Re: The Cronos Group (Codename: Dolphin) – FB Transportation Capital LLC – Amendment No. 1 to Equity Commitment Letter (the “Amendment”)
Exhibit
7.09
May
22,
2007
To: |
CRX
Acquisition Ltd.
|
c/o
Fortis Capital Corporation
000
Xxxx
00xx
Xxxxxx,
00xx
Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Re:
|
The
Cronos Group (Codename: Dolphin) –
FB
Transportation Capital LLC –
Amendment
No. 1 to Equity Commitment Letter (the “Amendment”)
|
Gentlemen:
Reference
is made to the Asset Purchase Agreement, dated as of the date hereof (as it
may
be amended from time to time, the “Asset
Purchase Agreement”),
by
and among CRX Acquisition Ltd., a Bermuda exempted company (“Purchaser”),
FB
Transportation Capital LLC, a Delaware limited liability company, and The Cronos
Group, a limited liability company (société
anonymé holding)
organized and existing under the laws of the Grand Duchy of Luxembourg (the
“Company”),
pursuant to which Purchaser, or a permitted assignee of Purchaser, will acquire
the assets and assume the liabilities of the Company subject to and in
accordance with its terms. Reference is also made to that certain Equity
Commitment Letter, dated as of February 28, 2007, by and between Purchaser
and
FB Transportation Capital LLC (the “Equity
Commitment Letter”).
Capitalized terms used but not defined herein shall have the meanings ascribed
to them in the Asset Purchase Agreement or the Equity Commitment Letter, as
the
case may be.
Purchaser
and the undersigned have agreed to certain changes to Schedule
B
attached
to the Equity Commitment Letter and desire to enter into this Amendment to
incorporate such changes into the Equity Commitment Letter. Specifically,
Purchaser and the undersigned hereby agree to amend the Equity Commitment Letter
by deleting in its entirety Schedule
B
attached
to the Equity Commitment Letter and replacing it with Schedule
B
attached
to this Amendment, which is made a part hereof.
Except
as
it is amended by the terms hereof, the terms of the Equity Commitment Letter
are
hereby ratified and confirmed by the parties in all respects. Each of Purchaser
and the undersigned agree that, notwithstanding anything to the contrary
contained in the Equity Commitment Letter or in any other agreement between
the
parties, Purchaser and the undersigned are entering into this Amendment for
the
specific purpose of amending the Equity Commitment Letter as set forth in the
immediately preceding paragraph. Except as set forth in the immediately
preceding paragraph, the terms of the Equity Commitment Letter shall continue
in
full force and effect in accordance with its terms. In the event of any conflict
or ambiguity between this Amendment (including this paragraph) and the Equity
Commitment Letter, the terms and conditions of this Amendment shall
prevail.
1
This
Amendment constitutes the entire agreement between Purchaser and the undersigned
with respect to the subject matter hereof. There are no agreements,
representations, warranties, promises, covenants, commitments or undertakings
other than those expressly set forth herein. This Amendment supersedes all
prior
agreements, representations, warranties, promises, covenants, commitments and
undertakings, whether written or oral, with respect to the subject matter
contained herein. This Amendment may be executed in several counterparts, all
of
which taken together shall constitute one single agreement between Purchaser
and
the undersigned.
[Remainder
of page intentionally left blank]
2
Very
truly yours,
FB
TRANSPORTATION CAPITAL LLC
By:
|
/s/
Xxxxxx X.
Xxxxxxxx
Name:
Xxxxxx X. Xxxxxxxx
Title:
Chief Executive Officer
|
Accepted
and Acknowledged as of
the
date
first written above:
CRX
ACQUISITION LTD.
By:
|
/s/
Xxxxxx X.
Xxxxxxxx
Name:
Xxxxxx X. Xxxxxxxx
Title:
President
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3
SCHEDULE
B
SUMMARY
OF TERMS
FOR
COMMON SHARES FINANCING OF
CRX
ACQUISITION LTD.
This
Summary of Terms summarizes the principal terms of the proposed equity financing
of CRX Acquisition Ltd., a Bermuda exempted company (“Purchaser”)
in
connection with its formation and its subsequent capitalization. It is intended
that Purchaser will (i) acquire all of the assets and assume all of the
liabilities of The Cronos Group, a
limited
liability company (société
anonymé holding)
organized
and existing under the laws of the Grand Duchy of Luxembourg
(the
“Company”),
(ii)
sell and transfer the interests in container assets formerly owned by the
Company and its affiliates to FB Transportation Capital LLC, a Delaware limited
liability company (“FB
Transportation”),
or an
affiliate or affiliates thereof (the transactions referred to in clauses (i)
and
(ii) above being hereinafter referred to collectively as the “Transaction”),
and
(iii) manage container assets owned by CF Leasing Limited (a Bermuda exempted
company) and/or any of its affiliates (and their respective successors and
assigns), and other container assets owned by third parties, following
consummation of the Transaction.
It
is
contemplated that Xxxxxx X. Xxxxx, Xxxxx X. Xxxxxxx, Xxxxx X. Xxxxxxx and Xxxx
X. Xxxxx, each of which are current officers and/or directors of the Company
(such individuals being referred herein to as the “Management
Parties”)
will
purchase at the closing of the Transaction (the “Closing”),
along
with FB Transportation, common shares, US $0.01 par value, of Purchaser (the
“Common
Shares”)
in
connection with Purchaser’s capitalization in connection with the Transaction.
It is also contemplated that at the Closing, certain Fortis employees (including
directors and officers of Purchaser and FB Transportation) (collectively,
“Fortis
Employees”)
will
purchase Common Shares of Purchaser, subject to the satisfaction of certain
conditions. In addition, within sixty (60) days after the Closing, third party
investors (the “Third
Party Investors”)
may
purchase additional Common Shares from Purchaser. FB Transportation, the
Management Parties, any Fortis Employees, any Third Party Investors and any
other person or entity that becomes or is deemed to become a party to or agrees
to be bound by the terms of the Shareholders Agreement are sometimes referred
to
herein as the “Shareholders.”
Any
Third Party Investors that purchase Common Shares of Purchaser in accordance
with this Summary of Terms will be subject to the prior approval by FB
Transportation, which approval will not be unreasonably withheld.
This
Summary of Terms includes the basic proposed rights, preferences and obligations
of the Shareholders, which are to be in embodied in the governance documents
of
Purchaser and other agreements among the Shareholders. In addition to the terms
set forth in this Summary of Terms, the initial Shareholders intend to negotiate
additional customary terms for inclusion in the governance documents and such
other agreements. All sums in dollars contained herein shall refer to U.S.
Dollars.
Offering
Terms
|
||
Closing
Date:
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As
of the closing of the Transaction.
|
|
Initial
Shareholders:
|
At
Closing, the Management Parties will acquire from Purchaser a minimum
of
2,000,000 Common Shares, which amount may be increased up to a maximum
of
4,000,000 Common Shares, in exchange for their contribution of
cash.
At
Closing, FB Transportation will acquire from Purchaser 4,800,000
Common
Shares in exchange for its contribution of cash.
It
is also contemplated that at Closing, certain Fortis Employees will
purchase up to 3,000,000 Common Shares from Purchaser in exchange
for
their contribution of cash, subject to the satisfaction of certain
conditions.
Within
sixty (60) days after Closing, Third Party Investors may purchase
up to
4,000,000 Common Shares in exchange for their contribution of cash,
at the
same purchase price per Common Share that FB Transportation, the
Management Investors and any Fortis Employees paid for those shares
at
Closing.
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|
Price
Per Common Share of
Purchaser
to be Acquired:
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US
$1.00 per share
|
|
Counsel
and Expenses:
|
Each
party shall pay its own expenses incurred in connection with the
matters
contemplated herein, including the completion of the Transaction
and/or
the termination of the definitive agreements governing same, irrespective
of the completion of the transactions contemplated hereunder.
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CHARTER
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General:
|
Except
as described below, the Charter will include standard terms. “Blank Check”
preferred shares will be authorized permitting the creation and issuance
of preferred shares by the Board of Directors of Purchaser (the
“Board”)
in the future, although the issuance of any preferred shares will
be
subject to the terms and conditions of the Shareholders Agreement
described below. Supermajority shareholder voting provisions will
be
required in connection with the approval and adoption of certain
transactions and events, as described below under “Liquidation
Events”.
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2
SHAREHOLDERS
AGREEMENT
|
|
General:
|
The
Shareholders Agreement will address how the Board is to be composed,
how
the Shareholders fit into that scheme, and shareholder voting agreement
provisions to enforce the intended Board composition terms and related
matters.
|
Dividends:
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Dividends
will be paid in respect of Common Shares when, as and if declared
by the
Board, but subject in all respects to “Matters Requiring Board Approval”
below.
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Information
Rights:
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Purchaser
will deliver to the holders of Common Shares (i) audited consolidated
financial statements no later than 120 days after the end of each
fiscal
year, (ii) unaudited consolidated quarterly financial statements
no later
than 60 days after each quarter and (iii) such operational information
as
reasonably requested by FB Transportation and the Third Party Investors.
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Board
Matters / Voting Rights:
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Purchaser’s
Board shall initially be composed of five members: (i) Xxxxxx X.
Xxxxx,
(ii) Xxxxx X. Xxxxxxx, (iii) two directors designated exclusively
by FB
Transportation (the “Fortis
Directors”)
and (iv) one director approved by the unanimous consent of FB
Transportation, Xxxxxx X. Xxxxx, and Xxxxx X. Xxxxxxx. Any replacements
for the director positions held by the Fortis Directors must be first
approved by FB Transportation. In addition, any replacements for
the
director positions held by Mr.. Xxxxx or Mr. Younger must also be
first
approved by FB Transportation. These arrangements will remain in
effect
through June 30, 2009.
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Restriction
on Transfer:
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Prior
to June 30, 2012, the Shareholders shall not transfer or otherwise
dispose
of any Common Shares or securities convertible, exercisable or
exchangeable into Common Shares, except (i) to an affiliate, in the
case
of FB Transportation and any Third Party Investor that is not an
individual, or a trust or other estate planning vehicle, in the case
of
any Management Party, any Fortis Employee or any Third Party Investor
that
is an individual (each, a “Permitted
Transferee”),
(ii) pursuant to a Public Offering (defined below) approved in accordance
with, and as described in, “Matters Requiring Board Approval” below, (iii)
to Purchaser, (iv) to another Shareholder so long as the transferee
complies with all conditions described under “Right of First Refusal/Tag
Along,” “Drag Along” and “Repurchase of Management Shares” below, (v) any
transfer that is approved by Shareholders holding collectively 65%
or more
of the outstanding voting shares of Purchaser, so long as the transferring
Shareholder complies with all conditions described under “Right of First
Refusal/Tag Along,” “Drag Along” and “Repurchase of Management Shares”
below, (vi) any transfer by FB Transportation to any person or entity
within ninety (90) days following the Closing, provided the transferee
agrees in writing to comply with the terms of the Shareholders Agreement,
or (vii) for any transfer under “Special Right of Sale for FB
Transportation” below. The foregoing shall not affect any restrictions on
transfer imposed under state or federal securities laws.
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3
Right
of First Refusal/Tag Along:
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Purchaser
(first) and then the Shareholders (second) shall have a right of
first
refusal with respect to the proposed sale of any Common Shares or
any
other equity in Purchaser by any of the Shareholders, in each case
with a
right of oversubscription of Common Shares unsubscribed by the other
holders of Common Shares. In addition, before any Shareholders may
offer
to sell collectively 35% or more of Purchaser’s outstanding Common Shares,
they must give the other Shareholders an opportunity to participate
in
such sale on a basis proportionate to the amount of securities held
by the
potential seller(s) and those held by the other Shareholders.
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Drag
Along:
|
If
one or more Shareholders holding collectively at least 75% of the
outstanding Common Shares propose to sell these Common Shares to
a third
party (who is not a Permitted Transferees), and such sale shall have
been
approved by FB Transportation, then the selling Shareholders shall
have
the right to require each other Shareholder to include in such sale
the
Common Shares of each such other Shareholder.
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Special
Right of Sale for
FB
Transportation:
|
If
FB Transportation or any affiliate(s) of FB Transportation that own
Common
Shares determines in good faith that the enactment, amendment or
interpretation of a law or governmental rule or regulation has made
ownership of Common Shares or continued performance under the Shareholders
Agreement impossible or illegal, or reasonably certain to result
in an
adverse effect on the business of FB Transportation or any of its
affiliate(s), then FB Transportation shall promptly notify Purchaser
and
the other Shareholders thereof, which notice shall constitute an
irrevocable offer to sell all Common Shares owned by FB Transportation
and
its applicable affiliate(s) to Purchaser and the remaining Shareholders
pursuant to the terms of the Shareholders Agreement. If Purchaser
and the
remaining Shareholders fail to purchase all such Common Shares, then
all
or any portion of such remaining Common Shares may be retained or
freely
transferred by FB Transportation and its applicable affiliate(s)
to any
third party, notwithstanding any restrictions set forth in the
Shareholders Agreement.
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Budget
Approval:
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Purchaser
will cause its management to prepare and to submit to the Board for
approval, at least thirty (30) days prior to the end of each fiscal
year,
(i) a comprehensive operating budget forecasting Purchaser’s revenues,
expenses, and cash position on a quarter-to-quarter basis for the
upcoming
fiscal year and (ii) a quarter-to-quarter capital expenditure budget
for
the upcoming fiscal year, both of which shall not become effective
until
approved by the Board.
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4
Matters
Requiring 75% Board Approval:
|
Unless
approved by the affirmative vote of at least 75% of the entire Board,
Purchaser shall not, and the Shareholders shall take all necessary
action
to cause Purchaser not to:
(A)
(i) liquidate, dissolve or wind up its affairs, or effect any Liquidation
Event (as defined below) (except as contemplated under the sections
entitled “Tag Along” and “Drag Along” below); (ii) authorize or create any
class or series of, or increase the authorized number of, or issue,
any
shares (including the Common Shares), or any options, warrants or
other
rights or securities convertible into or exercisable or exchangeable
for,
or otherwise relating to, any such shares, options, warrants, rights
or
securities (collectively, “Equity Securities”) (other than with respect to
one million five hundred thousand (1,500,000) Common Shares, including
those issuable upon exercise of options, which may be issued to employees
and directors of Purchaser under an equity incentive compensation
plan to
be approved by the Board (which approval shall require the affirmative
vote of both Fortis Directors), (iii) amend, alter, or repeal any
provision of the charter, byelaws, and any other constituent governing
documents of Purchaser; (iv) purchase or redeem, or declare or pay
any
dividend on, any Common Shares, (v) create or authorize the creation
of any debt security (and any extension, renewal, refinancing or
replacement thereof); (vi) adopt or approve any stock option plan
or other
executive equity compensation plan or benefit plan (other than as
referred
to in sub-clause (ii) of this paragraph; or (vii) increase or
decrease the size of the Board. The foregoing shall not affect or
be
applicable to the 1,300,000 Restricted Common Shares to be granted
to
Xxxxx Xxxxxxx at Closing pursuant to the terms of his employment
agreement, and such 1,300,000 Restricted Common Shares to be granted
to
Mr. Younger shall not be counted toward the 1,500,000 Common Shares
limitation set forth above in sub-clause (ii) of this sub-paragraph.
(B)
(i) make any loan or advance to, or acquire (whether by purchase,
merger, amalgamation, recapitalization, consolidation or otherwise)
any
shares or other securities of, any corporation, partnership or other
entity unless it is directly or indirectly wholly-owned by Purchaser
prior
to such loan, advance or acquisition; (ii) make any loan or advance
to any other person other than the extension of trade credit in the
ordinary course of Purchaser’s business; (iii) guarantee any
indebtedness or obligations of another, except for indebtedness of
any
subsidiary of Purchaser, or trade accounts of any subsidiary of Purchaser
arising in the ordinary course of Purchaser’s business; (iv) make any
investment other than investments in prime commercial paper, money
market
funds, certificates of deposit in any United States bank having a
net
worth in excess of $30,000,000 or obligations issued or guaranteed
by the
United States of America, in each case having a maturity not in excess
of
two years; (v) incur any aggregate indebtedness for borrowed money
(including, for this purpose, capital lease obligations) that at
any one
time is (or would be upon its incurrence) greater than $250,000 (and
any
extension, renewal, refinancing or replacement thereof), except that
trade
credit incurred in the ordinary course of Purchaser’s business shall not
be deemed indebtedness for borrowed money; (vi) make or commit to
the
making of any capital expenditure in excess of $1,000,000, that is
not
already included in a budget approved by the Board; (vii) enter into
or be a party to any transaction with any director, officer or employee
of
Purchaser or any “associate” (as that term is defined in Rule 12b-2
promulgated under the U.S. Securities Exchange Act of 1934, as amended
(the “Exchange
Act”))
of any such person, other than compensation arrangements for non-executive
employees that are included in a budget approved by the Board;
(viii) hire, fire or change the compensation of any executive
officer; (ix) change the principal business of Purchaser, enter new
lines of business, or exit the current line of business; (x) sell,
transfer, pledge or encumber any property of Purchaser or its
subsidiaries, other than certain customary “permitted” liens, liens
created in connection with indebtedness permitted in sub-clause (v)
of the
previous paragraph and liens granted in the ordinary course of Purchaser’s
business; (xi) settle any litigation where the amounts in dispute
exceed
$100,000; (xii) acquire or dispose of (except in the ordinary course
of
business) assets having a value in excess of $200,000; (xiii) establish
any committee of the Board, designate the members of any such committee
(including appointing any replacement members), amend the charter
for any
such committee, amend the resolutions of the Board establishing the
delegation of authority to any such committee or terminate any such
committee; (xiv) cause any subsidiary of Purchaser to take any action
that
the Purchaser is restricted from doing under the terms of this paragraph
and the preceding paragraph; (xv) sell its Common Shares in a firm
commitment underwritten public offering pursuant to a registration
statement under the U.S. Securities Act of 1933, as amended (a
“Public
Offering”);
or (xvi) make any amendment to Purchaser’s debt facilities or other debt
arrangements.
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5
Liquidation
Event:
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“Liquidation
Event”
shall mean any transaction or series of related transactions constituting:
(i) a voluntary or involuntary liquidation, reorganization, dissolution
or
winding up of Purchaser, (ii) a direct or indirect transfer, in one
or a
series of transactions, of all or substantially all of the assets
of
Purchaser, (iii) a sale, amalgamation, merger, reclassification,
recapitalization, restructuring, consolidation or business combination
or
any other similar transaction of or involving Purchaser (unless with
respect to any transaction described in clause (i), (ii) or (iii)
of this
definition, the holders of record of Purchaser’s voting shares as
constituted immediately prior to the consummation of any such transaction
will immediately after such transaction hold greater than 50% of
the
voting shares of the acquiring entity or surviving entity, or either
of
such entities’ parent, in approximately the same relative percentages
after any such transaction as before any such transaction), or (iv)
the
consummation of any transaction by which any person or group (as
referred
to in Section 13(d)(3) of the Exchange Act), other than FB Transportation,
the Fortis Employees, the Third Party Investors or any of their respective
Permitted Transferees, is or becomes the “beneficial owner” (as such term
is defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of 50% or more of the voting shares of Purchaser.
Prior
to June 30, 2012, any approval of a Liquidation Event described in
clauses
(ii) or (iii) contained in the definition of Liquidation Event above
shall
also require the affirmative vote of Shareholders holding at least
65% of
the outstanding Common Shares. On and after June 30, 2012, the
Shareholders shall use their commercially reasonable efforts to cause
Purchaser to effect a Liquidation Event to occur as soon as reasonably
practicable after such date, provided that Shareholders holding more
than
65% of the outstanding Common Shares do not disapprove of any such
Liquidation Event.
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Purchase
or Repurchase of
Shareholders’
Shares:
|
Until
June 30, 2012, the Purchaser and the Shareholders will be subject
to usual
and customary share purchase and repurchase arrangement provisions
to be
determined by mutual agreement by and among the Purchaser and the
initial
Shareholders, including rights of first refusal and rights to purchase
and
repurchase Common Shares upon the occurrence of certain events affecting
an Investor Party, such as death, disability, divorce, foreclosure,
retirement, insolvency, voluntary or involuntary transfer or sale
and
termination of employment of an Investor Party. On
and after June 30, 2012, it is currently intended that the Shareholders
shall not be subject to such share purchase or repurchase
arrangements.
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6
Termination:
|
The
rights and obligations of each Shareholder under the Shareholders
Agreement shall terminate upon the earliest to occur of: (i) the
consummation of a Liquidation Event; (ii) the completion of any initial
Public Offering; or (iii) the occurrence of any event that does not
violate the terms of the Shareholders Agreement and reduces the number
of
Shareholders to one.
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OTHER
AGREEMENTS
|
Registration
Rights Agreement:
|
The
parties shall enter into a registration rights agreement that shall
provide for three demand registrations by any person holding at least
15%
of the registrable securities at any time following the earlier of
(a)
three (3) years after the date of the Closing and (b) six months
following
an initial public offering. In addition, the parties shall have piggyback
registration rights and the agreement shall contain such other usual
and
customary provisions as the parties may agree.
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Employment
Agreements:
|
Messrs.
Xxxxx and Younger will each enter into an employment agreement in
a form
reasonably acceptable to Purchaser and to FB Transportation. Messrs.
Xxxxx'x and Younger's employment agreements shall each have terms
and
conditions substantially the same as those contained in the proposed
draft
employment agreement attached to their respective equity commitment
letter
as Exhibit I thereto. Messrs.
Xxxxx and Younger will each waive any severance payments they may
be
entitled to under their existing employment arrangements. In addition,
Mr.
Younger will waive any transaction bonus that he may be entitled
to
receive upon the consummation of the Transaction. The terms and conditions
of Messrs. Xxxxxxx’x and Xxxxx’x current employment agreements with
certain subsidiaries of the Company shall remain in full force and
effect
and will not be affected by the Transaction.
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Employee
Stock Options,
Restricted
Shares, Etc.:
|
Subject
to the provisions set forth above, the Board shall implement such
employee
stock option, restricted shares and such other equity compensation
plans
as it may determine.
|
Definitive
Agreements;
Governing
Law:
|
This
summary of terms does not constitute or create, and shall not be
deemed to
constitute or create, any legally binding or enforceable obligation,
or
any commitment to invest, on the part of any party referred to in
this
summary of terms. No such obligation shall be created except by the
execution and delivery of definitive agreements containing such terms
and
conditions of as shall be agreed upon by the parties and then only
in
accordance with the terms and conditions of such agreements. All
such
definitive agreements shall be governed in all respects by the laws
of the
State of New York (except with respect to certain terms that shall
be
governed by the internal law of the jurisdiction of formation of
Purchaser).
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7