Exhibit 10.11
 
SUBORDINATION AGREEMENT
 
This Subordination Agreement, dated the 16th day of July, 2010, by and among
Laminar Direct Capital, L.L.C., a Delaware limited liability company, in its
capacity as administrative agent for the Junior Lenders (as defined below) (in
such capacity, the "Junior Creditor"), Pac-Van, Inc., an Indiana corporation
("Pac-Van"), GFN North America Corp., a Delaware corporation ("GFN") (Pac-Van
and GFN are each an "Obligor" and collectively, the "Obligors"), and PNC Bank,
National Association ("PNC"), as administrative and collateral agent for the
Senior Lenders (as defined below) (in such capacity, the "Agent")
("Subordination Agreement").
 
W I T N E S S E T H:
 
WHEREAS, General Finance Corporation, a Delaware corporation ("Parent") is
indebted to the Junior Lenders in the aggregate principal amount of Fifteen
Million and 00/100 Dollars ($15,000,000) pursuant to (i) that certain Investment
Agreement, dated of even date herewith, by and among Parent, Junior Creditor and
the lenders party thereto (the "Junior Lenders") (the "Investment Agreement"),
(ii) the Notes (as defined in the Investment Agreement) (the "Junior Notes");
and (iii) any of the other Loan Documents (as defined in the Investment
Agreement) executed by Parent; and
 
WHEREAS, the Obligors have guaranteed the obligations of Parent under the
Investment Agreement and the Junior Notes and the other Subdebt Obligations (as
defined in the Investment Agreement) pursuant to that certain Continuing
Unconditional Guaranty, dated of even date herewith, made by the Obligors in
favor of the Junior Creditor, a true and correct copy of such guaranty being
attached hereto and made a part hereof as Exhibit A (the "Guaranty" and,
together with any documents, instruments and agreements executed by either
Obligor related thereto, the "Junior Creditor Documents") (the obligations of
the Obligors to the Junior Creditor pursuant to the Junior Creditor Documents
together with all other present and future obligations of the Obligors to the
Junior Creditor, whether or not contemplated by the Agent or the Senior Lenders,
the Junior Creditor or either Obligor are, collectively, the "Junior Creditor
Obligations");
 
WHEREAS, PNC and various other financial institutions from time to time (PNC and
such other financial institutions are each, a "Senior Lender" and collectively,
the "Senior Lenders") have agreed to make loans to Pac-Van and certain other
Borrowers (as defined in the Credit Agreement (as defined below)) (the "Loans")
pursuant to that certain Revolving Credit and Security Agreement, dated of even
date herewith (as amended, supplemented, modified or restated from time to time,
the "Credit Agreement"), by and among Pac-Van and the other Borrowers party
thereto, GFN and the other Guarantors (as defined in the Credit Agreement) party
thereto, the Senior Lenders and the Agent, as evidenced by, among other things,
the Notes (as defined in the Credit Agreement) (the "Senior Notes") (the
obligations of the Borrowers to the Senior Lenders pursuant to the Senior Notes,
the Credit Agreement, the other Other
 

 
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Documents (as defined in the Credit Agreement) and all other obligations of the
Loan Parties (as defined in the Credit Agreement) to the Senior Lenders
(including all Obligations (as defined in the Credit Agreement) and interest
accruing after the date on which any Loan Party becomes subject to the
jurisdiction of any federal or state debtor relief statute, whether or not
recoverable against such Loan Party), whether or not such debts are contemplated
by the Loan Parties, the Senior Lenders or the Junior Creditor, are hereinafter
collectively referred to as the "Bank Obligations");
 
WHEREAS, as a condition precedent to entering into the Credit Agreement, the
Agent and the Senior Lenders require that the Junior Creditor Obligations be
subordinated to the Bank Obligations; and
 
WHEREAS, in order to induce the Agent and the Senior Lenders to enter into the
Credit Agreement, the Junior Creditor has agreed to subordinate the Junior
Creditor Obligations to the Bank Obligations pursuant to the terms and
conditions of this Subordination Agreement.
 
NOW, THEREFORE, in consideration of the premises and mutual covenants contained
herein, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound hereby, agree as follows:
 
1. Unless otherwise defined herein, all capitalized terms used herein shall have
the meanings ascribed to them in the Credit Agreement.
 
2. The Junior Creditor will not ask, demand, sue for, take or receive from
either Obligor, in any manner, the whole or any part of any monies, now or
hereafter owing by either Obligor to the Junior Creditor pursuant to the Junior
Creditor Obligations until (i) the Bank Obligations are paid in full in cash and
discharged, or (ii) the Agent provides its prior written consent to either
Obligor, as applicable, and the Junior Creditor.  The Junior Creditor also
agrees that, regardless of whether the Bank Liabilities are secured or
unsecured, the Senior Lenders shall be subrogated to the Junior Creditor with
respect to the Junior Creditor's claims against either Obligor and the Junior
Creditor's rights and Liens, if any, in any of either Obligor's assets and the
proceeds thereof until all of the Bank Obligations shall have been fully paid in
cash and satisfied and all financing arrangements among either Obligor, the Loan
Parties, the Agent and the Senior Lenders have been terminated.
 
3. Notwithstanding any right of the Junior Creditor with respect to the Junior
Creditor Obligations, all rights and Liens of the Junior Creditor, whether now
existing or hereafter arising and howsoever existing, in any assets of either
Obligor shall be and hereby are subordinated to the rights and Liens of the
Agent and until the Bank Obligations shall have been fully paid in cash and
satisfied and all financing arrangements among either Obligor, the Loan Parties,
the Agent and the Senior Lenders have been terminated, the Junior Creditor shall
have no right to possession of any such assets or to foreclose upon any such
assets, whether by judicial action or otherwise.  In the event of (i) the
occurrence of a Default or an Event of Default under the Credit Agreement or any
of the Other Documents, (ii) any acceleration of the amount owed
 

 
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to the Junior Creditor pursuant to the Guaranty or any other Junior Creditor
Obligation or (iii) any distribution, division or application (partial or
complete), voluntary or involuntary, by operation of or otherwise of all or any
part of the assets of either Obligor or the proceeds thereof to creditors of the
Loan Parties by reason of the liquidation, dissolution or other winding up of
either Obligor's business or in the event of any sale, receivership, insolvency
or bankruptcy proceeding, or assignment for the benefit of creditors of either
Obligor, or any proceeding by or against either Obligor for any relief under any
bankruptcy or insolvency law relating to the relief of creditors, readjustment
of indebtedness, reorganizations, compositions or extensions, then and in any
such event all of the Bank Obligations shall first be paid in full in cash, or
payment thereof provided for in money or monies worth in accordance with the
terms thereof, before any payment is made on account of any Junior Creditor
Obligations; and upon any such distribution, division or application, any
payment or distribution of any kind or character, either in cash, securities or
other property, which shall be payable or deliverable upon or with respect to
the Junior Creditor Obligations shall be paid or delivered directly to the Agent
for application to the Bank Obligations until the Bank Obligations shall have
been fully paid and satisfied and all financing arrangements among either
Obligor, the other Loan Parties, the Agent and the Senior Lenders have been
terminated.
 
4. The Junior Creditor hereby irrevocably appoints the Agent as its
attorney-in-fact with full power to act in the place and stead of the Junior
Creditor, in all matters relating to or affecting the Junior Creditor
Obligations, including the right to make, present, file and vote such proofs of
claim against either Obligor on account of all or any part of the Junior
Creditor Obligations, as the Agent may deem advisable and to receive and collect
any and all distributions under any federal or state debtor relief statute on
account of the Junior Creditor Obligations and to apply the same on account of
the Bank Obligations.
 
5. Should any payment or distribution upon or with respect to the Junior
Creditor Obligations or any security therefor or proceeds thereof be received by
the Junior Creditor prior to the satisfaction of all of the Bank Obligations,
the Junior Creditor shall forthwith deliver the same to the Agent in precisely
the form received (except for the endorsement or assignment of the Junior
Creditor where necessary) for application to the Bank Obligations then due and
owing (whether by virtue of maturity or any installment or acceleration or
otherwise), and until so delivered the same shall be held in trust by the Junior
Creditor as the property of the Senior Lenders.
 
6. The Junior Creditor hereby represents, warrants and covenants to the Agent
that the Junior Creditor has not heretofore and will not in the future, without
the Agent's prior written consent in each instance, assign to or subordinate in
favor of any other Person any right, claim or interest in any part of the Junior
Creditor Obligations or commence or join with any other creditor in commencing
any bankruptcy, reorganization or insolvency proceeding against either
Obligor.  In addition, the Junior Creditor hereby represents, warrants and
covenants to the Agent that the Junior Creditor Obligations are unsecured and
shall not become secured or be reduced to judgment until the Bank Obligations
shall have been fully paid and satisfied and all financing arrangements among
either Obligor, the other Loan Parties, the Agent and the Senior Lenders have
been terminated.
 

 
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7. The Junior Creditor agrees that it may not at any time enter into any
agreement with either Obligor or Parent which modifies, changes or waives any
terms or conditions of the Junior Creditor Obligations including, but not
limited to, the Guaranty, while any of the Bank Obligations remain unpaid
without the prior written consent of the Agent.
 
8. The Agent and the Senior Lenders, at any time and from time to time, may
enter into such agreement or agreements with either Obligor and the other Loan
Parties as the Agent and the Senior Lenders may deem proper extending the time
of payment, increasing the amount of the Bank Obligations, increasing the
interest rate accruing with respect to the Bank Obligations or otherwise
altering the terms of the Credit Agreement or any Other Documents affecting any
security or guarantee conveyed in connection therewith, or may exchange, sell or
surrender or otherwise deal with such security, without notice to or the consent
of the Junior Creditor and without in any way impairing or affecting the rights
granted to the Agent (for itself and for the benefit of the Senior Lenders)
pursuant to this Subordination Agreement.
 
9. The Junior Creditor agrees that: (i) the provisions hereof shall inure to the
benefit of any financial institution obtained by Pac-Van and/or the other
Borrowers or any of the Senior Lenders to provide replacement working capital or
other financing for Pac-Van and/or the other Borrowers in place of any of the
Senior Lenders, regardless of whether any such replacement lender provides its
own financing or succeeds to any of the Senior Lenders' financing by assignment;
(ii) if requested by such replacement lender, the Junior Creditor shall execute
with such replacement lender a subordination agreement substantially similar to
this Subordination Agreement; and (iii) as a prior condition of any assignment
of any of its interests under any of the Junior Creditor Documents, the Junior
Creditor shall require the assignee to acknowledge this Subordination Agreement
and agree, in writing, to be bound by the terms and conditions hereof.
 
10. The Junior Creditor agrees to indemnify and to hold the Agent, the Senior
Lenders, their officers, directors, agents and employees (each, an "Indemnified
Party") harmless for any and all losses, damages, liabilities, expenses and
obligations, including attorneys' fees and expenses, as they arise, relating to
actions of the Junior Creditor taken contrary to this Subordination Agreement;
provided, however, that the foregoing indemnity shall not apply to claims,
damages, losses, liabilities and expenses solely attributable to an Indemnified
Party's gross negligence or willful misconduct.  The indemnity contained in this
Section shall survive the termination of this Subordination Agreement, payment
of any Bank Obligations and assignment of any rights hereunder.  If any action
or claim shall be brought or threatened against any Indemnified Party by reason
of or in connection with one of the foregoing events, the Agent, the Senior
Lenders or such Indemnified Party shall promptly notify the Junior Creditor in
writing.  The Junior Creditor may participate at its expense in the defense of
any such action or claim, including the employment of counsel and the payment of
all costs of litigation.  Notwithstanding the preceding sentence, such
Indemnified Party shall have the right to employ its own counsel and to
determine its own defense of such action in any such case, but the fees and
expenses of such counsel for such Indemnified Party shall be at the expense of
the Junior Creditor.  In the event that the Junior Creditor assumes the defense
of such proceedings and
 

 
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employs counsel in connection therewith, the Junior Creditor shall keep such
Indemnified Party, the Agent, the Senior Lenders and their respective counsels
currently informed of all material developments in such proceeding, including
the provision of all documents requested by such developments in such
proceeding, including the provision of all documents requested by such
Indemnified Party, the Agent, the Senior Lenders or their respective
counsels.  Neither such Indemnified Party, the Agent nor any of the Senior
Lenders shall be liable for any settlement of such action effected without the
prior written consent of such Indemnified Party, the Agent, the Senior Lenders
and their respective counsels.  The Junior Creditor shall not be liable for any
settlement of any such action effected without its consent.
 
11. No waiver shall be deemed to be made by the Agent or any of the Senior
Lenders of any of their rights hereunder unless the same shall be in writing,
signed by the Agent or the Senior Lenders, and such waiver, if any, shall be a
waiver only with respect to the specific matter or matters to which the waiver
relates and shall in no way impair the rights of the Agent or the Senior Lenders
or the obligations of the Junior Creditor to the Agent or the Senior Lenders in
any other respect at any other time.
 
12. This Subordination Agreement shall be binding upon and inure to the benefit
of the Junior Creditor, each Obligor, the Agent, the Senior Lenders and their
respective heirs, executors, administrators, successors and assigns.  The Agent
and the Junior Creditor each represent that it has not agreed to any
modification of the provisions of the Credit Agreement or the Investment
Agreement, as applicable, authorizing it to execute this Subordination Agreement
and to bind all of the Senior Lenders or Junior Lenders, as
applicable.  Notwithstanding any implication to the contrary in any provision in
this Subordination Agreement, neither the Agent nor the Junior Creditor makes
any representation regarding the validity or binding effect of the Credit
Agreement or Investment Agreement, as applicable, or its authority to bind any
of the Senior Lenders or Junior Lenders, as applicable, through its execution of
this Subordination Agreement.
 
13. The Guaranty shall contain a legend stating that the indebtedness evidenced
thereby is subject to the provisions of this Subordination Agreement.
 
14. This Subordination Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York, without regard
to the principles of the conflicts of laws thereof.
 
[INTENTIONALLY LEFT BLANK]
 

 

 
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IN WITNESS WHEREOF, the parties hereto have caused this Subordination Agreement
to be executed and delivered on the date first above written.
 
WITNESS:
Laminar Direct Capital, L.L.C., as Junior Creditor

 
 
 
By: /s/ Robert T. Ladd

 
Name: Robert T. Ladd

 
Title: Authorized Signatory

 
WITNESS:
Pac-Van, Inc., as an Obligor

 
 
 
By: /s/ Christopher A. Wilson

 
Name: Christopher A. Wilson

 
Title: Secretary

 
WITNESS:
GFN North America Corp., as an Obligor

 
 
 
By: /s/ Christopher A. Wilson

 
Name: Christopher A. Wilson

 
Title: Secretary

 
 
PNC Bank, National Association, as Agent

 
 
 
 
By:  /s/ Todd Milenius

 
Name: Todd Milenius

 
Title:  Vice President

 

 
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ACKNOWLEDGMENT

STATE/COMMONWEALTH
OF                                                                           
 
COUNTY
OF                                                                           
)
)
)
 
SS:

On this, the _____ day of July, 2010, before me, a Notary Public, the
undersigned officer, personally appeared ________________, who acknowledged
himself/herself to be the ______________ of Laminar Direct Capital, L.L.C., a
Delaware limited liability company (the "Company"), and that he/she as such
officer, being authorized to do so, executed the foregoing instrument for the
purposes therein contained by signing the name of the Company as such officer.
 
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
 
______________________________
Notary Public
 
My Commission Expires:

 
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ACKNOWLEDGMENT

STATE/COMMONWEALTH
OF                                                                           
 
COUNTY
OF                                                                           
)
)
)
 
SS:

On this, the _____ day of July, 2010, before me, a Notary Public, the
undersigned officer, personally appeared ________________, who acknowledged
himself/herself to be the ______________ of Pac-Van, Inc., an Indiana
corporation (the "Company"), and that he/she as such officer, being authorized
to do so, executed the foregoing instrument for the purposes therein contained
by signing the name of the Company as such officer.
 
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
 
______________________________
Notary Public
 
My Commission Expires:

 
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ACKNOWLEDGMENT

STATE/COMMONWEALTH
OF                                                                           
 
COUNTY
OF                                                                           
)
)
)
 
SS:

On this, the _____ day of July, 2010, before me, a Notary Public, the
undersigned officer, personally appeared ________________, who acknowledged
himself/herself to be the ______________ of GFN North America Corp., a Delaware
corporation (the "Company"), and that he/she as such officer, being authorized
to do so, executed the foregoing instrument for the purposes therein contained
by signing the name of the Company as such officer.
 
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
 
______________________________
Notary Public
 
My Commission Expires:
 

 

 
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Exhibit A

Guaranty

[See Attached]

 
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