Exhibit 10.7

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) OR ANY
STATE SECURITIES LAWS OR THE SECURITIES LAWS OF ANY JURISDICTION. THE HOLDER
HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE COMPANY
THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO
THE COMPANY, (B) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION MEETING
THE REQUIREMENTS OF RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT TO A
PERSON THAT IS NOT A U.S. PERSON WHO AGREES TO RESTRICTIONS ON RESALE THAT ARE
CONSISTENT WITH THE REQUIREMENTS OF REGULATION S UNDER THE U.S. SECURITIES ACT,
(C) FOLLOWING THE DISTRIBUTION COMPLIANCE PERIOD REQUIRED UNDER RULE 903 OF
REGULATION S UNDER THE SECURITIES ACT, IN THE UNITED STATES OR TO OR FOR THE
ACCOUNT OR BENEFIT OF A U.S. PERSON OR PERSONS IN THE UNITED STATES PURSUANT TO
AN AVAILABLE EXEMPTION UNDER THE SECURITIES ACT AND IN COMPLIANCE WITH
APPLICABLE STATE SECURITIES LAWS IN A TRANSACTION THAT IS EXEMPT FROM
REGISTRATION UNDER THE U.S. SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES
LAWS OR OTHER REGULATIONS GOVERNING THE OFFER AND SALE OF SECURITIES, OR
(D) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, AND THE HOLDER HAS, PRIOR
TO SUCH SALE, FURNISHED TO THE COMPANY AN OPINION OF COUNSEL, OF RECOGNIZED
STANDING, OR OTHER EVIDENCE OF EXEMPTION, IN EITHER CASE, REASONABLY
SATISFACTORY TO THE COMPANY. HEDGING TRANSACTIONS INVOLVING THE SECURITIES
REPRESENTED HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U. S.
SECURITIES ACT.

WARRANT

 

12-    -09-1   December     , 2009

To Purchase              Shares of Common Stock of

API Technologies Corp., a Delaware corporation (the “Company”)

1. Number of Shares; Exercise Price; Term. This certifies that for good and
valuable consideration, receipt and sufficiency of which are hereby acknowledged
                     (“Holder”) is entitled, upon the terms and subject to the
conditions hereinafter set forth, at any time after the date hereof and at or
prior to 11:59 p.m. Central Time, on June 23, 2012 (the “Expiration Time”), but
not thereafter, to acquire from the Company, in whole or in part, from time to
time, up to                      (            ) fully paid and nonassessable
shares (the “Shares”) of common stock, $0.001 par value, of the Company (“Common
Stock”), at a purchase price of $1.27 per share (the “Exercise Price”). The
right to purchase all of the Shares under the Warrant shall vest immediately
upon issuance of this Warrant. The number of Shares, type of security and
Exercise Price are subject to adjustment as provided herein, and all references
to “Common Stock” and “Exercise Price” herein shall be deemed to include any
such adjustment or series of adjustments.

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2. Exercise of Warrant. The purchase rights represented by this Warrant are
exercisable by the Holder, in whole or in part, at any time, or from time to
time, prior to the Expiration Time by the surrender of this Warrant and the
Notice of Exercise annexed hereto, all duly completed and executed on behalf of
the Holder, at the office of the Company in Toronto, Ontario, Canada (or such
other office or agency of the Company as it may designate by notice in writing
to the Holder at the address of the Holder appearing on the books of the
Company) and upon payment of the Exercise Price for the Shares thereby purchased
(by cash, certified or cashier’s check, or wire transfer payable to the
Company). Thereupon, the Holder as the holder of this Warrant, shall be entitled
to receive from the Company a stock certificate in proper form representing the
number of Shares so purchased, and a new Warrant in substantially identical form
and dated as of such exercise date for the purchase of that number of Shares
equal to the difference, if any, between the number of Shares subject hereto and
the number of Shares as to which this Warrant is so exercised.

3. Issuance of Shares. Certificates for Shares purchased hereunder shall be
delivered to the Holder within a reasonable time after the date on which this
Warrant shall have been exercised in accordance with the terms hereof. All
Shares that may be issued upon the exercise of this Warrant shall, upon such
exercise, be duly and validly authorized and issued, fully paid and
nonassessable and free from all taxes, liens and charges in respect of the
issuance thereof (other than liens or charges created by or imposed upon the
Holder as the holder of the Warrant or taxes in respect of any transfer
occurring contemporaneously or otherwise specified herein). The Company agrees
that the Shares so issued shall be and shall for all purposes be deemed to have
been issued to the Holder as the record owner of such Shares as of the close of
business on the date on which this Warrant shall have been exercised in
accordance with the terms hereof. The Company will at all times reserve and keep
available, solely for issuance, sale and delivery upon the exercise of this
Warrant, such number of Shares, equal to the number of such Shares purchasable
upon the exercise of this Warrant.

4. No Fractional Shares or Scrip. No fractional Shares or scrip representing
fractional Shares shall be issued upon the exercise of this Warrant. In lieu of
any fractional Warrant Share to which the Holder as the holder would otherwise
be entitled, the Holder shall be entitled, at its option, to receive either
(i) a cash payment equal to the excess of fair market value for such fractional
Warrant Share above the Exercise Price for such fractional share (as determined
in good faith by the Company) or (ii) a whole Share if the Holder tenders the
Exercise Price for one whole share.

5. No Rights as Shareholders. This Warrant does not entitle the Holder as a
holder hereof to any voting rights or other rights as a shareholder of the
Company prior to the exercise hereof.

6. Exchange and Registry of Warrant. This Warrant is exchangeable, upon the
surrender hereof by Holder as the registered holder at the above-mentioned
office or agency of the Company, for a new Warrant of substantially identical
form and dated as of such exchange. The Company shall maintain at the
above-mentioned office or agency a registry showing the name and address of
Holder as the registered Holder of this Warrant. This Warrant may be surrendered
for exchange or exercise, in accordance with its terms, at the office of the
Company, and the Company shall be entitled to rely in all respects, prior to
written notice to the contrary, upon such registry.

 

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7. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in the case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of this Warrant, if mutilated, the Company will
make and deliver a new Warrant of like tenor and dated as of such cancellation
and reissuance, in lieu of this Warrant.

8. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein
shall be a Saturday or a Sunday or shall be a legal holiday, then such action
may be taken or such right may be exercised on the next succeeding day that is
not a Saturday or a Sunday or a legal holiday.

9. Adjustments of Rights. The purchase price per Share and/or the number of
Shares purchasable hereunder are subject to adjustment from time to time as
follows:

(a) Merger or Consolidation. If at any time there shall be a merger or a
consolidation of the Company with or into another corporation when the Company
is not the surviving corporation, then, as part of such merger or consolidation,
lawful provision shall be made so that the Holder as the holder of this Warrant
shall thereafter be entitled to receive upon exercise of this Warrant, during
the period specified herein and upon payment of the aggregate Exercise Price
then in effect, the number of shares of stock or other securities or property
(including cash) of the successor corporation resulting from such merger or
consolidation, to which the Holder as the holder of the stock deliverable upon
exercise of this Warrant would have been entitled in such merger or
consolidation if this Warrant had been exercised immediately before such merger
or consolidation. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Warrant with respect to the rights and
interests of the Holder as the holder of this Warrant after the merger or
consolidation. This provision shall apply to successive mergers or
consolidations.

(b) Reclassification, Recapitalization, etc. If the Company at any time shall,
by subdivision, combination or reclassification of securities, recapitalization,
automatic conversion, or other similar event affecting the number or character
of outstanding shares of Common Stock, or otherwise, change any of the
securities as to which purchase rights under this Warrant exist into the same or
a different number of securities of any other class or classes, this Warrant
shall thereafter represent the right to acquire such number and kind of
securities as would have been issuable as the result of such change with respect
to the securities that were subject to the purchase rights under this Warrant
immediately prior to such subdivision, combination, reclassification or other
change.

(c) Split, Subdivision or Combination of Shares. If the Company at any time
while this Warrant remains outstanding and unexpired shall split, subdivide or
combine the securities as to which purchase rights under this Warrant exist, the
Exercise Price shall be proportionately decreased in the case of a split or
subdivision or proportionately increased in the case of a combination.

 

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(d) Common Stock Dividends. If the Company at any time while this Warrant is
outstanding and unexpired shall pay a dividend with respect to Common Stock
payable in shares of Common Stock, or make any other distribution with respect
to Common Stock payable in shares of Common Stock, then the Exercise Price shall
be adjusted, from and after the date of determination of the shareholders
entitled to receive such dividend or distribution, to that price determined by
multiplying the Exercise Price in effect immediately prior to such date of
determination by a fraction (i) the numerator of which shall be the total number
of shares of Common Stock outstanding immediately prior to such dividend or
distribution, and (ii) the denominator of which shall be the total number of
shares of Common Stock outstanding immediately after such dividend or
distribution.

10. Adjustment of Number of Shares. Upon each adjustment in the Exercise Price
pursuant to Section 9 hereof, the number of Shares purchasable hereunder shall
be adjusted, to the nearest whole Share, to the product obtained by multiplying
the number of Shares purchasable immediately prior to such adjustment by a
fraction (i) the numerator of which shall be the Exercise Price immediately
prior to such adjustment, and (ii) the denominator of which shall be the
Exercise Price immediately after such adjustment.

11. Notice of Adjustments; Notices. Whenever the Exercise Price or number or
type of securities issuable hereunder shall be adjusted pursuant to Sections 9
or 10 hereof, the Company shall issue and provide to the Holder as the holder of
this Warrant, within ten (10) days after the event requiring the adjustment, a
certificate signed by an officer of the Company setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated and the Exercise Price and number
of Shares purchasable hereunder after giving effect to such adjustment.

12. Governing Law. This Warrant shall be binding upon any successors or assigns
of the Company. This Warrant shall constitute a contract under the laws of
Delaware and for all purposes shall be construed in accordance with and governed
by the laws of said state, without giving effect to the conflict of laws
principles.

13. Amendments. This Warrant may be amended and the observance of any term of
this Warrant may be waived only with the written consent of the Company and the
Holder as the holder hereof.

14. Representations and Warranties of the Holder. In connection with the
issuance of this Warrant, the Holder makes the following representations and
warranties to the Company. The Holder understands that (a) the Company will rely
on the representations and warranties set forth below for purposes of
determining that the issuance of the Warrants is exempt from registration under
the Securities Act and (b) neither the Warrant nor the shares of common stock
(the “Shares”) of the Company into which the Warrant is convertible will be
registered under the Securities Act of 1933 (the “Securities Act”) in reliance
upon an exemption from registration thereunder, which in the case of the Holder,
is Regulation S under the Securities Act.

 

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The Holder makes the following representations and warranties to the Company:

(a) the Holder is not a U.S. Person as defined in Rule 902 of Regulation S under
the Securities Act and was not formed for the purpose of investing in securities
not registered under the Securities Act of 1933 (the “Securities Act”);

(b) the Holder is not acquiring the Warrants or the shares of common stock (the
“Shares”) of the Company into which the Warrant is convertible for the account
or benefit of a U.S. Person;

(c) the offer to issue the Warrant by the Company was made to the Holder outside
of the United States;

(d) the Holder understands that the offer and issuance of the Warrant to the
Holder is being made in reliance upon the exemption from the registration
requirements of the United States federal securities laws set forth in
Regulation S under the Securities Act;

(e) the activities of the Holder are not part of a scheme to avoid the
registration requirements of the United States federal or state securities laws;

(f) all subsequent offers and sales of the Warrants and Shares shall be made in
compliance with the resale provisions of Regulation S under the Securities Act,
pursuant to Rule 144 promulgated thereunder, pursuant to another applicable
exemption from registration under the Securities Act, or pursuant to an
effective registration statement (however, no registration rights are granted
hereby); and in each case, in accordance with any applicable state securities
laws. In any case, neither the Warrant nor the Shares will be resold or
transferred to a U.S. person(s) or for the account or benefit of a U.S. person
or within the United States until the end of the six month period distribution
compliance commencing on the date of this Warrant, and thereafter cannot be sold
to a U.S. person, for the account or benefit of a U.S. person or within the
United States, unless the Warrant or Shares, as applicable, are registered under
the Securities Act or are exempt from the registration requirements of the
Securities Act;

(g) the Holder understands that for subsequent disposition or transfers the
Company will require that the Holder obtain and give to the Company an opinion
of counsel satisfactory to the Company, that any intended disposition or
transfer of the Warrant or Shares will not violate the Securities Act, or any
applicable state securities law or the rules and regulations of the Securities
and Exchange Commission or of any state securities commission promulgated under
such statutes;

(h) the Holder understands that the Company will refuse to register any transfer
or disposition of the Warrant or Shares not made in accordance with the
provisions of Regulation S, pursuant to Rule 144 promulgated thereunder or
otherwise pursuant to an applicable exemption from registration under the
Securities Act, or pursuant to an effective registration statement, and in each
case, in accordance with any applicable state securities laws;

(i) the Holder understands that hedging transactions involving the Warrant or
Shares may not be conducted except in compliance with the Securities Act, which
means that no hedging transaction involving the Warrant or Shares may be
conducted before the end of the six month distribution compliance period;

 

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(j) the Holder understands that the Company is relying upon the truth and
accuracy of the representations, warranties, agreement and understandings of the
Holder set forth herein in order to determine the applicability of such
exemption and the suitability of the Holder to acquire the Warrant.

15. Notice. All notices hereunder shall be in writing and shall be effective
(a) on the day on which delivered if delivered personally or transmitted by
telecopier with evidence of receipt, (b) one business day after the date on
which the same is delivered to a nationally recognized overnight courier service
with evidence of receipt, or (c) five business days after the date on which the
same is deposited, postage prepaid, in the United States mail or Canadian mail,
sent by certified or registered mail, return receipt requested, and addressed to
the party to be notified at the address indicated below for the Company, or at
the address for the Holder set forth in the registry maintained by the Company
pursuant to Section 6, or at such other address and/or telecopy and/or to the
attention of such other person as the Company or the Holder may designate by
ten-day advance written notice. Any notice to the Company shall include a copy
sent in the same manner as notices sent hereunder to Leslie J. Weiss, Barnes &
Thornburg, One North Wacker Drive, Suite 4400, Chicago, IL 60606-2833.

16. Transfer. This Warrant may be transferred in whole or in part provided that
the issuance of the Warrant or the Shares to the transferee and the sale of the
Warrant or the Shares by the transferee is in compliance with Regulation S and
Rule 144 promulgated under the Securities Act and does not otherwise violate
Section 5 of the Securities Act or the registration requirements of any state
securities laws and the Company has received an opinion of counsel from the
Holder to that effect.

17. Entire Agreement. This Warrant and the form attached hereto contain the
entire agreement between the parties with respect to the subject matter hereof
and supersede all prior and contemporaneous arrangements or undertakings with
respect thereto.

[signature page to follow]

 

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IN WITNESS WHEREOF, API Technologies Corp. has caused this Warrant to be
executed by its duly authorized officer.

Dated: December     , 2009

 

API Technologies Corp.

a Delaware corporation

By:  

 

Its:  

 

HOLDER

 

 

 

 

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