SECOND AMENDMENT AND WAIVER AGREEMENT
This
Second Amendment and Waiver Agreement (the
“Agreement”)
is
being entered into as of August, 2006 by and among Corgi International Limited,
a corporation organized under the laws of Hong Kong (the “Company”),
and
certain of the entities and individuals listed on the Schedule of Purchasers
(the “Purchasers”)
attached as Exhibit C to that certain Note and Warrant Purchase Agreement dated
April 28, 2006, by and among the Company and the Purchasers, as amended by
that
certain Amendment and Waiver Agreement previously executed and delivered by
the
Company and certain of the Purchasers (together, the “Purchase
Agreement”).
Capitalized terms not otherwise defined in this Agreement shall have the meaning
ascribed to them in the Purchase Agreement.
Whereas,
pursuant to the terms of the Purchase Agreement the Company has issued
promissory notes (collectively, the “Notes”)
and
warrants to purchase American Depositary Shares (collectively, the “Warrants”)
to the
Purchasers; and
Whereas,
pursuant
to Section 9.1 of the Purchase Agreement, the written consent of the Company
and
the record holders of more than 60% of the Registrable Shares then outstanding
and held by Purchasers may waive or amend any term of Article VII of the
Purchase Agreement, and any such amendment or waiver shall be binding upon
the
Company and all holders of Registrable Shares; and
Whereas,
the
Purchasers that are parties to this Agreement are holders of more than 60%
of
the Registrable Shares as of the date of this Agreement; and
Whereas,
pursuant
to Section 11 of the Notes, any term of the Notes may be amended or waived
upon
the written consent of the Company and the Majority Holders (as such term is
defined in the Notes); provided, that (a) any such amendment or waiver must
apply to all outstanding Notes and (b) without the consent of a specific
Purchaser, no amendment or waiver shall (i) change the Stated Maturity Date
(as
defined in the Notes) of such Purchaser's Note, (ii) reduce the principal amount
of or the interest rate due on such Purchaser's Note; (iii) change the
Conversion Price of such Purchaser's Note or (iv) change the place of payment
of
such Purchaser's Note; and
Whereas,
the
Purchasers that are parties to this Agreement represent the Majority Holders;
and
Whereas,
pursuant
to Section 15 of the Warrants, any term of the Warrants may be amended or waived
upon the written consent of the Company and the holders of Warrants representing
at least 60% of the shares issuable upon exercise of all Warrants then
outstanding; provided, that (a) any such amendment or waiver must apply to
all
outstanding Warrants and (b) without the consent of a specific Purchaser, no
amendment or waiver shall (i) change the Exercise Period of such Purchaser's
Warrant, (ii) change the number of shares issuable upon exercise of such
Purchaser's Warrant, (iii) change the Exercise Price of such Purchaser's Warrant
or (iv) change the place to which a Notice of Exercise must be delivered; and
Whereas,
the
Purchasers that are parties to this Agreement hold Warrants representing at
least 60% of the shares issuable upon exercise of all Warrants outstanding
as of
the date of this Agreement; and
Whereas, the
Company and the Purchasers desire to amend the Purchase Agreement, the Notes
and
the Warrants as set forth below.
Agreement
Now,
Therefore, in
consideration of these premises and for other good and valid consideration,
the
receipt and sufficiency of which are hereby acknowledged, the parties agree
as
follows:
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1. Amendment
to Section 1.1 of Warrants.
Section
1.1 of each Warrant shall be deleted in its entirety and replaced with the
following (changes underlined):
“Exercise
Period” shall mean the period commencing on the date the Shareholder Approval
(as defined in the Purchase Agreement) is obtained and ending on April 27,
2009.
Notwithstanding the foregoing, the Exercise Period shall not commence unless
and
until (a) the Company fails to enter into a definitive agreement for a Change
of
Control Transaction (as defined in the Purchase Agreement) by September
15,
2006 or
(b) if the Company enters into a definitive agreement for a Change of Control
Transaction by such date, such agreement is terminated prior to consummation
of
such Change of Control Transaction.
For
purposes of this Agreement, the date on which the Exercise Period of the
Warrants commences shall be referred to as the “Warrant
Exercisability Date.”
2. Amendment
to First Paragraph of Notes. The
first
paragraph of each Note shall be deleted in its entirety and replaced with the
following (changes underlined):
For
value
received, Corgi
International Limited,
a Hong
Kong corporation (the “Company”),
promises to pay to [Name of Holder] (“Holder”)
at its
address at [address of Holder], the principal sum of [Holder’s principal amount]
with simple interest on the outstanding principal amount at the rate of (a)
11%
per annum until and including the date on which the Shareholder Approval (as
defined below) is obtained (the “Approval
Date”)
and
(b) 7.5% per annum thereafter. Interest shall commence with the date hereof
and
shall continue on the outstanding principal until paid in full or converted.
Interest shall be computed on the basis of a year of 365 days for the actual
number of days elapsed. Interest on this Note shall accrue semi-annually and
shall be payable semi-annually on the last day of June and December of each
year
(each, an “Interest
Payment Date”),
commencing on September
30,
2006,
to the Holder of record on the immediately preceding September
15
or
March
15,
as
applicable (each, an “Interest
Record Date”);
provided,
however,
that
in the event the Company enters into a definitive agreement for a Change of
Control Transaction (as defined in the Purchase Agreement) by September 15,
2006, no interest shall be payable until the earlier to occur of (i) conversion
of this Note upon consummation of such Change of Control Transaction (in which
case such interest shall convert into ADSs as provided in this Note) and (ii)
the termination of such definitive agreement in accordance with its terms (at
which time all interest accrued through the most recent payment date shall
be
due and payable).
Subject
to the other provisions of this Note, the principal of this Note and all accrued
and unpaid interest hereon shall mature and become due and payable on October
31, 2008 (the “Stated
Maturity Date”).
The
parties also hereby waive any Event of Default resulting from the Company’s
failure to pay interest and any right to penalty interest that may have accrued
under the Notes prior to the amendment to the Notes contained in this
Agreement.
3. Full
Force and Effect.
Except
as expressly modified by this Agreement and the Waiver and Amendment Agreement,
all of the terms and conditions of the Purchase Agreement, the Notes and the
Warrants shall remain in full force and effect.
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4. Counterparts.
This
Agreement may be executed in any number of counterparts, each of which shall
be
an original, but all of which together shall constitute one
instrument.
5. Governing
Law.
This
Agreement shall be governed in all respects by the laws of the State of New
York, without giving effect to conflict of law principles thereof.
[Signature
pages follow]
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The
parties hereto have executed this Second Amendment and Waiver Agreement as
of
the date first set forth above.
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Company:
CORGI
INTERNATIONAL LIMITED
By:
/s/
Xxxxxxx X. Xxxxxx
Name:
Xxxxxxx X. Xxxxxx
Title:
Chief Financial Officer
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Purchasers:
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Lagunitas
Partners, LP
By:
Xxxxxx & XxXxxxx Capital Management LLC
Its:
General Partner
By:
/s/
X. Xxxxxxxxx McBaine
Name:
X. Xxxxxxxxx XxXxxxx
Title:
Manager
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Xxxxxx
and McBaine International
By:
Xxxxxx & XxXxxxx Capital Management LLC
Its:
Attorney-in-Fact
By:
/s/
X. Xxxxxxxxx McBaine
Name:
X. Xxxxxxxxx XxXxxxx
Title:
Manager
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Xxx
X. & Xxxxx X. Xxxxxx Trust
By:
/s/
Xxx X. Xxxxxx
Name:
Xxx X. Xxxxxx
Title:
Trustee
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/s/
X. Xxxxxxxxx McBaine
X.
Xxxxxxxxx XxXxxxx
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/s/
Xxxxxx Xxxxxxxxx
Xxxxxx
Xxxxxxxxx
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/s/
Xxxxxxx XxXxxxxxxx
Xxxxxxx
XxXxxxxxxx
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LJHS
Company,
a
XxXxxx Family Partnership
By:
/s/
Xxxx X. XxXxxx
Name:
Xxxx X. XxXxxx
Title:
Agent
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SYM
Partners,
a
XxXxxx Family Partnership
By:
/s/
Xxxx X. XxXxxx
Name:
Xxxx X. XxXxxx
Title:
Agent
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[Signature
Page to Amendment and Waiver Agreement]
-4-
SRB
GREENWAY CAPITAL, L.P.
By:
SRB
Management, L.P., General Partner
By:
BC
Advisors, L.L.C., General Partner
By:
/s/
Xxxxxx X. Xxxxxx
Name:
Xxxxxx X. Xxxxxx
Title:
Member
SRB
GREENWAY CAPITAL QP, L.P.
By:
SRB
Management, L.P., General Partner
By:
BC
Advisors, L.L.C., General Partner
By:
/s/
Xxxxxx X. Xxxxxx
Name:
Xxxxxx X. Xxxxxx
Title:
Member
SRB
GREENWAY OFFSHORE
OPERATING
FUND, L.P.
By:
SRB
Management, L.P., General Partner
By:
BC
Advisors, L.L.C., General Partner
By:
/s/
Xxxxxx X. Xxxxxx
Name:
Xxxxxx X. Xxxxxx
Title:
Member
[Signature
Page to Amendment and Waiver Agreement]
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XXXXXX
XXXXX INTERNATIONAL FUND, LTD.
By:
WS
Capital Management, L.P., Attorney-in-Fact
By:
WS
Capital, L.L.C., General Partner
By:
/s/
Xxxx
X. Xxxxxx
Name:
Xxxx X. Xxxxxx
Title:
Member
XXXXXX
XXXXX CAPITAL (Q.P.), L.P.
By:
WS
Capital Management, L.P., General Partner
By:
WS
Capital, L.L.C., General Partner
By:
/s/
Xxxx
X. Xxxxxx
Name:
Xxxx X. Xxxxxx
Title:
Member
XXXXXX
XXXXX CAPITAL, L.P.
By:
WS
Capital Management, L.P., General Partner
By:
WS
Capital, L.L.C., General Partner
By:
/s/
Xxxx
X. Xxxxxx
Name:
Xxxx X. Xxxxxx
Title:
Member
HHMI
INVESTMENTS, L.P.
By:
WS
Capital Management, L.P., Investment Manager
By:
WS
Capital, L.L.C., General Partner
By:
/s/
Xxxx
X. Xxxxxx
Name:
Xxxx X. Xxxxxx
Title:
Member
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