-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TCerRC86vzij1foqZix/yqtEte2AnRw29xbCX8ymk+2jcHbH7VV9BtQ/MyD4Qwr7 vj84GT5HgTb4SBcOaugUMw== 0001050502-00-000269.txt : 20000316 0001050502-00-000269.hdr.sgml : 20000316 ACCESSION NUMBER: 0001050502-00-000269 CONFORMED SUBMISSION TYPE: F-3 PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20000315 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BONSO ELECTRONICS INTERNATIONAL INC CENTRAL INDEX KEY: 0000846546 STANDARD INDUSTRIAL CLASSIFICATION: MISC INDUSTRIAL & COMMERCIAL MACHINERY & EQUIPMENT [3590] IRS NUMBER: 000000000 FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: F-3 SEC ACT: SEC FILE NUMBER: 333-32524 FILM NUMBER: 570388 BUSINESS ADDRESS: STREET 1: FLAT AD 8TH FLR 23-25 SHAN MEI ST STREET 2: UNIVERSAL INDUSTL. CENTRE FO TAN SHA TIN CITY: NEW TERRITORIES HONG STATE: K3 BUSINESS PHONE: 011852260558224 MAIL ADDRESS: STREET 1: FLAT AD 8TH FLR 23-25 SHAN MEI ST STREET 2: UNIVERSAL INDUSTL CENTRE FO TAN SHA TIN CITY: NT HONG KONG STATE: K3 F-3 1 FORM F-3 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. [ ]
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 - ------------------------------------------------------------------------------------------------------ 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 ======================================================================================================
(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. 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 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 (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. 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. 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. 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. 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. 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 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. 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 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 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 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. 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.
Shares Beneficially Shares Beneficially Selling Owned Shares to be Owned % Owned Securityholder Prior to Offering Offered After Offering After Offering -------------- ----------------- ------- -------------- -------------- J. Stewart Jackson 800,000 350,000 450,000 6.8% Profit Concepts, Ltd. 250,000 250,000 0 0.0%
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. 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 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. 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. 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. 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. [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. 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 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 (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 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 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 EX-4.1 2 EXHIBIT 4.1 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. 1 (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 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 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 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 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 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 "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 8 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. 9 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 10 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 11 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. 12 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. 13 (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 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 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 ================================================================================ 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. 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] [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.) EX-23.1 3 EXHIBIT 23.1 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 - -------------------------- PricewaterhouseCoopers Hong Kong March 14, 2000 -----END PRIVACY-ENHANCED MESSAGE-----