AMENDMENT AND WAIVER AGREEMENT
This
Amendment and Waiver Agreement (the
"Agreement")
is
being entered into 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 (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:
| 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:
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“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 August 31, 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."
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2.
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Automatic
Conversion of Notes Immediately Prior to Proposed
Transaction.
The parties to this Agreement acknowledge that the Company is currently
in
discussions with certain parties relating to a potential business
combination (the "Proposed
Transaction").
The Notes are hereby amended such that, immediately prior to the
closing
of such Proposed Transaction, and without any further action on the
part
of the Company or the holders of such Notes, all outstanding principal
and
accrued but unpaid interest on each Note shall be converted into
a number
of the Company's American Depositary Shares ("ADSs")
obtained by dividing (a) the sum of all outstanding principal and
accrued
but unpaid interest by (b) the then-effective Conversion Price (as
defined
in the Notes). In addition, for avoidance of doubt, the Purchasers
that
are parties to this Agreement agree on behalf of all Purchasers that
Section 14(b) of the Notes is inapplicable with respect to the Proposed
Transaction.
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3.
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Amendment
to Purchase Agreement.
The Purchasers that are parties to this Agreement, on behalf of all
Purchasers, hereby waive any default or failure to comply with any
obligation, and agree to refrain from enforcement of any obligation
the
Company may otherwise have, by operation of the first sentence of
Section
7.2(a) (relating to the filing of a Registration Statement) or the
first
sentence of Section 7.2(b) (relating to causing the Registration
Statement
to become effective). In the event the Warrant Exercisability Date
occurs,
(a) the "Filing Deadline Date" for purposes of Section 7.2(a) of
the
Purchase Agreement shall be the date that is fifteen calendar days
following the Warrant Exercisability Date and (b) the "Effectiveness
Deadline Date" for purposes of Section 7.2(b) of the Purchase Agreement
shall be the date that is the earlier of (i) two business days after
the
SEC shall have informed the Company that no review of the Registration
Statement will be made or that the SEC has no further comments on
the
Registration Statement and (ii) the 90th day after the Warrant
Exercisability Date (the 120th
day if the Registration Statement is subject to a formal written
review by
the SEC). In the event the Proposed Transaction is consummated in
advance
of the Warrant Exercisability Date, the provisions set forth in Section
7.2(a) or 7.2(b) of the Notes relating to the "Filing Deadline Date,"
the
"Effectiveness Deadline Date" and the payment of any liquidated damages
shall be of no effect and shall be replaced in their entirety by
such
similar provisions (if any) that are agreed to by and between the
Company
and the investors in the financing the Company intends to consummate
in
connection with the Proposed Transaction (the "Proposed
Transaction Financing.")
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4.
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Waiver
of Obligations to Issue Additional Warrants. The
Purchasers that are parties to this Agreement, on behalf of all
Purchasers, hereby waive, and agree to refrain from enforcement of,
any
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obligation
the Company may otherwise have to issue Additional Warrants to the Purchasers
by
operation of the provisions of Section 7.2(a) or 7.2(b) of the Purchase
Agreement.
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5.
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Expansion
of Shares Registrable for Resale in Registration Statement.
Notwithstanding
anything to the contrary set forth in Section 7.2(a) of the Purchase
Agreement, any equity securities issued by the Company in connection
with
the Proposed Transaction or the Proposed Transaction Financing may
by
registered for resale in the Registration Statement along with the
Registrable Shares.
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6.
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Adjustments
in Connection with Proposed Transaction Financing. If
the price per share at which the ADSs are issued to the investors
in the
Proposed Transaction Financing (the "Financing
Per Share Issuance Price")
is less than the Conversion Price (as defined in the Notes) in effect
as
of immediately prior to the closing of the Proposed Transaction Financing,
the Conversion Price of each Note held by a Purchaser that is a party
to
this Agreement or who subsequently agrees to the terms of this Section
6
shall be adjusted as of the closing of the Proposed Transaction Financing
to equal the Financing Per Share Issuance Price. In addition, if
in
connection with the Proposed Transaction Financing the Company issues
any
security (other than ADSs) of a type not issued to the Purchasers
under
the terms of the Purchase Agreement, or grants the investors in the
Proposed Transaction Financing any material right or privilege (other
than
any such right or privilege appurtenant to any ADSs issued in the
Proposed
Transaction Financing) not granted to the Purchasers in connection
with
the transactions contemplated by the Purchase Agreement, any such
security, right or privilege shall be provided to each Purchaser,
whether
or not such Purchaser participates in the Proposed Transaction Financing,
as if such Purchaser had invested in the Proposed Transaction Financing
an
amount of cash equal to the outstanding principal amount of such
Purchaser's Note as of the day on which the Proposed Transaction
Financing
closes.
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7.
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Board
Composition.
Section 7.7 of the Purchase Agreement shall be deleted in its entirety
and
replaced with the following:
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7.7 Board
Composition.
From
and after the Closing Date until the earlier of (a) such time as Xxxxxx and
XxXxxxx International and its affiliates own less than 3% of the Company’s
issued and outstanding ADSs and (b) the closing of the Proposed Transaction
(as
defined in that certain Amendment and Waiver Agreement dated as of June _,
2006
by and between the Company and certain of the Purchasers) (the "Amendment
Agreement"), Xxxxxx and McBaine International ("G&M") shall be entitled to
nominate a person to the Company’s Board of Directors (the "Board") and if
nominated, such nominee shall be required to become a member of the Board within
10 business days of such nomination. From the Warrant Exercisability Date (as
defined in the Amendment Agreement) until such time as SRB Greenway Capital
("SRB") and its affiliates own less than 3% of the Company’s issued and
outstanding ADSs, SRB shall be entitled to nominate a person to the Board,
which
nominee shall not be a United States citizen or a United States resident if
the
Company is immediately prior to such appointment a “foreign private issuer”
within the meaning of the United States federal securities laws and appointing
an additional person to the Board who is a United States citizen or resident
would cause the Company to cease to be a “foreign private issuer,” and if
nominated, such nominee shall be required to become a member of the Board within
10 business days of such nomination.
From the
date of the closing of the Proposed Transaction until such time as G&M and
SRB, together with their affiliates, own less than 3% of the Company's issued
and outstanding ADSs, G&M and SRB shall collectively be entitled to nominate
one person (on whom G&M and SRB shall mutually
agree)
to
the Board, and if nominated, such nominee shall be required to become a member
of the Board within 10 business days of such nomination.
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8.
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Full
Force and Effect.
Except as expressly modified by this 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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9.
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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.
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10.
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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.
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[Signature
pages follow]
The
parties hereto have executed this 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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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
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
