THIS MEMBERS
AGREEMENT (this “Agreement" ), dated as of
September 18, 2002, is made among CF Leasing Ltd., a limited
liability company organized and existing under the laws of Bermuda
(the “Borrower” or the “Company" ),
MeesPierson Transport & Logistics Holding B.V., a Besloten
Vennootschap organized and existing under the laws of The
Netherlands ( “MeesPierson" ), and Cronos Equipment
(Bermuda) Limited, a limited liability company organized and
existing under the laws of Bermuda ( “Cronos" ), and
joined by Cronos Containers (Cayman) Ltd., a company organized and
existing under the laws of the Cayman Islands and by The Cronos
Group, a société anonyme holding organized and existing
under the laws of Grand Duchy of Luxembourg.
A. WHEREAS,
the Company previously issued 12,000 Common Shares (as defined
below) to MeesPierson and, simultaneously with the execution of
this Agreement, the Company will authorize the creation and
issuance of 12,000 Common Shares to Cronos.
B. WHEREAS,
the Company desires to issue 12,000 Common Shares to Cronos, and
Cronos desires to acquire its Common Shares in consideration of its
contribution to the capital of Company pursuant to
Section 2.1(b) hereof.
C. NOW,
THEREFORE, in consideration of the mutual agreements herein
contained, each party agrees as follows:
DEFINITIONS; SHARE
SUBSCRIPTION
SECTION 1.1.
Definitions .
Capitalized
terms used and not otherwise defined herein shall have the
following meanings:
Acquisition
Date . Any date on which
the Company acquires one or more Containers.
Acquisition
Fee . This term shall
have the meaning set forth in the Management Agreement.
Acquisition
Indebtedness . This term
shall have the meaning set forth in Section 2.1(a)
hereof.
Additional
Contribution Amount .
This term shall have the meaning set forth in
Section 2.2(b)(iii) hereof.
Adjusted
Capital Account . With
respect to any Member as of the end of each fiscal year of the
Company, such Member’s Capital Account (i) if United
States federal income tax principles are then applicable to any
Member, reduced by any anticipated allocations, adjustments and
distributions described in Treasury
Regulation Section 1.704-1(b)(2)(ii)(d)(4)-(6), and
(ii) if
United States
federal income tax principles are then applicable to any Member,
increased by the amount of any deficit in such Member’s
Capital Account that such Member is obligated to restore pursuant
to the terms of this Agreement or is deemed obligated to restore
pursuant to the penultimate sentences of the Treasury
Regulation Sections 1.704-2(g)(1) and 1.704-2(i)(5) or
under Section 1.704-1(b)(2)(ii)(c) of the Treasury Regulations as
of the end of such fiscal year.
Affiliate . This term shall have the meaning set forth in
Section 101 of the Loan Agreement.
Agent . The Person acting as agent on behalf of the
financial institutions from time to time party to the Loan
Agreement, its successors and permitted assigns; initially, Fortis
Bank (Nederland) N.V.
Aggregate
Principal Balance . This
term shall have the meaning set forth in Section 101 of the
Loan Agreement.
Agreed
Value . With respect to
any Container acquired by the Borrower, an amount equal to the sum
of (x) the net book value of such Container determined as of
the effective date of such acquisition, and (y) the fair
market value of the Related Transferred Assets determined as of the
effective date of such acquisition.
Applicable
Law . This term shall
have the meaning set forth in Section 101 of the Loan
Agreement.
Authorized
Persons . This term shall
have the meaning set forth in Section 7.4(c)
hereof.
Bankruptcy
Matters . The
commencement of a voluntary case or other proceeding under any
applicable bankruptcy, winding up, insolvency, reorganization, debt
arrangement, dissolution or other similar law now or hereafter in
effect, or the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator or the like,
for the Company or any substantial part of its property, or to make
any general assignment for the benefit of creditors, or for the
Company to admit in writing its inability to pay its debts
generally as they become due.
Bill of
Sale . This term shall
have the meaning set forth in Section 101 of the Loan
Agreement.
Board
Majority . This term
shall have the meaning set forth in Section 101 of the Loan
Agreement.
Book Net
Income and Book Net Losses. For each fiscal year or other period, an amount
equal to the Company’s taxable income or loss, as the case
may be, for such year or period, determined in accordance with all
applicable tax laws including, if United States federal income tax
principles are then applicable to any Member, in accordance with
Section 703(a) of the Code (for this purpose, all items of income,
gain, loss and deduction required to be stated separately pursuant
to Section 703(a)(1) of the Code shall be included in taxable
income or loss); provided, however, for purposes of computing such
taxable income or loss, (i) such taxable income or loss shall
be adjusted by any and all adjustments required to be made in order
to maintain Capital Account balances in compliance with Treasury
Regulation Section 1.704-1(b) and (ii) any and all
items of gross income or gain and/or partnership and/or partner
“nonrecourse deductions”
specially
allocated to any Member pursuant to Section 4.3 shall not be
taken into account in calculating such taxable income or
loss.
Capital
Account . A separate
capital account maintained for each Member throughout the term of
the Company, to which the following provisions apply:
(a) Each
Member’s Capital Account shall be credited with: (i) the
amount of money contributed by such Member to the capital of the
Company; (ii) the fair market value of any Property (other
than money) contributed by such Member to the capital of the
Company; and (iii) such Member’s share of Book Net
Income allocated to such Member pursuant to Section 4.2
hereof.
(b) Each
Member’s Capital Account shall be debited with: (i) the
amount of money distributed to such Member by the Company other
than amounts which are in repayment of debt obligations of the
Company to such Member; (ii) the fair market value of Property
(other than money) distributed to such Member; and (iii) such
Member’s share of Book Net Losses that are allocated to such
Member pursuant to Section 4.2 hereof.
(c) All such
contributions, allocations and distributions shall be credited or
charged, as the case may be, to the appropriate Capital Accounts of
the respective Members to whom they apply, as of the time the
contributions, allocations or distributions are made.
(d) Each
Member’s Capital Account shall be maintained in accordance
with applicable tax laws including, if United States federal income
tax principles are then applicable to any Member, Treasury
Regulation Section 1.704-1(b).
Capital
Contribution . Any
contribution of Property made by, or on behalf of, a Member to the
capital of the Company.
CEU .
A cost-equivalent unit that is a fixed unit of measurement based on
the cost of a Container relative to the cost of a twenty-foot
standard dry freight container.
Change of
Control . This term shall
have the meaning set forth in Section 101 of the Loan
Agreement.
Closing
Date . The date on which
the conditions precedent set forth in Section 6.1 hereof have
been satisfied.
Code. The Internal Revenue Code of 1986, as heretofore
and hereafter amended from time to time (and/or any corresponding
provision of any superseding revenue law).
Collection
Period . This term shall
have the meaning set forth in Section 101 of the Loan
Agreement.
Commitment . With respect to each Member, the amount set
forth on Exhibit C hereto opposite the name of such
Member. The amount of any Member’s Commitment shall be
determined without regard to any distributions made by the Company
to such Member (except for the
distributions
made to Cronos or MeesPierson under Section 2.1 of the
Purchase Agreement, which distributions shall not reduce
Cronos’ or MeesPierson’s Commitment).
Commitment
Expiration Date . The
earlier to occur of (x) the date on which an Early
Amortization Event occurs and (y) September 18, 2004 (or,
in the case of clause (y), such later date as may be agreed by all
of the Members).
Common
Share. This term shall
have the meaning set forth in Bye-Law 50 of the Company’s
bye-laws.
Companies
Act . This term shall
have the meaning set forth in Section 2.1(a)
hereof.
Container . This term shall have the meaning set forth in
Section 101 of the Loan Agreement.
Cronos
Capital Contribution .
This term shall have the meaning set forth in Section 2.1(b)
hereof.
Cronos
Shares . This term shall
have the meaning set forth in Section 2.1(b)
hereof.
Cronos
Transferred Assets . This
term shall have the meaning set forth in Section 2.1(b)
hereof.
Dollars . This term shall have the meaning set forth in
Section 101 of the Loan Agreement.
Early
Amortization Event . This
term shall have the meaning set forth in Section 101 of the
Loan Agreement.
Eligible
Container . This term
shall have the meaning set forth in Section 101 of the Loan
Agreement.
Event of
Default . This term shall
have the meaning set forth in Section 101 of the Loan
Agreement.
Finance
Lease . This term shall
have the meaning set forth in Section 101 of the Loan
Agreement.
Fiscal
Quarter . The three month
period ending on each March 31, June 30,
September 30 and December 31.
Further
Shares . This term shall
have the meaning set forth in Section 7.3 hereof.
Lenders . The financial institutions from time to time
party to the Loan Agreement, their successors and permitted
assigns.
Loan
Agreement . The Loan
Agreement, dated as of the Closing Date, by and among the Company,
the Agent and the Lenders, as such agreement shall be amended,
supplemented or modified from time to time in accordance with its
terms.
Managed
Container. This term
shall have the meaning set forth in Section 1 of the
Management Agreement.
Management
Agreement . The
Management Agreement, dated as of the Closing Date, by and between
the Manager and the Company, as such agreement shall be amended,
supplemented or modified from time to time in accordance with its
terms.
Manager
Default . This term shall
have the meaning set forth in Clause 11.1 of the Management
Agreement.
Manager . The Person performing the duties of the
Manager under the Management Agreement; initially, Cronos
Containers (Cayman) Ltd., a company organized under the laws of the
Cayman Islands.
Master
Lease . This term shall
have the meaning set forth in Section 101 of the Loan
Agreement.
MeesPierson
Cash Contribution . This
term shall have the meaning set forth in Section 2.1(a)
hereof.
MeesPierson
Shares . This term shall
have the meaning set forth in Section 2.1(a)
hereof.
MeesPierson
Transferred Assets . This
term shall have the meaning set forth in Section 2.1(a)
hereof.
Member . When in the singular, means each Person who
holds Common Shares; when used in the plural, means all Persons who
hold Common Shares, collectively.
Member
Representations and Warranties . This term shall have the meaning set forth in
Section 2.1(c) hereof.
Member
Transferred Assets . This
term shall have the meaning set forth in Section 2.1(b)
hereof.
Net Book
Value . This term shall
have the meaning set forth in Section 101 of the Loan
Agreement.
Net Cash
Flow . Net Cash Flow
shall mean, with respect to any Collection Period, the amount of
cash (if any) available to the Borrower for distribution pursuant
to the provisions of Section 302(a) the Loan Agreement in excess of
the sum of (i) all cash disbursements (inclusive, if United
States federal income tax principles are then applicable to any
Member, of any guaranteed payments within the meaning of Section
707(c) of the Code paid to any Member, but exclusive of
distributions to the Members in their capacities as such) of the
Borrower prior to that date, and (ii) a reserve, established
in the reasonable discretion of the Company’s Board of
Directors or, if authorized by the Board of Directors, the
Authorized Persons, for anticipated cash disbursements that will
have to be made by the Borrower before additional cash receipts
from third parties will provide the funds therefor. Net Cash Flow
shall only be distributed by the
Company to the
Members by way of dividends or other distributions in accordance
with Section 54 of the Companies Act.
New
Containers . This term
shall have the meaning set forth in Section 101 of the Loan
Agreement.
Note .
This term shall have the meaning set forth in Section 101 of
the Loan Agreement.
Outstanding
Obligations . This term
shall have the meaning set forth in Section 101 of the Loan
Agreement.
Payment
Date . This term shall
have the meaning set forth in Section 101 of the Loan
Agreement.
Person . This term shall have the meaning set forth in
Section 101 of the Loan Agreement.
Property . Any property, real or personal, tangible or
intangible, including money, and any legal or equitable interest in
such property, but excluding services and promises to perform
services in the future.
Purchase
Agreement . This term
shall have the meaning set forth in Section 101 of the Loan
Agreement.
Purchase
Parameters . The policy
employed by the Manager from time to time in acquiring New
Containers for the account of the Borrower, as such policy may be
amended from time to time by a Board Majority. Initially, the
“Purchase Parameters” are as follows:
(i) the maximum
purchase price to be paid by the Borrower for any standard dry
cargo Container shall not exceed $1,450 per CEU;
(ii) the maximum
purchase price to be paid by the Borrower for any Specialized
Containers shall not exceed the amount in effect and previously
approved by a Board Majority;
(iii) if such
Container is a New Container and will be subject to either a Term
Lease or a Finance Lease on the date on which it is acquired by the
Borrower, the projected ARPEC for such Lease shall be not less than
the sum of (A) three month LIBOR on such date and
(B) eleven percent (11%). In this regard, “ARPEC”
shall mean a fraction (expressed as a percentage) the numerator of
which is equal to the product of (A) the daily lease rental
attributable to such Container pursuant to the terms of such Lease
and (B) 365, and the denominator is equal to the original
equipment cost of such Container;
(iv) if such
Container is a New Container and will be subject to a Master Lease
on the date of acquisition by the Borrower, then, when considered
with all other New Containers then owned by the Borrower, the sum
of the Net Book Values of all New Containers then subject to the
terms of a Master Lease will shall not exceed an amount equal to
the product of (A) ten percent (10%) and
(B) the
sum of the then Net Book Values of all New Containers then owned by
the Borrower; and
(v) if
(A) such Container is a New Container and will be subject to
either a Term Lease or a Finance Lease on the date on which it is
acquired by the Borrower and (B) the aggregate amount of the
manufacturers’ invoices for all such Containers subject to
such Term Leases or Finance Leases shall be equal to or greater
than Three Million Dollars ($3,000,000), then Lease and Lessee
associated with such Containers shall have received the prior
written approval in writing of a designated Board Member of the
Borrower selected by MeesPierson.
Related Debt
Documents . Any loan or
other documents executed by the Company pursuant to which the
Company will borrow money in order to finance all or a portion of
the purchase of Containers. For avoidance of doubt, the term
“Related Debt Document” includes the Transaction
Documents as defined in the Loan Agreement.
Related
Transferred Assets . This
term shall have the meaning set forth in Section 101 of the
Purchase Agreement.
Securities
Act . The U.S. Securities
Act of 1933, as amended from time to time.
Shares . An ownership interest in the Company which
will be evidenced by a share certificate. There is one class of
Shares in the Company, the Common Shares.
Sharing
Ratio . With respect to
each Member, as of any date, the ratio of the number of outstanding
Common Shares issued to such Member to the number of outstanding
Common Shares issued to all of the Members.
Specialized
Containers . This term
shall have the meaning set forth in Section 101 of the Loan
Agreement.
Structuring/Arrangement Fee
. This term shall have the meaning
set forth in the Management Agreement.
Term
Lease . This term shall
have the meaning set forth in Section 101 of the Loan
Agreement.
Treasury
Regulation. Any proposed,
temporary, and/or final federal income tax regulation promulgated
by the United States Department of the Treasury as heretofore and
hereafter amended form time to time.
Unrecovered
Contribution Account. The
amount of money and/or the agreed upon fair market value of any
Property contributed by any Member to the capital of the Company
pursuant to Section 2.1 hereof (net of liabilities secured by
such contributed property that the Company is considered to assume
or take subject to), and decreased by the amount of money
distributed by the Company to such Member pursuant to
Section 4.1(b) hereof and the agreed upon fair market value of
any property distributed to such Member by the Company (net of
liabilities secured by such distributed property that such Member
is considered to assume or take subject to) pursuant to
Section 4.1(b) hereof.
Other capitalized
terms used herein and not otherwise defined shall have the meaning
set forth in Section 101 of the Loan Agreement.
PURCHASE OF SHARES AND ADDITIONAL
INVESTMENTS
SECTION 2.1.
Capital Contributions for Shares .
(a) The
Company has issued 12,000 Common Shares, par value U.S. $1.00 per
share, to MeesPierson (the “MeesPierson Shares”) on a
nil paid basis. The Company owns the Containers as set forth on
Exhibit A hereto and the Related Transferred Assets
thereto (collectively, the “MeesPierson Transferred
Assets”) with a collective Net Book Value of $4,672,452. The
MeesPierson Transferred Assets were acquired by the Company by
purchase from Eurovos B.V. through a loan made to the Company by
the Agent (the “Acquisition Indebtedness”). On the
Closing Date, and prior to the transfer contemplated in
Section 2.1(b), MeesPierson will contribute $4,672,452 (the
“MeesPierson Cash Contribution”) to the Company.
Effective the Closing Date, the Company shall credit
MeesPierson’s Capital Account with the MeesPierson Cash
Contribution and, for purposes of the Companies Act 1981 of
Bermuda, as amended (the “Companies Act”), shall credit
the MeesPierson Shares as being fully paid by $12,000, with the
excess of the MeesPierson Cash Contribution credited to the
contributed surplus account of the Company. The Company shall
utilize the MeesPierson Cash Contribution to repay, in full, the
Acquisition Indebtedness.
(b) On the
Closing Date, Cronos shall contribute the Containers as set forth
on Exhibit B hereto and the Related Transferred Assets
thereto (collectively, the “Cronos Transferred Assets”;
and together with the MeesPierson Transferred Assets, the
“Member Transferred Assets”). The collective Net Book
Value of the Cronos Transferred Assets is $4,672,452 (the
“Cronos Capital Contribution”). Effective the Closing
Date, the Company shall issue 12,000 Common Shares, par value U.S.
$1.00 per share, to Cronos (the “Cronos Shares”) in
consideration of Cronos’ contribution of the Cronos
Transferred Assets to the Company, and shall credit Cronos’
Capital Account by $4,672,452. For purposes of the Companies Act,
the Company shall credit the Cronos Shares as fully paid by $12,000
and credit the balance of the Cronos Capital Contribution to the
share premium account of the Company.
(c) In
connection with their respective contributions of Member
Transferred Assets, MeesPierson made, and Cronos hereby makes, to
the Company and its successors and assigns the following
representations and warranties (the “Member Representations
and Warranties”):
(i) Title .
At the time of delivery of its Member Transferred Assets to the
Company, the related Member had good title to such Member
Transferred Assets, free and clear of all liens, encumbrances and
rights of others. The Member hereby covenants to defend such title
to its Member Transferred Assets forever against all claims and
demands originating prior to the delivery of such Member
Transferred Assets to the Company.
(ii) Ordinary
Course of Business . If such Container is subject to a Lease on
the date of transfer, such Lease was originated in the ordinary
course of the related Member’s business;
(iii) No
Violation of Lease . If such Container is subject to a Lease on
the date of transfer, the transfer and conveyance to the Company of
such Containers and the Lease (to the extent that it relates to
such Container) will not violate the terms or provisions of any
Lease;
(iv)
Specifications . The Container conforms to the standard
specifications used by the related Member for containers purchased
for its own account for that category of Container and to any
applicable standards promulgated by applicable international
standards organizations; and
(v) Purchase
Price . The purchase price paid by the Company for such
Container was not greater than the fair market value of the
Container at the time of acquisition from the related
Member.
(d) In the
event that the Company discovers a breach of any of the Member
Representation and Warranties, and the Company determines that such
breach has a material adverse effect on the Company, then unless
the breach shall have been cured (which cure may be effected
through the exercise of remedies against the manufacturer) or
waived by the Company within 30 days after the earlier to
occur of the related Member’s discovery or receipt of written
notice of such breach, then the transferring Member will be
obligated to purchase the non-conforming Containers and the Related
Transferred Assets at the purchase price allocable to such
Container. Upon receipt by the Company of an amount equal to the
purchase price allocable to a Container, the Company shall convey
to the applicable Member the related non-conforming Containers and
the Related Transferred Assets free and clear of any liens arising
by, through or under the Company.
SECTION 2.2.
Capital Contributions for Purchase of Eligible
Containers.
(a) The
Members shall, from time to time after the Closing Date on a
several basis, make additional Capital Contributions by way of
contributed surplus, in proportion to their respective Sharing
Ratios, to the Company as provided herein, but in no event shall
the aggregate amount of any Member’s Capital Contributions
exceed the amount of such Member’s Commitment set forth on
Exhibit C hereto, and provided, further, that no Member
shall be required to make an additional Capital Contribution unless
the other Member shall have made an additional Capital Contribution
of equal amount. The actual amount of funds contributed by each
Member will be determined pursuant to the applicable procedures set
forth in this Section 2.2.
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