REGISTRATION RIGHTS AGREEMENT
This
Registration Rights Agreement (the “Agreement”) is made and entered into as of
this ___ day of December, 2006 by and among Corgi International Limited, a
corporation organized under the laws of Hong Kong (the “Company”), and the other
parties signatories hereto.
Recitals
The
Company has entered into a Purchase Agreement, dated November 14, 2006 (the
“Purchase Agreement”), pursuant to which it has agreed to issue and sell to the
investors party thereto (the “New Investors”), (i) an aggregate of up to
16,000,000 of the Company’s ADSs (the “Shares”) and (ii) warrants (the
“Warrants”) to purchase an aggregate of up to 4,800,000 ADSs (the “Warrant
Shares”). Capitalized terms used herein have the respective meanings ascribed
thereto in the Purchase Agreement unless otherwise defined herein.
The
Company has previously entered into a Note and Warrant Purchase Agreement,
dated
April 28, 2006 (as amended as of the date hereof, the “Note Purchase
Agreement”), pursuant to which, among other things, it issued and sold to the
investors party thereto (the “Note Investors”) $5,000,000 in aggregate principal
amount of its convertible promissory notes (the “Notes”) convertible in to an
aggregate of 2,500,000 ADSs (the “Conversion Shares”).
Pursuant
to the Note Purchase Agreement, the Company was obligated to, among other
things, register the Conversion Shares for resale by the Note
Investors.
The
Company and the Note Investors have entered into a Third Amendment and Waiver
Agreement (the “Waiver Agreement”) pursuant to which, among other things, the
Note Investors have agreed to terminate the registration provisions of the
Note
Purchase Agreement and to enter into this Agreement and to convert their Notes
into ADSs in accordance with the terms of the Notes (as modified by the Waiver
Agreement) on the Closing Date.
The
parties hereby agree as follows:
1. Certain
Definitions.
As
used
in this Agreement, the following terms shall have the following
meanings:
“Affiliate
Investors”
means
the Investors listed on Exhibit
A
attached
hereto.
“Affiliate
Securities”
means
Registrable Securities held by Affiliate Investors.
“Designated
Investors”
means
the Investors listed on Exhibit
B
attached
hereto.
“Filing
Date”
means
the date the Registration Statement is filed pursuant to Section
2(a)(i).
“Investors”
shall
mean the New Investors identified in the Purchase Agreement, the Note Investors
identified in the Note Purchase Agreement, and any Affiliate or permitted
transferee of any of such Investors who is a subsequent holder of any Shares,
Notes, Warrants or Registrable Securities.
“Prospectus”
shall
mean (i) the prospectus included in any Registration Statement, as amended
or
supplemented by any prospectus supplement, with respect to the terms of
the
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offering
of any portion of the Registrable Securities covered by such Registration
Statement and by all other amendments and supplements to the prospectus,
including post-effective amendments and all material incorporated by reference
in such prospectus, and (ii) any “free writing prospectus” as defined in Rule
405 under the 1933 Act.
“Other
Securities”
means
the ADSs issued by the Company in connection with the Master Replicas
Acquisition.
“Register,”
“registered”
and
“registration”
refer
to a registration made by preparing and filing a Registration Statement or
similar document in compliance with the 1933 Act (as defined below), and the
declaration or ordering of effectiveness of such Registration Statement or
document.
“Registrable
Securities”
shall
mean (i) the Shares, (ii) the Warrant Shares, (iii) the Conversion Shares and
(iv) any other securities issued or issuable with respect to or in exchange
for
Registrable Securities; provided, that, a security shall cease to be a
Registrable Security upon (A) sale pursuant to a Registration Statement or
Rule
144 under the 1933 Act, or (B) such security becoming eligible for sale by
the
Investors pursuant to Rule 144(k).
“Registration
Statement”
shall
mean any registration statement of the Company filed under the 1933 Act that
covers the resale of any of the Registrable Securities pursuant to the
provisions of this Agreement, amendments and supplements to such Registration
Statement, including post-effective amendments, all exhibits and all material
incorporated by reference in such Registration Statement.
“Required
Investors”
means
the Investors holding a majority of the Registrable Securities; provided,
however, that in the event that Section 2(a)(ii) applies, any Registrable
Securities excluded from the Registration Statement shall not be counted unless
and until such Registrable Securities are registered for resale pursuant to
the
terms hereof.
“SEC”
means
the U.S. Securities and Exchange Commission.
“1933
Act”
means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“1934
Act”
means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
2. Registration.
(a) Registration
Statements.
(i) Promptly
following the closing of the purchase and sale of the securities contemplated
by
the Purchase Agreement (the “Closing Date”) but no later than 120 days after the
Closing Date (the “Filing Deadline”), the Company 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 Company, 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 Registrable Securities in an amount at least equal
to
the Shares, the Warrant Shares and the Conversion Shares. Subject to any SEC
comments, such Registration Statement shall include the plan of distribution
attached hereto as Exhibit
C.
Such
Registration Statement also shall cover, to the extent allowable under the
1933
Act and the rules promulgated thereunder (including Rule 416), such
indeterminate
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number
of
additional ADSs resulting from stock splits, stock dividends or similar
transactions with respect to the Registrable Securities. Such Registration
Statement shall not include any other securities for the account of any other
holder; provided, however, that subject to Section 2(a)(ii) below, the
Registration Statement may include the Other Securities. The Registration
Statement (and each amendment or supplement thereto, and each request for
acceleration of effectiveness thereof) shall be provided in accordance with
Section 3(c) to the Investors and their counsel prior to its filing or other
submission. If a Registration Statement covering the Registrable Securities
is
not filed with the SEC on or prior to the Filing Deadline, the Company will
make
pro rata payments to each Investor, other than the Designated Investors, as
liquidated damages and not as a penalty, in an amount equal to 2.0% of the
aggregate amount invested by such Investor 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 Registrable Securities. Such payments
shall constitute the Investors’ exclusive monetary remedy for such events, but
shall not affect the right of the Investors to seek injunctive relief. Such
payments shall be made to each Investor in cash.
(ii) Notwithstanding
the provisions of Section 2(a)(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
Registrable Securities 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 Company shall (i) remove from
the
Registration Statement all or such portion of the Affiliate Securities and
the
Other Securities and/or (ii) agree to such restrictions and limitations on
the
registration and resale of the Affiliate Securities and the Other Securities
as
the SEC may require to assure the Company’s compliance with the requirements of
Rule 415 or (B) the inclusion of the Warrant Shares in the Registration
Statement, the Company 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 Company’s compliance with the requirements of Rule 415. In
the event that the provisions of this clause (ii) apply, the Company and the
Investors shall mutually agree as to whether clause (A) or (B) is applicable.
Any cut-back imposed pursuant to Section 2(a)(ii)(A) shall be allocated among
the Affiliate Securities and the Other Securities on a pro rata basis. Any
cut-back imposed pursuant to Section 2(a)(ii)(B) shall be allocated among the
Warrant Shares as follows: first, to the Warrant Shares held by the Affiliate
Investors on a pro rata basis; and second, to the Warrant Shares not held by
the
Affiliate Investors on a pro rata basis. The provisions of this Section 2(a)(ii)
shall not limit or otherwise affect the obligations of the Company, 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 2(a)(ii) are hereinafter
referred to as “Cut-Back Securities.” Except as provided in Section 2(a)(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 2(a)(ii).
(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
Company 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 Company, on such form of
registration statement as is then
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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 attached hereto
as
Exhibit
C.
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.
Such
Registration Statement shall not include any other securities for the account
of
any other holder. The Registration Statement (and each amendment or supplement
thereto, and each request for acceleration of effectiveness thereof) shall
be
provided in accordance with Section 3(c) to the Investors and their counsel
prior to its filing or other submission. 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 Company will make pro rata payments to each Investor
holding Cut-Back Securities, other than the Designated Investors, as liquidated
damages and not as a penalty, in an amount equal to 2.0% of the aggregate amount
invested by such Investor 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 Investors’ exclusive
monetary remedy for such events, but shall not affect the right of such
Investors to seek injunctive relief. Such payments shall be made to each
affected Investor in cash.
(b) Expenses.
The
Company will pay all expenses associated with each registration, including
filing and printing fees, the Company’s counsel and accounting fees and
expenses, costs associated with clearing the Registrable Securities for sale
under applicable state securities laws, listing fees, fees and expenses of
one
counsel to the Investors not to exceed $5,000 and the Investors’ reasonable
expenses in connection with the registration, but excluding discounts,
commissions, fees of underwriters, selling brokers, dealer managers or similar
securities industry professionals with respect to the Registrable Securities
being sold.
(c) Effectiveness.
(i) The
Company shall use commercially reasonable efforts to have any Registration
Statement declared effective as soon as practicable. The Company shall notify
the Investors by facsimile or e-mail as promptly as practicable, and in any
event, within twenty-four (24) hours, after any Registration Statement is
declared effective and shall simultaneously provide the Investors with copies
of
any related Prospectus to be used in connection with the sale or other
disposition of the securities covered thereby. If (A) a Registration Statement
covering all of the Registrable Securities (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 Company 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 Company
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
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cannot
be
made pursuant to such Registration Statement for any reason (including without
limitation by reason of a stop order, or the Company’s failure to update the
Registration Statement), but excluding the inability of any Investor to sell
the
Registrable Securities covered thereby due to market conditions and except
as
excused pursuant to subparagraph (ii) below, then
the
Company will make pro rata payments to each affected Investor, other than the
Designated Investors, as liquidated damages and not as a penalty, in an amount
equal to 2.0% of the aggregate amount invested by such Investor in the affected
Registrable Securities 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 Investors’
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.
(ii) 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 Company may delay
the
disclosure of material non-public information concerning the Company, by
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 Company, in the best interests of
the
Company (an “Allowed Delay”); provided, that the Company 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 Company 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.
(d) Limitation
on Liquidated Damages.
Notwithstanding the other provisions of this Section 2, in no event shall the
Company be liable for liquidated damages in excess of $1,175,000 in the
aggregate.
3. Company
Obligations.
The
Company will use commercially reasonable efforts to effect the registration
of
the Registrable Securities in accordance with the terms hereof, and pursuant
thereto the Company will, as expeditiously as possible:
(a) use
commercially reasonable efforts to cause such Registration Statement to become
effective and to remain continuously effective for a period that will terminate,
as to each Investor, upon the earlier of (i) the date on which all Registrable
Securities held by such Investor and covered by such Registration Statement
as
amended from time to time, have been sold, and (ii) the date on which all
Registrable Securities held by such Investor and covered by such Registration
Statement may be sold by such Investor pursuant to Rule 144(k) or, in the case
of the Other Securities only, when all of such Other Securities held by such
Investor may be resold by such Investor in any three-month period in accordance
with the volume limitations under Rule 144 (the “Effectiveness Period”) and
advise each Investor in writing when the Effectiveness Period with respect
to
its Registrable Securities has expired;
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(b) prepare
and file with the SEC such amendments and post-effective amendments to the
Registration Statement and the Prospectus as may be necessary to keep the
Registration Statement effective for the Effectiveness Period and to comply
with
the provisions of the 1933 Act and the 1934 Act with respect to the distribution
of all of the Registrable Securities covered thereby;
(c) provide
copies to and permit counsel designated by the Investors to review each
Registration Statement and all amendments and supplements thereto no fewer
than
seven (7) days prior to their filing with the SEC and not file any document
to
which such counsel reasonably objects;
(d) furnish
to the Investors and their legal counsel (i) promptly after the same is prepared
and publicly distributed, filed with the SEC, or received by the Company (but
not later than two (2) Business Days after the filing date, receipt date or
sending date, as the case may be) one (1) copy of any Registration Statement
and
any amendment thereto, each preliminary prospectus and Prospectus and each
amendment or supplement thereto, and each letter written by or on behalf of
the
Company to the SEC or the staff of the SEC, and each item of correspondence
from
the SEC or the staff of the SEC, in each case relating to such Registration
Statement (other than any portion of any thereof which contains information
for
which the Company has sought confidential treatment), and (ii) such number
of
copies of a Prospectus, including a preliminary prospectus, and all amendments
and supplements thereto and such other documents as each Investor may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such Investor that are covered by the related Registration
Statement;
(e) use
commercially reasonable efforts to (i) prevent the issuance of any stop order
or
other suspension of effectiveness and, (ii) if such order is issued, obtain
the
withdrawal of any such order at the earliest possible moment;
(f) prior
to
any public offering of Registrable Securities, use commercially reasonable
efforts to register or qualify or cooperate with the Investors and their counsel
in connection with the registration or qualification of such Registrable
Securities for offer and sale under the securities or blue sky laws of such
jurisdictions requested by the Investors and do any and all other commercially
reasonable acts or things necessary or advisable to enable the distribution
in
such jurisdictions of the Registrable Securities covered by the Registration
Statement;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (i) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3(f), (ii) subject itself to general taxation in any jurisdiction where
it would not otherwise be so subject but for this Section 3(f), or (iii) file
a
general consent to service of process in any such jurisdiction;
(g) use
commercially reasonable efforts to cause all Registrable Securities covered
by a
Registration Statement to be listed on each securities exchange, interdealer
quotation system or other market on which similar securities issued by the
Company are then listed;
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(h) immediately
notify the Investors, at any time prior to the end of the Effectiveness Period,
upon discovery that, or upon the happening of any event as a result of which,
the Prospectus includes an untrue statement of a material fact or omits to
state
any material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing,
and promptly prepare, file with the SEC and furnish to such holder a supplement
to or an amendment of such Prospectus as may be necessary so that such
Prospectus shall not include an untrue statement of a material fact or omit
to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing;
and
(i) otherwise
use commercially reasonable efforts to comply with all applicable rules and
regulations of the SEC under the 1933 Act and the 1934 Act, including, without
limitation, Rule 172 under the 1933 Act, file any final Prospectus, including
any supplement or amendment thereof, with the SEC pursuant to Rule 424 under
the
1933 Act, promptly inform the Investors in writing if, at any time during the
Effectiveness Period, the Company does not satisfy the conditions specified
in
Rule 172 and, as a result thereof, the Investors are required to deliver a
Prospectus in connection with any disposition of Registrable Securities and
take
such other actions as may be reasonably necessary to facilitate the registration
of the Registrable Securities hereunder; and make available to its security
holders, as soon as reasonably practicable, but not later than the Availability
Date (as defined below), an earnings statement covering a period of at least
twelve (12) months, beginning after the effective date of each Registration
Statement, which earnings statement shall satisfy the provisions of Section
11(a) of the 1933 Act, including Rule 158 promulgated thereunder (for the
purpose of this subsection 3(i), “Availability Date” means the 45th day
following the end of the fourth fiscal quarter that includes the effective
date
of such Registration Statement, except that, if such fourth fiscal quarter
is
the last quarter of the Company’s fiscal year, “Availability Date” means the
90th day after the end of such fourth fiscal quarter).
(j) With
a
view to making available to the Investors the benefits of Rule 144 (or its
successor rule) and any other rule or regulation of the SEC that may at any
time
permit the Investors to sell ADSs to the public without registration, the
Company 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 Registrable Securities may be resold
pursuant to Rule 144(k) or any other rule of similar effect or (B) such date
as
all of the Registrable Securities shall have been resold; (ii) file with the
SEC
in a timely manner all reports and other documents required of the Company
under
the 1934 Act; and (iii) furnish to each Investor upon request, as long as such
Investor owns any Registrable Securities, (A) a written statement by the Company
that it has complied with the reporting requirements of the 1934 Act, (B) a
copy
of the Company’s most recent Annual Report on Form 20-F or Report of Foreign
Private Issuer on Form 6-K, and (C) such other information as may be reasonably
requested in order to avail such Investor of any rule or regulation of the
SEC
that permits the selling of any such Registrable Securities without
registration.
4. Due
Diligence Review; Information.
The
Company shall make available, during normal business hours, for inspection
and
review by the Investors, advisors to and representatives of the Investors (who
may or may not be affiliated with the Investors and who are reasonably
acceptable to the Company), all financial and other records, all SEC Filings
(as
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defined
in the Purchase Agreement) and other filings with the SEC, and all other
corporate documents and properties of the Company as may be reasonably necessary
for the purpose of such review, and cause the Company’s officers, directors and
employees, within a reasonable time period, to supply all such information
reasonably requested by the Investors or any such representative, advisor or
underwriter in connection with such Registration Statement (including, without
limitation, in response to all questions and other inquiries reasonably made
or
submitted by any of them), prior to and from time to time after the filing
and
effectiveness of the Registration Statement for the sole purpose of enabling
the
Investors and such representatives, advisors and underwriters and their
respective accountants and attorneys to conduct initial and ongoing due
diligence with respect to the Company and the accuracy of such Registration
Statement.
The
Company shall not disclose material nonpublic information to the Investors,
or
to advisors to or representatives of the Investors, unless prior to disclosure
of such information the Company identifies such information as being material
nonpublic information and provides the Investors, such advisors and
representatives with the opportunity to accept or refuse to accept such material
nonpublic information for review and any Investor wishing to obtain such
information enters into an appropriate confidentiality agreement with the
Company with respect thereto.
5. Obligations
of the Investors.
(a) Each
Investor shall furnish in writing to the Company such information regarding
itself, the Registrable Securities held by it and the intended method of
disposition of the Registrable Securities held by it, as shall be reasonably
required to effect the registration of such Registrable Securities and shall
execute such documents in connection with such registration as the Company
may
reasonably request. At least five (5) Business Days prior to the first
anticipated filing date of any Registration Statement, the Company shall notify
each Investor of the information the Company requires from such Investor if
such
Investor elects to have any of the Registrable Securities included in the
Registration Statement. An Investor shall provide such information to the
Company at least two (2) Business Days prior to the first anticipated filing
date of such Registration Statement if such Investor elects to have any of
the
Registrable Securities included in the Registration Statement.
(b) Each
Investor, by its acceptance of the Registrable Securities agrees to cooperate
with the Company as reasonably requested by the Company in connection with
the
preparation and filing of a Registration Statement hereunder, unless such
Investor has notified the Company in writing of its election to exclude all
of
its Registrable Securities from such Registration Statement.
(c) Each
Investor agrees that, upon receipt of any notice from the Company of either
(i)
the commencement of an Allowed Delay pursuant to Section 2(c)(ii) or (ii) the
happening of an event pursuant to Section 3(h) hereof, such Investor will
immediately discontinue disposition of Registrable Securities pursuant to the
Registration Statement covering such Registrable Securities, until the Investor
is advised by the Company that such dispositions may again be made.
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6. Indemnification.
(a) Indemnification
by the Company.
The
Company will indemnify and hold harmless each Investor and its officers,
directors, members, employees and agents, successors and assigns, and each
other
person, if any, who controls such Investor within the meaning of the 1933 Act,
against any losses, claims, damages or liabilities, joint or several, to which
they may become subject under the 1933 Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of
or
are based upon: (i) any untrue statement or alleged untrue statement of any
material fact contained in any Registration Statement, any preliminary
Prospectus or final Prospectus, or any amendment or supplement thereof; (ii)
any
blue sky application or other document executed by the Company specifically
for
that purpose or based upon written information furnished by the Company filed
in
any state or other jurisdiction in order to qualify any or all of the
Registrable Securities under the securities laws thereof (any such application,
document or information herein called a “Blue
Sky
Application”);
(iii)
the omission or alleged omission to state therein a material fact required
to be
stated therein or necessary to make the statements therein not misleading;
(iv)
any violation by the Company or its agents of any rule or regulation promulgated
under the 1933 Act applicable to the Company or its agents and relating to
action or inaction required of the Company in connection with such registration;
or (v) any failure to register or qualify the Registrable Securities included
in
any such Registration in any state where the Company or its agents has
affirmatively undertaken or agreed in writing that the Company will undertake
such registration or qualification on an Investor’s behalf and will reimburse
such Investor, and each such officer, director or member and each such
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided,
however,
that
the Company will not be liable in any such case if and to the extent that any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission so made
in
conformity with information furnished by such Investor or any such controlling
person in writing specifically for use in such Registration Statement or
Prospectus.
(b) Indemnification
by the Investors.
Each
Investor agrees, severally but not jointly, to indemnify and hold harmless,
to
the fullest extent permitted by law, the Company, its directors, officers,
employees, stockholders and each person who controls the Company (within the
meaning of the 0000 Xxx) against any losses, claims, damages, liabilities and
expense (including reasonable attorney fees) resulting from any untrue statement
of a material fact or any omission of a material fact required to be stated
in
the Registration Statement or Prospectus or preliminary Prospectus or amendment
or supplement thereto or necessary to make the statements therein not
misleading, to the extent, but only to the extent that such untrue statement
or
omission is contained in any information furnished in writing by such Investor
to the Company specifically for inclusion in such Registration Statement or
Prospectus or amendment or supplement thereto. In no event shall the liability
of an Investor be greater in amount than the dollar amount of the proceeds
(net
of all expense paid by such Investor in connection with any claim relating
to
this Section 6 and the amount of any damages such Investor has otherwise been
required to pay by reason of such untrue statement or omission) received by
such
Investor upon the sale of the Registrable Securities included in the
Registration Statement giving rise to such indemnification
obligation.
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(c) Conduct
of Indemnification Proceedings.
Any
person entitled to indemnification hereunder shall (i) give prompt notice to
the
indemnifying party of any claim with respect to which it seeks indemnification
and (ii) permit such indemnifying party to assume the defense of such claim
with
counsel reasonably satisfactory to the indemnified party; provided
that any
person entitled to indemnification hereunder shall have the right to employ
separate counsel and to participate in the defense of such claim, but the fees
and expenses of such counsel shall be at the expense of such person unless
(a)
the indemnifying party has agreed to pay such fees or expenses, or (b) the
indemnifying party shall have failed to assume the defense of such claim and
employ counsel reasonably satisfactory to such person or (c) in the reasonable
judgment of any such person, based upon written advice of its counsel, a
conflict of interest exists between such person and the indemnifying party
with
respect to such claims (in which case, if the person notifies the indemnifying
party in writing that such person elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such claim on behalf of such person); and
provided,
further,
that
the failure of any indemnified party to give notice as provided herein shall
not
relieve the indemnifying party of its obligations hereunder, except to the
extent that such failure to give notice shall materially adversely affect the
indemnifying party in the defense of any such claim or litigation. It is
understood that the indemnifying party shall not, in connection with any
proceeding in the same jurisdiction, be liable for fees or expenses of more
than
one separate firm of attorneys at any time for all such indemnified parties.
No
indemnifying party will, except with the consent of the indemnified party,
consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release from all liability in respect of such
claim or litigation.
(d) Contribution.
If for
any reason the indemnification provided for in the preceding paragraphs (a)
and
(b) is unavailable to an indemnified party or insufficient to hold it harmless,
other than as expressly specified therein, then the indemnifying party shall
contribute to the amount paid or payable by the indemnified party as a result
of
such loss, claim, damage or liability in such proportion as is appropriate
to
reflect the relative fault of the indemnified party and the indemnifying party,
as well as any other relevant equitable considerations. No person guilty of
fraudulent misrepresentation within the meaning of Section 11(f) of the 1933
Act
shall be entitled to contribution from any person not guilty of such fraudulent
misrepresentation. In no event shall the contribution obligation of a holder
of
Registrable Securities be greater in amount than the dollar amount of the
proceeds (net of all expenses paid by such holder in connection with any claim
relating to this Section 6 and the amount of any damages such holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission) received by it upon the sale of
the
Registrable Securities giving rise to such contribution obligation.
7. Miscellaneous.
(a) Amendments
and Waivers.
This
Agreement may be amended only by a writing signed by the Company and the
Required Investors. The Company may take any action herein prohibited, or omit
to perform any act herein required to be performed by it, only if the Company
shall have obtained the written consent to such amendment, action or omission
to
act, of the Required Investors.
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(b) Notices.
All
notices and other communications provided for or permitted hereunder shall
be
made as set forth in Section 9.4 of the Purchase Agreement.
(c) Assignments
and Transfers by Investors.
The
provisions of this Agreement shall be binding upon and inure to the benefit
of
the Investors and their respective successors and assigns. An Investor may
transfer or assign, in whole or from time to time in part, to one or more
persons its rights hereunder in connection with the transfer of Registrable
Securities by such Investor to such person, provided that such Investor complies
with all laws applicable thereto and provides written notice of assignment
to
the Company promptly after such assignment is effected.
(d) Assignments
and Transfers by the Company.
This
Agreement may not be assigned by the Company (whether by operation of law or
otherwise) without the prior written consent of the Required Investors,
provided, however, that the Company may assign its rights and delegate its
duties hereunder to any surviving or successor corporation in connection with
a
merger or consolidation of the Company with another corporation, or a sale,
transfer or other disposition of all or substantially all of the Company’s
assets to another corporation, without the prior written consent of the Required
Investors, after notice duly given by the Company to each Investor.
(e) Benefits
of the Agreement.
The
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective permitted successors and assigns of the parties.
Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
(f) Counterparts;
Faxes.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument. This Agreement may also be executed via facsimile, which shall
be
deemed an original.
(g) Titles
and Subtitles.
The
titles and subtitles used in this Agreement are used for convenience only and
are not to be considered in construing or interpreting this
Agreement.
(h) Severability.
Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof but shall be interpreted as if it were written so as to be
enforceable to the maximum extent permitted by applicable law, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, the parties hereby waive any provision of law
which
renders any provisions hereof prohibited or unenforceable in any
respect.
(i) Further
Assurances.
The
parties shall execute and deliver all such further instruments and documents
and
take all such other actions as may reasonably be required
-11-
to
carry
out the transactions contemplated hereby and to evidence the fulfillment of
the
agreements herein contained.
(j) Entire
Agreement.
This
Agreement is intended by the parties as a final expression of their agreement
and intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
(k) Governing
Law; Consent to Jurisdiction; Waiver of Jury Trial.
This
Agreement shall be governed by, and construed in accordance with, the internal
laws of the State of New York without regard to the choice of law principles
thereof. Each of the parties hereto irrevocably submits to the exclusive
jurisdiction of the courts of the State of New York located in New York County
and the United States District Court for the Southern District of New York
for
the purpose of any suit, action, proceeding or judgment relating to or arising
out of this Agreement and the transactions contemplated hereby. Service of
process in connection with any such suit, action or proceeding may be served
on
each party hereto anywhere in the world by the same methods as are specified
for
the giving of notices under this Agreement. Each of the parties hereto
irrevocably consents to the jurisdiction of any such court in any such suit,
action or proceeding and to the laying of venue in such court. Each party hereto
irrevocably waives any objection to the laying of venue of any such suit, action
or proceeding brought in such courts and irrevocably waives any claim that
any
such suit, action or proceeding brought in any such court has been brought
in an
inconvenient forum. EACH
OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY
LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN
CONSULTED SPECIFICALLY AS TO THIS WAIVER.
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IN
WITNESS WHEREOF, the parties have executed this Agreement or caused their duly
authorized officers to execute this Agreement as of the date first above
written.
The
Company:
CORGI
INTERNATIONAL LIMITED
By:_________________________
Name:
Xxxxxx Xxxxxxxxx
Title:
Chief Executive Officer
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The
Investors: [TO
COME]
-14-
Exhibit
A
Affiliate
Investors
Xxxx
Xxxxxxx and affiliates, including Consor Capital I, L.P. and Consor Capital
II,
L.P.
Xxxxxxx
Xxxxxxx
Xxxxxxx
XxXxxxxxxx and affiliates
Xxxxxx
Xxxxxxxx
Royal
Capital and affiliates
Xxxxxx
XxXxxxx and affiliates
-15-
Exhibit
B
Designated
Investors
Xxxx
Xxxxxxx and affiliates, including Consor Capital I, L.P. and Consor Capital
II,
L.P.
Xxxxxxx
Xxxxxxx
Xxxxxxx
XxXxxxxxxx and affiliates
-16-
Exhibit
C
Plan
of Distribution
The
selling stockholders, which as used herein includes donees, pledgees,
transferees or other successors-in-interest selling ADSs or interests therein
received after the date of this prospectus from a selling stockholder as a
gift,
pledge, partnership distribution or other transfer, may, from time to time,
sell, transfer or otherwise dispose of any or all of their ADSs or interests
therein on any stock exchange, market or trading facility on which the ADSs
are
traded or in private transactions. These dispositions may be at fixed prices,
at
prevailing market prices at the time of sale, at prices related to the
prevailing market price, at varying prices determined at the time of sale,
or at
negotiated prices.
The
selling stockholders may use any one or more of the following methods when
disposing of ADSs or interests therein:
-
ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
-
block
trades in which the broker-dealer will attempt to sell the ADSs as agent, but
may position and resell a portion of the block as principal to facilitate the
transaction;
-
purchases by a broker-dealer as principal and resale by the broker-dealer for
its account;
-
an
exchange distribution in accordance with the rules of the applicable
exchange;
-
privately negotiated transactions;
-
short
sales effected after the date the registration statement of which this
Prospectus is a part is declared effective by the SEC;
-
through
the writing or settlement of options or other hedging transactions, whether
through an options exchange or otherwise;
-
broker-dealers may agree with the selling stockholders to sell a specified
number of such ADSs at a stipulated price per ADS; and
-
a
combination of any such methods of sale.
The
selling stockholders may, from time to time, pledge or grant a security interest
in some or all of the ADSs owned by them and, if they default in the performance
of their secured obligations, the pledgees or secured parties may offer and
sell
the ADSs, from time to time, under this prospectus, or under an amendment to
this prospectus under Rule 424(b)(3) or other applicable provision of the
Securities Act amending the list of selling stockholders to include the pledgee,
transferee or other successors in interest as selling stockholders under this
prospectus.
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The
selling stockholders also may transfer the ADSs in other circumstances, in
which
case the transferees, pledgees or other successors in interest will be the
selling beneficial owners for purposes of this prospectus.
In
connection with the sale of ADSs or interests therein, the selling stockholders
may enter into hedging transactions with broker-dealers or other financial
institutions, which may in turn engage in short sales of the ADSs in the course
of hedging the positions they assume. The selling stockholders may also sell
ADSs short and deliver these securities to close out their short positions,
or
loan or pledge the ADSs to broker-dealers that in turn may sell these
securities. The selling stockholders may also enter into option or other
transactions with broker-dealers or other financial institutions or the creation
of one or more derivative securities which require the delivery to such
broker-dealer or other financial institution of ADSs offered by this prospectus,
which ADSs such broker-dealer or other financial institution may resell pursuant
to this prospectus (as supplemented or amended to reflect such
transaction).
The
aggregate proceeds to the selling stockholders from the ADSs offered by them
will be the purchase price of the ADSs less discounts or commissions, if any.
Each of the selling stockholders reserves the right to accept and, together
with
their agents from time to time, to reject, in whole or in part, any proposed
purchase of ADSs to be made directly or through agents. We will not receive
any
of the proceeds from this offering. Upon any exercise of the warrants by payment
of cash, however, we will receive the exercise price of the
warrants.
The
selling stockholders also may resell all or a portion of the ADSs in open market
transactions in reliance upon Rule 144 under the Securities Act of 1933,
provided that they meet the criteria and conform to the requirements of that
rule.
The
selling stockholders and any underwriters, broker-dealers or agents that
participate in the sale of ADSs or interests therein may be "underwriters"
within the meaning of Section 2(11) of the Securities Act. Any discounts,
commissions, concessions or profit they earn on any resale of the ADSs may
be
underwriting discounts and commissions under the Securities Act. Selling
stockholders who are "underwriters" within the meaning of Section 2(11) of
the
Securities Act will be subject to the prospectus delivery requirements of the
Securities Act.
To
the
extent required, the ADSs to be sold, the names of the selling stockholders,
the
respective purchase prices and public offering prices, the names of any agents,
dealer or underwriter, any applicable commissions or discounts with respect
to a
particular offer will be set forth in an accompanying prospectus supplement
or,
if appropriate, a post-effective amendment to the registration statement that
includes this prospectus.
In
order
to comply with the securities laws of some states, if applicable, the ADSs
may
be sold in these jurisdictions only through registered or licensed brokers
or
dealers. In addition, in some states the ADSs may not be sold unless they have
been registered or qualified for sale or an exemption from registration or
qualification requirements is available and is complied with.
We
have
advised the selling stockholders that the anti-manipulation rules of Regulation
M under the Exchange Act may apply to sales of the ADSs in the market and to
the
activities of
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the
selling stockholders and their affiliates. In addition, to the extent applicable
we will make copies of this prospectus (as it may be supplemented or amended
from time to time) available to the selling stockholders for the purpose of
satisfying the prospectus delivery requirements of the Securities Act. The
selling stockholders may indemnify any broker-dealer that participates in
transactions involving the sale of the ADSs against certain liabilities,
including liabilities arising under the Securities Act.
We
have
agreed to indemnify the selling stockholders against liabilities, including
liabilities under the Securities Act and state securities laws, relating to
the
registration of the ADSs offered by this prospectus.
We
have
agreed with the selling stockholders to keep the registration statement of
which
this prospectus constitutes a part effective until the earlier of (1) such
time
as all of the ADSs covered by this prospectus have been disposed of pursuant
to
and in accordance with the registration statement or (2) the date on which
the
ADSs may be sold pursuant to Rule 144(k) of the Securities Act.
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