February 28, 2007
EXHIBIT
7.03
February 28,
2007
| To: | CRX Acquisition Ltd. |
| c/o Fortis Capital Corporation | |
| ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇ ▇▇▇▇▇ | |
| ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ |
Re: Dolphin,
Inc. - FB Transportation Capital LLC - Equity Commitment Letter
Gentlemen:
Reference
is made to the Asset Purchase Agreement, dated as of the date hereof (as it
may
be amended from time to time, the “Asset
Purchase Agreement”),
by
and among CRX Acquisition Ltd., a Bermuda exempted company (“Purchaser”),
FB
Transportation Capital LLC, a Delaware limited liability company acting in
its
capacity as sponsor (“Sponsor”),
and
The Cronos Group, a limited liability company (société
anonymé holding)
organized and existing under the laws of the Grand Duchy of Luxembourg (the
“Company”),
pursuant to which Purchaser, or a permitted assignee of Purchaser, will acquire
the assets and assume the liabilities of the Company subject to and in
accordance with its terms. Capitalized terms used but not defined herein shall
have the meanings ascribed to them in the Asset Purchase Agreement.
The
undersigned is entering into this commitment letter agreement (“Equity
Commitment Letter”)
at or
about the same time that certain other holders of Common Shares of the Company
are entering into Equity Commitment Letters with Purchaser having terms
substantially similar hereto. The undersigned, such other Persons who are
parties to such other Equity Commitment Letters and any other Persons who become
parties to Equity Commitment Letters with Purchaser after the date hereof,
are
collectively referred to herein as the “Investors”.
This
letter is being delivered to Purchaser in connection with the execution and
delivery of the Asset Purchase Agreement by Purchaser, Sponsor and the
Company.
This
letter confirms the commitment of the undersigned, subject to the conditions
set
forth herein, to contribute and deliver to Purchaser at or immediately prior
to
the Closing cash in the amount set forth on Schedule
A
attached
hereto (and which is made a part hereof) (the “Committed
Cash”)
in
exchange for that number of common shares of Purchaser, US$0.01 par value per
common share (such common shares of Purchaser being referred to herein as the
“Subject
Equity Securities”)
set
forth on Schedule
A;
provided,
that the
undersigned shall not, under any circumstances, be obligated to contribute
to
Purchaser an amount of cash in excess of the amount of Committed Cash set forth
on Schedule
A.
The
undersigned’s obligation hereunder to contribute and deliver the Committed Cash
to Purchaser is herein referred to as the “Commitment”),
and
such obligation is subject in all respects to (a) the terms of this letter,
(b)
the satisfaction of the conditions precedent to Purchaser’s obligations to
effect the Closing, (c) the performance in full by the other Investors of their
obligations under their respective Equity Commitment Letters and (d) the
issuance to the undersigned of the Subject Equity Securities (all of which
will
be deemed to occur immediately prior to the Closing). The other terms and
conditions regarding the undersigned’s proposed investment in Purchaser are
summarized in Schedule
B,
which
is attached hereto and made a part hereof.
1
The
undersigned’s obligation hereunder to contribute and deliver to Purchaser the
Committed Cash will terminate automatically and immediately upon the earlier
to
occur of the following: (a) the termination of the Asset Purchase Agreement
and (b) the Closing.
The
undersigned and Purchaser also each agree to enter into, effective upon the
Closing, definitive agreements reflecting the terms and conditions set forth
in
this letter and those referred to or summarized in Schedule
B
hereof,
with such agreements, in each case, containing such other terms as are (a)
not
materially inconsistent with the terms and conditions hereof and those
summarized in Schedule
B
and (b)
not materially adverse to the undersigned or Purchaser.
The
rights and obligations under this Equity Commitment Letter may not be assigned
by either party hereto without the prior written consent of Purchaser, and
any
attempted assignment shall be null and void and of no force or effect, except
as
otherwise permitted in this paragraph. Notwithstanding the foregoing, the
undersigned may assign all or a portion of its rights and obligations hereunder
to one or more of its affiliated entities (any such affiliated entities are
referred to herein as “Permitted Assignees”); provided,
however,
that no
such assignment by the undersigned shall relieve the undersigned of its
obligations under this Equity Commitment Letter. This letter may not be amended,
and no provision hereof waived or modified, except by an instrument in writing
signed by Purchaser and the undersigned. Notwithstanding the foregoing, the
undersigned and Purchaser acknowledge and agree that the structure and terms
of
the proposed investment contemplated hereunder may be subject to change upon
and
subject to the mutual consent of the parties hereto.
This
Equity Commitment Letter shall be binding on the undersigned and solely for
the
benefit of Purchaser, and nothing set forth in this letter shall be construed
to
confer upon or give to any person other than Purchaser any benefits, rights
or
remedies under or by reason of, or any rights to enforce, the commitment
expressed hereunder or any other provisions of this Equity Commitment
Letter.
The
undersigned represents and warrants to Purchaser that: (i) the undersigned
has
the requisite limited liability company power and authority to execute and
deliver this Equity Commitment Letter and to fulfill and perform the
undersigned's obligations hereunder and (ii) this Equity Commitment Letter
has
been duly and validly executed and delivered by the undersigned and constitutes
a legal, valid and binding agreement of the undersigned enforceable by Purchaser
against the undersigned in accordance with its terms.
Notwithstanding
any matter that may be otherwise expressed or implied in this Equity Commitment
Letter, each party hereto, by its acceptance of the benefits hereof, covenants,
agrees and acknowledges that no recourse hereunder or under any documents or
instruments delivered in connection herewith shall be had against any officer,
director, agent, employee, affiliate or assignee of the undersigned or any
officer, director, agent, employee, affiliate or assignee of any of the
foregoing, whether through the enforcement of any judgment or assessment or
by
any legal or equitable proceedings, or by virtue of any statute, regulation
or
other applicable law, it being expressly agreed and acknowledged that no
personal liability whatsoever shall attach to, be imposed on, or otherwise
be
incurred by, any officer, director, agent, employee, affiliate or assignee
of
the undersigned or any officer, director, agent, employee, affiliate or assignee
of any of the foregoing, as such, for any obligations of the undersigned under
this letter or any documents or instruments delivered in connection herewith
or
for any claim based on, in respect of, or by reason of, such
obligations.
2
This
letter may be executed in counterparts. This letter and any related dispute
shall be governed by, and construed and interpreted in accordance with, the
laws
of the State of New York applicable to contracts executed in and to be performed
in that State. Each of the parties hereto (i) consents to submit himself or
itself to the personal jurisdiction of any state or federal court located in
the
Borough of Manhattan of The City of New York in the event any dispute arises
out
of this letter or any of the transactions contemplated by this letter, (ii)
agrees that he or it (as the case may be) will not attempt to deny or defeat
such personal jurisdiction or venue by motion or other request for leave from
any such court and (iii) agrees that he or it (as the case may be) will not
bring any action relating to this letter or any of the transactions contemplated
by this letter in any court other than such courts sitting in the Borough of
Manhattan of The City of New York.
EACH
OF
THE PARTIES HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS LETTER
OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
[Remainder
of page intentionally left blank]
3
| Very truly yours, | ||
| FB TRANSPORTATION CAPITAL LLC | ||
|
By:
/s/
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
|
||
|
Name:
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
|
||
|
Title:
Chief Executive
Officer
|
Accepted
and Acknowledged as of
the
date
first written above:
CRX
ACQUISITION LTD.
By:
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Name:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title:
President
4
SCHEDULE
A
|
Amount
of Committed Cash
|
Number
of Common Shares of Purchaser (Subject Equity
Securities)
|
|
$4,800,000
|
4,800,000
|
SCHEDULE
B
SUMMARY
OF TERMS
FOR
COMMON STOCK FINANCING OF
CRX
ACQUISITION LTD.
FEBRUARY
28, 2007
This
Summary of Terms summarizes the principal terms of the proposed equity financing
of a Bermuda exempted company (“Purchaser”)
in
connection with its formation and its subsequent capitalization. It is intended
that Purchaser will (i) acquire all of the assets and assume all of the
liabilities of The Cronos Group, a
limited
liability company (société anonyme holding) organized and existing under the
laws of the Grand Duchy of Luxembourg
(“Dolphin”),
(ii)
sell and transfer the interests in container assets formerly owned by Dolphin
and its affiliates to FB Transportation Capital LLC, a Delaware limited
liability company (“FBT”),
or an
affiliate or affiliates thereof (the transactions referred to in clauses (i)
and
(ii) above being hereinafter referred to collectively as the “Transaction”),
and
(iii) manage container assets owned by CF Leasing Limited (a Bermuda exempted
company) and/or any of its affiliates (and their respective successors and
assigns) following consummation of the Transaction.
It
is
intended that ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇
▇.
▇▇▇▇▇, current officers and/or directors of Dolphin (such individuals being
referred herein to as the “Management
Parties”)
will
acquire, along with FBT, common shares, US $0.01 par value, of Purchaser (the
“Common Shares”) in connection with Purchaser’s capitalization in connection
with the Transaction. It is presently anticipated that a third party investor
or
investors that are accredited investors (“Third
Party Investors”)
will
join in such acquisition of Common Shares with FBT and the Management Parties.
FBT, the Third Party Investors and the Management Parties are sometimes referred
to herein as the “Investor
Parties.”
The
Third Party Investors that will make equity investments in Purchaser in
accordance with this Summary of Terms will be subject to the prior approval
by
FBT, which approval will not be unreasonably withheld.
This
Summary of Terms includes the basic proposed rights, preferences and obligations
of the Investor Parties, which are to be in embodied in the governance documents
of Purchaser and other agreements among the Investor Parties. In addition to
the
terms set forth in this Summary of Terms, the Investor Parties intend to
negotiate additional customary terms for inclusion in the governance documents
and such other agreements. All sums in dollars contained herein shall refer
to
U.S. Dollars.
|
Offering
Terms
|
|
|
Closing
Date:
|
As
of the closing of the Transaction (the “Closing”).
|
B-1
|
Investor
Parties:
|
At
Closing, the Management Parties will acquire a minimum of 2,000,000
Common
Shares of Purchaser, which may be increased up to a maximum of 4,000,000
Common Shares of Purchaser, in exchange for their contribution of
cash.
At
Closing, FBT will acquire 4,800,000 Common Shares of Purchaser in
exchange
for its contribution of cash.
At
Closing, Third Party Investors will acquire up to 5,000,000 Common
Shares
of Purchaser, in exchange for their contribution of cash. In the
event
that Management Parties and Third Party Investors do not invest at
least
$7,000,000 in cash at Closing to purchase Common Shares of Purchaser,
then
FBT will agree to purchase an additional number of Common Shares
for a sum
that is equal to the amount by which $7,000,000 exceeds the total
amount
actually invested by the Third Party Investors and Management
Parties.
|
|
|
Price
Per Common Share of Purchaser to be Acquired:
|
US
$1.00 per share
|
|
|
Counsel
and Expenses:
|
Each
party shall pay its own expenses incurred in connection with the
matters
contemplated herein, including the completion of the Transaction
and/or
the termination of the definitive agreements governing same, irrespective
of the completion of the transactions contemplated hereunder.
|
|
|
CHARTER
|
||
|
General:
|
Except
as described below, the Charter will include standard terms. “Blank Check”
preferred shares will be authorized permitting the creation and issuance
of preferred shares by the Board of Directors of Purchaser (the “Board”)
in the future, although the issuance of any preferred shares will
be
subject to the terms and conditions of the Shareholders Agreement
described below. Supermajority shareholder voting provisions will
be
required in connection with the approval and adoption of certain
transactions and events, as described below under “Liquidation
Events”.
|
|
SHAREHOLDERS
AGREEMENT
|
|
|
General:
|
The
Shareholders Agreement will address how the Board is to be composed,
how
the Investor Parties and any other/future investors would fit into
that
scheme, and shareholder voting agreement provisions to enforce the
intended Board composition terms and related
matters.
|
B-2
|
Dividends:
|
Dividends
will be paid in respect of Common Shares when, as and if declared
by the
Board of Directors, but subject in all respects to “Matters Requiring
Board Approval” below.
|
|
Information
Rights:
|
Purchaser
will deliver to the holders of Common Shares (i) audited consolidated
financial statements no later than 120 days after the end of each
fiscal
year, (ii) unaudited consolidated quarterly financial statements
no later
than 60 days after each quarter and (iii) such operational information
as
reasonably requested by FBT and the Third Party Investors.
|
|
Board
Matters / Voting Rights:
|
Purchaser’s
Board of Directors shall initially be composed of five members: (i)
▇▇▇▇▇▇
▇. ▇▇▇▇▇, (ii) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, (iii) two directors designated by
FBT and
(iv) one director designated by the Third Party Investors. Any replacement
of Messrs. ▇▇▇▇▇ or Younger must be first approved by FBT. However,
only
an Investor Party that has designated a director may remove that
director.
These arrangements will remain in effect for a period of not less
than two
years following the date of the Shareholders Agreement.
|
|
Restriction
on Transfer:
|
The
Investor Parties shall not transfer or otherwise dispose of any Common
Shares or securities convertible, exercisable or exchangeable into
Common
Shares, except (i) to a permitted transferee (an affiliate, in the
case of
FBT and any Third Party Investor, and a trust or other estate planning
vehicle, in the case of a Management Party), (ii) pursuant to a public
offering approved in accordance with, and as described in, “Matters
Requiring Board Approval” below, (iii) to the Company or (iv) as described
under “Right of First Refusal/Tag Along,” “Drag Along” and “Repurchase of
Management Shares” below.
|
|
Right
of First Refusal/Tag Along:
|
Purchaser
(first) and the Investor Parties (second) shall have a right of first
refusal with respect to the proposed sale of any Common Shares or
any
other shares of Purchaser by any of the Investor Parties, in each
case
with a right of oversubscription of shares unsubscribed by the other
holders of the Common Shares. In addition, before any Investor Parties
may
offer to sell collectively 60% or more of Purchaser’s outstanding Common
Shares, they must give the other Investor Parties an opportunity
to
participate in such sale on a basis proportionate to the amount of
securities held by the seller(s) and those held by the other participating
Investor Parties.
|
B-3
|
Drag
Along:
|
If
one or more Investor Parties holding collectively at least 50% of
Purchaser’s Common Shares propose to sell their Common Shares to a third
party (not constituting permitted transferees), and such sale shall
have
been approved by FBT, then the selling Investor Parties shall have
the
right to require all of the other Investor Parties to include in
such sale
the Common Shares of such other Investor Parties.
|
|
Budget
Approval:
|
Management
will prepare and submit to the Board for approval, at least thirty
days
prior to the end of each fiscal year, (i) a comprehensive operating
budget
forecasting Purchaser’s revenues, expenses, and cash position on a
quarter-to-quarter basis for the upcoming fiscal year and (ii) a
quarter-to-quarter capital expenditure budget for the upcoming fiscal
year.
|
|
Matters
Requiring 75% Board Approval:
|
Purchaser
will not, without the approval of a number of directors constituting
at
least 75% of the entire Board of Directors:
(A)
(i) liquidate, dissolve or wind up the affairs of Purchaser, or effect
any
Liquidation Event (as defined below); (ii) authorize or create any
class
or series of, or increase the authorized number of, or issue, any
shares
(including the Common Shares), or any options, warrants or other
rights or
securities convertible into or exercisable or exchangeable for, or
otherwise relating to, any such shares, options, warrants, rights
or
securities (collectively, “Equity Securities”) (other than with respect to
a to-be-determined sum of Common Shares, including those issuable
upon
exercise of options, which may be issued to employees and directors
of
Purchaser under an equity incentive compensation plan to be approved
by
the Board of Directors, which shall also include the approval of
both of
the FBT Directors, after Closing), (iii) amend, alter, or repeal any
provision of the charter, memorandum of association, byelaws and
other
constituent governing documents of Purchaser; (iv) purchase or redeem,
or
declare or pay any dividend on, any Equity Securities, (v) create or
authorize the creation of any debt security; (vi) adopt or approve
any
stock option plan or other executive equity compensation plan or
benefit
plan (other than as referred to in sub-clause (ii) above; or
(vii) increase or decrease the size of the Board of Directors.
(B)
(i) make any loan or advance to, or acquire (whether by purchase,
merger, amalgamation, recapitalization, consolidation or otherwise)
any
share or other securities of, any subsidiary or other corporation,
partnership or other entity unless it is wholly-owned by Purchaser
prior
to such loan, advance or acquisition; (ii) make any loan or advance
to any other person other than the extension of trade credit in the
ordinary course of Purchaser’s business; (iii) guarantee any
indebtedness except for indebtedness of any subsidiary or trade accounts
of any subsidiary arising in the ordinary course of Purchaser’s business;
(iv) make any investment other than investments in prime commercial
paper, money market funds, certificates of deposit in any United
States
bank having a net worth in excess of $30,000,000 or obligations issued
or
guaranteed by the United States of America, in each case having a
maturity
not in excess of two years; (v) incur any aggregate indebtedness for
borrowed money (including, for this purpose, capital lease obligations)
that at any one time is (or would be upon its incurrence) greater
than
$250,000, except that trade credit incurred in the ordinary course
of
Purchaser’s business shall not be deemed indebtedness for borrowed money;
(vi) make or commit to the making of any capital expenditure in excess
of
$1,000,000, that is not already included in a Board-approved budget;
(vii) enter into or be a party to any transaction with any director,
officer or employee of Purchaser or any “associate” (as that term is
defined in Rule 12b-2 promulgated under the Securities Exchange Act
of
1934, as amended (the “Exchange Act”)) of any such person other than
compensation arrangements for non-executive employees that are included
in
a Board-approved budget; (viii) hire, fire or change the compensation
of any executive officer; (ix) change the principal business of
Purchaser, enter new lines of business, or exit the current line
of
business; (xii) sell, transfer, pledge or encumber any property of
Purchaser or its subsidiaries, other than certain customary “permitted”
liens, liens created in connection with indebtedness permitted in
sub-clause (v) above and liens granted in the ordinary course of
Purchaser’s business; (xiii) settle any litigation where the amounts in
dispute exceed $100,000; (xiv) acquire or dispose (except in the
ordinary
course of business) of assets having a value in excess of $200,000;
or
(xvii) make any amendment to Purchaser’s debt arrangements.
|
B-4
|
Liquidation
Event:
|
Purchaser
will use its commercially reasonable efforts to explore a Liquidation
Event by the end of the fifth year following the date of the Shareholders
Agreement. It is anticipated that such Liquidation Event will result
in
aggregate net proceeds of at least $30.0 million, and a minimum
consideration to the Investor Parties attributed to the Common Shares
of
$2.50 per share (such price being subject to usual and customary
adjustments for stock splits, reverse splits, stock dividends and
similar
recapitalization events).
“Liquidation
Event”
means any transaction or series of related transactions constituting:
(i)
a voluntary or involuntary liquidation, reorganization, dissolution
or
winding up of Purchaser, (ii) a direct or indirect, transfer, in
one or a
series of transactions, of all or substantially all of the assets
of
Purchaser, (iii) a sale, amalgamation, merger, reclassification,
recapitalization, restructuring, consolidation or business combination
or
any other similar transaction of or involving Purchaser, unless the
holders of record of Purchaser’s voting stock as constituted immediately
prior to the consummation of any such transaction will, immediately
after
any such transaction hold greater than 50% of the voting stock of
the
acquiring entity or surviving entity, or either of such entities’ parent,
in approximately the same relative percentages after any such transaction
as before any such transaction, or (iv) the consummation of any
transaction by which any person or group (as referred to in Section
13(d)(3) of the Exchange Act), other than FBT, the Third Party Investors
or any of their respective permitted transferees, is or becomes the
“beneficial owner” (as such term is defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of 50% or more of the voting
stock
of Purchaser.
Until
the fifth anniversary of the date of the Shareholders Agreement,
the
approval of a Liquidation Event described in clauses (ii) or (iii)
above
in the immediately preceding paragraph shall also require the affirmative
vote of Shareholders holding at least 65% of the outstanding shares
of
Common Shares. On and after the fifth anniversary of the date of
the
Shareholders Agreement, the approval of a Liquidation Event described
in
such clauses (ii) or (iii) shall require only the affirmative vote
of
Shareholders holding not less than the minimum statutorily required
percentage of shares outstanding in order for such proposal to be
approved. The Purchaser’s charter shall contain these
provisions.
|
B-5
|
Purchase
or Repurchase of Investor Parties’ Shares:
|
For
the first five (5) years following the execution and delivery of
the
Shareholders Agreement, the Purchaser and the Shareholders will be
subject
to usual and customary share purchase and repurchase arrangement
provisions to be determined by mutual agreement by and among the
Purchaser
and the Investor Parties (including the Management Parties), including
rights of first refusal and rights to purchase and repurchase Common
Shares upon the occurrence of certain events affecting an Investor
Party,
such as death, disability, divorce, foreclosure, retirement, insolvency,
voluntary or involuntary transfer or sale and termination of employment
of
an Investor Party. Following
such five (5) year period, it is currently intended that the Shareholders
shall not be subject to such purchase or repurchase arrangements
by or on
behalf of the Purchaser and such other Investor
Parties.
|
|
Termination:
|
All
rights under the Shareholders Agreement shall terminate upon a Liquidation
Event.
|
B-6
|
OTHER
AGREEMENTS
|
|
Registration
Rights Agreement:
|
The
parties shall enter into a registration rights agreement that shall
provide for three demand registrations by any person holding at least
15%
of the registrable securities at any time following the earlier of
(a)
three (3) years after the date of the Closing and (b) six months
following
an initial public offering. In addition, the parties shall have piggyback
registration rights and the agreement shall contain such other usual
and
customary provisions as the parties may agree.
|
|
Employment
Agreements:
|
Messrs.
▇▇▇▇▇ and Younger will each enter into an employment agreement in
a form
reasonably acceptable to Purchaser and to FBT. Messrs. ▇▇▇▇▇'▇ and
Younger's employment agreements shall each have terms and conditions
substantially the same as those contained in the proposed draft employment
agreement attached to their respective equity commitment letter as
Exhibit
I thereto. Messrs.
▇▇▇▇▇ and Younger will each waive any severance payments they may
be
entitled to under their existing employment arrangements. In addition,
Mr.
Younger will waive any transaction bonus that he may be entitled
to
receive upon the consummation of the Transaction. The terms and conditions
of Messrs. ▇▇▇▇▇▇▇’▇ and ▇▇▇▇▇’▇ current employment agreements with
certain Subsidiaries of Dolphin shall remain in full force and effect
and
will not be affected by the Transaction.
|
|
Employee
Stock Options, Restricted Shares, Etc.:
|
Subject
to the provisions set forth above, the Board of Directors of Purchaser
shall implement such employee stock option, restricted shares and
such
other equity compensation plans as it may determine.
|
|
Definitive
Agreements; Governing Law:
|
This
summary of terms does not constitute or create, and shall not be
deemed to
constitute or create, any legally binding or enforceable obligation,
or
any commitment to invest, on the part of any party referred to in
this
summary of terms. No such obligation shall be created except by the
execution and delivery of definitive agreements containing such terms
and
conditions of as shall be agreed upon by the parties and then only
in
accordance with the terms and conditions of such agreements. All
such
definitive agreements shall be governed in all respects by the laws
of the
State of New York (except with respect to certain terms that shall
be
governed by the internal law of the jurisdiction of formation of
Purchaser).
|
B-7