AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 14, 2000
F-3 REGISTRATION NO. 333-_______________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C
FORM F-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
BONSO ELECTRONICS INTERNATIONAL INC.
------------------------------------
(Exact name of Registrant as specified in its charter)
British Virgin Islands None
---------------------- ----
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Flat A-D, 8th Floor
Universal Industrial Centre
23-25 Shan Mei Street
Fo Tan, Shatin
New Territories, Hong Kong
(852) 2605-5822
---------------
(Address and telephone number of Registrant's principal executive offices)
Henry F. Schlueter, Esq.
Schlueter & Associates, P.C.
1050 Seventeenth Street, Suite 1700
Denver, Colorado 80265
(303) 292-3883
--------------
(Name, address and telephone number of agent for service)
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<PAGE>
<TABLE>
<CAPTION>
Calculation of Registration Fee(1)
- ------------------------------------------------------------------------------------------------------
Proposed maximum Proposed maximum Amount of
Title of each class of Amount to be offering price aggregate offering registration
securities to be registered registered per unit(2) price(2) fee
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common stock purchase warrants(3) 2,174,403(4) $ 0.00 $ 0.00 $ 0
Common stock issuable upon
exercise of the common stock
purchase warrants 1,087,201(4) $17.50 $19,026,017 $5,023
Common stock issuable upon
exercise of outstanding common
stock purchase warrants(5)(6) 250,000(4) $ 8.00 $ 2,000,000 $ 528
Common stock(6) 350,000 $14.875(7) $ 5,206,250(7) $1,374
Total registration fee $6,925
======================================================================================================
</TABLE>
(1) In United States dollars.
(2) Estimated solely for the purpose of calculating the registration fee.
(3) To be issued as a warrant dividend to holders of record of certain prior
warrants at the close of trading on January 19, 2000, and to all persons
who exercised the prior warrants during the period commencing on November
22, 1999 and ending at the close of trading on January 19, 2000.
(4) An indeterminate number of additional shares of common stock are registered
hereunder which may be issued, as provided in the warrants, in the event
provisions against dilution become operative. No additional consideration
will be received by Bonso upon issuance of additional shares issued as a
result of the exercise of these warrants.
(5) Underlie warrants issued to a consultant in accordance with a consulting
agreement dated January 14, 2000.
(6) May be sold from time to time, at varying prices, by a selling shareholder.
(7) Based upon the closing price of the common stock on March 1, 2000.
The registrant hereby amends this registration statement on the date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on the date as the Commission, acting pursuant to said section 8(a),
may determine.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which the offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of that state.
<PAGE>
BONSO ELECTRONICS INTERNATIONAL INC.
Item No. and Heading
In Form F-3
Registration Statement Location In Prospectus
---------------------- ----------------------
1. Forepart of the Registration Forepart of Registration Statement
Statement and outside front and outside front cover page of
cover of Prospectus Prospectus
2. Inside front and outside back Inside front and outside back cover
cover pages of Prospectus pages of Prospectus
3. Summary Information, Prospectus Summary and Risk Factors
Risk Factors and Ratio of
Earnings to Fixed Charges
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Determination of Offering Price
6. Dilution Not Applicable
7. Selling Security Holders Selling Security Holders
8. Plan of Distribution Plan of Distribution
9. Description of Securities to be Description of Securities
Registered
10. Interests of Named Experts and Legal Matters
Counsel
11. Material Changes Recent Developments
12. Incorporation of Certain Additional Information
Information by Reference
13. Disclosure of Commission Not Applicable
Position on Indemnification for
Securities Act Liabilities
<PAGE>
BONSO ELECTRONICS INTERNATIONAL INC.
1,087,201 Shares of Common Stock
Issuable on Exercise of Common Stock Purchase Warrants
and
600,000 Shares of Common Stock Offered by Selling Shareholders
We are registering 2,174,403 common stock purchase warrants that we will
issue as a dividend to all record holders at the close of trading on January 19,
2000 of certain prior warrants, which expired on January 31, 2000, and to all
persons who exercised the prior warrants during the period commencing on
November 22, 1999 and ending at the close of trading on January 19, 2000. We are
also registering 1,087,201 shares of common stock issuable upon the exercise of
those warrants.
Each two warrants are exercisable to purchase one share of our common stock
at an exercise price of $17.50 per share. The warrants expire on December 31,
2001.
The warrants are redeemable by us upon 30 days notice at a redemption price
of $.01 per warrant but only if the public trading price for our common stock
equals or exceeds 110% of the then-current exercise price of the warrants for 20
trading days within the preceding 30 trading days.
We are also registering 250,000 shares of common stock which may be issued
upon exercise of outstanding warrants and 350,000 outstanding shares of common
stock. These shares may be offered and sold from time to time by selling
shareholders.
Prior to this offering, the common stock has traded on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") under
the symbol "BNSO." As of ______, 2000 (one day prior to the date of this
prospectus), the reported closing sales price of the common stock on
NASDAQ-National Market System was $______.
An investment in these securities involves a high degree of risk. See "Risk
Factors" beginning at page 5 of this prospectus for a discussion of certain
factors that you should consider before investing in these securities.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
================================================================================
Underwriting
Price to Discounts and Proceeds to
Public(1)(2) Commissions Company(3)
================================================================================
Per Warrant $ 0.00 $ 0.00 $ 0.00
Per Share(4) $ 17.50 $ 0.00 $ 17.50
Total Offering $19,026,017.50 $ 0.00 $19,026,017.50
================================================================================
Footnotes on following page
The date of this prospectus is ______________, 2000
<PAGE>
(1) The warrants are being issued as a dividend to all record holders of our
warrants at the close of trading on January 19, 2000, and to all persons
who exercised our warrants during the period commencing on November 22,
1999 and ending at the close of trading on January 19, 2000. The shares of
common stock underlying the warrants are being offered by us to the holders
of the warrants. There is no minimum purchase amount. The shares of common
stock are offered for cash only. The exercise price of the warrants was
arbitrarily determined and bears no relationship to the value of the
company or its assets, nor does the exercise price represent that the
common stock has a value or could be resold at that price. The shares of
common stock are being sold on a "best efforts" basis by us; consequently,
no minimum number of shares is required to be sold.
(2) The 600,000 shares offered by the selling shareholders are being registered
for the benefit of, and may be sold from time to time by, the selling
shareholders. We will receive no proceeds from the sale of these shares by
the selling shareholders.
(3) Before deducting other expenses of the offering payable by us estimated at
$125,000, including, among others, registration and filing fees,
professional fees and printing expenses. All proceeds received upon
exercise of the warrants will be applied directly to our benefit. There is
no escrow of funds and no assurance that all or any portion of the warrants
will be exercised.
(4) Shares underlying the dividend warrants.
You may exercise your warrants only if you live in a state where the common
stock has been qualified for issuance under applicable state laws, including
registration if required under your state's law. As a result, you may not be
permitted to exercise your warrants but may have to sell your warrants or let
them expire unexercised.
<PAGE>
PROSPECTUS SUMMARY
This summary highlights important information about our business and about
this offering. Because it's a summary, it doesn't contain all the information
you should consider before exercising your warrants. Therefore, please read the
entire prospectus.
As used in this prospectus, "China" refers to all parts of the People's
Republic of China other than the Special Administrative Region of Hong Kong. The
term "we" or "us" refers to Bonso Electronics International Inc. and, where the
context requires or suggests, its direct and indirect subsidiaries. All
outstanding share data excludes 271,700 shares of common stock reserved for
issuance upon exercise of certain outstanding stock options, 250,000 selling
shareholder shares reserved for issuance upon exercise of certain restricted
warrants and 986,300 shares reserved for issuance upon exercise of stock options
which may be granted in the future under our 1996 Stock Option Plan and our 1996
Non-Employee Directors' Stock Option Plan.
The Warrant Dividend
On January 5, 2000, we declared a warrant dividend payable to all record
holders of our warrants at the close of trading on January 19, 2000, and to all
persons who exercised our warrants during the period commencing on November 22,
1999 and ending at the close of trading on January 19, 2000. The warrant
dividend and January 19, 2000 record date were publicly announced in a press
release. Each two warrants are exercisable to purchase one share of our common
stock at an exercise price of $17.50 per share. The warrants are exercisable any
time prior to 2:00 p.m. (Pacific Time) on December 31, 2001, unless extended by
the board of directors.
The warrants are redeemable by us upon 30 days notice at a redemption price
of $.01 per warrant but only if the public trading price for our common stock
equals or exceeds 110% of the then-current exercise price of the warrants for 20
trading days within the preceding 30 trading days.
The registration statement of which this prospectus is a part registers the
warrants and the shares of common stock underlying the warrants.
The exercise price of the warrants as described above is wholly arbitrary
and there is no assurance that the price of the common stock will, at any time,
equal or exceed the exercise price of the warrants. The warrants can be
exercised only if a current prospectus is in effect. See "Description of
Securities--Warrants."
The Company
We design, develop, manufacture, assemble and market a comprehensive line
of electronic scales and weighing instruments and electronic consumer and health
care products, as well as, our new line of telecommunications products. Our
electronic scales include bathroom, kitchen, office, jewelry, laboratory,
pocket, hanging, postal, industrial and parcel scales that are used in consumer,
commercial and industrial applications. Our electronic consumer and health care
products include pedometers, chronographs, electronic thermometers and blood
pressure meters. Our tele-communications products include two-way radios,
cordless telephones and hand-held music players.
<PAGE>
Our wholly-owned Hong Kong subsidiary - Bonso Electronics Limited ("Bonso
Electronics") - is responsible for the design, development, manufacture and sale
of our products. Bonso Electronics has one active Hong Kong subsidiary - Bonso
Investment Limited ("BIL") - which has been used to acquire and hold our real
estate investments in Hong Kong and China, and one inactive subsidiary - Bonso
Advanced Technology Limited.
We have manufactured all of our products in China since 1989 in order to
take advantage of lower overhead costs and competitive labor rates available
there. In January 1997, we completed a new manufacturing facility in the DaYang
Synthetical Development District in Shenzhen, China, which approximately tripled
our production capacity. The leasehold, facilities, machinery, furniture and
equipment at that facility are owned and operated by Bonso Electronics
(Shenzhen) Co. Ltd. ("Shenzhen Bonso"), our wholly-owned Chinese limited
liability company which was formed in June 1994. The location of our factory in
Shenzhen, only about 50 miles from Hong Kong, permits us to manage easily
manufacturing operations from Hong Kong, and facilitates transportation of our
products out of China through the port of Hong Kong.
For the fiscal year ended March 31, 1999, we had sales of US$13,046,265 and
net income of US$13,754. For the six months ended September 30, 1999, we had
sales of US$7,854,730 and net income of US$621,536.
Our principal executive offices are located at Flat A-D, 8th Floor,
Universal Industrial Centre, 23-25 Shan Mei Street, Fo Tan, Shatin, New
Territories, Hong Kong and our telephone number is (852) 2605-5822.
The Offering
Securities offered ....................... 2,174,403 warrants, exercisable to
purchase one share of common stock
for each two warrants exercised
until 2:00 p.m. (Pacific Time) on
December 31, 2001.
1,087,201 shares of common stock,
$0.003 par value, issuable upon
exercise of warrants
Exercise price per share ................. $17.50 per share
of common stock
Terms of the offering .................... We will issue 2,174,403 warrants as
a dividend to all record holders of
our warrants at the close of
trading on January 19, 2000, and to
all persons who exercised our
warrants during the period
commencing on November 22, 1999 and
ending at the close of trading on
January 19, 2000. We are offering
the shares of common stock solely
to the holders of the warrants.
Shares not issued in this offering
will not be offered or sold to the
public. However, shares issued upon
exercise of the warrants, as well
as the other shares being
registered by the registration
statement which included this
prospectus, may be resold under
this prospectus from time to time.
<PAGE>
Common stock outstanding ................. 5,512,610 shares
prior to offering
Common stock outstanding ................. 6,599,811 shares
after offering if all warrants exercised
Estimated net proceeds to Bonso if ....... $18,901,017
all warrants exercised
Use of proceeds .......................... We intend to use the net proceeds
from this offering for working
capital. See "Use of Proceeds."
Risk factors ............................. Acquisition of shares of our common
stock entails a high degree of risk
and exercise of our warrants also
entails immediate substantial
dilution. See "Risk Factors" and
"Dilution."
Nasdaq symbols ........................... Common Shares.... BNSO
Warrants......... BNSOZ (proposed)
RISK FACTORS
Investment in the securities offered through this prospectus involves a high
degree of risk. Please carefully consider the following risk factors, along with
the other information contained in this prospectus, before deciding whether to
exercise your warrants.
Political, Legal, Economic and Other Uncertainties of
Operations in China and Hong Kong
China's Sovereignty over Hong Kong Could Cause Instability. Our principal
executive and corporate offices are located in Hong Kong, formerly a British
Crown Colony. Sovereignty over Hong Kong was transferred effective July 1, 1997
to China, and Hong Kong became a Special Administrative Region of China. The
National People's Congress of China enacted the Basic Law in 1990 as the
constitution of Hong Kong under China's sovereignty. While we do not believe
that the transfer of sovereignty over Hong Kong to China has had or will have a
material adverse effect on our business, there can be no assurance as to the
continued stability of political, economic or commercial conditions in Hong
Kong, and any instability could have an adverse impact on our business.
The Hong Kong dollar and the United States dollar have been fixed at
approximately 7.80 Hong Kong dollars to $1.00 since 1983. The Chinese government
expressed its intention in the Basic Law to maintain the stability of the Hong
Kong currency after the sovereignty of Hong Kong was transferred to China. There
can be no assurance that this will continue and we could face increased currency
risks if the current exchange rate mechanism is changed.
<PAGE>
Manufacturing in China Involves Risks Caused by Internal Political Factors.
Our manufacturing facility is located in China. As a result, our operations and
assets are subject to significant political, economic, legal and other
uncertainties. Changes in policies by the Chinese government resulting in
changes in laws, regulations or the interpretation of laws and regulations,
confiscatory taxation, restrictions on imports and sources of supply, import
duties, corruption, currency revaluation or the expropriation of private
enterprise could materially and adversely affect us. Over the past several
years, the Chinese government has pursued economic reform policies including the
encouragement of private economic activity and greater economic
decentralization. There can be no assurance that the Chinese government will
continue to pursue these policies, that these policies will be successful if
pursued, that these policies will not be significantly altered from time to time
or that business operations in China would not become subject to the risk of
nationalization, which could result in the total loss of investment in that
country. Economic development may be limited as well by the imposition of
austerity measures intended to reduce inflation, the inadequate development of
infrastructure and the potential unavailability of adequate power and water
supplies, transportation and communications. If for any reason we were required
to move our manufacturing operations outside of China, our profitability would
be substantially impaired, our competitiveness and market position would be
materially jeopardized and there can be no assurance that we could continue our
operations.
If China Were to Lose Most Favored Nation Status, We Could be Adversely
Affected. China currently enjoys most favored nation ("MFN") trade status, which
provides China with the trading privileges generally available to trading
partners of the United States. The United States annually reconsiders the
renewal of China's MFN status. Various interest groups continue to urge that the
United States not renew MFN for China and there can no assurance that
controversies will not arise that threaten the status quo involving trade
between the United States and China or that the United States will not revoke or
refuse to renew China's MFN status. In any of these eventualities, our business
could be adversely affected, by among other things, causing our products in the
United States to become more expensive, which could result in a reduction in the
demand for our products by customers in the United States. Trade friction
between the United States and China, whether or not actually affecting our
business, could also adversely affect the prevailing market price of our common
stock and warrants.
The Chinese Legal System and Application of Chinese Laws Are Uncertain. The
legal system of China relating to foreign investments is both new and
continually evolving, and currently there can be no certainty as to the
application of its laws and regulations in particular instances. China does not
have a comprehensive system of laws. Enforcement of existing laws or agreements
may be sporadic and implementation and interpretation of laws inconsistent. The
Chinese judiciary is relatively inexperienced in enforcing the laws that exist,
leading to a higher than usual degree of uncertainty as to the outcome of any
litigation. Even where adequate law exists in China, it may not be possible to
obtain swift and equitable enforcement of that law.
China's Economic Policies Could Change. As part of its economic reform,
China has designated certain areas, including Shenzhen where our manufacturing
complex is located, as Special Economic Zones. Foreign enterprises in these
areas benefit from greater economic autonomy and more favorable tax treatment
than enterprises in other parts of China. Changes in the policies or laws
governing Special Economic Zones could have a material adverse effect on us.
Moreover, economic reforms and growth in China have been more successful in
certain provinces than others, and the continuation or increase of these
disparities could affect the political or social stability of China.
<PAGE>
We are Dependent on a Single Factory. All of our products are currently
manufactured at our manufacturing facility located in Shenzhen, China. We do not
own the land underlying our factory complex. It occupies the site under an
agreement with the local Chinese government under which we are entitled to use
the land upon which our factory complex is situated until May 2044. This
agreement and the operations of our Shenzhen factory are dependent on our
relationship with the local government. Our operations and prospects would be
materially and adversely affected by the failure of the local government to
honor the agreement. In the event of a dispute, enforcement of the agreement
could be difficult in China.
Moreover, fire fighting and disaster relief or assistance in China may not
be as developed as in Western countries. We currently maintain property damage
insurance aggregating approximately $13,900,000 covering our stock in trade,
goods and merchandise, furniture and equipment and buildings. We do not maintain
business interruption insurance. Investors are cautioned that material damage
to, or the loss of, our factory due to fire, severe weather, flood or other act
of God or cause, even if insured against, could have a material adverse effect
on our financial condition, results of operations, business and prospects.
Asia Has Recently Experienced Significant Economic Problems. Recently,
several countries in Southeast Asia have experienced a significant devaluation
of their currencies and decline in the value of their capital markets. In
addition, several Asian countries have experienced a number of bank failures and
consolidations. We believe that most Asian countries have recovered from these
declines and we do not believe that the declines in Southeast Asia will affect
the demand for our products, because virtually all of our products are sold into
developed countries not experiencing these declines. Moreover, because most of
our products are paid for in U.S. dollars, we believe that we are less
susceptible to the effects of a devaluation in the Hong Kong dollar or Chinese
renminbi if either or both were to occur despite assurances to the contrary by
the Chinese government. However, the decline in the currencies of other
Southeast Asian countries could render our products less competitive if
competitors located in these countries are able to manufacture competitive
products at a lower effective cost. Investors are cautioned that the decline in
Southeast Asia may have a material adverse effect on our business, financial
condition, results of operations or market price of our securities.
Risk Factors Relating to Our Business
The Loss of Any of Our Major Customers Could Significantly Affect Our
Profitability. Four major customers accounted for approximately 62% of our sales
in the fiscal year ended March 31, 1998 and 51% of its sales during the fiscal
year ended March 31, 1999. The loss of any of these major customers could have a
material negative impact on our business.
We Are Dependent on Our Key Personnel. Our future performance will depend
to a significant extent upon the efforts and abilities of certain members of
senior management as well as upon our ability to attract and retain other
qualified personnel. In particular, we are largely dependent upon the continued
efforts of Mr. Anthony So, our president, secretary, treasurer and chairman of
our board of directors, and Mr. Kim Wah Chung, our director of engineering and
research and development. To the extent that the services of Mr. So or Mr. Chung
<PAGE>
would be unavailable to us, we would be required to obtain other personnel to
perform the duties that they otherwise would perform. There can be no assurance
that we would be able to employ another qualified person or persons, with the
appropriate background and expertise, to replace Mr. So or Mr. Chung on terms
suitable to us.
We Face Strong Competition. Our business is in an industry that is highly
competitive, and many of our competitors, both local and international, have
substantially greater technical, financial and marketing resources than we have.
We Need Qualified Employees. Our success is dependent on our ability to
attract and retain qualified technical, marketing and production personnel. We
will have to compete with other larger companies for this type of personnel, and
there can be no assurance that we will be able to attract or retain qualified
personnel of this nature.
Management Controls the Company. At the present time, Mr. Anthony So, our
founder and president, beneficially owns approximately 31.9% of the outstanding
shares of common stock and Mr. J. Stewart Jackson, one of our directors,
beneficially owns approximately 14.3%. Due to their stock ownership, Messrs. So
and Jackson may be in a position to elect the board of directors and, therefore,
to control our business and affairs including certain significant corporate
actions such as acquisitions, the sale or purchase of assets and the issuance
and sale of our securities.
Our Operating Results Are Subject to Wide Fluctuations. Our quarterly and
annual operating results are affected by a wide variety of factors that could
materially and adversely affect net sales, gross profit and profitability. This
could result from any one or a combination of factors, many of which are beyond
our control. Results of operations in any period should not be considered
indicative of results to be expected in any future period, and fluctuations in
operating results may also result in fluctuations in the market price of our
common stock.
Certain Legal Consequences of Foreign Incorporation and Operations
Judgments Against Us and Our Management May Be Difficult to Obtain or
Enforce. We are a holding corporation organized as an International Business
Company under the laws of the British Virgin Islands. Our principal operating
subsidiary is organized under the laws of Hong Kong, where our principal
executive offices are also located. Outside the United States, it may be
difficult for investors to enforce judgments against us obtained in the United
States in actions brought against us, including actions predicated upon civil
liability provisions of federal securities laws. In addition, most of our
officers and directors reside outside the United States and the assets of these
persons and of the company are located outside of the United States. As a
result, it may not be possible for investors to effect service of process within
the United States upon these persons, or to enforce against the company or these
persons judgments predicated upon the liability provisions of U.S. securities
laws. We have been advised by our Hong Kong counsel and our British Virgin
Islands counsel that there is substantial doubt as to the enforceability against
us or any of our directors or officers located outside the United States in
original actions or in actions for enforcement of judgments of U.S. courts of
liabilities predicated solely on the civil liability provisions of federal
securities laws.
<PAGE>
Because We Are Incorporated in the British Virgin Islands, Our Shareholders
May Not Have the Same Protections as Shareholders of U.S. Corporations. We are
organized under the laws of the British Virgin Islands. Principles of law
relating to matters affecting the validity of corporate procedures, the
fiduciary duties of our management, directors and controlling shareholders and
the rights of our shareholders differ from, and may not be as protective of
shareholders as, those that would apply if we were incorporated in a
jurisdiction within the United States. Our directors have the power to take
certain actions without shareholder approval, including an amendment of our
Memorandum or Articles of Association and certain fundamental corporate
transactions, including reorganizations, certain mergers or consolidations and
the sale or transfer of assets. In addition, there is doubt that the courts of
the British Virgin Islands would enforce liabilities predicated upon U.S.
securities laws.
Our Shareholders Do Not Have the Same Protections or Information Generally
Available to Shareholders of U.S. Corporations Because of Exemptions for Foreign
Private Issuers. We are a foreign private issuer within the meaning of rules
promulgated under the Securities Exchange Act of 1934. As a result, and though
our common stock is registered under Section 12(g) of the Exchange Act, we are
exempt from certain provisions of the Exchange Act applicable to United States
public companies including: the rules under the Exchange Act requiring the
filing with the Securities and Exchange Commission of quarterly reports on Form
10-Q or current reports on Form 8-K, the sections of the Exchange Act regulating
the solicitation of proxies, consents or authorizations in respect to a security
registered under the Exchange Act and the sections of the Exchange Act requiring
insiders to file public reports of their stock ownership and trading activities
and establishing insider liability for profits realized from any "short-swing"
trading transaction (i.e., a purchase and sale, or sale and purchase, of the
issuer's equity securities within six months or less). Because of the exemptions
under the Exchange Act applicable to foreign private issuers, our shareholders
are not afforded the same protections or information generally available to
investors in public companies organized in the United States.
Risks Relating to this Offering
You May Not be Able to Sell Your Shares of Common Stock for What You Paid
for Them. The exercise price of the warrants has been arbitrarily determined by
us and does not necessarily bear any relationship to our assets, operating
results, book value or shareholders' equity or any other statistical criterion
of value. The exercise price of the warrants should not under any circumstances
be regarded as an indication of any future market price of our common stock.
You May Not Be Able to Exercise Your Warrants. Exercise of our outstanding
warrants is subject to our either maintaining the effectiveness of our
registration statement, or filing an effective registration statement with the
Securities and Exchange Commission and complying with the appropriate state
securities laws. No assurance can be given that at the time a warrant holder
seeks to exercise the right to purchase our common stock an effective
registration statement will in fact be in effect or that we will have complied
with all appropriate state securities laws.
Future Sales of Restricted Shares Into the Public Market Could Depress the
Market Price of the Common Stock. As of the date of this prospectus, 3,889,333
outstanding shares of our common stock are restricted securities as that term is
defined in Rule 144 under the Securities Act of 1933. Although the Securities
Act and Rule 144 place certain prohibitions on the sale of restricted
<PAGE>
securities, they may be sold into the public market under certain conditions.
Further, we have outstanding options and restricted warrants to purchase 521,700
shares of common stock and have reserved an additional 986,300 shares for
issuance upon exercise of stock options which may be granted in the future under
our existing stock option plans, in addition to the 1,087,201 shares which could
be issued under this prospectus. It is possible that, when permitted, the sale
to the public of these shares, or shares acquired upon exercise of the options,
could have a depressing effect on the price of the common stock. Further, future
sales of these shares and the exercise of these options could adversely affect
our ability to raise capital in the future.
The Market Price of Our Common Stock Fluctuates . The markets for equity
securities have been volatile and the price of our common stock has been and
could continue to be subject to wide fluctuations in response to quarter to
quarter variations in operating results, news announcements, trading volume,
sales of common stock by officers, directors and principal shareholders, general
market trends and other factors.
Shareholders Who Do Not Exercise Their Warrants Would Be Diluted By the
Exercise of Other Warrants. Our current shareholders who are issued dividend
warrants will have their percentage of ownership in the company diluted if they
choose to let their warrants expire and other warrant holders choose to exercise
their warrants.
We Might Decide to Redeem the Warrants. The warrants are redeemable by us
at any time at $0.01 per warrant upon 30 days notice if the public trading price
of the common stock equals or exceeds 110% of the then-current exercise price of
the warrants for 20 trading days within the preceding 30 trading days. If we
call the warrants for redemption, the holders of the warrants must either (i)
exercise the warrants and pay the exercise price at a time when it may be
disadvantageous for them to do so; (ii) sell the warrants at the then current
market price when they might otherwise wish to hold the warrants; or (iii)
accept the nominal redemption price, which is likely to be substantially less
than the market value of the warrants. No assurance can be given that at the
time of redemption an effective registration statement will be in effect or that
we will have complied with all appropriate state securities laws so that a
warrant holder will be able to exercise his warrants rather than accepting the
$0.01 per warrant redemption price.
ADDITIONAL INFORMATION
We file annual and special reports, proxy statements and other information
with the Securities and Exchange Commission. You may read and copy any document
we file at the Commission's Public Reference Rooms in Washington, D.C., New
York, New York, and Chicago, Illinois. Please call the Commission at
1-800-SEC-0330 for further information on the Public Reference Rooms. You can
also obtain copies of our Commission filings by going to the Commission's
website at http://www.sec.gov.
The Commission allows us to "incorporate by reference" the information we
file with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information that we file
with the Commission will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings made
<PAGE>
with the Commission under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934. This prospectus is part of a registration statement we
filed with the Commission.
We incorporate the following documents by reference:
1. Our Annual Report on Form 20-F for the fiscal year ended March 31, 1999
filed with the Commission on August 4, 1999; and
2. Our Forms 6-K filed with the Commission on August 3, 1999 and February
10, 2000 (which contains our financial statements at and for the six months
ended September 30, 1999).
You may request a copy of these filings at no charge by a written or oral
request to Henry F. Schlueter, Schlueter & Associates, P.C., 1050 Seventeenth
Street, Denver, Colorado 80265 (303) 292-3883. In addition, you can obtain these
filings electronically at the Commission's worldwide website at
http://www.sec.gov/edgarhp/htm.
You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement to this prospectus. We have not
authorized anyone else to provide you with different information. We are not
making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information in this prospectus or any
supplement to this prospectus is accurate as of any date other than the date on
the front of those documents.
FORWARD-LOOKING STATEMENTS
Some statements contained in this prospectus that are not statements of
historical facts are "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements include, among others, statements regarding our future economic
performance and financial position and plans and objectives of management for
future operations including plans and objectives relating to the development and
sale of telecommunications products. Forward-looking statements are subject to
factors that could cause the actual results to differ materially from future
results expressed or implied by forward-looking statements. They are based on
assumptions, including the following:
o that political, economic and commercial conditions in Hong Kong and
China will not change materially or adversely
o that competitive conditions affecting us will not change materially or
adversely
o that demand for our products will be strong
o that we will retain existing key management personnel
o that our forecasts will accurately anticipate market demand
o that there will be no material adverse change in our operations or
business
<PAGE>
Assumptions relating to these factors involve judgments with respect to,
among other things, future economic, competitive and market conditions and
future business decisions, all of which are difficult or impossible to predict
accurately and many of which are beyond our control. Although we believe that
the assumptions underlying the forward-looking statements are reasonable, any of
the assumptions could prove inaccurate and, therefore, there can be no assurance
that the results contemplated in forward-looking information will be realized.
We intend that the forward-looking statements contained in this prospectus be
subject to the safe harbors created by Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of 1934.
USE OF PROCEEDS
If all of the 2,174,403 warrants are exercised, of which there can be no
assurance, the maximum estimated net proceeds to us will be approximately
$18,901,017 after deduction of fees and the expenses of this offering.
We intend to use the net proceeds for working capital. Working capital may
be used for further expansion of our operations, on-going operations, general
and administrative expenses or any other use which the board of directors deems
appropriate.
Pending utilization, we intend to make temporary investments of the
proceeds in bank certificates of deposit, interest-bearing savings and checking
accounts, prime commercial paper or government obligations. An investment in
interest-bearing assets, if continued for an extensive period of time within the
definitions of the Investment Company Act of 1940, as amended, could subject us
to classification as an "investment company" under the Investment Company Act of
1940 and to registration and reporting requirements thereunder, although we do
not intend this to be a result.
DETERMINATION OF OFFERING PRICE
The offering price of the 1,087,201 shares offered upon the exercise of the
warrants is $17.50 per share. The exercise price per share was determined by us
and bears no relationship to the market price of our common stock, the
prevailing market conditions, our operating results in recent periods, our book
value or other recognized criteria of value.
<PAGE>
SELLING SECURITYHOLDERS
The following table sets forth
o the number of shares of our common stock owned of record and
beneficially by the selling securityholders as of the date of this prospectus,
o the number of shares of our common stock that are to be offered and
sold by the selling securityholders from time to time under this prospectus,
assuming exercise of all of the warrants to be issued to selling
securityholders,
o the number of shares of our common stock to be owned by the selling
securityholders after the offering, assuming the sale of all 600,000 of the
shares of our common stock by the selling securityholders and
o the percent of our outstanding shares to be owned by the selling
securityholders after the offering assuming that all 2,174,403 dividend warrants
are exercised.
<TABLE>
<CAPTION>
Shares Beneficially Shares Beneficially
Selling Owned Shares to be Owned % Owned
Securityholder Prior to Offering Offered After Offering After Offering
-------------- ----------------- ------- -------------- --------------
<S> <C> <C> <C> <C>
J. Stewart Jackson 800,000 350,000 450,000 6.8%
Profit Concepts, Ltd. 250,000 250,000 0 0.0%
</TABLE>
J. Stewart Jackson is a member of our board of directors. An aggregate of
100,000 of the shares beneficially owned by Mr. Jackson underlie dividend
warrants to be issued to Mr. Jackson under this prospectus. All of the shares
listed above as owned by Profit Concepts, Ltd. underlie warrants previously
issued to that securityholder.
PLAN OF DISTRIBUTION
We have agreed to issue warrants as a dividend to the record holders of our
warrants at the close of trading on January 19, 2000, and to all persons who
exercised warrants between November 22, 1999 and the close of trading on January
19, 2000. The warrants will be distributed immediately after the effective date
of this registration statement. The warrants entitle the holders to purchase up
to 1,087,201 shares of common stock at an exercise price of $17.50 per share.
We are offering the shares of common stock underlying the warrants. Those
shares may be offered on a delayed or continuous basis under Rule 415 under the
Securities Act. No underwriter or placement agent will be involved and no
commissions or similar compensation will be paid to any person. You may resell
the warrants and/or shares of common stock from time to time in transactions
(which may include block transactions) on the Nasdaq SmallCap Market, in
negotiated transactions or through other methods of sale, at market prices
prevailing at the time of sale, or at negotiated prices. You may sell the
warrants and/or common stock directly to purchasers or through broker-dealers
that may act as agents or principals. Such broker-dealers may receive
compensation in the form of discount, concessions or commissions from you and/or
the purchasers of the warrants and/or shares of common stock.
<PAGE>
You and any broker-dealers that act as a principal in connection with the
sale of the warrants and/or shares of common stock may be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act and any
commissions received by them and any profit on the resale of the warrants and/or
shares of common stock might be deemed to be underwriting discounts and
commissions under the Securities Act. You may agree to indemnify any agent,
dealer or broker-dealer that participates in transactions involving sales of the
warrants and/or shares of common stock against some forms of liability,
including liability arising under the Securities Act. We will not receive any
proceeds from the issuance of the warrant dividend or from the sales of warrants
or shares of common stock by you. Transactions involving the warrants and/or
shares of common stock or even the potential of such sales, may have an adverse
effect on the market price of the warrants and/or our common stock.
We have agreed to pay all expenses incurred in connection with the
registration of the securities we are offering. You will be responsible to pay
any and all commissions, discounts and other payments to broker-dealers incurred
in connection with your sale of the warrants and/or common stock.
In order to comply with certain states' securities laws, if applicable, the
common stock may be sold in those jurisdictions only through registered or
licensed brokers or dealers. In certain states the common stock may not be sold
unless it has been registered or qualified for sale in any of those states, or
unless an exemption from registration or qualification is available and is
obtained.
DESCRIPTION OF SECURITIES
Common Stock
Our authorized capital consists of 23,333,334 shares of common stock,
$0.003 par value per share.
Holders of common stock are entitled to one vote for each whole share on
all matters to be voted upon by shareholders, including the election of
directors. Holders of common stock do not have cumulative voting rights in the
election of directors. All shares of common stock are equal to each other with
respect to liquidation and dividend rights. Holders of common stock are entitled
to receive dividends if and when declared by the board of directors out of funds
legally available therefor under British Virgin Islands law. In the event of the
liquidation of the company, all assets available for distribution to the holders
of the common stock are distributable among them according to their respective
holdings. Holders of common stock have no preemptive rights to purchase any
additional, unissued shares of common stock. All of the outstanding shares of
common stock of the company are, and those to be issued pursuant to this
offering will be, fully paid and non-assessable.
Under our Memorandum and Articles of Association and the laws of the
British Virgin Islands, our Memorandum and Articles of Association may be
amended by the board of directors without shareholder approval. This includes
amendments increasing or reducing the authorized capital stock of the company
and increasing or reducing the par value of our shares. The board of directors
may also increase the capital of the company without shareholder approval by
<PAGE>
transferring a portion of the company's surplus to capital or reduce the
company's capital by transferring a portion of the company's capital to surplus.
Our ability to amend our Memorandum and Articles of Association without
shareholder approval could have the effect of delaying, deterring or preventing
a change in control of the company without any further action by the
shareholders, including but not limited to a tender offer to purchase the common
stock at a premium over then current market prices.
Under United States law, majority and controlling shareholders generally
have certain fiduciary responsibilities to the minority shareholders.
Shareholder action must be taken in good faith and actions by controlling
shareholders that are obviously unreasonable may be declared null and void. The
British Virgin Islands law protecting the interests of the minority shareholders
may not be as protective in all circumstances as the laws protecting minority
shareholders in United States jurisdictions. While British Virgin Islands law
does permit a shareholder of a British Virgin Islands company to sue its
directors derivatively, i.e., in the name of and for the benefit of the company,
and to sue the company and its directors for his benefit and the benefit of
others similarly situated, the circumstances in which any action may be brought
and the procedures and defenses that may be available with respect to any action
may result in the rights of shareholders of a British Virgin Islands company
being more limited than those rights of shareholders in a United States company.
Warrants
We are authorized to issue 2,174,403 warrants that will be issued to you
after the effectiveness of the registration statement which includes this
prospectus. The warrants covered by this prospectus entitle the holders thereof
to purchase 1,087,201 shares of common stock at an exercise price of $17.50 per
share. We will not issue fractional shares upon exercise of warrants but,
instead, we will pay the warrant holder the current market price of the
fractional share, in cash. The warrants are exercisable for a period beginning
on the effective date of the registration statement and ending December 31,
2001. In the event the warrants are not exercised within such period, all
unexercised warrants will expire and be void and of no further force or effect.
We may extend the warrant exercise period in our discretion. The warrants will
expire, become void and be of no further force or effect upon conclusion of the
applicable exercise period, or any extension thereof. The warrants will be
governed by the terms of a warrant agreement between U.S. Stock Transfer, Inc.,
as warrant agent, and us. In our option, we may redeem the warrants upon 30 days
notice, at a redemption price of $.01 per warrant, if the public trading price
for our common stock equals or exceeds 110% of the then current exercise price
of the warrants for 20 trading days within the preceding 30 trading days. The
exercise price and the number and kind of common shares to be received upon
exercise of the warrants are subject to adjustment on the occurrence of events
such as stock splits, stock dividends or recapitalization. In the event of our
liquidation, dissolution or winding up, the holders of the warrants will not be
entitled to participate in the distribution of our assets. Additionally, holders
of the warrants have no voting, pre-emptive, liquidation or other rights of
shareholders, and no dividends will be declared on the warrants or the shares
underlying the warrants.
The warrants will be issued to you as part of a dividend to our warrant
holders, and upon issuance will be freely tradable. Prior to this offering, our
warrants have been traded on the Nasdaq SmallCap Market. Continuation of low
volume trading may adversely affect the liquidity of large holdings and may
contribute to high volatility of the price of our warrants. Additionally, we
cannot assure you that a public trading market for the warrants will continue.
<PAGE>
Transfer and Warrant Agent
The transfer agent and registrar for the common stock and the warrant agent
for the public warrants is U.S. Stock Transfer Corporation, 1745 Gardena Avenue
#200, Glendale, California 91204.
Reports to Shareholders
We intend to furnish annual reports to shareholders which include audited
financial statements reported on by our independent accountants and quarterly
reports for each of our first three quarters which contain unaudited financial
statements. We will continue to comply with the periodic reporting requirements
imposed on foreign issuers by the Exchange Act. We plan to furnish the same
annual and quarterly reports to holders of our public warrants.
Exchange Controls and Other Limitations Affecting Shareholders
There are no exchange control restrictions on payments of dividends on our
common stock or on the conduct of our operations either in Hong Kong, where our
principal executive offices are located, or the British Virgin Islands, where we
are incorporated. Other jurisdictions in which we conduct operations may have
various exchange controls. Taxation and repatriation of profits regarding our
China operations are regulated by Chinese laws and regulations. To date, these
controls have not had and are not expected to have a material impact on our
financial results. There are no material British Virgin Islands laws that impose
foreign exchange controls on us or that affect the payment of dividends,
interest or other payments to nonresident holders of our securities. British
Virgin Islands law and our Memorandum and Articles of Association impose no
limitations on the right of nonresident or foreign owners to hold or vote our
securities.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, we will have 6,599,811 shares of common
stock outstanding if all of the dividend warrants are exercised. Of these,
approximately 3,889,333 shares of common stock, other than shares held by our
affiliates, will be freely transferable and tradeable without restriction under
the Securities Act. This includes the 1,087,201 shares to be issued upon
exercise of the warrants. The remaining 2,710,478 shares of common stock are
restricted securities. These shares may only be sold in the public United States
market under an effective registration statement or in accordance with Rule 144
promulgated under the Securities Act.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are required to be aggregated) who has beneficially owned his or
her shares for at least one year, including our affiliates, would be entitled to
sell within any three-month period a number of shares equal to the greater of 1%
of the then outstanding shares of our common stock (approximately 65,998 shares
immediately after this offering if all of the warrants are exercised) or the
average weekly trading volume of our common stock during the four calendar weeks
preceding the filing of the required notice of the sale. Sales under Rule 144
also are subject to certain manner of sale restrictions, notice requirements and
the availability of current public information about us. Under Rule 144(k), a
person who is not deemed to have been an affiliate of ours at any time during
the 90 days preceding a sale, and who has beneficially owned the shares proposed
to be sold for at least two years, is entitled to sell the shares without regard
to the requirements described above. Sales of substantial numbers of shares of
common stock pursuant to a registration statement, Rule 144 or otherwise,
whether in the United States or abroad, could adversely affect the market price
of the common stock.
We also have reserved 271,700 shares of common stock for issuance upon
exercise of certain outstanding options, 250,000 selling shareholder shares
reserved for issuance upon exercise of certain restricted warrants and 986,300
shares for issuance upon exercise of stock options which may be granted in the
future under our stock option plans. If the holders of the options exercise the
options, the shares of common stock to be issued will constitute restricted
securities, subject to Rule 144.
<PAGE>
RECENT DEVELOPMENTS
Recent Warrant Exercises
An aggregate of 1,637,776 of our warrants, which expired on January 31,
2000, were exercised between November 22, 1999 and the expiration date, for the
purchase of 1,637,776 shares of our common stock at $7.35 per share. This
resulted in an equity infusion of over $12,000,000. An additional 25,597
warrants were exercised in 1998, for the purchase of 25,597 shares at $7.35 per
share.
New Products
New Wireless Communications Products. On January 24, 2000, we announced
that we had received significant contract manufacturing orders for a family of
two-way radios (walkie-talkies) and had commenced production shipments of this
new product. Our two-way radio products operate on the Family Radio System
("FRS") channel frequency and have a range of up to two miles. Our two-way radio
products include entry-level models with one channel up to the top of the line
unit, which offers 14 channels and as many as 38 sub-channels on each frequency.
All units include a "power indicator" light. Some units include a "call button"
that sends out a tone before the user sends his message. The higher priced
models come with a setting that changes the tone to vibration, similar to pagers
or cell phones.
New Cordless Telephone Products. On February 2, 2000, we announced that we
had received significant contract manufacturing orders for a family of 900 MHz
cordless telephones and had commenced production shipments of this product.
Hand-Held MP3 Music Player. On February 14, 2000, we announced that we have
developed a new hand-held MP3 music player. The product features solid-state
technology, flash memory and the ability to download through the internet and
store high-fidelity music. Smaller than a minidisk player, the MP3 can fit into
a shirt pocket. It comes in either a 32MB version, which can hold up to 30
minutes of near CD quality music which can be doubled by adding a 32MB flash
memory cartridge, or a 64MB version, which includes the cartridge. The MP3
player comes in a compact magnesium case and includes a voice recorder with up
to 12 hours of dictation capacity. It features a square LCD and control buttons
which follow the convention of CD players.
New Director
J. Stewart Jackson, IV was elected to our Board of Directors by the
shareholders at our Annual Shareholder Meeting held in Denver, Colorado on
January 10, 2000, increasing the number of directors from six to seven. From
1962 until its merger with Republic Industries in 1996, Mr. Jackson served in
various management capacities, including president, of Denver Burglar Alarm Co.,
Inc., a business founded by his family. In addition, in the mid-1960's, Mr.
Jackson founded Denver Burglar Alarm Products, a separate company which
invented, patented, manufactured, distributed and installed contained ionization
smoke detectors and which was later sold to a conglomerate manufacturer. After
the merger of Denver Burglar Alarm Co., Inc., Mr. Jackson founded Jackson
Burglar Alarm Co., Inc., of which he is currently president. Mr. Jackson served
on the advisory board of directors for Underwriter's Laboratories for burglar
and fire alarm systems for 25 years and has been an officer in the Central
Station Protection Association, which, along with the National Burglar Alarm
Association, was formed by his family in the late 1940's. Mr. Jackson was
graduated from the University of Colorado in 1962 with a degree in Business
Management and Engineering.
Mr. Jackson currently owns 700,000 shares of our common stock. In addition,
he is entitled to receive dividend warrants to purchase 100,000 shares of our
common stock. These share holdings, not including the shares underlying the
warrants, constitute approximately 12.7% of our outstanding shares of common
stock.
<PAGE>
Options
The following table sets forth all options to purchase common stock granted
by us which are outstanding as of the date of this prospectus:
Number of Exercise Price Expiration
Options per Share Date
------- --------- ----
10,000 $5.06 September 8, 2007
241,700 $8.00 January 6, 2010
20,000 $8.125 January 12, 2010
At the annual meeting of shareholders which was held on January 10, 2000,
our shareholders approved an increase in the number of options which may be
granted under the 1996 Stock Option Plan from 400,000 to 900,000 and an increase
in the number of options which may be granted under the 1996 Non-Employee
Directors' Stock Option Plan from 100,000 to 600,000. After the increases, there
were 500,000 options available for issuance under the 1996 Stock Option Plan,
23,700 of which have since been granted, and 530,000 options available for
issuance under the 1996 Non-Employee Directors' Stock Option Plan, 20,000 of
which have since been granted.
Principal Shareholders
The following table sets forth, as of February 29, 2000, the beneficial
ownership of our common stock by each person known to us to beneficially own
more than 5% of our common stock outstanding as of that date and by our officers
and directors as a group. Except as otherwise indicated, all shares are owned
directly.
Person or Group Amount Owned
--------------- ------------
Options/Warrants
Shares of to Purchase Percent of
Common Stock Common Stock Class
------------ ------------ -----
Anthony So 1,651,195 158,000 31.9%
J. Stewart Jackson 700,000 100,000 14.3%
Officers and directors
as a group (8 persons) 2,710,478 338,000 52.1%
LEGAL MATTERS
The validity of the common stock underlying the warrants will be passed
upon by Harney, Westwood & Riegels, Tortola, British Virgin Islands, who have
also advised us on all matters of BVI law disclosed in this prospectus.
Schlueter & Associates, P.C., Denver, Colorado has acted as United States
counsel for us in connection with this offering. Wong & Fok, Solicitors, Hong
Kong, has acted as Hong Kong counsel with respect to all matters in this
prospectus concerning the Hong Kong subsidiaries and Hong Kong law.
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference to the Annual Report on Form 20-F for the year ended March 31, 1999
have been so incorporated in reliance on the report of PricewaterhouseCoopers,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
<PAGE>
[Back Cover Page]
BONSO ELECTRONICS INTERNATIONAL INC.
1,087,201 Shares of Common Stock
Issuable on Exercise of Common Stock Purchase Warrants
and
600,000 Shares of Common Stock Offered by Selling Shareholders
TABLE OF CONTENTS
Page
Prospectus Summary ....................................................
Risk Factors ..........................................................
Additional Information ................................................
Forward-Looking Statements ............................................
Use of Proceeds .......................................................
Determination of Offering Price .......................................
Selling Securityholders ...............................................
Plan of Distribution ..................................................
Description of Securities .............................................
Shares Eligible for Future Sale .......................................
Recent Developments ...................................................
Legal Matters .........................................................
Experts ...............................................................
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING
MADE HEREBY. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES
OTHER THAN THE SECURITIES OFFERED BY THIS PROSPECTUS TO WHICH IT RELATES, OR AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY TO ANY PERSON IN ANY
JURISDICTION WHERE SUCH OFFER TO SELL OR SOLICITATION OF AN OFFER TO BUY WOULD
BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR SALE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THE COMPANY HAS UNDERTAKEN TO
FILE POST-EFFECTIVE AMENDMENTS TO THE REGISTRATION STATEMENT OF WHICH THIS
PROSPECTUS IS A PART IF MATERIAL CHANGES OR EVENTS OCCUR DURING THE WARRANT
EXERCISE PERIOD OR ANY EXTENSION THEREOF.
<PAGE>
PART II
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated expenses in connection with
this registration:
SEC Registration Fees ..................... $ 6,925
Nasdaq Application and Entry Fees ......... $ 44,750
Printing Registration Statement, Prospectus
and Related Documents .................. $ 25,000(1)
Accounting Fees and Expenses .............. $ 10,000(1)
Legal Fees and Expenses ................... $ 30,000(1)
Transfer/Warrant Agent Fees and Expenses .. $ 1,500(1)
Miscellaneous ............................. $ 6,825(1)
--------
Total ..................................... $125,000(1)
- -----------------------
(1) Estimated
Item 15. Indemnification of Directors and Officers.
The Articles of Association of Bonso provide that, subject to British
Virgin Islands law, every director or other officer of Bonso shall be entitled
to be indemnified out of the assets of Bonso against all losses or liabilities
which he may sustain or incur in or about the execution of the duties of his
office or otherwise in relation thereto. No director or other officer shall be
liable for any loss, damage or misfortune which may happen to, or be incurred by
Bonso in the execution of the duties of his office, or in relation thereto.
Item 16. Exhibits.
The following Exhibits are filed as part of this Registration Statement, or
are incorporated by reference to previously filed documents:
Exhibit No. Description
- ----------- -----------
4.1 Form of Warrant Agreement between Bonso and the Warrant
Agent (with form of Warrant certificate annexed)
4.2 Specimen Certificate of Common Stock, $.003 par value (1)
and relevant portions of Memorandum and Articles of
Association of the Registrant, as amended
5.1 Opinion and consent of Schlueter & Associates, P.C. as (2)
to legality of securities being registered
5.2 Opinion and consent of Harney, Westwood & Riegels, (2)
P.O. Box 71, Road Town, Tortola, British Virgin
Islands, as to the legality of securities being
registered
II-1
<PAGE>
Exhibit No. Description
- ----------- -----------
5.3 Opinion and consent of Wong & Fok, Solicitors, Room (2)
2014-15, Hutchison House, 10 Harcourt Road, Central,
Hong Kong, as to certain matters regarding the Hong
Kong subsidiaries and Hong Kong law
5.4 Opinion and consent of Shenzhen Jinyuan Law Firm, 7/F (3)
Office Tower, Shun Hing Square, Di Wang Commercial
Centre, Shen Nan Dong Road, Shenzhen, PRC 518008, as to
certain matters regarding thePRC subsidiary and PRC law
23.1 Consent of PricewaterhouseCoopers
23.2 Consent of Schlueter & Associates, P.C. (included in (2)
Exhibit 5.1)
23.3 Consent of Harney, Westwood & Riegels (included in (2)
Exhibit 5.2)
23.4 Consent of Wong & Fok, Solicitors (included in (2)
Exhibit 5.3)
23.5 Consent of Shenzhen Jinyuan Law Firm (included in (3)
Exhibit 5.4)
- ----------------
(1) This documemnt has been previously filed as Exhibit 4.1 to the Registrant's
Registration Statement on Form F-2 (SEC Registration No. 33-84872), and is
hereby incorporated by reference.
(2) To be filed by amendment.
(3) This documemnt has been previously filed as an Exhibit to the Registrant's
Registration Statement on Form F-3 (SEC Registration No. 333-9002), and is
hereby incorporated by reference.
Item 17. Undertakings
With regard to the securities of the Registrant being registered pursuant
to Rule 415 under the Securities Act of 1933, the Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement; and
II-2
<PAGE>
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) To file a post-effective amendment to the Registration Statement to
include any financial statements required by Rule 3-19 of Regulation S-X at the
start of any delayed offering or throughout a continuous offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 14 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form F-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Hong Kong, on March 10, 2000.
BONSO ELECTRONICS INTERNATIONAL INC.
By: /s/ Anthony So
------------------
Anthony So, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Date: March 10, 2000 /s/ Anthony So
--------------------------------------
Anthony So, President (Chief Executive
Officer), Secretary, Treasurer (Chief
Financial Officer) and Chairman of the
Board of Directors
Date: March 10, 2000 /s/ Kim Wah Chung
--------------------------------------
Kim Wah Chung, Director
Date: March 10, 2000 /s/ Woo Ping Fok
--------------------------------------
Woo Ping Fok, Director
Date: March 10, 2000 /s/ Kam Sun Luk
--------------------------------------
Kam Sun Luk, Director
Date: March 10, 2000 /s/ Cathy Pang
--------------------------------------
Cathy Pang, Director
Date: March __, 2000
--------------------------------------
George O'Leary, Director
Date: March __, 2000
--------------------------------------
J. Stewart Jackson, Director
SCHLUETER & ASSOCIATES, P.C.
Date: March 14, 2000 /s/ Henry F. Schlueter
--------------------------------------
Henry F. Schlueter, Authorized
Representative in the United States
II-4
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
4.1 Form of Warrant Agreement between Bonso and the Warrant
Agent (with form of Warrant certificate annexed)
4.2 Specimen Certificate of Common Stock, $.003 par value (1)
and relevant portions of Memorandum and Articles of
Association of the Registrant, as amended
5.1 Opinion and consent of Schlueter & Associates, P.C. as (2)
to legality of securities being registered
5.2 Opinion and consent of Harney, Westwood & Riegels, (2)
P.O. Box 71, Road Town, Tortola, British Virgin
Islands, as to the legality of securities being
registered
5.3 Opinion and consent of Wong & Fok, Solicitors, Room (2)
2014-15, Hutchison House, 10 Harcourt Road, Central,
Hong Kong, as to certain matters regarding the Hong
Kong subsidiaries and Hong Kong law
5.4 Opinion and consent of Shenzhen Jinyuan Law Firm, 7/F (3)
Office Tower, Shun Hing Square, Di Wang Commercial
Centre, Shen Nan Dong Road, Shenzhen, PRC 518008, as to
certain matters regarding thePRC subsidiary and PRC law
23.1 Consent of PricewaterhouseCoopers
23.2 Consent of Schlueter & Associates, P.C. (included in (2)
Exhibit 5.1)
23.3 Consent of Harney, Westwood & Riegels (included in (2)
Exhibit 5.2)
23.4 Consent of Wong & Fok, Solicitors (included in (2)
Exhibit 5.3)
23.5 Consent of Shenzhen Jinyuan Law Firm (included in (3)
Exhibit 5.4)
- ----------------
(1) This documemnt has been previously filed as Exhibit 4.1 to the Registrant's
Registration Statement on Form F-2 (SEC Registration No. 33-84872), and is
hereby incorporated by reference.
(2) To be filed by amendment.
(3) This documemnt has been previously filed as an Exhibit to the Registrant's
Registration Statement on Form F-3 (SEC Registration No. 333-9002), and is
hereby incorporated by reference.
II-5
BONSO ELECTRONICS INTERNATIONAL INC.
WARRANT AGREEMENT
-----------------
THIS AGREEMENT (the "Agreement"), dated as of _____________, 2000, is
between BONSO ELECTRONICS INTERNATIONAL INC., an International Business Company
organized in the British Virgin Islands (the "Company"), and U.S. STOCK TRANSFER
CORPORATION as warrant agent (the "Warrant Agent").
WHEREAS, the Company has declared a dividend payable to all record holders of
the Company's warrants at the close of trading on January 19, 2000 and to all
persons who exercised the Company's warrants during the period commencing
November 22, 1999 and ending at the close of business on January 19, 2000, said
dividend to consist of common stock purchase warrants (the "Warrants"); and
WHEREAS, in connection with the warrant dividend, the Company will issue
2,174,403 Warrants evidencing the right to purchase an aggregate of 1,087,201
shares of Common Stock as constituted on the date hereof; and
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance, registration, transfer, exchange, exercise and redemption of the
Warrants;
NOW, THEREFORE, in consideration of the promises and the mutual agreements
herein set forth, the parties agree as follows:
SECTION 1. Appointment of Warrant Agent. The Company hereby appoints the
Warrant Agent to act as agent of the Company for the Warrants, and the Warrant
Agent hereby accepts such appointment and agrees to perform the same in
accordance with the terms and conditions set forth in this Agreement.
SECTION 2. Warrants and Form of Warrant Certificates.
(A) Each two Warrants shall entitle the registered holder of the
certificate representing such Warrants to purchase upon the exercise thereof one
share of Common Stock, subject to the adjustments provided for in Section 9
hereof, at any time after issuance of the the Warrants until 2:00 p.m., Pacific
Time, on December 31, 2001 (the "Expiration Date"), unless earlier redeemed
pursuant to Section 11 hereof. At any time and from time to time prior to the
Expiration Date then in effect, the Company in its discretion may extend the
Expiration Date. In case the Company shall determine to extend the Expiration
Date, it shall so notify the Warrant Agent and the registered holders of the
outstanding Warrants, by mailing, first class, postage prepaid, notice that the
Expiration Date has been so extended, to such registered holders at their
addresses as they shall appear on the records of the Warrant Agent. Any notice
mailed in the manner provided herein shall be conclusively presumed to have been
duly given whether or not the registered holder actually receives such notice.
Upon the mailing of such notice as herein provided, the Expiration Date as so
extended shall be deemed the Expiration Date for all purposes of this Agreement.
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(B) The Warrant certificates shall be in registered form only. The text of
the Warrant certificate and the form of election to exercise a Warrant on the
reverse side thereof shall be substantially in the form of Exhibit A attached
hereto. Each Warrant certificate shall be dated as of the date of issuance
thereof by the Warrant Agent (whether upon initial issuance or upon transfer or
exchange), and shall be executed on behalf of the Company by the manual or
facsimile signature of its President or a Vice President, under its corporate
seal, affixed or in facsimile, and attested to by the manual or facsimile
signature of its Secretary or an Assistant Secretary. In case any officer of the
Company who shall have signed any Warrant certificate shall cease to be such
officer of the Company prior to the issuance thereof, such Warrant certificate
may nevertheless be issued and delivered with the same force and effect as
though the person who signed the same had not ceased to be such officer of the
Company. Any such Warrant certificate may be signed on behalf of the Company by
persons who at the actual date of execution of such Warrant certificate, are the
proper officers of the Company, although at the nominal date of such Warrant
certificate any such person shall not have been such officer of the Company.
SECTION 3. Exercise of Warrants, Duration and Warrant Price. Subject to the
provisions of this Agreement, each registered holder of one or more Warrant
certificates shall have the right, which may be exercised as in such Warrant
certificates expressed, to purchase from the Company (and the Company shall
issue and sell to such registered holder) the number of shares of Common Stock
to which the Warrants represented by such certificates are at the time entitled
hereunder.
Each Warrant not exercised by its Expiration Date shall become void, and
all rights thereunder and a in respect thereof under this Agreement shall cease
on such date.
A Warrant may be exercised by the surrender of the certificate representing
such Warrant to the Company, at the office of the Warrant Agent, or at the
office of a successor to the Warrant Agent, with the purchase form set forth on
the reverse thereof duly executed and properly endorsed with the signatures
properly guaranteed, and upon payment in full to the Warrant Agent for the
account of the Company of the Warrant Price (as hereinafter defined) for the
number of shares of Common Stock as to which the Warrant is exercised. Such
Warrant Price shall be paid in full in cash or by certified or official bank
check payable in United States currency to the order of the Warrant Agent.
The price per share of Common Stock at which the Warrants may be exercised
(the "Warrant Price") shall be $17.50, subject to adjustment in accordance with
Section 9 hereof and reduction as hereinafter provided. At any time and from
time to time prior to the Expiration Date, the Company in its discretion may
permanently or temporarily (for such period as the Company may determine) reduce
the Warrant Price. In case the Company shall determine to reduce the Warrant
Price, it shall so notify the Warrant Agent and the registered holders of the
outstanding Warrants, by mailing, first class, postage prepaid, notice of the
reduced Warrant Price (and if temporarily reduced, of the period during which
the Warrants may be exercised at such reduced price) to such registered holders
at their addresses as they shall appear on the records of the Warrant Agent. Any
notice mailed in the manner provided herein shall be conclusively presumed to
have been duly given whether or not the registered holder actually receives such
notice.
2
<PAGE>
Subject to the further provisions of this Section 3 and of Section 6
hereof, upon such surrender of Warrant certificates and payment of the Warrant
Price as aforesaid, the Company shall issue and cause to be delivered, with all
reasonable dispatch to or upon the written order of the registered holder of
such Warrants and in such name or names as such registered holder may designate,
a certificate or certificates for the number of securities so purchased upon the
exercise of such Warrants, together with cash, as provided in Section 10 of this
Agreement, in respect of any fraction of a share or security otherwise issuable
upon such surrender. All shares of Common Stock issued upon the exercise of a
Warrant shall be validly issued, fully paid and nonassessable and shall be
listed on any and all national securities exchanges upon which any other shares
of the Common Stock or securities otherwise issuable are then listed.
Certificates representing such securities shall be deemed to have been
issued and any person so designated to be named therein shall be deemed to have
become a holder of record of such securities as of the date of the surrender of
such Warrants and payment of the Warrant Price as aforesaid; provided, however,
that if, at the date of surrender of such Warrants and payment of such Warrant
Price, the transfer books for the Common Stock or other securities purchasable
upon the exercise of such Warrants shall be closed, the certificates for the
securities in respect of which such Warrants are then exercised shall be
issuable as of the date on which such books shall next be opened and until such
date the Company shall be under no duty to deliver any certificate for such
securities. The rights of purchase represented by each Warrant certificate shall
be exercisable, at the election of the registered holders thereof, either as an
entirety or from time to time for part of the number of securities specified
therein and, in the event that any Warrant certificate is exercised in respect
of less than all of the securities specified therein at any time prior to the
Expiration Date of the Warrant certificate, a new Warrant certificate or
certificates will be issued to such registered holder for the remaining number
of securities specified in the Warrant certificate so surrendered.
SECTION 4. Countersignature and Registration. The Warrant Agent shall
maintain books (the "Warrant Register") for the registration and the
registration of transfer of the Warrants. Upon the initial issuance of the
Warrants, the Warrant Agent shall issue and register the Warrants in the names
of the respective holders thereof in such denominations and otherwise in
accordance with instructions delivered to the Warrant Agent by the Company. The
Warrant certificates shall be countersigned manually or by facsimile by the
Warrant Agent (or by any successor to the Warrant Agent then acting as such
under this Agreement) and shall not be valid for any purpose unless so
countersigned. Warrant certificates may be so countersigned, however, by the
Warrant Agent and delivered by the Warrant Agent, notwithstanding that the
persons whose manual or facsimile signatures appear thereon as proper officers
of the Company shall have ceased to be such officers at the time of such
countersignature or delivery.
Prior to due presentment for registration of transfer of any Warrant
certificate, the Company and the Warrant Agent may deem and treat the person in
whose name such Warrant certificate shall be registered upon the Warrant
Register (the "registered holder") as the absolute owner of such Warrant
certificate and of each Warrant represented thereby (notwithstanding any
notation of ownership or other writing on the Warrant certificate made by anyone
other than the Company or the Warrant Agent), for the purpose of any exercise
thereof, of any distribution or notice to the holder thereof, and for all other
purposes, and neither the Company nor the Warrant Agent shall be affected by any
notice to the contrary.
3
<PAGE>
SECTION 5. Transfer and Exchange of Warrants. The Warrant Agent shall
register the transfer, from time to time, of any outstanding Warrant upon the
Warrant Register, upon surrender of the certificate evidencing such Warrant for
transfer, properly endorsed with signatures properly guaranteed and accompanied
by appropriate instructions for transfer. Upon any such transfer, a new Warrant
certificate representing an equal aggregate number of Warrants shall be issued
to the transferee and the surrendered Warrant certificate shall be cancelled by
the Warrant Agent. The Warrant certificates so cancelled shall be delivered by
the Warrant Agent to the Company from time to time upon request.
Warrant certificates may be surrendered to the Warrant Agent, together with
a written request for exchange, and thereupon the Warrant Agent shall issue in
exchange therefor one or more new Warrant certificates as requested by the
registered holder of the Warrant certificate or certificates so surrendered,
representing an equal aggregate number of Warrants.
The Warrant Agent shall not be required to effect any registration of
transfer or exchange which w. in the issuance of a Warrant certificate for a
fraction of a Warrant.
No service charge shall be made for any exchange or registration of transfer of
Warrant certificates.
The Warrant Agent is hereby authorized to countersign and to deliver, in
accordance with the terms of this Agreement, the new Warrant certificates
required to be issued pursuant to the provisions hereof, and the Company,
whenever required by the Warrant Agent, will supply the Warrant Agent with
Warrant certificates duly executed on behalf of the Company for such purpose.
SECTION 6. Payment of Taxes. The Company will pay any documentary stamp
taxes attributable to the initial issuance of the shares of Common Stock
issuable upon the exercise of Warrants; provided, however, that the Company
shall not be required to pay any tax or taxes which may be payable in respect of
any transfer involved in the issuance or delivery of any certificates for
Warrants or for shares of Common Stock in a name other than that of the
registered holder of the Warrants surrendered in respect thereof, and in such
case neither the Company nor the Warrant Agent shall be required to issue or
deliver any certificate for shares of Common Stock or any Warrant certificate
until the person requesting the same has paid to the Company the amount of such
tax or has established to the Company's satisfaction that such tax has been
paid.
SECTION 7. Mutilated or Missing Warrants. In case any of the Warrant
certificates shall be mutilated, lost, stolen or destroyed, the Company may in
its discretion issue, and the Warrant Agent shall countersign and deliver in
exchange and substitution for and upon cancellation of the mutilated Warrant
certificate, or in lieu of and substitution for the Warrant certificate lost,
stolen or destroyed, a new Warrant certificate representing an equal aggregate
number of Warrants, but only upon receipt of evidence satisfactory to the
Company and the Warrant Agent of such loss, theft or destruction of such Warrant
certificate and reasonable indemnity, if requested, also satisfactory to them.
Applicants for such substitute Warrant certificates shall also comply with such
other reasonable conditions and pay such reasonable charges as the Company or
the Warrant Agent may prescribe.
4
<PAGE>
SECTION 8. Reservation of Common Stock. There have been reserved, and the
Company shall at all times keep reserved, out of the authorized and unissued
shares of Common Stock, a number of shares sufficient to provide for the
exercise of the rights of purchase represented by the Warrants then outstanding
(or issuable upon exercise of the Representatives' Warrants), and the transfer
agent for the Common Stock and every subsequent transfer agent for any shares of
the Company's capital stock issuable upon the exercise of any of the rights of
purchase aforesaid are hereby irrevocably authorized and directed at all times
to reserve such number of authorized and unissued shares as shall be requisite
for such purpose.
Prior to the issuance of any shares of Common Stock upon exercise of the
Warrants, the Company shall secure the listing of such shares on any and all
national securities exchanges and/or The Nasdaq Stock Market upon which any of
the other shares of the Common Stock are then listed and/or included. So long as
any unexpired Warrants remain outstanding, the Company will use its best efforts
to file such post-effective amendments to the Registration Statement or
supplements to the Prospectus filed pursuant to the Securities Act of 1933, as
amended (the "Act"), with respect to the Warrants (or such other registration
statements or post-effective amendments or supplements) as may be necessary to
permit trading in the Warrants and to permit the Company to deliver to each
person exercising a Warrant a Prospectus meeting the requirements of Section
10(a)(3) of the Act, and otherwise complying therewith; and the Company will,
from time to time, furnish the Warrant Agent with such Prospectuses in
sufficient quantity to permit the Warrant Agent to deliver such a Prospectus to
each holder of a Warrant upon the exercise thereof. The Company will use its
best efforts to obtain appropriate approvals or registrations under state "blue
sky" securities laws to permit lawful exercise of the Warrants. Notwithstanding
anything herein, Warrants may not be exercised by, or shares of Common Stock
issued to, any registered holder in any state or under any circumstance in which
such exercise would be unlawful. The Company will keep a copy of this Agreement
on file with the transfer agent for the Common Stock and with every subsequent
transfer agent for any shares of the Company's capital stock issuable upon the
exercise of the rights of purchase represented by the Warrants.
The Warrant Agent is hereby irrevocably authorized to requisition from time
to time from such transfer agent stock certificates required to honor
outstanding Warrants. The Company will supply such transfer agent with duly
executed certificates for such purpose and will itself provide or otherwise make
available any cash as provided in Section 10 of this Agreement. All Warrant
certificates surrendered in the exercise of the rights thereby evidenced shall
be cancelled by the Warrant Agent and shall thereafter be delivered to the
Company, and such cancelled Warrant certificates shall constitute sufficient
evidence of the number of shares of Common Stock which have been issued upon the
exercise of such Warrants. Promptly after the Expiration Date of the Warrants,
the Warrant Agent shall certify to the Company the aggregate number of such
Warrants which expired unexercised, and after the Expiration Date of the
Warrants, no shares of Common Stock shall be subject to reservation in respect
of such Warrants.
SECTION 9. Adjustment of Warrant Price and Number of Shares of Common
Stock. Except as otherwise provided in this Section 9, the number and kind of
securities purchasable upon the exercise of the Warrants and the Warrant Price
shall be subject to adjustment from time to time upon the happening of certain
events, as follows:
5
<PAGE>
9.1 Adjustments. The number of shares of Common Stock purchasable upon the
exercise of each and the Warrant Price shall be subject to adjustment as
follows:
(a) In case the Company shall (i) pay a dividend in Common Stock or
make a distribution in Common Stock, (ii) subdivide its outstanding Common
Stock, (iii) combine its outstanding Common Stock into a smaller number of
shares of Common Stock, or (iv) issue, by reclassification of its Common Stock,
other securities of the Company, the number of shares of Common Stock
purchasable upon exercise of a Warrant immediately prior thereto shall be
adjusted so that the holder of a Warrant shall be entitled to receive the kind
and number of shares of Common Stock or other securities of the Company which
such holder would have owned or would have been entitled to receive immediately
after the happening of any of the events described above, had the Warrant been
exercised immediately prior to the happening of such event or any record date
with respect thereto. Any adjustment made pursuant to this subsection 9.1(a)
shall become effective immediately after the effective date of such event
retroactive to the record date, if any, for such event.
(b) In case the Company shall issue rights, options, warrants or
convertible securities to all or substantially all holders of its Common Stock,
without any charge to such holders, entitling them to subscribe for or purchase
Common Stock at a price per share which is lower at the record date mentioned
below than the then Current Market Price (as defined in Section 10 hereof), the
number of shares of Common Stock thereafter purchasable upon the exercise of
each Warrant shall be determined by multiplying the number of shares of Common
Stock theretofore purchasable upon exercise of a Warrant by a fraction, of which
the numerator shall be the number of shares of Common Stock outstanding
immediately prior to the issuance of such rights, options, warrants or
convertible securities plus the number of additional shares of Common Stock
offered for subscription or purchase, and of which the denominator shall be the
number of shares of Common Stock outstanding immediately prior to the issuance
of such rights, options, warrants or convertible securities plus the number of
shares which the aggregate offering price of the total number of shares offered
would purchase at such Current Market Price. Such adjustment shall be made
whenever such rights, options, warrants or convertible securities are issued,
and shall become effective immediately and retroactive to the record date for
the determination of shareholders entitled to receive such rights, options,
warrants or convertible securities.
(c) In case the Company shall distribute to all or substantially all
holders of its Common Stock, evidences of its indebtedness or assets (excluding
cash dividends or distributions out of earnings) or rights, options, warrants or
convertible securities containing the right to subscribe for or purchase Common
Stock (excluding those referred to in subsection 9.1(b) above), then in each
case the number of shares of Common Stock thereafter purchasable upon the
exercise of each Warrant shall be determined by multiplying the number of shares
of Common Stock theretofore purchasable upon exercise of such Warrant by a
fraction, of which the numerator shall be the then Current Market Price on the
date of such distribution, and of which the denominator shall be such Current
Market Price on such date minus the then fair value (determined as provided in
subparagraph (f) below) of the portion of the assets or evidences of
indebtedness so distributed or of such subscription rights, options, warrants or
convertible securities applicable to one share. Such adjustment shall be made
6
<PAGE>
whenever any such distribution is made and shall become effective on the date of
distribution retroactive to the record date for the determination of
shareholders entitled to receive such distribution.
(d) No adjustment in the number of shares of Common Stock purchasable
pursuant to the Warrants shall be required unless such adjustment would require
an increase or decrease of at least one percent in the number of shares of
Common Stock then purchasable upon the exercise of the Warrants or, if the
Warrants are not then exercisable, the number of shares of Common Stock
purchasable upon the exercise of the Warrants on the first date thereafter that
the Warrants become exercisable; provided, however, that any adjustments which
by reason of this subsection 9.1(d) are not required to be made immediately
shall be carried forward and taken into account in any subsequent adjustment.
(e) Whenever the number of shares of Common Stock purchasable upon the
exercise of a Warrant is adjusted as herein provided, the Warrant Price payable
upon exercise of the Warrant shall be adjusted by multiplying such Warrant Price
immediately prior to such adjustment by a fraction, of which the numerator shall
be the number of shares of Common Stock purchasable upon the exercise of such
Warrant immediately prior to such adjustment, and of which the denominator shall
be the number of shares of Common Stock so purchasable immediately thereafter.
(f) To the extent not covered by subsections 9.1(b) or (c) hereof, in
case the Company shall sell or issue Common Stock or rights, options, warrants
or convertible securities containing the right to subscribe for or purchase
shares of Common Stock at a price per share (determined, in the case of such
rights, options, warrants or convertible securities, by dividing (i) the total
amount received or receivable by the Company in consideration of the sale or
issuance of such rights, options, warrants or convertible securities, plus the
total consideration payable to the Company upon exercise or conversion thereof,
by (ii) the total number of shares covered by such rights, options, warrants or
convertible securities) lower than the then Current Market Price in effect
immediately prior to such sale or issuance, then the Warrant Price shall be
reduced to a price (calculated to the nearest cent) determined by dividing (I)
an amount equal to the sum of (A) the number of shares of Common Stock
outstanding immediately prior to such sale or issuance multiplied by the then
existing Warrant Price, plus (B) the consideration received by the Company upon
such sale or issuance, by (II) the total number of shares of Common Stock
outstanding immediately after such sale or issuance. The number of shares of
Common Stock purchasable upon the exercise of a Warrant shall thereafter be that
number determined by multiplying the number of shares of Common Stock issuable
upon exercise immediately prior to such adjustment by a fraction, of which the
numerator shall be the Warrant Price in effect immediately prior to such
adjustment and the denominator shall be the Warrant Price as so adjusted. For
the purposes of such adjustments, the Common Stock which the holders of any such
rights, options, warrants or convertible securities shall be entitled to
subscribe for or purchase shall be deemed issued and outstanding as of the date
of such sale or issuance and the consideration received by the Company therefor
shall be deemed to be the consideration received by the Company for such rights,
options, warrants or convertible securities, plus the consideration or premiums
stated in such rights, options, warrants or convertible securities to be paid
for the Common Stock covered thereby. In case the Company shall sell or issue
Common Stock or rights, options, warrants or convertible securities containing
the right to subscribe for or purchase Common Stock for a consideration
consisting, in whole or in part, of property other than cash or its equivalent,
then, in determining the "price per share" of Common Stock and the
7
<PAGE>
"consideration received by the Company ~ for purposes of the first sentence of
this subsection 9. l(f), the Board of Directors shall determine the fair value
of said property, and such determination, if based upon the Board of Directors'
good faith business judgment, shall be binding upon the registered holders. In
determining the "price per share" of Common Stock, any underwriting discounts or
commissions paid to brokers, dealers or other selling agents shall not be
deducted from the price received by the Company for sales of securities
registered under the Act or issued in a private placement. There shall be no
adjustment of the Warrant Price pursuant to this subsection 9.1(f) if the amount
of such adjustment would be less than $.05 per share of Common Stock; provided,
however, that any adjustment which by reason of this provision is not required
to be made immediately shall be carried forward and taken into account in any
subsequent adjustment.
(g) Whenever the number of shares of Common Stock purchasable upon the
exercise of a Warrant or the Warrant Price is adjusted as herein provided, the
Company shall cause to be promptly mailed to the Warrant Agent and each
registered holder of a Warrant by first class mail, postage prepaid, notice of
such adjustment or adjustments and, with regard to the Warrant Agent only, a
certificate of the chief financial officer of the Company setting forth the
number of shares of Common Stock purchasable upon the exercise of a Warrant and
the Warrant Price after such adjustment, a brief statement of the facts
requiring such adjustment and the computation by which such adjustment was made.
(h) For the purpose of this Section 9, the term "Common Stock" shall
mean (i) the class designated as the Common Stock of the Company at the date of
this Agreement, or (ii) any other class of stock resulting from successive
changes or reclassifications of such Common Stock consisting solely of changes
in par value, or from par value to no par value, or from no par value to par
value. In the event that at any time, as a result of an adjustment made pursuant
to this Section 9, a registered holder shall become entitled to purchase any
securities of the Company other than Common Stock, (i) if the registered
holder's right to purchase is on any other basis than that available to all
holders of the Company's Common Stock, the Company shall obtain an opinion of an
investment banking firm valuing such other securities and (ii) thereafter the
number of such other securities so purchasable upon exercise of a Warrant and
the Warrant Price of such securities shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in this Section 9.
(i) Upon the expiration of any rights, options, warrants or conversion
privileges, if such shall not have been exercised, the number of shares of
Common Stock purchasable upon exercise of a Warrant and the Warrant Price, to
the extent a Warrant has not then been exercised, shall, upon such expiration,
be readjusted and shall thereafter be such as they would have been had they been
originally adjusted (or had the original adjustment not been required, as the
case may be) on the basis of (A) the fact that the only shares of Common Stock
so issued were the shares of Common Stock, if any, actually issued or sold upon
the exercise of such rights, options, warrants or conversion privileges, and (B)
the fact that such shares of Common Stock, if any, were issued or sold for the
consideration actually received by the Company upon such exercise plus the
consideration, if any, actually received by the Company for the issuance, sale
or grant of all such privileges, options, warrants or conversion privileges
whether or not exercised; provided, however, that no such readjustment shall
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<PAGE>
have the effect of increasing the Warrant Price by an amount in excess of the
amount of the adjustment initially made in respect of the issuance, sale or
grant of such rights, options, warrants or conversion privileges.
9.2 No Adjustment for Dividends. Except as provided in Section 9.1 hereof,
no adjustment in respect of any dividends or distributions out of earnings shall
be made during the term of a Warrant or upon the exercise of a
9.3 No Adjustment in Certain Cases. No adjustments shall be made pursuant
to Section 9 hereof in connection with the issuance of the Warrants (or the
underlying shares of Common Stock), the exercise of options or warrants of the
Company outstanding at the date hereof or the grant or exercise of options to or
by officers, directors or employees of the Company or pursuant to the 1996 Stock
Option Plan or the 1996 Non-Employee Directors' Stock Option Plan of the
Company. No adjustment shall be made pursuant to Section 9.1(b), (c), or (f)
hereof if, as a result of such adjustment, either (i) the number of shares of
Common Stock purchasable upon the exercise of each Warrant immediately after
such adjustment would be less than the number of shares of Common Stock
otherwise purchasable upon exercise of each Warrant immediately prior to such
adjustment, or (ii) the Warrant Price immediately after such adjustment would be
more than the Warrant Price immediately prior to such adjustment.
9.4 Preservation of Purchase Rights upon Reclassification, Consolidation,
etc. In case of any consolidation of the Company with or merger of the Company
into another corporation or in case of any sale or conveyance to another
corporation of the property, assets or business of the Company as an entirety or
substantially as an entirety, the Company or such successor or purchasing
corporation, as the case may be, shall execute with the Warrant Agent an
agreement that the registered holders of the Warrants shall have the right
thereafter, upon payment of the Warrant Price in effect immediately prior to
such action, to purchase, upon exercise of each Warrant, the kind and amount of
shares and other securities and property which it would have owned or have been
entitled to receive after the happening of such consolidation, merger, sale or
conveyance had each Warrant been exercised immediately prior to such action. In
the event of a merger described in Section 368(a)(2)(E) of the Internal Revenue
Code of 1986, as amended, in which the Company is the surviving corporation, the
right to purchase shares of Common Stock under the Warrants shall terminate on
the date of such merger and thereupon the Warrants shall become null and void,
but only if the controlling corporation shall agree to substitute for the
Warrants its warrants which entitle the holders thereof to purchase upon their
exercise the kind and amount of shares and other securities and property which
they would have owned or been entitled to receive had the Warrants been
exercised immediately prior to such merger. Any such agreements referred to in
this subsection 9.4 shall provide for adjustments, which shall be as nearly
equivalent as may be practicable to the adjustments provided for in Section 9
hereof. The provisions of this subsection 9.4 shall similarly apply to
successive consolidations, mergers, sales or conveyances.
9.5 Par Value of Shares of Common Stock. Before taking any action which
would cause an adjustment reducing the Warrant Price below the then par value of
the Common Stock issuable upon exercise of the Warrants, the Company will take
any corporate action which may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue fully paid and
nonassessable Common Stock at such adjusted Warrant Price.
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<PAGE>
9.6 Independent Public Accountants. The Company may retain a firm of
independent public accountants of recognized national standing (which may be any
such firm regularly employed by the Company) to make any computation required
under this Section 9, and a certificate signed by such firm shall be conclusive
evidence of the correctness of any computation made under this Section 9.
9.7 Statement on Warrant Certificates. Irrespective of any adjustments in
the Warrant Price or the number of securities issuable upon exercise of
Warrants, Warrant certificates theretofore or thereafter issued may continue to
express the same price and number of securities as are stated in the similar
Warrant certificates initially issuable pursuant to this Agreement. However, the
Company may, at any time in its sole discretion (which shall be conclusive),
make any change in the form of Warrant certificate that it may deem appropriate
and that does not affect the substance thereof; and any Warrant certificate
thereafter issued, whether upon registration of transfer of, or in exchange or
substitution for, an outstanding Warrant certificate, may be in the form so
changed.
9.8 Notices to Holders of Warrants. If, at any time prior to the expiration
of a Warrant and prior to its exercise, any one or more of the following events
shall occur:
(a) any action which would require an adjustment pursuant to subsection 9.
I(a)(iv), 9.1(b), 9.1(c) or 9.4 hereof; or
(b) a dissolution, liquidation or winding up of the Company (other than in
connection with a consolidation, merger or sale of its property, assets and
business as an entirety or substantially as an entirety) shall be proposed;
then the Company shall give notice in writing of such event to the registered
holders of the Warrants, as provided in Section 18 hereof, at least 20 days
prior to the date fixed as a record date or the date of closing the transfer
books for the determination of the shareholders entitled to any relevant
dividend, distribution, subscription rights or other rights or for the
determination of shareholders entitled to vote on such proposed dissolution,
liquidation or winding up. Such notice shall specify such record date or the
date of closing the transfer books, as the case may be. Failure to mail or
receive such notice or any defect therein shall not affect the validity of any
action taken with respect thereto.
SECTION 10. Fractional Interests. The Company shall not be required to
issue fractional shares of Common Stock on the exercise of a Warrant. If any
fraction of a share of Common Stock would, except for the provisions of this
Section l0, be issuable on the exercise of a Warrant (or specified portion
thereof), the Company shall in lieu thereof pay an amount in cash equal to the
then Current Market Price multiplied by such fraction. For purposes of this
Agreement, the term "Current Market Price" shall mean (i) if the Common Stock is
traded in the over-the-counter market and not in The Nasdaq National Market nor
on any national securities exchange, the average of the per share closing bid
prices of the Common Stock on the 30 consecutive trading days immediately
preceding the date in question, as reported by The Nasdaq Small Cap Market (or
an equivalent generally accepted reporting service if quotations are not
reported on The Nasdaq Small Cap Market), or (ii) if the Common Stock is traded
in The Nasdaq National Market or on a national securities exchange, the average
for the 30 consecutive trading days immediately preceding the date in question
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<PAGE>
of the daily per share closing prices of the Common Stock in The Nasdaq National
Market or on the principal stock exchange on which it is listed, as the case may
be. For purposes of clause (i) above, if trading in the Common Stock is not
reported by The Nasdaq Small Cap Market, the bid price referred to in said
clause shall be the lowest bid price as reported in the Nasdaq Electronic
Bulletin Board or, if not reported thereon, as reported in the "pink sheets"
published by National Quotation Bureau, Incorporated, and, if such Common Stock
is not so reported, shall be the price of a share of Common Stock determined by
the Company's Board of Directors in good faith. The closing price referred to in
clause (ii) above shall be the last reported sale price or, in the case no such
reported sale takes place on such day, the average of the reported closing bid
and asked prices, in either case in The Nasdaq National Market or on the
national securities exchange on which the Common Stock is then listed.
SECTION 11. Redemption.
(A) The then outstanding Warrants may be redeemed, at the option of the
Company, at $.01 per Warrant, at any time after issuance, if, and only if, the
Public Trading Price per share of the Common Stock has equalled or exceeded 110%
of the then current Exercise Price of the Warrants for at least 20 trading days
within the preceding 30 trading days, and prior to expiration of the Warrants.
The Public Trading Price of the Common Stock shall be determined by the Company
in the manner set forth in Section ll.(E) as of the end of each trading day (or,
if no trading in the Common Stock occurred on such day, as of the end of the
immediately preceding trading day in which trading occurred) and verified to the
Warrant Agent before the Company may give notice of redemption. All outstanding
Warrants must be redeemed if any are redeemed, and any right to exercise an
outstanding Warrant shall terminate at 5:00 p.m. (Pacific Time) on the business
day immediately preceding the date fixed for redemption. A trading day shall
mean a day in which trading of securities occurred on the New York Stock
Exchange.
(B) The Company may exercise its right to redeem the Warrants only by
giving the notice set forth in the following sentence by the end of the
thirtieth (30th) day after the end of the applicable period of 30 trading days
referred to in Section 11(A). In case the Company shall exercise its right to
redeem, it shall give notice to the Warrant Agent and the registered holders of
the outstanding Warrants, by mailing to such registered holders a notice of
redemption, first class, postage prepaid, at their addresses as they shall
appear on the records of the Warrant Agent. Any notice mailed in the manner
provided herein shall be conclusively presumed to have been duly given whether
or not the registered holder actually receives such notice.
(C) The notice of redemption shall specify the redemption price, the date
fixed for redemption (which shall be at least thirty days after such notice is
mailed), the place where the Warrant certificates shall be delivered and the
redemption price shall be paid, and that the right to exercise the Warrants
shall terminate at 5:00 P.M. (Pacific Time) on the business day immediately
preceding the date fixed for redemption.
(D) At any time prior to the date fixed for redemption then in effect, the
Company in its discretion may extend the date fixed for redemption or rescind
the redemption without prejudice to its right later to redeem the Warrants if
each of the conditions specified in Section 11(A) have been satisfied at the
time of such later redemption. In case the Company shall determine to extend the
date fixed for redemption or to rescind the redemption, it shall so notify the
Warrant Agent and the registered holders of the outstanding Warrants, by
mailing, first class, postage prepaid, notice that the date fixed for redemption
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<PAGE>
has been extended or that the redemption has been rescinded, as the case may be,
to such registered holders at their addresses as they shall appear on the
records of the Warrant Agent. Any notice mailed in the manner provided herein
shall be conclusively presumed to have been duly given whether or not the
registered holder actually receives such notice.
(E) Appropriate adjustment shall be made to the redemption price and to the
minimum Public Trading Price prerequisite to redemption set forth in Section I
l(A) hereof, in each case on the same basis as provided in Section 9 hereof with
respect to adjustment of the Warrant Price.
(F) For purposes of this Agreement, the term "Public Trading Price" shall
mean (i) if the Common Stock is traded in the over-the-counter market and not in
The Nasdaq National Market nor on any national securities exchange, the closing
bid price of the Common Stock on the trading day in question, as reported by The
Nasdaq Small Cap Market (or an equivalent generally accepted reporting service
if quotations are not reported on The Nasdaq Small Cap Market), or (ii) if the
Common Stock is traded in The Nasdaq National Market or on a national securities
exchange, the daily per share closing price of the Common Stock in The Nasdaq
National Market System or on the principal stock exchange on which it is listed
on the trading day in question, as the case may be. For purposes of clause (i)
above, if trading in the Common Stock is not reported by The Nasdaq Small Cap
Market, the bid price referred to in said clause shall be the lowest bid price
as reported in the Nasdaq Electronic Bulletin Board or, if not reported thereon,
as reported in the "pink sheets" published by National Quotation Bureau,
Incorporated, and, if such Common Stock is not so reported, shall be the price
of a share of Common Stock determined by the Company's Board of Directors in
good faith. The closing price referred to in clause (ii) above shall be the last
reported sale price or, in the case no such reported sale takes place on such
day, the average of the reported closing bid and asked prices, in either case in
The Nasdaq National Market or on the national securities exchange on which the
Common Stock is then listed.
SECTION 12. Rights as Warrantholders. Nothing contained in this Agreement
or in any of the Warrants shall be construed as conferring upon the holders
thereof, as such, any of the rights of shareholders of the Company, including,
without limitation, the right to receive dividends or other distributions, to
exercise any preemptive rights, to vote or to consent or to receive notice as
shareholders in respect of the meetings of shareholders or the election of
directors of the Company or any other matter. Anything herein to the contrary
notwithstanding, the Company shall cause copies of all financial statements and
reports, proxy statements and other documents as it shall send to its
shareholders to be sent by the same class mail as sent to its shareholders,
postage prepaid, on the date of the mailing to such shareholders, to each
registered holder of Warrants at his address appearing on the Warrant Register
as of the record date for the determination of the shareholders entitled to such
documents
SECTION 13. Disposition of Proceeds on Exercise of Warrants. The Warrant
Agent shall account promptly to the Company with respect to Warrants exercised,
and shall promptly pay to the Company all monies received by it upon the
exercise of such Warrants, and shall keep copies of this Agreement available for
inspection by holders of Warrants during normal business hours.
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SECTION 14. Merger or Consolidation or Change of Name of Warrant Agent. Any
corporation into which the Warrant Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which the Warrant Agent shall be a party, or any corporation succeeding to the
corporate trust business of the Warrant Agent, shall be the successor to the
Warrant Agent hereunder without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor Warrant Agent under
the provisions of Section 16 of this Agreement. In case at the time such
successor to the Warrant Agent shall succeed to the agency created by this
Agreement and any of the Warrant certificates shall have been countersigned but
not delivered, any such successor to the Warrant Agent may adopt the
countersignature of the original Warrant Agent and deliver such Warrant
certificates so countersigned; and in case at that time any of the Warrant
certificates shall not have been countersigned, any successor to the Warrant
Agent may countersign such Warrant certificates either in the name of the
predecessor Warrant Agent or in the name of the successor Warrant Agent, and in
all such cases the Warrants represented by such Warrant certificates shall have
the full force provided in the Warrant certificates and in this Agreement. Any
such successor Warrant Agent shall promptly give notice of its succession as
Warrant Agent to the Company and to the registered holder of each Warrant
certificate.
In case at any time the name of the Warrant Agent shall be changed and at
such time any of the Warrant certificates shall have been countersigned but not
delivered, the Warrant Agent may adopt the countersignature under its prior name
and deliver Warrant certificates so countersigned; and in case at that time any
of the Warrant certificates shall not have been countersigned, the Warrant Agent
may countersign such Warrant certificates either in its prior name or in its
changed name; and in all such cases the Warrants represented by such Warrant
certificates shall have the full force provided in the Warrant certificates and
in this Agreement.
SECTION 15. Duties of Warrant Agent. The Warrant Agent hereby undertakes
the duties and obligations imposed by this Agreement upon the following terms
and conditions, all of which shall bind the Company and the holders of Warrants
by their acceptance thereof:
(A) The statements of fact and recitals contained herein and in the
Warrants shall be taken as statements of the Company, and the Warrant Agent
assumes no responsibility for the correctness of any of the same except such as
describe the Warrant Agent or action taken or to be taken by it. The Warrant
Agent assumes no responsibility with respect to the distribution of the Warrants
except as herein expressly provided.
(B) The Warrant Agent shall not be responsible for any failure of the
Company to comply with any of the covenants contained in this Agreement or in
the Warrants to be complied with by the Company.
(C) The Warrant Agent may consult at any time with counsel satisfactory to
it (who may be counsel for the Company) and the Warrant Agent shall incur no
liability or responsibility to the Company or to any holder of any Warrant in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in accordance with the opinion or the advice of such counsel.
(D) The Warrant Agent shall incur no liability or responsibility to the
Company or to any holder of any Warrant for any action taken in reliance on any
notice, resolution, waiver, consent, order, certificate or other paper, document
or instrument believed by it to be genuine and to have been signed, sent or
presented by the proper party or parties.
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(E) The Company agrees to pay to the Warrant Agent reasonable compensation
for all services rendered by the Warrant Agent in the execution of this
Agreement, to reimburse the Warrant Agent for all expenses, taxes and
governmental charges and other charges incurred by the Warrant Agent in the
execution of this Agreement and to indemnify the Warrant Agent and save it
harmless against any and all liabilities, including judgments, costs and
reasonable counsel fees, for anything done or omitted by the Warrant Agent in
the execution of this Agreement, except as a result of the Warrant Agent's
negligence, willful misconduct or bad faith.
(F) The Warrant Agent shall be under no obligation to institute any action,
suit or legal proceeding or to take any other action on behalf of the Company or
any registered holder, but this provision shall not affect the power of the
Warrant Agent to take such action as the Warrant Agent may consider proper. All
rights of action under this Agreement or under any of the Warrants may be
enforced by the Warrant Agent without the possession of any of the Warrants or
the production thereof at any trial or other proceeding relative thereto, and
any such action, suit or proceeding instituted by the Warrant Agent shall be
brought in its name as Warrant Agent, and any recovery of judgment shall be for
the ratable benefit of all the registered holders of the Warrants, as their
respective rights or interests may appear.
(G) The Warrant Agent and any shareholder, director, officer or employee of
the Warrant Agent may buy, sell or deal in any of the Warrants or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Warrant Agent
under this Agreement. Nothing herein shall preclude the Warrant Agent from
acting in any other capacity for the Company or for any other legal entity.
(H) The Warrant Agent shall act hereunder solely as agent and not in a
ministerial capacity, and its duties shall be determined solely by the
provisions hereof. The Warrant Agent shall not be liable for anything which it
may do or refrain from doing in connection with this Agreement, except for its
own negligence, willful misconduct or bad faith.
(I) Any request, direction, election, order or demand of the Company shall
be sufficient if evidenced by an instrument signed in the name of the Company by
its President, a Vice President or chief financial officer (unless other
evidence in respect thereof is therein specifically prescribed); and any
resolution of the Board of Directors may be evidenced to the Warrant Agent by a
copy thereof certified by the Secretary or an Assistant Secretary of the
Company.
SECTION 16. Change of Warrant Agent. The Warrant Agent may resign and be
discharged from its duties under this Agreement by giving the Company at least
30 days' prior notice in writing, and by mailing notice in writing to the
registered holders at their addresses appearing on the Warrant Register, of such
resignation, specifying a date when such resignation shall take effect. The
Warrant Agent may be removed by like notice to the Warrant Agent from the
Company and by like mailing of notice to the registered holders of the Warrants.
If the Warrant Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Warrant Agent.
If the Company shall fail to make such appointment within 30 days after such
removal or after it has been notified in writing of such resignation or
14
<PAGE>
incapacity by the resigning or incapacitated Warrant Agent or by the registered
holder of a Warrant (who shall, with such notice, submit his Warrant certificate
for inspection by the Company), then the registered holder of any Warrant may
apply to any court of competent jurisdiction for the appointment of a successor
to the Warrant Agent. Any successor Warrant Agent, whether appointed by the
Company or by such a court, shall be registered and otherwise authorized to
serve as a transfer agent pursuant to the Securities Exchange Act of 1934, as
amended. If at any time the Warrant Agent shall cease to be eligible in
accordance with the provisions of this Section 16, it shall resign immediately
in the manner and with the effect specified in this Section 16. After acceptance
in writing of the appointment, the successor Warrant Agent shall be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named as Warrant Agent without further act or deed; but the former
Warrant Agent shall deliver and transfer to the successor Warrant Agent any
property at the time held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose. Upon request of
any successor Warrant Agent, the Company shall make, execute, acknowledge and
deliver any and all instruments in writing for more fully and effectually
vesting in and confirming to such successor Warrant Agent all such powers,
rights, duties and responsibilities. Failure to file or mail any notice provided
in this Section 16, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Warrant Agent or the
appointment of the successor Warrant Agent, as the case may be.
SECTION 17. Identity of Transfer Agent. Forthwith upon the appointment of
any transfer agent for the Common Stock or of any subsequent transfer agent for
shares of the Common Stock or other shares of the Company's capital stock
issuable upon the exercise of the rights of purchase represented by the
Warrants, the Company will file with the Warrant Agent a statement setting forth
the name and address of such transfer agent.
SECTION 18. Notices. All notices, requests and other communications
pursuant to this Agreement shall be in writing and shall be sufficiently given
or made when delivered or mailed by first class mail, postage prepaid, addressed
as follows:
(a) if to the Company, to (until another address is filed in writing by the
Company with the Warrant Agent):
Bonso Electronics International Inc.
Flat A-D, 8/Floor,
Universal Industrial Centre,
23-25, Shan Mei Street,
Fo Tan, Sha Tin,
New Territories, Hong Kong
(b) if to the Warrant Agent, to (until another address is filed in writing
by the Warrant Agent with the Company):
U.S. Stock Transfer Corporation
1745 Gardena Avenue #200
Glendale, CA 91204
(c) if to the registered holder of a Warrant, to the address of such holder
as shown in the Warrant Register.
15
<PAGE>
SECTION 19. Supplements and Amendments. The Company and the Warrant Agent
may from time to time supplement or amend this Agreement without the approval of
any holders of Warrants (i) in order to cure any ambiguity or to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provision hereir, or (ii) to make any other provisions in regard
to matters or questions arising hereunder which the Company and the Warrant
Agent may deem necessary or desirable and which shall not be inconsistent with
the provisions of the Warrants, or (iii) to make amendments which shall not
adversely affect the interests of the holders of Warrants (including reducing
the Warrant Price or extending the date fixed for redemption or the Expiration
Date).
SECTION 20. Successors. All the covenants and provisions of this Agreement
by or for the benefit of the Company or the Warrant Agent or the registered
holders of the Warrants shall bind and inure to the benefit of their respective
successors and assigns hereunder.
SECTION 21. Governing Law. This Agreement shall be deemed to be a contract
made under the laws of the State of Colorado and for all purposes shall be
construed in accordance with the laws of said State.
SECTION 22. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company, the
Warrant Agent and the registered holders of the Warrants any legal or equitable
right, remedy or claim under this Agreement. This Agreement shall be for the
sole and exclusive benefit of the Company, the Warrant Agent and the registered
holders of the Warrants.
SECTION 23. Counterparts. This Agreement may be executed in counterparts
and each of such counterparts shall for all purposes be deemed to be an
original, and all such counterparts shall together constitute but one and the
same instrument.
SECTION 24. Descriptive Headings. The descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed,
as of the year first above written.
BONSO ELECTRONICS INTERNATIONAL INC.
By:
--------------------------------------
U.S. STOCK TRANSFER CORPORATION
By:
--------------------------------------
16
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================================================================================
Number Warrants to Purchase
- --------------------------------------------------------------------------------
BEI-W_____________________ Shares of of Common Stock
================================================================================
VOID AFTER 2:00 P.M,
PACIFIC TIME, ON DECEMBER 31, 2001
WARRANT TO PURCHASE SHARES OF CONMON STOCK
BONSO ELECTRONICS INTERNATIONAL INC.
AN INTERNATIONAL BUSINESS COMPANY ORGANIZED UNDER THE LAWS OF
THE BRITISH VIRGIN ISLANDS
This certifies that, for value received ________________________________,
the registered holder hereof or assigns (the "Holder".), is entitled to purchase
from Bonso Electronics International Inc., an International Business Company
organized under the laws of the British Virgin Islands (the "Company"), at any
time before 2:00 p.m., Pacific Time, on December 31, 2001 (unless extended), at
the purchase price per Share of S17.50 (the "Warrant Price"), the number of
shares of Common Stock of the Company set forth above (the "Shares"). The number
of Shares purchasable upon exercise of each Warrant evidenced hereby and the
Warrant Price per Share shall be subject to adjustment and reduction from time
to time as set forth in the Warrant Agreement referred to below. This Warrant is
subject to redemption by the Company, at $.01 per Warrant upon not less than 30
days' notice, at any time after issuance if, and only if, the Public Trading
Price (determined pursuant to the Warrant Agreement) per share of Common Stock
has equaled or exceeded 110% of the then current Exercise Price of the Warrants
for at least 20 trading days within the preceding 30 trading days ending within
30 days prior to the date of the notice of redemption, and prior to expiration
of the Warrants. The Warrant redemption price and the Public Trading Price
referred to above shall be subject to adjustment from time to time as set forth
in the Warrant Agreement.
The Warrants evidenced hereby may be exercised in whole or in part by
presentation of this Warrant certificate with the Purchase Form on the reverse
side hereof duly executed (with a signature guarantee as provided on the reverse
side hereof) and simultaneous payment of the Warrant Price (subject to
adjustment) at the principal office in Glendale, California, of U.S. Stock
Transfer Corporation (the "Warrant Agent"). Payment of such price shall be made
at the option of the Holder in cash or by certified or official check all as
provided in the Warrant Agreement.
The Warrants evidenced hereby are part of a duly authorized issue of Common
Stock Purchase Warrants with rights to purchase an aggregate of up to 1,087,201
Shares of Common Stock of the Company and are issued under and in accordance
with a Warrant Agreement dated as of ____________, 2000, between the Company and
the Warrant Agent (the "Warrant Agreement") and are subject to the terms and
provisions contained in such Warrant Agreement, to all of which the Holder of
this Warrant certificate by acceptance hereof consents. A copy of the Warrant
Agreement may be obtained for inspection by the Holder hereof upon written
request to the Warrant Agent.
<PAGE>
Upon any partial exercise of the Warrants evidenced hereby, there shall be
countersigned and issued to the Holder a new Warrant certificate in respect of
the Shares as to which the Warrants evidenced hereby share not have been
exercised. This Warrant certificate may be exchanged at the office of the
Warrant Agent by surrender of this Warrant certificate properly endorsed (with a
signature guarantee) either separately or in combination with one or more other
Warrants for one or more new Warrants to purchase the same aggregate number of
Shares as here evidenced by the Warrant or Warrants exchanged. No fractional
Shares will be issued upon the exercise of rights to purchase hereunder, but the
Company shall pay the cash value of any fraction upon the exercise of two or
more Warrants. The Warrants evidenced hereby are transferable at the office of
the Warrant Agent in the manner and subject to the limitations set forth in the
Warrant Agreement.
The Holder hereof may be treated by the Company, the Warrant Agent and all
other persons dealing with this Warrant certificate as the absolute owner hereof
for all purposes and as the person entitled to exercise the rights represented
hereby, any notice to the contrary notwithstanding, and until such transfer is
entered on such books, the Company may treat the Holder hereof as the owner for
all purposes.
This Warrant certificate does not entitle the Holder hereof to any of the rights
of a shareholder of the Company.
This Warrant certificate shall not be valid or obligatory for any purpose until
it shall have been countersigned by the Warrant Agent.
Dated: BONSO ELECTRONICS INTERNATIONAL, INC.
Countersigned: By: _________________________________
U.S. Stock Transfer Corporation, President
Warrant Agent
By: _________________________________
By:_____________________________ Secretary
Authorized Signatory
[Seal]
<PAGE>
[Reverse side of Warrant Certificate]
BONSO ELECTRONICS INTERNATIONAL INC.
PURCHASE FORM Mailing
Address:
Bonso Electronics International Inc.
c/o U.S. Stock Transfer Corporation
1745 Gardena Avenue, Suite 200
Glendale, California 91204, U.S.A.
The undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant certificate for, and to purchase thereunder,
__________ Shares of Common Stock provided for therein, and requests that
certificates for such Shares be issued in the name of:
_______________________________________________________________
(Please Print or Type Name, Address and Social Security Number)
_______________________________________________________________
and, if said number of Shares shall not be all the Shares purchasable hereunder,
that a new Warrant certificate for the balance of the Shares purchasable under
the within Warrant certificate be registered in the name of the undersigned
Holder or his Assignee as below indicated and delivered to the address stated
below.
Name of Holder or Assignee:__________________________
(Please Print)
Address:_____________________________________________
_____________________________________________________
Signature:___________________________________________
Note: The above signature must correspond with the name as it appears upon the
face of the within Warrant certificate in every particular, without alteration
or enlargement or any change whatever, unless these Warrants have been assigned.
Signature Guaranteed:__________________________________________________________
(Signature must be guaranteed by a bank or trust company having an office or
correspondent in the United States or by a member firm of a registered
securities exchange or the National Association of Securities Dealers, Inc.)
ASSIGNMENT
(To be signed only upon assignment of Warrants)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
_______________________________________________________________
(Please Print or Type Name, Address and Social Security Number)
_______________________________________________________________
_______________________________________________________________
the within Warrants, hereby irrevocably constituting and appointing
____________________________ Attorney to transfer said Warrants on the books of
the Company, with full power of substitution in the premises.
Dated:_____________________________ _______________________________
Signature of Registered Holder
Note: The signature on this assignment must correspond with the name as it
appears upon the face of the within Warrant certificate in every particular,
without alteration or enlargement or any change whatever.
Signature Guaranteed:__________________________________________________________
(Signature must be guaranteed by a bank or trust company having an office or
correspondent in the United States or by a member firm of a registered
securities exchange or the National Association of Securities Dealers, Inc.)
Consent of Independent Accountants
We hereby consent to the incorporation by reference in this Registration
Statement on Form F-3 of Bonso Electronics International Inc. of our report
dated May 28, 1999 relating to the financial statements appearing in Bonso
Electronics International Inc.'s Annual Report on Form 20-F for the year ended
March 31, 1999. We also consent to the reference to us under the headings
"Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers
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PricewaterhouseCoopers
Hong Kong
March 14, 2000
