AMENDMENT AND WAIVER AGREEMENT
This
Amendment and Waiver Agreement (the
“Agreement”)
is
being entered into as of November 14, 2006 by and among Corgi International
Limited, a corporation organized under the laws of Hong Kong (the “Company”),
LightSaber Acquisition Corp, a Delaware corporation and wholly-owned subsidiary
of the Company (“MergerSub”),
and
Master Replicas Inc., a Delaware corporation (“Master
Replicas”),
in
connection with the Agreement and Plan of Merger, dated October 4, 2006, among
the Company, MergerSub and Master Replicas (the “Merger
Agreement”).
Capitalized terms not otherwise defined in this Agreement shall have the meaning
ascribed to them in the Merger Agreement.
Whereas,
the
Company has entered into a Purchase Agreement, dated November 14, 2006 (the
“Purchase
Agreement”),
pursuant to which the Company will issue ADSs and warrants to the investors
party to the Purchase Agreement (the “Investors”)
and a
Registration Rights Agreement pursuant to which the Company will grant certain
registration rights to the Investors (the “Registration
Rights Agreement”);
and
Whereas,
the
Company and Master Replicas desire to conform certain provisions of the Merger
Agreement to those of the Purchase Agreement and the Registration Rights
Agreement and amend, clarify and waive certain provisions of the Merger
Agreement; and
Whereas,
pursuant
to Section 9.6 of the Merger Agreement, the Merger Agreement may be amended
by
written consent of the Company, MergerSub and Master Replicas; and
Whereas,
pursuant
to Section 9.7 of the Merger Agreement, the Company and MergerSub or Master
Replicas may waive compliance by the other party with any of the agreements
or
conditions contained in the Merger Agreement; and
Whereas,
the
Company, MergerSub and Master Replicas desire to amend and waive certain
provisions of the Merger Agreement 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:
1. Amendment
to Section 6.9(b) of the Merger Agreement.
Section
6.9(b) of the Merger Agreement shall be deleted in its entirety and replaced
with the following:
|
(b)(i)
|
Parent
shall file, as soon as possible but in no event later than 120 days
following the Closing Date (the “Filing Deadline”), a registration
statement on Form F-3 (or any successor to Form F-3 or other form)
under the Securities Act so as to register the issuance and resale
of the
ADSs that comprise the Merger Consideration (other than shares registrable
on Form F-8) including a plan of distribution substantially similar
to the
one contained in Exhibit C to the Purchase Agreement. If a Registration
Statement covering the Merger Consideration is not filed with the
SEC on
or prior to the Filing Deadline, the Parent will make pro rata payments
to
each stockholder of the Parent, other than Xx. Xxxxxxx, Xx. Xxxxxxx,
Xxxxxx Capital and their affiliates (the
“Designated
|
-1-
Holders”),
as liquidated damages and not as a penalty, in an amount equal to 2.0% of the
aggregate value of the ADSs that are part of the Merger Consideration registered
hereunder (assuming for this purpose the value of one ADS is $1.10, subject
to
adjustment for stock combinations, stock splits and the like (the “Deemed
Value”)) for each 30-day period or pro rata for any portion thereof following
the Filing Deadline for which no Registration Statement is filed with respect
to
the such ADSs. Such payments shall constitute the stockholders of the Company’s
exclusive monetary remedy for such events, but shall not affect the right of
such stockholders to seek injunctive relief. Such payments shall be made to
each
stockholder in cash.
|
(ii)
|
Notwithstanding
the provisions of Section 6.9(b)(i), if at any time prior to the
date the
Registration Statement is first declared effective by the SEC (such
date,
the “Effective Date”) the SEC takes the position that the offering of the
Merger Consideration as contemplated by the Registration Statement
violates the provisions of Rule 415 under the 1933 Act because of
(A) the
number of ADSs included in such Registration Statement, the Parent
shall
be permitted to remove from the Registration Statement all or such
portion
of the Affiliate Securities (as defined in the Purchase Agreement)
and the
Merger Consideration and/or (ii) agree to such restrictions and
limitations on the registration and resale of the Affiliate Securities
and
the Merger Consideration as the SEC may require to assure the Parent’s
compliance with the requirements of Rule 415 or (B) the inclusion
of the
Warrant Shares (as defined in the Purchase Agreement) in the Registration
Statement, the Parent shall (i) remove from the Registration Statement
all
or such portion of the Warrant Shares and/or (ii) agree to such
restrictions and limitations on the registration and resale of the
Warrant
Shares as the SEC may require to assure the Parent’s compliance with the
requirements of Rule 415. In the event that the provisions of this
clause
(ii) apply, the Parent shall determine as to whether clause (A) or
(B) is
applicable. The provisions of this Section 6.9(b)(ii) shall not limit
or
otherwise affect the obligations of the Parent, which are absolute
and
unconditional, to effect the registration of the Registrable Securities
as
provided in this Agreement. Any Registrable Securities excluded from
a
Registration Statement pursuant to this Section 6.9(b)(ii) are hereinafter
referred to as “Cut-Back Securities.” Except as provided in Section
6.9(b)(iii), no liquidated damages shall accrue or be owing on any
Cut-Back Securities excluded from the Registration Statement as a
result
of the application of this Section.
|
|
(iii)
|
No
later than 180 days after the earlier of (i) the Effectiveness Deadline
and (ii) the Effective Date (the earlier of such dates, the “Cut-Back
Filing Deadline”), the Parent shall prepare and file with the SEC one
Registration Statement on Form F-3 (or, if Form F-3 is not then available
to the Parent, on such form of registration statement as is then
available
to effect a registration for resale of the Registrable Securities),
covering the resale of the Cut-Back Securities. Subject to any SEC
comments, such Registration Statement shall include the plan of
distribution substantially in the form as Exhibit C to the Purchase
Agreement. Such Registration Statement also shall cover, to the extent
allowable under the 1933 Act and the rules promulgated thereunder
(including Rule 416), such indeterminate number of additional ADSs
resulting from stock splits, stock dividends or similar transactions
with
respect to the Cut-Back Securities. If a Registration Statement covering
the Cut-Back Securities is not filed with the SEC on or prior to
the
Cut-Back Filing Deadline, the Parent will make pro
rata
|
-2-
payments
to each Company stockholder holding Cut-Back Securities, other than the
Designated Holders, as liquidated damages and not as a penalty, in an amount
equal to 2.0% of the Deemed Value of the ADS held by such Company stockholder
in
respect of the Cut-Back Securities for each 30-day period or pro rata for any
portion thereof following the Cut-Back Filing Deadline for which no Registration
Statement is filed with respect to the Cut-Back Securities. Such payments shall
constitute such stockholders’ exclusive monetary remedy for such events, but
shall not affect the right of such stockholders to seek injunctive relief.
Such
payments shall be made to each affected stockholders in cash.
|
(iv)
|
The
Parent will pay all expenses associated with each registration, including
filing and printing fees, and accounting fees and expenses, costs
associated with clearing the Merger Consideration for sale under
applicable state securities laws, and listing fees, but excluding
discounts, commissions, fees of underwriters, selling brokers, dealer
managers or similar securities industry professionals with respect
to the
securities being sold.
|
|
(v)
|
The
Parent shall use commercially reasonable efforts to have any Registration
Statement declared effective as soon as practicable. If (A) a Registration
Statement covering all of the applicable Merger Consideration (other
than
any Cut-Back Securities) is not declared effective by the SEC prior
to the
earliest of (i) five (5) Business Days after the SEC shall have informed
the Parent that no review of the Registration Statement will be made
or
that the SEC has no further comments on the Registration Statement,
(ii)
the 120th
day after the Filing Date or (iii) the 240th
day after the Closing Date (the earliest of such dates, the “Effectiveness
Deadline”), (B) a Registration Statement covering all of the Cut-Back
Securities, if any, is not declared effective by the SEC prior to
the
earliest of (i) five (5) Business Days after the SEC shall have informed
the Parent that no review of the Registration Statement will be made
or
that the SEC has no further comments on the Registration Statement,
(ii)
the 60th
day after the Cut-Back Filing Deadline, or
(C) after a Registration Statement has been declared effective by
the SEC,
sales cannot be made pursuant to such Registration Statement for
any
reason (including without limitation by reason of a stop order, or
the
Parent’s failure to update the Registration Statement), but excluding the
inability of any stockholder to sell the Merger Consideration covered
thereby due to market conditions and except as excused pursuant to
subparagraph (vi) below, then
the Parent will make pro rata payments to each affected stock holder,
other than the Designated Holder, as liquidated damages and not as
a
penalty, in an amount equal to 2.0% of the aggregate Deemed Value
of ADSs
of such stockholder in the affected Merger Consideration for each
30-day
period or pro rata for any portion thereof following the date by
which
such Registration Statement should have been effective (the “Blackout
Period”). Such payments shall constitute the stockholders’ exclusive
monetary remedy for such events, but shall not affect the right of
the
Investors to seek injunctive relief. The amounts payable as liquidated
damages pursuant to this paragraph shall be paid monthly within three
(3)
Business Days of the last day of each month following the commencement
of
the Blackout Period until the termination of the Blackout Period.
Such
payments shall be made to each Investor in
cash.
|
|
(vi)
|
For
not more than twenty (20) consecutive days or for a total of not
more than
forty-five (45) days in any twelve (12) month period, the Parent
may delay
the disclosure of material non-public information concerning the
Parent,
by
|
-3-
suspending
the use of any Prospectus included in any registration contemplated by this
Section containing such information, the disclosure of which at the time is
not,
in the good faith opinion of the Parent, in the best interests of the Parent
(an
“Allowed Delay”); provided, that the Parent shall promptly (a) notify the
Investors in writing of the existence of (but in no event, without the prior
written consent of an Investor, shall the Parent disclose to such Investor
any
of the facts or circumstances regarding) material non-public information giving
rise to an Allowed Delay, (b) advise the Investors in writing to cease all
sales
under the Registration Statement until the end of the Allowed Delay and (c)
use
commercially reasonable efforts to terminate an Allowed Delay as promptly as
practicable.
|
(vii)
|
Notwithstanding
the other provisions of this Section, in no event shall the Parent
be
liable for liquidated damages under this Agreement in excess of $1,175,000
in the aggregate.
|
(viii)
Parent will use commercially reasonable efforts to effect the registration
of
the Merger Consideration in substantially similar manner as the ADSs pursuant
to
the Purchase Agreement.
|
(ix)
|
Parent’s
obligation to cause such Registration Statement to become effective
and to
remain continuously effective for a period that will terminate, as
to each
stockholder, upon the earlier of (i) the date on which all ADS part
of the
Merger Consideration held by such stockholder and covered by such
Registration Statement as amended from time to time, have been sold,
and
(ii) the date on which all such ADSs held by such stockholder and
covered
by such Registration Statement may be sold by such stockholder pursuant
to
Rule 144(k) or, in any three-month period in accordance with the
volume
limitations under Rule 144 (the “Effectiveness Period”). Parent
covenants and agrees to: (i) make and keep public information available,
as those terms are understood and defined in Rule 144, until the
earlier
of (A) six months after such date as all of the ADSs of the stockholders
may be resold pursuant to Rule 144(k) or any other rule of similar
effect
or (B) such date as all of the Merger Consideration shall have been
resold; and (ii) file with the SEC in a timely manner all reports
and
other documents required of the Company under the 1934 Act.
|
2. Amendment
to Section 2.1(h) of the Merger Agreement. Assuming
the closing of the sale of ADSs pursuant to the Purchase Agreement without
any
amendments or waivers relating to the purchase price of the ADSs thereunder,
Section 2.1(h) of the Merger Agreement is hereby amended so that the term “FP”
is defined as $1.10 (subject to adjustment for stock splits, combinations and
the like occurring prior to the Closing).
3. Waivers
regarding Xx. Xxx Xxxxxx.
Master
Replicas hereby waives any breach of any covenant of the Merger Agreement,
and
any inaccuracy of any representation or warranty of the Company in the Merger
Agreement, resulting from Xx. Xxx Xxxxxx’x resignation from the employment of
the Company and the severance payment made to Xx. Xxxxxx in connection
therewith. Master Replicas also hereby waives the conditions to its obligations
under the Merger Agreement set forth in Section 7.3(m) of the Merger Agreement
with respect to Xx. Xxxxxx’x failure to execute a lock-up
agreement.
4. Assumption
of Ropart Asset Management, LLC Series A Warrants.
The
following clause shall be added to the end of the first sentence of Section
6.16: “other than Series A Warrants issued to
-4-
Ropart
Asset Management, LLC and any of its affiliates”. In addition, the reference in
Section 2.1(i) to “Section 6.14” shall be replaced with “Section
6.16”.
5. Acknowledgement
of Satisfaction of Section 7.3(o) of the Merger Agreement.
Master
Replicas hereby acknowledges that the closing of the transactions contemplated
under the Sale and Purchase Agreement, dated November 3, 2006, among the
Company, Poundwell Limited, Zindart Manufacturing Limited, Dongguan Xinda
Giftware Company, Luen Tat Model Design Company Limited, Luen Tat Mould
Manufacturing Limited and Onchart Industrial (BVI) Limited satisfies the
condition set forth in Section 7.3(o) of the Merger Agreement and that the
execution of such agreement fulfills the provisions of Section 9.3(c) of the
Merger Agreement.
6. Extension
of Termination under Section 9.2 until December 31, 2006. The
reference to December 15, 2006 shall in Section 9.2 shall be replaced with
December 31, 2006.
7. Waiver
of Section 9.3(c) of the Merger Agreement.
Master
Replicas hereby waives the termination right set forth in Section 9.3(c) of
the
Merger Agreement.
8. Full
Force and Effect.
Except
as expressly modified by this Agreement, all of the terms and conditions of
the
Merger Agreement shall remain in full force and effect.
9. 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.
10. Governing
Law.
This
Agreement shall be governed in all respects by the laws of the State of
Delaware, without giving effect to conflict of law principles thereof.
[Signature
pages follow]
-5-
The
parties hereto have executed this Amendment and Waiver Agreement as of the
date
first set forth above.
| CORGI INTERNATIONAL LIMITED | |
|
By:
/s/
Xxxxxx Xxxxxxxxx
Name:
Xxxxxx Xxxxxxxxx
Title:
Chief Executive Officer
|
|
| LIGHTSABER ACQUISITION CORP. | |
|
By:
/s/
Xxxxxx Xxxxxxxxx
Name:
Xxxxxx Xxxxxxxxx
Title:
President
|
|
| MASTER REPLICAS INC. | |
|
By:
/s/
Xxxxxxx Xxxxxxx
Name:
Xxxxxxx Xxxxxxx
Title:
Chief Executive Officer
|
|
-6-
