Unassociated Document


    


    THIS
      WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT
      (1) ARE SUBJECT TO THE RESTRICTIONS ON TRANSFER SET FORTH IN SECTIONS 4 AND
      10
      OF THIS WARRANT AND (2) HAVE
      BEEN, OR WILL BE, ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER
      THE
      SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT
      BE
      SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL
      SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH REGISTRATION IS NOT
      REQUIRED.

     

    
      	 Warrant No. 	
               Number
                of Shares:
(subject to
                adjustment)

            


    

    Date
      of
      Issuance: 

     

    APOLLO
      GOLD CORP.

     

    Common
      Stock Purchase Warrant

     

    (Void
      after five years)

     

    Apollo
      Gold Corp., a ________corporation (the “Company”), for value received, hereby
      certifies that Shoreline Pacific, LLC, or its registered assigns (the
“Registered Holder”), is entitled, subject to the terms and conditions set forth
      below, to purchase from the Company, at any time or from time to time commencing
      six months after the date of issuance and on or before 5:00 p.m. (Eastern
      time) on January __, 20__, __________ shares of Common Stock, of the Company,
      at
      a purchase price of $_________ per share. The shares purchasable upon exercise
      of this Warrant, and the purchase price per share, each as adjusted from time
      to
      time pursuant to the provisions of this Warrant, are hereinafter referred to
      as
      the “Warrant Shares” and the “Purchase Price,” respectively.

    


    1.
      Exercise.

    


    (a)
      This
      Warrant may be exercised by the Registered Holder, in whole or in part, by
      surrendering this Warrant, with the purchase form appended hereto as
      Exhibit I duly executed by the Registered Holder or by the Registered
      Holder’s duly authorized attorney, at the principal office of the Company, or at
      such other office or agency as the Company may designate, accompanied by payment
      in full, in lawful money of the United States, of the Purchase Price payable
      in
      respect of the number of Warrant Shares purchased upon such
      exercise.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

      
        


        (b)
          The
          Registered Holder may, at its option, elect to pay some or all of the Purchase
          Price payable upon an exercise of this Warrant by canceling all or a portion
          of
          this Warrant. If the Registered Holder wishes to exercise this Warrant
          by this
          method, the number of Warrant Shares purchaseable (which shall in no event
          exceed the total number of Warrant Shares purchasable under this Warrant
          as set
          forth above), subject to adjustment under Section 2 of this Warrant) shall
          be
          determined as follows:

         

      

    

    X=Y[(A-B)/A];
      where

    


    X=
      the
      number of Warrant Shares to be issued to the Holder.

    


    Y=
      the
      number of Warrant Shares with respect to which this Warrant is being
      exercised.

    


    A=
      the
      Fair Market Value of one share of Common Stock.

    


    B=
      the
      Purchase Price of one share of Common Stock.

    


    The
      Fair
      Market Value per share of Common Stock shall be determined as
      follows:

    


    (i)
      If
      the Common Stock is listed on a national securities exchange, the Nasdaq Stock
      Market or another nationally recognized trading system (including, without
      limitation, the OTC Bulletin Board or any successor and, if the average daily
      trading volume for the preceding 10 days has been at least 100,000 shares,
      the
      Pink Sheets) as of the Exercise Date, the Fair Market Value per share of Common
      Stock shall be deemed to be the average of the high and low reported sale prices
      per share of Common Stock thereon on the three trading days immediately
      preceding the Exercise Date (provided that if no such price is reported on
      such
      day, the Fair Market Value per share of Common Stock shall be determined
      pursuant to clause (ii)).

    


    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

       

    

    (ii)
      If
      the Common Stock is not listed on a national securities exchange, the Nasdaq
      Stock Market or another nationally recognized trading system as of the Exercise
      Date, the Fair Market Value per share of Common Stock shall be deemed to be
      the
      amount most recently determined by the Board of Directors to represent the
      fair
      market value per share of the Common Stock (including without limitation a
      determination for purposes of granting Common Stock options or issuing Common
      Stock under an employee benefit plan of the Company); and, upon request of
      the
      Registered Holder, the Board of Directors (or a representative thereof) shall
      promptly notify the Registered Holder of the Fair Market Value per share of
      Common Stock. Notwithstanding the foregoing, if the Board of Directors has
      not
      made such a determination within the three-month period prior to the Exercise
      Date, then (A) the Board of Directors shall make a determination of the
      Fair Market Value per share of the Common Stock within 15 days of a request
      by
      the Registered Holder that it do so, and (B) the exercise of this Warrant
      pursuant to this subsection 1(b) shall be delayed until such determination
      is
      made.

    


    (c)
      Each
      exercise of this Warrant shall be deemed to have been effected immediately
      prior
      to the close of business on the day on which this Warrant shall have been
      surrendered to the Company as provided in subsection 1(a) above accompanied
      by
      payment in full of the Purchase Price (the “Exercise Date”). At such time, the
      person or persons in whose name or names any certificates for Warrant Shares
      shall be issuable upon such exercise as provided in subsection 1(d) below shall
      be deemed to have become the holder or holders of record of the Warrant Shares
      represented by such certificates.

    


    (d)
      As
      soon as reasonably practicable after the exercise of this Warrant in full or
      in
      part, the Company, at its expense, will cause to be issued in the name of,
      and
      delivered to, the Registered Holder, or as such Holder (upon payment by such
      Holder of any applicable transfer taxes) may direct:

    


    (i)
      a
      certificate or certificates for the number of full Warrant Shares to which
      the
      Registered Holder shall be entitled upon such exercise plus, in lieu of any
      fractional share to which the Registered Holder would otherwise be entitled,
      cash in an amount determined pursuant to Section 3 hereof; and

    


    (ii)
      in
      case such exercise is in part only, a new warrant or warrants (dated the date
      hereof) of like tenor, calling in the aggregate on the face or faces thereof
      for
      the number of remaining Warrant Shares.

    


    2.
      Adjustments.

    


    (a)
      Adjustment for Stock Splits and Combinations. If the Company shall at any
      time or from time to time after the date on which this Warrant was first issued
      (the “Original Issue Date”) effect a subdivision of the outstanding Common
      Stock, the Purchase Price then in effect immediately before that subdivision
      shall be proportionately decreased. If the Company shall at any time or from
      time to time after the Original Issue Date combine the outstanding shares of
      Common Stock, the Purchase Price then in effect immediately before the
      combination shall be proportionately increased. Any adjustment under this
      paragraph shall become effective at the close of business on the date the
      subdivision or combination becomes effective.

    


    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

       

    

    (b)
      Adjustment for Certain Dividends and Distributions. In the event the
      Company at any time, or from time to time after the Original Issue Date shall
      make or issue, or fix a record date for the determination of holders of Common
      Stock entitled to receive, a dividend or other distribution payable in
      additional shares of Common Stock, then and in each such event the Purchase
      Price then in effect immediately before such event shall be decreased as of
      the
      time of such issuance or, in the event such a record date shall have been fixed,
      as of the close of business on such record date, by multiplying the Purchase
      Price then in effect by a fraction:

    


    
      	
            	(1)	
              the
                numerator of which shall be the total number of shares of Common
                Stock
                issued and outstanding immediately prior to the time of such issuance
                or
                the close of business on such record date,
                and

            


    

    


    
      	
            	(2)	
              the
                denominator of which shall be the total number of shares of Common
                Stock
                issued and outstanding immediately prior to the time of such issuance
                or
                the close of business on such record date plus the number of shares
                of
                Common Stock issuable in payment of such dividend or
                distribution;

            


    

    


    provided,
      however, if such record date shall have been fixed and such dividend is not
      fully paid or if such distribution is not fully made on the date fixed therefor,
      the Purchase Price shall be recomputed accordingly as of the close of business
      on such record date and thereafter the Purchase Price shall be adjusted pursuant
      to this paragraph as of the time of actual payment of such dividends or
      distributions.

    


    (c)
      Adjustment in Number of Warrant Shares. When any adjustment is required
      to be made in the Purchase Price pursuant to subsections 2(a) or 2(b), the
      number of Warrant Shares purchasable upon the exercise of this Warrant shall
      be
      changed to the number determined by dividing (i) an amount equal to the
      number of shares issuable upon the exercise of this Warrant immediately prior
      to
      such adjustment, multiplied by the Purchase Price in effect immediately prior
      to
      such adjustment, by (ii) the Purchase Price in effect immediately after
      such adjustment.

    


    (d)
      Adjustments for Other Dividends and Distributions. In the event the
      Company at any time or from time to time after the Original Issue Date shall
      make or issue, or fix a record date for the determination of holders of Common
      Stock entitled to receive, a dividend or other distribution payable in
      securities of the Company (other than shares of Common Stock) or in cash or
      other property (other than cash out of earnings or earned surplus, determined
      in
      accordance with generally accepted accounting principles), then and in each
      such
      event provision shall be made so that the Registered Holder shall receive upon
      exercise hereof, in addition to the number of shares of Common Stock issuable
      hereunder, the kind and amount of securities of the Company and/or cash and
      other property which the Registered Holder would have been entitled to receive
      had this Warrant been exercised into Common Stock on the date of such event
      and
      had the Registered Holder thereafter, during the period from the date of such
      event to and including the Exercise Date, retained any such securities
      receivable, giving application to all adjustments called for during such period
      under this Section 2 with respect to the rights of the Registered
      Holder.

    


    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

       

    

    (e)
      Adjustment for Mergers or Reorganizations, etc. If there shall occur any
      reorganization, recapitalization, consolidation or merger involving the Company
      in which the Common Stock is converted into or exchanged for securities, cash
      or
      other property (other than a transaction covered by subsections 2(a), 2(b)
      or 2(d)), then, following any such reorganization, recapitalization,
      consolidation or merger, the Registered Holder shall receive upon exercise
      hereof the kind and amount of securities, cash or other property
      which
      the
      Registered Holder would have been entitled to receive if, immediately prior
      to
      such reorganization, recapitalization, consolidation or merger, the Registered
      Holder had held the number of shares of Common Stock subject to this Warrant.
      Notwithstanding the foregoing sentence, in the event the value of the stock,
      securities or other assets or property (determined in good faith by the Board
      of
      Directors of the Company) issuable or payable with respect to one share of
      the
      Common Stock in connection with such reorganization,
      recapitalization, consolidation or merger is in excess of the Purchase Price
      in
      effect at the time of such reorganization, recapitalization, consolidation
      or
      merger and securities received in such reorganization, recapitalization,
      consolidation or merger, if any, are publicly traded, then this Warrant shall
      expire unless exercised prior to such reorganization, recapitalization,
      consolidation or merger. In any such case, appropriate adjustment (as determined
      in good faith by the Board of Directors of the Company) shall be made in the
      application of the provisions set forth herein with respect to the rights and
      interests thereafter of the Registered Holder, to the end that the provisions
      set forth in this Section 2 (including provisions with respect to changes
      in and other adjustments of the Purchase Price) shall thereafter be applicable,
      as nearly as reasonably may be, in relation to any securities, cash or other
      property thereafter deliverable upon the exercise of this Warrant.

    


    (e)
      Certificate as to Adjustments. Upon the occurrence of each adjustment or
      readjustment of the Purchase Price pursuant to this Section 2, the Company
      at its expense shall promptly compute such adjustment or readjustment in
      accordance with the terms hereof and furnish to the Registered Holder a
      certificate setting forth such adjustment or readjustment (including the kind
      and amount of securities, cash or other property for which this Warrant shall
      be
      exercisable and the Purchase Price) and showing in detail the facts upon which
      such adjustment or readjustment is based. The Company shall, upon the written
      request at any time of the Registered Holder, furnish or cause to be furnished
      to the Registered Holder a certificate setting forth (i) the Purchase Price
      then in effect and (ii) the number of shares of Common Stock and the
      amount, if any, of other securities, cash or property which then would be
      received upon the exercise of this Warrant.

    


    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

       

    

    3.
      Fractional Shares.
      The
      Company shall not be required upon the exercise of this Warrant to issue any
      fractional shares, but shall make an adjustment therefor in cash on the basis
      of
      the Fair Market Value per share of Common Stock, as determined pursuant to
      subsection 1(b) above.

    


    4.
      Requirements for Transfer. (a)
      For a
      period of six months after the issuance date of this Warrant (which shall not
      be
      earlier than the closing date of the offering pursuant to which this Warrant
      is
      being issued), neither this Warrant nor any Warrant Shares issued upon exercise
      of this Warrant shall
      be
      sold, transferred, assigned, pledged, or hypothecated, or be the subject of any
      hedging, short sale, derivative, put, or call transaction that would result
      in
      the effective economic disposition of the securities by any person for a period
      of 180 days immediately following the date of effectiveness or commencement
      of
      sales of the offering pursuant to which this Warrant is being issued, except
      the
      transfer of any security: 

    


    (i)
      by
      operation of law or by reason of reorganization of the Company; 

     

    (ii)
      to
      any NASD member firm participating in the offering and the officers or partners
      thereof, if all securities so transferred remain subject to the lock-up
      restriction in subparagraph 4(a) above for the remainder of the time period;
      

     

    (iii)
      if
      the aggregate amount of securities of the Company held by Shoreline Pacific
      or
      related person do not exceed 1% of the securities being offered; 

     

    (iv)
      that
      is beneficially owned on a pro-rata basis by all equity owners of an investment
      fund, provided that no participating member manages or otherwise directs
      investments by the fund, and participating members in the aggregate do not
      own
      more than 10% of the equity in the fund; 

     

    (v)
      the
      exercise or conversion of any security, if all securities received remain
      subject to the lock-up restriction in subparagraph (g)(1) above for the
      remainder of the time period. 

     

    (b)
      Subject to the foregoing restrictions, the Company agrees that, at any time
      or
      times hereafter (but not more than six (6) years after October 15, 2006), as
      and
      when it intends to register any of its securities under the Securities Act
      of
      1933, as amended (the “Securities Act”) (except in connection with an offering
      on Form S-8 or an offering solely related to an acquisition or exchange on
      a
      Form S-4 or any subsequent similar form) the Company will notify the Holder
      of
      such intention and, upon request from the Holder, will use its reasonable best
      efforts to cause the Warrant Shares designated by the Holder to be registered
      for resale under the Securities Act. The number of Warrant Shares to be included
      in such offering may be reduced if and to the extent that the underwriter of
      securities included in the registration statement and offered by the Company
      shall be of the opinion that such inclusion would adversely affect the marketing
      of the securities to be sold by the Company therein; provided, however, that
      the
      percentage of the reduction of such Warrant Shares shall be no greater than
      the
      percentage reduction of securities of other selling stockholders, as such
      percentage reductions are determined in the good faith judgment of the Company.
      The Company will use its reasonable best efforts to keep such registration
      statement (or another registration statement for such purpose) in effect until
      at least the second anniversary of the Original Issue Date. 

    


    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    


    5.
      No Impairment.
      The
      Company will not, by amendment of its charter or through any reorganization,
      transfer of assets, consolidation, merger, dissolution, issue or sale of
      securities or any other voluntary action, avoid or seek to avoid the observance
      or performance of any of the terms of this Warrant, but will at all times in
      good faith assist in the carrying out of all such terms and in the taking of
      all
      such action as may be necessary or appropriate in order to protect the rights
      of
      the holder of this Warrant against impairment.

    


    6.
      Notices of Record Date, etc.
      In the
      event:

    


    (a)
      the
      Company shall take a record of the holders of its Common Stock (or other stock
      or securities at the time deliverable upon the exercise of this Warrant) for
      the
      purpose of entitling or enabling them to receive any dividend or other
      distribution, or to receive any right to subscribe for or purchase any shares
      of
      stock of any class or any other securities, or to receive any other right;
      

    


    (b)
      of
      any capital reorganization of the Company, any reclassification of the Common
      Stock of the Company, any consolidation or merger of the Company with or into
      another corporation (other than a consolidation or merger in which the Company
      is the surviving entity and its Common Stock is not converted into or exchanged
      for any other securities or property), or any transfer of all or substantially
      all of the assets of the Company; or

    


    (c)
      of
      the voluntary or involuntary dissolution, liquidation or winding-up of the
      Company, 

    


    then,
      and
      in each such case, the Company will mail or cause to be mailed to the Registered
      Holder a notice specifying, as the case may be, (i) the record date for such
      dividend, distribution or right, and the amount and character of such dividend,
      distribution or right, or (ii) the effective date on which such reorganization,
      reclassification, consolidation, merger, transfer, dissolution, liquidation
      or
      winding-up is to take place, and the time, if any is to be fixed, as of which
      the holders of record of Common Stock (or such other stock or securities at
      the
      time deliverable upon the exercise of this Warrant) shall be entitled to
      exchange their shares of Common Stock (or such other stock or securities) for
      securities or other property deliverable upon such reorganization,
      reclassification, consolidation, merger, transfer, dissolution, liquidation
      or
      winding-up. Such notice shall be mailed at least ten days prior to the record
      date or effective date for the event specified in such notice. 

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

       

    

    7.
      Reservation of Stock.
      The
      Company will at all times reserve and keep available, solely for issuance and
      delivery upon the exercise of this Warrant, such number of Warrant Shares and
      other securities, cash and/or property, as from time to time shall be issuable
      upon the exercise of this Warrant.

    


    8.
      Exchange of Warrants.
      Upon the
      surrender by the Registered Holder, properly endorsed, to the Company at the
      principal office of the Company, the Company will, subject to the provisions
      of
      Section 4 hereof, issue and deliver to or upon the order of such Holder, at
      the
      Company’s expense, a new Warrant or Warrants of like tenor, in the name of the
      Registered Holder or as the Registered Holder (upon payment by the Registered
      Holder of any applicable transfer taxes) may direct, calling in the aggregate
      on
      the face or faces thereof for the number of shares of Common Stock (or other
      securities, cash and/or property) then issuable upon exercise of this
      Warrant.

    


    9.
      Replacement of Warrants.
      Upon
      receipt of evidence reasonably satisfactory to the Company of the loss, theft,
      destruction or mutilation of this Warrant and (in the case of loss, theft or
      destruction) upon delivery of an indemnity agreement (with surety if reasonably
      required) in an amount reasonably satisfactory to the Company, or (in the case
      of mutilation) upon surrender and cancellation of this Warrant, the Company
      will
      issue, in lieu thereof, a new Warrant of like tenor.

    


    10.
      Transfers, etc.

    


    (a)
      The
      Company will maintain a register containing the name and address of the
      Registered Holder of this Warrant. The Registered Holder may change its or
      his
      address as shown on the warrant register by written notice to the Company
      requesting such change.

    


    (b)
      Subject to compliance with applicable securities laws, the legend set forth
      at
      the top of this Warrant and the provisions of Section 4 hereof, this Warrant
      and
      all rights hereunder are transferable, in whole or in part, upon surrender
      of
      this Warrant with a properly executed assignment (in the form of Exhibit II
      hereto) at the principal office of the Company.

    


    (c)
      Until
      any transfer of this Warrant is made in the warrant register, the Company may
      treat the Registered Holder as the absolute owner hereof for all purposes;
      provided, however, that if and when this Warrant is properly assigned in blank,
      the Company may (but shall not be obligated to) treat the bearer hereof as
      the
      absolute owner hereof for all purposes, notwithstanding any notice to the
      contrary.

    


    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

       

    

    11.
      Representations of the Registered Holder.
      The
      Registered Holder of this Warrant represents and warrants to the Company as
      follows:

    


    (a)
      Investment. The Registered Holder is acquiring this Warrant and the
      Warrant Shares issuable upon the exercise of this Warrant, for its own account
      for investment and not with a view to, or for sale in connection with, any
      distribution thereof, nor with any present intention of distributing or selling
      the same, except as otherwise may be permitted under applicable securities
      laws.


    


    (b)
      Authority. The Registered Holder has full power and authority to enter
      into and to perform this Warrant in accordance with its terms. The Registered
      Holder has not been organized specifically for the purpose of investing in
      the
      Company.

    


    (c)
      Accredited Investor. The Registered Holder is an Accredited Investor
      within the definition set forth in Rule 501(a) promulgated under the Securities
      Act. 

    


    12.
      Mailing of Notices, etc.
      All
      notices and other communications from the Company to the Registered Holder
      shall
      be mailed by first-class certified or registered mail, postage prepaid, to
      the
      address last furnished to the Company in writing by the Registered Holder.
      All
      notices and other communications from the Registered Holder or in connection
      herewith to the Company shall be mailed by first-class certified or registered
      mail, postage prepaid, to the Company at its principal office set forth below.
      If the Company should at any time change the location of its principal office
      to
      a place other than as set forth below, it shall give prompt written notice
      to
      the Registered Holder and thereafter all references in this Warrant to the
      location of its principal office at the particular time shall be as so specified
      in such notice.

    


    13.
      No Rights as Stockholder.
      Until
      the exercise of this Warrant, the Registered Holder shall not have or exercise
      any rights by virtue hereof as a stockholder of the Company. Notwithstanding
      the
      foregoing, in the event (i) the Company effects a split of the Common Stock
      by means of a stock dividend and the Purchase Price of and the number of Warrant
      Shares are adjusted as of the date of the distribution of the dividend (rather
      than as of the record date for such dividend), and (ii) the Registered
      Holder exercises this Warrant between the record date and the distribution
      date
      for such stock dividend, the Registered Holder shall be entitled to receive,
      on
      the distribution date, the stock dividend with respect to the shares of Common
      Stock acquired upon such exercise, notwithstanding the fact that such shares
      were not outstanding as of the close of business on the record date for such
      stock dividend.

    


    14.
      Change or Waiver.
      Any term
      of this Warrant may be changed or waived only by an instrument in writing signed
      by the party against which enforcement of the change or waiver is sought.


    


    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

       

    

    15.
      Section Headings.
      The
      section headings in this Warrant are for the convenience of the parties and
      in
      no way alter, modify, amend, limit or restrict the contractual obligations
      of
      the parties.

    


    16.
      Governing Law.
      This
      Warrant will be governed by and construed in accordance with the internal laws
      of the State of New York (without reference to the conflicts of law provisions
      thereof).

    


    EXECUTED
      as of the Date of Issuance indicated above.

     

    
      	 	 	 
	 	Apollo
              Gold
              Corp.
	 
 	 
 	 
 
	 	By:  	 
	 	 	 
	 	Title:	 
	 	
            
	 	 


    

     

    ATTEST:

    
 

    
      
        

      

    


    
      
        
        

      

      
        10

        
          

        

      

       

    


    EXHIBIT
      I

     

    PURCHASE
      FORM

     

    
      	 To:_________________	
              Dated:____________

            


    

     

    The
      undersigned, pursuant to the provisions set forth in the attached Warrant
      (No. ___), hereby irrevocably elects to purchase (check
      applicable box):

     

    
      	 	
               o

            	
              _____
                shares of the Common Stock covered by such Warrant;
                or

            


    

     

    
      	 	
               o

            	
              the
                maximum number of shares of Common Stock covered by such Warrant
                pursuant
                to the cashless exercise procedure set forth in
                Section 1(b).

            


    

     

    The
      undersigned herewith makes payment of the full purchase price for such shares
      at
      the price per share provided for in such Warrant, which is $________. Such
      payment takes the form of (check
      applicable box or boxes):

    


    
      	 	
               o

            	
              $______
                in lawful money of the United States;
                and/or

            


    

     

    
      	 	
               o

            	
              the
                cancellation of such portion of the attached Warrant as is exercisable
                for
                a total of _____ Warrant Shares (using a Fair Market Value of $_____
                per
                share for purposes of this calculation);
                and/or

            


    

     

    
      	 	
               o

            	
              the
                cancellation of such number of Warrant Shares as is necessary, in
                accordance with the formula set forth in Section 1(b), to exercise
                this Warrant with respect to the maximum number of Warrant Shares
                purchasable pursuant to the cashless exercise procedure set forth
                in
                Section 1(b).

            


    

     

    The
      undersigned hereby makes the representations set forth on Exhibit III of the
      Warrant.

    


     

    Signature: _____________________

     

    Address: ______________________

     

    ______________________

     


    
      
        
        

      

      
        11

        
          

        

      

       

    


    EXHIBIT
      II

     

    ASSIGNMENT
      FORM

     

    FOR
      VALUE
      RECEIVED, ________________________________________ hereby sells, assigns and
      transfers all of the rights of the undersigned under the attached Warrant (No.
      ____) with respect to the number of shares of Common Stock covered thereby
      set
      forth below, unto:

     

    
      	
              Name
                of Assignee

            	 	
              Address

            	 	
              No.
                of Shares

            
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 


    

    


    Dated:
      _____________________ 

    


    Signature:
      ________________________________

     

    Signature
      Guaranteed:
 

    By:
      _______________________

    
       

      The
        signature should be guaranteed by an eligible guarantor institution (banks,
        stockbrokers, savings and loan associations and credit unions with membership
        in
        an approved signature guarantee medallion program) pursuant to Rule 17Ad-15
        under the Securities Exchange Act of 1934.

       

    

     

    
      
        
        

      

      
        12

        
          

        

      

       

    


    Exhibit
      III

    


    INVESTMENT
      REPRESENTATION

     

    This
      agreement must be completed, signed and returned to Alteon Inc. along with
      the
      Purchase Form before the Common Stock issuable upon exercise of this Warrant
      will be issued.


    


    The
      undersigned, __________________________
      ("Purchaser"),
      intends to acquire  
      shares
      of the Common Stock (the "Common Stock") of Alteon Inc. (the "Company") from
      the
      Company pursuant to the exercise or conversion of a certain Warrant to purchase
      Common Stock held by Purchaser. The Common Stock will be issued to Purchaser
      in
      a transaction not involving a public offering and pursuant to an exemption
      from
      registration under the Securities Act of 1933, as amended (the "Securities
      Act")
      and applicable state securities laws. In connection with such purchase and
      in
      order to comply with the exemptions from registration relied upon by the
      Company, Purchaser represents, warrants and agrees as follows:

    


    Purchaser
      is acquiring the Common Stock for its own account for investment and not with
      a
      view to, or for sale in connection with, any distribution thereof, nor with
      any
      present intention of distributing or selling the same, except as otherwise
      may
      be permitted under applicable securities laws. 

    


    Purchaser
      has full power and authority to enter into and to perform the Purchase Form
      to
      which this letter is attached. Purchaser has not been organized specifically
      for
      the purpose of investing in the Company.

    


    Purchaser
      is an Accredited Investor within the definition set forth in Rule 501(a)
      promulgated under the Securities Act. 

    


    Purchaser
      has been advised that the Common Stock has not been registered under the
      Securities Act or state securities laws on the ground that this transaction
      is
      exempt from registration, and that reliance by the Company on such exemptions
      is
      predicated in part on Purchaser's representations set forth in this
      letter.

    


    Purchaser
      has been informed that under the Securities Act, the Common Stock must be held
      indefinitely unless it is subsequently registered under the Securities Act
      or
      unless an exemption from such registration (such as Rule 144) is available
      with
      respect to any proposed transfer or disposition by Purchaser of the Common
      Stock. Purchaser further agrees that the Company may refuse to permit Purchaser
      to sell, transfer or dispose of the Common Stock (except as permitted under
      Rule
      144) unless there is in effect a registration statement under the Securities
      Act
      and any applicable state securities laws covering such transfer, or unless
      Purchaser furnishes an opinion of counsel reasonably satisfactory to counsel
      for
      the Company, to the effect that such registration is not required.

    


    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

       

    

    Purchaser
      also understands and agrees that there will be placed on the certificate(s)
      for
      the Common Stock, or any substitutions therefor, a legend stating in
      substance:


    

      "The
        shares represented by this certificate have not been registered under the
        Securities Act of 1933, as amended (the "Securities Act"), or any state
        securities laws. These shares have been acquired for investment and may not
        be
        sold or otherwise transferred in the absence of an effective registration
        statement for these shares under the Securities Act and applicable state
        securities laws, or an opinion of counsel satisfactory to the Company that
        registration is not required and that an applicable exemption is
        available."

    

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    


    Purchaser
      has carefully read this letter and has discussed its requirements and other
      applicable limitations upon Purchaser's resale of the Common Stock with
      Purchaser's counsel.

     

    
      	 	 Very truly yours,
	 	 
	 	 
	 	
               By:

              
                

              
Title: