EXHIBIT 4.102
API ELECTRONICS GROUP INC.
SUBSCRIPTION AGREEMENT
June 14, 2002
API ELECTRONICS GROUP INC.
SUBSCRIPTION AGREEMENT
DATED the 14th day of June, 2002.
TO: API ELECTRONICS GROUP INC. (the "Corporation")
RE: Subscription for and Purchase of Units of the Corporation
References below to "this agreement" or "this subscription agreement"
are to be read as references to the agreement resulting from the Corporation's
acceptance of your offer. All dollar amounts referred to herein are in United
States dollars.
The Purchased Securities (as hereinafter defined) may be subject to
statutory hold periods during which they may not be resold, as well as certain
other statutory restrictions on resale. Subscribers are advised to consult their
own legal advisers in connection with any applicable resale restrictions.
1. DEFINITIONS
In this subscription agreement:
(a) "Closing" has the meaning ascribed in Section 6 of this
subscription agreement;
(b) "Closing Date" means June *, 2002, or such earlier or later date
as the Corporation and Subscriber shall mutually agree;
(c) "Closing Time" means 2:00 p.m. on the Closing Date, or such
earlier or later time as the Corporation and Subscriber shall
mutually agree;
(d) "Common Shares" means common shares in the capital stock of the
Corporation;
(e) "Corporation" means API Electronics Group Inc.;
(f) "Purchased Securities" means the Common Shares and Warrants
comprising the Purchased Units and the Common Shares issuable upon
the exercise of such Warrants;
(g) "Purchased Units" means 300,000 Units in the capital stock of the
Corporation;
(h) "Subscriber" means Syrah Invest Corp.;
(i) "Subscription Price" means US$2.35 per Unit;
(j) "Total Subscription Price" means US$705,000.00 (300,000 Units x
US$2.35 per Unit);
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(k) "Unit" means one (1) Common Share issued for US$2.35 and one (1)
Warrant; and
(l) "Warrant" means a purchase warrant granting the right to purchase
one Common Share at a purchase price of US$3.00 per Common Share
exercisable for a period of two (2) years after Closing, all as
more particularly set out in and in substantially the form
attached hereto as Exhibit "B".
2. PURCHASE OF UNITS
The undersigned (the "Subscriber") hereby irrevocably subscribes for
and agrees to purchase from the Corporation, subject to the terms and conditions
set forth herein, the Purchased Units in consideration of payment of the Total
Subscription Price.
3. ACKNOWLEDGEMENTS OF THE SUBSCRIBER
Subscriber acknowledges and agrees that:
(a) It has not received an offering memorandum or similar document and
that its decision to enter into this subscription agreement and to
purchase the Purchased Units has not been made upon any verbal or
written representation as to fact or otherwise made by the
Corporation or any other person associated therewith and that its
decision is based entirely upon publicly available information
concerning the Corporation and the representations of the
Corporation contained herein, including the documents delivered in
connection herewith.
(b) The distribution of the Purchased Units is being made on a private
placement basis and has not been qualified pursuant to the
securities laws of any province or territory of Canada, and any
transaction involving the Purchased Units in any province or
territory of Canada may constitute a violation of applicable
Canadian provincial securities legislation unless carried out
pursuant to an applicable exemption therefrom.
(c) It has been independently advised or is otherwise aware that any
resale of the Purchased Securities is subject to certain resale
restrictions provided for in certain securities legislation of the
provinces and territories of Canada. The Purchased Securities are
subject to statutory "hold periods" during which they may not be
resold, except pursuant to a further statutory exemption from the
applicable prospectus and distribution requirements under
securities legislation, or unless an appropriate discretionary
order is obtained pursuant to applicable security laws. It has
been advised and afforded the full opportunity to consult with its
own legal and other professional advisors in connection with any
applicable re-sale restrictions.
(d) It has been independently advised that the Purchased Units are
being offered for sale only on a "private placement" basis and
that the sale and delivery of the Purchased Securities underlying
the Purchased Units to the Subscriber is conditional upon such
sale being exempt from the requirement to file a prospectus under
any applicable law governing the sale of such securities or upon
the
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issuance of such orders, consents or approvals as may be required
to permit such sale without the requirement of filing a
prospectus.
(e) It has further been independently advised as to applicable resale
restrictions in the jurisdiction in which it resides, confirms
that no representation has been made to it by or on behalf of the
Corporation with respect thereto, acknowledges that it is aware of
the characteristics of the Purchased Securities underlying the
Purchased Units, the risks relating to an investment therein and
of the fact that it may not be able to resell the Purchased
Securities underlying the Purchased Units except in accordance
with exemptions under applicable securities legislation and
regulatory policy.
(f) The Subscriber acknowledges that the Purchased Units are subject
to the terms, conditions and provisions of this subscription
agreement.
(g) A prospectus will not be filed by the Corporation to qualify the
Purchased Securities or any of them.
(h) The Purchased Securities shall be subject to a forty-one (41) day
hold period in the U.S., pursuant to "Category 2" of Regulation S
under the U.S. Securities Act of 1933, as amended, which period
shall commence from the date of issuance, and the certificates
representing the same shall be engrossed with the following
legend, which shall be the only legend engrossed on such
certificates relating to resale in the U.S.:
"The securities represented by this certificate may not be sold,
transferred, hypothecated or otherwise traded until July *, 2002,
pursuant to "Category 2" of Regulation S under the U.S. Securities
Act of 1933, as amended."
4. CLOSING
Delivery and payment for the Purchased Units (the "Closing") will be
completed at the offices of the Corporation's legal counsel, Messrs. WeirFoulds
LLP, The Exchange Tower, Suite 1600, 000 Xxxx Xxxxxx Xxxx, Xxxxxxx, Xxxxxxx X0X
0X0 at the Closing Time on the Closing Date.
The Subscriber acknowledges that certificates representing the
Purchased Securities comprising the Purchased Units will be available for
delivery as soon as practicable after the Closing Date.
5. PAYMENT
Payment for the Purchased Units shall be made at the Closing Time on
the Closing Date and shall be made in United States currency by certified cheque
or bank draft drawn on a US bank and payable to the Corporation's solicitors,
WeirFoulds LLP, in Trust or by direct wire into the trust account maintained by
WeirFoulds LLP.
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6. DELIVERY AND PAYMENT
The parties agree that the following shall be delivered to WeirFoulds
LLP at 000 Xxxx Xxxxxx Xxxx, Xxxxx 0000, The Exchange Tower, Toronto, Ontario,
M5X 1J5, Attention: Xxxxx X. Xxxx, not later than 12:00 noon (Toronto time) on
the Closing Date or such other time, date and/or place as the Corporation may
advise:
(a) a completed and duly signed copy of this subscription agreement,
including, as to the Subscriber only, Exhibit "A" attached hereto
(being a direction with respect to registration and delivery
instructions);
(b) as to the Corporation only, the Purchased Units;
(c) as to the Corporation only, completed and duly signed instruction
to transfer agent in the form of Exhibit "C" attached hereto; and
(d) as to the Subscriber only, a certified cheque or bank draft made
payable to WeirFoulds LLP, In Trust, in same day freely
transferable US funds at par in Toronto, or wired directly into
the trust account maintained by WeirFoulds LLP, representing
payment of the Total Subscription Price for the Purchased Units,
net of any other amounts to be paid otherwise upon written
instructions from the Corporation.
7. CONDITIONS OF CLOSING
The Subscriber acknowledges and agrees that as the sale of the
Purchased Units will not be qualified by a prospectus, such sale is subject to
the condition that the Subscriber execute and return to the Corporation all
relevant documentation required by applicable securities legislation,
regulations and policies. Accordingly, the Subscriber agrees to:
(a) provide the Corporation with such information and documents,
including certificates, statutory declarations and undertakings,
as the Corporation may reasonably require from time to time to
comply with any filing or other requirements under applicable
provincial securities legislation and policies; and
(b) comply with the provisions of any applicable securities
legislation and policies with respect thereto concerning any
resale of the Purchased Securities.
8. PROSPECTUS EXEMPTIONS
The Subscriber acknowledges and agrees that the sale and delivery of
the Purchased Securities comprising the Purchased Units to the Subscriber are
conditional upon such sale being exempt from the requirements as to the filing
of a prospectus and as to the delivery of an offering memorandum as defined in
the applicable securities legislation or upon the issuance of such rulings,
orders, consents or approvals as may be required to permit such sale without the
requirement of filing a prospectus or delivering an offering memorandum.
In this regard, the Subscriber acknowledges and agrees that: (a) it was
not provided with, has not requested, and does not need to receive, a prospectus
or an offering memorandum as defined in the applicable securities legislation or
similar document; (b) its decision to execute
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this subscription agreement and to purchase the Purchased Units has not been
based upon any verbal or written representations as to fact or otherwise made by
or on behalf of the Corporation and that, other than the representations of the
Corporation contained herein, including the documents delivered in connection
herewith, its decision is based entirely upon publicly available information
concerning the Corporation; (c) the sale of the Purchased Units was not
accompanied by any advertisement in printed media of general and regular paid
circulation, radio or television; (d) it has been advised and has been afforded
full opportunity to consult its own legal and other professional advisors with
respect to all applicable resale restrictions relating to the Purchased
Securities and it is solely responsible (and the Corporation is not in any way
responsible) for compliance with any and all applicable resale restrictions.
9. Representations, Warranties and Covenants of the Subscriber
The Subscriber hereby represents and warrants to and covenants with the
Corporation, acknowledging that the Corporation is relying upon such
representations, warranties and covenants in making its decision to enter into
this subscription agreement that:
(a) if the Subscriber sells the Purchased Securities, it will comply
with the securities legislation of the jurisdiction in which said
Subscriber resides;
(b) the purchase of the Purchased Units by the Subscriber does not
contravene any of the applicable securities legislation in the
jurisdiction in which it is resident and does not trigger (i) any
obligation to prepare and file a prospectus or similar document,
or any other report with respect to such purchase, and (ii) any
registration or other obligation on the part of the Corporation;
(c) the Subscriber is incorporated under the laws of, and is resident
in, the British Virgin Islands (and, without limiting the
generality of the foregoing, is not a "U.S. Person" (as defined in
Rule 902(o) of Regulation S ("Regulation S") promulgated by the
United States Securities and Exchange Commission and meaning,
generally, any natural person resident in the British Virgin
Islands, any corporation or partnership incorporated or organized
under the laws of the British Virgin Islands, or any estate or
trust of which any executor, administrator or trustee is a U.S.
Person), and the Subscriber is not purchasing the Purchased Units
for the account or benefit of any U.S. Person or for offering,
resale or delivery for the account or benefit of any U.S. Person
or for the account of any person in any jurisdiction other than
the jurisdiction set out in the name and address of the Subscriber
below and the Subscriber does not have any agreement or
understanding (either written or oral) with any U.S. Person or a
person in British Virgin Islands respecting:
(i) the transfer or assignment of any rights or interest in any
of the Purchased Securities underlying the Purchased Units;
or
(ii) the division of profits, losses, fees, commissions, or any
financial stake in connection with this subscription;
(d) no offer of Purchased Units was made to the Subscriber in the
"United States" (as defined in Regulation S under the U.S.
Securities Act) and the Subscriber did not execute this
subscription agreement in the United States;
(e) the activities of the Subscriber contemplated hereunder are not a
scheme to avoid the registration requirements of the U.S.
Securities Act;
(f) the Subscriber has no intention to distribute, and shall not
transfer, either directly or indirectly, until after 41 days from
the Closing Date, any of the Purchased Securities to any person
within the United States or to "U.S. Persons" (as defined in
Regulation S under the U.S. Securities Act);
(g) the Subscriber is at arm's length to and is not an "insider" (as
such term is defined by the Securities Act (Ontario)) of the
Corporation;
(h) the Subscriber is duly incorporated, organized and validly
subsisting under the laws of the jurisdiction of its
incorporation;
(i) this agreement has been duly authorized, executed and delivered
by, and constitutes a legal, valid, binding and enforceable
obligation of, the Subscriber or the beneficial subscriber for
whom the Subscriber is purchasing;
(j) the Subscriber is capable of assessing the proposed investment
contemplated herein as a result of the Subscriber's experience and
financial and business acumen or as a result of advice received
from a registered person other than the Corporation or any
affiliates thereof, and is capable of evaluating the merits and
risks of its investment herein and is able to bear the economic
risk of loss of its entire investment; and
(k) the entering into of this Agreement and the completion of the
transaction contemplated hereby will not result in the violation
of any of the terms and provisions of any law applicable to, or
the constating documents of the Subscriber or of any agreement,
written or oral, to which the Subscriber is a party or by which
the Subscriber is bound.
10. REPRESENTATIONS AND WARRANTIES AND COVENANTS OF THE CORPORATION
The Corporation represents and warrants to and covenants with the
Subscriber, acknowledging that the Subscriber is relying upon such
representations, warranties and covenants in making its decision to enter into
this subscription agreement, as follows:
(a) it is a company duly amalgamated and organized under the laws of
the Province of Ontario and is presently in good standing
thereunder;
(b) the Corporation has full power and authority to enter into this
subscription agreement and to perform the same and do all other
acts which may be necessary to consummate the transaction
contemplated hereby;
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(c) the Common Shares to be issued to the Subscriber hereunder on the
Closing Date and upon exercise of the Warrants comprising the
Purchased Units shall be at the time of issuance by the
Corporation validly issued and outstanding as fully paid and
non-assessable Common Shares;
(d) this agreement has been duly executed and delivered by the
Corporation and is a valid agreement enforceable in accordance
with its terms;
(e) the Corporation is a reporting issuer in good standing under the
securities laws of the Province of Ontario and its Common Shares
are listed on the OTC Bulletin Board;
(f) the entering into of this agreement and the completion of the
transaction contemplated hereby will not result in the violation
of any of the terms and provisions of any law applicable to, or
the constating documents of the Corporation or of any agreement,
written or oral, to which the Corporation is a party or by which
the Corporation is bound
(g) the Corporation has publicly disclosed all material changes in its
affairs and since its last public announcement, there has not been
a material adverse change in the affairs or business of the
Corporation;
(h) the activities of the Corporation contemplated hereunder are not a
scheme to avoid the registration requirements of the U.S.
Securities Act;
(i) the Corporation will use its best efforts to cause its Common
Shares to continue to be registered under Section 12(b) or (g) of
the U.S. Securities Exchange Act of 1934, as amended (the
"Exchange Act"), will use its best efforts to comply in all
respects with its reporting and filing obligations under the
Exchange Act, and will not take any action or file any document
(whether or not permitted by the Exchange Act or the rules
thereunder) to terminate or suspend such registration or to
terminate or suspend its reporting and filing obligations under
the Exchange Act until 270 calendar days after the Closing;
(j) the Corporation hereby agrees to use its best efforts to either
maintain the listing of the Common Shares on the OTC Bulletin
Board or complete application and listing on another U.S. market
or exchange until 270 days after the Closing. The Corporation
further agrees, if the Corporation applies to have the Common
shares traded on any other U.S. market, it will include in such
application the Purchased Securities, if possible to do so, as
promptly as possible;
(k) at the Closing, the Corporation shall deliver a completed and duly
signed instruction to transfer agent in the form of Exhibit "C"
attached hereto. Such instructions shall be irrevocable by the
Corporation from and after the date hereof or from and after the
issuance thereof to any such substitute or replacement transfer
agent, as the case may be; and
(l) in the event that, at any time beginning 41 days after the Closing
Date, upon the request of the Subscriber, the Corporation's
transfer agent fails to remove all legends from the Purchased
Securities restricting the resale of the Purchased
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Securities in the U.S., in addition to all other remedies
available to the Subscriber, provided the Subscriber gives the
Corporation written notice of such failure and it has not been
rectified within five (5) business days thereafter, the
Corporation shall pay to the Subscriber, as liquidated damages
and not as a penalty, on the last day of each month, an amount
(or pro-rata portion thereof) equal to 2% of the aggregate
Subscription Price of the Purchased Securities then held by the
Subscriber.
11. RESALE RESTRICTIONS AND COMPLIANCE WITH SECURITIES LEGISLATION
The Subscriber acknowledges that the Purchased Securities of the
Corporation are being issued pursuant to prospectus and registration exemptions
and, accordingly, are subject to certain resale restrictions as provided in such
securities legislation; provided, however, there shall be no restriction on
resale in the U.S. by the Subscriber beginning 41 days after the Closing Date.
The Corporation and Subscriber each agree to make such filings and to do all
such things necessary to comply with any applicable requirements in relation to
the issuance of Purchased Securities of the Corporation hereunder.
12. COSTS
The parties acknowledge and agree that each party shall pay its own
costs and expenses (including any fees and disbursements of professionals or any
special counsel retained by such party) relating to the purchase of the
Purchased Units.
13. FURTHER ASSURANCES
The parties hereto covenant and agree to execute and deliver such
further agreements, documents and writings and provide such further assurances
as may be required by the parties to give effect to this agreement and, in
particular, to do all acts and things to execute and deliver all documents,
agreements and writings and provide such assurances, undertakings, information
and investment letters, as may be required from time to time by all regulatory
or governmental bodies or stock exchanges having jurisdiction over the
Corporation's affairs.
14. PUBLIC DISCLOSURES
The Corporation will not issue any public announcement, press release or
public document or otherwise concerning the Subscriber and its purchase of the
Purchased Units hereunder without having provided Subscriber with a copy of such
disclosure before release, and incorporating all reasonable comments of
Subscriber into such disclosure, subject to the Corporation taking all necessary
steps which in the opinion of its counsel are necessary to fulfill the
Corporation's obligations to issue timely and complete disclosure of all
material changes in its affairs.
15. NOTICES
Any notice to be given by either party to the other will be deemed to be
given when in writing and delivered by hand or communicated by telecopier on any
business day to the address for notice of the intended recipient. The address
for notice of each of the parties will, until changed, be as set forth in this
subscription agreement. A party may give notice to the other
party of a change of its address for notice to some other address and will so
change its address for notice whenever the existing address for notice ceased to
be adequate for delivery by hand or communication by telecopier.
16. REFERENCES
In this agreement a reference to:
(a) a statute or code includes every regulation made thereunder from
time to time, all amendments to the statute, code or to any such
regulation in force from time to time, and any statute, code or
regulation which supplements or supersedes such statute, code or
any such regulation; and
(b) any entity includes any entity that is a successor or permitted
assignee to such entity.
17. NUMBER AND GENDER
Wherever the singular and the neuter are used throughout this subscription
agreement, the same shall be construed as meaning the plural or the feminine or
masculine or a body corporate where the context or the parties so require.
18. GOVERNING LAW
This subscription agreement is governed by the laws of the Province of
Ontario and the federal laws of Canada applicable therein. The Subscriber, in
its personal or corporate capacity and, if applicable, on behalf of each
beneficial subscriber for whom it is acting, irrevocably attorns to the
jurisdiction of the courts of the Province of Ontario.
19. ASSIGNMENT
The obligations under this agreement are not transferable or assignable
by the parties hereto. The benefits under this agreement are transferable and
assignable by the parties hereto, subject to applicable law and the prior
written consent of the other parties.
20. ENTIRE AGREEMENT
This Agreement contains the entire agreement of the parties hereto
relating to the subject matter hereof and there are no representations,
covenants or other agreements relating to the subject matter hereof except as
stated or referred to herein.
21. FACSIMILE DELIVERIES
The parties shall be entitled to rely on delivery of a facsimile
transmission of an executed copy of this agreement, including the completed
Schedules hereto, and such facsimile copies shall be legally effective to create
a valid and binding agreement between the Subscriber and the Corporation in
accordance with the terms hereof. This agreement may be executed in multiple
counterparts, each of which may be executed by less than all of the parties and
shall be deemed
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to be an original instrument which shall be enforceable against the parties
actually executing such counterparts and all of which together shall constitute
one and the same instrument.
22. SUCCESSORS AND ASSIGNS
Except as otherwise expressly provided herein, this Agreement shall
enure to the benefit of and shall be binding upon each of the parties hereto and
their respective successors and permitted assigns, if any, and the heirs,
executors, administrators and permitted assigns of natural persons who are or
become a party hereto.
23. SURVIVAL
This subscription agreement, including, without limitation, the
representations, warranties and covenants contained herein, shall survive and
continue in full force and effect and be binding upon the parties
notwithstanding the completion of the purchase of the Purchased Units and any
subsequent disposition by the Subscriber of the Purchased Securities.
24. AMENDMENTS
The provisions of this Agreement may be amended in writing upon the
written consent of each of the parties hereto.
25. LANGUAGE
The parties hereto confirm their express wish that this agreement and
all documents, agreements and notices directly or indirectly relating thereto be
drawn up in the English language.
Les parties confirment leur volonte expresse que la presente convention
ainsi que tous les documents, contrats et avis s'y rattachant directement ou
indirectement soient rediges en anglais.
26. TIME OF THE ESSENCE
Time shall be of the essence in this agreement and each and every part
hereof.
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NUMBER OF UNITS TO BE PURCHASED
AT US$2.35 EACH: 300,000
TOTAL SUBSCRIPTION PRICE: $705,000
_____________________________________ SYRAH INVEST CORP.
Social Insurance Number or (Name of Subscriber - please type
Corporation Tax Account Number or print)
(as appropriate) /s/
---------------------------------------
(Signature and, if applicable,
Office of Subscriber)
ADDRESS OF SUBSCRIBER:
Pasea Estate
Road Town
Tortola, British Virgin Islands
TELEPHONE AND FACSIMILE
NUMBER OF SUBSCRIBER:
011 423 236 0909
------------------
(Telephone Number of Subscriber)
(Fax) 000 000 000 0000
----------------------
(Facsimile Number of Subscriber)
A C C E P T A N C E
The above-mentioned subscription agreement is hereby accepted and agreed
to by the Corporation.
DATED at Xxxxxxx, Xxxxxxx, the _________ day of June, 2002.
API ELECTRONICS GROUP INC.
Per: /s/
--------------------------------
Name:
Title:
EXHIBIT "A"
API ELECTRONICS GROUP INC.
Subscription Agreement
--------------------------------------------------------------------------------
API ELECTRONICS GROUP INC.
Dear Sirs:
Re: API Electronics Group Inc. -
Private Placement of Units of the Corporation comprised of one (1)
Common Share and one (1) Warrant
1. Delivery - Please deliver the Common Share and Warrant certificates
to:
PASEA ESTATE
ROAD TOWN
TORTOLA, BRITISH VIRGIN ISLANDS
2. Registration - Registration of the single certificate which is to be
delivered at closing should be made out as follows:
--------------------------------------------------------------------
(Name)
--------------------------------------------------------------------
(Address)
011 423 236 0909 000 000000 0000
(Telephone Number) (Facsimile Number)
DATED the ___ day of June, 2002.
SYRAH INVEST CORP.
----------------------------------------
(Name of Subscriber)
Per: /s/
---------------------------------
(signature)
---------------------------------
(office or position of person
signing, if applicable)
EXHIBIT "B"
NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
OR ANY OTHER APPLICABLE STATE SECURITIES LAWS IN RELIANCE UPON AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT PURSUANT TO REGULATION S AND
SUCH OTHER SECURITIES LAWS. NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON
EXERCISE HEREOF MAY BE SOLD, PLEDGED, TRANSFERRED, ENCUMBERED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR IN A TRANSACTION WHICH IS EXEMPT FROM REGISTRATION UNDER THE
PROVISIONS OF THE SECURITIES ACT AND ANY APPLICABLE STATE LAWS INCLUDING
REGULATION S.
STOCK PURCHASE WARRANT
To Purchase 300,000 Shares of Common Stock of
API ELECTRONICS GROUP INC.
THIS CERTIFIES that, for value received, Syrah Invest Corp. (the
"Holder"), is entitled, upon the terms and subject to the limitations on
exercise and the conditions hereinafter set forth, at any time on or after June
*, 2002 (the "Initial Exercise Date") and on or prior to the close of business
on the final calendar day of the 24th month after the Initial Exercise Date (the
"Termination Date") but not thereafter, to subscribe for and purchase from API
Electronics Group Inc., a corporation incorporated under the laws of Ontario,
Canada (the "Company"), up to 300,000 common shares (the "Warrant Shares"), no
par value per share, of the Company (the "Common Stock"). The purchase price of
one share of Common Stock (the "Exercise Price") under this Warrant shall be
US$3.00. The Exercise Price and the number of Warrant Shares for which the
Warrant is exercisable shall be subject to adjustment as provided herein.
Capitalized terms used and not otherwise defined herein shall have the meanings
set forth in that certain Subscription Agreement (the "Purchase Agreement"),
dated June *, 2002, between the Company and the Holder.
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1. Title to Warrant. Prior to the Termination Date and subject to
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company by the
Holder in person or by duly authorized attorney, upon surrender of this Warrant
together with the Assignment Form annexed hereto properly endorsed.
2. Authorization of Shares. The Company covenants that all Warrant Shares
which may be issued upon the exercise of the purchase rights represented by this
Warrant will, upon exercise of the purchase rights represented by this Warrant,
be duly authorized, validly issued, fully paid and nonassessable and free from
all taxes, liens and charges in respect of the issue thereof (other than taxes
in respect of any transfer occurring contemporaneously with such issue).
3. Exercise of Warrant.
(a) Except as provided in Section 4 herein, exercise of the purchase
rights represented by this Warrant may be made at any time or times on or after
the Initial Exercise Date and on or before the Termination Date by the surrender
of this Warrant and the Notice of Exercise Form annexed hereto duly executed, at
the office of the Company (or such other office or agency of the Company as it
may designate by notice in writing to the registered Holder at the address of
such Holder appearing on the books of the Company) and upon payment of the
Exercise Price of the shares thereby purchased by wire transfer or cashier's
check drawn on a United States bank, the Holder shall be entitled to receive a
certificate for the number of Warrant Shares so purchased. Certificates for
shares purchased hereunder shall be delivered to the Holder within three (3)
Trading Days after the date on which this Warrant shall have been exercised as
aforesaid. This Warrant shall be deemed to have been exercised and such
certificate or certificates shall be deemed to have been issued, and Holder or
any other person so designated to be named therein shall be deemed to have
become a holder of record of such shares for all purposes, as of the date the
Warrant has been exercised by payment to the Company of the Exercise Price and
all taxes required to be paid by the Holder, if any, pursuant to Section 5 prior
to the issuance of such shares, have been paid.
(b) If this Warrant shall have been exercised in part, the Company
shall, at the time of delivery of the certificate or certificates representing
Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder
to purchase the unpurchased Warrant Shares called for by this Warrant, which new
Warrant shall in all other respects be identical with this Warrant.
(c) Notwithstanding anything herein to the contrary, in no event
shall the Holder be permitted to exercise this Warrant for Warrant Shares to the
extent that (i) the number of shares of Common Stock owned by such Holder (other
than Warrant Shares issuable upon exercise of this Warrant) plus (ii) the number
of Warrant Shares issuable upon exercise of this Warrant, would be equal to or
exceed 4.999% of the number of shares of Common Stock then issued and
outstanding, including shares issuable upon exercise of this Warrant held by
such Holder after application of this Section 3(c). As used herein, beneficial
ownership shall be determined in accordance with Section 13(d) of the Exchange
Act. To the extent that the limitation contained in this Section 3(c) applies,
the determination of whether this Warrant is exercisable (in relation to other
securities owned by the Holder) and of which a portion of this Warrant is
exercisable shall be in the sole discretion of such Holder, and the submission
of a Notice of Exercise shall be deemed to be such Holder's determination of
whether this Warrant is exercisable (in relation to
3
other securities owned by such Holder) and of which portion of this Warrant is
exercisable, in each case subject to such aggregate percentage limitation, and
the Company shall have no obligation to verify or confirm the accuracy of such
determination. Nothing contained herein shall be deemed to restrict the right of
a Holder to exercise this Warrant into Warrant Shares at such time as such
exercise will not violate the provisions of this Section 3(c). The provisions of
this Section 3(c) may be waived by the Holder upon, at the election of the
Holder, not less than 61 days' prior notice to the Company, and the provisions
of this Section 3(c) shall continue to apply until such 61st day (or such later
date, as determined by the Holder, as may be specified in such notice of
waiver). No exercise of this Warrant in violation of this Section 3(c) but
otherwise in accordance with this Warrant shall affect the status of the Warrant
Shares as validly issued, fully-paid and nonassessable.
4. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. As to any fraction of a share which Holder would otherwise be entitled
to purchase upon such exercise, the Company shall pay a cash adjustment in
respect of such final fraction in an amount equal to such fraction multiplied by
the Exercise Price.
5. Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares
shall be made without charge to the Holder for any issue or transfer tax or
other incidental expense in respect of the issuance of such certificate, all of
which taxes and expenses shall be paid by the Company, and such certificates
shall be issued in the name of the Holder or in such name or names as may be
directed by the Holder; provided, however, that in the event certificates for
Warrant Shares are to be issued in a name other than the name of the Holder,
this Warrant when surrendered for exercise shall be accompanied by the
Assignment Form attached hereto duly executed by the Holder; and the Company may
require, as a condition thereto, the payment of a sum sufficient to reimburse it
for any transfer tax incidental thereto.
6. Closing of Books. The Company will not close its stockholder books or
records in any manner which prevents the timely exercise of this Warrant.
7. Transfer, Division and Combination.
(a) Subject to compliance with any applicable securities laws,
transfer of this Warrant and all rights hereunder, in whole or in part, shall be
registered on the books of the Company to be maintained for such purpose, upon
surrender of this Warrant at the principal office of the Company, together with
a written assignment of this Warrant substantially in the form attached hereto
duly executed by the Holder or its agent or attorney and funds sufficient to pay
any transfer taxes payable upon the making of such transfer. In the event that
the Holder wishes to transfer a portion of this Warrant, the Holder shall
transfer at least 25,000 shares underlying this Warrant to any such transferee.
Upon such surrender and, if required, such payment, the Company shall execute
and deliver a new Warrant or Warrants in the name of the assignee or assignees
and in the denomination or denominations specified in such instrument of
assignment, and shall issue to the assignor a new Warrant evidencing the portion
of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A
Warrant, if properly assigned, may be exercised by a new holder for the purchase
of Warrant Shares without having a new Warrant issued. Notwithstanding the
above, the Holder shall not transfer this Warrant or any rights hereunder to any
person or entity which is then engaged in a business that is in the reasonable
judgement of the Company is in direct competition with the Company.
4
(b) This Warrant may be divided or combined with other Warrants
upon presentation hereof at the aforesaid office of the Company, together with a
written notice specifying the names and denominations in which new Warrants are
to be issued, signed by the Holder or its agent or attorney. Subject to
compliance with Section 7(a), as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.
(c) The Company shall prepare, issue and deliver at its own
expense (other than transfer taxes) the new Warrant or Warrants under this
Section 7.
(d) The Company agrees to maintain, at its aforesaid office, books
for the registration and the registration of transfer of the Warrants.
8. No Rights as Shareholder until Exercise. This Warrant does not entitle
the Holder to any voting rights or other rights as a shareholder of the Company
prior to the exercise hereof. Upon the surrender of this Warrant and the payment
of the aggregate Exercise Price, the Warrant Shares so purchased shall be and be
deemed to be issued to such Holder as the record owner of such shares as of the
close of business on the later of the date of such surrender or payment.
9. Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants
that upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant or any stock
certificate relating to the Warrant Shares, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it (which shall
not include the posting of any bond), and upon surrender and cancellation of
such Warrant or stock certificate, if mutilated, the Company will make and
deliver a new Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of such Warrant or stock certificate.
10. 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, Sunday or a legal holiday, then such action may be taken or
such right may be exercised on the next succeeding day not a Saturday, Sunday or
legal holiday.
11. Adjustments of Exercise Price and Number of Warrant Shares/Stock Splits,
etc. The number and kind of securities purchasable upon the exercise of this
Warrant and the Exercise Price shall be subject to adjustment from time to time
upon the happening of any of the following. In case the Company shall (i) pay a
dividend in shares of Common Stock or make a distribution in shares of Common
Stock to holders of its outstanding Common Stock, (ii) subdivide its outstanding
shares of Common Stock into a greater number of shares, (iii) combine its
outstanding shares of Common Stock into a smaller number of shares of Common
Stock, or (iv) issue any shares of its capital stock in a reclassification of
the Common Stock, then the number of Warrant Shares purchasable upon exercise of
this Warrant immediately prior thereto shall be adjusted so that the Holder
shall be entitled to receive the kind and number of Warrant Shares or other
securities of the Company which it would have owned or have been entitled to
receive had such Warrant been exercised in advance thereof. Upon each such
adjustment of the kind and number of Warrant Shares or other securities of the
Company which are purchasable hereunder, the Holder shall thereafter be entitled
to purchase the number of Warrant Shares or other securities resulting from such
adjustment at an Exercise Price per Warrant Share or other security obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment
5
by the number of Warrant Shares purchasable pursuant hereto immediately prior to
such adjustment and dividing by the number of Warrant Shares or other securities
of the Company resulting from such adjustment. An adjustment made pursuant to
this paragraph shall become effective immediately after the effective date of
such event retroactive to the record date, if any, for such event.
12. Reorganization, Reclassification, Merger, Consolidation or Disposition
of Assets. In case the Company shall reorganize its capital, reclassify its
capital stock, consolidate or merge with or into another corporation (where the
Company is not the surviving corporation or where there is a change in or
distribution with respect to the Common Stock of the Company), or sell, transfer
or otherwise dispose of all or substantially all its property, assets or
business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition of
assets, shares of common stock of the successor or acquiring corporation, or any
cash, shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of common stock of the successor or acquiring corporation ("Other
Property"), are to be received by or distributed to the holders of Common Stock
of the Company, then the Holder shall have the right thereafter to receive, at
their option, (a) upon exercise of this Warrant, the number of shares of Common
Stock of the successor or acquiring corporation or of the Company, if it is the
surviving corporation, and Other Property receivable upon or as a result of such
reorganization, reclassification, merger, consolidation or disposition of assets
by a Holder of the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such event, or (b) cash equal to the value of
this Warrant as determined in accordance with the Black-Sholes option pricing
formula. In case of any such reorganization, reclassification, merger,
consolidation or disposition of assets, the successor or acquiring corporation
(if other than the Company) shall expressly assume the due and punctual
observance and performance of each and every covenant and condition of this
Warrant to be performed and observed by the Company and all the obligations and
liabilities hereunder, subject to such modifications as may be deemed
appropriate (as determined in good faith by resolution of the Board of Directors
of the Company) in order to provide for adjustments of Warrant Shares for which
this Warrant is exercisable which shall be as nearly equivalent as practicable
to the adjustments provided for in this Section 12. For purposes of this Section
12, "common stock of the successor or acquiring corporation" shall include stock
of such corporation of any class which is not preferred as to dividends or
assets over any other class of stock of such corporation and which is not
subject to redemption and shall also include any evidences of indebtedness,
shares of stock or other securities which are convertible into or exchangeable
for any such stock, either immediately or upon the arrival of a specified date
or the happening of a specified event and any warrants or other rights to
subscribe for or purchase any such stock. The foregoing provisions of this
Section 12 shall similarly apply to successive reorganizations,
reclassifications, mergers, consolidations or disposition of assets.
13. Voluntary Adjustment by the Company. The Company may at any time during
the term of this Warrant reduce the then current Exercise Price to any amount
and for any period of time deemed appropriate by the Board of Directors of the
Company.
14. Notice of Adjustment. Whenever the number of Warrant Shares or number or
kind of securities or other property purchasable upon the exercise of this
Warrant or the Exercise Price is adjusted, as herein provided, the Company shall
promptly mail by registered or certified mail, return receipt requested, to the
Holder notice of such adjustment or adjustments setting forth the
6
number of Warrant Shares (and other securities or property) purchasable upon the
exercise of this Warrant and the Exercise Price of such Warrant Shares (and
other securities or property) after such adjustment, setting forth a brief
statement of the facts requiring such adjustment and setting forth the
computation by which such adjustment was made. Such notice, in the absence of
manifest error, shall be conclusive evidence of the correctness of such
adjustment.
15. Notice of Corporate Action. If at any time:
(a) the Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend or other
distribution, or any right to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any other securities or
property, or to receive any other right, or
(b) there shall be any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company or any
consolidation or merger of the Company with, or any sale, transfer or other
disposition of all or substantially all the property, assets or business of the
Company to, another corporation or,
(c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in any one or more of such cases, the Company shall give to Holder (i) at
least 20 days' prior written notice of the date on which a record date shall be
selected for such dividend, distribution or right or for determining rights to
vote in respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, liquidation or winding up, and (ii)
in the case of any such reorganization, reclassification, merger, consolidation,
sale, transfer, disposition, dissolution, liquidation or winding up, at least 20
days' prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause also shall specify (i) the date
on which any such record is to be taken for the purpose of such dividend,
distribution or right, the date on which the holders of Common Stock shall be
entitled to any such dividend, distribution or right, and the amount and
character thereof, and (ii) the date on which any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up is to take place and the time, if any
such time is to be fixed, as of which the holders of Common Stock shall be
entitled to exchange their Warrant Shares for securities or other property
deliverable upon such disposition, dissolution, liquidation or winding up. Each
such written notice shall be sufficiently given if addressed to Holder at the
last address of Holder appearing on the books of the Company and delivered in
accordance with Section 17(d).
7
16. Authorized Shares. The Company covenants that during the period the
Warrant is outstanding, it will reserve from its authorized and unissued Common
Stock a sufficient number of shares to provide for the issuance of the Warrant
Shares upon the exercise of any purchase rights under this Warrant. The Company
further covenants that its issuance of this Warrant shall constitute full
authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for the Warrant
Shares upon the exercise of the purchase rights under this Warrant. The Company
will take all such reasonable action as may be necessary to assure that such
Warrant Shares may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of the principal market
upon which the Common Stock may be listed.
The Company shall not by any action, including, without limitation,
amending its certificate of incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such actions as may be necessary or appropriate to protect the rights of Holder
against impairment. Without limiting the generality of the foregoing, the
Company will (a) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to such increase in
par value, (b) take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable
Warrant Shares upon the exercise of this Warrant, and (c) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof as may be necessary
to enable the Company to perform its obligations under this Warrant.
Before taking any action which would result in an adjustment in the
number of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or exemptions
thereof, or consents thereto, as may be necessary from any public regulatory
body or bodies having jurisdiction thereof.
17. Miscellaneous.
(a) Jurisdiction. This Warrant shall constitute a contract under the
laws of Ontario, without regard to its conflict of law, principles or rules, and
be subject to arbitration pursuant to the terms set forth in the Purchase
Agreement.
(b) Restrictions. The Holder acknowledges that the Warrant Shares
acquired upon the exercise of this Warrant, if not registered, will have
restrictions upon resale imposed by state and federal securities laws.
(c) Nonwaiver and Expenses. No course of dealing or any delay or
failure to exercise any right hereunder on the part of Holder shall operate as a
waiver of such right or otherwise prejudice Holder's rights, powers or remedies,
notwithstanding all rights hereunder terminate on the Termination Date. If the
Company willfully and knowingly fails to comply with any provision of this
Warrant, which results in any material damages to the Holder, the Company shall
pay to Holder such amounts as shall be sufficient to cover any costs and
expenses including, but not limited to, reasonable attorneys' fees, including
those of appellate proceedings,
8
incurred by Holder in collecting any amounts due pursuant hereto or in otherwise
enforcing any of its rights, powers or remedies hereunder.
(d) Notices. Any notice, request or other document required or
permitted to be given or delivered to the Holder by the Company shall be
delivered in accordance with the notice provisions of the Purchase Agreement.
(e) Limitation of Liability. No provision hereof, in the absence of
affirmative action by Holder to purchase Warrant Shares, and no enumeration
herein of the rights or privileges of Holder, shall give rise to any liability
of Holder for the purchase price of any Common Stock or as a stockholder of the
Company, whether such liability is asserted by the Company or by creditors of
the Company.
(f) Remedies. Holder, in addition to being entitled to exercise all
rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Warrant. The Company agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Warrant and hereby agrees to
waive the defense in any action for specific performance that a remedy at law
would be adequate.
(g) Successors and Assigns. Subject to applicable securities laws,
this Warrant and the rights and obligations evidenced hereby shall inure to the
benefit of and be binding upon the successors of the Company and the successors
and permitted assigns of Holder. The provisions of this Warrant are intended to
be for the benefit of all Holders from time to time of this Warrant and shall be
enforceable by any such Holder or holder of Warrant Shares.
(h) Amendment. This Warrant may be modified or amended or the
provisions hereof waived with the written consent of the Company and the Holder.
(i) Severability. Wherever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provisions or the remaining provisions of this Warrant.
(j) Headings. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
*********************
IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed by its officer thereunto duly authorized.
Dated: June *, 2002
API ELECTRONICS GROUP INC.
By:
------------------------------------
Name:
Title:
NOTICE OF EXERCISE
To: API Electronics Group Inc.
(1) The undersigned hereby elects to purchase ________ Warrant Shares
(the "Common Stock"), of API Electronics Group Inc. pursuant to the terms of the
attached Warrant, and tenders herewith payment of the exercise price in full,
together with all applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing said
Warrant Shares in the name of the undersigned or in such other name as is
specified below:
____________________________
The Warrant Shares shall be delivered to the following:
____________________________
____________________________
____________________________
[PURCHASER]
By:
------------------------------------
Name:
Title:
Dated: ________________________
ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
_______________________________________________ whose address is
________________________________________________________________
________________________________________________________________
Dated: ______________, _______
Holder's Signature:_____________________________________
Holder's Address: _____________________________________
_____________________________________
Signature Guaranteed: ___________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in an fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.
EXHIBIT "C"
INSTRUCTIONS TO TRANSFER AGENT
API ELECTRONICS GROUP INC.
[date]
Equity Transfer Services Inc.
Richmond Adelaide Centre
000 Xxxxxxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxxx, XX X0X 0X0
Ladies and Gentlemen:
Reference is made to the Subscription Agreement and all Exhibits
thereto (the "Agreement"), dated as of * day of June, 2002, between Syrah Invest
Corp. and API Electronics Group Inc. (the "Company"). Pursuant to the Agreement,
and subject to the terms and conditions set forth in the Agreement, the company
has issued to the Investor shares of the Company's common shares (the "Common
Stock"), and (ii) warrants to purchase up to 300,000 shares of Common Stock (the
"Warrants"). The number of Shares and Warrants issued to the Investor is as
follows:
---------------------------------------------------------------
INVESTOR COMMON STOCK WARRANTS
---------------------------------------------------------------
1. Syrah Invest Corp. 300,000 300,000
---------------------------------------------------------------
As a condition to the effectiveness of the Agreement, the Company
has agreed to issue to you, as the transfer agent for the Common Stock (the
"Transfer Agent"), these instructions relating to the Common Stock to be issued
to the Investor (or a permitted assignee) pursuant to the Agreement at the
Closing of the Agreement and upon the exercise of the Warrants. All capitalized
terms used herein and not otherwise defined shall have the meaning set forth in
the Agreement.
1. ISSUANCE OF COMMON STOCK WITHOUT THE LEGEND
Pursuant to the Agreement, the Company has sold at the Closing Shares
and Warrants as described in the [legal opinion of * ]. Such Shares and
Warrants have been sold to the Investor, which is a non-U.S. Person,
pursuant to Regulation S under the U.S. Securities Act of 1933 as
amended (the "Securities Act"). The Transfer Agent shall be entitled to
rely on such advice and such opinion. The Transfer Agent shall deliver
to the Investor certificates representing Common Stock not bearing the
Legend without requiring further advice or instruction or additional
documentation from the Company or its counsel or the Investor or its
counsel or any other party at any time forty-two (42) or more calendar
days from the date of this letter, which the Company warrants to you is
the date of the Closing, as certified to you by the Investor.
2
2. FEES OF TRANSFER AGENT; INDEMNIFICATION
The Company agrees to pay the Transfer Agent for all fees incurred in
connection with these Irrevocable Instructions. The Company agrees to
indemnify the Transfer Agent and its officers, employees and agents,
against any losses, claims, damages or liabilities, joint or several, to
which it or they become subject based upon the performance by the
Transfer Agent of its duties in accordance with the Irrevocable
Instructions, other than as a result of the Transfer Agent's gross
negligence or wilful misconduct.
3. THIRD PARTY BENEFICIARY
The Company and the Transfer Agent acknowledge and agree that the
Investor is an express third party beneficiary of these Irrevocable
Instructions and shall be entitled to rely upon, and enforce, the
provisions hereof.
API ELECTRONICS GROUP INC.
By:
------------------------------
Name:
Title:
AGREED:
EQUITY TRANSFER SERVICE INC.
By:
------------------------------------------------------------
Name:
Title:
