Document:

EXHIBIT 4.2

THIS WARRANT AND THE SECURITIES DELIVERABLE UPON EXERCISE THEREOF (THE “SECURITIES”) HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933. AS AMENDED (THE “1933 ACT”), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED IN THE UNITED STATES OR BY OR FOR THE BENEFIT OF A U.S. PERSON UNLESS (A) THE SECURITIES HAVE BEEN REGISTERED UNDER THE 1933 ACT AND THE APPLICABLE SECURITIES LEGISLATION OF ANY SUCH STATE, (B) THE SALE OF THE SECURITIES IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE 1933 ACT, OR (C) THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THE SECURITIES REASONABLY
SATISFACTORY TO THE CORPORATION, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE 1933 ACT. “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED BY REGULATION S UNDER THE 1933 ACT.

UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE FEBRUARY 20, 2005.

 

COMPENSATION WARRANTS 

TO PURCHASE COMMON SHARES OF

APOLLO GOLD CORPORATION

(continued under the laws of the Yukon Territory)

Void after 5:00 p.m. (Toronto time) on the 19th day of October, 2006.

	
Warrant Certificate Number: W-2004/01

 
	
Number of Compensation Warrants: 1,000,000

 

THIS CERTIFIES THAT, for value received, Regent Mercantile Bancorp Inc., 105 Adelaide St. W., Suite 904, Toronto, Ontario M5H 1P9 (the “Holder”) is entitled, at any time and from time to time up to 5:00 p.m. (Toronto time) on October 19, 2006 (the “Expiry Time”), one fully paid and non-assessable Common Share for each warrant (individually, a “Warrant”) represented by this certificate (the “Warrant Certificate”) at a price of US$0.80 per share (the “Exercise Price
”), upon and subject to the terms and conditions herein.

The Warrants are issued pursuant to an underwriting agreement between the Corporation and the Holder dated October 19, 2004, in connection with a private placement of the Corporation’s Series 2004-A secured debenture.

1.  For the purpose of this Warrant, the term “Common Shares” means common shares in the capital of the Corporation as constituted on the date hereof; provided that in the event of a change, subdivision, re-division, reduction, combination or consolidation thereof or any other adjustment under clause 
 7 hereof, or such successive changes, subdivisions, re-divisions, reductions, combinations, consolidations or other adjustments, then subject to the adjustments, if any, having been made in accordance with the provisions of this Warrant Certificate, “Common Shares” shall thereafter mean the
 shares, other securities or other property resulting from such change,
subdivision, re-division, reduction, combination or consolidation or other adjustment.

2.  All rights under any of the Warrants in respect of which the right of subscription and purchase therein provided for shall not theretofore have been exercised shall wholly cease and determine and such Warrants shall be wholly void and of no valid or binding effect after the Expiry Time.

	 
	 	 	 
	

	 

3.  The right to purchase Common Shares pursuant to the Warrants may only be exercised by the Holder before the Expiry Time by:

 

	(a)  	duly completing and executing a subscription substantially in the form attached hereto, in the manner therein indicated; and

	(b)  	surrendering this Warrant Certificate and the duly completed and executed subscription form to the Corporation at the principal office of the Corporation in the City of Denver, Colorado, together with payment of the purchase price for the Common Shares subscribed for in the form of cash or a certified cheque payable to the Corporation in an amount equal to the then applicable Exercise Price multiplied by the number of Common Shares subscribed for.

4.  Issue of Common Shares upon Exercise.

 

	(a)  	Upon such delivery and payment as set forth in clause  3, the Corporation shall cause to be issued to the Holder the number of Common Shares to be issued and the Holder shall become a shareholder of the Corporation in respect of such Common Shares with effect from the date of such delivery and payment and shall be entitled to delivery of a certificate or certificates evidencing such shares. The Corporation shall cause such certificate or certificates to be delivered via bonded overnight courier to the Holder at the address or addresses specified in such subscription form within five (5) business days of such delivery and payment as herein
provided.

 

	(b)  	The Corporation shall not be required to issue fractional Common Shares upon the exercise of the Warrants and no payment shall be made by the Corporation in lieu of issuing any fractional interest in a Common Share.

 

5.  The holding of a Warrant shall not constitute the Holder a shareholder of the Corporation nor entitle him to any right or interest in respect thereof except as herein expressly provided.

6.  The Corporation covenants and agrees that until the Expiry Time, while any of the Warrants shall be outstanding, it shall reserve and there shall remain unissued out of its authorized capital a sufficient number of Common Shares to satisfy the right of purchase herein provided, as such right of purchase may be adjusted pursuant to clauses  7 and 
 8 hereof. All Common Shares which shall be issued upon the exercise of the right to purchase herein provided for, upon payment therefor of the amount at which such Common Shares may at the time be purchased pursuant to the provisions hereof, shall be issued as fully paid and non-assessable shares and the holders thereof shall not be liable to the Corporation or its creditors in respect thereof.

7.  Adjustment

	(a)  	If and whenever at any time after the date hereof and prior to the Expiry Time the Corporation shall:

 

	(i)  	subdivide, re-divide or change its then outstanding Common Shares into a greater number of Common Shares, 

 

	(ii)  	reduce, combine or consolidate its then outstanding Common Shares into a lesser number of Common Shares, or 

 

	(iii)  	issue Common Shares (or securities exchangeable for or convertible into Common Shares) to the holders of all or substantially all of its then outstanding Common Shares by way of a stock dividend or other distribution;

 

	 
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(any of such events herein called a “Common Share Reorganization”), then the Exercise Price shall be adjusted effective immediately after the effective date of any such event in  7(a)(i) or 
 7(a)(ii) above or the record date at which the holders of Common Shares are determined for the purpose of any such dividend or distribution in  7(a)(iii) above, as the case may be, by multiplying the Exercise Price in effect on such effective date or record date, as the case may be, by a fraction, the numerator of which shall be the number of Common Shares outstanding on such effective date or record date, as the case may be, before giving effect to
 such Common Share Reorganization and
 the denominator of which shall be the number of Common Shares outstanding immediately after giving effect to such Common Share Reorganization including, in the case where securities exchangeable for or convertible into Common Shares are distributed, the number of Common Shares that would be outstanding if such securities were exchanged for or converted into Common Shares.

 

	(b)  	If and whenever at any time after the date hereof and prior to the Expiry Time, the Corporation shall distribute any class of shares or rights, options or warrants or other securities (other than those referred to in  7(a) above), evidences of indebtedness or property (excluding cash dividends paid in the ordinary course) to holders of all or substantially all of its then outstanding Common Shares, the Holder shall receive, in addition to the number of Common Shares in respect of which the right to purchase is then being exercised, the aggregate number of Common Shares or other securities or property that the Holder would have been
entitled to receive as a result of such event, as if, on the record date thereof, the Holder had been the registered holder of the number of Common Shares to which the Holder was theretofore entitled upon the exercise of the rights of the Holder hereunder.

	(c)  	If and whenever at any time after the 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
”), the Holder, where he has not exercised the right of subscription and purchase under this Warrant Certificate prior to the effective date of such Capital Reorganization, shall be entitled to receive and shall accept, upon the exercise of such right, on such date or any time thereafter, for the same aggregate consideration in lieu of the number of Common Shares to which he was theretofore entitled to subscribe for and purchase, the aggregate number of shares or other securities or property which the Holder would have been entitled to receive as a result of such Capital Reorganization as if, on the effective date thereof, he had been the registered holder of the number of Common Shares to which he was theretofore entitled to subscribe for and purchase.

	(d)  	If and whenever at any time after the date hereof and prior to the Expiry Time, the Corporation shall fix a record date for the issuance of rights, options or warrants to all or substantially all of the holders of the outstanding Common Shares entitling them, for a period expiring not more than forty-five (45) days after the record date, to subscribe for or purchase Common Shares or securities convertible, exercisable or exchangeable into Common Shares (each, a “Convertible Security”) at a price per share (or having a conversion, exercise or exchange price per share) less than 95% of the Current Market Price (as defined below) on the earlier of the record date and the date on which the Corporation announces its
intention to make such issuance (any such issuance being herein called a “Rights Offering”), the Exercise Price shall be adjusted on the record date so that it shall equal the number which is the product of the Exercise Price in effect immediately prior to the record date and the fraction:

	 
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	(i)  	the numerator of which shall be the total number of Common Shares outstanding immediately prior to the record date plus a number of Common Shares equal to the number arrived at by multiplying the total number of additional Common Shares offered for subscription or purchase or into or for which the total number of rights, options or warrants so offered are convertible or exchangeable by the quotient obtained by dividing the purchase or subscription price for each Common Share or conversion price for each Convertible Security offered for subscription or purchase by such Current Market Price for the Common Shares, and 

	(ii)  	the denominator of which shall be the total number of Common Shares outstanding immediately prior to such record date plus the total number of additional Common Shares offered for subscription or purchase or into or for which the total number of rights, options or warrants so offered are convertible or exchangeable.

 

To the extent that any rights, options or warrants are not so issued or any of the rights, options or warrants so issued are not exercised prior to the expiration thereof, the Exercise Price will be readjusted to the Exercise Price in effect immediately prior to the record date, and the Exercise Price will be further adjusted based upon the number of additional Common Shares actually delivered upon the exercise of the rights, options or warrants, as the case may be.

For the purposes of this clause  7 (d), “Current Market Price”, at any date, means the weighted average price per Common Share
at which the Common Shares have traded: (a) on the Toronto Stock Exchange; or (b) if the Common Shares are not quoted on the Toronto Stock Exchange, on any stock exchange or over-the-counter market upon which the Common Shares are then listed or quoted for trading, during the twenty (20) consecutive trading days (on each of which at least five hundred (500) Common Shares are traded in board lots) ending the third (3rd) trading day before such date, and the weighted average price shall be determined by dividing the aggregate sale price of all Common Shares sold in board lots on the exchange or market, as the case may be, during the twenty (20) consecutive trading days by the number of Common Shares sold, provided that if the Common Shares are not listed or quoted for trading on any stock exchange or market, the price shall be determined by the board of directors of the Corporation in its sole discretion, acting reasonably.

	(e)  	If and whenever at any time after the date hereof and prior to the Expiry Time, any of the events set out in clause  7(a) or  7(b) shall occur and the occurrence of such event results in an adjustment of the Exercise Price pursuant to the provisions of clause clause 
 7(a) or  7(b), then the number of Common Shares purchasable pursuant to this Warrant shall be adjusted contemporaneously with the adjustment of the Exercise Price by multiplying the number of Common Shares then otherwise purchasable on the exercise thereof by a fraction, the numerator of which shall be the Exercise Price in effect immediately prior to the adjustment and the denominator of which shall be the Exercise Price resulting from such
 adjustment.

 

	(f)  	If the Corporation takes any action affecting its Common Shares to which the foregoing provisions of this clause  7, in the opinion of the board of directors of the Corporation, acting in good faith, are not strictly applicable, or if strictly applicable would not fairly adjust the rights of the Holder against dilution in accordance with the intent and purposes hereof, or would otherwise materially affect the rights of the Holder of the Warrants hereunder, then the Corporation shall execute and deliver to the Holder an amendment hereto providing for an adjustment in the application of such provisions so as to adjust such rights as
aforesaid in such manner as the board of directors of the Corporation may determine to be equitable in the circumstances, acting in good faith. The failure of the taking of action by the board of directors of the Corporation to so provide for any adjustment on or prior to the effective date of any action or occurrence giving rise to such state of facts will be conclusive evidence that the board of directors has determined that it is equitable to make no adjustment in the circumstances.

 

	 
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8.  The following rules and procedures shall be applicable to the adjustments made pursuant to clause  7:

 

	(a)  	no adjustment in the Exercise Price shall be required unless a change of at least 1% of the prevailing Exercise Price would result, provided, however, that any adjustment which, except for the provisions of this clause  8(a), would otherwise have been required to be made, shall be carried forward and taken into account in any subsequent adjustment;

 

	(b)  	the adjustments provided for in clause  7 are cumulative and shall apply to successive subdivisions, consolidations, dividends, distributions and other events resulting in any adjustment under the provisions of such clause;

 

	(c)  	in the absence of a resolution of the board of directors of the Corporation fixing a record date for any dividend or distribution referred to in clause  7(a)(iii) above, the Corporation shall be deemed to have fixed as the record date therefor the date on which such dividend or distribution is effected;

 

	(d)  	if the Corporation sets a record date to take any action and thereafter and before the taking of such action abandons its plan to take such action, then no adjustment to the Exercise Price will be required by reason of the setting of such record date;

 

	(e)  	forthwith after any adjustment to the Exercise Price or the number of Common Shares purchasable pursuant to the Warrants, the Corporation shall provide to the Holder a certificate of an officer of the Corporation certifying as to the amount of such adjustment and, in reasonable detail, describing the event requiring and the manner of computing or determining such adjustment; and

 

	(f)  	any question that at any time or from time to time arises with respect to the amount of any adjustment to the Exercise Price or other adjustment pursuant to clause  7 shall be conclusively determined by a firm of independent chartered accountants (who may be the Corporation's auditors) and shall be binding upon the Corporation and the Holder.

 

9.  On the happening of each and every such event set out in clause  7, the applicable provisions of this Warrant, including the Exercise Price, shall, ipso facto, be deemed to be amended accordingly and the Corporation shall
take all necessary action so as to comply with such provisions as so amended.

 

10.  The Corporation shall not be required to deliver certificates for Common Shares issuable upon the exercise of the Warrants while the share transfer books of the Corporation are properly closed, having regard to the provisions of clauses  7 and  
8 hereof, prior to any meeting of shareholders or for the payment of dividends or for any other purpose and in the event of the surrender of any Warrant in accordance with the provisions hereof and the making of any subscription and payment for the Common Shares called for thereby during any such period delivery of certificates for Common Shares may be postponed for not more than five (5) days after the date of the re-opening of said share transfer books. Provided, however, that any such postponement of delivery of certificates shall be without prejudice to the right of the Holder so surrendering the same and making payment during such period to receive after the share transfer books shall have been re-opened such certificates for the Common Shares called for, as the same may be adjusted pursuant to clause 
 7 hereof as a result of the completion of the event in respect of which the transfer books were closed.

 

	 
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11.  Subject as hereinafter provided, all or any of the rights conferred upon the Holder by the terms hereof may be enforced by the Holder by appropriate legal proceedings. No recourse under or upon any obligation, covenant or agreement contained herein shall be had against any shareholder, director or officer of the Corporation either directly or through the Corporation, it being expressly agreed and declared that the obligations under the Warrants are solely corporate obligations and that no personal liability whatever shall attach to or be incurred by the shareholders, directors or officers of the Corporation or any of them in respect thereof, any and all rights and claims against every
such shareholder, officer or director being hereby expressly waived as a condition of and as a consideration for the issue of the Warrants.

 

12.  The Holder may subscribe for and purchase any lesser number of Common Shares than the number of shares expressed in this Warrant Certificate. In the case of any subscription for a lesser number of Common Shares than expressed in this Warrant Certificate, the Holder hereof shall be entitled to receive at no cost to the Holder a new Warrant Certificate in respect of the balance of Warrant not then exercised. Such new Warrant Certificate shall be delivered by bonded overnight courier to the Holder by the Corporation, contemporaneously with the delivery of the certificate or certificates representing the Common Shares issued pursuant to clause 
 4.

 

13.  If this Warrant Certificate is stolen, lost, mutilated or destroyed, the Corporation shall, on such terms as it may in its discretion acting reasonably impose, issue and sign a new Warrant Certificate of like denomination, tenor and date, and if applicable, with the same legend, as the Warrant Certificate so stolen, lost, mutilated or destroyed for delivery to the Holder.

 

14.  The Corporation shall keep at its principal office: (a) a register of holders in which shall be entered the names and addresses of the Holder of the Warrants and of the number of Warrants held by him; and (b) a register of transfers in which shall be entered the date and other particulars of each transfer of Warrants. The registers hereinbefore referred to shall be open at all reasonable times for inspection by the Holder.

 

15.  The transferee of a Warrant Certificate shall, after the transfer form attached to the Warrant Certificate or any other form of transfer acceptable to the Corporation, acting reasonably, is duly completed and the Warrant Certificate is lodged with the Corporation and upon compliance with all other conditions in that regard required by this Warrant, by the Toronto Stock Exchange or by law, be entitled to have his name entered on the register of holders as the owner of the Warrants represented thereby free from all equities or rights of set-off or counterclaim between the Corporation and the transferor or any previous holder of such Warrant, save in respect of equities of which the Corporation or
 the transferee is required to take notice by statute or by order of a court of competent jurisdiction.

 

16.  Warrant Certificates may, upon compliance with the reasonable requirements of the Corporation, be exchanged for Warrant Certificates in any other denomination representing in the aggregate the same number of Warrants. The Corporation shall issue and sign all Warrant Certificates necessary to carry out the exchanges contemplated herein, provided:

 

	(i)  	Warrant Certificates may be exchanged only at the principal office of the Corporation in the City of Denver, Colorado;

 

	 
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	(ii)  	any Warrant Certificates tendered for exchange shall be surrendered to the Corporation and cancelled; and

 

	(iii)  	except as otherwise herein provided, the Corporation shall not charge the Holder requesting an exchange any sum for any new Warrant Certificate issued. 

 

17.  The Corporation may deem and treat the registered holder of any Warrant Certificate as the absolute owner of the Warrants represented thereby for all purposes, and the Corporation shall not be affected by any notice or knowledge to the contrary except where the Corporation is required to take notice by statute or by order of a court of competent jurisdiction. A Holder shall be entitled to the rights evidenced by such Warrant free from all equities or rights of set-off or counterclaim between the Corporation and the original or any intermediate holder thereof and all persons may act accordingly and the receipt by any such Holder of the Common Shares purchasable pursuant to such Warrant shall be
a good discharge to the Corporation for the same and the Corporation shall not be bound to inquire into the title of any such Holder except where the Corporation is required to take notice by statute or by order of a court of competent jurisdiction.

 

18.  Legend

 

	(a)  	The Holder, if resident in Canada, acknowledges that appropriate legend as follows will be placed upon certificates representing any Common Shares issued upon the exercise of the Warrants represented by this certificate until the hold period expires for the Warrants so represented hereby:

“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE FEBRUARY 20, 2005.”

	(b)  	The Holder understands that upon the original issuance thereof, and until such time as the same is no longer required under the applicable requirements of the United States Securities Act of 1933, as amended (the “1933 Act”) or applicable U.S. state laws and regulations, the certificates representing the Common Shares, and all securities issued in exchange therefor or in substitution thereof, will bear a legend in substantially the following form:

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”). THESE SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE 1933 ACT, (C) IN COMPLIANCE WITH THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE 1933 ACT PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE 1933 ACT OR ANY APPLICABLE STATE LAWS, AND THE HOLDER HAS, PRIOR TO SUCH SALE, FURNISHED TO THE CORPORATION AN OPINION OF COUNSEL OR OTHER EVIDENCE OF EXEMPTION, IN EITHER CASE REASONABLY
SATISFACTORY TO THE CORPORATION.”

	 
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provided, that if any of the Common Shares are being sold pursuant to Rule 144 of the 1933 Act, the legend may be removed by delivery to the Corporation’s transfer agent of an opinion of counsel satisfactory to the Corporation to the effect that the legend is no longer required under applicable requirements of the 1933 Act or state securities laws.

	(c)  	The Holder acknowledges that the certificates representing the Common Shares and all certificates issued in exchange or substitution thereof, will bear a legend in substantially the following form as long as the legend referred to in either subsection  18(a) or  18(b) remains on such certificate:

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

 

19.  This Warrant Certificate shall be governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof, except to the extent mandatorily governed by the law of another jurisdiction. Each of the Holder and the Corporation: (i) irrevocably consents to the exclusive jurisdiction and venue of the Courts of Ontario in connection with any matter or dispute based upon or arising out of this Warrant Certificate or the matters contemplated herein; (ii) agrees that process may be served upon them in any manner authorized by the laws of
the Province of Ontario for such persons; and (iii) waives and covenants not to assert or plead any objection which they might otherwise have to such jurisdiction, venue and such process.

 

20.  The Warrants represented by this Warrant Certificate and the Common Shares issuable upon exercise thereof have not been and will not be registered under the 1933 Act. The Warrants represented by this Warrant Certificate may not be exercised by a U.S. person or person within the United States (or on behalf of any such person) unless registered under the 1933 Act or unless an exemption from such registration is available and the holder has furnished an opinion of counsel of recognized standing in form and substance satisfactory to the Corporation to such effect. Terms used in this clause 
20 have the meanings assigned to them in Regulation S under the 1933 Act. 

 

21.  The Warrants represented by this Warrant Certificate may not be transferred or assigned in whole or in part without the prior written consent of the Corporation, such consent not to be unreasonably withheld, or without compliance with all applicable United States federal and state securities laws, all applicable securities laws in Canada and other applicable securities laws and the rules of the Toronto Stock Exchange, by the transferor and the transferee (including the delivery of investment representation letters and legal opinion reasonably satisfactory to the Corporation, if requested by the Corporation).

 

22.  Notwithstanding anything to the contrary in this Warrant Certificate, no supplement or amendment to the terms of this Warrant Certificate may be made without the prior written approval of the Toronto Stock Exchange.

 

23.  The Holder, by acceptance hereof, agrees that the Warrants represented by this Warrant Certificate, and the Common Shares issuable upon exercise thereof, are being acquired solely for its own account and not as a nominee for any other party and not with a view toward the resale or distribution thereof and that it will not offer, sell or otherwise dispose of the Warrants or the Common Shares issuable upon exercise thereof except under circumstances which will not result in a violation of the 1933 Act, any applicable securities laws in Canada and other applicable securities laws or the rules of the Toronto Stock Exchange.

 

	 
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24.  All references herein to monetary amounts are references to lawful money of the United States, unless otherwise specified herein.

 

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

 

	 	(a)	if to the Holder:

 

to the address on the face page hereof

 

	 	(b)	if to the Corporation:

 

Apollo Gold Corporation

4601 DTC Boulevard, Suite 750

Denver, Colorado

80237-2571

 

Attention:      R. Llee Chapman 

                 Chief Financial Officer

 

Telephone No.:     (720) 886-9656

Facsimile No.:         (720) 482-0957

 

Notice so mailed shall be deemed to have been given on the fourth Business Day after deposit in a post office or public letter box. Neither the Holder nor the Corporation shall mail any notice, request or other communication hereunder during any period in which applicable postal workers are on strike or if such strike is imminent and may reasonably be anticipated to affect the normal delivery of mail. Notices transmitted by a form of recorded telecommunication or delivered personally shall be deemed given on the day of transmission or personal delivery, as the case may be. The Holder or the Corporation may from time to time notify the other in the manner provided herein of any change of address or facsimile number which thereafter, until changed by like notice, shall be the address or facsimile number of
such person for all purposes hereof.

 

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

DATED this 19th day of October, 2004.

	 	 	 
	 	APOLLO GOLD CORPORATION
	 
 	 
 	 
 
	 	By:  	 
	 	

	 	Authorized Signing Officer

	 
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SUBSCRIPTION FORM

(TO BE COMPLETED IF WARRANTS ARE TO BE EXERCISED)

	TO:		APOLLO GOLD CORPORATION

			4601 DTC Boulevard, Suite 750

			Denver, Colorado

			80237-2571

 

THE UNDERSIGNED hereby subscribes for ___________________ common shares of APOLLO GOLD CORPORATION according to the terms and conditions set forth in the annexed warrant certificate (or such number of other securities or property to which such warrant entitles the undersigned to acquire under the terms and conditions set forth in the annexed warrant certificate).

Address for Delivery of Shares:         

______________________________________________________________________________

 

______________________________________________________________________________

 

______________________________________________________________________________

 

Attention: ______________________________________________________________________

                

Exercise Price Tendered

(US$0.80 per share or as adjusted)      US$ ____________

The undersigned represents, warrants and certifies as follows (one (only) of the following must be checked):

 

	 	A.  o	The undersigned holder (i) at the time of exercise of these Warrants is not in the United States; (ii) is not a “U.S. person” as defined in Regulation S under the United States Securities Act of 1933, as amended (the “1933 Act”) and is not exercising these Warrants on behalf of a “U.S. person”; and (iii) did not execute or deliver this Exercise Form in the United States.

 

	 	B.  o	The undersigned holder has delivered to CIBC Mellon Trust Company an opinion of counsel (which will not be sufficient unless it is from counsel of recognized standing and in form and substance satisfactory to the Corporation) to the effect that an exemption from the registration requirements of the 1933 Act and applicable state securities laws is available for the exercise of the Warrants.

 

The undersigned holder understands that unless Box A above is checked, the certificates representing the common shares issuable upon the exercise of the Warrants will bear a legend restricting transfer without registration under the 1933 Act and applicable state securities laws unless an exemption from registration is available.

 

If Box B is checked, any opinion tendered must be in form and substance satisfactory to the Corporation. Holders planning to deliver an opinion of counsel in connection with the exercise of the Warrants should contact the Corporation in advance to determine whether any opinions to be tendered will be acceptable to the Corporation.

 

	 
	 	 	 
	

	 

(If any common shares are to be issued to a person or persons other than the undersigned holder, the undersigned holder must pay all applicable transfer taxes or other government charges.)

 

DATED at         , this _____day of _______________, 200___. 

Witness:            )

)                            

)    Holder's Name

)

                     )                    
        

)    Authorized Signature

)

)                            

)    Title (if applicable)

	

	 	 	 
	

	

ASSIGNMENT FORM

(TO BE COMPLETED IF WARRANTS ARE TO BE ASSIGNED)

	TO:		APOLLO GOLD CORPORATION

			4601 DTC Boulevard, Suite 750

			Denver, Colorado

			80237-2571

FOR VALUE RECEIVED, _________________________________ Warrants represented by this Warrant Certificate are

hereby transferred to _______________________________________________________________________________

residing at _______________________________________________________________________________________

You are hereby instructed to take the necessary steps to effect this transfer.

 

 

 

DATED at         , this _____day of _______________,  ___. 

Witness:            )

)                            

)    Holder's Name

)

                     )                    
        

)    Authorized Signature

)

)                            

)    Title (if applicable)

 

Signature guaranteed:

The signature must be guaranteed by a Canadian chartered bank or a member of a recognized stock exchange or other entity acceptable to the Corporation.EXHIBIT 10.1
                  [Letterhead of Universal Finanz Holding AG]

October 11, 2004

MRU Holdings, Inc.
600 Lexington Avenue
New York, New York 10002

Attention: Vishal Garg
           Raza Khan

                      $50 Million Credit Support Facility
                               COMMITMENT LETTER

Ladies and Gentlemen:

Universal  Finanz Holding AG ("UNIVERSAL") is pleased to offer up to $50 million
of credit  support (the "CREDIT  SUPPORT  FACILITY") to MRU Universal  Guarantee
Agency, Inc., a Delaware corporation (the "GUARANTOR"),  upon and subject to the
terms and  conditions  of this  letter and the  Summary of Terms and  Conditions
attached  hereto as Exhibit A hereto and  incorporated  herein by reference (the
"SUMMARY OF TERMS" and, together with this letter, this "COMMITMENT LETTER").

The commitment of Universal  hereunder is subject to the satisfaction of each of
the following conditions  precedent in a manner acceptable to Universal:  (a) we
shall have  executed on terms and  conditions  satisfactory  to us, an agreement
upon which Universal or one of its affiliates may purchase up to a 65% ownership
interest in the Guarantor on a fully diluted basis (and Universal shall have the
right to pay the  purchase  price for such  ownership  interest  by  agreeing to
release  the  Guarantor  from  its  obligation  to  repay a like  amount  of its
outstanding obligations under the Credit Support Facility); (b) the accuracy and
completeness  of all  representations  that  you  and  your  affiliates  make to
Universal and your compliance with the terms of this Commitment  Letter; (c) the
negotiation,  execution and delivery of definitive  loan  documentation  for the
Credit  Support  Facility  consistent  with the  Summary of Terms and  otherwise
reasonably satisfactory to Universal (collectively,  the "LOAN DOCUMENTS");  and
(d) no change,  occurrence  or  development  that shall have  occurred or become
known to Universal  since August 14, 2004 that  constitutes  or has had or could
reasonably be expected to constitute or to have,  either  individually or in the
aggregate,  a  material  adverse  effect on the  business,  operations,  assets,
liabilities (actual or contingent) or condition  (financial or otherwise) of you
and the Guarantor, taken as a whole.

You hereby represent, warrant and covenant that (a) all information,  other than
Projections  (defined  below),  which has been or is hereafter made available to
Universal by you or any of your  representatives (or on your or their behalf) in
connection with the transactions  contemplated hereby (the "INFORMATION") is and
will be complete and correct in all material  respects and does not and will not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements  contained therein not misleading,  and (b) all
financial  projections  concerning the Guarantor that have been or are hereafter
made  available  to  Universal  by  you  or any  of  your  representatives  (the
"PROJECTIONS") have been or will be prepared in good faith based upon reasonable
assumptions,   it  being   understood   that  the  Projections  are  subject  to
contingencies,  many of which are beyond your control, and that no assurance can
be given that the  Projections  will be  realized.  You agree to furnish us with
such Information and Projections as we may reasonably  request and to supplement
the  Information  and the  Projections  from time to time  until the date of the
execution and delivery of the Loan  Documents  (the "CLOSING  DATE") so that the
representation,  warranty and covenant in the  preceding  sentence is correct on
the Closing Date.

The Guarantor  will  reimburse  Universal  pursuant to the Loan Documents on the
Closing Date for all  reasonable  out-of-pocket  fees and  expenses  incurred in
connection  with the  preparation,  negotiation,  execution and delivery of this
Commitment   Letter  and  the  Loan  Documents;   provided   however  that  this
reimbursement obligation shall not exceed $10,000 in aggregate.

                               Commitment Letter
<PAGE>

The Guarantor  will also  indemnify and hold harmless  Universal and each of its
affiliates and their respective officers, directors, employees, agents, advisors
and other  representatives  (each, an "INDEMNIFIED PARTY") following the Closing
Date pursuant to the Loan  Documents  from and against (and will  reimburse each
Indemnified  Party as the same are  incurred  for) any and all claims,  damages,
losses, liabilities and expenses (including,  without limitation, the reasonable
fees,  disbursements  and other  charges of counsel)  that may be incurred by or
asserted or awarded against any Indemnified  Party, in each case, arising out of
or in  connection  with or by reason  of any  matters  contemplated  by the Loan
Documents,  except to the extent such claim,  damage, loss, liability or expense
is  found  by a court of  competent  jurisdiction  to have  resulted  from  such
Indemnified Party's gross negligence or willful misconduct.

This Commitment  Letter and the contents hereof are confidential and, except for
disclosure  hereof on a confidential  basis to your  accountants,  attorneys and
other  professional  advisors  retained  by you in  connection  with the  Credit
Support Facility or as otherwise  required by law, may not be disclosed in whole
or in part to any other  person or entity  without  our prior  written  consent;
provided,  however,  it is  understood  and agreed  that you may  disclose  this
Commitment Letter (a) in filings with the Securities and Exchange Commission and
other  applicable  regulatory  authorities  and stock  exchanges  and (b) to the
Warehouse  Facility Agent and the Warehouse  Facility Lenders (as such terms are
defined  in the  Summary of Terms) and their  accountants,  attorneys  and other
professional advisors, and ratings agencies.

This Commitment  Letter may be executed in counterparts  which,  taken together,
shall  constitute  an  original.  Delivery  of an executed  counterpart  of this
Commitment Letter by telecopier or facsimile shall be effective as delivery of a
manually executed counterpart thereof.

This Commitment  Letter shall be governed by, and construed in accordance  with,
the laws of the State of New York.

This Commitment  Letter embodies the entire  agreement and  understanding  among
Universal, you and your affiliates (including the Guarantor) with respect to the
Credit Support Facility and supercedes all prior  agreements and  understandings
relating to the specific  matters hereof.  Those matters that are not covered or
made clear herein or in the Summary of Terms are subject to mutual  agreement of
the  parties.  This  Commitment  Letter is not  assignable  by you (and the Loan
Documents  will not be  assignable by the  Guarantor)  without our prior written
consent and this  Commitment  Letter is intended to be solely for the benefit of
the parties hereto and the  Indemnified  Parties;  provided  however,  that this
Commitment  Letter may be utilized by you and the Loan Documents may be utilized
by the  Guarantor,  in each case, to provide  comfort to the Warehouse  Facility
Agent and the Warehouse Facility Lenders.

                            [SIGNATURE PAGE FOLLOWS]

                                       2
                               Commitment Letter
<PAGE>

We are pleased to have the  opportunity to work with you in connection with this
important financing.

Very truly yours,

UNIVERSAL FINANZ HOLDING AG

By:
   ---------------------------
   Name:
   Title:

Accepted and agreed to
as of October 25, 2004

MRU HOLDINGS INC.

By:
   ---------------------------
   Name:
   Title:

                                 SIGNATURE PAGE
                                Commitment Letter

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