Exhibit 10.22
MANAGEMENT AGREEMENT
by and between
CRONOS CONTAINERS (CAYMAN) LTD.
and
CF LEASING LTD.
Dated as of September 18, 2002
================================================================================
ALL RIGHT, TITLE AND INTEREST IN AND TO THIS AGREEMENT ON THE PART OF CF LEASING
LTD HAVE BEEN ASSIGNED TO AND ARE SUBJECT TO A SECURITY INTEREST IN FAVOR OF
FORTIS BANK (NEDERLAND) N.V., AS AGENT, UNDER A SECURITY AGREEMENT, DATED AS OF
SEPTEMBER 18, 2002, FOR THE BENEFIT OF THE LENDERS AND THE OTHER PERSONS
REFERRED TO THEREIN.
TABLE OF CONTENTS
Page
----
SECTION
1 DEFINITIONS........................................................1
2 APPOINTMENT/AGENCY.................................................9
3 DUTIES/RIGHTS OF MANAGER...........................................9
4 AUTHORITY/CONSENTS................................................12
5 REMUNERATION......................................................12
6 PAYMENTS TO/FROM BORROWER.........................................13
7 REPORTS/BOOKS AND RECORDS/INSPECTION..............................13
8 WARRANTY..........................................................17
9 INSURANCE.........................................................18
10 TERM; RESIGNATION BY MANAGER......................................19
11 MANAGER DEFAULT...................................................19
12 NON-EXCLUSIVITY...................................................24
13 SUB-CONTRACTORS AND AGENTS........................................24
14 LIENS.............................................................24
15 NO PARTNERSHIP....................................................24
16 FORCE MAJEURE.....................................................25
17 CURRENCY/BUSINESS DAY.............................................25
18 INDEMNIFICATION...................................................25
19 NO BANKRUPTCY PETITION AGAINST BORROWER...........................26
20 REPRESENTATIONS AND WARRANTIES....................................26
21 GENERAL...........................................................28
Exhibit A Form of Manager Report
Exhibit B Form of Asset Base Certificate
Exhibit C Copy of Lease Agent Agreement
i
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (as amended, modified and supplemented from
time to time in accordance with the terms hereof, this "Agreement") is dated as
of September 18, 2002 between CF LEASING LTD., a company with limited liability
organized and existing under the laws of Bermuda whose registered office is
located at Xxxxxxxxx Xxxxx, Xxxxxx Xxxxxx, Xxxxxxxx XX 11, Bermuda (the
"Borrower") and CRONOS CONTAINERS (CAYMAN) LTD., a corporation organized and
existing under the laws of the Cayman Islands whose office is located at
Xxxxxxxxxx Xxxxx, X.X. Xxx 00000 XXX, Xxxxxx Xxxx Grand Cayman, Cayman Islands
("Cronos" or the "Manager").
RECITALS
WHEREAS, the Borrower is the owner of the Managed Containers (as defined
herein); and
WHEREAS, the Manager is in the business of managing Containers (as
defined herein) on behalf of owners of containers, and is experienced in
administration of companies that own and operate containers;
NOW, THEREFORE, in consideration of the premises and mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
1. DEFINITIONS
Capitalized terms used in this Agreement shall have the following
meanings, and the definitions of such terms shall be equally applicable to the
singular and plural forms of such terms:
"ACQUISITION AGREEMENT" shall have the meaning set forth in Section 3.3
hereof.
"ACQUISITION AGENT" means Cronos.
"ACQUISITION FEE" shall have the meaning set forth in Section 5.2(a)
hereof.
"ADMINISTRATIVE FUNCTION" shall have the meaning set forth in Section
2.1 hereof.
"AFFILIATE" shall have the meaning set forth in Section 101 of the Loan
Agreement.
"AGENT" means the Person fulfilling the role of the Agent under the Loan
Agreement; Fortis will be the initial Agent.
"AGREEMENT TERMINATION DATE" means the date on which the Manager
receives notice that Manager has been terminated as the manager of the Managed
Containers pursuant to the provisions of Section 11.2 hereof.
"APPLICABLE LAW" shall have the meaning set forth in Section 101 of the
Loan Agreement.
"ASSET BASE" shall have the meaning set forth in Section 101 of the Loan
Agreement.
"ASSET BASE CERTIFICATE" means an Asset Base Certificate substantially
in the form attached hereto as Exhibit B.
"BACK-UP MANAGER" means Fortis or any of its Affiliates.
"BOARD MAJORITY" means, with respect to an action to be approved by the
Board of Directors of the Borrower, approval of such action by Directors
representing seventy percent (70%) or more of the total number of Directors then
constituting the Board of Directors of the Borrower.
"BORROWER" shall have the meaning set forth in the preamble hereof.
"BORROWER EXPENSES" shall have the meaning set forth in Section 101 of
the Loan Agreement.
"BUSINESS DAY" shall have the meaning set forth in Section 101 of the
Loan Agreement.
"CASUALTY LOSS" shall have the meaning set forth in Section 101 of the
Loan Agreement.
"CASUALTY PROCEEDS" shall have the meaning set forth in Section 101 of
the Loan Agreement.
"CHANGE OF CONTROL" shall have the meaning set forth in Section 101 of
the Loan Agreement.
"COLLATERAL" shall have the meaning set forth in Section 1 of the
Security Agreement.
"COLLECTION PERIOD" shall have the meaning set forth in Section 101 of
the Loan Agreement.
"CONSOLIDATED TANGIBLE NET WORTH" shall have the meaning set forth in
Section 101 of the Loan Agreement.
"CONTAINER" or "CONTAINER" shall have the meaning set forth in Section
101 of the Loan Agreement.
"CONTAINER IDENTIFICATION NUMBER" means the unique reference number
assigned to a Container which is painted on or affixed to such Container.
"CRONOS" shall have the meaning set forth in the preamble hereof.
"DETERMINATION DATE" shall have the meaning set forth in Section 101 of
the Loan Agreement.
-2-
"DIRECT OPERATING EXPENSE PAYMENTS" for any measurement period means all
fixed or variable operating costs and expenses to the extent actually paid by
Manager in connection with the use and/or operation of the Managed Containers
during such Collection Period but only to the extent not otherwise payable by
the relevant user of such Managed Container and net of any rebate, discount or
other reduction relating to the relevant cost or expense, including without
limitation all of the following:
(i) expenses of maintaining, repairing, refurbishing, storing,
positioning, transporting and handling of the Managed Containers (in each case
in accordance with the provisions of this Agreement),
(iii) the proportion of the fees and expenses of agents used by
Manager in the ordinary course of its business that relate to the leasing of
Containers (such proportion calculated on a pro-rata basis according to the
proportion that the TEU of the Managed Containers bears to the TEU of the
Containers in the Container Fleet, including the Managed Containers), depot
charges applicable to the Managed Containers (to the extent not charged as a
storage expense referred to in subparagraph 1 above) and insurance premiums (as
provided for pursuant to Section 7 hereof) including premiums paid by, or to
Affiliates of, Manager,
(ii) legal fees and expenses incurred by Manager in connection with
the Managed Containers and the collection of amounts payable by container users
pursuant to Leases relating to the Managed Containers,
(iv) charges, assessments, levies or duties of whatever kind or
nature imposed upon or against the Managed Containers,
(v) ad valorem, gross receipts, property or other taxes levied
against or upon the Managed Containers or the amounts payable in respect of the
leasing thereof,
(vi) the costs of any examination, investigation or other
proceedings conducted by any regulatory body relating to operation of the
Managed Containers, and
(vii) the cost of any capital improvement with respect to a Managed
Container payable by Manager in respect of such measurement period; and
Notwithstanding the above, Direct Operating Expense Payments do not include (x)
any Borrower Expenses or (y) marketing, general and administrative expenses of
Manager or its Affiliates, whether or not allocable in part or in whole to the
Managed Containers.
"DIRECT OPERATING EXPENSES" for any measurement period means all fixed
or variable operating costs and expenses to the extent incurred by Manager in
connection with the use and/or operation of the Managed Containers during such
Collection Period but only to the extent not otherwise payable by the relevant
user of such Managed Container and net of any rebate, discount or other
reduction relating to the relevant cost or expense, including without limitation
all of the following:
-3-
(i) expenses of maintaining, repairing, refurbishing, storing,
positioning, transporting and handling of the Managed Containers (in each case
in accordance with the provisions of this Agreement),
(ii) the proportion of the fees and expenses of agents used by
Manager in the ordinary course of its business that relate to the leasing of
Containers (such proportion calculated on a pro-rata basis according to the
proportion that the TEU of the Managed Containers bears to the TEU of the
Containers in the Container Fleet, including the Managed Containers), depot
charges applicable to the Managed Containers (to the extent not charged as a
storage expense referred to in subparagraph 1 above) and insurance premiums (as
provided for pursuant to Section 7 hereof) including premiums paid by, or to
Affiliates of, Manager,
(iii) legal fees and expenses incurred by Manager in connection with
the Managed Containers and the collection of amounts payable by container users
pursuant to Leases relating to the Managed Containers,
(iv) charges, assessments, levies or duties of whatever kind or
nature imposed upon or against the Managed Containers,
(v) ad valorem, gross receipts, property or other taxes levied
against or upon the Managed Containers or the amounts payable in respect of the
leasing thereof,
(vi) the costs of any examination, investigation or other
proceedings conducted by any regulatory body relating to operation of the
Managed Containers, and
(vii) the cost of any capital improvement with respect to a Managed
Container payable by Manager in respect of such measurement period; and
Notwithstanding the above, Direct Operating Expenses do not include (x) any
Borrower Expenses or (y) marketing, general and administrative expenses of
Manager or its Affiliates, whether or not allocable in part or in whole to the
Managed Containers.
"DISPOSITION FEES" shall have the meaning set forth in Section 5.3
hereof.
"DOLLARS" or "$" shall have the meaning set forth in Section 101 of the
Loan Agreement.
"EARLY AMORTIZATION EVENT" shall have the meaning set forth in Section
101 of the Loan Agreement.
"EBIT RATIO" shall have the meaning set forth in Section 101 of the Loan
Agreement.
"ELIGIBLE INVESTMENTS" shall have the meaning set forth in Section 101
of the Loan Agreement.
"EVENT OF DEFAULT" shall have the meaning set forth in Section 101 of
the Loan Agreement.
-4-
"FLEET" means, as of any date of determination, the entire fleet of
Containers (including the Managed Containers) then owned or managed by the
Manager.
"FORTIS" means Fortis Bank (Nederland) N.V., a Naamloze Vennootschap,
its successors and assigns.
"GAAP" or "GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" shall have the
meaning set forth in Section 101 of the Loan Agreement.
"GOVERNMENTAL AUTHORITY" shall have the meaning set forth in Section 101
of the Loan Agreement.
"GROSS CONTAINER REVENUE RECEIPTS" means for any measurement period:
1. the gross amounts actually received by Manager during such
measurement period from the leasing of the Managed Containers pursuant
to Leases, including, without limitation, amounts in respect of per diem
charges, pick-up and turn-in charges, charges for early termination,
transportation charges, realized exchange differences, pre-trip
inspection charges, direct interchange charges, handling and repair
charges, off-hire service charges, damage protection premiums and other
charges relating to or arising from the Managed Containers, and
2. all other amounts actually received by Manager which are
attributable to the Managed Containers, including but not limited to (i)
amounts received from the manufacturers or sellers of the Managed
Containers for breach of sale warranties relating thereto or in
settlement or satisfaction of any other claims, losses, disputes or
proceedings relating to the Managed Containers, (ii) amounts received
from any other Person in settlement of any claims, losses, disputes or
proceedings relating to the Managed Containers, including insurance
proceeds relating thereto, (iii) amounts representing insurance proceeds
for lost lease revenues and (iv) any insurance premiums relating to the
Managed Containers which have been refunded by the insurer.
Notwithstanding the above, Gross Container Revenue Receipts do not include Sales
Proceeds.
"GROSS CONTAINER REVENUES" means for any measurement period:
1. the gross amounts actually earned by Manager during such
measurement period from the leasing of the Managed Containers pursuant
to Leases, including, without limitation, amounts in respect of per diem
charges, pick-up and turn-in charges, charges for early termination,
transportation charges, realized exchange differences, pre-trip
inspection charges, direct interchange charges, handling and repair
charges, off-hire service charges, damage protection premiums and other
charges relating to or arising from the Managed Containers, and
2. all other amounts actually earned by Manager which are
attributable to the Managed Containers, including but not limited to (i)
amounts earned from the manufacturers or sellers of the Managed
Containers for breach of sale warranties relating thereto or in
settlement or satisfaction of any other claims, losses, disputes or
proceedings
-5-
relating to the Managed Containers, (ii) amounts earned from any other
Person in settlement of any claims, losses, disputes or proceedings
relating to the Managed Containers, including insurance proceeds
relating thereto, (iii) amounts representing insurance proceeds for lost
lease revenues and (iv) any insurance premiums relating to the Managed
Containers which have been refunded by the insurer.
Notwithstanding the above, Gross Container Revenues do not include Sales
Proceeds.
"INDEBTEDNESS" shall have the meaning set forth in Section 101 of the
Loan Agreement.
"INSOLVENCY PROCEEDING" means a proceeding under the United States
Bankruptcy Code or the Bermuda Companies Act 1981 or similar applicable law in
any other applicable jurisdiction.
"INTEREST EXPENSE" means for any period, the aggregate amount of
interest expense as shown for such period on the income statement of the Manager
or the Borrower, as applicable.
"INTEREST RATE HEDGE AGREEMENT" shall have the meaning set forth in
Section 101 of the Loan Agreement.
"INTEREST RATE HEDGE PROVIDER" shall have the meaning set forth in
Section 101 of the Loan Agreement.
"LEASE" shall have the meaning set forth in Section 101 of the Loan
Agreement.
"LENDER" shall have the meaning set forth in Section 101 of the Loan
Agreement.
"LESSEE" means any Person to whom the Manager (in its capacity as
lessor) leases one or more containers.
"LIEN" shall have the meaning set forth in Section 101 of the Loan
Agreement.
"LIST OF CONTAINERS" shall have the meaning set forth in Section 101 of
the Loan Agreement.
"LOAN AGREEMENT" means the Loan Agreement, dated as of September 18,
2002, by and among the Borrower, the Agent and the Lenders from time to time
party thereto, as such agreement may be amended, modified or supplemented from
time to time in accordance with its terms.
"MANAGED CONTAINERS" means all of the containers owned by Borrower from
time to time, including, without limitation, any Containers acquired by the
Borrower in accordance with the provisions of Section 3.3 hereof.
"MANAGEMENT FEE" shall have the meaning set forth in Section 5.1 hereof.
"MANAGEMENT FUNCTIONS" shall have the meaning set forth in Section 2.1
hereof.
"MANAGER" shall have the meaning set forth in the preamble hereof.
-6-
"MANAGER DEFAULT" shall mean the existence of any of the events or
conditions set forth in Section 11.1 hereof beyond any applicable grace or cure
period set forth therein.
"MANAGER REPORT" means a written completed informational statement by
Manager in the form attached hereto as Exhibit A to be provided by Manager in
accordance with the terms of this Agreement.
"MEMBERS AGREEMENT" shall have the meaning set forth in Section 101 of
the Loan Agreement.
"NET BOOK VALUE" shall have the meaning set forth in Section 101 of the
Loan Agreement.
"NET CONTAINER REVENUE RECEIPTS" means, for any period of measurement,
the excess (if any) of (x) the Gross Container Revenue Receipts for such period,
over (y) the Direct Operating Expense Payments for such period.
"NET CONTAINER REVENUES" means, for any period of measurement, the
excess (if any) of (x) the Gross Container Revenues for such period, over (y)
the Direct Operating Expenses for such period.
"NET INCOME" means the net income of the Borrower as determined in
accordance with GAAP.
"NOTE" shall have the meaning set forth in Section 101 of the Loan
Agreement.
"OPINION OF COUNSEL" shall have the meaning set forth in Section 101 of
the Loan Agreement.
"OUTSTANDING" shall have the meaning set forth in Section 101 of the
Loan Agreement.
"OUTSTANDING OBLIGATIONS" shall have the meaning set forth in Section
101 of the Loan Agreement.
"PAYMENT DATE" shall have the meaning set forth in Section 101 of the
Loan Agreement.
"PERMITTED LIENS" shall have the meaning set forth in Section 101 of the
Loan Agreement.
"PERSON" shall have the meaning set forth in Section 101 of the Loan
Agreement.
"PURCHASE AGREEMENT" means the Purchase Agreement, dated as of September
18, 2002, between the Borrower and Cronos Equipment (Bermuda) Ltd., as such
agreement may be amended, modified or supplemented from time to time in
accordance with its terms.
"PURCHASE PARAMETERS" shall have the meaning set forth in Section 1.1 of
the Members Agreement.
-7-
"RESTRICTED CASH ACCOUNT" shall have the meaning set forth in Section
101 of the Loan Agreement.
"SALES PROCEEDS" means, with respect to any Managed Container, the gross
proceeds of the sale or other disposition of such Managed Container and
insurance proceeds, if any, received by Manager in respect of a Casualty Loss
affecting such Managed Container, less:
1. any commission, administrative fee or other amount of cash
paid, or to be paid, in connection with such sale or other disposition
(which shall include all handling charges incurred in connection with
the delivery of such Managed Container to the point of sale and any cash
paid, or to be paid, in connection with repairs in respect of damage to
such Managed Container, as determined in the sole discretion of
Manager), but excluding the Disposition Fee;
2. the amount considered appropriate by Manager to provide
reserves for the payment of taxes, insurance, repairs or other costs and
expenses of Manager attributable to such Managed Container sold or
otherwise disposed of; and
3. all costs, expenses and fees paid by Manager in order to
ensure that such Managed Container sold or otherwise disposed of
satisfies applicable import, customs, tax and other requirements and
restrictions and that all required permits and licenses have been
obtained and all applicable fees paid;
provided, however, that all of the amounts referred to in subparagraphs 1, 2,
and 3 of this definition shall not include (i) any applicable rebate, (ii) any
amount described therein which is charged as a Direct Operating Expense, (iii)
any amount by which the reserves set aside under subparagraph 2 above exceed the
costs and expenses actually incurred by Manager for which such reserves were set
aside and (iv) any payment received by Manager or any Affiliate thereof from the
purchaser of the relevant Managed Container or any other Person in partial or
full payment of such amounts (and to the extent that no such netting occurs, the
amount of any such rebate or payment shall form part of the Sales Proceeds of
the relevant Managed Container).
"SECURITY AGREEMENT" means the Security Agreement, dated as of September
18, 2002, by Borrower in favor of the Agent.
"STRUCTURING/ARRANGEMENT AGENT" means Fortis.
"STRUCTURING/ARRANGEMENT FEE" shall have the meaning set forth in
Section 5.2(B) hereof.
"SUBSIDIARY" shall have the meaning set forth in Section 101 of the Loan
Agreement.
"TERMINATED MANAGED CONTAINER" means any Managed Container which is
subject to the terms of this Agreement on the Agreement Termination Date.
"TEU" means twenty (20) foot equivalent units, a standard measure of the
size of a Container.
-8-
"TRANSACTION DOCUMENTS" shall have the meaning set forth in Section 101
of the Loan Agreement.
"TRUST ACCOUNT" shall have the meaning set forth in Section 101 of the
Loan Agreement.
"WARRANTY PURCHASE AMOUNT" shall have the meaning set forth in Section
1.1 of the Purchase Agreement.
Other capitalized terms used herein and not otherwise defined shall have the
meaning set forth in the Loan Agreement or, if not defined therein, as defined
in the Security Agreement.
2. APPOINTMENT/AGENCY.
2.1 Upon the terms and conditions hereinafter provided, Borrower hereby
appoints Cronos Containers (Cayman) Ltd. for the term set forth in
Section 10 hereof to (A) administer the Borrower's business, including
performance of all of Borrower's duties and observance of all of
Borrower's obligations under this Agreement, the Loan Agreement and the
Security Agreement (the functions described in this Section (A)
collectively, the "Administrative Functions") and (B) operate, lease and
manage the Managed Containers on behalf of Borrower (the functions
described in this Section (B) collectively, the "Management Functions").
In furtherance of the foregoing, the Borrower hereby grants to Manager
the authority to enter into, administer and terminate Leases, to sell,
transfer or otherwise dispose of the Managed Containers, to collect
monies and make disbursements on behalf of Borrower, and to manage its
finances. By executing this Agreement, Cronos Containers (Cayman) Ltd.
hereby accepts such appointment and agrees to perform the Management
Functions and the Administrative Functions upon the terms and conditions
herein.
2.2 The Borrower shall at all times retain full legal and equitable
title to the Managed Containers, notwithstanding the management thereof
by Manager hereunder. Manager shall not make reference to or otherwise
deal with or treat the Managed Containers in any manner except in
conformity with this Section 2.2.
2.3 Manager shall ensure that the Managed Containers shall carry livery
and other such markings as may be required for their operation in the
marine shipping service including, for each Managed Container, the
Container Identification Number of that Managed Container.
3. DUTIES/RIGHTS OF MANAGER.
3.1 (a) Manager shall operate, manage, lease and administer the Managed
Containers as part of its Fleet and shall perform all managerial and
administrative functions and provide or arrange for the provision of all
services of any nature which it considers necessary or desirable to
fulfill the Management Functions. Without prejudice to the generality of
the foregoing, Manager shall:
-9-
(i) seek Lessees, arrange for the leasing and enter into Leases
as lessor in its capacity of the agent of the Borrower, and
decide the identity of each Lessee, the period of each Lease,
the rental or other sums payable thereunder, and the form and
content of each Lease;
(ii) perform on behalf of Borrower the obligations of the lessor
under the Leases;
(iii) exercise all rights of the lessor under the Leases,
including, without limitation, in the name of Manager, the
invoicing and collection of rental and other payments due from
Lessees;
(iv) take any actions Manager deems necessary to ensure
compliance by Lessees with the terms of their Leases;
(v) log interchanges of the Managed Containers including the
return and re-lease of Managed Containers from depots;
(vi) inspect, repair, maintain, service and store the Managed
Containers to the extent Manager deems necessary for the
purposes of this Agreement, to comply with the Leases and in
accordance with Manager's maintenance and repair standards for
its Fleet;
(vii) sell (either outright or through lease/purchase
arrangements) Managed Containers in the ordinary course of its
business, including the Manager's sell/repair decision-making
procedures that are from time to time in effect; provided that,
after giving effect to sale no Asset Base Deficiency would then
result;
(viii) obtain insurance in accordance with the provisions of
Section 9 hereof and in respect of any matters which Manager
considers necessary or prudent, including, without limitation,
public liability insurance;
(ix) follow such credit policies with respect to the leasing of
the Managed Containers as it follows from time to time with
respect to its Fleet and, subject to such credit policies,
Manager may, in its sole discretion, (a) determine and approve
the creditworthiness of any Lessee (but Manager makes no
representation and warranty to Borrower as to the solvency or
financial stability of any Lessee), (b) determine that any
amount due from any Lessee is not collectible, (c) institute and
prosecute legal proceedings against a Lessee as permitted by
applicable law, (d) terminate or cancel any Lease, (e) recover
possession of Managed Containers from any Lessee, (f) settle,
compromise or release any proceeding or claim against a Lessee
in the name of Manager or, if appropriate, in the name of
Borrower, or (g) reinstate any Lease;
-10-
(x) ensure that each Managed Container carries its Container
Identification Number and other markings as may be required for
its operation in marine and intermodal shipping;
(xi) institute and prosecute claims against the manufacturers of
the Managed Containers as Manager may consider advisable for
breach of warranty, any defect in condition, design, operation
or fitness or any other non-conformity with the terms of
manufacture and/or the related sale agreement; and
(xii) prepare and deliver the reports required pursuant to
Section 7 hereof.
(b) In discharging the Administrative Functions, Manager shall
perform the following tasks:
(i) contract for the services included in the definition of the
term "Borrower Expenses" and arrange for the Borrower to pay
such amounts in accordance with the terms of the Loan Agreement;
(ii) prepare and file all tax returns required to be filed by
Borrower, and arrange for the payment by the Borrower of all
taxes incurred by Borrower as a Borrower Expense;
(iii) in its sole discretion and in accordance with its normal
business practices, direct the Agent, in accordance with the
terms of the Loan Agreement, as to which Eligible Investments it
shall invest funds held in the Trust Account and the Restricted
Cash Account;
(iv) enter into Interest Rate Hedge Agreements on Borrower's
behalf from time to time in accordance with the provisions of
the Loan Agreement;
(v) maintain Borrower's financial books and records and prepare
Borrower's financial statements;
(vi) notify each Lender and the Agent of any change in the
location of Borrower's books and records; and
(vii) arrange for such secretarial, accounting, administrative,
financial, technical, research, consulting and legal services
(other than legal services which would be a Direct Operating
Expense) as the Borrower may require from time to time (it being
understood that such consulting and legal services constitute
Borrower Expenses).
Nothing contained in this Section 3.1(b) shall be construed as an
obligation of the Manager to pay Borrower Expenses from its own funds.
-11-
3.2 In performing its Management Functions pursuant to this Agreement,
Manager shall operate the Fleet in accordance with its reasonable
business practice and without preference to ownership thereof, and no
preference will be afforded for or against the Managed Containers.
Subject to the provisions of this Section 3.2 and the express terms of
the Transaction Documents, Manager shall have absolute discretion as to
the manner of performance of its duties and the exercise of its rights
under this Agreement.
3.3 [Reserved].
4. AUTHORITY/CONSENTS.
Borrower confers on Manager all such authorities and grants all such
consents as may be necessary for Manager's performance of its duties under this
Agreement, and will, at the request of Manager, confirm any such authorities and
consents to any third parties, execute such other documents and do such other
things as Manager may reasonably request for the purpose of giving full effect
to this Agreement and enabling Manager to carry out its duties hereunder.
5. REMUNERATION.
5.1 In consideration of Manager providing the Management Functions and
the Administrative Functions, the Borrower shall pay to Manager on each
Payment Date for the immediately preceding Collection Period a fee (the
"Management Fee") in an amount equal to the product of (i) the aggregate
Net Container Revenues for such Collection Period, multiplied by (ii)
eight percent (8.0%). The Management Fee shall be payable from amounts
on deposit in the Trust Account in accordance with the terms and
conditions of Section 302 of the Loan Agreement.
5.2 In connection with each acquisition of a container by the Borrower
pursuant to the provisions of Section 3.3 herein, the Borrower shall pay
to the Person(s) set forth below on the date of such acquisition:
(A) to the Acquisition Agent, a fee (the "Acquisition Fee") in
an amount equal to the product of (x) one and one quarter percent
(1.25%) and (y) the sum of the vendor's or manufacturer's invoice
price of such Container and all reasonable and customary inspection,
transport, and initial positioning costs necessary to put such
container in service; and
(B) to the Structuring/Arrangement Agent, a fee (the
"Structuring/Arrangement Fee") in an amount equal to the product of
(x) one and one quarter percent (1.25%) and (y) the sum of the
vendor's or manufacturer's invoice price of such Container and all
reasonable and customary inspection, transport, and initial
positioning costs necessary to put such container in service.
Each of the Acquisition Fee and the Structuring/Arrangement Fee shall be added
to the purchase price of the related Containers and shall be paid by the
Borrower on the date on which such Container is acquired by the Borrower.
-12-
5.3 In connection with each sale or other disposition of a Managed
Container by the Borrower, the Borrower shall pay to the Manager on each
Payment Date a fee (the "Disposition Fee") that is equal to the product
of (x) five percent (5%) and (y) the Sales Proceeds (exclusive of any
repair allowances) with respect to each sale of a Managed Container in
the immediately preceding Collection Period provided that such Sales
Proceeds exceeds the Net Book Value of the related Managed Container on
the date of disposition thereof. All such Disposition Fees earned in any
Collection Period shall be payable on the immediately succeeding Payment
Date from amounts on deposit in the Trust Account in accordance with the
provisions of Section 302 of the Loan Agreement.
6. PAYMENTS TO/FROM BORROWER.
6.1 The Manager shall remit to the Trust Account on a weekly basis all
Net Container Revenue Receipts actually received for the immediately
preceding calendar week.
6.2 Manager's obligation under this Agreement to deposit Net Container
Revenue Receipts to the Trust Account in accordance with the provisions
of Section 6.1 shall be absolute and unconditional and all payments
thereof shall be made free and clear of and without any deduction for or
on account of any set-off or counterclaim or any circumstance,
recoupment, defense or other right which Manager may have against
Borrower or any other Person for any reason whatsoever (whether in
connection with the transactions contemplated hereby or any other
transactions), including, without limitation, (i) any defect in title,
condition, design or fitness for use of, or any damage to or loss or
destruction of, any Managed Container, (ii) any insolvency, bankruptcy,
moratorium, reorganization or similar proceeding by or against Manager
or any other Person or (iii) any other circumstance, happening or event
whatsoever, whether or not unforeseen or similar to any of the
foregoing.
6.3 All payments hereunder shall be made in United States Dollars by
wire transfer of immediately available funds prior to 3:00 P.M., London
time, on the date of payment.
7. COVENANTS OF MANAGER.
7.1 On or prior to each Determination Date, Manager shall deliver to the
Borrower, the Agent and each Lender, in the format which Manager uses
for its Fleet, a report as to the Managed Containers reporting: (a)
utilization rates; (b) average lease rates; (c) receivables aging; and
(d) the collections (such report, a "Monthly Lease Report").
7.2 On or prior to each Determination Date, Manager will deliver a
Manager Report to each of the Borrower, the Agent and each Lender.
7.3 On or prior to (i) each Determination Date and (ii) any date on
which an Advance is made to Borrower under the Loan Agreement, Manager
will deliver to Borrower, the Agent and each Lender an Asset Base
Certificate, calculated using the data available to Manager (x) with
respect to the Asset Base Certificate delivered on each Determination
Date, as of the end of the immediately preceding Collection Period, and
(y) with respect
-13-
to the Asset Base Certificate delivered on each advance date, as of the
date of such Asset Base Certificate and after giving effect to such
advance.
7.4 Manager shall provide to each of the Borrower, the Agent and each
Lender an annual confirmation of the renewal of insurance required by
Section 9.2 hereof within forty-five (45) days of each such renewal.
7.5 Manager shall provide, in the form which Manager uses for its own
operations, any other reports and information available with respect to
the Managed Containers reasonably requested by the Borrower, the Agent
or any Lender.
7.6 Manager shall maintain, at the office of its Affiliate, Cronos
Containers Limited, located at Xxx Xxx Xxxxx, Xxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxxxx XX0 0XX, England, such books and records (including
computer records) with respect to the Managed Containers as it maintains
for the Fleet and the leasing thereof, including a computer database
including the Managed Containers (containing sufficient information to
generate the List of Containers and the reports required to be delivered
pursuant to this Agreement), any Leases relating thereto, the Lessees
(if on-hire) or location (if off-hire), and their Net Book Value.
Manager shall notify the Borrower, the Agent and each Lender of any
change in the location of Manager's books and records.
7.7 Upon reasonable request, Manager shall make available (and cause any
of its Affiliates engaged in the management of the Managed Containers to
be made available) to Borrower, the Agent and each Lender, for
inspection and copying, its books, records and reports relating to the
Managed Containers and copies of all Leases or other documents relating
thereto, all in the format which Manager uses for the Fleet. Such
inspections shall be conducted during normal business hours and shall
not unreasonably disrupt Manager's business. Manager shall grant the
Agent, the Borrower and each Lender access to Manager's computer systems
and data contained therein, but not copies of the software itself. The
Borrower, the Agent and each Lender shall have the right, upon
reasonable request, to inspect the Managed Containers at any time, upon
reasonable notice and to the extent Manager has access thereto, subject
to the Leases, and provided such inspection does not interfere with
utilization of the Managed Containers in the ordinary course of
business.
7.8 The Manager shall provide to the Borrower, each Lender promptly
after each shall become available, all of the following: (i) written
notice of any material change in the Manager's credit and collection
policy (which determination shall be made in the reasonable discretion
of the Manager), and (ii) summaries of all management letter comments
relating to the Borrower or Manager issued by the independent
accountants of the Borrower or Manager (as the case may be) to the board
of the directors of the Borrower or Manager (as the case may be) or any
of its committees that the Borrower or the Manager, in its sole
discretion, deems material.
7.9 The Manager will deliver to the Borrower, the Agent and each Lender:
-14-
(i) Immediately upon becoming aware of the existence of any
condition or event which constitutes a Manager Default or which,
with notice and lapse of time, would become a Manager Default, a
written notice describing its nature and period of existence and
what action the Manager is taking or proposes to take with respect
thereto;
(ii) As applicable and promptly upon their becoming available, one
copy of each report (including reports on Form 8-K, 10-K and 10-Q),
definitive proxy statement, registration statement (upon it
becoming effective), definitive prospectus and notices that the
Manager for and on behalf of Borrower, filed with or delivered to
any securities exchange or the Securities and Exchange Commission
or any successor agency; and
(iii) Promptly upon the Manager's becoming aware of:
(x) any threatened or pending investigation of it by any
Governmental Authority or agency, or
(y) any threatened or pending court or administrative
Proceeding which individually or in the aggregate involves
the possibility of materially and adversely affecting a
material portion of the Managed Containers or the business or
financial conditions of the Manager,
a written notice specifying the nature of such investigation or
proceeding and what action the Manager is taking or proposes to take
with respect thereto and evaluating its merits.
7.10 The Manager shall furnish or cause to be furnished to each Person
who is identified by the Agent to the Manager as a Person who was a
Lender at any time during such year and to the Agent, within a
reasonable time after the end of each calendar year, a report setting
forth the amount of principal and interest paid on each Note during such
year and such other customary factual information as any Lender
reasonably requests from time to time, to enable Lenders to prepare
their tax returns. In addition, if any class of Notes are issued with
original issue discount, the Manager shall provide or cause to be
provided to the IRS and the Lenders information statements with respect
to original issue discount as required by the Code or as such Lenders
may reasonably request from time to time.
7.11 The Manager shall provide to each of the Members (as defined in the
Members Agreement) each of the financial reports required pursuant to
the Members Agreement.
7.12 The Manager shall deliver to the Agent and each Lender:
(i) Annual Statements -- within 120 days after the end of each
fiscal year of each of the Borrower and The Cronos Group, one copy
of:
(a) the balance sheet of the Borrower and the consolidated
balance sheet of The Cronos Group and its consolidated
subsidiaries, at the end of such fiscal year; and
-15-
(b) statements of income, retained earnings and cash flows of
the Borrower and the consolidated statements of income,
retained earnings and cash flows of The Cronos Group and its
consolidated subsidiaries for the fiscal year then ended,
setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail and, in the case of The
Cronos Group, accompanied by an opinion of a firm of independent
certified public accountants of recognized national standing, stating
that such financial statements present fairly in all material respects
the financial condition of The Cronos Group and its consolidated
subsidiaries and have been prepared in accordance with generally
accepted accounting principles consistently applied (except for changes
in application in which such accountants concur and footnote), and that
the examination of such accountants in connection with such financial
statements has been made in accordance with generally accepted auditing
standards;
(ii) Quarterly Statements -- within 60 days after the end of each
fiscal quarter of each of the Borrower and The Cronos Group, one
copy of:
(a) the balance sheets of the Borrower and the consolidated
balance sheets of The Cronos Group and its consolidated
subsidiaries, at the end of such fiscal quarter; and
(b) the statements of income, retained earnings and cash
flows of the Borrower and the consolidated statements of
income, retained earnings and cash flows of The Cronos Group
and its consolidated subsidiaries for the fiscal quarter and
that portion of the fiscal year then ended, setting forth in
each case in comparative form the figures for the equivalent
timeframe for the previous year;
(iii) SEC and Other Reports -- promptly upon their becoming
available, one copy of each report (if any), definitive proxy
statement, registration statement (upon it becoming effective) and
definitive prospectus filed by The Cronos Group or the Borrower
with or delivered to any securities exchange or the Securities and
Exchange Commission or any successor agency; and
(iv) Requested Information -- with reasonable promptness, but in
any event within two calendar weeks of the date requested, (A) any
data and information so requested and (B) any other publicly
available information with respect to The Cronos Group, in each
case as may be requested from time to time by the Agent or any
Lender.
7.13 The Manager shall deliver to each of the Borrower, the Agent and
each Lender, within sixty (60) days after the end of each fiscal
quarter, one copy of:
(i) a certificate setting forth the calculation of EBIT Ratio of
the Borrower as of such quarter end;
-16-
(ii) a certificate setting forth the financial calculations for The
Cronos Group set forth in Section 11.1(p) and 11.1(r) hereof as of
such quarter end; and
(iii) certificate setting forth the Weighted Average Age of the
Managed Containers as of such quarter end.
7.14 Manager shall not, without the prior written consent of the Agent
amend, modify or terminate the lease agent agreement between the Manager
and Cronos Containers Limited that is in effect on the Closing Date;
provided, however, that the Manager and Cronos Containers Limited may
modify the fee arrangements set forth in the lease agent agreement
without the prior written consent of the Agent.
7.15 The Manager shall at all times comply with the Purchase Parameters,
as such Purchase Parameters may be amended or otherwise modified from
time to time. The Borrower shall provide the Manager with a copy of the
Purchase Parameters as in effect on the date hereof and shall promptly
provide to the Manager a copy of all amendments thereto, together with
evidence satisfactory to the Manager as to the approval by the board of
directors of the Borrower of each such amendment.
7.16 The Manager shall, at the Borrower's sole cost and expense and
solely to the extent that the Agent has not made such filings, execute
and file UCC financing statements, short form grants, charges and other
documents, and take such other action, in such manner and in such places
as may be required pursuant to Applicable Law or as may be reasonably
requested by the Agent, or any Lender to preserve, maintain, perfect,
continue and protect the first priority perfected security interest of
the Agent, on behalf of the Lenders, in the Collateral. The Manager or
an Affiliate thereof is holding the Leases (to the extent, but only to
the extent that, such Leases relate to the Managed Containers) on behalf
of, and for the benefit of, the Agent, on behalf of the Lenders. None of
such Leases shall have any marks or notations indicating that they have
been pledged assigned or otherwise conveyed to any Person other than the
Agent, on behalf of the Lenders.
8. WARRANTY.
8.1 THE MANAGED CONTAINERS ARE BEING DELIVERED BY BORROWER TO MANAGER
"AS IS". BORROWER MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR
IMPLIED, WITH RESPECT TO THE CONDITION, MERCHANTABILITY OR FITNESS FOR
ANY PARTICULAR PURPOSE OF THE MANAGED CONTAINERS, THE ABSENCE OF LATENT
OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, THE ABSENCE OF
OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR ANY OTHER
REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED.
8.2 MANAGER WARRANTS THAT IT WILL CARRY OUT ITS SERVICES WITH REASONABLE
CARE AND SKILL. THIS EXPRESS WARRANTY IS IN LIEU OF ALL OTHER
WARRANTIES, WHETHER EXPRESS OR IMPLIED. UNDER NO CIRCUMSTANCES SHALL
MANAGER HAVE ANY LIABILITY TO BORROWER FOR ANY SPECIAL, INDIRECT OR
CONSEQUENTIAL DAMAGES.
-17-
9. INSURANCE.
9.1 Manager shall require each Lessee of a Managed Container and depot
owners in which a Managed Container is stored to place and maintain a
primary insurance policy covering the Managed Containers against all
normally insurable risks (including, but not limited to, liability and
property casualty insurance) in amounts and on terms agreed to by
Manager. The amount of insurance coverage maintained by each Lessee
shall be in the sole discretion of Manager; provided, however, that the
amount and terms and conditions of such insurance shall be no less than
that required generally by Manager with respect to other Containers in
the Fleet of a similar type used in a similar manner by similar Lessees.
9.2 Manager shall place and maintain secondary insurance covering
physical loss, damage and liability coverage to the Managed Containers
in addition to and payable only upon the failure of the primary coverage
(as referred to in Section 9.1 hereof) upon such terms and in such
amounts, and with such deductibles, as shall be determined by Manager in
its sole discretion; provided, however, that the amount and terms and
conditions of such insurance shall be no less than that required
generally by Manager with respect to other Containers in the Fleet of a
similar type used in a similar manner by similar Lessees. Such insurance
shall cover physical damage to the Managed Containers while on land,
afloat, in transit or at rest anywhere in the world and liability for
damage to person or property for limits of at least $2 million per
occurrence. Any such casualty insurance shall be endorsed with a loss
payable clause in favor of Agent with respect to the Managed Containers,
and any such liability insurance shall name the Agent and each Lender as
an additional insured. As soon as practicable and in any event not later
than 30 days following the lapse or loss of coverage provided by such
secondary insurance, Manager shall give notice to Borrower and the Agent
that such secondary insurance is no longer in place with respect to the
Managed Containers. Notwithstanding the foregoing, Manager shall not be
required to maintain such secondary insurance unless such insurance is
available in the London commercial insurance market on terms and at
premium levels that are considered commercially reasonable by owners or
operators of containers in the marine cargo container industry.
9.3 Manager or its Affiliates may include the insurance required
hereunder in policies covering the entire Fleet, in which event the cost
thereof shall be apportioned between Borrower and the other container
owners on a pro rata basis according to proportion that the TEU of the
Managed Containers bears to the TEU of the total Containers in the
Fleet. All insurance premiums, including any premiums paid to Affiliates
of Manager, payable under such policies in the event of any loss shall
be included in Direct Operating Expense Payments on such basis.
9.4 Borrower hereby irrevocably appoints Manager as the agent of
Borrower for the purpose of receiving all monies payable under such
policy or policies of insurance as described in Sections 9.1 and 9.2
hereof, whether effected by Manager, depots or Lessees, and Manager may
give a good discharge therefor to the insurance company for all such
monies.
-18-
10. TERM; RESIGNATION BY MANAGER.
10.1 This Agreement shall come into force on the date hereof and,
subject to the provisions of Section 11 hereof, shall continue in force
with respect to a Managed Container until the earliest to occur of (i)
the destruction or loss of such Managed Container by its Lessee or other
third party, (ii) the sale or other disposition of such Managed
Container by Manager pursuant to the terms of this Agreement, (iii) the
date on which such Managed Container is repurchased or replaced pursuant
to the terms of the Purchase Agreement, and (iv) the Agreement
Termination Date.
10.2 The Manager may not resign from its obligations and duties as
Manager hereunder, except (i) with the prior written consent of the
Borrower and the Agent or (ii) upon a determination by the Manager that
the performance by Manager of its duties under this Agreement is no
longer permissible under applicable law, which determination shall be
evidenced by an Opinion of Counsel, in form and substance reasonably
satisfactory to the Borrower and the Agent, to such effect delivered to
the Agent and each Lender. No such resignation shall, to the extent
consistent with Applicable Law, become effective until the Back-up
Manager has assumed the responsibilities of the resigning Manager in
accordance with the terms of this Agreement and the other Transaction
Documents.
11. MANAGER DEFAULT.
11.1 The existence of any of the following events or conditions beyond
any applicable grace and/or cure period shall constitute a Manager
Default:
(a) Manager shall fail to (i) make any deposit to the Trust Account
within three (3) Business Days after the due date thereof, or (ii)
deliver a Manager Report or an Asset Base Certificate within three
(3) Business Days after the due date thereof or (iii) deliver any
of the financial statements set forth in Section 7.12 hereof within
ten (10) days after the required timeframes specified therein;
(b) Manager shall fail to carry and maintain (or cause to be
carried and maintained) liability insurance and, to the extent such
insurance is available on commercially reasonable terms, physical
loss and damage insurance with respect to the Managed Containers in
accordance with the requirements of Section 9 hereof for a period
of more than thirty (30) days from the earlier to occur of (A) an
officer of Manager obtaining actual knowledge of such failure and
(B) receipt of written notice by an officer of Manager of such
failure;
(c) Manager shall consent to the appointment of or taking
possession of all or a substantial part of its property by a
receiver, encumbrancer, liquidator or similar official, or shall
admit in writing its inability to pay its debts generally as they
become due, or shall make a general assignment for the benefit of,
or a composition with, all or some of its creditors, or shall
voluntarily commence any proceeding seeking liquidation,
reorganisation or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law, or being
-19-
unable to pay its debts as they fall due shall commence
negotiations with any one or more of its creditors with a view to
the general readjustment or rescheduling of its indebtedness;
(d) any covenant (to the extent not otherwise addressed in this
Section 9), agreement or statement made by Manager in this
Agreement or in any notice or other document, certificate or
statement delivered by it pursuant hereto (including any Manager
Report or Asset Base Certificate) or in connection herewith or
therewith the breach or non-performance of which is reasonably
likely have a material and adverse effect on the Borrower, Agent or
Noteholders and (where capable of remedy) such defect has not been
remedied within 30 days of the earlier to occur of (A) an officer
of Manager obtaining actual knowledge of such failure and (B)
receipt of written notice by Manager of such failure;
(e) any representation or warranty made by Manager in this
Agreement or in any notice or other document, certificate or
statement delivered by it pursuant hereto (including any Manager
Report or Asset Base Certificate) or in connection herewith or
therewith the breach or non-performance of which is reasonably
likely to have a material and adverse effect on the Borrower, Agent
or Noteholders and (where capable of remedy) such defect has not
been remedied within 30 days of the earlier to occur of (A) an
officer of Manager obtaining actual knowledge of such failure and
(B) receipt of written notice by Manager of such failure;
(f) a receiver, receiver and manager, liquidator, provisional
liquidator, administrator or other similar person shall be
appointed for Manager or a substantial part of its assets or any
resolution of the directors or shareholders of Manager shall be
passed or a petition shall be lodged for the purpose of such
appointment which shall not be revoked or set aside within 60 days
of being passed or lodged;
(g) Manager shall be insolvent or unable to pay its debts when they
fall due, or Manager shall stop, suspend or threaten to stop or
suspend payment of all or a material part of its debts or a
moratorium is agreed or declared in respect of or affecting all or
a material part of (or a particular type of) Manager's debts;
(h) a distress, attachment, execution or other legal process shall
be levied or enforced against the assets of Manager that has a
material adverse effect on the Borrower, Agent or Noteholders, such
determination to be made in the sole discretion of the Noteholders,
which shall not be revoked or set aside within 60 days of being
passed or lodged;
(i) a person entitled to the benefit of any mortgage, charge or
other encumbrance shall take possession of all or a material part
of the assets of Manager;
-20-
(j) the Independent Accountant of The Cronos Group shall resign or
otherwise be replaced and shall not have been replaced by a
replacement independent accountant within sixty (60) days after the
date of resignation or replacement;
(k) judgments, which individually or in the aggregate exceed
$1,000,000, are rendered against The Cronos Group, and which remain
unpaid and are unstayed on appeal, undischarged, unbonded or
undismissed for a period of thirty (30) days after the entry
thereof;
(l) the institution of any legal proceeding against the Manager or
any Affiliate, which, if determined adversely, would in the
reasonable judgment of the Agent (after consultation with counsel,
including counsel for the Manager) is reasonably likely to have a
material adverse effect on the ability of the Manager to perform
its obligations hereunder;
(m) the return of Xxxxxx X. Xxxxxxx in a management position with
the Manager or any of its Affiliates;
(n) except as permitted by Sections 13 and 21.5 hereof, Manager
assigns its interest under this Agreement;
(o) the Manager or The Cronos Group shall fail to pay any principal
of, premium or interest on or any other amount payable in respect
of any Indebtedness that is outstanding in a principal or notional
amount of at least Two Million Dollars ($2,000,000), either
individually or in the aggregate, when the same becomes due and
payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), and such failure shall continue
after the applicable grace period, if any, specified in the
agreement or instrument relating to such Indebtedness and provided
further that such payment default shall be determined without
giving effect to any permanent or temporary (i) extensions of
applicable grace periods which in aggregate exceed sixty (60) days
or (ii) waivers or forbearances which in the aggregate exceed sixty
(60) days; or any other event shall occur or condition shall exist
under any agreement or instrument relating to any such Indebtedness
and shall continue after the applicable grace period, if any,
specified in such agreement or instrument and provided further that
any such event or condition shall be determined without giving
effect to any permanent or temporary (i) extensions of applicable
grace periods which in aggregate exceed sixty (60) days or (ii)
waivers or forbearances which in aggregate exceed sixty (60) days,
if the effect of such event or condition is to accelerate, or to
permit the acceleration of (regardless of whether such amounts are
actually accelerated), the maturity of such Indebtedness or
otherwise to cause, or to permit the holder thereof to cause, such
Indebtedness to mature; or any such Indebtedness shall be declared
to be due and payable or required to be prepaid (other than by a
regularly scheduled prepayment) or redeemed, purchased or defeased,
or an offer to prepay, redeem, purchase or defease such
Indebtedness shall be required to be made, in each case, prior to
the stated maturity thereof;
-21-
(p) the Consolidated Tangible Net Worth of The Cronos Group (as
reflected in the most recently available financial statements of
The Cronos Group delivered pursuant to Section 7.12 hereof) shall
be less than an amount equal to the sum of (i) Forty Million
Dollars ($40,000,000) and (ii) the product of (x) fifty percent
(50%) and (y) all consolidated net income (but not reduced for net
losses), determined in accordance with GAAP, of The Cronos Group
and its consolidated Subsidiaries for all periods commencing after
December 31, 2000;
(q) a Change of Control shall occur with respect to The Cronos
Group, unless all of the following conditions are satisfied after
giving effect to such Change of Control: (A) The Cronos Group is
the surviving entity of such sale, conveyance, contribution,
transfer or lease of all, or substantially all, of its assets to
any Person, (B) no Manager Default (or event or condition which
with the giving of notice or the passage of time or both would
become a Manager Default) would occur after giving effect to such
Change of Control and (c) after giving effect to such Change of
Control, The Cronos Group has a Consolidated Tangible Net Worth
greater than or equal to its Consolidated Tangible Net Worth at the
end of the fiscal quarter immediately preceding such Change of
Control; or
(r) the EBIT Ratio (measured on a consolidated basis) of The Cronos
Group shall be less than 1.05:1.0, as calculated on a rolling
six-quarter basis, as of the end of any fiscal quarter.
11.2 If a Manager Default shall have occurred and be continuing, the
Agent (if any amounts owing pursuant to the Loan Agreement are still
outstanding) or, in all other cases, the Borrower, shall have the right
in its discretion, in addition to any other rights or remedies that it
may have under any Applicable Law or in equity, (i) to immediately
terminate this Agreement with respect to all Managed Containers then
subject to the terms of this Agreement, (ii) subject to any right of
quiet enjoyment of a Lessee under any Managed Container then on lease,
to repossess the Managed Containers wherever located (at Borrower's sole
cost and expense unless more than 5% of the Managed Containers are
located at a single depot in which case Manager shall bear the cost and
expense of the repossession of such Managed Containers that exceed 5% of
the total number of Managed Containers in the Fleet), and (iii) to take
any other such action as the Borrower or the Agent, as the case may be,
deems appropriate under the circumstances, including assigning this
Agreement to the Back-up Manager or any other Person designated by the
Agent. Notwithstanding such termination pursuant to the provisions of
this Section 11.2, Borrower shall continue to receive from the
terminated Manager all Net Container Revenue Receipts due hereunder
until such repossession is effected and the Lessees make payments with
respect to the Managed Containers to the Back-up Manager.
11.3 Upon any termination of this Agreement as aforesaid, Manager shall
cooperate with Borrower in transferring management of the Managed
Containers to the Back-up Manager or any other Person designated by the
Agent. Such cooperation shall include, without limitation, making
available books and records (including computer records) pertaining to
Manager's activities hereunder (including the status and location of
each Managed Container), promptly notifying Lessees of the repossession
of the Managed
-22-
Containers by Borrower and/or the Back-up Manager, transferring funds
belonging to Borrower to such accounts as are designated by Borrower
and/or the Back-up Manager and taking any other action as may be
reasonably requested by Borrower and/or the Back-up Manager to ensure
the orderly transfer and repossession of the Managed Containers to
Borrower or its designee. The Manager shall promptly remit to the
Back-up Manager or such other Person as the Agent shall designate all
payments received from the Lessees with respect to the Managed
Containers after the Agreement Termination Date. The Manager hereby
agrees to transfer to the Back-up Manager copies of its electronic
records and all other records, correspondence and documents relating to
the Managed Containers in the manner and at such times as the Back-up
Manager shall reasonably request and do any and all other acts or things
necessary or appropriate to effect the purposes of termination.
11.4 During the period commencing on the date on which the Borrower
acting at the direction of the Agent have terminated this Agreement, a
firm of Independent Accountants reasonably satisfactory to the Borrower,
acting at the direction of the Agent, will review for each month the
Manager's calculation of the Net Container Revenue Receipts. The
reasonable expense of such accountants shall be for the account of the
replaced Manager. Such Independent Accountants will provide a report to
the Agent, each Lender, the Manager and the Borrower, coincident with
the delivery of each Manager Report, as to the conformity of such
calculations with the terms of the Manager Report.
11.5 Manager, irrevocably and by way of security to Borrower for the
obligations of Manager herein, appoints Borrower to be its
attorney-in-fact in the event that Manager Default shall have occurred
and be continuing (with full power to appoint substitutes and to
delegate, including power to authorize the Person so appointed to make
further appointments) on behalf of Manager and in its name or otherwise
to execute any document, with power to date the same, and to give any
notice and to do any act or thing which Manager is obliged to execute or
do, under this Agreement or otherwise, and which Manager fails to do
after reasonable request therefor by Borrower; and any person appointed
as the substitute or delegate of Borrower shall, in connection with the
exercise of the said power of attorney, be the agent of Manager. Manager
hereby ratifies and confirms and agrees to ratify and confirm whatever
any such attorney shall do or propose to do in the exercise or purported
exercise of all or any of the powers, authorities and discretion
referred to in this paragraph.
11.6 Upon the occurrence of a Manager Default, Manager and Borrower
shall take reasonable direction in accordance with this Agreement from,
and fully cooperate with, Agent. The prior written consent of the Agent
must be obtained in order to waive any Manager Default or any or all of
its consequences. Upon any such waiver of a past default, such default
shall cease to exist, and any default arising therefrom shall be deemed
to have been remedied for every purpose of this Agreement. No such
waiver shall extend to any subsequent or other default or impair any
right consequent thereon except to the extent expressly so waived.
-23-
11.7 In no event shall Manager be required to act in any manner
inconsistent with the rights of Lessees under any Leases related to the
Managed Containers.
11.8 Termination of this Agreement shall be without prejudice to the
rights and obligations of the parties which have accrued prior to such
termination; provided, however, that any amount then due to Manager
shall be reduced by the reasonable and necessary out-of-pocket costs
incurred by Borrower, the Agent and the Back-up Manager in connection
with the removal and replacement of Manager.
12. NON-EXCLUSIVITY.
During the term of this Agreement, Manager may provide services (similar
or dissimilar) directly or indirectly to any other Person or on behalf of any
other Person.
13. SUB-CONTRACTORS AND AGENTS.
Borrower hereby consents to and agrees that, in performing its duties
hereunder, Manager may further contract with its Affiliates or Subsidiaries to
provide any or all services to be provided by Manager, provided that Manager
shall remain primarily liable for all services which its Affiliates have
contracted to perform. Borrower further consents to and agrees that Manager
shall be entitled to appoint subcontractors or agents who are not its Affiliates
or Subsidiaries to carry out any portion of its duties hereunder; provided,
however, that (i) Manager shall remain primarily liable for all such services
and (ii) the Agent shall have given its prior written consent to each such
appointment.
14. LIENS.
Manager agrees not to create, incur, assume or grant, or suffer to
exist, directly or indirectly, any lien, security interest, pledge or
hypothecation of any kind on or concerning the Managed Containers, title thereto
or any interest therein or in this Agreement to any Person other than Borrower,
except (i) liens for taxes not yet due or being contested in good faith by
appropriate proceedings so long as such proceedings do not involve any material
danger of the sale, forfeiture or loss of any Managed Container, (ii)
materialmen's, mechanics', workmen's, repairmen's or other similar liens arising
in the ordinary course of business (including those arising under maintenance
agreements entered into in the ordinary course of business) securing obligations
that are not overdue or are being contested in good faith by appropriate
proceedings so long as such proceedings do not involve any material danger of
the sale, forfeiture or loss of any Managed Container and (iii) the Liens
created pursuant to the Transaction Documents. Manager will promptly, at its
expense, take or cause to be taken such actions as may be necessary duly to
discharge any such lien not excepted above if the same shall arise at any time.
15. NO PARTNERSHIP.
Nothing in this Agreement shall be deemed to constitute a partnership
between the parties hereto.
-24-
16. FORCE MAJEURE.
Neither party shall be deemed to be in breach of its obligations
hereunder nor shall it be liable to the other for any loss or damage which may
be suffered as a direct or indirect result of the performance of any of their
respective obligations being prevented, hindered or delayed by reason of any
Force Majeure circumstances. "Force Majeure circumstances" shall mean any act of
God, war, riot, civil commotion, strike, lock-out, trade dispute or labor
disturbance, accident, breakdown of plant or machinery, explosion, fire, flood,
difficulty in obtaining workmen, materials or transport, government action,
epidemic, difficulty or impossibility in obtaining access to any of the Managed
Containers, or other circumstances whatsoever outside the control of such party
affecting the performance of such party's duties hereunder.
17. CURRENCY/BUSINESS DAY.
17.1 All sums payable under this Agreement shall be paid in U.S.
Dollars.
17.2 Notwithstanding anything to the contrary contained herein, if any
date on which a payment becomes due hereunder is not a Business Day,
then such payment may be made on the next succeeding Business Day with
the same force and effect as if made on such scheduled date.
18. INDEMNIFICATION.
18.1 Borrower shall defend, indemnify and hold Manager and its
Affiliates and their respective shareholders, officers, directors,
agents and employees (collectively, "Manager Indemnified Parties")
harmless from and against any Claims or Losses (defined as including all
claims, actions, damages, expenses, losses or liabilities, including,
without limitation, reasonable attorneys' fees and other out-of-pocket
expenses, incurred in defending against such Claims or Losses) asserted
against, or incurred by, any Manager Indemnified Party and arising with
respect to the Managed Containers or the services rendered by the
Manager to the Borrower (including Administrative Functions and
Management Functions) pursuant to the terms of this Agreement; provided,
however, that the foregoing indemnity shall not apply to any Claims or
Losses to the extent caused by, or arising from, (i) the gross
negligence or the willful misconduct of the Manager in the case of the
Administrative Functions, (ii) the negligence, gross negligence or
willful misconduct of Manager in the case of the Management Functions,
(iii) a breach by the Manager of its contractual obligations hereunder
(other than with respect to the Administrative Functions) or (iv) any
material misrepresentation made by the Manager herein. Manager hereby
subordinates its claims under this Section 18.1 to all claims which have
priority in payment under Section 302 of the Loan Agreement, and further
agrees that any such claims shall only be payable at the times and in
the amounts for which funds are available for such purpose pursuant to
Section 302 of the Loan Agreement; provided, however, that no such
subordination of the Manager shall apply to any amounts that would
otherwise be included in the definition of Direct Operating Expense
Payments set forth herein.
-25-
18.2 Cronos Containers (Cayman) Ltd., in its capacity as the initial
Manager, agrees to, and hereby does, indemnify and hold harmless the
Borrower, its assignees and their respective officers, directors,
employees and agents (each of the foregoing, an "Indemnified Party")
against any and all liabilities, losses, damages, penalties, costs and
expenses (including costs of defense and legal fees and expenses) which
may be incurred or suffered by any Indemnified Party (except to the
extent caused by the negligence or willful misconduct of any Indemnified
Party) as a result of claims, actions, suits or judgments asserted or
imposed against an Indemnified Party and arising out of (i) breach by
the Manager of its covenants and obligations hereunder related to the
Management Functions or (ii) a material breach by the Manager of its
representations and warranties set forth in this Agreement; provided,
however, that the indemnity obligation of Cronos Containers (Cayman)
Ltd. pursuant to this Section 18.2 shall not extend to any
consequential, indirect or special damages incurred by any Indemnified
Party except for losses incurred by the Lenders under the Loan Agreement
as a result of the conditions or events described in Sections (i) and
(ii) of this Section 18.2. The parties hereto hereby agree that (i)
nothing contained in this Section 18.2 shall be interpreted as an
implicit or explicit guarantee by Cronos Containers (Cayman) Ltd. of the
payment of the principal balance of, or accrued interest on, the Notes
and (ii) losses on the Notes may occur for various reasons including,
but not limited to, the financial inability of the Lessee to make rental
payments and/or the inability of the Manager to re-lease containers in
sufficient amounts or at sufficient rates to repay the Notes.
18.3 The obligations of the Borrower and the Manager under Sections 18.1
and 18.2 hereof, respectively, shall survive the termination of this
Agreement.
19. NO BANKRUPTCY PETITION AGAINST BORROWER.
Manager will not, prior to the date that is one (1) year and one (1) day
after the payment in full of the aggregate Outstanding Obligations, institute
against Borrower, or join any other Person in instituting against Borrower, an
Insolvency Proceeding. This Section 19 shall survive the termination of this
Agreement.
20. REPRESENTATIONS AND WARRANTIES.
20.1 Manager represents and warrants to Borrower that:
(a) The Manager is a corporation duly organized and validly
existing and in compliance under the laws of the Cayman Islands;
(b) The Manager has the requisite power and authority to enter into
and perform its obligations under this Agreement, and all requisite
corporate authorizations have been given for it to enter into this
Agreement and to perform all the matters envisaged hereby. Upon due
execution and delivery hereof this Agreement will constitute the
valid, legally binding and enforceable obligation of Manager,
subject to bankruptcy, insolvency, moratorium, reorganization and
other laws of general applicability relating to or affecting
creditors' rights and to general equity principles;
-26-
(c) The Manager has not breached its memorandum and articles of
association or any other agreement to which it is a party or by
which it is bound in the course of conduct of its business and
corporate affairs or any applicable laws and regulations of the
Cayman Islands in such manner as would in any such case have a
materially adverse effect on its ability to perform its obligations
under this Agreement;
(d) The consummation of the transactions contemplated by and the
fulfillment of the terms of this Agreement will not conflict with,
result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time or both) a
default under, the memorandum and articles of association of
Manager, or any material term of any indenture, agreement,
mortgage, deed of trust, or other instrument to which Manager is a
party or by which it is bound, or result in the creation or
imposition of any Lien upon any of its properties pursuant to the
terms of any such indenture, agreement, mortgage, deed of trust, or
other instrument, or violate any law or any order, rule, or
regulation applicable to Manager of any court or of any federal or
state regulatory body, administrative agency, or other Governmental
Authority having jurisdiction over Manager or any of its
properties; and
(e) There are (i) no proceedings or investigations pending, or, to
the knowledge of Manager, threatened, before any court, regulatory
body, administrative agency, or other tribunal or Governmental
Authority (A) asserting the invalidity of this Agreement, (B)
seeking to prevent the consummation of any of the transactions
contemplated by this Agreement, or (C) seeking any determination or
ruling that might materially and adversely affect the performance
by Manager of its obligations under, or the validity or
enforceability of, this Agreement; and (ii) no injunctions, writs,
restraining orders or other orders in effect against Manager that
would adversely affect its ability to perform under this Agreement.
(f) A true, complete and correct copy of the Lease Agent Agreement
between the Manager and Cronos Company Limited is attached as
Exhibit C hereto.
20.2 Borrower represents and warrants to Manager that:
(a) Borrower is a limited liability company duly organized, validly
existing and in compliance under the laws of Bermuda;
(b) Borrower has the requisite power and authority to enter into
and perform its obligations under this Agreement, and all requisite
corporate authorizations have been given for it to enter into this
Agreement and to perform all the matters envisaged hereby. Upon due
execution and delivery hereof this Agreement will constitute the
valid, legally binding and enforceable obligation of Borrower,
subject to bankruptcy, insolvency, moratorium, reorganization and
other laws of
-27-
general applicability relating to or affecting creditors' rights
and to general equity principles;
(c) Borrower has not breached its memorandum of association or
bye-laws or any other agreement to which it is a party or by which
it is bound in the course of conduct of its business and corporate
affairs or any applicable laws and regulations of Bermuda in such
manner as would in any such case have a materially adverse effect
on its ability to perform its obligations under this Agreement;
(d) The consummation of the transactions contemplated by and the
fulfillment of the terms of this Agreement will not conflict with,
result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time or both) a
default under, the memorandum of association or bye-laws of
Borrower, or any material term of any indenture, agreement,
mortgage, deed of trust, or other instrument to which Borrower is a
party or by which it is bound, or result in the creation or
imposition of any Lien upon any of its properties pursuant to the
terms of any such indenture, agreement, mortgage, deed of trust, or
other instrument, or violate any law or any order, rule, or
regulation applicable to Borrower of any court or of any federal or
state regulatory body, administrative agency, or other Governmental
Authority having jurisdiction over Borrower or any of its
properties; and
(e) There are (i) no proceedings or investigations pending, or, to
the knowledge of Borrower, threatened, before any court, regulatory
body, administrative agency, or other tribunal or Governmental
Authority (A) asserting the invalidity of this Agreement, (B)
seeking to prevent the consummation of any of the transactions
contemplated by this Agreement, or (C) seeking any determination or
ruling that might materially and adversely affect the performance
by Borrower of its obligations under, or the validity or
enforceability of, this Agreement, and (ii) no injunctions, writs,
restraining orders or other orders in effect against Borrower that
would adversely affect its ability to perform under this Agreement.
21. GENERAL.
21.1 All notices, demands or requests given pursuant to this Agreement
shall be in writing, sent by internationally-recognized, overnight
courier service or by telefax or hand delivery to the following
addresses:
To Manager: Cronos Containers (Cayman) Ltd.
X.X. Xxx 00000 SMB
Queensgate House
Xxxxxx Town Grand Cayman
Cayman Islands
Telephone:
Telefax:
-28-
Attention:
with a copy to:
Cronos Containers Limited
Xxx Xxx Xxxxx
Xxxx Xxxxxx
Xxxxxx
Xxxxxxxxxxxxxxx XX0 0XX
Xxxxxxx
Telephone: 44 1628.405580
Telefax: 44 1628.405648
Attention: Xxxxx X. Xxxxxxx
To Borrower: CF Leasing Ltd.
Xxxxxxxxx Xxxxx
Xxxxxx Xxxxxx
Xxxxxxxx XX 00, Xxxxxxx
Telephone: 000 000-0000
Fax: 000 000-0000
Attention: Secretary
To the Agent: Fortis Bank (Nederland) N.V.
Xxxxxxxxxx 00/0
X.X. Xxx 000
0000 XX Xxxxxxxxx
Xxx Xxxxxxxxxxx
Telephone: 00-00-000-0000
Telefax: 31 10 401 63 43
Attention: Menno Van Lacum
To any Lender: At its address as set forth in the Loan
Agreement.
Notice shall be effective and deemed received (a) two (2) days after
being delivered to the courier service, if sent by courier, (b) upon
receipt of confirmation of transmission, if sent by telecopy, or (c)
when delivered, if delivered by hand.
21.2 If any proceeding is brought for enforcement of this Agreement or
because of an alleged dispute, breach, default, in connection with any
provision of this Agreement, the prevailing party shall be entitled to
recover, in addition to other relief to which it may be entitled,
reasonable attorney fees and other costs incurred in connection
therewith.
21.3 Borrower and Manager shall each perform such further acts and
execute such further documents as may be necessary to implement the
intent of, and consummate the transactions contemplated by, this
Agreement.
-29-
21.4 If any term or provision of this Agreement or the performance
thereof shall to any extent be or become invalid or unenforceable, such
invalidity or unenforceability shall not affect or render invalid or
unenforceable any other provision of this Agreement and this Agreement
shall continue to be valid and enforceable to the fullest extent
permitted by law.
21.5 This Agreement shall be binding upon and inure to the benefit of,
and be enforceable by, Borrower and Manager, and their respective
successors in interest or permitted assigns; provided, however, that
this Agreement and the rights and duties of Manager hereunder may not be
assigned by Manager to any other Person, other than an Affiliate or
Subsidiary of Manager, without obtaining the prior written consent of
Borrower and the Agent (acting at the direction of the Lenders). The
Manager hereby acknowledges and agrees that Borrower shall assign all of
its rights, title and interest under this Agreement to the Agent on
behalf of the Lenders. Manager hereby consents to such assignment and
agrees that the Agent may enforce the rights and remedies of the
Borrower hereunder.
21.6 Waiver of any term or condition of this Agreement (including any
extension of time required for performance) shall be effective only if
in a written instrument signed by each of the Manager, the Borrower and
the Agent and shall not be construed as a waiver of any subsequent
breach or waiver of the same term or condition or a waiver of any other
term or condition of this Agreement. No delay on the part of any party
in exercising any right, power or privilege hereunder shall operate as a
waiver hereof.
21.7 The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of
this Agreement.
21.8 This Agreement represents the entire agreement between the parties
with respect to the subject matter hereof. The terms of this Agreement
may be amended, modified or waived only by a written instrument signed
by the Manager, the Borrower and the Agent. The Borrower shall forward
copies of any amendment to this Agreement to the Agent and each Lender.
21.9 This Agreement may be signed in two or more counterparts each of
which shall constitute an original instrument, but all of which together
shall constitute but one and the same instrument.
21.10 Any signature required with respect to this Agreement may be
provided via facsimile or by electronic means and shall in either case
be equally effective as the delivery of an originally executed
counterpart.
21.11 This Agreement shall be governed by and construed in accordance
with the substantive laws of the State of New York of the United States
of America (without regard to choice of law principles) applicable to
agreements made and to be performed therein and the obligations, rights,
and remedies of the parties under this Agreement shall be determined in
accordance with such laws. Any legal suit, action or proceeding against
Borrower or Manager arising out of or relating to this Agreement, or any
transaction
-30-
contemplated hereby, may, be instituted in any federal or state court in
the City of New York, State of New York, and each of the Borrower and
the Manager hereby waive any objection which it may now or hereafter
have to the laying of venue of any such suit, action or proceeding, and,
solely for the purposes of enforcing this Agreement, Borrower and
Manager each hereby irrevocably submits to the jurisdiction of any such
court in any such suit, action or proceeding. Each of Borrower and
Manager hereby irrevocably appoints and designates CT Corporation
System, having an address at 000 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx,
00000, its true and duly authorized agent for the limited purpose of
receiving and forwarding legal process in any such suit, action or
proceeding, and each of Borrower and Manager agrees that service of
process upon such party shall constitute personal service of such
process on such Person. Each of Borrower and Manager shall maintain the
designation and appointment of such authorized agent until the
termination of this Agreement; provided, however, if such agent shall
cease to so act, each of Borrower and Manager shall immediately
designate and appoint another such agent and each shall promptly deliver
to the other evidence in writing of such other agent's acceptance of
such appointment.
21.12 The parties hereto acknowledge that the Agent, its successors and
assigns are each an express third party beneficiary of this Agreement.
[Signature page follows.]
-31-
MANAGEMENT AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
CF LEASING LTD.
By: /s/ Xxxxx X. Xxxxxxx
---------------------
Xxxxx X. Xxxxxxx
Title Director
Date: September 18, 2002
CRONOS CONTAINERS (CAYMAN) LTD.
By: /s/ Xxxxxx X. Xxxxx
-------------------
Xxxxxx X. Xxxxx
Title Director
Date: September 18, 2002
C-1