EXHIBIT 10.4
 
 
 
CONFIDENTIAL
 
May 13, 2011
 
Mr. Ronald Valenta
Chief Executive Officer
General Finance Corporation
39 East Union Street
Pasadena, CA 91103
 
Re:           Obligations Associated with Royal Wolf Equity Investment
 
Dear Mr. Valenta:
 
Pursuant to our recent conversations with General Finance Corporation, a
Delaware corporation (“GFN”), and in advance of the period in which Bison
Capital Australia, L.P., a Delaware limited partnership (“Bison Capital”), is
eligible to exercise its Put Option as referenced in that certain Shareholders
Agreement dated September 13, 2007 among GFN, GFN U.S. Australasia Holdings,
Inc., a Delaware corporation (“GFN (US)”), GFN Australasia Holdings Pty Limited,
a corporation organized under the laws of Australia (the “Company”), GFN
Australasia Finance Pty Limited, a corporation organized under the laws of
Australia (“GFN Finance”), and Bison Capital, as amended by that certain First
Amendment to Shareholders Agreement dated May 1, 2008 and that certain Second
Amendment to Shareholders Agreement dated September 21, 2009 (as amended, the
“Shareholders Agreement”), the parties hereby agree as follows.  Capitalized
terms used herein but not otherwise defined shall have the meanings ascribed to
them in the Shareholders Agreement, and unless otherwise indicated all
references to “$” are to United States Dollars).
 
1.  
Negotiated Put Value.  Bison Capital agrees that if (each of conditions in the
following clauses, a “Condition”):

 
(a) The Company or an affiliate thereof (the entity undergoing an initial public
offering, the “Offering Company”) completes an initial public offering on or
before December 31, 2011 that results in gross proceeds to the Company of at
least AUS$90,000,000 (such initial public offering, an “IPO”, and the date of
the consummation of the IPO, the “IPO Date”);
 
(b) prior to or on the IPO Date, GFN Finance and its affiliates have paid in
full all monetary obligations to Bison Capital, including, without limitation,
(i) all outstanding obligations owed to Bison Capital pursuant to that certain
Secured Senior Subordinated Promissory Note dated September 13, 2007 in the
original principal amount of A$20,000,000 made by GFN Finance in favor of Bison
Capital (the “First Note”), which obligations, include, without limitation, the
Repayment Premium as defined in the First Note, and prepayment amounts payable
pursuant to Section 3 of the First Note and (ii) all outstanding obligations
owed to Bison Capital pursuant to that certain Secured
 

 
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Senior Subordinated Promissory Note dated September 13, 2007 in the original
principal amount of A$5,889,281.50 made by GFN Finance in favor of Bison Capital
(the “Second Note” and collectively with the First Note, the “Notes”), which
obligations include, without limitation the prepayment amounts payable pursuant
to Section 3 of the Second Note;
 
(c) On the IPO Date each of GFN, GFN (US), the Company and GFN Finance is in
compliance with its obligations to Bison Capital under that certain Securities
Purchase Agreement dated September 13, 2007 by among Bison Capital, GFN, GFN
(US), the Company and GFN Finance (the “SPA”) and the transaction documents
delivered in connection therewith; and
 
(d) GFN complies in full with its true-up obligations described in Section 2 of
this letter agreement; then
 
Bison Capital shall, on the IPO Date, exercise its Put Option for cash
consideration equal to  $18,000,000 (the “Negotiated Put Value”).
 
2.  
True-Up Obligations.  On the IPO Date, Bison Capital shall deliver via email to
the Chief Executive Officers of GFN and the Offering Company a statement showing
the Original Put Value (as defined below).  If the Original Put Value is greater
than the Negotiated Put Value, then concurrently with or immediately following
the consummation of the IPO, GFN and the Offering Company shall pay (and be
jointly and severally liable to pay) the amount of such difference to Bison
Capital.  This payment shall be effected as follows:  the Offering Company shall
subtract such amount from any proceeds payable to GFN and remit such amount
directly to Bison Capital.  If the Original Put Value is less than the
Negotiated Put Value, then, concurrently with or immediately following the
consummation of the IPO, Bison Capital shall pay the amount of such difference
to GFN.  This payment shall be effected as follows:  the Offering Company shall
subtract such amount from any proceeds payable to Bison Capital and remit such
amount directly to GFN and pay to Bison Capital the balance due.  The failure of
the Offering Company to properly remit amounts to GFN or Bison Capital, as
applicable, shall not excuse or diminish the obligation of GFN or Bison Capital,
as applicable, to make the payments described above.  All payments to be made
hereunder shall be made by wire transfer of immediately available to an account
designated by the payee.  If GFN disputes Bison Capital’s calculation of the
Original Put Value, then within 10 days following the IPO Date, GFN shall notify
Bison Capital in writing of such dispute.  If GFN does not notify Bison in
writing of any dispute with respect to the calculation of the Original Put Value
within such 10 day period, then Bison Capital’s calculation of the Original Put
Value shall be binding and final on the parties.

 
“Original Put Value” means the greater of:
 
(e) 13.8% of the Implied Equity Value minus the Management Bonus, and
 
(f) An amount equal to:
 

 
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(i) the amount that would be due to Bison Capital if it exercised its Put Option
as calculated per the Shareholders Agreement; minus
 
(ii) 13.8% of accrued but unpaid management fees of the Company owed to GFN,
which fees shall not exceed $2,100,000; minus
 
(iii) the Management Bonus
 
“Management Bonus” means the lesser of (i) $1,000,000 and (ii) 10% of Bison
Capital’s net gain on equity (calculated as the Original Put Value less
$8,300,000).
 
“Implied Equity Value” means:
 
(a) The enterprise value of the Offering Company upon the IPO (calculated as the
offering price per share in the IPO multiplied by the outstanding shares of
stock of the Offering Company following the IPO plus all funded debt of the
Offering Company immediately following the IPO minus cash immediately following
the IPO) plus the fair market value of any securities (excluding employee stock
options) with rights to purchase or convert into shares of stock of the Offering
Company; minus
 
(b) All of the Offering Company’s funded debt immediately prior to the IPO minus
all of the Offering Company’s cash immediately prior to the IPO (including as
funded debt up to $2,300,000 million of advances to the Company by GFN but
excluding  as funded debt all intercompany debt between or among the Offering
Company, GFN, GFN (US), GFN Finance and their respective affiliates (such as the
GFN Mezz B Note)); minus
 
(c) accrued but unpaid management fees of the Company to the extent not already
included in the calculation of Implied Equity Value; provided that such fees
shall not exceed $2,100,000; minus
 
(d) All third party out of pocket expenses of the Offering Company incurred in
connection with the IPO to the extent that such expenses are (i) not counted in
the offering price per share in the IPO, (ii) were not paid prior to the IPO or
(iii) otherwise already included in the calculation of Implied Equity Value.
 
3.  
Releases.

 
(a) Each of the Company, GFN, GFN (US), the Company, GFN Finance and their
respective affiliates (collectively, the "GFN Parties" and collectively with
Bison Capital, the “Releasing Parties”) fully releases and discharges forever
Bison Capital and its current and former agents, employees, officers, directors,
owners, limited partners, general partner, trustees, representatives, attorneys,
subsidiaries, divisions, related corporations, assigns, successors, and
affiliated organizations (hereafter referred to collectively as the "Bison
Parties"), and each and all of them, from any and all liabilities, claims,
causes of action, charges, complaints, obligations, costs, losses, damages,
injuries, attorneys' fees, and other legal responsibilities, of any form
whatsoever, whether known or unknown, unforeseen, unanticipated, unsuspected or
latent, which the GFN
 

 
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Parties or any of their respective successors in interest and/or assigns have
incurred or expect to incur, or now own or hold, or have at any time heretofore
owned or held, or may at any time own, hold, or claim to hold by reason of any
matter or thing arising from any cause whatsoever prior to the date of GFN’s
execution of this letter agreement.  This letter agreement does not purport to
release claims that cannot be released as a matter of law.
 
(b) Bison Capital fully releases and discharges forever each of the GFN Parties
and their respective current and former agents, employees, officers, directors,
owners, representatives, attorneys, subsidiaries, divisions, related
corporations, assigns, successors, and affiliated organizations (collectively,
the “GFN Related Parties” and collectively with the Bison Parties, the “Released
Parties”), and each and all of them, from any and all liabilities, claims,
causes of action, charges, complaints, obligations, costs, losses, damages,
injuries, attorneys' fees, and other legal responsibilities, of any form
whatsoever, whether known or unknown, unforeseen, unanticipated, unsuspected or
latent, which Bison Capital or any of its successors in interest and/or assigns
have incurred or expect to incur, or now own or hold, or have at any time
heretofore owned or held, or may at any time own, hold, or claim to hold by
reason of any matter or thing arising from any cause whatsoever prior to the
date of Bison Capital’s execution of this letter agreement.  This letter
agreement does not purport to release claims that cannot be released as a matter
of law.
 
Each Releasing Party acknowledges and intends that the Released Parties are
being released from unknown and unforeseen claims to the fullest extent
permitted by law and each Releasing Party waives any defenses based
thereon.  Each Releasing Party expressly waives and relinquishes all rights and
benefits that the Releasing Party may have under any statute or other applicable
law comparable to Section 1542 of the California Civil Code, which Section 1542
is intended to protect against an inadvertent release of unknown or unsuspected
claims, and reads as follows:
 
“Section 1542. [General Release; extent.] A general release does not extend to
claims which the creditor does not know or suspect to exist in his or her favor
at the time of executing the release, which if known by him or her must have
materially affected his or her settlement with the debtor.”
 
Each Releasing Party, being aware of said Section 1542, hereby expressly waives
any rights the Releasing Party may have under any statutes, other applicable law
or common law principles of similar effect, with respect to the claims purported
to be released hereby.
 
Each Releasing Party covenants and agrees never to commence, prosecute or assist
in any way, or cause, permit or advise to be commenced or prosecuted, any
action, proceeding, or discovery against any Released Party based on any
released claim.
 
Each Releasing Party agrees to indemnify and hold each of the Released Parties
and the other persons and entities released by this letter agreement harmless
from and against any and all claims arising from or in connection with any
action or proceeding brought by it or for its benefit or on its initiative
contrary to the provisions of this letter agreement.  This letter agreement
shall
 

 
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be deemed breached and a cause of action shall accrue immediately upon the
commencement of any action or proceeding contrary to this letter agreement, and
in any such action or proceeding this letter agreement may be pleaded as a
defense by any person or entity released by this letter agreement, or may be
asserted by way of cross-complaint, counterclaim or cross-claim in any such
action or proceeding.
 
4.  
Consent, Waiver and Notice of Prepayment.  In consideration for the payment of
the amounts set forth in this letter agreement, Bison Capital (a) consents to
the issuance by the Company of capital stock pursuant to the IPO, (b) waives its
rights under Section 8.2(a) of the Shareholders Agreement to purchase its
pro-rata share of capital stock issued in the IPO and (c) agrees the first
sentence of Section 3(b) of the First Note and the Second Note are each amended
and restated in their entirety as follows: “Maker shall give Holder written
notice of each voluntary prepayment not less than three (3) business days prior
to the date of prepayment.”

 
5.  
Termination of Shareholders Agreement.  Upon the payment in full of the Notes
and the payment of the amounts owed to Bison Capital under this letter agreement
in consideration for the exercise by Bison Capital of the Put Option under the
Shareholders Agreement, the Shareholders Agreement shall terminate.

 
6.  
No Impairment.  Nothing herein shall affect any of Bison Capital’s rights other
than the agreement to delay exercise of its Put Option until December 31, 2011
and the agreement to accept the consideration described above upon satisfaction
of all of the Conditions.  For the avoidance of doubt, if any of the Conditions
is not met, then Bison will not be obligated to exercise its Put Option in the
manner described above, and the terms of the SPA and the transaction documents
delivered in connection therewith will govern the exercise of the Put
Option.  Except as expressly stated herein, the SPA shall remain unchanged and
in full force and effect, and is hereby ratified and confirmed on and as of the
date hereof.  Except as expressly set forth in this letter agreement, the
execution, delivery and effectiveness of this letter agreement shall not operate
as a modification, limitation, impairment, or waiver of (i) any right, power or
remedy of Bison Capital under any agreement or instrument or (ii) any terms or
conditions of any agreement or instrument.

 
7.  
Miscellaneous.  In connection with the preparation of this letter agreement, GFN
shall reimburse Bison Capital for all of its reasonable attorneys’ fees and
other out of pocket expenses, which shall not exceed $10,000.  This letter
agreement shall be construed without regard to any presumption or rule requiring
construction or interpretation against the party drafting or causing any
instrument to be drafted.  In all respects, including matters of construction,
validity and performance, this letter agreement shall be governed by, and
construed and enforced in accordance with, the internal laws of the State of
California applicable to contracts made and performed in that state (without
regard to the choice of law or conflicts of law provisions thereof).

 

 
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[SIGNATURE PAGE TO LETTER AGREEMENT]
 

 

 
Sincerely,
 
BISON CAPITAL AUSTRALIA, L.P.
 
By:  BISON CAPITAL AUSTRALIA GP, LLC,
 
its general partner|
 

 
By:             /s/ Douglas B.
Trussler                                           
Name:           Douglas B. Trussler
Title:  Managing Member
 
Agreed and accepted as of the date of this letter
 
GENERAL FINANCE CORPORATION
By:   /s/ Ronald Valenta­­­­
        Ronald Valenta
        President and Chief Executive Officer
 
GFN US AUSTRALASIA HOLDINGS, INC.
 
 
By:     /s/ Charles E. Barrantes
Name:  Charles E. Barrantes
Title:    Director
 
GFN AUSTRALASIA HOLDINGS PTY LIMITED
 
 
By:       /s/ Charles E. Barrantes
Name:  Charles E. Barrantes
Title:    Director
 
GFN AUSTRALASIA FINANCE PTY LIMITED
 
 
By:       /s/ Charles E. Barrantes
Name:  Charles E. Barrantes
Title:    Director
 

 
 
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