[TRANSLATION] Warrant Covenants with Regards to the Rights and Duties of the Issuer and the Holders of Warrant to Purchase Ordinary Shares of Series 2/2012 ( Warrants Series 2 or GSTEL-W2 ) GSteel Issue of Warrants to Purchase Ordinary Shares of, Series 2/2012 ( Warrants Series 2 or GSTEL-W2 ) Up to 2,400,000,000 units (the Company issue by General Mandate no.1 of up to 1,351,218,656 units, the Company may issue the remaining Warrants together with the Newly Issued Ordinary Share by General Mandate in the next time) 1 unit of Warrant is entitled to 1 newly issued shares at Baht 0.55 per share By giving the right to the existing shareholder who subscribe for the Newly Issued Ordinary Share and being allocated at the ratio of 1 allocated newly issued share to 1 unit of Warrants at Baht 0.002 per unit. The list of Company s ordinary shareholders entitled to the allocation of the Newly Issued Ordinary Share and Warrants issued in this series is as of 21 August 2012 After the issue of Warrants in this series, the Company will register the Warrant as a listed security in the SET. The Company, however, cannot ensure that the SET will approve the Warrants as a listed security. Therefore, if the SET does not give approval, the allocated subscribers will not be able to trade the Warrants on the stock exchange. Rights and Duties of the Issuer and Holders of Warrants
Warrant Covenants with Regards to the Rights and Duties of the Issuer and Holders of Warrants Series 2/2012 to Purchase Ordinary Shares Issued to the Existing Shareholders who subscribe for the Newly Issued Ordinary Shares and being allocated and also subscribe for the Warrants and being allocated of Warrants to purchase ordinary shares of, Series 2/2012, allocated to the existing shareholders who subscribe for the Newly Issued Ordinary Share and being allocated and also subscribe for the Warrants and being allocated at the ratio of 1 allocated newly issued share to 1 unit of Warrants ( Warrants Series 2 or GSTEL-W2 ) are issued by according to the resolution of the Extraordinary General Meeting (EGM) of Shareholders No. 1/2012 held on 6 August 2012. The Warrant Holders shall be entitled to the rights as described in the Warrant Covenants, and the Issuer and Warrant Holders shall be obligated according to the Warrant Covenants as described herein. It shall also be deemed that the Warrant Holders fully acknowledge and understand all the terms and conditions set forth. The Issuer shall arrange to have a copy of the Warrant Covenants at its head office, so the Warrant Holders can request for review of the copy of Warrant Covenants and related agreements (if any) during the Issuer's business days and hours. Definitions Below is a list of terms used in this Warrant Covenants with their respective meanings: Warrant Covenants means The Warrant Covenants with regards to the rights and duties of the Issuer and the Holders of Warrant to purchase ordinary shares of G Steel Public Company Limited, Series 2/2012, allocated to the existing shareholders who subscribe for the Newly Issued Ordinary Share and being allocated and also subscribe for the Warrants and being allocated ( Warrants Series 2 or GSTEL-W2 ) (including applicable amendments) Warrants means Named and transferable Warrants to purchase ordinary shares of G Steel Public Company Limited, Series 2/2012, allocated to the existing shareholders who subscribe for the Newly Issued Ordinary Share and being allocated and also subscribe for the Warrants and being allocated Certificate Representing the Warrant means Certificate issued by Thailand Securities Depository Company Limited representing the Warrants to purchase ordinary shares of G Steel Public Company Limited Warrant Covenants page 1
Company or Issuer means Warrant Holders means Holders of Warrant Certificates to purchase ordinary shares of the Company and including Holders of Certificates Representing the Warrant to purchase the ordinary shares Business days means The days on which commercial banks in Bangkok operate as usual, except Saturdays or Sundays or any bank holidays as announced by the Bank of Thailand Notification No. Tor Chor 34/2551 means Notification of the Capital Market Supervisory Board, reference number Tor Chor 34/2551 (Tor Chor.. 34/2551), Re: Application for and Approval of New Issue of Warrants and Underlying Shares SEC means Securities and Exchange Commission SET means Stock Exchange of Thailand TSD means Thailand Securities Depository Company Limited Issue Date means 8 February 2013 Exercise Dates means As specified in clause 1.2.1 of the Warrant Covenants Last Exercise Date means As specified in clause 1.2.1 of the Warrant Covenants Notification Period means As specified in clause 1.2.2 of the Warrant Covenants for the Exercise 1. Details of the Warrants The Company will issue the Warrants in the amount of up to 2,400,000,000 units, to be allocated to the existing shareholders who subscribe for the Newly Issued Ordinary Share and being allocated and also subscribe for the Warrants and being allocated at the ratio of 1 allocated newly issued share to 1 unit of Warrants (the Company issue by General Mandate no.1 of up to 1,351,218,656 units, the Company may issue the remaining Warrants together with the Newly Issued Ordinary Share by General Mandate in the next time) with the details of the Warrants as listed below: 1.1 Nature of the Warrants Issuer Address Type of Warrants PASO Tower, 18 th Floor, 88 Silom Road, Suriyawong, Bangrak, Bangkok 10500 Phone: (66) 0-2634-2222 Fax: (66) 0-2634-4114 Warrants to purchase ordinary shares of, Series 2/2012, allocated to the Company s existing shareholders who Warrant Covenants page 2
subscribe for the Newly Issued Ordinary Share and being allocated and also subscribe for the Warrants and being allocated ( Warrant Series 2 or GSTEL-W2 ) Category of Warrants Named and transferable Warrants to purchase the Company s ordinary shares Number of Warrants issued 2,400,000,000 units (the Company issue by General Mandate no.1 of up to 1,351,218,656 units, the Company may issue the remaining Warrants together with the Newly Issued Ordinary Share by General Mandate in the next time) Underlying ordinary shares 2,400,000,000 shares (at par value of Baht 1.00), equivalent to 11.84% of total 20,268,279,833 issued and paid-up shares (at par value of Baht 1.00) as of 6 August 2012 (the EGM No. 1/2012) Offering method Issue together with the Newly Issued Ordinary Share to the existing shareholders who subscribe for the Newly Issued Ordinary Share and being allocated and also subscribe for the Warrants and being allocated at the ratio of 1 allocated newly issued share to 1 unit of Warrants Price per unit Baht 0.002 per unit Term of Warrants Expire on 26 September 2019 (the same date as Warrant Series 1/2012 or GSTEL-W1) Warrant Issue Date 8 February 2013 Exercise Ratio 1 unit of Warrants can purchase 1 new ordinary share (subject to changes in subsequent adjustment of rights of the Warrants) Exercise Price Baht 0.55 per share (par value of Baht 1.00) (subject to changes in subsequent adjustment of rights of the Warrants) Allocation method The Company will allocate to the existing shareholders who subscribe for the Newly Issued Ordinary Share and being allocated and also subscribe for the Warrants and being allocated at the ratio of 1 allocated newly issued share to 1 unit of Warrants Exercise Period The Warrant Holders shall exercise the warrants on the last business day of June and December of each year through the Term of Warrants. The First Exercise Date shall be 28 June 2013 and the Last Exercise Date shall be 26 September 2019. In case the Last Exercise Date falls on the Company s holiday, such the date shall be advanced to the last business day prior to such the Last Exercise Date. The notification period for the last exercise shall not be less than 15 days prior to the Last Exercise Date. Warrant Covenants page 3
Warrant Maturity Date 26 September 2019 Warrant Registrar Thailand Securities Depository Company Limited Secondary Market for the The Company shall register the Warrants as a listed security in the SET. The Warrants Company, however, cannot ensure that the SET will approve the Warrant as a listed security. So if the SET does not approve the Warrants to be listed, the allocated subscribers will not be able to trade the Warrants on the Stock Exchange. Secondary Market for the Ordinary Shares from the Exercise of Warrants Exercise Procedures and The Company shall register the ordinary shares from the exercise of Warrants issued in this series as a listed security in the SET. As specified in clause 1.2 Conditions Dilution Effects 1. The entitlements and conditions of ordinary shares issued from the exercise of Warrants rights in this series shall be identical to all the Company s ordinary shares issued earlier. 2. The dilution effects resulted from the issue of Warrants to the existing shareholders are as follow: 1. Control Dilution Control dilution = 1- [Qo / (Qo+Qw)] Where Qo = Number of the existing paid-up shares, equal to 20,268.28 million shares (at the par value of Baht 1.00 per share) (calculated from the number of paid-up shares, as of 6 August 2012 when the Shareholders EGM No. 1/2012 was held) Qw = Number of the increased shares from the exercise of GSTEL- W2, equal to 2,400.00 million shares Therefore, Control Dilution = 1- [Qo / (Qo+Qw)] = 1 - [20,268.28 / (20,268.28 + 2,400.00)] = 10.59% In case the Warrants are issued to the existing shareholders, and the existing shareholders fully exercise the Warrants, the existing shareholders will not be affected by the control dilution due the rights offering. However, if the Warrants in this series are fully exercised by persons other than the existing shareholders, the existing shareholders will be affected by 10.59%. In addition, since the Company is issuing new 34,305.35 million shares (including the 2,400.00 million underlying shares in this series) as per the following details: Warrant Covenants page 4
1. 5,676.19 million shares as underlying shares for Warrants series 1/2012 (GSTEL-W1) 2. 10,500.00 million shares to the Company s creditors under the debt-to-equity conversion scheme 3. 1,719.16 million shares to not exceeding 50 of the subsidiary s shareholders in order to accommodate the Company s debt restructuring 4. 2,760.00 million shares to the shareholders of GS Security Holdings Co., Ltd. (subsidiary of which 99.99% of shares held by the Company) 5. 2,400.00 million shares to the Company s existing shareholders 6. 1,110.00 million shares to The Brooker Group Public Company Limited and/or its group companies as remuneration for advice on debt restructuring and recapitalization and/or financing or credit lines and other related matters 7. 240.00 million shares to The Brooker Group Public Company Limited and/or its group companies as remuneration for advice on the Company s merger and acquisition 8. As reserve for the Warrants that will be issued to the Company s existing shareholders according to their proportion of shareholding (Rights Offering) as per no.5, under the general mandate basis in the amount of 2,400 million shares (GSTEL-W2). 9. As reserve for the Warrants that will be issued to the new investors as investment in or financing or granting credit lines to the Company and group companies for the amounts totaled not less than Baht 1.5 billion (GSTEL-W3) in the amount of 7,500.00 million shares. Therefore, if such the new issues take place and the rights are fully exercised, the existing shareholders will be additionally affected up to 62.86% in total, as described below: Control Dilution = 1- [Qo / (Qo+Qw)] Where Qo = Number of the existing paid-up shares, equal to 20,268.28 million shares (at the par value of Baht 1.00 per share) (calculated from the number of paid-up shares, as of 6 August 2012 when the Shareholders EGM No. 1/2012 was held) Qw = Number of the increased shares, equal to 34,305.35 million shares = 1 - [20,268.28 / (20,268.28 + 34,305.35)] = 62.86% 2. Earnings Dilution Earnings dilution = (EPSo - EPSnew) / EPSo Warrant Covenants page 5
Where EPSo = Net Profit / Qo EPSnew = Net Profit / (Qo + Qw) Earnings dilution cannot be calculated due to the Company s operating loss for the year 2011 and net loss for the first 9 months of 2012. Anyhow, to reveal the earnings dilution effect, the net profit in the formula is replaced with Baht 1,000.00 million (This is an assumed number to reveal the calculation of earnings dilution only. The Warrant Holders, therefore, should not refer to the said numbers on the Company s financial performance in the future.) Therefore, EPSo = Net Profit / Qo = 1,000.00 / 20,268.28 = 0.0493 EPSnew = Net Profit / (Qo + Qw) = 1,000.00 / (20,268.28 + 2,400.00) = 0.0441 Earnings Dilution = (EPSo EPSnew) / EPSo = (0.0493 0.0441) / 0.0493 = 10.59% In case the Warrants are issued and offered to the existing shareholders and the existing shareholders fully exercise the Warrants, the existing shareholders will not be affected by the earnings dilution as the issue is made to the existing shareholders according to the shareholding proportion. However, if the Warrants are fully exercised in this series by persons other than the existing shareholders, the existing shareholders will be affected by 10.59%. In addition, since the Company is issuing new 34,305.35 million shares (including the 2,400.00 million underlying shares in this series) (please refer to the details under Control Dilution above). Therefore, if such the new share issues take place and the rights are fully exercised, the existing shareholders will be additionally affected up to total 62.86%, as described below: Earnings Dilution = (EPSo - EPSnew) / EPSo EPSo = Net Profit / Qo EPSnew = Net Profit / (Qo + Qw) Where Qo = Number of the existing paid-up shares, equal to 20,268.28 million shares (at the par value of Baht 1.00 per share) (calculated from the number of paid-up Warrant Covenants page 6
shares, as of 6 August 2012 when the Shareholders EGM No. 1/2012 was held) Qw = Number of the increased shares, equal to 34,305.35 million shares Therefore, EPSo = Net Profit / Qo = 1,000.00 / 20,268.28 = 0.0493 EPSnew = Net Profit / (Qo + Qw) = 1,000.00 / (20,268.28 + 34,305.35) = 0.0183 Earning Dilutions = (EPSo - EPSnew) / EPSo = (0.0493 0.0183) / 0.0493 = 62.86% 3. Price Dilution As the Exercise Price for GSTEL-W2, equal to 0.55 per share, is higher than the weighted average price of 15 business days before the Company s board of directors meeting that proposed the issue of new ordinary shares and Warrants to the Shareholders EGM No. 1/2012 on 29 June 2012 (during 8 28 June 2012), which is equal to Baht 0.3726 per share; the existing shareholders, therefore, will not be affected by price dilution. 1.2 Exercise Procedure and Conditions 1.2.1 Exercise Dates The Warrant Holders shall exercise the Warrants on the last business day of June and December of each year, as specified in the Warrants, through the Term of Warrants, except the Last Exercise Date. The First Exercise Date shall be 28 June 2013 and the Last Exercise Date shall be on 26 September 2019. In case that the Last Exercise Date is not a business day, the Exercise Date shall be advanced to the business day prior to such the Last Exercise Date. 1.2.2 Notification Period for the Exercise The Warrant Holders who wish to exercise their rights to purchase the Company s ordinary shares shall notify their intention to purchase the shares during 9:00 to 16:00 hours within 5 business days prior to each Exercise Date (hereinafter called the Notification Period ). Except in case of the Last Exercise Date, the Warrant Covenants page 7
Warrant Holders shall notify the intention to purchase the Company s ordinary shares within 15 business days prior to the Last Exercise Date (hereinafter called the Last Notification Period ) The Company will not close the register book to suspend transfers of Warrants, except for the Last Exercise Date, where the Company will close the register book to suspend transfers of Warrants 21 days prior to the Last Exercise Date. And in case the SET approves GSTEL-W2 to be a listed security, the SET will post SP (Suspended) sign for 3 business days prior to the register book closing date (in the event that the register book closing date falls on the SET s holiday, the register book closing date shall be advanced to the prior business day). The information regarding the exercise of rights, Exercise Ratio, Exercise Price, Exercise Period and Notification Period will be informed by the Company through the SET s electronic news system (SCP: SET Community Portal) at least 5 business days prior to the first date of each Notification Period. For the Last Exercise Date, the Company will send the information by registered mail to the Warrant Holders whose names appear on the Warrant Holders register on the last register book closing date. 1.2.3 Warrant Registrar Thailand Securities Depository Company Limited Capital Market Technology Institution Building, Floor 2 2/7 Moo 4 (North Park Project), Khwaeng Tungsonghong, Khet Laksi, Bangkok 10210 Phone: (66) 0 2596 9000 Fax: (66) 0 2832 4994-5 The Warrant Registrar shall be responsible for closing the Warrant Holders register that consists of full name, nationality and address of the Warrant Holders and other details as required by TSD. If there are any discrepancies of the data, the information in the Warrant Holders register shall be deemed as correct. Hence, the Warrant Holders are responsible for direct notifying the Warrant Registrar of any changes or errors in the information in the Warrant Holders register. The Company reserves the right to change the Warrant Registrar and will promptly keep the Warrant Holders notified of such change via the SET s electronic news system (SCP) and will inform the SEC within 15 days. In addition, the Company will also dispatch letters informing the changes to the Warrant Holders via registered mail. 1.2.4 Contact Place and Procedure for the Exercise (1) Contact Place for the Exercise: PASO Tower, 18 th Floor Warrant Covenants page 8
88 Silom Road, Suriyawong, Bangrak, Bangkok 10500 Phone (66) 0-2634-2222 Fax (66) 0-2634-4114 In case that the Company changes the contact place for the exercise, the Company will inform the Warrant Holders of such change via the SET s electronic news system (SCP). (2) The Warrant Holders or the Holders of Certificate Representing the Warrant may request and obtain the Exercise Form from the Company and must notify their intention to exercise the rights within the Notification Periods, or within the Last Notification Period. In case the Warrants are in the scripless system, the Warrant Holders who want to exercise the rights shall notify their intention and file with their brokers the completed application for issuing the Warrants or the Certificate Representing the Warrant as prescribed by the SET. The brokers will then notify TSD to request for withdrawal of the Warrants or the Certificate Representing the Warrant to be used as one of the evidences for the exercise of the rights with the Company. The Warrant Holders or the Holders of Certificate Representing the Warrant who wish to exercise their rights to purchase ordinary shares shall also follow the requirements or laws governing the exercise of the rights to purchase ordinary shares by taking actions and submitting the documents as mentioned below: (2.1) Duly and accurately completed Exercise Form with the Warrant Holders signature: The Warrant Holders may request and obtain the Exercise Form from the above contact place for exercise within the Notification Periods or the Last Notification Period. (2.2) The Warrants or a Certificate Representing the Warrant specifying that the holder is entitled to the Warrants in a relevant number as specified in the Exercise Form. (2.3) Evidences required for the exercise (a) Thai Individual: Duly certified copy of valid identification card (b) Foreign Individual: Duly certified copy of valid passport (c) Thai Juristic Person: Duly certified copy of Certificate of Incorporation issued by Ministry of Commerce not over 6 months prior to the Exercise Date and evidences Warrant Covenants page 9
of the authorized persons as in (a) or (b) duly certified (except in case TSD or the depositing firm to TSD is transferor/transferee, no such evidences are required) (d) Foreign Juristic Person: Copies of Memorandum of Association, Articles of Incorporation, and Certificate of Incorporation issued not over 1 year prior to the Exercise Date, which are certified by Notary Public and evidences of the authorized persons as in (a) or (b) duly certified (2.4) Payment of the full amount as specified in the Exercise Form within the specified period and within the Exercise Date, by either of the following ways: (a) Transfer fund to the current account named G Steel Plc. for Share Subscription at Siam Commercial Bank Public Company Limited, PASO Tower Branch, Account Number 245-3-00218-2 enclosed with the evidence of fund transfer. (b) Pay by crossed cheque, draft, bank s bill of exchange, or bank s payment order collectible in Bangkok within the Exercise Date to G Steel Plc. for Share Subscription. The exercise shall be valid only if the payment is collectible. In the event that the payment cannot be collected for whatsoever reasons not caused by the Company, the Warrant Holders will be deemed as intend to cancel such exercise and the Company correspondingly agrees with such cancellation. However, such cancellation shall not deprive the Warrant Holders rights to purchase ordinary shares for the next times, except for the cancellation of the last exercise whereby their rights to purchase ordinary shares shall be deemed to expire. Note: The Warrant Holders who wish to exercise the rights are responsible for the payment of all expenses including taxes and/or duty stamps (if any) arising from the exercise of their Warrants (if any) according to the Provision of Revenue Code or other laws and regulations that are related or enforced in exercising the Warrants (if any). (3) The number of Warrants to be exercised must be in a whole number with the exercise ratio of 1 unit of Warrant to 1 ordinary share except for the adjustment of rights. Warrant Covenants page 10
(4) The number of ordinary shares to be issued upon the exercise shall be calculated by dividing the Warrant Holders payment amount by the Exercise Price at the relevant Exercise Period. The Company shall issue its ordinary shares in whole number not greater than the number of Warrants multiplied by the Exercise Ratio. If there is a fraction of share derived from the calculation of adjustment to the Exercise Price and/or the Exercise Ratio, the Company will discard such fraction and return to the Warrant Holders the paid amount left from such exercise by registered mail within 14 days from each Exercise Date without interest. In case that the Exercise Ratio must be changed based on the adjustments of Exercise Price and Exercise Ratio as specified in the adjustment conditions and there exist fractions of ordinary shares from the exercise of the Warrants, the fractions shall be discarded. (5) The calculation of the adjustment to the Exercise Price and the Exercise Ratio shall not cause an increase in the new Exercise Price and/or decrease in Exercise Ratio, except in the case of reverse stock split (consolidation of shares). The proceeds from the exercise of Warrants shall be calculated from the new Exercise Price after the adjustment (in 3 decimal digits) multiplied by the number of ordinary shares. (The number of ordinary shares is calculated from multiplying the new Exercise Ratio by the number of Warrants exercised, where any fraction to be rounded down.) (6) If the Company receives incomplete evidence of Warrants as specified in the Exercise Form, or examines that the information filled in by the Warrant Holders is incomplete or incorrect or inadequate duty stamp affixed as required by the concerned laws or articles, the Warrant Holders must amend in order to comply with the conditions prior to the Exercise Date, otherwise the Company deems the notification is invalid and there is no exercise for that time. The Company then will return the Warrants to the Warrant Holders by within 14 days from the Exercise Date without interest in all cases. Any failure by the Warrant Holders to make payment for such exercise in full, the Company has the right to proceed to one of the following alternatives as appropriate: (6.1) Deem that the Exercise Form is invalid without any exercise; or (6.2) Deem that the number of ordinary shares subscribed shall equal to the amount of exercise of the Warrants actually received by the Company at the Exercise Price at that time. In case of (6.1), the Company will return to the Warrant Holders the payment received and the Warrants deemed as not exercised within 14 days from the Exercise Date without interest in all cases. Anyhow, the Warrants that are not yet exercised are still Warrant Covenants page 11
valid till the Last Exercise Date; or in case of (6.2), the Company will return to the Warrant Holders the remaining Warrants and payment in the case that the Company deems that only partial exercise is made and the remaining payment balance (if any) within 14 days from the Exercise Date without interest in all cases. However, part of the Warrants that is not yet exercised will still be valid till the Last Exercise Date. (7) Once the Warrant Holders who wish to exercise their rights to purchase ordinary shares comply with all conditions governing the Notification of Intention to Exercise, i.e. the Warrant Holders duly and completely deliver the Warrants, the Exercise Form, and pay for the ordinary share subscription; they cannot withdraw the exercise without written consent from the Company. (8) If after the Last Exercise Date the Warrant Holders have not completely complied with all the conditions governing the exercise, the Warrants shall be deemed invalid with no exercise, and the Warrant Holders shall no longer exercise their rights after the Exercise Period. (9) In the event that the delivered Warrants exceed the exercise number as notified by the Warrant Holders, the Company will return the surplus Warrants to the Warrant Holders within 14 days from each Exercise Date. (10) The Company will apply to the Ministry of Commerce for the registration of increase of its paid-up capital within 14 days after the Company receives full payments for the exercised number of shares for each exercise. In addition, the Company will register the names of Warrant Holders exercising their rights as ordinary shareholders of the Company by the relevant number of ordinary shares calculated on the exercise. (11) In case that the underlying ordinary shares are not sufficient, the Company will compensate to the Warrant Holders who cannot exercise their rights. However, the Company will not compensate to the Warrant Holders who cannot exercise their rights due to restrictions on shareholding proportion as specified in the Company s Articles of Incorporation even though the underlying shares are sufficient. (12) The Company s board of directors or the persons appointed by the board of directors shall consider the Warrant Covenants, other conditions and other details, or causes for issuing new shares, including changes in the exercise of rights in terms of Exercise Price and Exercise Ratio based on appropriate calculations when there exists a circumstance as per the relevant SEC s Announcement specifies. In case of need for a resolution from a shareholders meeting, the board of directors will then bring the matter to the shareholders meeting according to the rules and regulations. Warrant Covenants page 12
2. Offering and Allocation 2.1 Offering Method The Warrants Offering in this series is not made through an underwriter but made by allocation to the existing shareholders, whose names as appear on the shareholders register book on 21 August 2012, who exercise the rights to subscribe for the Newly Issued Ordinary Share and being allocated and also subscribe for the Warrants and being allocated at the ratio of 1 allocated newly issued share to 1 unit of Warrants at the Offer Price of Baht 0.002 per unit. 2.2 Allocation Method The Company allocates the Warrants to the existing shareholders, whose names as appear on the shareholders register on 21 August 2012, who exercise the rights to subscribe for the Newly Issued Ordinary Share and being allocated and also subscribe for the Warrants and being allocated at the ratio of 1 allocated newly issued share to 1 unit of Warrants, at the Offer Price of Baht 0.002 per unit. 2.3 Warrant Subscription Date, Method, and Payment The Company allocates the Warrants to the existing shareholders who subscribe for the Newly Issued Ordinary Share and being allocated and also subscribe for the Warrants issued this time and being allocated on the Warrant Issue Date at the Offer Price of Baht 0.002 per unit. The subscription and payment date for the Newly Issued Ordinary Share and Warrants issued this time is 24-25 and 28-30 January 2013. 2.4 Delivery of the Warrants The Company will proceed to make TSD the Warrants Registrar and will deliver the Warrants to the existing shareholders, whose names as appear on the shareholders register on 21 August 2012, who exercise the rights to subscribe for the Newly Issued Ordinary Share and being allocated and also subscribe for the Warrants issued this time and being allocated, based on the same method of newly issued share delivery which the existing shareholder subscribe for, according to the following procedure: (1) In case the allocated subscribers would like to receive the Newly Issued Ordinary Share issued in their names, this will be deemed that subscribers would like to receive the Warrants issued in their names as well. The Company s Warrants Registrar, i.e. TSD, will deliver the Warrants as per the allocated number of units to the allocated shareholders via registered mail to the name and address as indicated in the shareholders register as of 21 August 2012 within 15 business days from the Warrant Issue Date or the subscription closing date, either of which occurs later. In this case, the Warrants-allocated shareholders will not be able to sell the Warrants on the SET till they receive the Warrants, maybe after the Warrants is permitted to be tradable on the stock exchange. (2) In case the allocated subscribers specify to deposit the Newly Issued Ordinary Share into their existing securities account with a securities firm, this will be deemed that subscribers would not like to receive the Warrants, but to be serviced by the TSD, i.e. to deposit the Warrants into their existing securities account Warrant Covenants page 13
with a securities firm; the Company s Warrant Registrar, i.e. TSD, will deliver the Warrants as per the allocated number of units to the allocated shareholders by depositing into Thailand Securities Depository Co., Ltd. for Depositors ; and at the same time issue an evidence of deposit to the subscribers within 7 business days from the Warrant Issue Date or the subscription closing date, either of which occurs later, while the concerned securities firm will be recording the amount of Warrants that the subscribers deposit. In this case, the Warrantsallocated shareholders may sell the Warrants on the stock exchange as soon as the SET permits the Warrants to be tradable. In the event that the subscribers choose to let the Company proceed according to this case, the subscribers name on the Subscription Form must be the same as the owner of securities account that the subscribers would like to deposit the Warrants into, otherwise the Company reserves the right to issue the Warrants according to the case (1) instead. (3) In case the allocated subscribers specify to deposit the Newly Issued Ordinary Share into the Issuer s account, Member Number 600, this will be deemed that subscribers would not like to receive the Warrants, but to be serviced by the TSD, by depositing the Warrants into the Issuer s account, Member Number 600. So, the Company will deposit the allocated Warrants with the TSD, and the TSD will record the amount of Warrants deposited into the Issuer s account, Member Number 600, and issue an evidence of deposit to the subscribers within 7 business days from the Warrant Issue Date or the subscription closing date, either of which occurs later. If the subscribers would like to withdraw the Warrants from the Issuer s account, Member Number 600, please make request to the TSD, subject to the TSD s tariff on withdrawal of Warrants. Withdrawal of Warrants from the Issuer s account, Member Number 600, will take time in processing, the subscribers therefore may not be able to withdraw the Warrants within the first trading day on the stock exchange. 3. Compensation in Case of Insufficient Underlying Shares The Company shall compensate the Warrant Holders according to the following clauses: 3.1 The Company shall compensate the Warrant Holders only when the Warrant Holders notify their intention to exercise the rights in each exercise duly and completely according to the specified conditions, and the Company is unable to provide sufficient underlying ordinary shares. Calculation for the compensation that the Company shall pay the Warrant Holders is as follows: Compensation per 1 unit of Warrants = B X [MP EP] Where B is Number of shares that cannot be provided and/or increased in accordance with the Exercise Ratio per 1 unit increased MP is Total trade value of the Company s ordinary shares divided by total Warrant Covenants page 14
number of the Company s ordinary shares traded on the stock exchange on each Exercise Date EP is Exercise Price or the adjusted Exercise Price for the Warrants In case that the Market Price for Ordinary Share (MP) cannot be calculated since there is no trading transaction on the Exercise Date, the Company will instead determine a fair price for calculation. 3.2 The Company shall pay the above-mentioned compensation by crossed cheque sent by registered mail within 14 days from each Exercise Date without interest. If the Company is unable to compensate as said to the Warrant Holders within the specified period, the Company will pay interest to the Warrant Holders at the rate of 7.5% p.a., calculated on the compensation amount after the specified 14-day period till the date the Warrant Holders receive the refund. In any cases, when refunded cheque is correctly sent by registered mail to the address as specified in the Exercise Form, it shall be deemed that the Warrant Holders duly receive the compensation, and the Warrant Holders will have no more right to claim any interest or compensation. In case that foreign Warrant Holders exercise the rights to subscribe for ordinary shares but cannot subscribe because the shareholding proportion of the foreign shareholders at that time exceeds the limit as stipulated in the Company s Articles of Incorporation on each Exercise Date, the Company will not compensate nor take any action for the foreign Warrant Holders. And such the foreign Warrant Holders will have no right to claim for compensation nor claim the Company to make any payments. The Warrants, anyhow, is still valid till the Last Exercise Date. If on the Last Exercise Date the foreign Warrant Holders still cannot exercise their rights because the shareholding proportion of the foreign shareholders at that time exceeds the limit as stipulated in the Company s Articles of Incorporation on each Exercise Date, the said Warrants are deemed to expire while the foreign Warrant Holders have no right to claim the Company for any compensation, and the Company will not pay any compensation. 4. Conditions for Right Adjustment The Company shall adjust the Exercise Price and Exercise Ratio throughout the term of Warrants, to ensure that the benefits of Warrant Holders are not less favorable, upon an incurrence of the following events: 1) When there is a change in the par value of the Company s common stock as a result from a reverse stock split or a stock split. The change of the Exercise Price and the Exercise Ratio shall be effective immediately from the date the par value of the Company s common stock is changed. a. The Exercise Price will be adjusted according to the following formula: Price 1 = Price 0 x [Par 1] [Par 0] b. The Exercise Ratio will be adjusted according to the following formula: Warrant Covenants page 15
Ratio 1 = Ratio 0 x [Par 0] [Par 1] Where Price 1 is New Exercise Price after the adjustment Price 0 is Exercise Price prior to the adjustment Ratio 1 is New Exercise Ratio after the adjustment Ratio 0 is Exercise Ratio prior to the adjustment Par 1 is Par value of common stock after the adjustment Par 0 is Par value of common stock prior to the adjustment 2) When the Company issues common stock by rights offering (to the existing shareholders) and/or public offering and/or private placement at the calculated net price for newly issued stock below 90% of the Market Price for Ordinary Share. The adjustment of the Exercise Price and the Exercise Ratio shall be effective immediately from the first day that the ordinary share subscribers will not obtain rights to subscribe for the newly issued ordinary shares (the first day that the SET posts XR sign) in case of rights offering, and/or the first day of offering in case of public offering and/or private placement, as the case may be. Net Price for Newly Issued Ordinary Share is calculated from the total sum the Company receives from the common stock offerings deducting expenses then divided by the total number of newly issued common stock. Market Price for Ordinary Share means the market price as determined by the Company s board of directors for considering whether the new issue at that time is a new issue at low price in accordance with the principles and methods as stipulated in clause 2 (2) of the SEC s announcement ref. Sor Jor 39/2551, subject Calculations of Offer Price and Market Price for Securities for Consideration on New Issues of Stock at Low Prices dated 24 December 2008 (including any subsequent amendments or replacement). In case that the Market Price for Ordinary Share cannot be calculated since there is no trading transaction at the said time, the Company will instead determine a fair price for calculation. In case there are more than 1 Offer Price for ordinary shares at a time under the condition that the subscriptions are to be done simultaneously, the Net Price for newly issued shares will be calculated from all the offer prices. But in case the offerings are out of the condition that the subscriptions are to Warrant Covenants page 16
be done simultaneously, the offer prices below 90% of the Market Price for Ordinary Share will be applied in the calculation for the adjustment. a. The Exercise Price will be adjusted based on the following formula: Price 1 = Price 0 x [(A x MP) + BY] [MP(A + B)] b. The Exercise Ratio will be adjusted based on the following formula: Where Ratio 1 = Ratio 0 x [MP(A + B)] [(A x MP) + BY] Price 1 is New Exercise Price after the adjustment Price 0 is Exercise Price prior to the adjustment Ratio 1 is New Exercise Ratio after the adjustment Ratio 0 is Exercise Ratio prior to the adjustment MP is Market Price for Ordinary Share A is Number of total paid-up ordinary shares as of the date prior to the closing of the shareholders register book for the subscription rights in case of rights offering, and/or the date prior to the first offering date in case of public offering, and/or private placement, whichever case may be B is Number of newly issued ordinary shares by rights offering and/or public offering and/or private placement BY is The sum that the Company receives after deducting expenses incurred from the offerings of shares (if any) either by rights offering and/or public offering and/or private placement 3) When the Company issues new securities by rights offering and/or public offering and/or private placement, and such the securities entitle the holders to conversion rights or rights to change into common stock or rights to purchase common stock (e.g. convertible bond, or Warrant), where the price for underlying common stock is below 90% of Market Price for Ordinary Share. The adjustment of the Exercise Price and the Exercise Ratio shall be effective immediately from the first day that the subscribers will not obtain rights to subscribe for the newly issued securities that entitle to Warrant Covenants page 17
conversion rights or conversion into common stock, or rights to purchase common stock (the first day that the SET posts XR or XW sign) in case of rights offering, and/or the first day of offering in case of public offering and/or private placement, as the case may be. Market Price for Underlying Ordinary Shares is calculated from the total sum the Company will receive from the issue of convertible securities or conversion into common stock or rights to purchase common stock plus the sum to be received from the conversion or being converted into common stock or exercise of rights to purchase common stock, divided by total number of underlying common stock. Market Price for Ordinary Share means the market price is applied and defined as per clause 2) above. a. The Exercise Price will be adjusted based on the following formula: Price 1 = Price 0 x [(A x MP) + BY] [MP(A + B)] b. The Exercise Ratio will be adjusted based on the following formula: Where Ratio 1 = Ratio 0 x [MP(A + B)] [(A x MP) + BY] Price 1 is New Exercise Price after the adjustment Price 0 is Exercise Price prior to the adjustment Ratio 1 is New Exercise Ratio after the adjustment Ratio 0 is Exercise Ratio prior to the adjustment MP is Market Price for Ordinary Share A is Number of total paid-up ordinary shares as of the date prior to the closing of the shareholders register book for the subscription rights that entitle to conversion rights or conversion into ordinary shares, or rights to buy ordinary shares in case of rights offering, and/or the date prior to the first offering date in case of public offering, and/or private placement, whichever case may be B is Number of underlying ordinary shares that entitle to conversion rights or conversion into ordinary shares, or the rights to buy ordinary shares as in rights offering and/or public offering and/or private placement BY is The sum that the Company receives after deducting Warrant Covenants page 18
expenses (if any) incurred from the issue of securities that entitle to conversion rights or conversion into ordinary shares, or rights to buy ordinary shares as in rights offering, and/or public offering and/or private placement plus the sum to be received from the exercise of conversion rights or conversion into ordinary shares, or the exercise of rights to purchase ordinary shares 4) When the Company makes a partial or whole stock dividend payment to the Company s shareholders, where the adjustments of the Exercise Price and the Exercise Ratio shall be effective immediately from the first day that the ordinary share subscribers have no rights to receive the stock dividend (i.e. the first date that XD sign is posted), a. The Exercise Price will be adjusted based on the following formula: Price 1 = Price 0 x A [A + B] b. The Exercise Ratio will be adjusted according to the following formula: Where Ratio 1 = Ratio 0 x [A + B] A Price 1 is New Exercise Price after the adjustment Price 0 is Exercise Price prior to the adjustment Ratio 1 is New Exercise Ratio after the adjustment Ratio 0 is Exercise Ratio prior to the adjustment A is Number of total paid-up shares on the date prior to the closing of the shareholders register book for entitlement to stock dividend B is Number of newly issued ordinary shares as stock dividend 5) When the Company makes a cash dividend payment at the rate higher than 80% of net profit after income tax and legal reserve as per the Company s separate financial statements for any accounting period during the Term of Warrants, starting from the accounting period of the year 2012. The adjustments of the Exercise Price and the Exercise Ratio shall be effective immediately from the date that the ordinary share subscribers will have no rights to receive the cash dividend (i.e. the first date that the SET posts XD sign). Warrant Covenants page 19
The percentage of the cash dividend paid to shareholders shall be calculated by dividing the actual cash dividend pay-out based on the operational performance in each accounting period by net profit after tax as per the Company s-separate financial statements in the same accounting year period. The actual cash dividend paid shall also include all interim dividend pay-out made in each of the said accounting period. Calculation date means the first date that the ordinary share subscribers will have no rights to receive cash dividend (i.e. the first date that the SET posts XD sign). a. The Exercise Price will be adjusted based on the following formula: Price 1 = Price 0 x [MP - (D R)] [MP] b. The Exercise Ratio will be adjusted based on the following formula: Where Ratio 1 = Ratio 0 x [MP] [MP - (D R) Price 1 is New Exercise Price after the adjustment Price 0 is Exercise Price prior to the adjustment Ratio 1 is New Exercise Ratio after the adjustment Ratio 0 is Exercise Ratio prior to the adjustment MP is Market Price for Ordinary Share D is Dividend per share paid to the shareholders R is Dividend per share paid, if calculated by 80% of net profit after income tax and legal reserve as per the Company s separate financial statements divided by total number of eligible shares Market Price for Ordinary Share means the total trade value of the Company s ordinary shares divided by the number of ordinary shares traded on the stock exchange during 15 consecutive business days (business days of the stock exchange) prior to the calculation date. In case that the Market Price for Ordinary Share cannot be calculated since there is no trading transaction at the said time, the Company will instead determine a fair price for calculation. 6) In case there are any events not mentioned in clauses 1) 5) that may impair the Warrant Holders possible rights and benefits, the Company shall fairly consider and determine the adjustment of the Exercise Price and/or the Exercise Ratio (or adjust the unit of Warrants instead of the Exercise Ratio) Warrant Covenants page 20
not to lessen the Warrant Holders rights and benefits. The results from such consideration shall be deemed ultimatum. The Company will notify the SET without delay, and will notify the SEC within 15 days from the day the event causing the adjustment occurs, or the consideration results finalize; and also announce the revised Warrant Covenants at the Company s head office. 7) The calculations for adjustments of the Exercise Price and the Exercise Ratio according to clauses 1) 6) above are independent from one another. In case that more than one circumstance simultaneously occurs, the calculations for adjustments shall be made in a respective order of 1) 5) 4) 2) 3) 6) with a 3-decimal digit number for the Exercise Price and the Exercise Ratio maintained. The Company will notify the results from adjustments of the Exercise Price and the Exercise Ratio according to clauses 1) 6) above with the details of the calculation and reason of the adjustments to the Warrant Holders through the SET s electronic news system (SCP) without delay, and to the SEC and the SET within 15 days from the effective date of such the adjustments. 8) The Company will not alter the Exercise Price and the Exercise Ratio, except there are adjustments according to the Adjustment Conditions. Moreover, the Company will not extend the Term of Warrants. 9) The Company may adjust the Exercise Price and simultaneously issue new Warrants to compensate the Exercise Price adjustment. If the Company will have to issue additional underlying shares, it shall duly submit to the SEC Office the shareholders meeting resolution approving the issue of underlying shares sufficient before the adjustment is done as permission for the Company to offer the underlying shares. 5. Status of Warrants during the Warrant Holders Notification for the Exercise The status of Warrants during the date the Warrant Holders notify their intention to exercise the rights till the date before the Ministry of Commerce registers the paid-up capital increase as the result from the exercise of Warrants, such the Warrants will have the same rights as the Warrants not lodged with Exercise Form, and such status will end on the date the Ministry of Commerce registers the capital increase according to the abovementioned exercise of Warrants. In the event where the Company has adjusted the Exercise Price and/or the Exercise Ratio during which the Company has not yet got the newly issued shares registered with the Ministry of Commerce, the Warrant Holders who have already exercised their rights will be entitled to the retrospective adjustment where the Company shall promptly issue additional Warrants according to the number they will be entitled to if the adjusted price becomes effective. Such additional shares might be delivered a later than previously delivered shares but not later than 45 days from the adjustment date. 6. Rights of the Newly Issued Shares from the Exercise of Warrants Warrant Covenants page 21
The rights of ordinary shares issued from the exercise to Warrants will be the same rights and of the same status as the ordinary shares the Company issued earlier, including the rights to receive dividend or other benefits the Company provides to the shareholders; effective from the date the Company s ordinary share registrar registers the Warrant Holders' names in the Company s shareholders register and Ministry of Commerce has registered the increase in paid-up capital. If the Company announced the entitlement date of dividend or other benefits for the shareholders before getting the names of the Warrant Holders that are offered in this series registered as shareholders in the Company s shareholders register by Ministry of Commerce, such the Warrant Holders shall not be entitled to receive the dividend or such other benefits. In case of right adjustment and that the Company has to issue additional underlying ordinary shares, it will submit to the SEC the shareholder meeting s resolution approving the issue of additional underlying ordinary shares without delay. 7. Details of Newly Issued Underlying Ordinary Shares for the Exercise of Warrants Nature of Shares Number of underlying ordinary shares for rights offering : 2,400,000,000 shares* equivalent to 100% of Warrants issued to the Company s existing shareholders in this series Par value : Baht 1.00 per share (as of 8 November 2012) Exercise Price : Baht 0.55 per share, except where exercise price adjustments exist according to the Adjustment Conditions Remark:* The Company s Board of Directors meeting no. 8/2012 held on 6 August 2012 passed the resolution to allocate the Newly Issued Ordinary Share by General Mandate no.1 of up to 1,351,218,656 shares in order to reserve for the Warrants (For the remaining 1,048,781,344 shares or more, the Company may allocate in the next General Mandate). As the Company s common stock is a listed security on the SET, the newly issued common stock by the exercise of Warrants rights will be tradable on the stock exchange after the Company registers the new common stock with the SET. The Company will proceed to request for permission to register the newly issued common stock by the exercise of Warrants conversion rights as a listed security in the SET without delay, but no later than 30 days from each Exercise Date, so that the said common stock become tradable on the stock exchange like the Company s existing common stock. And in case the Company has some underlying ordinary shares remaining from the Last Exercise Date, it will sequentially bring into the board of directors meeting and the shareholders meeting for further consideration. Warrant Covenants page 22