<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 25, 2000
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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THE CRONOS GROUP
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C>
LUXEMBOURG NOT APPLICABLE
(STATE OF OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
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16, ALLEE MARCONI, BOITE POSTALE 260
L-2120 LUXEMBOURG
TELEPHONE: 352 453145
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
<TABLE>
<S> <C>
DENNIS J. TIETZ COPY TO:
THE CRONOS GROUP JAMES F. FOTENOS, ESQ.
444 MARKET STREET FOTENOS & SUTTLE, P.C.
SAN FRANCISCO, CALIFORNIA 94111 50 CALIFORNIA STREET, SUITE 700
(415) 677-8990 SAN FRANCISCO, CALIFORNIA 94111
[email protected] [email protected]
(NAME, ADDRESS, INCLUDING ZIP CODE,
AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
</TABLE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED PER SHARE PRICE REGISTRATION FEE
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Common Stock, par value
$2.00 per share........ 500,000(1) $5.437(2) $2,718,750(2) $717.75
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Common Stock, par value
$2.00 per share (3).... 300,000(3) $4.375(4) $1,312,500(4) $ 346.50
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Total.................... 800,000 $4,031,250 $1,064.25
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</TABLE>
(1) Relates to the issuance of up to 500,000 shares of common stock upon
exercise of options granted under The Cronos Group 1999 Stock Option Plan.
In addition, pursuant to Rule 416(c) under the Securities Act of 1933, this
Registration Statement also covers an indeterminate amount of interests to
be offered or sold pursuant to the 1999 Stock Option Plan.
(2) Estimated in accordance with Rule 457(h) solely for the purpose of
calculating the registration fee and based upon the last sale price per
share of the Company's common stock as reported on the NASDAQ National
Market as of February 24, 2000.
(3) Relates to the issuance of up to 300,000 shares of common stock upon
exercise of an option granted to Dennis J. Tietz, Chief Executive Officer of
the Company.
(4) Based upon the exercise price of the shares under the option granted to Mr.
Tietz.
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EXPLANATORY NOTE
This Registration Statement has been prepared in accordance with the
requirements of Form S-8 under the Securities Act of 1933, as amended (the
"Securities Act") to register certain shares of common stock that may be
acquired upon the exercise of options granted under The Cronos Group 1999 Stock
Option Plan and a separate option issued to the Chief Executive Officer of the
Company upon his employment by the Company in December 1998.
Under cover of this Registration Statement on Form S-8 is a reoffer
prospectus prepared in accordance with Part I of Form S-3 under the Securities
Act. The reoffer prospectus may be utilized for reofferings and resales of up to
300,000 shares of common stock that may be acquired upon the exercise of an
option granted to the selling shareholder, who may be deemed an "affiliate" (as
such term is defined in Rule 405 under the Securities Act) of the Company.
<PAGE> 3
REOFFER PROSPECTUS
THE CRONOS GROUP
300,000 SHARES OF COMMON STOCK
This Prospectus relates to the reoffer and resale of up to 300,000 shares
of our common stock, par value $2.00 per share, that may be acquired upon the
exercise of an option granted to the selling shareholder named in this
Prospectus.
The shares may be offered from time to time by the selling shareholder. The
shares may be offered through brokers and dealers to be selected by the selling
shareholder and through public or private transactions, on or off the Nasdaq
National Market System, pursuant to this Registration Statement, at fixed
prices, at market prices prevailing at the time of sale, at prices related to
prevailing market prices or at negotiated prices. We will receive none of the
proceeds from the sale of the shares. We have agreed to bear certain expenses,
including the fees and costs of preparing, filing and keeping effective this
Registration Statement (other than selling commissions and fees and expenses of
counsel and other advisors to the selling shareholder) in connection with the
registration of the shares.
This Prospectus has been prepared for the purpose of registering the shares
under the Securities Act to allow for future sales by the selling shareholder to
the public without restriction. To our knowledge, the selling shareholder has no
arrangement with any brokerage firm for the sale of the shares.
Our common shares are currently traded on the Nasdaq National Market under
the symbol "CRNS."
CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 6 OF THIS PROSPECTUS.
The selling shareholder and any broker-dealer, agent or underwriter that
participates with the selling shareholder in the distribution of the shares may
be deemed to be "underwriters" within the meaning of Section 2(11) of the
Securities Act, and any commissions received by them and any profit on the
resale of the shares purchased by them may be deemed underwriting commissions or
discounts under the Securities Act.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS FEBRUARY 25, 2000
<PAGE> 4
ENFORCEABILITY OF CIVIL LIABILITIES
The Cronos Group is a holding company incorporated under the laws of
Luxembourg. Two of the six directors of Cronos are residents of countries other
than the United States, and all or a substantial portion of the assets of such
persons are located outside of the United States. As a result, it may not be
possible for investors to effect service of process within the United States
upon such persons to enforce against them judgments of courts of the United
States predicated upon the civil liability provisions of the Federal or state
securities laws of the United States. The Company has been advised by its
Luxembourg counsel, Elvinger, Hoss & Prussen, that there is doubt (a) whether a
judgment of a United States court predicated solely upon the civil liability
provisions of the Federal or state securities laws would be enforceable in
Luxembourg against Cronos or such persons, and (b) whether an action could be
brought in Luxembourg against Cronos or such persons in the first instance on
the basis of liability predicated solely upon the provisions of the Federal or
state securities laws.
-------------------------
We have not taken any action to permit a public offering of the common
shares covered hereby outside of the United States or to permit the possession
or distribution of this Prospectus outside of the United States. Persons outside
of the United States who come into possession of this Prospectus must inform
themselves about and observe any restrictions relating to the offering of the
common shares and the distribution of this Prospectus outside of the United
States.
In this Prospectus, "Cronos," "Company," "we," "us," and "our" refer to The
Cronos Group.
YOU SHOULD RELY ONLY ON THE INFORMATION INCORPORATED BY REFERENCE OR
PROVIDED IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT. WE HAVE NOT AUTHORIZED
ANYONE ELSE TO PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE NOT MAKING AN
OFFER OF THESE SECURITIES IN ANY STATE WHERE THE OFFER IS NOT PERMITTED. YOU
SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS OR ANY PROSPECTUS
SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHER THAN ON THE FRONT OF THESE
DOCUMENTS.
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TABLE OF CONTENTS
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PAGE
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Where You Can Find More Information......................... 4
The Company................................................. 4
Selling Shareholder......................................... 4
Forward-Looking Statements.................................. 4
Recent Developments......................................... 5
Risk Factors................................................ 6
Use of Proceeds............................................. 11
Price Range of Common Shares................................ 12
Financial Condition and Results of Operations as of
September 30, 1999........................................ 12
Selling Shareholder......................................... 12
Plan of Distribution........................................ 13
Description of Common Shares................................ 14
Tax Considerations.......................................... 17
Legal Matters............................................... 21
Experts..................................................... 21
Incorporation of Certain Documents by Reference............. 21
</TABLE>
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WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission (the "SEC") a
Registration Statement on Form S-8 registering the common shares offered hereby.
This Prospectus, which constitutes a part of the Registration Statement, does
not contain all of the information in the Registration Statement or the exhibits
that are part of the Registration Statement. For further information with
respect to Cronos and our common shares, please see the Registration Statement
and the exhibits that are part of the Registration Statement.
You may read and copy any document we file at the SEC's public reference
rooms in Washington, D.C., New York, New York, and Chicago, Illinois. Please
call the SEC at 1-800-SEC-0330 for further information about the public
reference rooms. Our SEC filings are also available to the public from the SEC's
Website at http://www.SEC.gov.
We are subject to the information and periodic reporting requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). As
required by the Exchange Act, we file periodic reports, proxy statements, and
other information with the SEC. These periodic reports, proxy statements, and
other information will be available for inspection and copying at the SEC's
public reference rooms and the Website of the SEC referred to above.
THE COMPANY
We are one of the world's leading lessors of intermodal marine containers.
Through an extensive global network of offices and agents, Cronos leases both
its own and other owners' containers to over 400 ocean carriers and transport
operators, including to the 20 largest ocean carriers. Cronos, through its
predecessor companies, has been in the container leasing business since November
1978. Cronos is a limited liability company (societe anonyme) organized in
Luxembourg, with register number RCS LUX B27.489. Cronos conducts its container
leasing business through operating subsidiaries. Cronos first offered its common
shares to the public in December 1995. Our registered offices are located at 16,
Allee Marconi, Boite Postale 260, L-2120 Luxembourg, and our telephone number is
352-453145.
SELLING SHAREHOLDER
This Prospectus covers the common shares to be acquired by Dennis J. Tietz,
Chief Executive Officer and Chairman of the Board of Cronos (the "Selling
Shareholder"), upon the exercise of an option issued to him. The Selling
Shareholder acquired the option on December 11, 1998 at the time he was hired by
the Company's Board as Chief Executive Officer.
FORWARD-LOOKING STATEMENTS
An investment in our common shares involves a high degree of risk. In
addition to the other information contained in this Prospectus, you should
carefully consider the risk factors identified below before investing in our
common shares. All statements, trend analyses, and other information contained
in this Prospectus regarding the markets for our container leasing services and
net revenue, profitability, and anticipated expense levels, and any statements
containing the words "anticipate," "believe," "plan," "estimate," "expect,"
"intend," or other similar expressions constitute forward-looking statements.
These forward-looking statements are subject to business and economic risks. Our
actual results of operations may differ materially from those contained in the
forward-looking
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statements. The cautionary statements made in this Prospectus apply to all
forward-looking statements wherever they appear in this Prospectus.
RECENT DEVELOPMENTS
On September 21, 1999, we received an unsolicited merger proposal from the
President of Interpool, Inc. ("Interpool"). Interpool is a competitor of the
Company. Cronos' container fleet consists of approximately 365,000 TEUs, both
owned and managed for third parties (a "TEU" is a measure used in the container
industry and signifies a "twenty-foot equivalent unit," with a 20-foot container
representing one TEU and a 40-foot container representing two TEUs.).
Interpool's fleet consists of approximately 500,000 TEUs. While we concentrate
primarily on the short-term and master lease market, meaning that most of our
leases have terms of less than one year, Interpool concentrates on the
longer-term lease market, with the bulk of its fleet of containers leased under
leases of terms of three years or more.
By its proposal, Interpool proposed a merger of Cronos with Interpool's
50%-owned Nevada subsidiary, Container Applications International, Inc. ("CAI").
Interpool proposed, subject to conditions, that the shareholders of Cronos would
receive $5.00 per share in the transaction. Interpool's proposal was subject to
numerous conditions, including the conduct of "confirmatory" due diligence, the
absence of a material adverse effect prior to closing, the negotiation of a
definitive acquisition agreement, and the obtaining of regulatory and other
approvals.
While Interpool indicated in its letter a willingness to discuss its
proposal and its structure, Interpool gave us 24 hours to provide a
"satisfactory response," or Interpool threatened to take its proposal "directly
to [our] shareholders." On September 23, 1999, Interpool filed its preliminary
proxy statement with the SEC proposing an alternative slate of nominees for the
Board of Directors of Cronos, whose sole purpose would be to merge Cronos with
and into CAI pursuant to the Interpool proposal.
Promptly after we received Interpool's September 21st proposal, we
instructed our financial advisors, First Union Securities, Inc. ("First Union"),
to evaluate it. On October 4 and 8, 1999, the Board met and unanimously
determined that the Interpool proposal, in its then current form, be rejected as
inadequate and not in the best interest of the Company and its shareholders. At
the same time, the Board instructed First Union to pursue strategic alternatives
to enhance shareholder value, including a possible sale of the Company.
The Company has entered into confidentiality and standstill agreements with
several parties, and has supplied these parties with financial and other
information about the Company. On January 4, 2000, the Company also entered into
a confidentiality agreement with Interpool, whereby the Company agreed to
provide Interpool with access to the same information as the Company made
available to other interested parties. Interpool also agreed not to pursue a
transaction with Cronos on an unsolicited basis until April 30, 2000. Interpool
may pursue a transaction with the Company on an unsolicited basis earlier than
April 30, 2000, in the event that Cronos enters into a letter of intent or an
agreement in principle to merge, or engages in a business combination or like
transaction with another entity, or if another entity or Cronos makes a tender
or an exchange offer for 25% or more of the outstanding shares of common stock
of Cronos.
The Company, with its advisor, First Union, has continued to hold
discussions with Interpool and other interested parties. However, at this time,
the Company is unable to predict whether a transaction will result from these
discussions.
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RISK FACTORS
You should carefully consider the following risk factors and all other
information contained in this Prospectus before investing in our common shares.
Investing in our common shares involves a high degree of risk. Any of the
following factors could harm our business and could result in a partial or
complete loss of your investment.
OUR BUSINESS IS CYCLICAL
Demand for leased containers and container leasing rates depend largely
upon levels of world trade. Recessionary business cycles and worldwide
oversupplies of containers can negatively impact our operating results. During
economic downturns, ocean carriers tend to lease fewer containers and rely on
their own fleets to satisfy a greater percentage of their requirements. Thus, a
decrease in the volume of world trade could adversely affect our financial
results.
Our industry has experienced cyclical downturns during the last fifteen
years. Since 1996, the container leasing industry has experienced declines in
container utilization and daily container rental rates due to consolidation in
the global shipping industry. While we have observed an improvement in terms of
world trade since the second quarter of 1999, as the economies of Asia and Latin
America recover from the financial crises that affected them in 1997, and while
we have seen indications that containerized trade volumes from North America and
Europe to Asia may be increasing, these positive signs have yet to have a
positive impact upon Cronos' operating performance. At December 31, 1999, the
combined utilization of our container fleet (based on approximate original
equipment cost) stood at 80%. This utilization represents an improvement over
the utilization of 75% reported at the end of 1998. However, our utilization at
December 31, 1999 was still lower than it was during the first six months of
1998. During the course of 1999, our per diem container rental rate fell by
approximately 11%.
Other factors that affect the demand for leased containers and utilization
and per-diem rental rates include the supply and pricing of new and used
containers, economic conditions in the shipping industry, the availability of
financing, fluctuations in interest rates, currency valuations, import-export
restrictions, quotas, tariffs, exchange restrictions, other governmental
regulations, and other factors that are inherently unpredictable and beyond the
control of Cronos.
DEPENDENCE ON FINANCING
We are heavily dependent upon third parties to supply us with the capital
needed to acquire containers. Our operations require significant capital on an
ongoing basis to expand the size of our fleet and to replace our existing fleet
of containers. We have historically funded container fleet expansion through a
combination of secured debt financings, capital leases, management of containers
for third-party container owners, and the sponsorship of public limited
partnerships in the United States.
All of the containers owned by Cronos are pledged to secure borrowings.
Additional financing will be necessary if we are to continue to increase the
rate of expansion of our fleet. We may not be able to obtain such financing when
needed or on terms favorable to us. Furthermore, delays in obtaining financing
for containers Cronos has ordered from container manufacturers could require
Cronos to reduce or curtail future orders, resulting in a reduction in the
expansion of our container fleet.
As of December 31, 1999, approximately 35% of our total container fleet had
been financed by United States public limited partnerships. During 1997, 1998,
and 1999 approximately 34%, 40%, and 43% respectively, of our gross lease
revenue was generated by containers managed by Cronos for third parties, and
approximately 38%, 35%, and 33% respectively, of our gross lease revenue was
generated from containers owned by public limited partnerships. We have not
offered a public limited
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partnership since 1997. While we intend to offer a limited partnership to the
public in the year 2000, there can be no assurance that we will be successful in
doing so or that the financing of our container fleet through the offering of
public limited partnerships will be a source of financing for us in the future.
As of December 31, 1999, we had total borrowings of $110 million, of which
$30 million (27%) bore interest at fixed rates and the remaining $80 million
(73%) bore interest at variable rates. All of the variable rate borrowings bear
interest at a margin over an established market rate (e.g., LIBOR) or over the
lender's own base rate. An increase of 1% in these base rates, leaving all other
factors constant, would increase our annual interest expense on the borrowings
outstanding at December 31, 1999, by $0.8 million.
WE FACE STIFF COMPETITION
We compete for lessees of our containers with several large container
leasing companies that have substantially greater financial and other resources
than we do. Competition among container leasing companies is based upon several
factors, including the location and availability of inventory, lease rates,
service, and the quality of containers. The industry has been in a period of
consolidation since 1993. As of December 31, 1999, the two largest container
leasing companies had fleets totaling approximately 2.3 million TEUs, or 42% of
the worldwide leased container fleet. Our larger competitors might be able to
exploit their greater financial resources and economies of scale and reduce
per-diem rates to enhance their market share. In addition, an increase in the
availability of capital or sustained low rates of interest could provide an
incentive for ocean carriers to purchase containers rather than to lease them
from the container leasing industry.
DEFAULTS BY LESSEES
We are dependent upon our lessees continuing to make lease payments for
their containers. A default by a lessee under a lease may cause us to lose
revenues for past services as well as future revenues. In addition, the
equipment may be returned to us in a location where we may be unable to arrange
efficiently for the re-leasing or the sale of such equipment, in which event we
could incur additional operating expenses. Consequently, defaults may prevent us
from being able to recover our investment in such equipment. In addition, due to
a variety of factors, repossession from defaulting lessees may be difficult in
certain jurisdictions.
In each of the last five years, Cronos' write-offs for specific doubtful
accounts have been less than 2% of annual gross lease revenue, although no
assurance can be given that the level of lessee defaults will remain at this
level or not increase to an extent that would materially affect our results of
operations or financial condition.
DISPUTE WITH THE CONTRIN GROUP
We manage containers for investment entities sponsored or affiliated with
Contrin Holding S.A., a Luxembourg holding company (collectively "Contrin").
Approximately 1.6% (measured by TEUs) of the fleet of containers we manage for
third parties is owned by members of the Contrin Group. We are in a dispute with
Contrin over funds that Contrin claims to have remitted to Cronos for the
purchase of containers. Contrin claims that in 1994 it transmitted $2.6 million
to Cronos for the purchase of containers. We believe that these funds were not
received by us but were diverted to an account in the name of and/or controlled
by our former chairman, Stefan M. Palatin, and that this was known or should
have been known by Contrin. We also believe that the bank that received the
funds is at fault. Contrin's counsel has advised us that Contrin will institute
proceedings for the recovery of the $2.6 million against Cronos, together with
accrued interest. While we believe that we
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have meritorious defenses to Contrin's claims, if a proceeding is instituted, we
could lose and be obligated to pay Contrin the money it is demanding.
THE SEC'S NOVEMBER 15, 1999 CEASE-AND-DESIST ORDER
On November 15, 1999, we consented to the entry by the SEC of an
administrative cease and desist order (the "Order"). Without admitting or
denying the findings made by the SEC in the Order, we agreed to cease and desist
from committing or causing any future violation of certain antifraud, reporting,
and recordkeeping provisions of the Federal securities laws. The SEC's
investigation of the Company began in February 1997 and was triggered by the
actions of our former chairman, Stefan M. Palatin. Cronos' Board removed Mr.
Palatin as CEO in May 1998 and, in July 1998, Mr. Palatin resigned from our
Board. While Mr. Palatin is no longer an officer or director of the Company, he
continues to control approximately 20% of our outstanding common shares.
The SEC made certain findings by its Order. We neither admitted nor denied
the findings made by the SEC. The SEC found that Cronos, under the domination
and control of Mr. Palatin, misrepresented, through affirmative misstatements
and omissions in its public statements and filings with the SEC, transactions it
had with Mr. Palatin for the period from December 1995 through 1997, including:
- That Mr. Palatin had intercepted payments between Cronos and one of its
major customers (which Mr. Palatin also controlled);
- That Cronos paid Mr. Palatin millions of dollars in 1994 before Cronos
first sold its shares of Common Stock to the public;
- That Mr. Palatin sold shares in Cronos' initial public offering through
another entity which he controlled;
- That Cronos paid additional monies to Mr. Palatin shortly after the 1995
offering; and
- That Mr. Palatin did not own certain collateral that he pledged to secure
loans he owed to Cronos.
The SEC further found that Cronos systematically fired or demoted employees
and directors who challenged or questioned Mr. Palatin's transactions or the
disclosures of the Company related thereto.
While the Order did not impose any fine or penalty against Cronos, we are
unable to predict what impact, if any, it will have on our future business or
whether it will lead to future litigation involving Cronos. Under the Order, we
have designated an agent for service of process with respect to any proceeding
instituted by the SEC to enforce the Order or with respect to any future
investigation of the Company by the SEC. In addition, the entry of the Order
precludes the Company and persons acting on its behalf from relying upon certain
protections accorded to forward-looking statements by the Securities Act of 1933
and the Securities Exchange Act of 1934 for the three years ended November 14,
2002.
CONTROL BY PRINCIPAL SHAREHOLDERS
Our four largest shareholders or groups of shareholders control
approximately 60% of our outstanding common shares. These shareholders,
individually, or as a group (were they to associate as a group), could have the
ability to elect members of our Board of Directors and to control the outcome of
certain matters submitted to a vote of shareholders, such as any proposed merger
or consolidation of Cronos.
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Our largest shareholder remains Stefan M. Palatin, our former Chief
Executive Officer and Chairman of the Board. We are in a dispute with Mr.
Palatin over monies he owes to us under promissory notes he signed in favor of a
subsidiary of the Company. In November 1999, we brought an action in New York
State Court to collect on the promissory notes, and on February 8, 2000, we
obtained a default judgment against Mr. Palatin in the amount of $6,583,666. We
do not know whether we will be able to collect on this judgment against Mr.
Palatin, as he is not resident in the United States. As a result of this and
other disputes between the Company and Mr. Palatin, we anticipate that Mr.
Palatin will vote the common shares that he exercises control over against the
recommendations of management on proposals we may submit to our shareholders.
LACK OF LIQUIDITY FOR OUR COMMON SHARES
Because of the percentage of our common shares controlled by a few
shareholders or groups of shareholders, the trading volume in our common shares
is low. For 1999, the average daily trading volume in our shares was 9,288
shares, or approximately 0.1% of our outstanding shares as of December 31, 1999.
The effect of limited liquidity can be to make it more difficult to sell our
common shares and can increase the volatility of the price of our common shares.
OUR SHAREHOLDER RIGHTS PLAN MAY LIMIT THE VALUE OF OUR COMMON SHARES
On October 25, 1999, we adopted a shareholder rights plan, commonly
referred to as a "poison pill." We adopted the plan in response to the
unsolicited proposal by one of our competitors, Interpool, Inc., to acquire the
Company by merger with Interpool's 50%-owned subsidiary, Container Applications
International, Inc., for $5.00 per share in cash for all of our outstanding
common shares. We discuss Interpool's proposal under "Recent Developments"
above.
Pursuant to the shareholder rights plan, Cronos declared an allocation of
one right to purchase one-tenth of a share of our common stock for each
outstanding share of common stock, payable to our shareholders of record on
October 25, 1999. Each right, when it becomes exercisable, entitles the
registered holder to purchase from Cronos one-tenth of a share of common stock
at a price per whole share of common stock of $16, subject to adjustment. The
rights generally become exercisable when a person or a group of persons acquires
the beneficial ownership of 20% or more of our outstanding common shares, or
after the commencement of or announcement of an intention to make a tender or
exchange offer for our shares that would result in a person or group becoming
the beneficial owner of 20% or more of our shares. The rights would not be
triggered in the event that an acquisition, or a tender or exchange offer, is at
a price and on terms that the Board of Cronos determines to be adequate and in
the best interest of Cronos and its shareholders. The plan is designed to
prevent takeover attempts of the Company, including any such attempt by
Interpool, without the approval of the Company's Board. The plan can also have
the effect of discouraging bidders interested in taking over the Company and of
depressing the price at which our common shares would otherwise trade to reflect
this reduced interest.
SHARES ELIGIBLE FOR FUTURE SALE
There are currently 9,158,378 shares of our common stock outstanding. In
addition, our Chief Executive Officer, Mr. Tietz, holds an option to acquire
300,000 of our common shares, and the Board adopted, and the shareholders at our
meeting held January 13, 2000 approved, our 1999 Stock Option Plan, which
authorizes the grant of options to our officers and employees for the purchase
of 500,000 common shares. On February 4, 2000, the Compensation Committee of our
Board authorized the grant of options for 420,000 of our common shares under the
1999 Stock Option Plan to eight
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officers of subsidiaries of the Company. In addition, two of our lenders hold
warrants to purchase, in the aggregate, 200,000 of our common shares.
Other than for the shares held by certain of our largest shareholders,
virtually all of our outstanding common shares are available for immediate
resale without restriction. In addition, by the Registration Statement of which
this Prospectus is a part and by a separate Registration Statement, the
1,000,000 shares issuable upon exercise of options granted to Mr. Tietz and that
have been or may be granted to officers and employees of the Company, or
issuable to our lenders under the warrants held by them, may upon issuance to
the option holders and/or warrant holders be generally resold without
restriction. Given the limited liquidity of the market for our common shares,
the sale of the common shares covered hereby in open market transactions, or
sales of common stock by our existing shareholders in material amounts, could
depress the market price of our common shares.
WE ARE DEPENDENT UPON KEY MANAGEMENT
Most of our senior executives and other management-level employees have
been with us for over five years and have significant industry experience. The
loss of the services of one or more of them could have a material adverse effect
on our business. We believe that our future success will depend on our ability
to retain key members of our management team and to attract capable management
in the future. There can be no assurance that we will be able to do so. We do
not maintain "key man" life insurance on any of our officers.
FLUCTUATIONS IN FOREIGN EXCHANGE RATES COULD REDUCE OUR PROFITABILITY
Substantially all of our revenues are billed and paid in U.S. dollars, and
approximately 78% of our costs in 1999 were incurred and paid in U.S. dollars.
Of the remaining costs, most are not predictable and individually are of small
amounts and in various denominations, and thus are not suitable for
cost-effective hedging. From time to time we hedge a portion of the expenses
which are predictable and are principally in U.K. pounds sterling. In addition,
almost all of our container purchases are paid for in U.S. dollars. There can be
no assurance that exchange rate fluctuations will not adversely affect our
results of operations and financial condition.
WE MAY BE LIABLE FOR ENVIRONMENTAL CLEANUP AS THE OWNER OF CONTAINERS
Under the state and federal laws of the United Sates and the laws of
certain other countries, the owner of a container may be liable for
environmental damage, cleanup or other costs in the event of actual or
threatened contamination resulting from discharge of material from a container.
There is a possibility that such liability or a portion thereof may be imposed
on a container owner, such as Cronos, even if the owner is not at fault.
Although we maintain insurance against property damage and bodily injury and
generally we require lessees of containers to obtain similar insurance, there
can be no assurance that such insurance will protect us fully against damages
stemming from this risk or that we will be able to avoid liability for
environmental damages or costs relating to the operations of our lessees.
Many countries, including the United States, have taken action, both
collectively and individually, to regulate chlorofluorocarbon compounds
("CFCs"). CFCs historically have been used in the manufacture and operation of
refrigerated containers, including those we purchased prior to June 1993.
Refrigerated containers that we have purchased since that date do not use CFCs
as a refrigerant gas. The possibility exists that at some time in the future
market pressures or possible governmental regulations may require refrigerated
containers using CFCs to be retrofitted with non-CFC refrigerants. Also, there
can be no assurance that the replacement refrigerant used in our new
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refrigerated containers will not become subject to similar market pressures or
governmental regulations. We may have to bear all or a substantial portion of
such costs relating to retrofitting the refrigerated containers that we own.
Although no assurance can be given in this regard, we do not believe that any
such further expenses would be material in relation to our financial position
and results of operation. In addition, refrigerated containers that are not
retrofitted may command lower prices in the market for used containers once we
retire these containers from our fleet.
CONSEQUENCES OF LUXEMBOURG INCORPORATION
We are organized as a Luxembourg company, and are governed by our Articles
of Incorporation, the Luxembourg Company Act of August 10, 1915, as amended, and
the Luxembourg Law on Holding Companies of July 31, 1929. Luxembourg law differs
in certain respects from the corporate laws of most states of the United States.
Principles of law relating to such matters as corporate procedures, fiduciary
duties of management, and the rights of our shareholders may differ from those
that would apply if we were incorporated in a state of the United States. For
example, our authorized but unissued capital stock is eliminated every five
years unless the shareholders reauthorize it, which is not typically required in
the United States, and shareholders have preemptive rights unless such rights
are suppressed every five years. In addition, Luxembourg law imposes a 1.0% tax
on most new issuances of shares that increase shareholders' equity.
HOLDING COMPANY STRUCTURE
We are a holding company. We derive all of our operating income and cash
flow from our subsidiaries. We rely upon distributions from our subsidiaries and
intercompany borrowings to generate the funds necessary to meet our obligations.
The ability of our subsidiaries to make payments to us is subject, among other
things, to applicable laws of their respective jurisdictions of incorporation
and such restrictions as may be contained in credit agreements or other
financing arrangements entered into by such subsidiaries. Claims of creditors of
our subsidiaries will generally have priority as to the assets of such
subsidiaries over our claims and those of our shareholders.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the common shares that
the Selling Shareholder may sell pursuant to this Prospectus.
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PRICE RANGE OF COMMON SHARES
Our common shares are quoted on the Nasdaq National Market under the symbol
"CRNS." The following table sets forth, for the period indicated, the high and
low closing prices per share of our common shares as reported on the Nasdaq
National Market.
<TABLE>
<CAPTION>
HIGH LOW
------- ------
<S> <C> <C>
CALENDAR YEAR 1998
First Quarter............................................... $ 7.25 $5.125
Second Quarter.............................................. $ 7.125 $ 5.00
Third Quarter............................................... $ 5.969 $4.875
Fourth Quarter.............................................. $ 6.625 $3.375
CALENDAR YEAR 1999
First Quarter............................................... $5.9375 $4.125
Second Quarter.............................................. $ 4.875 $ 3.50
Third Quarter............................................... $ 4.625 $ 3.50
Fourth Quarter.............................................. $ 5.625 $4.563
</TABLE>
On February 24, 2000, the last reported sale price of our common shares on
the Nasdaq National Market was $5.437 per share. As of December 31, 1999, there
were 446 shareholders of record of our common shares.
FINANCIAL CONDITION AND RESULTS OF OPERATIONS AS OF SEPTEMBER 30, 1999
For our financial condition and the results of our operations as of
September 30, 1999, we refer you to our quarterly report on Form 10-Q for the
quarter ended September 30, 1999.
SELLING SHAREHOLDER
This Prospectus covers the common shares to be acquired by Dennis J. Tietz,
Chief Executive Officer and Chairman of the Board of Cronos (the "Selling
Shareholder"), upon the exercise of an option granted to him. The Selling
Shareholder acquired the option (the "Option") on December 11, 1998 at the time
he was hired by the Company's Board as Chief Executive Officer.
The shares of our common stock to which this Prospectus relates are being
registered for reoffers and resales by the Selling Shareholder, who may acquire
the shares pursuant to the exercise of the Option. The Selling Shareholder may
resell all, a portion, or none of the relevant shares at any time.
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<PAGE> 15
The table below sets forth, with respect to the Selling Shareholder and
based upon the information available to us as of February 15, 2000: (a) the
Selling Shareholder's relationship with us within the past three years; (b) the
number of shares of common stock beneficially owned by the Selling Shareholder
prior to this offering; (c) the number of securities which may be offered
pursuant to this Prospectus; and (d) the amount and percentage of our common
shares that would be owned by the Selling Shareholder after completion of this
offering.
<TABLE>
<CAPTION>
SHARES TO BE
BENEFICIALLY
SHARES OF OWNED UPON
SHARES COMMON COMPLETION OF
BENEFICIALLY STOCK OFFERED OFFERING(1)(2)
RELATIONSHIP TO OWNED PRIOR UNDER THIS ----------------
SELLING SHAREHOLDER COMPANY TO THE OFFERING PROSPECTUS NUMBER PERCENT
------------------- ----------------------- --------------- ------------- ------ -------
<S> <C> <C> <C> <C> <C>
Dennis J. Tietz...... Chief Executive Officer 321,600(3) 300,000 21,600 (4)
and Chairman of the
Board
</TABLE>
- -------------------------
(1) In calculating the percentage of total class ownership, the number of
outstanding shares used was 9,158,378.
(2) Assumes that the outstanding option is exercised and all shares offered
hereby are sold, that no additional shares will be acquired and that no
shares other than those offered hereby will be sold. Mr. Tietz' option
vested upon grant, and therefore is presently exercisable, in whole or in
part.
(3) Mr. Tietz may purchase 21,600 shares by exercising outstanding options
before November 24, 2001, and may purchase an additional 300,000 shares by
exercising the Option on or before December 10, 2008.
(4) Less than 1%.
PLAN OF DISTRIBUTION
The shares offered by this Prospectus may be sold by the Selling
Shareholder from time to time on the Nasdaq National Market System on terms to
be determined by the Selling Shareholder at the time of sale. The Selling
Shareholder may also make private sales directly or through a broker or brokers.
Alternatively, the Selling Shareholder may from time to time offer shares to or
through underwriters, dealers or agents, who may receive consideration in the
form of discounts and commissions. That compensation, which may be in excess of
ordinary brokerage commissions, may be paid by the Selling Shareholder and/or
the purchasers of the shares offered by this Prospectus for whom such
underwriters, dealers or agents may act. The Selling Shareholder and any dealer
or agent that participates in the distribution of the shares offered by this
Prospectus may be deemed to be an "underwriter" as defined in the Securities
Act, and any profit on the sale of the shares offered by this Prospectus by them
and any discounts, commissions or concessions received by those dealers or
agents might be deemed to be underwriting discounts and commissions under the
Securities Act. The aggregate proceeds to the Selling Shareholder from sales of
the shares offered by the Selling Shareholder will be the purchase price of the
common shares less any broker's commissions.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the common shares offered by this Prospectus may
not simultaneously engage in market making activities with respect to the common
shares. The Selling Shareholder will be subject to applicable provisions of the
Exchange Act and the rules and regulations under the Exchange Act, which may
limit the timing of purchases and sales of our common shares by the Selling
Shareholder.
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<PAGE> 16
In addition to the shares sold under this Prospectus, the Selling
Shareholder may, at the same time, sell any shares of common stock, including
the shares to be offered through this Prospectus, owned by him in compliance
with all of the requirements of Rule 144 under the Securities Act, regardless of
whether those shares are covered by this Prospectus.
There is no assurance that the Selling Shareholder will sell any or all of
the common shares offered by this Prospectus.
We will pay all expenses in connection with this offering other than
commissions and discounts of underwriters, dealers or agents. All selling and
other expenses incurred by the Selling Shareholder will be borne by him. We will
not receive any proceeds from sales of any shares by the Selling Shareholder.
DESCRIPTION OF COMMON SHARES
GOVERNING LAW
Cronos is a Luxembourg company and its affairs are governed by its Articles
of Incorporation (the "Articles"), the Luxembourg Company Act of August 10,
1915, as amended (the "Company Act"), and the Luxembourg Law on Holding
Companies of July 31, 1929. A number of the provisions of the Company Act differ
in certain respects from the corporate laws of most states of the United States.
In addition, while the leading United States commercial jurisdictions, such as
California, Delaware and New York, have extensive bodies of case law
interpreting provisions of their respective statutes, the case law in Luxembourg
is less extensive.
We have filed a copy of our Articles as an exhibit to our Registration
Statement on Form S-3, filed with the SEC on November 24, 1999. The summary that
follows is qualified by reference to the full text of the Articles.
AUTHORIZED SHARES
Cronos' authorized capital consists of 25,000,000 common shares, $2 par
value per share, of which 9,158,378 common shares are presently issued and
outstanding. If the shares registered by this Registration Statement are all
issued pursuant to the terms of the Company's 1999 Stock Option Plan and the
option granted to Mr. Tietz, and if two of our lenders exercise warrants they
hold for the purchase of 200,000 shares of our common stock, then the number of
our outstanding shares would increase to 10,158,378 shares outstanding. Our
Articles currently do not authorize the issuance of preferred shares. All of our
common shares are issued in registered form.
Under Luxembourg law, our authorized capital is automatically reduced to
the amount represented by our outstanding shares, unless our shareholders renew
the authorized capital every five years. Our shareholders last renewed our
authorized capital at the special shareholders' meeting held on August 13, 1997.
Accordingly, our authorized capital will automatically be reduced to the amount
represented by our outstanding shares in 2002, on the fifth anniversary of the
shareholders' meeting just referred to, unless the authorized capital is
extended at or before that meeting. The Board of Directors is authorized,
without further shareholder action, to issue additional common shares from time
to time up to the maximum number authorized at the time.
All common shares to be outstanding upon consummation of this offering will
be fully paid and nonassessable.
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<PAGE> 17
VOTING RIGHTS
All common shares entitle the holder thereof to cast one vote for each
share held. Under Luxembourg law shareholder action can generally be taken by a
simple majority of shares present or represented, without regard to any minimum
quorum requirements. Two exceptions to the law are (i) to amend the Articles,
which requires (x) a two-thirds vote of the shares present or represented and
(y) a quorum of 50% of the outstanding shares entitled to vote when the meeting
is first convened, and (ii) any action for which the Articles require more than
a majority vote or a quorum.
Our Articles currently provide that Cronos is to be managed by a Board of
Directors composed of at least three members who shall be elected by simple
majority of the outstanding shares for a term of three years and until their
successors are elected. The terms of our directors are staggered so that the
terms of one-third of the total number of Directors expire in each year.
Currently, our Board consists of six members.
Our common shares are traded on the Nasdaq Stock Market. Under Nasdaq's
rules, the minimum quorum for any meeting of shareholders of a Nasdaq company is
33 1/3% of the outstanding shares of the company's common voting stock. We
observe this requirement in holding our annual meetings of shareholders.
SHAREHOLDER MEETINGS AND NOTICE
Under the Articles, the Company is required to hold a general meeting of
shareholders at 5:30 p.m. on May 20th of each year at the Company's registered
office in Luxembourg or in another location as designated. In addition, the
Board may call any number of extraordinary general meetings, which may be held
in Luxembourg or elsewhere. The Articles require notice of any general meeting
to be sent by first class mail, postage prepaid, at least 20 days prior to any
such meeting. Shareholders may be represented by written proxy, provided the
written proxy is deposited with the Company at its registered office in
Luxembourg, or with any Director before the opening of the meeting.
DIVIDENDS
Our common shares are entitled to such dividends as may be declared by the
Board of Directors from time to time out of funds legally available therefor. In
general, under Luxembourg law only realized profits on an unconsolidated basis,
determined in accordance with Luxembourg accounting principles, are available
for dividends. Interim dividends can be declared up to three times in any fiscal
year (at the end of the second, third or fourth quarters) by the Board of
Directors. Interim dividends can be paid, but only after our independent
auditors have reported to the Board of Directors that certain conditions have
been satisfied. Final dividends are declared once a year at the annual general
meeting by the shareholders; as specifically authorized by the Articles, both
interim and final dividends can be paid out of any earnings, retained and
current, as well as additional paid-in capital. Luxembourg law authorizes the
payment of share dividends if sufficient surplus exists to provide for the
related increase in stated capital.
Luxembourg law requires that 5% of Cronos' unconsolidated net profits each
year be allocated to a legal reserve before declaration of dividends. This
requirement continues until the reserve is 10% of our stated capital, after
which no further allocations are required until further issuance of shares. The
legal reserve may also be satisfied by a transfer from capital surplus. The
legal reserve is not available for dividends. The Company currently maintains a
legal reserve equal to 10% of its stated capital. Upon issuance of the common
shares covered hereby pursuant to exercise by the Selling Shareholders
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<PAGE> 18
of their warrants, we will transfer an amount from additional paid-in capital
sufficient to maintain our legal reserve equal to 10% of our stated capital.
LIQUIDATION
Under the Articles, in the event of the liquidation, dissolution or winding
up of the Company, all debts and obligations of the Company must first be paid,
and any surplus thereafter remaining will be distributed to the holders of our
common shares.
PREEMPTIVE RIGHTS
As a general rule shareholders are entitled to preemptive rights under
Luxembourg law unless the Articles provide otherwise. The Company's Articles
authorize the Board of Directors to suppress shareholders' preemptive rights,
and the Board has done so with respect to all authorized but unissued common
shares. Upon the expiration of authorized but unissued shares discussed above,
the suppression of preemptive rights will also terminate and shareholders will
be entitled to preemptive rights once again unless the Board recommends and the
shareholders approve suppressing further such rights. Accordingly, the common
shares sold in this offering will not be entitled to preemptive rights at least
until 2002.
SHAREHOLDER RIGHTS PLAN
On October 25, 1999, we adopted a shareholder rights plan (the "Plan"). For
shareholders of record on that date, we declared an allocation of one right to
purchase one-tenth of a share of our common stock. Such rights shall also attach
to each common share issued after October 25th until the "distribution date"
(defined below). Each right, when it becomes exercisable, generally entitles the
holders of our common shares to purchase from Cronos one-tenth of a common share
at a price per whole common share of $16, subject to adjustment. The terms of
the plan are set forth in a Rights Agreement between the Company and BankBoston,
N.A., dated as of October 28, 1999 (the "Rights Agreement"), a copy of which we
filed with the SEC as an exhibit to our Registration Statement on Form 8-A on
October 29, 1999.
Initially, the rights will attach to all certificates representing our
common shares outstanding; no separate rights certificate will be distributed.
The rights will separate from our common shares upon the earliest to occur of
(i) a person or entity or group of affiliated or associated persons having
acquired beneficial ownership of 20% or more of our outstanding common shares
(except pursuant to a permitted offer, as defined below), or (ii) ten business
days (or such later date as the Board may determine) following the commencement
of, or announcement of an intention to make, a tender or exchange offer the
consummation of which would result in a person or group becoming an "acquiring
person" (the earliest of such dates referred to in the Plan as a "Distribution
Date"). A person or group whose acquisition of our common shares causes a
Distribution Date is defined under the Plan as an "Acquiring Person." A person
who acquires our common shares pursuant to a tender or exchange offer which is
for all of our outstanding shares at a price and on terms which the Board
determines (prior to the acquisition) to be adequate and in the best interest of
the Company and its shareholders (a "Permitted Offer") will not be deemed to be
an Acquiring Person under the Plan and such person's ownership will not trigger
a Distribution Date. The rights are not exercisable until the Distribution Date
and will expire on the close of business on October 28, 2009, unless earlier
terminated.
In the event that any person becomes an Acquiring Person, then each holder
of rights will generally have the right (a "Flip-In Right") to receive, upon
exercise of such rights, the number of
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<PAGE> 19
whole common shares having a value (immediately prior to such triggering event)
equal to two times the aggregate exercise price of such rights. In no event,
however, will shares be issued upon exercise of the Flip-In Rights for a price
of less than the par value (currently $2.00) per common share.
The Plan also has a "Flip-Over Right" that would apply in certain mergers
or other business combinations. In such event, each holder of rights would be
entitled to receive, upon exercise of such rights, common shares of the
acquiring company (or, in certain circumstances, its parent) having a value
equal to two times the aggregate exercise price of the rights.
At any time prior to a person becoming an Acquiring Person, or the
expiration of the rights, the Company may redeem the rights, in whole, but not
in part, at a price of $0.01 per right. The Plan may also be amended by the
Board prior to the Distribution Date; and may be amended after the Distribution
Date, subject to the requirements of applicable law, to cure any ambiguity,
defect, or inconsistency, or to make changes which the Board determines to be in
the best interest of the Company and its shareholders.
Until a right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the rights shall not
be taxable to the shareholders of the Company, the shareholders may, depending
on the circumstances, recognize taxable income should the rights become
exercisable or upon the occurrence of certain events thereafter.
For a complete description of the Plan, prospective purchasers of our
common shares are directed to the Registration Statement on Form 8-A and the
Rights Agreement, which we filed with the SEC on October 29, 1999.
TRANSFER AGENT AND REGISTRAR
We have appointed BankBoston, N.A. as Transfer Agent and Registrar for our
common shares.
TAX CONSIDERATIONS
The following summary of the material Luxembourg and United States Federal
tax consequences is not a comprehensive description of all of the tax
considerations that may be relevant to a decision to purchase, own or dispose of
our common shares (the "shares"), and does not deal with the tax consequences
applicable to all categories of investors, some of which may be subject to
special rules. Prospective investors therefore should consult their tax advisors
with respect to the Luxembourg and United States and other tax consequences of
the purchase, ownership and disposition of Cronos' shares, including the effect
of any foreign, state or local tax laws.
LUXEMBOURG
The following summary of the material Luxembourg tax consequences of the
purchase, ownership and disposition of shares reflects the opinion of Elvinger,
Hoss & Prussen. Under present Luxembourg law, so long as the Company maintains
its status as a holding company, no income tax, withholding tax (including with
respect to dividends), capital gains tax, estate tax, or inheritance tax is
payable in Luxembourg by shareholders in respect of the shares, except for
shareholders domiciled, resident (or, in certain circumstances, formerly
resident), or having a permanent establishment in Luxembourg.
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<PAGE> 20
UNITED STATES
The following summary of the material United States Federal tax
consequences resulting from the purchase, ownership and disposition of shares
reflects the opinion of Fotenos & Suttle, P.C. San Francisco, California, United
States counsel to the Company. The summary is limited to holders that hold
shares as capital assets and that hold less than 10% of the voting stock in the
Company.
Non U.S. Holders
A beneficial owner of shares that is, for U.S. Federal income tax purposes,
a nonresident alien individual or a foreign corporation (a "Non U.S. Holder")
will not be subject to U.S. Federal income tax, including withholding taxes, on
dividends paid by the Company or gains recognized on the sale, exchange or
redemption of shares in the Company, unless the dividends or gains are
effectively connected with a U.S. trade or business or, in the case of gains
realized by an individual Non U.S. Holder, the Non U.S. Holder is present in the
United States for 183 days or more in the taxable year of sale, exchange or
redemption and certain other conditions are met.
U.S. Holders
Subject to the discussion of passive foreign investment companies below:
Dividends paid with respect to the shares will be included in the gross
income of a beneficial owner of shares that is, for United States Federal income
tax purposes, (i) a citizen or resident of the United States, (ii) a domestic
corporation, or (iii) a holder otherwise subject to the United States Federal
income taxation on a net income basis in respect of income or gain from the
shares (a "U.S. Holder") as ordinary income to the extent paid out of current or
accumulated earnings and profits of the Company, as determined under United
States Federal income tax principles. Such dividends will not be eligible for
the dividends received deduction allowed a United States corporation.
A distribution not paid out of earnings and profits of the Company will
reduce the basis of the shares, and, to the extent of the excess of such basis,
will constitute taxable gain. Such gain will generally be capital gain and will
be long-term capital gain if the shares have been held for more than one year.
A U.S. Holder will recognize gain or loss upon a sale, redemption or other
taxable disposition of shares measured by the difference between such U.S.
Holder's tax basis in the shares and the amount realized on the disposition,
assuming that the redemption is not treated as a dividend for U.S. Federal
income tax purposes. Such gain or loss will generally be capital gain or loss
and will be long-term capital gain or loss if the shares have been held for more
than one year.
PASSIVE FOREIGN INVESTMENT COMPANY RULES
Under Section 1297 of the Internal Revenue Code of 1986, as amended (the
"Code") and applicable temporary and final Treasury regulations (the
"Regulations"), a foreign corporation is a passive foreign investment company
("PFIC") as to a shareholder who is a citizen or resident of the United States,
a corporation or partnership organized in or under the laws of the United
States, any State thereof or the District of Columbia, an estate the income of
which is subject to United States Federal income tax regardless of its source, a
trust if a court within the United States is able to exercise primary
supervision over the administration of the trust, and one or more United States
persons have the authority to control all substantial decisions of the trust in
foreign countries (a "U.S. Person") if, for any current or prior taxable year of
the foreign corporation during which the U.S. Person owned shares in the foreign
corporation, either (a) at least 75% of the foreign
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<PAGE> 21
corporation's gross income was "passive income," or (b) at least 50% of the
foreign corporation's gross assets were "passive assets." Assets under lease and
income from leasing activities generally are not deemed to be "passive" for this
purpose if the income is derived by the foreign corporation or its subsidiaries
from the active conduct of a trade or business. The Treasury Regulations provide
that leasing income will be considered derived from the active conduct of a
trade or business if the lessor maintains and operates a leasing organization
that is regularly engaged in marketing, or marketing and servicing, the leased
property and that is substantial in relation to the leasing income derived from
leasing property as a result of the performance of such marketing functions.
Whether the foreign corporation's leasing organization is substantial is
determined based upon all of the facts and circumstances.
The Company believes that its leasing organization is substantial and that
it derives its leasing income from the active conduct of a trade or business for
purposes of the PFIC provisions described above, in part because (i) the
Company, through its subsidiaries, has more than 55 employees engaged in leasing
activities, the majority of whom are engaged in sales, marketing and equipment
management, (ii) the company directly incurs a high proportion of the overall
expenses related to its leasing business, and (iii) the Company exercises close
and direct supervision over the performance of services by third parties
incurring the remainder of its overall leasing expenses. This matter is not
entirely free from doubt, however, due to the absence of relevant authority
indicating the manner in which the PFIC provisions should be applied and
interpreted in this context, and accordingly there can be no assurance that the
Internal Revenue Service would not assert that the Company is a PFIC or that
there will not be a development or change in the relevant factual circumstances
or legal rules that would cause the Company to become a PFIC.
If the Company were a PFIC, unless a U.S. Person made the election
described in the next paragraph, a special tax regime set forth in Section 1291
of the Code would apply to both (a) any "excess distribution" by the Company
(generally, the U.S. Person's ratable share of distributions in any year that
are greater than 125% of the average annual distributions received by such U.S.
Person in the three preceding years or its holding period, if shorter) and (b)
any gain realized on the sale or other disposition of the shares. Under this
regime, any excess distribution and realized gain would be treated as ordinary
income and would be subject to tax as if (a) the excess distribution or gain had
been realized ratably over the U.S. Person's holding period, (b) the amount
deemed realized had been subject to tax in each year of that holding period at
the highest applicable tax rate, and (c) the interest charge generally
applicable to underpayment of tax had been imposed on the taxes deemed to have
been payable in those years.
If the Company were a PFIC, a U.S. Person could elect, under Code Section
1295, provided the Company complies with certain reporting requirements, to have
the Company treated, with respect to that Person's shareholding, as a "qualified
electing fund," in which case such U.S. Person would include annually in gross
income his pro rata share of the Company's annual ordinary earnings and annual
net realized gains, whether or not such amounts are actually distributed to the
U.S. Person. These amounts would be included by a U.S. Person for its taxable
year in or with which the Company's taxable year ends. If the election were
made, amounts included as income generally could be distributed tax free, and,
to the extent not distributed, would increase the tax basis of the shares.
A shareholder for whom a qualified electing fund election is in effect for
each of the years that are included in the shareholder's holding period for his
shares and for which the Company was determined to be a PFIC would not be
subject to the Code Section 1291 provisions discussed above. If a qualified
electing fund election is not in effect for each of such years, the shareholder
may make an election pursuant to which the shareholder is deemed to have sold
the shares in the PFIC at their fair market value; gain would be realized and
taxed under the Code Section 1291 regime, as discussed above.
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As another possible means of avoiding, all or in part, the application of
the Code Section 1291 provisions, in the event the Company were determined to be
a PFIC, a shareholder could make a mark-to-market election under Code Section
1296 (relating to marketable PFIC stock). If this election were made, the
shareholder would include in income each year an amount equal to the excess, if
any, of the fair market value of the PFIC stock as of the close of the tax year
over the shareholder's adjusted basis in the stock. There would be a deduction
for the lesser of the excess, if any, of the adjusted basis of the PFIC stock
over its fair market value as of the close of the tax year or the unreversed
inclusions (i.e., the excess of the mark-to-market gains over the mark-to-market
losses) for previous years.
If the Company were determined to be a PFIC, then the Company would comply
with all requirements necessary to permit shareholders to make a "qualified
electing fund" election under Code Section 1295. Such an election would not,
however, retroactively eliminate adverse PFIC consequences for prior years,
unless the taxpayer satisfies the Treasury Regulation's requirements relating to
retroactive elections in circumstances in which a timely election is not made
because the taxpayer reasonably believed that the Company is not a PFIC. This
may require filing a "Protective Statement" or, in limited circumstances,
requesting IRS consent. However, certain "qualified shareholders" are deemed to
have satisfied the reasonable belief requirement and do not need to file a
"Protective Statement" or request IRS consent in order to make a retroactive
election for any open year in the shareholder's holding period. Generally, a
qualified shareholder must meet the following tests: (a) the shareholder must
own at all times during the tax year, directly, indirectly, or constructively,
less than 2% of the vote and value of each class of the Company's stock, (b)
with respect to the tax year of the Company ending within the shareholder's tax
year, the Company or its U.S. counsel must have indicated, in a public filing,
disclosure statement, or other notice ("filing") provided to U.S. Persons that
are shareholders of the Company that the Company (i) reasonably believes that it
is not or should not constitute a PFIC for the Company's taxable year, or (ii)
is unable to conclude that it is not or should not be a PFIC (due to certain
asset valuation or interpretation issues, or because PFIC status will depend on
the income or assets of the Company in the Company's subsequent taxable years)
but reasonably believes that, more likely than not, it ultimately will not be a
PFIC, and (c) the shareholder must not know or have reason to know that a filing
by the Company regarding the Company's PFIC status was inaccurate or know that
the Company was a PFIC for the tax year of the Company ending with or within
such tax year of the shareholder.
FOREIGN PERSONAL HOLDING COMPANY RULES
The Company currently believes that it is not a foreign personal holding
company ("FPHC") because no group of five or fewer United States citizens or
residents owns, directly or indirectly, more than 50% of the Company's stock. If
the Company were to become a FPHC in the future (for example by reason of
certain constructive ownership rules or a change in the ownership of its stock)
then, in general, each U.S. Person holding shares on the last day of the
Company's taxable year would be treated as receiving a dividend in an amount
equal to each such U.S. Person's share of the Company's undistributed foreign
personal holding company income for such taxable year.
BACKUP WITHHOLDING
A beneficial owner of shares may, under certain circumstances, be subject
to United States "backup withholding" at the rate of 31% with respect to
dividends paid or the proceeds of a sale, exchange or redemption of shares,
unless such holder (a) is a corporation or is otherwise exempt; (b) is a Non
U.S. Holder who certifies as to its non-U.S. status; or (c) provides an accurate
taxpayer
20
<PAGE> 23
identification number, certifies as to no loss of exemption from backup
withholding and otherwise complies with applicable requirements of the backup
withholding rules.
LEGAL MATTERS
The validity of the common shares offered hereby will be passed upon for
the Company by Elvinger, Hoss & Prussen, Luxembourg. The summaries of Luxembourg
and United States federal tax consequences of an investment in the common
shares, as described under "Tax Considerations" herein, are based upon the
opinions of Elvinger, Hoss & Prussen (Luxembourg tax consequences), and Fotenos
& Suttle, P.C. (United States federal tax consequences).
EXPERTS
The consolidated balance sheets of Cronos as of December 31, 1998 and 1997,
and the consolidated statements of income, shareholders' equity, and cash flows
of Cronos for each of the three years ended December 31, 1998, incorporated by
reference in this Prospectus, have been incorporated herein in reliance on the
report of Moore Stephens, which includes explanatory paragraphs on Cronos'
ability to continue as a going concern and on the possibility of Cronos'
becoming a defendant in certain lawsuits. Said report of Moore Stephens,
independent accountants, is given on the authority of said firm as experts in
accounting and auditing.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
This Prospectus incorporates documents by reference which are not presented
or delivered with it. This means that we can disclose certain information by
referring a reader to certain documents. These documents (other than the
exhibits to such documents unless specifically incorporated by reference) are
available, without charge, upon written or oral request directed to Elinor A.
Wexler, The Cronos Group, at its offices located at 444 Market Street, 15th
Floor, San Francisco, California 94111, telephone (415) 677-8990.
The following documents, which have been filed by the Company with the
Commission pursuant to Section 13(a) or 15(d) of the Exchange (File No. 0-24464)
are incorporated in this Prospectus by reference and shall be deemed to be a
part hereof:
(a) Annual Report on Form 10-K for the fiscal year ended December 31,
1998, dated April 13, 1999, as amended on April 28, 1999;
(b) Quarterly Reports on Form 10-Q dated November 15, 1999, August 12,
1999, and May 14, 1999;
(c) Current Reports on Form 8-K dated January 24, 2000, November 16,
1999, November 3, 1999, August 27, 1999, August 23, 1999, August 20, 1999,
April 13, 1999, April 1, 1999, and March 15, 1999;
(d) The Company's Registration Statement on Form 8-A, filed with the
Commission on December 4, 1995, registering the Company's common shares
pursuant to Section 12(g) of the Exchange Act, the Company's Registration
Statement on Form 8-A, filed with the Commission on October 29, 1999,
registering the Company's common share purchase rights, including any
amendments or reports filed for the purpose of updating such descriptions;
and
21
<PAGE> 24
(e) All documents filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the
date of this Prospectus and prior to the termination of the offering made
by this Prospectus.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superceded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document that also is, or is to be deemed to
be, incorporated by reference modifies or supercedes such statement. Any such
statement so modified or superceded shall not be deemed, except as so modified
or superceded, to constitute a part of this Prospectus.
22
<PAGE> 25
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
WITH RESPECT TO COMMON SHARES TO BE ISSUED
TO PLAN PARTICIPANTS IN THE CRONOS GROUP
1999 STOCK OPTION PLAN
The document containing the information specified in Items 1 and 2 of Part
I of Form S-8 will be sent or given to plan participants in the Company's 1999
Stock Option Plan as specified in Rule 428(b)(1) and, in accordance with the
instructions to Part I of Form S-8, is not filed with the Securities and
Exchange Commission as part of this Registration Statement.
I-1
<PAGE> 26
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
This Prospectus incorporates documents by reference which are not presented
or delivered with it. This means that we can disclose certain information by
referring a reader to certain documents. These documents (other than the
exhibits to such documents unless specifically incorporated by reference) are
available, without charge, upon written or oral request directed to Elinor A.
Wexler, The Cronos Group, at its offices located at 444 Market Street, 15th
Floor, San Francisco, California 94111, telephone (415) 677-8990.
The following documents, which have been filed by the Company with the
Commission pursuant to Section 13(a) or 15(d) of the Exchange Act (file no.
0-24464) are incorporated in this Prospectus by reference and shall be deemed to
be a part hereof:
(a) Annual Report on Form 10-K for the fiscal year ended December 31,
1998, dated April 13, 1999, as amended on April 28, 1999;
(b) Quarterly Reports on Form 10-Q dated November 15, 1999, August 12,
1999, and May 14, 1999;
(c) Current Reports on Form 8-K dated January 24, 2000, November 16,
1999, November 3, 1999, August 27, 1999, August 23, 1999, August 20, 1999,
April 13, 1999, April 1, 1999, and March 15, 1999;
(d) The Company's Registration Statement on Form 8-A, filed with the
Commission on December 4, 1995, registering the Company's common shares
pursuant to Section 12(g) of the Exchange Act, and the Company's
Registration Statement on Form 8-A, filed with the Commission on October
29, 1999, registering the Company's common share purchase rights, including
any amendments or reports filed for the purpose of updating such
descriptions; and
(e) All documents filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the
date of this Prospectus and prior to the termination of the offering made
by this Prospectus.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superceded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document that also is, or is to be deemed to
be, incorporated by reference modifies or supercedes such statement. Any such
statement so modified or superceded shall not be deemed, except as so modified
or superceded, to constitute a part of this Prospectus.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTEREST OF NAMED EXPERTS AND COUNSEL.
Not applicable.
II-1
<PAGE> 27
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Subject to certain exceptions and limitations for willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his or her office, every person who is, or has been, a director or
officer of the Company shall be indemnified by the Company to the fullest extent
permitted by the laws of the Grand Duchy of Luxembourg against liability and
against all expenses reasonably incurred or paid by him or her in connection
with any claim, action, suit or proceeding in which he or she becomes involved
as a party, or otherwise by virtue of his being or having been such director or
officer, and against amounts paid or incurred by him or her in the settlement
thereof. For purposes of this indemnification, the words "claim," "action,"
"suit," or "proceeding" shall apply to all claims, actions, suits or proceedings
(civil, criminal or otherwise, including appeals) actual or threatened and the
words "liability" and "expenses" shall include without limitation attorneys'
fees, costs, judgments, amounts paid in settlement and other liabilities.
The Articles of Incorporation of the Company provide, in Article 15
thereof, for indemnification of every person who is, or has been, a director or
officer of the Company to the fullest extent permitted by law, against liability
and against all expenses reasonably incurred or paid by him or her in connection
with any claim, action, suit, or proceeding in which he or she becomes involved
as a party, or otherwise by virtue of his or her being or having been such
director or officer, and against amounts paid or incurred by him or her in the
settlement thereof.
Additionally, the Board of Directors of the Company has adopted
indemnification policies and procedures providing for the indemnification of
present and future officers and directors of the Company. A copy of these
policies and procedures, as adopted by the Board of Directors of the Company on
August 4, 1999, is hereby incorporated by reference to Exhibit 3.2 to the
Company's Registration Statement on Form S-3 filed with the Commission on
November 24, 1999.
The Company has obtained insurance for the benefit of the directors and
officers of the Company and its subsidiaries insuring such persons against
certain liabilities, including liabilities under Federal and state securities
law.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
The grant of the option to Dennis J. Tietz to acquire 300,000 shares of the
Company's common stock was exempt from registration under the Securities Act
pursuant to Section 4(2) thereof. The employment agreement in which the option
was granted to Mr. Tietz was entered into on December 11, 1998, at the time that
Mr. Tietz was hired by the Company's Board as Chief Executive Officer. The
employment agreement is hereby incorporated by reference to Exhibit 10.19 to the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1998, filed with the Commission on April 13, 1999, as amended on April 28, 1999.
ITEM 8. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DOCUMENT
- ------- --------
<C> <S>
4.1 The Cronos Group 1999 Stock Option Plan, incorporated by
reference to Appendix A to the Company's Proxy Statement
filed with the Commission on December 22, 1999.
4.2 Form of Stock Option Agreement for use with the 1999 Stock
Option Plan.
4.3 Confidentiality Agreement by and between First Union
Securities, Inc., acting on behalf of the Company, and
Interpool, Inc., dated as of January 4, 2000.
</TABLE>
II-2
<PAGE> 28
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DOCUMENT
- ------- --------
<C> <S>
5.1 Opinion of Elvinger, Hoss & Prussen as to the validity of
the shares being registered and as to tax matters.
8.1 Opinion of Elvinger, Hoss & Prussen as to tax matters
(included in Exhibit 5.1).
8.2 Opinion of Fotenos & Suttle, P.C. as to tax matters.
23.1 Consent of Luxembourg counsel to the Company (included in
Exhibit 5.1).
23.2 Consent of Fotenos & Suttle, P.C., counsel to the Company
(included in Exhibit 8.2).
23.3 Consent of Moore Stephens, independent public accountants.
24.1 Power of Attorney (see page II-4).
</TABLE>
ITEM 9. UNDERTAKINGS.
A. Undertaking to Update.
The Company hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement to include
any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change
to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
B. Undertaking With Respect to Documents Incorporated by Reference.
The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act each filing of the Company's annual report
pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
C. Undertaking With Respect to Indemnification.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that in the opinion of the SEC such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Company of expenses incurred or paid by a director, officer or
controlling person of the Company in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-3
<PAGE> 29
SIGNATURES
Pursuant to the requirements of the Securities Act, the Company, The Cronos
Group, certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Francisco, State of California, on this 25th day
of February 2000.
THE CRONOS GROUP
By /s/ DENNIS J. TIETZ
------------------------------------
Dennis J. Tietz
Chairman of the Board
And Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Dennis J. Tietz, Peter J. Younger, and Elinor A.
Wexler, and each of them, any of whom may act without joinder of the others, his
or her true and lawful attorneys-in-fact and agents, for him or her and in his
or her name, place and stead, in any and all capacities, to sign any or all pre-
and post-effective amendments and supplements to this Registration Statement,
and to file the same, or cause to be filed the same, with all exhibits thereto
and all other documents in connection therewith, with the Securities and
Exchange Commission, granting unto such attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, and each of them, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below by the following persons in the capacities and
on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <C> <S>
DENNIS J. TIETZ Chairman of the Board of Directors February 25, 2000
- ---------------------------------- and Chief Executive Officer
Dennis J. Tietz (Principal Executive Officer)
PETER J. YOUNGER Chief Financial Officer (Principal February 25, 2000
- ---------------------------------- Financial and Accounting Officer)
Peter J. Younger and Director
MAURICE TAYLOR Director February 25, 2000
- ----------------------------------
Maurice Taylor
CHARLES THARP Director February 25, 2000
- ----------------------------------
Charles Tharp
S. NICHOLAS WALKER Director February 25, 2000
- ----------------------------------
S. Nicholas Walker
ROBERT M. MELZER Director February 25, 2000
- ----------------------------------
Robert M. Melzer
</TABLE>
II-4
<PAGE> 30
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------- -------
<C> <S>
4.1 The Cronos Group 1999 Stock Option Plan, incorporated by
reference to Appendix A to the Company's Proxy Statement
filed with the Commission on December 22, 1999.
4.2 Form of Stock Option Agreement for use with the 1999 Stock
Option Plan.
4.3 Confidentiality Agreement by and between First Union
Securities, Inc., acting on behalf of the Company, and
Interpool, Inc., dated as of January 4, 2000.
5.1 Opinion of Elvinger, Hoss & Prussen as to the validity of
the shares being registered and as to tax matters.
8.1 Opinion of Elvinger, Hoss & Prussen as to tax matters
(included in Exhibit 5.1).
8.2 Opinion of Fotenos & Suttle, P.C. as to tax matters.
23.1 Consent of Luxembourg counsel to the Company (included in
Exhibit 5.1).
23.2 Consent of Fotenos & Suttle, P.C., counsel to the Company
(included in Exhibit 8.2).
23.3 Consent of Moore Stephens, independent public accountants.
24.1 Power of Attorney (see page II-4).
</TABLE>
<PAGE> 1
EXHIBIT 4.2
FORM OF STOCK OPTION AGREEMENT
FOR USE WITH
1999 STOCK OPTION PLAN
<PAGE> 2
THE CRONOS GROUP
1999 STOCK OPTION PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in The Cronos
Group 1999 Stock Option Plan (the "Plan") shall have the same defined meanings
in this Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
-----------------------------------
-----------------------------------
-----------------------------------
Name and Address of Employee
You have been granted an option to purchase Common Stock, par
value $2.00 per share, of The Cronos Group (the "Company"), subject to the terms
and conditions of the Plan and this Option Agreement, as follows:
EMPLOYER NAME ________________________
DATE OF GRANT _________________________
EXERCISE PRICE PER SHARE $_____________________________
TOTAL NUMBER OF SHARES GRANTED ____________________
("Optioned Shares")
TOTAL EXERCISE PRICE $_________________________
TYPE OF OPTION ___ Incentive Stock Option
___ Nonqualified Stock Option
TERM/EXPIRATION DATE _________________________
-1-
<PAGE> 3
VESTING SCHEDULE.
Conditional on the Employee's continued employment for at least
12 months after the Date of Grant, unless a different vesting schedule is
specified by the Committee as set forth in Exhibit A, this Option shall become
vested and may be exercised, in whole or in part, as follows:
<TABLE>
<CAPTION>
SHARES
SUBJECT TO
ANNIVERSARY OF DATE OF GRANT OPTION
---------------------------- ------
<S> <C>
First anniversary............................. 25%
Second anniversary............................ 50%
Third anniversary............................. 75%
Fourth anniversary............................ 100%
</TABLE>
The Option shall be fully vested and exercisable four (4) years
after the Date of Grant. Any Optioned Shares that an Employee has the right to
purchase but elects not to purchase shall remain available for purchase by the
Employee under the terms of this Option Agreement and the provisions of the
Plan.
TERMINATION PERIOD.
In the event that an Employee is terminated, other than upon the
Employee's death or disability, and other than upon the Employee's termination
for cause, Employee may exercise his or her Option, but only within thirty (30)
days (or such other period of time, not exceeding ninety (90) days, as is
determined by the Committee), subject to the provisions of Section 9 of the
Plan. Upon the death or disability of the Employee, this Option may be exercised
for such longer period as provided in Section 10 of the Plan. In the event that
an Employee is terminated for cause, then all rights of the Employee under his
or her Option to purchase Optioned Shares shall terminate on the date of
termination of employment. In no event shall this Option be exercised later than
the Term/Expiration Date.
-2-
<PAGE> 4
II. AGREEMENT
1. GRANT OF OPTION.
(a) The Committee hereby grants to the Employee an
option (the "Option") to purchase the number of Shares set forth above at the
exercise price per share set forth above (the "Exercise Price"), subject to the
terms and conditions of the Plan, which is incorporated herein by reference. In
the event of a conflict between the terms and conditions of the Plan and the
terms and conditions of this Option Agreement, the terms and conditions of the
Plan shall prevail.
(b) If designated as an incentive stock option ("ISO"),
this Option is intended to qualify as an incentive stock option under Section
422 of the Code. However, if this Option is intended to be an incentive stock
option, to the extent that the aggregate Fair Market Value (determined as of the
Date of Grant) of the Optioned Shares with respect to which the ISO granted to
Employee becomes exercisable for the first time during any calendar year (under
the Plan and all other stock option plans of the Company) exceeds the $100,000
rule of Code Section 422(d) (or such corresponding amount as may be set by the
Code), then such excess shall be treated as a nonqualified stock option ("NSO").
2. EXERCISE OF OPTION.
(a) RIGHT TO EXERCISE. This Option is exercisable during
its term in accordance with the Vesting Schedule set forth above and the
applicable provisions of the Plan and this Option Agreement. In the event of
Employee's death, disability or other termination of Employee, the applicable
provisions of the Plan and this Option Agreement govern the exercisability of
the Option.
(b) METHOD OF EXERCISE. This Option is exercisable by
delivery of an exercise notice, in the form attached as Exhibit B (the "Exercise
Notice"), which shall state the election to exercise the Option, the number of
Optioned Shares in respect of which the Option is being exercised (the
"Exercised Shares"), and such other representations and agreements as may be
required by the Company pursuant to the provisions of the Plan. The Exercise
Notice shall be signed by the Employee and shall be delivered in person or by a
recognized overnight delivery service to the Secretary of the Company at 444
Market Street, 15th Floor, San Francisco, California 94111, or such other
address as the Company shall designate in a written notice to the Employee. The
-3-
<PAGE> 5
Exercise Notice shall be accompanied by payment of the aggregate Exercise Price
as to all Exercised Shares. This Option shall be deemed to be exercised upon
receipt by the Company of such fully executed Exercise Notice accompanied by
such aggregate Exercise Price.
No Exercised Shares shall be issued pursuant to the
exercise of this Option unless such issuance and exercise complies with all
relevant provisions of law and the requirements of any stock exchange or market
upon or in which the Exercised Shares are then listed and traded. Assuming such
compliance, for income tax purposes the Exercised Shares shall be considered
transferred to the Employee on the date the Option is exercised with respect to
such Exercised Shares.
3. METHOD OF PAYMENT. Payment of the aggregate Exercise Price
shall be by any of the following, or a combination thereof, at the election of
the Employee:
(a) Cash or cash equivalent;
(b) Consideration received by the Company under a
cashless exercise program implemented by the Company with respect to the Option,
(c) Stock-for-stock payment (as described in Section 7,
paragraph (f) of the Plan),
(d) Any combination of the above, or
(e) Such other means as the Committee may approve.
4. NON-TRANSFERABILITY OF OPTION. This Option may not be
assigned or transferred in any manner otherwise than by will or by the laws of
descent or distribution and may be exercised during the lifetime of Employee
only by the Employee. The terms of the Plan and this Option Agreement shall be
binding upon the executors, administrators, heirs, successors and assigns of the
Employee.
5. TERM OF OPTION. This Option may be exercised only within the
term set forth above, and may be exercised during such term only in accordance
with the Plan and the terms of this Option Agreement.
-4-
<PAGE> 6
6. TAX CONSEQUENCES.
(a) Employee hereby acknowledges that Employee has: (i)
received and read the Plan Summary, including the summary of the tax
consequences of the grant and exercise of this Option, and (ii) been advised to
consult his or her tax adviser before exercising this Option or disposing of the
Exercised Shares.
(b) If the Employee sells or otherwise disposes of any
of the Exercised Shares acquired pursuant to an ISO on or before the later of
(i) two years after the grant date, or (ii) one year after the exercise date,
the Employee shall immediately notify the Company in writing of such
disposition. The Employee agrees that he or she may be subject to income tax
withholding by the Company on the compensation income recognized from such early
disposition of ISO Exercised Shares by payment in cash or out of the current
earnings payable by the Employer to the Employee
7. ENTIRE AGREEMENT.
(a) The Plan is incorporated herein by reference. The
Plan and this Option Agreement constitute the entire agreement of the parties
with respect to the subject matter hereof and supersede in their entirety all
prior undertakings and agreements of the Company, the Employer and the Employee
with respect to the subject matter hereof, and may not be modified adversely to
the Employee's interest except by means of a writing signed by the Company, the
Employer and Employee.
(b) By Employee's signature and the signature of the
Company's and Employer's representative below, the Employee, the Company and the
Employer agree that this Option is granted under and governed by the terms and
conditions of the Plan and this Option Agreement. Employee has reviewed the Plan
and this Option Agreement in their entirety, and has had an opportunity to
obtain the advice of counsel prior to executing this Option Agreement. Employee
hereby agrees to accept as binding, conclusive and final all decisions or
interpretations of the Committee upon any question relating to the Plan and this
Option Agreement. Employee further agrees to notify the Company upon any change
in the residence address indicated below.
-5-
<PAGE> 7
IN WITNESS WHEREOF, the Company, the Employer, and the Employee
have executed this Agreement as of the Date of Grant specified above.
THE CRONOS GROUP
By
---------------------------------
Name
--------------------------------
Title
-------------------------------
EMPLOYER
Employer Name
-----------------------
By
---------------------------------
Name
--------------------------------
Title
-------------------------------
EMPLOYEE
------------------------------------
(signature)
Print Name
--------------------------
Residence Address
------------------------------------
------------------------------------
------------------------------------
-6-
<PAGE> 8
CONSENT OF SPOUSE
The undersigned spouse of Employee has read and hereby approves
the terms and conditions of the Plan and this Option Agreement. In consideration
of the Company's and the Employer's granting his or her spouse the right to
purchase the Optioned Shares as set forth in the Plan and this Option Agreement,
the undersigned hereby agrees to be irrevocably bound by the terms and
conditions of the Plan and this Option Agreement and further agrees that any
community property interest shall be similarly bound. The undersigned hereby
appoints the undersigned's spouse as attorney-in-fact for the undersigned with
respect to any amendment or exercise of rights under the Plan or this Option
Agreement.
SPOUSE OF EMPLOYEE
------------------------------------
(signature)
Print Name:
-------------------------
-7-
<PAGE> 9
EXHIBIT A
ALTERNATE VESTING SCHEDULE
Approved by:
COMPENSATION COMMITTEE
------------------------------------
Charles Tharp, Chair
------------------------------------
Maurice Taylor
------------------------------------
S. Nicholas Walker
A-1
<PAGE> 10
EXHIBIT B
EXERCISE NOTICE
The Cronos Group
444 Market Street, 15th Floor
San Francisco, California 94111
Attention: Secretary
1. EXERCISE OF OPTION. Effective as of today, ________________,
200__, the undersigned (the "Purchaser") hereby elects to purchase
______________ shares (the "Shares") of Common Stock, par value $2.00 per share,
of The Cronos Group (the "Company") under and pursuant to the 1999 Stock Option
Plan (the "Plan") and the Stock Option Agreement dated _________________, 200__
(the "Option Agreement"). The purchase price for the Shares shall be $________
per Share and $ _____________ in the aggregate.
2. DELIVERY OF PAYMENT. Purchaser herewith delivers to the
Company the full purchase price for the Shares.
3. REPRESENTATIONS OF PURCHASER. Purchaser acknowledges that
Purchaser has received and read the Plan and the Option Agreement and agrees to
abide by and be bound by their terms and conditions.
4. RIGHTS AS SHAREHOLDER. Until the issuance (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company) of the stock certificate evidencing such Shares,
no right to vote or receive dividends or any other rights as a shareholder shall
exist with respect to the optioned Shares, notwithstanding the exercise of the
Option. A share certificate for the number of Shares so acquired shall be issued
to the Employee as soon as practicable after exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Sections 5 and 12 of the Plan.
5. TAX CONSULTATION. Purchaser understands that Purchaser may
suffer adverse tax consequences as a result of Purchaser's purchase or
disposition of the Shares. Purchaser represents that Purchaser has consulted
with any tax consultant Purchaser deems advisable in connection with the
purchase or
B-1
<PAGE> 11
disposition of the Shares and that Purchaser is not relying on the
Company or the Employer for any tax advice.
6. ENTIRE AGREEMENT. The Plan and Option Agreement are
incorporated herein by reference. The Plan and this Option Agreement constitute
the entire agreement of the parties with respect to the subject matter hereof
and supersede in their entirety all prior undertakings and agreements of the
Company, the Employer and Purchaser with respect to the subject matter hereof,
and may not be modified adversely to the Purchaser's interest except by means of
a writing signed by the Company, the Employer and Purchaser. This Agreement is
governed by California law except for that body of law pertaining to conflict of
laws.
Accepted by:
THE CRONOS GROUP
By
---------------------------------
Name
--------------------------------
Title
-------------------------------
Address
444 Market Street, 15th Floor
San Francisco, California 94111
EMPLOYER
Employer Name
------------------------------------
By
---------------------------------
Name
--------------------------------
Title
-------------------------------
Address
------------------------------------
------------------------------------
B-2
<PAGE> 12
Submitted by:
PURCHASER
------------------------------------
(signature)
Print Name
--------------------------
Residence Address
------------------------------------
------------------------------------
------------------------------------
B-3
<PAGE> 1
EXHIBIT 4.3
CONFIDENTIALITY AGREEMENT BY AND BETWEEN FIRST
UNION SECURITIES INC., ACTING ON BEHALF OF
THE COMPANY, AND INTERPOOL, INC.
DATED AS OF JANUARY 4, 2000
<PAGE> 2
CONFIDENTIALITY AGREEMENT
First Union Securities, Inc.
101 South Tryon Street, 40th Floor
Charlotte, North Carolina 28280
Ladies and Gentlemen:
The Cronos Group ("Cronos") and Interpool, Inc. (the "Company") are
interested in discussing and evaluating the potential sale of Cronos to the
Company and/or an affiliate of the Company or a business combination
transaction involving Cronos and the Company and/or an affiliate of the Company.
In connection with such negotiations ("Negotiations"), information of a
confidential nature has been and/or will be disclosed by Cronos (the term
"Cronos" including, for purposes of this Agreement, all of its directly and
indirectly owned subsidiaries and other affiliates and all of its and its
directly and indirectly owned subsidiaries' and other affiliates' officers,
employees, representatives and other agents) to the Company (the term "Company"
including, for purposes of this Agreement, all of its directly and indirectly
owned subsidiaries and other affiliates) or its Agents (as hereinafter
defined). In consideration of Cronos providing such information to the Company
and its Agents and in order to protect Cronos's interests therein, the Company
and Cronos hereby agree as follows:
1. All information disclosed or transmitted by Cronos, whether verbally
or in written, electronic, recorded or other form, to the Company or any of its
Agents, including without limitation all financial information, marketing
information, customer and supplier information, manufacturing and technical
information and intellectual property, whether prior to, on or after the date
hereof and whether or not in writing (collectively, the "Confidential
Information") shall be treated by the Company and its Agents as set forth in
this Agreement. As used herein, the term "Confidential Information" shall also
include all analyses, records, compilations, studies, notes or other documents
(whether in written, electronic, recorded or other form) whatever prepared by
the Company or its Agents which contain or otherwise reflect Confidential
Information.
2. Except as required by law, including the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder
(collectively, the "Exchange Act") and the rules and regulations of any national
securities exchange or over-the-counter market, without the prior written
consent of Cronos, (a) the Company shall keep confidential and shall not
disclose any Confidential Information to any third person or entity (private or
governmental) except to such of its or its directly and indirectly owned
subsidiaries' and other affiliates' officers, directors, employees, agents,
advisors or other representatives, including without limitation accountants,
attorneys, business consultants and financial advisors (all the foregoing,
"Agents") who need to know the Confidential Information for the purposes
contemplated by this Agreement, who are informed of the confidential nature of
the Confidential Information and who agree to be bound by the restrictions of
this Agreement; and (b) the Company and its Agents shall use the Confidential
Information only for the purposes contemplated by this Agreement and in no event
in any way detrimental to Cronos or for any other purpose, commercial or
otherwise. Each of these parties agrees that, except as deemed necessary by such
party's counsel to comply with applicable law (including the Exchange Act) or
the rules and regulations of any national securities exchange or
over-the-counter market, it would not disclose to any party that
<PAGE> 3
CONFIDENTIALITY AGREEMENT
Page 2
negotiations are taking, or have taken, place between the parties and the terms
and status thereof, including the fact that this Agreement has been entered
into (collectively, the "Other Information").
3. This Agreement shall be inoperative as to any Confidential
Information which (a) is or becomes available or known publicly without a
breach of this Agreement by the Company or its Agents, or (b) is subsequently
disclosed to the Company by a third person or entity who is known by the
Company to be not prohibited from disclosing same by a contractual, fiduciary
or other legal obligation to Cronos, or (c) is independently developed by the
Company without reference to the Confidential Information. In addition, nothing
in this Agreement shall be construed to limit the ability of the Company to
make such disclosures as are deemed necessary or appropriate by its counsel to
comply with the Exchange Act, including, without limitation, in connection with
a tender offer or proxy or consent solicitation.
4. Each of the parties shall be responsible for any breach of this
Agreement by any of its Agents, including those who become former Agents after
the date hereof. In addition, (a) the Company shall, at its sole expense, take
all reasonable actions, including without limitation court proceedings, to
restrain its Agents and former Agents from unauthorized disclosure or use of
the Confidential Information, and (b) each of the parties shall, at such
party's sole expense, take all reasonably actions, including without
limitation, court proceedings, to restrain its Agents from unauthorized
disclosure of the Other Information.
5. Any Confidential Information provided to the Company or its Agents
shall be returned (with all copies, extracts or other whole or partial
reproductions thereof) to Cronos, and the Company and its Agents shall destroy
all analyses, records, compilations, studies, notes or other documents (whether
in written, electronic, recorded or other form) prepared by or for the Company
which contain or are based on any Confidential Information and provide Cronos
with a certificate of an officer of the Company to the effect that all such
Confidential Information has been returned or destroyed as required, all within
thirty days of receipt by the Company of a written request therefor from Cronos.
6. Nothing in this Agreement shall give the Company any right, title,
license or interest whatever in or to the Confidential Information (which shall
remain at all times the property of Cronos) or in or to any existing or future
patents, know-how, inventions or other intellectual property of Cronos.
7. If a party or any of its Agents is requested, or upon the advice of
legal counsel, is required, in any court proceeding (e.g., by oral questions,
interrogatories, requests for information or documents, subpoena or the like),
by any government agency or authority or by law (other than the Exchange Act) to
disclose any of the Confidential Information or Other Information, as the case
may be, the disclosing party shall promptly so notify the other party so that
the other party may seek appropriate protective relief or waive compliance with
the applicable provisions of this Agreement for such situation. If the other
party does not obtain such relief on a timely basis, the disclosing party may
disclose only that portion of the Confidential Information or Other Information,
as the case may be, which its legal counsel
<PAGE> 4
CONFIDENTIALITY AGREEMENT
Page 3
advises must be disclosed and the disclosing party will use its reasonable
efforts to obtain satisfactory assurances that the Confidential Information or
Other Information, as the case may be, will be maintained in confidence
following its required disclosure. The provisions of this paragraph 7 shall not
apply to any disclosure permitted to be made pursuant to the introductory
proviso of paragraph 2.
8. The obligations of a party not to use or disclose (including not to
allow the use or disclosure by its Agents), and to return on request or
destroy, the Confidential Information or the Other Information shall continue
for a period of three years from the date hereof.
9. For a period of one year from the date hereof, the Company shall not
solicit for hire or hire as a director, officer, employee, independent
contractor, consultant or advisor any person employed by Cronos on the date
hereof in an executive or significant managerial, financial, sales, marketing,
engineering, research, development, manufacturing or technical position with
whom the Company has had contact or who becomes known to the Company in
connection with the Negotiations. However, the foregoing provisions of this
paragraph shall not prevent the Company from hiring any such person, who, at
the time of the initial contact with the Company regarding employment, is
responding to (a) a general advertisement or other non-directed search inquiry
or (b) who is no longer employed by Cronos and, at the time of such contact, had
not been employed by Cronos for at least three months.
10. The Company understands that Cronos shall endeavor to assure that any
Confidential Information or other information provided to the Company pursuant
to this Agreement will be accurate and relevant for the purposes contemplated
by this Agreement but acknowledges that Cronos is not making any representation
or warranty as to, and shall not have liability in regard to, the accuracy or
completeness of such Confidential Information or other information.
11. The Company understands that no contract or agreement providing for
any transaction with Cronos shall be deemed to exist between the parties unless
and until a definitive agreement has been executed and delivered by both
parties. Only representations and warranties, if any, hereafter made in such
definitive agreement shall have any legal effect and agrees that Cronos may
establish procedures and guidelines for the submission of proposals with respect
to the transaction contemplated by this Agreement and may change those
procedures at any time without prior notice. The Company and its representatives
shall act in accordance with these procedures and agree to be bound by the terms
and conditions thereof. The Company further acknowledges that Cronos is free to
conduct the process leading up to a possible sale of Cronos as Cronos, in it
sole discretion, determines, including, without limitation, the negotiation and
entering into of any preliminary or definitive agreement with any other person
or entity without prior notice to the Company. Unless and until complete and
definitive written agreements for an actual sale and purchase of Cronos between
Cronos and the Company have been formally prepared, executed and delivered by
both parties, after approval by their respective Board of Directors, (a) each
has the right, in its sole discretion, to reject any proposal from the other
and/or to terminate the Negotiations at any time, and (b) neither will have any
further legal obligation of any sort except for the matters specifically agreed
to in this Agreement. Only
<PAGE> 5
CONFIDENTIALITY AGREEMENT
Page 4
representations and warranties, if any, hereafter made in such definitive
agreements shall have any legal effect.
12. Each of the parties shall advise their Agents who are aware or become
aware of the Negotiations and/or to whom Confidential Information or the Other
Information is disclosed, that United States securities laws prohibit them, as
recipients from an issuer of material, non-public information regarding that
issuer, from buying or selling securities of that issuer or from communicating
such material, non-public information to any other person where it is
reasonably likely or foreseeable that such person may purchase or sell such
securities in reliance upon such information.
13. The Company agrees, during the Standstill Period (as defined below),
that it shall not, alone or through or with any other person or entity, in any
manner, without the prior written consent of Cronos:
(i) acquire, offer to acquire, or agree to acquire, directly or
indirectly, by purchase or otherwise, any voting securities of Cronos or any
subsidiary thereof, or any assets of Cronos or any subsidiary or division
thereof;
(ii) file with the SEC or mail a proxy statement relating to the
solicitation of proxies by the Company from the shareholders of Cronos to be
used at the 1999 Annual Meeting of Shareholders of Cronos in support of the
election of the Company's nominees (as set forth in the Company's preliminary
proxy statement filed with the SEC on August 24, 1999 as amended December 3,
1999) to the Board of Directors of Cronos;
(iii) make any public announcement with respect to, or submit a
proposal for, or offer of (with or without conditions) any extraordinary
transaction involving Cronos or its securities or assets: (1) act, directly or
indirectly, to seek to control, direct or influence the management, Board of
Directors, stockholders, policies or affairs of Cronos or communicate with any
of the shareholders of Cronos; or
(iv) form, join or in any way participate in a "group" as defined
in Section 13(d)(3) of the Exchange Act) in connection with any of the
foregoing.
The foregoing provisions shall not prohibit or otherwise prevent the
Negotiations as contemplated by this Agreement, between Cronos and the Company.
The Company and Cronos each agree that during the Standstill Period not to
initiate any legal action against the other in any court or jurisdiction except
to the extent necessary to enforce the provisions of this Agreement.
As used in this Agreement, the term "Standstill Period" shall mean the period
beginning on the date of this Agreement and ending the earlier of (i) such date
that it is publicly announced, whether by press release, filing with the SEC or
otherwise, that Cronos or any affiliate thereof has entered into a letter of
intent, agreement in principle or any other agreement with any party with
respect to a Competing Transaction (as hereafter defined), (ii) such date that
any person or
<PAGE> 6
CONFIDENTIALITY AGREEMENT
Page 5
"group" (as defined in Section 13(d)(3) of the Exchange Act), other than the
Company or its affiliates or any group of which any of the Company or its
affiliates is a member, shall have acquired or announced its intention to
acquire (including by commencement of a tender or exchange offer) beneficial
ownership (as determined pursuant to Rule 13d-3 promulgated under the Exchange
Act) of 25% or more of Cronos's common stock, (iii) 11:58 p.m., New York City
Cronos, on April 30, 2000. For the purposes of this Agreement, "Competing
Transaction" shall mean any of the following: (i) any merger, consolidation,
share exchange, recapitalization, restructuring, liquidation, dissolution,
business combination, joint venture or other extraordinary transaction involving
Cronos or any of its subsidiaries; (ii) any sale, lease, exchange, mortgage,
pledge, transfer or other disposition of a significant portion of the assets of
Cronos and its subsidiaries, taken as a whole, in a single transaction or series
of related transactions; (iii) any tender or exchange offer for 25% percent or
more of the outstanding shares of capital stock of Cronos made by any Person
(including Cronos or any affiliate thereof); (iv) any transaction by which any
Person would acquire the ability to elect a majority of the members of Cronos's
Board of Directors; (v) any sale or proposed sale of equity securities
representing, or securities convertible, exchangeable or representing the right
to acquire, more than 25% of the equity capitalization of Cronos; or (vi) any
similar business combination or extraordinary transaction.
In consideration for entering into the Standstill Period agreement, Cronos
agrees to allow the Company to conduct such due diligence as is reasonable and
customary.
14. The Company agrees that Cronos shall not be obligated to pay any fees
on its behalf to any brokers, finders, or other parties claiming to represent
the Company in the transaction contemplated by this Agreement, unless otherwise
agreed to in a subsequent agreement.
15. In the event of any breach of any provision of this Agreement, the
parties acknowledge and agree that money damages would not be a sufficient
remedy, and the non-breaching party shall therefore be entitled to equitable
relief, including in the form of injunctions and orders for specific
performance and without the necessity of posting any bond, in an action
instituted in any court having subject matter jurisdiction, in addition to all
other remedies available to the non-breaching party with respect thereto at law
or in equity. Except as otherwise provided herein, this Agreement shall
terminate one year from the date hereof, provided that the expiration of any
period of time specified in this Agreement is not intended to terminate the
rights and obligations of either party hereto in regard to any breaches of
this Agreement occurring prior to the expiration of such period, which rights
and obligations shall continue.
16. No failure or delay by either party hereto in exercising in whole or
in part any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise or waiver thereof preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege hereunder or at law or in equity. Either party hereto may at any
time waive compliance by the other with any covenant, condition or agreement
contained in this Agreement, but only by a written instrument executed by the
party expressly waiving such compliance.
<PAGE> 7
CONFIDENTIALITY AGREEMENT
Page 6
17. This Agreement shall be governed by, and interpreted and enforced in
accordance with, the local laws of the State of California applicable to
contracts to be performed fully within such state and without regard to the
conflicts of law provisions thereof or of any other jurisdictions.
18. This Agreement will be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. This
Agreement may not be assigned or otherwise transferred by either party hereto
(including by operation of law) without the prior written consent of the
non-assigning party. No assignment will in any event relieve the assigning party
of any of its obligations hereunder without the prior written consent of the
non-assigning party. No assignment will in any event relieve the assigning party
of any of its obligations hereunder without the prior written consent of the
non-assigning party. The language used in this Agreement was selected by the
parties jointly, and no presumptions of legal construction or interpretation are
intended to, or shall, apply against either party as the author hereof. If any
provision of this Agreement shall be determined to be invalid or unenforceable,
it shall not affect the remainder of this Agreement, which shall continue in
full force and effect. This Agreement will be executed in two or more
counterparts, any or all of which shall constitute one and the same instrument.
19. This Agreement supersedes any other representation, warranty,
agreement, commitment, arrangement or understanding of any sort whatever,
whether written or oral, that may have been made or entered into by either
Cronos or the Company or its Agents relating to the matters contemplated
hereby, but not limited to, (i) the Confidentiality Agreement dated November
15, 1996 by and among the Company, Cronos and Stephen M. Palatin, and (ii) the
Mutual Nondisclosure Agreement dated as of May 20, 1999 by and between the
Company and Cronos. This Agreement constitutes the entire understanding and
agreement of the parties with respect to the subject matter hereof, and there
are no representations, warranties, agreements, commitments, arrangements or
understandings except as expressly set forth herein. This Agreement may not be
amended orally, but only by a written instrument executed by both parties
hereto expressly setting forth such amendment.
<PAGE> 8
CONFIDENTIALITY AGREEMENT
Page 7
If the foregoing agreement is acceptable, please sign both copies of this
letter, and return one to me at the above address.
FIRST UNION SECURITIES, INC. as agent for THE CRONOS GROUP
By: /s/ RAYMOND C. GROTH
-----------------------------
Raymond C. Groth
Managing Director
The foregoing is hereby accepted and agreed to
as of Jan 9, 2000.
Interpool, Inc.
By: /s/ MITCHELL L. GORDON
-----------------------------
Mitchell L. Gordon
Director
<PAGE> 1
EXHIBIT 5.1
OPINION OF ELVINGER, HOSS & PRUSSEN
LUXEMBOURG COUNSEL
<PAGE> 2
[ELVINGER, HOSS & PRUSSEN LETTERHEAD]
The Cronos Group
16, allee Marconi
Boite Postale 260
L-2120 Luxembourg
(the "Company")
Luxembourg 24 February 2000
O/Ref.: JH/FW/cf
Re:
Dear Sirs,
We have acted as your special Luxembourg counsel in connection with the issuance
of 500,000 Common Shares upon the exercise of options granted under The Cronos
Group 1999 Stock Option Plan, and of 300,000 Common Shares upon the exercise of
an option granted to Dennis J. Tietz, CEO and Chairman of the Board of the
Company, as more fully described in the Registration Statement on Form S-8 to
be filed by the Company with the Securities and Exchange Commission pursuant to
the Securities Act of 1933, as amended (the "Registration Statement").
We have examined the Articles of Incorporation of the Company. We have also
examined corporate proceedings relating to the authorisation and issuance of
the presently outstanding Common Shares.
Based upon the foregoing and such further examination and inquiries as we have
deemed necessary, we are of the opinion that:
1. The Company is a corporation duly organised and validly existing under the
laws of Luxembourg;
<PAGE> 3
-2-
2. The 300,000 Common Shares which are being offered by the Selling Shareholder
who acquired the option on December 11, 1998, pursuant to the Registration
Statement, have been duly authorised, are validly issued and will be fully
paid and non-assessable;
3. The 500,000 Common Shares, which may be purchased according to the 1999
Stock Option Plan, adopted by the Board and approved by the shareholders
meeting held January 13, 2000, which authorises the grant of options to the
officers and employees of the Company, pursuant to the Registration
Statement, have been duly authorised and, when issued, will have been validly
issued and will be fully paid and non-assessable.
4. We hereby confirm to you that, subject to the limitations set forth
thereunder, the statements of Luxembourg tax law set forth under the heading
"Tax Considerations" in the Prospectus covering such Common Shares (which is
part of the Registration Statement to which this letter is attached as an
exhibit) are accurate in all material respects.
We hereby consent to the filing of this opinion as an exhibit to the aforesaid
Registration Statement with the Securities and Exchange Commission and the
reference to us under the headings "Enforceability of Civil Liabilities", "Tax
Considerations" and "Legal Matters" in the Prospectus constituting a part of
such Registration Statement. By giving the foregoing consent, we do not admit
that we come within the category of persons whose consent is required under
Section 7 of the Securities Act 1933, as amended.
Very truly yours,
ELVINGER, HOSS & PRUSSEN
By /s/ JEAN HOSS
----------------------
Jean Hoss
<PAGE> 1
EXHIBIT 8.2
OPINION OF FOTENOS & SUTTLE, P.C.
AS TO TAX MATTERS
<PAGE> 2
[FOTENOS & SUTTLE, P.C. LETTERHEAD]
February 23, 2000
The Cronos Group
16 Allee Marconi
L-2120 Luxembourg
Ladies and Gentlemen:
As United States tax counsel for The Cronos Group, a societe
anonyme organized and existing under the laws of Luxembourg (the "Company"), and
in connection with the proposed offer and sale by a selling shareholder of
common shares of the Company (the "Common Shares"), we hereby confirm to you
that, subject to the limitations set forth thereunder, the statements of United
States federal income tax law set forth under the heading "Tax Considerations"
in the Prospectus covering such Common Shares (which is a part of the
Registration Statement on Form S-8 to be filed by the Company with the
Securities and Exchange Commission (the "Registration Statement")), to which
this letter is attached as an exhibit, are accurate in all material respects.
We hereby consent to the filing with the SEC of this opinion as
an exhibit to the Registration Statement and to the reference to us under the
heading "Tax Considerations" and "Legal Counsel" in the Prospectus. By giving
the foregoing consent, we do not admit that we are within the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended.
Respectfully submitted,
FOTENOS & SUTTLE, P.C.
By /s/ JAMES F. FOTENOS
---------------------------------
James F. Fotenos
<PAGE> 1
EXHIBIT 23.3
CONSENT OF MOORE STEPHENS
INDEPENDENT PUBLIC ACCOUNTANTS
<PAGE> 2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the inclusion in this
Registration Statement on Form S-8 of our report, which includes explanatory
paragraphs on Cronos' ability to continue as a going concern and on the
possibility of Cronos becoming a defendant in certain lawsuits, dated April 8,
1999, on our audits of the financial statements and financial statement
schedules of The Cronos Group. We also consent to the reference to our firm
under the caption "Experts" in the Registration Statement.
/s/ MOORE STEPHENS
------------------------------
Moore Stephens
London, England
14 February 2000
