE EXERCISED BY OR ON BEHALF OF
ANY U.S. PERSON, AS SUCH TERM IS DEFINED IN REGULATION S PROMULGATED PURSUANT TO
THE 1933 ACT, UNLESS REGISTERED UNDER THE 1933 ACT OR AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE.
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST
NOT TRADE THE SECURITY BEFORE MARCH 5, 2005.
APOLLO GOLD CORPORATION
(Continued under the Business Corporations Act (Yukon))
SPECIAL NOTE
TO ACQUIRE
SERIES 2004 - B SECURED CONVERTIBLE DEBENTURES
AND
WARRANTS
Certificate Number: 2004-SN-o Principal Amount: US$ o
THIS IS TO CERTIFY THAT, for value received, [INSERT REGISTRATION INFORMATION]
(the "HOLDER") is the registered holder of [US$ 0O ] principal amount special
note (the "SPECIAL NOTE") of Apollo Gold Corporation (the "CORPORATION"). Each
US$1,000 principal amount of the Special Note is convertible, at the holder's
option at anytime prior to the Expiry Time, into US$1,000 principal amount of
12% Series 2004-B secured convertible debenture of the Corporation having a term
of three years from the date of issue (the "SERIES B DEBENTURE") issuable
pursuant to the terms of a debenture indenture (the "TRUST INDENTURE") dated the
date hereof between the Corporation and The Canada Trust Company (the "INDENTURE
Trustee") and 600 common share purchase warrants (the "WARRANTS"), subject to
the adjustments and limitations referred to herein. The principal amount of a
Series B Debenture will be convertible, at the holder's option, during its term
into common shares of the Corporation (a "COMMON SHARE") at US$0.75 per share in
accordance with the terms of the Trust Indenture. Each Warrant entitles the
holder thereof to acquire one fully paid and non-assessable common share in the
capital of the Corporation (a "WARRANT SHARE") at any time commencing on the
issuance thereof and continuing up to 5:00 p.m. (Toronto time) on the third
anniversary date of issue on payment of $0.80 per Warrant Share subject to
adjustment (the "EXERCISE PRICE").
Special Notes
2
The Series B Debentures and Warrants issuable upon the conversion or deemed
conversion of the Special Note are hereafter collectively referred to as the
"UNDERLYING SECURITIES".
The underlying Common Shares are subject to a Registration Rights Agreement
between the Corporation and the initial holders of the Special Notes, dated
November 4, 2004.
Surrender of this Special Note Certificate will be deemed to have been effected
only on personal delivery thereof to, or, if sent by mail or other means of
transmission, on actual receipt thereof by, the Corporation's counsel at the
office specified above.
REFERENCE IS MADE TO SCHEDULE "A" ANNEXED HERETO (WHICH SCHEDULE IS INCORPORATED
BY REFERENCE HEREIN AND IS DEEMED TO BE A PART HEREOF) FOR PARTICULARS OF THE
RIGHTS OF THE HOLDERS OF THE SPECIAL NOTES OF THE CORPORATION EVIDENCED HEREBY
AND OF THE TERMS AND CONDITIONS UPON WHICH THE SPECIAL NOTES ARE ISSUED AND
HELD, TO ALL OF WHICH THE HOLDER, BY ACCEPTANCE HEREOF, ASSENTS.
The Holder may convert the Special Note at any time until the Time of Expiry by
completing the election to convert form attached as Exhibit "1" to this
certificate. The term "TIME OF EXPIRY" shall mean 5:00 p.m. (Toronto time) on
the date (the "EXPIRY DATE") that is the earlier of:
(i) the fifth (5th) Business Day (as hereinafter defined) after the
issuance of the Receipt (as hereinafter defined) in respect of a
(final) prospectus qualifying, among other things, the issuance of
the Series B Debentures and Warrants issuable on the conversion or
deemed conversion of the Special Notes (the "PROSPECTUS") by the
Ontario Securities Commission (the "COMMISSION") and any other
securities regulatory authority in each of the jurisdictions in
Canada in which purchasers of Special Notes and Special Warrants (as
defined in the in the agency agreement among, inter alia, the Holder
and the Corporation dated as of November 4, 2004) reside; and
(ii) November 4, 2005.
Any principal amount outstanding under the Special Note on the Expiry Date will
be automatically converted by the Corporation on behalf of the Holder without
any action on the part of the Holder immediately prior to the Time of Expiry.
The Corporation will by the fifth Business Day following the day on which the
Expiry Time occurs give such notice to the Holders of Special Notes of such
deemed conversion along with the certificates representing the Underlying
Securities issued on the conversion or deemed conversion of the Special Notes.
The certificate representing the Series B Debenture shall be in the form
prescribed in the Trust Indenture. The certificate representing the Warrants
shall be in the form attached as Exhibit "3" hereto.
The term "BUSINESS DAY" shall mean a day which is not a Saturday or Sunday or a
legal holiday in the City of Toronto, Ontario or Denver, Colorado. The term
"RECEIPT" means, in respect of a securities commission of the Province of
Ontario, the decision document, receipt or similar notice or document in respect
of the Prospectus issued by the Commission.
3
If the Corporation has not obtained the Receipt for the Prospectus on or before
December 20, 2004 (the "QUALIFICATION DEADLINE"), each US$1,000 principal amount
of Special Note will thereafter entitle the Holder thereof to acquire upon the
conversion thereof and for no additional consideration, US$1,000 principal
amount Series B Debenture and 660 Warrants (in lieu of US$1,000 principal amount
Series B Debenture and 600 Warrants).
On and after the date of any conversion or deemed conversion of the Special Note
evidenced by this Special Note Certificate, the Holder will have no rights
hereunder except to receive within five Business Days of such conversion or
deemed conversion certificates representing the Underlying Securities thereby
issued to the Holder.
The Corporation will not be obligated to issue any fraction of a Warrant on the
conversion or deemed conversion of the Special Note and no compensation will be
paid by the Corporation for the Holder for any fraction of a Warrant.
Nothing contained in this Special Note Certificate shall be constructed as
conferring upon the Holder any right or interest whatsoever as a Holder of
Common Shares or any other right or interest except as herein provided.
Time will be of the essence hereof.
This Special Note Certificate shall be governed and construed in accordance with
the laws of the Province of Ontario.
IN WITNESS WHEREOF Apollo Gold Corporation has caused this Special Note
Certificate to be signed by a duly authorized signing officer as of November 4,
2004.
APOLLO GOLD CORPORATION
By:
--------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Senior Vice President
Finance and Corporate Development
A-1
SCHEDULE "A"
TO SPECIAL NOTE CERTIFICATE
TERMS AND CONDITIONS OF SPECIAL NOTE
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
In these Terms and Conditions, unless there is something in the subject
matter or context inconsistent therewith:
"ADJUSTMENT PERIOD" has the meaning ascribed to the term in section 4.7;
"AFFILIATE" shall have the meaning ascribed to such term in the Securities Act
(Ontario);
"BUSINESS DAY" means any day that is not a Saturday, Sunday or any other day on
which the principal chartered banks located in the city of Toronto, Ontario, or
Denver, Colorado are not open for business;
"CLOSING DATE" means the date on which this Special Note Certificate is issued
to the Holder;
"COMMISSION" means the Ontario Securities Commission;
"COMMON SHARES" means the common shares in the capital of the Corporation;
"CORPORATION" means Apollo Gold Corporation and includes any successor
corporation to or of the Corporation;
"CORPORATION'S AUDITORS" means the auditors to be duly appointed by the
directors as auditors of the Corporation;
"COUNSEL" means Fogler, ▇▇▇▇▇▇▇▇ LLP;
"CONVERSION DATE" means, with respect to the Special Note converted by the
Holder thereof pursuant to subsection 4.1(1), the day on which the Special Note
Certificate evidencing such Special Note is surrendered to the Corporation in
accordance with the provisions of section 4.1;
"DEEMED CONVERSION DATE" means, with respect to the deemed conversion of the
Special Notes pursuant to subsection 4.2(1), the date on which the Special Notes
are so deemed to have been converted as provided in such subsection;
"DIRECTOR" means a director of the Corporation for the time being, and reference
without more to action by the directors means action by the directors of the
Corporation as a board or, to the extent empowered, by a committee of the board,
in each case by resolution duly passed;
"EXERCISE PRICE" shall have the meaning ascribed to such term on the first page
hereof;
"EXPIRY TIME" shall have the meaning ascribed to such term on the first page
hereof;
"INDENTURE TRUSTEE" means The Canada Trust Company, and its successors and
permitted assigns;
2
"PERSON" means an individual, corporation, firm, sole proprietorship, syndicate,
joint venture trust, partnership, trustee or unincorporated organization, and
words importing persons have a similar extended meaning;
"PROSPECTUS" means the final prospectus qualifying the distribution of the
Series B Debentures and Warrants in the Province of Ontario and such other
jurisdictions where the Special Notes are lawfully sold;
"QUALIFICATION DEADLINE" means December 20, 2004;
"RECEIPT" means the receipt for the Prospectus to be issued by the Commissions;
"SERIES B DEBENTURE" means the 12% Series 2004 - B secured convertible
debentures of the Corporation issuable pursuant and subject to the Trust
Indenture;
"SPECIAL NOTE CERTIFICATE" means the certificate evidencing one or more Special
Notes to which these Terms and Conditions are attached;
"SPECIAL NOTEHOLDERS" or "HOLDERS" means the persons for the time being entered
in a register of holders described in section 3.1 as holders of Special Notes;
"SPECIAL NOTES" means the Special Notes issued by the Corporation, each US$1,000
principal amount of Special Notes convertible into US$1,000 principal amount of
Series B Debenture and 600 Warrants, subject to adjustment as provided herein,
created and authorized for issuance hereunder and evidenced by this Special Note
Certificate issued and certified in accordance with the provisions hereof and
that have not for the time being expired or been converted or deemed to have
been converted;
"THESE TERMS AND CONDITIONS", "HERETO", "HEREUNDER", "HEREOF", "HEREIN",
"HEREBY" and similar expressions mean or refer to these Terms and Conditions and
any indenture, deed or instrument supplemental or ancillary hereto, and the
expressions "ARTICLE", "SECTION", "SUBSECTION" and "PARAGRAPH" followed by a
number mean the specified Article, section, subsection or paragraph of these
Terms and Conditions;
"TRUST INDENTURE" means the trust indenture dated as of the date hereof between
the Corporation and the Indenture Trustee in respect of the creation and
issuance of up to US$12,500,000 principal amount of Series B Debentures;
"UNDERLYING SECURITIES" means the Series B Debentures and the Warrants issuable
upon the conversion or deemed conversion of the Special Notes;
"U.S. SECURITIES ACT" United States Securities Act of 1933, as amended;
"WARRANTS" means the common share purchase warrants of the Corporation issuable
upon the conversion or deemed conversion of the Special Notes, with each warrant
exercisable at a price of US$0.80 for a three year period from the date of
issue; and
"WRITTEN ORDER OF THE CORPORATION", "WRITTEN REQUEST OF THE CORPORATION",
"WRITTEN CONSENT OF THE CORPORATION", "WRITTEN DIRECTION OF THE CORPORATION" and
"CERTIFICATE OF THE CORPORATION" mean, respectively, a written order, request,
consent, direction and certificate signed in the name of the Corporation by any
director or officer of the Corporation or by any other individual to whom such
signing authority is delegated by the directors from time to time, and may
consist of one or more instruments so executed.
3
1.2 WORDS IMPORTING THE SINGULAR
Words importing the singular include the plural and vice versa and words
importing a particular gender include all genders.
1.3 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC.
The division of these Terms and Conditions into Articles, sections,
subsections, paragraphs, subparagraphs, clauses and subclauses and the insertion
of headings are for convenience of reference only and will not affect the
construction or interpretation of these Terms and Conditions.
1.4 DAY NOT A BUSINESS DAY
If the day on or before which any action that would otherwise be required
to be taken hereunder is not a Business Day in the place where the action is
required to be taken, that action will be required to be taken on or before the
requisite time on the next succeeding day that is a Business Day.
1.5 TIME OF THE ESSENCE
Time will be of the essence in all respects in these Terms and Conditions
and the Special Note Certificate.
1.6 CURRENCY
Except as otherwise stated, all dollar amounts herein are expressed in
United States dollars.
1.7 APPLICABLE LAW
These Terms and Conditions and the Special Note Certificate will be
construed and enforced in accordance with the laws prevailing in Ontario and
will be treated in all respects as Ontario contracts.
ARTICLE 2
THE SPECIAL NOTES
2.1 CREATION AND ISSUE OF SPECIAL NOTE
The Special Note set forth on the attached certificate, each $1,000
principal amount of Special Notes convertible, without payment of any additional
consideration, into $1,000 principal amount of Series B Debenture and 600
Warrants (subject to adjustment as provided herein) on the terms and subject to
the conditions herein provided, is hereby created and authorized for issuance at
a price of $1,000 for each $1,000 principal amount of Special Note, paid for in
cash.
2.2 TERMS OF SPECIAL NOTES
(1) Subject to subsection 2.2(2) hereof, each $1,000 principal amount of
Special Notes issued hereunder, will entitle the Holder thereof,
upon the conversion or deemed conversion thereof in accordance with
the provisions of Article 4, and without payment of any additional
consideration, to be issued $1,000 principal amount Series B
Debenture and 600 Warrants.
4
(2) If the Corporation has not obtained the Receipt for the Prospectus
on or before the Qualification Deadline, each US$1,000 principal
amount of Special Note will thereafter entitle the Holder thereof to
acquire upon the conversion thereof and for no additional
consideration, US$1,000 principal amount Series B Debenture and 660
Warrants (in lieu of US$1,000 principal amount Series B Debenture
and 600 Warrants).
2.3 ISSUE IN SUBSTITUTION FOR LOST CERTIFICATES, ETC.
(1) If any Special Note Certificate becomes mutilated or is lost,
destroyed or stolen, the Corporation, subject to applicable law and
to subsection (2), will issue and deliver, a new Special Note
Certificate of like tenor as the one mutilated, lost, destroyed or
stolen in exchange for and in place of and on surrender and
cancellation of such mutilated certificate or in lieu of and in
substitution for such lost, destroyed or stolen certificate.
(2) The applicant for the issue of a new Special Note Certificate
pursuant to this section will bear the reasonable cost of the issue
thereof and in case of loss, destruction or theft will, as a
condition precedent to the issue thereof:
(a) furnish to the Corporation such evidence of ownership and of
the loss, destruction or theft of the Special Note Certificate
to be replaced as is satisfactory to the Corporation in its
discretion;
(b) if so required, furnish an indemnity in amount and form
satisfactory to the Corporation in its discretion; and
(c) pay the reasonable charges of the Corporation in connection
therewith.
2.4 CANCELLATION OF SURRENDERED SPECIAL NOTES
All Special Note Certificates surrendered to the Corporation pursuant to
sections 2.3 or 4.1 will be cancelled by the Corporation.
2.5 SPECIAL NOTEHOLDER NOT A SHAREHOLDER
Nothing in these Terms and Conditions or in the holding of the Special
Note evidenced by a Special Note Certificate, or otherwise, will be construed as
conferring on any Special Noteholder any right or interest whatsoever as a
shareholder of the Corporation, including but not limited to any right to vote
at, to receive notice of, or to attend any meeting of shareholders or any other
proceeding of the Corporation or any right to receive any dividend or other
distribution.
5
ARTICLE 3
REGISTRATION AND OWNERSHIP OF SPECIAL NOTES
3.1 REGISTRATION OF SPECIAL NOTES
(1) The Corporation will cause to be kept at the offices of its counsel,
a register of Holders in which shall be entered the names and
addresses of the Holders of Special Notes and particulars of the
Special Notes held by them.
(2) The register referred to in subsection 3.1(1), will at all
reasonable times be open for inspection by any Special Noteholder.
The Corporation will from time to time when requested to do so in
writing by any Special Noteholder (upon payment of the Corporation's
reasonable charges), furnish such Special Noteholder with a list of
the names and addresses of Holders of Special Notes entered on such
register and showing the number of Special Notes held by each such
Holder.
3.2 TRANSFERABILITY OF SPECIAL NOTE
(1) The Special Note evidenced by this Special Note Certificate may only
be transferred in accordance with applicable laws.
(2) The Special Note will be subject to certain resale restrictions
imposed under applicable securities laws and the rules of regulatory
bodies having jurisdiction including, without limiting the
generality of the foregoing, the requirement that the Special Note
issuable not be traded for a period of four months from the Closing
Date as required under the applicable securities laws of Canada, and
the applicable restriction period under the U.S. Securities Act,
except as permitted by applicable securities laws in the United
States.
(3) The Special Note is a "restricted security" as defined under Rule
144 under the U.S. Securities Act and shall bear a restrictive
legend to this effect until such time as the Special Note is no
longer a "restricted security" under Rule 144 and is transferred
pursuant to the requirements of Rule 144 or subject to an effective
registration statement under the U.S. Securities Act.
3.3 OWNERSHIP OF SPECIAL NOTES
(1) The Corporation may deem and treat the person in whose name the
Special Note is registered as the absolute owner of such Special
Note for all purposes, and such person will for all purposes of
these Terms and Conditions be and be deemed to be the absolute owner
thereof, and the Corporation will not be affected by any notice or
knowledge to the contrary except as required by statute or by order
of a court of competent jurisdiction.
(2) The registered Holder of the Special Note will be entitled to the
rights evidenced thereby free from all equities and rights of
set-off or counterclaim between the Corporation and the original or
any intermediate Holder thereof and all persons may act accordingly,
and the delivery to any such registered Holder of the Underlying
Securities issued on conversion or deemed conversion of such Special
Note will be a good discharge to the Corporation therefor and,
unless the Corporation is required by statute or by an order of a
court of competent jurisdiction, the Corporation will not be bound
to inquire into the title of any such registered Holder.
6
ARTICLE 4
CONVERSION OF SPECIAL NOTE
4.1 CONVERSION
(1) Subject to the limitation set forth in subsection 4.1(2) and
provided that the Holder of the Special Note converts not less than
all of principal amount of the Special Note evidenced by this
Special Note Certificate at the same time, the Holder of the Special
Note may at any time prior to the Expiry Time convert the principal
amount of the Special Note into the Underlying Securities by
surrendering to the Corporation at its counsel's principal office at
Suite 4400, P.O. Box 95, Royal Trust Tower, Toronto-Dominion Centre,
Toronto, Ontario, M5K 1G8 Canada, or to any other person at any
other place designated by the Corporation in respect of which notice
has been given to the Holders of the Special Notes, during normal
business hours on a Business Day at such place, the Special Note
Certificate evidencing such Special Note, with a duly completed and
executed notice of conversion substantially in the form set out in
Exhibit "1" to this Special Note Certificate.
(2) Any Special Note Certificate with a duly completed and executed
notice of conversion referred to in subsection 4.1(1) will be deemed
to have been surrendered only on personal delivery thereof to, or,
if sent by mail or other means of transmission, on actual receipt
thereof by, the Corporation's counsel or one of the other persons at
the office or one of the other places specified in subsection
4.1(1).
(3) Any notice of conversion referred to in subsection 4.1(1) must be
signed by the Special Noteholder, or his executors, administrators
or other legal representatives or his or their attorney duly
appointed by an instrument in writing in form and execution
satisfactory to the Corporation, acting reasonably, and, if any
Underlying Securities thereby issuable are to be issued to a person
or persons other than the Special Noteholder, must specify the name
or names and the address or addresses of each such person or persons
and the principal amount of the Series B Debenture and the number of
Warrants to be issued to each such person if more than one is so
specified.
4.2 DEEMED CONVERSION
(1) If any principal amount of the Special Note has not been converted
pursuant to section 4.1 on the Expiry Date, such principal amount of
the Special Note will be deemed to have been converted by the Holder
thereof (without any further action on the part of such Holder or
the Corporation) immediately prior to the Expiry Time. In such
event, the Corporation will, within five Business Days following the
Expiry Time, give notice of such deemed conversion to the Holder of
such Special Note. Such notice shall specify that the Special Note
is deemed to have been converted automatically in accordance with
its terms and will indicate the principal amount of Series B
Debenture and number of Warrants issued upon such deemed conversion
of the Special Note.
(2) The Holder of the Special Notes deemed to have been converted
pursuant to subsection 4.2(1) will have no rights thereunder except
to receive certificates representing the Underlying Securities
thereby issued to him upon such conversion.
7
4.3 EFFECT OF CONVERSION OR DEEMED CONVERSION
(1) Upon the conversion of the Special Notes in accordance with section
4.1 or upon the deemed conversion of the Special Notes in accordance
with section 4.2 the Underlying Securities thereby issuable will be
deemed to have been issued, and the person or persons to whom such
Underlying Securities are to be issued will be deemed to have become
the holder or holders of record thereof, on the Conversion Date or
the Deemed Conversion Date, as the case may be, unless the transfer
registers for the Underlying Securities are closed on that date, in
which case such Underlying Securities will be deemed to have been
issued and such person or persons will be deemed to have become the
holder or holders of record thereof on the date on which such
transfer registers are reopened, but such Underlying Securities will
be issued on the basis of the principal amount of Series B
Debentures and number of Warrants to which such person or persons
were entitled on the Conversion Date or the Deemed Conversion Date,
as the case may be.
(2) As soon as practicable and in any event not later than, in the case
of the conversion of the Special Note in accordance with section
4.1, the fifth Business Day on which the transfer registers for the
Underlying Securities have been open after such conversion or, in
the case of the deemed conversion of the Special Note in accordance
with section 4.2, within five Business Days after such deemed
conversion, the Corporation will mail to the person or persons in
whose name or names the Underlying Securities thereby issued have
been issued, at his or their respective addresses in the register of
Special Noteholders, certificates representing the Underlying
Securities so issued.
(3) If any Underlying Securities issuable pursuant to the conversion of
the Special Note are to be issued to a person or persons other than
the Special Noteholder, the Special Noteholder must pay to the
Corporation an amount equal to all eligible transfer taxes or other
government charges, and the Corporation will not be required to
issue or deliver any certificates representing any Underlying
Securities unless or until such amount has been so paid or the
Special Noteholder has established to the satisfaction of the
Corporation that such taxes and charges have been paid or that no
such taxes or charges are owing.
4.4 NO FRACTIONAL WARRANTS
The Corporation will not, whether pursuant to an adjustment in accordance
with section 4.7 or under any other circumstances, be obligated to issue any
fraction of a Warrant on the conversion or deemed conversion of Special Notes.
No compensation will be paid by the Corporation for such fractional Warrant.
4.5 RECORDING
The Corporation will record particulars of each Special Note converted or
deemed to have been converted which will include the name and address of each
person to whom Underlying Securities are thereby issued, the principal amount of
Series B Debenture and number of Warrants so issued and the Conversion Date or
Deemed Conversion Date in respect thereof.
4.6 SECURITIES RESTRICTIONS
(1) No Underlying Securities will be issued on conversion or deemed
conversion of the Special Note, if in the opinion of counsel to the
Corporation, the issuance of such Underlying Securities would
constitute a violation of the securities laws of any applicable
jurisdiction or require the Corporation to qualify or register the
Underlying Securities issuable on conversion or deemed conversion of
the Special Note for distribution in any jurisdiction.
8
(2) Without limiting the generality of Section 4.6(1), the certificates
representing the Underlying Securities thereby issued will bear such
legends as may, in the opinion of counsel to the Corporation, be
necessary or advisable in order to avoid a violation of any
securities laws of any country, province or state or to comply with
the requirements of any stock exchange on which the Common Shares
are listed, provided that if, at any time, in the opinion of counsel
to the Corporation, such legends are no longer necessary or
advisable in order to avoid a violation of any such laws, or the
holder of any such legended certificate, at his expense, provides
the Corporation with evidence satisfactory in form and substance to
the Corporation (which may include an opinion of counsel
satisfactory to the Corporation) to the effect that such holder is
entitled to sell or otherwise transfer such Underlying Securities in
a transaction in which such legends are not required, such legended
certificate may thereafter be surrendered to the Corporation in
exchange for a certificate which does not bear such legends.
4.7 LEGENDS
(1) The holder, if resident in Canada, acknowledges that the appropriate
legend as follows will be placed upon certificates representing any
Underlying Securities issued upon the exercise of the Special Note
represented by this certificate until the earlier of (1) the Receipt
being issued by the securities regulatory authority in the holder's
jurisdiction of residence; and (2) the applicable restricted period
under the Multilateral Instrument 45-102 "Resale of Securities" has
expired, may be endorsed with the following legends to that effect.
"UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF
THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE MARCH 5,
2005."
(2) The holder understands that upon the original issuance thereof, and
until such time as the same is no longer required under the
applicable requirements of the U.S. Securities Act or applicable
U.S. state laws and regulations, the certificates representing the
Underlying Securities, and all securities issued in exchange
therefor or in substitution thereof, will bear a legend in
substantially the following form:
"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) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A ADOPTED UNDER THE SECURITIES
ACT); (B) IT IS AN ACCREDITED INVESTOR (AS DEFINED IN
REGULATION D UNDER THE SECURITIES ACT); OR (C) IT IS NOT A
U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S ADOPTED UNDER THE
SECURITIES ACT; (2) AGREES THAT IT WILL NOT RESELL OR
OTHERWISE TRANSFER THE SECURITY EVIDENCED, EXCEPT (A) TO THE
ISSUER OR A SUBSIDIARY THEREOF; (B) TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A ADOPTED UNDER
THE SECURITIES ACT (IF AVAILABLE); (C) TO PERSONS OTHER THAN
U.S. PERSONS OUTSIDE THE UNITED STATES IN COMPLIANCE WITH
REGULATION S UNDER THE SECURITIES ACT; (D) 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 (E) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (3)
AGREES THAT IT WILL, PRIOR TO ANY TRANSFER OF THIS SECURITY,
FURNISH TO THE ISSUER SUCH CERTIFICATIONS, LEGAL OPINIONS OR
OTHER INFORMATION AS MAY BE REQUIRED 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 "OFFSHORE
TRANSACTION," "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, EXCEPT AS PERMITTED BY THE SECURITIES ACT."
9
provided, that if any of the Underlying Securities are being sold
pursuant to Rule 144 of the U.S. Securities Act, the legend may be
removed by delivery to the Corporation's transfer agent of an
opinion of counsel satisfactory to the Corporation to the effect
that such Underlying Securities are not "restricted securities" as
defined in Rule 144 under the U.S. Securities Act and the legend is
no longer required under applicable requirements of the U.S.
Securities Act or state securities laws.
(3) The holder acknowledges that the certificates representing the
Underlying Securities 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 either
subsection 4.7(1) or 4.7(2) remains on such certificate:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON
THE TORONTO STOCK EXCHANGE; HOWEVER, THE SAID SECURITIES
CANNOT BE TRADED THROUGH THE FACILITIES OF SUCH EXCHANGE SINCE
THEY ARE NOT FREELY TRADABLE, AND CONSEQUENTLY ANY CERTIFICATE
REPRESENTING SUCH SECURITIES IS NOT 'GOOD DELIVERY' IN
SETTLEMENT OF TRANSACTIONS ON THE TORONTO STOCK EXCHANGE."
10
4.8 NOTICE OF ADJUSTMENTS TO WARRANTS
(1) Upon the occurrence of any event requiring an adjustment of the
Exercise Price pursuant to the terms of the Warrants from the date
hereof until the issue date of the Warrants, then and in each such
case, the Corporation shall give written notice thereof to the
Holder, which notice shall state the Exercise Price and the number
of Warrants Shares or other securities subject to the unexercised
Warrants resulting from such adjustment, and shall set forth in
reasonable detail the method of calculation and the facts upon which
such calculation is based. Upon the request of the Holder, there
shall be transmitted promptly to the Holder a statement of the firm
of independent chartered accountants retained to audit the financial
statements of the Corporation to the effect that such firm concurs
in the Corporation's calculation of the change.
(2) In case at any time from the date hereof until the issue date of the
Warrants:
(a) the Corporation shall declare any dividend upon its Common
Shares payable in Common Shares or other securities of the
Corporation;
(b) the Corporation shall offer for subscription pro rata to the
holders of its Common Shares any additional shares of any
class or other rights;
(c) there shall be any capital reorganization or reclassification
of the capital stock of the Corporation, or consolidation,
amalgamation or merger of the Corporation with, or sale of all
or substantially all of its assets to, another corporation; or
(d) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Corporation,
then, in any one or more of such cases, the Corporation shall give
to the Holder: (A) at least 10 days' prior written notice of the
date on which a record shall be taken for such dividend,
distribution or subscription rights or for determining rights to
vote in respect of any such reorganization, reclassification,
consolidation, merger, amalgamation, sale, dissolution, liquidation
or winding-up; and (B) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up, at least 10 days' prior written notice of
the date when the same shall take place. Such notice in accordance
with the foregoing clause (A) shall also specify, in the case of any
such dividend, distribution or subscription rights, the date on
which the holders of Common Shares shall be entitled thereto, and
such notice in accordance with the foregoing clause (B) shall also
specify the date on which the holders of Common Shares shall be
entitled to exchange their Common Shares for securities or other
property deliverable upon such reorganization, reclassification,
consolidation, merger, amalgamation, sale, dissolution, liquidation
or winding-up, as the case may be.
11
ARTICLE 5
COVENANTS
5.1 GENERAL COVENANTS
(1) The Corporation represents, warrants, covenants and agrees with the
Special Noteholders that so long as any Special Note remains
outstanding and may be converted:
(a) the Corporation is duly authorized to create and issue the
Special Note and that this Special Note Certificate be valid
and enforceable against the Corporation;
(b) the Corporation will at all times maintain its corporate
existence, carry on and conduct its business in a proper and
business-like manner and keep or cause to be kept proper books
of account in accordance with generally accepted accounting
practice;
(c) the Corporation will reserve for the purpose and keep
available sufficient unissued or created Series B Debentures
and Warrants to enable it to satisfy its obligations on the
conversion or deemed conversion of the Special Notes;
(d) the Corporation will enter into the Trust Indenture on the
date hereof with respect to the creation and issuance of the
Series B Debentures;
(e) the Corporation will cause the Warrants from time to time
issued pursuant to the conversion or deemed conversion of the
Special Note, and the certificates representing such Warrants,
to be duly issued and delivered in accordance with the Special
Notes and the terms hereof;
(f) all Common Shares that are issued on conversion of the
Warrants will be fully paid and non-assessable;
(g) the Corporation will keep open on Business Days the registers
of holders referred to in section 3.1 and will not take any
action or omit to take any action which would have the effect
of preventing the Special Noteholders from exercising any of
the Special Notes or receiving any of the Series B Debentures
and Warrants upon such conversion;
(h) the Corporation will make all requisite filings in connection
with the issuance of the Special Notes and issue of the Series
B Debentures and Warrants;
(i) the Corporation will provide the Special Noteholders with the
financial statements and other continuous disclosure documents
required to be delivered by it to its shareholders under
applicable corporate and securities laws;
(j) the Corporation will provide the Special Noteholders with a
copy of any prospectus filed by the Corporation qualifying the
distribution of the Series B Debentures and Warrants issuable
upon the conversion or deemed conversion of the Special Notes;
and
(k) generally, the Corporation will well and truly perform and
carry out all acts and things to be done by it as provided in
these Terms and Conditions.
12
ARTICLE 6
ENFORCEMENT
6.1 SUITS BY SPECIAL NOTEHOLDERS
All or any of the rights conferred upon any Special Noteholder by these
Terms and Conditions or the Special Note Certificates may be enforced by a
Special Noteholder by appropriate proceedings.
6.2 IMMUNITY OF SHAREHOLDERS, ETC.
By the acceptance of the Special Note Certificates and as part of the
consideration for the issue of the Special Notes, the Special Noteholders,
hereby waive and release any right, cause of action or remedy now or hereafter
existing in any jurisdiction against any person in his capacity as an
incorporator or any past, present or future shareholder or other securityholder,
director, officer, employee or agent of the Corporation for the creation and
issue of the Series B Debentures and Warrants pursuant to any Special Note or on
any covenant, agreement, representation or warranty by the Corporation herein.
6.3 LIMITATION OF LIABILITY
The obligations hereunder are not personally binding upon, nor shall
resort hereunder be had to, the directors or shareholders of the Corporation or
any of the past, present or future directors or shareholders of the Corporation
or any of the past, present or future officers, employees or agents of the
Corporation, but only the property of the Corporation shall be bound in respect
hereof.
ARTICLE 7
SUCCESSOR CORPORATIONS
7.1 SUCCESSOR CORPORATIONS
In the case of the consolidation, amalgamation, arrangement, merger or
transfer of the undertaking or assets of the Corporation as an entirety, or
substantially as an entirety, to another corporation, the successor corporation
resulting from such consolidation, amalgamation, arrangement, merger or transfer
(if not the Corporation) will be bound by the provisions hereof and for the due
and punctual performance and observance of each and every covenant and
obligation contained in these Terms and Conditions to be performed by the
Corporation.
ARTICLE 8
GENERAL
8.1 NOTICE TO THE CORPORATION
(1) Unless herein otherwise expressly provided, a notice to be given
hereunder to the Corporation will be validly given if delivered or
if sent by registered letter, postage prepaid, or if sent by
facsimile transmission (receipt of such transmission is confirmed in
writing), to:
Apollo Gold Corporation
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇-2571
13
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to the Corporation's counsel at
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ LLP
Suite 4400, P.O. Box 95
Royal Trust Tower
Toronto-Dominion Centre
Toronto, Ontario, M5K 1G8
Canada
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
-and-
▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and any such notice, if delivered personally, shall be deemed to
have been given and received on the day on which it was delivered,
provided that if such day is not a Business Day then the notice
shall be deemed to have been given and received on the first
Business Day next following such day and if transmitted by fax,
shall be deemed to have been given and received on the day of its
transmission, provided that if such day is not a Business Day or if
it is transmitted or received after the end of normal business hours
then the notice shall be deemed to have been given and received on
the first Business Day next following the day of such transmission
and if mailed, shall be deemed to be given and received on the fifth
Business Day following the day of the mailing of the notice.
(2) The Corporation may from time to time notify the other in the manner
provided in subsection (1) of a change of address which, from the
effective date of such notice and until changed by like notice, will
be the address of the Corporation for all purposes of these Terms
and Conditions.
(3) If, by reason of a strike, lockout or other work stoppage, actual or
threatened, involving Canadian postal employees, a notice to be
given to the Corporation hereunder could reasonably be considered
unlikely to reach or likely to be delayed in reaching its
destination, the notice will be valid and effective only if it is
delivered to an officer of the party to which it is addressed or if
it is delivered to such party at the appropriate address provided in
subsection (1) by confirmed facsimile transmission.
14
8.2 NOTICE TO SPECIAL NOTEHOLDERS
(1) Unless herein otherwise expressly provided, a notice to be given
hereunder to Special Noteholders will be deemed to be validly given
if the notice is sent by ordinary surface or air mail, postage
prepaid, addressed to the Special Noteholders or delivered (or so
mailed to certain Special Noteholders and so delivered to the other
Special Noteholders) at their respective addresses appearing on any
of the registers of holders described in section 3.1, provided,
however, that if, by reason of a strike, lockout or other work
stoppage, actual or threatened, involving Canadian postal employers,
the notice could reasonably be considered unlikely to reach or
likely to be delayed in reaching its destination, the notice will be
valid and effective only if it is so delivered or is given by
publication twice in the Report on Business section in the national
edition of The Globe and Mail newspaper.
(2) A notice so given by mail or so delivered will be deemed to have
been given on the fifth business day after it has been mailed or on
the day which it has been delivered, as the case may be, and a
notice so given by publication will be deemed to have been given on
the day on which it has been published as required. In determining
under any provision hereof the date when notice of a meeting or
other event must be given, the date of giving notice will be
included and the date of the meeting or other event will be
excluded. Accidental error or omission in giving notice or
accidental failure to mail notice to any Special Noteholder will not
invalidate any action or proceeding founded thereon.
8.3 SOLE BENEFIT OF PARTIES AND SPECIAL NOTEHOLDERS
Nothing in these Terms and Conditions or the Special Note Certificates,
expressed or implied, will give or be construed to give to any person other than
the Corporation and the Special Noteholders, any legal or equitable right,
remedy or claim under these Terms and Conditions or the Special Note
Certificates, or under any covenant or provision herein or therein contained,
all such covenants and provisions being for the sole benefit of the Special
Noteholders.
8.4 DISCRETION OF DIRECTORS
Any matter provided herein to be determined by the directors will be
determined by the directors of the Corporation in their sole discretion, and a
determination so made will be conclusive, provided that the directors acted
reasonably and in good faith in the absence of any malice or prejudice.
1-1
EXHIBIT "1"
TO SPECIAL NOTE CERTIFICATE
NOTICE OF CONVERSION
To: APOLLO GOLD CORPORATION (the "CORPORATION")
The undersigned holder of the Special Note evidenced by the within Special Note
Certificate hereby convert all principal amount outstanding under such Special
Note into Series B Debentures and Warrants of the Corporation (or such other
securities or property to which such conversion entitles him in lieu thereof or
in addition thereto under the provisions of the Special Note Certificate to
which this Notice is appended) that are issuable upon the conversion of such
Special Note, on the terms specified in such Special Note Certificate.
The undersigned hereby acknowledges that it is aware that the Series B
Debentures and Warrants received on conversion may be subject to restrictions on
resale under applicable securities legislation.
The undersigned hereby irrevocably directs that the said Series B Debentures and
Warrants be issued, registered and delivered as follows:
Principal Amount($) of
Name(s) in Full Address(es) Series B Debenture Number(s) of Warrants
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Please print full name in which certificates for Series B Debenture and
Warrants are to be issued. If any securities are to be issued to a person or
persons other than the holder, the holder must pay to the Corporation all
exigible transfer taxes or other government charges and sign the Form of
Transfer, which is attached as Exhibit "2" to the Special Note Certificate to
which this Appendix is attached).
DATED this _____ day of ________________ 200__.
)
)
)
) ------------------------------
Witness ) Signature of Registered Holder
)
------------------------------
Name of Registered Holder
Note: The name of the Registered Holder on this Notice of Conversion must be the
same as the name appearing on the face page of the Special Note Certificate to
which this Exhibit is attached.
|_| Please check if the Series B Debentures and Warrant certificates are to be
delivered at the office where this Special Note Certificate is surrendered,
failing which such certificates will be mailed.
Certificates will be delivered or mailed within five Business Days after the due
surrender of the Special Note Certificate to which this Exhibit is attached.
3-1
EXHIBIT "2"
TO SPECIAL NOTE CERTIFICATE
ASSIGNMENT FORM
(TO BE COMPLETED IF ANY PART OF THE SPECIAL NOTE IS TO BE ASSIGNED)
TO: APOLLO GOLD CORPORATION
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇
FOR VALUE RECEIVED, US$ _____ principal amount of the Special Note by this
Special Note Certificate
is hereby transferred to
--------------------------------------------------------
residing at
--------------------------------------------------------------------
You are hereby instructed to take the necessary steps to effect this transfer.
DATED ______________ at ____________, ________________ this _____________ day
____________ of __________, __________. , .
Witness: )
)
----------------------------------
) Holder's Name
)
)
----------------------------------
) Authorized Signature
)
)
----------------------------------
) Title (if applicable)
Signature guaranteed:
The signature must be guaranteed by a Canadian chartered bank or a member of a
recognized stock exchange or other entity acceptable to the Corporation.
3-1
EXHIBIT "3"
TO SPECIAL NOTE CERTIFICATE
FORM OF WARRANT CERTIFICATE
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) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A ADOPTED UNDER THE SECURITIES ACT); (B) IT IS AN ACCREDITED
INVESTOR (AS DEFINED IN REGULATION D UNDER THE SECURITIES ACT); OR (C) IT IS NOT
A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH REGULATION S ADOPTED UNDER THE SECURITIES ACT; (2) AGREES THAT
IT WILL NOT RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY OR THE
COMMON SHARES ISSUABLE UPON EXERCISE OF SUCH SECURITY, EXCEPT (A) TO THE ISSUER
OR A SUBSIDIARY THEREOF; (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE
WITH RULE 144A ADOPTED UNDER THE SECURITIES ACT (IF AVAILABLE); (C) TO PERSONS
OTHER THAN U.S. PERSONS OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION
S UNDER THE SECURITIES ACT; (D) 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 (E) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (3) AGREES THAT
IT WILL, PRIOR TO ANY TRANSFER OF THIS SECURITY, FURNISH TO THE ISSUER SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS MAY BE REQUIRED 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 "OFFSHORE TRANSACTION," "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 OR ANY COMMON SHARES ISSUABLE
UPON EXERCISE OF SUCH SECURITY, EXCEPT AS PERMITTED BY THE SECURITIES ACT.
THE WARRANTS REPRESENTED BY THIS WARRANT CERTIFICATE HAVE NOT BEEN AND WILL NOT
BE REGISTERED UNDER THE 1933 ACT. THE SECURITIES TO BE ISSUED UPON EXERCISE OF
SUCH WARRANTS WILL NOT BE INITIALLY REGISTERED AND MAY OR MAY NOT LATER BECOME
REGISTERED FOR RESALE UNDER THE 1933 ACT. NEITHER ANY WARRANT REPRESENTED BY
THIS WARRANT CERTIFICATE NOR ANY SECURITIES ISSUED UPON EXERCISE OF SUCH WARRANT
MAY BE EXERCISED BY OR ON BEHALF OF ANY U.S. PERSON, AS SUCH TERM IS DEFINED IN
REGULATION S PROMULGATED PURSUANT TO THE 1933 ACT, UNLESS REGISTERED UNDER THE
1933 ACT OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
[INSERT LEGEND ONLY IF REQUIRED UNDER SECTION 4.6 OF SCHEDULE "A" OF THE SPECIAL
NOTE CERTIFICATE.] UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF
THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE MARCH 5, 2005.
WARRANTS
TO PURCHASE COMMON SHARES OF
APOLLO GOLD CORPORATION
(Continued under the laws of the Yukon Territory)
Void after 5:00 p.m. (Toronto time) on the ____ day of ____, 200____.
WARRANT CERTIFICATE NUMBER: W-2004-____ NUMBER OF WARRANTS: ____
3-2
THIS CERTIFIES THAT, for value received, ____, [ADDRESS] (the "HOLDER") is
entitled, at any time and from time to time up to 5:00 p.m. (Toronto time) on
____ day of ____, 200____ (the "EXPIRY TIME"), one fully paid and non-assessable
Common Share for each warrant (individually, a "WARRANT") represented by this
certificate (the "WARRANT CERTIFICATE") at a price of US$0.80 per share (the
"EXERCISE PRICE"), upon and subject to the terms and conditions herein.
The Warrants are issued pursuant to the exercise or deemed exercise of a Special
Note (the "SPECIAL NOTE") issued by the Corporation to the Holder on November 4,
2004 (the "CLOSING DATE").
1. For the purpose of this Warrant, the term "COMMON SHARES" means common shares
in the capital of the Corporation as constituted on the date hereof; provided
that in the event of a change, subdivision, re-division, reduction, combination
or consolidation thereof or any other adjustment under clause 7 hereof, or such
successive changes, subdivisions, re-divisions, reductions, combinations,
consolidations or other adjustments, then subject to the adjustments, if any,
having been made in accordance with the provisions of this Warrant Certificate,
"COMMON SHARES" shall thereafter mean the shares, other securities or other
property resulting from such change, subdivision, re-division, reduction,
combination or consolidation or other adjustment.
2. All rights under any of the Warrants in respect of which the right of
subscription and purchase therein provided for shall not theretofore have been
exercised shall wholly cease and determine and such Warrants shall be wholly
void and of no valid or binding effect after the Expiry Time.
3. The right to purchase Common Shares pursuant to the Warrants may only be
exercised by the Holder before the Expiry Time by:
(a) duly completing and executing a subscription substantially in the
form attached hereto, in the manner therein indicated; and
t 6 12 (b) surrendering this Warrant Certificate and the duly completed
and executed subscription form to the Corporation at the principal office of the
Corporation in the City of Denver, Colorado, together with payment of the
purchase price for the Common Shares subscribed for in the form of cash or a
certified cheque payable to the Corporation in an amount equal to the then
applicable Exercise Price multiplied by the number of Common Shares subscribed
for.
4. Issue of Common Shares upon Exercise.
(a) Upon such delivery and payment as set forth in clause 3, the
Corporation shall cause to be issued to the Holder the number of
Common Shares to be issued and the Holder shall become a shareholder
of the Corporation in respect of such Common Shares with effect from
the date of such delivery and payment and shall be entitled to
delivery of a certificate or certificates evidencing such shares.
The Corporation shall cause such certificate or certificates to be
delivered via bonded overnight courier to the Holder at the address
or addresses specified in such subscription form within five (5)
business days of such delivery and payment as herein provided.
(b) The Corporation shall not be required to issue fractional Common
Shares upon the exercise of the Warrants and no payment shall be
made by the Corporation in lieu of issuing any fractional interest
in a Common Share.
5. The holding of a Warrant shall not constitute the Holder a shareholder of the
Corporation nor entitle him to any right or interest in respect thereof except
as herein expressly provided.
3-3
6. The Corporation covenants and agrees that until the Expiry Time, while any of
the Warrants shall be 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 herein provided, as such right of purchase may be
adjusted pursuant to clauses 7 and 8 hereof. All Common Shares which shall be
issued upon the exercise of the right to purchase herein provided for, upon
payment therefor of the amount at which such Common Shares may at the time be
purchased pursuant to the provisions hereof, shall be issued as fully paid and
non-assessable shares and the holders thereof shall not be liable to the
Corporation or its creditors in respect thereof.
7. Adjustment
(a) If and whenever at any time after the Closing Date and prior to the
Expiry Time the Corporation shall:
(i) subdivide, re-divide or change its then outstanding Common
Shares into a greater number of Common Shares,
(ii) reduce, combine or consolidate its then outstanding Common
Shares into a lesser number of Common Shares, or
(iii) issue Common Shares (or securities exchangeable for or
convertible into Common Shares) to the holders of all or
substantially all of its then outstanding Common Shares by way
of a stock dividend or other distribution;
(any of such events herein called a "COMMON SHARE REORGANIZATION"),
then the Exercise Price shall be adjusted effective immediately
after the effective date of any such event in 7(a)(i) or 7(a)(ii)
above or the record date at which the holders of Common Shares are
determined for the purpose of any such dividend or distribution in
7(a)(iii) above, as the case may be, by multiplying the Exercise
Price in effect on such effective date or record date, as the case
may be, by a fraction, the numerator of which shall be the number of
Common Shares outstanding on such effective date or record date, as
the case may be, before giving effect to such Common Share
Reorganization and the denominator of which shall be 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 be outstanding if such
securities were exchanged for or converted into Common Shares.
(b) If and whenever at any time after the Closing Date and prior to the
Expiry Time, the Corporation shall distribute any class of shares or
rights, options or warrants or other securities (other than those
referred to in 7(a) above), evidences of indebtedness or property
(excluding cash dividends paid in the ordinary course) to holders of
all or substantially all of its then outstanding Common Shares, the
Holder shall receive, in addition to the number of Common Shares in
respect of which the right to purchase is then being exercised, the
aggregate number of Common Shares or other securities or property
that the Holder would have been entitled to receive as a result of
such event, as if, on the record date thereof, the Holder had been
the registered holder of the number of Common Shares to which the
Holder was theretofore entitled upon the exercise of the rights of
the Holder hereunder.
(c) If and whenever at any time after the Closing Date and prior to the
Expiry Time there is a capital reorganization of the Corporation or
a reclassification or other change in the Common Shares (other than
a Common Share Reorganization) or a consolidation or merger or
amalgamation of the Corporation with or into any other corporation
or other entity (other than a consolidation, merger or amalgamation
which does not result in any reclassification of the outstanding
Common Shares or a change of the Common Shares into other
securities), or a transfer of all or substantially all of the
Corporation's undertaking and assets to another corporation or other
entity in which the holders of Common Shares are entitled to receive
shares, other securities or other property (any of such events being
called a "CAPITAL REORGANIZATION"), the Holder, where he has not
exercised the right of subscription and purchase under this Warrant
Certificate prior to the effective date of such Capital
Reorganization, shall be entitled to receive and shall accept, upon
the exercise of such right, on such date or any time thereafter, for
the same aggregate consideration in lieu of the number of Common
Shares to which he was theretofore entitled to subscribe for and
purchase, the aggregate number of shares or other securities or
property which the Holder would have been entitled to receive as a
result of such Capital Reorganization as if, on the effective date
thereof, he had been the registered holder of the number of Common
Shares to which he was theretofore entitled to subscribe for and
purchase.
3-4
(d) If and whenever at any time after the Closing Date and prior to the
Expiry Time, the Corporation shall fix a record date for the
issuance of rights, options or warrants to all or substantially all
of the holders of the outstanding Common Shares entitling them, for
a period expiring not more than forty-five (45) days after the
record date, to subscribe for or purchase Common Shares or
securities convertible, exercisable or exchangeable into Common
Shares (each, a "CONVERTIBLE SECURITY") at a price per share (or
having a conversion, exercise or exchange price per share) less than
95% of the Current Market Price (as defined below) on the earlier of
the record date and the date on which the Corporation announces its
intention to make such issuance (any such issuance being herein
called a "RIGHTS OFFERING"), the Exercise Price shall be adjusted on
the record date so that it shall equal the number which is the
product of the Exercise Price in effect immediately prior to the
record date and the fraction:
(i) the numerator of which shall be the total number of Common
Shares outstanding immediately prior to the record date plus a
number of Common Shares equal to the number arrived at by
multiplying the total number of additional Common Shares
offered for subscription or purchase or into or for which the
total number of rights, options or warrants so offered are
convertible or exchangeable by the quotient obtained by
dividing the purchase or subscription price for each Common
Share or conversion price for each Convertible Security
offered for subscription or purchase by such Current Market
Price for the Common Shares, and
(ii) the denominator of which shall be the total number of Common
Shares outstanding immediately prior to such record date plus
the total number of additional Common Shares offered for
subscription or purchase or into or for which the total number
of rights, options or warrants so offered are convertible or
exchangeable.
To the extent that any rights, options or warrants are not so issued
or any of the rights, options or warrants so issued are not
exercised prior to the expiration thereof, the Exercise Price will
be readjusted to the Exercise Price in effect immediately prior to
the record date, and the Exercise Price will be further adjusted
based upon the number of additional Common Shares actually delivered
upon the exercise of the rights, options or warrants, as the case
may be.
3-5
For the purposes of this clause 7(d), "CURRENT MARKET PRICE", at any
date, means the weighted average price per Common Share at which the
Common Shares have traded: (a) on the Toronto Stock Exchange; or (b)
if the Common Shares are not quoted on the Toronto Stock Exchange,
on any stock exchange or over-the-counter market upon which the
Common Shares are then listed or quoted for trading, during the
twenty (20) consecutive trading days (on each of which at least five
hundred (500) Common Shares are traded in board lots) ending the
third (3rd) trading day before such date, and the weighted average
price shall be determined by dividing the aggregate sale price of
all Common Shares sold in board lots on the exchange or market, as
the case may be, during the twenty (20) consecutive trading days by
the number of Common Shares sold, provided that if the Common Shares
are not listed or quoted for trading on any stock exchange or
market, the price shall be determined by the board of directors of
the Corporation in its sole discretion, acting reasonably.
(e) If and whenever at any time after the Closing Date and prior to the
Expiry Time, any of the events set out in clause 7(a) or 7(b) shall
occur and the occurrence of such event results in an adjustment of
the Exercise Price pursuant to the provisions of clause 7(a) or
7(b), then the number of Common Shares purchasable pursuant to this
Warrant shall be adjusted contemporaneously with the adjustment of
the Exercise Price by multiplying the number of Common Shares then
otherwise purchasable on the exercise thereof by a fraction, the
numerator of which shall be the Exercise Price in effect immediately
prior to the adjustment and the denominator of which shall be the
Exercise Price resulting from such adjustment.
(f) If the Corporation takes any action affecting its Common Shares to
which the foregoing provisions of this clause 7, in the opinion of
the board of directors of the Corporation, acting in good faith, are
not strictly applicable, or if strictly applicable would not fairly
adjust the rights of the Holder against dilution in accordance with
the intent and purposes hereof, or would otherwise materially affect
the rights of the Holder of the Warrants hereunder, then the
Corporation shall execute and deliver to the Holder an amendment
hereto providing for an adjustment in the application of such
provisions so as to adjust such rights as aforesaid in such manner
as the board of directors of the Corporation may determine to be
equitable in the circumstances, acting in good faith. The failure of
the taking of action by the board of directors of the Corporation to
so provide for any adjustment on or prior to the effective date of
any action or occurrence giving rise to such state of facts will be
conclusive evidence that the board of directors has determined that
it is equitable to make no adjustment in the circumstances.
8. The following rules and procedures shall be applicable to the adjustments
made pursuant to clause 7:
(a) no adjustment in the Exercise Price shall be required unless a
change of at least 1% of the prevailing Exercise Price would result,
provided, however, that any adjustment which, except for the
provisions of this clause 8(a), would otherwise have been required
to be made, shall be carried forward and taken into account in any
subsequent adjustment;
(b) the adjustments provided for in clause 7 are cumulative and shall
apply to successive subdivisions, consolidations, dividends,
distributions and other events resulting in any adjustment under the
provisions of such clause;
3-6
(c) in the absence of a resolution of the board of directors of the
Corporation fixing a record date for any dividend or distribution
referred to in clause 7(a)(iii) above, the Corporation shall be
deemed to have fixed as the record date therefor the date on which
such dividend or distribution is effected;
(d) if the Corporation sets a record date to take any action and
thereafter and before the taking of such action abandons its plan to
take such action, then no adjustment to the Exercise Price will be
required by reason of the setting of such record date;
(e) forthwith after any adjustment to the Exercise Price or the number
of Common Shares purchasable pursuant to the Warrants, the
Corporation shall provide to the Holder a certificate of an officer
of the Corporation certifying as to the amount of such adjustment
and, in reasonable detail, describing the event requiring and the
manner of computing or determining such adjustment; and
(f) any question that at any time or from time to time arises with
respect to the amount of any adjustment to the Exercise Price or
other adjustment pursuant to clause 7 shall be conclusively
determined by a firm of independent chartered accountants (who may
be the Corporation's auditors) and shall be binding upon the
Corporation and the Holder.
9. On the happening of each and every such event set out in clause 7, the
applicable provisions of this Warrant, including the Exercise Price, shall, ipso
facto, be deemed to be amended accordingly and the Corporation shall take all
necessary action so as to comply with such provisions as so amended.
10. The Corporation shall not be required to deliver certificates for Common
Shares issuable upon the exercise of the Warrants while the share transfer books
of the Corporation are properly closed, having regard to the provisions of
clauses 7 and 8 hereof, prior to any meeting of shareholders or for the payment
of dividends or for any other purpose and in the event of the surrender of any
Warrant in accordance with the provisions hereof and the making of any
subscription and payment for the Common Shares called for thereby during any
such period delivery of certificates for Common Shares may be postponed for not
more than five (5) days after the date of the re-opening of said share transfer
books. Provided, however, that any such postponement of delivery of certificates
shall be without prejudice to the right of the Holder so surrendering the same
and making payment during such period to receive after the share transfer books
shall have been re-opened such certificates for the Common Shares called for, as
the same may be adjusted pursuant to clause 7 hereof as a result of the
completion of the event in respect of which the transfer books were closed.
11. Subject as hereinafter provided, all or any of the rights conferred upon the
Holder by the terms hereof may be enforced by the Holder by appropriate legal
proceedings. No recourse under or upon any obligation, covenant or agreement
contained herein shall be had against any shareholder, director or officer of
the Corporation either directly or through the Corporation, it being expressly
agreed and declared that the obligations under the Warrants are solely corporate
obligations and that no personal liability whatever shall attach to or be
incurred by the shareholders, directors or officers of the Corporation or any of
them in respect thereof, any and all rights and claims against every such
shareholder, officer or director being hereby expressly waived as a condition of
and as a consideration for the issue of the Warrants.
12. The Holder may subscribe for and purchase any lesser number of Common Shares
than the number of shares expressed in this Warrant Certificate. In the case of
any subscription for a lesser number of Common Shares than expressed in this
Warrant Certificate, the Holder hereof shall be entitled to receive at no cost
to the Holder a new Warrant Certificate in respect of the balance of Warrant not
then exercised. Such new Warrant Certificate shall be delivered by bonded
overnight courier to the Holder by the Corporation, contemporaneously with the
delivery of the certificate or certificates representing the Common Shares
issued pursuant to clause 4.
3-7
13. If this Warrant Certificate is stolen, lost, mutilated or destroyed, the
Corporation shall, on such terms as it may in its discretion acting reasonably
impose, issue and sign a new Warrant Certificate of like denomination, tenor and
date, and if applicable, with the same legend, as the Warrant Certificate so
stolen, lost, mutilated or destroyed for delivery to the Holder.
14. The Corporation shall keep at its principal office: (a) a register of
holders in which shall be entered the names and addresses of the Holder of the
Warrants and of the number of Warrants held by him; and (b) a register of
transfers in which shall be entered the date and other particulars of each
transfer of Warrants. The registers hereinbefore referred to shall be open at
all reasonable times for inspection by the Holder.
15. The transferee of a Warrant Certificate shall, after the transfer form
attached to the Warrant Certificate or any other form of transfer acceptable to
the Corporation, acting reasonably, is duly completed and the Warrant
Certificate is lodged with the Corporation and upon compliance with all other
conditions in that regard required by this Warrant, by the Toronto Stock
Exchange or by law, be entitled to have his name entered on the register of
holders as the owner of the Warrants represented thereby free from all equities
or rights of set-off or counterclaim between the Corporation and the transferor
or any previous holder of such Warrant, save in respect of equities of which the
Corporation or the transferee is required to take notice by statute or by order
of a court of competent jurisdiction.
16. Warrant Certificates may, upon compliance with the reasonable requirements
of the Corporation, be exchanged for Warrant Certificates in any other
denomination representing in the aggregate the same number of Warrants. The
Corporation shall issue and sign all Warrant Certificates necessary to carry out
the exchanges contemplated herein, provided:
(i) Warrant Certificates may be exchanged only at the principal office
of the Corporation in the City of Denver, Colorado;
(ii) any Warrant Certificates tendered for exchange shall be surrendered
to the Corporation and cancelled; and
(iii) except as otherwise herein provided, the Corporation shall not
charge the Holder requesting an exchange any sum for any new Warrant
Certificate issued.
17. The Corporation may deem and treat the registered holder of any Warrant
Certificate as the absolute owner of the Warrants represented thereby for all
purposes, and the Corporation shall not be affected by any notice or knowledge
to the contrary except where the Corporation is required to take notice by
statute or by order of a court of competent jurisdiction. A Holder shall be
entitled to the rights evidenced by such Warrant free from all equities or
rights of set-off or counterclaim between the Corporation and the original or
any intermediate holder thereof and all persons may act accordingly and the
receipt by any such Holder of the Common Shares purchasable pursuant to such
Warrant shall be a good discharge to the Corporation for the same and the
Corporation shall not be bound to inquire into the title of any such Holder
except where the Corporation is required to take notice by statute or by order
of a court of competent jurisdiction.
18. Legend
(a) The Holder, if resident in Canada, acknowledges that appropriate
legend as follows will be placed upon certificates representing any
Common Shares issued upon the exercise of the Warrants represented
by this certificate until the earlier of (1) the Receipt being
issued by the Commission; and (2) the applicable restricted period
under the Multilateral Instrument 45-102 "Resale of Securities" has
expired, may be endorsed with the following legends to that effect.
3-8
"UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF
THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE MARCH 5,
2005."
(b) The Holder understands that upon the original issuance thereof, and
until such time as the same is no longer required under the
applicable requirements of the United States Securities Act of 1933,
as amended (the "U.S. SECURITIES ACT") or applicable U.S. state laws
and regulations, the certificates representing the Common Shares,
and all securities issued in exchange therefor or in substitution
thereof, will bear a legend in substantially the following form:
"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) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A ADOPTED UNDER THE SECURITIES
ACT); (B) IT IS AN ACCREDITED INVESTOR (AS DEFINED IN
REGULATION D UNDER THE SECURITIES ACT); OR (C) IT IS NOT A
U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S ADOPTED UNDER THE
SECURITIES ACT; (2) AGREES THAT IT WILL NOT RESELL OR
OTHERWISE TRANSFER THE SECURITY EVIDENCED, EXCEPT (A) TO THE
ISSUER OR A SUBSIDIARY THEREOF; (B) TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A ADOPTED UNDER
THE SECURITIES ACT (IF AVAILABLE); (C) TO PERSONS OTHER THAN
U.S. PERSONS OUTSIDE THE UNITED STATES IN COMPLIANCE WITH
REGULATION S UNDER THE SECURITIES ACT; (D) 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 (E) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (3)
AGREES THAT IT WILL, PRIOR TO ANY TRANSFER OF THIS SECURITY,
FURNISH TO THE ISSUER SUCH CERTIFICATIONS, LEGAL OPINIONS OR
OTHER INFORMATION AS MAY BE REQUIRED 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 "OFFSHORE
TRANSACTION," "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, EXCEPT AS PERMITTED BY THE SECURITIES ACT."
3-9
provided, that if any of the Common Shares are being sold pursuant
to Rule 144 of the U.S. Securities Act, the legend may be removed by
delivery to the Corporation's transfer agent of an opinion of
counsel satisfactory to the Corporation to the effect that such
Common Shares are not "restricted securities" as defined in Rule 144
under the U.S. Securities Act and the legend is no longer required
under applicable requirements of the U.S. Securities Act or state
securities laws.
(c) 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 either
subsection 18(a) or 18(b) remains on such certificate:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON
THE TORONTO STOCK EXCHANGE; HOWEVER, THE SAID SECURITIES
CANNOT BE TRADED THROUGH THE FACILITIES OF SUCH EXCHANGE SINCE
THEY ARE NOT FREELY TRADABLE, AND CONSEQUENTLY ANY CERTIFICATE
REPRESENTING SUCH SECURITIES IS NOT 'GOOD DELIVERY' IN
SETTLEMENT OF TRANSACTIONS ON THE TORONTO STOCK EXCHANGE."
19. This Warrant 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 Warrant 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.
20. The Warrants represented by this Warrant Certificate may not be exercised by
a U.S. person or person within the United States (or on behalf of any such
person) unless registered under the U.S. Securities Act or unless an exemption
from such registration is available and the holder has furnished an opinion of
counsel of recognized standing in form and substance satisfactory to the
Corporation to such effect or unless the Holder acquired the Warrant in the
exercise or conversion of the Special Note was a U.S. person at the time of
acquisition of the Special Note directly from the Corporation and each of the
representations and warranties made by the undersigned in the subscription
agreement between the undersigned and the Corporation, pursuant to which the
undersigned acquired the Special Note, is true and correct as of the date
hereof. Terms used in this clause 20 have the meanings assigned to them in
Regulation S under the U.S. Securities Act.
21. The Warrants represented by this Warrant Certificate may not, unless
transferred to an affiliate of the holder, be transferred or assigned in whole
or in part without the prior written consent of the Corporation, such consent
not to be unreasonably withheld, or without compliance with all applicable
United States federal and state securities laws, all applicable securities laws
in Canada and other applicable securities laws and the rules of the Toronto
Stock Exchange, by the transferor and the transferee (including the delivery of
investment representation letters and legal opinion reasonably satisfactory to
the Corporation, if requested by the Corporation).
3-10
22. Notwithstanding anything to the contrary in this Warrant Certificate, no
supplement or amendment to the terms of this Warrant Certificate may be made
without the prior written approval of the Toronto Stock Exchange.
23. The Holder, by acceptance hereof, agrees that the Warrants represented by
this Warrant 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 Warrants or the Common Shares
issuable upon exercise thereof except under circumstances which will not result
in a violation of the U.S. Securities Act, any applicable securities laws in
Canada and other applicable securities laws or the rules of the Toronto Stock
Exchange.
24. All references herein to monetary amounts are references to lawful money of
the United States, unless otherwise specified herein.
25. Any notice, document or other communication required or permitted by this
Warrant Certificate to be given by the Holder or the Corporation shall be in
writing and is sufficiently given if delivered personally, or if sent by prepaid
registered mail or if transmitted by any form of recorded telecommunication
tested prior to transmission, to such person addressed as follows:
(a) if to the Holder:
to the address on the face page hereof
(b) if to the Corporation:
Apollo Gold Corporation
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇-2571
Attention: ▇. ▇▇▇▇ ▇▇▇▇▇▇▇
Chief Financial Officer
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Notice so mailed shall be deemed to have been given on the fourth Business Day
after deposit in a post office or public letter box. Neither the Holder nor the
Corporation shall mail any notice, request or other communication hereunder
during any period in which applicable postal workers are on strike or if such
strike is imminent and may reasonably be anticipated to affect the normal
delivery of mail. Notices transmitted by a form of recorded telecommunication or
delivered personally shall be deemed given on the day of transmission or
personal delivery, as the case may be. 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.
IN WITNESS WHEREOF, the Corporation has caused this Warrant Certificate to
be signed by its duly authorized officer.
3-11
DATED this day of , 200 .
----------- ----------------------------- ------
APOLLO GOLD CORPORATION
By:
-------------------------------------
Authorized Signing Officer
3-11
SUBSCRIPTION FORM
(TO BE COMPLETED IF WARRANTS ARE TO BE EXERCISED)
TO: APOLLO GOLD CORPORATION
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇
THE UNDERSIGNED hereby subscribes for common shares of APOLLO GOLD CORPORATION
according to the terms and conditions set forth in the annexed warrant
certificate (or such number of other securities or property to which such
warrant entitles the undersigned to acquire under the terms and conditions set
forth in the annexed warrant certificate).
Address for Delivery of Shares:
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
Attention:
---------------------------------------
Exercise Price Tendered
(US$0.80 per share or as adjusted) US$
-----------------------------
The undersigned represents, warrants and certifies as follows (one (only) of the
following must be checked):
A. The undersigned holder (i) at the time of exercise of these Warrants
is not in the United States; (ii) is not a "U.S. person" as defined
in Regulation S under the United States Securities Act of 1933, as
amended (the "U.S. Securities Act") and is not exercising these
Warrants on behalf of a "U.S. person"; and (iii) did not execute or
deliver this Exercise Form in the United States.
B. The undersigned holder has delivered to CIBC Mellon Trust Company an
opinion of counsel (which will not be sufficient unless it is from
counsel of recognized standing and in form and substance
satisfactory to the Corporation) to the effect that an exemption
from the registration requirements of the U.S. Securities Act and
applicable state securities laws is available for the exercise of
the Warrants.
C. The undersigned acquired the Warrants in the conversion of the
Special Note and was a U.S. person at the time of acquisition of the
Special Note directly from the Corporation and each of the
representations and warranties made by the undersigned in the
subscription agreement between the undersigned and the Corporation,
pursuant to which the undersigned acquired the Special Note.
The undersigned holder understands that the certificates representing the common
shares issuable upon the exercise of the Warrants will bear a legend restricting
transfer without registration under the U.S. Securities Act and applicable state
securities laws or applicable exemptions therefrom.
3-12
If Box B is checked, any opinion tendered must be in form and substance
satisfactory to the Corporation. Holders planning to deliver an opinion of
counsel in connection with the exercise of the Warrants should contact the
Corporation in advance to determine whether any opinions to be tendered will be
acceptable to the Corporation.
(If any common shares are to be issued to a person or persons other than the
undersigned holder, the undersigned holder must pay all applicable transfer
taxes or other government charges.)
DATED at _________________ , this _____day of _______________, 200___.
Witness: )
) ---------------------------------------
) Holder's Name
)
________________________________) ---------------------------------------
) Authorized Signature
)
) ---------------------------------------
) Title (if applicable)
3-13
ASSIGNMENT FORM
(TO BE COMPLETED IF WARRANTS ARE TO BE ASSIGNED)
TO: APOLLO GOLD CORPORATION
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇
FOR VALUE RECEIVED, __________________ Warrants represented by this Warrant
Certificate are
hereby transferred to
-----------------------------------------------------------
residing at
--------------------------------------------------------------------
You are hereby instructed to take the necessary steps to effect this transfer.
DATED at ________ , this _________ day of ___________, _____________.
Witness: )
) ---------------------------------------
) Holder's Name
)
________________________________) ---------------------------------------
) Authorized Signature
)
) ---------------------------------------
) Title (if applicable)
Signature guaranteed:
The signature must be guaranteed by a Canadian chartered bank or a member of a
recognized stock exchange or other entity acceptable to the Corporation.