Document:

exhibit_10-4.htm

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

 

 

 

6exhibit_10-5.htm

EXHIBIT 10.5

 

 

 

May 13, 2011

Payoff Letter

Mr. Ronald Valenta

Chief Executive Officer

General Finance Corporation

39 East Union Street

Pasadena, CA 91103

 

Attention: Ronald F. Valenta

Ladies and Gentlemen:

Reference is made to that certain Shareholders Agreement among General Finance Corporation, a Delaware corporation (“GFN”), GFN U.S. Australasia Holdings, Inc., a Delaware corporation (“GFN (US)”), and Bison Capital Australia, L.P., a Delaware limited partnership (“Bison Capital”), dated September 13, 2007, 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”).

 

Reference is also made to that certain Secured Senior Subordinated Promissory Note (the “First Bison Note”) dated September 13, 2007 in the original principal amount of US$16,816,000 made by GFN Australasia Finance Pty Ltd., a corporation organized under the laws of Australia (the “Company”), in favor of Bison Capital.

 

 Reference is also made to that certain Secured Senior Subordinated Promissory Note (the “Second Bison Note” and collectively with the First Bison Note, the “Notes”) dated May 1, 2008 in the original principal amount of US$5,500,000 made by the Company in favor of Bison Capital.

 

Reference is also made to that certain Securities Purchase Agreement (the “Securities Purchase Agreement”) dated September 13, 2007 among Bison Capital, GFN, GFN (US), GFN Australasia Holdings Pty Ltd., a corporation organized under the laws of Australia (“GFN Australasia Holdings”, and the Company.

 

Reference is also made to each and every Collateral Document granted by any member of the GFN Group (including GFN Australasia Holdings, the Company, and each subsidiary of GFN Australasia Holdings) and each of their current and former agents, employees, officers, directors, owners, representatives, attorneys, subsidiaries, divisions, related corporations, assigns, successors and affiliated organizations (each a “Security Provider”), for the purpose of securing the Obligations (as defined in the Securities Purchase Agreement) to Bison Capital or any other obligations of the GFN Group under the Securities Purchase Agreement, the First Bison Note, the Second Bison Note or any Related Agreement, in each case as amended, restated, supplemented or otherwise modified from time to time (each a “Security Document”).

 

  

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All capitalized terms herein shall have the meanings ascribed to such terms in the Securities Purchase Agreement, unless otherwise defined herein.  All currency amounts herein are expressed in U.S. dollars.

 

The Company has informed Bison that the Company intends on May 31, 2011 (the “Payoff Date”) pursuant to the terms and conditions of that certain Letter Agreement among GFN, GFNUS, the Company and Bison Capital of even date herewith attached hereto to repay in full the Notes and all other all liabilities, obligations, costs, fees and expenses owing by thereunder (collectively, the “Obligations”).  In that regard, the Company has requested that Bison set forth the balance of principal, interest and all other amounts owing under the Notes in respect of the Obligations.

As of the Payoff Date, the amount payable by Borrower in respect of the Notes is (i) an outstanding aggregate principal amount of USD$22,316,000, plus (ii) accrued and unpaid interest in the amount of a) USD$123,750, plus b) AUD$1,850,000, payable in USD at the then outstanding USD/AUD exchange rate; plus (iii) accrued and unpaid fees, costs and expenses of Bison Capital, including, without limitation, attorneys’ fees and expenses, in the amount of USD$20,000, (in the aggregate, the "Payoff Amount").

Payment in full of the Payoff Amount shall be made by 2:00 p.m., [New York, New York] time on the Payoff Date by wire transfer of immediately available funds in U.S. Dollars an amount equal to the Payoff Amount, to Bison Capital at the office of Bison Capital located at 10877 Wilshire Blvd., Suite 1520, Los Angeles, CA 90024.  Wire transfer shall be made to:

 

Bank:                                           Union Bank of California

ABA Number:                           122000496

Account Number:                     3350209963

Account Name:                          Bison Capital Equity Partners II-B, L.P.

Reference:                                   Bison Capital Australia Note Payoff

 

Upon receipt of the Payoff Amount, Bison Capital will promptly advise the Company by e-mail that the Payoff Amount has been received and that the Effective Time (defined below) has occurred.

 

The Payoff Amount has been computed on the basis that payment in full of such amount is received by Bison Capital on or before 2:00 p.m., [New York, New York] time.   If the Payoff Amount is not received on a timely basis the amounts must be recomputed.  The per diem interest payable on the Notes is AUD$9,410, payable in USD at the then outstanding USD/AUD exchange rate.

 

Upon timely receipt (the time of such receipt being herein called the “Effective Time”) by Bison Capital of the Payoff Amount, in immediately available funds in U.S. Dollars:  (i) the Obligations (other than indemnification and expense reimbursement provisions contained in the Loan Agreements but for the avoidance of doubt excluding all other provisions and rights including any rights of re-instatement in favor of Bison Capital) have been irrevocably satisfied and paid in full, (ii) all interests of Bison Capital in the Notes, all Security Documents, any and all subordinated claims, and all Liens and security interests (including any rights of set-off or

 

  

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assignment, or any pledges or liens however described) on and in any and all Collateral granted under or in connection with the Notes or to secure the Obligations thereunder are irrevocably released, discharged, terminated and of no further force and effect, (iii) all Security Providers are irrevocably released and discharged forever from any obligations under the Security Documents, (iv) all Collateral assigned by the Security Providers to Bison Capital is immediately and irrevocably re-assigned to the relevant Security Provider and (v) the Notes, the Security Documents, the Securities Purchase Agreement, Collateral Documents, the Related Agreements and that certain Royal Wolf Amended and Restated Intercreditor Deed (the “Intercreditor Deed” and collectively with the Notes, the Securities Purchase Agreement, the Collateral Documents and the Related Agreements, the “Loan Agreements”) dated May 1, 2008 among Australia and New Zealand Banking Group (“ANZ”), the Company and certain other parties, other than indemnification and expense reimbursement provisions contained in the Loan Agreements, but for the avoidance of doubt excluding all other provisions and rights including any rights of re-instatement in favor of Bison Capital), are irrevocably terminated and of no further force and effect.

 

The parties hereto agree that upon the termination of the Loan Agreements   (i) no further borrowings, loans or extensions of credit exist between Bison Capital, on the one part, and the other parties thereto, on the second part, and (ii) all rights, duties, liabilities, commitments and other obligations of the parties thereto shall terminate, except that each indemnity and expense reimbursement provision in the Loan Agreements that by their terms survive the termination of such agreements shall survive the termination thereof. For the avoidance of doubt such provisions do not include any rights of re-instatement in favor of Bison Capital.

 

The Company, on behalf of itself and its successors, assigns and other legal representatives and its subsidiaries, including each Guarantor, hereby confirms that the commitments of Bison Capital to make loans and otherwise extend credit under the Loan Agreements are irrevocably terminated.

Bison Capital will execute and deliver and authorizes the relevant Security Provider to file Uniform Commercial Code termination statements, lien releases, mortgage releases, discharges of security interests (including, without limitation, any notices or forms required to be lodged with any Australian authority, including the Australian Securities and Investments Commission), any documents of re-assignment of Collateral, and guarantees and other similar discharge or release documents (and if applicable, in recordable form) as are reasonably necessary to release, as of record, the security interests and all notices of security interests and liens previously filed or recorded by Bison Capital with respect to the Obligations.  Bison Capital represents and warrants that it has not taken and does not have physical possession of any Collateral.

GFN, GFN US and each Security Provider confirms their agreement to the terms and provisions of this letter by returning to Bison Capital a signed counterpart of this letter.  ANZ is an intended third party beneficiary of this letter.

  

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This letter may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which when taken together shall constitute but one and the same letter.  Delivery of executed counterparts of this letter may be effected by means of facsimile or electronic transmission.

 

This letter shall be construed in accordance with and governed by the laws of the State of California.

 

                                                                Very truly yours,

BISON CAPITAL AUSTRALIA, L.P.,

a Delaware limited partnership,

                                                                By   /s/ Doug Trussler

                                                                      Name:  Doug Trussler

      Title:    EVP

Agreed to by the undersigned:

	
GENERAL FINANCE CORPORATION,

a Delaware corporation

 

 

By  /s/ Ronald F. Valenta

Name:  Ronald F. Valenta

Title:    CEO

 

	
GFN U.S. AUSTRALASIA HOLDINGS, INC.,

a Delaware corporation,

 

 

By /s/ Charles E. Barrantes

Name:  Charles E. Barrantes

Title:    Director

 

	  	
GFN AUSTRALASIA HOLDINGS PTY LTD.,

a corporation organized under the laws of Australia

 

 

By /s/ Charles E. Barrantes

Name:  Charles E. Barrantes

Title:    Director

 

  

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ROYAL WOLF TRADING AUSTRALIA PTY LTD.,

a corporation organized under the laws of Australia

 

 

 

 

By /s/ Gregory B. Baker

Name:  Gregory B. Baker

Title:     Director

 

	
ROYAL WOLF HI-TECH PTY LTD.,

a corporation organized under the laws of Australia

 

 

 

By /s/ Gregory B. Baker

Name:  Gregory B. Baker

 

Title:         Director

 

	
RWA HOLDINGS PTY LTD.,

a corporation organized under the laws of Australia

 

 

By /s/ Gregory B. Baker

Name:  Gregory B. Baker

Title:     Director

 

	
GFN AUSTRALASIA FINANCE PTY LTD.,

a corporation organized under the laws of Australia

 

 

By /s/ Gregory B. Baker

Name:  Gregory B. Baker

Title:     Director

 

	
RWNZ ACQUISITION CO. LIMITED,

a corporation organized under the laws of New Zealand

 

 

By /s/ Gregory B. Baker

Name:  Gregory B. Baker

Title:     Director

 

	
ROYALWOLF TRADING NEW ZEALAND LIMITED,

a corporation organized under the laws of New Zealand

 

 

By /s/ Gregory B. Baker

Name:  Gregory B. Baker

Title:     Director

 

 

 

 

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