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EXHIBIT 4.1
NAM TAI ELECTRONICS, INC.
WARRANT AGREEMENT
THIS AGREEMENT (the "Agreement"), dated as of __________ __, 1997, is
between NAM TAI ELECTRONICS, INC., a British Virgin Islands international
business company (the "Company"), and U.S. STOCK TRANSFER CORPORATION, as
warrant agent (the "Warrant Agent").
WHEREAS, in connection with an offering (the "Offering") of
non-transferable subscription rights (the "Rights") to the existing shareholders
of the Company to purchase up to 3,000,000 units (the "Units") at a price equal
to $______(the "Unit Purchase Price"), each Unit consisting of one of the
Company's common shares, $.01 par value (the "Common Shares"), and one Common
Share purchase warrant (the "Warrants"), the issuance to Joseph Charles &
Associates, Inc. ("JCA") or its designees of warrants (the "Standby
Underwriter's Warrants") to purchase up to 120,000 Units, and the issuance to
Freshman, Marantz, Orlanski, Cooper & Klein, a law corporation, or its designees
of warrants (the "Counsel's Warrants") to purchase up to 10,000 Units, the
Company will issue up to 3,130,000 Warrants evidencing the right to purchase an
aggregate of 3,130,000 Common Shares 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.
2.1 Each Warrant shall initially entitle the registered holder of the
certificate representing such Warrant to purchase at the Warrant Price therefor
one Common Share, subject to the adjustments provided for in Section 9 hereof,
at any time prior to 5:00 p.m. Eastern time on _________ __, 2000.
2.2 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.
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2.3 Upon execution of this Agreement, warrant certificates representing
3,000,000 Warrants to purchase up to 3,000,000 Common Shares (subject to
modification and adjustment as provided in Section 9) shall be countersigned,
issued and delivered by the Warrant Agent upon written order by the Company.
2.4 Upon exercise of the Standby Underwriter's Warrants as provided
therein, warrant certificates representing 120,000 Warrants to purchase up to
120,000 Common Shares (subject to modification and adjustment as provided in
Section 9 hereof and in the Standby Underwriter's Warrant Agreement) shall be
countersigned, issued and delivered by the Warrant Agent.
2.5 Upon exercise of the Counsel's Warrants as provided therein, warrant
certificates representing 10,000 Warrants to purchase up to 10,000 Common Shares
(subject to modification and adjustment as provided in Section 9 hereof and in
the Counsel's Warrant Agreement) shall be countersigned, issued and delivered by
the Warrant Agent.
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 expressed in such
Warrant certificates to purchase from the Company (and the Company shall issue
and sell to such registered holder) the number of Common Shares 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 all rights 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 subscription 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 Common Shares as to which the Warrant is exercised. Such Warrant
Price shall be paid in full in cash, by certified check or bank draft payable in
United States currency to the order of the Warrant Agent.
The price per Common Share at which the Warrants may be exercised (the
"Warrant Price") shall be $_____ (adjusted in accordance with Section 9 hereof,
taking into account prior adjustments).
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 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 Common Shares 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, or listed for quotation on any
inter-dealer quotation system, upon which any other Common Shares 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 Shares 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.
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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.
The Company shall not solicit the exercise of any Warrant other than
through JCA. If at the time of exercise of any Warrant, (i) the market price of
the Company's Common Shares is greater than the then Warrant Price of the
Warrant, (ii) the exercise of the Warrant was solicited by a member of the
National Association of Securities Dealers, Inc. ("NASD"), (iii) the Warrant was
not held in a discretionary account, (iv) disclosure of the compensation
arrangements has been made in documents provided to customers both as part of
the original offering and at the time of exercise and (v) the solicitation of
the exercise of the Warrant was not in violation of Regulation M (as such
regulation or any successor regulation may be in effect as of such time of
exercise) promulgated under the Securities Exchange Act of 1934, then the
Company, immediately upon its receipt of the Warrant Price, or if it receives
the Warrant Price, the Warrant Agent, simultaneously with the distribution of
proceeds to the Company upon exercise of the Warrant(s) so exercised, shall pay
a fee of one percent (1%) of the Warrant Price to JCA (a portion of which may be
reallowed to the dealer who solicited the exercise, which may also be JCA). The
acceptance by JCA of such fee shall, in each case, constitute the certification
by JCA (and the other dealer if any portion of the fee is reallowed) to the
Company and the Warrant Agent that the Warrant was not held in a discretionary
account, that disclosure of the compensation arrangement has been made in
documents provided to the customer both as part of the original offering and at
the time of exercise and that the solicitation of the exercise of the Warrant
was not in violation of Regulation M (as such regulation or any successor
regulation may be in effect as of such time of exercise) promulgated under the
Securities Exchange Act of 1934. Within five days after exercise, the Warrant
Agent shall send JCA a copy of the reverse side of each Warrant exercised. In
addition, JCA and the Company may at any time during business hours, examine the
records of the Warrant Agent, including its ledger of original Warrant
Certificates returned to the Warrant Agent upon exercise of Warrants. JCA shall
reimburse the Warrant Agent, upon request, for its reasonable expenses relating
to the Warrant Agent's compliance with provisions of this paragraph. The
provisions of this paragraph and Section 13 are intended for the benefit of JCA
and may not be modified, amended or deleted without the prior written consent of
JCA.
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.
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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 will result 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 Common Shares 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 Common Shares in a
name other than that of the registered holder of Warrants in respect of which
such shares are issued, and in such case neither the Company nor the Warrant
Agent shall be required to issue or deliver any certificate for Common Shares 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.
SECTION 8. RESERVATION OF COMMON SHARES. There have been reserved, and the
Company shall at all times keep reserved, out of the authorized and unissued
Common Shares, 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 Standby Underwriter's Warrants or Counsel's Warrants), and
the transfer agent for the Common Shares 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.
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Prior to the issuance of any Common Shares upon exercise of the Warrants,
the Company shall secure the listing of such shares on any and all national
securities exchanges upon which any of the other Common Shares are then listed.
So long as any unexpired Warrants remain outstanding, the Company will 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 Common Shares issued to, any registered
holder of Warrants 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 Shares 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 Common Shares 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
Common Shares shall be subject to reservation in respect of such Warrants.
SECTION 9. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF COMMON SHARES. 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:
9.1 Adjustments. The number of Common Shares purchasable upon the
exercise of each Warrant and the Warrant Price shall be subject to adjustment as
follows:
(a) In case the Company shall (i) pay a dividend in Common Shares or
make a distribution in Common Shares, (ii) subdivide its outstanding Common
Shares, (iii) combine its outstanding Common Shares into a smaller number of
Common Shares, or (iv) issue, by reclassification of its Common Shares, other
securities of the Company, the number of Common Shares 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 Common Shares 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 Shares,
without any charge to such holders, entitling them to subscribe for or purchase
Common Shares 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 Common Shares thereafter
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purchasable upon the exercise of each Warrant shall be determined by multiplying
the number of Common Shares thereafter purchasable upon exercise of a Warrant by
a fraction, of which the numerator shall be the number of Common Shares
outstanding immediately prior to the issuance of such rights, options, warrants
or convertible securities plus the number of additional Common Shares offered
for subscription or purchase, and of which the denominator shall be the number
of Common Shares 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 Shares, 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
Shares (excluding those referred to in subsection 9.1(b) above), then in each
case the number of Common Shares thereafter purchasable upon the exercise of
each Warrant shall be determined by multiplying the number of Common Shares
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 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 Common Shares 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 Common Shares
then purchasable upon the exercise of the Warrants or, if the Warrants are not
then exercisable, the number of Common Shares 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 Common Shares 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 Common Shares purchasable upon the exercise of such Warrant
immediately prior to such adjustment, and of which the denominator shall be the
number of Common Shares 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 Shares or rights, options,
warrants or convertible securities containing the right to subscribe for or
purchase Common Shares 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 Common Shares 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 Common Shares outstanding immediately
after such sale or issuance. The number of shares of Common Shares purchasable
upon the exercise
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of a Warrant shall thereafter be that number determined by multiplying the
number of shares of Common Shares 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
Shares 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 Shares covered
thereby. In case the Company shall sell or issue Common Shares or rights,
options, warrants or convertible securities containing the right to subscribe
for or purchase Common Shares 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 the Common Shares and the "consideration received by the
Company" for purposes of the first sentence of this subsection 9.1(f), the Board
of Directors shall determine the fair value of said property, and such
determination, if reasonable and based upon the Board of Directors' good faith
business judgment, shall be binding upon the registered holders. In determining
the "price per share" of the Common Shares, any underwriting discounts or
commissions shall not be deducted from the price received by the Company for
sales of securities registered under the Act. 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 Common Shares; 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 Common Shares 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 Common Shares 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 Shares"
shall mean (i) the class of stock designated as the Common Shares 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 Shares 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 Shares, (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 Shares, 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 Shares 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
Common Shares 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 Common Shares so issued
were the Common Shares, if any, actually issued or sold upon the exercise of
such rights, options, warrants or conversion privileges, and (B) the fact that
such Common Shares, 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
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exercised; provided, however, that no such readjustment shall 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 Warrant.
9.3 No Adjustment in Certain Cases. No adjustments shall be made pursuant
to Section 9 hereof in connection with the distribution of the Rights, the
issuance of the Units (or the Common Shares included therein), the Warrants (or
the underlying Common Shares), the Standby Underwriter's Warrants (or any of the
underlying securities) or the Counsel's Warrants (or any of the underlying
securities). No adjustments shall be made pursuant to Section 9 hereof in
connection with the grant or exercise of presently authorized or outstanding
options to purchase, or the issuance of shares, aggregating up to [300,00]
Common Shares under the Company's existing or future stock option plans.
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 Common Shares 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 Shares. Before taking any action which
would cause an adjustment reducing the Warrant Price below the then par value of
the Common Shares 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 Shares at such adjusted Warrant Price.
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
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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 No Rights as Stockholder; 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 9.1 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 interests in the Common Shares on the exercise of a Warrant. If
any fraction of a Common Share would, except for the provisions of this Section
10, 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 Shares are traded in
the over-the-counter market and not in the NASDAQ National Market System nor on
any national securities exchange, the average of the per share closing bid
prices of the Common Shares on the 30 consecutive trading days immediately
preceding the date in question, as reported by NASDAQ or an equivalent generally
accepted reporting service, or (ii) if the Common Shares are traded in the
NASDAQ National Market System or on a national securities exchange, the average
for the 30 consecutive trading days immediately preceding the date in question
of the daily per share closing prices of the Common Shares in the NASDAQ
National Market System 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
Shares are not reported by NASDAQ, the bid price referred to in said clause
shall be the lowest bid price as reported in the "pink sheets" published by
National Quotation Bureau, Incorporated. 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 System or on the
national securities exchange on which the Common Shares are then listed.
SECTION 11. REDEMPTION.
(A) The then outstanding Warrants may be redeemed, at the option of the
Company, at $.05 for each Common Share purchasable upon exercise of such
Warrants, at any time after the Daily Market Price per Common Share for a period
of at least 20 consecutive trading days ending not more than 10 days prior to
the date of the notice given pursuant to Section 11(B) hereof has equaled or
exceeded $_____ per share, and prior to expiration of the Warrants. The Daily
Market Price of the Common Shares shall be determined by the Company in the
manner set forth in Section 11(E) as of the end of each trading day (or, if no
trading in the Common Shares 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
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be redeemed if any are redeemed, and any right to exercise an outstanding
Warrant shall terminate at 5:00 p.m. (Eastern 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 tenth
day after the provisions of Section 11(A) have been satisfied. 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 between the thirtieth and forty-fifth day
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 Warrant shall terminate at 5:00 p.m. (Eastern Time) on the business day
immediately preceding the date fixed for redemption.
(D) Appropriate adjustment shall be made to the redemption price and to
the minimum Daily Market Price prerequisite to redemption set forth in Section
11(A) hereof, in each case on the same basis as provided in Section 9 hereof
with respect to adjustment of the Warrant Price.
(E) For purposes of this Agreement, the term "Daily Market Price" shall
mean (i) if the Common Shares are traded in the over-the-counter market and not
in the NASDAQ National Market System nor on any national securities exchange,
the closing bid price of the Common Shares on the trading day in question, as
reported by NASDAQ or an equivalent generally accepted reporting service, or
(ii) if the Common Shares are traded in the NASDAQ National Market System or on
a national securities exchange, the daily per share closing price of the Common
Shares 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 Shares are not reported
by NASDAQ, the bid price referred to in said clause shall be the lowest bid
price as reported in the "pink sheets" published by National Quotation Bureau,
Incorporated. The closing price referred to in clause (ii) above shall be the
last reported sale price or, in 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 System or on the national securities exchange on
which the Common Shares are 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 (net of any fees remitted to JCA pursuant to the last
paragraph of Section 3), 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.
(E) The Company agrees to pay to the Warrant Agent reasonable compensation
for all services rendered by the Warrant Agent in connection with the execution
of, and performance of its services as Warrant Agent under, 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,
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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 stockholder, 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
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
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responsibilities. Failure to file or mail any notice provided in this Section
16, however, or any detect 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 Shares or of any subsequent transfer agent for
Common Shares 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):
Nam Tai Electronics, Inc.
c/o Nam Tai Electronics (Canada) Ltd.
Suite 530
999 West Hastings Street
Vancouver, B.C. Canada V6C 2W2
Attention: Mr. M. K. Koo, President
(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 Corp.
1745 Gardena Street
2nd Floor
Glendale, CA 91204
Attn: Mr. Henry Artaza
(c) if to the registered holder of a Warrant, to the address of such
holder as shown in the Warrant Register.
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 herein, 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) subject to the provisions of the last
paragraph of Section 3, to make amendments which shall not adversely affect the
interests of the holders of Warrants (including reducing the Warrant Price or
extending the redemption or 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.
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SECTION 21. GOVERNING LAW. This Agreement shall be deemed to be a contract
made under the laws of the State of California and for all purposes shall be
construed in accordance with the laws of said State applicable to contracts
entered into and performed in said State, and without regard to any conflicts of
laws principles thereof.
SECTION 22. BENEFITS OF THIS AGREEMENT. Except as provided in the last
paragraph of Section 3, 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. Except as provided in the last paragraph of Section 3,
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 day and year first above written.
NAM TAI ELECTRONICS, INC.
By:
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M. K. Koo
Chairman of the Board
U.S. STOCK TRANSFER CORP.
By:
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John Stein
President
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