LETTEROF OFFER

SECURITY SCHEDULE to Letter of Offer dated 17 December 2008.

 

 

·	Corporate Guarantee and Indemnity dated 14 September 2007 between:
	-	Royal Wolf Trading Australia Pty Ltd ACN 069 244 417
	-	RWA Holdings Pty Ltd ACN 106 913 964
	-	GFN Australasia Holdings Pty Ltd ACN 121 226 793
	-	GFN Australasia Finance Pty Ltd ACN 121 227 790
	-	Royal Wolf Hi-Tech Pty Ltd ACN 079 735 050

·	First Registered Company Charges (Mortgage Debentures) over all the assets and undertaking of:
	-	Royal Wolf Trading Australia Pty Ltd ACN 069 244 417 Charge Number 1117185 dated 20 May 2005
	-	RWA Holdings Pty Ltd ACN 106 913 964 Charge Number 1117184 dated 20 May 2005
	-	Royal Wolf Hi-Tech Pty Ltd ACN 079 735 050 Charge Number 1438843 dated 12 April 2007
	-	GFN Australasia Holdings Pty Ltd ACN 121 226 793 Charge Number 1514557.
	-	GFN Australasia Finance Pty Ltd ACN 121 227 790 Charge Number 1514546.
	-	Royal Wolf Trading New Zealand Ltd
	-	RWNZ Acquisition Co Ltd
	-	Royalwolf NZ Acquisition Co Ltd
	These are fixed and floating charge over all present and future assets, undertaking (including goodwill) and unpaid/uncalled capital of the companies.

·	First Registered Mortgage given by Royal Wolf Trading New Zealand Ltd over the property situated at 4 Ormiston Rd, East Tamaki, New Zealand.

·

Amendment and Restatement Deed dated 1 May 2008 amending and restating the original Intercreditor Deed dated 14 September 2007 between, among others, General Finance Corporation (U.S), GFN U.S. Australasia Holdings, Inc., Bison Capital Australia, L.P., Royal Wolf Australia Group and Australia and New Zealand Banking Group Limited ABN 11 005 357 522 (the Bank).

 

FINANCIAL REQUIREMENTS AND OTHER CONDITIONS SCHEDULE to Letter of Offer dated 17 December 2008.

 

 

You agree to provide us with:

·	Consolidated Audited annual financial statements as soon as they are available, but not later than 120 days after the end of each financial year.
·	An Annual Compliance Certificate signed by two Directors certifying compliance with consolidated financial undertakings as soon as it is available, but not later than 120 after the end of each financial year.
·	Board approved business plan, consolidated annual projected Statement of Financial Position, Statement of Financial Performance, cashflow forecast and consolidated CAPEX (Capital Expenditure). Budget detailing non-discretionary and discretionary CAPEX at the start of each financial year for the ensuing 12 months as soon as they are available, but not later than 15 days prior to the commencement of each financial year.   Forward projected statements (balance sheet, profit & loss and cash flow forecast) are to be prepared on a monthly basis covering at least 12 months and updated as necessary.
·	A review of the consolidated company’s inventory management systems to be conducted as at 30 June each year as part of the General Audit.  A copy of the report to be provided to the Bank within 120 days after the end of each financial year.

·	Consolidated Management accounts (Statement of Financial Position and Statement of Financial Performance accounts) within 45 days after the end of each financial quarter. These accounts may be provided electronically in terms of our requirements for provision of electronic financials.
·	Consolidated Working capital information including a listing of aged debtors, creditors and stock to be provided within 30 days of the end of each financial quarter (ie. March, June, September, December).
·	Consolidated Compliance Certificate signed by two Directors certifying compliance with consolidated financial undertakings as soon as it is available, but not later than 45 after the end of each financial quarter.
·	A Borrowing Base certificate within 30 days after the end of each financial quarter verifying the face value of facilities drawn and unpaid under the Commercial Bill Facilities, Overdraft Facility and ANZ NZ Term Debt Facilities available does not exceed 80% of the lesser of the orderly liquidation value of the fleet or the book value of the fleet.

Any financial information provided by you must be signed by a director or secretary as giving a true and fair view of the financial position of the company on the ‘as at’ date for which financial statements are issued. This requirement is waived for Management accounts as listed above when these are provided electronically and in compliance with our requirements for provision of electronic financials.

 

 

Copies of management accounts provided via electronic mail (email) must be sent by, either:

·	A person nominated by you and acceptable to ANZ (“Nominated Representative”).

In the case of the latter, the attached letter must be signed by both the Nominated Representative and by you, and returned to ANZ.

You will ensure that every director of each company‡  (to which the management accounts relate) reviews the management accounts on or before the date they are sent to ANZ to confirm they are true and correct and are not misleading in any way. The directors will be taken to have jointly and severally certified the management accounts in this manner, unless they notify ANZ of any discrepancy within five business days from the date that your Nominated Representative sends the management accounts to ANZ.

A director sending management accounts to ANZ in this manner will be taken to have certified the accounts as true and correct and not misleading in any way on the date that they are received by ANZ.

A failure to meet any of the above requirements where they apply will constitute an event of default under this letter.

‡Where the number of such people/officers is greater than two, the management accounts sent (electronically) to the bank need only be copied to a minimum of two such people/officers.

 

 

While we are making facilities available to you and while there remains any obligations by you to us, you undertake that:

·	Consolidated Interest Cover: The interest cover ratio for each financial quarter on a rolling basis will not, as at the compliance date, be less than 2.25:1, increasing to 2.50:1 as at 30 June 2009.
·	Consolidated Senior Debt Interest Cover: The senior debt interest cover ratio for each financial quarter on a rolling basis must be equal to or greater than 3.50:1 at all times.
·	Consolidated Gearing Ratio: Total Debt (excluding loans from General Finance Corporation to the Group) to adjusted trailing EBITDA for each financial quarter must be equal to or less than 5.50:1, reducing to 4.50 as at 30 June 2009 onwards.
·	Consolidated Gearing Ratio: Senior Debt to adjusted trailing EBITDA ratio for each financial quarter must be equal to or less than 4.50:1, reducing to 3.50 as at 30 June 2009 onwards.
·	Consolidated Loan to valuation limitation: Face value of facilities drawn and unpaid under the Commercial Bill Facilities, Overdraft Facility, Multi-Option Facility (2) and ANZ NZ Term Debt Facilities (being the Bill Priced Term Loan Facility which is currently NZD2,025,000 and the Bill Priced Term Loan Facility which is currently NZD10,329,000) must not exceed 80% of the Orderly Liquidation value of the Group’s container fleet.

 

unless we have given you our prior written consent to a variation.

 

 

If any of the above financial covenants are breached, unless we have given you our prior written consent to a variation, you will be in breach of your obligations in terms of Default clauses in the General Conditions.

We will test the financial covenants for each entity that the financial covenants apply to at the end of each compliance period as set out above, based on the definitions and calculations set out below.

You agree that the interpretation and testing of the above financial covenants will be carried out in accordance with the provisions of the Corporation Act 2001 (Cth) and the accounting concepts, standards and disclosure requirements of the Australian accounting bodies consistently applied, unless otherwise agreed in writing.

 

 

“Consolidated” means, for the purposes of your financial statements, the following entities

·     Royal Wolf Trading Australia Pty Ltd ACN 069 244 417

·     RWA Holdings Pty Ltd ACN 106 913 964

·     GFN Australasia Holdings Pty Ltd ACN 121 226 793

·     GFN Australasia Finance Pty Ltd ACN 121 227 790

·     Royal Wolf Hi-Tech Pty Ltd ACN 079 735 050

·     Royal Wolf Trading New Zealand Ltd

·     RWNZ Acquisition Co Ltd

·     Royalwolf NZ Acquisition Co Ltd

“RWNZ Group” is a reference to the following New Zealand entities individually and collectively:

•     Royal Wolf Trading New Zealand Ltd

•     RWNZ Acquisition Co Ltd

•     Royalwolf NZ Acquisition Co Ltd

“Interest Expense” means the aggregate of interest expense, interest expense – Intra Group loans and interest expense of Directors, Owners and Shareholder loans, and includes Senior Debt Interest Expense.

“EBITDA” means the consolidated net profit/(loss) before deduction of, interest, tax depreciation and amortisation (before significant items).

“Senior Debt Interest Expense” means the aggregate gross amount of interest and payments in the nature of interest paid or payable to the Bank in respect of ANZ Commercial Bills and Invoice Finance interest expense,  including Invoice Finance Administration Fees and Funding Charges.

“GFN Loan Interest Subordinated” means the aggregate of interest expense on loans from General Finance Corporation to the Group, which have principal and interest subordinated to the facilities being provided by the bank.

“Trailing Adjusted EBITDA” means GFN Australasia Holdings actual EBITDA plus 12 months trailing EBITDA of future acquired companies.

“Invoice Finance Administration Fees and Funding Charges” are those fees and funding charges directly related to provision of an Invoice Finance Facility.

“Debt” is the aggregate of short term and long term debt.

The above terms are to be interpreted according to the Corporations Act 2001 (Cth), Statement of Accounting Concepts, Australian Accounting Standards and other mandatory reporting requirements.

 

 

 

Total Interest Expense (inclusive of Bison Interest) less GFN Loan Interest Subordinated

 

Total Senior Debt Interest Expense

 

 

 

Trailing Adjusted EBITDA

 

 

 

Trailing Adjusted EBITDA

 

 

§

Orderly Liquidation Value:

 

Funding of the Interchangeable Facility (1), Interchangeable Facility (2), Interchangeable Facility (3), Interchangeable Facility (4), Interchangeable Facility (5), Overdraft Facility, Mutli-Option Facility (2), Bill Priced Term Loan Facility NZD2.025M and Bill Priced Term Loan Facility NZD 10.392M and Multi-Option Facility (2) are restricted to an amount in total which is no greater than 80% of the orderly liquidation value of the container fleet (being, the container fleet owned from time to time by the Group or the RWNZ Group (as defined in this letter of offer)). Should this condition be breached you must reduce the balance of the facilities within 5 Sydney business days to a level that will satisfy this condition.

 

·

Management Fee payments are to be payable to GFN U.S. Australasia Holdings Inc. and restricted to USD $1,500,000 or less per annum and are not to be made if the payment of such will cause a breach of the banks financial covenants or if it will become an Event of Default or if an Event of Default subsists.

 

·

Provision of loans or advances, excluding scheduled overhead charges from parent company in an amount to be agreed upon, to directors, shareholders, related or associated companies are not to be made without prior written consent from the Bank.

 

·

Detailed schedule of containers with the following information as soon as they are available but no later than 30 days after the end of each quarter:

o

Held for hire/lease outlining type, number, acquisition cost and book value.

o

Held for sale outlining type, number, acquisition cost and book value

·

Invoice Finance Field Reviews to continue as per facility agreement.

·

Royal Wolf Australia Group standard lease / rental / hire documentation / contracts are to be vetted by the Bank's legal advisors and confirmed acceptable.

·

Fair market value & orderly liquidated value of the container fleet is to be undertaken (at your cost) by a valuer appointed by and acceptable to the Bank on a quarterly basis.

·

All containers (owned by the borrower and / or security providers) are to be restricted within the shores of Australia and/or New Zealand and the company's Lease/Rental documentation should include this limitation.  Any movement of containers outside the shores of Australia and/or New Zealand will require the Bank's prior written consent.

·

Current depreciation and amortisation policy is not to be amended without prior written consent of the bank.

·

Any additional off or on balance sheet liabilities greater than A$500,000.00 p.a are not to be incurred without prior written consent from the Bank. Such consent will not be unreasonably withheld.

·

The banks prior written consent for container fleet sale of $3,000,000 or greater in any one transaction is to be sought. Such consent will not be unreasonably withheld.

·

Dividend payment / shareholder loans repayment are not to be paid without the banks prior consent except for the payment of dividends by RWA Holdings Pty Ltd to GFN Australasia Holdings Pty Ltd (GFNAH) to enable GFNAH to pay interest to Bison Capital Australia, L.P.. Such consent will not be unreasonably withheld.

·

Interest payable on Bison Capital Australia, L.P subordinated loan is subject to no current event of default and compliance of the bank's financial covenants.

·

At all times you must have entered into arrangements with the Bank to hedge your interest rate risks in relation to no less than 50% of debt funding

a)

Fluctuations in the exchange rate of currencies occur from time to time. These fluctuations may mean the amount of your liability to us in Australian dollars for a Loan in foreign currency under this agreement could be significantly more than the Australian dollar equivalent of the amount of the Loan on the drawdown date;

b)

While we will inform you of the availability of mechanisms, if they exist, for limiting the risks associated with fluctuations in the exchange rate of currencies, it is not our role or responsibility to advise in relation to, monitor, manage or in any way take steps designed to protect your exposure to loss as a result of fluctuations in the exchange rate of currencies from time to time. We are not obliged to notify you of fluctuations in exchange rates.

 

 

All insurable property mortgaged to us must be insured for all usual risks under a policy acceptable to us. The insurance must be for full replacement value of the property insured.

Before drawdown and thereafter within 14 days of a request by ANZ you must submit to the bank a Cover Note or a Certificate of Currency for the property mortgaged to us. Such request may be made by ANZ at any time in writing, verbally, by facsimile transmission, by email or other electronic means of communication.  If a Cover Note is issued, the Bank must receive a Certificate of Currency to confirm the insurance, within 90 calendar days of the Cover Note expiration.

As a minimum, the Certificate of Currency must include:

 

·

Insurance cover expiry date

 

·

Situation(s)

 

·

Type of cover

 

·

Policy number

 

·

Policy underwriter and /or broker name

 

·

Insured Amount

 

·

The Bank’s interest clearly noted on the insurance policy

You agree to advise the bank in the event that the insurance is cancelled or the nature of the cover changes and submit an updated Certificate of Currency for our records.

 

 

You agree that properties listed in the Security Schedule must be re-valued for the Bank at least once every 36 months at your cost while facilities continue to be provided by the Bank. Each valuation must be undertaken by a reputable licensed property valuer acceptable to the Bank.

 

 

Our obligation to make any facilities available is subject to our being satisfied that you have complied with Clause 4 of the General Conditions and the following relative to Authorised Representatives.

 

We must have received from you a properly completed and executed Authorised Representative Certificate and the identity of each Authorised Representative must be verified to our satisfaction in order to comply with the Anti-Money Laundering and Counter-Terrorism Financing Act. Each person so named as an Authorised Representative will be an authorised representative for the purposes of the transaction documents.

 

 

You agree to:

 

(i)

comply, and ensure each surety complies, with the requirements of all environmental laws; and

 

 

(ii)

ensure that each surety complies with the requirements of all environmental laws in relation to property given or to be given by it to us as security.

An “environmental law” means an act of Parliament which has the purpose of protecting the environment from pollution, including without limitation, pollution relating to air, water, noise or chemicals (and any statutory modification of, or legislative provision substituted for, and any subordinate legislation under an act of Parliament of that kind).

GENERAL AND SPECIFIC CONDITIONS SCHEDULE to Letter of Offer dated 17 December 2008.

 

 

Our General Conditions (Fourth Edition 2003) apply to the facilities as well as any applicable Specific Conditions to the facilities.  Both the General Conditions and any applicable Specific Conditions are enclosed with this letter.

 

 

 

This clause and the meaning of “International Financial Reporting Standard” at clause 23 are deleted in their entirety.

This clause is deleted and replaced with the following.

You agree that we may delay, block or refuse to make a payment or process any transaction without incurring any liability if we suspect that:

(a)	the transaction or payment may breach any laws or regulations in Australia or any other country;

(b)	the transaction involves any person (natural, corporate  or governmental) that is itself sanctioned or is connected, directly or indirectly, to any person that is sanctioned under economic and trade sanctions imposed by the United States, the European Union or any country; or

(c)	the transaction or payment may directly or indirectly involve the proceeds of, or be applied for the purposes of, conduct which is unlawful in Australia or any other country.

You also agree to provide all information to us which in our reasonable opinion we require in order to manage our money laundering, terrorism financing or economic and trade sanctions risk or to comply with any laws or regulations in Australia or any other country.

 

You further agree that we may disclose any information concerning you to any law enforcement, regulatory agency or court where required by any such law or regulation in Australia or elsewhere.

Unless you have disclosed that you are acting in a trustee capacity or on behalf of another party, you warrant that you are acting on your own behalf in entering into this agreement.

 

You declare and undertake to us that the payment of monies or processing of transactions by us in accordance with your instructions will not breach any laws or regulations in Australia or any other country.

This clause is inserted as a new sub clause.

(15) Trade or country sanctions

Trade and economic sanctions (sanctions) imposed by Governments, Government agencies or departments and regulators, Central Banks and/or Transnational Organisations (including the United Nations and European Union impact upon transactions involving countries, persons or corporate entities resident within countries currently including, but not limited to, the following:

BALKANS, BELARUS, COTE D'IVOIRE (IVORY COAST), LEBANON, LIBERIA, RWANDA, SIERRA LEONE, SOMALIA, SYRIA, THE DEMOCRATIC REPUBLIC OF CONGO, UZBEKISTAN, AFGHANISTAN, IRAN, IRAQ, MYANMAR (BURMA), NORTH KOREA, CUBA, ZIMBABWE AND SUDAN.

 

We and our related Bodies Corporate might be subject to and affected by sanctions with which we will comply.

 

We are not and will not be liable for any loss or damage whatsoever associated directly or indirectly with the application of sanctions to a transaction or financial service involving us.

This clause is inserted as a new sub clause.

Terms used in this clause have the same meaning as those defined in the A New Tax System (Goods and Services Tax) Act 1999 (“GST Act”) unless provided otherwise.

 

If any supply made under or in connection with this Agreement is subject to GST, the party making the supply (“ANZ”) may increase the consideration otherwise provided for by the amount of that GST and recover such additional amount from the party liable for payment of the consideration. This clause does not apply to the extent that the consideration is expressly agreed to be GST inclusive.

 

If you are required to reimburse ANZ for any costs, the amount must be reduced to the extent that ANZ is entitled to claim an input tax credit in respect of those costs. A party will be assumed to have an entitlement to claim a full input tax credit unless it demonstrates otherwise prior to the date on which the consideration must be provided.

 

No payment of any amount in respect of GST is required until ANZ has provided a tax invoice or adjustment note, as the case may be, to you. ANZ must provide a tax invoice or adjustment note to you as required by the GST Act.

 

Any reference in this Agreement to fee, price, value, sales, revenue, or similar amount (“Revenue”) shall be a reference to that Revenue exclusive of GST, unless and to the extent that the revenue is expressly agreed to be GST inclusive.

 

 

Despite anything in the General Conditions, the Specific Conditions that applied to a Lease Finance facility or a Hire Purchase facility at the time of transaction draw down or settlement shall remain in force until the termination of the drawn down portion of that Lease Finance facility or Hire Purchase facility.

 

 

If drawings are made to your account in excess of the agreed limit and we decide to pay those drawings, we may charge an excess fee of up to $150. This fee is to compensate us for costs we incur as a result of an excess.  If charged this fee is payable on the date of the excess.

 

 

For the purposes of clause 8 of the General Conditions, the applicable rate of interest is the interest applicable to the facility on which the excess occurs or the facility on which an overdue amount occurs plus margin, plus 4% pa.

 

 

The definition of “your authorised representative” in the General Conditions is amended to read:

“your authorised representative” means, at a particular time, a person appointed by your board of directors, if a company, or all partners, if a partnership, as an authorised representative;

An appointment of authorised representatives must be evidenced by a notice to us, showing the name and date of birth (to assist us to identify the authorised representative) and signature of each nominated person and bearing the certification of your director(s) or director and secretary, in the case of a company, or the signatures of all partners, in the case of a partnership, certifying that each signature is correct.

 

 

In terms of Clause 24 (8) of the General Conditions and by mutual agreement between us, you must reconcile your records in respect of each account held with us within 30 days after you should have received the statement of account.  All other conditions of this clause remain unchanged.

Acceptance of Letter of Offer dated 17 December 2008.

We accept your offer to provide the facilities on the conditions detailed in this letter of offer and acknowledge receipt of the General Conditions (Fourth Edition 2003) and the applicable Specific Conditions.

We authorise ANZ to provide information about the borrower (including credit worthiness, history, standing or capacity) to:

·

An intending guarantor, to enable that person to consider whether or not to act as guarantor, or offer property as security, for a loan or loans in the name of the borrower.

·

A person who is a guarantor, or has provided property as security, for a loan or loans in the name of the borrower.

Dated 17/12/08

 

 

Corporate Surety Acknowledgment to Letter of Offer dated 17 December 2008.

 

Each of the following sureties acknowledges that the securities given, or to be given by us secure all present and future obligations of the customers to the Bank, including obligations in respect of the facilities.

 

By providing this surety Acknowledgment to the facilities, each surety acknowledges that the provisions contained at Clause 22 “Privacy” of the General Conditions apply to them.

 

Dated 17/12/08

 

 

 

 

Group Name:

Royal Wolf Australia Group

 

 

We refer to the letter dated 17 December 2008 and accompanying General Conditions) and applicable Specific Conditions, that constitute the agreement (the "agreement") between the Bank and Royal Wolf Australia Group (the “customer”).

Terms used in this certificate that are defined in the agreement have, unless the context otherwise requires, the same meanings as in the agreement.

[I am]/[We are]/[ a director]/[ directors]/[ a director and a company secretary] of the customer.

The schedule and attachments to this certificate are complete and up to date copies of:

1.	A list of the customer’s authorised representatives with the signature, or a copy of the signature, of each authorised representative appearing beside their name.

 

We certify that the above document is complete, correct, fully in force and not subject to amendment or revocation.

Terms used in this certificate that are defined in the agreement have, unless the context otherwise requires, the same meanings as in the agreement.

[I am]/[We are]/[ a director]/[ directors]/[ a director and a company secretary] of the customer.

The schedule and attachments to this certificate are complete and up to date copies of:

2.	A list of the customer’s authorised representatives with the signature, or a copy of the signature, of each authorised representative appearing beside their name.

 

We certify that the above document is complete, correct, fully in force and not subject to amendment or revocation.

We refer to the letter dated 17 December 2008 and accompanying General Conditions) and applicable Specific Conditions, that constitute the agreement (the "agreement") between the Bank and Royal Wolf Australia Group (the “customer”).

Terms used in this certificate that are defined in the agreement have, unless the context otherwise requires, the same meanings as in the agreement.

[I am]/[We are]/[ a director]/[ directors]/[ a director and a company secretary] of the customer.

The schedule and attachments to this certificate are complete and up to date copies of:

3.	A list of the customer’s authorised representatives with the signature, or a copy of the signature, of each authorised representative appearing beside their name.

 

We certify that the above document is complete, correct, fully in force and not subject to amendment or revocation.

 

 

 

 

Terms used in this certificate that are defined in the agreement have, unless the context otherwise requires, the same meanings as in the agreement.

[I am]/[We are]/[ a director]/[ directors]/[ a director and a company secretary] of the customer.

The schedule and attachments to this certificate are complete and up to date copies of:

4.	A list of the customer’s authorised representatives with the signature, or a copy of the signature, of each authorised representative appearing beside their name.

 

We certify that the above document is complete, correct, fully in force and not subject to amendment or revocation.

 

We refer to the letter dated 17 December 2008 and accompanying General Conditions) and applicable Specific Conditions, that constitute the agreement (the "agreement") between the Bank and Royal Wolf Australia Group (the “customer”).

Terms used in this certificate that are defined in the agreement have, unless the context otherwise requires, the same meanings as in the agreement.

[I am]/[We are]/[ a director]/[ directors]/[ a director and a company secretary] of the customer.

The schedule and attachments to this certificate are complete and up to date copies of:

5.	A list of the customer’s authorised representatives with the signature, or a copy of the signature, of each authorised representative appearing beside their name.

 

We certify that the above document is complete, correct, fully in force and not subject to amendment or revocation.