Document:

exv4w4

Exhibit 4.4

BRIDGE NOTE PURCHASE AGREEMENT

          THIS BRIDGE NOTE PURCHASE AGREEMENT (“Agreement”) is made as of the 9th day of
November, 2007 by and among Corgi International Limited, a corporation organized under the laws of
Hong Kong (the “Company”), and the Investors set forth on the signature pages affixed
hereto (each an “Investor” and collectively the “Investors”).

Recitals

          A. The Company and the Investors are executing and delivering this Agreement in reliance upon
the exemption from securities registration afforded by either Section 4(2) of the Securities Act of
1933, as amended (the Act”) or the provisions of Regulation D (“Regulation D”), as
promulgated by the U.S. Securities and Exchange Commission (the “SEC”) under the Securities
Act of 1933, as amended.

          B. The Investors wish to purchase from the Company, and the Company wishes to sell and issue
to the Investors, upon the terms and conditions stated in this Agreement, (i) a bridge promissory
note in substantially the form attached to this Agreement as Exhibit A (the “Note”)
which may become convertible on the terms stated therein into American Depositary Shares of the
Company (together with any securities into which such American Depositary Shares may be classified
or reclassified the “ADSs”), and (ii) a warrant to purchase the Company’s ADSs in
substantially the form attached to this Agreement as Exhibit B (the “Warrant”).
The Agreement, the Notes and the Warrants are collectively referred to herein as the
“Transaction Documents.”

          C. In consideration of the mutual promises made herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

1. Purchase and Sale of the Notes and Warrants.

     1.1 Subject to the terms and conditions of this Agreement, as of the applicable Closing Date,
each of the Investors shall severally, and not jointly, purchase, and the Company shall sell and
issue to such Investors, (i) a Note in the principal amount set forth opposite such Investor’s name
on the signature pages affixed hereto, and (ii) a Warrant to purchase the number of ADSs set forth
opposite such Investor’s name on the signature pages affixed hereto (1 warrant for each US $10.0 of
principal of Notes purchased). The purchase price of each Note shall be equal to 100% of the
principal amount of such Note, and the exercise price of each Warrant shall be par value ($3.00
Hong Kong dollars) (approximately US $0.38) for each ADS issuable thereunder. The Company’s
agreements with each of the Investors are separate agreements, and the sales of the Notes and
Warrants to each of the Investors are separate sales. The Company may sell up to $3,000,000 in
principal amount of Notes.

     1.2 The initial purchase and sale of the Notes shall take on November 9, 2007, or at such
other time and place as the Company and the Investors mutually agree upon, orally or in writing so
long as the Company has received subscriptions for $750,000 of Notes (which time

 

 

and place are
designated as the “Initial Closing”). In the event there is more than one closing, the
term “Closing” shall apply to each such closing, unless otherwise specified herein

               At each Closing, the Company shall deliver to each Investor the Note to be purchased by such
Investor against (1) payment of the purchase price therefor by check payable to the Company or by
wire transfer to a bank designated by the Company, (2) delivery of counterpart signature pages to
this Agreement and the Note, and (3) delivery of a validly completed and executed IRS Form W-8 BEN
or IRS Form W-9, as applicable, establishing such Investor’s exemption from withholding tax, which
forms are attached to this Agreement as Exhibit C.

               Until the earlier of (A) such time as the aggregate amount of principal indebtedness evidenced
by the Notes equals a total of $3,000,000, or (B) November 16, 2007 from the date hereof, the
Company may sell additional Notes to such persons or entities as determined by the Company, or to
any Investor who desires to acquire additional Notes. All such sales shall be made on the terms and
conditions set forth in this Agreement. For purposes of this Agreement, and all other agreements
contemplated hereby, any additional Investor so acquiring Notes shall be deemed to be a “Investor”
for purposes of this Agreement, and any notes and so acquired such additional purchaser shall be
deemed to be “Notes” and “Securities” as applicable.

     1.3 Each Investor understands and agrees that the conversion of the Notes into ADS of the
Company will require such Investor’s execution of certain agreements relating to the purchase and
sale of such securities as well as any rights relating to such equity securities.

2. Representations and Warranties of the Company. The Company hereby represents and
warrants to each Investor that:

     2.1 Organization, Good Standing and Qualification. The Company is a corporation duly
organized, validly existing and in good standing under the laws of Hong Kong and has all requisite
corporate power and authority to carry on its business as now conducted and as proposed to be
conducted. The Company is duly qualified to transact business and is in good standing in each
jurisdiction in which the failure so to qualify would have a material adverse effect on its
business or properties.

     2.2 Authorization. All corporate action on the part of the Company, its officers and
directors necessary for the authorization, execution and delivery of this Agreement and the
authorization, sale, issuance and delivery of the Notes and the Warrants, the shares of the
Company’s capital stock issuable on conversion of the Notes or ADS issuable upon exercise of the
Warrants, and the performance of all obligations of the Company hereunder and thereunder has been
taken or will be taken prior to the closing date. The Agreement, the Notes, and the Warrants, when
executed and delivered by the Company, shall constitute valid and legally binding obligations of
the Company, enforceable against the Company in accordance with their respective terms except as
limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance,
and other laws of general application affecting enforcement
of creditors’ rights generally, and as limited by laws relating to the availability of
specific performance, injunctive relief, or other equitable remedies.

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     2.3 Delivery of SEC Filings; Business. The Company has made available to the
Investors through the EDGAR system true and complete copies of the Company’s most recent Annual
Report on Form 20-F for the fiscal year ended March 31, 2007 (the “20-F”), and all other reports
filed by the Company pursuant to the 1934 Act since the filing of the 20-F and prior to the date
hereof (collectively, the “SEC Filings”). The SEC Filings are the only filings required of the
Company pursuant to the 1934 Act for such period. The Company and its Subsidiaries are engaged in
all material respects only in the business described in the SEC Filings and the SEC Filings contain
a complete and accurate description in all material respects of the business of the Company and its
Subsidiaries, taken as a whole.

     2.4 Use of Proceeds. The net proceeds of the sale of the Notes and the Warrants
hereunder shall be used by the Company to repay indebtedness and for working capital and general
corporate purposes.

3. Representations and Warranties of the Investors. As of the Initial Closing, each of the
Investors hereby severally, and not jointly, represents and warrants to the Company that:

     3.1 Organization and Existence. If such Investor is not a natural person, such
Investor is a validly existing corporation, limited partnership or limited liability company and
has all requisite corporate, partnership or limited liability company power and authority to invest
in the securities issuable pursuant to this Agreement.

     3.2 Authorization. The execution, delivery and performance by such Investor of the
Transaction Documents to which such Investor is a party have been duly authorized and will each
constitute the valid and legally binding obligation of such Investor, enforceable against such
Investor in accordance with their respective terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability, relating to or
affecting creditors’ rights generally.

     3.3 Purchase Entirely for Own Account. The Notes, the Warrants and the ADSs issuable
upon conversion or exercise thereof (the “Securities”), will be acquired for such
Investor’s own account, not as nominee or agent, and not with a view to the resale or distribution
of any part thereof in violation of the 1933 Act, and such Investor has no present intention of
selling, granting any participation in, or otherwise distributing the same in violation of the 1933
Act without prejudice, however, to such Investor’s right at all times to sell or otherwise dispose
of all or any part of such Securities in compliance with applicable federal and state securities
laws. Nothing contained herein shall be deemed a representation or warranty by such Investor to
hold the Securities for any period of time. Such Investor is not a broker-dealer registered with
the SEC under the 1934 Act or an entity engaged in a business that would require it to be so
registered.

     3.4 Investment Experience. Such Investor acknowledges that it can bear the economic
risk and complete loss of its investment in the Securities and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and risks of

     3.5 Disclosure of Information. Such Investor has had an opportunity to receive all
information related to the Company requested by it and to ask questions of and receive answers

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from the Company regarding the Company, its business and the terms and conditions of the offering of the
Securities. Such Investor acknowledges receipt of copies of the SEC Filings. Neither such
inquiries nor any other due diligence investigation conducted by such Investor shall modify, limit
or otherwise affect such Investor’s right to rely on the Company’s representations and warranties
contained in this Agreement.

     3.6 Restricted Securities. Such Investor understands that the Securities are
characterized as “restricted securities” under the U.S. federal securities laws inasmuch as they
are being acquired from the Company in a transaction not involving a public offering and that under
such laws and applicable regulations such Securities may be resold without registration under the
1933 Act only in certain limited circumstances.

     3.7 Legends. It is understood that, except as provided below, certificates evidencing
the Securities may bear the following or any similar legend:

          (a) “The securities represented hereby may not be transferred unless (i) such securities have
been registered for sale pursuant to the Securities Act of 1933, as amended, (ii) such securities
may be sold pursuant to Rule 144(k), or (iii) the Company has received an opinion of counsel
reasonably satisfactory to it that such transfer may lawfully be made without registration under
the Securities Act of 1933 or qualification under applicable state securities laws.”

          (b) If required by the authorities of any state in connection with the issuance of sale of the
Securities, the legend required by such state authority.

     3.8 Accredited Investor. Such Investor is an accredited investor as defined in Rule
501(a) of Regulation D, as amended, under the 1933 Act.

     3.9 No General Solicitation. Such Investor did not learn of the investment in the
Securities as a result of any general solicitation or general advertising.

     3.10 Brokers and Finders. No Person will have, as a result of the transactions
contemplated by the Transaction Documents, any valid right, interest or claim against or upon the
Company, any Subsidiary or an Investor for any commission, fee or other compensation pursuant to
any agreement, arrangement or understanding entered into by or on behalf of such Investor.

     3.11 Transferees Bound. Each Investor agrees that prior to registration of the ADS or
the Notes, it will not transfer such securities of the Company unless each transferee agrees in
writing to be bound by all of the provisions of this Agreement.

     3.12 Foreign Investors. If an Investor is not a United States person (as defined by
Rule 902(k) under the Securities Act), such Purchaser hereby represents that it has satisfied
itself as to the full observance of the laws of its jurisdiction in connection with any invitation
to subscribe for the securities or any use of this Agreement, including (i) the legal requirements
within its jurisdiction for the purchase of the Securities, (ii) any foreign exchange restrictions
applicable to
such purchase, (iii) any governmental or other consents that may need to be obtained and (iv)
the income tax and other tax consequences, if any, that may be relevant to the purchase, holding,

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redemption, sale or transfer of the Securities. Such Investor’s subscription and payment for, and
his or her continued beneficial ownership of the securities issued hereunder, will not violate any
applicable securities or other laws of the Investor’s jurisdiction. Such Investor also hereby
represents that such Purchaser is not a “10-percent shareholder” as defined in Section 871(h) of
the Internal Revenue Code.

     3.13  Prohibited Transactions. During the last thirty (30) days prior to the date
hereof, neither such Investor nor any affiliate of such Investor which (x) had knowledge of the
transactions contemplated hereby, (y) has or shares discretion relating to such Investor’s
investments or trading or information concerning such Investor’s investments, including in respect
of the securities, or (z) is subject to such Investor’s review or input concerning such affiliate’s
investments or trading (collectively, “Trading Affiliates”) has, directly or indirectly, effected
or agreed to effect any short sale, whether or not against the box, established any “put equivalent
position” (as defined in Rule 16a-1(h) under the 1934 Act) with respect to the ADSs or the Ordinary
Shares, granted any other right (including, without limitation, any put or call option) with
respect to the ADSs or the Ordinary Shares or with respect to any security that includes, relates
to or derived any significant part of its value from the ADSs or the Ordinary Shares or otherwise
sought to hedge its position in the Securities (each, a “Prohibited Transaction”). Prior to the
Initial Closing, such Investor shall not, and shall cause its Trading Affiliates not to, engage,
directly or indirectly, in a Prohibited Transaction. Such Investor acknowledges that the
representations, warranties and covenants contained in this Section are being made for the benefit
of the Investors as well as the Company and that each of the other Investors shall have an
independent right to assert any claims against such Investor arising out of any breach or violation
of the provisions of this Section.

4. Miscellaneous.

     4.1 Successors and Assigns. This Agreement may not be assigned by a party hereto
without the prior written consent of the Company or the Investors.

     4.2 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.

     4.3 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.

     4.4 Amendments and Waivers. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written consent of the Company
and the Investors. Any amendment or waiver effected in accordance with this paragraph shall be
binding upon each holder of any Securities purchased under this Agreement at the time outstanding,
each future holder of all such Securities, and the Company.

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     4.5 Publicity. Except as set forth below, no public release or announcement
concerning the transactions contemplated hereby shall be issued by the Investors without the prior
consent of the Company.

     4.6 Entire Agreement. This Agreement, including the Exhibits constitutes the entire
agreement among the parties hereof with respect to the subject matter hereof and thereof and
supersedes all prior agreements and understandings, both oral and written, between the parties with
respect to the subject matter hereof and thereof.

     4.7 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 to carry
out the transactions contemplated hereby and to evidence the fulfillment of the agreements herein
contained.

     4.8 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.

     4.9 Registration of ADS. The Company agrees to use commercially reasonable efforts to
file a registration statement to register the ADS issuable upon exercise of the Warrants or issued
upon conversion of the Notes (the “Registration Statement”), to be filed within 120 days
following issuance of such ADSs and make the Registration Statement declared effective within 120
days thereafter.

     4.10 Independent Nature of Investors’ Obligations and Rights. The obligations of each
Investor are several and not joint with the obligations of any other Investor, and no Investor
shall be responsible in any way for the performance of the obligations of any other Investor. The
decision of each Investor to purchase the Notes and Warrants has been made by such Investor
independently of any other Investor. Nothing contained herein and no action taken by any Investor
pursuant thereto, shall be deemed to constitute the Investors as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the Investors are in any
way acting in concert or as a group with respect to such obligations or the transactions
contemplated hereby. Each Investor acknowledges that no other Investor has acted as agent for such
Investor in connection with making its investment hereunder and that no Investor will be acting as
agent of such Investor in connection with monitoring its investment in the Securities or enforcing
its rights under the Transaction Documents. Each Investor shall be entitled to independently
protect and enforce its rights, including, without limitation, the rights arising out of this
Agreement and it shall not be necessary for any other Investor to be joined as an additional party
in any proceeding for such purpose.

[signature page follows]

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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: Jack Lawrence	 	 
	 	 	Title: Chief Financial Officer	 	 

[Purchase Agreement Signature Page]

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	INVESTOR
	 	 
	 
	 	 
	 

	 	Principal Note Value: $300,000
	 
	 	 
	 

	 	Number of initial Warrants: 30,000
	 

	 	[1 warrant for each $10 of Notes]
	 
	 	 
	 
	 	 
	Michel Cookson
	 	 
	2785 West Dry Creek Road
	 	 
	Healdsburg, CA 95448
	 	 

[Purchase Agreement Signature Page]

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	INVESTOR
	 	 
	 
	 	 
	 

	 	Principal Note Value: $99,960.00
	 
	 	 
	 

	 	Number of initial Warrants: 9,996
	 

	 	[1 warrant for each $10 of Notes]
	 
	 	 
	 
	 	 
	JOHN CLOUGH
	 	 
	 
	 	 
	Flat 12/C, Tower 12,
	 	 
	South Horizons
	 	 
	Ap Lei Chau,
	 	 
	HONG KONG
	 	 

[Purchase Agreement Signature Page]

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	INVESTOR
	 	 
	 
	 	 
	 

	 	Principal Note Value: $100,000.00
	 
	 	 
	Leo Paul & D. Virginia Koulos TRS

U/T/A Dated 05/29/98 The Koulos

Trust

	 	Number of initial Warrants: 10,000

[1 warrant for each $10 of Notes]
	 
	 	 
	 
	 	 
	Leo Paul Koulos, Trustee
	 	 
	C/O The Shemano Group, Inc.
	 	 
	601 California Street, Suite #1150
	 	 
	San Francisco, CA 94108
	 	 

[Purchase Agreement Signature Page]

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	INVESTOR
	 	 
	 
	 	 
	 

	 	Principal Note Value: $60,000
	 
	 	 
	 

	 	Number of initial Warrants: 6,000
	 

	 	[1 warrant for each $10 of Notes]
	 
	 	 
	 
	 	 
	Robert E Esterbrook
	 	 
	142 Evington Lane
	 	 
	Leicester
	 	 
	LE5 6DG
	 	 
	UK
	 	 

[Purchase Agreement Signature Page]

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	INVESTOR
	 	 
	 
	 	 
	 

	 	Principal Note Value: $100,000
	 
	 	 
	 

	 	Number of initial Warrants: 10000
	 

	 	[1 warrant for each $10 of Notes]
	 
	 	 
	 
	 	 
	Denis E Horton
	 	 
	31 Bedford Road
	 	 
	Northwood
	 	 
	Middlesex
	 	 
	UK
	 	 
	HA6 2AY
	 	 

[Purchase Agreement Signature Page]

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	INVESTOR
	 	 
	 
	 	 
	 

	 	Principal Note Value: $41,600
	 
	 	 
	 

	 	Number of initial Warrants: 4,160
	 

	 	[1 warrant for each $10 of Notes]
	 
	 	 
	 
	 	 
	David W. Strelitz
	 	 
	39 Eton Avenue
	 	 
	Flat 3
	 	 
	London NW33EP
	 	 
	UK
	 	 

[Purchase Agreement Signature Page]

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	INVESTOR
	 	 
	 
	 	 
	 

	 	Principal Note Value: $75,000
	 
	 	 
	 

	 	Number of initial Warrants: 7500
	 

	 	[1 warrant for each $10 of Notes]
	 
	 	 
	 
	 	 
	Darren Epstein
	 	 
	4 Waterside
	 	 
	Shenley Hill
	 	 
	Radlett
	 	 
	WD7 7D4
	 	 

[Purchase Agreement Signature Page]

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	INVESTOR
	 	 
	Consor Capital I, LP
	 	 
	 
	 	 
	 

	 	Principal Note Value: $200,000
	 
	 	 
	 

	 	Number of initial Warrants: 20,000
	 

	 	[1 warrant for each $10 of Notes]
	 
	 	 
	 
	 	 
	Josh Huffard
	 	 
	Manager of the G.P., Consor Capital LLC
	 	 
	495 Gate Five Road, Suite 32C
	 	 
	Sausalito, CA 94965
	 	 

[Purchase Agreement Signature Page]

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EXHIBIT A

FORM OF NOTE

 

 

     THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH,
THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO
THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

BRIDGE PROMISSORY NOTE

			
	$                                        
	 	November ___, 2007
	 
	 	Hong Kong, China

     For value received, Corgi International Limited, a Hong Kong corporation (the
“Company”), promises to pay to                                          (the “Holder”), the principal
sum of
                                        Dollars ($            
           
               
  ). Interest shall accrue from the date of
this Note on the unpaid principal amount at a rate equal to 15.0% per annum, compounded annually;
provided, that if the unpaid principal amount of the Note is not paid in full by 5:00 p.m.
on the 90th day from the date hereof, then the interest rate shall automatically increase to 25%
per annum. In the event that, contrary to the intent of the Holder and the Company, the Company
pays interest under this Note and it is determined that such interest rate was in excess of the
then legal maximum rate, then that portion of the interest payment representing an amount in excess
of the then legal maximum rate shall be deemed a payment of principal and applied against the
principal then due under this Note. This Note is one of a series of Bridge Promissory Notes
containing substantially identical terms and conditions issued pursuant to that certain Convertible
Promissory Note Purchase Agreement dated as of November___, 2007 by and among the Company, the
Holder and certain other parties (the “Purchase Agreement”). Such Notes are referred to
herein as the “Notes,” and the holders thereof are referred to herein as the
“Holders.” This Note is subject to the following terms and conditions.

     1. Maturity. Unless converted as provided in Section 2, this Note will automatically
mature and be due and payable on the one year anniversary of the date hereof (the “Maturity
Date”). Subject to Section 2 below, interest shall accrue on this Note but shall not be due
and payable until the Maturity Date. Notwithstanding the foregoing, the entire unpaid principal
sum of this Note, together with accrued and unpaid interest thereon, shall become immediately due
and payable upon the execution by the Company of a general assignment for the benefit of creditors,
the filing by or against the Company of a petition in bankruptcy or any petition for relief under
the federal bankruptcy act or the continuation of such petition without dismissal for a period of
90 days or more, the appointment of a receiver or trustee to take possession of the property or
assets of the Company or the sale, transfer or license of all or substantially all of assets of the
Company to a third party or an affiliate or the sale of more than 50% of the outstanding capital
stock of the Company to a third party.

 

 

2. Conversion.

          (a) Election by the Holder if Note Not Paid on or before the 90th day from the Date
hereof. If the outstanding principal amount of the Note has not been paid by 5:00 p.m. (San
Francisco time) on the 90th day after the date hereof, then at any time thereafter until the
repayment of the outstanding principal amount of the Note, upon written notice by the Holder to the
Company, the outstanding principal and any accrued and unpaid interest then accrued on the Note may
be automatically converted into ADSs of the Company at $3.50 per ADS (the “Conversion Price”) with
the number of ADS rounded down to the nearest whole ADS; provided, however that if the Company
closes an equity financing for the sale of ADS prior to the repayment or conversion of the Notes at
a price per ADS of less then $3.50 per ADS or the Conversion Price then effect, then the Conversion
Price shall be automatically reduced to the price per ADS sold in such equity financing; provided
further that any issuance of ADS in connection with the exercise of employee options, outstanding
warrants or new warrants issued in connection with a loan or lease shall not be deemed to be an
equity financing and shall not constitute an event requiring an adjustment to the Conversion Price.
In the event the number of ADS to be issued in connection with the conversion hereof is rounded
down, the Company shall promptly pay the value of the fractional share to the Holder assuming the
fractional share value at the Conversion Price.

          (b) Mechanics and Effect of Conversion. No fractional ADS of the Company will be
issued upon conversion of this Note. In lieu of any fractional share to which the Holder would
otherwise be entitled, the Company will pay to the Holder in cash the amount of the unconverted
principal and interest balance of this Note that would otherwise be converted into such fractional
share. Upon conversion of this Note pursuant to this Section 2, the Holder shall surrender this
Note (or a Lost Note Affidavit), duly endorsed, at the principal offices of the Company or any
transfer agent of the Company and sign all applicable documents, including any requested by the
Company to evidence the conversion of the Note into ADA. At its expense, the Company will, as soon
as practicable thereafter, cause the issuance of and delivery to such Holder, at such principal
office, a certificate or certificates for the number of ADS to which such Holder is entitled upon
such conversion, together with any other securities and property to which the Holder is entitled
upon such conversion under the terms of this Note, including a check payable to the Holder for any
cash amounts payable as described herein. Upon conversion of this Note, the Company will be
forever released from all of its obligations and liabilities under this Note with regard to that
portion of the principal amount and accrued interest being converted including without limitation
the obligation to pay such portion of the principal amount and accrued interest.

     3. Payment; Prepayment. All payments shall be made in lawful money of the United
States of America at such place as the Holder hereof may from time to time designate in writing to
the Company and shall be made on a pro rata basis among all of the Notes. Payment shall be
credited first to the accrued interest then due and payable and the remainder applied to principal.
Except as contemplated by the conversion hereof, the principal and interest of the Notes may be
prepaid at any time, in full or in part. The Company hereby agrees to use the proceeds from any
financing from ADM Capital Europe LLP to repay the Notes. After the 90

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day from the date hereof, the Company shall provide the Holder one business day notice of
payment of the Note to permit the Holder the ability to convert the Note as set forth in Section 2
above.

     4. Transfer; Successors and Assigns. The terms and conditions of this Note shall
inure to the benefit of and be binding upon the respective successors and assigns of the parties.
Notwithstanding the foregoing, the Holder may not assign, pledge, or otherwise transfer this Note
without the prior written consent of the Company not to be unreasonably withheld, except for
transfers to affiliates that agree in writing to be bound by the terms of the Purchase Agreement.
Subject to the preceding sentence, this Note may be transferred only upon surrender of the original
Note for registration of transfer, duly endorsed, or accompanied by a duly executed written
instrument of transfer in form satisfactory to the Company. Thereupon, a new note for the same
principal amount and interest will be issued to, and registered in the name of, the transferee.
Interest and principal are payable only to the registered holder of this Note.

     5. Governing Law. This Note and all acts and transactions pursuant hereto and the
rights and obligations of the parties hereto shall be governed, construed and interpreted in
accordance with the laws of the State of New York, without giving effect to principles of conflicts
of law.

     6. Notices. Any notice required or permitted by this Agreement shall be in writing
and shall be deemed sufficient upon receipt, when delivered personally or by courier, overnight
delivery service or confirmed facsimile, in each case, during normal business hours, or five days
after being deposited in the U.S. mail as certified or registered mail with postage prepaid, if
such notice is addressed to the party to be notified at such party’s address or facsimile number as
set forth below or as subsequently modified by written notice.

     7. Amendments and Waivers. Any term of this Note may be amended only with the written
consent of the Company and the Noteholders holding 50% of the principal amount of the Notes. Any
amendment or waiver effected in accordance with this Section 7 shall be binding upon the Company,
each Holder and each transferee of any Note.

     8. Employees, Officers and Directors Not Liable. In no event shall any employee,
officer, or director of the Company be liable for any amounts due or payable pursuant to this Note.

     9. Counterparts. This Note may be executed in counterparts, each of which will be
deemed to be an original and all of which together will constitute a single agreement.

     10. Action to Collect on Note. If action is instituted to collect on this Note, the
Company promises to pay all costs and expenses, including reasonable attorney’s fees, incurred in
connection with such action.

     11. Loss of Note. Upon receipt by the Company of evidence satisfactory to it of the
loss, theft, destruction or mutilation of this Note or any Note exchanged for it, and indemnity
satisfactory to the Company (in case of loss, theft or destruction) or surrender and cancellation
of such Note (in the case of mutilation), the Company will make and deliver in lieu of such Note a
new Note of like tenor.

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12. No Security Interest. This Note will be an unsecured obligation of the Company.

[Signature page follows]

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	 	COMPANY:

CORGI INTERNATIONAL LIMITED

 	 
	 	By:  	 	 
	 	 	Michael Cookson, Chief Executive 	 
	 	 	Officer 	 
	 
	 	 	 
	 	By:  	
 	 
	 	 	Jack Lawrence, Chief Financial        	 
	 	 	Officer, Chief Operating Officer and

General  Manager of North America 	 
	 

[SIGNATURE PAGE TO BRIDGE PROMISSORY NOTE]

	 	 	 	 	 

 

 

	 	 	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 

EXHIBIT B

FORM OF WARRANT

 

 

     THE SECURITIES REPRESENTED HEREBY MAY NOT BE TRANSFERRED UNLESS (I) SUCH SECURITIES HAVE BEEN
REGISTERED FOR SALE PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, (II) SUCH SECURITIES MAY BE
SOLD PURSUANT TO RULE 144(K), OR (III) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO IT THAT SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OF 1933 OR QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS.

     SUBJECT TO THE PROVISIONS OF SECTION 10 HEREOF, THIS WARRANT SHALL BE VOID AFTER 5:00 P.M.
EASTERN TIME ON THIRD ANNIVERSARY OF THE DATE HEREOF (THE “EXPIRATION DATE”).

No.                     

CORGI INTERNATIONAL LIMITED

WARRANT
TO PURCHASE ___ AMERICAN DEPOSITARY SHARES

This Warrant is one of a series of Warrants of like tenor issued by the Company pursuant to the
Bridge Note Purchase Agreement, dated as of November 9, 2007 (the “Purchase Agreement”), among the
Company and the investors named therein (collectively, the “Company Warrants”). Capitalized terms
used herein have the respective meanings ascribed thereto in the Purchase Agreement unless
otherwise defined herein.

For VALUE RECEIVED,                                          (“Warrantholder”), is entitled to purchase, subject to the
provisions of this Warrant, from Corgi International Limited, a corporation organized under the
laws of Hong Kong (the “Company”), at any time not later than 5:00 P.M., Eastern time, on the
Expiration Date (as defined above), at an exercise price per share equal to HK$3.00 (Hong Kong
dollars) (the exercise price in effect being herein called the “Warrant Price”),                      of
the Company’s American Depositary Shares (“Warrant Shares”); provided if the Note issued to the
Warrantholder in connection with this Warrant is not paid in full within 90 days after the date
hereof, then the number of Warrant Shares issuable pursuant to the Warrant shall automatically
increased by the following formula:

     WS = OWS + (OWS * (NB on the 90th day/ Original NB))

Whereas,

WS =Warrant Shares subject to the Warrant after the 90th day;

OWS = the original number of Warrant Shares subject to this Warrant on the date of issuance;

NB = the principal balance of the Note issued to the Warrantholder in connection with this Warrant;

 

 

“NB on the 90th day” equals NB on the 90 day after the date hereof; and

“Original
NB” means the NB of the Note on the date of issuance.

For the avoidance of doubt and for illustration, if the Note issued in connection with this Warrant
was $100,000; the original number of Warrant Shares was 10,000 and the Company paid $50,000 of the
principal balance of the Notes prior to the 90th day, then the number or Warrant Shares subject to
this Warrant would be increased as follows:

WS = 10,000 + (10,000 * (50,000/$100,000))

WS = 10,000 +5,000 or 15,000 Warrant Shares

     The number of Warrant Shares purchasable upon exercise of this Warrant and the Warrant Price
shall be subject to further adjustment from time to time as described herein.

     Section 1. Registration. The Company shall maintain books for the transfer and
registration of the Warrant. Upon the initial issuance of this Warrant, the Company shall issue
and register the Warrant in the name of the Warrantholder.

     Section 2. Transfers. As provided herein, this Warrant may be transferred only
pursuant to a registration statement filed under the Securities Act of 1933, as amended (the
“Securities Act”), or an exemption from such registration. Subject to such restrictions, the
Company shall transfer this Warrant from time to time upon the books to be maintained by the
Company for that purpose, upon surrender hereof for transfer, properly endorsed or accompanied by
appropriate instructions for transfer and such other documents as may be reasonably required by the
Company, including, if required by the Company, an opinion of its counsel to the effect that such
transfer is exempt from the registration requirements of the Securities Act, to establish that such
transfer is being made in accordance with the terms hereof, and a new Warrant shall be issued to
the transferee and the surrendered Warrant shall be canceled by the Company.

     Section 3. Exercise of Warrant. Subject to the provisions hereof, the Warrantholder
may exercise this Warrant, in whole or in part, at any time prior to its expiration upon surrender
of the Warrant, together with delivery of a duly executed Warrant exercise form, in the form
attached hereto as Appendix A (the “Exercise Agreement”) and payment by cash, certified
check or wire transfer of funds of the aggregate Warrant Price for that number of Warrant Shares
then being purchased, to the Company during normal business hours on any business day at the
Company’s United States executive offices. The Warrant Shares so purchased shall be deemed to be
issued to the Warrantholder or the Warrantholder’s designee, as the record owner of such shares, as
of the close of business on the date on which this Warrant shall have been surrendered (or the date
evidence of loss, theft or destruction thereof and security or indemnity satisfactory to the
Company has been provided to the Company), the Warrant Price shall have been paid and the completed
Exercise Agreement shall have been delivered. Certificates for the Warrant Shares so purchased
shall be delivered to the Warrantholder, after this Warrant shall have been so exercised. The
certificates so delivered shall be in such denominations as may be requested by the Warrantholder
and shall be registered in the name of the Warrantholder or such other name

 

 

as shall be designated by the Warrantholder, as specified in the Exercise Agreement. If this
Warrant shall have been exercised only in part, then, unless this Warrant has expired, the Company
shall, at its expense, at the time of delivery of such certificates, deliver to the Warrantholder a
new Warrant representing the right to purchase the number of shares with respect to which this
Warrant shall not then have been exercised. As used herein, “business day” means a day, other than
a Saturday or Sunday, on which banks in New York City and Hong Kong are open for the general
transaction of business. Each exercise hereof shall constitute the re-affirmation by the
Warrantholder that the representations and warranties contained in Section 5 of the Purchase
Agreement are true and correct in all material respects with respect to the Warrantholder as of the
time of such exercise.

     Section 4. Compliance with the Securities Act of 1933. Except as provided in the
Purchase Agreement, the Company may cause the legend set forth on the first page of this Warrant to
be set forth on each Warrant, and a similar legend on any security issued or issuable upon exercise
of this Warrant, unless counsel for the Company is of the opinion as to any such security that such
legend is unnecessary.

     Section 5. Payment of Taxes. The Company will pay any documentary stamp taxes
attributable to the initial issuance of Warrant Shares issuable upon the exercise of the Warrant;
provided, however, that the Company shall not be required to pay any tax or taxes which may be
payable in respect of any transfer involved in the issuance or delivery of any certificates for
Warrant Shares in a name other than that of the Warrantholder in respect of which such shares are
issued, and in such case, the Company shall not be required to issue or deliver any certificate for
Warrant Shares or any Warrant until the person requesting the same has paid to the Company the
amount of such tax or has established to the Company’s reasonable satisfaction that such tax has
been paid. The Warrantholder shall be responsible for income taxes due under federal, state or
other law, if any such tax is due.

     Section 6. Mutilated or Missing Warrants. In case this Warrant shall be mutilated,
lost, stolen, or destroyed, the Company shall issue in exchange and substitution of and upon
surrender and cancellation of the mutilated Warrant, or in lieu of and substitution for the Warrant
lost, stolen or destroyed, a new Warrant of like tenor and for the purchase of a like number of
Warrant Shares, but only upon receipt of evidence reasonably satisfactory to the Company of such
loss, theft or destruction of the Warrant, and with respect to a lost, stolen or destroyed Warrant,
reasonable indemnity with respect thereto, if requested by the Company.

     Section 7. Reservation of Shares. The Company covenants and agrees that all Warrant
Shares that may be issued upon the exercise of the rights represented by this Warrant will, upon
issuance, be validly issued and outstanding, fully paid and nonassessable, and free from all taxes,
liens and charges with respect to the issuance thereof. The Company further covenants and agrees
that the Company will at all times prior to the Expiration Date, have authorized and reserved, free
from preemptive rights, a sufficient number of ADSs (and underlying Ordinary Shares of the Company)
to provide for the exercise of the rights represented by this Warrant. If at any time prior to the
Expiration Date the number of authorized but unissued ADSs or Ordinary Shares shall not be
sufficient to permit exercise of this Warrant, the Company will take such corporate action as may,
in the opinion of its counsel, be necessary to

 

 

increase its authorized but unissued Ordinary Shares and ADSs to such number of shares as shall be
sufficient for such purposes.

     Section 8. Adjustments. Subject and pursuant to the provisions of this Section 8, the
Warrant Price and number of Warrant Shares subject to this Warrant shall be subject to adjustment
from time to time as set forth hereinafter.

          (a) If the Company shall, at any time or from time to time while this Warrant is outstanding,
pay a dividend or make a distribution on its Ordinary Shares or ADSs in Ordinary Shares or ADSs,
subdivide its outstanding Ordinary Shares or ADSs into a greater number of shares or combine its
outstanding Ordinary Shares or ADSs into a smaller number of shares or issue by reclassification of
its outstanding Ordinary Shares or ADSs any shares of its capital stock (including any such
reclassification in connection with a consolidation or merger in which the Company is the
continuing corporation), then (i) the Warrant Price in effect immediately prior to the date on
which such change shall become effective shall be adjusted by multiplying such Warrant Price by a
fraction, the numerator of which shall be the number of Ordinary Shares or ADSs, as applicable,
outstanding immediately prior to such change and the denominator of which shall be the number of
Ordinary Shares or ADSs, as applicable, outstanding immediately after giving effect to such change
and (ii) the number of Warrant Shares purchasable upon exercise of this Warrant shall be adjusted
by multiplying the number of Warrant Shares purchasable upon exercise of this Warrant immediately
prior to the date on which such change shall become effective by a fraction, the numerator of which
is shall be the Warrant Price in effect immediately prior to the date on which such change shall
become effective and the denominator of which shall be the Warrant Price in effect immediately
after giving effect to such change, calculated in accordance with clause (i) above. Such
adjustments shall be made successively whenever any event listed above shall occur.

          (b) If any capital reorganization, reclassification of the capital stock of the Company,
consolidation or merger of the Company with another corporation in which the Company is not the
survivor, or sale, transfer or other disposition of all or substantially all of the Company’s
assets to another corporation shall be effected, then, as a condition of such reorganization,
reclassification, consolidation, merger, sale, transfer or other disposition, lawful and adequate
provision shall be made whereby each Warrantholder shall thereafter have the right to purchase and
receive upon the basis and upon the terms and conditions herein specified and in lieu of the
Warrant Shares immediately theretofore issuable upon exercise of the Warrant, such shares of stock,
securities or assets as would have been issuable or payable with respect to or in exchange for a
number of Warrant Shares equal to the number of Warrant Shares immediately theretofore issuable
upon exercise of the Warrant, had such reorganization, reclassification, consolidation, merger,
sale, transfer or other disposition not taken place, and in any such case appropriate provision
shall be made with respect to the rights and interests of each Warrantholder to the end that the
provisions hereof (including, without limitation, provision for adjustment of the Warrant Price)
shall thereafter be applicable, as nearly equivalent as may be practicable in relation to any
shares of stock, securities or assets thereafter deliverable upon the exercise hereof. The Company
shall not effect any such consolidation, merger, sale, transfer or other disposition unless prior
to or simultaneously with the consummation thereof the successor corporation (if other than the
Company) resulting from such consolidation or merger, or the corporation

 

 

purchasing or otherwise acquiring such assets or other appropriate corporation or entity shall
assume the obligation to deliver to the Warrantholder, at the last address of the Warrantholder
appearing on the books of the Company, such shares of stock, securities or assets as, in accordance
with the foregoing provisions, the Warrantholder may be entitled to purchase, and the other
obligations under this Warrant. The provisions of this paragraph (b) shall similarly apply to
successive reorganizations, reclassifications, consolidations, mergers, sales, transfers or other
dispositions.

               (c) In case the Company shall fix a payment date for the making of a distribution to all
holders of is Ordinary Shares or ADSs (including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing corporation) of evidences of
indebtedness or assets (other than cash dividends or cash distributions payable out of consolidated
earnings or earned surplus or dividends or distributions referred to in Section 8(a)), or
subscription rights or warrants, the Warrant Price to be in effect after such payment date shall be
determined by multiplying the Warrant Price in effect immediately prior to such payment date by a
fraction, the numerator of which shall be the total number of Ordinary Shares or ADSs, as
applicable, outstanding multiplied by the Market Price (as defined below) per Ordinary Share or
ADS, as applicable, prior to such payment date, less the fair market value (as determined by the
Company’s Board of Directors in good faith) of said assets or evidences of indebtedness so
distributed, or of such subscription rights or warrants, and the denominator of which shall be the
total number of Ordinary Shares or ADSs, as applicable, outstanding multiplied by such Market Price
per Ordinary Share or ADS, as applicable, immediately prior to such payment date. “Market Price”
as of a particular date (the “Valuation Date”) shall mean the following: (a) if the Ordinary Shares
or the ADSs, as applicable, are then listed on a national stock exchange, the closing sale price of
one Ordinary Share or ADS on such exchange on the last trading day prior to the Valuation Date; (b)
if the Ordinary Shares or the ADSs, as applicable, are then quoted on the National Association of
Securities Dealers, Inc. OTC Bulletin Board (the “Bulletin Board”) or such similar quotation system
or association, the closing sale price of one Ordinary Share or ADS on the Bulletin Board or such
other quotation system or association on the last trading day prior to the Valuation Date or, if no
such closing sale price is available, the average of the high bid and the low asked price quoted
thereon on the last trading day prior to the Valuation Date; or (c) if the Ordinary Shares or the
ADSs, as applicable, are not then listed on a national stock exchange or quoted on the Bulletin
Board or such other quotation system or association, the fair market value of one Ordinary Share or
ADS, as applicable, as of the Valuation Date, as determined in good faith by the Board of Directors
of the Company and the Warrantholder. If the Ordinary Shares or the ADSs, as applicable, are not
then listed on a national securities exchange, the Bulletin Board or such other quotation system or
association, the Board of Directors of the Company shall respond promptly, in writing, to an
inquiry by the Warrantholder prior to the exercise hereunder as to the fair market value of an
Ordinary Share or an ADS, as applicable, as determined by the Board of Directors of the Company.
In the event that the Board of Directors of the Company and the Warrantholder are unable to agree
upon the fair market value in respect of subpart (c) of this paragraph, the Company and the
Warrantholder shall jointly select an appraiser, who is experienced in such matters. The decision
of such appraiser shall be final and conclusive, and the cost of such appraiser shall be borne
equally by the Company and the Warrantholder. Such adjustment shall be made successively whenever
such a payment date is fixed.

 

 

          (d) An adjustment to the Warrant Price shall become effective immediately after the payment
date in the case of each dividend or distribution and immediately after the effective date of each
other event which requires an adjustment.

          (e) In the event that, as a result of an adjustment made pursuant to this Section 8, the
Warrantholder shall become entitled to receive any shares of capital stock of the Company other
than Ordinary Shares or ADSs, the number of such other shares so receivable upon exercise of this
Warrant shall be subject thereafter to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the Warrant Shares contained in
this Warrant.

     Section 9. Fractional Interest. The Company shall not be required to issue fractions
of Warrant Shares upon the exercise of this Warrant. If any fractional share of an ADS would,
except for the provisions of the first sentence of this Section 9, be deliverable upon such
exercise, the Company, in lieu of delivering such fractional share, shall pay to the exercising
Warrantholder an amount in cash equal to the Market Price of such fractional ADS on the date of
exercise.

     Section 10. Termination upon Company Sale.

          Notwithstanding the other provisions of this Warrant, the Expiration Date shall be accelerated
so that this Warrant shall expire upon the consummation of a Company Sale. As used herein,
“Company Sale” shall mean (x) the cash sale of all or substantially all of the Company’s assets, in
a single transaction or series of related transactions, or (y) the merger or other combination of
the Company with another entity in which the holders of the Company’s equity securities immediately
prior to such merger or other combination receive only cash in payment for their equity securities.

     Section 11. Benefits. Nothing in this Warrant shall be construed to give any person,
firm or corporation (other than the Company and the Warrantholder) any legal or equitable right,
remedy or claim, it being agreed that this Warrant shall be for the sole and exclusive benefit of
the Company and the Warrantholder.

     Section 12. Notices to Warrantholder. Upon the happening of any event requiring an
adjustment of the Warrant Price, the Company shall promptly give written notice thereof to the
Warrantholder at the address appearing in the records of the Company, stating the adjusted Warrant
Price and the adjusted number of Warrant Shares resulting from such event and setting forth in
reasonable detail the method of calculation and the facts upon which such calculation is based.
Failure to give such notice to the Warrantholder or any defect therein shall not affect the
legality or validity of the subject adjustment.

     Section 13. Identity of Transfer Agent. The Transfer Agent for the ADSs is the Bank
of New York. Upon the appointment of any subsequent transfer agent for the Warrant Shares or other
shares of the Company’s capital stock issuable upon the exercise of the rights of purchase

 

 

represented by the Warrant, the Company will mail to the Warrantholder a statement setting forth
the name and address of such transfer agent.

     Section 14. Notices. Unless otherwise provided, any notice required or permitted
under this Warrant shall be given in writing and shall be deemed effectively given as hereinafter
described (i) if given by personal delivery, then such notice shall be deemed given upon such
delivery, (ii) if given by telex or facsimile, then such notice shall be deemed given upon receipt
of confirmation of complete transmittal, (iii) if given by mail, then such notice shall be deemed
given upon the earlier of (A) receipt of such notice by the recipient or (B) three days after such
notice is deposited in first class mail, postage prepaid, and (iv) if given by an internationally
recognized overnight air courier, then such notice shall be deemed given one business day after
delivery to such carrier. All notices shall be addressed as follows: if to the Warrantholder, at
its address as set forth in the Company’s books and records and, if to the Company, at the address
as follows, or at such other address as the Warrantholder or the Company may designate by ten days’
advance written notice to the other:

If to the Company:

Corgi International

201 North Civic Drive, #239

Walnut Creek, California 94596

Attention: Jack Lawrence, CFO and COO

With a copy to:

Orrick, Herrington & Sutcliffe LLP

The Orrick Building

405 Howard Street

San Francisco, CA 94105

Attention: Lawrence T. Kane

Fax: (415) 773-5759

     Section 15. Registration Rights. Within 120 days after the issuance of the Notes, the
Company shall be obligated to use its reasonable commercial efforts to file a registration
statement with the Securities Exchange Commission (the “SEC”) registering for resale the ADSs
issuable upon exercise of the Warrants. Within 120 days after filing the registration statement,
the Company shall use commercial reasonable efforts to have the SEC declare effective such
registration statement.

     Section 16.  Successors. All the covenants and provisions hereof by or for the
benefit of the Warrantholder shall bind and inure to the benefit of its respective successors and
assigns hereunder.

     Section 17. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. This
Warrant shall be governed by, and construed in accordance with, the internal laws of the State of

 

 

New York, without reference to the choice of law provisions thereof. The Company and, by accepting
this Warrant, the Warrantholder, each 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 Warrant 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
Warrant. The Company and, by accepting this Warrant, the Warrantholder, each 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. The Company and, by accepting this Warrant, the Warrantholder, each
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 COMPANY AND, BY
ITS ACCEPTANCE HEREOF, THE WARRANTHOLDER HEREBY WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY
LITIGATION WITH RESPECT TO THIS WARRANT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY
AS TO THIS WAIVER.

     Section 19. No Rights as Stockholder. Prior to the exercise of this Warrant, the
Warrantholder shall not have or exercise any rights as a stockholder of the Company by virtue of
its ownership of this Warrant.

     Section 20. Amendment; Waiver. Any term of this Warrant may be amended or waived
(including the adjustment provisions included in Section 8 of this Warrant) upon the written
consent of the Company and the holders of Company Warrants representing at least 50% of the number
of ADSs then subject to all outstanding Company Warrants issued pursuant to the Note Purchase
Agreement (the “Majority Holders”); provided, that (x) any such amendment or waiver
must apply to all Company Warrants; and (y) the number of Warrant Shares subject to this Warrant,
the Warrant Price and the Expiration Date may not be adversely amended, and the right to exercise
this Warrant may not be altered or waived, without the written consent of the Warrantholder.

     Section 21. Section Headings. The section headings in this Warrant are for the
convenience of the Company and the Warrantholder and in no way alter, modify, amend, limit or
restrict the provisions hereof.

 

 

     IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed, as of the ___
day of November, 2007

	 	 	 	 	 	 	 
	 	 	CORGI INTERNATIONAL LIMITED	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Jack Lawrence	 	 
	 	 	Title: Chief Financial Officer	 	 

[SIGNATURE PAGE TO WARRANT]

 

 

APPENDIX A

CORGI INTERNATIONAL LIMITED

WARRANT EXERCISE FORM

To Corgi International Limited:

     The undersigned hereby irrevocably elects to exercise the right of purchase represented by the
within Warrant (“Warrant”) for, and to purchase thereunder by the payment of the Warrant Price and
surrender of the Warrant,                      American Depositary Shares (“Warrant Shares”) provided
for therein, and requests that certificates for the Warrant Shares be issued as follows:

                                                            

Name

                                                            

Address

                                                            

                                                            

Federal Tax ID or Social Security No.

	 	 	 
	     and delivered by

	 	(certified mail to the above address, or
	 

	 	(electronically (provide DWAC Instructions:                    ), or
	 

	 	(other (specify):                                                                   ).

and, if the number of Warrant Shares shall not be all the Warrant Shares purchasable upon exercise
of the Warrant, that a new Warrant for the balance of the Warrant Shares purchasable upon exercise
of this Warrant be registered in the name of the undersigned Warrantholder or the undersigned’s
Assignee as below indicated and delivered to the address stated below.

	 	 	 
	Dated:                                         , ___
	 	 
	 
	 	 
	Note: The signature must correspond with
the name of the Warrantholder as written
on the first page of the Warrant in every
particular, without alteration or enlargement
or any change whatever, unless the Warrant
has been assigned.

	 	Signature:                                                            

                                                            

Name (please print)

                                                            
	 

	 	                                                            
	 

	 	Address
	 
	 

	 	                                                            
	 

	 	Federal Identification or
	 

	 	Social Security No.
	 
	 	 
	 

	 	Assignee:
	 

	 	                                                            
	 

	 	                                                            
	 

	 	                                                            

 

 

EXHIBIT C

WITHHOLDING TAX EXEMPTION FORMS

 

 

     THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH,
THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO
THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

BRIDGE PROMISSORY NOTE

			
	 	 	 
	$300,000.00
	 	November 9, 2007
	 
	 	Hong Kong, China

     For value received, Corgi International Limited, a Hong Kong corporation (the
“Company”), promises to pay to Michael Cookson (the “Holder”), the principal sum of
Three Hundred Thousand Dollars ($300,000.00). Interest shall accrue from the date of this Note on
the unpaid principal amount at a rate equal to 15.0% per annum, compounded annually;
provided, that if the unpaid principal amount of the Note is not paid in full by 5:00 p.m.
on the 90th day from the date hereof, then the interest rate shall automatically increase to 25%
per annum. In the event that, contrary to the intent of the Holder and the Company, the Company
pays interest under this Note and it is determined that such interest rate was in excess of the
then legal maximum rate, then that portion of the interest payment representing an amount in excess
of the then legal maximum rate shall be deemed a payment of principal and applied against the
principal then due under this Note. This Note is one of a series of Bridge Promissory Notes
containing substantially identical terms and conditions issued pursuant to that certain Convertible
Promissory Note Purchase Agreement dated as of November 9, 2007 by and among the Company, the
Holder and certain other parties (the “Purchase Agreement”). Such Notes are referred to
herein as the “Notes,” and the holders thereof are referred to herein as the
“Holders.” This Note is subject to the following terms and conditions.

     1. Maturity. Unless converted as provided in Section 2, this Note will automatically
mature and be due and payable on the one year anniversary of the date hereof (the “Maturity
Date”). Subject to Section 2 below, interest shall accrue on this Note but shall not be due
and payable until the Maturity Date. Notwithstanding the foregoing, the entire unpaid principal
sum of this Note, together with accrued and unpaid interest thereon, shall become immediately due
and payable upon the execution by the Company of a general assignment for the benefit of creditors,
the filing by or against the Company of a petition in bankruptcy or any petition for relief under
the federal bankruptcy act or the continuation of such petition without
dismissal for a period of 90 days or more, the appointment of a receiver or trustee to take
possession of the property or assets of the Company or the sale, transfer or license of all or
substantially all of assets of the Company to a third party or an affiliate or the sale of more
than 50% of the outstanding capital stock of the Company to a third party.

 

 

     2. Conversion.

          (a) Election by the Holder if Note Not Paid on or before the 90th day from the Date
hereof. If the outstanding principal amount of the Note has not been paid by 5:00 p.m. (San
Francisco time) on the 90th day after the date hereof, then at any time thereafter until the
repayment of the outstanding principal amount of the Note, upon written notice by the Holder to the
Company, the outstanding principal and any accrued and unpaid interest then accrued on the Note may
be automatically converted into ADSs of the Company at $3.50 per ADS (the “Conversion Price”) with
the number of ADS rounded down to the nearest whole ADS; provided, however that if the Company
closes an equity financing for the sale of ADS prior to the repayment or conversion of the Notes at
a price per ADS of less then $3.50 per ADS or the Conversion Price then effect, then the Conversion
Price shall be automatically reduced to the price per ADS sold in such equity financing; provided
further that any issuance of ADS in connection with the exercise of employee options, outstanding
warrants or new warrants issued in connection with a loan or lease shall not be deemed to be an
equity financing and shall not constitute an event requiring an adjustment to the Conversion Price.
In the event the number of ADS to be issued in connection with the conversion hereof is rounded
down, the Company shall promptly pay the value of the fractional share to the Holder assuming the
fractional share value at the Conversion Price.

          (b) Mechanics and Effect of Conversion. No fractional ADS of the Company will be
issued upon conversion of this Note. In lieu of any fractional share to which the Holder would
otherwise be entitled, the Company will pay to the Holder in cash the amount of the unconverted
principal and interest balance of this Note that would otherwise be converted into such fractional
share. Upon conversion of this Note pursuant to this Section 2, the Holder shall surrender this
Note (or a Lost Note Affidavit), duly endorsed, at the principal offices of the Company or any
transfer agent of the Company and sign all applicable documents, including any requested by the
Company to evidence the conversion of the Note into ADA. At its expense, the Company will, as soon
as practicable thereafter, cause the issuance of and delivery to such Holder, at such principal
office, a certificate or certificates for the number of ADS to which such Holder is entitled upon
such conversion, together with any other securities and property to which the Holder is entitled
upon such conversion under the terms of this Note, including a check payable to the Holder for any
cash amounts payable as described herein. Upon conversion of this Note, the Company will be
forever released from all of its obligations and liabilities under this Note with regard to that
portion of the principal amount and accrued interest being converted including without limitation
the obligation to pay such portion of the principal amount and accrued interest.

     3. Payment; Prepayment. All payments shall be made in lawful money of the United
States of America at such place as the Holder hereof may from time to time designate in writing to
the Company and shall be made on a pro rata basis among all of the Notes. Payment shall be
credited first to the accrued interest then due and payable and the remainder applied to principal.
Except as contemplated by the conversion hereof, the principal and interest of the Notes may be
prepaid at any time, in full or in part. The Company hereby agrees to use the proceeds from any
financing from ADM Capital Europe LLP to repay the Notes. After the 90

-2-

 

day from the date hereof, the Company shall provide the Holder one business day notice of
payment of the Note to permit the Holder the ability to convert the Note as set forth in Section 2
above.

     4. Transfer; Successors and Assigns. The terms and conditions of this Note shall
inure to the benefit of and be binding upon the respective successors and assigns of the parties.
Notwithstanding the foregoing, the Holder may not assign, pledge, or otherwise transfer this Note
without the prior written consent of the Company not to be unreasonably withheld, except for
transfers to affiliates that agree in writing to be bound by the terms of the Purchase Agreement.
Subject to the preceding sentence, this Note may be transferred only upon surrender of the original
Note for registration of transfer, duly endorsed, or accompanied by a duly executed written
instrument of transfer in form satisfactory to the Company. Thereupon, a new note for the same
principal amount and interest will be issued to, and registered in the name of, the transferee.
Interest and principal are payable only to the registered holder of this Note.

     5. Governing Law. This Note and all acts and transactions pursuant hereto and the
rights and obligations of the parties hereto shall be governed, construed and interpreted in
accordance with the laws of the State of New York, without giving effect to principles of conflicts
of law.

     6. Notices. Any notice required or permitted by this Agreement shall be in writing
and shall be deemed sufficient upon receipt, when delivered personally or by courier, overnight
delivery service or confirmed facsimile, in each case, during normal business hours, or five days
after being deposited in the U.S. mail as certified or registered mail with postage prepaid, if
such notice is addressed to the party to be notified at such party’s address or facsimile number as
set forth below or as subsequently modified by written notice.

     7. Amendments and Waivers. Any term of this Note may be amended only with the written
consent of the Company and the Noteholders holding 50% of the principal amount of the Notes. Any
amendment or waiver effected in accordance with this Section 7 shall be binding upon the Company,
each Holder and each transferee of any Note.

     8. Employees, Officers and Directors Not Liable. In no event shall any employee,
officer, or director of the Company be liable for any amounts due or payable pursuant to this Note.

     9. Counterparts. This Note may be executed in counterparts, each of which will be
deemed to be an original and all of which together will constitute a single agreement.

     10. Action to Collect on Note. If action is instituted to collect on this Note, the
Company promises to pay all costs and expenses, including reasonable attorney’s fees, incurred in
connection with such action.

     11. Loss of Note. Upon receipt by the Company of evidence satisfactory to it of the
loss, theft, destruction or mutilation of this Note or any Note exchanged for it, and indemnity
satisfactory to the Company (in case of loss, theft or destruction) or surrender and cancellation
of such Note (in the case of mutilation), the Company will make and deliver in lieu of such Note a
new Note of like tenor.

-3-

 

     12. No Security Interest. This Note will be an unsecured obligation of the Company.

[Signature page follows]

-4-

 

	 	 	 	 	 
	 	COMPANY:

CORGI INTERNATIONAL LIMITED

 	 
	 	By:  	 	 
	 	 	Michael Cookson, Chief Executive 	 
	 	 	Officer 	 
	 	 	 
	 	By:  	
 	 
	 	 	Jack Lawrence, Chief Financial        	 
	 	 	Officer, Chief Operating Officer and

General  Manager of North America 	 
	 

[SIGNATURE PAGE TO BRIDGE PROMISSORY NOTE]

 

 

     THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH,
THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO
THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

BRIDGE PROMISSORY NOTE

			
	 	 	 
	$99,960.00
	 	November 9, 2007
	 
	 	Hong Kong, China

     For value received, Corgi International Limited, a Hong Kong corporation (the
“Company”), promises to pay to John Clough (the “Holder”), the principal sum of
Ninety Nine Thousand Nine Hundred Sixty Dollars ($99,960.00). Interest shall accrue from the date
of this Note on the unpaid principal amount at a rate equal to 15.0% per annum, compounded
annually; provided, that if the unpaid principal amount of the Note is not paid in full by
5:00 p.m. on the 90th day from the date hereof, then the interest rate shall automatically increase
to 25% per annum. In the event that, contrary to the intent of the Holder and the Company, the
Company pays interest under this Note and it is determined that such interest rate was in excess of
the then legal maximum rate, then that portion of the interest payment representing an amount in
excess of the then legal maximum rate shall be deemed a payment of principal and applied against
the principal then due under this Note. This Note is one of a series of Bridge Promissory Notes
containing substantially identical terms and conditions issued pursuant to that certain Convertible
Promissory Note Purchase Agreement dated as of November 9, 2007 by and among the
Company, the Holder and certain other parties (the “Purchase Agreement”). Such Notes
are referred to herein as the “Notes,” and the holders thereof are referred to herein as
the “Holders.” This Note is subject to the following terms and conditions.

     1. Maturity. Unless converted as provided in Section 2, this Note will automatically
mature and be due and payable on the one year anniversary of the date hereof (the “Maturity
Date”). Subject to Section 2 below, interest shall accrue on this Note but shall not be due
and payable until the Maturity Date. Notwithstanding the foregoing, the entire unpaid principal
sum of this Note, together with accrued and unpaid interest thereon, shall become immediately due
and payable upon the execution by the Company of a general assignment for the benefit of creditors,
the filing by or against the Company of a petition in bankruptcy or any petition for relief under
the federal bankruptcy act or the continuation of such petition without dismissal for a period of
90 days or more, the appointment of a receiver or trustee to take possession of the property or
assets of the Company or the sale, transfer or license of all or substantially all of assets of the
Company to a third party or an affiliate or the sale of more than 50% of the outstanding capital
stock of the Company to a third party.

 

 

     2. Conversion.

          (a) Election by the Holder if Note Not Paid on or before the 90th day from the Date
hereof. If the outstanding principal amount of the Note has not been paid by 5:00 p.m. (San
Francisco time) on the 90th day after the date hereof, then at any time thereafter until the
repayment of the outstanding principal amount of the Note, upon written notice by the Holder to the
Company, the outstanding principal and any accrued and unpaid interest then accrued on the Note may
be automatically converted into ADSs of the Company at $3.50 per ADS (the “Conversion Price”) with
the number of ADS rounded down to the nearest whole ADS; provided, however that if the Company
closes an equity financing for the sale of ADS prior to the repayment or conversion of the Notes at
a price per ADS of less then $3.50 per ADS or the Conversion Price then effect, then the Conversion
Price shall be automatically reduced to the price per ADS sold in such equity financing; provided
further that any issuance of ADS in connection with the exercise of employee options, outstanding
warrants or new warrants issued in connection with a loan or lease shall not be deemed to be an
equity financing and shall not constitute an event requiring an adjustment to the Conversion Price.
In the event the number of ADS to be issued in connection with the conversion hereof is rounded
down, the Company shall promptly pay the value of the fractional share to the Holder assuming the
fractional share value at the Conversion Price.

          (b) Mechanics and Effect of Conversion. No fractional ADS of the Company will be
issued upon conversion of this Note. In lieu of any fractional share to which the Holder would
otherwise be entitled, the Company will pay to the Holder in cash the amount of the unconverted
principal and interest balance of this Note that would otherwise be converted into such fractional
share. Upon conversion of this Note pursuant to this Section 2, the Holder shall surrender this
Note (or a Lost Note Affidavit), duly endorsed, at the principal offices of the Company or any
transfer agent of the Company and sign all applicable documents, including any requested by the
Company to evidence the conversion of the Note into ADA. At its expense, the Company will, as soon
as practicable thereafter, cause the issuance of and delivery to such Holder, at such principal
office, a certificate or certificates for the number of ADS to which such Holder is entitled upon
such conversion, together with any other securities and property to which the Holder is entitled
upon such conversion under the terms of this Note, including a check payable to the Holder for any
cash amounts payable as described herein. Upon conversion of this Note, the Company will be
forever released from all of its obligations and liabilities under this Note with regard to that
portion of the principal amount and accrued interest being converted including without limitation
the obligation to pay such portion of the principal amount and accrued interest.

     3. Payment; Prepayment. All payments shall be made in lawful money of the United
States of America at such place as the Holder hereof may from time to time designate in writing to
the Company and shall be made on a pro rata basis among all of the Notes. Payment shall be
credited first to the accrued interest then due and payable and the remainder applied to principal.
Except as contemplated by the conversion hereof, the principal and interest of the Notes may be
prepaid at any time, in full or in part. The Company hereby agrees to use the proceeds from any
financing from ADM Capital Europe LLP to repay the Notes. After the 90

-2-

 

day from the date hereof, the Company shall provide the Holder one business day notice of
payment of the Note to permit the Holder the ability to convert the Note as set forth in Section 2
above.

     4. Transfer; Successors and Assigns. The terms and conditions of this Note shall
inure to the benefit of and be binding upon the respective successors and assigns of the parties.
Notwithstanding the foregoing, the Holder may not assign, pledge, or otherwise transfer this Note
without the prior written consent of the Company not to be unreasonably withheld, except for
transfers to affiliates that agree in writing to be bound by the terms of the Purchase Agreement.
Subject to the preceding sentence, this Note may be transferred only upon surrender of the original
Note for registration of transfer, duly endorsed, or accompanied by a duly executed written
instrument of transfer in form satisfactory to the Company. Thereupon, a new note for the same
principal amount and interest will be issued to, and registered in the name of, the transferee.
Interest and principal are payable only to the registered holder of this Note.

     5. Governing Law. This Note and all acts and transactions pursuant hereto and the
rights and obligations of the parties hereto shall be governed, construed and interpreted in
accordance with the laws of the State of New York, without giving effect to principles of conflicts
of law.

     6. Notices. Any notice required or permitted by this Agreement shall be in writing
and shall be deemed sufficient upon receipt, when delivered personally or by courier, overnight
delivery service or confirmed facsimile, in each case, during normal business hours, or five days
after being deposited in the U.S. mail as certified or registered mail with postage prepaid, if
such notice is addressed to the party to be notified at such party’s address or facsimile number as
set forth below or as subsequently modified by written notice.

     7. Amendments and Waivers. Any term of this Note may be amended only with the written
consent of the Company and the Noteholders holding 50% of the principal amount of the Notes. Any
amendment or waiver effected in accordance with this Section 7 shall be binding upon the Company,
each Holder and each transferee of any Note.

     8. Employees, Officers and Directors Not Liable. In no event shall any employee,
officer, or director of the Company be liable for any amounts due or payable pursuant to this Note.

     9. Counterparts. This Note may be executed in counterparts, each of which will be
deemed to be an original and all of which together will constitute a single agreement.

     10. Action to Collect on Note. If action is instituted to collect on this Note, the
Company promises to pay all costs and expenses, including reasonable attorney’s fees, incurred in
connection with such action.

     11. Loss of Note. Upon receipt by the Company of evidence satisfactory to it of the
loss, theft, destruction or mutilation of this Note or any Note exchanged for it, and indemnity
satisfactory to the Company (in case of loss, theft or destruction) or surrender and cancellation
of such Note (in the case of mutilation), the Company will make and deliver in lieu of such Note a
new Note of like tenor.

-3-

 

     12. No Security Interest. This Note will be an unsecured obligation of the Company.

[Signature page follows]

-4-

 

	 	 	 	 	 
	 	COMPANY:

CORGI INTERNATIONAL LIMITED

 	 
	 	By:  	 	 
	 	 	Michael Cookson, Chief Executive 	 
	 	 	Officer 	 
	 	 	 
	 	By:  	
 	 
	 	 	Jack Lawrence, Chief Financial        	 
	 	 	Officer, Chief Operating Officer and

General  Manager of North America 	 
	 

[SIGNATURE PAGE TO BRIDGE PROMISSORY NOTE]

 

 

     THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH,
THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO
THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

BRIDGE PROMISSORY NOTE

			
	 	 	 
	$99,999.00
	 	November 9, 2007
	 
	 	Hong Kong, China

     For value received, Corgi International Limited, a Hong Kong corporation (the
“Company”), promises to pay to Denis E. Horton (the “Holder”), the principal sum of
Ninety Nine Thousand Nine Hundred Ninety Nine Dollars ($99,999.00). Interest shall accrue from the
date of this Note on the unpaid principal amount at a rate equal to 15.0% per annum, compounded
annually; provided, that if the unpaid principal amount of the Note is not paid in full by
5:00 p.m. on the 90th day from the date hereof, then the interest rate shall automatically increase
to 25% per annum. In the event that, contrary to the intent of the Holder and the Company, the
Company pays interest under this Note and it is determined that such interest rate was in excess of
the then legal maximum rate, then that portion of the interest payment representing an amount in
excess of the then legal maximum rate shall be deemed a payment of principal and applied against
the principal then due under this Note. This Note is one of a series
of Bridge Promissory Notes containing substantially identical terms and conditions issued
pursuant to that certain Convertible Promissory Note Purchase Agreement dated as of November 9,
2007 by and among the Company, the Holder and certain other parties (the “Purchase
Agreement”). Such Notes are referred to herein as the “Notes,” and the holders thereof
are referred to herein as the “Holders.” This Note is subject to the following terms and
conditions.

     1. Maturity. Unless converted as provided in Section 2, this Note will automatically
mature and be due and payable on the one year anniversary of the date hereof (the “Maturity
Date”). Subject to Section 2 below, interest shall accrue on this Note but shall not be due
and payable until the Maturity Date. Notwithstanding the foregoing, the entire unpaid principal
sum of this Note, together with accrued and unpaid interest thereon, shall become immediately due
and payable upon the execution by the Company of a general assignment for the benefit of creditors,
the filing by or against the Company of a petition in bankruptcy or any petition for relief under
the federal bankruptcy act or the continuation of such petition without dismissal for a period of
90 days or more, the appointment of a receiver or trustee to take possession of the property or
assets of the Company or the sale, transfer or license of all or substantially all of assets of the
Company to a third party or an affiliate or the sale of more than 50% of the outstanding capital
stock of the Company to a third party.

 

 

     2. Conversion.

          (a) Election by the Holder if Note Not Paid on or before the 90th day from the Date
hereof. If the outstanding principal amount of the Note has not been paid by 5:00 p.m. (San
Francisco time) on the 90th day after the date hereof, then at any time thereafter until the
repayment of the outstanding principal amount of the Note, upon written notice by the Holder to the
Company, the outstanding principal and any accrued and unpaid interest then accrued on the Note may
be automatically converted into ADSs of the Company at $3.50 per ADS (the “Conversion Price”) with
the number of ADS rounded down to the nearest whole ADS; provided, however that if the Company
closes an equity financing for the sale of ADS prior to the repayment or conversion of the Notes at
a price per ADS of less then $3.50 per ADS or the Conversion Price then effect, then the Conversion
Price shall be automatically reduced to the price per ADS sold in such equity financing; provided
further that any issuance of ADS in connection with the exercise of employee options, outstanding
warrants or new warrants issued in connection with a loan or lease shall not be deemed to be an
equity financing and shall not constitute an event requiring an adjustment to the Conversion Price.
In the event the number of ADS to be issued in connection with the conversion hereof is rounded
down, the Company shall promptly pay the value of the fractional share to the Holder assuming the
fractional share value at the Conversion Price.

          (b) Mechanics and Effect of Conversion. No fractional ADS of the Company will be
issued upon conversion of this Note. In lieu of any fractional share to which the Holder would
otherwise be entitled, the Company will pay to the Holder in cash the amount of the unconverted
principal and interest balance of this Note that would otherwise be converted into such fractional
share. Upon conversion of this Note pursuant to this Section 2, the Holder shall surrender this
Note (or a Lost Note Affidavit), duly endorsed, at the principal offices of the Company or any
transfer agent of the Company and sign all applicable documents, including any requested by the
Company to evidence the conversion of the Note into ADA. At its expense, the Company will, as soon
as practicable thereafter, cause the issuance of and delivery to such Holder, at such principal
office, a certificate or certificates for the number of ADS to which such Holder is entitled upon
such conversion, together with any other securities and property to which the Holder is entitled
upon such conversion under the terms of this Note, including a check payable to the Holder for any
cash amounts payable as described herein. Upon conversion of this Note, the Company will be
forever released from all of its obligations and liabilities under this Note with regard to that
portion of the principal amount and accrued interest being converted including without limitation
the obligation to pay such portion of the principal amount and accrued interest.

     3. Payment; Prepayment. All payments shall be made in lawful money of the United
States of America at such place as the Holder hereof may from time to time designate in writing to
the Company and shall be made on a pro rata basis among all of the Notes. Payment shall be
credited first to the accrued interest then due and payable and the remainder applied to principal.
Except as contemplated by the conversion hereof, the principal and interest of the Notes may be
prepaid at any time, in full or in part. The Company hereby agrees to use the proceeds from any
financing from ADM Capital Europe LLP to repay the Notes. After the 90

-2-

 

day from the date hereof, the Company shall provide the Holder one business day notice of
payment of the Note to permit the Holder the ability to convert the Note as set forth in Section 2
above.

     4. Transfer; Successors and Assigns. The terms and conditions of this Note shall
inure to the benefit of and be binding upon the respective successors and assigns of the parties.
Notwithstanding the foregoing, the Holder may not assign, pledge, or otherwise transfer this Note
without the prior written consent of the Company not to be unreasonably withheld, except for
transfers to affiliates that agree in writing to be bound by the terms of the Purchase Agreement.
Subject to the preceding sentence, this Note may be transferred only upon surrender of the original
Note for registration of transfer, duly endorsed, or accompanied by a duly executed written
instrument of transfer in form satisfactory to the Company. Thereupon, a new note for the same
principal amount and interest will be issued to, and registered in the name of, the transferee.
Interest and principal are payable only to the registered holder of this Note.

     5. Governing Law. This Note and all acts and transactions pursuant hereto and the
rights and obligations of the parties hereto shall be governed, construed and interpreted in
accordance with the laws of the State of New York, without giving effect to principles of conflicts
of law.

     6. Notices. Any notice required or permitted by this Agreement shall be in writing
and shall be deemed sufficient upon receipt, when delivered personally or by courier, overnight
delivery service or confirmed facsimile, in each case, during normal business hours, or five days
after being deposited in the U.S. mail as certified or registered mail with postage prepaid, if
such notice is addressed to the party to be notified at such party’s address or facsimile number as
set forth below or as subsequently modified by written notice.

     7. Amendments and Waivers. Any term of this Note may be amended only with the written
consent of the Company and the Noteholders holding 50% of the principal amount of the Notes. Any
amendment or waiver effected in accordance with this Section 7 shall be binding upon the Company,
each Holder and each transferee of any Note.

     8. Employees, Officers and Directors Not Liable. In no event shall any employee,
officer, or director of the Company be liable for any amounts due or payable pursuant to this Note.

     9. Counterparts. This Note may be executed in counterparts, each of which will be
deemed to be an original and all of which together will constitute a single agreement.

     10. Action to Collect on Note. If action is instituted to collect on this Note, the
Company promises to pay all costs and expenses, including reasonable attorney’s fees, incurred in
connection with such action.

     11. Loss of Note. Upon receipt by the Company of evidence satisfactory to it of the
loss, theft, destruction or mutilation of this Note or any Note exchanged for it, and indemnity
satisfactory to the Company (in case of loss, theft or destruction) or surrender and cancellation
of such Note (in the case of mutilation), the Company will make and deliver in lieu of such Note a
new Note of like tenor.

-3-

 

     12. No Security Interest. This Note will be an unsecured obligation of the Company.

[Signature page follows]

-4-

 

	 	 	 	 	 
	 	COMPANY:

CORGI INTERNATIONAL LIMITED

 	 
	 	By:  	 	 
	 	 	Michael Cookson, Chief Executive 	 
	 	 	Officer 	 
	 	 	 
	 	By:  	
 	 
	 	 	Jack Lawrence, Chief Financial        	 
	 	 	Officer, Chief Operating Officer and

General  Manager of North America 	 
	 

[SIGNATURE PAGE TO BRIDGE PROMISSORY NOTE]

 

 

     THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH,
THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO
THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

BRIDGE PROMISSORY NOTE

			
	 	 	 
	$60,000.00
	 	November 9, 2007
	 
	 	Hong Kong, China

     For value received, Corgi International Limited, a Hong Kong corporation (the
“Company”), promises to pay to Robert E. Esterbrook (the “Holder”), the principal
sum of Sixty Thousand Dollars ($60,000.00). Interest shall accrue from the date of this Note on
the unpaid principal amount at a rate equal to 15.0% per annum, compounded annually;
provided, that if the unpaid principal amount of the Note is not paid in full by 5:00 p.m.
on the 90th day from the date hereof, then the interest rate shall automatically increase to 25%
per annum. In the event that, contrary to the intent of the Holder and the Company, the Company
pays interest under this Note and it is determined that such interest rate was in excess of the
then legal maximum rate, then that portion of the interest payment representing an amount in excess
of the then legal maximum rate shall be deemed a payment of principal and applied against the
principal then due under this
Note. This Note is one of a series of Bridge Promissory Notes containing substantially
identical terms and conditions issued pursuant to that certain Convertible Promissory Note Purchase
Agreement dated as of November 9, 2007 by and among the Company, the Holder and certain other
parties (the “Purchase Agreement”). Such Notes are referred to herein as the
“Notes,” and the holders thereof are referred to herein as the “Holders.” This
Note is subject to the following terms and conditions.

     1. Maturity. Unless converted as provided in Section 2, this Note will automatically
mature and be due and payable on the one year anniversary of the date hereof (the “Maturity
Date”). Subject to Section 2 below, interest shall accrue on this Note but shall not be due
and payable until the Maturity Date. Notwithstanding the foregoing, the entire unpaid principal
sum of this Note, together with accrued and unpaid interest thereon, shall become immediately due
and payable upon the execution by the Company of a general assignment for the benefit of creditors,
the filing by or against the Company of a petition in bankruptcy or any petition for relief under
the federal bankruptcy act or the continuation of such petition without dismissal for a period of
90 days or more, the appointment of a receiver or trustee to take possession of the property or
assets of the Company or the sale, transfer or license of all or substantially all of assets of the
Company to a third party or an affiliate or the sale of more than 50% of the outstanding capital
stock of the Company to a third party.

 

 

     2. Conversion.

          (a) Election by the Holder if Note Not Paid on or before the 90th day from the Date
hereof. If the outstanding principal amount of the Note has not been paid by 5:00 p.m. (San
Francisco time) on the 90th day after the date hereof, then at any time thereafter until the
repayment of the outstanding principal amount of the Note, upon written notice by the Holder to the
Company, the outstanding principal and any accrued and unpaid interest then accrued on the Note may
be automatically converted into ADSs of the Company at $3.50 per ADS (the “Conversion Price”) with
the number of ADS rounded down to the nearest whole ADS; provided, however that if the Company
closes an equity financing for the sale of ADS prior to the repayment or conversion of the Notes at
a price per ADS of less then $3.50 per ADS or the Conversion Price then effect, then the Conversion
Price shall be automatically reduced to the price per ADS sold in such equity financing; provided
further that any issuance of ADS in connection with the exercise of employee options, outstanding
warrants or new warrants issued in connection with a loan or lease shall not be deemed to be an
equity financing and shall not constitute an event requiring an adjustment to the Conversion Price.
In the event the number of ADS to be issued in connection with the conversion hereof is rounded
down, the Company shall promptly pay the value of the fractional share to the Holder assuming the
fractional share value at the Conversion Price.

          (b) Mechanics and Effect of Conversion. No fractional ADS of the Company will be
issued upon conversion of this Note. In lieu of any fractional share to which the Holder would
otherwise be entitled, the Company will pay to the Holder in cash the amount of the unconverted
principal and interest balance of this Note that would otherwise be converted into such fractional
share. Upon conversion of this Note pursuant to this Section 2, the Holder shall surrender this
Note (or a Lost Note Affidavit), duly endorsed, at the principal offices of the Company or any
transfer agent of the Company and sign all applicable documents, including any requested by the
Company to evidence the conversion of the Note into ADA. At its expense, the Company will, as soon
as practicable thereafter, cause the issuance of and delivery to such Holder, at such principal
office, a certificate or certificates for the number of ADS to which such Holder is entitled upon
such conversion, together with any other securities and property to which the Holder is entitled
upon such conversion under the terms of this Note, including a check payable to the Holder for any
cash amounts payable as described herein. Upon conversion of this Note, the Company will be
forever released from all of its obligations and liabilities under this Note with regard to that
portion of the principal amount and accrued interest being converted including without limitation
the obligation to pay such portion of the principal amount and accrued interest.

     3. Payment; Prepayment. All payments shall be made in lawful money of the United
States of America at such place as the Holder hereof may from time to time designate in writing to
the Company and shall be made on a pro rata basis among all of the Notes. Payment shall be
credited first to the accrued interest then due and payable and the remainder applied to principal.
Except as contemplated by the conversion hereof, the principal and interest of the Notes may be
prepaid at any time, in full or in part. The Company hereby agrees to use the proceeds from any
financing from ADM Capital Europe LLP to repay the Notes. After the 90

-2-

 

day from the date hereof, the Company shall provide the Holder one business day notice of
payment of the Note to permit the Holder the ability to convert the Note as set forth in Section 2
above.

     4. Transfer; Successors and Assigns. The terms and conditions of this Note shall
inure to the benefit of and be binding upon the respective successors and assigns of the parties.
Notwithstanding the foregoing, the Holder may not assign, pledge, or otherwise transfer this Note
without the prior written consent of the Company not to be unreasonably withheld, except for
transfers to affiliates that agree in writing to be bound by the terms of the Purchase Agreement.
Subject to the preceding sentence, this Note may be transferred only upon surrender of the original
Note for registration of transfer, duly endorsed, or accompanied by a duly executed written
instrument of transfer in form satisfactory to the Company. Thereupon, a new note for the same
principal amount and interest will be issued to, and registered in the name of, the transferee.
Interest and principal are payable only to the registered holder of this Note.

     5. Governing Law. This Note and all acts and transactions pursuant hereto and the
rights and obligations of the parties hereto shall be governed, construed and interpreted in
accordance with the laws of the State of New York, without giving effect to principles of conflicts
of law.

     6. Notices. Any notice required or permitted by this Agreement shall be in writing
and shall be deemed sufficient upon receipt, when delivered personally or by courier, overnight
delivery service or confirmed facsimile, in each case, during normal business hours, or five days
after being deposited in the U.S. mail as certified or registered mail with postage prepaid, if
such notice is addressed to the party to be notified at such party’s address or facsimile number as
set forth below or as subsequently modified by written notice.

     7. Amendments and Waivers. Any term of this Note may be amended only with the written
consent of the Company and the Noteholders holding 50% of the principal amount of the Notes. Any
amendment or waiver effected in accordance with this Section 7 shall be binding upon the Company,
each Holder and each transferee of any Note.

     8. Employees, Officers and Directors Not Liable. In no event shall any employee,
officer, or director of the Company be liable for any amounts due or payable pursuant to this Note.

     9. Counterparts. This Note may be executed in counterparts, each of which will be
deemed to be an original and all of which together will constitute a single agreement.

     10. Action to Collect on Note. If action is instituted to collect on this Note, the
Company promises to pay all costs and expenses, including reasonable attorney’s fees, incurred in
connection with such action.

     11. Loss of Note. Upon receipt by the Company of evidence satisfactory to it of the
loss, theft, destruction or mutilation of this Note or any Note exchanged for it, and indemnity
satisfactory to the Company (in case of loss, theft or destruction) or surrender and cancellation
of such Note (in the case of mutilation), the Company will make and deliver in lieu of such Note a
new Note of like tenor.

-3-

 

     12. No
Security Interest. This Note will be an unsecured obligation of the Company.

[Signature page follows]

-4-

 

	 	 	 	 	 
	 	COMPANY:

CORGI INTERNATIONAL LIMITED

 	 
	 	By:  	 	 
	 	 	Michael Cookson, Chief Executive 	 
	 	 	Officer 	 
	 	 	 
	 	By:  	
 	 
	 	 	Jack Lawrence, Chief Financial        	 
	 	 	Officer, Chief Operating Officer and

General  Manager of North America 	 
	 

[SIGNATURE PAGE TO BRIDGE PROMISSORY NOTE]

 

 

EXECUTION COPY

SECURITIES EXCHANGE AGREEMENT

          THIS SECURITIES EXCHANGE AGREEMENT (“Agreement”) is made as of the 21st day of
December, 2007 by and among Corgi International Limited, a corporation organized under the laws of
Hong Kong (the “Company”), and the Note Holders, set forth on the signature pages affixed
hereto (each an “Investor” and collectively the “Investors”).

Recitals

          A. The Company and the Investors are executing and delivering this Agreement in reliance upon
the exemption from securities registration afforded by the provisions of Regulation D
(“Regulation D”), as promulgated by the U.S. Securities and Exchange Commission (the
“SEC”) under the Securities Act of 1933, as amended; and

          B. The Investors wish to convert their Notes, and the Company wishes to issue to the
Investors, upon the terms and conditions stated in this Agreement, (i) the number of American
Depositary Shares (together with any securities into which such American Depositary Shares may be
reclassified the “ADSs”) as set forth in Section 2.1 below; and

          C. In consideration of the mutual promises made herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

     1. Definitions. In addition to those terms defined above and elsewhere in this
Agreement, for the purposes of this Agreement, the following terms shall have the meanings set
forth below:

          “Deposit Agreement” means the Deposit Agreement, dated as at January 1997, by and
between the Company and The Bank of New York, as depositary, as the same may have been amended on
or prior to the date hereof.

          “Material Adverse Effect” means a material adverse effect on (i) the assets,
liabilities, results of operations, condition (financial or otherwise), business, or prospects of
the Company and its Subsidiaries taken as a whole, or (ii) the ability of the Company to perform
its obligations under the Transaction Documents.

          “Note” means a bridge promissory note pursuant to the Bridge Note Purchase Agreement,
dated November 9, 2007, by and among the Company and the Investors.

          “Note Holder” means a holder of a Notes issued under the Bridge Note Purchase
Agreement, dated November 9, 2007, by and among the Company and the Investors.

          “Ordinary Shares” means the Ordinary Shares of the Company and any securities into
which such Ordinary Shares may be reclassified.

 

 

          “Person” means an individual, corporation, partnership, limited liability company,
trust, business trust, association, joint stock company, joint venture, sole proprietorship,
unincorporated organization, governmental authority or any other form of entity not specifically
listed herein.

          “Purchase Price” means $1.93 per Share, or if higher, the closing consolidated bid
price at 4:00 p.m. (Eastern time) on December 20, 2007 as reflected on the NASDAQ (General Market).

          “SEC Filings” has the meaning set forth in Section 4.4.

          “Shares” means the ADSs being purchased by the Investors hereunder.

          “Subsidiary” of any Person means another Person, an amount of the voting securities,
other voting ownership or voting partnership interests of which is sufficient to elect at least a
majority of its Board of Directors or other governing body (or, if there are no such voting
interests, 50% or more of the equity interests of which) is owned directly or indirectly by such
first Person.

          “Transaction Documents” means this Agreement.

          “Underlying ADS Shares” means the Ordinary Shares underlying the Shares.

          “1933 Act” means the Securities Act of 1933, as amended, or any successor statute, and
the rules and regulations promulgated thereunder.

          “1934 Act” means the Securities Exchange Act of 1934, as amended, or any successor
statute, and the rules and regulations promulgated thereunder.

     2. Conversion of Notes and Issuance of the Shares. Subject to the terms and
conditions of this Agreement, on the Closing as provided below, each of the Investors shall
severally, and not jointly, automatically convert the amount of outstanding principal and accrued
interest of their Notes as indicated on the signature page hereto, and the Company shall issue to
such Investors, the Shares for the Purchase Price per Share, rounded down to the nearest whole
share as described below in Section 2.1 and 2.2.

          2.1 Conversion. On the Closing, the principal amount of and accrued interest of each
Note as indicated on the signature page hereto shall automatically be converted into the Company’s
Shares issued at the Purchase Price per Share, rounded down to the nearest whole share, and the
issuance of such shares upon such conversion shall be upon the terms and subject to this Agreement.

          2.2 Mechanics and Effect of Conversion. No fractional Shares will be issued upon
conversion of each Note. In lieu of any fractional share to which any Investor would otherwise be
entitled, the Company will pay to the Investor in cash the amount of the

2

 

unconverted principal and
interest balance of each Note that would otherwise be converted into such fractional share. On the
Closing, upon conversion of each Note, the Company will be forever released from all of its
obligations and liabilities under each Note with regard to that portion of the principal amount and
accrued interest being converted including without limitation the obligation to pay such portion of
the principal amount and accrued interest.

     3. Closing On the closing (the “Closing”) of the sale of ADS pursuant to the
$2.2 million Purchase Agreement (as defined below) expected on January 8, 2008 (such date, the
“Closing Date”), the conversion of the Notes shall automatically occur and be converted.
The Company shall use reasonable commercial efforts to cause the delivery of the certificates
evidencing the Shares as promptly as possible after the Closing.

     4. Representations and Warranties of the Company. The Company hereby represents and
warrants to the Investors the following:

          4.1 Organization, Good Standing and Qualification. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to carry on its business as now
conducted and to own its properties. The Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the conduct of its business or
its ownership or leasing of property makes such qualification or leasing necessary unless the
failure to so qualify has not had and could not reasonably be expected to have a Material Adverse
Effect.

          4.2 Authorization. The Company has full power and authority and has taken all
requisite action on the part of the Company, its officers and directors, and as of the Closing will
have taken all requisite action of the part of its shareholders, necessary for (i) the
authorization, execution and delivery of the Transaction Documents, (ii) the authorization of the
performance of all obligations of the Company hereunder or thereunder and (iii) the authorization,
issuance (or reservation for issuance) and delivery of the Shares. The Transaction Documents
constitute the legal, valid and binding obligations of the Company, enforceable against the Company
in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability, relating to or affecting
creditors’ rights generally.

          4.3 Valid Issuance. The Shares and the Underlying ADS Shares have been duly and
validly authorized and, when issued and paid for pursuant to this Agreement and the Deposit
Agreement, will be validly issued, fully paid and nonassessable, and shall be free and clear of all
encumbrances and restrictions (other than those created by the Investors), except for restrictions
on transfer set forth in the Transaction Documents or imposed by applicable securities laws.

          4.4 Delivery of SEC Filings; Business. The Company has made available to the
Investors through the EDGAR system true and complete copies of the Company’s most recent Annual
Report on Form 20-F for the fiscal year ended March 31, 2007 (the “20-F”), and

3

 

all other reports
filed by the Company pursuant to the 1934 Act since the filing of the 20-F and prior to the date
hereof (collectively, the “SEC Filings”).

          4.5 Brokers and Finders. No Person will have, as a result of the transactions
contemplated by the Transaction Documents, any valid right, interest or claim against or upon the
Company, any Subsidiary or an Investor for any commission, fee or other compensation pursuant to
any agreement, arrangement or understanding entered into by or on behalf of the Company.

     5 Representations and Warranties of the Investors. Each of the Investors hereby
severally, and not jointly, represents and warrants to the Company that:

          5.1 Organization and Existence. If such Investor is not a natural person, such
Investor is a validly existing corporation, limited partnership or limited liability company and
has all requisite corporate, partnership or limited liability company power and authority to invest
in the Shares pursuant to this Agreement.

          5.2 Authorization. The execution, delivery and performance by such Investor of the
Transaction Documents to which such Investor is a party have been duly authorized and will each
constitute the valid and legally binding obligation of such Investor, enforceable against such
Investor in accordance with their respective terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability, relating to or
affecting creditors’ rights generally.

          5.3 Purchase Entirely for Own Account. The Shares to be received by such Investor
hereunder will be acquired for such Investor’s own account, not as nominee or agent, and not with a
view to the resale or distribution of any part thereof in violation of the 1933 Act, and such
Investor has no present intention of selling, granting any participation in, or otherwise
distributing the same in violation of the 1933 Act without prejudice, however, to such Investor’s
right at all times to sell or otherwise dispose of all or any part of such Shares in compliance
with applicable federal and state securities laws. Nothing contained herein shall be deemed a
representation or warranty by such Investor to hold the Shares for any period of time. Such
Investor is not a broker-dealer registered with the SEC under the 1934 Act or an entity engaged in
a business that would require it to be so registered.

          5.4 Investment Experience. Such Investor acknowledges that it can bear the economic
risk and complete loss of its investment in the Shares and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and risks of the
investment contemplated hereby.

          5.5 Disclosure of Information. Such Investor has had an opportunity to receive all
information related to the Company requested by it and to ask questions of and receive answers from
the Company regarding the Company, its business and the terms and
conditions of the offering of the Shares. Such Investor acknowledges receipt of copies of the SEC
Filings. Neither such inquiries nor any other due diligence investigation conducted by such

4

 

Investor shall modify, limit or otherwise affect such Investor’s right to rely on the Company’s
representations and warranties contained in this Agreement.

          5.6 Restricted Shares. Such Investor understands that the Shares are characterized as
“restricted securities” under the U.S. federal securities laws inasmuch as they are being acquired
from the Company in a transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under the 1933 Act only
in certain limited circumstances.

          5.7 Legends. It is understood that, except as provided below, certificates evidencing
the Shares may bear the following or any similar legend:

               (a) “The securities represented hereby may not be transferred unless (i) such securities have
been registered for sale pursuant to the Securities Act of 1933, as amended, (ii) such securities
may be sold pursuant to Rule 144(k) or Rule 144(1), or (iii) the Company has received an opinion of
counsel reasonably satisfactory to it that such transfer may lawfully be made without registration
under the Securities Act of 1933 or qualification under applicable state securities laws.”

               (b) If required by the authorities of any state in connection with the issuance of sale of the
Securities, the legend required by such state authority.

          5.8 Accredited Investor. Such Investor is an accredited investor as defined in Rule
501(a) of Regulation D, as amended, under the 1933 Act.

          5.9 No General Solicitation. Such Investor did not learn of the investment in the
Shares as a result of any general solicitation or general advertising.

          5.10 Brokers and Finders. No Person will have, as a result of the transactions
contemplated by the Transaction Documents, any valid right, interest or claim against or upon the
Company, any Subsidiary or an Investor for any commission, fee or other compensation pursuant to
any agreement, arrangement or understanding entered into by or on behalf of such Investor.

     6. Conditions to Closing.

          6.1 Conditions to the Investors’ Obligations. The obligation of each Investor to
purchase the Shares at the Closing is subject to the fulfillment on or prior to the Closing Date,
of the following conditions, any of which may be waived by such Investor (as to itself only):

               (a) The Company shall have entered into and fully executed the definitive documents in
connection with the debt facility for approximately Thirty Three Million Dollars ($33,000,000) with
Burdale Financial Limited (“Burdale”) and Burdale shall funded the facility pursuant to the
definitive documents.

5

 

               (b) The Company shall have closed the sale of approximately $2.2 million of ADS pursuant to a
Purchase Agreement dated the date hereof between the Company and the investors named therein (the
“$2.2 million Purchase Agreement”).

          6.2 Conditions to Obligations of the Company. The Company’s obligation to sell and
issue the Shares at the Closing is subject to the fulfillment to the satisfaction of the Company on
or prior to the Closing Date of the following conditions, any of which may be waived by the
Company:

               (a) The representations and warranties made by the Investors in Section 5 hereof, other than
the representations and warranties contained in Sections 5.3, 5.4, 5.5, 5.6, 5.7, 5.8 and 5.9 (the
“Investment Representations”), shall be true and correct in all material respects when made, and
shall be true and correct in all material respects on the Closing Date with the same force and
effect as if they had been made on and as of said date. The Investment Representations shall be
true and correct in all respects when made, and shall be true and correct in all respects on the
Closing Date with the same force and effect as if they had been made on and as of said date.

     7. Miscellaneous.

          7.1 Successors and Assigns. This Agreement may not be assigned by a party hereto
without the prior written consent of the Company or the Investors.

          7.2 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.

          7.3 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.

          7.4 Amendments and Waivers. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written consent of the Company
and the Investors holding a majority of the subscriptions for Shares hereunder. Any amendment or
waiver effected in accordance with this paragraph shall be binding upon each holder of any Shares
purchased under this Agreement at the time outstanding, each future holder of all such Shares, and
the Company.

          7.5 Publicity. Except as set forth below, no public release or announcement
concerning the transactions contemplated hereby shall be issued by the Investors without the prior
consent of the Company.

          7.6 Entire Agreement. This Agreement, including the Exhibits constitutes the entire
agreement among the parties hereof with respect to the subject matter hereof and thereof

6

 

and
supersede all prior agreements and understandings, both oral and written, between the parties with
respect to the subject matter hereof and thereof.

          7.7 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 to carry
out the transactions contemplated hereby and to evidence the fulfillment of the agreements herein
contained.

          7.8 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
California without regard to the choice of law principles thereof.

          7.9 Independent Nature of Investors’ Obligations and Rights. The obligations of each
Investor are several and not joint with the obligations of any other Investor, and no Investor
shall be responsible in any way for the performance of the obligations of any other Investor. The
decision of each Investor to purchase ADS has been made by such Investor independently of any other
Investor. Nothing contained herein and no action taken by any Investor pursuant thereto, shall be
deemed to constitute the Investors as a partnership, an association, a joint venture or any other
kind of entity, or create a presumption that the Investors are in any way acting in concert or as a
group with respect to such obligations or the transactions contemplated hereby. Each Investor
acknowledges that no other Investor has acted as agent for such Investor in connection with making
its investment hereunder and that no Investor will be acting as agent of such Investor in
connection with monitoring its investment in the Shares or enforcing its rights under the
Transaction Documents. Each Investor shall be entitled to independently protect and enforce its
rights, including, without limitation, the rights arising out of this Agreement and it shall not be
necessary for any other Investor to be joined as an additional party in any proceeding for such
purpose.

[signature pages follow]

7

 

          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:
	 	 

	 	 
	 	 	Title:      Director	 	 

[Securities Exchange Agreement Signature Page]

 

 

INVESTOR

	 	 	 
	MICHAEL COOKSON

	 	Total Amount of Principal and Accrued Interest being converted*: $205,301.37
($100,000.00 will be repaid by the Company)

Number of ADS**:

	 	 	 
	By:

	 	                                                            

 

			
	*	 	Plus any interest on the Note accrued after December 21, 2007 until the closing.

[Securities Exchange Agreement Signature Page]

 

 

INVESTOR

	 	 	 
	JOHN CLOUGH

	 	Total Amount of Principal and Accrued Interest being converted*: $101,726.42

Number of ADS**:

	 	 	 
	By:

	 	                                                            

 

			
	*	 	Plus any interest on the Note accrued after December 21, 2007 until the closing.

[Securities Exchange Agreement Signature Page]

 

 

INVESTOR

	 	 	 
	DENIS HORTON

	 	Total Amount of Principal and Accrued Interest being converted*: $101,766.11

Number of ADS**:

	 	 	 
	By:

	 	                                                            

 

			
	*	 	Plus any interest on the Note accrued after December 21, 2007 until the closing.

[Securities Exchange Agreement Signature Page]

 

 

INVESTOR

	 	 	 
	ROBERT ESTERBROOK

	 	Total Amount of Principal and Accrued Interest being converted*: $61,060.27

Number of ADS**:

	 	 	 
	By:

	 	                                                            

 

			
	*	 	Plus any interest on the Note accrued after December 21, 2007 until the closing.

[Securities Exchange Agreement Signature Page]

 

 

SCHEDULE OF NOTEHOLDERS

Closing January 8, 2008

	 	 	 	 	 	 	 	 	 
	 	 	Total Amount of Principal and	 	 
	 	 	Accrued Interest Being	 	 
	Name of Noteholder	 	converted	 	Number of ADS
	Michael Cookson
	 	$	207,397.26	 	 	 	102,166	 
	John Clough
	 	$	102,424.77	 	 	 	50,455	 
	Denis Horton
	 	$	102,464.73	 	 	 	50,475	 
	Robert Esterbrook
	 	$	61,479.45	 	 	 	30,285	 
	TOTAL
	 	$	473,766.21	 	 	 	233,381exv4w27

Exhibit 4.27

COFACE RECEIVABLES

FINANCE LIMITED

Receivables Finance

Standard Terms & Conditions

 

 

ORDER OF CONDITIONS

	 	 	 	 	 	 	 
	1
	 	INTRODUCTION	 	 	2	 
	2
	 	START AND LENGTH OF RELATIONSHIP BETWEEN YOU AND US	 	 	2	 
	3
	 	OUR OWNERSHIP OF DEBTS, OFFERS AND NOTIFICATIONS	 	 	3	 
	4
	 	PURCHASE PRICE OF DEBTS	 	 	3	 
	5
	 	LIMITS AND PERCENTAGES	 	 	3	 
	6
	 	DECISIONS	 	 	3	 
	7
	 	PROTECTION OF DEBTS	 	 	4	 
	8
	 	INSOLVENCY OF CUSTOMERS OR UNCOLLECTABLE DEBTS	 	 	5	 
	9
	 	DISPUTES	 	 	5	 
	10
	 	OUR ACCOUNTS	 	 	6	 
	11
	 	CHARGES FEES AND INDEMNITIES	 	 	7	 
	12
	 	REPURCHASES AND REPAYMENTS	 	 	9	 
	13
	 	NOTICES TO CUSTOMERS	 	 	9	 
	14
	 	CUSTOMERS’ ACCOUNTS AND DEBT COLLECTIONS	 	 	9	 
	15
	 	TRUSTS AND OTHER RIGHTS	 	 	10	 
	16
	 	YOUR UNDERTAKINGS TO US	 	 	11	 
	17
	 	YOUR WARRANTIES TO US	 	 	13	 
	18
	 	INTERNET SERVICE	 	 	14	 
	19
	 	INFORMATION FOR US	 	 	15	 
	20
	 	TERMINATION EVENTS	 	 	16	 
	21
	 	POWER TO ACT IN YOUR NAME	 	 	17	 
	22
	 	CONTACTING CUSTOMERS AND OTHER PARTIES	 	 	17	 
	23
	 	ASSIGNMENT, DELEGATION AND FORCE MAJEURE	 	 	18	 
	24
	 	UNLIMITED PARTNERSHIPS AND SOLE TRADER CLIENTS	 	 	18	 
	25
	 	SERVICE OF NOTICES AND PROCESS	 	 	19	 
	26
	 	INTERPRETATION OF THIS AGREEMENT	 	 	20	 
	27
	 	GENERAL	 	 	20	 
	28
	 	FOREIGN CURRENCIES	 	 	21	 
	29
	 	DATA PROTECTION ACT 1998	 	 	21	 
	30
	 	LAW AND JURISDICTION	 	 	22	 
	31
	 	REGULATORY STATUS	 	 	22	 
	32
	 	ANNEXE OF DEFINITIONS	 	 	23	 

CRF1 — Standard terms and conditions — Version 1.1

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	1	 	INTRODUCTION
	 
	1.1	 	We provide a number of different facilities for financing the sales ledgers of our clients.
The Receivables Finance Agreement shows:

	 	1.1.1	 	whether you have our factoring or invoice discounting facility and whether such
facility is confidential or disclosed. Please note that;

	 	•	 	with our disclosed factoring facility we will operate your sales ledger and
directly collect the Debts from your Customers;
	 
	 	•	 	with our confidential factoring facility we will operate your sales ledger and
we will collect the Debts from your Customers without disclosing our involvement
except as permitted by these conditions;
	 
	 	•	 	with our disclosed invoice discounting facility you will operate the sales
ledger and collect the debts as our disclosed agent and trustee by obtaining
Remittances in our favour;
	 
	 	•	 	with our confidential invoice discounting facility you will operate the sales
ledger and collect the Debts as our agent and trustee without disclosing our
involvement except as permitted by these conditions;
	 
	 	•	 	at any time we can cancel your agency and/or give notice of our interest to
your Customers under any facility;

	 	1.1.2	 	whether we are financing Debts due by your UK Customers or by your overseas
Customers or a combination of both.
	 
	 	1.1.3	 	whether Debts are purchased on a recourse or a non-recourse basis; normally we
only purchase on a recourse basis so that you must bear the risk of unpaid debts and
unless stated to the contrary, these conditions are on this basis;
	 
	 	1.1.4	 	whether we are financing Debts expressed only in Sterling or in Approved Currencies;

	1.2	 	These conditions apply to all our facilities unless stated to apply (or not to apply) to a specific facility;
	 
	1.3	 	These conditions apply to all our clients however constituted, except where specified.
	 
	1.4	 	Certain words used in this document have special meanings which are explained in the Annexe
of Definitions at the end of this document. Their first letter is in capitals. Those which
only apply to a specific facility are so indicated.
	 
	2	 	START AND LENGTH OF RELATIONSHIP BETWEEN YOU AND US
	 
	2.1	 	Our Agreement with you starts on the Commencement Date and will run for a minimum period of
twelve (12) months. After the end of such minimum period our relationship with you will then
continue until ended by either you or us giving to the other notice of at least six (6) months
to expire at the end of a calendar month. Such notice may be given at any time, even during
the minimum period, provided it runs out on or after the end of the minimum period. During
any period of notice you must continue to comply with all your
obligations to us. However if all monies due to us shall not have been paid on or before the
termination date of such notice then any notice given by you shall be ineffective and this
Agreement will continue.
	 
	2.2	 	Should this Agreement end within such minimum period you must pay us a sum equal to the
shortfall between the amount of the minimum service fee that would have been earned had the
Agreement continued for the minimum period and the service fees actually earned from the
Commencement Date.
	 
	2.3	 	Should you wish to end this Agreement but give us notice of less than the minimum period of
notice we may still agree to your request, subject to an additional fee. For each month or
part of a month that your notice falls short of the minimum notice period the fee will be the
higher of:

	 	2.3.1	 	the monthly average of the service fees earned in the six calendar months (or from
the Commencement Date if within six calendar months) before we agree to accept your
request; or
	 
	 	2.3.2	 	one twelfth of the Minimum Service Fees for the twelve calendar months before we
agree to accept your request.

	2.4	 	We can also immediately end this Agreement by giving you written notice upon or at any time
after a Termination Event. If we end this

CRF1 — Standard terms and conditions — Version 1.0

 2 of 30

 

	 	 	agreement in this
way there will be no refund of
any fees or charges and any payable shall be immediately due.
	 
	3	 	OUR OWNERSHIP OF DEBTS, OFFERS AND NOTIFICATIONS
	 
	3.1	 	Our Agreement with you applies only to those Debts specified in the Receivables Finance
Agreement and which are created by you under whatever trading name or style you may ever carry
on business. We may alter, extend or reduce the scope of your facility to such Debts as we
agree with you.
	 
	3.2	 	Upon the terms and conditions of this Agreement you will sell and we will purchase with a
full title guarantee all your Debts which are owing to you at Commencement Date or which later
come into existence before this Agreement ends.
	 
	3.3	 	Unless you are an unlimited partnership or a sole trader then you now assign to us with full
title guarantee all Debts and their Related Rights which are in existence on the Commencement
Date or which come into existence at any time thereafter before the termination of this
Agreement. They shall vest automatically in us on the Commencement Date and thereafter upon
their coming into existence. You will include each such Debt on a Notification and ensure
that the Notification is received by us within seven days from the date of the invoice. Such
date must not be before the Goods are delivered. Such vesting will take place irrespective of
whether or not you Notify us of a Debt or even if you do not enter a Debt in your books.
	 
	3.4	 	If you are an unlimited partnership or a sole trader you will Offer to sell us all Debts and
their Related Rights in existence on the Commencement Date or which come into existence at any
time thereafter before the termination of this Agreement. We may, in our absolute discretion,
accept or refuse each Offer. We shall accept an Offer by debiting the Notified Value of the
accepted Debts to your Debtor Control Account in our books. Upon doing so our ownership of
the Debts that we have accepted shall be complete and the Debts thereby assigned to us. Where
more than one Debt is at the same time the subject of an Offer it shall be treated as an
independent offer to sell us each Debt so offered, which may be accepted or rejected by us
entirely at our discretion.
	 
	4	 	PURCHASE PRICE OF DEBTS
	 
	4.1	 	The Purchase Price of each Debt covered by this Agreement is to be the amount received by us
for the Debt but less:

	 	4.1.1	 	any prompt settlement discount later claimed by the Customer; and
	 
	 	4.1.2	 	any other deductions, abatements or set-offs later claimed by the Customer; and
	 
	 	4.1.3	 	the Early Payment Charge, the Service Fee and any Extended Service Fee; and
	 
	 	4.1.4	 	all other sums due to us.
	 
	 	4.1.5	 	The Purchase Price will be payable as soon as practicable after we receive cleared
funds for the Remittance discharging the Debt. However, at our discretion an Early
Payment may be possible if your Availability permits.

	4.2	 	(Additionally applicable only if you have our non-recourse facility) For each Protected Debt
for which no Remittance is received by us the Purchase Price shall be calculated and paid by
us in accordance with conditions 8.1 and 8.2.
	 
	5	 	LIMITS AND PERCENTAGES
	 
	5.1	 	We may set up a Funding Limit for each Customer. Initially the Default Funding Limit will
apply to all your Customers. Debts in excess of a Funding Limit will be Unapproved Debts. We
can change Funding Limits at any time or reduce them to zero. We can remove any Customer from
the Default Funding Limit or declare all Default Funding Limits of not effect. If, following
a reduction of a Funding Limit, the amount of Early Payments already made exceeds your
Availability, the excess must immediately be paid back to us.
	 
	5.2	 	Most of the starting Limits are stated in the Receivables Finance Agreement including the
Default Funding Limit. However, other Funding Limits and Credit Limits (non-recourse
facility) will be established by us on or after the Commencement Date. We may at any time
increase or decrease any of the Limits with immediate effect. We or our agents Coface will
tell you of these by written notice, oral advice or making the same available through our
Internet Service, effective even if no enquiry be made.
	 
	6	 	DECISIONS
	 
	6.1	 	We need not give reasons for any of our decisions and all decisions and information given by
us are confidential. You must treat

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	 	 	any information regarding Funding Limits and Credit
Limits (non-recourse facility) as legally privileged and will indemnify us against all claims
arising from breach of your duty of confidentiality. We do not operate as a credit reference
service so you must not take Funding Limits or Credit Limits as our view of the
creditworthiness or otherwise of a Customer.
	 
	6.2	 	(Applicable only to our facility for Export Debts) We may at any time remove any country,
territory, region or continent from the list of Approved Countries by written notice to you or
by making the same available to you through our Internet Service, even if no enquiry be made.
However, such removal or addition shall not affect Debts Notified to us prior to such notice
or making the same available.
	 
	6.3	 	(Applicable only to our facility for Approved Currencies) We may at any time remove a
currency from the list of Approved Currencies by written notice to you or by making the same
available to you through our Internet service, even if no enquiry be made. However, such
removal or addition shall not affect Debts Notified to us prior to such notice or making the
same available.
	 
	7	 	PROTECTION OF DEBTS
(Condition 7 is only applicable if you have our non-recourse facility)
	 
	7.1	 	Our associated company COFACE will be our agents for establishing and managing Credit Limits.
Any limit issued by them is to be treated as a Credit Limit under this Agreement. You must
comply with all their instructions and requirements. You must provide COFACE with all the
information about your Customers which we or they may require together with an indication of
the Credit Limits you want. COFACE will advise you of the Credit Limits that will apply until
further notice to the Notified Debts of those Customers. If the Credit Limit states that you
must obtain security then it is your responsibility to ensure that the security is valid and
enforceable. You must also comply with all other conditions under which a Credit Limit is
issued. If you fail to comply with any term, condition, obligation or procedure in this
Agreement or laid down by COFACE, we may change the status of a Protected Debt to an
Unprotected Debt without notice to you.
	 
	7.2	 	You must submit a request to COFACE for a Credit Limit if at any time you intend to enter
into a Sale Contract with any of the following and wish the resulting Debts to be Protected
Debts:

	 	7.2.1	 	a Customer who is not indebted to you at the Commencement Date;
	 
	 	7.2.2	 	a Customer for whom you consider the existing Credit Limit is less than the
expected Outstanding Debts of that Customer;
	 
	 	7.2.3	 	a Customer for whom a Credit Limit has previously been withdrawn or refused by
COFACE;
	 
	 	7.2.4	 	a Customer in respect of whom you have been required by COFACE to apply for a
revised Credit Limit.

	7.3	 	Debts within Credit Limits will be treated as Protected Debts in the order in which they are
Notified. Initial Debts can be Protected Debts.
	 
	7.4	 	At all times you must provide us and COFACE with all the information that we or they require.
Information must be true and accurate. If you later become aware of any change to the
information given or you have knowledge that a Customer is in financial difficulties or is
Insolvent, you must immediately tell us and COFACE and must not make any further deliveries
without our consent.
	 
	7.5	 	Any Credit Limit will only be valid for as long as the particulars submitted by you in
seeking such Credit Limit remain unchanged. Any alteration by you to your business, credit or
discount terms without our and COFACE’s prior written approval will automatically cancel any
Credit Limits given and the Debts within such cancelled Credit Limits shall rank as
Unprotected Debts.
	 
	7.6	 	We or COFACE may at any time establish, change, suspend or remove a Credit Limit with
immediate effect upon notice or making the same available through their on line system or
through our Internet Service (even if no enquiry be made) or upon despatching a written notice
about the same to you. Any Debts subsequently created or Notified will be so affected.
	 
	7.7	 	A Credit Limit previously given shall automatically be withdrawn without notice to you, if:

	 	7.7.1	 	the Customer prohibits the assignment of any Debt;
	 
	 	7.7.2	 	the Customer will not accept our ownership of Debts;
	 
	 	7.7.3	 	you are in breach of any of your obligations to us in respect of the Customer; or

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	 	7.7.4	 	you request us not to pursue collection procedures against the Customer.
	 	 
	 	Upon such withdrawal all Outstanding Protected Debts and all future Debts of that Customer
shall be treated as Unprotected Debts.

	7.8	 	Once we or you have issued legal proceedings for any Debt Outstanding, then the Credit Limit
for that Customer shall be withdrawn and you must not Deliver any further Goods without our
prior written consent.
	 
	7.9	 	A Credit Limit shall become ineffective if it
relates to a Debt

	 	7.9.1	 	arising from Goods Delivered after we or Coface have refused or cancelled a Credit
Limit;
	 
	 	7.9.2	 	arising from Goods Delivered after either you have Adverse Information about the
Customer or after the Customer has an Overdue Account;
	 
	 	7.9.3	 	arising from Goods delivered to an Insolvent Customer;

	7.10	 	Upon or at any time after a Termination Event, we can without notice withdraw any Credit
Limit and treat any Outstanding Protected Debts as Unprotected Debts. The exercise of this
entitlement shall be at our discretion. If this Agreement ends all Credit Limits previously
given shall automatically be withdrawn without notice and any Outstanding Debts thereupon
shall be Unprotected Debts.

	8	 	INSOLVENCY OF CUSTOMERS OR UNCOLLECTABLE DEBTS
(Condition 8 is only applicable if you have our non-recourse facility)
	 
	8.1	 	If, in respect of a Protected Debt which exceeds the threshold limit referred to in the
Receivables Finance Agreement, we decide that it is Uncollectable or if we are advised of both
the Insolvency of a Customer and that Debts totalling in excess of such threshold limit have
been accepted by the Customer’s Insolvency Practitioner as undisputed Debts then within
thirty (30) days thereof we will credit its or their Purchase Price to the Current Account.
This will be calculated by taking the value of such Outstanding Protected Debt and then
deducting:

	 	8.1.1	 	firstly the VAT included in such Debts;
	 
	 	8.1.2	 	secondly any First Loss;
	 
	 	8.1.3	 	thirdly the amount of any Recoveries;
	 
	 	8.1.4	 	fourthly the total of any expenses that you do not have to pay as a result of the
Insolvency or because the Debt is Uncollectable;
	 
	 	8.1.5	 	fifthly the greater of either the recourse percentage (stated in the Receivables
Finance Agreement) of its Notified Value or any minimum retention (stated in the
Receivables Finance Agreement) If a Customer due to pay an Unprotected Debt, including a
Debt outside a Credit Limit or included in
the deductions in clause 8.1, becomes Insolvent such Debt shall forthwith become an
Unapproved Debt.

	8.2	 	If a Protected Debt has been reassigned to you:

	 	8.2.1	 	you must use your best endeavours to recover payment of the Debt (including any
dividend from the estate of the Customer);
	 
	 	8.2.2	 	we may complete and lodge in your name any claim, proof or statement of Debt in
the Insolvency of the Customer; and
	 
	 	8.2.3	 	you will pay to us any future sums (after deduction of any portion representing
VAT) which you recover in respect of such Protected Debt and until paid to us you will
hold such sums in trust for us.

	9	 	DISPUTES
	 
	9.1	 	If any Customer disputes a Debt or his liability to pay us by its due date or asserts any
counterclaim or claim for reduction of or retention or set-off against a Debt (except for a
settlement discount not exceeding 5%), then:

	 	9.1.1	 	you must promptly give us full details; and
	 
	 	9.1.2	 	you must do your best to settle all such disputes and claims promptly and directly
with your Customers; but
	 
	 	9.1.3	 	we may also settle or compromise (or require that you should settle or compromise)
disputes on such terms as we may decide in our absolute discretion and you will be bound
by such compromise;
	 
	 	9.1.4	 	the Disputed Debt shall forthwith become an Unapproved Debt and any Protected Debt
subject to a Dispute shall forthwith become an Unprotected Debt.

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	9.2	 	If we become aware that a Customer is disputing a Debt or his ability to pay by its due date,
we will normally, but need not, send you a notice called a “dispute notice”. You must resolve
the dispute within the period which we will tell you in such notice. The Debt will be an
Unapproved Debt and an Unprotected Debt whilst we await evidence satisfactory to us that the
dispute has been resolved.
	 
	9.3	 	You must promptly raise a credit note if a Customer is entitled to one. Unless we have
brought condition 9.4 into effect you must immediately deliver the credit note to the Customer
and include its details on your next Credit Note Listing. You will put such notice on the
credit note as we specify and it will be credited to the Debtors Control Account.
	 
	9.4	 	We may at any time tell you either that no credit notes can be despatched to your Customers
without our prior consent or that any credit notes must be sent to us for our consent before
we then despatch them.
	 
	9.5	 	Conditions 9.1 to 9.4 shall not affect those rights which we may have because you may have
breached this Agreement.
	 
	10	 	OUR ACCOUNTS
	 
	10.1	 	We will keep these accounts to reflect the arrangements under the Agreement:

	 	10.1.1	 	Debtors Control Account;
	 
	 	10.1.2	 	Current Account
	 
	 	10.1.3	 	individual Customer’s sales ledgers (factoring);

	10.2	 	To the Debtors Control Account there will, amongst other things, be:

	 	10.2.1	 	credited the following items

	 	•	 	the Notified Value of Credit Notes
	 
	 	•	 	the Notified Value of Debts subject to Repurchase
	 
	 	•	 	the Notified Value of any allowance made to the Customer
	 
	 	•	 	the Notified Value of Protected Debts where the Debtor is Insolvent or the
Debt is Uncollectable
	 
	 	•	 	Remittances

	 	10.2.2	 	debited the following items

	 	•	 	the Notified Value of Debts
	 
	 	•	 	refunds to Customers

	10.3	 	To the Current Account there will, amongst other things, be:

	 	10.3.1	 	credited the following items

	 	•	 	Remittances
	 
	 	•	 	the Purchase Price of Protected Debts where the Debtor is Insolvent or the
Debt is Uncollectable.
	 
	 	•	 	monies paid by you to us
	 
	 	•	 	refunds and credits from us to you

	 	10.3.2	 	debited the following items

	 	•	 	all fees and charges made by us to you
	 
	 	•	 	the Early Payment Charge
	 
	 	•	 	Early Payments
	 
	 	•	 	other payments to you
	 
	 	•	 	refunds to Customers
	 
	 	•	 	VAT on our fees and charges

	10.4	 	To each individual Customer’s sales ledger (factoring) there will, amongst other things, be

	 	10.4.1	 	credited the following items

	 	•	 	the Notified Value of Credit Notes
	 
	 	•	 	the Notified Value of Debts upon Repurchase
	 
	 	•	 	the Notified Value of any allowance granted to the Customer
	 
	 	•	 	Remittances
	 
	 	•	 	the Purchase Price of Protected Debts if the Debtor is Insolvent or the Debt is Uncollectable

	 	10.4.2	 	debited the following items

	 	•	 	the Notified Value of Debts
	 
	 	•	 	payments made to Customers

	10.5	 	To all our accounts we may debit or credit Adjustments and such other items as may be necessary.
	 
	10.6	 	The Early Payment Charge will accrue from day to day on the debit balance on the Current
Account and such charge will be debited to the Current Account on the last Day of each month.
	 
	10.7	 	If any information sent with your Offer or Notification is incomplete or missing we may
reverse the entry of, or refuse to enter, the Debt in our books.
	 
	10.8	 	You may draw monies from us provided that the amount taken does not exceed the lesser of
either your Availability or the Maximum Funds in Use stated in the Receivables Finance
Agreement. Your Availability will immediately be affected if any Approved Debt is later
designated as an Unapproved Debt. If the amount drawn by you exceeds either the Maximum Funds
in Use or your Availability then you must immediately pay the excess to us without our having
to ask you.

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	10.9	 	We cannot permit you to draw any monies from us whilst any steps are under way towards your
Insolvency.
	 
	10.10	 	We may at any time add together the balances on all accounts recording transactions between
you and us. We may also at any time apply or set-off any amounts owing by you to us or the
amount of Your Responsibility against any amounts owing by us to you and for such purposes
where any amounts due by you to us, including those prospectively and contingently due, cannot
immediately be found out then we may make a reasonable estimate.
	 
	10.11	 	We will provide you with statements of the Debtors Control Account, and the Current Account.
These shall be treated as correct and binding upon you, except for those errors which shall
be obvious or contrary to law or where we receive your written notice within ten (10) days of
our despatch of such statements to you or making the same available to you via our Internet
Service.
	 
	10.12	 	You will accept a certificate signed by our Company Secretary or a director of ours as to
all or any of the following on the date referred to in the certificate:

	 	10.12.1	 	the balance on any account;
	 
	 	10.12.2	 	any loss or damage suffered by us;
	 
	 	10.12.3	 	the amount or Your Responsibility;
	 
	 	10.12.4	 	any other amount payable to us.

	 	 	In any proceedings such certificate shall be conclusive evidence as to the balance, loss,
damage or amount on the date so certified.
	 
	10.13	 	If we ask you to do anything which you are obliged to do under this Agreement you will have
to pay all costs and expenses of doing so. If you do not carry out anything which we have a
right to ask for then we may do it and you will pay all our costs and expenses.
	 
	10.14	 	All payments due from you to us shall be made as they fall due in immediately available
funds free and clear of any right of retention, set-off or counterclaim or any other
withholding or deduction. If you are required by law to make any withholding or deduction,
you will pay such additional sum as is needed so that we receive the full amount due to us
under this Agreement.
	 
	10.15	 	Where we receive a Remittance and there is no allocation to specific Debts by you or the
Customer or any other party either before or at the time of its receipt by us then we shall be
entitled to apply the unallocated portion in satisfaction of such Debts as we may decide; we
may likewise apply any payment made generally on account.
	 
	11	 	CHARGES FEES AND INDEMNITIES
	 
	11.1	 	Our services are subject to the following fees and charges payable by you:

	 	11.1.1	 	the Arrangement Fee
	 
	 	11.1.2	 	the Early Payment Charge
	 
	 	11.1.3	 	the Service Fee, which is subject to the Minimum Service Fee
	 
	 	11.1.4	 	the Extended Service Fee
	 
	 	11.1.5	 	the Annual review Fee
	 
	 	11.1.6	 	the Excess Facility Fee
	 
	 	11.1.7	 	the Tariff Fees

	11.2	 	The Early Payment Charge will be calculated on the debit balance on the Current Account but
adjusted so that

	 	11.2.1	 	monies received by us are ignored until four (4) Working Days after we enter the
respective receipt on our accounts.
	 
	 	11.2.2	 	any monies paid to you by CHAPS shall attract Discount for an additional three (3)
Working Days;
	 
	 	11.2.3	 	Discount shall be applied to reflect the additional clearance time needed for
Remittances drawn on a bank outside England and Wales or in a foreign currency;

	 	 	Any entry on the Current Account will affect the Early Payment Charge. The Early Payment
Charge will be debited in accordance with clause 10.5.
	 
	11.3	 	If the Service Fee is based on the value of each Notified Debt we will debit this to the
Current Account when we receive your Offer or Notification. If the Service Fee is a fixed
amount we will debit this at the start of the relevant period. No refund of any service fees
can be made either if a credit note is issued or if this Agreement ends.
	 
	11.4	 	If the Receivables Finance Agreement provides for a Minimum Service Fee then this will apply
to each twelve month period from the first day of the month after the Commencement Date. You
will pay us a charge equivalent to any shortfall between the total of all service fees
received by us in that period and such Minimum Service Fee. Such shortfall shall be
calculated and debited to the Current Account monthly on a proportional basis with any
necessary adjustment being made regularly as and when required and on the date of termination
of this Agreement.
	 
	11.5	 	If at the end of the Funding Period a Debt remains Outstanding then you will thereafter pay
us an Extended Service Fee whilst the Debt remains Outstanding. This does not

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	 	 	apply to a
Protected Debt (non-recourse) nor to a Debt which whilst it remains subject to any protection
under a credit insurance policy with COFACE where you are the insured.
	 
	11.6	 	Payments to you will be made by BACS or CHAPS or such other method we may at any time advise
you. Payments by CHAPS will be subject to the appropriate Tariff Fee. Additionally you will
reimburse us for all charges made to us by our bankers, including but not limited to those
for:

	 	11.6.1	 	dealing with dishonoured Remittances;
	 
	 	11.6.2	 	collecting any Remittances in a currency other than Sterling;
	 
	 	11.6.3	 	collecting Remittances in Sterling drawn on a bank outside the United Kingdom;
	 
	 	11.6.4	 	making any payment in a currency other than Sterling;
	 
	 	11.6.5	 	making any payment outside the United Kingdom;
	 
	 	11.6.6	 	maintaining any trust account.

	11.7	 	If we make special visits to your premises or anywhere else then you will pay all our costs
and expenses; except where these are part of our regular audit programme
	 
	11.8	 	You will fully indemnify us against and we shall be entitled to require advance security for
all losses, costs, demands, disbursements, fees and expenses of:

	 	11.8.1	 	obtaining the release of Debts from charges, trusts or other encumbrances or enforcing
such release;
	 
	 	11.8.2	 	assignments or reassignments of Debts or Related Rights or giving notices of assignment
or reassignment;
	 
	 	11.8.3	 	taking guarantees or indemnities from any person, including a receiver;
	 
	 	11.8.4	 	enforcing either this Agreement against you or any other party or any guarantee or
indemnity given in respect of it;
	 
	 	11.8.5	 	all matters arising from any breach by you of this Agreement or the occurrence of a
Termination Event;
	 
	 	11.8.6	 	dealing with disputes by Customers;
	 
	 	11.8.7	 	any Customer failing to pay a Debt to us at its full Notified Value by end of the
Funding Period, unless (non-recourse facility only) it is a Protected Debt either unpaid
solely for reason of the Customer’s Insolvency or which we determine to be Uncollectable;
	 
	 	11.8.8	 	credit reference agency fees;
	 
	 	11.8.9	 	appointing investigating accountants and/or lawyers;
	 
	 	11.8.10	 	having to refund a Customer under a direct debit guarantee given by us;
	 
	 	11.8.11	 	collecting any Remittance in your favour or that of any third party which is marked
“account payee” or which is otherwise restricted in its collectability;
	 
	 	11.8.12	 	failing to fulfil your obligations and conditions under this Agreement;
	 
	 	11.8.13	 	in making any payment based upon false or substantially incomplete information given
by you, including prior to this Agreement or when applying for any Limit;
	 
	 	11.8.14	 	collecting or attempting to collect any Debt (except a Protected Debt under a
non-recourse factoring facility) from the moment that we threaten proceedings, including:

	 	(i)	 	our own internal costs, expenses and court fees;
	 
	 	(ii)	 	those of any solicitor or agent including COFACE engaged by us
to collected Debts;
	 
	 	(iii)	 	those payable to any other party to the proceedings.

	 	 	 	(If you have our non-recourse facility) On a pro rata basis we will share with you
the charges, costs, expenses and fees referred to in this sub clause 11.8.12:

	 	(a)	 	where the claim involves both Protected and Unprotected Debts;
or
	 
	 	(b)	 	if you are responsible to us for a First Loss or a Recourse
Percentage in respect of the Protected Debts of that Customer.

	11.9	 	We can at any time give you one month’s notice of any increase in any or all of the Tariff
Fees or any other fees or charges. If you are dissatisfied with the proposed increase you may
then serve notice on us to end this Agreement in accordance with clause 2.1 provided that you
give such notice before the increase becomes effective. Until the Agreement ends in
accordance with such notice from you the increase shall not be effected.

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	11.10	 	VAT, if applicable, will be added to all fees and charges quoted by us.
	 
	12	 	REPURCHASES AND REPAYMENTS
	 
	12.1	 	We may at any time require you to Repurchase Unapproved Debts from us. We will continue to
own all such Debts until we receive the price for all Repurchases. At this point we shall
transfer them back to you. Afterwards we shall account to you for any further sums received
by us from your Customers in respect of such Debts.
	 
	12.2	 	You will forthwith on demand repay to us any monies paid to you if:

	 	12.2.1	 	it subsequently appears that they should not have been paid to you; or
	 
	 	12.2.2	 	a Protected Debt is not admitted to rank for payment in the Insolvency.

	13	 	NOTICES TO CUSTOMERS
	 
	 	 	(If you have a disclosed factoring or invoice discounting facility) Notice to each Customer
that we are the owner of the Debts must appear on each invoice and all copies. If we ask you,
you will also give a general notice to each Customer that we own all your present and future
Debts. We will tell you the wording of the notices which we can also give on your behalf and
at your expense.
	 
	14	 	CUSTOMERS’ ACCOUNTS AND DEBT COLLECTIONS
	 
	14.1	 	(Condition 14.1 is only applicable if you have our factoring facility)

	 	14.1.1	 	Under this Condition 14.1 we will act in our name if you have our disclosed factoring
facility. We will act in your name if you have our confidential factoring facility.
	 
	 	14.1.2	 	We alone shall be entitled to collect and enforce payment of Debts in whatever way we
see fit, and you must ensure that Customers pay all their Debts to us (disclosed) or by
Remittances in our favour to our address (confidential factoring) or as we direct,
including by direct debits.
	 
	 	14.1.3	 	We will maintain your Customers’ accounts in the form of a sales ledger.
	 
	 	14.1.4	 	In our absolute discretion we can at any time grant time or other indulgence to any
Customer and compromise claims with Customers or accept payment from a Customer which is
less than the Notified Value of the Debt without discharging you from your obligations to
us
	 
	 	14.1.5	 	If any Customer refuses or fails to pay an amount in settlement of a Debt up to that
shown in the Receivables Finance Agreement as the shortfall amount, that amount shall be
treated as an Unapproved Debt. We will send you a notice called a “shortfall notice”,
which you must treat as our demand for you immediately to Repurchase the Debt for the
amount shown.
	 
	 	14.1.6	 	Upon request you must help us to collect Debts, whether or not we have to issue legal
proceedings against Customers. In our absolute discretion we may start, defend or
compromise any legal proceedings and you will be bound by our actions and decisions. The
proceedings may be in our or your name if you have our disclosed facility or in your name
if you have our confidential facility. You will give us all evidence that we may at any
time need, whether before, during or after any proceedings. You will make sure that
those witnesses we need will attend court. We may at any time use an alternative dispute
resolution procedure involving mediation or arbitration.
	 
	 	14.1.7	 	If you request us not to issue or continue with proceedings for a Debt, we may agree to
your request but shall not be obliged to do so. If we do agree then the Debt will
immediately become an Unapproved Debt and/or an Unprotected Debt.
	 
	 	14.1.8	 	We can repay to a Customer any credit balance shown on their account.
	 
	 	14.1.9	 	In most cases we will engage the services of a Group Company as our agent for
exercising our rights under this Condition 14 who may issue proceedings in your, our or
their name.

	14.2	 	(Condition 14.2 is applicable only if you have our invoice discounting facility)

	 	14.2.1	 	We alone shall have sole and absolute discretion as to how to collect and enforce
payment of Debts. We can do this in whatever way we see fit. Until we exercise our

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	 	 	 	rights under condition 14.2.5 you must, at your expense, collect Debts and manage
Customers’ accounts for us as our undisclosed agent. You are not our agent for any other
purpose. If the agreement provides for a confidential invoice discounting facility you
do not have to disclose to your Customers that Debts have been Assigned to us. If the
Agreement provides for a disclosed invoice discounting facility you will give notice of
Assignment to your customers but direct them to send Remittances in our favour but to
your address.
	 
	 	14.2.2	 	Throughout the term of this Agreement you must ensure that all Debts are promptly and
correctly recorded in your Accounting Records and that your sales ledger control bears a
conspicuous notation that Debts have been sold and assigned to us.
	 
	 	14.2.3	 	During your agency we may communicate with Customers for the purposes of Debt
verification.
	 
	 	14.2.4	 	You must act promptly and efficiently when carrying out your duties as our agent.
	 
	 	14.2.5	 	We may at any time vary the terms of your agency or terminate it as we see fit. If we
so request you will give notice to each Customer that we are the owner of all your
present and future Debts and that payment must be made direct to us. We will tell you
the wording of the notice which we can also give on your behalf. Unless we state
otherwise, such request will act as a cancellation of your agency, whereupon we alone
shall be entitled to collect and enforce payment of all Debts in whatever way we see fit.
You will fully co-operate with us and, as we direct, will help us to collect Debts.
	 
	 	14.2.6	 	After the cancellation of your agency conditions 14.3.1 to 14.3.7 will also apply.

	14.3	 	After the cancellation of your agency;

	 	14.3.1	 	you must not say you are our agent;
	 
	 	14.3.2	 	you must immediately send us your Accounting Records to do with Debts;
	 
	 	14.3.3	 	we will maintain your Customers’ accounts in the form of a sales ledger;
	 
	 	14.3.4	 	you must ensure that Customers pay all their Debts to us or as we direct including by
direct debits;
	 
	 	14.3.5	 	increase the Service Fee to ten per cent (10%) of the Notified Value of Debts then
Outstanding or subsequently Notified;
	 
	 	14.3.6	 	increase the Early Payment Charge percentage by two per cent (2%);
	 
	 	14.3.7	 	clauses 14.1.3 to 14.1.9 will then apply;
	 
	 	14.3.8	 	the increases under clauses 14.3.5 and 14.3.6 do not give you any rights under clause 11.9

	15	 	TRUSTS AND OTHER RIGHTS
	 
	15.1	 	From the moment that you receive any Remittance, you will hold it absolutely in trust for us.
We may give notice to anyone that such trust exists.
	 
	15.2	 	When you receive a Remittance you must;

	 	15.2.1	 	immediately hand over to us the identical Remittance or pay it into our bank account or
into a trust account for our benefit;
	 
	 	15.2.2	 	not pay it into any other account or deal with or negotiate it;
	 
	 	15.2.3	 	give us any advice received with it.

	15.3	 	A trust bank account must be run according to our instructions. This means that you must
irrevocably appoint our officers as the only persons authorised to undertake transactions on
the account.
	 
	15.4	 	You must give us a letter addressed to your bankers instructing them to transfer to our
bankers any cheques, bank giro transfers, BACS, CHAPS and other electronically transferred
funds that may be received by your bank from Customers. You will not be able to cancel such
instructions. You must indemnify our bankers so they can collect the proceeds of any
Remittances payable to you or your agents.
	 
	15.5	 	If we do not become the owner of any Debt or its Related Rights covered by this Agreement for
any reason then you will hold such Debt or its Related Rights on trust for us free from all
encumbrances.
	 
	15.6	 	You must promptly tell us about all Returned Goods. We may require you to set these aside
marked with our name as the owner. You will then deliver them to us, or deal with them as we
direct. We can, without notice, enter any premises where we believe Returned Goods or

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	 	 	any
other items comprised in the Related Rights are kept. We can take possession of or sell any
Returned Goods on such terms and at such prices as we consider appropriate. We shall credit
the net proceeds towards the discharge of the relative Debts. If we ask, you will deliver to
us or allow us to take away any other items included in the Related Rights which we may deal
with as we see fit.
	 
	16	 	YOUR UNDERTAKINGS TO US
	 
	16.1	 	Whilst this Agreement is in force and then until we have been paid all monies owing to us
(including by you and by Customers) you undertake:

	 	16.1.1	 	to ensure that all invoices are raised and sent to Customers within seven (7) days of
Goods being Delivered and that we are Notified within the same period;
	 
	 	16.1.2	 	to make sure the payment and settlement discount terms for each Debt and any rights of
retention, abatement or rebate are not more generous than those appearing in the
Receivables Finance Agreement and that these appear on every invoice and all copies;
	 
	 	16.1.3	 	not to cancel or vary any Sale Contract or any payment terms or settlement or discounts
after Delivery unless you have our written consent;
	 
	 	16.1.4	 	to make sure that every Sale Contract shall:

	 	•	 	only be made in the ordinary course of your business stated in the Client
particulars in the Receivables Finance Agreement;
	 
	 	•	 	be subject to the law of one of the jurisdictions within the United Kingdom,
other than the Channel Islands or the Isle of Man;
	 
	 	•	 	provide for payment by the Customer in Sterling or (if you have our Foreign
Currency Facility) in an Approved Currency;
	 
	 	•	 	not include any prohibition against assignment of the Debt;

	 	16.1.5	 	to make sure that neither you nor any Associate enters into any other agreement for the
factoring, charging, declaring in trust or discounting of Debts with any other party or
into any arrangement prejudicial to our outright ownership of Debts;
	 
	 	16.1.6	 	to tell us immediately you know about the following:

	 	•	 	any change or contemplated change in the directors or partners or the control
or ownership of your company, firm or business or of any guarantor or indemnifier
of your obligations to us;
	 
	 	•	 	any threatened or pending insolvency proceedings against you, or against any
guarantor, indemnifier or Associate;
	 
	 	•	 	all Adverse Information about a Customer and any changes in the status,
address or creditworthiness of a Customer;
	 
	 	•	 	any security holder taking any steps towards or actually enforcing its
security over any part of your assets or undertaking;
	 
	 	•	 	any floating charge given by you being crystallised or becoming converted into
a fixed charge;
	 
	 	•	 	all retrospective or quantity discounts agreed with Customers;
	 
	 	•	 	any payment or settlement discount terms different from those shown in the
Receivables Finance Agreement;
	 
	 	•	 	any rights of set-off or counterclaim that Customers may have or seek to
raise;
	 
	 	•	 	any Adjustments;

	 	16.1.7	 	immediately we ask;

	 	•	 	all retrospective or quantity discounts agreed with Customers;
	 
	 	•	 	to provide information about your Customers;
	 
	 	•	 	to give evidence satisfactory to us of any order and the completion of any Sale contract;
	 
	 	•	 	to exercise any reservation of title to Goods in the Sale Contract;

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	 	•	 	to deliver to us and not to your Customer the originals of any of the items
comprised in the Related Rights, together with as many copies as we may require;
we may forward these to the Customer or other persons or organisations as
appropriate at your expense;

	 	16.1.8	 	not to Notify us, until we tell you, any Debt which shall;

	 	•	 	be due by an Associate;
	 
	 	•	 	include a claim for interest for late payment or any penalties or damages;
	 
	 	•	 	arise from Goods supplied by you on approval, trial, evaluation, consignment,
sale or return or similar terms
	 
	 	•	 	be due by a Customer who has not purchased the Goods for his business;
	 
	 	•	 	be regulated by the Consumer Credit Act 1974;
	 
	 	•	 	arise from the sale of your capital or fixed assets;
	 
	 	•	 	be due in a currency other than Sterling (unless you have our Foreign Currency
Facility);
	 
	 	•	 	(Applicable only if you have our Export Debts facility) be dischargeable
wholly or in part by letters of credit;
	 
	 	•	 	due under a Sales Contract under which payment is to be received before the
Goods are Delivered or under a Cash Against Documents Sale;
	 
	 	•	 	due under a Sale Contract with any ministry or department of the Government of
the United Kingdom, or of Scotland, Wales, Northern Ireland, the Channel Islands
or the Isle of Man; or of any foreign government;
	 
	 	•	 	be evidenced by an invoice addressed to a Customer outside any Approved
Countries;
	 
	 	•	 	be within a category of such other debts as we may specify;

	 	16.1.9	 	immediately to cease and desist from any contra accounting arrangements with your Customers;
	 
	 	16.1.10	 	not to Notify us of any Debt until the Goods have been Delivered;
	 
	 	16.1.11	 	to keep us advised of the identity of your Associates;
	 
	 	16.1.12	 	promptly to perform all your further and continuing obligations to a Customer and, if
we ask, to give evidence of such performance;
	 
	 	16.1.13	 	to create such security in our favour on your undertaking and assets as we may specify
for your performance of this Agreement, or in respect of Debts intended to be owned by us
but which for any reason fail to belong to us;
	 
	 	16.1.14	 	to sign any additional documents and do anything we may need to exercise or enforce
our rights, to sign assignments of Debts or Related Rights or endorse or Assign any
instrument or security
included in the Related Rights; any such assignment of a Scottish Debt or any of its
Related Rights will support the assignment given in condition 3 but will not prejudice
that earlier assignment;
	 
	 	16.1.15	 	to follow our guidelines for the day to day efficient working of this Agreement;
	 
	 	16.1.16	 	to make sure that your warranties about Debts are complied with until they are
discharged;
	 
	 	16.1.17	 	to take all steps we may require for the protection of our interests under or arising
out of this Agreement and in mitigating any loss we may suffer and to use all reasonable
endeavours to preserve our rights against both Customers and third parties;
	 
	 	16.1.18	 	to make sure that in relation to your sole trader and unlimited partnership Customers
your processing of information about them (including any transfers to us) complies in all
respects with the Data Acts, and is accurate;
	 
	 	16.1.19	 	to advise us promptly should you receive any notice or allegation of non-compliance
with the Data Acts;
	 
	 	16.1.20	 	to advise us promptly of all changes made to information transferred to us if you
receive a request from a Data Subject;
	 
	 	16.1.21	 	to permit us to advise your sole trader and unlimited partnership

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	 	 	 	Customers about your
disclosure of information about them to us and the use we will make of such information,
including making searches with our credit reference and fraud prevention agencies;
	 
	 	16.1.22	 	(Non-Recourse Facility only) to comply with all the requirements advised by us to you
of any credit insurance policy that we may effect in our name covering Debts vested in us
hereunder to the extent that such compliance can be effected by you;
	 
	 	16.1.23	 	(where the Receivables Finance Agreement requires you to effect a Credit Insurance
Policy) to comply with the credit insurance policy and to ensure that we are made loss
payees or joint insured (as we may determine) and to pay all renewal premiums, make all
declarations and to produce the premium receipts to us forthwith upon each renewal.

	17	 	YOUR WARRANTIES TO US
	 
	17.1	 	By Notifying us of a purported Debt you will be treated as having given all of the following
warranties to us in relation to it:

	 	17.1.1	 	all the particulars Notified to us are correct and complete and the Debt has not been
previously Notified to us;
	 
	 	17.1.2	 	each Debt relates to an actual and bona fide sale and Delivery has taken place in
accordance with the Sale Contract;
	 
	 	17.1.3	 	the Debt is one to which this Agreement applies and is payable in the UK by a Customer
with an established place of business in the UK or (or if you have an Export Debts
Facility) in an Approved Country.
	 
	 	17.1.4	 	you have the absolute right to transfer the Debt to us and, except in our favour, it is
shall remain free from any security, charge, trust, option, pledge, hypothecation,
encumbrance, lien or any tracing rights adversely affecting the Debt, the Goods or the
proceeds;
	 
	 	17.1.5	 	our ownership of the Debt will not violate any laws or agreement affecting you;
	 
	 	17.1.6	 	the Notified Value of the Debt is the same as its Contracted Value;
	 
	 	17.1.7	 	you have complied and will continue to comply with all terms, conditions and approvals
under any credit insurance policy affecting the Debt and whether issued by COFACE or any
other credit insurer and whether issued to you or us but where the policy has been issued
to us such warranty applies only to such terms, conditions and approvals about which you
may be advised);
	 
	 	17.1.8	 	all sums due or obligations by you to the Customer have been paid or performed and you
will have no other obligations towards the Customers which could reduce the amount
payable to us for the Debt;
	 
	 	17.1.9	 	no right or claim of rescission, defence, adjustment or other right or claim exists or
will arise to reduce or extinguish the Notified Value of the Debt or affect our ability
to collect the Debt at its full Notified Value without any retention, set-off or
counterclaim;
	 
	 	17.1.10	 	the correct name and address of the Customer and any required purchase order number
appear on the invoice or credit note, on any documents supplied evidencing the Debt and
all correspondence;
	 
	 	17.1.11	 	our Customer account number appears on the Offer, Notification or Client Note Listing;
	 
	 	17.1.12	 	the Customer has obtained all the consents and certificates necessary in order to pay
the Debt to us;
	 
	 	17.1.13	 	the invoice or credit note identifies the currency for payment as Sterling or (if you
have our Foreign Currency Facility) an Approved Currency;
	 
	 	17.1.14	 	the Customer has all unconditional authorities, licences and permits necessary for him
lawfully to purchase the Goods and to pay for them by their due date for payment;
	 
	 	17.1.15	 	(Applicable only if you have our Export Debts facility) where the Debt is an Export
Debt you will be treated as additionally warranting to us that;

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	 	•	 	the Debt is payable by a Customer with an established place of business in the
country to which the invoice is addressed, (such country being an Approved
Country) and without any set-off or counterclaim;
	 
	 	•	 	the exportation of the Goods does not breach the laws of the United Kingdom or
any other country or territory;

	 	17.1.16	 	you have complied with all your undertakings to us which should have been performed
prior to Notification of the Debt have been performed.

	17.2	 	You warrant that prior to entering into this Agreement you have disclosed to us every fact or
matter known to you or which you should have reasonably known might influence us in our
decision whether or not;

	 	17.2.1	 	to enter into this Agreement on these terms; or
	 
	 	17.2.2	 	to accept any person as a guarantor or indemnifier of your obligations to us.

	17.3	 	You will immediately tell us of anything which might reasonably influence our decision to
continue with this Agreement on these terms. You will also immediately tell us of any change
in the information given to us
before entering into this Agreement, particularly in the nature of your basis, the scope of
your activities or your legal status.

	18	 	INTERNET SERVICE
	 
	18.1	 	We will provide you with our Internet Service. You will provide all computer equipment
required at your premises and will keep this equipment virus free and suitable for use. We
shall have no responsibility for any damage, loss or corruption of your data, software or
equipment caused through the loading or operation of our Software.
	 
	18.2	 	You undertake:

	 	18.2.1	 	to use your best endeavours to keep such equipment free from any Equipment Defect or
Transmission Defect and to make suitable contingency arrangements to cover any such
defect or the withdrawal or suspension of our Internet Service;
	 
	 	18.2.2	 	immediately to load and use any Software updates which we may provide;
	 
	 	18.2.3	 	to keep secret and confidential the method of operation of our Internet Service, the
Software and all access data and security procedures and to tell us promptly if any
contravention is known or suspected;
	 
	 	18.2.4	 	on a weekly basis or more frequently if we tell you, to make back up copies on disk of
your sales ledger records, including invoices and credit notes, and to securely store
such copies away from your premises for at least four (4) months, and to advise us of
their location.

	18.3	 	You will have a non-transferable licence to use the Software. We own all rights in the
Software. You may not copy it without our prior written consent, except one copy solely for
back-up purposes.
	 
	18.4	 	You and we undertake to each other;

	 	18.4.1	 	to use all reasonable endeavours to ensure that each Transmission is completely and
correctly sent;
	 
	 	18.4.2	 	to tell the other promptly if either is aware of any Equipment Defect or Transmission
Defect and to co-operate with the other to remedy it;
	 
	 	18.4.3	 	to maintain appropriate records in support of Transmissions and to ensure that our
Internet Service is not accessible to unauthorised persons.

	18.5	 	We will maintain a Transmission Log which shall, in the absence of manifest error, be
conclusive proof and evidence of the Transmission sent or received by us.
	 
	18.6	 	We may rely upon any Transmission ostensibly sent by you even though it may be sent without
your authority. We may also rely upon any Transmission sent through your agent or
intermediary.
	 
	18.7	 	We may without notice suspend, withdraw or reactivate the operation of our Internet Service.
	 
	18.8	 	We shall have no responsibility to you for any loss or damage as a result of any failure or
delay in complying with our obligations in connection with our Internet Service, including
that arising from any:

	 	18.8.1	 	Equipment Defect or Transmission Defect;
	 
	 	18.8.2	 	suspension or withdrawal of our Internet Service;
	 
	 	18.8.3	 	act or omission of any third party or abnormal operating conditions;
	 
	 	18.8.4	 	failure to process any Transmission to our internal systems.

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	18.9	 	Please note that any information available from our Internet Service may only be accurate to
an earlier point in time. In particular any request by you for a payment based upon any
Availability shown may not be actioned by us as further information becomes available.
	 
	18.10	 	You and we will give each Transmission the same status as if it had been in writing, signed
on behalf of the sender and physically delivered to the recipient, unless the Transmission can
be shown to have been corrupted as a result of technical failure. Transmissions shall be
treated as satisfying any legal requirement for a communication to be in writing. You waive
any rights to challenger the validity of any Transmission on the ground that it was prepared
and/or sent and/or received only in electronic form.
	 
	18.11	 	If you are an unlimited partnership or sole trader a Transmission regarding Debts shall be
treated as including the following words:

	 	 	 	“In accordance with the Receivables Finance Agreement between, Coface Receivables
Finance Limited and me/us the Debts referred to in this Transmission shall be
considered as being subject to an Offer. I/we confirm that all the warranties and
undertakings contained in the Agreement relating to Debts and their Related Rights have
been complied with and in particular the goods have been delivered and/or the services
have been completely performed. Where I/we have a disclosed facility I/we certify that
the original invoices have been sent to the Customers with notice of assignment in the
form stipulated by you. If for any reason any of these Debts and their Associated
Rights have failed to vest in you under the Agreement or following the Offer, we hereby
absolutely assign the same to you.”

	19	 	INFORMATION FOR US
	 
	19.1	 	You must give us a signed copy of your full set of accounts, including your directors’ or
partners’ (as the case may be) and auditors’ report or such other financial reports as we
request, for each of your accounting reference periods (as defined in the Companies Act 1985).
You must give us these items as soon as you have them, which must be no later than six months
from the end of each accounting period.
	 
	19.2	 	You must give us your management profit and loss account and balance sheet at such intervals
as we tell you. You will also give us such other financial reports that we may ask for and
you will ensure that your auditors or external accountants report to us directly any
information we require. If we ask you will provide us with a copy of your partnership
agreement and any amendments if you are a limited liability partnership.
	 
	19.3	 	You will let any employee, representative or agent of ours enter any of your business
premises or locations under your control in order to:

	 	19.3.1	 	inspect Goods, stocks, Sale Contracts and evidence of their performance;
	 
	 	19.3.2	 	verify, check, remove or at our option be provided with copies certified by a solicitor
of all Accounting Records.

	19.4	 	We may at all times rely upon any signature, act or communication of any person purporting to
act on your behalf and the same shall be binding upon you.
	 
	19.5	 	(If you have our invoice discounting facility) You will provide us by the monthly returns
date specified in the Receivables Finance Agreement with;

	 	19.5.1	 	an aged analysis of Debts on the basis specified in condition 19.6 and correct to the
last date of the preceding month and identifying those Customers’ accounts which are
either in dispute or have been passed to solicitors, debt collectors or other third
parties for collection,
	 
	 	19.5.2	 	copy Customers’ statements for the last day of the preceding month;
	 
	 	19.5.3	 	a sales ledger control in the format we tell you reconciled to the aged analysis of Debts;
	 
	 	19.5.4	 	a copy of your purchase ledger up to the last day of the preceding month;
	 
	 	19.5.5	 	your sales ledger control in the format we tell you reconciled to our sales ledger control account;
	 
	 	19.5.6	 	any other information we may ask for.

	19.6	 	The basis for the analysis of Debts is that, from each invoice date, it will separately
identify the amounts of Outstanding Debts by Customer and show Customer balances as follows;
total; up to 30 days; 31-60 days; 61-90 days, 90-120 days and beyond 120 days, plus a summary
ageing of the totals of each of these categories.

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	20	 	TERMINATION EVENTS
	 
	20.1	 	In addition to the right of either you or us to give notice to the other to end this
Agreement under condition 2.1, we may immediately end it (or give you shorter notice) at any
time after any of the following events:

	 	20.1.1	 	any breach or threatened breach by you of this Agreement;
	 
	 	20.1.2	 	the breach or threatened breach or the termination of any contract between us and any
of your Associates;
	 
	 	20.1.3	 	any application by any creditor of yours for a court order that we must pay money to
your creditor or must stop paying any monies to you;
	 
	 	20.1.4	 	if you have an obligation to a third party for repayment of borrowed money which is
declared due prior to its stated maturity date or you do not pay it when due;
	 
	 	20.1.5	 	any change in your directors or partners (as the case may be), or in your ownership,
control, constitution or composition or business activities;
	 
	 	20.1.6	 	breach or termination by you or a third party of any representation, warranty or
undertaking given to us;
	 
	 	20.1.7	 	the termination of any waiver, consent, ranking or priority arrangement in our favour;
	 
	 	20.1.8	 	your ceasing or threatening to cease to carry on the business referred to in the client
particulars in the Receivables Finance Agreement;
	 
	 	20.1.9	 	your Insolvency;
	 
	 	20.1.10	 	the Insolvency or death of any person who has given a guarantee or indemnity for your
obligations to us, or the service of a notice of intention to end such guarantee or
indemnity or the legal disability of that person;
	 
	 	20.1.11	 	if any Associate factors or discounts its debts with another party or is threatened
with Insolvency proceedings or becomes Insolvent.
	 
	 	20.1.12	 	your failure for a period of forty five (45) days to deliver a Notification to us;
	 
	 	20.1.13	 	a criminal conviction (except a nonprisonable motoring offence) being imposed on any
of your directors, partners or (if you are a sole trader) yourself;
	 
	 	20.1.14	 	if any statement made to us at any time is or is found to be false or substantially
incomplete such as to have materially influenced our decision to enter into this
Agreement, or for COFACE or ourselves to issue or vary any Limit or to make any payment.

	20.2	 	Upon or at any time after a Termination Event (whether or not we use our right immediately to
end this Agreement), we may, with or without notice to you and without affecting any other
rights under this Agreement, do any or all of the following;

	 	20.2.1	 	reduce the Early Payment Percentage to zero or such other figure as we may decide;
	 
	 	20.2.2	 	designate all or any Outstanding Debts as Unprotected Debts and/or Unapproved Debts;
	 
	 	20.2.3	 	create a special reserve against your Availability to cover Your Responsibility;
	 
	 	20.2.4	 	add together the balances on all accounts recording transactions between you and us;
	 
	 	20.2.5	 	demand that you pay us immediately any debit balance on the Current Account plus all
charges accrued but not yet debited to any account and an amount equal to all credit
balances on Customers accounts;
	 
	 	20.2.6	 	require you to Repurchase any Debts then Outstanding;
	 
	 	20.2.7	 	cancel your agency to collect Debts;
	 
	 	20.2.8	 	give notice of Assignment to Customers (where any confidential facility previously existed);
	 
	 	20.2.9	 	convert any invoice discounting facility to a factoring facility;
	 
	 	20.2.10	 	increase the service fee to ten per cent of the Notified Value of the Debts then
Outstanding or subsequently Notified;
	 
	 	20.2.11	 	increase the Early Payment Charge by 2% above Base Rate.

	20.3	 	Upon the ending of this Agreement, for whatever reason:

	 	20.3.1	 	(non-recourse facility only) all Protected Debts shall forthwith become Unprotected
Debts and Unapproved Debts;
	 
	 	20.3.2	 	you must Repurchase all Outstanding Debts from us at a price equivalent to the debit
balance on the Current Account and all other sums due to us and we shall continue to own
all Debts subject to Repurchase until so paid;

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	 	20.3.3	 	you will not attempt to cancel any notices of assignment or assignation given to
Customers or attempt to collect Debts until you have paid the Repurchase price under
condition 20.3.2;
	 
	 	20.3.4	 	you will be responsible for all credit balances on Customers’ accounts and indemnify us
in respect of all claims for them;
	 
	 	20.3.5	 	you will not Notify us of any Debts arising after the date on which this Agreement
ends; and
	 
	 	20.3.6	 	we shall pay you any credit balance on the Current Account less the amount of Your
Responsibility but allowing sufficient time for clearance of Customers’ cheques.

	20.4	 	Except as otherwise provided, the ending of this Agreement shall not affect our respective
rights and obligations in respect of:

	 	20.4.1	 	any Debts which shall have come into existence prior to such termination; and
	 
	 	20.4.2	 	all transactions or events having their inception prior to such termination, including
the continued running of the discounting charge and our rights to set-off monies or
combine accounts.

	 	 	Such rights and obligations shall remain in full force and effect until all monies due from
you shall have been received by us and all monies due from us to you shall have been paid.
	 
	20.5	 	Any discharge of your obligations to us shall be of no effect to the extent that any receipt
by us shall later be set aside under insolvency law.
	 
	21	 	POWER TO ACT IN YOUR NAME
	 
	21.1	 	To ensure that you carry out your obligations to us and as security for all sums which shall
become due to us you irrevocably appoint us and our directors, Company Secretary and officers,
and those of COFACE at any time, jointly and each of them severally to act as your attorneys
as we or they think fit and solely for our benefit in order to do any of the following:

	 	21.1.1	 	complete and perfect our title to or deal with any Debt, Related Rights or Returned
Goods;
	 
	 	21.1.2	 	obtain payment of and give valid discharges for any Debt;
	 
	 	21.1.3	 	secure performance of any of your obligations to us or any Customer or to any insurer
providing credit or other insurance to either you or us;
	 
	 	21.1.4	 	sign and deliver Offers to us;
	 
	 	21.1.5	 	to effect a credit insurance policy covering debts, administer the policy and pay all premiums.

	21.2	 	For these purposes, your attorneys may do any of the following:

	 	21.2.1	 	sign all documents;
	 
	 	21.2.2	 	endorse and/or negotiate all Remittances;
	 
	 	21.2.3	 	make all payments;
	 
	 	21.2.4	 	conduct, defend or compromise any legal proceedings and settle any indebtedness;
	 
	 	21.2.5	 	take all other steps they consider necessary.

	21.3	 	These powers shall continue both during and after the ending of this Agreement or during any
disability on your part until all sums due to us have been paid. You will ratify and confirm
whatever shall be lawfully done under these powers.
	 
	21.4	 	You also irrevocably appoint any assignee of ours or any person to whom we may novate this
Agreement to perform any of the acts set out above. We may also appoint or remove a
substitute attorney.
	 
	22	 	CONTACTING CUSTOMERS AND OTHER PARTIES
	 
	22.1	 	We may:

	 	22.1.1	 	communicate with your Customers as we think necessary;
	 
	 	22.1.2	 	provide your bank, auditors, accountants, other professional advisers and any
guarantors and/or indemnifiers to this Agreement with such information about your
accounts with us as they may ask or we may consider necessary;
	 
	 	22.1.3	 	obtain from your bank, auditors, accountants and other professional advisers such
information as we may request.

	22.2	 	We may disclose this Agreement and any information which we have obtained:

	 	22.2.1	 	to any actual or potential assignee, transferee or sub-participant;
	 
	 	22.2.2	 	to any agency, security trustee, agent and/or arranger in connection with any financing
of any such assignee, transferee or sub-participant;
	 
	 	22.2.3	 	in any listing particulars, prospectus or offering circular;
	 
	 	22.2.4	 	to any or potential credit insurer;

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	 	22.2.5	 	to any person with legal authority to receive the same.

	22.3	 	You confirm that you have authorised the persons referred to in condition 22.1.3 to give us
such information.
	 
	22.4	 	You will hold us harmless and make no claim if we inadvertently disclose to any third party
this Agreement or anything about it or you.
	 
	23	 	ASSIGNMENT, DELEGATION AND FORCE MAJEURE
	 
	23.1	 	As we see fit we may delegate all or any of our rights and duties under this Agreement to any
party of our choosing.
	 
	23.2	 	You also consent to our novating to any other party any or all of our obligations, rights and
remedies. This Agreement shall bind and ensure to the benefit of our successors and
assignees.
	 
	23.3	 	Except where the context otherwise requires, references to “we” or “us” shall include our
successors, assignees and transferees in clauses and conditions conferring benefits and/or
rights on us; in clauses and conditions imposing obligations on us, such references shall
extend to such successors, assignees and transferees only if they shall specifically assume
such obligations.
	 
	23.4	 	You will not, without our prior written consent:

	 	23.4.1	 	Assign, grant security over or charge any of your rights or benefits or delegate any of
your duties under this Agreement;
	 
	 	23.4.2	 	dispose of any plan of your business, assets or undertaking, except in the ordinary
course of your business;
	 
	 	23.4.3	 	create any securities, mortgages or charges on or over your assets or undertaking.

	23.5	 	We shall not be liable to you for any consequential, secondary or indirect loss, injury or
damage or any loss of or damage to goodwill, profits or anticipated savings. However nothing
shall operate to excuse us from liability caused by the fraud of any of our officers.
	 
	23.6	 	We shall have no liability to you if we are delayed in or unable to perform our duties
directly or indirectly because of an event of Force Majeure.
	 
	23.7	 	Any waiver or apparent waiver by us of any breach of any obligation or provision in this
Agreement cannot be treated as a general waiver or be construed as implying or establishing
consent to any subsequent breach.
	 
	23.8	 	Where any Debt is subject to credit insurance under a policy in our name then the insurers
shall have full rights of subrogation to all our and to all your rights and actions in respect
of the Debt and to any securities attached to it..
	 
	24	 	UNLIMITED PARTNERSHIPS AND SOLE TRADER CLIENTS
	 
	 	 	If you are an unlimited partnership, the provisions or conditions 24.1 to 24.9 and 24.11
additionally apply. If you are a sole trader conditions 24.10 and 24.11 additionally apply.
	 
	24.1	 	Any reference to you shall be treated as a reference to both your firm (under whatever name
or trading style you may use) and to any one or more of your partners. Your undertakings and
warranties to us shall also be treated as given by you and by each of your partners all of
whose obligations to us shall be joint and several.
	 
	24.2	 	The persons signing this Agreement comprise you and all your partners.
	 
	24.3	 	We shall have all of these rights namely to:

	 	24.3.1	 	release or conclude an arrangement or compromise with you or any one or more of your
partners, without affecting our rights against the others;
	 
	 	24.3.2	 	treat a notice or demand by us to any of your partners as a notice or demand given to
the others;
	 
	 	24.3.3	 	treat a notice or demand by any of your partners to us as a notice or demand given by
you or all of your partners (but we shall not be obliged to treat a notice or demand in
this way);
	 
	 	24.3.4	 	treat this Agreement as binding upon any executor, administrator or personal
representative of any of your partners and upon any committee, receiver, trustee,
supervisor or other persons acting on behalf of any of you; and
	 
	 	24.3.5	 	treat any variation of this Agreement which is required to be signed by you as binding
on you if signed by one or more of your partners.

	24.4	 	We may immediately end this Agreement at any time after the death, retirement, dismissal or
other event by which any of your partners shall cease to be a member of your partnership or
after the dissolution of the partnership for any reason.
	 
	24.5	 	We may treat condition 21.1 as if there were added after the words “to act as your attorneys”

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	 	 	the words “and to act as the attorneys of each of your partners”.
	 
	24.6	 	If at any time a partner dies or ceases (or intends to cease) to be a member of your
partnership (a “Retiring Partner”) you will immediately give us written notice of that fact.
Without affecting any other rights of ours under this Agreement the following provisions shall
apply:

	 	24.6.1	 	a Retiring Partner in respect of whom such notice has been given to and acknowledged by
us in writing will have no rights or liabilities in respect of any Debts created after
the date of such acknowledgement but shall remain fully liable to us for Debts created
before such acknowledgement; and
	 
	 	24.6.2	 	until we receive and acknowledge such notice in respect of a Retiring Partner he shall
remain fully liable to us.

	24.7	 	If you intend to:

	 	24.7.1	 	take in a new partner; or
	 
	 	24.7.2	 	change your trading style, or adopt another style; or
	 
	 	24.7.3	 	change your domicile to a legal jurisdiction outside England Wales; or
	 
	 	24.7.4	 	change your constitution or become a limited liability partnership; or
	 
	 	24.7.5	 	transfer your assets or business to another legal entity

	 	 	then you must immediately give us written notice of such intention and sign such documents at
your expense as we may require. However, we may within one month of such notice immediately
end this Agreement or may exercise our rights under this Agreement as if such intention were a
Termination Event.
	 
	24.8	 	Until we exercise any rights set out above or any of our rights following a Termination
Event, this Agreement shall remain effective despite any change in your constitution,
composition or legal personality and whether by death, retirement, addition or otherwise.
Despite any addition to or change in the name or trading style or the members of your
partnership we may treat the Agreement as continuing. Unless otherwise agreed we may account
to the partnership or exercise all rights of set-off or retention as if there had been no such
change.
	 
	24.9	 	You warrant that each partner’s residential address is correctly stated in the Client
particulars in the Receivables Finance Agreement. You will advise us of any changes.
	 
	24.10	 	If you are a sole trader:

	 	24.10.1	 	we may treat the Agreement as binding upon any executor, administrator or personal
representative of yours; and
	 
	 	24.10.2	 	you will immediately give us written notice of any intention to change or add to your
name or trading style or to enter into a partnership with any person or incorporate your
business and sign such documents at your expense as we may require; however we may within
one month of such notice immediately end this Agreement or may exercise our rights under
this Agreement as if such intention were a Termination Event; and
	 
	 	24.10.3	 	if you enter into a partnership or incorporate in breach of condition 24.10.2 and we
accept Offers or act upon Notifications in respect of the Debts of such partnership or
corporation, we shall be entitled to treat them as subject to all the terms of this
Agreement; your partnership or corporation (as the case may be) shall be bound by this
Agreement; and this Agreement shall then be treated as amended mutatis mutandis.

	24.11	 	Whether you are a partnership or sole trader:

	 	24.11.1	 	we are authorised to pay all sums due to you under this Agreement to your bank account
detailed in the client particulars to the Receivables Finance Agreement and such
authority shall remain in effect until we otherwise agree following your written request;
and
	 
	 	24.11.2	 	you must give us a signed copy of your annual profit and loss account and balance
sheet and any notes attached to them duly certified by a firm of Chartered or Certified
Accountants as soon as you have them, which must be no later than 6 months from the end
of each of your financial years.

	25	 	SERVICE OF NOTICES AND PROCESS
	 
	25.1	 	Except as otherwise stated, any written notice from us to you and any proceedings issued by

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	 	 	us requiring service on you may be given or served by delivering it at or posting it to:

	 	25.1.1	 	your address stated in the Client particulars in the Receivables Finance Agreement or
such other address advised to and acknowledged by us as being effective for the purposes
of this condition; or
	 
	 	25.1.2	 	your registered office if you are incorporated; or
	 
	 	25.1.3	 	any address last known to us at which you carried on business; or
	 
	 	25.1.4	 	if you are an unlimited or limited partnership additionally by:

	 	(i)	 	delivering it at or posting it to the residential or business
address last known to us of any partner; or
	 
	 	(ii)	 	handing it to any partner or officer of yours; or

	 	25.1.5	 	If you are a sole trader additionally by:

	 	(i)	 	delivering it at or posting it to your residential address or
business address last known to us; or
	 
	 	(ii)	 	handing it to you personally

	25.2	 	However you are constituted it may also be handed to any officer of yours or be given by fax
or e-mail to your number or address last known to us for communication by such means or by
making the same available to you via our Internet Service even if no access is made by you.
	 
	25.3	 	Any notice or process from us to you shall be considered delivered or served at the following times:

	 	25.3.1	 	if delivered — at the time of delivery; or
	 
	 	25.3.2	 	if sent by post — 48 hours from the time of posting; or
	 
	 	25.3.3	 	if sent by fax, e-mail or electronic medium — at the time of transmission; or
	 
	 	25.3.4	 	if made available on our Internet Service — at the time it is made available; or
	 
	 	25.3.5	 	if handed over- at the time of handing over.

	25.4	 	Any notice in writing by you to us under this Agreement shall take effect at the time it is
received by us at our registered office.
	 
	26	 	INTERPRETATION OF THIS AGREEMENT
	 
	26.1	 	Any reference to a statute includes any amendment or replacement or re-enactment or that
statute for the time being and any order and any subordinate legislation made under it.
	 
	26.2	 	The singular includes the plural and vice versa. Reference to any gender shall include any
other gender. References to a person or party shall be construed as references to any person,
firm, company, corporation, association, partnership, government, whether local, national or
supranational or other official body.
	 
	26.3	 	The meaning of general words introduced by the word “other’ is not to be limited by reference
to any preceding words.
	 
	26.4	 	Where the meaning of a word or expression in this Agreement has to be considered in relation
to any place outside England and Wales and such word or expression has no exact counterpart in
that place, it is to have the meaning of its closest equivalent as conclusively determined by
us.
	 
	26.5	 	The interpretation and construction of this Agreement shall not be affected by any headings,
which are for convenience only.
	 
	27	 	GENERAL
	 
	27.1	 	The whole Agreement between you and us consists of only or the Receivables Finance Agreement,
these Standard Terms and Conditions, any security granted by you in our favour, any annexes or
schedules to any of them and any documents referred to in any of them as being expressly
incorporated into our relationship. References to “the Agreement” or “this Agreement” include
all such documents and all subsequent amendments, variations or extensions to any of them. If
there is any conflict between the terms of the Receivables Finance Agreement and these
Standard Terms and Conditions then those in the Receivables Finance Agreement are to be
prevail. All earlier agreements, prior negotiations, quotations, warranties, advertisements
and representations shall be of no effect unless expressly stated to be incorporated herein.
You have not relied upon any representation made to you by us or on our behalf or been
influenced, induced or persuaded to enter into this Agreement by any representation.
	 
	27.2	 	We may use all or any of the rights and remedies contained in this Agreement. They are not
exclusive of each other or of any rights or remedies given to us by law. If we choose not to
enforce or cannot enforce any term or

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	 	 	condition, this will not affect our right to enforce the
rest of the Agreement or to enforce that term or condition at a later date. Also, such rights
and remedies shall not be affected if we compromise with any Customer.
	 
	27.3	 	This Agreement is considered by both you and us to be reasonable. Should any part of it be
valid only if some other part were deleted then the Agreement will apply as if it were so
deleted. The remainder of this Agreement will not be affected by such deletion.
	 
	27.4	 	Except where condition 5.1 (where we may change Limits at our complete discretion) any change
to the Agreement must be in writing and signed by or on behalf of the party to be bound and in
your case by a director, partner or proprietor as applicable.
	 
	28	 	FOREIGN CURRENCIES
(Condition 28 only applies if you have our Foreign Currency Facility)
	 
	28.1	 	Where Debts are expressed in different currencies each currency must be separately Notified to us.
	 
	28.2	 	If the Receivables Finance Agreement shows that in respect of Debts in Approved Currencies,
their Early Payments and the Purchase Price shall be payable by us only in Sterling, then:

	 	28.2.1	 	we will provisionally calculate the Sterling Purchase Price at the rate of exchange
quoted by our bankers for them to buy the currency of the Debt on the day that we debit
the Notified Value to the Debtors Control Account; and
	 
	 	28.2.2	 	on the date that any Remittance is credited to the Debtors Control Account, we will
adjust the Sterling Purchase Price using the rate of exchange quoted to us by our bankers
for them to buy the currency of the Remittance on the day of such debit; and

	28.3	 	Any part of Your Responsibilities to us in a foreign currency may be converted into Sterling.
We shall use the rate of exchange notified by our bankers for the date that any obligation
arises or make an estimate. Where we have to add together the balances on two or more
accounts recording transactions between you and us and such accounts are in different
currencies, we will use the prevailing spot rate as advised to us by our bankers.
	 
	28.4	 	Where any Remittance is received by or paid into our bank or a trust bank account which is
drawn on a bank outside the UK it will be sent by our bank or the trust bank either for
negotiation or collection but may be ignored when calculating your Availability until we
receive confirmation that such Remittance has been cleared for value;
	 
	28.5	 	We may, at any time, remove any currency from the definition of Approved Currencies by
written notice to you or by making the same available through our Internet Service even if no
enquiry be made. However this shall not affect Debts Notified to us prior to our despatch of
such notice or making the same available.
	 
	28.6	 	If we keep any account in a currency other than Sterling then any sum expressed in this
Agreement in Sterling shall be treated as if the words “or its currency equivalent” were also
added.
	 
	29	 	DATA PROTECTION ACT 1998
(Applicable only if you are an unlimited partnership or a sole trader)
	 
	29.1	 	You consent to our storing and processing information about you on our computers, the
computers of any Group Company used by us or Group Companies and in any other way. You
confirm your awareness that this will be used by us for credit or financial assessments,
making payments, recovering monies, training purposes and preparing statistics. Information
about you will also be used so that we or Group Companies can develop and improve our services
to you and other clients and to protect our interests (including establishing limits for the
benefit of other clients or obtaining settlement of Your Responsibility). We may also use
such information to prevent fraud and money laundering.
	 
	29.2	 	We may use some or all of the information held or to be held about you (from wherever
obtained) to decide whether to continue with this Agreement or to vary its terms.
	 
	29.3	 	We or Group Companies may make decisions about you solely using an automated decision making
process, such as credit scoring. However you will be told if a significant decision is made
only using such a process and you can then request a review of the decision, using other
means.
	 
	29.4	 	We may from time to time make searches of your record at our credit reference agency where
your record includes searches made and information given by other businesses; details of our
searches will be kept by such agency and will be available to other subscribers.

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	29.5	 	We may at any time search your record with our fraud prevention agency but if at any time you
give us or procure the giving of false or inaccurate information and we suspect fraud we will
record this; it is therefore important that you always give us accurate information; our fraud
prevention agency will use information recorded for statistical analysis about fraud and will
also share it with us and other organisations who may use it to:

	 	29.5.1	 	help make decisions about credit and credit related services for you and members of
your household; and
	 
	 	29.5.2	 	help make decisions on insurance proposals and insurance claims, for you and members of
your household; and
	 
	 	29.5.3	 	trace debtors, recover debt, prevent fraud and to manage your accounts or insurance
policies; and
	 
	 	29.5.4	 	check your identity to prevent money laundering, unless other satisfactory proof of
identity is furnished.

	29.6	 	We may give information about you, this Agreement any account maintained for you, your
performance under it, any debts you sell to us and any financial information about you to:

	 	29.6.1	 	any Group Company — so that they may make credit, financial or insurance decisions and
for statistical analysis;
	 
	 	29.6.2	 	any guarantor or indemnifier of your obligations to us — so they can assess their
obligations to us so we can enforce such obligations;
	 
	 	29.6.3	 	our or your bankers or any advisers or other persons acting on our or your behalf — so
they can carry out their services to us or to you;
	 
	 	29.6.4	 	any business providing a similar service to ours to whom you may wish to transfer — to
facilitate such a transfer;
	 
	 	29.6.5	 	any business to whom we may wish to transfer Debts — to facilitate such a transfer;
	 
	 	29.6.6	 	anyone else to whom we transfer our rights or duties under this Agreement — so they can
comply with or enforce this Agreement;
	 
	 	29.6.7	 	any introducer of your business to us — to enable them better to serve you and in
connection with any commissions due; and
	 
	 	29.6.8	 	any company from whom we may obtain funding or with whom we may share the obligations
and risks hereunder — so they can comply with their agreement with us.
	 
	 	29.6.9	 	our or your insurers — so they can quote for and issue any policy or deal with any
claims;
	 
	 	29.6.10	 	any business carrying out services for us.

	29.7	 	Unless you object or have objected we and other Group Companies may also contact you (by
letter, telephone or email):

	 	29.7.1	 	about services and products which we or they consider may be of interest to you; and/or
	 
	 	29.7.2	 	to carry out market research about our or their services and products.

	29.8	 	For training and/or security purposes, your phone calls with us may be monitored and/or recorded.
	 
	29.9	 	We may transfer information we hold about you to Group Companies or responsible third parties
in countries outside the European Economic Area for any of the purposes stated above. Whilst
the level of data protection in such countries may not be as high as in the United Kingdom we
will use our best endeavours to protect your information.
	 
	29.10	 	If you are a sole trader or a partner in the Client and want to have details of those credit
reference agencies and other third parties referred to above from whom we obtain and to whom
we may give information about you please contact our Compliance Department on 01923 478100.
You have a legal right to these details. You can also obtain a copy of the information we
hold about you if an application is made in writing. However a fee will be payable.
	 
	30	 	LAW AND JURISDICTION
	 
	30.1	 	Our relationship with you is to be governed and interpreted by English law. You submit to
the jurisdiction of the English courts. We may, however, use the courts of any other
jurisdiction.
	 
	31	 	REGULATORY STATUS
	 
	31.1	 	Coface Receivables Finance Limited is an appointed representative of Coface UK which is
authorised in France by the ‘Commission de Controle des Assurances, des Mutuelles et des
Institutions de Prévoyancé (CCAMIP) and regulated by the Financial Services Authority for the
conduct of UK business.

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	32	 	ANNEXE OF DEFINITIONS

In this Agreement the following expressions have the meanings set out against each of them.

	 	 	“Accounting Records” Any of the following:

	 	1	 	accounting books, records and ledgers, financial and management accounts:
	 
	 	2	 	computer data or materials about your financial position, purchases and sales:
	 
	 	3	 	invoices, credit notes or documents evidencing entries in any of the above;
	 
	 	4	 	such other documents relating to Debts as we may specify.

	 	 	“Adjustments” Any entry on your Customers’ accounts or the Current account which changes the
Notified Value of Debts.
	 
	 	 	“Adverse Information” Any event of which you may become aware and which has led or may lead to
a deterioration of your Customer’s financial situation.
	 
	 	 	“Agreement” The Receivable Finance Agreement, these Standard Terms and Conditions, any
document evidencing or comprising security in our favour over your undertaking or assets, any
document referred to in any of them as being expressly incorporated into the relationship
between you and us, together with all amendments, variations, replacements, additions at any
time and from time to time applicable to any of them.
	 
	 	 	“Annual Review Fee” The fee so stated in the Receivables Finance agreement.
	 
	 	 	“Approved Countries” (Applicable only to our Export Debt facility) The countries, areas or
territories referred to in the Receivables Finance Agreement and such other countries or
territories as we may advise you.
	 
	 	 	“Approved Currencies” (Applicable only to our Foreign Currency Facility) The Euro, United
States Dollar and such other currencies as we advise you.
	 
	 	 	“Approved Debt” Any Debt (including a Protected Debt) which is not an Unapproved Debt.
	 
	 	 	“Arrangement Fee” The fee specified in the Receivables Finance Agreement to cover our initial
costs of setting up your facility.
	 
	 	 	“Annual Review Fee” The fee stated in the Receivables Finance Agreement and which is payable
on each anniversary of the Commencement Date.
	 
	 	 	“Assign/Assignment” The transfer of ownership which includes in Scotland the giving of an
assignation.
	 
	 	 	“Associate”
	 
	 	 	In relation to the person or party named:

	 	1	 	Any Subsidiary or holding company as defined in sections 736 and 736A of the
Companies Acts 1985 to 1989 or Articles 4 or 4A of the Companies (No. 2) (Northern
Ireland) Order 1990; or
	 
	 	2	 	any other form of associate as defined in section 184 of the Consumer Credit Act
1974; or
	 
	 	3	 	a director, partner, shareholder or employee or the spouse of any of them; or
	 
	 	4	 	any company in which such person or party has an interest other than purely for
investment purposes in a publicly quoted company; or
	 
	 	5	 	its parent undertaking as defined in section 258 of the Companies Act 1985.

	 	 	“Availability” The maximum amount that can be drawn from us (including by way of Early
Payments) which will be calculated by:

	 	(1)	 	taking the debit balance on the Debtors Control Account at the close of business on
the preceding Working Day and deducting the value of all Unapproved Debts on such day;
and
	 
	 	(2)	 	multiplying the resultant sum in (1) by the Early Payment Percentage stated in the
Receivables Finance Agreement; and
	 
	 	(3)	 	from the resultant sum in (2) deducting:

	 	•	 	any debit balance on the Current Account existing at the close of business on the
preceding Working Day; and
	 
	 	•	 	the amount of Your Responsibility; and
	 
	 	•	 	any special reserves created at our discretion.

	 	 	“BACS” The Bankers Automated Clearing System.
	 
	 	 	“Base Rate” The Sterling Base Rate per annum quoted. from time to time, by Barclays Bank Plc
or its successors or such other bank as we may tell you.
	 
	 	 	“Cash Against Documents Sale” A Sale Contract where the payment terms provide that you keep
title to the Goods until full payment has been made to the person responsible for handing the
documents of title over to the Customer.
	 
	 	 	“CHAPS” The Clearing Houses Automated Payments System.
	 
	 	 	“Commencement Date” The date so specified in the Receivables Finance Agreement.
	 
	 	 	“COFACE” Compagnie Francaise d’Assurance pour le Commerce Exterieur SA.
	 
	 	 	“Concentration Limit” The percentage shown in the Receivables Finance Agreement of the 

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	 	 	balance
of all Outstanding Notified Eligible Debts so that the Debts of any Debtor or Group Debtor in
excess of such percentage become Unapproved Debts.

	 	 	“Contracted Value” The amount of a Debt payable by a Customer in accordance with the Sale
Contract after taking into account any deduction, discount, claim or allowance.
	 
	 	 	“Credit Limit” (Applicable only to our non-recourse facility) The maximum value decided by us
and/or COFACE of the Debts due by a Customer which we are prepared to designate as Protected
Debts.
	 
	 	 	“Credit Note Listing” Your advice to us, in such way as we specify, including in a
Transmission, of credit notes which have not previously been advised to us together with such
reasons for the issue of a credit note as we may require.
	 
	 	 	“Current Account” An account operated by us to calculate the Early Payment Charge.
	 
	 	 	“Customer” Anyone incurring any indebtedness under a Sale Contract except a private
individual, buying Goods for a purpose other than his trade, business or profession.
	 
	 	 	“Data Acts” The Data Protection Acts of 1984 and 1998.
	 
	 	 	“Data Subjects” Has the same meaning as in the Data Acts.
	 
	 	 	“Debt” Any present, future or contingent obligation of a Customer to make payment under a Sale
Contract together with its Related Rights or where the context allows a part of such
obligation or its Related Rights, including:

	 	(1)	 	the future right to recover sums due following the determination, assessment or
agreement of the amount of the obligation; and
	 
	 	(2)	 	VAT; and
	 
	 	(3)	 	all duties and charges.

	 	 	“Debtors Control Account” An account reflecting the prospective Purchase Price of all
Outstanding Debts.
	 
	 	 	“Default Funding Limit” The amount shown in the Receivables Finance Agreement or such other
amount as we may tell you up to which amount the Debts of each of your Customers shall be
treated as Approved Debts.
	 
	 	 	“Delivered” In relation to Goods:

	 	(1)	 	their removal from your control and from your premises, carriers and agents; and
	 
	 	(2)	 	their physical delivery to the Customer or to the Customer’s order or carrier; and
	 
	 	(3)	 	the assumption of risk therein by the Customer; and
	 
	 	(4)	 	complete performance of the Sale Contract.

	 	 	In relation to services: fully performed. 

“Dispute/Disputed” Any disagreement regarding the
amount or validity of a Debt or the validity of your or our rights thereto, including any
claim to reduce the amount payable through a set-off or counterclaim.
	 
	 	 	“Early Payment” A part payment of the Purchase Price of a Debt earlier than the date for
payment of the Purchase Price under clause 4.1.
	 
	 	 	“Early Payment Charge” In consideration of an Early Payment a discount against the Purchase
Price calculated at the rate stated in the Receivables Finance Agreement upon each Early
Payment- in respect of Outstanding Debts (and for administrative convenience any amount
debited to the Current Account is to be treated as an Early Payment) which will accrue from
day to day on the debit balance of the Current Account and be debited monthly to that Account.
	 
	 	 	“Early Payment Percentage” The percentage initially referred to in the Receivables Finance
Agreement to be used in the calculation of your Availability.
	 
	 	 	“Equipment Defect” Any malfunction, failure, defect, downtime or unavailability of computer
equipment or software or any ancillary service or link including telephone or other
communication systems.
	 
	 	 	“Excess Facility Fee” Such fee as may be agreed either for (i) any service or facility beyond
that covered by this Agreement; or (ii) allowing monies to be drawn or remaining drawn in
excess of your Availability or the Maximum Funds in use (if this is less than your
Availability).
	 
	 	 	“Export Debt” (Applicable only to our Export Debts facility) A Debt where the invoice is
addressed to a Customer in an Approved Country outside the United Kingdom.
	 
	 	 	“Export Debts Facility” Our extension of the Receivables Finance Agreement to Export debts.
	 
	 	 	“Extended Service Fee” For each Debt (except a Protected Debt) that remains outstanding beyond
the end of the Funding Period, the percentage thereof specified in the Receivables Finance
Agreement for each period of thirty days or part thereof until it is either discharged,
written off or reassigned to you.
	 
	 	 	“First Loss” (Applicable only to our non-recourse facility) The higher of either the amount or
the percentage shown in the 

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	 	 	Receivables Finance Agreement as the First Loss up to which Debts
whilst within a Credit Limit shall be Unprotected Debts.

	 	 	“Force Majeure” Any circumstances outside our or a Customer’s reasonable control, including an
act of God, any exchange control, governmental or other official regulations or requirements,
the outbreak of war, nuclear explosion or contamination, any terrorist act, revolution, civil
insurrection, strike, lockout, industrial action or failure or non-operation of postal,
banking or communication services.
	 
	 	 	“Foreign Currency Facility” Our extension of the Receivables Finance Agreement to Approved
Currency Debts.
	 
	 	 	“Funding Limit” A monetary limit established by us from time to time in respect of each
Customer so that Debts in excess of such limit will be treated as Unapproved Debts.
	 
	 	 	“Funding Period” The period initially specified in the Receivables Finance Agreement, after
which an Approved Debt (unless it is a Protected Debt) will rank as an Unapproved Debt, but
which may be extended by us at our discretion.
	 
	 	 	“Goods” Any merchandise or services the subject of a Sale Contract.
	 
	 	 	“Group Company” Any company within the Natexis Group or the COFACE Group, including COFACE,
COFACE UK Limited, Cofacerating.UK Limited and COFACE Debt Purchase Limited.
	 
	 	 	“Group Customer” Any Customer where another Customer appears to us to be an Associate or have
a common director, partner, proprietor or shareholder, or is a Subsidiary of the other or both
are the Subsidiaries of another company or are otherwise affiliated or under common control
(whether directly or indirectly)
	 
	 	 	“Initial Debt” A Debt whose invoice date exceeds sixty (60) days before the Commencement Date
(non-recourse only).
	 
	 	 	“Insolvency Practitioner” (applicable only to our non-recourse facility) The person having
control over the Customer’s assets following the Customer’s Insolvency.
	 
	 	 	“Insolvent”

	 	(A)	 	In relation to you or any guarantor or indemnifier of your obligations to us – any
of or the occurrence of any of the following:
	 
	 	(1)	 	the issue of a petition or application, the calling or a meeting or making
proposals, for any of the matters listed in sub section ‘B’ below;
	 
	 	(2)	 	any part of your or their income or assets being subject to any of the following:

	 	•	 	seizure, distress, diligence or lien;
	 
	 	•	 	enforcement of security rights;
	 
	 	•	 	execution of legal process;
	 
	 	•	 	sequestration;
	 
	 	•	 	an injunction or interdict;
	 
	 	•	 	attachment;
	 
	 	•	 	other legal process;

	 	(3)	 	the service of any statutory demand under the Insolvency Act 1986;
	 
	 	(4)	 	the entry of making of any judgment, order, decree or award which shall remain
unsatisfied or whose terms shall not be complied with for seven (7) days (except pending
any appeal);
	 
	 	(5)	 	an application for garnishee order;
	 
	 	(6)	 	of payments of debts: giving notice of the intended suspension
	 
	 	(7)	 	becoming apparently insolvent;
	 
	 	(8)	 	an application for a Moratorium under the Insolvency Act 2000;

	 	 	and the taking of any steps for the commencement of any proceeding in respect of any of the
above matters.

	 	(B)	 	In relation to a Customer — any of the following:
	 
	 	(1)	 	in relation to an individual — bankruptcy, apparent insolvency or sequestration or
the granting of a trust deed for the benefit of creditors;
	 
	 	(2)	 	in relation to a company — a resolution for voluntary winding up by reason of
insolvency, a winding up order, an administration order, the appointment of an
administrator under the Insolvency Act of 1986 or the appointment of a provisional
liquidator or receiver (whether in or out of court) or an administrative receiver of any
of its assets or income or a judicial factor;
	 
	 	(3)	 	in relation to a partnership — its bankruptcy, apparent insolvency or sequestration
or its winding up or the appointment to it of an administrator under the Insolvency Act
1986 or the appointment of a judicial factor or an order for the bankruptcy or
sequestration of any partner or the grant by a partner of a trust deed for creditors;
	 
	 	(4)	 	in relation to any person — entry into a voluntary arrangement under the Insolvency
Act 1986 or a valid assignment or composition or other arrangement for the benefit of
creditors generally;
	 
	 	(5)	 	such condition as are by any other system of law to that person to achieve

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	 	 	 	substantially the same effect as items (1) to (4) in this subsection (B).

	 	 	“Insolvency” shall be construed accordingly.
	 
	 	 	“Internet Service” A computerised data enquiry and transmission system between you and us as
updated from time to time.
	 
	 	 	“Limits” Any percentage, limit, period, level, date, figure, threshold, amount or balance
referred to in this Agreement and, without affecting the generality of this list, including:

	 	•	 	First Loss;
	 
	 	•	 	Recourse Percentage
	 
	 	•	 	Early Payment Percentage
	 
	 	•	 	Maximum Funds in Use;
	 
	 	•	 	Funding Period;
	 
	 	•	 	Funding Limit;
	 
	 	•	 	Default Funding Limit
	 
	 	•	 	Concentration Limit;
	 
	 	•	 	Credit Limits;
	 
	 	•	 	Shortfall Amount.

	 	 	(but excluding any fee or charge referred to in the Receivables Finance Agreement).

 “Maximum
Funds in Use” Either the amount (if any) referred to in the Sales Finance Agreement or such
other amount as we tell you from time to time.
	 
	 	 	“Minimum Service Fee” The total of Service Fees specified in the Receivables Finance Agreement
and in calculating whether you have paid the Minimum Service Fees then any Service Fees in
respect of Debts in existence on the Commencement Date and all Early Payment Charges, all
Extended Service Fees and all other fees and charges are to be disregarded.
	 
	 	 	“Non-Notifiable Debt” A Debt which must not be Notified to us until we tell you, including
specifically those referred to in condition 16.1.7.
	 
	 	 	“Notification” Your notification to us, in such way as we may specify, including in a
Transmission, of Debts and credit notes which have not previously been Notified to us together
with such evidence of the performance of the Sale Contract or reasons for a credit note as we
may specify (Not applicable to clients who are unlimited partnerships or sole traders).
	 
	 	 	“Notified/Notify/Notifying” Inclusion of a Debt in an Offer or Notification or including a
Credit Note in a Credit Note Listing.
	 
	 	 	“Notified Value” The amount of the Debt as shown in an Offer, Notification or Client Advice.
	 
	 	 	“Offer” An unconditional offer to sell us a Debt with full title guarantee to be made in such
form and with such evidence of the performance of the Sale Contract as we may specify.
(Applicable only to unlimited partnerships and sole traders).
	 
	 	 	“Outstanding” A Debt for which we have not received payment from the Customer, you or a third
party.
	 
	 	 	“Overdue Account” Where a Debt has not been paid on the date, in the currency and in the place
specified in the Sale Contract.
	 
	 	 	“Protected Debt” (Applicable only to our non-recourse facility) A Debt (except an Initial
Debt) within a Credit Limit in respect of which:

	 	(1)	 	you are not in breach of any warranty or undertaking to us;
	 
	 	(2)	 	the value does not comprise discount wrongly claimed by the Customer: and
	 
	 	(3)	 	there is no dispute.

	 	 	“Purchase Price” The price payable by us for a Debt calculated in accordance with conditions 4
and (if you have our non-recourse facility) conditions 8.1 and 8.2.
	 
	 	 	“Receivables Finance Agreement” The document signed by or on behalf of you and us, setting out
other agreed matters together with additional details of matters referred to in these
conditions.
	 
	 	 	“Recoveries” Any amount received by you from the Customer or any third party in connection
with the Debt, whether before or after we pay you the Purchase Price including:

	 	•	 	any interest on late payment;
	 
	 	•	 	realisations of any security;
	 
	 	•	 	the value of any Credit Note raised;
	 
	 	•	 	any value arising from the exercise of any set-off;
	 
	 	•	 	any proceeds of Goods which you have or could have been recovered and kept; with the
value of such proceeds being the actual value obtained from recovered Goods and where you
could have recovered Goods or kept the proceeds but did not do so then the value will be
treated as twenty five per cent (25%) of their Contracted Value

	 	 	“Related Rights” Any of the following in
relation to any Debt or Returned Goods:

	 	(1)	 	all your rights by law as an unpaid vendor or under the Sale Contract but without
any obligation on us to complete the Sale Contract;
	 
	 	(2)	 	all evidence of the Sale Contract or its performance or any disputes arising;
	 
	 	(3)	 	documents of title to goods, warehouse keepers receipts, bills of lading, shipping
documents, airway bills, certificates of origin, customs forms, commercial and 

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	 	 	 	consular
invoices, insurance documents or similar;

	 	(4)	 	the benefit of all insurances including credit insurances;
	 
	 	(5)	 	alL Remittances, securities, bonds, guarantees and indemnities;
	 
	 	(6)	 	all Accounting Records to do with the Debt:
	 
	 	(7)	 	the right to call for the ownership of all Returned Goods;
	 
	 	(8)	 	interest.

	 	 	“Remittances” Cash, cheques, bills of exchange, negotiable and non-negotiable instruments,
letters of credit, orders, drafts, promissory notes, electronic payments and any other
instruments, methods or forms of payment or engagement received by us, you or your agents
towards a Debt.
	 
	 	 	“Repurchase” Our right to require you to buy back, and in respect of a Scottish Debt to take a
reassignment from us of, an Outstanding Debt at a price equivalent to the lesser of its
Notified Value and all other sums due in respect of it.
	 
	 	 	“Returned Goods” Any Goods relating to or purporting to comply with a Sale Contract which any
Customer shall for any reason:

	 	(1)	 	reject or give notice of rejection; or
	 
	 	(2)	 	return or attempt to or wish to return to you or us; or
	 
	 	(3)	 	which you or we recover from a Customer.

	 	 	“Sale Contract” A contract in any form, including a purchase order, between you and a Customer
for the sale or hire of Goods or the provision of services or work done and materials supplied
against payment of a price.
	 
	 	 	“Scottish Debt” Debts arising under Sale Contracts where either those Sale Contracts are
governed by Scots law or the invoices for the Debts are addressed to Customers in Scotland.
	 
	 	 	“Service Fee” A fee (including any Minimum Service Fee) as specifÌed in the Receivables
Finance Agreement for:

	 	(1)	 	the provision of our Internet Service
	 
	 	(2)	 	the provision of a monthly statement and management information.

	 	 	and in factoring

	 	(3)	 	the normal operation of your Customers’ accounts including:

	 	•	 	sales ledger management
	 
	 	•	 	arranging collections
	 
	 	•	 	cash reconciliations
	 
	 	•	 	assisting dispute resolutions

	 	 	and under Non-Recourse Agreement

	 	(4)	 	accepting the obligation to pay you the Purchase Price of Protected Debts in
certain circumstances.

	 	 	“Software” The software provided by us to enable you to use our Internet Service.
	 
	 	 	“Sterling” The lawful currency from time to time of the UK;
	 
	 	 	“Subsidiary”

	 	(1)	 	A subsidiary within the meaning of section 736 of the Companies Act 1985; and
	 
	 	(2)	 	unless the context otherwise requires, a subsidiary undertaking within the meaning
of sections 258-260 of the Companies Act 1985 as substituted by section 21 of the
Companies Act 1989.

	 	 	“Tariff Fees” any fees or charges payable by you to us referred to in the Receivables
Financing Agreement (other than those listed in Conditions 11.1.1 to 11.1.6 of these Standard
Terms and Conditions.
	 
	 	 	“Termination Event” Any event listed in condition 20.1 or as otherwise specified by us as such
an event.
	 
	 	 	“Transmission” Any item of information transmitted between you and us using the Internet
Service.
	 
	 	 	“Transmission Defect” Any programming error, corruption or other defect or any delay or
failure or breach of security in a Transmission.
	 
	 	 	“Transmissions Log” A record maintained by us of Transmissions.
	 
	 	 	“Unapproved Debt” A Debt which is or shall be:

	 	(1)	 	either Disputed by the Customer for any reason including the Customer’s liability
to pay us or to pay it by its due date for payment or subject to a Dispute between us and
you for any reason;
	 
	 	(2)	 	the subject of a breach of any undertaking or warranty given to us about it or any
other obligations of yours to us arising from it; or
	 
	 	(3)	 	owing by any Customer in excess of the Concentration Limit; or
	 
	 	(4)	 	a Non-Notifiable Debt; or
	 
	 	(5)	 	due by a Customer who also supplies goods or services to you; or
	 
	 	(6)	 	specified by us at any other time; or
	 
	 	(7)	 	due by Customer where five (5%) per cent or more of its Debts remain Outstanding
beyond end of their Funding Periods.
	 
	 	(8)	 	in excess of the Customer’s Funding Limit; or
	 
	 	(9)	 	owing by a Customer who is Insolvent (except whilst the Debt is an Protected Debt
under our non-recourse facility); or
	 
	 	(10)	 	(applicable only to our recourse facility) which remains Outstanding beyond the end

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	 	 	 	of the Funding Period or in respect of which we have threatened legal proceedings.

	 	 	“Uncollectable” (Applicable only to our non-recourse facility) Outstanding because of the
Customer’s financial inability to pay as conclusively determined by us.
	 
	 	 	“Unprotected Debt” (Applicable only to our non-recourse facility) A Debt which is not an
Protected Debt including all Debts on termination of this Agreement and all Debts within
categories (1) to (6) of the definition of “Unapproved Debt”.
	 
	 	 	“United Kingdom/U.K.” The United Kingdom of Great Britain and Northern Ireland, the Channel
Islands and the Isle of Man.
	 
	 	 	“U.K. Debt” A Debt evidenced by an invoice addressed to a Customer in the United Kingdom.
	 
	 	 	“VAT” Value Added Tax.
	 
	 	 	“Working Day” A day when our offices and our bank are both normally open for the conduct of
all normal business.
	 
	 	 	“Your Responsibility” Monies payable or possibly payable to us in the future including
liability:

	 	(1)	 	arising from debts transferred to us by any of your suppliers; or
	 
	 	(2)	 	as a guarantor or indemnifier of another client of ours; or
	 
	 	(3)	 	for the breach of your obligations to us; or
	 
	 	(4)	 	for legal costs and expenses;

	 	 	and our reasonable estimate of such monies where the amount cannot be immediately found out.

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The same persons who signed the Receivables Finance Agreement between you:

Corgi Classics Ltd

and us, Coface Receivables Finance Limited, have also signed below in order to identify the
attached conditions which are incorporated into the Agreement.

	 	 	 	 	 	 	 
	Corgi Classics Ltd	 	 	 	 
	 
	 	 	 	 	 	 
	Signature 1:

	 	 	 	Date:	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Full name
	 	 	 	 	 	 
	(please print):

	 	 	 	Position:	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Signature: 2

	 	 	 	Date:	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Full name
	 	 	 	 	 	 
	(please print):

	 	 	 	Position:	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	COFACE RECEIVABLES FINANCE LIMITED	 	 	 	 
	 
	 	 	 	 	 	 
	Signature :

	 	 	 	Date:	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Full name
	 	 	 	 	 	 
	(please print):

	 	 	 	Position:	 	 
	 

	 	 
	 	 	 	 

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