AMENDMENT TO WARRANT AGREEMENT
AMENDMENT dated October __, 1996 to the Warrant Agreement dated August
18, 1994 ("Warrant Agreement") by and among U.S.-China Industrial Exchange,
Inc., a New York corporation ("Company"), American Stock Transfer & Trust
Company, as Warrant Agent ("Warrant Agent"), and X.X. Xxxxx Investment Banking
Corp., a New York corporation ("Xxxxx"). All terms used in this Amendment,
unless otherwise defined herein, shall have such meaning as ascribed to them in
the Warrant Agreement.
WHEREAS, in connection with (i) a public offering ("Secondary Offering")
of up to 11,500 units ("Units"), each unit consisting of _____ units (the "IPO
Units"), each IPO Unit consisting of one share of the Company's Common Stock,
$.01 par value ("Common Stock"), one redeemable Class A Warrant ("Class A
Warrant") and one redeemable Class B Warrant ("Class B Warrant") pursuant to an
underwriting agreement (the "Secondary Underwriting Agreement") dated October
__, 1996 between the Company and Xxxxx and (ii) the issuance to Xxxxx or its
designees of Unit Purchase Options to purchase an aggregate of 1,000 additional
Units, to be dated as of October __, 1996 (the "Secondary Unit Purchase
Options"), the Company may issue up to an additional ______ Class A Warrants and
______ Class B Warrants; and
WHEREAS, each Class A Warrant entitles the Registered Holder thereof to
purchase one share of Common Stock and one Class B Warrant, and accordingly, the
Company may issue up to an additional ________ Class B Warrants; and
WHEREAS, in connection with the Secondary Offering, the parties hereto
desire to amend certain provisions of the Warrant Agreement as set forth in this
Agreement:
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties intending to be legally bound,
hereby agree as follows:
1. Amendments to Warrant Agreement. Upon the effective date of the
registration statement relating to the Secondary Offering, the Warrant Agreement
shall be amended as follows:
(a) The number of Class A Warrants subject to issuance under the
Warrant Agreement is hereby increased to ______ Class A Warrants.
(b) The number of Class B Warrants subject to issuance under the
Warrant Agreement is hereby increased to______ Class B Warrants.
(c) Subsection (d) of Section 1 of the Warrant Agreement shall be
deleted in its entirety and replaced with the following new subsection (d):
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"(d) "Initial Warrant Exercise Date" shall mean as to each
Class A Warrant and Class B Warrant the date of issuance of such
Class A Warrant or Class B Warrant, as the case may be."
(d) Subsections (e) and (g) of Section 2 of the Warrant Agreement
shall be deleted in their entirety and replaced with the following new
subsections (e) and (g):
"(e) From time to time, up to the Warrant Expiration Date,
the Transfer Agent shall countersign and deliver stock
certificates in required whole number denominations representing
up to an aggregate of _______ shares of Common Stock, subject to
adjustment as described herein, upon the exercise of Warrants in
accordance with this Agreement.
(g) Pursuant to the terms of the Unit Purchase Options and
the Secondary Unit Purchase Options, Xxxxx or its designees and a
finder may purchase Units, which include up to ______ Class A
Warrants and _____ Class B Warrants. Notwithstanding anything to
the contrary contained herein, the Warrants underlying the Unit
Purchase Options and the Secondary Unit Purchase Options shall
not be subject to redemption by the Company except under the
terms and conditions set forth in the Unit Purchase Options and
Secondary Unit Purchase Options, as the case may be."
(e) Subsection (b) of Section 4 of the Warrant Agreement shall be
deleted in its entirety and replaced with the following new subsection (b):
"(b) If, at the Exercise Date, in respect of the exercise
of any Warrants (i) the market price of the Company's Common
Stock is greater than the then Purchase Price of the Warrant,
(ii) the exercise of the Warrant was solicited by a member of the
National Association of Securities Dealers, Inc. ("NASD") as
designated in writing on the Warrant Certificate Subscription
Form, (iii) the Warrant was not held in a discretionary account,
(iv) disclosure of compensation arrangements was made both at the
time of the original offering and at the time of exercise; and
(v) the solicitation of the exercise of the Warrant was not in
violation of Rule 10b-6 (as such rule or any successor rule may
be in effect as of such time of exercise) promulgated under the
Securities Exchange Act of 1934, then the Warrant Agent,
simultaneously with the distribution of the Warrant Proceeds to
the Company shall, on behalf of the Company, pay from the Warrant
Proceeds, a fee of 5% (the "Xxxxx Fee") of the Purchase Price to
Xxxxx (of which
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a portion may be reallowed by Xxxxx to the dealer who solicited
the exercise, which may also be Xxxxx or X.X. Xxxxx & Co., Inc.);
provided, however, in the event any Warrants are exercised prior
to October __, 1997, Xxxxx shall only be entitled to receive the
Xxxxx Fee with respect to 2,000,000 Class A Warrants and
4,000,000 Class B Warrants (which include the 2,000,000 Class B
Warrants that may be issued on exercise of the Class A Warrants
issued in connection with the Company's initial public offering
("IPO") in August 1994). For purposes of determining which
Warrants have been exercised, it will be assumed that the first
2,000,000 Class A Warrants and 4,000,000 Class B Warrants
exercised were those issued in connection with the Company's IPO.
In the event the Xxxxx Fee is not received within five days of
the date on which the Company receives Warrant Proceeds, then the
Xxxxx Fee shall begin accruing interest at an annual rate of
prime plus four (4)%, payable by the Company to Xxxxx at the time
Xxxxx receives the Xxxxx Fee. Within five days after exercise the
Warrant Agent shall send to Xxxxx a copy of the reverse side of
each Warrant exercised. Xxxxx shall reimburse the Warrant Agent,
upon request, for its reasonable expenses relating to compliance
with this section 4(b). In addition, Xxxxx and the Company may at
any time during business hours, examine the records of the
Warrant Agent, including its ledger of original Warrant
Certificates returned to the Warrant Agent upon exercise of
Warrants. The provisions of this paragraph may not be modified,
amended or deleted without the prior written consent of Xxxxx."
2. Full Force and Effect. Except as provided herein, all other terms and
provisions of the Warrant Agreement shall remain in full force and effect.
3. Counterparts. This Agreement may be executed in one or more
counterparts, which taken together shall constitute a single document.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
U.S.- CHINA INDUSTRIAL EXCHANGE, INC.
By:
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Xxxxxxx Xxxxxx, President
AMERICAN STOCK TRANSFER & TRUST COMPANY
By:
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X.X. XXXXX INVESTMENT BANKING CORP.
By:
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Xxxxxx X. Xxxx, Vice Chairman and
General Counsel
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