Exhibit 99.5
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HUB INTERNATIONAL LIMITED
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GUARANTY AGREEMENT
relating to
U.S.$75,000,000 6.43% Senior Notes
of Hub International Limited Partnership
due April 4, 2016
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Dated as of April 4, 2006
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TABLE OF CONTENTS
(Not a part of the Agreement)
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SECTION 1. DEFINITIONS................................................... 1
SECTION 2. GUARANTY...................................................... 3
Section 2.1. Guarantee of Payment and Performance of Obligations..... 3
Section 2.2. Obligations Absolute.................................... 4
Section 2.3. Waiver.................................................. 4
Section 2.4. Obligations Unimpaired.................................. 5
Section 2.5. Subrogation; Subordination.............................. 5
Section 2.6. Reinstatement Of Guaranty............................... 6
SECTION 3. AFFIRMATIVE COVENANTS......................................... 6
Section 3.1. Financial and Business Information...................... 6
Section 3.2. Compliance with Law..................................... 9
Section 3.3. Insurance............................................... 9
Section 3.4. Maintenance of Properties............................... 9
Section 3.5. Payment of Taxes and Claims............................. 10
Section 3.6. Corporate Existence, Etc................................ 10
SECTION 4. NEGATIVE COVENANTS............................................ 10
Section 4.1. Nature of Business...................................... 10
Section 4.2. Transactions with Affiliates............................ 10
Section 4.3. Most Favored Lender Status.............................. 10
Section 4.4. Purchase of Notes....................................... 11
Section 4.5. Defaults under Note Purchase Agreement.................. 11
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY................. 11
Section 5.1. Organization; Power and Authority....................... 11
Section 5.2. Authorization, Etc...................................... 12
Section 5.3. Disclosure.............................................. 12
Section 5.4. Organization and Ownership of Shares of Subsidiaries;
Affiliates.............................................. 12
Section 5.5. Financial Statements.................................... 13
Section 5.6. Compliance with Laws, Other Instruments, Etc............ 13
Section 5.7. Governmental Authorizations, Etc........................ 13
Section 5.8. Litigation; Observance of Agreements, Statutes and
Orders.................................................. 13
Section 5.9. Taxes................................................... 14
Section 5.10. Title to Property; Leases............................... 14
Section 5.11. Licenses, Permits, Etc.................................. 14
Section 5.12. Compliance with ERISA................................... 15
Section 5.13. Private Offering by the Company......................... 16
Section 5.14. [Intentionally Omitted]................................. 16
Section 5.15. Existing Debt; Future Liens............................. 16
Section 5.16. Foreign Assets Control Regulations, Etc................. 16
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TABLE OF CONTENTS
(continued)
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Section 5.17. Status under Certain Statutes........................... 17
Section 5.18. Environmental Matters................................... 17
Section 5.19. Guaranty Ranks Pari Passu............................... 17
Section 5.20. Permitted Senior Indebtedness........................... 17
SECTION 6. PAYMENTS FREE AND CLEAR OF TAXES.............................. 18
SECTION 7. EXPENSES, ETC................................................. 19
Section 7.1. Transaction Expenses.................................... 19
Section 7.2. Survival................................................ 20
SECTION 8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.. 20
SECTION 9. AMENDMENT AND WAIVER.......................................... 20
Section 9.1. Requirements............................................ 20
Section 9.2. Solicitation of Holders of Notes........................ 20
Section 9.3. Binding Effect, Etc..................................... 21
Section 9.4. Notes Held by Company, Etc.............................. 21
SECTION 10. NOTICES...................................................... 21
SECTION 11. REPRODUCTION OF DOCUMENTS.................................... 22
SECTION 12. SUBMISSION TO JURISDICTION, JUDGMENTS, ETC................... 22
Section 12.1. Submission to Jurisdiction.............................. 22
Section 12.2. Judgments............................................... 23
SECTION 13. MISCELLANEOUS................................................ 23
Section 13.1. Successors and Assigns.................................. 23
Section 13.2. Payments Due on Non-Business Days....................... 23
Section 13.3. Severability............................................ 23
Section 13.4. Construction............................................ 23
Section 13.5. Counterparts............................................ 23
Section 13.6. Currency................................................ 24
Section 13.7. Governing Law........................................... 24
Section 13.8. Opinions................................................ 24
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ATTACHMENTS TO THE GUARANTY AGREEMENT:
SCHEDULE 5.3 -- Disclosure Materials
SCHEDULE 5.4 -- Subsidiaries of the Company and Ownership of Subsidiary
Shares
SCHEDULE 5.5 -- Financial Statements
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GUARANTY AGREEMENT
This GUARANTY AGREEMENT (this "Guaranty") is entered into as of April 4,
2006 HUB INTERNATIONAL LIMITED, a Canadian corporation (the "Company"), in favor
of and for the benefit of the holders (as defined below).
WHEREAS, concurrently herewith, Hub International Limited Partnership, a
limited partnership organized under the laws of the State of Delaware (the
"Issuer") is entering into that certain Note Purchase Agreement (as amended,
restated or otherwise modified, the "Note Purchase Agreement"), dated as of
April 4, 2006, under which the Purchasers named in the Purchaser Schedule
attached thereto (the "Purchasers") will purchase $75,000,000 aggregate
principal amount of the Issuer's 6.43% Senior Notes due April 4, 2016 (the
"Notes"), and
WHEREAS, as a condition precedent to its willingness to purchase the Notes
the Purchasers have requested, among other things, that the Company execute this
Guaranty for the benefit of the holders.
NOW THEREFORE, for value received, to satisfy one of the conditions
precedent to the purchase of the Notes, to induce the Purchasers to purchase the
Notes, to induce any transferee of any Note to accept the transfer of all or any
part of any Note, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company agrees as follows:
SECTION 1. DEFINITIONS.
Capitalized terms used herein and not otherwise defined have the meanings
given in the Note Purchase Agreement. As used herein, the following terms have
the respective meanings set forth below or set forth in the Section hereof
following such term:
"Anti-Terrorism Order" shall mean Executive Order No. 13,224 66 Fed Reg.
49,079 (2001) issued by the President of the United States of America (Executive
Order Blocking Property and Prohibiting Transactions with Persons Who Commit,
Threaten to Commit, or Support Terrorism).
"Bankruptcy Code" shall mean Chapter 11 of Title 11 of the Federal
Bankruptcy Code or any similar law of Canada or any province thereof.
"Company" shall mean Hub International Limited, a Canadian corporation and
any Successor Corporation.
"Environmental Laws" shall mean any and all Federal, state, provincial,
local, and foreign statutes, laws, regulations, ordinances, rules, judgments,
orders, decrees, permits, concessions, grants, franchises, licenses, agreements
or governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.
SCHEDULE 5.3
(to Guaranty Agreement)
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company
under Section 414 of the Code.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Forms" is defined in Section 6.
"Governmental Authority" shall mean
(a) the government of
(1) the United States of America, Canada or any State or Province
or other political subdivision thereof, or
(2) any jurisdiction in which the Company or any Subsidiary
conducts all or any part of its business, or which asserts
jurisdiction over any properties of the Company or any Subsidiary, or
(b) any entity exercising executive, legislative, judicial, regulatory
or administrative functions of, or pertaining to, any such government.
"Guaranteed Indebtedness" shall have the meaning given in Section 2.1.
"Guaranty" shall mean this Guaranty, as amended, restated or otherwise
modified from time to time.
"Hazardous Material" shall mean any and all pollutants, toxic or hazardous
wastes or any other substances that might pose a hazard to health or safety, the
removal of which may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage, or filtration of which is
or shall be restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polychlorinated biphenyls).
"Issuer" shall have the meaning given in the recitals hereto.
"Material" shall mean material in relation to the business, operations,
affairs, financial condition, assets, properties or prospects of the Company and
its Subsidiaries, taken as a whole.
"Material Adverse Effect" shall mean a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Company and its Subsidiaries taken as a whole, or (b) the ability of the Company
to perform its obligations under this Guaranty or the ability of the Issuer to
perform its obligations under the Note Purchase Agreement and the Notes, or (c)
the validity or enforceability of this Guaranty, the Note Purchase Agreement or
the Notes.
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"Multiemployer Plan" shall mean any Plan that is a "multiemployer plan" (as
such term is defined in Section 4001(a)(3) of ERISA).
"Notes" shall have the meaning given in the recitals hereto.
"Note Purchase Agreement" shall have the meaning given in the recitals
hereto.
"Patriot Act" shall means Public Law 107-56 of the United States of
America, United and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism (USA PATRIOT Act) Act of 2001.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"Plan" shall mean an "employee benefit plan" subject to Title IV of ERISA
or Section 412 of the Code that is or, within the preceding five years, has been
established or maintained, or to which contributions are or, within the
preceding five years, have been made or required to be made, by the Company or
any ERISA Affiliate or with respect to which the Company or any ERISA Affiliate
could reasonably be expected to have any liability.
"Purchasers" shall have the meaning given in the recitals.
"Relevant Tax" is defined in Section 6.
"Resident Country" is defined in Section 6.
"Tax Indemnity Amounts" is defined in Section 6.
"Taxing Jurisdiction" is defined in Section 6.
SECTION 2. GUARANTY.
Section 2.1. Guarantee of Payment and Performance of Obligations. The
Company hereby irrevocably, unconditionally and jointly and severally guarantees
to each holder the due and punctual payment in full of (i) the principal of,
Make-Whole Amount, if any, and interest on (including interest accruing after
the filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Issuer, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding),
and any other amounts due under, the Notes when and as the same shall become due
and payable (whether at stated maturity or by required or optional prepayment or
by acceleration or otherwise) and (ii) any other sums which may become due under
the terms and provisions of the Note Purchase Agreement or the Notes (all such
obligations described in clauses (i) and (ii) above are herein called the
"Guaranteed Obligations"). The guaranty in the preceding sentence is an
absolute, present and continuing guaranty of payment and not of collectibility
and is in no way conditional or contingent upon any attempt to collect from the
Issuer or any other guarantor of the Notes or upon any other action, occurrence
or circumstance whatsoever. In the event that the Issuer shall fail so to pay
any of the Guaranteed Obligations, the Company agrees to pay the same when due
to the holders entitled thereto, without demand, presentment, protest or notice
of any kind, in
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lawful money of the United States of America, at the place for payment specified
in the Notes and the Note Purchase Agreement. Each default in payment of
principal of, Make-Whole Amount, if any, or interest on any Note shall give rise
to a separate cause of action hereunder and separate suits may be brought
hereunder as each cause of action arises. The Company hereby agrees that the
Notes issued in connection with the Note Purchase Agreement may make reference
to this Guaranty.
The Company hereby agrees to pay and to indemnify and save each holder
harmless from and against any damage, loss, cost or expense (including
attorneys' fees) which such holder may incur or be subject to as a consequence,
direct or indirect, of (i) any breach by the Company or the Issuer of any
warranty, covenant, term or condition in, or the occurrence of any default
under, this Guaranty, the Notes or the Note Purchase Agreement, together with
all expenses resulting from the compromise or defense of any claims or
liabilities arising as a result of any such breach or default, and (ii) any
legal action commenced to challenge the validity or enforceability of this
Guaranty, the Notes or the Note Purchase Agreement.
Section 2.2. Obligations Absolute. The obligations of the Company hereunder
shall be primary, absolute, irrevocable and unconditional, irrespective of the
validity, regularity or enforceability of the Notes or of the Note Purchase
Agreement, shall not be subject to any counterclaim, setoff, deduction or
defense based upon any claim the Company may have against the Issuer or any
holder or otherwise, and shall remain in full force and effect without regard
to, and shall not be released, discharged or in any way affected by, any
circumstance or condition whatsoever (whether or not the Company shall have any
knowledge or notice thereof), including, without limitation: (a) any amendment,
modification of or supplement to the Note Purchase Agreement or the Notes
(except that the obligations of the Company hereunder shall apply to the Note
Purchase Agreement or the Notes as so amended, modified or supplemented) or any
assignment or transfer of any thereof or of any interest therein, or any
furnishing, acceptance or release of any security for the Notes; (b) any waiver,
consent, extension, indulgence or other action or inaction under or in respect
of the Notes or in respect of the Note Purchase Agreement; (c) any bankruptcy,
insolvency, readjustment, composition, liquidation or similar proceeding with
respect to the Issuer or its property; (d) any merger, amalgamation or
consolidation of any of the Company or any of its Subsidiaries with any other
Subsidiary or with any other entity or any sale, lease or transfer of any or all
of the assets of the Company or any of its Subsidiaries to any Person; (e) any
failure on the part of the Issuer for any reason to comply with or perform any
of the terms of any other agreement with the Company; or (f) any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a guarantor. The Company covenants that its obligations hereunder
will not be discharged except by payment in full of all of the Guaranteed
Obligations.
Section 2.3. Waiver. The Company unconditionally waives to the fullest
extent permitted by law, (a) notice of acceptance hereof, of any action taken or
omitted in reliance hereon and of any defaults by the Issuer in the payment of
any amounts due under the Notes or the Note Purchase Agreement, and of any of
the matters referred to in Section 2.2 hereof; (b) all notices which may be
required by statute, rule of law or otherwise to preserve any of the rights of
each holder against the Company, including, without limitation, presentment to
or demand for payment from the Issuer or the Company with respect to any Note,
notice to the Issuer or the Company of default or protest for nonpayment or
dishonor and the filing of claims with a court
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in the event of the bankruptcy of the Issuer; (c) any right to the enforcement,
assertion or exercise by any holder of any right, power or remedy conferred in
this Guaranty, the Note Purchase Agreement or the Notes; (d) any requirement or
diligence on the part of any holder; and (e) any other act or omission or thing
or delay to do any other act or thing which might in any manner or to any extent
vary the risk of the Company or which might otherwise operate as a discharge of
the Company.
Section 2.4. Obligations Unimpaired. The Company authorizes the holders,
without notice or demand to the Company and without affecting its obligations
hereunder, from time to time (a) to renew, compromise, extend, accelerate or
otherwise change the time for payment of, or otherwise change the terms of, all
or any part of the Notes or the Note Purchase Agreement or any other instrument
referred to therein; (b) to take and hold security for the payment of the Notes,
for the performance of this Guaranty or otherwise for the indebtedness
guaranteed hereby and to exchange, enforce, waive and release any such security;
(c) to apply any such security and to direct the order or manner of sale thereof
as the holders in their sole discretion may determine; (d) to obtain additional
or substitute endorsers or guarantors; (e) to exercise or refrain from
exercising any rights against the Company and others; and (f) to apply any sums,
by whomsoever paid or however realized, to the payment of the principal of,
Make-Whole Amount, if any, and interest on the Notes and any other Guaranteed
Obligations. The Company waives any right to require the holders to proceed
against any additional or substitute endorsers or guarantors or to pursue or
exhaust any security provided by the Issuer, the Company or any other person or
to pursue any other remedy available to such holders.
Section 2.5. Subrogation; Subordination.
(a) Subject to the final sentence of Section 2.5(c) hereof, the
Company will not (i) exercise any rights which it may have acquired by way
of subrogation under this Guaranty, by any payment made hereunder or
otherwise, or (ii) accept any payment on account of such subrogation
rights, or any rights of reimbursement, indemnity or any rights or recourse
to any security for the Notes or this Guaranty unless and until all of the
obligations, undertakings or conditions to be performed or observed by the
Issuer pursuant to the Notes and the Note Purchase Agreement at the time of
the Company's exercise of any such right shall have been performed,
observed or paid in full.
(b) For a period of one hundred eighty (180) days after the payment in
full of the Guaranteed Obligations, the Company will not, subject to the
final sentence of Section 2.5(c) hereof, exercise (x) any rights of
subrogation which it may at any time otherwise have as a result of this
Guaranty (whether statutory or otherwise) to the claims of the holders
against the Issuer or any other guarantor of the Guaranteed Obligations
(each referred to herein as the "Other Party") and all contractual,
statutory or common law rights of reimbursement, contribution or indemnity
from any Other Party which it may at any time otherwise have as a result of
this Guaranty; (y) any right to enforce any other remedy which the holders
now have or may hereafter have against any Other Party, any endorser or any
other guarantor of all or any part of the Guaranteed Obligations; and (z)
any claims (as such term is defined in the Bankruptcy Code) it may at any
time otherwise have against any Other Party arising from any transaction
whatsoever, including without limitation its right to assert or enforce any
such claims.
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(c) The Company hereby subordinates the payment of all Debt and other
obligations of the Issuer or any Other Party owing to the Company, whether
now existing or hereafter arising, including, without limitation, all
rights and claims described in Sections 2.5(a) and (b) hereof, to the
indefeasible payment in full of all Guaranteed Obligations. If the Required
Holder(s) so request, any such Debt or other obligations shall be enforced
and performance received by the Company as trustee for the holders and the
proceeds thereof shall be paid over to the holders to be credited and
applied upon the Guaranteed Obligations, whether matured or unmatured, as
may be directed by Required Holder(s), but without reducing or affecting in
any manner the liability of the Company under this Guaranty.
(d) If any amount or other payment is made to or accepted by the
Company in violation of the preceding Sections 2.5(a), (b) or (c), such
amount shall be deemed to have been paid to the Company for the benefit of,
and held in trust for the benefit of, the holders and shall be paid over to
the holders, in the form received (together with any necessary
endorsements), promptly upon request therefor, to be applied to the
Guaranteed Obligations, whether matured or unmatured, in such order as may
be directed by the Required Holder(s). The Company acknowledges that it
will receive benefits from the financing arrangements contemplated by the
Note Purchase Agreement and that the waiver set forth in this paragraph is
knowingly made in contemplation of such benefits.
Section 2.6. Reinstatement Of Guaranty. This Guaranty shall continue to be
effective, or be reinstated, as the case may be, if and to the extent at any
time payment, in whole or in part, of any of the sums due to any holder for
principal, Make-Whole Amount, if any, or interest on the Notes or any of the
other Guaranteed Obligations is rescinded or must otherwise be restored or
returned by such holder upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the Issuer, or upon or as a result of the
appointment of a custodian, receiver, trustee or other officer with similar
powers with respect to the Issuer or any substantial part of its property, or
otherwise, all as though such payments had not been made. If an event permitting
the acceleration of the maturity of the principal amount of the Notes shall at
any time have occurred and be continuing and such acceleration shall at such
time be prevented or the right of any holder to receive any payment under any
Note shall at such time be delayed or otherwise affected by reason of the
pendency against the Issuer of a case or proceeding under a bankruptcy or
insolvency law, for purposes of this Guaranty and the Company's obligations
hereunder, the maturity of such principal amount shall be deemed to have been
accelerated with the same effect as if the holders had accelerated the same in
accordance with the terms of the Note Purchase Agreement, and the Company shall
forthwith pay such accelerated principal amount, accrued interest and Make-Whole
Amount, if any, thereon and any other amounts guaranteed hereunder.
SECTION 3. AFFIRMATIVE COVENANTS. The Company covenants that so long as any of
the Notes are outstanding:
Section 3.1. Financial and Business Information. The Company shall deliver
to each holder that is an Institutional Investor:
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(a) Quarterly Statements -- within 60 days after the end of each
quarterly fiscal period in each fiscal year of the Company (other than the
last quarterly fiscal period of each such fiscal year), duplicate copies
of:
(1) a consolidated balance sheet of the Company and its
Subsidiaries as at the end of such quarter, and
(2) consolidated statements of earnings, retained earnings and
cash flows of the Company and its Subsidiaries for such quarter and
(in the case of the second and third quarters) for the portion of the
fiscal year ending with such quarter,
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all in reasonable
detail, prepared in accordance with GAAP applicable to quarterly financial
statements generally, and certified by a Senior Financial Officer of the
Company as fairly presenting, in all material respects, the consolidated
financial position of the companies being reported on and their results of
operations and cash flows, subject to changes resulting from year-end
adjustments, provided that delivery within the time period specified above
of copies of the Company's Quarterly Report on Form 10-Q prepared in
compliance with the requirements therefor and filed with the Securities and
Exchange Commission shall be deemed to satisfy the requirements of this
Section 3.1(a);
(b) Annual Statements -- within 120 days after the end of each fiscal
year of the Company, duplicate copies of,
(1) a consolidated balance sheet of the Company and its
Subsidiaries, as at the end of such year, and
(2) consolidated statements of earnings, retained earnings and
cash flows of the Company and its Subsidiaries, for such year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP,
and accompanied by an opinion thereon of independent chartered accountants
of recognized international standing, which opinion shall state that such
financial statements present fairly, in all material respects, the
consolidated financial position of the companies being reported upon and
their results of operations and cash flows and have been prepared in
conformity with GAAP, and that the examination of such accountants in
connection with such financial statements has been made in accordance with
generally accepted auditing standards in Canada and the United States, and
that such audit provides a reasonable basis for such opinion in the
circumstances, provided that delivery within the time period specified
above of the Company's Annual Report on Form 10-K for such fiscal year
(together with the Company's annual report to shareholders, if any,
prepared pursuant to Rule 14a-3 of the Exchange Act) prepared in compliance
with requirements therefor and filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements of this Section
3.1(b);
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(c) OSC, SEC and Other Reports -- promptly upon their becoming
available, one copy of (1) each financial statement, report, notice or
proxy statement sent by the Company or any Subsidiary to public securities
holders generally, and (2) each regular or periodic report, each
registration statement that has become effective (without exhibits except
as expressly requested by such holder), and each final prospectus and all
amendments thereto filed by the Company or any Subsidiary with the Ontario
Securities Commission or provincial securities regulatory authorities or
the Securities and Exchange Commission and of all press releases and other
statements made available generally by the Company or any Subsidiary to the
public concerning developments that are Material;
(d) Notice of Default or Event of Default -- promptly, and in any
event within five Business Days after a Responsible Officer of the Issuer
or the Company becoming aware of the existence of any Default or Event of
Default or that any Person has given any notice or taken any action with
respect to a claimed default hereunder or that any Person has given any
notice or taken any action with respect to a claimed default of the type
referred to in Section 11(g) of the Note Purchase Agreement, a written
notice specifying the nature and period of existence thereof and what
action the Company is taking or proposes to take with respect thereto;
(e) ERISA Matters -- promptly, and in any event within ten days after
a Responsible Officer of the Issuer or the Company becoming aware of any of
the following, a written notice setting forth the nature thereof and the
action, if any, that the Company or an ERISA Affiliate proposes to take
with respect thereto:
(1) with respect to any Plan, any reportable event, as defined in
Section 4043(c) of ERISA, for which notice thereof has not been waived
pursuant to the applicable regulations if such reportable event could
reasonably be expected to have a Material Adverse Effect, it being
agreed that an event required to be reported pursuant to Department of
Labor Regulation Section 4043.25, 4043.26 or 4043.33 shall, in any
event, be subject to the notice requirement of this Section 3.1(e)(1);
or
(2) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under
Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the receipt by the Company or any
ERISA Affiliate of a notice from a Multiemployer Plan that such action
has been taken by the PBGC with respect to such Multiemployer Plan; or
(3) any event, transaction or condition that could result in the
incurrence of any liability by the Company or any ERISA Affiliate
pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans, or in the
imposition of any Lien on any of the rights, properties or assets of
the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA
or such penalty or excise tax provisions, if such liability or Lien,
taken together with any other such liabilities or Liens then existing,
could reasonably be expected to have a Material Adverse Effect;
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(f) Notices from Governmental Authority -- promptly, and in any event
within 30 days of receipt thereof, copies of any notice to the Company or
any Subsidiary from any Federal, state or provincial Governmental Authority
relating to any order, ruling, statute or other law or regulation that
could reasonably be expected to have a Material Adverse Effect;
(g) Requested Information -- with reasonable promptness, such other
data and information relating to the business, operations, affairs,
financial condition, assets or properties of the Company or any of its
Subsidiaries or relating to the ability of the Company to perform its
obligations hereunder or the Issuer to perform its obligations under the
Note Purchase Agreement or the Notes as from time to time may be reasonably
requested by any holder.
The Company authorizes its independent chartered accountants to discuss the
affairs, finances and accounts of the Company and its Subsidiaries with the
representatives of the holders as provided in Section 7.3(b) of the Note
Purchase Agreement.
Section 3.2. Compliance with Law. The Company will, and will cause each of
its Subsidiaries to, comply with all laws, ordinances or governmental rules or
regulations to which each of them is subject, including, without limitation,
Environmental Laws, and will obtain and maintain in effect all licenses,
certificates, permits, franchises and other governmental authorizations
necessary to the ownership of their respective properties or to the conduct of
their respective businesses, in each case to the extent necessary to ensure that
non-compliance with such laws, ordinances or governmental rules or regulations
or failures to obtain or maintain in effect such licenses, certificates,
permits, franchises and other governmental authorizations could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Without limitation of the foregoing, the Company will, and will
cause each of its Subsidiaries to, not be a Person described in Section 1 of the
Anti-Terrorism Order, and not engage in any dealings or transactions, or
otherwise be associated, with any such Person.
Section 3.3. Insurance. The Company will, and will cause each of its
Subsidiaries to, maintain, with insurers reasonably determined by the Company in
good faith to be financially sound and reputable, insurance with respect to
their respective properties and businesses against such casualties and
contingencies, of such types, on such terms and in such amounts (including
deductibles, co-insurance and self-insurance, if adequate reserves are
maintained with respect thereto) as is customary in the case of entities of
established reputations engaged in the same or a similar business and similarly
situated.
Section 3.4. Maintenance of Properties. The Company will, and will cause
each of its Subsidiaries to, maintain and keep, or cause to be maintained and
kept, their respective properties in good repair, working order and condition
(other than ordinary wear and tear), so that the business carried on in
connection therewith may be properly conducted at all times, provided that this
Section shall not prevent the Company or any Subsidiary from discontinuing the
operation and the maintenance of any of its properties if such discontinuance is
desirable in the conduct of its business and the Company has concluded that such
discontinuance could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
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Section 3.5. Payment of Taxes and Claims. The Company will, and will cause
each of its Subsidiaries to, file all tax returns required to be filed in any
jurisdiction and to pay and discharge all taxes shown to be due and payable on
such returns and all other taxes, assessments, governmental charges, or levies
imposed on them or any of their properties, assets, income or franchises, to the
extent such taxes and assessments have become due and payable and before they
have become delinquent and all claims for which sums have become due and payable
that have or might become a Lien on properties or assets of the Company or any
Subsidiary, provided that neither the Company nor any Subsidiary need pay any
such tax, assessment, charge, levy or claim if (a) the amount, applicability or
validity thereof is contested by the Company or such Subsidiary on a timely
basis in good faith and in appropriate proceedings, and the Company or a
Subsidiary has established adequate reserves therefor in accordance with GAAP on
the books of the Company or such Subsidiary or (b) the nonpayment of all such
taxes and assessments in the aggregate could not reasonably be expected to have
a Material Adverse Effect.
Section 3.6. Corporate Existence, Etc. The Company will at all times
preserve and keep in full force and effect its corporate existence. Subject to
Sections 10.4, 10.5 and 10.7 of the Note Purchase Agreement, the Company will at
all times preserve and keep in full force and effect the legal existence of each
of its Subsidiaries (unless merged, consolidated or amalgamated into or with the
Company or another Subsidiary) and all rights and franchises of the Company and
its Subsidiaries unless, in the good faith judgment of the Company, the
termination of or failure to preserve and keep in full force and effect such
legal existence, right or franchise could not, individually or in the aggregate,
have a Material Adverse Effect.
SECTION 4. NEGATIVE COVENANTS.
The Company covenants that so long as any of the Notes are outstanding:
Section 4.1. Nature of Business. The Company will not, and will not permit
any of its Subsidiaries to, engage in any business if, as a result, the general
nature of the business in which the Company and its Subsidiaries, taken as a
whole, would then be engaged would be substantially changed from the general
nature of the business in which the Company and its Subsidiaries, taken as a
whole, are engaged on the date of the Closing.
Section 4.2. Transactions with Affiliates. The Company will not, and will
not permit any Subsidiary to, enter into directly or indirectly any Material
transaction or Material group of related transactions (including, without
limitation, the purchase, lease, sale or exchange of properties of any kind or
the rendering of any service) with any Affiliate (other than the Company or
another Subsidiary), except in the ordinary course and pursuant to the
reasonable requirements of the Company's or such Subsidiary's business and upon
fair and reasonable terms no less favorable to the Company or such Subsidiary
than would be obtainable in a comparable arm's-length transaction with a Person
not an Affiliate.
Section 4.3. Most Favored Lender Status. The Company will not, and will not
permit any Subsidiary to, enter into, assume or otherwise become bound or
obligated under any agreement evidencing, securing, guaranteeing or otherwise
relating to Designated Debt that contains, or amend any such agreement to
contain, one or more Additional Covenants or Additional Defaults, unless the
Company or such Subsidiary has offered to make an amendment
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to this Guaranty and the Note Purchase Agreement, in form and substance
satisfactory to the Required Holder(s), to add to or amend this Guaranty and the
Note Purchase Agreement to contain such Additional Covenants or Additional
Defaults; provided, however, in the event that the Company or any Subsidiary
enters into, assumes or otherwise becomes bound or obligated under, or so
amends, any such agreement without making such offer, or if such offer was made
and has not been rejected by the Required Holder(s), this Guaranty and the Note
Purchase Agreement shall, without any further action on the part of the Company,
the Issuer or any of the holders, be deemed to be amended automatically to
include each Additional Covenant and each Additional Default contained in such
agreement. The Company further covenants to, and to cause each of its
Subsidiaries to, promptly execute and deliver at its expense (including the
reasonable fees and expenses of counsel for the holders) an amendment to this
Guaranty and the Note Purchase Agreement in form and substance satisfactory to
the Required Holder(s) evidencing the amendments of this Guaranty and the Note
Purchase Agreement to include such Additional Covenants and Additional Defaults,
provided that the execution and delivery of such amendments shall not be a
precondition to the effectiveness of such amendment as provided for in this
Section 4.3, but shall merely be for the convenience of the parties hereto.
Section 4.4. Purchase of Notes. The Company will not, and will not permit
any Subsidiary to, purchase, redeem, prepay or otherwise acquire, directly or
indirectly, any of the outstanding Notes except pursuant to an offer to purchase
made by the Company or a Subsidiary pro rata to the holders of all Notes at the
time outstanding upon the same terms and conditions. Any such offer shall
provide each holder with sufficient information to enable it to make an informed
decision with respect to such offer, and shall remain open for at least 10
Business Days. If the holders of more than 25% of the principal amount of the
Notes then outstanding accept such offer, the Company shall, or shall cause such
Subsidiary to, promptly notify the remaining holders of such fact and the
expiration date for the acceptance by holders of Notes of such offer shall be
extended by the number of days necessary to give each such remaining holder at
least 10 Business Days from its receipt of such notice to accept such offer.
Section 4.5. Defaults under Note Purchase Agreement. The Company will not,
and will not permit any Subsidiary to, take or fail to take any action if the
taking or failing to take such action would cause a Default or an Event of
Default to occur or continue to exist under the Note Purchase Agreement. Without
limiting the generality of the foregoing, the Company will, and will cause each
of its Subsidiaries to, take, or refrain from taking, any action, as from time
to time requested by the Issuer, in order to enable the Issuer to cause the
Company and its Subsidiaries to comply with the provisions of Sections 7, 9, 10
and 11 of the Note Purchase Agreement.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each Purchaser that:
Section 5.1. Organization; Power and Authority. The Company is a
corporation duly incorporated and validly existing under the laws of Canada, and
is duly qualified as a foreign corporation and is in good standing in each
jurisdiction in which such qualification is required by law, other than those
jurisdictions as to which the failure to be so qualified or in good standing
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse
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Effect. The Company has the corporate power and authority to own or hold under
lease the properties it purports to own or hold under lease, to transact the
business it transacts and proposes to transact, to execute and deliver this
Guaranty and to perform the provisions hereof.
Section 5.2. Authorization, Etc. This Guaranty has been duly authorized by
all necessary corporate action on the part of the Company, and this Guaranty
constitutes, a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as such enforceability
may be limited by (a) applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and (b) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
Section 5.3. Disclosure. Except as disclosed in Schedule 5.3, this
Guaranty, the documents, certificates or other writings delivered to the
Purchasers by or on behalf of the Company or the Issuer in connection with the
transactions contemplated by the Note Purchase Agreement and the financial
statements listed in Schedule 5.5, taken as a whole, do not contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein not misleading in light of the circumstances under
which they were made. Except as expressly described in Schedule 5.3, or in one
of the documents, certificates or other writings identified therein, or in the
financial statements listed in Schedule 5.5, since December 31, 2004, there has
been no change in the financial condition, operations, business, properties or
prospects of the Company or any Subsidiary except changes that, individually or
in the aggregate, could not reasonably be expected to have a Material Adverse
Effect. There is no fact known to the Company that could reasonably be expected
to have a Material Adverse Effect that has not been set forth herein or in the
other documents, certificates and other writings delivered to each Purchaser by
or on behalf of the Company specifically for use in connection with the
transactions contemplated hereby.
Section 5.4. Organization and Ownership of Shares of Subsidiaries;
Affiliates. (a) Schedule 5.4 contains (except as noted therein) complete and
correct lists (1) of the Company's Subsidiaries, showing, as to each Subsidiary,
the correct name thereof, the jurisdiction of its organization, the percentage
of shares of each class of its share capital or similar equity interests
outstanding owned by the Company and each other Subsidiary and, as of the date
of the Closing, whether such Subsidiary is a Material Subsidiary, (2) of the
Company's Affiliates, other than Subsidiaries, and (3) of the Company's
directors and senior officers.
(b) All of the outstanding share capital or similar equity interests of
each Subsidiary shown in Schedule 5.4 as being owned by the Company and its
Subsidiaries have been validly issued, are fully paid and nonassessable and are
owned by the Company or another Subsidiary free and clear of any Lien (except as
otherwise disclosed in Schedule 5.4).
(c) Each Subsidiary identified in Schedule 5.4 is a corporation or other
legal entity duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization, and is duly qualified as a foreign
corporation or other legal entity and is in good standing in each jurisdiction
in which such qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Each such
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Subsidiary has the corporate or other power and authority to own or hold under
lease the properties it purports to own or hold under lease and to transact the
business it transacts and proposes to transact.
(d) No Subsidiary is a party to, or otherwise subject to any legal
restriction or any agreement (other than the Note Purchase Agreement, the Notes,
the agreements listed on Schedule 5.4 and customary limitations imposed by
corporate law and insurance regulatory statutes or other statutes governing the
organization of legal entities) restricting the ability of such Subsidiary to
pay dividends out of profits or make any other similar distributions of profits
to the Company or any of its Subsidiaries that owns any outstanding share
capital or similar equity interests of such Subsidiary.
Section 5.5. Financial Statements. The Company has delivered to each
Purchaser copies of the financial statements of the Company and its Subsidiaries
listed on Schedule 5.5. All of said financial statements (including in each case
the related schedules and notes) fairly present, in all material respects, the
consolidated financial position of the Company and its Subsidiaries as of the
respective dates specified in such Schedule and the consolidated results of
their operations and cash flows for the respective periods so specified and have
been prepared in accordance with GAAP consistently applied throughout the
periods involved except as set forth in the notes thereto (subject, in the case
of any interim financial statements, to normal year-end adjustments).
Section 5.6. Compliance with Laws, Other Instruments, Etc. The execution,
delivery and performance by the Company of this Guaranty and the consummation of
the Reorganization will not (a) contravene, result in any breach of, or
constitute a default under, or result in the creation of any Lien in respect of
any property of the Company or any Subsidiary under, any indenture, mortgage,
deed of trust, loan, purchase or credit agreement, lease, corporate charter or
by-laws, or any other Material agreement or instrument to which the Company or
any Subsidiary is bound or by which the Company or any Subsidiary or any of
their respective properties may be bound or affected, (b) conflict with or
result in a breach of any of the terms, conditions or provisions of any order,
judgment, decree or ruling of any court, arbitrator or Governmental Authority
applicable to the Company or any Subsidiary or (c) violate any provision of any
statute or other rule or regulation of any Governmental Authority applicable to
the Company or any Subsidiary.
Section 5.7. Governmental Authorizations, Etc. No consent, approval or
authorization of, or registration, filing or declaration with, any Governmental
Authority is required in connection with the execution, delivery or performance
by the Company of this Guaranty or the consummation of the Reorganization, other
than those consents, approvals or authorizations obtained and those
registrations, filings or declarations made on or before the date of the
Closing.
Section 5.8. Litigation; Observance of Agreements, Statutes and Orders. (a)
Except as disclosed in the financial statements described in Schedule 5.5, there
are no actions, suits or other proceedings pending or, to the knowledge of the
Company, threatened against or affecting the Company or any Subsidiary or any
property of the Company or any Subsidiary in any court or
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before any arbitrator of any kind or before or by any Governmental Authority
that, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
(b) Neither the Company nor any Subsidiary is in default under any term of
any agreement or instrument to which it is a party or by which it is bound, or
any order, judgment, decree or ruling of any court, arbitrator or Governmental
Authority or is in violation of any applicable law, ordinance, rule or
regulation (including, without limitation, Environmental Laws) of any
Governmental Authority, which default or violation, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
Section 5.9. Taxes. The Company and its Subsidiaries have filed all income
tax returns that are required to have been filed in any jurisdiction, and have
paid all taxes shown to be due and payable on such returns and all other taxes
and assessments levied upon them or their properties, assets, income or
franchises, to the extent such taxes and assessments have become due and payable
and before they have become delinquent, except for any taxes and assessments (a)
the amount of which is not, individually or in the aggregate, Material or (b)
the amount, applicability or validity of which is currently being contested in
good faith by appropriate proceedings and with respect to which the Company or a
Subsidiary, as the case may be, has established adequate reserves in accordance
with GAAP. The Company knows of no basis for any other tax or assessment that
could reasonably be expected to have a Material Adverse Effect. The charges,
accruals and reserves on the books of the Company and its Subsidiaries in
respect of United States and Canadian federal, state, provincial or other taxes
for all fiscal periods are adequate. The Canadian federal and provincial income
tax liabilities of the Company and its Subsidiaries have been determined by the
Canadian Customs and Revenue Agency and corresponding provincial taxing
authorities by the issuance of notices of assessment for all fiscal years up to
and including the fiscal year ended December 31, 2004, and the Company and its
Subsidiaries have paid any taxes indicated to be owing on such notices of
assessment. The United States federal income tax liabilities of the Company and
its Subsidiaries have been determined by the Internal Revenue Service and paid
for all fiscal years up to and including the fiscal year ended December 31,
2004.
Section 5.10. Title to Property; Leases. The Company and its Subsidiaries
have good and sufficient title to their respective properties that, individually
or in the aggregate, are Material, including all such properties reflected in
the most recent audited balance sheet referred to in Section 5.5 or purported to
have been acquired by the Company or any Subsidiary after said date (except as
sold or otherwise disposed of in the ordinary course of business), in each case
free and clear of Liens prohibited by this Guaranty. All leases that,
individually or in the aggregate, are Material are valid and subsisting and are
in full force and effect in all material respects.
Section 5.11. Licenses, Permits, Etc. Except as disclosed in the financial
statements described in Schedule 5.5,
(a) the Company and its Subsidiaries own, possess or are licensed to
use all licenses, permits, franchises, authorizations, patents, copyrights,
service marks, trademarks, trade names and domain names, or rights thereto,
that, individually or in the aggregate, are Material, without known
conflict with the rights of others;
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(b) to the best knowledge of the Company, no product of the Company
infringes in any material respect any license, permit, franchise,
authorization, patent, copyright, service mark, trademark, trade name,
domain name or other right owned by any other Person; and
(c) to the best knowledge of the Company, there is no Material
violation by any Person of any right of the Company or any of its
Subsidiaries with respect to any patent, copyright, service mark,
trademark, trade name, domain name or other right owned or used by the
Company or any of its Subsidiaries.
Section 5.12. Compliance with ERISA. (a) All Canadian pension plans of the
Company and its Subsidiaries have been established, operated, administered and
maintained in compliance with all applicable laws, regulations and orders
applicable thereto except where the failure to comply could not reasonably be
expected to have a Material Adverse Effect. All premiums, contributions and any
other amounts required by applicable Canadian pension plan documents or
applicable laws have been paid or accrued as required, except where the failure
to pay such premiums, contributions and amounts could not reasonably be expected
to have a Material Adverse Effect.
(b) The Company and each ERISA Affiliate have operated and administered
each employee benefit plan (as defined in Section 3(3) of ERISA) in compliance
with all applicable laws except for such instances of noncompliance as have not
resulted in and could not reasonably be expected to result in a Material Adverse
Effect. Neither the Company nor any ERISA Affiliate has incurred any liability
pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of
the Code relating to employee benefit plans (as defined in Section 3 of ERISA),
and no event, transaction or condition has occurred or exists that could
reasonably be expected to result in the incurrence of any such liability by the
Company or any ERISA Affiliate, or in the imposition of any Lien on any of the
rights, properties or assets of the Company or any ERISA Affiliate, in either
case pursuant to Title I or IV of ERISA or to such penalty or excise tax
provisions or to Section 401(a)(29) or 412 of the Code, other than such
liabilities or Liens as could not, individually or in the aggregate, reasonably
be expected to result in a Material Adverse Effect.
(c) The present value of the aggregate benefit liabilities under each of
the Plans (other than Multiemployer Plans), determined as of the end of such
Plan's most recently ended plan year on the basis of the actuarial assumptions
specified for funding purposes in such Plan's most recent actuarial valuation
report, did not exceed the aggregate current value of the assets of such Plan
allocable to such benefit liabilities by more than $1,000,000 in the aggregate
for all Plans. The term "benefit liabilities" has the meaning specified in
Section 4001 of ERISA and the terms "current value" and "present value" have the
meanings specified in Section 3 of ERISA.
(d) The Company and its ERISA Affiliates have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal liabilities) under
Section 4201 or 4204 of ERISA in respect of Multiemployer Plans that could,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.
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(e) The expected post-retirement benefit obligation (determined as of the
last day of the Company's most recently ended fiscal year in accordance with
Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by Section 4980B of
the Code) of the Company and its Subsidiaries is not Material.
(f) The execution and delivery of this Guaranty will not involve any
transaction that is subject to the prohibitions of Section 406(a) of ERISA or in
connection with which a tax could be imposed pursuant to Section
4975(c)(1)(A)-(D) of the Code for which an exemption is not available. The
representation by the Company in the first sentence of this Section 5.12(f) is
made in reliance upon and subject to the accuracy of each Purchaser's
representation in Section 6.2 of the Note Purchase Agreement as to the sources
of the funds used to pay the purchase price of the Notes to be purchased by such
Purchaser, and is made only as of the date each Purchaser's representation in
such Section 6.2 is made.
Section 5.13. Private Offering by the Company. Neither the Company nor
anyone acting on its behalf has offered the Notes or any similar securities for
sale to, or solicited any offer to buy any of the same from, or otherwise
approached or negotiated in respect thereof with, any Person other than the
Purchasers and not more than 45 other Institutional Investors of the types
described in clause (c) of the definition thereof, each of which has been
offered the Notes at a private sale for investment. Neither the Company nor
anyone acting on its behalf has taken, or will take, any action that would
subject the issuance or sale of the Notes to the registration requirements of
Section 5 of the Securities Act or the prospectus and registration requirements
of securities legislation of any of the provinces or territories of Canada.
Section 5.14. [Intentionally Omitted].
Section 5.15. Existing Debt; Future Liens. (a) Except as described therein,
the financial statements described in Schedule 5.5 set forth a complete and
correct list of all outstanding Debt of the Company and its Subsidiaries as of
December 31, 2005 since which date there has been no Material change in the
amounts, interest rates, sinking funds, installment payments or maturities of
the Debt of the Company or its Subsidiaries. Neither the Company nor any
Subsidiary is in default and no waiver of default is currently in effect, in the
payment of any principal or interest on any Debt of the Company or such
Subsidiary and no event or condition exists with respect to any Debt of the
Company or any Subsidiary that would permit (or that with notice or the lapse of
time, or both, would permit) one or more Persons to cause such Debt to become
due and payable before its stated maturity or before its regularly scheduled
dates of payment.
(b) Except as disclosed in the financial statements described in Schedule
5.5, neither the Company nor any Subsidiary has agreed or consented to cause or
permit in the future (upon the happening of a contingency or otherwise) any of
its property, whether now owned or hereafter acquired, to be subject to a Lien
not permitted by Section 10.3 of the Note Purchase Agreement.
Section 5.16. Foreign Assets Control Regulations, Etc. The Company's
execution, delivery and performance of this Guaranty and the consummation of the
Reorganization will not
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violate the Anti-Terrorism Order, the Patriot Act or the Trading with the Enemy
Act, as amended, or any of the foreign assets control regulations of the United
States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any
enabling legislation or executive order relating thereto.
Section 5.17. Status under Certain Statutes. Neither the Company nor any
Subsidiary is required to be registered under the Investment Company Act of
1940, as amended, the Public Utility Holding Company Act of 1935, as amended,
the ICC Termination Act of 1995, as amended, or the Federal Power Act, as
amended.
Section 5.18. Environmental Matters. Neither the Company nor any Subsidiary
has knowledge of any claim or has received any notice of any claim, and no
proceeding has been instituted raising any claim against the Company or any of
its Subsidiaries or any of their respective real properties now or formerly
owned, leased or operated by any of them or other assets, alleging any damage to
the environment or violation of any Environmental Laws, except, in each case,
such as could not reasonably be expected to result in a Material Adverse Effect.
Except as otherwise disclosed to each Purchaser in writing:
(a) neither the Company nor any Subsidiary has knowledge of any facts
which would give rise to any claim, public or private, of violation of
Environmental Laws or damage to the environment emanating from, occurring
on or in any way related to real properties now or formerly owned, leased
or operated by any of them or to other assets or their use, except, in each
case, such as could not reasonably be expected to result in a Material
Adverse Effect;
(b) neither the Company nor any of its Subsidiaries has stored any
Hazardous Materials on real properties now or formerly owned, leased or
operated by any of them or has disposed of any Hazardous Materials in a
manner contrary to any Environmental Laws in each case in any manner that
could reasonably be expected to result in a Material Adverse Effect; and
(c) all buildings on all real properties now owned, leased or operated
by the Company or any of its Subsidiaries are in compliance with applicable
Environmental Laws, except where failure to comply could not reasonably be
expected to result in a Material Adverse Effect.
Section 5.19. Guaranty Ranks Pari Passu. The obligations of the Company
under this Guaranty rank at least pari passu in right of payment with all other
Senior Debt (actual or contingent) of the Company, including, without
limitation, all Senior Debt of the Company described in Schedule 5.15.
Section 5.20. Permitted Senior Indebtedness. The obligations of the Company
under this Guaranty constitute Permitted Senior Indebtedness, as defined in the
Subordinated Debentures.
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SECTION 6. PAYMENTS FREE AND CLEAR OF TAXES.
(a) The Company, for the benefit of the holders, agrees that in the event
payments, if any, made by the Company hereunder to any holder are subject to any
present or future tax, duty, assessment, impost, levy, withholding or other
similar charge (a "Relevant Tax") imposed upon such holder by the government of
any country or jurisdiction (or any authority or political subdivision therein
or thereof) other than any tax based on or measured by net income or capital
imposed on any holder by the country in which such holder is a resident for
income tax purposes (the "Resident Country"), from or through which payments
hereunder or on or in respect of the Notes are actually made (each a "Taxing
Jurisdiction"), the Company will pay to such holder such additional amounts
("Tax Indemnity Amounts") as may be necessary in order that the net amounts paid
to such holder pursuant to the terms of this Guaranty after imposition of any
such Relevant Tax shall be not less than the amounts specified in the Note
Purchase Agreement or the Notes to be then due and payable (after giving effect
to the exclusion for Relevant Taxes imposed by the government of the Resident
Country), provided that the Company shall not be obliged to pay such Tax
Indemnity Amounts to any holder of a Note in respect of Relevant Taxes to the
extent such Relevant Taxes exceed the Relevant Taxes that would have been
payable:
(1) had such holder not been a resident of Canada within the
meaning of the Income Tax Act (Canada) or not used or held such Note
in the course of carrying on a business in Canada within the meaning
of the Income Tax Act (Canada); or
(2) had such holder not dealt with the Company on a non-arm's
length basis (within the meaning of the Income Tax Act (Canada)) in
connection with any such payment; or
(3) had such holder not had any connection with such Taxing
Jurisdiction or any territory or political subdivision thereof other
than the mere holding of a Note (or the receipt of any payments in
respect thereof) or activities incidental thereto (including
enforcement thereof); or
(4) but for the delay or failure by such holder (following a
written request by the Company) in the filing with an appropriate
Governmental Authority or otherwise of forms, certificates, documents,
applications or other reasonably required evidence, that is required
to be filed by such holder to avoid or reduce such Relevant Taxes and
that in the case of any of the foregoing would not result in any
confidential or proprietary income tax return information being
revealed, either directly or indirectly, to any Person (collectively,
"Forms") and such delay or failure could have been lawfully avoided by
such holder, provided that such holder shall be deemed to have
satisfied the requirements of this clause (4) upon the good faith
completion and submission of such Forms as may be specified in a
written request of the Company no later than 45 days after receipt by
such holder of such written request (which written request shall be
accompanied by a copy of such Forms and all applicable instructions
and, if any
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such Forms or instructions shall not be in the English language, an
English translation thereof);
and provided further that in no event shall the Company be obligated to pay any
Tax Indemnity Amount to any holder not resident for income tax purposes in the
United States of America or any other jurisdiction in which an original
Purchaser is resident for tax purposes on the date of Closing in excess of the
amounts that the Company would have been obligated to pay if such holder had
been a resident of the United States of America or such other jurisdiction, as
applicable, for income tax purposes for purposes of, and eligible for the
benefits of, any double taxation treaty from time to time in effect between the
United States of America or such other jurisdiction and the relevant Taxing
Jurisdiction.
(b) Within 60 days after the date of any payment by the Company of any
Relevant Tax in respect of any payment under this Guaranty, the Company shall
furnish to each holder of a Note the original tax receipt for the payment of
such Relevant Tax (or if such original tax receipt is not available, such other
evidence as may be acceptable to the holders), together with such other
documentary evidence with respect to such payments as may be reasonably
requested from time to time by any holder of a Note.
(c) If the Company has made a payment to or on account of any holder of a
Note pursuant to Section 6(a) above and such holder, in such holder's reasonable
discretion, determines that it is entitled to a refund of the Relevant Tax to
which such payment is attributable from the Governmental Authority to which the
payment of the Relevant Tax was made and such refund can be obtained by filing
one or more Forms, then (i) such holder shall, as soon as practicable after
receiving a written request therefor from the Company (which request shall
specify in reasonable detail the Forms to be filed), file such Forms and (ii)
upon receipt of such refund, if any, provided no Default or Event of Default
then exists, promptly pay over such refund to the Company.
For the avoidance of doubt, nothing herein shall (a) restrict the right of
any holder to arrange its tax affairs as it shall deem appropriate or (b)
require any holder to disclose any information regarding its tax affairs or
computations to the Company or any other Person other than as shall be necessary
to permit the Company to determine whether the payment of any Tax Indemnity
Amount would be required to be made pursuant to the provisions of this Section
6; provided, however, no holder shall be obligated to disclose any of its tax
returns to the Company or any other Person.
SECTION 7. EXPENSES, ETC.
Section 7.1. Transaction Expenses. Whether or not the transactions
contemplated hereby are consummated, the Company will pay all reasonable costs
and expenses (including reasonable attorneys' fees of a special counsel and, if
reasonably required, local or other counsel) incurred by each Purchaser or
holder in connection with such transactions and any amendments, waivers or
consents under or in respect of this Guaranty (whether or not such amendment,
waiver or consent becomes effective), including, without limitation: (a) the
reasonable costs and expenses incurred in enforcing or defending (or determining
whether or how to enforce or defend) any rights under this Guaranty or in
responding to any subpoena or other legal process or
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informal investigative demand issued in connection with this Guaranty, or by
reason of being a holder, and (b) the reasonable costs and expenses, including
reasonable financial advisors' fees, incurred in connection with the insolvency
or bankruptcy of the Company or any Subsidiary or in connection with any
work-out or restructuring of the transactions contemplated hereby and by the
Notes. The Company will pay, and will save each Purchaser and each other holder
harmless from, all claims in respect of any fees, costs or expenses, if any, of
brokers and finders (other than those retained by such Person).
Section 7.2. Survival. The obligations of the Company under this Section 7
will survive the payment or transfer of any Note, the enforcement, amendment or
waiver of any provision of this Guaranty, the Note Purchase Agreement or the
Notes, and the termination of this Guaranty.
SECTION 8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall survive the
execution and delivery of this Guaranty, the purchase or transfer by any
Purchaser or subsequent holder of any Note or portion thereof or interest
therein and the payment of any Note, and may be relied upon by any subsequent
holder, regardless of any investigation made at any time by or on behalf of any
Purchaser or any subsequent holder. All statements contained in any certificate
or other instrument delivered by or on behalf of the Company pursuant to this
Guaranty shall be deemed representations and warranties of the Company under
this Guaranty. Subject to the preceding sentence, this Guaranty embodies the
entire agreement and understanding between the Purchasers and the Company and
supersede all prior agreements and understandings relating to the subject matter
hereof.
SECTION 9. AMENDMENT AND WAIVER.
Section 9.1. Requirements. This Guaranty may be amended, and the observance
of any term hereof or of the Notes may be waived (either retroactively or
prospectively), with (and only with) the written consent of the Company (except
amendments which occur pursuant to Section 4.3 hereof) and any holder or holders
of not less than 51% in principal amount of Notes at the time outstanding,
except that no such amendment or waiver may, without the written consent of the
holder of each Note at the time outstanding affected thereby, amend any of
Sections 6 or 9 hereof.
Section 9.2. Solicitation of Holders of Notes.
(a) Solicitation. The Company will provide each holder (irrespective of the
amount of Notes then owned by it) with sufficient information, sufficiently far
in advance of the date a decision is required, to enable such holder to make an
informed and considered decision with respect to any proposed amendment, waiver
or consent in respect of any of the provisions hereof. The Company will deliver
executed or true and correct copies of each amendment, waiver or consent
effected pursuant to the provisions of this Section 9 to each holder of
outstanding Notes promptly following the date on which it is executed and
delivered by, or receives the consent or approval of, the requisite holders of
Notes.
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(b) Payment. The Company will not directly or indirectly pay or cause to be
paid any remuneration, whether by way of supplemental or additional interest,
fee or otherwise, or grant any security, to any holder as consideration for or
as an inducement to the entering into by such holder of any waiver or amendment
of any of the terms and provisions hereof, unless such remuneration is
concurrently paid, or security is concurrently granted, on the same terms,
ratably to each holder even if such holder did not consent to such waiver or
amendment.
(c) Consent in Contemplation of Transfer. Any consent made pursuant to this
Section 9 by a holder that has transferred or has agreed to transfer its Notes
to, or has had or has agreed to have its Notes prepaid by, the Company, any
Subsidiary or any Affiliate of the Company and has provided or has agreed to
provide such written consent as a condition to such transfer or prepayment shall
be void and of no force or effect except solely as to such holder, and any
amendments effected or waivers granted or to be effected or granted that would
not have been or would not be so effected or granted but for such consent (and
the consents of all other holders that were acquired under the same or similar
conditions) shall be void and of no force or effect except solely as to such
holder.
Section 9.3. Binding Effect, Etc. Any amendment or waiver consented to as
provided in this Section 9 applies equally to all holders of Notes affected
thereby and is binding upon them and upon each future holder of any Note and
upon the Company without regard to whether such Note has been marked to indicate
such amendment or waiver. No such amendment or waiver will extend to or affect
any obligation, covenant, agreement, Default or Event of Default not expressly
amended or waived or impair any right consequent thereon. No course of dealing
between the Company and the holder of any Note nor any delay in exercising any
rights hereunder or under any Note shall operate as a waiver of any rights of
any holder of such Note. As used herein, the term "this Guaranty" and references
thereto shall mean this Guaranty as it may from time to time be amended or
supplemented.
Section 9.4. Notes Held by Company, Etc. Solely for the purpose of
determining whether the holders of the requisite percentage of the aggregate
principal amount of Notes then outstanding approved or consented to any
amendment, waiver or consent to be given under this Guaranty, or have directed
the taking of any action provided herein or in the Notes to be taken upon the
direction of the holders of a specified percentage of the aggregate principal
amount of Notes then outstanding, Notes directly or indirectly owned by the
Company or any of its Subsidiaries or Affiliates shall be deemed not to be
outstanding.
SECTION 10. NOTICES.
All notices and communications provided for hereunder shall be in writing
and sent (a) by facsimile if the sender on the same day sends a confirming copy
of such notice by a recognized overnight delivery service (charges prepaid), or
(b) by registered or certified mail with return receipt requested (postage
prepaid), or (c) by a recognized overnight delivery service (charges prepaid).
Any such notice must be sent:
(1) if to a Purchaser or its nominee, to such Purchaser or its
nominee at the address specified for such communications in Schedule A
to the Note
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Purchase Agreement, or at such other address as such Purchaser or its
nominee shall have specified to the Company in writing,
(2) if to any other holder of any Note, to such holder at such
address as such other holder shall have specified to the Company in
writing, or
(3) if to the Company, to Hub International Limited, 55 East
Jackson Boulevard, Chicago, Illinois, 60604, Attention: Marianne
Paine, Chief Legal Officer, or at such other address as the Company
shall have specified to the holder of each Note in writing.
Notices under this Section 10 will be deemed given only when actually received.
SECTION 11. REPRODUCTION OF DOCUMENTS.
This Guaranty and all documents relating hereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by each Purchaser at the Closing, and (c)
financial statements, certificates and other information previously or hereafter
furnished to any holder, may be reproduced by such holder by any photographic,
photostatic, microfilm, microcard, miniature photographic or other similar
process and such holder may destroy any original document so reproduced. To the
extent permitted by applicable law, any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made by such holder in the regular course of business) and any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence. This Section 11 shall not prohibit the
Company or any other holder of Notes from contesting any such reproduction to
the same extent that it could contest the original, or from introducing evidence
to demonstrate the inaccuracy of any such reproduction.
SECTION 12. SUBMISSION TO JURISDICTION, JUDGMENTS, ETC.
Section 12.1. Submission to Jurisdiction. The Company hereby irrevocably
consents and submits to the non-exclusive jurisdiction of any court located
within the State of New York sitting in the Borough of Manhattan and the United
States District Court for the Southern District of New York and irrevocably
agrees that all actions or proceedings relating to this Guaranty may be
litigated in such courts and the Company irrevocably waives any objection which
it may have based on improper venue or forum non conveniens to the conduct of
any proceeding in any such court. The Company hereby irrevocably appoints, with
respect to any suit or proceeding that may be initiated hereunder, Hub
International Northeast, Inc. as the Company's agent for the purpose of
accepting service of process within the State of New York and agrees to retain
and consents that all such service of process be made by mail or messenger
directed to its General Counsel at its office located at 1065 Avenue of the
Americas, New York, New York, 10018, with a copy to the Company's Chief Legal
Officer at its office located at 55 East Jackson Boulevard, Chicago, Illinois,
60604 or at such other address of Hub International Northeast located in the
State of New York, as may be designated by the Company by notice to each holder
and that service so made shall be deemed to be completed upon the earlier of
actual receipt or three Business Days after the same shall have been posted to
the Company. Nothing contained
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in this Section 12.1 shall affect the right of any holder to serve legal process
in any other manner permitted by law or to bring any action or proceeding in the
courts of any jurisdiction against the Company or to enforce a judgment obtained
in the courts of any other jurisdiction.
Section 12.2. Judgments. Any payment made by the Company to any holder or
for the account of any such holder in respect of any amount payable by the
Company in lawful currency of the United States of America, which payment is
made in a foreign currency, whether pursuant to any judgment or order of a court
or tribunal or otherwise, shall constitute a discharge of the obligations of the
Company only to the extent of the amount of lawful currency of the United States
of America which may be purchased with such other foreign currency on the day of
payment. The Company shall, as a separate and independent obligation, which
shall not be merged in any such judgment or order, pay or cause to be paid the
amount payable in lawful currency of the United States of America and not so
discharged in accordance with the foregoing.
SECTION 13. MISCELLANEOUS.
Section 13.1. Successors and Assigns. All covenants and other agreements
contained in this Guaranty by or on behalf of any of the parties hereto bind and
inure to the benefit of their respective successors and assigns (including,
without limitation, any subsequent holder of a Note) whether so expressed or
not.
Section 13.2. Payments Due on Non-Business Days. Anything in this Guaranty
to the contrary notwithstanding, any payment of principal of or Make-Whole
Amount or interest on any Note that is due on a date other than a Business Day
shall be made on the next succeeding Business Day without including the
additional days elapsed in the computation of the interest payable on such next
succeeding Business Day.
Section 13.3. Severability. Any provision of this Guaranty that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by law)
not invalidate or render unenforceable such provision in any other jurisdiction.
Section 13.4. Construction. (a) Each covenant contained herein shall be
construed (absent express provision to the contrary) as being independent of
each other covenant contained herein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. Where any provision herein refers to action
to be taken by any Person, or which such Person is prohibited from taking, such
provision shall be applicable whether such action is taken directly or
indirectly by such Person.
(b) Where the character or amount of any asset or liability or item of
income or expense is required to be determined or any consolidation or other
accounting computation is required to be made for the purposes of this Guaranty,
the same shall be done in accordance with GAAP, to the extent applicable, except
where such principles are inconsistent with the requirements of this Guaranty.
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Section 13.5. Counterparts. This Guaranty may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one instrument. Each counterpart may consist of a number of copies
hereof, each signed by less than all, but together signed by all, of the parties
hereto.
Section 13.6. Currency. All moneys referred to in this Guaranty shall mean
money which at the time is lawful money of the United States of America.
Section 13.7. Governing Law. This Guaranty shall be construed and enforced
in accordance with, and the rights of the parties shall be governed by, the law
of the State of New York excluding choice-of-law principles of the law of such
State that would require the application of the laws of a jurisdiction other
than such State.
Section 13.8. Opinions. The Company hereby instructs the counsel named in
clauses (a) and (c) of Section 4.7 of the Note Purchase Agreement to deliver to
the Purchasers the opinions described therein.
* * * * *
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IN WITNESS WHEREOF, this Guaranty has been duly executed by the Company as
of the date first set forth above.
Very truly yours,
HUB INTERNATIONAL LIMITED
By: /s/ W. Kirk James
------------------------------------
Name: W. Kirk James
Title: VP and Secretary
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SCHEDULE 5.3
Disclosure Materials
None
SCHEDULE 5.3
(to Guaranty Agreement)
SCHEDULE 5.4
Subsidiaries of the Company and Ownership of Subsidiary Shares
(See Attached)
SCHEDULE 5.4
(to Guaranty Agreement)
SCHEDULE 5.5
Financial Statements
Annual Consolidated Financial Statements of HUB International Limited and its
Subsidiaries for the fiscal year ended December 31, 2005
SCHEDULE 5.5
(to Guaranty Agreement)