Document:

Unassociated Document

    UNLESS
      PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT
      TRADE THE SECURITY BEFORE MARCH 1, 2007.

     

    COMPENSATION
      WARRANTS TO PURCHASE UNITS OF

     

    APOLLO
      GOLD CORPORATION

     

    
      	
              Compensation
                Warrant Certificate No.: CO-2006/01

            	
              No.
                of Compensation Warrants:
●

            

    

    

     

    For
      value
      received, Apollo Gold Corporation (the "Corporation")
      hereby
      grants to [Insert
      name and address]
      (the
      "Holder"),
●
      compensation warrants (the "Compensation
      Warrants"),
      which
      gives the Holder the right and option, subject to the terms and conditions
      set
      forth in this compensation warrant certificate (the "Compensation
      Warrant Certificate"),
      to
      purchase from the Corporation, up to ● units of the Corporation (the
      "Units")
      at an
      exercise price of $0.45 per Unit (the "Exercise
      Price")
      at any
      time and from time to time up to 4:00 p.m. (Toronto time) on October 30,
      2008 (the
      "Expiry
      Time"),
      with
      each Unit comprised of one fully-paid and non-assessable common share in the
      capital of the Corporation (a "Common Share")
      and
      one-half (1/2) of one common share purchase warrant (a "Warrant"),
      with
      each whole Warrant entitling the holder thereof to purchase one additional
      Common Share (a "Warrant
      Share")
      for
      each Warrant represented hereby until the Expiry Time at a price of Cdn$1.00
      per
      Common Share for the first 12 months, and at a price of Cdn$1.15 per Common
      Share for the last 12 months (collectively, the "Exercise
      Price"),
      upon
      and subject to the terms and conditions set forth herein.

     

    The
      Warrants issuable upon exercise of the Compensation Warrants shall be issued
      pursuant to and governed by a warrant certificate, the form of which is attached
      hereto as Schedule "B". The number of Common Shares comprising part of each
      Unit
      (but not the number of Warrants) which the Holder is entitled to purchase upon
      exercise of the Compensation Warrants and the Exercise Price shall be subject
      to
      adjustment as hereinafter provided.

     

    1.    Definitions

     

    In
      this Compensation Warrant Certificate, unless there is something in the subject
      matter or context inconsistent therewith, the following terms shall have the
      following meanings respectively:

     

    
      	 	
              (a)

            	
              "Business
                Day"
                means any day other than a Saturday, Sunday, statutory or civic holiday
                or
                a day on which the principal banking institutions are closed in the
                City
                of Toronto, Ontario or the State of
                Colorado;

            

    

     

    
      	 	
              (b)

            	
              "Current
                Market Price"
                of the Common Shares at any date means the price per share equal
                to the
                weighted average price at which the Common Shares have traded on
                the TSX
                or, if the Common Shares are not then listed on the TSX, on such
                other
                Canadian stock exchange on which the shares trade as may be selected
                by
                the directors of the Corporation for such purpose or, if the Common
                Shares
                are not then listed on any Canadian stock exchange, in the
                over-the-counter market, during the period of any twenty consecutive
                trading days ending not more than five (5) business days before such
                date;
                provided that the weighted average price shall be determined by dividing
                the aggregate sale price of all Common Shares sold on the said exchange
                or
                market, as the case may be, during the said twenty consecutive trading
                days by the total number of Common Shares so sold; and provided further
                that if the Common Shares are not then listed on any Canadian stock
                exchange or traded in the over-the counter market, then the Current
                Market
                Price shall be determined by such firm of independent chartered
                accountants as may be selected by the directors of the
                Corporation;

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (c)

            	
              "Equity
                Shares"
                means the Common Shares and any shares of any other class or series
                of the
                Corporation which may from time to time be authorized for issue if
                by
                their terms such shares confer on the holders thereof the right to
                participate in the distribution of assets upon the voluntary or
                involuntary liquidation, dissolution or winding up of the Corporation
                beyond a fixed sum or a fixed sum plus accrued
                dividends;

            

    

     

    
      	 	
              (d)

            	
              "Holder"
                means the registered holder of this Compensation Warrant Certificate
                or
                any additional Compensation Warrant Certificates issued by the Corporation
                pursuant to the terms hereof;

            

    

     

    
      	 	
              (e)

            	
              "person"
                means an individual, corporation, partnership, unincorporated syndicate,
                unincorporated organization, trust, trustee, executor, administrator
                or
                other legal representative or any group or combination
                thereof;

            

    

     

    
      	 	
              (f)

            	
              "Subscription
                Form"
                means the form of subscription annexed hereto as Schedule "A";
                

            

    

     

    
      	 	
              (g)

            	
              "Trading
                Day"
                means any day on which the Common Shares are listed and posted for
                trading
                on the TSX and such exchange is open for business or, if not listed
                and
                posted for trading on such exchange, on such stock exchange or quotation
                system on which the Common Shares are then listed and posted (or
                quoted)
                for trading and which is open for business, and, in each case, no
                cease
                trading or similar order is in effect with respect to the Common
                Shares;
                and

            

    

     

    
      	 	
              (h)

            	
              "TSX"
                means the Toronto Stock Exchange.

            

    

     

    2.    Expiry
      Time

     

    After
      the Expiry Time, all rights under this Compensation Warrant Certificate and
      any
      outstanding Compensation Warrants evidenced hereby, in respect of which the
      right of subscription and purchase herein provided for shall not have been
      exercised, shall wholly cease and terminate and this Compensation Warrant
      Certificate and the Compensation Warrant Certificates evidenced hereby shall
      be
      void and of no value or effect.

     

    3.    Exercise
      Procedure

     

    
      	 	
              (a)

            	
              The
                Holder may exercise its right of purchase hereunder in whole or in
                part at
                any time at or prior to the Expiry Time by surrendering or delivering
                to
                the Corporation prior to the Expiry Time at its principal office
                in
                Colorado: (i) this Compensation Warrant Certificate together with
                the
                Subscription Form duly completed and executed by the Holder or its
                legal
                representative or attorney, duly appointed by an instrument in writing
                in
                form and manner satisfactory to the Corporation; and (ii) cash or
                a
                certified cheque, money order or bank draft payable to or to the
                order of
                the Corporation in an amount equal to the Exercise Price multiplied
                by the
                number of Units for which subscription is being
                made.

            

    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (b)

            	
              Any
                Compensation Warrant Certificate, Subscription Form and cash, certified
                cheque, money order or bank draft referred to in the foregoing subsection
                3(a) shall be deemed to be surrendered only upon delivery thereof
                to the
                Corporation at its principal office in the manner provided in Section
                26
                hereof.

            

    

     

    4.    Entitlement
      to Certificates

     

    Upon
      delivery and payment as provided for in Section 3 above, the Corporation shall
      cause to be issued to the Holder the Common Shares and Warrants subscribed
      for
      and the Holder shall become a shareholder of the Corporation in respect of
      such
      Common Shares purchased with effect from the date of such delivery and payment
      and shall be entitled to delivery of a certificate or certificates evidencing
      such Common Shares and Warrants. The Corporation shall cause such certificate
      or
      certificates to be issued and delivered to the Holder at the address or
      addresses specified in the Subscription Form as soon as practicable, but in
      any
      event, not later than seven (7) Business Days following such delivery and
      payment.

     

    5.    Assignment
      or Transfer of Compensation Warrants

     

    The
      Compensation Warrants evidenced hereby may not be assigned or transferred by
      the
      Holder or exercised by or for the benefit of any person other than the Holder.
      The Compensation Warrants evidenced hereby may not be exercised in the United
      States or by or on behalf of a U.S. Person or person in the United States.
      "United States" and "U.S. Person" are as defined in Regulation S under the
      United States Securities Act of 1933, as amended.

     

    6.    Partial
      Exercise and Exchanges

     

    The
      Holder may subscribe for and purchase a number of Units which is less than
      the
      number it is entitled to purchase pursuant to this Compensation Warrant
      Certificate. In the event of any such subscription and purchase prior to the
      Expiry Time, the Holder shall also be entitled to receive, without charge,
      a new
      Compensation Warrant Certificate in respect of the balance of the Units which
      it
      continues to be entitled to purchase pursuant to this Compensation Warrant
      Certificate.

     

    This
      Compensation Warrant Certificate is also exchangeable, without charge, from
      time
      to time, upon surrender hereof by the Holder to the Corporation, for a new
      Compensation Warrant certificate or certificates of like tenor representing
      in
      the aggregate the same number of Compensation Warrants under the Compensation
      Warrant Certificate so surrendered.

     

    7.    No
      Fractional Common Shares or Warrants

     

    Notwithstanding
      any adjustment provided for in Section 11 hereof, the Corporation shall not
      be
      required upon the exercise of any Compensation Warrants to issue fractional
      Common Shares or Warrants in satisfaction of its obligations hereunder and
      the
      Holder understands and agrees that it will not be entitled to any cash payment
      or other form of compensation in respect of a fractional Common Share or Warrant
      that might otherwise have been issued.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    8.    Not
      a Shareholder

     

    Nothing
      in this Compensation Warrant Certificate or in the holding of the Compensation
      Warrants evidenced hereby shall be construed as conferring upon the Holder
      any
      right or interest whatsoever as a shareholder of the Corporation.

     

    9.    No
      Obligation to Purchase

     

    Nothing
      herein contained or done pursuant hereto shall obligate the Holder to purchase
      or pay for or the Corporation to issue any Common Shares or Warrants except
      those Common Shares and Warrants in respect of which the Holder shall have
      exercised its right to purchase in the manner provided hereunder.

     

    10.    Covenants

     

    
      	 	
              (a)

            	
              The
                Corporation covenants that: (i) so long as any Compensation Warrants
                evidenced hereby remain outstanding, it shall reserve and there shall
                remain unissued out of its authorized capital a sufficient number
                of
                Common Shares and Warrants to satisfy the right of purchase provided
                for
                herein; and (ii) all Common Shares which shall be issued upon the
                exercise
                of the right to purchase provided for herein, upon payment of the
                Exercise
                Price therefor, shall be issued as fully paid and non-assessable
                and free
                from all taxes, liens and charges with respect to the issue thereof,
                other
                than which may arise by virtue of the Holder's personal
                circumstances.

            

    

     

    
      	 	
              (b)

            	
              While
                any Compensation Warrants evidenced hereby remain outstanding, the
                Corporation shall comply with the securities legislation applicable
                to it
                in order that the Corporation continue as a reporting issuer, or
                analogous
                entity, not in default of any requirements of such
                legislation.

            

    

     

    
      	 	
              (c)

            	
              The
                Corporation shall at its expense expeditiously use its commercially
                reasonable best efforts to obtain the listing on the TSX of the Common
                Shares issuable upon the exercise of the right to purchase provided
                for
                herein, and the Common Shares issuable upon exercise of the
                Warrants.

            

    

     

    
      	 	
              (d)

            	
              The
                Corporation shall use its commercially reasonable best efforts to
                do or
                cause to be done all things necessary to preserve and maintain its
                corporate existence.

            

    

     

    11.    Adjustment
      to Exercise Price

     

    The
      rights of the holder of this Compensation Warrant Certificate, including the
      number of Common Shares comprising part of each Unit issuable upon the exercise
      of each Compensation Warrant represented hereby, will be adjusted from time
      to
      time upon the occurrence of the events and in the manner provided in, and in
      accordance with the provisions of, this Section. For greater certainty, the
      number of Warrants comprising part of each Unit issuable upon the exercise
      of
      each Compensation Warrant will not be adjusted pursuant to the provisions of
      this Section.

     

    The
      Exercise Price in effect at any time is subject to adjustment from time to
      time
      in the events and in the manner provided as follows:

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (1)

            	
              If
                and whenever at any time after the date hereof the
                Corporation:

            

    

     

    
      	 	
              (a)

            	
              issues
                Common Shares or securities exchangeable for or convertible into
                Common
                Shares to all or substantially all the holders of the Common Shares
                as a
                stock dividend; 

            

    

     

    
      	 	
              (b)

            	
              makes
                a distribution on its outstanding Common Shares payable in Common
                Shares
                or securities exchangeable for or convertible into Common Shares;
                

            

    

     

    
      	 	
              (c)

            	
              subdivides
                its outstanding Common Shares into a greater number of shares;
                or

            

    

     

    
      	 	
              (d)

            	
              consolidates
                its outstanding Common Shares into a small number of
                shares;

            

    

     

    
      	 	
               

            	
              
                (any
                  of such events being called a "Common
                  Share Reorganization"),
                  then the Exercise Price will be adjusted effective immediately
                  after the
                  effective date or record date for the happening of a Common Share
                  Reorganization, as the case may be, at which the holders of Common
                  Shares
                  are determined for the purpose of the Common Share Reorganization
                  by
                  multiplying the Exercise Price in effect immediately prior to such
                  effective date or record date by a fraction, the numerator of which
                  is the
                  number of Common Shares outstanding on such effective date or record
                  date
                  before giving effect to such Common Share Reorganization and the
                  denominator of which is the number of Common Shares outstanding
                  immediately after giving effect to such Common Share Reorganization
                  (including, in the case where securities exchangeable for or convertible
                  into Common Shares are distributed, the number of Common Shares
                  that would
                  have been outstanding had all such securities been exchanged for
                  or
                  converted into Common Shares on such effective date or record
                  date).

              

            

    

     

    
      	 	
              (2)

            	
              If
                and whenever, at any time after the date hereof, the Corporation
                fixes a
                record date for the issue of rights, options or warrants to the holders
                of
                all or substantially all of its outstanding Common Shares under which
                such
                holders are entitled to subscribe for or purchase Common Shares or
                securities exchangeable for or convertible into Common Shares,
                where:

            

    

     

    
      	 	
              (a)

            	
              the
                right to subscribe for or purchase Common Shares or the right to
                exchange
                securities for or convert securities into Common Shares, expires
                not more
                than 45 days after the date of such issue (the period from the record
                date
                to the date of expiry being herein in this Section 11(2) called the
                "Rights
                Period");
                and

            

    

     

    
      	 	
              (b)

            	
              the
                cost per Common Share during the Rights Period (inclusive of any
                cost of
                acquisition of securities exchangeable for or convertible into Common
                Shares in addition to any direct cost of Common Shares) (in this
                Section
                11(2) called the "Per
                Share Cost")
                is less than 95% of the Current Market Price of the Common Shares
                on the
                record date;

            

    

     

    
      	 	
               

            	
              
                (any
                  of such events being called a "Rights
                  Offering"),
                  then the Exercise Price will be adjusted effective immediately
                  after the
                  end of the Rights Period to a price determined by multiplying the
                  Exercise
                  Price in effect immediately prior to the end of the Rights Period
                  by a
                  fraction:

              

            

    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (i)

            	
              the
                numerator of which is the aggregate
                of:

            

    

     

    
      	 	
              A.

            	
              the
                number of Common Shares outstanding as of the record date for the
                Rights
                Offering; and

            

    

     

    
      	 	
              B.

            	
              a
                number determined by dividing the product of the Per Share Cost
                and:

            

    

     

    
      	 	
              (I)

            	
              where
                the event giving rise to the application of this subsection 11(2)
                was the
                issue of rights, options or warrants to the holders of Common Shares
                under
                which such holders are entitled to subscribe for or purchase additional
                Common Shares, the number of Common Shares so subscribed for or purchased
                during the Rights Period; or

            

    

     

    
      	 	
              (II)

            	
              where
                the event giving rise to the application of this subsection 11(2)
                was the
                issue of rights, options or warrants to the holders of Common Shares
                under
                which such holders are entitled to subscribe for or purchase securities
                exchangeable for or convertible into Common Shares, the number of
                Common
                Shares for which those securities so subscribed for or purchased
                during
                the Rights Period could have been exchanged or into which they could
                have
                been converted during the Rights
                Period,

            

    

     

    
      	 	
               

            	
              by
                the Current Market Price of the Common Shares as of the record date
                for
                the Rights Offering; and

            

    

     

    
      	 	
              (ii)

            	
              the
                denominator of which is:

            

    

     

    
      	 	
              A.

            	
              in
                the case described in subparagraph 11(2)(i)(B)(I), the number of
                Common
                Shares outstanding; or

            

    

     

    
      	 	
              B.

            	
              in
                the case described in subparagraph 11(2)(i)(B)(II), the number of
                Common
                Shares that would be outstanding if all the Common Shares described
                in
                subparagraph 11(2)(i)(B)(II) had been
                issued,

            

    

     

    
      	 	
               

            	
              as
                at the end of the Rights Period.

            

    

     

    
      
        	 	 	
                Any Common Shares owned by
                  or held for the
                  account of the Corporation or any subsidiary or affiliate (as such
                  terms
                  are defined in the Securities
                  Act
                  (Ontario)) of the Corporation will be deemed not to be outstanding
                  for the
                  purpose of any such
                  computations

              

      

    

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    
      
        	 	 	
                If
                  by the terms of the rights, options or warrants referred to in
                  this
                  Section 11(2), there is more than one purchase, conversion or exchange
                  price per Common Share, the aggregate price of the total number
                  of
                  additional Common Shares offered for subscription or purchase,
                  or the
                  aggregate conversion or exchange price of the convertible securities
                  so
                  offered, will be calculated for purposes of the adjustment on the
                  basis
                  of:

              

      

    

     

    
      	 	
              (i)

            	
              the
                lowest purchase, conversion or exchange price per Common Share, as
                the
                case may be, if such price is applicable to all Common Shares which
                are
                subject to the rights, options or warrants;
                and

            

    

     

    
      	 	
              (ii)

            	
              the
                average purchase, conversion or exchange price per Common Share,
                as the
                case may be, if the applicable price is determined by reference to
                that
                number of Common Shares acquired.

            

    

     

    
      	 	 	
              To
                the extent that any adjustment in the Exercise Price occurs pursuant
                to
                this Section 11(2) as a result of the fixing by the Corporation of
                a
                record date for the distribution of rights, options or warrants referred
                to in this Section 11(2), the Exercise Price will be readjusted
                immediately after the expiration of any relevant exchange, conversion
                or
                exercise right to the Exercise Price which would then be in effect
                based
                upon the number of Common Shares actually issued and remaining issuable
                after such expiration and will be further readjusted in such manner
                upon
                expiration of any further such right.

            

      	 	 	 

      	 	 	
              If
                the Holder has exercised this Compensation Warrant Certificate in
                accordance herewith during the period beginning after the record
                date for
                a Rights Offering and ending on the last day of the Rights Period
                thereunder, the Holder will, in addition to the Common Shares to
                which it is otherwise entitled upon such exercise, be entitled to
                that
                number of additional Common Shares equal
                to the difference, if any, between (x) the result obtained when the
                Exercise Price in effect immediately prior to the end of such Rights
                Offering pursuant to this subsection is multiplied by the number
                of Common
                Shares received
                upon the exercise of this Compensation Warrant Certificate during
                such
                period, and the resulting product is divided by the Exercise Price
                as
                adjusted for such Rights Offering pursuant to this subsection provided
                that the provisions of Section 7 will be applicable to any fractional
                interest in a Common Share to
                which such Holder might otherwise be entitled and (y) the number
                of Common
                Shares received upon the exercise of this Compensation Warrant Certificate
                during such period. Such additional Common Shares will
                be deemed to have been issued to the Holder immediately following
                the end
                of the Rights Period and
                a certificate for such additional Common Shares will
                be delivered to such Holder within ten (10) Business Days following
                the
                end of the Rights Period.

            

      	 	 	 

      	 	
              (3)

            	
              If
                and whenever at any time after the date hereof, the Corporation fixes
                a
                record date for the issue or the distribution to the holders of all
                or
                substantially all its Common Shares
                of:

            

    

     

    
      	 	
              (i)

            	
              shares
                of the Corporation of any class other than Common
                Shares;

            

    

     

    
      	 	
              (ii)

            	
              rights,
                options or warrants to acquire shares or securities exchangeable
                for or
                convertible into shares or property or other assets of
                the

            

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      
      

      	 	 	
              Corporation
                (other than a right to subscribe for or purchase Common Shares or
                a right
                to exchange securities for or convert securities into Common Shares
                which
                expires not more than 45 days after the date of such issue and the
                cost
                per Common Share during such period (inclusive of any cost of acquisition
                of securities exchangeable for or convertible into Common Shares
                in
                addition to any direct cost of Common Shares) is at least 95% of
                the
                Current Market Price of the Common Shares on the record
                date);

            

    

     

    
      	 	
              (iii)

            	
              evidence
                of indebtedness; or

            

    

     

    
      	 	
              (iv)

            	
              any
                property or other assets,

            

    

     

    
      	 	
               

            	
              and
                if such issuance or distribution does not constitute a Common Share
                Reorganization or a Rights Offering (any of such non-excluded events
                being
                called a "Special
                Distribution"),
                the Exercise Price will be adjusted effective immediately after such
                record date to a price determined by multiplying the Exercise Price
                in
                effect on such record date by a
                fraction:

            

    

     

    
      	 	(i)	the numerator of which
              is:

    

     

    
      	 	
              A.

            	
              the
                product of the number of Common Shares outstanding on such record
                date and
                the Current Market Price of the Common Shares on such record date;
                less

            

    

     

    
      	 	
              B.

            	
              the
                aggregate fair market value (as determined by action by the auditors
                of
                the Corporation) to the holders of the Common Shares of such securities
                or
                property or other assets so issued or distributed in the Special
                Distribution; and

            

    

     

    
      	 	
              (ii)

            	
              the
                denominator of which is the number of Common Shares outstanding on
                such
                record date multiplied by the Current Market Price of the Common
                Shares on
                such record date.

            

    

     

    
      	 	
               

            	
              Any
                Common Shares owned by or held for the account of the Corporation
                or any
                subsidiary or affiliate (as such terms are defined in the Securities
                Act
                (Ontario)) of the Corporation will be deemed not to be outstanding
                for the
                purpose of any such computation.

            

    

     

    
      	 	
              (4)

            	
              If
                and whenever at any time after the date hereof there is a Common
                Share
                Reorganization, a Rights Offering, a Special Distribution, a
                reclassification of the Common Shares outstanding at any time or
                change of
                the Common Shares into other shares or into other securities (other
                than a
                Common Share Reorganization), or a consolidation, amalgamation or
                merger
                of the Corporation with or into any other corporation or other entity
                (other than a consolidation, amalgamation or merger which does not
                result
                in any reclassification of the outstanding Common Shares or a change
                of
                the Common Shares into other shares), or a transfer of the undertaking
                or
                assets of the Corporation as an entirety or substantially as an entirety
                to another corporation or other entity
                (any of such events being called a "Capital
                Reorganization"),
                the Holder, upon exercising this Compensation Warrant Certificate
                after
                the effective date of such Capital Reorganization, will be entitled
                to
                receive in lieu of the number of Common Shares to
                which such Holder was theretofore entitled upon such exercise, the
                aggregate number of Common Shares, other securities or other property
                which such Holder would have been entitled to receive as a result
                of such
                Capital Reorganization if, on the effective date thereof, the Holder
                had
                been the registered holder of the number of Common Shares to which
                such
                Holder was therefore entitled upon exercise of this Compensation
                Warrant
                Certificate. If determined appropriate by action of the directors
                of the
                Corporation, appropriate adjustments will be made as a result of
                any such
                Capital Reorganization in the application of the provisions set forth
                in
                this Section 11(4) with respect to the rights and interests thereafter
                of
                the Holder to the end that the provisions set forth in this Section
                11(4)
                will thereafter correspondingly be made applicable as nearly as may
                reasonably be in relation to any shares, other securities or other
                property thereafter deliverable upon the exercise hereof. Any such
                adjustment must be made by and set forth in an amendment to this
                Compensation Warrant Certificate approved by action by the directors
                of
                the Corporation and will for all purposes be conclusively deemed
                to be an
                appropriate adjustment.

            

    

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (5)

            	
              If
                at any time after the date hereof and prior to the Expiry Time any
                adjustment in the Exercise Price shall occur as a result
                of:

            

    

     

    
      	 	
              (a)

            	
              an
                event referred to in subsection
                11(1);

            

    

     

    
      	 	
              (b)

            	
              the
                fixing by the Corporation of a record date for an event referred
                to in
                subsection 11(2); or

            

    

     

    
      	 	
              (c)

            	
              the
                fixing by the Corporation of a record date for an event referred
                to in
                subsection 11(3) if such event constitutes the issue or distribution
                to
                the holders of all or substantially all of its outstanding Common
                Shares
                of: (A) Equity Shares, or (B) securities exchangeable for or convertible
                into Equity Shares at an exchange or conversion price per Equity
                Share
                less than 95% of the Current Market Price on such record date, or
                (C)
                rights, options or warrants to acquire Equity Shares at an exercise,
                exchange or conversion price per Equity Share less than 95% of the
                Current
                Market Price on such record date,

            

    

     

    
      	 	
               

            	
              then
                the number of Common
                Shares
                purchasable upon the subsequent exercise of this Compensation Warrant
                Certificate shall be simultaneously adjusted by multiplying the number
                of
                Common
                Shares
                purchasable upon the exercise of this Compensation Warrant Certificate
                immediately prior to such adjustment by a fraction which shall be
                the
                reciprocal of the fraction employed in the adjustment of the Exercise
                Price. To the extent any adjustment in subscription rights occurs
                pursuant
                to this subsection 11(5) as a result of a distribution of exchangeable
                or
                convertible securities other than Equity Shares referred to in subsection
                11(1) or as a result of the fixing by the Corporation of a record
                date for
                the distribution of rights, options or warrants referred to in
                subsection 11(2), the number of Common
                Shares purchasable
                upon exercise of this Compensation Warrant Certificate shall be readjusted
                immediately after the expiration of any relevant exchange, conversion
                or
                exercise right to the number of Common Shares actually issued and
remaining
                issuable immediately after such expiration and shall be further readjusted
                in such manner upon expiration of any further such right. To the
                extent
                that any adjustment in subscription rights occurs pursuant to this
                subsection 11(5) as a result of the fixing by the Corporation of
                a record
                date for the distribution of exchangeable or convertible securities
                other
                than Equity Shares or rights, options or warrants referred to in
                subsection 11(3), the number of Common
                Shares purchasable
                upon exercise of this Compensation Warrant Certificate shall be readjusted
                immediately after the expiration of any relevant exchange, conversion
                or
                exercise right to the number which would be purchasable pursuant
                to this
                subsection 11(5) if the fair market value of such securities or such
                rights, options or warrants had been determined for purposes of the
                adjustment pursuant to this subsection 11(5) on the basis of the
                number of
                Equity Shares issued and remaining issuable immediately after such
                expiration and shall be further readjusted in such manner upon expiration
                of any further such right.

            

    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (6)

            	
              If
                at any time any adjustment or readjustment in the Exercise Price
                shall
                occur pursuant to the provisions of this Section 11, then the number
                of
                Common Shares purchasable upon the subsequent exercise of the Compensation
                Warrants shall be simultaneously adjusted or readjusted, as the case
                may
                be, by multiplying the number of Common Shares purchasable upon the
                exercise of the Compensation Warrants immediately prior to such adjustment
                or readjustment by a fraction which shall be the reciprocal of the
                fraction used in the adjustment or readjustment of the Exercise
                Price.

            

    

     

    12.    Rules
      Regarding Calculation of Adjustments

     

    The
      following rules and procedures shall be applicable to adjustments made pursuant
      to Section 11 herein:

     

    
      	 	
              (1)

            	
              The
                adjustments provided for in Section 11 are cumulative and will, in
                the
                case of adjustments to the Exercise Price, be computed to the nearest
                one-tenth of one cent and will be made successively whenever an event
                referred to therein occurs, subject to the following subsections
                of this
                Section 12.

            

    

     

    
      	 	
              (2)

            	
              No
                adjustment in the Exercise Price is required to be made unless such
                adjustment would result in a change of at least 1% in the prevailing
                Exercise Price, provided however, that any adjustment which, except
                for
                the provisions of this subsection, would otherwise have been required
                to
                be made, will be carried forward and taken into account in any subsequent
                adjustments.

            

    

     

    
      	 	
              (3)

            	
              No
                adjustment in the Exercise Price will be made in respect of any event
                described in Section 11, other than the events referred to in clauses
                11(1)(c) and (d), if the Holder is entitled to participate in such
                event
                on the same terms, mutatis
                mutandis,
                as if the Holder had exercised the Compensation Warrants evidenced
                hereby
                prior to or on the effective date or record date of such event. Any
                participation by a Holder pursuant to this Section 12(3) is subject
                to the
                prior approval of the TSX (or such other stock exchange or quotation
                system on which the Common Shares are then listed and posted (or
                quoted)
                for trading, as applicable.

            

    

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (4)

            	
              No
                adjustment in the Exercise Price will be made under Section 11 in
                respect
                of the issue from time to time of Common Shares issuable from time
                to time
                as dividends paid in the ordinary course to holders of Common Shares
                who
                exercise an option or election to receive substantially equivalent
                dividends in Common Shares in lieu of receiving a cash dividend and
                any
                such issue will be deemed not to be a Common Share
                Reorganization.

            

    

     

    
      	 	
              (5)

            	
              If
                at any time a dispute arises with respect to adjustments provided
                for in
                Section 11, such dispute will be conclusively determined by the auditors
                of the Corporation or if they are unable or unwilling to act, by
                such
                other firm of independent chartered accountants as may be selected
                by the
                directors of the Corporation and approved by the Holder, acting
                reasonably, and any such determination, absent manifest error, will
                be
                binding upon the Corporation, the Holder and shareholders of the
                Corporation. The Corporation will provide such auditors or accountants
                with access to all necessary records of the
                Corporation.

            

    

     

    
      	 	
              (6)

            	
              In
                case the Corporation, after the date of issue of this Compensation
                Warrant
                Certificate, takes any action affecting the Common Shares, other
                than an
                action described in Section 11, which in the opinion of the directors
                of
                the Corporation would materially affect the rights of the Holder,
                the
                Exercise Price will be adjusted in such manner, if any, and at such
                time,
                by action by the directors of the Corporation but subject in all
                cases to
                any necessary regulatory approval, including approval of the TSX.
                Failure
                of the taking of action by the directors of the Corporation so as
                to
                provide for an adjustment on or prior to the effective date of any
                action
                by the Corporation affecting the Common Shares will be conclusive
                evidence
                that the board of directors of the Corporation has determined that
                it is
                equitable to make no adjustment in the
                circumstances.

            

    

     

    
      	 	
              (7)

            	
              If
                the Corporation sets a record date to determine the holders of the
                Common
                Shares for the purpose of entitling them to receive any dividend
                or
                distribution or sets a record date to take any other action and,
                thereafter and before the distribution to such shareholders of any
                such
                dividend or distribution or the taking of any other action, decides
                not to
                implement its plan or pay or deliver such dividend or distribution
                or take
                such other action, then no adjustment in the Exercise Price will
                be
                required by reason of the setting of such record
                date.

            

    

     

    
      	 	
              (8)

            	
              In
                the absence of a resolution of the directors of the Corporation fixing
                a
                record date for a Special Distribution or Rights Offering, the Corporation
                will be deemed to have fixed as the record date therefor the date
                on which
                the Special Distribution or Rights Offering is
                effected.

            

    

     

    
      	 	
              (9)

            	
              As
                a condition precedent to the taking of any action which would require
                any
                adjustment to the Compensation Warrants evidenced hereby, including
                the
                Exercise Price, the Corporation must take any corporate action which
                may
                be necessary in order that the Corporation shall have unissued and
                reserved in its authorized capital and may validly and legally issue
                as
                fully paid and non-assessable all of the shares or other securities
                which
                the Holder is entitled to receive on the full exercise thereof in
                accordance with the provisions
                hereof.

            

    

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (10)

            	
              The
                Corporation will from time to time, within 10 Business Days after
                the
                occurrence of any event which requires an adjustment or readjustment
                as
                provided in Section 11, give notice to the Holder specifying the
                event
                requiring such adjustment or readjustment and the results thereof,
                including the resulting Exercise
                Price.

            

    

     

    
      	 	
              (11)

            	
              Any
                adjustment to the Exercise Price under the terms of this Compensation
                Warrant Certificate shall be subject to the prior approval of the
                TSX and
                such other stock exchange or quotation system on which the Common
                Shares
                are then listed and posted (or quoted) for trading, as
                applicable.

            

    

     

    13.    Consolidation
      and Amalgamation

     

    
      	 	
              (1)

            	
              The
                Corporation shall not enter into any transaction whereby all or
                substantially all of its undertaking, property and assets would become
                the
                property of any other corporation or entity (herein called a "successor
                corporation")
                whether by way of reorganization, reconstruction, consolidation,
                amalgamation, merger, transfer, sale, disposition or otherwise, unless
                prior to or contemporaneously with the consummation of such transaction
                the Corporation and the successor corporation shall have executed
                such
                instruments and done such things as, in the opinion of counsel to
                the
                Corporation, are necessary or advisable to establish that upon the
                consummation of such transaction:

            

    

     

    
      	 	
              (i)

            	
              the
                successor corporation will have assumed all the covenants and obligations
                of the Corporation under this Compensation Warrant Certificate;
                and

            

    

     

    
      	 	
              (ii)

            	
              this
                Compensation Warrant Certificate will be a valid and binding obligation
                of
                the successor corporation entitling the Holder, as against the successor
                corporation, to all the rights of the Holder under this Compensation
                Warrant Certificate.

            

    

     

    
      	 	
              (2)

            	
              Whenever
                the conditions of subsection 13(1) shall have been duly observed
                and
                performed, the successor corporation shall possess and from time
                to time
                may exercise each and every right and power of the Corporation under
                this
                Compensation Warrant Certificate in the name of the Corporation or
                otherwise and any act or proceeding by any provision hereof required
                to be
                done or performed by any director or officer of the Corporation may
                be
                done and performed with like force and effect by the like directors
                or
                officers of the successor
                corporation.

            

    

     

    14.    Representations
      and Warranties

     

    The
      Corporation hereby represents and warrants with and to the Holder that the
      Corporation is duly authorized and has the corporate and lawful power and
      authority to create and issue the Compensation Warrants evidenced hereby, the
      Common Shares and Warrants issuable upon the exercise hereof and the Common
      Shares issuable upon the exercise of the Warrants, and to perform its
      obligations hereunder and that this Compensation Warrant Certificate represents
      a valid, legal and binding obligation of the Corporation enforceable in
      accordance with its terms subject to bankruptcy, insolvency and other laws
      of
      general application affecting the rights of creditors and equitable remedies
      being in the discretion of the court.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    15.    If
      Share Transfer Books Closed

     

    The
      Corporation shall not be required to deliver certificates for Common Shares
      or
      Warrants while the share transfer books of the Corporation are properly closed
      prior to any meeting of shareholders, for the payment of dividends or for any
      other purpose and in the event of the surrender of any Compensation Warrant
      Certificate in accordance with the provisions hereof and the making of any
      subscription and payment for Units called for thereby during any such period,
      delivery of certificates for Units may be postponed for not more than five
      (5)
      Business Days after the date of the re-opening of said share transfer books.
      Any
      such postponement of delivery of certificates shall be without prejudice to
      the
      right of the Holder, if the Holder has surrendered the same and made payment
      during such period, to receive certificates for the Common Shares and Warrants
      comprising such Units called for after the share transfer books have been
      re-opened.

     

    16.    Stolen,
      Lost, Mutilated or Destroyed Certificate

     

    If
      this Compensation Warrant Certificate is stolen, lost, mutilated or destroyed,
      the Corporation shall, on such terms as it shall in its discretion impose,
      issue
      and countersign a new Compensation Warrant Certificate of like denomination,
      tenor and date as the certificate so stolen, lost, mutilated or
      destroyed.

     

    17.    Governing
      Law

     

    This
      Compensation 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 Compensation 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.

     

    18.    Severability

     

    If
      any one or more of the provisions or parts thereof contained in this
      Compensation Warrant Certificate should be or become invalid, illegal or
      unenforceable in any respect in any jurisdiction, the remaining provisions
      or
      parts thereof contained herein shall be and shall be conclusively deemed to
      be,
      as to such jurisdiction, severable therefrom and:

     

    
      	 	
              (a)

            	
              the
                validity, legality or enforceability of such remaining provisions
                or parts
                thereof shall not in any way be affected or impaired by the severance
                of
                the provisions or parts thereof severed;
                and

            

    

     

    
      	 	
              (b)

            	
              the
                invalidity, illegality or unenforceability of any provision or part
                thereof contained in this Compensation Warrant Certificate in any
                jurisdiction shall not affect or impair such provision or part thereof
                or
                any other provisions of this Compensation Warrant Certificate in
                any other
                jurisdiction.

            

    

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    
      
        19.    Headings

         

      

    

    The
      headings of the sections, subsections, clauses and subclauses of this
      Compensation Warrant Certificate have been inserted for convenience and
      reference only and do not define, limit, alter or enlarge the meaning of any
      provision of this Compensation Warrant Certificate.

     

    20.    Compensation
      Warrants Rank Pari Passu

     

    All
      Compensation Warrants shall rank pari
      passu,
      whatever may be the actual date of issue of the same.

     

    21.    Numbering
      of Articles, etc.

     

    Unless
      otherwise stated, a reference herein to a numbered or lettered section,
      subsection, clause, subclause or schedule refers to the section, subsection,
      clause, subclause or schedule bearing that number or letter in this Compensation
      Warrant Certificate.

     

    22.    Number
      and Gender

     

    Whenever
      used in this Compensation Warrant Certificate, words importing the singular
      number only shall include the plural and vice
      versa
      and words importing gender shall include all genders.

     

    23.    Day
      Not a Business Day

     

    In
      the event that any day on or before which any action is required to be taken
      hereunder is not a Business Day then such action shall be required to be taken
      on or before the requisite time on the next day that is a Business
      Day.

     

    24.    TSX
      Approval

     

    Notwithstanding
      anything to the contrary in this Compensation Warrant Certificate, no supplement
      or amendment to the terms of this Compensation Warrant Certificate may be made
      without the prior written approval of the TSX and such other stock exchange
      or
      quotation system on which the Common Shares are then listed and posted (or
      quoted) for trading, as applicable.

     

    25.    Binding
      Effect

     

    This
      Compensation Warrant Certificate and all of its provisions shall enure to the
      benefit of the Holder and its successors and shall be binding upon the
      Corporation and its successors.

     

    26.    Legends

     

    
      	
              (a)

            	
              The
                Holder acknowledges that any certificate representing Common Shares
                and/or
                Warrants issued upon the exercise of this Compensation 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 MARCH 1, 2007."

      
      

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

      	 	
              provided
                that at any time subsequent to the date which is four months and
                one day
                after the date hereof any certificate representing such Common Shares
                and/or Warrants 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 and/or Warrants bearing
                no
                such legends within three Business Days after receipt of the legended
                certificate.

            

    

     

    
      	
              (b)

            	
              The
                Holder acknowledges that the certificates representing the Common
                Shares
                and all certificates issued in exchange or substitution thereof,
                will bear
                a legend in substantially the following form as long as the legend
                referred to in subsection 26(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."

            

    

     

    27.    Currency

     

    All
      references herein to monetary amounts are references to lawful money of Canada,
      unless otherwise specified herein.

     

    28.    Notice

     

    Any
      notice, document or other communication required or permitted by this
      Compensation Warrant Certificate to be given by the Holder or the Corporation
      shall be in writing and is sufficiently given if delivered personally, or if
      delivered or if transmitted by any form of recorded telecommunication tested
      prior to transmission, to such person addressed as follows:

     

    
      	 	
              (a)

            	
              if
                to the Holder:

            

      	 	 	 

      	 	 	to the address on the face page
              hereof

    

     

    
      	 	
              (b)

            	
              if
                to the Corporation:

            

      	 	 	 

      	 	 	
              Apollo Gold Corporation

              5655
                S. Yosemite Street, Suite 200

              Greenwood
                Village, Colorado,
                80111-3220

            

      	 	 	 

      	 	 	Attention: Chief
              Financial Officer

      	 	 	 

      	 	 	Telephone
              No.: (720)
              886-9656

      	 	 	 

      	 	 	Facsimile
              No.: (720)
              482-0957

    

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    Notice
      so delivered shall be deemed to have been given on the Business Day that it
      is
      received. Notices transmitted by a form of recorded telecommunication shall
      be
      deemed given on the day of transmission. The Holder or the Corporation may
      from
      time to time notify the other in the manner provided herein of any change of
      address or facsimile number which thereafter, until changed by like notice,
      shall be the address or facsimile number of such person for all purposes
      hereof.

     

    29.    Time
      of Essence

     

    Time
      shall be of the essence hereof.

     

     

    IN
      WITNESS WHEREOF, the
      Corporation has caused this Compensation Warrant Certificate to be signed by
      its
      duly authorized officer this 30th day of October, 2006.

     

    
      	 	 	 
	 	APOLLO
              GOLD CORPORATION
	 
 	 
 	 
 
	 	Per: 	 
	 	
              
Authorized
              Signatory
	 	 

    

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      "A"

     

    SUBSCRIPTION
      FORM

     

     

    
      	TO:	 	APOLLO GOLD
              CORPORATION
              5655
                S. Yosemite Street, Suite 200

              Greenwood
                Village, Colorado, 80111-3220

            
	 	 	 

    

     

    The
      undersigned holder of the within Compensation Warrant Certificate hereby
      irrevocably subscribes for ___________________________ Units of APOLLO GOLD
      CORPORATION (the "Corporation")
      pursuant to the within Compensation Warrant Certificate at the Exercise Price
      per Unit specified in the said Compensation Warrant Certificate and encloses
      herewith cash or a certified cheque, money order or bank draft payable to or
      to
      the order of the Corporation in the aggregate amount of $_____________ in
      payment of the subscription price therefor. As used herein, the terms
      "Unit"
      and "Units"
      shall have the meanings ascribed thereto in the Compensation Warrant Certificate
      to which this subscription form is attached.

     

    The
      undersigned hereby represents, warrants and certifies to the Corporation that
      the undersigned holder: (i) at the time of exercise of this Compensation Warrant
      Certificate is not in the United States; (ii) is not a U.S. Person and is not
      exercising this Compensation Warrant Certificate for the account or benefit
      of a
      U.S. Person; (iii) did not execute or deliver this subscription form while
      within the United States; (iv) has in all other respects complied with the
      terms
      of Regulation S of the United States Securities Act of 1933, as amended (the
      "U.S.
      Securities Act")
      or any successor rule or regulation of the United States Securities and Exchange
      Commission as presently in effect.

     

    DATED
      this __________ day of _____________________, ___________.

     

    The
      undersigned hereby directs that the said Units be issued and registered as
      follows:

     

    
      	Name:	 	
            
	 	 	
              

            
	Address:	 	 
	 	 	
              
                

              

               

               

            
	 	 	
              

            
	 	 	
            
	Signature:	 	 
	 	 	
              

            

    

     

    
      	o	Please
              check box if the certificates evidencing the securities comprising
              the
              Units are to be delivered at the office where this Compensation Warrant
              Certificate is surrendered, failing which the certificate(s) evidencing
              such securities will be mailed to the subscriber at the address set
              out
               above.
              

    

    
       

    

    If
      any Compensation Warrants represented by this certificate are not being
      exercised, a new Compensation Warrant Certificate will be issued and delivered
      to the holder with the certificates evidencing the securities comprising the
      Units.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      "B"

     

    FORM
      OF WARRANT

     

    UNLESS
      PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT
      TRADE THE SECURITY BEFORE MARCH 1, 2007.

     

    Void
      after 5:00 p.m. (Toronto time) on the 30th day of October, 2008.

     

    
      	
              Number
                of Warrants: l

            	
              Warrant
                Certificate No. 2006-01-l

            

    

    

     

    APOLLO
      GOLD CORPORATION

     

    (A
      corporation existing under the laws of the Yukon Territory)

     

    This
      is
      to certify that, for value received, l
(the
      "Holder"),
      shall
      have the right to purchase from APOLLO GOLD CORPORATION (the "Corporation"),
      at
      any time and from time to time up to 4:00 p.m. (Toronto time) on October 30,
      2008 (the
      "Expiry
      Time"),
      one
      fully paid and non-assessable common share in the capital of the Corporation
      (a
      "Common
      Share")
      for
      each Warrant (individually, a "Warrant")
      represented hereby at a price of Cdn$1.00 per Common Share for the first 12
      months, and at a price of Cdn$1.15 per Common Share for the last 12 months
      (collectively, the "Exercise
      Price"),
      upon
      and subject to the terms and conditions set forth herein.

     

    1. For
      the
      purposes of this Warrant Certificate, the term "Common
      Shares"
      means
      common shares without par value in the capital of the Corporation as constituted
      as of the date hereof, provided that in the event of a subdivision, redivision,
      reduction, combination or consolidation thereof or any other adjustment under
      section 8 herein, or successive such subdivisions, redivisions, 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 subdivision, redivision, reduction, combination or consolidation or other
      adjustment.

     

    2. All
      Warrant Certificates shall be signed by an officer of the Corporation holding
      office at the time of signing, or any successor or replacement of such person
      and notwithstanding any change in any of the persons holding said offices
      between the time of actual signing and the delivery of the Warrant Certificate,
      the Warrant Certificate so signed shall be valid and binding upon the
      Corporation.

     

    3. 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 such Warrants shall be wholly void and of no valid or
      binding effect after the Expiry Time.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    4. The
      right
      to purchase Common Shares of the Corporation pursuant to the Warrants may only
      be exercised by the Holder at or before the Expiry Time by:

     

    
      	 	
              (a)

            	
              duly
                completing and executing a subscription substantially in the form
                attached
                as Schedule "A" (the "Subscription
                Form"),
                in the manner therein indicated;
                and

            

    

     

    
      	 	
              (b)

            	
              surrendering
                this Warrant Certificate and the duly completed and executed Subscription
                Form to the Corporation prior to the Expiry Time at its
                principal office, 5655 S. Yosemite Street, Suite 200, Greenwood Village,
                Colorado, 80111-3220,
                together with payment of the purchase price for the Common Shares
                subscribed for in the form of certified cheque or bank draft payable
                to
                the Corporation in an amount equal to the then applicable Exercise
                Price
                multiplied by the number of Common Shares subscribed
                for.

            

    

     

    5. Upon
      delivery and payment as set forth in section 4 herein, the Corporation shall
      cause to be issued to the Holder the number of Common Shares subscribed for
      by
      the Holder 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 mailed to the Holder at the address or addresses specified
      in
      the Subscription Form within five (5) business days of such delivery and payment
      as set forth in section 4 herein or, if so instructed by the Holder, held for
      pick-up by the Holder at the principal office of the Corporation.
      Notwithstanding any adjustment provided for in section 8 herein, the Corporation
      shall not be required upon the exercise of any Warrants to issue fractional
      Common Shares in satisfaction of its obligations hereunder and the Holder
      understands and agrees that it will not be entitled to any cash payment or
      other
      form of compensation in respect of a fractional Common Share that might
      otherwise have been issued.

     

    6. 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.

     

    7. 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 sections 8 and 9 herein. The Corporation further covenants and
      agrees that while any of the Warrants shall be outstanding, the Corporation
      shall (a) comply with the securities legislation applicable to it in
      order that the Corporation continue as a reporting issuer, or analogous
      entity,
      not in
      default of any requirements of such legislation; (b) use its commercially
      reasonable best efforts to do or cause to be done all things necessary to
      preserve and maintain its corporate existence; and (c) at its own expense
      expeditiously use its commercially reasonable best efforts to obtain the listing
      of such Common Shares (subject to issue or notice of issue) on each stock
      exchange or over-the-counter market on which the Corporation’s Common Shares may
      be listed from time to time. 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.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    8.    (a) For
      the
      purpose of this section 8, unless there is something in the subject matter
      or
      context inconsistent therewith, the words and terms defined below shall have
      the
      respective meanings specified therefor:

     

    "Current
      Market Price"
      of the Common Shares at any date means the price per share equal to the weighted
      average price at which the Common Shares have traded on the Toronto Stock
      Exchange (the "TSX")
      or, if the Common Shares are not then listed on the TSX, on such other Canadian
      stock exchange on which the shares trade as may be selected by the directors
      of
      the Corporation for such purpose or, if the Common Shares are not then listed
      on
      any Canadian stock exchange, in the over-the-counter market, during the period
      of any twenty consecutive trading days ending not more than five (5) business
      days before such date; provided that the weighted average price shall be
      determined by dividing the aggregate sale price of all Common Shares sold on
      the
      said exchange or market, as the case may be, during the said twenty consecutive
      trading days by the total number of Common Shares so sold; and provided further
      that if the Common Shares are not then listed on any Canadian stock exchange
      or
      traded in the over-the counter market, then the Current Market Price shall
      be
      determined by such firm of independent chartered accountants as may be selected
      by the directors of the Corporation;

     

    "director"
      means a director of the Corporation for the time being and, unless otherwise
      specified herein, a reference to action "by the directors" means action by
      the
      directors of the Corporation as a board or, whenever empowered, action by the
      executive committee of such board; and

     

    "trading
      day"
      with respect to a stock exchange or over-the-counter market means a day on
      which
      such stock exchange or market is open for business.

     

    (b) If
      and
      whenever at any time after the date hereof and prior to the Expiry Time the
      Corporation shall (i) subdivide or redivide 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 (i) or (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 (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.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    (c) If
      at any
      time after the date hereof and prior to the Expiry Time the Corporation shall
      fix a record date for the issue or distribution to the holders of all or
      substantially all of the outstanding Common Shares, of rights, options or
      warrants pursuant to which such holders are entitled, during a period expiring
      not more than 45 days after the record date for such issue (such period being
      the "Rights
      Period"),
      to
      subscribe for or purchase Common Shares or securities exchangeable for or
      convertible into Common Shares at a price per share (or in the case of
      securities exchangeable for or convertible into Common Shares at an exchange
      or
      conversion price per share at the date of issue of such securities) of less
      than
      95% of the Current Market Price of the Common Shares on such record date (any
      of
      such events being herein called a "Rights
      Offering"),
      the
      Exercise Price shall be adjusted effective immediately after the record date
      for
      the Rights Offering to the amount determined by multiplying the Exercise Price
      in effect on such record date by a fraction:

     

    
      	 	
              (i)

            	
              the
                numerator of which shall be the aggregate
                of

            

    

     

    
      	 	
              (A)

            	
              the
                number of Common Shares outstanding on the record date for the Rights
                Offering; and

            

    

     

    
      	 	
              (B)

            	
              the
                quotient determined by dividing

            

    

     

    
      	 	
              (I)

            	
              either
                (a) the product of the number of Common Shares offered during the
                Rights
                Period pursuant to the Rights Offering and the price at which such
                Common
                Shares are offered, or, (b) the product of the exchange or conversion
                price of the securities so offered and the number of Common Shares
                for or
                into which the securities offered pursuant to the Rights Offering
                may be
                exchanged or converted, as the case may be,
                by

            

    

     

    
      	 	
              (II)

            	
              the
                Current Market Price of the Common Shares as of the record date for
                the
                Rights Offering; and

            

    

     

    
      	 	
              (ii)

            	
              the
                denominator of which shall be the aggregate of the number of Common
                Shares
                outstanding on such record date and the number of Common Shares offered
                pursuant to the Rights Offering (including in the case of the issue
                or
                distribution of securities exchangeable for or convertible into Common
                Shares the number of Common Shares for or into which such securities
                may
                be exchanged or converted).

            

    

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    
      	 	
               

            	
              If
                by the terms of the rights, options, or warrants referred to in this
                section 8(c), there is more than one purchase, conversion or exchange
                price per Common Share, the aggregate price of the total number of
                additional Common Shares offered for subscription or purchase, or
                the
                aggregate conversion or exchange price of the convertible or exchangeable
                securities so offered, shall be calculated for purposes of the adjustment
                on the basis of the lowest purchase, conversion or exchange price
                per
                Common Share, as the case may be. Any Common Shares owned by or held
                for
                the account of the Corporation shall be deemed not to be outstanding
                for
                the purpose of any such calculation. To the extent that any adjustment
                in
                the Exercise Price occurs pursuant to this section 8(c) as a result
                of the
                fixing by the Corporation of a record date for the issue or distribution
                of rights, options or warrants referred to in this section 8(c),
                the
                Exercise Price shall be readjusted immediately after the expiry of
                any
                relevant exchange, conversion or exercise right to the Exercise Price
                which would then be in effect based upon the number of Common Shares
                actually issued and remaining issuable after such expiry and shall
                be
                further readjusted in such manner upon the expiry of any further
                such
                right.

            

    

     

    
      	 	
               

            	
              If
                the Holder has exercised this Warrant Certificate in accordance herewith
                during the period beginning after the record date for a Rights Offering
                and ending on the last day of the Rights Period thereunder, the Holder
                will, in addition to the Common Shares to which it is otherwise entitled
                upon such exercise, be entitled to that number of additional Common
                Shares
                equal to the difference, if any, between (x) the result obtained
                when the
                Exercise Price in effect immediately prior to the end of such Rights
                Offering pursuant to this subsection is multiplied by the number
                of Common
                Shares received upon the exercise of this Warrant Certificate during
                such
                period, and the resulting product is divided by the Exercise Price
                as
                adjusted for such Rights Offering pursuant to this subsection provided
                that the provisions of section 9 herein will be applicable to any
                fractional interest in a Common Share to which such Holder might
                otherwise
                be entitled and (y) the number of Common Shares received upon the
                exercise
                of this Warrant Certificate during such period. Such additional Common
                Shares will be deemed to have been issued to the Holder immediately
                following the end of the Rights Period and a certificate for such
                additional Common Shares will be delivered to such Holder within
                ten (10)
                business days following the end of the Rights
                Period.

            

    

     

    
      	
            	
               

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

    

        

    
      	 	(i)	shares of the Corporation of any class other than
              Common
              Shares;

      	 	 	 

      	 	
              (ii)

            	
              rights,
                options or warrants to acquire Common Shares or securities exchangeable
                for or convertible into Common Shares (other than rights, options
                or
                warrants pursuant to which holders of Common Shares are entitled,
                during a period expiring not more than 45 days after the record date
                for
                such issue, to subscribe for or purchase Common Shares at a price
                per
                share (or in the case of securities exchangeable for or convertible
                into
                Common Shares at an exchange or conversion price per share at the
                date of
                issue of such securities) of at least 95% of the Current Market Price
                of
                the Common Shares on such record
                date);

            

    

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

       

     

    
      	 	(iii) 	evidences of indebtedness of the
              Corporation; or

      	 	 	 

      	 	
              (iv)

            	
              any
                property or assets of the Corporation (for greater certainty, excluding
                a
                cash dividend);

            

    

     

    and
      if such issue or distribution does not constitute a Common Share Reorganization
      or a Rights Offering (any of such non-excluded events being herein called a
      "Special
      Distribution"),
      the Exercise Price shall be adjusted effective immediately after the record
      date
      for the Special Distribution to the amount determined by multiplying the
      Exercise Price in effect on the record date for the Special Distribution by
      a
      fraction:

     

    (A)    the
      numerator of which shall be the difference between

     

    
      	 	
              (I)

            	
              the
                product of the number of Common Shares outstanding on such record
                date and
                the Current Market Price of the Common Shares on such record date,
                and

            

    

     

    
      	 	
              (II)

            	
              the
                fair value, as determined by the directors of the Corporation, to
                the
                holders of the Common Shares of the shares, rights, options, warrants,
                evidences of indebtedness or property or assets to be issued or
                distributed in the Special Distribution,
                and

            

    

     

    
      	 	
              (B)

            	
              the
                denominator of which shall be the product obtained by multiplying
                the
                number of Common Shares outstanding on such record date by the Current
                Market Price of the Common Shares on such record
                date.

            

    

     

    Any
      Common Shares owned by or held for the account of the Corporation shall be
      deemed not to be outstanding for the purpose of such calculation. To the extent
      that any adjustment in the Exercise Price occurs pursuant to this section 8(d)
      as a result of the fixing by the Corporation of a record date for the issue
      or
      distribution of rights, options or warrants to acquire Common Shares or
      securities exchangeable for or convertible into Common Shares referred to in
      this section 8(d), the Exercise Price shall be readjusted immediately after
      the
      expiry of any relevant exercise, exchange or conversion right to the amount
      which would then be in effect if the fair market value had been determined
      on
      the basis of the number of Common Shares issued and remaining issuable
      immediately after such expiry,
      and shall be further readjusted in such manner upon the expiry of any further
      such right.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (e)

            	
              If and whenever at any time after
                the date
                hereof 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"),
                after the effective date of the Capital Reorganization the Holder
                shall be
                entitled to receive, and shall accept, for the same aggregate
                consideration, upon exercise of the Warrants, in lieu of the number
                of
                Common Shares to which the Holder was theretofore entitled upon the
                exercise of the Warrants, the kind and aggregate number of Common
                Shares
                and other securities or property resulting from the Capital Reorganization
                which the Holder would have been entitled to receive as a result
                of the
                Capital Reorganization if, on the effective date thereof, the Holder
                has
                been the registered holder of the number of Common Shares to which
                the
                Holder was theretofore entitled to purchase or receive upon the exercise
                of the Warrants. If necessary, as a result of any Capital Reorganization,
                appropriate adjustments shall be made in the application of the provisions
                of this Warrant Certificate with respect to the rights and interest
                thereafter of the Holder to the end that the provisions of this Warrant
                Certificate 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
                this
                Warrant Certificate.

            

       

    

    
      	 	
              (f)

            	
              
                If
                  and whenever at any time after the date hereof and prior to the
                  Expiry
                  Time, any of the events set out in sections 8(a), (b), (c), (d)
                  or (e)
                  herein shall occur and the occurrence of such event results in
                  an
                  adjustment of the Exercise Price pursuant to the provisions of
                  this
                  section 8, 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.

              

            

       

    

    
      	 	
              (g)

            	
              If
                the Corporation takes any action affecting its Common Shares to which
                the
                foregoing provisions of this section 8, 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 hereunder, then the Corporation shall, subject
                to
                the approval of the TSX (or such other stock exchange or quotation
                system
                on which the Common Shares are then listed and posted (or quoted)
                for
                trading, as applicable), 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.

            

       

      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

    

     

    9.    The
      following rules and procedures shall be applicable to the adjustments made
      pursuant to section 8 herein:

     

    
      	 	
              (a)

            	
              any
                Common Shares owned or held by or for the account of the Corporation
                shall
                be deemed not be to outstanding except that, for the purposes of
                section 8
                herein, any Common Shares owned by a pension plan or profit sharing
                plan
                for employees of the Corporation or any of its subsidiaries shall
                not be
                considered to be owned or held by or for the account of the
                Corporation;

            

    

     

    
      	 	
              (b)

            	
              no
                adjustment in the Exercise Price or the number of Common Shares
                purchasable pursuant to this Warrant shall be required unless a change
                of
                at least 1% of the prevailing Exercise Price or the number of Common
                Shares purchasable pursuant to this Warrant would result, provided,
                however, that any adjustment which, except for the provisions of
                this
                section 9(b), would otherwise have been required to be made, shall
                be
                carried forward and taken into account in any subsequent
                adjustment;

            

    

     

    
      	 	
              (c)

            	
              the
                adjustments provided for in section 8 herein are cumulative and shall
                apply to successive subdivisions, consolidations, dividends, distributions
                and other events resulting in any adjustment under the provisions
                of such
                item;

            

    

     

    
      	 	
              (d)

            	
              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
                section 8(a)(iii) herein, the Corporation shall be deemed to have
                fixed as
                the record date therefor the date on which such dividend or distribution
                is effected;

            

    

     

    
      	 	
              (e)

            	
              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;

            

    

     

    
      	 	
              (f)

            	
              as
                a condition precedent to the taking of any action which would require
                any
                adjustment to the Warrants evidenced hereby, including the Exercise
                Price,
                the Corporation must take any corporate action which may be necessary
                in
                order that the
                Corporation shall have unissued and reserved in its authorized capital
                and
                may validly and legally issue as fully paid and non-assessable all
                of the
                shares or other securities which the Holder is entitled to receive
                on the
                full exercise thereof in accordance with the provisions
                hereof;

            

    

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (g)

            	
              forthwith,
                but no later than fourteen (14) days, 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;

            

    

     

    
      	 	
              (h)

            	
              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 section 8 herein 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;

            

    

     

    
      	 	
              (i)

            	
              any
                adjustment to the Exercise Price under the terms of this Warrant
                Certificate shall be subject to the prior approval of the TSX (or
                such
                other stock exchange or quotation system on which the Common Shares
                are
                then listed and posted (or quoted) for trading, as applicable);
                and

            

    

     

    
      	 	
              (j)

            	
              in
                case the Corporation, after the date of issue of this Warrant Certificate,
                takes any action affecting the Common Shares, other than an action
                described in section 8 herein, which in the opinion of the directors
                of
                the Corporation would materially affect the rights of the Holder,
                the
                Exercise Price will be adjusted in such manner, if any, and at such
                time,
                by action by the directors of the Corporation but subject in all
                cases to
                any necessary regulatory approval, including approval of the TSX
                (or such
                other stock exchange or quotation system on which the Common Shares
                are
                then listed and posted (or quoted) for trading, as applicable). Failure
                of
                the taking of action by the directors of the Corporation so as to
                provide
                for an adjustment on or prior to the effective date of any action
                by the
                Corporation affecting the Common Shares will be conclusive evidence
                that
                the board of directors of the Corporation has determined that it
                is
                equitable to make no adjustment in the
                circumstances.

            

    

     

    10. On
      the
      happening of each and every such event set out in section 8 herein, the
      applicable provisions of this Warrant Certificate, 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.

     

    11. The
      Corporation shall not be required to deliver certificates for Common Shares
      while the share transfer books of the Corporation are properly closed, having
      regard to the provisions of sections 8 and 9 herein, 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)
      business 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 sections 8 and 9 herein as a result of
      the
      completion of the event in respect of which the transfer books were
      closed.

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    12. 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 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
      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.

     

    13. The
      Holder may subscribe for and purchase any lesser number of Common Shares than
      the number of Common Shares expressed in any Warrant Certificate. In the case
      of
      any subscription for a lesser number of Common Shares than expressed in any
      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 Warrants
      not then exercised. Such new Warrant Certificate shall be mailed to the Holder
      by the Corporation or, at its direction, the transfer agent of the Corporation,
      contemporaneously with the mailing of the certificate or certificates
      representing the Common Shares issued pursuant to section 5 herein.

     

    14. If
      any
      Warrant Certificate becomes stolen, lost, mutilated or destroyed, the
      Corporation shall, on such terms as it may in its discretion impose, acting
      reasonably, issue and sign a new Warrant Certificate of like denomination,
      tenor
      and date as the Warrant Certificate so stolen, lost, mutilated or destroyed
      for
      delivery to the Holder.

     

    15.    The
      Holder may transfer the Warrants represented hereby by:

     

    
      	 	
              (a)

            	
              duly
                completing and executing the transfer form attached as Schedule "B"
                ("Transfer
                Form");
                and

            

    

     

    
      	 	
              (b)

            	
              surrendering
                this Warrant Certificate and the completed Transfer Form, together
                with
                such other documents as the Corporation may reasonably request, to
                the
                Corporation at the address set forth on the Transfer Form or such
                other
                office as may be specified by the Corporation, in a written notice
                to the
                Holder, from time to time, provided
                that all such transfers shall be effected in accordance with all
                applicable securities laws, and provided that, after such transfer,
                the
                term "Holder" shall mean and include any transferee or assignee of
                the
                current or any future Holder. If only part of the Warrants evidenced
                hereby is transferred, the Corporation will deliver to the Holder
                and the
                transferee replacement Warrant Certificates substantially in the
                form of
                this Warrant Certificate.

            

    

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    16. Neither
      the Warrants represented by this Warrant Certificate nor the Common Shares
      issuable upon exercise hereof have been or will be registered under the United
      States Securities Act of 1933, as amended (the "1933
      Act")
      nor
      under the laws of any state of the United States. Subject to certain limited
      exceptions, (i) Warrants may not be exercised within the United States and
      (ii)
      no Common Shares issuable upon exercise of Warrants will be delivered to any
      address in the United States. The Holder acknowledges that a legend to that
      effect may be placed on any certificates representing the Common Shares issued
      on exercise of the rights represented by this Warrant Certificate. Terms used
      in
      this paragraph have the meanings given to them in Regulation S under the 1933
      Act.

     

    17. Any
      certificate representing Common Shares issued upon the exercise of this Warrant
      prior to the date which is four months and one day after the date hereof will
      bear the following legends:

     

    "UNLESS
      PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT
      TRADE THE SECURITY BEFORE MARCH 1, 2007."

     

    and

     

    "THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON THE TORONTO STOCK
      EXCHANGE ("TSX"); HOWEVER, THE SAID SECURITIES CANNOT BE TRADED THROUGH THE
      FACILITIES OF TSX SINCE THEY ARE NOT FREELY TRANSFERABLE, AND CONSEQUENTLY
      ANY
      CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT “GOOD DELIVERY” IN SETTLEMENT OF
      TRANSACTIONS ON TSX."

     

    provided
      that at any time subsequent to the date which is four months 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 five business days after receipt of the legended
      certificate.

     

    18. The
      Corporation will maintain a register of holders of Warrants at its principal
      office. 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.

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

    19. The
      Corporation shall notify the Holder forthwith of any change of the Corporation’s
      address.

     

    20.    The
      registered holders of Warrants shall have the power from time to time by an
      extraordinary resolution (as hereinafter defined):

     

    
      	 	
              (a)

            	
              to
                sanction any modification, abrogation, alteration or compromise of
                the
                rights of the registered holders of Warrants against the Corporation
                which
                shall be agreed to by the Corporation;
                and/or

            

    

     

    
      	 	
              (b)

            	
              to
                assent to any modification of or change in or omission from the provisions
                contained herein or in any instrument ancillary or supplemental hereto
                which shall be agreed to by the Corporation;
                and/or

            

    

     

    
      	 	
              (c)

            	
              to
                restrain any registered holder of a Warrant from taking or instituting
                any
                suit or proceedings against the Corporation for the enforcement of
                any of
                the covenants on the part of the Corporation conferred upon the registered
                holders of Warrants by the terms of the
                Warrants.

            

    

     

    Any
      such extraordinary resolution as aforesaid shall be binding upon all the
      registered holders of Warrants whether or not assenting in writing to any such
      extraordinary resolution, and each registered holder of any of the Warrants
      shall be bound to give effect thereto accordingly. Such extraordinary resolution
      shall, where applicable, be binding on the Corporation which shall give effect
      thereto accordingly.

     

    The
      Corporation shall forthwith upon receipt of an extraordinary resolution provide
      notice to all registered holders of Warrants of the date and text of such
      resolution. The registered holders of Warrants assenting to an extraordinary
      resolution agree to provide the Corporation forthwith with a copy of any
      extraordinary resolution passed.

     

    The
      expression "extraordinary resolution" when used herein shall mean a resolution
      assented to in writing, in one or more counterparts, by the registered holders
      of Warrants calling in the aggregate for not less than seventy-five per cent
      (75%) of the aggregate number of Common Shares called for by all of the Warrants
      which are, at the applicable time, outstanding.

     

    21. All
      notices to be sent hereunder shall be deemed to be validly given to the
      registered holders of the Warrants if delivered personally or if sent by
      registered letter through the post addressed to such holders at their post
      office addresses appearing in the register of Warrant holders caused to be
      maintained by the Corporation, and such notice shall be deemed to have been
      given, if delivered personally when so delivered, and if sent by post on the
      fifth business day next following the post thereof.

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

    22. If
      for
      any reason, other than the failure or default of the Holder, the Corporation
      is
      unable to issue and deliver the Common Shares or other securities as
      contemplated herein to the Holder upon the proper exercise by the Holder of
      the
      right to purchase any of the Common Shares purchasable upon exercise of the
      Warrants represented hereby, the Corporation may pay, at its option and in
      complete satisfaction of its obligations and the rights of the Holder hereunder,
      to the Holder, in cash, an amount equal to the difference between the Exercise
      Price and the Current Market Price of such Common Shares or other securities
      on
      the date of exercise by the Holder, and upon such payment the Corporation shall
      have no liability or other obligation to the Holder relating to or in respect
      of
      the Warrants or this Warrant Certificate.

     

    23. This
      Warrant Certificate shall be governed by the laws of the Province of Ontario
      and
      the federal laws of Canada applicable herein.

     

    24. All
      Warrants shall rank pari
      passu,
      whatever may be the actual date of issue of the same.

     

    25. This
      Warrant Certificate shall enure to the benefit of and shall be binding upon
      the
      Holder and the Corporation and their respective successors and
      assigns.

     

    26. All
      references herein to monetary amounts are references to lawful money of Canada,
      unless otherwise specified herein.

     

    27.    Any
      notice, document or other communication required or permitted by this
      Compensation Warrant Certificate to be given by the Holder or the Corporation
      shall be in writing and is sufficiently given if delivered personally, or if
      delivered or if transmitted by any form of recorded telecommunication tested
      prior to transmission, to such person addressed as follows:

     

    
      	 	
              (a)

            	
              if
                to the Holder:

            

      	 	 	 

      	 	 	to
              the address on the face page hereof

      	 	 	 

      	 	(b)	if
              to the Corporation:

      	 	 	 

      	 	 	
              Apollo Gold Corporation

              5655
                S. Yosemite Street, Suite 200

              Greenwood
                Village, Colorado, 80111-3220

            

      	 	 	 

      	 	 	Attention: Chief
              Financial Officer

      	 	 	 

      	 	 	Telephone
              No.: (720)
              886-9656

      
      

      
        
          
          

        

        
          30

          
            

          

        

        
          
          

        

      

       

      	 	 	Facsimile
              No.:  (720)
              482-0957

    

     

    28. Notice
      so delivered shall be deemed to have been given on the Business Day that it
      is
      received. Notices transmitted by a form of recorded telecommunication shall
      be
      deemed given on the day of transmission. The Holder or the Corporation may
      from
      time to time notify the other in the manner provided herein of any change of
      address or facsimile number which thereafter, until changed by like notice,
      shall be the address or facsimile number of such person for all purposes
      hereof.

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

     

    IN
      WITNESS WHEREOF
      the Corporation has caused this Warrant Certificate to be signed by its duly
      authorized officer.

     

    DATED
      as of the   
      day of October, 2006.

    
      	 	 	 
	 	APOLLO
              GOLD CORPORATION
	 
 	 
 	 
 
	 	Per:  	 
	 	
              

              Authorized
                Signatory

            
	 	 

    

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

    Schedule
      "A"

     

    SUBSCRIPTION
      FORM

     

    TO
      BE COMPLETED IF WARRANTS ARE TO BE EXERCISED:

     

    
      	 	
              TO:

            	
              APOLLO
                GOLD CORPORATION

              5655
                S. Yosemite Street, Suite 200

              Greenwood
                Village, Colorado,
                80111-3220

            

    

    

    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 Certificate entitles the undersigned to acquire under the terms and
      conditions set forth in such Warrant Certificate).

     

    
      	Address for Delivery of Common
              Shares:	 	 
	 	 	
              

            
	 	 	
              

            
	 	 	
              

            
	 	 	Attention:    _________________________________________________
	 	 	
            
	
              Exercise
                Price

            	 	 
	
              Tendered
                (Cdn.$1.00 per

            	 	 
	
              Common
                Share until October 30, 2007 and Cdn.$1.15 per

            	 	
               

            
	
              Common
                Share until October 30, 2008

            	 	 
	
              or
                as adjusted)

            	 	    $
              ________________________________
	 	 	 

    

     Dated
      at ________,
      this _____day
      of ______,
      200__.

    
      	 	
              )

              )

              )

              )

              )
                

              )

              )

              )

            	 
	
              Witness:

            	
              Holder's
                Name

            
	
              Authorized
                Signature

            
	
              Title
                (if applicable)

            

    

     

    Signature
      guaranteed1:

     

    
      

    

    1. If
      the Common Shares are to be registered in a name other than the name of the
      registered Warrant Holder, the signature of the Warrant Holder must be medallion
      guaranteed by a bank, trust company or a member of a stock exchange in
      Canada.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    Schedule
      "B"

     

    WARRANT
      TRANSFER FORM

     

    FOR
      VALUE
      RECEIVED, subject to receipt of prior written approval of APOLLO GOLD
      CORPORATION (the "Company"),
      the
      undersigned (the "Transferor")
      hereby
      sells, assigns and transfers unto
      (name)_______________________________(the
      "Transferee")
      of
      (residential
      address)_________________________________________________________________________________________________________________

    _______________________________________________________________________________________________________________________________________________________________________________

    Warrants
      of the Company registered in the name of the undersigned represented by the
      within certificate, and irrevocably appoints the Company as the attorney of
      the
      undersigned to transfer the said securities on the register of transfers for
      the
      said Warrants, with full power of substitution.

     

    
      	
              NOTICE:

            	
              The
                signature of this assignment must correspond with the name as written
                upon
                the face of the certificate, in every particular, without alteration
                or
                enlargement or any change whatever, and must be guaranteed by a bank,
                trust company or a member of a recognized stock exchange. The guarantor
                must affix a stamp bearing the actual words "Signature
                Guaranteed".

            

    

     

    DATED
      this_______ day
      of
      ________,
      20____.

     

     

    
      	
              
Signature
              Guaranteed  	 	
              
(Signature
              of transferring Warrantholder)
	 	 	 
	 	 	
              

              Name (please print)
	 	 	 
	 	 	
              
Address
	 	 	
            
	 	 	
              

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    TRANSFEREE
      ACKNOWLEDGMENT

     

    In
      connection with this transfer (check one):

     

    
      	o	
              The
                undersigned transferee hereby certifies that (i) it was not offered
                the
                Warrants while in the United States and did not execute this certificate
                while within the United States; (ii) it is not acquiring any of the
                Warrants represented by this Warrant Certificate by or on behalf
                of any
                person within the United States; and (iii) it has in all other respects
                complied with the terms of Regulation S of United States Securities
                Act of
                1933, as amended (the "1933
                Act"),
                or any successor rule or regulation of the United States Securities
                and
                Exchange Commission as presently in
                effect.

            

    

     

    
      	o	
              The
                undersigned transferee is delivering a written opinion of U.S. Counsel
                acceptable to the Company to the effect that this transfer of Warrants
                has
                been registered under the 1933 Act or is exempt from registration
                thereunder.

            

    

     

    
      	 	 	 
	
              
(Signature
              of Transferee)	 	 
	 	 	 
	
              
Date	 	
              
Name
              of Transferee (please print)

    

     

    The
      Warrants and the common shares issuable upon exercise of the Warrants shall
      only
      be transferable in accordance with applicable laws. The Warrants may only be
      exercised in the manner required by the certificate representing the Warrants
      and the Warrant Exercise Form attached thereto. Any common shares acquired
      pursuant to this Warrant shall be subject to applicable hold periods and any
      certificate representing such common shares will bear restrictive
      legends.SECURITIES
        PURCHASE AGREEMENT

       

      This
        Securities Purchase Agreement (this “Agreement”)
        is
        dated as of October 30, 2006, among Apollo Gold Corporation, a corporation
        incorporated under the laws of the Yukon Territory, Canada (the “Company”),
        and
        each purchaser identified on the signature pages hereto (each, including
        its
        successors and assigns, a “Purchaser”
and
        collectively the “Purchasers”).

       

      WHEREAS,
        subject to the terms and conditions set forth in this Agreement and pursuant
        to
        an effective registration statement under the Securities Act of 1933, as
        amended
        (the “Securities
        Act”),
        the
        Company desires to issue and sell to each Purchaser, and each Purchaser,
        severally and not jointly, desires to purchase from the Company, securities
        of
        the Company as more fully described in this Agreement.

       

      NOW,
        THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
        and for other good and valuable consideration the receipt and adequacy of
        which
        are hereby acknowledged, the Company and each Purchaser agree as
        follows:

       

      ARTICLE
        I.

      DEFINITIONS

       

      1.1 Definitions

       

      “Action”
shall
        have the meaning ascribed to such term in Section 3.1(j).

       

      “Affiliate”
means
        any Person that, directly or indirectly through one or more intermediaries,
        controls or is controlled by or is under common control with a Person as
        such
        terms are used in and construed under Rule 144 under the Securities Act.
        With
        respect to a Purchaser, any investment fund or managed account that is managed
        on a discretionary basis by the same investment manager as such Purchaser
        will
        be deemed to be an Affiliate of such Purchaser.

       

      “Business
        Day”
means
        any day except Saturday, Sunday, any day which shall be a federal legal holiday
        in the United States or any day on which banking institutions in the State
        of
        New York are authorized or required by law or other governmental action to
        close.

       

      “Closing”
means
        the closing of the purchase and sale of the Securities pursuant to Section
        2.1.

       

      “Closing
        Date”
means
        the Trading Day when all of the Transaction Documents have been executed
        and
        delivered by the applicable parties thereto, and all conditions precedent
        to (i)
        the Purchasers’ obligations to pay the Subscription Amount and (ii) the
        Company’s obligations to deliver the Securities have been satisfied or
        waived.

       

      “Commission”
means
        the Securities and Exchange Commission.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      “Common
        Stock”
means
        the common stock of the Company, [no] par value per share, and any other
        class
        of securities into which such securities may hereafter be reclassified or
        changed into. 

       

      “Common
        Stock Equivalents”
means
        any securities of the Company or the Subsidiaries which would entitle the
        holder
        thereof to acquire at any time Common Stock, including, without limitation,
        any
        debt, preferred stock, rights, options, warrants or other instrument that
        is at
        any time convertible into or exercisable or exchangeable for, or otherwise
        entitles the holder thereof to receive, Common Stock.

       

      “Disclosure
        Schedules”
means
        the Disclosure Schedules of the Company delivered concurrently herewith.
        

       

      “Escrow
        Agent”
shall
        mean Signature Bank, a New York banking corporation.

       

      “Escrow
        Agreement”
shall
        mean the Escrow Agreement among the Company, the Escrow Agent and Shoreline
        pursuant to which the Subscription Amounts shall be deposited and disbursed
        at
        Closing.

       

      “Evaluation
        Date”
shall
        have the meaning ascribed to such term in Section 3.1(r). 

       

      “Exchange
        Act”
means
        the Securities Exchange Act of 1934, as amended, and the rules and regulations
        promulgated thereunder.

      

      “Exempt
        Issuance”
means
        the issuance of (a) shares of Common Stock or options to employees, officers
        or
        directors of the Company pursuant to any stock or option plan duly adopted
        by a
        majority of the non-employee members of the Board of Directors of the Company
        or
        a majority of the members of a committee of non-employee directors established
        for such purpose, (b) securities upon the exercise or exchange of or conversion
        of any Securities issued hereunder and/or other securities exercisable or
        exchangeable for or convertible into shares of Common Stock issued and
        outstanding on the date of this Agreement, provided that such securities
        have
        not been amended since the date of this Agreement to increase the number
        of such
        securities or to decrease the exercise, exchange or conversion price of any
        such
        securities, (c) securities issued pursuant to acquisitions or strategic
        transactions approved by a majority of the disinterested directors, provided
        any
        such issuance shall only be to a Person which is, itself or through its
        subsidiaries, an operating company in a business that the Company reasonably
        believes to be synergistic with the business of the Company and in which
        the
        Company receives benefits in addition to the investment of funds, but shall
        not
        include a transaction in which the Company is issuing securities primarily
        for
        the purpose of raising capital or to an entity whose primary business is
        investing in securities, (d) securities as compensation for services, (e)
        securities in connection with Canadian flow-through financing, (f) securities
        in
        a firm commitment underwritten offering and (g) securities in connection
        with
        the severance of any employee.

       

      “FWS”
means
        Feldman Weinstein LLP, with offices located at 420 Lexington Avenue, Suite
        2620,
        New York, New York 10170-0002.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      “GAAP”
shall
        have the meaning ascribed to such term in Section 3.1(h).

       

      “Governmental
        Entity”
means
        any federal, state, local, provincial, international or multinational entity
        or
        authority exercising executive, legislative, judicial, regulatory,
        administrative or taxing functions of or pertaining to government.

       

      “Intellectual
        Property Rights”
shall
        have the meaning ascribed to such term in Section 3.1(o).

       

      “Liens”
means
        a
        lien, charge, security interest, encumbrance, right of first refusal, preemptive
        right or other similar restriction.

       

      “Material
        Adverse Effect”
shall
        have the meaning ascribed to such term in Section 3.1(b).

       

      “Material
        Permits”
shall
        have the meaning ascribed to such term in Section 3.1(m).

       

      “Participation
        Maximum”
shall
        have the meaning ascribed to such term in Section 4.13. 

       

      “Per
        Unit Purchase Price”
equals
        $0.30.

       

      “Permitted
        Encumbrances”
means
        (i) Liens or other encumbrances for Taxes and other governmental charges
        and
        assessments (except assessments for public improvements levied, pending or
        deferred against real property) that are not yet due and payable or which
        are
        being contested in good faith by appropriate proceedings (provided required
        payments have been made in connection with any such contest), (ii) Liens
        or
        other encumbrances of carriers, warehousemen, mechanics’ and materialmen and
        other like Encumbrances, including purchase money security interests, arising
        in
        the ordinary course of business of the Company or any of the Subsidiaries,
        (iii)
        survey exceptions, easements, rights of way and restrictions, zoning ordinances
        and restrictions or other limitations imposed by any Governmental Entity
        and
        other similar Liens or encumbrances affecting real property and which do
        not
        unreasonably restrict the use thereof in the ordinary course of business
        of the
        Company or any of the Subsidiaries, (iv) statutory Liens in favor of lessors
        arising in connection with any real or personal property leased to the Company
        or any of its Subsidiaries, (v) Liens or other encumbrances recorded as
        liabilities on any of the financial statements contained in the Company’s SEC
        Reports, (vi) reservations in federal patents, (vii) liens of pledges or
        deposits under workers’ compensation laws or similar legislation, unemployment
        insurance or other types of social security, (viii) rights reserved to or
        vested
        in any Governmental Entity to control or regulate any interest in any real
        or
        personal property owned or held by the Company or any of the Subsidiaries
        as
        imposed by applicable federal, provincial, state or local laws, rules or
        regulations, (ix) Liens or other encumbrances that are a matter of public
        record, and (x) such other Liens or encumbrances on any asset that are not
        material in amount or do not materially detract from the value of or materially
        impair the existing use of such asset.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      “Person”
means
        an individual or corporation, partnership, trust, incorporated or unincorporated
        association, joint venture, limited liability company, joint stock company,
        government (or an agency or subdivision thereof) or other entity of any
        kind.

       

      “Pre-Notice”
shall
        have the meaning ascribed to such term in Section 4.13. 

       

      “Proceeding”
means
        an action, claim, suit, investigation or proceeding (including, without
        limitation, an investigation or partial proceeding, such as a deposition),
        whether commenced or threatened.

       

      “Prospectus”
means
        the final prospectus filed for the Registration Statement.

       

      “Prospectus
        Supplement”
means
        the supplement to the Prospectus complying with Rule 424(b) of the Securities
        Act that is filed with the Commission and delivered by the Company to each
        Purchaser at the Closing.

       

      “Purchaser
        Party”
shall
        have the meaning ascribed to such term in Section 4.9.

       

      “Registration
        Statement”
means
        the effective registration statement with Commission file No. 333-119198
        which
        registers the sale of the Shares, the Warrants and the Warrant Shares by
        the
        Purchasers.

       

      “Required
        Approvals”
shall
        have the meaning ascribed to such term in Section 3.1(e).

       

      “Rule
        144”
means
        Rule 144 promulgated by the Commission pursuant to the Securities Act, as
        such
        Rule may be amended from time to time, or any similar rule or regulation
        hereafter adopted by the Commission having substantially the same effect
        as such
        Rule. 

       

      “SEC
        Reports”
shall
        have the meaning ascribed to such term in Section 3.1(h).

       

      “Securities”
means
        the Shares, the Warrants and the Warrant Shares.

       

      “Securities
        Act”
means
        the Securities Act of 1933, as amended, and the rules and regulations
        promulgated thereunder.

       

      “Shares”
means
        the shares of Common Stock issued or issuable to each Purchaser pursuant
        to this
        Agreement.

       

      “Shoreline”
means
        Shoreline Pacific, LLC, the placement agent for the offering contemplated
        by
        this Agreement.

       

      “Short
        Sales”
shall
        include all “short sales” as defined in Rule 200 of Regulation SHO under the
        Exchange Act (but
        shall not be deemed to include the location and/or reservation of borrowable
        shares of Common Stock). 

       

      “Subscription
        Amount”
means,
        as to each Purchaser, the aggregate amount to be paid for Shares and Warrants
        purchased hereunder as specified below such Purchaser’s name on the signature
        page of this Agreement and next to the heading “Subscription Amount”, in United
        States Dollars and in immediately available funds.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      “Subsequent
        Financing”
shall
        have the meaning ascribed to such term in Section 4.13.

       

      “Subsequent
        Financing Notice”
shall
        have the meaning ascribed to such term in Section 4.13. 

       

      “Subsidiary”
means
        any subsidiary of the Company as set forth on Schedule
        3.1(a).

       

      “Taxes”
means
        all taxes, charges, fees, levies or other assessments, including all net
        income,
        gross income, gross receipts, sales, use, ad valorem, transfer, franchise,
        profits, license, withholding, payroll, employment, social security,
        unemployment, excise, estimated, severance, stamp, occupation, property or
        other
        taxes, customs duties, fees, assessments or charges of any kind whatsoever,
        including all interest and penalties thereon, and additions to tax or additional
        amounts imposed by any Governmental Entity upon the Company or any of the
        Subsidiaries or any of their respective assets.

       

      “Trading
        Day”
means
        a
        day on which the Common Stock is traded on a Trading Market.

       

      “Trading
        Market”
means
        the following markets or exchanges on which the Common Stock is listed or
        quoted
        for trading on the date in question: the Nasdaq Capital Market, the American
        Stock Exchange, the New York Stock Exchange, the Nasdaq Global Market, the
        Toronto Stock Exchange or the Nasdaq Global Select Market.

       

      “Transaction
        Documents”
means
        this Agreement, the Warrants, the Escrow Agreement and any other documents
        or
        agreements executed in connection with the transactions contemplated hereunder.
        

       

      “Unit”
means
        one share of Common Stock and 0.5 of one warrant to purchase one share of
        Common
        Stock

       

      “VWAP”
means,
        for any date, the price determined by the first of the following clauses
        that
        applies: (a) if the Common Stock is then listed or quoted on a Trading Market,
        the daily volume weighted average price of the Common Stock for such date
        (or
        the nearest preceding date) on the Trading Market on which the Common Stock
        is
        then listed or quoted for trading as reported by Bloomberg L.P. (based on
        a
        Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City
        time) (it being understood that if the Common Stock is then listed or quoted
        on
        both a U.S. Trading Market and a non-U.S. Trading Market, then, for purposes
        of
        this definition, the Trading Market shall be the U.S. Trading Market); (b) 
if the OTC Bulletin Board is not a Trading Market, the volume weighted average
        price of the Common Stock for such date (or the nearest preceding date) on
        the
        OTC Bulletin Board; (c) if the Common Stock is not then quoted for trading
        on
        the OTC Bulletin Board and if prices for the Common Stock are then reported
        in
        the “Pink Sheets” published by Pink Sheets, LLC (or a similar organization or
        agency succeeding to its functions of reporting prices), the most recent
        bid
        price per share of the Common Stock so reported; or (d) in all other cases,
        the fair market value of a share of Common Stock as determined by an independent
        appraiser jointly selected in good faith by the Holder and the Company.

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      “Warrants”
means
        collectively the Common Stock purchase warrants, in the form of Exhibit
        C
        delivered to the Purchasers at the Closing in accordance with Section 2.2(a)
        hereof, which Warrants shall be exercisable immediately following the date
        of
        issuance and have a term of exercise equal to 3 years.

       

      “Warrant
        Shares”
means
        the shares of Common Stock issuable upon exercise of the Warrants.

       

      ARTICLE
        II.

      PURCHASE
        AND SALE

       

      2.1 Closing.
        On the Closing Date, upon the terms and subject to the conditions set forth
        herein, substantially concurrent with the execution and delivery of this
        Agreement by the parties hereto, the Company agrees to sell, and each Purchaser
        agrees to purchase in the aggregate, severally and not jointly, not less
        than
        $5,000,000 and up to $10,000,000 of Units. Each Purchaser shall deliver to
        the
        Escrow Agent via wire transfer or a certified check immediately available
        funds
        equal to their Subscription Amount, as instructed by Shoreline and, upon
        receipt
        of the Subscription Amounts from the Escrow Agent, the Company shall deliver
        to
        each Purchaser their respective Units as determined pursuant to Section 2.2(a)
        and the other items set forth in Section 2.2 issuable at the Closing. Shoreline
        will transmit any investor funds received by it to the Escrow Agent by noon
        of
        the business day following the date of any such receipt. Upon satisfaction
        of
        the conditions set forth in Sections 2.2 and 2.3, the Closing shall occur
        at the
        offices of FWS, or such other location as the parties shall mutually agree.
        If
        the Closing does not occur for any reason by November 15, 2006, all funds
        received in escrow will be returned to the Purchasers without interest and
        without any deduction from their Subscription Amounts.

       

      2.2 Deliveries

       

      (a) On
        or
        prior to the Closing Date, the Company shall deliver or cause to be delivered
        to
        each Purchaser the following:

       

      (i) this
        Agreement duly executed by the Company;

       

      (ii) a
        copy of
        the irrevocable instructions to the Company’s transfer agent instructing the
        transfer agent to deliver a Common Stock certificate representing the number
        of
        Shares equal to such Purchaser’s Subscription Amount divided by the Per Unit
        Purchase Price, registered in the name of such Purchaser;

       

      (iii) a
        Warrant
        registered in the name of such Purchaser to purchase up to a number of shares
        of
        Common Stock equal to 50% of the number of Shares being purchase by such
        Purchaser with an exercise price equal to $0.50, subject to adjustment therein
        (such Warrant certificate may be delivered within three Trading Days of the
        Closing Date);

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      (iv) a
        legal
        opinion of the Company’s Canadian counsel, in the form delivered to
        Shoreline;

       

      (v) an
        officer’s certificate of the Company’s Chief Executive Officer or Chief
        Financial Officer, in form reasonably acceptable to the Purchasers, certifying
        the continuing material accuracy of the Company’s representations and warranties
        made in this Agreement and the Company’s performance in all material respects of
        the covenants to be performed by it pursuant to this Agreement at or prior
        to
        Closing; and

       

      (vi) the
        Prospectus and Prospectus Supplement (which may be delivered in accordance
        with
        Rule 172 under the Securities Act).

       

      (b) On
        or
        prior to the Closing Date, each Purchaser shall deliver or cause to be delivered
        to the Company the following:

       

      (i) this
        Agreement duly executed by such Purchaser; and

       

      (ii) such
        Purchaser’s Subscription Amount by wire transfer to the escrow account as
        specified in writing by Shoreline.

       

      2.3 Closing
        Conditions. 

       

      (a) The
        obligations of the Company hereunder in connection with the Closing are subject
        to the following conditions being met:

       

      (i) the
        accuracy in all material respects when made and on the Closing Date (unless
        any
        representation or warranty expressly relates to an earlier date, in which
        case,
        as of such earlier date) of the representations and warranties of the Purchasers
        contained herein; 

       

      (ii) all
        obligations, covenants and agreements of the Purchasers required to be performed
        at or prior to the Closing Date shall have been performed in all material
        respects; 

       

      (iii) the
        delivery by the Purchasers of the items set forth in Section 2.2(b) of this
        Agreement; 

       

      (iv) the
        receipt by the Company of at least $5,000,000 in aggregate Subscription Amount
        from Purchasers; and

       

      (v) the
        acceptance of the listing of the Shares and Warrant Shares by the American
        Stock
        Exchange.

       

      (b) The
        respective obligations of the Purchasers hereunder in connection with the
        Closing are subject to the following conditions being met:

       

      (i) the
        accuracy in all material respects on the Closing Date (unless any representation
        or warranty expressly relates to an earlier date, in which case, as of such
        earlier date) of the representations and warranties of the Company contained
        herein;

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      (ii) all
        obligations, covenants and agreements of the Company required to be performed
        at
        or prior to the Closing Date shall have been performed in all material respects;
        

       

      (iii) the
        delivery by the Company of the items set forth in Section 2.2(a) of this
        Agreement; 

       

      (iv) there
        shall have been no Material Adverse Effect with respect to the Company since
        the
        date hereof; 

       

      (v) the
        acceptance of the listing of the Shares and Warrant Shares by the American
        Stock
        Exchange; and

       

      (vi) from
        the
        date hereof to the Closing Date, trading in the Common Stock shall not have
        been
        suspended by the Commission or the Company’s principal Trading Market (except
        for any suspension of trading of limited duration agreed to by the Company,
        which suspension shall be terminated prior to the Closing), and, at any time
        prior to the Closing Date, trading in securities generally as reported by
        Bloomberg L.P. shall not have been suspended or limited, or minimum prices
        shall
        not have been established on securities whose trades are reported by such
        service, or on any Trading Market, nor shall a banking moratorium have been
        declared either by the United States or New York State authorities nor shall
        there have occurred any material outbreak or escalation of hostilities or
        other
        national or international calamity of such magnitude in its effect on, or
        any
        material adverse change in, any financial market which, in each case, in
        the
        reasonable judgment of each Purchaser, makes it impracticable or inadvisable
        to
        purchase the Securities at the Closing.

       

      ARTICLE
        III.

      REPRESENTATIONS
        AND WARRANTIES

       

      3.1 Representations
        and Warranties of the Company. Except as otherwise set forth in the SEC
        Reports, the Company represents and warrants to each Purchaser as
        follows:

       

      (a) Subsidiaries.
        All of
        the direct and indirect subsidiaries of the Company are set forth on
Schedule
        3.1(a).
        Except
        as set forth in Schedule
        3.1(a),
        the
        Company owns, directly or indirectly, all of the capital stock or other equity
        interests of each Subsidiary free and clear of any Liens (except for Permitted
        Encumbrances), and all the issued and outstanding shares of capital stock
        of
        each Subsidiary are validly issued and are fully paid, non-assessable and
        free
        of preemptive and similar rights to subscribe for or purchase
        securities.

       

      (b) Organization
        and Qualification.
        The
        Company and each of the Subsidiaries is an entity duly incorporated or otherwise
        organized, validly existing and in good standing under the laws of the
        jurisdiction of its incorporation or organization (as applicable), with the
        requisite corporate power and authority to own and use its properties and
        assets
        and to carry on its business as currently conducted. Neither the Company
        nor any
        Subsidiary is in violation or default of any of the provisions of its respective
        certificate or articles of incorporation, bylaws or other organizational
        or
        charter documents. Each of the Company and the Subsidiaries is duly qualified
        to
        conduct business and is in good standing as a foreign corporation or other
        entity in each jurisdiction in which the nature of the business conducted
        or
        property owned by it makes such qualification necessary, except where the
        failure to be so qualified or in good standing, as the case may be, would
        not
        have or reasonably be expected to result in (i) a material adverse effect
        on the
        legality, validity or enforceability of any Transaction Document, (ii) a
        material adverse effect on the results of operations, assets, business,
        prospects or financial condition of the Company and the Subsidiaries, taken
        as a
        whole, or (iii) a material adverse effect on the Company’s ability to perform in
        any material respect on a timely basis its obligations under any Transaction
        Document (any of (i), (ii) or (iii), a “Material
        Adverse Effect”)
        and no
        Proceeding has been instituted in any such jurisdiction revoking, limiting
        or
        curtailing or seeking to revoke, limit or curtail such power and authority
        or
        qualification.

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      (c) Authorization;
        Enforcement.
        The
        Company has the requisite corporate power and authority to enter into and
        to
        consummate the transactions contemplated by each of the Transaction Documents
        and otherwise to carry out its obligations hereunder and thereunder. The
        execution and delivery of each of the Transaction Documents by the Company
        and
        the consummation by it of the transactions contemplated hereby and thereby
        have
        been duly authorized by all necessary action on the part of the Company and
        no
        further action is required by the Company, its board of directors or its
        stockholders in connection therewith other than in connection with the Required
        Approvals. Each Transaction Document has been (or upon delivery will have
        been)
        duly executed by the Company and, when delivered in accordance with the terms
        hereof and thereof, will constitute the valid and binding obligation of the
        Company enforceable against the Company in accordance with its terms except
        (i)
        as limited by general equitable principles and applicable bankruptcy,
        insolvency, reorganization, moratorium and other laws of general application
        affecting enforcement of creditors’ rights generally, (ii) as limited by laws
        relating to the availability of specific performance, injunctive relief or
        other
        equitable remedies and (iii) insofar as indemnification and contribution
        provisions may be limited by applicable law.

       

      (d) No
        Conflicts.
        The
        execution, delivery and performance of the Transaction Documents by the Company,
        the issuance and sale of the Shares and the consummation by the Company of
        the
        other transactions contemplated hereby and thereby do not and will not (i)
        conflict with or violate any provision of the Company’s or any Subsidiary’s
        certificate or articles of incorporation, bylaws or other organizational
        or
        charter documents, or (ii) conflict with, or constitute a default (or an
        event
        that with notice or lapse of time or both would become a default) under,
        result
        in the creation of any Lien upon any of the properties or assets of the Company
        or any Subsidiary, or give to others any rights of termination, amendment,
        acceleration or cancellation (with or without notice, lapse of time or both)
        of,
        any agreement, credit facility, debt or other instrument (evidencing a Company
        or Subsidiary debt or otherwise) or other understanding to which the Company
        or
        any Subsidiary is a party or by which any property or asset of the Company
        or
        any Subsidiary is bound or affected, or (iii) subject to the Required Approvals,
        conflict with or result in a violation of any law, rule, regulation, order,
        judgment, injunction, decree or other restriction of any court or governmental
        authority to which the Company or a Subsidiary is subject (including federal
        and
        state securities laws and regulations), or by which any property or asset
        of the
        Company or a Subsidiary is bound or affected; except in the case of each
        of
        clauses (ii) and (iii), such as would not have or reasonably be expected
        to
        result in a Material Adverse Effect.

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      (e) Filings,
        Consents and Approvals.
        The
        Company is not required to obtain any consent, waiver, authorization or order
        of, give any notice to, or make any filing or registration with, any court
        or
        other federal, state, local or other governmental authority or other Person
        in
        connection with the execution, delivery and performance by the Company of
        the
        Transaction Documents, other than (i) filings required pursuant to Section
        4.4
        of this Agreement, (ii) the filing with the Commission of the Prospectus
        Supplement, (iii) application(s) to each applicable Trading Market for the
        listing of the Securities for trading thereon in the time and manner required
        thereby, and (iv) such filings as are required to be made under applicable
        state
        securities laws (collectively, the “Required
        Approvals”).

       

      (f) Issuance
        of the Securities; Registration.
        The
        Securities are duly authorized and, when issued and paid for in accordance
        with
        the applicable Transaction Documents, will be duly and validly issued, fully
        paid and nonassessable, free and clear of all Liens imposed by the Company.
        The
        Warrant Shares, when issued in accordance with the terms of the Warrants,
        will
        be validly issued, fully paid and nonassessable, free and clear of all Liens
        imposed by the Company. The Company has reserved from its duly authorized
        capital stock the maximum number of shares of Common Stock issuable pursuant
        to
        this Agreement and the Warrants. The Securities are being issued pursuant
        to the
        Registration Statement and the issuance of the Securities has been registered
        by
        the Company under the Securities Act. The Registration Statement is effective
        and available for the issuance of the Securities thereunder and the Company
        has
        not received any notice that the Commission has issued or intends to issuer
        a
        stop-order with respect to the Registration Statement or that the Commission
        otherwise has suspended or withdrawn the effectiveness of the Registration
        Statement, either temporarily or permanently, or intends or has threatened
        in
        writing to do so. The “Plan of Distribution” section under the Registration
        Statement permits the issuance and sale the Securities hereunder. Upon receipt
        of the Securities, the Purchasers will have good and marketable title to
        such
        Securities, and so long as the Registration Statement remains effective,
        the
        Securities will be freely tradable, and the Shares and Warrant Shares will
        be
        tradable on the Trading Market.

       

      (g) Capitalization.
        The
        capitalization of the Company as of October 26, 2006 is as set forth in the
        SEC
        Reports. The Company has not issued any capital stock since its most
        recently filed periodic report under the Exchange Act, other
        than as set forth in any SEC Reports filed subsequent thereto and pursuant
        to
        the exercise of employee stock options under the Company’s stock option plans,
        the issuance of shares of Common Stock to employees pursuant to the Company’s
        employee stock purchase plan and pursuant to the conversion or exercise of
        Common Stock Equivalents outstanding as of the date of the most recently
        filed
        periodic report under the Exchange Act. No Person has any right of first
        refusal, preemptive right, right of participation, or any similar right to
        participate in the transactions contemplated by the Transaction Documents.
        Except as a result of the purchase and sale of the Securities and as set
        forth
        in the SEC Reports, there are no outstanding options, warrants, script rights
        to
        subscribe to, calls or commitments of any character whatsoever relating to,
        or
        securities, rights or obligations convertible into or exercisable or
        exchangeable for, or giving any Person any right to subscribe for or acquire,
        any shares of Common Stock, or contracts, commitments, understandings or
        arrangements by which the Company or any Subsidiary is or may become bound
        to
        issue additional shares of Common Stock or Common Stock Equivalents. The
        issuance and sale of the Securities will not obligate the Company to issue
        shares of Common Stock or other securities to any Person (other than the
        Purchasers) and will not result in a right of any holder of Company securities
        to adjust the exercise, conversion, exchange or reset price under any of
        such
        securities. All of the outstanding shares of capital stock of the Company
        are
        validly issued, fully paid and nonassessable, have been issued in compliance
        with all federal and state securities laws, and none of such outstanding
        shares
        was issued in violation of any preemptive rights or similar rights to subscribe
        for or purchase securities. Other than the approval of the American Stock
        Exchange, no further approval or authorization of any stockholder, the Board
        of
        Directors of the Company or others is required for the issuance and sale
        of the
        Securities. There are no stockholders agreements, voting agreements or other
        similar agreements with respect to the Company’s capital stock to which the
        Company is a party or, to the knowledge of the Company, between or among
        any of
        the Company’s stockholders.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      (h) SEC
        Reports; Financial Statements.
        The
        Company has filed all reports, schedules, forms, statements and other documents
        required to be filed by it under the Securities Act and the Exchange Act,
        including pursuant to Section 13(a) or 15(d) thereof, for the two years
        preceding the date hereof (or such shorter period as the Company was required
        by
        law or regulation to file such material) (the foregoing materials, including
        the
        exhibits thereto and documents incorporated by reference therein, together
        with
        the Prospectus and the Prospectus Supplement, being collectively referred
        to
        herein as the “SEC
        Reports”)
        on a
        timely basis or has received a valid extension of such time of filing and
        has
        filed any such SEC Reports prior to the expiration of any such extension.
        As of
        their respective dates, the SEC Reports complied in all material respects
        with
        the requirements of the Securities Act and the Exchange Act and the rules
        and
        regulations of the Commission promulgated thereunder, as applicable, and
        none of
        the SEC Reports, when filed, contained any untrue statement of a material
        fact
        or omitted to state a material fact required to be stated therein or necessary
        in order to make the statements therein, in the light of the circumstances
        under
        which they were made, not misleading. The financial statements of the Company
        included in the SEC Reports comply in all material respects with applicable
        accounting requirements and the rules and regulations of the Commission with
        respect thereto as in effect at the time of filing. Such financial statements
        have been prepared in accordance with Canadian generally accepted accounting
        principles applied on a consistent basis during the periods involved
        (“GAAP”),
        except as may be otherwise specified in such financial statements or the
        notes
        thereto and except that unaudited financial statements may not contain all
        footnotes required by GAAP, and fairly present in all material respects the
        financial position of the Company and its consolidated subsidiaries as of
        and
        for the dates thereof and the results of operations and cash flows for the
        periods then ended, subject, in the case of unaudited statements, to year-end
        audit adjustments.

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      (i) Material
        Changes; Undisclosed Events, Liabilities or Developments.
        Since
        the date of the latest audited financial statements included within the SEC
        Reports, except as specifically disclosed in a subsequent SEC Report, (i)
        there
        has been no event, occurrence or development that has had or that could
        reasonably be expected to result in a Material Adverse Effect, (ii) the Company
        has not incurred any liabilities (contingent or otherwise) other than (A)
        trade
        payables and accrued expenses incurred in the ordinary course of business
        consistent with past practice and (B) liabilities not required to be reflected
        in the Company’s financial statements pursuant to GAAP or disclosed in filings
        made with the Commission, (iii) the Company has not altered its method of
        accounting, (iii) the Company has not declared or made any dividend or
        distribution of cash or other property to its stockholders or purchased,
        redeemed or made any agreements to purchase or redeem any shares of its capital
        stock and (iv) the Company has not issued any equity securities to any officer,
        director or Affiliate, except pursuant to existing Company stock option plans.
        The Company does not have pending before the Commission any request for
        confidential treatment of information. Except for the issuance of the Securities
        contemplated by this Agreement or as set forth on Schedule
        3.1(i),
        no
        event, liability or development has occurred or exists with respect to the
        Company or its Subsidiaries or their respective business, properties, operations
        or financial condition, that would be required to be disclosed by the Company
        under applicable securities laws at the time this representation is made
        that
        has not been publicly disclosed at least 1 Trading Day prior to the date
        that
        this representation is made.

       

      (j) Litigation.
        Except
        as set forth in the Company SEC Reports, there is no action, suit, inquiry,
        notice of violation, proceeding or investigation pending or, to the knowledge
        of
        the Company, threatened against or affecting the Company, any Subsidiary
        or any
        of their respective properties before or by any court, arbitrator, governmental
        or administrative agency or regulatory authority (federal, state, county,
        local
        or foreign) (collectively, an “Action”)
        which
        (i) adversely affects or challenges the legality, validity or enforceability
        of
        any of the Transaction Documents or the Securities or (ii) would, if there
        were
        an unfavorable decision, have or reasonably be expected to result in a Material
        Adverse Effect. Neither the Company nor any Subsidiary, nor any director
        or
        officer thereof, is or has been the subject of any Action involving a claim
        of
        violation of or liability under federal or state securities laws or a claim
        of
        breach of fiduciary duty. There has not been, and to the knowledge of the
        Company, there is not pending or contemplated, any investigation by the
        Commission involving the Company or any current or former director or officer
        of
        the Company. The Commission has not issued any stop order or other order
        suspending the effectiveness of any registration statement filed by the Company
        or any Subsidiary under the Exchange Act or the Securities Act. 

       

      (k) Labor
        Relations.
        No
        material labor dispute exists or, to the knowledge of the Company, is imminent
        with respect to any of the employees of the Company which would reasonably
        be
        expected to result in a Material Adverse Effect. None of the Company’s or its
        Subsidiaries’ employees is a member of a union that relates to such employee’s
        relationship with the Company, and neither the Company or any of its
        Subsidiaries is a party to a collective bargaining agreement, and the Company
        and its Subsidiaries believe that their relationship with their employees
        are
        satisfactory. No executive officer, to the knowledge of the Company, is,
        or is
        now expected to be, in violation of any material term of any employment
        contract, confidentiality, disclosure or proprietary information agreement
        or
        non-competition agreement, or any other contract or agreement or any restrictive
        covenant, and the continued employment of each such executive officer does
        not
        subject the Company or any of its Subsidiaries to any liability with respect
        to
        any of the foregoing matters. The Company and its Subsidiaries are in compliance
        with all U.S. federal, state, local and foreign laws and regulations relating
        to
        employment and employment practices, terms and conditions of employment and
        wages and hours, except where the failure to be in compliance would not,
        individually or in the aggregate, reasonably be expected to have a Material
        Adverse Effect.

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      (l) Compliance.
        Neither
        the Company nor any Subsidiary (i) is in default under or in violation of
        (and
        no event has occurred that has not been waived that, with notice or lapse
        of
        time or both, would result in a default by the Company or any Subsidiary
        under),
        nor has the Company or any Subsidiary received notice of a claim that it
        is in
        default under or that it is in violation of, any indenture, loan or credit
        agreement or any other agreement or instrument to which it is a party or
        by
        which it or any of its properties is bound (whether or not such default or
        violation has been waived), (ii) is in violation of any order of any court,
        arbitrator or governmental body, or (iii) is or has been in violation of
        any
        statute, rule or regulation of any governmental authority, including without
        limitation all foreign, federal, state and local laws applicable to its business
        and all such laws that affect the environment, except in each case as would
        not
        have or reasonably be expected to result in a Material Adverse
        Effect.

       

      (m) Regulatory
        Permits.
        The
        Company and the Subsidiaries possess all certificates, authorizations and
        permits issued by the appropriate federal, state, local or foreign regulatory
        authorities necessary to conduct their respective businesses as currently
        being
        conducted as described in the SEC Reports, except where the failure to possess
        such permits would not have or reasonably be expected to result in a Material
        Adverse Effect (“Material
        Permits”),
        and
        neither the Company nor any Subsidiary has received any notice of proceedings
        relating to the revocation or modification of any Material Permit.

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      (n) Title
        to Assets.
        Except
        as would not have or reasonably be expected to result in a Material Adverse
        Effect, the Company and the Subsidiaries have good and marketable title all
        real
        property owned in fee by them that is material to the business of the Company
        and the Subsidiaries, and good and marketable title in all personal property
        owned by them that is material to the business of the Company and the
        Subsidiaries, in each case free and clear of all Liens, except for Permitted
        Encumbrances and for Liens as do not materially affect the value of such
        property and do not materially interfere with the use made and proposed to
        be
        made of such property by the Company and the Subsidiaries and Liens for the
        payment of federal, state or other taxes, the payment of which is neither
        delinquent nor subject to penalties. The
        Company or the Subsidiaries own record title to those unpatented mining claims
        and millsites owned by them (collectively, “Mining
        Claims”),
        except as would not reasonably be expected to have a Material Adverse Effect
        and
        subject to the paramount title of the United States and the rights of third
        parties to use the surface of those Mining Claims pursuant to applicable
        federal, state and local laws, rules and regulations, free and clear of any
        encumbrances arising by, through or under them, other than Permitted
        Encumbrances. With respect to such Mining Claims located by the Company or
        any
        Subsidiary: (i) location notices or certificates for those Mining Claims
        were
        properly recorded and filed with appropriate governmental agencies;
        (ii) required assessment work which was performed in accordance with
        industry standards and which was reasonably sufficient to hold those Mining
        Claims has been performed and all claim maintenance fees have been timely
        paid
        as required by Law in order to maintain those Mining Claims through the current
        assessment year; and (iii) all affidavits of assessment work, evidence of
        payment of claim maintenance fees, and other filings required to maintain
        those
        Mining Claims in good standing through the current assessment year have been
        properly and timely recorded or filed with appropriate governmental agencies.
        With respect to any such Mining Claims not located by the Company or any
        Subsidiary, from and after the date of their acquisition by the Company or
        any
        of the Subsidiaries, (i) required assessment work which was performed in
        accordance with industry standards and which was reasonably sufficient to
        hold
        those Mining Claims has been performed and all claim maintenance fees have
        been
        timely paid as required in order to maintain those Mining Claims through
        the
        current assessment year; and (ii) all affidavits of assessment work,
        evidence of payment of claim maintenance fees, and other filings required
        to
        maintain those Mining Claims in good standing through the current assessment
        year have been properly and timely recorded or filed with appropriate
        governmental agencies. The Company and the Subsidiaries do not make and hereby
        expressly disclaim any representation or warranty as to (i) whether any of
        those Mining Claims contains a discovery of valuable minerals, (ii) the
        absence of any patented or unpatented mining claims in conflict with those
        Mining Claims, (iii) whether or not any of those Mining Claims comprise a
        contiguous group of claims or are free from interior gaps or fractions, (iv)
        whether or not the Company, any of the Subsidiaries, or its
        predecessors-in-title established or maintained pedis
        possessio
        rights
        with respect to any of those Mining Claims, (v) what rights the Company or
        any of the Subsidiaries has to use the surface of any of those Mining Claims
        for
        any purpose; or (vi) otherwise as to the validity of any of the Mining
        Claims or the use of the same (except as specifically set forth above).
Any
        real
        property, facilities and personal property held under lease by the Company
        and
        the Subsidiaries are held by them under valid, subsisting and enforceable
        leases
        with which the Company and the Subsidiaries are in compliance, except where
        a
        failure to be in compliance would not have a Material Adverse Effect.
Further,
        the Company and the Subsidiaries make no and expressly disclaim any
        representation or warranty with respect to priority, status, nature of permitted
        beneficial use or abandonment of any water rights, whether held by the Company
        or any of the Subsidiaries of record, or in which the Company or any of the
        Subsidiaries has a beneficial or other interest.

       

      (o) Patents
        and Trademarks.
        The
        Company and the Subsidiaries have, or have rights to use, all patents, patent
        applications, trademarks, trademark applications, service marks, trade names,
        trade secrets, inventions, copyrights, licenses and other intellectual property
        rights and similar rights necessary or material for use in connection with
        their
        respective businesses as described in the SEC Reports and which the failure
        to
        so have would have a Material Adverse Effect (collectively, the “Intellectual
        Property Rights”).
        Neither the Company nor any Subsidiary has received a notice (written or
        otherwise) that the Intellectual Property Rights used by the Company or any
        Subsidiary violates or infringes upon the rights of any Person. To the knowledge
        of the Company, all such Intellectual Property Rights are enforceable and
        there
        is no existing infringement by another Person of any of the Intellectual
        Property Rights. The Company and its Subsidiaries have taken reasonable security
        measures to protect the secrecy, confidentiality and value of all of their
        intellectual properties, except where failure to do so would not, individually
        or in the aggregate, reasonably be expected to have a Material Adverse
        Effect.

       

      
        
          
          

        

        
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      (p) Insurance.
        The
        Company and the Subsidiaries are insured by insurers of recognized financial
        responsibility against such losses and risks and in such amounts as are prudent
        and customary in the businesses in which the Company and the Subsidiaries
        are
        engaged, including, but not limited to, directors and officers insurance
        coverage at least equal to the aggregate Subscription Amount. Neither the
        Company nor any Subsidiary has any reason to believe that it will not be
        able to
        renew its existing insurance coverage as and when such coverage expires or
        to
        obtain similar coverage from similar insurers as may be necessary to continue
        its business without a significant increase in cost.

       

      (q) Transactions
        With Affiliates and Employees.
        Except
        as set forth in the SEC Reports, none of the officers or directors of the
        Company and, to the knowledge of the Company, none of the employees of the
        Company is presently a party to any transaction with the Company or any
        Subsidiary (other than for services as employees, officers and directors),
        including any contract, agreement or other arrangement providing for the
        furnishing of services to or by, providing for rental of real or personal
        property to or from, or otherwise requiring payments to or from any officer,
        director or such employee or, to the knowledge of the Company, any entity
        in
        which any officer, director, or any such employee has a substantial interest
        or
        is an officer, director, trustee or partner, in each case in excess of $60,000
        other than (i) for payment of salary or consulting fees for services rendered,
        (ii) reimbursement for expenses incurred on behalf of the Company and (iii)
        for
        other employee benefits, including stock option agreements under any stock
        option plan of the Company.

       

      (r) Sarbanes-Oxley;
        Internal Accounting Controls.
        Except
        as set forth in the SEC Reports, the Company is in material compliance with
        all
        provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it as
        of
        the Closing Date. Except as set forth in the SEC Reports, the
        Company and the Subsidiaries maintain a system of internal accounting controls
        sufficient to provide reasonable assurance that (i) transactions are executed
        in
        accordance with management’s general or specific authorizations, (ii)
        transactions are recorded as necessary to permit preparation of financial
        statements in conformity with GAAP and to maintain asset accountability,
        (iii)
        access to assets is permitted only in accordance with management’s general or
        specific authorization, and (iv) the recorded accountability for assets is
        compared with the existing assets at reasonable intervals and appropriate
        action
        is taken with respect to any differences. Except as set forth in the SEC
        Reports, the Company has established disclosure controls and procedures (as
        defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and
        designed such disclosure controls and procedures to ensure that information
        required to be disclosed by the Company in the reports it files or submits
        under
        the Exchange Act is recorded, processed, summarized and reported, within
        the
        time periods specified in the Commission’s rules and forms. The Company’s
        certifying officers have evaluated the effectiveness of the Company’s disclosure
        controls and procedures as of the end of the period covered by the Company’s
        most recently filed periodic report under the Exchange Act (such date, the
        “Evaluation
        Date”).
        The
        Company presented in its most recently filed periodic report under the Exchange
        Act the conclusions of the certifying officers about the effectiveness of
        the
        disclosure controls and procedures based on their evaluations as of the
        Evaluation Date. Since the Evaluation Date, there have been no changes in
        the
        Company’s internal control over financial reporting (as such term is defined in
        the Exchange Act) that has materially affected, or is reasonably likely to
        materially affect, the Company’s internal control over financial
        reporting.

       

      
        
          
          

        

        
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      (s) Certain
        Fees.
        Except
        as set forth in the Prospectus Supplement, no brokerage or finder’s fees or
        commissions are or will be payable by the Company to any broker, financial
        advisor or consultant, finder, placement agent, investment banker, bank or
        other
        Person with respect to the transactions contemplated by the Transaction
        Documents. The Purchasers shall have no obligation with respect to any fees
        or
        with respect to any claims made by or on behalf of other Persons for fees
        of a
        type contemplated in this Section that may be due in connection with the
        transactions contemplated by the Transaction Documents.

       

      (t) Investment
        Company.
        The
        Company is not, and is not an Affiliate of, and immediately after receipt
        of
        payment for the Securities, will not be or be an Affiliate of, an “investment
        company” within the meaning of the Investment Company Act of 1940, as amended.
        The Company shall conduct its business in a manner so that it will not become
        subject to the Investment Company Act, as amended.

       

      (u) Registration
        Rights.
        No
        Person has any right to cause the Company to effect the registration under
        the
        Securities Act of any securities of the Company.

       

      (v) Listing
        and Maintenance Requirements.
        The
        Company’s Common Stock is registered pursuant to Section 12(b) or 12(g) of the
        Exchange Act, and the Company has taken no action designed to, or which to
        its
        knowledge is likely to have the effect of, terminating the registration of
        the
        Common Stock under the Exchange Act nor has the Company received any
        notification that the Commission is contemplating terminating such registration.
        The Company has not, in the 12 months preceding the date hereof, received
        notice
        from any Trading Market on which the Common Stock is or has been listed or
        quoted to the effect that the Company is not in compliance with the listing
        or
        maintenance requirements of such Trading Market. The Company is in compliance
        with all such listing and maintenance requirements.

       

      
        
          
          

        

        
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      (w) Disclosure.
        Except
        with respect to the material terms and conditions of the transactions
        contemplated by the Transaction Documents, the Company confirms that, neither
        it
        nor any other Person acting on its behalf has provided any of the Purchasers
        or
        their agents or counsel with any information that it believes constitutes
        or
        might constitute material, non-public information which is not otherwise
        disclosed in the Prospectus Supplement. All disclosure furnished by or on
        behalf
        of the Company to the Purchasers regarding the Company, its business and
        the
        transactions contemplated hereby, including the Prospectus Supplement, with
        respect to the representations and warranties made herein, are true and correct
        with respect to such representations and warranties and do not contain any
        untrue statement of a material fact or omit to state any material fact necessary
        in order to make the statements made therein, in light of the circumstances
        under which they were made, not misleading. The Company understands and confirms
        that the Purchasers will rely on the foregoing representation in effecting
        transactions in securities of the Company. The Company acknowledges and agrees
        that no Purchaser makes or has made any representations or warranties with
        respect to the transactions contemplated hereby other than those specifically
        set forth in Section 3.2 hereof.

       

      (x) Trading
        Market Compliance.
        Neither
        the Company, nor any of its Affiliates, nor any Person acting on its or their
        behalf has, directly or indirectly, made any sales of any security, under
        circumstances that would cause this offering of the Securities to be integrated
        with prior offerings by the Company for purposes of any applicable shareholder
        approval provisions of any Trading Market on which any of the securities
        of the
        Company are listed or designated. 

       

      (y) Solvency.
        Based
        on the financial condition of the Company as of the Closing Date after giving
        effect to the receipt by the Company of the proceeds from the sale of the
        Securities hereunder, (i) the fair saleable value of the Company’s assets
        exceeds the amount that will be required to be paid on or in respect of the
        Company’s existing debts and other liabilities (including known contingent
        liabilities) as they mature; (ii) the Company’s assets do not constitute
        unreasonably small capital to carry on its business as now conducted and
        as
        proposed to be conducted including its capital needs taking into account
        the
        particular capital requirements of the business conducted by the Company,
        and
        projected capital requirements and capital availability thereof; and (iii)
        the
        current cash flow of the Company, together with the proceeds the Company
        would
        receive, were it to liquidate all of its assets, after taking into account
        all
        anticipated uses of the cash, would be sufficient to pay all amounts on or
        in
        respect of its liabilities when such amounts are required to be paid. The
        Company has no knowledge of any facts or circumstances which lead it to believe
        that it will file for reorganization or liquidation under the bankruptcy
        or
        reorganization laws of any jurisdiction within one year from the Closing
        Date.
        The SEC Reports set forth as of the dates thereof all outstanding secured
        and
        unsecured Indebtedness of the Company or any Subsidiary, or for which the
        Company or any Subsidiary has commitments. For the purposes of this Agreement,
        “Indebtedness”
shall
        mean (a) any liabilities for borrowed money or amounts owed in excess of
        $50,000
        (other than trade accounts payable incurred in the ordinary course of business),
        (b) all guaranties, endorsements and other contingent obligations in respect
        of
        Indebtedness of others, whether or not the same are or should be reflected
        in
        the Company’s balance sheet (or the notes thereto), except guaranties by
        endorsement of negotiable instruments for deposit or collection or similar
        transactions in the ordinary course of business; and (c) the present value
        of
        any lease payments
        in excess of $50,000 due under leases required to be capitalized in accordance
        with GAAP. Neither
        the Company nor any Subsidiary is in default with respect to any
        Indebtedness.

       

      
        
          
          

        

        
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      (z) Tax
        Status.
        Except
        for matters that would not, individually or in the aggregate, have or reasonably
        be expected to result in a Material Adverse Effect, the Company and each
        Subsidiary has filed all necessary federal, state and foreign income and
        franchise tax returns and has paid or accrued all taxes shown as due thereon,
        and the Company has no knowledge of a tax deficiency which has been asserted
        or
        threatened against the Company or any Subsidiary.

       

      (aa) Foreign
        Corrupt Practices.
        Neither
        the Company, nor to the knowledge of the Company, any agent or other person
        acting on behalf of the Company, has (i) directly or indirectly, used any
        funds
        for unlawful contributions, gifts, entertainment or other unlawful expenses
        related to foreign or domestic political activity, (ii) made any unlawful
        payment to foreign or domestic government officials or employees or to any
        foreign or domestic political parties or campaigns from corporate funds,
        (iii)
        failed to disclose fully any contribution made by the Company (or made by
        any
        person acting on its behalf of which the Company is aware) which is in violation
        of law, or (iv) violated in any material respect any provision of the Foreign
        Corrupt Practices Act of 1977, as amended.

       

      (bb) Accountants.
        The
        Company’s accountants are identified in the Prospectus or Prospectus Supplement.
        To the knowledge of the Company, such accountants, who the Company expects
        will
        express their opinion with respect to the financial statements to be included
        in
        the Company’s Annual Report on Form 10-K for the year ending December 31, 2006,
        are a registered public accounting firm as required by the Securities
        Act.

       

      (cc) Acknowledgment
        Regarding Purchasers’ Purchase of Securities.
        The
        Company acknowledges and agrees that each of the Purchasers is acting solely
        in
        the capacity of an arm’s length purchaser with respect to the Transaction
        Documents and the transactions contemplated thereby. The Company further
        acknowledges that no Purchaser is acting as a financial advisor or fiduciary
        of
        the Company (or in any similar capacity) with respect to the Transaction
        Documents and the transactions contemplated thereby and any advice given
        by any
        Purchaser or any of their respective representatives or agents in connection
        with the Transaction Documents and the transactions contemplated thereby
        is
        merely incidental to the Purchasers’ purchase of the Securities. The Company
        further represents to each Purchaser that the Company’s decision to enter into
        this Agreement and the other Transaction Documents has been based solely
        on the
        independent evaluation of the transactions contemplated hereby by the Company
        and its representatives.

       

      (dd) Acknowledgement
        Regarding Purchasers’ Trading Activity.
        Anything in this Agreement or elsewhere herein to the contrary notwithstanding
        (except for Sections 3.2(e) and 4.15 hereof), it is understood and acknowledged
        by the Company (i) that none of the Purchasers have been asked to agree,
        nor has
        any Purchaser agreed, to desist from purchasing or selling, long and/or short,
        securities of the Company, or “derivative” securities based on securities issued
        by the Company or to hold the Securities for any specified term; (ii) that
        past
        or future open market or other transactions by any Purchaser, including Short
        Sales, and specifically including, without limitation, Short Sales or
“derivative” transactions, before or after the closing of this or future private
        placement transactions, may negatively impact the market price of the Company’s
        publicly-traded securities; (iii) that any Purchaser, and counter-parties
        in
“derivative” transactions to which any such Purchaser is a party, directly or
        indirectly, presently may have a “short” position in the Common Stock, and (iv)
        that each Purchaser shall not be deemed to have any affiliation with or control
        over any arm’s length counter-party in any “derivative” transaction.
The
        Company further understands and acknowledges that (a) one or more Purchasers
        may
        engage in hedging activities at various times during the period that the
        Securities are outstanding, including, without limitation, during the periods
        that the value of the Warrant Shares deliverable with respect to the exercise
        of
        the Warrant are being determined and (b) such hedging activities (if any)
        could
        reduce the value of the existing stockholders' equity interests in the Company
        at and after the time that the hedging activities are being conducted.  The
        Company acknowledges that such aforementioned hedging activities do not
        constitute a breach of any of the Transaction Documents.

       

      
        
          
          

        

        
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      (ee) Regulation
        M Compliance. 
        The Company has not, and to its knowledge no one acting on its behalf has,
        (i)
        taken, directly or indirectly, any action designed to cause or to result
        in the
        stabilization or manipulation of the price of any security of the Company
        to
        facilitate the sale or resale of any of the Securities, (ii) sold, bid for,
        purchased, or, paid any compensation for soliciting purchases of, any of
        the
        Securities, or (iii) paid or agreed to pay to any person any compensation
        for
        soliciting another to purchase any other securities of the Company, other
        than,
        in the case of clauses (ii) and (iii), compensation paid to the Company’s
        placement agent in connection with the placement of the Securities.

       

      3.2 Representations
        and Warranties of the Purchasers. Each Purchaser hereby, for itself and for
        no other Purchaser, represents and warrants as of the date hereof and as
        of the
        Closing Date to the Company as follows:

       

      (a) Organization;
        Authority.
        Such
        Purchaser is an entity duly organized, validly existing and in good standing
        under the laws of the jurisdiction of its organization with full right,
        corporate or partnership power and authority to enter into and to consummate
        the
        transactions contemplated by the Transaction Documents and otherwise to carry
        out its obligations hereunder and thereunder. The execution, delivery and
        performance by such Purchaser of the transactions contemplated by this Agreement
        have been duly authorized by all necessary corporate or similar action on
        the
        part of such Purchaser. Each Transaction Document to which it is a party
        has
        been duly executed by such Purchaser, and when delivered by such Purchaser
        in
        accordance with the terms hereof, will constitute the valid and legally binding
        obligation of such Purchaser, enforceable against it in accordance with its
        terms, except (i) as limited by general equitable principles and applicable
        bankruptcy, insolvency, reorganization, moratorium and other laws of general
        application affecting enforcement of creditors’ rights generally, (ii) as
        limited by laws relating to the availability of specific performance, injunctive
        relief or other equitable remedies and (iii) insofar as indemnification and
        contribution provisions may be limited by applicable law.

       

      
        
          
          

        

        
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      (b) Own
        Account.
        Such
        Purchaser is acquiring the Securities as principal for its own account and
        not
        with a view to or for distributing or reselling such Securities or any part
        thereof in violation of the Securities Act or any applicable state securities
        law, has no present intention of distributing any of such Securities in
        violation of the Securities Act or any applicable state securities law and
        has
        no direct or indirect arrangement or understandings with any other persons
        to
        distribute or regarding the distribution of such Securities (this representation
        and warranty not limiting such Purchaser’s right to sell the Securities in
        compliance with applicable federal and state securities laws) in violation
        of
        the Securities Act or any applicable state securities law. Such Purchaser
        is
        acquiring the Securities hereunder in the ordinary course of its
        business.

       

      (c) Purchaser
        Status.
        At the
        time such Purchaser was offered the Securities, it was, and at the date hereof
        it is, and on each date on which it exercises any Warrants, it will be either:
        (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3),
        (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional
        buyer” as defined in Rule 144A(a) under the Securities Act. Such Purchaser is
        not required to be registered as a broker-dealer under Section 15 of the
        Exchange Act. 

       

      (d) Experience
        of Such Purchaser.
        Such
        Purchaser, either alone or together with its representatives, has such
        knowledge, sophistication and experience in business and financial matters
        so as
        to be capable of evaluating the merits and risks of the prospective investment
        in the Securities, and has so evaluated the merits and risks of such investment.
        Such Purchaser is able to bear the economic risk of an investment in the
        Securities and, at the present time, is able to afford a complete loss of
        such
        investment.

       

      (e) Short
        Sales and Confidentiality Prior To The Date Hereof.
        Other
        than the transaction contemplated hereunder, such Purchaser has not directly
        or
        indirectly, nor has any Person acting on behalf of or pursuant to any
        understanding with such Purchaser, executed any disposition, including Short
        Sales, in the securities of the Company during the period commencing from
        the time that such Purchaser first received a term sheet (written or oral)
        from
        the Company or any other Person setting forth the material terms of the
        transactions contemplated hereunder until the date hereof (“Discussion
        Time”).
        Notwithstanding the foregoing, in the case of a Purchaser that is a
        multi-managed investment vehicle whereby separate portfolio managers manage
        separate portions of such Purchaser's assets and the portfolio managers have
        no
        direct knowledge of the investment decisions made by the portfolio managers
        managing other portions of such Purchaser's assets, the representation set
        forth
        above shall only apply with respect to the portion of assets managed by the
        portfolio manager that made the investment decision to purchase the Securities
        covered by this Agreement. Other than to other Persons party to this Agreement,
        such Purchaser has maintained the confidentiality of all disclosures made
        to it
        in connection with this transaction (including the existence and terms of
        this
        transaction).

       

      
        
          
          

        

        
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      (f) Receipt
        of Information; Access to Information.
        Such
        Purchaser acknowledges that he or it, as the case may be:

       

      (a) has
        been
        furnished with copies of each of the Transaction Documents, the Prospectus
        and
        the Prospectus Supplement, and such Purchaser has read carefully the Transaction
        Documents and such other documents, and understands and has evaluated the
        types
        of risks involved with a purchase of the Units;

       

      (b) has
        not
        relied upon any representations or other information (whether oral or written)
        from the Company or its directors, officers or Affiliates, or from any other
        Persons, other than the representations contained in this Agreement, the
        Transaction Documents, the Prospectus and the Prospectus Supplement;
        and

      

      (c) has
        considered carefully and has, to the extent such Purchaser believes such
        discussion necessary, discussed with such Purchaser’s professional, legal,
        financial and tax advisers, the suitability of an investment in the Units
        for
        such Purchaser’s particular financial and tax situation and has determined that
        the Units are a suitable investment for such Purchaser.

       

      ARTICLE
        IV.

      OTHER
        AGREEMENTS OF THE PARTIES

       

      4.1
        Intentionally Omitted. 

       

      4.2 Securities
        Laws Disclosure; Publicity. The Company shall, by 8:30 a.m. (New York City
        time) on the Trading Day immediately following the date hereof, issue a press
        release disclosing the material terms of the transactions contemplated hereby,
        and, within the time limits prescribed by Commission rules, file
        a
        Current Report on Form 8-K with the Commission disclosing the material terms
        of
        the transactions contemplated hereby. No Purchaser shall issue any such press
        release or otherwise make any such public statement without the prior consent
        of
        the Company, except if such disclosure is required by law, in which case
        the
        disclosing party shall promptly provide the Company with prior notice of
        such
        public statement or communication. Notwithstanding the foregoing, the Company
        shall not publicly disclose the name of any Purchaser, or include the name
        of
        any Purchaser in any filing with the Commission or any regulatory agency
        or
        Trading Market, without the prior written consent of such Purchaser (such
        consent not to be unreasonably withheld), except (i) as required by federal
        securities law in connection with the filing of final Transaction Documents
        (including signature pages thereto) with the Commission and (ii) to the extent
        such disclosure is required by law or Trading Market regulations, in which
        case
        the Company shall provide the Purchasers with prior notice of such disclosure
        permitted under this subclause (ii).

       

      4.3 Shareholder
        Rights Plan. No claim will be made or enforced by the Company or, with the
        consent of the Company, any other Person, that any Purchaser is an “Acquiring
        Person” under any control share acquisition, business combination, poison pill
        (including any distribution under a rights agreement) or similar anti-takeover
        plan or arrangement in effect or hereafter adopted by the Company, or that
        any
        Purchaser could be deemed to trigger the provisions of any such plan or
        arrangement, by virtue of receiving Securities under the Transaction Documents
        or under any other agreement between the Company and the
        Purchasers.

       

      
        
          
          

        

        
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      4.4 Non-Public
        Information. Except with respect to the material terms and conditions of the
        transactions contemplated by the Transaction Documents, the Company covenants
        and agrees that neither it nor any other Person acting on its behalf will
        provide any Purchaser or its agents or counsel with any information that
        the
        Company believes constitutes material non-public information, unless prior
        thereto such Purchaser shall have executed a written agreement regarding
        the
        confidentiality and use of such information. The Company understands and
        confirms that each Purchaser shall be relying on the foregoing representations
        in effecting transactions in securities of the Company.

       

      4.5 Use
        of
        Proceeds. The Company shall use the net proceeds from the sale of the
        Securities hereunder for the purposes set forth in the Prospectus Supplement
        and
        not for the satisfaction of any portion of the Company’s debt (other than
        payment of trade payables in the ordinary course of the Company’s business and
        prior practices), to redeem any Common Stock or Common Stock Equivalents
        or to
        settle any outstanding litigation.

       

      4.6 (Intentionally
        omitted)

       

      4.7 Indemnification
        of Purchasers. Subject to the provisions of this Section 4.7, the Company
        will indemnify and hold each Purchaser and its directors, officers,
        shareholders, members, partners, employees and agents (and any other Persons
        with a functionally equivalent role of a Person holding such titles
        notwithstanding a lack of such title or any other title), each Person who
        controls such Purchaser (within the meaning of Section 15 of the Securities
        Act
        and Section 20 of the Exchange Act), and the directors, officers, shareholders,
        agents, members, partners or employees (and any other Persons with a
        functionally equivalent role of a Person holding such titles notwithstanding
        a
        lack of such title or any other title) of such controlling persons (each,
        a
“Purchaser Party”) harmless from any and all losses, liabilities, obligations,
        claims, contingencies, damages, costs and expenses, including all judgments,
        amounts paid in settlements, court costs and reasonable attorneys’ fees and
        costs of investigation that any such Purchaser Party may suffer or incur
        as a
        result of or relating to (a) any breach of any of the representations,
        warranties, covenants or agreements made by the Company in this Agreement
        or in
        the other Transaction Documents or (b) any action instituted against a
        Purchaser, or any of them or their respective Affiliates, by any stockholder
        of
        the Company who is not an Affiliate of such Purchaser, with respect to any
        of
        the transactions contemplated by the Transaction Documents (unless such action
        is based upon a breach of such Purchaser’s representations, warranties or
        covenants under the Transaction Documents or any agreements or understandings
        such Purchaser may have with any such stockholder or any violations by the
        Purchaser of state or federal securities laws or any conduct by such Purchaser
        which constitutes fraud, gross negligence, willful misconduct or malfeasance).
        If any action shall be brought against any Purchaser Party in respect of
        which
        indemnity may be sought pursuant to this Agreement, such Purchaser Party
        shall
        promptly notify the Company in writing, and the Company shall have the right
        to
        assume the defense thereof with counsel of its own choosing reasonably
        acceptable to the Purchaser Party. Any Purchaser Party shall have the right
        to
        employ separate counsel in any such action and participate in the defense
        thereof, but the fees and expenses of such counsel shall be at the expense
        of
        such Purchaser Party except to the extent that (i) the employment thereof
        has
        been specifically authorized by the Company in writing, (ii) the Company
        has
        failed after a reasonable period of time to assume such defense and to employ
        counsel or (iii) in such action there is, in the reasonable opinion of such
        separate counsel, a material conflict on any material issue between the position
        of the Company and the position of such Purchaser Party, in which case the
        Company shall be responsible for the reasonable fees and expenses of no more
        than one such separate counsel. The Company will not be liable to any Purchaser
        Party under this Agreement (i) for any settlement by a Purchaser Party effected
        without the Company’s prior written consent, which shall not be unreasonably
        withheld or delayed or (ii) to the extent, but only to the extent that a
        loss,
        claim, damage or liability is attributable to such Purchaser Party’s breach of
        any of the representations, warranties, covenants or agreements made by such
        Purchaser Party in this Agreement or in the other Transaction
        Documents.

       

      
        
          
          

        

        
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      4.8 Reservation
        of Common Stock.
        As of
        the date hereof, the Company has reserved and the Company shall continue
        to
        reserve and keep available at all times, free of preemptive rights, a sufficient
        number of shares of Common Stock for the purpose of enabling the Company
        to
        issue Shares pursuant to this Agreement and Warrant Shares pursuant to any
        exercise of the Warrants. 

       

      4.9
        Listing
        of Common Stock.
        The
        Company hereby agrees to use commercially reasonable best efforts to maintain
        the listing of the Common Stock on a Trading Market, and as soon as reasonably
        practicable following the Closing (but not later than the Closing Date) to
        list
        all of the Shares and Warrant Shares on such Trading Market. The Company
        further
        agrees, if the Company applies to have the Common Stock traded on any other
        Trading Market, it will include in such application all of the Shares and
        Warrant Shares, and will use commercially reasonable best efforts to cause
        all
        of the Shares and Warrant Shares to be listed on such other Trading Market
        as
        promptly as possible. The Company will use commercially reasonable best efforts
        to continue the listing and trading of its Common Stock on a Trading Market
        and
        will comply in all respects with the Company’s reporting, filing and other
        obligations under the bylaws or rules of the Trading Market.

       

      4.10 Equal
        Treatment of Purchasers. No consideration shall be offered or paid to any
        Person to amend or consent to a waiver or modification of any provision of
        any
        of the Transaction Documents unless the same consideration is also offered
        to
        all of the parties to the Transaction Documents. For clarification purposes,
        this provision constitutes a separate right granted to each Purchaser by
        the
        Company and negotiated separately by each Purchaser, and is intended to treat
        for the Company the Purchasers as a class and shall not in any way be construed
        as the Purchasers acting in concert or as a group with respect to the purchase,
        disposition or voting of Securities or otherwise.

       

      4.11
        Participation
        in Future Financing. 

       

      (a) From
        the
        date hereof until the date that is the 12 month anniversary of the Closing
        Date,
        upon any issuance by the Company or any of its Subsidiaries of Common Stock
        or
        Common Stock Equivalents (a “Subsequent
        Financing”),
        each
        Purchaser shall have the right to participate in up to an amount of the
        Subsequent Financing equal to 50% of the Subsequent Financing (the “Participation
        Maximum”)
        on the
        same terms, conditions and price provided for in the Subsequent Financing,
        unless the Subsequent Financing is a registered public offering, in which
        case
        the Company shall offer each Purchaser the right to participate in such public
        offering when it is lawful for the Company to do so, but no Purchaser shall
        be
        entitled to purchase any particular amount of such public
        offering. 

       

      
        
          
          

        

        
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      (b) At
        least
        5 Trading Days prior to the closing of the Subsequent Financing, the Company
        shall deliver to each Purchaser a written notice of its intention to effect
        a
        Subsequent Financing (“Pre-Notice”),
        which
        Pre-Notice shall ask such Purchaser if it wants to review the details of
        such
        financing (such additional notice, a “Subsequent
        Financing Notice”). 
        Upon the request of a Purchaser, and only upon a request by such Purchaser,
        for
        a Subsequent Financing Notice, the Company shall promptly, but no later than
        1
        Trading Day after such request, deliver a Subsequent Financing Notice to
        such
        Purchaser.  The Subsequent Financing Notice shall describe in reasonable
        detail the proposed terms of such Subsequent Financing, the amount of proceeds
        intended to be raised thereunder, the Person or Persons through or with whom
        such Subsequent Financing is proposed to be effected, and attached to which
        shall be a term sheet or similar document relating
        thereto.   

       

      (c) Any
        Purchaser desiring to participate in such Subsequent Financing must provide
        written notice to the Company by not later than 5:30 p.m. (New York City
        time)
        on the 5th
        Trading
        Day after all of the Purchasers have received the Pre-Notice that the Purchaser
        is willing to participate in the Subsequent Financing, the amount of the
        Purchaser’s participation, and that the Purchaser has such funds ready, willing,
        and available for investment on the terms set forth in the Subsequent Financing
        Notice. If the Company receives no notice from a Purchaser as of such
        5th
        Trading
        Day, such Purchaser shall be deemed to have notified the Company that it
        does
        not elect to participate.  

       

      (d) If
        by
        5:30 p.m. (New York City time) on the 5th
        Trading
        Day after all of the Purchasers have received the Pre-Notice, notifications
        by
        the Purchasers of their willingness to participate in the Subsequent Financing
        (or to cause their designees to participate) is, in the aggregate, less than
        the
        Participation Maximum, then the Company may effect the remaining portion
        of such
        Subsequent Financing on the terms and with the Persons set forth in the
        Subsequent Financing Notice.  

       

      (e) If
        by
        5:30 p.m. (New York City time) on the 5th
        Trading
        Day after all of the Purchasers have received the Pre-Notice, the Company
        receives responses to a Subsequent Financing Notice from Purchasers seeking
        to
        purchase more than the aggregate amount of the Participation Maximum, each
        such
        Purchaser shall have the right to purchase the greater of (a) their Pro Rata
        Portion (as defined below) of the Participation Maximum and (b) the difference
        between the Participation Maximum and the aggregate amount of participation
        by
        all other Purchasers.  “Pro
        Rata Portion”
is
        the
        ratio of (x) the Subscription Amount of Securities purchased on the Closing
        Date
        by a Purchaser participating under this Section 4.11 and (y) the sum of the
        aggregate Subscription Amounts of Securities purchased on the Closing Date
        by
        all Purchasers participating under this Section 4.11.

       

      
        
          
          

        

        
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      (f) The
        Company must provide the Purchasers with a second Subsequent Financing Notice,
        and the Purchasers will again have the right of participation set forth above
        in
        this Section 4.11, if the Subsequent Financing subject to the initial Subsequent
        Financing Notice is not consummated for any reason on the terms set forth
        in
        such Subsequent Financing Notice within 60 Trading Days after the date of
        the
        initial Subsequent Financing Notice.

       

      (g) Notwithstanding
        the foregoing, this Section 4.11 shall not apply in respect of an Exempt
        Issuance.

       

      4.12 Subsequent
        Equity Sales. 

       

      (a) From
        the
        date hereof until 90 days after the Closing Date, neither the Company nor
        any
        Subsidiary shall issue shares of Common Stock or Common Stock Equivalents;
        provided, however, the 90 day period set forth in this Section 4.12 shall
        be
        extended for the number of Trading Days during such period in which trading
        in
        the Common Stock is suspended by any Trading Market, or following the Closing
        Date, the Registration Statement is not effective or the Prospectus may not
        be
        used by the Purchasers for the purchase of Warrant Shares. 

       

      (b) From
        the
        date hereof until the twelve month anniversary of the date hereof, the Company
        shall be prohibited from effecting or entering into an agreement to effect
        any
        Subsequent Financing involving a Variable Rate Transaction. The term
“Variable
        Rate Transaction”
shall
        mean a transaction in which the Company issues or sells (i) any debt or equity
        securities that are convertible into, exchangeable or exercisable for, or
        include the right to receive additional shares of Common Stock either (A)
        at a
        conversion, exercise or exchange rate or other price that is based upon and/or
        varies with the trading prices of or quotations for the shares of Common
        Stock
        at any time after the initial issuance of such debt or equity securities,
        or (B)
        with a conversion, exercise or exchange price that is subject to being reset
        at
        some future date after the initial issuance of such debt or equity security
        or
        upon the occurrence of specified or contingent events directly or indirectly
        related to the business of the Company or the market for the Common Stock
        or
        (ii) enters into any agreement, including, but not limited to, an equity
        line of
        credit, whereby the Company may sell securities at a future determined price.
        Any Purchaser shall be entitled to obtain injunctive relief against the Company
        to preclude any such issuance, which remedy shall be in addition to any right
        to
        collect damages. 

       

      (c) Notwithstanding
        the foregoing, this Section 4.12 shall not apply in respect of an Exempt
        Issuance, except that no Variable Rate Transaction shall be an Exempt
        Issuance.

       

      (d) The
        Company agrees that it shall not effect, or announce its intention to effect,
        a
        reverse split of the Common Stock for a period ending one year after the
        Closing
        Date.

       

      4.13 Short
        Sales and Confidentiality After The Date Hereof. Each
        Purchaser severally and not jointly with the other Purchasers covenants that
        neither it nor any Affiliate acting on its behalf or pursuant to any
        understanding with it will execute any Short Sales during the period commencing
        at the Discussion Time and ending at the time that the transactions contemplated
        by this Agreement are first publicly announced as described
        in
        Section 4.4. Each
        Purchaser, severally and not jointly with the other Purchasers, covenants
        that
        until such time as the transactions contemplated by this Agreement are publicly
        disclosed by the Company as described in Section 4.4, such Purchaser will
        maintain the confidentiality of all disclosures made to it in connection
        with
        this transaction (including the existence and terms of this transaction).
        Notwithstanding
        the foregoing, no Purchaser makes any representation, warranty or covenant
        hereby that it will not engage in Short Sales in the securities of the Company
        after the time that the transactions contemplated by this Agreement are first
        publicly announced as described in Section 4.4. Notwithstanding
        the foregoing, in the case of a Purchaser that is a multi-managed investment
        vehicle whereby separate portfolio managers manage separate portions of such
        Purchaser's assets and the portfolio managers have no knowledge of the
        investment decisions made by the portfolio managers managing other portions
        of
        such Purchaser's assets, the covenant set forth above shall only apply with
        respect to the portion of assets managed by the portfolio manager that made
        the
        investment decision to purchase the Securities covered by this
        Agreement.

       

      
        
          
          

        

        
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      4.14 Delivery
        of Securities After Closing. The Company shall deliver, or cause to be
        delivered, the Units purchased by each Purchaser to such Purchaser within
        3
        Trading Days of the Closing Date.

       

      ARTICLE
        V.

      MISCELLANEOUS

       

      5.1 Termination. 
        This Agreement may be terminated by any Purchaser, as to such Purchaser’s
        obligations hereunder only and without any effect whatsoever on the obligations
        between the Company and the other Purchasers, by written notice to the other
        parties, if the Closing has not been consummated on or before November 15,
        2006;
        provided, however, that no such termination will affect the right of any
        party
        to sue for any breach by the other party (or parties).

       

      5.2 Fees
        and Expenses. At the Closing, the Company has agreed to reimburse Shoreline
        the non-accountable sum of $25,000 for due diligence fees and expenses and
        up to
        $50,000 for reasonable legal fees and expenses, none of which has been paid
        prior to the Closing. If, for any reason, the transactions contemplated hereby
        do not close, Shoreline shall only be entitled to reimbursement for its actual,
        accountable out-of-pocket expenses up to a maximum of $25,000. Except as
        expressly set forth in the Transaction Documents to the contrary, each party
        shall pay the fees and expenses of its advisers, counsel, accountants and
        other
        experts, if any, and all other expenses incurred by such party incident to
        the
        negotiation, preparation, execution, delivery and performance of this Agreement.
        The Company shall pay all transfer agent fees, stamp taxes and other taxes
        and
        duties levied in connection with the delivery of any Securities to the
        Purchasers.

       

      5.3 Entire
        Agreement. The Transaction Documents, together with the exhibits and
        schedules thereto, the Prospectus and the Prospectus Supplement contain the
        entire understanding of the parties with respect to the subject matter hereof
        and supersede all prior agreements and understandings, oral or written, with
        respect to such matters, which the parties acknowledge have been merged into
        such documents, exhibits and schedules.

       

      
        
          
          

        

        
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      5.4 Notices.
        Any and all notices or other communications or deliveries required or permitted
        to be provided hereunder shall be in writing and shall be deemed given and
        effective on the earliest of (a) the date of transmission, if such notice
        or
        communication is delivered via facsimile at the facsimile number set forth
        on
        the signature pages attached hereto prior to 5:30 p.m. (New York City time)
        on a
        Trading Day, (b) the next Trading Day after the date of transmission, if
        such
        notice or communication is delivered via facsimile at the facsimile number
        set
        forth on the signature pages attached hereto on a day that is not a Trading
        Day
        or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the
        2nd
        Trading
        Day following the date of mailing, if sent by U.S. nationally recognized
        overnight courier service, or (d) upon actual receipt by the party to whom
        such
        notice is required to be given. The address for such notices and communications
        shall be as set forth on the signature pages attached hereto.

       

      5.5 Amendments;
        Waivers. No provision of this Agreement may be waived or amended except in a
        written instrument signed, in the case of an amendment, by the Company and
        each
        Purchaser or, in the case of a waiver, by the party against whom enforcement
        of
        any such waived provision is sought. No waiver of any default with respect
        to
        any provision, condition or requirement of this Agreement shall be deemed
        to be
        a continuing waiver in the future or a waiver of any subsequent default or
        a
        waiver of any other provision, condition or requirement hereof, nor shall
        any
        delay or omission of any party to exercise any right hereunder in any manner
        impair the exercise of any such right.

       

      5.6 Headings.
        The headings herein are for convenience only, do not constitute a part of
        this
        Agreement and shall not be deemed to limit or affect any of the provisions
        hereof.

       

      5.7 Successors
        and Assigns. This Agreement shall be binding upon and inure to the benefit
        of the parties and their successors and permitted assigns. The Company may
        not
        assign this Agreement or any rights or obligations hereunder without the
        prior
        written consent of each Purchaser (other than by merger). Any Purchaser may
        assign any or all of its rights under this Agreement to any Person to whom
        such
        Purchaser assigns or transfers any Securities, provided such transferee agrees
        in writing to be bound, with respect to the transferred Securities, by the
        provisions of the Transaction Documents that apply to the
“Purchasers”.

       

      5.8 No
        Third-Party Beneficiaries. This Agreement is intended for the benefit of the
        parties hereto and their respective successors and permitted assigns and
        is not
        for the benefit of, nor may any provision hereof be enforced by, any other
        Person, except as otherwise set forth in Section 4.9.

       

      5.9 Governing
        Law. All questions concerning the construction, validity, enforcement and
        interpretation of the Transaction Documents shall be governed by and construed
        and enforced in accordance with the internal laws of the State of New York,
        without regard to the principles of conflicts of law thereof. Each party
        agrees
        that all legal proceedings concerning the interpretations, enforcement and
        defense of the transactions contemplated by this Agreement and any other
        Transaction Documents (whether brought against a party hereto or its respective
        Affiliates, directors, officers, shareholders, employees or agents) shall
        be
        commenced exclusively in the state and federal courts sitting in the City
        of New
        York, County of New York, State of New York. Each party hereby irrevocably
        submits to the exclusive jurisdiction of the state and federal courts sitting
        in
        the City of New York, County of New York, State of New York for the adjudication
        of any dispute hereunder or in connection herewith or with any transaction
        contemplated hereby or discussed herein (including with respect to the
        enforcement of any of the Transaction Documents), and hereby irrevocably
        waives,
        and agrees not to assert in any suit, action or proceeding, any claim that
        it is
        not personally subject to the jurisdiction of any such court, that such suit,
        action or proceeding is improper or is an inconvenient venue for such
        proceeding. Each party hereby irrevocably waives personal service of process
        and
        consents to process being served in any such suit, action or proceeding by
        mailing a copy thereof via registered or certified mail or overnight delivery
        (with evidence of delivery) to such party at the address in effect for notices
        to it under this Agreement and agrees that such service shall constitute
        good
        and sufficient service of process and notice thereof. Nothing contained herein
        shall be deemed to limit in any way any right to serve process in any other
        manner permitted by law. The parties hereby waive all rights to a trial by
        jury.
        If either party shall commence an action or proceeding to enforce any provisions
        of the Transaction Documents, then the prevailing party in such action or
        proceeding shall be reimbursed by the other party for its reasonable attorneys’
fees and other costs and expenses incurred with the investigation, preparation
        and prosecution of such action or proceeding. The Company hereby irrevocably
        appoints Apollo Gold, Inc., 5655 S. Yosemite Street, Suite 200, Greenwood
        Village, CO 80111, as its agent to accept and acknowledge on its behalf service
        of any and all process which may be served in any action, proceeding or
        counterclaim in any way relating to or arising out this Agreement.

       

      
        
          
          

        

        
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      5.10 Survival.
        The representations and warranties contained herein shall survive the Closing
        and the delivery of the Shares and Warrant Shares.

       

      5.11 Execution.
        This Agreement may be executed in two or more counterparts, all of which
        when
        taken together shall be considered one and the same agreement and shall become
        effective when counterparts have been signed by each party and delivered
        to the
        other party, it being understood that both parties need not sign the same
        counterpart. In the event that any signature is delivered by facsimile
        transmission or by e-mail delivery of a “.pdf” format data file, such signature
        shall create a valid and binding obligation of the party executing (or on
        whose
        behalf such signature is executed) with the same force and effect as if such
        facsimile or “.pdf” signature page were an original thereof.

       

      5.12 Severability.
        If any term, provision, covenant or restriction of this Agreement is held
        by a
        court of competent jurisdiction to be invalid, illegal, void or unenforceable,
        the remainder of the terms, provisions, covenants and restrictions set forth
        herein shall remain in full force and effect and shall in no way be affected,
        impaired or invalidated, and the parties hereto shall use their commercially
        reasonable efforts to find and employ an alternative means to achieve the
        same
        or substantially the same result as that contemplated by such term, provision,
        covenant or restriction. It is hereby stipulated and declared to be the
        intention of the parties that they would have executed the remaining terms,
        provisions, covenants and restrictions without including any of such that
        may be
        hereafter declared invalid, illegal, void or unenforceable.

       

      5.13 Rescission
        and Withdrawal Right. Notwithstanding anything to the contrary contained in
        (and without limiting any similar provisions of) any of the other Transaction
        Documents, whenever any Purchaser exercises a right, election, demand or
        option
        under a Transaction Document and the Company does not timely perform its
        related
        obligations within the periods therein provided, then such Purchaser may
        rescind
        or withdraw, in its sole discretion from time to time upon written notice
        to the
        Company, any relevant notice, demand or election in whole or in part without
        prejudice to its future actions and rights.

       

      
        
          
          

        

        
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      5.14 Replacement
        of Securities. If any certificate or instrument evidencing any Securities is
        mutilated, lost, stolen or destroyed, the Company shall issue or cause to
        be
        issued in exchange and substitution for and upon cancellation thereof (in
        the
        case of mutilation), or in lieu of and substitution therefor, a new certificate
        or instrument, but only upon receipt of evidence reasonably satisfactory
        to the
        Company of such loss, theft or destruction. The applicant for a new certificate
        or instrument under such circumstances shall also pay any reasonable third-party
        costs (including customary indemnity) associated with the issuance of such
        replacement Securities.

       

      5.15 Remedies.
        In addition to being entitled to exercise all rights provided herein or granted
        by law, including recovery of damages, each of the Purchasers and the Company
        will be entitled to specific performance under the Transaction Documents.
        The
        parties agree that monetary damages may not be adequate compensation for
        any
        loss incurred by reason of any breach of obligations contained in the
        Transaction Documents and hereby agrees to waive and not to assert in any
        action
        for specific performance of any such obligation the defense that a remedy
        at law
        would be adequate.

       

      5.16 Payment
        Set Aside. To the extent that the Company makes a payment or payments to any
        Purchaser pursuant to any Transaction Document or a Purchaser enforces or
        exercises its rights thereunder, and such payment or payments or the proceeds
        of
        such enforcement or exercise or any part thereof are subsequently invalidated,
        declared to be fraudulent or preferential, set aside, recovered from, disgorged
        by or are required to be refunded, repaid or otherwise restored to the Company,
        a trustee, receiver or any other person under any law (including, without
        limitation, any bankruptcy law, state or federal law, common law or equitable
        cause of action), then to the extent of any such restoration the obligation
        or
        part thereof originally intended to be satisfied shall be revived and continued
        in full force and effect as if such payment had not been made or such
        enforcement or setoff had not occurred.

       

      5.17 Independent
        Nature of Purchasers’ Obligations and Rights. The obligations of each
        Purchaser under any Transaction Document are several and not joint with the
        obligations of any other Purchaser, and no Purchaser shall be responsible
        in any
        way for the performance or non-performance of the obligations of any other
        Purchaser under any Transaction Document. Nothing contained herein or in
        any
        other Transaction Document, and no action taken by any Purchaser pursuant
        thereto, shall be deemed to constitute the Purchasers as a partnership, an
        association, a joint venture or any other kind of entity, or create a
        presumption that the Purchasers are in any way acting in concert or as a
        group
        with respect to such obligations or the transactions contemplated by the
        Transaction Documents. Each Purchaser shall be entitled to independently
        protect
        and enforce its rights, including without limitation, the rights arising
        out of
        this Agreement or out of the other Transaction Documents, and it shall not
        be
        necessary for any other Purchaser to be joined as an additional party in
        any
        proceeding for such purpose. Each Purchaser has been represented by its own
        separate legal counsel in their review and negotiation of the Transaction
        Documents. For reasons of administrative convenience only, Purchasers and
        their
        respective counsel have chosen to communicate with the Company through FWS.
        FWS
        does not represent all of the Purchasers but only Shoreline Pacific, LLC,
        who
        has acted as placement agent to the transaction. The Company has elected
        to
        provide all Purchasers with the same terms and Transaction Documents for
        the
        convenience of the Company and not because it was required or requested to
        do so
        by the Purchasers.

       

      
        
          
          

        

        
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      5.18 Construction.
        The parties agree that each of them and/or their respective counsel has reviewed
        and had an opportunity to revise the Transaction Documents and, therefore,
        the
        normal rule of construction to the effect that any ambiguities are to be
        resolved against the drafting party shall not be employed in the interpretation
        of the Transaction Documents or any amendments hereto.

       

      (Signature
        Pages Follow)

       

      
        
          
          

        

        
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      IN
        WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
        Agreement to be duly executed by their respective authorized signatories
        as of
        the date first indicated above.

       

      
        	 	 	 	 
	
                APOLLO
                  GOLD CORPORATION

              	 	 	
                Address
                  for Notice:

              
	 	 	 	 
	By:	 	 	
              
	
                
                  

                

                Name:

                Title:

              	 	 	
                5655
                  South Yosemite Street

                Suite
                  200

                Greenwood
                  Village, Colorado

                80111-3220

                Attn:
                  David Russell, CEO

              

      

       

      
        With
          a
          copy to (which shall not constitute notice):

      

      

      [REMAINDER
        OF PAGE INTENTIONALLY LEFT BLANK

      SIGNATURE
        PAGE FOR PURCHASER FOLLOWS]

       

      
        
          
          

        

        
          31

          
            

          

        

        
          
          

        

      

      [PURCHASER
        SIGNATURE PAGES TO AGT SECURITIES PURCHASE AGREEMENT]

      

      IN
        WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
        to be duly executed by their respective authorized signatories as of the
        date
        first indicated above.

       

      Name
        of
        Purchaser: ________________________________________________________

       

      Signature
        of Authorized Signatory of Purchaser:
        __________________________________

       

      Name
        of
        Authorized Signatory:
        ____________________________________________________

       

      Title
        of
        Authorized Signatory:
        _____________________________________________________

       

      Email
        Address of
        Purchaser:________________________________________________

       

      Fax
        Number of Purchaser:
        ________________________________________________

       

      Address
        for Notice of Purchaser:

       

      Address
        for Delivery of Securities for Purchaser (if not same as above):

       

      Subscription
        Amount:

      Shares:

      Warrant
        Shares:

      EIN
        Number: [PROVIDE
        THIS UNDER SEPARATE COVER]

       

      [SIGNATURE
        PAGES CONTINUE]

       

      
        
          
          

        

        
          32

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00112-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00112-of-00352.parquet"}]]