EXHIBIT 10.2
 
WARRANT CERTIFICATE
 
APOLLO GOLD CORPORATION

(Incorporated under the laws of Yukon Territory, Canada)
 

 
 
WARRANT CERTIFICATE
NO.                                                                                                                                                    WARRANTS
 

 
Unless permitted under securities legislation, the holder of this security must
not trade the security before June 21, 2009.
 
Without prior written approval of the TSX and compliance with all applicable
securities legislation, the securities represented by this certificate may not
be sold, transferred, hypothecated or otherwise traded on or through the
facilities of the TSX or otherwise in Canada or to or for the benefit of a
Canadian resident until June 21, 2009.
 
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE ‘SECURITIES ACT’), AND ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF,
THE HOLDER (1) REPRESENTS THAT (A) IT IS AN ACCREDITED INVESTOR (AS DEFINED IN
REGULATION D UNDER THE SECURITIES ACT); OR (B) 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 PERSONS OTHER THAN U.S. PERSONS OUTSIDE THE UNITED STATES IN
COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; (C) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 ADOPTED UNDER THE SECURITIES
ACT OR ANOTHER AVAILABLE EXEMPTION UNDER THE SECURITIES ACT; OR (D) 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.
 
THIS WARRANT HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT.
THE SECURITIES TO BE ISSUED UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT.  THIS WARRANT MAY NOT BE EXERCISED BY OR ON
BEHALF OF ANY U.S. PERSON UNLESS THE COMMON SHARES ISSUABLE UPON EXERCISE ARE
REGISTERED UNDER THE SECURITIES ACT OR AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE.
 
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.
 
This warrant certificate is void if not exercised on or before 5:00 p.m.
(Toronto time) on February 20, 2013.
 
THIS IS TO CERTIFY THAT FOR VALUE RECEIVED
 
(hereinafter referred to as the ‘holder’ or the ‘Warrantholder’) is entitled to
acquire, for each Warrant represented hereby, in the manner and subject to the
restrictions and adjustments set forth herein, at any time and from time to time
from February  20, 2009 (the ‘Issue Date’) until 5:00 p.m. (Toronto time) on
February 20, 2013, at a price of Cdn$0.252 per share, one fully paid and non
assessable common share (‘Common Share’) of Apollo Gold Corporation (the
‘Corporation’), subject to adjustment as herein provided.
 
This Warrant may only be exercised at the registered office of the Corporation
located at 5655 South Yosemite Street, Suite 200, Greenwood Village, Colorado
80111-3220, United States of America Attention: R. David Russell, or such other
office as the Corporation may advise the holder in writing.  This Warrant is
issued subject to the terms and conditions appended hereto as Schedule ‘A’.
 
IN WITNESS WHEREOF, the Corporation has caused this Warrant to be executed by a
duly authorized signing officer.
 
DATED for reference this 20th day of February 2009.
 

 
APOLLO GOLD CORPORATION
 

 
Per:                                                                        
       Melvyn Williams, Chief Financial Officer
 

 
(See terms and conditions attached hereto)
 

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SCHEDULE ‘A’
 
TERMS AND CONDITIONS FOR WARRANT
 
ARTICLE 1
 
INTERPRETATION
 
1.1 
Definitions

 
In these Terms and Conditions, unless there is something in the subject matter
or context inconsistent therewith:
 
(a)
‘Common Shares’ means the common shares in the capital of the Corporation as
constituted on the Issue Date provided that in the event of an adjustment of the
subscription rights pursuant to Article 4 then ‘Common Shares’ shall thereafter
mean the shares or other securities or properties purchasable upon exercise of
the Warrants as a result of any such adjustment;

 
(b)
‘Corporation’ means Apollo Gold Corporation until a successor corporation shall
have become such in the manner prescribed in Article 6, and thereafter
‘Corporation’ shall mean such successor corporation;

 
(c)
‘Corporation's Auditors’ means an independent firm of accountants duly appointed
as auditors of the Corporation;

 
(d)
Credit Agreement means Project Facility Agreement dated February 20, 2009
between the Corporation, RMB Australia Holdings Limited, Macquarie Bank Limited
and RMB Resources Inc..

 
(e)
‘Current Market Price’ means at any date the price per share equal to the
trading price of the Common Shares on the Toronto Stock Exchange (the ‘TSX’) or,
if the Common Shares are not then listed on the TSX, on the NYSE Alternext U.S.
Exchange, formerly known as the American Stock Exchange or, if the Common Shares
are not then listed on any stock exchange, in the over-the-counter market,
during the period of any twenty consecutive trading days ending not more than
five (5) business days before such date; provided that the trading price shall
be determined by dividing the aggregate volume weighted average trading price of
all Common Shares traded on the said exchange or market, as the case may be,
during the said twenty consecutive trading days by the total number of Common
Shares so traded during such period; and provided further that if the Common
Shares are not then listed on any Canadian or United States stock exchange or
traded in the over-the counter market, then the Current Market Price shall be
determined by the directors of the Corporation;

 
(f)
‘Dividends Paid in the Ordinary Course’ means cash dividends declared payable on
the Common Shares in any fiscal year which, in the aggregate, do not exceed the
sum of (i) 100% of the retained earnings of the Corporation as at the end of its
immediately preceding fiscal year and (ii) 100% of the aggregate consolidated
net income of the Corporation, before extraordinary items, for its immediately
preceding fiscal year;

 
(g)
‘Exchange’ means the Toronto Stock Exchange or, if the Common Shares are not at
the applicable time listed on the Toronto Stock Exchange, the NYSE Alternext
U.S. Exchange (formerly known as the American Stock Exchange), or, if the Common
Shares are not then listed on any stock exchange, on such other stock
exchange(s) or over the counter quotation system on which the Common Shares are
listed and/or posted for trading;

 
(h)
‘Exercise Price’ means the price of Cdn$0.252• per Common Share;

 
(i)
‘Expiry Date’ means February 20, 2013;

 
(j)
‘Expiry Time’ means 5:00 p.m. (Toronto time) on the Expiry Date, unless the
Expiry Time occurs on a day that is a Saturday, Sunday or civic or statutory
holiday in Toronto, in which case the Expiry Time means 5:00 p.m. (Toronto time)
on the next day succeeding the Expiry Date that is not a Saturday, Sunday or
civic or statutory holiday in Toronto;

 
(k)
‘herein’, ‘hereby’ and similar expressions refer to these Terms and Conditions
as the same may be amended or modified from time to time; and the expression
‘Article’ and ‘Section’ followed by a number refer to the specified Article or
Section of these Terms and Conditions;

 
(l)
‘Issue Date’ means February 20, 2009;

 
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(m)
‘person’ means an individual, corporation, partnership, trustee or any
unincorporated organization and words importing persons have a similar meaning;

 
(n)
‘Warrant’ means the warrant to acquire Common Shares evidenced by the Warrant
Certificate; and

 
(o)
‘Warrant Certificate’ means the certificate to which these Terms and Conditions
are attached.

 
1.2 
Gender

 
Words importing the singular number include the plural and vice versa and words
importing the masculine gender include the feminine and neuter genders.
 
1.3 
Interpretation Not Affected by Headings

 
The division of these Terms and Conditions into Articles, Sections and
subsections and the insertion of headings are for convenience of reference only
and shall not affect the construction of interpretation thereof.
 
 
ARTICLE 2
 
ISSUE OF WARRANT
 
2.1 
Issue of Warrants

 
That number of Warrants set out on the Warrant Certificate are hereby created
and authorized to be issued.
 
2.2 
Additional Warrants

 
Subject to any other written agreement between the Corporation and the
Warrantholders, the Corporation may at any time and from time to time undertake
further equity or debt financing and may issue additional Common Shares,
warrants or grant options or similar rights to purchase Common Shares at any
time and to any person.
 
2.3 
Issue in Substitution for Lost Warrants

 
If the Warrant Certificate becomes mutilated, lost, destroyed or stolen:
 
(a)
the Corporation shall, subject to subsection 2.3(b) hereof, issue and deliver a
new Warrant Certificate of like date and tenor as the one mutilated, lost,
destroyed or stolen, in exchange for and in place of and upon cancellation of
such mutilated, lost, destroyed or stolen Warrant Certificate; and

 
(b)
the holder shall bear the cost of the issue of a new Warrant Certificate
hereunder and in the case of the loss, destruction or theft of the Warrant
Certificate, shall, as a condition precedent to the issuance of a new Warrant
Certificate, furnish to the Corporation such evidence of loss, destruction, or
theft as shall be satisfactory to the Corporation in its discretion and, if
required by the Corporation, an indemnity in an amount and form satisfactory to
the Corporation, in its discretion, and shall pay the reasonable charges of the
Corporation in connection therewith.

 
2.4 
Issue for Transferred Warrants

 
In the event of a transfer or assignment of this Warrant Certificate, or the
Warrants represented hereby, the Corporation shall, at the expense of the
Corporation, issue a new Warrant Certificate to the transferee or assignee of
the Warrant Certificate or Warrants, on receipt by the Corporation of this
Warrant Certificate, together with appropriate documentation evidencing the
transfer or assignment. The Corporation's obligation under this Section 2.4
shall be conditioned on compliance with applicable securities laws, which
determination shall be in the discretion of the Corporation.  The Corporation
may require as a condition to such transfer the delivery of legal opinions and
certificates supporting such compliance.
 
2.5 
Warrantholders Not Shareholders

 
The Warrant shall not constitute the holder a shareholder of the Corporation,
nor entitle it to any right or interest in respect thereof except as may be
expressly provided in the Warrant.  The Corporation may deem and treat the
holder of the Warrant as the absolute owner thereof for all purposes and the
Corporation shall not be affected by any notice to the contrary.
 
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ARTICLE 3
 
EXERCISE OF THE WARRANT
 
3.1 
Method of Exercise of The Warrant

 
The right to purchase Common Shares conferred by the Warrant Certificate may be
exercised, at any time and from time to time prior to the Expiry Time, in whole
or in part, by the holder surrendering the Warrant Certificate, with a duly
completed and executed exercise form substantially in the form attached hereto
as Schedule ‘B’ and cash or a certified cheque payable to or to the order of the
Corporation representing the purchase price applicable at the time of surrender
in respect of the Common Shares subscribed for in lawful money of Canada, to the
Corporation.
 
3.2 
Effect of Exercise of the Warrant

 
(a)
Upon surrender and payment pursuant to Section 3.1 the Common Shares so
subscribed for shall be issued as fully paid and non-assessable shares, free
from all liens, charges and encumbrances and the holder shall become the holder
of record of such Common Shares on the date of such surrender and payment;

 
(b)
Within three (3) business days after surrender and payment as aforesaid and
delivery of any required certificates and opinions, the Corporation shall
forthwith cause the issuance of and make available for pick up or, at the
request of the Holder, mail to the holder, a certificate for the Common Shares
purchased as aforesaid; and

 
(c)
Notwithstanding anything herein contained including any adjustment provided for
in Article 4, the Corporation shall not be required, upon the exercise of any
Warrants, to issue fractions of Common Shares or to distribute certificates
which evidence fractional Common Shares.  In lieu of fractional Common Shares,
there shall be paid to the holder by the Corporation upon surrender of Warrant
Certificate(s) for exercise of Warrants pursuant to Section 3.1 within ten (10)
business days after the exercise date, an amount in lawful money of Canada equal
to the then current market value of such fractional interest computed on the
basis of the closing price of the Common Shares on the Exchange (or if the
Common Shares are not then listed on any stock exchange, then the market value
of the Common Shares as determined by the board of directors of the Corporation,
acting reasonably and in accordance with applicable accounting and security
valuation principles), provided that the Corporation shall not be required to
make any payment, calculated as aforesaid, that is less than Cdn$5.00.

 
3.3 
Subscription for Less than Entitlement

 
The holder may subscribe for and purchase a number of Common Shares less than
the number which it is entitled to purchase pursuant to the surrendered Warrant
Certificate.  In the event of any purchase of a number of Common Shares less
than the number which can be purchased pursuant to the Warrant Certificate, the
holder shall be entitled to the return of the Warrant Certificate with a
notation on the grid attached hereto as Schedule ‘C’ showing the balance of the
Common Shares which it is entitled to purchase pursuant to the Warrant
Certificate which were not then purchased or, alternatively, at the option of
the Corporation, the Warrant Certificate shall be cancelled and a new Warrant
Certificate issued reflecting the balance of the Common Shares entitled to be
purchased.
 
3.4 
U.S. Non-Registration

 
This Warrant and the Common Shares issuable upon exercise hereof have not been
registered under the United States Securities Act of 1933 (the ‘Securities Act’)
or the securities laws of any state of the United States and the Warrant may not
be exercised, and the Common Shares may not be issued, within the United States
or by or on behalf of, or to, any person in the United States unless the common
shares issuable upon exercise are registered under the Securities Act and the
securities laws of all applicable states of the United States or an exemption
from such registration requirements is available.  ‘United States’ is as defined
by Regulation S under the Securities Act.  Other defined terms used herein
without definition have the meanings given to such terms in this certificate.
 
3.5 
Expiration of the Warrant

 
After the Expiry Time all rights hereunder shall wholly cease and terminate and
the Warrant represented hereby shall be void and of no effect.
 
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ARTICLE 4
 
ADJUSTMENTS
 
4.1 
Adjustments

 
The purchase rights in effect at any date attaching to the Warrants shall be
subject to adjustment from time to time as follows:
 
 
(a)
If and whenever after the date hereof and at any time prior to the Expiry Time,
the Corporation shall:

 
 
(i)
subdivide the outstanding Common Shares into a greater number of Common Shares;

 
 
(ii)
consolidate the outstanding Common Shares into a lesser number of Common Shares;

 
 
(iii)
issue Common Shares (or securities convertible into Common Shares) to all or
substantially all of the holders of outstanding Common Shares by way of a stock
dividend or other distribution of Common Shares or securities convertible into
Common Shares (other than Dividends Paid in the Ordinary Course);

 
the Exercise Price in effect on the effective date of such subdivision or
consolidation, or on the record date of such stock dividend, as the case may be,
shall be adjusted to equal the price determined by multiplying the Exercise
Price in effect immediately prior to such effective date or record date by a
fraction of which the numerator shall be the total number of Common Shares
outstanding immediately prior to such date and the denominator shall be the
total number of Common Shares immediately after such date.  Such adjustment
shall be made successively whenever any event referred to in this subsection (a)
shall occur, and any such issue of Common Shares by way of a stock dividend
shall be deemed to have been made on the record date for the stock dividend for
the purpose of calculating the number of outstanding Common Shares under
subsections (b) and (c) of this Section.
 
Upon any adjustment of the Exercise Price pursuant to this subsection (a), the
number of Common Shares subject to the right of purchase under each Warrant not
previously exercised shall be contemporaneously adjusted by multiplying the
number of Common Shares which theretofore may have been purchased under such
Warrant by a fraction of which the numerator shall be the respective Exercise
Price in effect immediately prior to such adjustment and the denominator shall
be the respective Exercise Price resulting from such adjustments.
 
(b)
If and whenever at any time after the date hereof and prior to the Expiry Time,
the Corporation shall fix a record date for the distribution to all or
substantially all of the holders of Common Shares of rights, options or warrants
(other than the Warrants) entitling them for a period expiring not more than
forty five (45) days after such record date to subscribe for or purchase Common
Shares (or securities convertible into Common Shares) at a price (or having a
conversion price or exchange price) less than 90% of the Current Market Price
(or, if the price (or conversion price or exchange price) is stated in U.S.
Dollars, the price shall be translated into the Canadian equivalent at the noon
rate of exchange on the day before the record date for purposes of this
determination) on such record date, the Exercise Price shall be adjusted
immediately after such record date so that it shall equal the price determined
by multiplying the Exercise Price in effect on such record date by a fraction,
of which the numerator shall be the total number of Common Shares outstanding on
such record date plus the number arrived at by dividing the aggregate price of
the total number of additional Common Shares offered for subscription or
purchase (or the aggregate exchange price of the convertible securities so
offered) by such Current Market Price, and of which the denominator shall be
total number of Common Shares outstanding on such record date plus the total
number of additional Common Shares offered for subscription or purchase (or into
which the convertible securities so offered are convertible); any Common Shares
owned by or held for the account of the Corporation or any subsidiary (as
defined in the Canada Business Corporations Act) of the Corporation shall be
deemed not to be outstanding for the purpose of any such computation; such
adjustment shall be made successively whenever such a record date is fixed; to
the extent that any rights, options or warrants are not so issued or any such
rights, options or warrants are not exercised prior to the expiration thereof,
the Exercise Price shall then be readjusted to the Exercise Price which would
then be in effect if such record date had not been fixed or to the Exercise
Price which would then be in effect based upon the number and aggregate price of
Common Shares (or securities convertible into Common Shares) actually issued
upon the exercise of such rights, options or warrants, as the case may be.

 
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(c)
If and whenever at any time after the date hereof and prior to the Expiry Time,
the Corporation shall fix a record date for the making of a distribution to all
or substantially all the holders of its outstanding Common Shares of:

 
 
(i)
shares of any class other than Common Shares, whether of the Corporation or any
other corporation (other than shares distributed as Dividends Paid in the
Ordinary Course);

 
 
(ii)
rights, options or warrants to subscribe for or purchase Common Shares (or other
securities convertible into Common Shares) (excluding (A) those referred to in
subsection (b), and (B) those described in subsection (b) but exercisable for a
period not more than forty five (45) days after such record date exercisable at
a price per share (or having a conversion or exchange price per share) not less
than 90% of the Current Market Price, subject to the currency translation
methodology set forth in 4.1(b) for securities with a price (or conversion or
exercise price) stated in U.S. Dollars);

 
 
(iii)
evidence of its indebtedness; or

 
 
(iv)
assets (excluding Dividends Paid in the Ordinary Course);

 
then, and in each such case, the Exercise Price shall be adjusted immediately
after such record date so that it shall equal the price determined by
multiplying the Exercise Price in effect on such record date by a fraction, of
which the numerator shall be the total number of Common Shares outstanding on
such record date multiplied by the Current Market Price on such record date,
less the aggregate fair market value (as determined by the directors according
to applicable accounting and security valuation principles, which determination
shall be conclusive) of such shares, rights, options, warrants, evidence of
indebtedness or assets so distributed, and of which the denominator shall be the
total number of Common Shares outstanding on such record date multiplied by such
Current Market Price; any Common Shares owned by or held for the account of the
Corporation or any subsidiary (as defined in the Canada Business Corporations
Act) of the Corporation shall be deemed not to be outstanding for the purpose of
any such computation; such adjustment shall be made successively whenever such a
record date is fixed; to the extent that such distribution is not so made, the
Exercise Price shall then be readjusted to the Exercise Price which would then
be in effect if such record date had not been fixed or to the Exercise Price
which would then be in effect based upon such shares, rights, options, warrants,
evidences of indebtedness or assets actually distributed, as the case may be.
 
(d)
If and whenever at any time after the date hereof and prior to the Expiry Time,
there is a reclassification of the Common Shares, a conversion or change of the
Common Shares into other shares or into other securities, or a capital
reorganization of the Corporation other than as described in paragraph (a) or a
consolidation, amalgamation or merger of the Corporation (including, without
limitation, by way of plan of arrangement) with or into any other body
corporate, trust, partnership or other entity, or a sale or conveyance of the
property and assets of the Corporation as an entirety or substantially as an
entirety to any other body corporate, trust, partnership or other entity, any
Warrantholder who has not exercised his right of acquisition prior to the
effective date of such reclassification,  conversion, reorganization,
consolidation, amalgamation, merger, sale or conveyance, upon the exercise of
such right thereafter, shall be entitled to receive and shall accept, in lieu of
the number of Common Shares then sought to be acquired by it, the kind and
number of shares or other securities or property (including cash) of the
Corporation or of the body corporate, trust, partnership or other entity
resulting from such reclassification, conversion, reorganization, merger,
amalgamation or consolidation, or to which such sale or conveyance may be made,
as the case may be, that such holder would have been entitled to receive as a
result of such reclassification, conversion, consolidation,
reorganization,  amalgamation, merger, sale or conveyance, if, on the record
date or the effective date thereof, as the case may be, the Warrantholders had
been the registered holder of the number of Common Shares to which the holder
was theretofore entitled upon exercise.  If determined appropriate by the board
of directors of the Corporation to give effect to or to evidence the provisions
of this subsection (d), the Corporation, its successor, or such purchasing body
corporate, partnership, trust or other entity, as the case may be, shall prior
to or contemporaneously with any such reclassification, reorganization,
consolidation, amalgamation, merger, sale or conveyance, enter into an agreement
or new Warrant Certificate which shall provide, to the extent possible, for the
application of the provisions set forth in this Warrant with respect to the
rights and interests thereafter of the Warrantholders to the end that the
provisions set forth in this Warrant shall thereafter correspondingly be made
applicable, as nearly as may reasonably be, with respect to any shares, other
securities or property (including cash) to which a Warrantholder is entitled on
the exercise of its acquisition rights thereafter and upon entering into such
new Warrant Certificate or agreement, the Corporation shall cease to have any
obligations (including the obligation to issue any Common Shares) hereunder and
the holder shall cease to have any rights hereunder.  Any Warrant Certificate or
agreement entered into pursuant to the provisions of this subsection (d) shall
be an agreement entered into pursuant to the provisions of Article 7.  Any
Warrant Certificate or agreement entered into between the Corporation, any
successor to the Corporation or such purchasing body corporate, partnership,
trust or other entity shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided in this Section 4.1
and which shall apply to successive reclassifications, reorganizations,
amalgamations, consolidations, mergers, sales or conveyances.

 
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(e)
If necessary, appropriate adjustments shall be made in the application of the
provisions set forth in this Section 4.1 with respect to the rights and interest
thereafter of the holders of Warrants to the end that the provisions set forth
in this Article 4 shall thereafter correspondingly be made applicable as nearly
as may reasonably be possible in relation to any shares or other securities or
property thereafter deliverable upon the exercise of any Warrant.  Any such
adjustments shall be made by and set forth in an amendment to this Warrant
Certificate hereto approved by the directors of the Corporation and shall for
all purposes conclusively be deemed to be an appropriate adjustment.  The
subdivision or consolidation of the Common Shares at any time outstanding into a
greater or lesser number of Common Shares shall be deemed not to be a
reclassification of the capital of the Corporation for the purposes of this
subsection.

 
(f)
If any case in which this Section 4.1 shall require that an adjustment shall
become effective immediately after a record date for an event referred to
herein, the Corporation may defer, until the occurrence of such event, issuing
to the holder of any Warrant exercised after such event the additional Common
Shares issuable upon such conversion by reason of the adjustment required by
such event before giving effect to such adjustment; provided, however, that the
Corporation shall deliver to such holder an appropriate instrument evidencing
such holder's right to receive such additional Common Shares upon the occurrence
of the event requiring such adjustment and the right to receive any
distributions made on such additional Common Shares declared in favour of
holders of record of Common Shares on and after the relevant date of exercise or
such later date as such holder would, but for the provisions of this subsection
(f), have become the holder of record of such additional Common Shares pursuant
to subsection (b).

 
(g)
If the purchase price provided for in any right, warrant or option issued as
described in subsection (b) or (c) is decreased, or the price at which Common
Shares are issued as described in subsection (a) is decreased or the rate of
conversion at which any convertible securities which are issued as described in
subsection (a) is increased, the Exercise Price shall, subject to subsection
(f), forthwith be changed so as to decrease the  Exercise Price to such Exercise
Price as would have been obtained had the adjustment made in connection with the
issuance of all such rights, options or securities been made upon the basis of
such purchase price as so decreased or such rate as so increased.

 
(h)
No adjustment in the Exercise Price or in the number of shares to be issued
pursuant to the exercise of the Warrants shall be required unless such
adjustment would result in a change of at least 1% in the Exercise Price then in
effect or unless the number of shares to be issued would change by at least
1/100th of a share, provided, however, that any adjustments which, except for
the provisions of this subsection 4.1(h) would otherwise have been required to
be made, shall be carried forward and taken into account in any subsequent
adjustment.

 
(i)
No adjustment in the Exercise Price shall be made in respect of any event
described in subsections 4.1(a)(iii), 4.1(b), 4.1(c) or 4.1(d):

 
 
(i)
if each of the Warrantholders are entitled to participate in such event on the
same terms mutatis mutandis as if they had exercised their purchase rights prior
to the effective date or record date of such event, subject to the prior
approval of the Exchange and any other exchange on which the Common Shares are
then listed, if applicable, to such participation if the Common Shares or the
Warrants are then listed on any such exchange;

 
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(ii)
in respect to the issuance of Common Shares on exercise of the Warrants or
warrants similar to the Warrants, held by other persons; or

 
 
(iii)
in respect of the issuance of Common Shares pursuant to the Corporation's stock
option plans.

 
(j)
(Upon the expiry of the period for conversion of convertible securities and the
exercise period for rights, options or warrants (other than rights, options or
warrants in respect of which the Warrantholders are entitled to participate, as
contemplated in subsection 4.1(i)) to purchase Common Shares or convertible
securities, the Exercise Price shall be adjusted to what it would have been if
such unconverted convertible securities and unexercised rights, options or
warrants had not been issued.

 
(k)
The adjustments provided for in this Section in the Exercise Price and in the
number and classes of shares which are to be received on the exercise of
Warrants are cumulative.  After any adjustment pursuant to this Section, the
term ‘Common Shares’ where used in this Warrant shall be interpreted to mean the
shares or other securities or property of the Corporation which, as a result of
all prior adjustments pursuant to this Section, the Warrantholders are entitled
to receive upon the exercise of his Warrant, and the number of Common Shares
indicated in any subscription made pursuant to a Warrant shall be interpreted to
mean the number and kind of securities or property which, as a result of all
prior adjustments pursuant to this Section, a Warrantholder is entitled to
receive upon the full exercise of a Warrant entitling the holder thereof to
purchase the number of Common Shares so indicated.

 
(l)
All securities and property which a Warrantholder is at the time in question
entitled to receive on the full exercise of his Warrant, whether or not as a
result of adjustments made pursuant to this Section, shall, for the purposes of
the interpretation of this Warrant be deemed to be securities and property which
such Warrantholder is entitled to purchase pursuant to such Warrant.

 
4.2 
Voluntary Adjustment by the Corporation

 
Subject to approval of the Exchange and any other exchange on which the Common
Shares are then listed, if applicable, the Corporation may, at its option, at
any time prior to the Expiry Time, reduce the then current Exercise Price to any
amount deemed appropriate by the Board of Directors of the Corporation.
 
4.3 
Notice of Adjustment

 
Whenever the number of Common Shares purchasable upon the exercise of each
Warrant or the Exercise Price of such Common Shares is adjusted, as herein
provided, the Corporation shall promptly send to the Warrantholders, at the
address set out on the face page of this Warrant Certificate, or such other
address as to which the Corporation shall have been notified pursuant to Section
8.2 by first class mail, postage prepaid, notice of such adjustment or
adjustments.
 
4.4 
No Adjustment for Dividends

 
Except as provided in section 4.1 of this Article 4, no adjustment in respect of
any dividends shall be made during the term of a Warrant or upon the exercise of
a Warrant.
 
4.5 
Determination of Adjustments

 
If any questions shall at any time arise with respect to the Exercise Price,
such question shall be conclusively determined by the Corporation's Auditors,
or, if they decline to so act, any other firm of chartered accountants that the
Corporation may designate and the Warrantholders, acting reasonably, may
approve, and who shall have access to all appropriate records and such
determination shall be binding upon the Corporation and the holder.
 
4.6 
Notice of Special Matters

 
The Corporation covenants that, so long as any Warrants remain outstanding it
will give notice to the Warrantholders of its intention to fix a record date
that is prior to the Expiry Date for any event referred to in subsections (a),
(b), (c) or (d) of Section 4.1 (other than subdivision, consolidation or of its
Common Shares) which may give rise to an adjustment in the number of Common
Shares, or the securities or property, to be received on exercise or the
Exercise Price.  Such notice shall specify the particulars of such event and the
record date for such event, provided that the Corporation shall only be required
to specify in the notice such particulars of the event as shall have been fixed
and determined on the date on which the notice if given.  The notice shall be
given in each case not less than 15 days prior to such applicable record date.
 
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4.7 
No Action after Notice

 
The Corporation covenants that it will not close its transfer books or take any
other corporate action which might deprive the holder of the opportunity to
exercise its right of acquisition pursuant thereto during the period of 15 days
after the giving of the certificate or notices set forth in section 4.6.
 
ARTICLE 5
 
COVENANTS BY THE CORPORATION
 
5.1 
Covenants by the Corporation

 
The Corporation hereby covenants and agrees as follows:
 
 
(a)
it will at all times maintain its corporate existence and will carry on its
business as currently carried on and will use its best efforts to keep the
Common Shares listed on the Exchange;

 
 
(b)
it will reserve and there will remain unissued out of its authorized capital a
sufficient number of Common Shares to satisfy the rights of acquisition provided
for in the Warrant Certificate;

 
 
(c)
all Common Shares issued upon exercise of the right to purchase provided for
herein shall, upon payment of the Exercise Price therefor, be issued as fully
paid and non assessable shares, and be free from any and all taxes, liens and
charges relating thereto; and

 
 
(d)
it will take all reasonable steps and actions and do all such acts and things as
may be required to:

 
 
 
(1)
as long as it meets the minimum listing requirements of such institutions,
maintain the listing and posting for trading of the Shares on the TSX; and

 
 
 
(2)
maintain its status as a reporting issuer not in default of the requirements of
applicable securities legislation of the provinces of Canada.

 
5.2
Representations and Warranties by the Corporation Regarding Listing Approvals

 
The Corporation hereby represents and warrants that all necessary Exchange
approvals have been obtained and that it will use commercially reasonable
efforts to obtain listing on the NYSE Alternext U.S. Exchange, formerly known as
the American Stock Exchange and such listings will be maintained in connection
with the issue of the Common Shares on due exercise of the Warrants prior to the
Expiry Time.
 
ARTICLE 6
 
LEGENDS ON COMMON SHARES
 
6.1 
Legends on Common Shares

 
 
(a)
The Warrantholder acknowledges that any certificate representing Common Shares
issued upon the exercise of this Warrant Certificate prior to the date which is
four months and one day after the date hereof will bear the following legend:

 

 
‘UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST
NOT TRADE THE SECURITY BEFORE JUNE 21, 2009.’

 
provided that at any time on or subsequent to the date which is four months and
one day after the date hereof any certificate representing such Common Shares
may be exchanged for a certificate bearing no such legends.  The Corporation
hereby covenants and agrees that it will use the best efforts thereof to deliver
or to cause to be delivered a certificate or certificates representing such
Common Shares bearing no such legends within three Business Days after receipt
of the legended certificate.

 
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(b)
The Warrantholder acknowledges that the certificates representing the Common
Shares and all certificates issued in exchange or substitution thereof, will
bear a legend in substantially the following form as long as the legend referred
to in subsection 6.1(a) remains on such certificate:

 
‘THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON THE TORONTO STOCK
EXCHANGE; HOWEVER, THE SAID SECURITIES CAN NOT BE TRADED THROUGH THE FACILITIES
OF SUCH EXCHANGE SINCE THEY ARE NOT FREELY TRANSFERABLE, AND CONSEQUENTLY ANY
CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT ‘GOOD DELIVERY’ IN SETTLEMENT OF
TRANSACTIONS ON THE TORONTO STOCK EXCHANGE.’

(c)
The Warrantholder further acknowledges that any certificate representing Common
Shares issued upon the exercise of this Warrant Certificate and all certificates
issued in exchange or substitution thereof will bear the following legend:

 
‘UNTIL THE SEPARATION TIME (AS DEFINED IN THE RIGHTS AGREEMENT REFERRED TO
BELOW), THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO
CERTAIN RIGHTS AS SET FORTH IN A SHAREHOLDER RIGHTS PLAN AGREEMENT, DATED AS OF
THE 17TH DAY OF JANUARY, 2007 (THE ‘RIGHTS AGREEMENT’), BETWEEN THE CORPORATION
AND CIBC MELLON TRUST COMPANY, AS RIGHTS AGENT, THE TERMS OF WHICH ARE HEREBY
INCORPORATED HEREIN BY REFERENCE AND A COPY OF WHICH MAY BE INSPECTED DURING
NORMAL BUSINESS HOURS AT THE PRINCIPAL EXECUTIVE OFFICES OF THE
CORPORATION.  UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT,
SUCH RIGHTS MAY BE TERMINATED, MAY EXPIRE, MAY BECOME VOID (IF, IN CERTAIN
CASES, THEY ARE ‘BENEFICIALLY OWNED’ BY AN ‘ACQUIRING PERSON’, AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT, WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH
PERSON OR ANY SUBSEQUENT HOLDER) OR MAY BE EVIDENCED BY SEPARATE CERTIFICATES
AND MAY NO LONGER BE EVIDENCED BY THIS CERTIFICATE.  THE CORPORATION WILL MAIL
OR ARRANGE FOR THE MAILING OF A COPY OF THE RIGHTS AGREEMENT TO THE HOLDER OF
THIS CERTIFICATE WITHOUT CHARGE AS SOON AS IS PRACTICABLE AFTER THE RECEIPT OF A
WRITTEN REQUEST THEREFOR.’

 
(d)
United States Legends:  Any certificate representing Common Shares issued upon
the exercise of the Warrants will bear the following legends:

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 AN ACCREDITED INVESTOR (AS DEFINED IN
REGULATION D UNDER THE SECURITIES ACT); OR (B) 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 PERSONS OTHER THAN U.S. PERSONS OUTSIDE THE UNITED STATES IN
COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; (C) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 ADOPTED UNDER THE SECURITIES
ACT OR ANOTHER AVAILABLE EXEMPTION UNDER THE SECURITIES ACT; OR (D) 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.
 
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THIS WARRANT HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT.
THE SECURITIES TO BE ISSUED UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT.  THIS WARRANT MAY NOT BE EXERCISED BY OR ON
BEHALF OF ANY U.S. PERSON UNLESS THE COMMON SHARES ISSUABLE UPON EXERCISE ARE
REGISTERED UNDER THE SECURITIES ACT OR AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE.
 
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.
 
ARTICLE 7
 
MERGER AND SUCCESSORS
 
7.1 
Corporation May Consolidate, etc. on Certain Terms

 
Nothing herein contained shall prevent any amalgamation or merger of the
Corporation with or into any other corporation or corporations, or a conveyance
or transfer of all or substantially all the properties and estates of the
Corporation as an entirety to any corporation lawfully entitled to acquire and
operate same, provided, however, that the corporation formed by such
amalgamation or merger or which acquires by conveyance or transfer all or
substantially all the properties and estates of the Corporation shall,
simultaneously with such amalgamation, merger, conveyance or transfer, assume
the due and punctual performance and observance of all the covenants and
conditions hereof to be performed or observed by the Corporation.
 
7.2 
Successor Corporation Substituted

 
In case the Corporation, pursuant to Section 7.1 shall be amalgamated or merged
with or into any other corporation or corporations the shares of which are not
listed on a stock exchange, or shall convey or transfer all or substantially all
of its properties and estates as an entirety to any other corporation, the
successor corporation formed by such consolidation or amalgamation, or into
which the Corporation shall have been amalgamated or merged or which shall have
received a conveyance or transfer as aforesaid, shall succeed to and be
substituted for the Corporation hereunder and such changes in phraseology and
form (but not in substance) may be made in the Warrant Certificate and herein as
may be appropriate in view of such amalgamation, merger or transfer.
 
ARTICLE 8
 
MISCELLANEOUS
 
8.1 
Transfer and assignment of Warrants

 
Subject to the transfer and assignment restrictions set out in the Warrant
Certificate and those arising under applicable securities laws, the
Warrantholders are entitled to transfer or assign the Warrants evidenced by this
Warrant Certificate to another person by transferring or assigning this Warrant
Certificate. This Warrant Certificate, and the Warrants evidenced by this
Warrant Certificate, shall be transferable or assignable to any person at any
time prior to the Expiry Time. This Warrant Certificate enures to the benefit of
the Holder and its successors and permitted assigns and is binding on the
Corporation and its successors and permitted assigns.
 
8.2 
Communication

 
Any notice or other communication (a ‘Communication’) to be made or given in
connection with this Warrant Certificate shall be made or given in writing and
may be made or given by personal delivery or by registered mail addressed to the
recipient at its address provided on the first page of this Warrant Certificate
or such other address or individual as may be designated by it by notice given
in accordance with this Section 8.2.  Any Communication made or given by
personal delivery shall be conclusively deemed to have been given on the day of
actual delivery thereof and, if made or given by registered mail, on the fourth
day, other than a Saturday, Sunday or civic or statutory holiday in Toronto,
following the deposit thereof in the mail.  If the party giving any
Communication knows or ought reasonably to know of any difficulties with the
postal system which might affect the delivery of the mail, any such
Communication shall not be mailed but shall be made or given by personal
delivery.
 
8.3 
Governing Law and severance

 
This Warrant Certificate shall be governed and interpreted by the laws of the
Province of Ontario and all Federal laws of Canada that apply in the Province of
Ontario. If a court or other tribunal of competent jurisdiction determines that
any one or more of the provisions contained in this Warrant Certificate is
invalid, illegal or unenforceable in any respect in any jurisdiction, the
validity, legality and enforceability of such provision or provisions shall not
in any way be affected or impaired thereby in any other jurisdiction and the
validity, legality and enforceability of the remaining provisions contained in
this Warrant Certificate shall not in any way be affected or impaired thereby,
unless in either case as a result of such determination this Warrant Certificate
would fail in its essential purpose.
 
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