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-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JEjHSCxZseTDCQN9oIgqiKBuwsdTb/tC19iKfjvVJRZqDtPpU7p53YaqKQ74WyWS ylrjx9FV8QoNnphxwoN5KQ== 0000909567-06-000544.txt : 20060405 0000909567-06-000544.hdr.sgml : 20060405 20060405172138 ACCESSION NUMBER: 0000909567-06-000544 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 20060330 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Completion of Acquisition or Disposition of Assets ITEM INFORMATION: Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant FILED AS OF DATE: 20060405 DATE AS OF CHANGE: 20060405 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HUB INTERNATIONAL LTD CENTRAL INDEX KEY: 0001133016 STANDARD INDUSTRIAL CLASSIFICATION: INSURANCE AGENTS BROKERS & SERVICES [6411] IRS NUMBER: 364412416 STATE OF INCORPORATION: A6 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-31310 FILM NUMBER: 06742962 BUSINESS ADDRESS: STREET 1: 8 NELSON STREET WEST STREET 2: 6TH FLOOR CITY: BRAMPTON STATE: A6 ZIP: L6X 4J2 BUSINESS PHONE: 905.866.5200 MAIL ADDRESS: STREET 1: 55 EAST JACKSON BOULEVARD STREET 2: FLOOR 14A CITY: CHICAGO STATE: IL ZIP: 60604 8-K 1 o30946e8vk.htm FORM 8-K e8vk

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 30, 2006

HUB INTERNATIONAL LIMITED

(Exact name of Registrant as specified in its charter)

Canada
(State or Other Jurisdiction of Incorporation)


1-31310 (Commission File Number)		36-4412416 (I.R.S. Employer Identification Number)

55 East Jackson Boulevard, Chicago, Illinois 60604
(877) 402-6601
(Address of principal executive offices and telephone number, including area code)

n/a
(Former name or former Address, if changed since last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13c-4(c))

Item 1.01. Entry into a Material Definitive Agreement.

Bridge Credit Facility

On March 30, 2006, Hub International Limited (“Hub”) entered into a Credit Agreement (the “Bridge Agreement”) with Bank of Montreal, as lender (“BMO”).

The Bridge Agreement provides for a one-year non-revolving credit facility of US$75.0 million (the “Bridge Facility”), which is available for direct, unsecured borrowings by Hub. The Bridge Facility was used to fund the acquisition described below under Item 2.01. All loans and Banker’s Acceptance advances outstanding under the Bridge Facility will be due and payable on the maturity date, March 29, 2007. On April 4, 2006, the Bridge Facility was fully repaid and terminated. See Item 2.03 below. A copy of the Bridge Agreement is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

Revolving Credit Facility and Guarantee

On April 4, 2006, Hub International Limited Partnership (“HILP”), a subsidiary of Hub, entered into a Credit Agreement (the “Credit Agreement”) with BMO, as lender.

The Credit Agreement provides for a one-year revolving credit facility of US$75.0 million (the “Credit Facility”), which is available for direct, unsecured borrowings by HILP.

U.S. dollar loans under the Credit Facility will bear interest at a fluctuating rate per annum equal to 1.0% plus the higher of (a) the federal funds rate plus 0.5% and (b) BMO’s publicly announced prime rate for U.S. dollar loans. Canadian dollar loans will bear interest at a fluctuating rate per annum equal to 1.0% plus the higher of (a) the Canadian Dollar Offered Rate (CDOR) plus 1.0% and (b) BMO’s publicly announced prime rate for Canadian dollar loans. Alternatively, at HILP’s option, U.S. dollar loans and Canadian dollar loans converted into U.S. dollars will bear

interest at the London Interbank Offered Rate (LIBOR) plus 1.125%. Banker’s Acceptance advances will bear interest at the Banker’s Acceptance Reference Rate plus 1.125%.

Unless extended, all loans and advances outstanding as of the term of the Credit Facility, April 4, 2007, will be converted into three-year non-revolving loans. Interest on such loans will be 0.25% higher than the interest rates discussed in the previous paragraph.

The Credit Agreement includes customary affirmative and negative covenants. An event of default may be triggered by events such as a failure to make principal or interest payments, a failure to comply with other covenants, a default under other indebtedness of HILP and certain events of bankruptcy. A default under the Credit Agreement would permit BMO, among other remedies, to restrict HILP’s ability to further access the Credit Facility for loans and require the immediate repayment of any outstanding loans. A copy of the Credit Agreement is attached as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by reference.

On April 4, 2006, Hub executed a guarantee (the “Facility Guarantee”) in favor of BMO, guaranteeing HILP’s performance under the Credit Agreement. A copy of the Facility Guarantee is attached as Exhibit 99.3 to this Current Report on Form 8-K and is incorporated herein by reference.

BMO and/or its affiliates have provided, from time to time, and may continue to provide, commercial banking, investment banking, financial and other services to Hub, HILP and/or their affiliates for which Hub, HILP and/or their affiliates have paid, and intend to pay, customary fees.

Note Purchase Agreement and Guaranty

On April 4, 2006, HILP completed the private sale of US$75.0 million aggregate principal amount of 6.43% senior notes due April 4, 2016 (the “Notes”). The Notes were issued pursuant to a Note Purchase Agreement, dated as of April 4, 2006 (the “Note Purchase Agreement”), between HILP and the purchasers listed on Schedule A thereto.

Interest on the Notes accrues at a rate of 6.43% per annum and is payable in arrears quarterly on January 4, April 4, July 4, and October 4 of each year starting on July 4, 2006. The Notes must be prepaid by US$12.5 million on April 4 of each year, beginning on April 4, 2011 and through and including April 4, 2015. The Notes mature on April 4, 2016.

Under the terms of the Notes, HILP is subject to customary affirmative and negative covenants. An event of default may be triggered by events such as a failure to make principal or interest payments, a failure to comply with other covenants, a default under other indebtedness of HILP and certain events of bankruptcy. A default under the Notes would permit noteholders to require the immediate repayment of the Notes. A copy of the Note Purchase Agreement is attached as Exhibit 99.4 to this Current Report on Form 8-K and is incorporated herein by reference.

On April 4, 2006, Hub entered into a Guaranty Agreement (the “Note Guaranty”), in favor of the purchasers listed on Schedule A thereto, guaranteeing HILP’s performance under the Note Purchase Agreement. A copy of the Note Guaranty is attached as Exhibit 99.5 to this Current Report on Form 8-K and is incorporated herein by reference.

Amended Note Purchase Agreement and Guaranty

On April 4, 2006, under an Amended and Restated Note Purchase Agreement, dated as of April 4, 2006 (the “Amended Note Purchase Agreement”), between HILP and the noteholders listed on Schedule A thereto, HILP assumed Hub’s obligations under the Note Purchase Agreement, dated as of June 1, 2003, relating to (i) US$10.0 million aggregate principal amount of 5.71% Series A Senior Notes (the “Series A Notes”) and (ii) US$55.0 million aggregate principal amount of 6.16% Series B Senior Notes (the “Series B Notes” and together with the Series A Notes, the “Amended Notes”) issued by Hub on June 1, 2003. No proceeds were received by Hub or HILP in connection with the issuance of the Amended Notes.

Interest on the Amended Notes accrues at a rate of 5.71% per annum for the Series A Notes and at a rate of 6.16% per annum for the Series B Notes, and is payable in arrears semi-annually on June 15 and December 15 of each year starting on June 15, 2006.

The Series A Notes must be prepaid by US$2.5 million on June 15, 2006 and mature on April 4, 2011. The Series B Notes must be prepaid by US$4,583,333 on June 15, 2008; US$4,583,333 on June 15, 2009; US$4,583,333 on June 15, 2010; US$19,250,001 on June 15, 2011 and US$11,000,000 on June 15, 2012 and mature on June 15, 2013.

Under the terms of the Amended Notes, HILP is subject to customary affirmative and negative covenants. An event of default may be triggered by events such as a failure to make principal or interest payments, a failure to comply with other covenants, a default under other indebtedness of HILP and certain events of bankruptcy. A default under the Amended Notes would permit noteholders to require the immediate repayment of the Amended Notes. A copy of the Amended Note Purchase Agreement is attached as Exhibit 99.6 to this Current Report on Form 8-K and is incorporated herein by reference.

On April 4, 2006, Hub entered into a Guaranty Agreement (the “Amended Note Guaranty”), in favor of the noteholders listed on Schedule A thereto, guaranteeing HILP’s performance under the Amended Note Purchase Agreement. A copy of the Amended Note Guaranty is attached as Exhibit 99.7 to this Current Report on Form 8-K and is incorporated herein by reference.

Swap Agreements

On April 4, 2006, HILP assumed Hub’s existing interest rate swap relating to the Amended Notes. Such assumption was effected by HILP entering into an ISDA master agreement with BMO (the “Master Agreement”), a schedule to the ISDA master agreement with BMO (the “Schedule”) and a transfer, assignment and assumption agreement with BMO and Hub (the “Transfer Agreement” and together with the Master Agreement and the Schedule, the “Swap Agreements”). The effect of the Swap Agreements is to convert HILP’s fixed rate interest obligations under the Amended Notes into floating interest rate obligations. Hub has guaranteed HILP’s obligations under the Swap Agreements. Copies of the Master Agreement,

Transfer Agreement and Schedule are attached as Exhibits 99.8, 99.9 and 99.10, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.

Item 2.01. Completion of Acquisition or Disposition of Assets.

On March 31, 2006, Hub and Hub U.S. Holdings, Inc. completed the purchase of Citizens Clair Insurance Group, Brewer & Lord and Feitelberg Insurance, three insurance brokerages, from Citizens Financial Group, Inc. (the “Citizens’ Brokerages”). The purchase price for the acquisition of the three brokerages was US$80.0 million (inclusive of tangible net worth) paid in cash at closing, as well as an earn-out based on future performance. The earn-out payments, which will in the aggregate be at least US$3.0 million, are payable over three years and, at Hub’s option, in cash or a combination of cash and Hub common shares. The Purchase and Sale Agreement relating to this purchase is incorporated herein by reference to Exhibit 99.1 to Hub’s Current Report on Form 8-K filed on March 1, 2006.

To finance the acquisition, Hub utilized existing cash reserves and borrowed US$75.0 million pursuant to the Bridge Facility described above. See Item 2.03 below.

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

See Item 1.01 above. On March 30, 2006, Hub borrowed US$75.0 million under the Bridge Facility to fund, in part, the acquisition of the Citizens’ Brokerages. On April 4, 2006, Hub’s subsidiary HILP issued US$75.0 million of Notes and borrowed US$56.0 million under the Credit Facility. The aggregate proceeds of HILP’s borrowings, along with US$9.0 million of cash on hand, were used to repay and terminate the Bridge Facility and to repay US$65.0 million of indebtedness under and terminate Hub’s existing revolving credit facility.

As a result of the transactions described above, Hub has incurred an additional US$66.0 million of indebtedness as compared to the amount reported as of December 31, 2005.

EXHIBIT INDEX


Exhibit		Description
	99.1	Non-Revolving Credit Agreement between Hub International Limited, as borrower, and Bank of Montreal, as lender, dated as of March 30, 2006.

	99.2	Credit Agreement between Hub International Limited Partnership, as borrower, and Bank of Montreal, as lender, dated as of April 4, 2006.

	99.3	Hub International Limited Guarantee in favour of Bank of Montreal, dated as of April 4, 2006.

	99.4	Hub International Limited Partnership Note Purchase Agreement, dated as of April 4, 2006.

	99.5	Hub International Limited Guaranty Agreement relating to the Note Purchase Agreement, dated as of April 4, 2006.

	99.6	Hub International Limited Partnership Amended and Restated Note Purchase Agreement, dated as of April 4, 2006.

	99.7	Hub International Limited Guaranty Agreement relating to the Amended and Restated Note Purchase Agreement, dated as of April 4, 2006.

	99.8	ISDA Master Agreement between Hub International Limited Partnership and Bank of Montreal, dated as of April 4, 2006.

	99.9	Transfer, Assignment and Assumption Agreement among Hub International Limited, Hub International Limited Partnership and Bank of Montreal, dated as of April 4, 2006.

	99.10	Schedule to the Master Agreement between Hub International Limited Partnership and Bank of Montreal, dated as of April 4, 2006.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: April 5, 2006


HUB INTERNATIONAL LIMITED
By:	/s/ Marianne D. Paine
	Name:	Marianne D. Paine
	Title:	Chief Legal Officer

EX-99.1 2 o30946exv99w1.txt EX-99.1 EXHIBIT 99.1 HUB INTERNATIONAL LIMITED AS BORROWER - AND - BANK OF MONTREAL AS LENDER - -------------------------------------------------------------------------------- NON-REVOLVING CREDIT AGREEMENT DATED AS OF MARCH 30, 2006 - -------------------------------------------------------------------------------- FRASER MILNER CASGRAIN LLP 42ND FLOOR 1 FIRST CANADIAN PLACE TORONTO, ONTARIO M5X 1B2 TABLE OF CONTENTS ARTICLE 1 DEFINITIONS AND ACCOUNTING TERMS Section 1.1 Defined Terms........................................... 1 Section 1.2 Computation of Time Periods............................. 17 Section 1.3 Accounting Terms........................................ 17 Section 1.4 Extended Meanings....................................... 17 Section 1.5 Incorporation of Schedules.............................. 17 Section 1.6 Headings and Table of Contents.......................... 18 Section 1.7 Singular, Plural, Gender................................ 18 Section 1.8 Conflict................................................ 18 Section 1.9 Currency................................................ 18 Section 1.10 Time.................................................... 18 Section 1.11 Control................................................. 18 Section 1.12 Wholly Owned Subsidiary................................. 19 Section 1.13 References to Conversion of Advances.................... 19 ARTICLE 2 THE CREDIT FACILITIES Section 2.1 Credit Facility......................................... 19 Section 2.2 Drawdown Availability................................... 19 Section 2.3 Advance Requests........................................ 20 Section 2.4 Advances under the Credit Facility...................... 21 Section 2.5 Currency................................................ 21 Section 2.6 Conversion of Advance................................... 21 Section 2.7 LIBOR Maturity.......................................... 22 Section 2.8 Certain Provisions Relating to Bankers' Acceptances..... 22 Section 2.9 Reduction or Termination of Commitment.................. 24 Section 2.10 Use of Proceeds......................................... 25 ARTICLE 3 INTEREST AND FEES Section 3.1 Interest on Prime Rate Loans............................ 25 Section 3.2 Interest on U.S. Base Rate Loans........................ 25 Section 3.3 Interest on LIBOR Loans................................. 25 Section 3.4 Acceptance Fee.......................................... 26 Section 3.5 Standby Fee............................................. 26 Section 3.6 Reimbursement Obligations............................... 26 Section 3.7 Yearly Rate Statements.................................. 26 ARTICLE 4 REPAYMENT OF OBLIGATIONS Section 4.1 Repayment on Maturity................................... 27

ii. Section 4.2 Voluntary Repayment..................................... 27 Section 4.3 Mandatory Repayment of Credit Facility.................. 28 Section 4.4 Early Repayment of Credit Facility...................... 28 ARTICLE 5 PAYMENTS AND ACCOUNTS Section 5.1 Maintenance of Accounts................................. 28 Section 5.2 Payments by Borrower.................................... 28 Section 5.3 Due Date of Payments.................................... 29 Section 5.4 Time of Payments........................................ 29 Section 5.5 Form and Amount of Payments............................. 29 Section 5.6 Charging Borrower's Accounts............................ 29 ARTICLE 6 CURRENCY AND COSTS Section 6.1 Market Disruption and Illegality........................ 29 Section 6.2 Additional Payments..................................... 31 Section 6.3 Prepayment and Conversion............................... 32 Section 6.4 Mitigation.............................................. 33 Section 6.5 Mandatory Prepayment.................................... 33 ARTICLE 7 CONDITIONS PRECEDENT TO LENDING Section 7.1 Conditions Precedent to Initial Advance................. 33 Section 7.2 Conditions Precedent to Each Advance.................... 34 ARTICLE 8 REPRESENTATIONS AND WARRANTIES Section 8.1 Representations and Warranties by the Borrower.......... 35 Section 8.2 Survival of Representations and Warranties.............. 41 ARTICLE 9 COVENANTS OF THE BORROWER Section 9.1 Affirmative Covenants................................... 42 Section 9.2 Negative Covenants...................................... 45 ARTICLE 10 ACCELERATION Section 10.1 Events of Default....................................... 52 Section 10.2 Remedies Upon Default................................... 54 Section 10.3 Right of Set-Off........................................ 55 Section 10.4 Currency Conversion After Maturity...................... 55 Section 10.5 Judgment Currency....................................... 55 ARTICLE 11 GENERAL Section 11.1 Evidence of Debt........................................ 56

iii. Section 11.2 Additional Expenses..................................... 56 Section 11.3 Invalidity of any Provisions............................ 56 Section 11.4 Amendments, Waivers, etc................................ 56 Section 11.5 Notices, etc............................................ 57 Section 11.6 Costs and Expenses...................................... 57 Section 11.7 Indemnification......................................... 58 Section 11.8 Taxes................................................... 58 Section 11.9 Calculations............................................ 59 Section 11.10 Assignments and Participations.......................... 59 Section 11.11 Governing Law........................................... 61 Section 11.12 Consent to Jurisdiction................................. 61 Section 11.13 Binding Effect.......................................... 61 Section 11.14 Interest Savings Clause................................. 61 Section 11.15 Entire Agreement........................................ 61 Section 11.16 Counterparts............................................ 62

~~Schedule 1 Form of Advance Request Schedule 2 Form of Compliance Certificate Schedule 3 Reorganization Schedule 8.1(h) Subsidiaries Schedule 8.1(l) Financial Statements~~

THIS NON-REVOLVING CREDIT AGREEMENT is made as of the 30th day of March, 2006, BETWEEN: HUB INTERNATIONAL LIMITED, a corporation incorporated under the laws of Canada, as the Borrower hereunder, - and - BANK OF MONTREAL, as the Lender hereunder NOW THEREFORE in consideration of these premises and the agreements hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: ARTICLE 1 DEFINITIONS AND ACCOUNTING TERMS SECTION 1.1 DEFINED TERMS. Unless the context otherwise requires, the following capitalized terms shall have the following respective meanings in this Agreement and in each of the other Loan Documents: "ACCEPTANCE FEE" means the fee payable in Canadian dollars to the Lender in respect of the Drafts accepted or purchased by the Lender prior to and as a condition of such acceptance or purchase, computed in accordance with Section 3.4; "ACQUISITION" means the acquisition by the Borrower or its Subsidiaries of all of the membership interests in The Feitelberg Company, LLC, a Delaware limited liability company, Brewer & Lord LLC, a Massachusetts limited liability company, and Citizens Clair Insurance Agency, LLC, a Pennsylvania limited liability company; "ADVANCE" means any extension of credit by the Lender hereunder in the form of a Prime Rate Loan, a U.S. Base Rate Loan, a LIBOR Loan or a BA Advance (each of which is referred to herein as a "Type of Advance"), including the conversion of an Advance into another Advance; "ADVANCE REQUEST" means a request for an Advance or conversion of an Advance to another Advance duly completed and executed on behalf of the Borrower, 2. substantially in the form of Schedule 1 hereto, or a notice of a request for an Advance or conversion of an Advance to another Advance delivered pursuant to Section 2.3(c); "AFFILIATE" shall mean, at any time, and with respect to any Person, (a) any other Person that at such time directly or indirectly through one or more intermediaries Controls, or is Controlled by, or is under common Control with, such first Person, and (b) in the case of the Borrower or any Subsidiary, any Person beneficially owning or holding, directly or indirectly, 10% or more of any class of voting or equity interests of the Borrower or any Subsidiary or any corporation of which the Borrower and its Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly, 10% or more of any class of voting or equity interests; provided that "Affiliate," in relation to the Borrower, shall not include any Subsidiary. Unless the context otherwise clearly requires, any reference to an "Affiliate" is a reference to an Affiliate of the Borrower; "AGREEMENT" means this credit agreement as supplemented, amended, modified or restated from time to time, and the expressions "Article", "Section" and "Schedule" followed by a number mean and refer to the specified Article, Section or Schedule of this Agreement, respectively; "ASSET DISPOSITION" shall mean any Transfer except: (a) any (i) Transfer from a Subsidiary to the Borrower or a Wholly-Owned Subsidiary; and (ii) Transfer from the Borrower to a Wholly-Owned Subsidiary; so long as immediately before and immediately after the consummation of any such Transfer and after giving effect thereto, no Default or Event of Default shall exist; and (b) any Transfer made in the ordinary course of business and involving only property that is either (i) inventory held for sale or (ii) equipment, fixtures, supplies or materials no longer required in the operation of the business of the Borrower or any of its Subsidiaries or that is obsolete; "APPLICABLE MARGIN" means: (a) in respect of any Prime Rate Loan, the rate of 1.0% per annum; (b) in respect of any U.S. Base Rate Loan, the rate of 1.0% per annum; (c) in respect of any LIBOR Loan, the rate of 1.125% per annum; and (d) in respect of any BA Advance, 1.125%; 3. "ARM'S-LENGTH" means arm's-length within the meaning of such term under the Income Tax Act (Canada), as amended from time to time; "ASSIGNEE LENDER" has the meaning set out in Section 11.10; "ASSIGNEE LENDER'S COMMITMENT" has the meaning set out in Section 11.10; "ASSIGNEE LENDER'S COMMITMENT PERCENTAGE" has the meaning set out in Section 11.10; "ATTRIBUTABLE DEBT" shall mean, as to any particular lease relating to a Sale-and-Leaseback Transaction not permitted under clause (i), (ii) or (iii) of Section 9.2(i), the present value of all Lease Rentals required to be paid by the Borrower or any Subsidiary under such lease during the remaining term thereof (determined in accordance with generally accepted financial practice using a discount factor equal to the interest rate implicit in such lease if known or, if not known, of 10% per annum); "AVAILABLE COMMITMENT" means at any time the amount at such time of the Commitment less the amount of the Outstanding Principal Obligations, all expressed in Canadian Dollars, with any amount thereof denominated in another currency to be expressed in Canadian Dollars at the Canadian Dollar Equivalent at such time of such amount; "BA ADVANCE" means any Advance by way of the acceptance of any Draft drawn by the Borrower on, and the purchase of the resulting Bankers' Acceptance by, the Lender; "BA DISCOUNT PROCEEDS" means in respect of any Bankers' Acceptance being purchased by the Lender on any day an amount (rounded to the nearest whole Canadian cent, and with one-half of one Canadian cent being rounded up) calculated on such day by multiplying (a) Face Amount of such Bankers' Acceptance, by (b) the quotient equal to one divided by the sum of one plus the product of: (i) the BA Reference Rate (expressed as a decimal) applicable to such Bankers' Acceptance; and (ii) a fraction, the numerator of which is the number of days remaining in the term of such Bankers' Acceptance and the denominator of which is 365, with such quotient being rounded up or down to the nearest fifth decimal place and 0.000005 being rounded up, less the amount of the Acceptance Fee payable to the Lender in respect of, and as a condition precedent to the acceptance or purchase by the Lender of, such Bankers' Acceptance; "BA LIABILITIES" means, at any time and in respect of any Bankers' Acceptance, the Face Amount thereof if still outstanding and unpaid, whether or not payment thereof is due 4. or, following the maturity thereof, the aggregate unpaid amount of all Reimbursement Obligations at that time due and payable in respect of such Bankers' Acceptance; "BA REFERENCE RATE" means, as applicable to any Bankers' Acceptance being purchased by the Lender on any day, the per annum percentage discount rate (expressed to two decimal places and rounded upward, if necessary, to the nearest 1/100th of 1%), quoted by the Lender as that at which the Lender would, in accordance with its normal practice, on such day be prepared to purchase its own bankers' acceptances in an amount and having a maturity date comparable to the amount and maturity date of such Bankers' Acceptance; "BANKERS' ACCEPTANCE" means a Draft of the Borrower denominated in Canadian Dollars which has been accepted and purchased by the Lender pursuant to Article 2; "BORROWER" means Hub International Limited, a corporation incorporated under the laws of Canada, and any successor(s) and permitted assign(s) thereof; "BORROWER'S ACCOUNTS" means the Canadian Dollar account and U.S. Dollar account to be maintained by the Borrower with the Lender at the Lender's Branch in accordance with Article 5; "BUSINESS DAY" means (i) any day of the year, other than Saturday or Sunday or any other day on which banks are closed for normal business in Toronto, Ontario, (ii) when used in connection with U.S. Base Rate Loans, any day of the year, other than Saturday or Sunday or any other day on which banks are closed for normal business in either Toronto, Ontario or New York, New York, and (iii) when used in connection with LIBOR Loans, any day of the year, other than Saturday or Sunday or any other day on which banks are closed for normal business in any of Toronto, Ontario, New York, New York and London, England, and which is also a day on which dealings in U.S. Dollars may be carried on by and between banks in the London interbank market; "CANADA TREASURY BILL RATE" means on any day and for any discount calculation period the rate for Government of Canada Treasury bills for a period approximately equal to such discount calculation period appearing on the "Reuters Screen ISDD Page" (as defined in the International Swaps and Derivatives Association, Inc. definitions, as modified and amended from time to time) at approximately 10:00 a.m. (Toronto, Ontario time) on such day, or if such day is not a Business Day then on the immediately preceding Business Day; "CANADIAN DOLLARS" and the symbols "Can. $" and "Cdn. $" mean lawful money of Canada; "CANADIAN DOLLAR EQUIVALENT" means, at any time, the amount of Canadian Dollars which could be purchased from the Lender by the payment of a specified amount of another currency using the Lender's relevant spot rate for the sale of Canadian Dollars quoted by the Lender's treasury department at such time; "CAPITAL ADEQUACY GUIDELINE" means the capital adequacy requirements from time to time specified by OSFI or any other applicable Governmental Authority and published by it as one or more guidelines for chartered banks in Canada; 5. "CAPITAL LEASE" shall mean, at any time, a lease with respect to which the lessee is required concurrently to recognize the acquisition of an asset and the incurrence of a liability in accordance with GAAP; "CAPITAL LEASE OBLIGATION" shall mean, with respect to any Person and a Capital Lease, the amount of the obligation of such Person as the lessee under such Capital Lease which would, in accordance with GAAP, appear as a liability on a balance sheet of such Person; "CDOR RATE" means, on any day, the annual rate which is the rate determined by the Lender as being the arithmetic average (rounded up or down, if necessary, to the nearest 0.01% and 0.005% being rounded up) of the discount rates applicable to Canadian Dollar bankers' acceptances for a period of one month appearing on the "Reuters Screen CDOR Page" (as defined in the International Swaps and Derivatives Association, Inc. definitions, as modified and amended from time to time) at approximately 10:00 a.m. on such day, or if such day is not a Business Day then on the immediately preceding Business Day; provided, however, if such rates do not appear on the Reuters Screen CDOR Page for such one month period as contemplated, then the CDOR Rate on any day shall be calculated as the rate as determined by the Lender equal to the BA Reference Rate that would be applicable to any Drafts required to be purchased by the Lender on such day and having a term to maturity of 30 days; "CLAIM" means any claim of any nature whatsoever including, without limitation, any demand, liability, obligation, cause of action, suit, proceeding, judgment, award, assessment and reassessment, whether present or future; "CLOSING" means the execution and delivery of this Credit Agreement and the other Loan Documents by the respective parties thereto; "CLOSING DATE" means the date on which the Closing occurred; "CODE" shall mean the Internal Revenue Code of 1986 of the United States of America, as amended from time to time, and the rules and regulations promulgated thereunder from time to time; "COMMITMENT" means the amount of U.S. $75,000,000 or the Canadian Dollar Equivalent thereof, as such amount may be reduced or cancelled from time to time in accordance with the provisions of this Agreement; "COMPENSATING AMOUNT" has the meaning set out in Section 6.2; "COMPLIANCE CERTIFICATE" means, the certificate of the Borrower substantially in the form set out in Schedule 2 delivered pursuant to Section 9.1 and signed on its behalf by its chief financial officer, or any other Senior Officer acceptable to the Lender; "CONSOLIDATED DEBT" shall mean, as of any date of determination, the total of all Debt of the Borrower and its Subsidiaries outstanding on such date, after eliminating all offsetting debits and credits between the Borrower and its Subsidiaries and all other items required to be eliminated in the course of the preparation of consolidated financial statements of the Borrower and its Subsidiaries in accordance with GAAP; 6. "CONSOLIDATED NET INCOME" shall mean, with reference to any period, the net income (or loss) of the Borrower and its Subsidiaries for such period (taken as a cumulative whole), as determined in accordance with GAAP, after eliminating all offsetting debits and credits between the Borrower and its Subsidiaries and all other items required to be eliminated in the course of the preparation of consolidated financial statements of the Borrower and its Subsidiaries in accordance with GAAP, but excluding, in any event, any extraordinary gains or losses determined in accordance with GAAP; "CONSOLIDATED NET WORTH" shall mean, as of any date of determination thereof, (a) the sum of (i) the par value (or value stated on the books of the corporation) of the share capital (but excluding treasury shares and share capital subscribed and unissued) of the Borrower and its Subsidiaries plus (ii) the amount of the paid-in capital and retained earnings of the Borrower and its Subsidiaries, in each case as such amounts would be shown on a consolidated balance sheet of the Borrower and its Subsidiaries as of such time prepared in accordance with GAAP, minus (b) to the extent included in clause (a) above, all amounts properly attributable to minority interests, if any, in the shares and surplus of Subsidiaries; "CONSOLIDATED TOTAL ASSETS" shall mean, as of any date of determination, the total assets of the Borrower and its Subsidiaries that would be shown as assets on a consolidated balance sheet of the Borrower and its Subsidiaries as of such time prepared in accordance with GAAP, after eliminating all amounts properly attributable to minority interests, if any, in the shares and surplus of Subsidiaries; "CONSOLIDATED TOTAL CAPITALIZATION" shall mean, as of any date of determination, the sum of Consolidated Debt and Consolidated Net Worth; "CORPORATE DISTRIBUTION" means, in respect of any Person: (a) any payment, dividend or other distribution on or in respect of securities (whether in the form of debt or equity) issued by such Person; (b) any purchase, redemption, retraction or other acquisition by such Person of any of its issued securities (whether in the form of debt or equity), or any purchase by such Person from any of its Affiliates or Subsidiaries or any other Person not dealing at Arm's-Length with such Person of any securities (whether in the form of debt or equity) issued by such Affiliate or Subsidiary or other Person; (c) any consulting, management, administration, service or license fee, royalty or charge or any similar fee or charge paid or payable by such Person to any of its Affiliates or Subsidiaries or any other Person not dealing at Arm's-Length with such Person; (d) any payment by such Person or any of its Subsidiaries on account of any loan or advance owed by such Person to any of its Affiliates or Subsidiaries or any other Person not dealing at Arm's-Length with such Person; or 7. (e) any loan to, or guarantee of the indebtedness of, or other financial assistance provided to, any Person not dealing at Arm's-Length with such Person; "COVER" for any BA Liabilities shall be effected by paying to the Lender immediately available and freely transferable funds in Canadian Dollars, in the full amount of such BA Liabilities, which funds shall be held by the Lender in a collateral account maintained by the Lender at the Lender's Branch to provide for the payment of such BA Liabilities. Such funds shall be retained by the Lender in such collateral account until such time as the applicable Bankers' Acceptances shall have matured and the related BA Liabilities shall have been fully satisfied; provided, however, that at such time if a Default or an Event of Default has occurred and is continuing, the Lender shall not be required to release any of the said funds in such collateral account until such Default or Event of Default shall have been cured or waived; "CREDIT FACILITY" means the revolving credit facility to be made available to the Borrower hereunder during the Drawdown Period by way of Advances pursuant to Section 2.1; "CROWN" shall mean the Crown in Right of Canada or of any Province or Territory thereof; "DEBT" shall mean, with respect to any Person, without duplication, (a) its liabilities for borrowed money; (b) its liabilities for the deferred purchase price of property acquired by such Person (excluding accounts payable arising in the ordinary course of business but including, without limitation, all liabilities created or arising under any conditional sale or other title retention agreement with respect to any such property); (c) its Capital Lease Obligations; (d) all liabilities for borrowed money secured by any Lien with respect to any property owned by such Person (whether or not it has assumed or otherwise become liable for such liabilities); (e) the principal or lease balance outstanding under Synthetic Leases; (f) its income-put option liabilities; and (g) any Guarantee of such Person with respect to liabilities of a type described in any of clauses (a) through (f) hereof; provided, that Debt shall not include Guaranties of bank loans to officers of the Borrower the proceeds of which are used to purchase shares of the Borrower, in an aggregate principal amount not to exceed U.S. $12,000,000 at any one time outstanding; Debt of any Person shall include all obligations of such Person of the character described in clauses (a) through (g) to the extent such Person remains legally 8. liable in respect thereof notwithstanding that any such obligation is deemed to be extinguished under GAAP; "DEBT PREPAYMENT APPLICATION" shall mean, with respect to any Transfer of property, the application by the Borrower or its Subsidiaries of cash in an amount equal to the Net Proceeds Amount with respect to such Transfer to pay Senior Funded Debt of the Borrower or any Subsidiary (other than Senior Funded Debt owing to the Borrower, any of its Subsidiaries or any Affiliates and Senior Funded Debt in respect of any revolving credit or similar facility providing the Borrower or any of its Subsidiaries with the right to obtain loans or other extensions of credit from time to time, except to the extent that in connection with such payment of Senior Funded Debt the availability under such revolving credit or similar facility is permanently reduced by an amount not less than the amount of such proceeds applied to the payment of such Senior Funded Debt); "DEFAULT" means any event which with the giving of notice, the passage of time, or both, would constitute an Event of Default; "DISPOSITION VALUE" shall mean with respect to any property: (a) in the case of property that does not constitute Subsidiary Shares, the book value thereof, valued at the time of such disposition in good faith by the Borrower, and (b) in the case of property that constitutes Subsidiary Shares, an amount equal to that percentage of book value of the assets of the Subsidiary that issued such shares as is equal to the percentage that the book value of such Subsidiary Shares represents of the book value of all of the outstanding share capital of such Subsidiary (assuming, in making such calculations, that all securities convertible into such share capital are so converted and giving full effect to all transactions that would occur or be required in connection with such conversion) determined at the time of the disposition thereof, in good faith by the Borrower; "DRAFT" means at any time a bill of exchange, within the meaning of the Bills of Exchange Act (Canada), drawn by the Borrower on the Lender and bearing such distinguishing letters and numbers as the Lender may determine, but which at such time has not been completed or accepted by the Lender; "DRAWDOWN DATE" means a day which the Borrower has notified the Lender in an Advance Request as the date on which the Borrower requests an Advance in accordance with Article 2; "DRAWDOWN PERIOD" the period from the Closing Date to 11:00 a.m. (Toronto, Ontario time) on the Drawdown Period Termination Date; "DRAWDOWN PERIOD TERMINATION DATE" means April 30, 2006; "EBITDA" shall mean, with respect to any period, the sum of (a) Consolidated Net Income for such period, plus (b) to the extent deducted in the determination of Consolidated Net Income for such period, (i) all Interest Charges during such period, (ii) all depreciation and 9. amortization expenses during such period, (iii) all federal, state and provincial income taxes during such period and (iv) other non-cash expenses during such period, minus (c) to the extent included in the determination of Consolidated Net Income for such period, gains from the sale of capital assets and investments and other income-put option liabilities, all as determined in accordance with GAAP consistently applied; "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; "ERISA" shall mean the Employee Retirement Income Security Act of 1974 of the United States of America, 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 Borrower under Section 414 of the Code; "EVENT OF DEFAULT" means any of the events specified in Section 10.1; "FACE AMOUNT" means in respect of a Bankers' Acceptance, the amount stated therein to be payable to the holder thereof on its maturity; "FAIR MARKET VALUE" shall mean, as of any date of determination thereof and with respect to any property, the sale value of such property that would be realized in an arm's-length sale at such time between an informed and willing buyer and an informed and willing seller (neither being under a compulsion to buy or sell); "FED FUNDS RATE" means, on any day, the rate equal to the USD-Federal Funds-H.15 rate (as defined in the International Swaps and Derivatives Association, Inc. definitions, as modified and amended from time to time) as of such day, or if such day is not a Business Day then on the immediately preceding Business Day; "FUNDED DEBT" means, with respect to any Person, all Debt of such Person which by its terms or by the terms of any instrument or agreement relating thereto matures, or which is otherwise payable or unpaid, one year or more from, or is directly or indirectly renewable or extendible at the option of the obligor in respect thereof to a date one year or more (including, without limitation, an option of such obligor under a revolving credit or similar agreement obligating the lender or lenders to extend credit over a period of one year or more) from, the date of any determination thereof; "GAAP" means generally accepted accounting principles as in effect from time to time as now or hereafter established by the Canadian Institute of Chartered Accountants or any successor thereto; 10. "GOVERNMENTAL AUTHORITY" means any nation or government, and any political subdivision thereof, and any central bank, agency, department, commission, board, bureau, court, tribunal or other entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government; "GUARANTEE" shall mean, with respect to any Person, any obligation (except the endorsement in the ordinary course of business of negotiable instruments for deposit or collection) of such Person guaranteeing or in effect guaranteeing any Debt, dividend or other obligation of any other Person in any manner, whether directly or indirectly, including, without limitation, obligations incurred through an agreement, contingent or otherwise, by such Person: (a) to purchase such Debt or obligation or any property constituting security therefor; (b) to advance or supply funds (i) for the purchase or payment of such Debt or obligation, or (ii) to maintain any working capital or other balance sheet condition or any income statement condition of any other Person or otherwise to advance or make available funds for the purchase or payment of such Debt or obligation; (c) to lease properties or to purchase properties or services primarily for the purpose of assuring the owner of such Debt or obligation of the ability of any other Person to make payment of the Debt or obligation; or (d) otherwise to assure the owner of such Debt or obligation against loss in respect thereof. In any computation of the Debt or other liabilities of the obligor under any Guarantee, the Debt or other obligations that are the subject of such Guarantee shall be assumed to be direct obligations of such obligor. "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); "HOSTILE ACQUISITION" means an offer to acquire, directly or indirectly and whether by purchase, amalgamation, merger or otherwise, properties, whether held directly or indirectly, or securities of any Person (the "Target") where (i) in the case of such offer to acquire securities of the Target, the securities subject to such offer and the securities of the Target beneficially owned, directly or indirectly, by the offeror or Affiliates of the offeror or Persons acting in concert with the offeror and its Affiliates, exceed 10% of the then outstanding securities of any class of securities of the Target, (ii) the board of directors or other governing body of the Target has not recommended (at or prior to the time that such offer is made to the holders of the securities subject to such offer or is submitted for consideration by the holders of securities of the Target) acceptance or approval of such offer by such holders, and (iii) the properties or securities 11. that are the subject of such offer to acquire would upon completion of such acquisition constitute a property or group of properties the loss of which would have a Material Adverse Effect; "INTEREST CHARGES" shall mean, with respect to any period, the sum (without duplication) of the following (in each case, eliminating all offsetting debits and credits between the Borrower and its Subsidiaries and all other items required to be eliminated in the course of the preparation of consolidated financial statements of the Borrower and its Subsidiaries in accordance with GAAP): (a) all interest in respect of Debt of the Borrower and its Subsidiaries (including imputed interest on Capital Lease Obligations) deducted in determining Consolidated Net Income for such period, and (b) all debt discount and expense amortized or required to be amortized in the determination of Consolidated Net Income for such period; "LEASE RENTALS" shall mean, with respect to any period, the sum of all fixed payments (including as such all payments which the lessee is obligated to make to the lessor on termination of the lease or surrender of the property) payable by the Borrower or a Subsidiary, as lessee or sublessee under a lease of property, but shall be exclusive of any amounts required to be paid by the Borrower or a Subsidiary (whether or not designated as rents or additional rents) on account of maintenance, repairs, insurance, taxes and similar charges. Fixed rents under any so-called "percentage leases" shall be computed solely on the basis of the minimum rents, if any, required to be paid by the lessee regardless of sales volume or gross revenues; "LEGAL REQUIREMENT" means any law, statute, ordinance, decree, requirement, order, judgment, treaty, rule, guideline, bulletin, license, permit or regulation, and any applicable determination, interpretation, ruling, order or decree, of any Governmental Authority or arbitrator, which is binding upon or applicable to the Lender, the Borrower or a Subsidiary of the Borrower, whether presently existing or arising in the future, including without limitation all Guidelines and Bulletins issued by OSFI; "LENDER" means Bank of Montreal and any other bank or financial institution to which a Commitment in the Credit Facility is assigned by the Lender or a further permitted assignee thereof in accordance with Section 11.10, and their respective successors and permitted assigns; "LENDER'S BRANCH" means the Lender's main Toronto, Ontario branch, or such other branch of the Lender in Canada as the Lender may from time to time specify to the Borrower; "LIBO RATE" means, for any LIBOR Period for each LIBOR Loan, the annual rate of interest determined by the Lender as being the rate at which deposits in U.S. Dollars are offered by the Lender in the London interbank market to leading international banks for an amount similar to the principal amount of such LIBOR Loan and having a term similar to such LIBOR Period, such rate to be determined as of 11:00 a.m. London time on the date two Business Days prior to the first day of the LIBOR Period for such LIBOR Loan; "LIBOR LOAN" means any Advance made by the Lender to the Borrower in, or converted into U.S. Dollars, bearing interest by reference to a LIBO Rate; 12. "LIBOR PERIOD" means, for each LIBOR Loan, a period (subject to Section 6.1) of one (1), two (2), three (3), six (6), nine (9) or twelve (12) months selected by the Borrower and advised to the Lender by written notice given in accordance with the provisions hereof, commencing with the date on which such LIBOR Loan is made and ending on the last day of such selected period and thereafter each successive period of one (1), two (2), three (3), six (6), nine (9) or twelve (12) months (again subject to Section 6.1) selected by the Borrower and advised to the Lender by written notice given in respect of the continuation of such LIBOR Loan in accordance with the provisions hereof, commencing on the last day of the immediately preceding LIBOR Period in respect of such LIBOR Loan, provided that the last day of a LIBOR Period shall occur on or before the Maturity Date and whenever the last day of a LIBOR Period would otherwise occur on a day other than a Business Day, the last day of such LIBOR Period shall be extended to the next succeeding Business Day unless such extension would cause the last day of such LIBOR Period to occur in the next following calendar month, in which case the last day of such LIBOR Period shall occur on the last preceding Business Day; "LIEN" shall mean, with respect to any Person, any mortgage, lien, pledge, charge, security interest or other encumbrance, or any interest or title of any vendor, lessor, lender or other secured party to or of such Person under any conditional sale or other title retention agreement or Capital Lease, upon or with respect to any property or asset of such Person (including in the case of shares, shareholder agreements, voting trust agreements and all similar arrangements); "LOAN" means a direct advance of monies hereunder, by way of a Prime Rate Loan, a U.S. Base Rate Loan or a LIBOR Loan; "LOAN DOCUMENTS" means this Agreement and all other documents, certificates, instruments and agreements to be executed and delivered to the Lender by the Borrower or by any other Person as contemplated hereunder and thereunder; "LOSS" means any loss, cost or expense whatsoever, whether present or future, direct or indirect, including, without limitation, any damages, judgments, penalties, fines, fees, charges, claims, demands, liabilities and any and all legal and other professional fees and disbursements, and, with respect to any Advance by the Lender, any loss, cost or expense incurred by reason of the liquidation or re-employment of deposits or other funds acquired by the Lender to fund or maintain such Advance, except any such loss representing loss of profit; "MATERIAL" shall mean material in relation to the business, operations, affairs, financial condition, assets, properties or prospects of the Borrower 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 Borrower and its Subsidiaries taken as a whole, or (b) the ability of the Borrower to perform its obligations under this Agreement, or (c) the validity or enforceability of this Agreement; "MATERIAL SUBSIDIARY" shall mean, at any time, any Subsidiary that accounts for more than (a) 5% of Consolidated Total Assets determined as of the immediately preceding 13. fiscal quarter or (b) 5% of consolidated revenue of the Borrower and its Subsidiaries determined as of the immediately preceding fiscal year; "MATURITY DATE" means the date that occurs 364 days after the date of this Agreement; "MINIMUM INTEREST COVERAGE RATIO" shall mean, as of the date of any determination thereof, the ratio of (a) EBITDA for the period consisting of the immediately preceding four consecutive fiscal quarters of the Borrower ending on, or most recently ended prior to, such date to (b) Interest Charges for such period; "MULTIEMPLOYER PLAN" shall mean any Plan that is a "multiemployer plan" (as such term is defined in Section 4001(a)(3) of ERISA); "NET PROCEEDS AMOUNT" shall mean, with respect to any Transfer of any Property by any Person, an amount equal to the difference of (a) the aggregate amount of the consideration (valued at the Fair Market Value of such consideration at the time of the consummation of such Transfer) received by such Person in respect of such Transfer, minus (b) all ordinary and reasonable out-of-pocket costs and expenses actually incurred by such Person in connection with such Transfer; "OBLIGATIONS" means, at any time, the sum of (a) the aggregate principal amount of all Loans advanced to the Borrower and all accrued and unpaid interest thereon outstanding and unpaid at such time, (b) the aggregate BA Liabilities of the Borrower at such time in respect of all Bankers' Acceptances accepted or purchased by the Lender at or prior to such time, including all accrued and unpaid interest on any then outstanding Reimbursement Obligations in respect of any such Bankers' Acceptances, and (c) all other then outstanding liabilities, obligations and indebtedness of the Borrower to the Lender under this Agreement or any of the other Loan Documents; "OSFI" means the Office of the Superintendent of Financial Institutions (Canada); "OUTSTANDING PRINCIPAL OBLIGATIONS" means, at any time, the sum of the aggregate principal amount of all Loans advanced to the Borrower outstanding and unpaid at such time and the aggregate BA Liabilities outstanding and unpaid at such time in respect of Bankers' Acceptances accepted or purchased by the Lender, all expressed in Canadian Dollars (or the U.S. Dollar Equivalent thereof), with any amount thereof denominated in another currency to be expressed in Canadian Dollars at the Canadian Dollar Equivalent or the U.S. Dollar Equivalent at such time of such amount; "PAST DUE RATE" means, on any day, a rate per annum equal to the Prime Rate, in the case of Obligations denominated in Canadian Dollars, and U.S. Base Rate, in the case of Obligations denominated in U.S. Dollars, plus two percent; 14. "PBGC" shall mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA or any successor thereto; "PERMITTED PURPOSE" means the use by the Borrower of the proceeds of any Advance hereunder for the Acquisition pending receipt by the Borrower of permanent financing for the Acquisition from the Repayment Sources, for general corporate and working capital purposes of the Borrower and for the conversion of an Advance to another Type of Advance; "PERSON" includes an individual, partnership, whether general, limited or undeclared, corporation, limited liability corporation, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature; "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 Borrower or any ERISA Affiliate or with respect to which the Borrower or any ERISA Affiliate could reasonably be expected to have any liability; "PRIME RATE" means, on any day, the greater of (a) the floating rate of interest per annum announced from time to time by the Lender, and in effect on such day, as the reference rate of interest the Lender will use to determine rates of interest for Canadian Dollar commercial loans made by the Lender to borrowers in Canada, and (b) the rate as determined by the Lender equal to (i) the CDOR Rate, plus (ii) 1.0% per annum; "PRIME RATE LOAN" means any Advance made by the Lender to the Borrower in Canadian Dollars bearing interest by reference to the Prime Rate; "PRIORITY DEBT" shall mean, without duplication, the sum of (a) Debt of the Borrower and its Subsidiaries secured by Liens other than Liens permitted by paragraphs (i) through (xi), inclusive, of Section 9.2(f), (b) Debt of Subsidiaries other than Debt permitted by paragraphs (i) through (iii), inclusive, of Section 9.2(c), and (c) Attributable Debt of the Borrower and its Subsidiaries relating to Sale-and-Leaseback Transactions other than Sale-and-Leaseback Transactions permitted by paragraphs (i) through (iii), inclusive, of Section 9.2(i); "PROPERTY" OR "PROPERTIES" shall mean, unless otherwise specifically limited, real or personal property of any kind, tangible or intangible, choate or inchoate; "PROPERTY REINVESTMENT APPLICATION" shall mean, with respect to any Transfer of property, the application of an amount equal to the Net Proceeds Amount with respect to such Transfer to the acquisition by the Borrower or any Subsidiary of operating assets of the Borrower or any Subsidiary to be used in the principal business of such Person; "REFUNDING BANKERS' ACCEPTANCE" has the meaning set out in Section 2.8(g); "REIMBURSEMENT OBLIGATIONS" means, at any time, the obligations of the Borrower to reimburse the Lender in respect of any Bankers' Acceptance drawn by the Borrower upon the Lender and paid by the Lender on maturity thereof, which remain outstanding and unpaid at such time; 15. "REORGANIZATION" means the reorganization described in Schedule 3; "REPAYMENT SOURCES" means: (a) cash proceeds, net of reasonable offering costs, realized or received by the Borrower from the issuance and sale by the Borrower or any Subsidiary of any debt or equity securities, whether by way of public offering or private placement; and (b) cash proceeds, net of reasonable transaction costs, realized or received by the Borrower pursuant to the Reorganization and available pursuant to the terms of the Reorganization for application to the payment of the Obligations; "SALE-AND-LEASEBACK TRANSACTION" means a transaction or series of transactions pursuant to which the Borrower or any Subsidiary shall sell or transfer to any Person (other than the Borrower or a Wholly-Owned Subsidiary) any property, whether now owned or hereafter acquired, and, as part of the same transaction or series of transactions, the Borrower or any Subsidiary shall rent or lease as lessee (other than pursuant to a Capital Lease), or similarly acquire the right to possession or use of, such property or one or more properties which it intends to use for the same purpose or purposes as such property; "SENIOR DEBT" in respect of any Person, shall mean, as of the date of any determination thereof, all Debt of such Person other than Subordinated Debt; "SENIOR FUNDED DEBT" in respect of any Person, shall mean, as of the date of any determination thereof, all Funded Debt of such Person other than Subordinated Funded Debt; "SENIOR OFFICER" means the president, any executive vice-president, the chief financial officer, principal accounting officer, treasurer, comptroller or the secretary of the Borrower and any other Person designated from time to time as a Senior Officer by the president of the Borrower in writing; "STANDBY FEE" has the meaning specified in Section 3.5; "SUBORDINATED DEBT" in respect of any Person, shall mean, as of the date of any determination thereof, all unsecured Debt of such Person which shall contain or have applicable thereto subordination provisions providing for the subordination thereof to other Debt of such Person; "SUBORDINATED FUNDED DEBT" in respect of any Person, shall mean, as of the date of any determination thereof, all unsecured Funded Debt of such Person which shall contain or have applicable thereto subordination provisions providing for the subordination thereof to other Funded Debt of such Person; "SUBSIDIARY" shall mean, as to any Person, any corporation, association or other business entity in which such Person or one or more of its Subsidiaries or such Person and one or more of its Subsidiaries owns sufficient equity or voting interests to enable it or them (as a group) ordinarily, in the absence of contingencies, to elect a majority of the directors (or Persons 16. performing similar functions) of such entity, and any partnership or joint venture if more than a 50% interest in the profits or capital thereof is owned by such Person or one or more of its Subsidiaries or such Person and one or more of its Subsidiaries (unless such partnership can and does ordinarily take major business actions without the prior approval of such Person or one or more of its Subsidiaries). Unless the context otherwise clearly requires, any reference to a "Subsidiary" is a reference to a Subsidiary of the Borrower; "SUBSIDIARY SHARES" shall mean, with respect to any Person, the shares (or any options or warrants to purchase shares or other securities exchangeable for or convertible into shares) of any Subsidiary of such Person; "SUCCESSOR CORPORATION" is defined in Section 9.2(g); "SYNTHETIC LEASE" shall mean any synthetic lease, tax retention operating lease, off-balance sheet loan or similar off-balance sheet financing product, where such transaction is considered debt for borrowed money for tax purposes but is classified as an operating lease in accordance with GAAP; "TAX" or "TAXES" means all taxes, assessments, levies, imposts, stamp taxes, duties, charges to tax, fees, deductions, withholdings and any restrictions or conditions resulting in a charge imposed, levied, collected, withheld or assessed as of the date of this Agreement or at any time in the future, and all penalty, interest and other payments on or in respect thereof but does not include any tax on the overall income or capital of the Lender; "TERMINATION DATE" means the earlier of (a) the Maturity Date, and (b) the date on which the Obligations shall automatically, or by virtue of a declaration by the Lender made in accordance with this Agreement, become due and payable; "TRANSFER" shall mean, with respect to any Person, any transaction in which such Person sells, conveys, transfers or leases (as lessor) any of its property, including, without limitation, Subsidiary Shares. For purposes of determining the application of the Net Proceeds Amount in respect of any Transfer, the Borrower may designate any Transfer as one or more separate Transfers each yielding a separate Net Proceeds Amount. In any such case, (a) the Disposition Value of any property subject to each such separate Transfer and (b) the amount of Consolidated Total Assets attributable to any property subject to each such separate Transfer shall be determined by ratably allocating the aggregate Disposition Value of, and the aggregate Consolidated Total Assets attributable to, all property subject to all such separate Transfers to each such separate Transfer on a proportionate basis; "U.S. BASE RATE" means, on any day, the greater of (i) the floating rate of interest per annum established or announced from time to time by the Lender, and in effect on such day, as its reference rate for determining rates of interest for U.S. Dollar commercial loans made by the Lender to borrowers in Canada, and (ii) the rate as determined by the Lender equal to (A) the Fed Funds Rate, plus (B) 0.50% per annum; "U.S. BASE RATE LOAN" means any Advance made by the Lender to the Borrower in U.S. Dollars bearing interest by reference to the U.S. Base Rate; 17. "U.S. DOLLAR EQUIVALENT" means, at any time, the amount of U.S. Dollars which could be purchased from the Lender by the payment of a specified amount of another currency using the Lender's relevant spot rate for the sale of U.S. Dollars quoted by the Lender's treasury department at such time; "U.S. DOLLARS" and the symbol "U.S. $" mean lawful money of the United States of America in same day immediately available funds or, if such funds are not available, the form of money of the United States of America which is customarily used in the settlement of international banking transactions on that day; "WHOLLY-OWNED SUBSIDIARY" shall mean any Subsidiary 100% of all of the equity interests (except directors' qualifying shares) and voting interests of which are owned by any one or more of the Borrower and the Borrower's other Wholly-Owned Subsidiaries; "WRITTEN" or "IN WRITING" shall include printing, typewriting, or any electronic means of communication capable of being visibly reproduced at the point of reception including telegraph and telecopier. SECTION 1.2 COMPUTATION OF TIME PERIODS. SECTION 1.2 COMPUTATION OF TIME PERIODS. In this Agreement, in the computation of periods of time from a specified date to a later specified date, unless otherwise expressly stated the word "from" means "from and including" and the words "to" and "until" each mean "to but excluding". SECTION 1.3 ACCOUNTING TERMS. Each accounting term, including all defined terms, used in this Agreement shall be construed in accordance with GAAP and in accordance with the auditing and accounting recommendations and guidelines issued from time to time by the Canadian Institute of Chartered Accountants, as amended from time to time, unless something in the subject matter or the context otherwise is inconsistent therewith. SECTION 1.4 EXTENDED MEANINGS. Unless otherwise specified, any reference in this Agreement to any statute will include all regulations made thereunder or in connection therewith from time to time, and will include such statute as the same may be amended, supplemented or replaced from time to time. Every use of the word "including" herein shall be construed as meaning "including, without limitation". SECTION 1.5 INCORPORATION OF SCHEDULES. The following Schedules annexed hereto shall, for all purposes hereof, form an integral part of this Agreement: Schedule 1 Form of Advance Request Schedule 2 Form of Compliance Certificate 18. Schedule 3 Reorganization Schedule 8.1(h) Subsidiaries Schedule 8.1(l) Financial Statements SECTION 1.6 HEADINGS AND TABLE OF CONTENTS. The inclusion of headings and a table of contents in this Agreement is intended for convenience of reference only and shall not affect in any way the construction or interpretation hereof. SECTION 1.7 SINGULAR, PLURAL, GENDER As used herein, gender is used as a reference term only and applies with the same effect whether the parties are masculine, feminine, corporate or other form, and the singular shall include the plural and the plural the singular, as the context shall require. SECTION 1.8 CONFLICT. In the event of a conflict between the provisions of this Agreement and the provisions of any of the other Loan Documents, the provisions of this Agreement shall prevail. SECTION 1.9 CURRENCY. Unless otherwise expressly stated, any reference herein to any sum of money herein shall be construed as a reference to Canadian Dollars. Whenever any limitation herein is expressed in U.S. Dollars the limitation shall apply and include the Canadian Dollar Equivalent thereof and the equivalent thereof in all other currencies. Whenever any limitation herein is expressed in Canadian Dollars the limitation shall apply and include the U.S. Dollar Equivalent thereof and the equivalent thereof in all other currencies. Any amount denominated in another currency required herein to be expressed at any time in Canadian Dollars or U.S. Dollars shall be so expressed as the Canadian Dollar Equivalent or the U.S. Dollar Equivalent, as the case may be, at such time of such amount. SECTION 1.10 TIME. Unless otherwise expressly stated, any reference herein to time shall be construed as a reference to local time in Toronto, Ontario, Canada, and time is and shall be construed to be of the essence. SECTION 1.11 CONTROL. Unless otherwise expressly stated, any reference herein to "control" shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise and the expressions "controlled by" and "under common control" shall have correlative meanings. 19. SECTION 1.12 WHOLLY OWNED SUBSIDIARY. Unless otherwise expressly stated, any reference herein to a wholly owned Subsidiary of a Person shall mean a Subsidiary of such Person where such Person is the beneficial owner, directly or indirectly, of all of the issued and outstanding shares in the capital of such Subsidiary, other than qualifying shares of such Subsidiary required by any applicable Legal Requirement to be held by any directors or nominee directors, and any reference herein to the ownership of all of the issued and outstanding shares in the capital of a Person shall exclude qualifying shares of such Person required by any applicable Legal Requirement to be held by any directors or nominee directors. SECTION 1.13 REFERENCES TO CONVERSION OF ADVANCES. References to "convert" and "conversion", and other similar terms, in the context of Advances or Types of Advances, shall, unless the context otherwise requires, mean and refer to an election to have the Outstanding Principal Obligations of the referenced Advance or Type of Advance bear interest or fees on a different basis or fixed rate henceforth and so on from time to time, and any reference to the conversion of an Advance or Type of Advance to another Advance or Type of Advance includes, without limitation, issue of Refunding Bankers' Acceptances to provide for the payment of maturing Bankers' Acceptances and the continuation of a LIBOR Loan upon the expiry of the then current LIBOR Period for a successive LIBOR Period. ARTICLE 2 THE CREDIT FACILITIES SECTION 2.1 CREDIT FACILITY. Upon and subject to the terms and conditions of this Agreement, the Lender agrees to extend to the Borrower a non-revolving credit facility available from time to time during the Drawdown Period by way of Advances in an aggregate principal amount such that the maximum aggregate amount of Outstanding Principal Obligations for all Advances made by the Lender under the Credit Facility (after giving effect to the making of any such Advances and any conversion of outstanding Advances from one Advance to another in accordance with Section 2.6) shall not exceed at any time an amount equal at such time to the Commitment, provided that the aggregate principal amount of all Advances by way of overdrafts shall not exceed at any time the maximum aggregate amount of U.S. $10,000,000. Subject to conversion of outstanding Advances from one Advance to another Advance or Type of Advance in accordance with Section 2.6, any payment made on account of Outstanding Principal Obligations under the Credit Facility shall constitute a permanent reduction in the Commitment and may not be reborrowed by the Borrower hereunder. SECTION 2.2 DRAWDOWN AVAILABILITY. Subject to the terms and conditions of this Agreement: 20. (a) the Drawdown Period shall terminate at 11:00 a.m. (Toronto, Ontario time) on the Drawdown Period Termination Date; (b) from and after such time on the Drawdown Period Termination Date, the Borrower shall cease to be entitled to obtain, and, subject to conversion of outstanding Advances from one Advance to another Advance or Type of Advance in accordance with Section 2.6, the Lender shall cease to have any obligation to make, any further Advance; and (c) at such time on the Drawdown Period Termination Date, the Commitment in excess of the Outstanding Principal Obligations at such time shall automatically be cancelled on a permanent basis. SECTION 2.3 ADVANCE REQUESTS. The Borrower if it wishes to obtain an Advance under the Credit Facility, or to convert an existing Advance under the Credit Facility to another Advance under the Credit Facility, shall deliver to the Lender an Advance Request in writing, substantially in the form of Schedule 1 hereto, in respect of such Advance not later than 11:00 a.m. (Toronto, Ontario time): (a) in the case of any Advance by way of LIBOR Loan or BA Advance, three Business Days prior to the proposed date of such Advance; (b) in the case of any other Advance, one Business Day prior to the proposed date of such Advance, except that in the case of any Prime Rate Loan or U.S. Base Rate Loan of U.S. $10,000,000 or less requested by a Borrower by way of overdraft in any of its accounts with the Lender, the Borrower shall use its best efforts to deliver to the Lender in a reasonably timely manner (which may be on the proposed date of such Advance) an Advance Request by telephone or telecopy notice (or such other method of notification as may be agreed upon between the Lender and the Borrower), provided that the Lender shall have no obligation to advance such Advance unless the Lender has received at least one hour prior to the time of the advance of such Advance an Advance Request in writing, substantially in the form of Schedule 1 hereto, in respect of such Advance, specifying the date of the Advance, which date shall be a Business Day in respect of such Advance, the Type of Advance, the aggregate amount thereof and (in the case of a BA Advance) the term or terms to maturity of the requested Bankers' Acceptances or (in the case of a LIBOR Loan) the requested LIBOR Period. Any such Advance Request, once delivered by the Borrower to the Lender, shall be binding, and (subject to the conditions precedent provided for herein conditioning the Borrower's right to obtain the requested, or any, Advance), the Borrower shall be obligated to take the requested Advance on the date specified in such Advance Request. The Lender may rely and act upon, and shall incur no liability under or in respect of this Agreement by in good faith relying or acting upon, any Advance Request under this Section 2.3 given by telephone or telecopier (or other method of notification as may be agreed upon between the Lender and the Borrower) believed by the Lender to be genuine (without any verification inquiries) and to be 21. signed or sent or given on behalf of the Borrower or by acting upon any representation or warranty of the Borrower made or deemed to be made hereunder by reason of or as a result of such Advance Request. SECTION 2.4 ADVANCES UNDER THE CREDIT FACILITY. The aggregate of all Loans to be made by the Lender in connection with any particular Advance under the Credit Facility, shall not be less than the lesser of (i) the aggregate amount of the Commitment in respect of the Credit Facility not utilized by way of outstanding Advances, and (ii) U.S. $10,000,000. SECTION 2.5 CURRENCY. Subject to Sections 6.1, 10.4 and 10.5, Advances under the Credit Facility shall only be denominated, at the option of the Borrower, in Canadian Dollars or U.S. Dollars, and any Advance denominated in either such currency shall be repayable, and all interest and fees in respect thereof or in connection therewith shall accrue and be payable, by the Borrower in like currency. SECTION 2.6 CONVERSION OF ADVANCE. Subject to the terms and conditions hereof, the Borrower shall be entitled from time to time to convert any outstanding Advance to any other Advance or Type of Advance under the Credit Facility by giving notice thereof to the Lender in accordance with Section 2.3, provided that: (a) such conversion does not result in the Outstanding Principal Obligations exceeding the then current Commitment of the Lender; (b) no such conversion of a BA Advance shall be made or purported to be made prior to the maturity date of any Bankers' Acceptance purchased or issued hereunder in respect of such BA Advance; and (c) no such conversion of a LIBOR Loan shall be made or purported to be made prior to the last day of the LIBOR Period applicable to such LIBOR Loan. Any Advance so converted shall cease to bear interest and fees as the former Advance, and shall begin to bear interest and fees as the new Advance, on and as of the date of such conversion. If the Borrower gives notice to the Lender that all or any portion of the principal amount of, or the BA Discount Proceeds in respect of, any new Advance to be advanced by the Lender to the Borrower is to be applied to repay Outstanding Principal Obligations in respect of any outstanding Advance, the Lender shall directly apply such amount to repay such Outstanding Principal Obligations owing to the Lender in satisfaction and discharge of the Lender's obligations hereunder to deposit such amount into the Borrower's Account. 22. SECTION 2.7 LIBOR MATURITY. Any LIBOR Loan in respect of which the Borrower shall not have given notice of the conversion of such outstanding LIBOR Loan to another Advance in accordance with Section 2.3 shall automatically be converted to a U.S. Base Rate Loan upon the expiry of the then current LIBOR Period. Should the Borrower not be entitled to a U.S. Base Rate Loan at all or in an amount sufficient to fully repay the principal of, and accrued and unpaid interest on, such outstanding LIBOR Loan, such principal and interest shall be due and payable on the expiry of the then current LIBOR Period and shall bear interest in accordance with Section 3.2. SECTION 2.8 CERTAIN PROVISIONS RELATING TO BANKERS' ACCEPTANCES. (a) Bankers' Acceptances shall be issued and shall mature on a Business Day. Each Bankers' Acceptance shall have, subject to availability, a term of at least 30 days and not more than 364 days excluding days of grace, shall mature on or before the Maturity Date and shall be in form and substance satisfactory to the Lender. No Bankers' Acceptance may be made or accepted on or after the Termination Date, nor may any Bankers' Acceptance be prepaid, whether pursuant to Section 4.2 or otherwise, or converted to another Type of Advance, prior to the maturity date of such Bankers' Acceptance. (b) To facilitate the acceptance of Bankers' Acceptances under this Agreement, the Borrower shall, upon execution of this Agreement and from time to time as required, provide to the Lender Drafts, in form satisfactory to the Lender, duly executed and endorsed in blank by the Borrower in quantities sufficient for the Lender to fulfill its obligations hereunder. In addition, the Borrower hereby appoints the Lender as its attorney to sign and endorse on its behalf, in handwriting or by facsimile or mechanical signature as and when deemed necessary by the Lender, blank forms of Bankers' Acceptances and the Borrower shall deliver to the Lender powers of attorney, in form satisfactory to the Lender, whereby the Borrower appoints the Lender as its attorney to sign and endorse on its behalf, in handwriting or by facsimile or mechanical signature blank forms of Bankers' Acceptances in accordance with the terms of such powers of attorney. The Borrower recognizes and agrees that all Bankers' Acceptances signed and/or endorsed on its behalf by the Lender shall bind the Borrower as fully and effectually as if signed in the handwriting of and duly issued by the proper signing officer of the Borrower. The Lender is hereby authorized to issue such Bankers' Acceptances endorsed in blank in such Face Amounts as may be determined by the Lender provided that the aggregate amount thereof is equal to the aggregate Face Amount of Bankers' Acceptances required to be accepted by the Lender. The Lender shall not be responsible or liable for its failure to accept a Bankers' Acceptance if the cause of such failure is, in whole or in part, due to the failure of the Borrower to provide duly executed and endorsed Drafts to the Lender on a timely basis nor shall the Lender be liable for any damage, loss or other claim arising by reason of any loss or improper use of any such instrument except loss or improper use arising by reason of the gross negligence or willful misconduct of the Lender, its officers, employees, agents or representatives. The Lender shall maintain a record with respect to Bankers' Acceptances (i) received by it from the Borrower in blank hereunder, (ii) voided by it for any reason, (iii) accepted by it hereunder, (iv) purchased by it hereunder, and (v) cancelled at their respective maturities. 23. (c) Drafts of the Borrower to be accepted as Bankers' Acceptances hereunder shall be duly executed by a duly authorized officer of the Borrower. Notwithstanding that any person whose signature appears on any Bankers' Acceptance as a signatory for the Borrower may no longer be an authorized signatory for the Borrower at the date of issuance of a Bankers' Acceptance, such signature shall nevertheless be valid and sufficient for all purposes as if such authority had remained in force at the time of such issuance and any such Bankers' Acceptance so signed shall be binding on the Borrower. (d) On the requested date of Advance, the Lender agrees to purchase from the Borrower, at the face amount thereof discounted by the BA Reference Rate, any Bankers' Acceptance accepted by it and provide to the Borrower, the amount of the BA Discount Proceeds in respect thereof, which amount (for greater certainty) shall be net of the amount of the Acceptance Fee payable by the Borrower to the Lender under Section 3.4 in respect of such Bankers' Acceptance. (e) The Lender may at any time and from time to time hold, sell, rediscount or otherwise dispose of any or all Bankers' Acceptances accepted and purchased by it. (f) The Borrower waives presentment for payment and any other defense to payment of any amounts due to the Lender in respect of a Bankers' Acceptance accepted by it pursuant to this Agreement which might exist solely by reason of such Bankers' Acceptance being held, at the maturity thereof, by the Lender in its own right and the Borrower agrees not to claim any days of grace if the Lender as holder sues the Borrower on any such Bankers' Acceptance for payment of the amount payable by the Borrower thereunder. (g) With respect to each Bankers' Acceptance, the Borrower, prior to the occurrence and continuation of a Default or an Event of Default, may give irrevocable written notice by means of an Advance Request (or such other method of notification as may be agreed upon between the Lender and the Borrower) to the Lender at or before 11:00 a.m. (Toronto, Ontario time) not less than two Business Days prior to the maturity date of such Bankers' Acceptance of the Borrower's intention to issue one or more Bankers' Acceptances on such maturity date (each a "Refunding Bankers' Acceptance") to provide for the payment of such maturing Bankers' Acceptance (it being understood that payments by the Borrower and fundings by the Lender in respect of each maturing Bankers' Acceptance and each related Refunding Bankers' Acceptance shall be made on a net basis reflecting the difference between the Face Amount of such maturing Bankers' Acceptance and the BA Discount Proceeds (net of the applicable Acceptance Fee) of such Refunding Bankers' Acceptance). Any funding on account of any maturing Bankers' Acceptance must be made at or before 11:00 a.m. (Toronto, Ontario time) on the maturity date of such Bankers Acceptance. If the Borrower fails to give such notice, then subject to satisfaction of the conditions in Section VII hereof, the Borrower shall be irrevocably deemed to have requested and to have been advanced a Prime Rate Loan in the Face Amount of such maturing Bankers' Acceptance on the maturity date of such Bankers' Acceptance from the Lender, which Prime Rate Loan shall thereafter bear interest as such in accordance with the provisions hereof until paid in full. Should the Borrower not be entitled to a Prime Rate Loan at all or in an amount sufficient to fully reimburse the Lender for the Face Amount of a matured Bankers' Acceptance, the Face Amount of such Bankers' Acceptance shall constitute Reimbursement Obligations of the Borrower to the Lender and shall bear interest in accordance with Section 3.6. 24. (h) If the Lender determines in good faith, which determination shall be final, conclusive and binding upon the Borrower, and notifies the Borrower that, by reason of circumstances affecting the money market, there is no competitive market for Bankers' Acceptances, then, (i) the right of the Borrower to request an Advance by way of Bankers' Acceptances shall be suspended until the Lender determines that the circumstances causing such suspension no longer exist and the Lender so notifies the Borrower; and (ii) any Advance Request which is outstanding shall be deemed to constitute a request for an Advance by way of a Prime Rate Loan. (i) The Lender shall promptly notify the Borrower of the suspension of the Borrower's right to request an Advance by way of Bankers' Acceptances and of the termination of any such suspension. (j) If an Event of Default shall have occurred and then be continuing (whether or not any declaration pursuant to Article 10 is made), the Borrower shall forthwith provide Cover to, and thereafter shall maintain Cover with, the Lender in respect of all outstanding Bankers' Acceptances. (k) Bankers' Acceptances accepted or purchased by the Lender under this Agreement may, at the option of the Lender, be issued in the form of a "depository bill" and deposited with a "clearing house", as each such term is defined in the Depository Bills and Notes Act (Canada). SECTION 2.9 REDUCTION OR TERMINATION OF COMMITMENT. (a) The Borrower shall have the right, exercisable by it at any time and from time to time upon not less than three Business Days prior written notice to the Lender and without penalty, but subject to the terms of this Section 2.9, to terminate any portion of the Commitment in respect of the Credit Facility not being used by the Borrower, provided that any such partial termination shall be in an amount not less than the lesser of (i) U.S. $10,000,000 and integral multiples thereof, and (ii) the entire amount of the unused Commitment. Notwithstanding the foregoing, the Borrower shall not be entitled to thereby (i) reduce the Commitment of the Lender below the then Outstanding Principal Obligations under the Credit Facility, or (ii) to prepay any outstanding BA Advance or LIBOR Loan, unless the Borrower shall pay to the Lender all interest accrued to the date of such prepayment on the Advances so prepaid, provide Cover to and thereafter maintain Cover with, the Lender in respect of all outstanding Bankers' Acceptances related to such BA Advances and on demand pay to the Lender any additional amounts payable pursuant to Section 11.7. No such reduction or termination of the Commitment in respect of the Credit Facility pursuant to this Section may be reinstated without the prior written approval of the Lender. Concurrently with the giving of any such notice, the Borrower shall prepay the Standby Fee that will have accrued due on the amount of the terminated portion of the Commitment to the effective date of such termination. (b) On the Termination Date in respect of the Credit Facility, all Commitments in respect of the Credit Facility shall be terminated in their entirety. 25. SECTION 2.10 USE OF PROCEEDS. The proceeds of the Advances shall be used by the Borrower only for Permitted Purposes, provided that as against the Borrower and any other Person, the Lender shall not have any responsibility as to the use of any such proceeds. ARTICLE 3 INTEREST AND FEES SECTION 3.1 INTEREST ON PRIME RATE LOANS. The Borrower shall pay interest on the outstanding principal amount of each Prime Rate Loan outstanding under the Credit Facility from the date on which such Prime Rate Loan was made until such outstanding principal amount shall have been repaid in full, and both before and after maturity, default and judgment, at a floating rate per annum equal to the Prime Rate in effect from time to time plus the Applicable Margin in respect of Prime Rate Loans in effect from time to time, calculated daily and compounded and payable (a) monthly in arrears on the last Business Day of each month of each year, and (b) on the date on which such Prime Rate Loan becomes due and payable or is converted to another Type of Advance as contemplated by Article 2, in each case based on the actual number of days elapsed and a year of 365 or 366 days, as the case may be. SECTION 3.2 INTEREST ON U.S. BASE RATE LOANS. The Borrower shall pay interest on the outstanding principal amount of each U.S. Base Rate Loan outstanding under the Credit Facility from the date on which such U.S. Base Rate Loan was made until such outstanding principal amount shall have been repaid in full, and both before and after maturity, default and judgment, at a floating rate per annum equal to the sum of the U.S. Base Rate in effect from time to time plus the Applicable Margin in respect of U.S. Base Rate Loans in effect from time to time, calculated daily and compounded and payable (a) monthly in arrears on the last Business Day of each month of each year, and (b) on the date on which such U.S. Base Rate Loan becomes due and payable or is converted to another Type of Advance as contemplated by Article 2, in each case based on the actual number of days elapsed and a year of 365 or 366 days, as the case may be. SECTION 3.3 INTEREST ON LIBOR LOANS. The Borrower shall pay interest on the outstanding principal amount of each LIBOR Loan outstanding under the Credit Facility from the date on which such LIBOR Loan was made until such outstanding principal amount shall have been repaid in full, and both before and after maturity, default and judgement, at a rate per annum equal at all times during each LIBOR Period for such LIBOR Loan to the sum of the LIBO Rate for such LIBOR Period plus the Applicable Margin in respect of LIBOR Loans in effect from time to time, in each case calculated daily and compounded and payable (a) in arrears on the last day of such LIBOR Period unless such LIBOR Period is greater than 90 days, in which case such interest shall be calculated daily and compounded and payable quarterly in arrears as well as on the last day of such LIBOR Period, and (b) on the date on which such LIBOR Loan otherwise becomes due and 26. payable or is converted to another Type of Advance as contemplated by Article 2, in each case based on the actual number of days elapsed and a year of 360 days. SECTION 3.4 ACCEPTANCE FEE. The Borrower shall pay the Lender a fee equal to the Applicable Margin in respect of BA Advances in effect from time to time of the Face Amount of each Bankers' Acceptance accepted or purchased by the Lender multiplied by a fraction the numerator of which is the term to maturity of such Bankers' Acceptance, expressed in days, and the denominator of which is 365 (or 366 during a year of 366 days), which fee shall be paid as a condition precedent to any obligation on the part of the Lender to accept or purchase such Bankers' Acceptance. If at the time of an increase in the Applicable Margin in respect of BA Advances there exists any outstanding BA Advance, then the Borrower shall pay to the Lenders an amount in respect of such BA Advance equal to the product obtained by multiplying (i) the product of (A) the difference between the Applicable Margin in respect of BA Advances in effect prior to such change in the Applicable Margin in respect of BA Advances and the Applicable Margin in respect of BA Advances in effect immediately after such change, and (B) the aggregate Face Amount of the Bankers' Acceptances in respect of such BA Advance, by (ii) the quotient obtained by dividing (A) the number of days to maturity remaining in respect of such BA Advance at such time, by (B) 365 days. Any payment in respect of an outstanding BA Advance as a result of a change in the Applicable Margin in respect of BA Advances shall be paid on the maturity date of the Bankers' Acceptances in respect of such BA Advance. SECTION 3.5 STANDBY FEE. The Borrower shall pay the Lender a standby fee in respect of the Credit Facility at the rate of 0.2% per annum (based on a year of 365 or 366 days, as the case may be) on the Available Commitment for the period from and including February 24, 2006 to and including the Drawdown Period Termination Date, expressed in Canadian Dollars and calculated on a daily basis and compounded and payable quarterly in arrears on the last Business Day of January, April, July and October in each year and on the Drawdown Period Termination Date. SECTION 3.6 REIMBURSEMENT OBLIGATIONS. The amount of any Reimbursement Obligation may, if the applicable conditions precedent specified in Article 7 hereof have been satisfied, be paid with the proceeds of Prime Rate Loans or, as provided in Section 2.8(g), by the purchase of Refunding Bankers' Acceptances. Pending any such repayment in full, the Borrower shall pay to the Lender interest on any Reimbursement Obligation at the Past Due Rate, from and including the date on which such Reimbursement Obligations arose to the date of payment in full, calculated daily and compounded monthly in arrears based on the number of days elapsed and a year of 365 or 366 days, as the case may be, and payable on demand, both before and after judgement in respect thereof. SECTION 3.7 YEARLY RATE STATEMENTS. For the purpose of complying with the Interest Act (Canada), it is expressly stated that: 27. (a) where interest is calculated pursuant hereto at a rate based on a 365 day period, the yearly rate or percentage of interest to which such rate is equivalent is such rate multiplied by the actual number of days in the year (365 or 366, as the case may be) divided by 365; (b) where interest is calculated pursuant hereto at a rate based on a 360 day period, the yearly rate or percentage of interest to which such rate is equivalent is such rate multiplied by the actual number of days in the year (365 or 366, as the case may be) divided by 360; and (c) the rates of interest specified in this Agreement are nominal rates and not effective rates or yields and the parties hereto acknowledge that there is a material distinction between the nominal and effective rates of interest, that they are capable of making the calculations necessary to compare such rates and that the principle of deemed reinvestment of interest shall not apply to any calculations of interest hereunder. ARTICLE 4 REPAYMENT OF OBLIGATIONS SECTION 4.1 REPAYMENT ON MATURITY. The Obligations shall become due and payable, and shall be paid in full, on the Termination Date. SECTION 4.2 VOLUNTARY REPAYMENT Subject to the terms and conditions hereof, the Borrower may, without bonus or penalty, upon prior written notice to the Lender specifying the proposed date and aggregate principal amount of the prepayment and the Advance or Advances on account of which such prepayment is to be applied, prepay the specified principal amount on account of the then Outstanding Principal Obligations under the Credit Facility, together with all accrued interest to the date of such prepayment on the specified principal amount so prepaid and any other amounts payable to the Lender by the Borrower hereunder in respect thereof including, without limitation, pursuant to Section 11.7. Such notice shall be given at or before 11:00 a.m. (Toronto, Ontario time) not less than three Business Days prior to the proposed date of prepayment and, once given, any such notice shall be irrevocable and binding upon the Borrower. Notwithstanding the foregoing, the Borrower shall not be entitled to prepay any outstanding BA Advance or LIBOR Loan, unless the Borrower shall pay to the Lender all interest accrued to the date of such prepayment on the Advances so prepaid, provide Cover to and thereafter maintain Cover with, the Lender in respect of all outstanding Bankers' Acceptances related to such BA Advances and on demand pay to the Lender any additional amounts payable pursuant to Section 11.7, nor shall the Borrower be entitled to give any such notice or to make any such prepayment unless each partial prepayment is in an aggregate principal amount of not less than U.S. $10,000,000. 28. SECTION 4.3 MANDATORY REPAYMENT OF CREDIT FACILITY. Subject to the terms and conditions hereof, the Outstanding Principal Obligations under the Credit Facility shall be repaid forthwith, upon demand by or on behalf of the Lender, to the extent that the Outstanding Principal Obligations under the Credit Facility exceed the then current Commitment in respect of the Credit Facility, whether as a result of oversight or otherwise, together with all accrued interest to the date of such repayment on the principal amount so repaid and any other amounts payable to the Lender by the Borrower hereunder in respect thereof including, without limitation, pursuant to Section 11.7, provided that any such repayment of the Outstanding Principal Obligations in respect of any BA Advance shall be discounted for the period to the maturity of the Bankers' Acceptances outstanding in respect of such BA Advance at the Canada Treasury Bill Rate for such discount calculation period in effect on the date of such repayment. SECTION 4.4 EARLY REPAYMENT OF CREDIT FACILITY. The Borrower shall apply net cash proceeds realized or received by the Borrower from all of the Repayment Sources to repay the Outstanding Principal Obligations under the Credit Facilities, together with all accrued interest to the date of such prepayment on the principal amount so prepaid and any other amounts payable to the Lender by the Borrower hereunder in respect thereof including, without limitation, pursuant to Section 11.7, provided that any such repayment of the Outstanding Principal Obligations in respect of any BA Advance shall be discounted for the period to the maturity of the Bankers' Acceptances outstanding in respect of such BA Advance at the Canada Treasury Bill Rate for such discount calculation period in effect on the date of such repayment. ARTICLE 5 PAYMENTS AND ACCOUNTS SECTION 5.1 MAINTENANCE OF ACCOUNTS. The Borrower shall open in its name and maintain the Borrower's Accounts with the Lender at the Lender's Branch. SECTION 5.2 PAYMENTS BY BORROWER. Any payment by the Borrower on account of any amount due and payable by it hereunder, whether on account of principal, interest, fees, costs and expenses or otherwise, shall be made by the Borrower in the currency in which such payment is due in immediately available funds to the Lender at the Lender's Branch. No payment by the Borrower shall be effective until such time as it is so paid to the Lender at the Lender's Branch. The Borrower shall make all payments hereunder regardless of any counterclaim, compensation or set-off rights of the Borrower. 29. SECTION 5.3 DUE DATE OF PAYMENTS. Whenever any payment hereunder shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of interest or fees, as the case may be, payable on such date, provided that if any such extension would cause repayment of the principal of or interest on a LIBOR Loan to be made in the next following calendar month, such payment shall be made on the last preceding Business Day with interest payments adjusted accordingly. SECTION 5.4 TIME OF PAYMENTS. All payments to be made by the Borrower to the Lender shall be paid in immediately available funds no later than 11:00 a.m. (Toronto, Ontario time) on the date of payment in order to obtain same day credit. Any such payment so paid after such time on such date shall be deemed to have been paid on the next following Business Day. SECTION 5.5 FORM AND AMOUNT OF PAYMENTS. All amounts due hereunder, whether for principal, interest, or otherwise, in respect of any Advance denominated in Canadian Dollars shall be paid in full by the Borrower in Canadian Dollars, and all amounts due hereunder, whether for principal, interest fees or otherwise, in respect of any Advance denominated in U.S. Dollars shall be paid in full in U.S. Dollars, and all amounts due hereunder in respect of costs and expenses shall be paid in full by the Borrower in the currency in which such costs or expenses were originally incurred, in any case without set-off, withholding or deduction of any kind or nature whatsoever unless required by law, and then subject to Section 11.8. SECTION 5.6 CHARGING BORROWER'S ACCOUNTS. In respect of all Obligations the Borrower hereby irrevocably authorizes and instructs the Lender to withdraw from or debit, from time to time when such Obligations are due and payable, any account of the Borrower with the Lender for the purpose of satisfying payment thereof. Without limiting the generality of the foregoing, the Borrower hereby authorizes the Lender, if and to the extent that any payment owed to the Lender by the Borrower in respect of such Obligations is not made when due hereunder, to charge from time to time against any or all of the Borrower's accounts with the Lender, including without limitation the Borrower's Accounts, the full amount of the payment so due. ARTICLE 6 CURRENCY AND COSTS SECTION 6.1 MARKET DISRUPTION AND ILLEGALITY. If the Lender determines in good faith and acting reasonably, which determination shall be final, conclusive and binding upon the Borrower, and notifies the Borrower that (a) by reason of circumstances affecting financial markets inside or outside Canada or the United 30. States, as the case may be, deposits of U.S. Dollars are unavailable to Canadian banks generally; (b) adequate and fair means do not exist for ascertaining the applicable interest rate on the basis provided in the definition of LIBO Rate or U.S. Base Rate, as the case may be; (c) the making or continuation of any U.S. Base Rate Loans or LIBOR Loans, as the case may be, has been made impracticable by the occurrence of an event (other than a mere increase in rates payable by the Lender to fund the Loans) which materially and adversely affects the funding of the Credit Facility at any interest rate computed on the basis of the LIBO Rate or the U.S. Base Rate, as the case may be; or (d) any change to the present, or the introduction of any future, Legal Requirement or any guideline, directive, policy, request or requirement with which it is customary for the Lender to comply (whether or not having the force of law) of any Governmental Authority, or in the interpretation or application thereof by any Governmental Authority, has made it unlawful for the Lender to make, fund, or maintain or to give effect to its obligations in respect of any Type of Advance as contemplated hereby, then the Lender shall notify the Borrower in writing thereof and: (a) the right of the Borrower to select any affected Type of Advance shall be suspended until the Lender determines in good faith that the circumstances causing such suspension no longer exist and the Lender so notifies the Borrower; (b) if any affected Type of Advance is not yet outstanding, any outstanding request for such Type of Advance shall be cancelled and the Type of Advance requested therein shall not be made; and (c) if any Advance is already outstanding at any time when the right of the Borrower to select that Type of Advance is suspended, in addition to its rights under Section 4.2, the Borrower shall, by written notice to the Lender given within three Business Days of the date of the notification, elect to (i) prepay within (A) seven Business Days of the date of such written notice to the Lender such Advance (in the case of Outstanding Principal Obligations in respect of any BA Advance, discounted for the period to the maturity of the Bankers' Acceptances outstanding in respect of such BA Advance at the Canada Treasury Bill Rate for such discount calculation period in effect on the date of such prepayment), but should it do so the Borrower shall pay to the Lender all interest accrued to the date of such prepayment on the Advances so prepaid and on demand all such amounts as are required to compensate the Lender for (A) any Compensating Amount payable pursuant to Section 6.2, and (B) any additional amounts payable pursuant to Section 11.7, or (ii) convert, immediately, or in the case of a LIBOR Loan, effective the last day of the then current LIBOR Period applicable thereto (or on such earlier date as may be required to comply with any applicable Legal Requirement), or in the case of a BA Advance, on the maturity date of the outstanding Bankers' Acceptances in respect of such BA Advance (or on such earlier date as may be required to comply with any applicable Legal Requirement), such outstanding Advance to another Type of Advance which the Borrower is then entitled to select, failing which such outstanding Advance shall be converted, at the sole discretion of the Lender, to another Type of Advance which the Borrower is then entitled to select as of the date specified above for conversion of such outstanding Advance by the Borrower or, if the Borrower is 31. not then entitled to select any other Type of Advance, the Borrower shall immediately prepay such Advance as above provided. If the provisions of this Section 6.1 apply or prepayment is made of any Advance, the Lender and the Borrower shall negotiate in good faith with a view to providing alternative funding arrangements for the Borrower in a similar amount (or the equivalent thereof in another currency) and on similar terms to the amount affected or prepaid to the extent reasonably practicable, provided that such alternative funding arrangements shall not be, in the reasonable judgment of the Lender, materially disadvantageous to the Lender. SECTION 6.2 ADDITIONAL PAYMENTS. If subsequent to the date hereof (a) any change in applicable Legal Requirements or any change in the interpretation or application thereof by any Governmental Authority; or (b) compliance by the Lender with any guideline, direction, request or requirement with which it is customary for the Lender to comply (whether or not having the force of law) of any Governmental Authority shall have the effect of: (a) increasing the cost to the Lender (which it would not otherwise have incurred) of continuing to provide or maintain the Credit Facility (including, without limitation, the costs of maintaining any reserve or special deposit or similar requirements with respect to this Agreement, or with respect to its obligations hereunder or thereunder), other than an increased cost resulting from a generally applicable higher rate of tax imposed on the overall net income or capital of the Lender; (b) imposing on the Lender or expecting there to be maintained by the Lender any additional reserve, special deposit or similar requirement or any additional capital adequacy or additional capital requirement (including, without limiting the generality of the foregoing, under any Capital Adequacy Guideline or any other requirement which affects the Lender's allocation of capital resources to its obligations) in respect of the Lender's obligations hereunder; (c) reducing any amount paid or payable to the Lender under this Agreement in any amount which is material; (d) causing the Lender to make any payment or to forego any return, on a basis calculated by reference to any amount received or receivable by the Lender under this Agreement; or (e) directly or indirectly reducing the effective return to the Lender under this Agreement or on the Lender's overall capital as a result of entering into this Agreement or as a result of any of the transactions or obligations contemplated by this Agreement (other than a reduction resulting from a generally applicable higher rate of tax imposed on the net income or capital of the Lender) received or receivable by the Lender under this Agreement; 32. the Borrower shall, subject to the terms and conditions hereof, pay such amount (the "Compensating Amount") as may be necessary to compensate the Lender for and will indemnify the Lender against any such additional cost, reduction, payment or foregone return. The payment by the Borrower of such Compensating Amount is not, and shall not be deemed to be or construed as, a repayment on account of any Outstanding Principal Obligations. The Lender shall, forthwith after the Lender becoming aware of the occurrence of an event entitling the Lender to the payment of a Compensating Amount and the Lender determining to claim such Compensating Amount (which determination the Lender shall make without undue delay), give notice to the Borrower of the Compensating Amount claimed with details of the events giving rise thereto and shall at that time or within twenty (20) days thereafter provide to the Borrower a certificate setting out in reasonable detail a compilation of the Compensating Amount claimed (and where appropriate the Lender's reasonable allocation to its Advances hereunder of Compensating Amounts with respect to the aggregate of such similar credits granted by the Lender affected by such event) or, if the Lender is then unable to determine the Compensating Amount or the method of compilation thereof an estimate of such Compensating Amount and/or the method or the basis on which the Lender estimates the calculation will be made which estimate will be confirmed or adjusted by the aforesaid certificate. The certificate of the Lender with respect to the Compensating Amount shall be conclusive evidence of the amount thereof, absent manifest error. The Borrower shall within thirty (30) days of receipt of such notice from the Lender pay to the Lender the Compensating Amount (or the estimated Compensating Amount) claimed but, if the Compensating Amount claimed and paid is greater or lesser than the Compensating Amount as finally determined, the Lender or the Borrower, as the case may be, shall pay to the other the amount required to adjust the payment to the Compensating Amount required to be paid. The obligation to pay such a Compensating Amount for subsequent periods will continue, subject as herein provided, until the earlier of the payment in full of the Obligations owed to the Lender and the lapse or cessation of the event giving rise to the Compensating Amount. SECTION 6.3 PREPAYMENT AND CONVERSION. In addition to the Borrower's rights under Section 4.2, if any notification of a Compensating Amount is given under Section 6.2 in respect of any Advance, then the Borrower may, by written notice to the Lender given within thirty Business Days next following the date of the notification, elect to prepay such Advances (in the case of Outstanding Principal Obligations in respect of any BA Advance, discounted for the period to the maturity of the Bankers' Acceptances outstanding in respect of such BA Advance at the Canada Treasury Bill Rate for such discount calculation period in effect on the date of such prepayment) or to convert all such Advances to any other Type of Advance, but should it do so the Borrower shall pay to the Lender all interest accrued to the date of such prepayment on the Advances so prepaid and on demand all such amounts as are required to compensate the Lender for (a) any Compensating Amount payable pursuant to Section 6.2, and (b) any additional amounts payable pursuant to Section 11.7. 33. SECTION 6.4 MITIGATION. If the provisions of Section 6.1 become applicable or any Compensating Amount becomes payable pursuant to Section 6.2, the Lender shall use its reasonable efforts (subject to any legal and regulatory restrictions) to avoid the necessity of invoking the provisions of Section 6.1 or to avoid the need for paying, or to reduce, such additional Compensating Amount, including changing the jurisdiction of its applicable lending office; provided that the taking of any such action would not, in the reasonable judgment of the Lender, be materially disadvantageous to the Lender. SECTION 6.5 MANDATORY PREPAYMENT. In the event that the provisions of Section 6.1 become applicable or any Compensating Amount becomes payable to the Lender pursuant to Section 6.2, the Borrower may, at its own expense and in its sole discretion terminate the Commitment of the Lender and prepay all Outstanding Principal Obligations to the Lender (in the case of Outstanding Principal Obligations in respect of any BA Advance, discounted for the period to the maturity of the Bankers' Acceptances outstanding in respect of such BA Advance at the Canada Treasury Bill Rate for such discount calculation period in effect on the date of such prepayment); provided that (a) the Borrower shall have paid to the Lender (i) the Outstanding Principal Obligations in respect of (in the case of Outstanding Principal Obligations in respect of any BA Advance, discounted as above provided) and interest accrued to the date of such payment on the Advances made by the Lender hereunder, (ii) any Compensating Amount payable pursuant to Section 6.2, (iii) any additional amounts payable pursuant to Section 11.7, (iv) Standby Fees accrued to the date of suspension of all Types of Advances pursuant to Section 6.1 or the date of such payment, whichever is earlier, and (v) all other amounts (excluding Standby Fees) owed to the Lender hereunder, and (b) such termination of the Commitment of the Lender and prepayment of Advances is not prohibited by any Legal Requirement. ARTICLE 7 CONDITIONS PRECEDENT TO LENDING SECTION 7.1 CONDITIONS PRECEDENT TO INITIAL ADVANCE. The obligation of the Lender to make its initial Advance under the Credit Facility is subject to the Lender having received the following, each dated as of a date satisfactory to the Lender and in form and substance reasonably satisfactory to the Lender, provided that such condition precedent, being for the sole benefit of the Lender, may be unilaterally waived by it in whole or in part at any time on or before the date of the initial Advance: (a) certified copies of the articles and borrowing by-laws of the Borrower, together with a related certificate of non-restriction; (b) certified copies of the resolutions of the board of directors of the Borrower approving and authorizing the execution, delivery and performance of this Agreement; 34. (c) a certificate of status or like certificate with respect to the Borrower issued by the appropriate Governmental Authority of the jurisdiction of its incorporation; (d) a certificate of the Secretary or an Assistant Secretary of the Borrower, certifying as to the names and true signatures of its officers authorized to sign this Agreement and the other Loan Documents; (e) a certificate of a Senior Officer of the Borrower to the effect that all representations and warranties of the Borrower set forth in Article 8 are true in all material respects as of the initial Drawdown Date; (f) such other certificates and documentation relating to the Borrower or this Agreement as separately agreed to by the Borrower and the Lender; (g) a certificate of a Senior Officer of the Borrower that there has been no material adverse change in the financial condition or results of operations of the Borrower and its Subsidiaries, taken as a whole, from the financial condition and results of operations of the Borrower and its Subsidiaries presented in the financial statements listed in Schedule 8.1(l); (h) favourable opinion of counsel for the Borrower to and in favour of the Lender in form and substance reasonably satisfactory to the Lender and its counsel; and (i) evidence satisfactory to the Lender that the Acquisition will be completed in accordance with the terms of the Acquisition disclosed in writing by the Borrower to the Lender and that the proceeds of the initial Advance will be used by the Borrower only for the completion of the Acquisition or another Permitted Purpose disclosed in writing by the Borrower to the Lender. SECTION 7.2 CONDITIONS PRECEDENT TO EACH ADVANCE. The obligation of the Lender to make any Advance (including the initial Advance) under the Credit Facility is subject to the fulfilment of each of the following conditions precedent to the reasonable satisfaction of the Lender (provided that each such condition precedent, being for the sole benefit of the Lender, may be unilaterally waived by it in whole or in part at any time either generally or with respect to any particular Advance): (a) the Lender shall have received from the Borrower a duly completed Advance Request in accordance with the provisions of this Agreement in that regard; (b) the representations and warranties set forth herein and in any other Loan Document shall be true and correct in all material respects, both on the date of such Advance Request and on the requested date of Advance; (c) the Borrower shall have observed and performed in all material respects all covenants set forth herein and in any other Loan Document; 35. (d) no Default or Event of Default shall have occurred and be continuing or will result from giving effect to such Advance Request; (e) the making of the requested Advance shall not be prohibited by any Legal Requirement. The submission by the Borrower of an Advance Request shall be deemed to constitute a representation and warranty by the Borrower that the conditions precedent to the making of the Advance requested thereby set forth in this Article 7 have been satisfied in full. ARTICLE 8 REPRESENTATIONS AND WARRANTIES SECTION 8.1 REPRESENTATIONS AND WARRANTIES BY THE BORROWER. The Borrower represents and warrants to the Lender, acknowledging that the Lender is relying thereon without independent inquiry in entering into this Agreement and making Advances from time to time hereunder, that: (a) ORGANIZATION AND QUALIFICATION. The Borrower is a corporation duly incorporated and organized and validly existing and in good standing and up-to-date in the filing of all corporate, financial and other returns under the laws of Canada, the jurisdiction of its incorporation, except where the failure to file any such corporate, financial or other return does not affect the Borrower's good standing and would not otherwise have a Material Adverse Effect; it is duly authorized to do business wherever the nature of its material properties or activities requires authorization, except to the extent that a failure to be so duly authorized would not have a Material Adverse Effect, and it has the corporate right, power and authority and all material governmental licences, authorizations, consents, registrations and approvals required to own and lease its material properties and assets and to conduct the business in which it is presently engaged, except to the extent that the lack thereof would not have a Material Adverse Effect. The Borrower has delivered to the Lender a complete and correct copy of the charter documents and borrowing by-laws of the Borrower, in each case as amended to the date of such delivery, and there have been no amendments to any such charter documents or by-laws other than as have been disclosed to the Lender; (b) CORPORATE POWER. The Borrower has full corporate right, power and authority to enter into and perform its obligations under each of the Loan Documents and the Borrower and each Material Subsidiary has full corporate power and authority to own and operate its properties and to carry on its business as now conducted and as presently proposed to be conducted; (c) CONFLICT WITH OTHER INSTRUMENTS. The execution and delivery by the Borrower of the Loan Documents, the performance by the Borrower of its obligations thereunder and hereunder (as the case may be) and compliance with the terms, conditions and provisions thereof and hereof will not (i) 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 Borrower 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 Borrower or any 36. Subsidiary is bound or by which the Borrower or any Subsidiary or any of their respective properties may be bound or affected, (ii) 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 Borrower or any Subsidiary or (iii) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to the Borrower or any Subsidiary; (d) AUTHORIZATION, GOVERNMENTAL APPROVALS, ETC. The execution and delivery of each of the Loan Documents by the Borrower and the performance by the Borrower of its obligations hereunder and thereunder (as the case may be) have been duly authorized by all necessary corporate action; no consent, approval, order, authorization, licence, exemption or designation of or by any Governmental Authority or other Person is required in connection with the execution, delivery and performance by the Borrower of this Agreement or any of the other Loan Documents except such as have been obtained and true copies of which have been delivered to the Lender on or prior to the Closing Date; and no registration, qualification, designation, declaration or filing with any Governmental Authority is or was necessary to enable or empower the Borrower to enter into and to perform its obligations under the Loan Documents except such as have been made or obtained and are in full force and effect, unamended; (e) DUE EXECUTION. The Loan Documents have each been duly executed and delivered by the Borrower and each constitutes a legal, valid and binding obligation of the Borrower enforceable in accordance with its terms, subject to bankruptcy, insolvency, arrangement and other laws affecting the enforcement of creditors' rights generally (other than those pertaining to settlements, fraudulent conveyances, assignments and preferences) and the availability, in the discretion of a court of competent jurisdiction, of equitable remedies; (f) RANKING. The Obligations rank at least pari passu in right of payment with all other Senior Debt (actual or contingent) of the Borrower including, without limitation, all Senior Debt of the Borrower described in Schedule 8.1(i); (g) OWNERSHIP OF PROPERTY. (i) The Borrower 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 in the financial statements described in Schedule 8.1(l) or purported to have been acquired by the Borrower or any Subsidiary after December 31, 2005 (except as sold or otherwise disposed of in the ordinary course of business), in each case free and clear of Liens prohibited by this Agreement. 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; (ii) Except as disclosed in the financial statements described in Schedule 8.1(l), (A) the Borrower and its Subsidiaries own, possess or are licensed to use all licenses, permits, franchises, authorizations, patents, copyrights, service marks, 37. 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; (B) to the best knowledge of the Borrower, no product of the Borrower 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 Borrower, there is no Material violation by any Person of any right of the Borrower 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 Borrower or any of its Subsidiaries; (h) SUBSIDIARIES. (i) Schedule 8.1(h) contains (except as noted therein) complete and correct lists (A) of the Borrower's Material Subsidiaries, showing, as to each Material 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 Borrower and each other Subsidiary and, as of the Closing Date, whether such Subsidiary is a Material Subsidiary, (B) of the Borrower's Affiliates, other than Material Subsidiaries, and (C) of the Borrower's directors and Senior Officers; (ii) All of the outstanding share capital or similar equity interests of each Subsidiary shown in Schedule 8.1(h) as being owned by the Borrower and its Subsidiaries have been validly issued, are fully paid and nonassessable and are owned by the Borrower or another Subsidiary free and clear of any Lien (except as otherwise disclosed in Schedule 8.1(h)); (iii) Each Subsidiary identified in Schedule 8.1(h) 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 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; (iv) No Subsidiary is a party to, or otherwise subject to any legal restriction or any agreement (other than this Agreement, the agreements listed on Schedule 8.1(h) 38. 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 Borrower or any of its Subsidiaries that owns any outstanding share capital or similar equity interests of such Subsidiary; (i) DEBT. (i) Except as described therein, the financial statements described in Section 8.1(l) set forth a complete and correct list of all outstanding Debt of the Borrower and its Subsidiaries as of December 31, 2005 since which date there has been no Material change in the amounts, interest rates, sinking funds, instalment payments or maturities of the Debt of the Borrower or its Subsidiaries. Neither the Borrower 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 Borrower or such Subsidiary and no event or condition exists with respect to any Debt of the Borrower 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. (ii) Except as disclosed in the financial statements described in Schedule 8.1(l), neither the Borrower 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 9.2(f). (j) TAX MATTERS. The Borrower 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 Borrower or a Subsidiary, as the case may be, has established adequate reserves in accordance with GAAP. The Borrower 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 Borrower 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 Borrower 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, 2001, and the Borrower 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 Borrower 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 2001. 39. (k) LITIGATION AND OTHER PROCEEDINGS. (i) Except as disclosed in the financial statements described in Schedule 8.1(l), there are no actions, suits or proceedings pending or, to the knowledge of the Borrower, threatened against or affecting the Borrower or any Subsidiary or any property of the Borrower or any Subsidiary in any court or 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; (ii) Neither the Borrower 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; (l) FINANCIAL STATEMENTS. The Borrower has delivered to the Lender copies of the financial statements of the Borrower and its Subsidiaries listed on Schedule 8.1(l). 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 Borrower 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); (m) DISCLOSURE. To the best of the knowledge of the Borrower, all information supplied to the Lender by the Borrower, and its Affiliates, shareholders or Subsidiaries (i) with respect to any and all factual matters, is true and correct in all material respects (except as otherwise disclosed to the Lender in writing on or before the Closing Date), (ii) with respect to any projections or forecasts therein and the assumptions on the basis of which such information was prepared, is believed to be reasonable in the circumstances (except as otherwise disclosed to the Lender in writing on or before the Closing Date), and (iii) with respect to any other matters being the subject of opinion, is believed on reasonable grounds to be true and correct in all material respects (except as otherwise disclosed to the Lender in writing on or before the Closing Date). There is no fact known to the Borrower as of the Closing Date which could reasonably be expected to have after the Closing Date a Material Adverse Effect which has not been fully and adequately disclosed to the Lender prior to the Closing Date; (n) PENSION PLANS, COMPLIANCE WITH ERISA. (i) All Canadian pension plans of the Borrower 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 40. required, except where the failure to pay such premiums, contributions and amounts could not reasonably be expected to have a Material Adverse Effect; (ii) The Borrower 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 Borrower 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 Borrower or any ERISA Affiliate, or in the imposition of any Lien on any of the rights, properties or assets of the Borrower 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; (iii) 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; (iv) The Borrower 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; (v) The expected post-retirement benefit obligation (determined as of the last day of the Borrower'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 Borrower and its Subsidiaries is not Material; (vi) The execution and delivery of this Agreement 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; 41. (o) INSURANCE. The Borrower and each of its Material Subsidiaries has in place all insurance policies required in accordance with the provisions of this Agreement and all policy premiums owing or payable in respect thereof have been paid to date; (p) COMPLIANCE WITH LAWS. The Borrower and each of its Subsidiaries has complied and is complying in all material respects with all Legal Requirements applicable to its business, properties and operations in each jurisdiction in which such corporations own any Material properties or carry on any material portion of their respective businesses where the failure to do so could reasonably be expected to have a Material Adverse Effect; and (q) ENVIRONMENTAL MATTERS. Neither the Borrower 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 Borrower 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: (i) neither the Borrower 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; (ii) neither the Borrower 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 (iii) all buildings on all real properties now owned, leased or operated by the Borrower 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 8.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and warranties herein set forth or contained in any certificates or documents delivered to the Lender pursuant hereto shall survive the execution and delivery hereof and any Advance hereunder and any investigation at any time made by or on behalf of the Lender. The representations and warranties shall be deemed to be continuing and repeated by the Borrower upon each Drawdown Date, and all references to the Closing Date contained in such representations and warranties shall be deemed to refer to such Drawdown Date. 42. ARTICLE 9 COVENANTS OF THE BORROWER SECTION 9.1 AFFIRMATIVE COVENANTS. From and after the Closing Date and so long as any Obligations remain outstanding and unpaid or any Commitment of the Lender shall continue to exist, the Borrower shall: (a) PAYMENT OF OBLIGATIONS TO LENDER. Duly and punctually pay to the Lender all amounts payable by the Borrower hereunder as and when the same become due; (b) PAYMENT OF TAXES, ETC. The Borrower 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 Borrower or any Subsidiary, provided that neither the Borrower nor any Subsidiary need pay any such tax or assessment or claims if (i) the amount, applicability or validity thereof is contested by the Borrower or such Subsidiary on a timely basis in good faith and in appropriate proceedings, and the Borrower or a Subsidiary has established adequate reserves therefor in accordance with GAAP on the books of the Borrower or such Subsidiary or (ii) the nonpayment of all such taxes and assessments in the aggregate could not reasonably be expected to have a Material Adverse Effect; (c) MAINTENANCE OF INSURANCE. The Borrower will, and will cause each of its Subsidiaries to, maintain, with insurers reasonably determined by the Borrower 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; (d) PRESERVATION OF CORPORATE EXISTENCE, ETC. The Borrower will at all times preserve and keep in full force and effect its corporate existence. Subject to Sections 9.2(g), 9.2(h) and 9.2(j), the Borrower will at all times preserve and keep in full force and effect the corporate existence of each of its Subsidiaries (unless merged, consolidated or amalgamated into or with the Borrower or another Subsidiary) and all rights and franchises of the Borrower and its Subsidiaries unless, in the good faith judgment of the Borrower, the termination of or failure to preserve and keep in full force and effect such corporate existence, right or franchise could not, individually or in the aggregate, have a Material Adverse Effect; (e) CONFLICT WITH OTHER INSTRUMENTS. Ensure that at all times and from time to time the execution and delivery by it of each of the Loan Documents to which it is a party, the performance by it of its obligations thereunder and the compliance by it with the terms, conditions and provisions thereof will not (i) contravene, result in any breach of, or constitute a 43. default under, or result in the creation of any Lien in respect of any property of the Borrower 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 Borrower or any Subsidiary is bound or by which the Borrower or any Subsidiary or any of their respective properties may be bound or affected, (ii) 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 Borrower or any Subsidiary or (iii) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to the Borrower or any Subsidiary; (f) ENFORCEABILITY. Ensure that at all times and from time to time the execution and delivery of each of the Loan Documents by it and the performance by it of its obligations thereunder will be, upon the execution and delivery thereof, duly authorized by all necessary corporate action; that all consents, approvals, orders, authorizations, licenses, exemptions or designations of or by any Governmental Authority or other Person required in connection with the execution, delivery and performance by it of any such documents have been obtained; and that all registrations, qualifications, designations, declarations or filings with any Governmental Authority necessary to enable or empower it to enter into and to perform its obligations under any such documents have been obtained and continue in full force and effect as required for such purpose; and that any and all Loan Documents to which it is a party have been duly executed and delivered by it and that each will constitute its legal, valid and binding obligation enforceable in accordance with its terms, subject only to bankruptcy, insolvency, arrangement and other laws affecting the enforcement of creditors' rights generally (other than those pertaining to settlements, fraudulent conveyances, assignments and preferences) and the availability, in the discretion of a court of competent jurisdiction, of equitable remedies; (g) COMPLIANCE WITH LAWS, ETC. The Borrower 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; (h) KEEPING OF BOOKS. Keep, and cause each of its Material Subsidiaries to keep, financial books and records systems in accordance with GAAP and all applicable Legal Requirements, and in such books and records make full and correct entries of all financial transactions, properties, liabilities, shareholders equity, participation accounts and business of the Borrower and each of its Material Subsidiaries in accordance with GAAP; (i) MAINTENANCE OF PROPERTIES, ETC. The Borrower 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 Borrower or any Subsidiary from discontinuing 44. the operation and the maintenance of any of its properties if such discontinuance is desirable in the conduct of its business and the Borrower has concluded that such discontinuance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; (j) REPORTING REQUIREMENTS. Furnish to the Lender: (i) annually, as soon as available and in any event within 120 days after the end of each financial year: (A) Audited Financial Statements. The audited annual consolidated financial statements of the Borrower and the Material Subsidiaries for such financial year; and (B) Compliance Certificate. A Compliance Certificate dated the date of delivery thereof, with work sheets attached thereto setting forth in reasonable detail the computations necessary to determine whether the covenants of the Borrower pursuant to Section 9.2 shall have been complied with; (ii) quarterly, as soon as available and in any event within 60 days after the end of each financial quarter of each financial year: (A) Quarterly Financial Statements. The quarterly consolidated financial statements of the Borrower and the Material Subsidiaries for such financial quarter of each financial year; and (B) Compliance Certificate. A Compliance Certificate dated the date of delivery thereof, with work sheets attached thereto setting forth in reasonable detail the computations necessary to determine whether the covenants of the Borrower pursuant to Section 9.2 shall have been complied with; (iii) promptly on reasonable demand, a Compliance Certificate dated the date of delivery thereof, with work sheets attached thereto setting forth in reasonable detail the computations necessary to determine whether the covenants of the Borrower pursuant to Section 9.2 shall have been complied with; (iv) promptly upon becoming aware thereof, notice of any fact or change which has had, is having or is expected to have a Material Adverse Effect; (v) notice of any Subsidiary of the Borrower becoming a Material Subsidiary thereof, forthwith after becoming aware thereof; and (vi) such other information respecting the business and affairs, financial or otherwise, of the Borrower or any of its Subsidiaries or Affiliates, as the Lender may from time to time reasonably request; 45. (k) CURE DEFECTS. Promptly cure or cause to be cured, or cause its Subsidiaries to cure or cause to be cured, any defects in the execution, delivery, validity or enforceability of any of the Loan Documents or any of the other agreements, instruments or documents contemplated thereby or executed pursuant hereto or thereto and at its expense, execute and deliver or cause to be executed and delivered all such agreements, instruments and other documents and make all necessary filings and recordings as the Lender may consider reasonably necessary or desirable for the foregoing purposes; (l) NOTICE OF DEFAULT, ETC. Notify the Lender forthwith in writing of the occurrence of a Default, an Event of Default, and in such notice and in further notices delivered from time to time thereafter to (and in any event forthwith in response to any request for such a notice by) the Lender, provide the Lender with the particulars of the steps being taken to remedy any such Default, Event of Default; (m) CORPORATE DISTRIBUTIONS. Subject to compliance with applicable Legal Requirements, cause such of its Subsidiaries to declare and pay to the Borrower or to such Subsidiary's holding body corporate such dividends and other Corporate Distributions as may be required to provide sufficient funds to the Borrower to duly and punctually pay to the Lender all amounts payable by the Borrower hereunder as and when the same become due; and (n) FURTHER ASSURANCES. At its cost and expense, upon request of the Lender, duly execute and deliver, or cause to be duly executed and delivered, to the Lender all such further agreements, instruments, documents and other assurances and do and cause to be done all such further acts and things as may be necessary or desirable in the reasonable opinion of the Lender to carry out more effectually the provisions and purposes of this Agreement or any of the other Loan Documents. SECTION 9.2 NEGATIVE COVENANTS. From and after the Closing Date and so long as any Obligations remain outstanding and unpaid or any Commitment of the Lender shall continue to exist, the Borrower shall not, unless required pursuant to a Legal Requirement, or, if not required pursuant to a Legal Requirement then without the prior written consent of the Lender, which consent shall not be unreasonably withheld: (a) CONSOLIDATED NET WORTH. The Borrower will not, at any time, permit Consolidated Net Worth to be less than the sum of (a) U.S.$200,000,000, plus (b) an aggregate amount equal to 25% of its Consolidated Net Income (but, in each case, only if a positive number) for each completed fiscal quarter beginning with the fiscal quarter ended March 31, 2003. (b) LIMITATION ON CONSOLIDATED DEBT. The Borrower will not, at any time, permit the Consolidated Debt to exceed 45% of Consolidated Total Capitalization. (c) LIMITATION ON SUBSIDIARY DEBT. The Borrower will not, at any time, permit any Subsidiary to, directly or indirectly, create, incur, assume, guarantee, have outstanding, or otherwise become or remain directly or indirectly liable with respect to any Debt other than: 46. (i) Debt of a Subsidiary outstanding on December 31, 2005 described on Schedule 8.1(i) and any extension, renewal or refunding thereof, provided that (A) the principal amount thereof is not increased in connection with such extension, renewal or refunding and (B) no Default or Event of Default shall exist at the time of such extension, renewal or refunding; (ii) Debt of a Subsidiary owed to the Borrower or a Wholly-Owned Subsidiary; (iii) Debt of a Subsidiary outstanding at the time such Subsidiary becomes a Subsidiary, provided that (A) such Debt shall not have been incurred in contemplation of such Subsidiary becoming a Subsidiary and (B) immediately after such Subsidiary becomes a Subsidiary no Default or Event of Default shall exist, and any extension, renewal or refunding of such Debt, provided, that (x) the principal amount thereof is not increased in connection with such extension, renewal or refunding and (y) no Default or Event of Default shall exist at the time of such extension, renewal or refunding; and (iv) Debt of a Subsidiary in addition to that otherwise permitted by the provisions of this Section 9.2(c); provided that on the date such Subsidiary incurs or otherwise becomes liable with respect to any such additional Debt and immediately after giving effect thereto and to the concurrent retirement of any other Debt (A) no Default or Event of Default shall exist, and (B) such Debt can be incurred within the applicable limitations provided in Sections 9.2(b) and 9.2(d). (d) LIMITATION ON PRIORITY DEBT. The Borrower will not, at any time, permit Priority Debt to exceed 10% of Consolidated Total Capitalization. (e) MINIMUM INTEREST COVERAGE RATIO. The Borrower will not, at any time, permit the Minimum Interest Coverage Ratio to be less than 3.0 to 1.0. (f) LIMITATION ON LIENS. The Borrower will not, and will not permit any of its Subsidiaries to, directly or indirectly create, incur, assume or permit to exist (upon the happening of a contingency or otherwise) any Lien on or with respect to any property or asset (including, without limitation, any document or instrument in respect of goods or accounts receivable) of the Borrower or any such Subsidiary, whether now owned or held or hereafter acquired, or any income or profits therefrom or assign or otherwise convey any right to receive income or profits, except: (i) Liens for taxes, assessments or other governmental charges or levies which are not yet due and payable or the payment of which is not at the time required by Section 9.1(b); (ii) statutory Liens of landlords, undetermined or inchoate Liens and other Liens imposed by law such as Liens of carriers, warehousemen, mechanics, materialmen and other similar Liens, in each case, incurred in the ordinary course of business for sums not yet due and payable or the payment of which is not at the time required by Section 9.1(b); 47. (iii) Liens (other than any Lien imposed by ERISA, the Income Tax Act (Canada), the Pension Benefits Standards Act, 1985 (Canada) and all other applicable Canadian Federal and provincial statutes or regulations governing pension plans) incurred or deposits made in the ordinary course of business (A) in connection with workers' compensation, unemployment insurance, other types of social security or retirement benefits or insurance regulatory requirements or (B) to secure (or to obtain letters of credit that secure) the performance of tenders, statutory obligations, surety bonds, appeal bonds, bids, leases (other than Capital Leases), performance bonds, purchase, construction or sales contracts and other similar obligations, in each case not incurred or made in connection with the borrowing of money, the obtaining of advances or credit or the payment of the deferred purchase price of property; (iv) any attachment or judgment Lien, unless the judgment it secures shall not, within 60 days after the entry thereof, have been discharged or execution thereof stayed pending appeal, or shall not have been discharged within 60 days after the expiration of any such stay; (v) Liens on property or assets of a Subsidiary securing Debt owing to the Borrower or to a Wholly-Owned Subsidiary; (vi) Liens existing on December 31, 2005 and described on Schedule 8.1(i); (vii) leases or subleases granted to others, easements, rights-of-way, restrictions and other similar charges or encumbrances or minor survey exceptions, in each case incidental to, and not interfering with, the ordinary conduct of the business of the Borrower or any of its Subsidiaries, provided that such Liens do not, in the aggregate, materially detract from the value of such property; (viii) any Lien created to secure all or any part of the purchase price, or to secure Debt incurred or assumed to pay all or any part of the purchase price or cost of construction, of property (or any improvement thereon) acquired or constructed by the Borrower or a Subsidiary after the date of the Closing, provided that (A) any such Lien shall extend solely to the item or items of such property (or improvement thereon) so acquired or constructed and, if required by the terms of the instrument originally creating such Lien, other property (or improvement thereon) which is an improvement to or is acquired for specific use in connection with such acquired or constructed property (or improvement thereon) or which is real property being improved by such acquired or constructed property (or improvement thereon), (B) the principal amount of the Debt secured by any such Lien shall at no time exceed an amount equal to the lesser of (i) the cost to the Borrower or such Subsidiary of the property 48. (or improvement thereon) so acquired or constructed and (ii) the Fair Market Value (as determined in good faith by one or more officers of the Borrower to whom authority to enter into the subject transaction has been delegated by the board of directors of the Borrower) of such property (or improvement thereon) at the time of such acquisition or construction, (C) any such Lien shall be created contemporaneously with, or within 12 months after, the acquisition or construction of such property, (D) the aggregate principal amount of all Debt secured by such Liens shall be permitted by the limitation set forth in Section 9.2(b), and (E) at the time of the incurrence of the Debt secured by such Liens, no Default or Event of Default shall exist; (ix) any Lien existing on property of a Person immediately prior to its being consolidated with or merged into the Borrower or a Subsidiary or its becoming a Subsidiary, or any Lien existing on any property acquired by the Borrower or any Subsidiary at the time such property is so acquired (whether or not the Debt secured thereby shall have been assumed), provided that (A) no such Lien shall have been created or assumed in contemplation of such consolidation or merger or such Person's becoming a Subsidiary or such acquisition of property, (B) each such Lien shall extend solely to the item or items of property so acquired and, if required by the terms of the instrument originally creating such Lien, other property which is an improvement to or is acquired for specific use in connection with such acquired property and (C) the aggregate amount of all Debt secured by such Liens shall be permitted by the limitation set forth in Section 9.2(b); (x) any Lien renewing, extending or refunding any Lien permitted by paragraphs (vi), (viii) or (ix) of this Section 9.2(f), provided that (A) the principal amount of Debt secured by such Lien immediately prior to such extension, renewal or refunding is not increased or the maturity thereof reduced, (B) such Lien is not extended to any other property and (C) immediately after such extension, renewal or refunding no Default or Event of Default would exist; (x) any Lien renewing, extending or refunding any Lien permitted by paragraphs (vi), (viii) or (ix) of this Section 9.2(f), provided that (A) the principal amount of Debt secured by such Lien immediately prior to such extension, renewal or refunding is not increased or the maturity thereof reduced, (B) such Lien is not extended to any other property and (C) immediately after such extension, renewal or refunding no Default or Event of Default would exist; (xi) reservations, conditions, limitations and exceptions contained in or implied by statute in the original disposition from the Crown and grants made by the Crown of interests so reserved or excepted; and (xii) other Liens not otherwise permitted by paragraphs (i) through (xi), inclusive, of this Section 9.2(f), provided that the Debt secured by such Liens shall be permitted by the limitation set forth in Sections 9.2(b) and 9.2(d) at the time that the Lien securing such Debt is created. 49. Any Person that becomes a Subsidiary after the date of the Closing shall, for all purposes of this Section 9.2(f), be deemed to have created or incurred, at the time it becomes a Subsidiary, all outstanding Liens of such Person immediately after it becomes a Subsidiary, and any Person extending, renewing or refunding any Debt secured by any Lien shall be deemed to have incurred such Lien at the time of such extension, renewal or refunding. (g) MERGER, CONSOLIDATION, ETC. The Borrower will not, and will not permit any of its Subsidiaries to, consolidate with or merge with any other corporation or convey, transfer or lease substantially all of its assets in a single transaction or series of transactions to any Person (except that a Subsidiary of the Borrower may (x) consolidate, merge or amalgamate with, or convey, transfer or lease substantially all of its assets in a single transaction or series of transactions to, the Borrower or a Wholly-Owned Subsidiary of the Borrower, as applicable, and (y) convey, transfer or lease all of its assets in compliance with the provisions of Section 9.2(h) or 9.2(j)), provided that the foregoing restriction does not apply to the consolidation or merger of the Borrower with, or the conveyance, transfer or lease of substantially all of the assets of the Borrower in a single transaction or series of transactions to, any Person so long as: (i) the successor formed by such consolidation or the survivor of such merger or the Person that acquires by conveyance, transfer or lease substantially all of the assets of the Borrower as an entirety, as the case may be (the "Successor Corporation"), shall be a solvent corporation organized and existing under the laws of the United States or any State thereof (including the District of Columbia) or Canada or any Province thereof; (ii) if the Borrower is not the Successor Corporation, (A) the Successor Corporation shall have executed and delivered to the Lender its assumption of the due and punctual performance and observance of each covenant and condition of this Agreement (pursuant to such agreements and instruments as shall be reasonably satisfactory to the Lender) and (B) the Successor Corporation shall have caused to be delivered to the Lender an opinion of counsel of United States or Canadian national standing (and not an employee of the Borrower) or other counsel reasonably satisfactory to the Lender, to the effect that all agreements or instruments effecting such assumption are enforceable in accordance with their terms and comply with the terms hereof; and (iii) immediately after giving effect to such transaction, no Default or Event of Default would exist. No such conveyance, transfer or lease of substantially all of the assets of the Borrower shall have the effect of releasing the Borrower or any Successor Corporation from its liability under this Agreement. (h) SALE OF ASSETS, ETC. Except as permitted under Section 9.2(g), Section 9.2(i) and Section 9.2(j), the Borrower will not, and will not permit any of its Subsidiaries to, make any Asset Disposition unless: 50. (i) in the good faith opinion of the Borrower, the Asset Disposition is in exchange for consideration having a Fair Market Value at least equal to that of the property exchanged and is in the best interest of the Borrower or such Subsidiary; (ii) immediately after giving effect to the Asset Disposition, no Default or Event of Default would exist; and (iii) subject to the following paragraph, immediately after giving effect to the Asset Disposition the Disposition Value of all property that was the subject of any Asset Disposition occurring in the immediately preceding period of 12 consecutive months would not exceed 15% of Consolidated Total Assets as of the end of the then most recently ended fiscal quarter of the Borrower. If the Net Proceeds Amount for any Transfer is applied to a Debt Prepayment Application or a Property Reinvestment Application, in either case, within 12 months after such Transfer, then such Transfer, only for the purpose of determining compliance with subsection (iii) of this Section 9.2(h) as of a date on or after the Net Proceeds Amount is so applied, shall be deemed not to be an Asset Disposition. (i) SALE-AND-LEASEBACKS. The Borrower will not, and will not permit any Subsidiary to, enter into any Sale-and-Leaseback Transaction with respect to any property more than 180 days following the acquisition or occupancy of such property by the Borrower or such Subsidiary, whichever is later, unless: (i) the term of the lease in respect of such Sale-and-Leaseback Transaction, including all renewal terms, shall not exceed three years; (ii) such Sale-and-Leaseback Transaction constitutes a sale by a Subsidiary to the Borrower or by the Borrower to a Wholly-Owned Subsidiary; (iii) the Net Proceeds Amount received by the Borrower or such Subsidiary in respect of such Sale-and-Leaseback Transaction is applied within 12 months of the consummation thereof to a Debt Prepayment Application or a Property Reinvestment Application; or (iv) immediately after giving effect thereto, the aggregate amount of Priority Debt does not exceed 10% of Consolidated Total Capitalization determined at such time and no Default or Event of Default would exist. (j) DISPOSAL OF OWNERSHIP OF A SUBSIDIARY. The Borrower will not, and will not permit any of its Subsidiaries to, sell or otherwise dispose of any Subsidiary Shares, nor will the Borrower permit any such Subsidiary to issue, sell or otherwise dispose of any shares of its own share capital, provided that the foregoing restrictions do not apply to: (i) the issue of directors' qualifying shares by any such Subsidiary; (ii) any such Transfer of Subsidiary Shares constituting a Transfer described in clause (a) of the definition of "Asset Disposition"; and 51. (iii) the Transfer of the Subsidiary Shares of a Subsidiary of the Borrower owned by the Borrower and its other Subsidiaries; provided that such Transfer satisfies the requirements of Section 9.2(h). (k) NATURE OF BUSINESS. The Borrower 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 Borrower 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 Borrower and its Subsidiaries, taken as a whole, are engaged on the date of the Closing Date as described in the information supplied to the Lender and referred to in Section 8.1(m). (l) TRANSACTIONS WITH AFFILIATES. The Borrower 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 Borrower or another Subsidiary), except in the ordinary course and pursuant to the reasonable requirements of the Borrower's or such Subsidiary's business and upon fair and reasonable terms no less favourable to the Borrower or such Subsidiary than would be obtainable in a comparable arm's-length transaction with a Person not an Affiliate. (m) HOSTILE AQUISITION. Engage in, or permit any of its Subsidiaries to engage in, any Hostile Acquisition, whether alone or in concert with any other Person or Persons; (n) PROHIBITION ON RESTRICTIONS. Create or permit any of its Material Subsidiaries to, create or otherwise cause or suffer to exist any Encumbrance or restriction which prohibits or otherwise restricts in any material respect: (i) the ability of any such Subsidiary to (A) pay dividends or make other distributions or pay any Debt owed to the Borrower or any such Subsidiary, (B) make any other Corporate Distribution to the Borrower or any such Subsidiary or (C) transfer any of its properties or assets to the Borrower or any such Subsidiary; or (ii) the ability of the Borrower or any such Subsidiary to create, incur, assume or suffer to exist any Encumbrance upon its property or assets to secure the Obligations, other than prohibitions or restrictions existing under or by reason of (A) this Agreement and the Loan Documents, (B) Legal Requirements, (C) customary non-assignment provisions entered into in the ordinary course of business and consistent with past practices, and (D) Liens permitted pursuant to Section 9.2(f) and any documents or instruments governing the terms of any Debt secured by any such Liens permitted pursuant to Section 9.2(f), provided that such prohibitions or restrictions apply only to the assets subject to such Liens permitted pursuant to Section 9.2(f); or (o) FINANCIAL YEAR. Change its fiscal year, or permit any of its Material Subsidiaries to change their respective fiscal years to other than December 31 or to have a fiscal year that does not end on December 31 of each calendar year. 52. ARTICLE 10 ACCELERATION SECTION 10.1 EVENTS OF DEFAULT. If any one or more of the following events (each an "Event of Default") shall occur and be continuing then the Lender may, (i) terminate the Lender's obligations to make any further Advance under the Credit Facility, and (ii) (at the same time or at any time after such termination) declare the Obligations to be immediately due and payable, provided that should any Event of Default specified in Sections 10.1(e), 10.1(f), 10.1(g) or 10.1(h) occur then the Obligations shall, to the extent permitted by applicable law, be and become immediately due and payable without any declaration or other act on the part of the Lender: (a) the Borrower makes default in the payment on the due date thereof of any amount payable by it hereunder on account of the Outstanding Principal Obligations under the Credit Facility; (b) the Borrower makes default in the payment when due of any amount payable by it hereunder on account of interest, fees, costs, expenses or other amounts payable by it hereunder, and such default shall continue for three Business Days after notice of such default being given to the Borrower by the Lender; (c) the Borrower fails to perform any covenant, agreement or undertaking under this Agreement other than those referred to in paragraphs (a) and (b) of this Section 10.1 or in any other Loan Document, provided that if such failure is capable of being remedied or cured within a ten day period, the Borrower, subject to the other provisions of this Section 10.1, shall have a period of ten Business Days after the earlier of the Borrower becoming aware of such default and notice of such default being given to the Borrower by the Lender within which to remedy or cure such failure; (d) any representation or warranty made by the Borrower in this Agreement or in any other Loan Document is incorrect in any material respect when made (or when deemed to be made hereunder or thereunder), provided that, notwithstanding any lack of correctness of any such representation or warranty as so stated as at such time, if the subject matter of such representation and warranty is capable of being remedied or cured within a period of ten Business Days such that it would be true if so stated at such later time, the Borrower, subject to the other provisions of this Section 10.1, shall have a period of ten Business Days after the earlier of receipt of written notice from the Lender specifying the representation or warranty concerned and the Borrower otherwise becoming aware that such representation or warranty is incorrect in any material respect, within which to remedy or cure such lack of correctness; (e) the Borrower or any of its Material Subsidiaries ceases or threatens to cease to carry on business or becomes insolvent or bankrupt or ceases paying its debts generally as they fall due, other than any such debts which are contested in good faith and by appropriate proceedings and for which adequate provision has been made to the Lender' sole satisfaction, or the Borrower or any of its Material Subsidiaries commits any act of bankruptcy or makes an assignment for the benefit of creditors or otherwise acknowledges its insolvency, or a trustee, 53. receiver, receiver and manager, liquidator, agent or similar official is appointed for the Borrower or any of its Material Subsidiaries or for any material part of its properties with the consent of or without contest by the Borrower or such Material Subsidiaries upon receipt of notice of such appointment or action or proceeding to effect such appointment; (f) without limiting the generality of paragraph (e) of this Section 10.1, any Governmental Authority shall take control of the Borrower or any of its Material Subsidiaries, or shall take control of the properties of any such Person or any Material properties; (g) any proceeding is instituted by the Borrower or any of its Material Subsidiaries, any order is made or any resolution is passed for the winding-up of the Borrower or any of its Material Subsidiaries; (h) any petition shall be filed or other action or proceeding shall be commenced, whether judicial, quasi-judicial or administrative in nature or by or in respect of the Borrower or any of its Material Subsidiaries, to adjudge the Borrower or any of its Material Subsidiaries insolvent or a bankrupt, or to give notice of, consider or approve any proposal, reorganization, compromise, moratorium or arrangement with all or any of the creditors of the Borrower or any of its Material Subsidiaries, or to appoint a trustee, receiver, receiver and manager, liquidator, agent or similar official of the Borrower or any of its Material Subsidiaries or any of its properties or any Material properties, or to wind-up, dissolve or otherwise liquidate the Borrower or any of its Material Subsidiaries, provided that, if the Borrower or any of its Material Subsidiaries shall be contesting such petition, action or proceeding in good faith and by appropriate proceedings based, in the Lender's sole opinion, on reasonable and substantial grounds, the Borrower and each of its Material Subsidiaries, subject to the other provisions of this Section 10.1, shall have a period of forty-five days after the date of the filing or commencement of such petition, action or proceeding within which to obtain or procure an abandonment, dismissal, withdrawal, quashing or permanent stay of such petition, action or proceeding; (i) a final judgment or judgments or any execution, sequestration or any other process of any court, any work order or any distress or analogous process for the payment of money resulting in liability (exclusive of amounts fully covered by valid and collectible insurance in respect thereof), aggregating in excess of U.S. $5,000,000 are rendered or become enforceable against one or more of the Borrower and its Subsidiaries and which judgments are not, within 60 days after entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within 60 days after the expiration of such stay; (j) (i) the Borrower or any Subsidiary is in default (as principal or as guarantor or other surety) in the payment of any principal of or premium or make-whole amount or interest on any Debt that is outstanding in an aggregate principal amount of at least U.S. $5,000,000 beyond any period of grace provided with respect thereto, or (ii) the Borrower or any Subsidiary is in default in the performance of or compliance with any term of any evidence of any Debt in an aggregate outstanding principal amount of at least U.S. $5,000,000 or of any mortgage, indenture or other agreement relating thereto or any other condition exists, and as a consequence of such default or condition such Debt has become, or has been declared, due and payable before its stated maturity or before its regularly scheduled dates of payment and such declaration has not 54. been annulled or rescinded, or (iii) as a consequence of the occurrence or continuation of any event or condition (other than the passage of time or the right of the holder of Debt to convert such Debt into equity interests), the Borrower or any Subsidiary has become obligated to purchase or repay Debt before its regular maturity or before its regularly scheduled dates of payment in an aggregate outstanding principal amount of at least U.S. $5,000,000; (k) if (i) any Plan shall fail to satisfy the minimum funding standards of ERISA or the Code for any plan year or part thereof or a waiver of such standards or extension of any amortization period is sought or granted under Section 412 of the Code, (ii) a notice of intent to terminate any Plan shall have been or is reasonably expected to be filed with the PBGC or the PBGC shall have instituted proceedings under ERISA Section 4042 to terminate or appoint a trustee to administer any Plan or the PBGC shall have notified the Borrower or any ERISA Affiliate that a Plan may become a subject of any such proceedings, (iii) the aggregate "amount of unfunded benefit liabilities" (within the meaning of Section 4001(a)(18) of ERISA) under all Plans, determined in accordance with Title IV of ERISA, shall exceed U.S. $5,000,000, (iv) the Borrower or any ERISA Affiliate shall have incurred or is reasonably expected to incur 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, (v) the Borrower or any ERISA Affiliate withdraws from any Multiemployer Plan or (vi) the Borrower or any ERISA Affiliate establishes or amends any employee welfare benefit plan that provides post-employment welfare benefits in a manner that would increase the liability of the Borrower or any ERISA Affiliate thereunder; and any such event or events described in clauses (i) through (vi) above, either individually or together with any other such event or events, could reasonably be expected to have a Material Adverse Effect; (l) the Lender's rights and entitlement to be paid the Obligations hereunder shall cease to rank at least pari passu in right of payment with all other Senior Debt (actual or contingent) of the Borrower including, without limitation, all Senior Debt of the Borrower described in Schedule 8.1(i); (m) a Material Adverse Effect shall occur; (n) there is any adverse qualification to any of the financial statements of the Borrower or any of its Material Subsidiaries by their respective auditors; or (o) this Agreement shall cease to be in full force and effect and to constitute a legal, valid and binding obligation of any of the parties signatory thereto enforceable against such parties in accordance with its terms, subject to bankruptcy, insolvency, arrangement and other laws affecting the enforcement of creditors' rights generally (other than those pertaining to settlements, fraudulent conveyances, assignments and preferences) and the availability, in the discretion of a court of competent jurisdiction, of equitable remedies. SECTION 10.2 REMEDIES UPON DEFAULT. Upon the occurrence of an Event of Default and acceleration of the maturity of the Obligations owed to the Lender hereunder, the Lender may commence such litigation or proceedings as it may deem expedient, all without any additional notice, presentation, demand, protest, notice of dishonour, including entering into of possession of any of the property or assets 55. of the Borrower, or any other action, notice of all of which the Borrower hereby expressly waives. For greater certainty, and subject to any curative provisions specified herein, the Borrower will be considered to be in default of its obligations hereunder by the mere lapse of time provided herein for performing such obligations, without any requirement of further notice or other act of the Lender unless a notice is specifically required under this Agreement. The rights and remedies of the Lender hereunder are cumulative and are in addition to and not in substitution for any other rights or remedies provided by law. Nothing contained herein or in any Loan Documents now or hereafter held by the Lender with respect to the Obligations of the Borrower to the Lender, or any part thereof, nor any act or omission of the Lender with respect to such Loan Documents, shall in any way prejudice or affect the rights, remedies and powers of the Lender with respect to any other such Loan Documents. SECTION 10.3 RIGHT OF SET-OFF. Upon the occurrence of an Event of Default and the acceleration of the maturity of the Obligations owed to the Lender hereunder, the Lender is hereby authorized by the Borrower at any time and from time to time and shall to the fullest extent permitted by law, set off, appropriate and apply any and all deposits (general or special, time or demand, matured or unmatured, provisional or final) at any time held and other Debt at any time owing to or for the credit or the account of the Borrower against any and all of the Obligations of the Borrower now or hereafter existing hereunder. The Lender shall promptly notify the Borrower in advance of any such set-off and application made by the Lender, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Lender under this Section 10.3 are in addition to all other rights and remedies (including, without limitation, other rights of set-off) which the Lender may have. SECTION 10.4 CURRENCY CONVERSION AFTER MATURITY. At any time following the occurrence of an Event of Default and the acceleration of the maturity of the Obligations owed to the Lender hereunder, the Lender shall be entitled to convert, with two (2) Business Days' prior notice to the Borrower, any and all then unpaid and outstanding LIBOR Loans or U.S. Base Rate Loans or any of them to Prime Rate Loans. Any such conversion shall be calculated so that the resulting Prime Rate Loans shall be the Canadian Dollar Equivalent on the date of conversion of the amount of United States Dollars so converted. Any accrued and unpaid interest denominated in United States Dollars at the time of any such conversion shall be similarly converted to Canadian Dollars, and such Prime Rate Loans and accrued and unpaid interest thereon shall thereafter bear interest in accordance with Section 3.1. SECTION 10.5 JUDGMENT CURRENCY. The obligation of the Borrower to make payments on any Obligations to the Lender hereunder in any currency (the "first currency") shall not be discharged or satisfied by any tender or recovery pursuant to any judgment expressed in or converted into any other currency (the "second currency") except to the extent to which such tender or recovery shall result in the effective receipt by the Lender of the full amount of the first currency payable, and accordingly the primary obligation of the Borrower shall be enforceable as an alternative or additional cause of action for the purpose of recovery in the second currency of the amount (if 56. any) by which such effective receipt shall fall short of the full amount of the first currency payable and shall not be affected by a judgment being obtained for any other sum due hereunder. ARTICLE 11 GENERAL SECTION 11.1 EVIDENCE OF DEBT. The Obligations of the Borrower hereunder, in respect of or in connection with the Advances under the Credit Facility made from time to time by the Lender or otherwise, shall, absent manifest error, be conclusively evidenced by the records of the Lender. SECTION 11.2 ADDITIONAL EXPENSES. If during the continuation of an Event of Default the Borrower should fail to observe or perform any covenant or agreement to be observed or performed by the Borrower hereunder the Lender may but shall not be obliged to perform or cause to be performed the same for which purpose the Borrower hereby appoints the Lender to be the lawful attorney of the Borrower, and all reasonable expenses incurred or payments made by the Lender in so doing shall be paid by the Borrower to the Lender forthwith upon demand and any such unpaid amount shall bear interest, both before and after judgment, at the Past Due Rate, calculated daily and compounded monthly in arrears and payable on demand, and the Borrower hereby indemnifies the Lender against any loss incurred by the Lender in that regard. SECTION 11.3 INVALIDITY OF ANY PROVISIONS. Any provision of this Agreement or any of the other Loan Documents which is prohibited by the laws of any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition without invalidating the remaining terms and provisions hereof or thereof and no such invalidity shall affect the obligation of the Borrower to pay the Obligations in full. The rate of interest chargeable or collectable on overdue instalments of interest shall not exceed the maximum rate permitted by applicable law. SECTION 11.4 AMENDMENTS, WAIVERS, ETC. No amendment, modification or waiver of any provision of, and no waiver of the strict observance, performance or compliance by the Borrower with any term, covenant, condition or agreement contained in this Agreement and no indulgence granted by the Lender or consent to any departure by the Borrower therefrom, shall in any event be effective unless it shall be in writing and signed by the Lender (and the Borrower in the case of amendments or modifications or waivers by the Borrower), and then such amendment, modification, waiver or consent shall be effective only in the specific instance and for the specific purpose for which it is given. Notwithstanding the foregoing, no failure to exercise and no delay in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege under this Agreement preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The remedies 57. herein provided are cumulative and not exclusive of any other rights or remedies available at or provided by law. SECTION 11.5 NOTICES, ETC. All notices and other communications provided for hereunder shall, except as otherwise permitted hereunder, be in writing personally delivered by messenger or courier or facsimile or telecopy transmission, if (a) to the Borrower, to it at: Hub International Limited 55 East Jackson Boulevard Chicago, Illinois, 60604 Telecopy: (877)-402-6606 for the attention of: Marianne Paine Chief Legal Counsel (b) to the Lender, to it at: Bank of Montreal 4th Floor 1 First Canadian Place Toronto, Ontario M5X 1A1 Telecopy: (416)-359-7796 for the attention of: Vice President, Loan Products Group or to such other address or facsimile or telecopy number as any party hereto may from time to time designate to the other parties hereto in such manner. All such notices and communications shall be effective, and deemed to be received by the intended recipient, on the date delivered or transmitted, if delivered or transmitted before 3:00 p.m. (Toronto, Ontario time) on a Business Day, or, in any other case, on the first Business Day following the date delivered or transmitted. SECTION 11.6 COSTS AND EXPENSES. The Borrower shall pay to the Lender, on demand all reasonable out of pocket costs and expenses (including, without limitation, all reasonable legal fees and disbursements) incurred by the Lender in connection with this Agreement, the other Loan Documents and the Credit Facility including, without limitation, (a) the negotiation, preparation, execution, delivery and interpretation, both prior and subsequent to the Closing Date, of this Agreement and the other Loan Documents or any agreement or instrument contemplated hereby or thereby; (b) the performance by the Lender of its obligations and duties under this Agreement and the other Loan Documents; (c) advice of counsel with respect to the interpretation of the Credit Facility, the Loan Documents or any transaction contemplated thereunder; (d) the enforcement of any of the 58. Loan Documents or the enforcement or preservation of rights under and the refinancing, renegotiation or restructuring of the Credit Facility under this Agreement or the other Loan Documents or the bringing of any action, suit or proceeding with respect to the enforcement of any of the Loan Documents or any such right or seeking any remedy which may be available to the Lender at law or in equity; and (e) any amendments, waivers or consents requested by the Borrower pursuant to the provisions hereof or any other Loan Document. The Borrower shall supply all statements, reports, certificates, opinions, appraisals and other documents or information required to be furnished to the Lender pursuant to this Agreement without cost to the Lender. SECTION 11.7 INDEMNIFICATION. (a) The Borrower agrees to indemnify the Lender and its directors, officers and employees from and against any and all Claims and Losses of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Lender or the directors, officers or employees of the Lender, arising by reason of any action (including any action referred to herein) or inaction or omission to do any act legally required of the Borrower pursuant to the Loan Documents. (b) The Borrower shall pay to the Lender on demand any amounts required to compensate the Lender for any Loss suffered or incurred by the Lender as a result of (i) any payment being made (due to acceleration of the maturity of any Advance pursuant to Article 10, a mandatory or optional prepayment of principal or otherwise) in respect of any Bankers' Acceptance other than on the maturity date of such Bankers' Acceptance or in respect of a LIBOR Loan other than on the last day of the related LIBOR Period; (ii) the failure of the Borrower to give any notice in the manner and at the times required by this Agreement; (iii) the failure of the Borrower to effect an Advance in the manner and at the time specified in any Advance Request; or (iv) the failure of the Borrower to make a payment or a mandatory repayment in the manner at the time specified in this Agreement or any notice given by the Borrower to the Lender in accordance with this Agreement. A certificate as to the amount of any such Loss, providing reasonable detail of the calculation of such Loss and submitted in good faith by the Lender to the Borrower shall be conclusive and binding for all purposes, absent manifest error. (c) The provisions of this Section 11.7 shall survive the termination of this Agreement and the repayment of all Obligations. The Borrower acknowledges that neither its obligation to indemnify, nor any actual indemnification by it, of the Lender or any other indemnified party hereunder in respect of such Person's Losses for the legal fees and expenses of such Person's counsel shall in any way affect the confidentiality or privilege relating to any information communicated by such Person to its counsel. SECTION 11.8 TAXES. (a) Any and all payments to the Lender by the Borrower hereunder (or under any of the other Loan Documents) shall be made free and clear of and without deduction or withholding for any and all present and future Taxes, imposed by any Governmental Authority including, without limitation, any Taxes which arise from the execution, delivery or registration of, or 59. otherwise with respect to, this Agreement or any of the other Loan Documents, unless such Taxes are required by law or the administration thereof to be deducted or withheld. If the Borrower shall be required by law or the administration thereof to deduct or withhold any such Taxes from or in respect of any amount payable hereunder, (i) the amount payable shall be increased as may be necessary so that after making all required deductions or withholdings (including deductions or withholdings applicable to additional amounts paid under this paragraph), the Lender receives an amount equal to the amount it would have received if no such deduction or withholding had been made; (ii) the Borrower shall make such deductions or withholdings; and (iii) the Borrower shall pay forthwith the full amount deducted or withheld to the relevant taxation or other authority in accordance with applicable law. (b) The Borrower agrees to indemnify the Lender for the full amount of Taxes not deducted or withheld and paid by the Borrower in accordance with Section 11.8 (a) to the relevant taxation or other authority and any Taxes imposed by any jurisdiction on amounts payable by the Borrower under this Section 11.8, paid by the Lender and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not any such Taxes were correctly or legally asserted. Payment under this indemnification shall be made within fifteen days from the date the Lender makes written demand therefor. A certificate as to the amount of such Taxes, providing reasonable details of the calculation thereof, and evidence of payment thereof submitted to the Borrower by the Lender shall be conclusive evidence of the amount due from the Borrower to the Lender absent manifest error. (c) The Borrower shall furnish to the Lender the original or a certified copy of a receipt evidencing any payment of Taxes made by the Borrower, as soon as such receipt becomes available. (d) If the provisions of Section 11.8(a) or 11.8(b) require the Borrower to deduct or withhold and pay Taxes to any relevant taxation or other authority or to pay any additional amounts thereunder, the Lender shall use its reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to avoid the necessity of invoking such provisions of this Section 11.8, or to reduce the amounts payable thereunder, including changing the jurisdiction of its applicable lending office; provided that the taking of any such action would not, in the reasonable judgment of the Lender, be disadvantageous to the Lender. (e) The provisions of this Section 11.8 shall survive the termination of this Agreement and the repayment of all Obligations. SECTION 11.9 CALCULATIONS. Except as otherwise provided herein, the financial statements and returns to be furnished to the Lender pursuant to this Agreement shall be made and prepared in accordance with GAAP consistently applied throughout the periods involved (except as set forth in the notes thereto or as otherwise disclosed in writing by the Borrower to the Lender). SECTION 11.10 ASSIGNMENTS AND PARTICIPATIONS. (a) The Borrower shall not be entitled to assign its rights and obligations hereunder or any interest herein without the prior consent of the Lender. 60. (b) Subject to the provisions of this Agreement, the Lender may grant participations to one or more Persons in or respect of all or any part of the Lender's Commitment and the Obligations owed to the Lender, but in any such event the participant shall not have any rights under this Agreement or the other Loan Documents in respect of its participation and shall only have, as against the Lender, those rights and remedies in respect of such participation as are set forth in the agreement or agreements made between the Lender and such participant relating thereto. (c) The Lender may at any time, subject, prior to the occurrence of an Event of Default and other than in respect to an assignment by a Lender to one of its Affiliates, to the consent of the Borrower (such consent not to be unreasonably withheld or delayed), assign all or part of the Lender's Commitment and the Obligations then owed to the Lender to one or more Persons (each of which is hereinafter in this Section called the "Assignee Lender") in consideration of the agreement of each such Assignee Lender to advance or hold that percentage of the Lender's Commitment or Obligations owed to the Lender as corresponds with the percentage thereof so assigned to such Assignee (hereinafter called the "Assignee Lender's Commitment" and the "Assignee Lender's Commitment Percentage", respectively). (d) If the Lender proposes to make any such assignment to a potential Assignee Lender, the Lender shall provide to the Borrower or procure the provision to the Borrower of any material information about such potential Assignee Lender which is generally available in order to assist the Borrower in complying with any applicable laws, treaties and regulations relating to the lending by such potential Assignee Lender and to determine whether to give any required consent by the Borrower under clause (c) above. (e) If the Lender assigns all or any part of its Commitment hereunder to an Assignee Lender as provided above, all references in this Agreement to the Lender shall thereafter be construed as references to the Lender and such Assignee Lender to the extent of their respective Commitments and, if such Assignee Lender is not an Affiliate of the Lender the Borrower shall thereafter look only to such Assignee Lender (and not to the Lender) in respect of that proportion of such Lender's Commitment as corresponds to such Assignee Lenders' Commitment therein and accordingly the Lender's obligation to provide Advances in accordance with its Commitment hereunder shall be reduced correspondingly and such Assignee Lender shall assume a Commitment equivalent to such reduction in the Lender's Commitment. (f) The Lender may disclose to a potential participant or potential Assignee Lender (provided that such potential participant or Assignee Lender has been approved by the Borrower, such approval not to be unreasonably withheld) such information concerning or pertaining to the Obligations of the Borrower and its Subsidiaries as is known to the Lender, and may in addition express to any such Person any opinion it may have with respect to any matter, provided such potential participant or potential Assignee Lender covenants in favour of the Borrower and the Lender to only use such information in connection with its evaluation as to whether to take any such participation or assignment and, should it do so, in connection therewith, and to maintain the confidential nature of all such information. 61. SECTION 11.11 GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with, the laws of the Province of Ontario and the laws of Canada applicable therein. SECTION 11.12 CONSENT TO JURISDICTION. The Borrower hereby irrevocably submits to the non-exclusive jurisdiction of the Courts of the Province of Ontario in respect of any action, suit or proceeding arising out of or relating to this Agreement and the other Loan Documents and the Credit Facility hereby extended and hereby irrevocably agrees that all Claims in respect of any such action, suit or proceeding may be heard and determined in any such Ontario Court. The Borrower hereby irrevocably waives, to the fullest extent it and they may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding. The Borrower agrees that a final judgment in any such suit, action or proceeding shall be conclusive and may be enforced in another jurisdiction by suit on the judgment or in any other manner provided by law. Nothing in this Section 11.12 shall affect the right of the Lender to bring any suit, action or proceeding against the Borrower or its assets in the courts of any other jurisdiction. SECTION 11.13 BINDING EFFECT. This Agreement shall be binding upon and enure to the benefit of the parties hereto and their respective successors and permitted assigns. SECTION 11.14 INTEREST SAVINGS CLAUSE. Nothing contained in this Agreement or in any promissory notes made by the Borrower to the Lender or in any of the other Loan Documents shall be construed to permit the Lender to receive at any time interest, fees or other charges in excess of the amounts which the Lender is legally entitled to charge and receive under any law to which such interest, fees or charges are subject. In no contingency or event whatsoever shall the compensation payable to the Lender by the Borrower, howsoever characterized or computed, hereunder or under any other agreement or instrument evidencing or relating to the Obligations of the Borrower to the Lender hereunder, exceed the highest rate permissible under any law to which such compensation is subject. There is no intention that the Lender shall contract for, charge or receive compensation in excess of the highest lawful rate, and, in the event it should be determined that any excess has been charged or received, then, ipso facto, such rate shall be reduced to the highest lawful rate so that no amounts shall be charged which are in excess thereof; and the Lender shall apply such excess against the Obligations of the Borrower to the Lender then outstanding and, to the extent of any amounts remaining thereafter, refund such excess to the Borrower. SECTION 11.15 ENTIRE AGREEMENT. This Agreement, including the Schedules hereto, constitutes the entire agreement between the Borrower and the Lender and supersedes all prior agreements, whether oral or written, between the Borrower and the Lender in respect of the Credit Facility extended hereby. 62. SECTION 11.16 COUNTERPARTS. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute one and the same instrument. [Signature page follows.] 63. IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. HUB INTERNATIONAL LIMITED Per: /s/ W. Kirk James c/s -------------------------------------------- Authorized Signing Officer Per: /s/ Marianne D. Paine -------------------------------------------- Authorized Signing Officer BANK OF MONTREAL Per: /s/ -------------------------------------------- Authorized Signing Officer SCHEDULE 1 FORM OF ADVANCE REQUEST [Date of Request] Bank of Montreal 23rd Floor 1 First Canadian Place Toronto, Ontario M5X 1A1 Attention: Telecopy: Dear Sirs: ADVANCE REQUEST The undersigned refers to the non-revolving credit agreement (the "Credit Agreement") dated as of the 30th day of March, 2006, between Hub International Limited, as Borrower, and Bank of Montreal, as Lender thereunder. All capitalized terms used herein shall have the respective meanings attributed thereto in the Credit Agreement. The undersigned hereby requests, in accordance with Article 2 of the Credit Agreement, the following Advance: Requested Advance: Type____________________________________________________ (specify Type of Advance) Amount__________________________________________________ If BA Advance requested, maturity date of Bankers' Acceptances___________________ If LIBOR Loan requested, requested LIBOR Period__________________________________ Proposed Business Day of such Advance:__________________ Day/Month/Year 2. If requested Advance required for conversion of outstanding Advances identify Type, Outstanding Principal Amount and dates of outstanding Advances to be converted________________________________ ________________________________________________________ The undersigned hereby confirms that the Advance requested hereby complies with the requirements of the Credit Agreement, that this Advance Request is executed on behalf of the Borrower by representatives of the Borrower duly authorized in that behalf and that no Default or Event of Default has occurred and is continuing or will result from giving effect to the Advance requested hereby. HUB INTERNATIONAL LIMITED By: ------------------------------------------ Name: Title: By: ------------------------------------------ Name: Title: SCHEDULE 2 FORM OF COMPLIANCE CERTIFICATE (to be signed by the chief executive officer, the chief financial officer or any other officer of the Borrower acceptable to the Lender) TO: BANK OF MONTREAL (the "Lender") COMPLIANCE CERTIFICATE The undersigned, , hereby certifies that [he][she] is the of Hub International Limited, a corporation incorporated under the laws of Canada (the "Borrower"), and that, as such, is authorized to execute and deliver this certificate on behalf of the Borrower pursuant to the non-revolving credit agreement (the "Credit Agreement") dated as of the 30th day of March, 2006, between the Borrower and the Lender, and hereby further certifies that: I. The representations and warranties set forth in Article 8 of the Credit Agreement and in any documents delivered pursuant to the Credit Agreement are true and correct with the same effect as though made on and as of the date of this certificate. II. The Borrower is in compliance with all of the provisions contained in the Credit Agreement on its part to be observed and performed and as of the date of this certificate and after giving effect to any Advance in respect of which this certificate is delivered, no Default or Event of Default has occurred and is continuing. III. As of the date of this certificate, the Consolidated Debt is U.S. $ , the Consolidated Net Worth is U.S. $ , the Consolidated Total Capitalization is U.S. $ , the Priority Debt is U.S. $ , the Consolidated Net Income for the last completed fiscal quarter of the Borrower is U.S. $ , the Interest Charges for the last completed fiscal quarter of the Borrower are U.S. $ and the EBITDA for the last completed fiscal quarter of the Borrower is U.S. $ . IV. As of the date of this certificate, the sum of (a) U.S. $200,000,000, plus (b) the aggregate amount equal to 25% of the Borrower's Consolidated Net Income (but, in each case, only if a positive number) for each completed fiscal quarter beginning with the fiscal quarter ended March 31, 2003 is U.S. $ . V. As of the date of this certificate, the Consolidated Debt is % of Consolidated Total Capitalization. 2. VI. As of the date of this certificate, the Priority Debt is % of Consolidated Total Capitalization. VII. As of the date of this certificate, the EBITDA for the period consisting of the immediately preceding four consecutive fiscal quarters of the Borrower ending on, or most recently ended prior to, such date is U.S. $ and the Interest Charges for such period are U.S. $ . VIII. As of the date of this certificate, the Minimum Interest Coverage Ratio is :1. IX. Attached to this certificate are work sheets showing the calculations used to derive the amounts set out above from the financial statements of the Borrower and its Subsidiaries. All capitalized terms used herein shall have the respective meanings attributed thereto in the Credit Agreement. DATED this day of , . HUB INTERNATIONAL LIMITED By: ----------------------------------------- Name: Title: SCHEDULE 3 REORGANIZATION Reference is made to the Transaction Plan, dated March <>, 2006, attached hereto. SCHEDULE 8.1(h) SUBSIDIARIES SCHEDULE 8.1(l) FINANCIAL STATEMENTS Reference is made to item 8 of the Borrower's Form 10-K for the period ending December 31, 2005 filed with the United States Securities and Exchange Commission on March 13, 2006. EX-99.2 3 o30946exv99w2.txt EX-99.2 Exhibit 99.2 HUB INTERNATIONAL LIMITED PARTNERSHIP AS BORROWER - AND - BANK OF MONTREAL AS LENDER ---------- CREDIT AGREEMENT DATED AS OF APRIL 4, 2006 ---------- TABLE OF CONTENTS ARTICLE 1 DEFINITIONS AND ACCOUNTING TERMS Section 1.1 Defined Terms.............................................. 1 Section 1.1. Company Guarantee Defined Terms............................ 19 Section 1.2 Computation of Time Periods................................ 19 Section 1.3 Accounting Terms........................................... 19 Section 1.4 Extended Meanings.......................................... 19 Section 1.5 Incorporation of Schedules................................. 19 Section 1.6 Headings and Table of Contents............................. 19 Section 1.7 Singular, Plural, Gender................................... 20 Section 1.8 Conflict................................................... 20 Section 1.9 Currency................................................... 20 Section 1.10 Time....................................................... 20 Section 1.11 References to Conversion of Advances....................... 20 ARTICLE 2 THE CREDIT FACILITIES Section 2.1 Credit Facility............................................ 21 Section 2.2 Drawdown Availability...................................... 21 Section 2.3 Renewal of Drawdown Period................................. 21 Section 2.4 Term Obligations........................................... 22 Section 2.5 Advance Requests........................................... 23 Section 2.6 Advances under the Credit Facility......................... 23 Section 2.7 Currency................................................... 24 Section 2.8 Conversion of Advance...................................... 24 Section 2.9 LIBOR Maturity............................................. 24 Section 2.10 Certain Provisions Relating to Bankers' Acceptances........ 25 Section 2.11 Reduction or Termination of Commitment..................... 27 Section 2.12 Use of Proceeds............................................ 27 ARTICLE 3 INTEREST AND FEES Section 3.1 Interest on Prime Rate Loans............................... 28 Section 3.2 Interest on U.S. Base Rate Loans........................... 28 Section 3.3 Interest on LIBOR Loans.................................... 28 Section 3.4 Acceptance Fee............................................. 29 Section 3.5 Standby Fee................................................ 29 Section 3.6 Reimbursement Obligations.................................. 29 Section 3.7 Fixed Rate Option.......................................... 29

ii. Section 3.8 Yearly Rate Statements..................................... 30 ARTICLE 4 REPAYMENT OF OBLIGATIONS Section 4.1 Repayment on Maturity...................................... 30 Section 4.2 Voluntary Repayment........................................ 31 Section 4.3 Mandatory Repayment of Credit Facility..................... 31 Section 4.4 Scheduled Repayment of Obligations......................... 31 ARTICLE 5 PAYMENTS AND ACCOUNTS Section 5.1 Maintenance of Accounts.................................... 32 Section 5.2 Payments by Borrower....................................... 32 Section 5.3 Due Date of Payments....................................... 32 Section 5.4 Time of Payments........................................... 32 Section 5.5 Form and Amount of Payments................................ 33 Section 5.6 Charging Borrower's Accounts............................... 33 ARTICLE 6 CURRENCY AND COSTS Section 6.1 Market Disruption and Illegality........................... 33 Section 6.2 Additional Payments........................................ 34 Section 6.3 Prepayment and Conversion.................................. 36 Section 6.4 Mitigation................................................. 36 Section 6.5 Mandatory Prepayment....................................... 36 ARTICLE 7 CONDITIONS PRECEDENT TO LENDING Section 7.1 Conditions Precedent to Initial Advance.................... 37 Section 7.2 Conditions Precedent to Each Advance....................... 40 ARTICLE 8 REPRESENTATIONS AND WARRANTIES Section 8.1 Representations and Warranties by the Borrower............. 40 Section 8.2 Survival of Representations and Warranties................. 42 ARTICLE 9 COVENANTS OF THE BORROWER Section 9.1 Affirmative Covenants...................................... 43 Section 9.2 Negative Covenants......................................... 46

iii. ARTICLE 10 ACCELERATION Section 10.1 Events of Default.......................................... 54 Section 10.2 Remedies Upon Default...................................... 58 Section 10.3 Right of Set-Off........................................... 58 Section 10.4 Currency Conversion After Maturity......................... 58 Section 10.5 Judgment Currency.......................................... 59 ARTICLE 11 GENERAL Section 11.1 Evidence of Debt........................................... 59 Section 11.2 Additional Expenses........................................ 59 Section 11.3 Invalidity of any Provisions............................... 59 Section 11.4 Amendments, Waivers, etc................................... 59 Section 11.5 Notices, etc............................................... 60 Section 11.6 Costs and Expenses......................................... 61 Section 11.7 Indemnification............................................ 61 Section 11.8 Taxes...................................................... 62 Section 11.9 Calculations............................................... 63 Section 11.10 Assignments and Participations............................. 63 Section 11.11 Governing Law.............................................. 64 Section 11.12 Consent to Jurisdiction.................................... 64 Section 11.13 Binding Effect............................................. 65 Section 11.14 Interest Savings Clause.................................... 65 Section 11.15 Entire Agreement........................................... 65 Section 11.16 Counterparts............................................... 65

Schedule 1 Form of Advance Request Schedule 2 Form of Company Guarantee Schedule 7.1(i) Forms of Opinions Schedule 7.1(n) Reorganization Schedule 9.2(c) Existing Liens THIS CREDIT AGREEMENT is made as of the 4th day of April, 2006, BETWEEN: HUB INTERNATIONAL LIMITED PARTNERSHIP, a limited partnership organized under the laws of the State of Delaware, as the Borrower hereunder, - and - BANK OF MONTREAL, as the Lender hereunder WHEREAS Bank of Montreal has agreed, on and subject to the terms and conditions of this credit agreement, to make available the credit facilities in favour of Hub International Limited Partnership; NOW THEREFORE in consideration of these premises and the agreements hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: ARTICLE 1 DEFINITIONS AND ACCOUNTING TERMS SECTION 1.1 DEFINED TERMS. Unless the context otherwise requires, the following capitalized terms shall have the following respective meanings in this Agreement and in each of the other Loan Documents: "ACCEPTANCE FEE" means the fee payable in Canadian dollars to the Lender in respect of the Drafts accepted or purchased by the Lender prior to and as a condition of such acceptance or purchase, computed in accordance with Section 3.4; "ADVANCE" means any extension of credit by the Lender hereunder in the form of a Prime Rate Loan, a U.S. Base Rate Loan, a LIBOR Loan or a BA Advance (each of which is referred to herein as a "Type of Advance"), including the conversion of an Advance into another Advance; "ADVANCE REQUEST" means a request for an Advance or conversion of an Advance to another Advance duly completed and executed on behalf of the Borrower, substantially in the form of Schedule 1 hereto, or a notice of a request for an Advance or conversion of an Advance to another Advance delivered pursuant to Section 2.5(c); 2. "AFFILIATE" shall mean, at any time, and with respect to any Person, (a) any other Person that at such time directly or indirectly through one or more intermediaries Controls, or is Controlled by, or is under common Control with, such first Person, and (b) in the case of the Company or any Subsidiary, any Person beneficially owning or holding, directly or indirectly, 10% or more of any class of voting or equity interests of the Company or any Subsidiary or any corporation of which the Company and its Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly, 10% or more of any class of voting or equity interests; provided that "Affiliate," in relation to the Company, shall not include any Subsidiary. As used in this definition, "Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. Unless otherwise clearly stated, any reference to an "Affiliate" is a reference to an Affiliate of the Company; "ADDITIONAL COVENANT" shall mean any affirmative or negative covenant or similar restriction applicable to the Company or any Subsidiary (regardless of whether such provision is labeled or otherwise characterized as a covenant) the subject matter of which either (i) is similar to that of any covenant in Article 9 of this Agreement, or related definitions in Section 1.1 of this Agreement, or Section 3.1 or 4.1 of the Company Guarantee, or related definitions in Section 1.1 of the Company Guarantee, but contains one or more percentages, amounts or formulas that is more restrictive than those set forth herein or more beneficial to any holder of any Designated Debt (and such covenant or similar restriction shall be deemed an Additional Covenant only to the extent that it is more restrictive or more beneficial) or (ii) is different from the subject matter of any covenants in Article 9 of this Agreement or Section 3.1 or 4.1 of the Company Guarantee, or related definitions in Section 1.1 of this Agreement or Section 1.1 of the Company Guarantee. Notwithstanding the foregoing, the provisions set forth in Section 1008 of each of the Subordinated Debentures as in effect on the date hereof shall not constitute Additional Covenants; "ADDITIONAL DEFAULT" shall mean any provision for the benefit of any holder of any Designated Debt to accelerate (with the passage of time or giving of notice or both) the maturity thereof or otherwise requires the Company or any Subsidiary to purchase the Debt under such Designated Debt prior to the stated maturity thereof and which either (i) is similar to any Default or Event of Default contained in Section 10.1 of this Agreement, or related definitions in Section 1.1 of this Agreement or Section 1.1 of the Company Guarantee, but contains one or more percentages, amounts or formulas that is more restrictive or has a shorter grace period than those set forth therein or is more beneficial to any holder of any Designated Debt (and such provision shall be deemed an Additional Default only to the extent that it is more restrictive, has a shorter grace period or is more beneficial) or (ii) is different from the subject matter of any Default or Event of Default contained in Section 10.1 of this Agreement, or related definitions in Section 1.1 of this Agreement or Section 1.1 of the Company Guarantee; "AGREEMENT" means this credit agreement as supplemented, amended, modified or restated from time to time, and the expressions "Article", "Section" and "Schedule" followed by a number mean and refer to the specified Article, Section or Schedule of this Agreement, respectively; 3. "AMENDED AND RESTATED 2003 NOTE PURCHASE AGREEMENT" shall mean that certain Amended and Restated Note Purchase Agreement dated as of April 4, 2006 by and among the Borrower and the holders of the 2003 Notes; "AMORTIZATION DATE" means the first date, if any, on which the ratio of (a) Consolidated Debt (after excluding therefrom the Subordinated Debentures in the maximum aggregate principal amount of U.S.$ 35,000,000 that are subject to mandatory conversion into common shares of the Borrower) on such date, to (b) the product of (i) 4, multiplied by (ii) the EBITDA for the last completed fiscal quarter of the Borrower, exceeds 4:1; "APPLICABLE MARGIN" means: (a) in respect of any Prime Rate Loan, at any time prior to the Term Date, the rate of 1.0% per annum, and at any time on or after the Term Date, the rate of 1.25% per annum; (b) in respect of any U.S. Base Rate Loan, at any time prior to the Term Date, the rate of 1.0% per annum, and at any time on or after the Term Date, the rate of 1.25% per annum; (c) in respect of any LIBOR Loan, at any time prior to the Term Date, the rate of 1.125% per annum, and at any time on or after the Term Date, the rate of 1.375% per annum; and (d) in respect of any BA Advance, at any time prior to the Term Date, 1.125%, and at any time on or after the Term Date, 1.375%; "ARM'S-LENGTH" means arm's-length within the meaning of such term under the Income Tax Act (Canada), as amended from time to time; "ASSET DISPOSITION" shall mean any Transfer except: (a) any (i) Transfer from a Subsidiary to the Company or a Wholly-Owned Subsidiary; and (ii) Transfer from the Company to a Wholly-Owned Subsidiary; so long as immediately before and immediately after the consummation of any such Transfer and after giving effect thereto, no Default or Event of Default shall exist; and (b) any Transfer made in the ordinary course of business and involving only property that is either (i) inventory held for sale or (ii) equipment, fixtures, supplies or materials no longer required in the operation of the business of the Company or any of its Subsidiaries or that is obsolete; 4. "ASSIGNEE LENDER" has the meaning set out in Section 11.10; "ASSIGNEE LENDER'S COMMITMENT" has the meaning set out in Section 11.10; "ASSIGNEE LENDER'S COMMITMENT PERCENTAGE" has the meaning set out in Section 11.10; "ATTRIBUTABLE DEBT" shall mean, as to any particular lease relating to a Sale-and-Leaseback Transaction not permitted under clause (i), (ii) or (iii) of Section 9.2(f), the present value of all Lease Rentals required to be paid by the Company or any Subsidiary under such lease during the remaining term thereof (determined in accordance with generally accepted financial practice using a discount factor equal to the interest rate implicit in such lease if known or, if not known, of 10% per annum); "AVAILABLE COMMITMENT" means at any time the amount at such time of the Commitment less the amount of the Outstanding Principal Obligations, all expressed in Canadian Dollars, with any amount thereof denominated in another currency to be expressed in Canadian Dollars at the Canadian Dollar Equivalent at such time of such amount; "BA ADVANCE" means any Advance by way of the acceptance of any Draft drawn by the Borrower on, and the purchase of the resulting Bankers' Acceptance by, the Lender; "BA DISCOUNT PROCEEDS" means in respect of any Bankers' Acceptance being purchased by the Lender on any day an amount (rounded to the nearest whole Canadian cent, and with one-half of one Canadian cent being rounded up) calculated on such day by multiplying (a) Face Amount of such Bankers' Acceptance, by (b) the quotient equal to one divided by the sum of one plus the product of: (i) the BA Reference Rate (expressed as a decimal) applicable to such Bankers' Acceptance; and (ii) a fraction, the numerator of which is the number of days remaining in the term of such Bankers' Acceptance and the denominator of which is 365, with such quotient being rounded up or down to the nearest fifth decimal place and 0.000005 being rounded up, less the amount of the Acceptance Fee payable to the Lender in respect of, and as a condition precedent to the acceptance or purchase by the Lender of, such Bankers' Acceptance; "BA LIABILITIES" means, at any time and in respect of any Bankers' Acceptance, the Face Amount thereof if still outstanding and unpaid, whether or not payment thereof is due or, following the maturity thereof, the aggregate unpaid amount of all Reimbursement Obligations at that time due and payable in respect of such Bankers' Acceptance; 5. "BA REFERENCE RATE" means, as applicable to any Bankers' Acceptance being purchased by the Lender on any day, the per annum percentage discount rate (expressed to two decimal places and rounded upward, if necessary, to the nearest 1/100th of 1%), quoted by the Lender as that at which the Lender would, in accordance with its normal practice, on such day be prepared to purchase its own bankers' acceptances in an amount and having a maturity date comparable to the amount and maturity date of such Bankers' Acceptance; "BANKERS' ACCEPTANCE" means a Draft of the Borrower denominated in Canadian Dollars which has been accepted and purchased by the Lender pursuant to Article 2; "BORROWER" means Hub International Limited Partnership, a limited partnership organized under the laws of the State of Delaware, and any successor(s) and permitted assign(s) thereof; "BORROWER'S ACCOUNTS" means the Canadian Dollar account and U.S. Dollar account to be maintained by the Borrower with the Lender at the Lender's Branch in accordance with Article 5; "BUSINESS DAY" means (i) any day of the year, other than Saturday or Sunday or any other day on which banks are closed for normal business in Toronto, Ontario, (ii) when used in connection with U.S. Base Rate Loans, any day of the year, other than Saturday or Sunday or any other day on which banks are closed for normal business in either Toronto, Ontario or New York, New York, and (iii) when used in connection with LIBOR Loans, any day of the year, other than Saturday or Sunday or any other day on which banks are closed for normal business in any of Toronto, Ontario, New York, New York and London, England, and which is also a day on which dealings in U.S. Dollars may be carried on by and between banks in the London interbank market; "CANADA TREASURY BILL RATE" means on any day and for any discount calculation period the rate for Government of Canada Treasury bills for a period approximately equal to such discount calculation period appearing on the "Reuters Screen ISDD Page" (as defined in the International Swaps and Derivatives Association, Inc. definitions, as modified and amended from time to time) at approximately 10:00 a.m. (Toronto, Ontario time) on such day, or if such day is not a Business Day then on the immediately preceding Business Day; "CANADIAN DOLLARS" and the symbols "Can. $" and "Cdn. $" mean lawful money of Canada; "CANADIAN DOLLAR EQUIVALENT" means, at any time, the amount of Canadian Dollars which could be purchased from the Lender by the payment of a specified amount of another currency using the Lender's relevant spot rate for the sale of Canadian Dollars quoted by the Lender's treasury department at such time; "CAPITAL ADEQUACY GUIDELINE" means the capital adequacy requirements from time to time specified by OSFI or any other applicable Governmental Authority and published by it as one or more guidelines for chartered banks in Canada; 6. "CAPITAL LEASE" shall mean, at any time, a lease with respect to which the lessee is required concurrently to recognize the acquisition of an asset and the incurrence of a liability in accordance with GAAP; "CAPITAL LEASE OBLIGATION" shall mean, with respect to any Person and a Capital Lease, the amount of the obligation of such Person as the lessee under such Capital Lease which would, in accordance with GAAP, appear as a liability on a balance sheet of such Person; "CDOR RATE" means, on any day, the annual rate which is the rate determined by the Lender as being the arithmetic average (rounded up or down, if necessary, to the nearest 0.01% and 0.005% being rounded up) of the discount rates applicable to Canadian Dollar bankers' acceptances for a period of one month appearing on the "Reuters Screen CDOR Page" (as defined in the International Swaps and Derivatives Association, Inc. definitions, as modified and amended from time to time) at approximately 10:00 a.m. on such day, or if such day is not a Business Day then on the immediately preceding Business Day; provided, however, if such rates do not appear on the Reuters Screen CDOR Page for such one month period as contemplated, then the CDOR Rate on any day shall be calculated as the rate as determined by the Lender equal to the BA Reference Rate that would be applicable to any Drafts required to be purchased by the Lender on such day and having a term to maturity of 30 days; "CLAIM" means any claim of any nature whatsoever including, without limitation, any demand, liability, obligation, cause of action, suit, proceeding, judgment, award, assessment and reassessment, whether present or future; "CLOSING" means the execution and delivery of this Agreement and the other Loan Documents by the respective parties thereto; "CLOSING DATE" means the date on which the Closing occurs; "CODE" shall mean the Internal Revenue Code of 1986 of the United States of America, as amended from time to time, and the rules and regulations promulgated thereunder from time to time; "COMMITMENT" means the amount of U.S. $75,000,000 or the Canadian Dollar Equivalent thereof, as such amount may be reduced or cancelled from time to time in accordance with the provisions of this Agreement; "COMPANY" means Hub International Limited; "COMPANY BRIDGE FACILITY" means the credit facility provided by Bank of Montreal in favour of the Company pursuant to the Non-Revolving Credit Agreement made as of March 30, 2006 between Bank of Montreal and the Company, as amended, modified or supplemented; "COMPANY CREDIT FACILITY" means the credit facility provided by Bank of Montreal in favour of the Company pursuant to the Amended and Restated Credit Agreement made as of April 23, 2004 between Bank of Montreal and the Company, as amended, modified or supplemented; 7. "COMPANY GUARANTEE" means a Guarantee in the form of Schedule 2 hereto, as the same may be amended, modified or supplemented from time to time in accordance with the provisions thereof; "COMPENSATING AMOUNT" has the meaning set out in Section 6.2; "CONSOLIDATED DEBT" shall mean, as of any date of determination, the total of all Debt of the Company and its Subsidiaries outstanding on such date, after eliminating all offsetting debits and credits between the Company and its Subsidiaries and all other items required to be eliminated in the course of the preparation of consolidated financial statements of the Company and its Subsidiaries in accordance with GAAP; "CONSOLIDATED NET INCOME" shall mean, with reference to any period, the net income (or loss) of the Company and its Subsidiaries for such period (taken as a cumulative whole), as determined in accordance with GAAP, after eliminating all offsetting debits and credits between the Company and its Subsidiaries and all other items required to be eliminated in the course of the preparation of consolidated financial statements of the Company and its Subsidiaries in accordance with GAAP, but excluding, in any event, any extraordinary gains or losses determined in accordance with GAAP; "CONSOLIDATED NET WORTH" shall mean, as of any date of determination thereof, (a) the sum of (i) the par value (or value stated on the books of the corporation) of the share capital (but excluding treasury shares and share capital subscribed and unissued) of the Company and its Subsidiaries plus (ii) the amount of the paid-in capital and retained earnings of the Company and its Subsidiaries, in each case as such amounts would be shown on a consolidated balance sheet of the Company and its Subsidiaries as of such time prepared in accordance with GAAP, minus (b) to the extent included in clause (a) above, all amounts properly attributable to minority interests, if any, in the shares and surplus of Subsidiaries; "CONSOLIDATED TOTAL ASSETS" shall mean, as of any date of determination, the total assets of the Company and its Subsidiaries that would be shown as assets on a consolidated balance sheet of the Company and its Subsidiaries as of such time prepared in accordance with GAAP, after eliminating all amounts properly attributable to minority interests, if any, in the shares and surplus of Subsidiaries; "CONSOLIDATED TOTAL CAPITALIZATION" shall mean, as of any date of determination, the sum of Consolidated Debt and Consolidated Net Worth; "COVER" for any BA Liabilities shall be effected by paying to the Lender immediately available and freely transferable funds in Canadian Dollars, in the full amount of such BA Liabilities, which funds shall be held by the Lender in a collateral account maintained by the Lender at the Lender's Branch to provide for the payment of such BA Liabilities. Such funds shall be retained by the Lender in such collateral account until such time as the applicable Bankers' Acceptances shall have matured and the related BA Liabilities shall have been fully satisfied; provided, however, that at such time if a Default or an Event of Default has occurred 8. and is continuing, the Lender shall not be required to release any of the said funds in such collateral account until such Default or Event of Default shall have been cured or waived; "CREDIT FACILITY" means the revolving credit facility to be made available to the Borrower hereunder during the Drawdown Period by way of Advances pursuant to Section 2.1 and the Term Obligations resulting from the conversion of Outstanding Principal Obligations to non-revolving term Debt pursuant to Section 2.2; "CROWN" shall mean the Crown in Right of Canada or of any Province or Territory thereof; "DEBT" shall mean, with respect to any Person, without duplication, (a) its liabilities for borrowed money; (b) its liabilities for the deferred purchase price of property acquired by such Person (excluding accounts payable arising in the ordinary course of business but including, without limitation, all liabilities created or arising under any conditional sale or other title retention agreement with respect to any such property); (c) its Capital Lease Obligations; (d) all liabilities for borrowed money secured by any Lien with respect to any property owned by such Person (whether or not it has assumed or otherwise become liable for such liabilities); (e) the principal or lease balance outstanding under Synthetic Leases; (f) its income-put option liabilities; and (g) any Guarantee of such Person with respect to liabilities of a type described in any of clauses (a) through (f) hereof; provided, that Debt shall not include Guarantees of bank loans to officers of the Company the proceeds of which are used to purchase shares of the Company, in an aggregate principal amount not to exceed U.S. $12,000,000 at any one time outstanding; Debt of any Person shall include all obligations of such Person of the character described in clauses (a) through (g) to the extent such Person remains legally liable in respect thereof notwithstanding that any such obligation is deemed to be extinguished under GAAP; "DEBT PREPAYMENT APPLICATION" shall mean, with respect to any Transfer of property, the application by the Borrower or its Subsidiaries of cash in an amount equal to the Net Proceeds Amount with respect to such Transfer to pay Senior Funded Debt of the Borrower or any Subsidiary (other than Senior Funded Debt owing to the Borrower, any of its Subsidiaries or any Affiliates and Senior Funded Debt in respect of any revolving credit or similar facility providing the Borrower or any of its Subsidiaries with the right to obtain loans or other 9. extensions of credit from time to time, except to the extent that in connection with such payment of Senior Funded Debt the availability under such revolving credit or similar facility is permanently reduced by an amount not less than the amount of such proceeds applied to the payment of such Senior Funded Debt); "DEFAULT" means any event which with the giving of notice, the passage of time, or both, would constitute an Event of Default; "DESIGNATED DEBT" shall mean (a) any Debt of the Company or any Subsidiary issued or outstanding under any agreement if the aggregate outstanding principal amount of the Debt issued or outstanding under such agreement, together with the aggregate amount of any undrawn commitments to provide loans or financial accommodations to the Company or any Subsidiary under such agreement, exceeds U.S. $10,000,000, and (b) any Debt of the Company or any Subsidiary issued or outstanding under one or more agreements if the aggregate outstanding principal amount of the Debt issued or outstanding under all such agreements, together with the aggregate amount of any undrawn commitments to provide loans or financial accommodations to the Company or any Subsidiary under all such agreements, exceeds U.S. $25,000,000. For the avoidance of doubt, all Debt of the Company and its Subsidiaries under the 2006 Notes, the 2003 Notes and the Subordinated Debentures shall be deemed Designated Debt; "DISPOSITION VALUE" shall mean with respect to any property: (a) in the case of property that does not constitute Subsidiary Shares, the book value thereof, valued at the time of such disposition in good faith by the Company, and (b) in the case of property that constitutes Subsidiary Shares, an amount equal to that percentage of book value of the assets of the Subsidiary that issued such shares as is equal to the percentage that the book value of such Subsidiary Shares represents of the book value of all of the outstanding share capital of such Subsidiary (assuming, in making such calculations, that all securities convertible into such share capital are so converted and giving full effect to all transactions that would occur or be required in connection with such conversion) determined at the time of the disposition thereof, in good faith by the Company; "DRAFT" means at any time a bill of exchange, within the meaning of the Bills of Exchange Act (Canada), drawn by the Borrower on the Lender and bearing such distinguishing letters and numbers as the Lender may determine, but which at such time has not been completed or accepted by the Lender; "DRAWDOWN DATE" means a day which the Borrower has notified the Lender in an Advance Request as the date on which the Borrower requests an Advance in accordance with Article 2; "DRAWDOWN PERIOD" the period from the Closing Date to 11:00 a.m. (Toronto, Ontario time) on the Term Date; "EBITDA" shall mean, with respect to any period, the sum of (a) Consolidated Net Income for such period, plus (b) to the extent deducted in the determination of Consolidated 10. Net Income for such period, (i) all Interest Charges during such period, (ii) all depreciation and amortization expenses during such period, (iii) all federal, state and provincial income taxes during such period and (iv) other non-cash expenses during such period, minus (c) to the extent included in the determination of Consolidated Net Income for such period, gains from the sale of capital assets and investments and other income-put option liabilities, all as determined in accordance with GAAP consistently applied; "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; "EQUITY INTERESTS" means in the case of a corporation, shares of capital stock of any class or series, including warrants, rights, participating interests or options to purchase or otherwise acquire any class or series of capital stock or securities exchangeable for or convertible into any class or series of capital stock, and in the case of any other Person or entity shall mean any class or series of partnership interests (including, without limitation, any general or limited partnership interests), units, membership interests or like interests constituting equity, and in the case of each of the foregoing, any part or portion thereof or participation in any of the foregoing; "EVENT OF DEFAULT" means any of the events specified in Section 10.1; "FACE AMOUNT" means in respect of a Bankers' Acceptance, the amount stated therein to be payable to the holder thereof on its maturity; "FAIR MARKET VALUE" shall mean, as of any date of determination thereof and with respect to any property, the sale value of such property that would be realized in an arm's-length sale at such time between an informed and willing buyer and an informed and willing seller (neither being under a compulsion to buy or sell); "FED FUNDS RATE" means, on any day, the rate equal to the USD-Federal Funds-H.15 rate (as defined in the International Swaps and Derivatives Association, Inc. definitions, as modified and amended from time to time) as of such day, or if such day is not a Business Day then on the immediately preceding Business Day; "FUNDED DEBT" means, with respect to any Person, all Debt of such Person which by its terms or by the terms of any instrument or agreement relating thereto matures, or which is otherwise payable or unpaid, one year or more from, or is directly or indirectly renewable or extendible at the option of the obligor in respect thereof to a date one year or more (including, without limitation, an option of such obligor under a revolving credit or similar agreement obligating the lender or lenders to extend credit over a period of one year or more) from, the date of any determination thereof; "GAAP" means generally accepted accounting principles as in effect from time to time as now or hereafter established by the Canadian Institute of Chartered Accountants or any successor thereto; 11. "GENERAL PARTNER" shall mean Hub International Partners Limited, an Ontario corporation; "GOVERNMENTAL AUTHORITY" means any nation or government, and any political subdivision thereof, and any central bank, agency, department, commission, board, bureau, court, tribunal or other entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government; "GUARANTEE" shall mean, with respect to any Person, any obligation (except the endorsement in the ordinary course of business of negotiable instruments for deposit or collection) of such Person guaranteeing or in effect guaranteeing any Debt, dividend or other obligation of any other Person in any manner, whether directly or indirectly, including, without limitation, obligations incurred through an agreement, contingent or otherwise, by such Person: (a) to purchase such Debt or obligation or any property constituting security therefor; (b) to advance or supply funds (i) for the purchase or payment of such Debt or obligation, or (ii) to maintain any working capital or other balance sheet condition or any income statement condition of any other Person or otherwise to advance or make available funds for the purchase or payment of such Debt or obligation; (c) to lease properties or to purchase properties or services primarily for the purpose of assuring the owner of such Debt or obligation of the ability of any other Person to make payment of the Debt or obligation; or (d) otherwise to assure the owner of such Debt or obligation against loss in respect thereof. In any computation of the Debt or other liabilities of the obligor under any Guarantee, the Debt or other obligations that are the subject of such Guarantee shall be assumed to be direct obligations of such obligor. "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); "HOSTILE ACQUISITION" means an offer to acquire, directly or indirectly and whether by purchase, amalgamation, merger or otherwise, properties, whether held directly or indirectly, or securities of any Person (the "Target") where (i) in the case of such offer to acquire securities of the Target, the securities subject to such offer and the securities of the Target beneficially owned, directly or indirectly, by the offeror or Affiliates of the offeror or Persons acting in concert with the offeror and its Affiliates, exceed 10% of the then outstanding securities of any class of securities of the Target, (ii) the board of directors or other governing body of the Target has not recommended (at or prior to the time that such offer is made to the holders of the 12. securities subject to such offer or is submitted for consideration by the holders of securities of the Target) acceptance or approval of such offer by such holders, and (iii) the properties or securities that are the subject of such offer to acquire would upon completion of such acquisition constitute a property or group of properties the loss of which would have a Material Adverse Effect; "INTEREST CHARGES" shall mean, with respect to any period, the sum (without duplication) of the following (in each case, eliminating all offsetting debits and credits between the Company and its Subsidiaries and all other items required to be eliminated in the course of the preparation of consolidated financial statements of the Company and its Subsidiaries in accordance with GAAP): (a) all interest in respect of Debt of the Company and its Subsidiaries (including imputed interest on Capital Lease Obligations) deducted in determining Consolidated Net Income for such period, and (b) all debt discount and expense amortized or required to be amortized in the determination of Consolidated Net Income for such period; "LEASE RENTALS" shall mean, with respect to any period, the sum of all fixed payments (including as such all payments which the lessee is obligated to make to the lessor on termination of the lease or surrender of the property) payable by the Company or a Subsidiary, as lessee or sublessee under a lease of property, but shall be exclusive of any amounts required to be paid by the Company or a Subsidiary (whether or not designated as rents or additional rents) on account of maintenance, repairs, insurance, taxes and similar charges. Fixed rents under any so-called "percentage leases" shall be computed solely on the basis of the minimum rents, if any, required to be paid by the lessee regardless of sales volume or gross revenues; "LEGAL REQUIREMENT" means any law, statute, ordinance, decree, requirement, order, judgment, treaty, rule, guideline, bulletin, license, permit or regulation, and any applicable determination, interpretation, ruling, order or decree, of any Governmental Authority or arbitrator, which is binding upon or applicable to the Lender, the Company, the Borrower or a Subsidiary , whether presently existing or arising in the future, including without limitation all Guidelines and Bulletins issued by OSFI; "LENDER" means Bank of Montreal and any other bank or financial institution to which a Commitment in the Credit Facility is assigned by the Lender or a further permitted assignee thereof in accordance with Section 11.10, and their respective successors and permitted assigns; "LENDER'S BRANCH" means the Lender's Chicago, Illinois branch, or such other branch of the Lender in the United States of America as the Lender may from time to time specify to the Borrower; "LIBO RATE" means, for any LIBOR Period for each LIBOR Loan, the annual rate of interest determined by the Lender as being the rate at which deposits in U.S. Dollars are offered by the Lender in the London interbank market to leading international banks for an amount similar to the principal amount of such LIBOR Loan and having a term similar to such LIBOR Period, such rate to be determined as of 11:00 a.m. London time on the date two Business Days prior to the first day of the LIBOR Period for such LIBOR Loan; 13. "LIBOR LOAN" means any Advance made by the Lender to the Borrower in, or converted into U.S. Dollars, bearing interest by reference to a LIBO Rate; "LIBOR PERIOD" means, for each LIBOR Loan, a period (subject to Section 6.1) of one (1), two (2), three (3), six (6), nine (9) or twelve (12) months selected by the Borrower and advised to the Lender by written notice given in accordance with the provisions hereof, commencing with the date on which such LIBOR Loan is made and ending on the last day of such selected period and thereafter each successive period of one (1), two (2), three (3), six (6), nine (9) or twelve (12) months (again subject to Section 6.1) selected by the Borrower and advised to the Lender by written notice given in respect of the continuation of such LIBOR Loan in accordance with the provisions hereof, commencing on the last day of the immediately preceding LIBOR Period in respect of such LIBOR Loan, provided that the last day of a LIBOR Period shall occur on or before the Maturity Date and whenever the last day of a LIBOR Period would otherwise occur on a day other than a Business Day, the last day of such LIBOR Period shall be extended to the next succeeding Business Day unless such extension would cause the last day of such LIBOR Period to occur in the next following calendar month, in which case the last day of such LIBOR Period shall occur on the last preceding Business Day; "LIEN" shall mean, with respect to any Person, any mortgage, lien, pledge, charge, security interest or other encumbrance, or any interest or title of any vendor, lessor, lender or other secured party to or of such Person under any conditional sale or other title retention agreement or Capital Lease, upon or with respect to any property or asset of such Person (including in the case of shares, shareholder agreements, voting trust agreements and all similar arrangements); "LOAN" means a direct advance of monies hereunder, by way of a Prime Rate Loan, a U.S. Base Rate Loan or a LIBOR Loan; "LOAN DOCUMENTS" means this Agreement, the Company Guarantee and all other documents, certificates, instruments and agreements to be executed and delivered to the Lender by the Borrower, the Company or by any other Person as contemplated hereunder and thereunder; "LOSS" means any loss, cost or expense whatsoever, whether present or future, direct or indirect, including, without limitation, any damages, judgments, penalties, fines, fees, charges, claims, demands, liabilities and any and all legal and other professional fees and disbursements, and, with respect to any Advance by the Lender, any loss, cost or expense incurred by reason of the liquidation or re-employment of deposits or other funds acquired by the Lender to fund or maintain such Advance, except any such loss representing loss of profit; "MATERIAL SUBSIDIARY" shall mean, at any time, any Subsidiary that accounts for more than (a) 5% of Consolidated Total Assets determined as of the immediately preceding fiscal quarter or (b) 5% of consolidated revenue of the Company and its Subsidiaries determined as of the immediately preceding fiscal year; "MATURITY DATE" means at any time the third anniversary of the Term Date; 14. "MINIMUM INTEREST COVERAGE RATIO" shall mean, as of the date of any determination thereof, the ratio of (a) EBITDA for the period consisting of the immediately preceding four consecutive fiscal quarters of the Company ending on, or most recently ended prior to, such date to (b) Interest Charges for such period; "NET PROCEEDS AMOUNT" shall mean, with respect to any Transfer of any Property by any Person, an amount equal to the difference of (a) the aggregate amount of the consideration (valued at the Fair Market Value of such consideration at the time of the consummation of such Transfer) received by such Person in respect of such Transfer, minus (b) all ordinary and reasonable out-of-pocket costs and expenses actually incurred by such Person in connection with such Transfer; "OBLIGATIONS" means, at any time, the sum of (a) the aggregate principal amount of all Loans advanced to the Borrower and all accrued and unpaid interest thereon outstanding and unpaid at such time, (b) the aggregate BA Liabilities of the Borrower at such time in respect of all Bankers' Acceptances accepted or purchased by the Lender at or prior to such time, including all accrued and unpaid interest on any then outstanding Reimbursement Obligations in respect of any such Bankers' Acceptances, and (c) all other then outstanding liabilities, obligations and indebtedness of the Borrower to the Lender under this Agreement or any of the other Loan Documents; "OSFI" means the Office of the Superintendent of Financial Institutions (Canada); "OUTSTANDING PRINCIPAL OBLIGATIONS" means, at any time, the sum of the aggregate principal amount of all Loans advanced to the Borrower outstanding and unpaid at such time and the aggregate BA Liabilities outstanding and unpaid at such time in respect of Bankers' Acceptances accepted or purchased by the Lender, all expressed in Canadian Dollars (or the U.S. Dollar Equivalent thereof), with any amount thereof denominated in another currency to be expressed in Canadian Dollars at the Canadian Dollar Equivalent or the U.S. Dollar Equivalent at such time of such amount; "PAST DUE RATE" means, on any day, a rate per annum equal to the Prime Rate, in the case of Obligations denominated in Canadian Dollars, and U.S. Base Rate, in the case of Obligations denominated in U.S. Dollars, plus two percent; "PBGC" shall mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA or any successor thereto; "PERMITTED PURPOSE" means the use by the Borrower of the proceeds of any Advance hereunder for general partnership purposes, including property acquisitions (other than Hostile Acquisitions or the payment of any costs, expenses or liabilities arising out of or relating to any Hostile Acquisition) pending receipt by the Borrower of permanent financing for such property acquisitions from capital markets, and for the conversion of Advances to other Advances hereunder; 15. "PERSON" includes an individual, partnership, whether general, limited or undeclared, corporation, limited liability corporation, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature; "PRIME RATE" means, on any day, the greater of (a) the floating rate of interest per annum announced from time to time by the Lender, and in effect on such day, as the reference rate of interest the Lender will use to determine rates of interest for Canadian Dollar commercial loans made by the Lender to borrowers in Canada, and (b) the rate as determined by the Lender equal to (i) the CDOR Rate, plus (ii) 1.0% per annum; "PRIME RATE LOAN" means any Advance made by the Lender to the Borrower in Canadian Dollars bearing interest by reference to the Prime Rate; "PRIORITY DEBT" shall mean, without duplication, the sum of (a) Debt of the Company and its Subsidiaries secured by Liens other than Liens permitted by paragraphs (i) through (xi), inclusive, of Section 9.2(c), (b) Debt of Subsidiaries (including, without limitation, any Guarantee by any Subsidiary of any Debt of the Company or any other Subsidiary) other than (i) Debt of the Borrower and (ii) Debt of other Subsidiaries permitted by paragraphs (i) through (iii), inclusive, of Section 9.2(a), and (c) Attributable Debt of the Company and its Subsidiaries relating to Sale-and-Leaseback Transactions other than Sale-and-Leaseback Transactions permitted by paragraphs (i) through (iii), inclusive, of Section 9.2(f); "PROPERTY" OR "PROPERTIES" shall mean, unless otherwise specifically limited, real or personal property of any kind, tangible or intangible, choate or inchoate; "PROPERTY REINVESTMENT APPLICATION" shall mean, with respect to any Transfer of property, the application of an amount equal to the Net Proceeds Amount with respect to such Transfer to the acquisition by the Borrower or any Subsidiary of operating assets of the Borrower or any Subsidiary to be used in the principal business of such Person; "REFUNDING BANKERS' ACCEPTANCE" has the meaning set out in Section 2.10(g); "REIMBURSEMENT OBLIGATIONS" means, at any time, the obligations of the Borrower to reimburse the Lender in respect of any Bankers' Acceptance drawn by the Borrower upon the Lender and paid by the Lender on maturity thereof, which remain outstanding and unpaid at such time; "RENEWAL ACCEPTANCE" has the meaning specified in Section 2.3; "RENEWAL REQUEST" has the meaning specified in Section 2.3; "REORGANIZATION" means the reorganization described in Schedule 7.1(n); "RESPONSIBLE OFFICER" shall mean any Senior Financial Officer and any other officer of the Company or the Borrower, as applicable, with responsibility for the administration of the relevant portion of this Agreement; "RESTRICTED PAYMENTS" has the meaning specified in Section 9.2(n); 16. "SALE-AND-LEASEBACK TRANSACTION" means a transaction or series of transactions pursuant to which the Company or any Subsidiary shall sell or transfer to any Person (other than the Company or a Wholly-Owned Subsidiary) any property, whether now owned or hereafter acquired, and, as part of the same transaction or series of transactions, the Company or any Subsidiary shall rent or lease as lessee (other than pursuant to a Capital Lease), or similarly acquire the right to possession or use of, such property or one or more properties which it intends to use for the same purpose or purposes as such property; "SENIOR DEBT" in respect of any Person, shall mean, as of the date of any determination thereof, all Debt of such Person other than Subordinated Debt; "SENIOR FINANCIAL OFFICER" shall mean the chief financial officer, principal accounting officer, treasurer or comptroller of the Company or the Borrower, as applicable; "SENIOR FUNDED DEBT" in respect of any Person, shall mean, as of the date of any determination thereof, all Funded Debt of such Person other than Subordinated Funded Debt; "SENIOR OFFICER" means the president, any executive vice-president, the chief financial officer, principal accounting officer, treasurer, comptroller or the secretary of the Company or the Borrower, as applicable and any other Person designated in writing from time to time as a Senior Officer by the president of the Company or the Borrower, as applicable; "STANDBY FEE" has the meaning specified in Section 3.5; "SUBORDINATED DEBENTURES" shall mean, collectively, that certain 8.5% Convertible Subordinated Debenture due June 28, 2007 of the Company in favour of Odyssey Reinsurance Corporation in the original principal amount of U.S.$17,500,000 and that certain 8.5% Convertible Subordinated Debenture due June 28, 2007 of the Company in favour of United States Fire Insurance Company in the original principal amount of U.S.$17,500,000; "SUBORDINATED DEBT" in respect of any Person, shall mean, as of the date of any determination thereof, all unsecured Debt of such Person which shall contain or have applicable thereto subordination provisions providing for the subordination thereof to other Debt of such Person. For the avoidance of doubt, all Debt of the Company or any Subsidiary under the Subordinated Debentures shall be deemed Subordinated Debt of the Company or such Subsidiary; "SUBORDINATED FUNDED DEBT" in respect of any Person, shall mean, as of the date of any determination thereof, all unsecured Funded Debt of such Person which shall contain or have applicable thereto subordination provisions providing for the subordination thereof to other Funded Debt of such Person; "SUBSIDIARY" shall mean, as to any Person, any corporation, association or other business entity in which such Person or one or more of its Subsidiaries or such Person and one or more of its Subsidiaries owns sufficient equity or voting interests to enable it or them (as a group) ordinarily, in the absence of contingencies, to elect a majority of the directors (or Persons performing similar functions) of such entity, and any partnership or joint venture if more than a 50% interest in the profits or capital thereof is owned by such Person or one or more of its Subsidiaries or such Person and one or more of its 17. Subsidiaries (unless such partnership can and does ordinarily take major business actions without the prior approval of such Person or one or more of its Subsidiaries). Unless the context otherwise clearly requires, any reference to a "Subsidiary" is a reference to a Subsidiary of the Company and the Borrower is included as a Subsidiary of the Company; "SUBSIDIARY SHARES" shall mean, with respect to any Person, the shares (or any options or warrants to purchase shares or other securities exchangeable for or convertible into shares) of any Subsidiary of such Person; "SUCCESSOR CORPORATION" is defined in Section 9.2(d); "SUCCESSOR ENTITY" is defined in Section 9.2(d); "SYNTHETIC LEASE" shall mean any synthetic lease, tax retention operating lease, off-balance sheet loan or similar off-balance sheet financing product, where such transaction is considered debt for borrowed money for tax purposes but is classified as an operating lease in accordance with GAAP; "TAX" or "TAXES" means all taxes, assessments, levies, imposts, stamp taxes, duties, charges to tax, fees, deductions, withholdings and any restrictions or conditions resulting in a charge imposed, levied, collected, withheld or assessed as of the date of this Agreement or at any time in the future, and all penalty, interest and other payments on or in respect thereof but does not include any tax imposed by any Governmental Authority of the United States of America or a political subdivision thereof or therein on the net income or capital of the Lender attributable in accordance with the Canada-U.S. Income Tax Convention (1980) to the Lender's Branch situated therein; "TERM CREDIT PERIOD" means the period of time commencing on the Term Date and ending at 11:00 a.m. (Toronto, Ontario time) on the Termination Date; "TERM DATE" means the earlier of (a) the date that occurs 364 days after the date of this Agreement or, if such date is extended pursuant to Section 2.3(c), the date to which it has been extended, and (b) the Amortization Date; "TERM OBLIGATIONS" means the Outstanding Principal Obligations converted to non-revolving term Debt hereunder pursuant to Section 2.2; "TERMINATION DATE" means the earlier of (a) the Maturity Date, and (b) the date on which the Obligations shall automatically, or by virtue of a declaration by the Lender made in accordance with this Agreement, become due and payable; "TRANSFER" shall mean, with respect to any Person, any transaction in which such Person sells, conveys, transfers or leases (as lessor) any of its property, including, without limitation, Subsidiary Shares. For purposes of determining the application of the Net Proceeds Amount in respect of any Transfer, the Company may designate any Transfer as one or more separate Transfers each yielding a separate Net Proceeds Amount. In any such case, (a) the Disposition Value of any property subject to each such separate Transfer and (b) the amount of 18. Consolidated Total Assets attributable to any property subject to each such separate Transfer shall be determined by ratably allocating the aggregate Disposition Value of, and the aggregate Consolidated Total Assets attributable to, all property subject to all such separate Transfers to each such separate Transfer on a proportionate basis; "2003 NOTES" shall mean, collectively, those certain 5.71% Series A Senior Notes of the Company due June 15, 2010 in the original aggregate principal amount of U.S.$10,000,000 and those certain 6.16% Series B Senior Notes of the Company due June 15, 2013 in the original aggregate principal amount of U.S.$55,000,000, each as amended and restated on the date hereof; "2006 NOTE PURCHASE AGREEMENT" shall mean that certain Note Purchase Agreement dated as of April 4, 2006 by and among the Borrower and the Purchasers named therein pursuant to which such Purchasers purchase the 2006 Notes; "2006 NOTES" shall mean those certain 6.43% Senior Notes of the Borrower due April 4, 2016 in the original aggregate principal amount of U.S.$75,000,000; "U.S. BASE RATE" means, on any day, the greater of (i) the floating rate of interest per annum established or announced from time to time by the Lender, and in effect on such day, as its reference rate for determining rates of interest for U.S. Dollar commercial loans made by the Lender to borrowers in Canada, and (ii) the rate as determined by the Lender equal to (A) the Fed Funds Rate, plus (B) 0.50% per annum; "U.S. BASE RATE LOAN" means any Advance made by the Lender to the Borrower in U.S. Dollars bearing interest by reference to the U.S. Base Rate; "U.S. DOLLAR EQUIVALENT" means, at any time, the amount of U.S. Dollars which could be purchased from the Lender by the payment of a specified amount of another currency using the Lender's relevant spot rate for the sale of U.S. Dollars quoted by the Lender's treasury department at such time; "U.S. DOLLARS" and the symbol "U.S. $" mean lawful money of the United States of America in same day immediately available funds or, if such funds are not available, the form of money of the United States of America which is customarily used in the settlement of international banking transactions on that day; "WHOLLY-OWNED SUBSIDIARY" shall mean any Subsidiary 100% of all of the equity interests (except directors' qualifying shares) and voting interests of which are owned by any one or more of the Company and the Company's other Wholly-Owned Subsidiaries; "WRITTEN" or "IN WRITING" shall include printing, typewriting, or any electronic means of communication capable of being visibly reproduced at the point of reception including telegraph and telecopier. 19. SECTION 1.1. COMPANY GUARANTEE DEFINED TERMS. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed thereto in the Company Guarantee. SECTION 1.2 COMPUTATION OF TIME PERIODS. In this Agreement, in the computation of periods of time from a specified date to a later specified date, unless otherwise expressly stated the word "from" means "from and including" and the words "to" and "until" each mean "to but excluding". SECTION 1.3 ACCOUNTING TERMS. Each accounting term, including all defined terms, used in this Agreement shall be construed in accordance with GAAP and in accordance with the auditing and accounting recommendations and guidelines issued from time to time by the Canadian Institute of Chartered Accountants, as amended from time to time, unless something in the subject matter or the context otherwise is inconsistent therewith. SECTION 1.4 EXTENDED MEANINGS. Unless otherwise specified, any reference in this Agreement to any statute will include all regulations made thereunder or in connection therewith from time to time, and will include such statute as the same may be amended, supplemented or replaced from time to time. Every use of the word "including" herein shall be construed as meaning "including, without limitation". SECTION 1.5 INCORPORATION OF SCHEDULES. The following Schedules annexed hereto shall, for all purposes hereof, form an integral part of this Agreement: Schedule 1 Form of Advance Request Schedule 2 Form of Company Guarantee Schedule 7.1(i) Forms of Opinions Schedule 7.1(n) Reorganization Schedule 9.2(c) Existing Liens SECTION 1.6 HEADINGS AND TABLE OF CONTENTS. The inclusion of headings and a table of contents in this Agreement is intended for convenience of reference only and shall not affect in any way the construction or interpretation hereof. 20. SECTION 1.7 SINGULAR, PLURAL, GENDER As used herein, gender is used as a reference term only and applies with the same effect whether the parties are masculine, feminine, corporate or other form, and the singular shall include the plural and the plural the singular, as the context shall require. SECTION 1.8 CONFLICT. In the event of a conflict between the provisions of this Agreement and the provisions of any of the other Loan Documents, the provisions of this Agreement shall prevail. SECTION 1.9 CURRENCY. Unless otherwise expressly stated, any reference herein to any sum of money herein shall be construed as a reference to U.S. Dollars. Whenever any limitation herein is expressed in U.S. Dollars the limitation shall apply and include the Canadian Dollar Equivalent thereof and the equivalent thereof in all other currencies. Whenever any limitation herein is expressed in Canadian Dollars the limitation shall apply and include the U.S. Dollar Equivalent thereof and the equivalent thereof in all other currencies. Any amount denominated in another currency required herein to be expressed at any time in Canadian Dollars or U.S. Dollars shall be so expressed as the Canadian Dollar Equivalent or the U.S. Dollar Equivalent, as the case may be, at such time of such amount. SECTION 1.10 TIME. Unless otherwise expressly stated, any reference herein to time shall be construed as a reference to local time in Toronto, Ontario, Canada, and time is and shall be construed to be of the essence. SECTION 1.11 REFERENCES TO CONVERSION OF ADVANCES. References to "convert" and "conversion", and other similar terms, in the context of Advances or Types of Advances, shall, unless the context otherwise requires, mean and refer to an election to have the Outstanding Principal Obligations of the referenced Advance or Type of Advance bear interest or fees on a different basis or fixed rate henceforth and so on from time to time, and any reference to the conversion of an Advance or Type of Advance to another Advance or Type of Advance includes, without limitation, issue of Refunding Bankers' Acceptances to provide for the payment of maturing Bankers' Acceptances and the continuation of a LIBOR Loan upon the expiry of the then current LIBOR Period for a successive LIBOR Period. 21. ARTICLE 2 THE CREDIT FACILITIES SECTION 2.1 CREDIT FACILITY. Upon and subject to the terms and conditions of this Agreement, the Lender, acting through the Lender's Branch, agrees to extend to the Borrower a revolving credit facility available from time to time during the Drawdown Period by way of Advances in an aggregate principal amount such that the maximum aggregate amount of Outstanding Principal Obligations for all Advances made by the Lender under the Credit Facility (after giving effect to the making of any such Advances, all repayments of Outstanding Principal Obligations made concurrently with making any such Advances and any conversion of outstanding Advances from one Advance to another in accordance with Section 2.8) shall not exceed at any time an amount equal at such time to the Commitment, provided that the aggregate principal amount of all Advances by way of overdrafts shall not exceed at any time the maximum aggregate amount of Cdn. $10,000,000. The Borrower may borrow, prepay in whole or in part and reborrow Advances during the Drawdown Period, all in accordance with the terms and conditions hereof. SECTION 2.2 DRAWDOWN AVAILABILITY. Subject to the terms and conditions of this Agreement: (a) the Drawdown Period shall terminate at 11:00 a.m. (Toronto, Ontario time) on the Term Date; (b) from and after such time on the Term Date, the Borrower shall cease to be entitled to obtain any further Advance under the Credit Facility, subject to conversion of any Term Obligations outstanding by way of Advances under the Credit Facility from one Advance to another in accordance with Section 2.4; (c) provided that no Event of Default has occurred and is continuing, the Outstanding Principal Obligations outstanding as of the Term Date shall be automatically converted as of such time on such Term Date into Term Obligations under the Credit Facility; (d) the Outstanding Principal Obligations so converted shall be subject to the terms and conditions applicable to Term Obligations under the Credit Facility pursuant to this Agreement; and (e) on such Term Date the Commitment in excess of the Outstanding Principal Obligations so converted to Term Obligations under the Credit Facility shall automatically be cancelled on a permanent basis. SECTION 2.3 RENEWAL OF DRAWDOWN PERIOD. (a) The Borrower may request prior to the occurrence of the Amortization Date that the Lender agree to a renewal of the Drawdown Period for an additional period of 364 days upon 22. the terms and conditions of this Section 2.3 by notice in writing (a "Renewal Request") to the Lender given not less than 60 days nor more than 75 days prior to the then current Term Date. (b) Upon receipt of any Renewal Request from the Borrower, the Lender shall undertake a credit assessment of the Borrower consistent with the Lender's then current credit standards and practices and when the Lender decides, in its sole and total discretion, to renew or not to renew the Drawdown Period for an additional 364 day period, the Lender shall give the Borrower notice in writing of its decision not less than 30 days prior to the then current Term Date. (c) If the Lender gives the Borrower a notice in writing (a "Renewal Acceptance") as provided above that the Lender has agreed in its sole and total discretion to renew the Drawdown Period for an additional 364 day period, then on and as of the date such Renewal Acceptance is given to the Borrower, the Term Date will automatically be extended to the date that occurs 364 days after the date such Renewal Acceptance is given to and deemed to have been received by the Borrower pursuant to the terms of this Agreement. (d) If (i) the Lender fails to advise the Borrower of its decision as provided above, or (ii) the Lender shall give the Borrower notice in writing of its decision not to renew the Drawdown Period pursuant to such Renewal Request, the provisions of Section 2.2 shall continue to apply to the Credit Facility up until the then current Term Date and the Borrower may continue to obtain further Advances during the Drawdown Period ending on the then current Term Date upon and subject to the terms and conditions of this Agreement. (e) The Borrower acknowledges that (i) the Lender has not made any representations to the Borrower regarding its intention to renew the Drawdown Period as set forth in this Section 2.3 and that the Lender shall not have any obligation to renew the Drawdown Period, and (ii) no extension of the Term Date or renewal of the Drawdown Period pursuant to this Section 2.3 shall extend the Term Date or renew the Drawdown Period beyond the Amortization Date. SECTION 2.4 TERM OBLIGATIONS. During the Term Credit Period, and subject to the terms and conditions hereof, including without limitation the provisions of Section 2.8, Section 3.7 and Article 7, the Borrower shall be entitled to convert, in whole or in part, any Term Obligation outstanding by way of an Advance under the Credit Facility to any other Advance under the Credit Facility, provided that, in the case of a LIBOR Loan, the last day of the applicable LIBOR Period shall not occur, and, in the case of a BA Advance, the Bankers' Acceptances comprising such BA Advance shall not mature, beyond any date on which a scheduled repayment of Outstanding Principal Obligations in respect of the Credit Facility is required to be made pursuant to Article 4 if after giving effect to such Advance the Outstanding Principal Obligations in respect of LIBOR Loans and BA Advances which would mature after such date and all other Outstanding Principal Obligations under the Credit Facility would exceed the Commitment, after giving effect to such repayment. Subject to any such conversion, any payment made on account of Term Obligations shall constitute a permanent reduction in the Commitment and may not be reborrowed by the Borrower hereunder. 23. SECTION 2.5 ADVANCE REQUESTS. The Borrower if it wishes to obtain an Advance under the Credit Facility, or to convert an existing Advance under the Credit Facility to another Advance under the Credit Facility, shall deliver to the Lender an Advance Request in writing, substantially in the form of Schedule 1 hereto, in respect of such Advance not later than 11:00 a.m. (Toronto, Ontario time): (a) in the case of any Advance by way of LIBOR Loan or BA Advance, three Business Days prior to the proposed date of such Advance; (b) in the case of any aggregate Advance by way of Prime Rate Loan or U.S. Base Rate Loan of Cdn. $10,000,000 or more, three Business Days prior to the proposed date of such Advance; and (c) in the case of any other Advance, one Business Day prior to the proposed date of such Advance, except that in the case of any Prime Rate Loan or U.S. Base Rate Loan of $10,000,000 or less requested by a Borrower by way of overdraft in any of its accounts with the Lender, the Borrower shall use its best efforts to deliver to the Lender in a reasonably timely manner (which may be on the proposed date of such Advance) an Advance Request by telephone or telecopy notice (or such other method of notification as may be agreed upon between the Lender and the Borrower), provided that the Lender shall have no obligation to advance such Advance unless the Lender has received at least one hour prior to the time of the advance of such Advance an Advance Request in writing, substantially in the form of Schedule 1 hereto, in respect of such Advance, specifying the date of the Advance, which date shall be a Business Day in respect of such Advance, the Type of Advance, the aggregate amount thereof and (in the case of a BA Advance) the term or terms to maturity of the requested Bankers' Acceptances or (in the case of a LIBOR Loan) the requested LIBOR Period. Any such Advance Request, once delivered by the Borrower to the Lender, shall be binding, and (subject to the conditions precedent provided for herein conditioning the Borrower's right to obtain the requested, or any, Advance), the Borrower shall be obligated to take the requested Advance on the date specified in such Advance Request. The Lender may rely and act upon, and shall incur no liability under or in respect of this Agreement by in good faith relying or acting upon, any Advance Request under this Section 2.5 given by telephone or telecopier (or other method of notification as may be agreed upon between the Lender and the Borrower) believed by the Lender to be genuine (without any verification inquiries) and to be signed or sent or given on behalf of the Borrower or by acting upon any representation or warranty of the Borrower made or deemed to be made hereunder by reason of or as a result of such Advance Request. SECTION 2.6 ADVANCES UNDER THE CREDIT FACILITY. The aggregate of all Loans to be made by the Lender in connection with any particular Advance under the Credit Facility, shall not be less than the lesser of (i) the aggregate 24. amount of the Commitment in respect of the Credit Facility not utilized by way of outstanding Advances, and (ii) an integral multiple of U.S. $10,000,000. SECTION 2.7 CURRENCY. Subject to Sections 6.1, 10.4 and 10.5, Advances under the Credit Facility shall only be denominated, at the option of the Borrower, in Canadian Dollars or U.S. Dollars, and any Advance denominated in either such currency shall be repayable, and all interest and fees in respect thereof or in connection therewith shall accrue and be payable, by the Borrower in like currency. SECTION 2.8 CONVERSION OF ADVANCE. Subject to the terms and conditions hereof, the Borrower shall be entitled from time to time to convert any outstanding Advance to any other Advance or Type of Advance under the Credit Facility by giving notice thereof to the Lender in accordance with Section 2.5, provided that: (a) such conversion does not result in the Outstanding Principal Obligations exceeding the then current Commitment of the Lender; (b) no such conversion of a BA Advance shall be made or purported to be made prior to the maturity date of any Bankers' Acceptance purchased or issued hereunder in respect of such BA Advance; and (c) no such conversion of a LIBOR Loan shall be made or purported to be made prior to the last day of the LIBOR Period applicable to such LIBOR Loan. Any Advance so converted shall cease to bear interest and fees as the former Advance, and shall begin to bear interest and fees as the new Advance, on and as of the date of such conversion. If the Borrower gives notice to the Lender that all or any portion of the principal amount of, or the BA Discount Proceeds in respect of, any new Advance to be advanced by the Lender to the Borrower is to be applied to repay Outstanding Principal Obligations in respect of any outstanding Advance, the Lender shall directly apply such amount to repay such Outstanding Principal Obligations owing to the Lender in satisfaction and discharge of the Lender's obligations hereunder to deposit such amount into the Borrower's Account. SECTION 2.9 LIBOR MATURITY. Any LIBOR Loan in respect of which the Borrower shall not have given notice of the conversion of such outstanding LIBOR Loan to another Advance in accordance with Section 2.5 shall automatically be converted to a U.S. Base Rate Loan upon the expiry of the then current LIBOR Period. Should the Borrower not be entitled to a U.S. Base Rate Loan at all or in an amount sufficient to fully repay the principal of, and accrued and unpaid interest on, such outstanding LIBOR Loan, such principal and interest shall be due and payable on the expiry of the then current LIBOR Period and shall bear interest in accordance with Section 3.2. 25. SECTION 2.10 CERTAIN PROVISIONS RELATING TO BANKERS' ACCEPTANCES. (a) Bankers' Acceptances shall be issued and shall mature on a Business Day. Each Bankers' Acceptance shall have a term of at least 30 days and not more than 364 days excluding days of grace, shall mature on or before the Maturity Date and shall be in form and substance satisfactory to the Lender. No Bankers' Acceptance may be made or accepted on or after the Termination Date, nor may any Bankers' Acceptance be prepaid, whether pursuant to Section 4.2 or otherwise, or converted to another Type of Advance, prior to the maturity date of such Bankers' Acceptance. (b) To facilitate the acceptance of Bankers' Acceptances under this Agreement, the Borrower shall, upon execution of this Agreement and from time to time as required, provide to the Lender Drafts, in form satisfactory to the Lender, duly executed and endorsed in blank by the Borrower in quantities sufficient for the Lender to fulfill its obligations hereunder. In addition, the Borrower hereby appoints the Lender as its attorney to sign and endorse on its behalf, in handwriting or by facsimile or mechanical signature as and when deemed necessary by the Lender, blank forms of Bankers' Acceptances and the Borrower shall deliver to the Lender powers of attorney, in form satisfactory to the Lender, whereby the Borrower appoints the Lender as its attorney to sign and endorse on its behalf, in handwriting or by facsimile or mechanical signature blank forms of Bankers' Acceptances in accordance with the terms of such powers of attorney. The Borrower recognizes and agrees that all Bankers' Acceptances signed and/or endorsed on its behalf by the Lender shall bind the Borrower as fully and effectually as if signed in the handwriting of and duly issued by the proper signing officer of the Borrower. The Lender is hereby authorized to issue such Bankers' Acceptances endorsed in blank in such Face Amounts as may be determined by the Lender provided that the aggregate amount thereof is equal to the aggregate Face Amount of Bankers' Acceptances required to be accepted by the Lender. The Lender shall not be responsible or liable for its failure to accept a Bankers' Acceptance if the cause of such failure is, in whole or in part, due to the failure of the Borrower to provide duly executed and endorsed Drafts to the Lender on a timely basis nor shall the Lender be liable for any damage, loss or other claim arising by reason of any loss or improper use of any such instrument except loss or improper use arising by reason of the gross negligence or willful misconduct of the Lender, its officers, employees, agents or representatives. The Lender shall maintain a record with respect to Bankers' Acceptances (i) received by it from the Borrower in blank hereunder, (ii) voided by it for any reason, (iii) accepted by it hereunder, (iv) purchased by it hereunder, and (v) cancelled at their respective maturities. (c) Drafts of the Borrower to be accepted as Bankers' Acceptances hereunder shall be duly executed by a duly authorized officer of the Borrower. Notwithstanding that any person whose signature appears on any Bankers' Acceptance as a signatory for the Borrower may no longer be an authorized signatory for the Borrower at the date of issuance of a Bankers' Acceptance, such signature shall nevertheless be valid and sufficient for all purposes as if such authority had remained in force at the time of such issuance and any such Bankers' Acceptance so signed shall be binding on the Borrower. (d) On the requested date of Advance, the Lender agrees to purchase from the Borrower, at the face amount thereof discounted by the BA Reference Rate, any Bankers' Acceptance accepted by it and provide to the Borrower, the amount of the BA Discount Proceeds 26. in respect thereof, which amount (for greater certainty) shall be net of the amount of the Acceptance Fee payable by the Borrower to the Lender under Section 3.4 in respect of such Bankers' Acceptance. (e) The Lender may at any time and from time to time hold, sell, rediscount or otherwise dispose of any or all Bankers' Acceptances accepted and purchased by it. (f) The Borrower waives presentment for payment and any other defense to payment of any amounts due to the Lender in respect of a Bankers' Acceptance accepted by it pursuant to this Agreement which might exist solely by reason of such Bankers' Acceptance being held, at the maturity thereof, by the Lender in its own right and the Borrower agrees not to claim any days of grace if the Lender as holder sues the Borrower on any such Bankers' Acceptance for payment of the amount payable by the Borrower thereunder. (g) With respect to each Bankers' Acceptance, the Borrower, prior to the occurrence and continuation of a Default or an Event of Default, may give irrevocable written notice by means of an Advance Request (or such other method of notification as may be agreed upon between the Lender and the Borrower) to the Lender at or before 11:00 a.m. (Toronto, Ontario time) not less than two Business Days prior to the maturity date of such Bankers' Acceptance of the Borrower's intention to issue one or more Bankers' Acceptances on such maturity date (each a "Refunding Bankers' Acceptance") to provide for the payment of such maturing Bankers' Acceptance (it being understood that payments by the Borrower and fundings by the Lender in respect of each maturing Bankers' Acceptance and each related Refunding Bankers' Acceptance shall be made on a net basis reflecting the difference between the Face Amount of such maturing Bankers' Acceptance and the BA Discount Proceeds (net of the applicable Acceptance Fee) of such Refunding Bankers' Acceptance). Any funding on account of any maturing Bankers' Acceptance must be made at or before 11:00 a.m. (Toronto, Ontario time) on the maturity date of such Bankers Acceptance. If the Borrower fails to give such notice, then subject to satisfaction of the conditions in Section VII hereof, the Borrower shall be irrevocably deemed to have requested and to have been advanced a Prime Rate Loan in the Face Amount of such maturing Bankers' Acceptance on the maturity date of such Bankers' Acceptance from the Lender, which Prime Rate Loan shall thereafter bear interest as such in accordance with the provisions hereof until paid in full. Should the Borrower not be entitled to a Prime Rate Loan at all or in an amount sufficient to fully reimburse the Lender for the Face Amount of a matured Bankers' Acceptance, the Face Amount of such Bankers' Acceptance shall constitute Reimbursement Obligations of the Borrower to the Lender and shall bear interest in accordance with Section 3.6. (h) If the Lender determines in good faith, which determination shall be final, conclusive and binding upon the Borrower, and notifies the Borrower that, by reason of circumstances affecting the money market, there is no competitive market for Bankers' Acceptances, then, (i) the right of the Borrower to request an Advance by way of Bankers' Acceptances shall be suspended until the Lender determines that the circumstances causing such suspension no longer exist and the Lender so notifies the Borrower; and 27. (ii) any Advance Request which is outstanding shall be deemed to constitute a request for an Advance by way of a Prime Rate Loan. (i) The Lender shall promptly notify the Borrower of the suspension of the Borrower's right to request an Advance by way of Bankers' Acceptances and of the termination of any such suspension. (j) If an Event of Default shall have occurred and then be continuing (whether or not any declaration pursuant to Article 10 is made), the Borrower shall forthwith provide Cover to, and thereafter shall maintain Cover with, the Lender in respect of all outstanding Bankers' Acceptances. (k) Bankers' Acceptances accepted or purchased by the Lender under this Agreement may, at the option of the Lender, be issued in the form of a "depository bill" and deposited with a "clearing house", as each such term is defined in the Depository Bills and Notes Act (Canada). SECTION 2.11 REDUCTION OR TERMINATION OF COMMITMENT. (a) The Borrower shall have the right, exercisable by it at any time and from time to time upon not less than three Business Days prior written notice to the Lender and without penalty, but subject to the terms of this Section 2.11, to terminate any portion of the Commitment in respect of the Credit Facility not being used by the Borrower, provided that any such partial termination shall be in an amount not less than the lesser of (i) U.S. $10,000,000 and integral multiples thereof, and (ii) the entire amount of the unused Commitment. Notwithstanding the foregoing, the Borrower shall not be entitled to thereby (i) reduce the Commitment of the Lender below the then Outstanding Principal Obligations under the Credit Facility, or (ii) to prepay any outstanding BA Advance or LIBOR Loan, unless the Borrower shall pay to the Lender all interest accrued to the date of such prepayment on the Advances so prepaid, provide Cover to and thereafter maintain Cover with, the Lender in respect of all outstanding Bankers' Acceptances related to such BA Advances and on demand pay to the Lender any additional amounts payable pursuant to Section 11.7. No such reduction or termination of the Commitment in respect of the Credit Facility pursuant to this Section may be reinstated without the prior written approval of the Lender. Concurrently with the giving of any such notice, the Borrower shall prepay the Standby Fee that will have accrued due on the amount of the terminated portion of the Commitment to the effective date of such termination. (b) On the Termination Date in respect of the Credit Facility, all Commitments in respect of the Credit Facility shall be terminated in their entirety. SECTION 2.12 USE OF PROCEEDS. The proceeds of the Advances shall be used by the Borrower only for Permitted Purposes, provided that as against the Borrower and any other Person, the Lender shall not have any responsibility as to the use of any such proceeds. 28. ARTICLE 3 INTEREST AND FEES SECTION 3.1 INTEREST ON PRIME RATE LOANS. The Borrower shall pay interest on the outstanding principal amount of each Prime Rate Loan outstanding under the Credit Facility from the date on which such Prime Rate Loan was made until such outstanding principal amount shall have been repaid in full, and both before and after maturity, default and judgment, at a floating rate per annum equal to the Prime Rate in effect from time to time plus the Applicable Margin in respect of Prime Rate Loans in effect from time to time, calculated daily and compounded and payable (a) monthly in arrears on the last Business Day of each month of each year, and (b) on the date on which such Prime Rate Loan becomes due and payable or is converted to another Type of Advance as contemplated by Article 2, in each case based on the actual number of days elapsed and a year of 365 or 366 days, as the case may be. SECTION 3.2 INTEREST ON U.S. BASE RATE LOANS. The Borrower shall pay interest on the outstanding principal amount of each U.S. Base Rate Loan outstanding under the Credit Facility from the date on which such U.S. Base Rate Loan was made until such outstanding principal amount shall have been repaid in full, and both before and after maturity, default and judgment, at a floating rate per annum equal to the sum of the U.S. Base Rate in effect from time to time plus the Applicable Margin in respect of U.S. Base Rate Loans in effect from time to time, calculated daily and compounded and payable (a) monthly in arrears on the last Business Day of each month of each year, and (b) on the date on which such U.S. Base Rate Loan becomes due and payable or is converted to another Type of Advance as contemplated by Article 2, in each case based on the actual number of days elapsed and a year of 365 or 366 days, as the case may be. SECTION 3.3 INTEREST ON LIBOR LOANS. The Borrower shall pay interest on the outstanding principal amount of each LIBOR Loan outstanding under the Credit Facility from the date on which such LIBOR Loan was made until such outstanding principal amount shall have been repaid in full, and both before and after maturity, default and judgement, at a rate per annum equal at all times during each LIBOR Period for such LIBOR Loan to the sum of the LIBO Rate for such LIBOR Period plus the Applicable Margin in respect of LIBOR Loans in effect from time to time, in each case calculated daily and compounded and payable (a) in arrears on the last day of such LIBOR Period unless such LIBOR Period is greater than 90 days, in which case such interest shall be calculated daily and compounded and payable quarterly in arrears as well as on the last day of such LIBOR Period, and (b) on the date on which such LIBOR Loan otherwise becomes due and payable or is converted to another Type of Advance as contemplated by Article 2, in each case based on the actual number of days elapsed and a year of 360 days. 29. SECTION 3.4 ACCEPTANCE FEE. The Borrower shall pay the Lender a fee equal to the Applicable Margin in respect of BA Advances in effect from time to time of the Face Amount of each Bankers' Acceptance accepted or purchased by the Lender multiplied by a fraction the numerator of which is the term to maturity of such Bankers' Acceptance, expressed in days, and the denominator of which is 365 (or 366 during a year of 366 days), which fee shall be paid as a condition precedent to any obligation on the part of the Lender to accept or purchase such Bankers' Acceptance. If at the time of an increase in the Applicable Margin in respect of BA Advances there exists any outstanding BA Advance, then the Borrower shall pay to the Lenders an amount in respect of such BA Advance equal to the product obtained by multiplying (i) the product of (A) the difference between the Applicable Margin in respect of BA Advances in effect prior to such change in the Applicable Margin in respect of BA Advances and the Applicable Margin in respect of BA Advances in effect immediately after such change, and (B) the aggregate Face Amount of the Bankers' Acceptances in respect of such BA Advance, by (ii) the quotient obtained by dividing (A) the number of days to maturity remaining in respect of such BA Advance at such time, by (B) 365 days. Any payment in respect of an outstanding BA Advance as a result of a change in the Applicable Margin in respect of BA Advances shall be paid on the maturity date of the Bankers' Acceptances in respect of such BA Advance. SECTION 3.5 STANDBY FEE. The Borrower shall pay the Lender a standby fee in respect of the Credit Facility at the rate of 0.20% per annum (based on a year of 365 or 366 days, as the case may be) on the Available Commitment, expressed in Canadian Dollars and calculated on a daily basis and compounded and payable quarterly in arrears on the last Business Day of January, April, July and October in each year and on the Termination Date. SECTION 3.6 REIMBURSEMENT OBLIGATIONS. The amount of any Reimbursement Obligation may, if the applicable conditions precedent specified in Article 7 hereof have been satisfied, be paid with the proceeds of Prime Rate Loans or, as provided in Section 2.10(g), by the purchase of Refunding Bankers' Acceptances. Pending any such repayment in full, the Borrower shall pay to the Lender interest on any Reimbursement Obligation at the Past Due Rate, from and including the date on which such Reimbursement Obligations arose to the date of payment in full, calculated daily and compounded monthly in arrears based on the number of days elapsed and a year of 365 or 366 days, as the case may be, and payable on demand, both before and after judgement in respect thereof. SECTION 3.7 FIXED RATE OPTION Subject to the availability of fixed rate funds, the Borrower may, at its option, provided that such option may be exercised only once by notice in writing to the Lender given not more than 30 days prior to the Term Date or during the Term Credit Period, request the Lender to fix the rate at which all, but not less than all, of the Term Obligations shall bear interest during the then remaining Term Credit Period, which fixed rate shall be equal to (i) the 30. annual rate of interest equal to the Canadian Dollar interest swap rate quoted by the Lender for the then remaining Term Credit Period as of the later of (A) the Term Date, and (B) any date within 30 days after the date such notice is given to the Lender specified by the Borrower in such notice, plus (ii) 1.375% per annum. Interest payable at such fixed rate shall be compounded and payable (a) monthly in arrears on the last Business Day of each month of each year, and (b) on the date on which such Term Obligations become due and payable, in each case based on the actual number of days elapsed and a year of 365 or 366 days, as the case may be. Any interest payable at such fixed rate not paid on the date it is due and payable pursuant to this Section 3.7 shall bear interest from such date at the Past Due Rate. Upon the exercise by the Borrower of its option pursuant to this Section 3.7 all then outstanding Term Obligations shall be deemed to be thereupon converted into a Prime Rate Loan made by the Lender to the Borrower hereunder but bearing interest at the fixed rate established pursuant to this Section 3.7 and the rights or entitlements of the Borrower to convert, in whole or in part, any Term Obligation to any other Advance or Type of Advance under the Credit Facility shall be permanently terminated. SECTION 3.8 YEARLY RATE STATEMENTS. For the purpose of complying with the Interest Act (Canada), it is expressly stated that: (a) where interest is calculated pursuant hereto at a rate based on a 365 day period, the yearly rate or percentage of interest to which such rate is equivalent is such rate multiplied by the actual number of days in the year (365 or 366, as the case may be) divided by 365; (b) where interest is calculated pursuant hereto at a rate based on a 360 day period, the yearly rate or percentage of interest to which such rate is equivalent is such rate multiplied by the actual number of days in the year (365 or 366, as the case may be) divided by 360; and (c) the rates of interest specified in this Agreement are nominal rates and not effective rates or yields and the parties hereto acknowledge that there is a material distinction between the nominal and effective rates of interest, that they are capable of making the calculations necessary to compare such rates and that the principle of deemed reinvestment of interest shall not apply to any calculations of interest hereunder. ARTICLE 4 REPAYMENT OF OBLIGATIONS SECTION 4.1 REPAYMENT ON MATURITY. The Obligations shall become due and payable, and shall be paid in full, on the Termination Date. 31. SECTION 4.2 VOLUNTARY REPAYMENT Subject to the terms and conditions hereof, the Borrower may, without bonus or penalty, upon prior written notice to the Lender specifying the proposed date and aggregate principal amount of the prepayment and the Advance or Advances on account of which such prepayment is to be applied, prepay the specified principal amount on account of the then Outstanding Principal Obligations under the Credit Facility, together with all accrued interest to the date of such prepayment on the specified principal amount so prepaid and any other amounts payable to the Lender by the Borrower hereunder in respect thereof including, without limitation, pursuant to Section 11.7. Such notice shall be given at or before 11:00 a.m. (Toronto, Ontario time) not less than three Business Days prior to the proposed date of prepayment and, once given, any such notice shall be irrevocable and binding upon the Borrower. Notwithstanding the foregoing, the Borrower shall not be entitled to prepay any outstanding BA Advance or LIBOR Loan, unless the Borrower shall pay to the Lender all interest accrued to the date of such prepayment on the Advances so prepaid, provide Cover to and thereafter maintain Cover with, the Lender in respect of all outstanding Bankers' Acceptances related to such BA Advances and on demand pay to the Lender any additional amounts payable pursuant to Section 11.7, nor shall the Borrower be entitled to give any such notice or to make any such prepayment unless each partial prepayment is in an aggregate principal amount of not less than U.S. $10,000,000. SECTION 4.3 MANDATORY REPAYMENT OF CREDIT FACILITY. Subject to the terms and conditions hereof, the Outstanding Principal Obligations under the Credit Facility shall be repaid forthwith, upon demand by or on behalf of the Lender, to the extent that the Outstanding Principal Obligations under the Credit Facility exceed the then current Commitment in respect of the Credit Facility, whether as a result of oversight or otherwise, together with all accrued interest to the date of such repayment on the principal amount so repaid and any other amounts payable to the Lender by the Borrower hereunder in respect thereof including, without limitation, pursuant to Section 11.7, provided that any such repayment of the Outstanding Principal Obligations in respect of any BA Advance shall be discounted for the period to the maturity of the Bankers' Acceptances outstanding in respect of such BA Advance at the Canada Treasury Bill Rate for such discount calculation period in effect on the date of such repayment. SECTION 4.4 SCHEDULED REPAYMENT OF OBLIGATIONS. Subject to the Lender's rights of acceleration pursuant to Article 10 and without limiting Section 4.1: (a) if the Amortization Date does not occur, the Outstanding Principal Obligations shall be repaid by the Borrower in full on the Maturity Date; or (b) if the Amortization Date occurs, the Borrower shall repay Outstanding Principal Obligations in: (i) two equal semi-annual payments on the first and second semi-annual anniversaries of the Amortization Date, in an aggregate amount equal to 15% of the aggregate Outstanding Principal Obligations as of the Amortization Date; plus 32. (ii) two equal semi-annual payments on the third and fourth semi-annual anniversaries of the Amortization Date, in an aggregate amount equal to an additional 25% of the aggregate Outstanding Principal Obligations as of the Amortization Date, plus (iii) in two equal semi-annual payments on the fifth and sixth semi-annual anniversaries of the Amortization Date, in an aggregate amount equal to the aggregate Outstanding Principal Obligations remaining unpaid immediately prior to such fifth semi-annual anniversary, provided that, notwithstanding the foregoing, if the Amortization Date occurs after the Term Date and the Maturity Date therefore occurs prior to one or more of the semi-annual payment dates referred to above, the Outstanding Principal Obligations remaining unpaid on the Maturity Date shall be due and payable, and shall be repaid by the Borrower, in full on the Maturity Date. ARTICLE 5 PAYMENTS AND ACCOUNTS SECTION 5.1 MAINTENANCE OF ACCOUNTS. The Borrower shall open in its name and maintain the Borrower's Accounts with the Lender at the Lender's Branch. SECTION 5.2 PAYMENTS BY BORROWER. Any payment by the Borrower on account of any amount due and payable by it hereunder, whether on account of principal, interest, fees, costs and expenses or otherwise, shall be made by the Borrower in the currency in which such payment is due in immediately available funds to the Lender at the Lender's Branch. No payment by the Borrower shall be effective until such time as it is so paid to the Lender at the Lender's Branch. The Borrower shall make all payments hereunder regardless of any counterclaim, compensation or set-off rights of the Borrower. SECTION 5.3 DUE DATE OF PAYMENTS. Whenever any payment hereunder shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of interest or fees, as the case may be, payable on such date, provided that if any such extension would cause repayment of the principal of or interest on a LIBOR Loan to be made in the next following calendar month, such payment shall be made on the last preceding Business Day with interest payments adjusted accordingly. SECTION 5.4 TIME OF PAYMENTS. All payments to be made by the Borrower to the Lender shall be paid in immediately available funds no later than 11:00 a.m. (Toronto, Ontario time) on the date of 33. payment in order to obtain same day credit. Any such payment so paid after such time on such date shall be deemed to have been paid on the next following Business Day. SECTION 5.5 FORM AND AMOUNT OF PAYMENTS. All amounts due hereunder, whether for principal, interest, or otherwise, in respect of any Advance denominated in Canadian Dollars shall be paid in full by the Borrower in Canadian Dollars, and all amounts due hereunder, whether for principal, interest fees or otherwise, in respect of any Advance denominated in U.S. Dollars shall be paid in full in U.S. Dollars, and all amounts due hereunder in respect of costs and expenses shall be paid in full by the Borrower in the currency in which such costs or expenses were originally incurred, in any case without set-off, withholding or deduction of any kind or nature whatsoever unless required by law, and then subject to Section 11.8. SECTION 5.6 CHARGING BORROWER'S ACCOUNTS. In respect of all Obligations the Borrower hereby irrevocably authorizes and instructs the Lender to withdraw from or debit, from time to time when such Obligations are due and payable, any account of the Borrower with the Lender for the purpose of satisfying payment thereof. Without limiting the generality of the foregoing, the Borrower hereby authorizes the Lender, if and to the extent that any payment owed to the Lender by the Borrower in respect of such Obligations is not made when due hereunder, to charge from time to time against any or all of the Borrower's accounts with the Lender, including without limitation the Borrower's Accounts, the full amount of the payment so due. ARTICLE 6 CURRENCY AND COSTS SECTION 6.1 MARKET DISRUPTION AND ILLEGALITY. If the Lender determines in good faith and acting reasonably, which determination shall be final, conclusive and binding upon the Borrower, and notifies the Borrower that (a) by reason of circumstances affecting financial markets inside or outside Canada or the United States, as the case may be, deposits of U.S. Dollars are unavailable to Canadian banks generally; (b) adequate and fair means do not exist for ascertaining the applicable interest rate on the basis provided in the definition of LIBO Rate or U.S. Base Rate, as the case may be; (c) the making or continuation of any U.S. Base Rate Loans or LIBOR Loans, as the case may be, has been made impracticable by the occurrence of an event (other than a mere increase in rates payable by the Lender to fund the Loans) which materially and adversely affects the funding of the Credit Facility at any interest rate computed on the basis of the LIBO Rate or the U.S. Base Rate, as the case may be; or (d) any change to the present, or the introduction of any future, Legal Requirement or any guideline, directive, policy, request or requirement with which it is customary for the Lender to comply (whether or not having the force of law) of any Governmental Authority, or in the interpretation or application thereof by any Governmental Authority, has made it unlawful for the Lender to make, fund, or maintain or to give effect to its obligations in respect of any Type of Advance as contemplated hereby, then the Lender shall notify the Borrower in writing thereof and: 34. (a) the right of the Borrower to select any affected Type of Advance shall be suspended until the Lender determines in good faith that the circumstances causing such suspension no longer exist and the Lender so notifies the Borrower; (b) if any affected Type of Advance is not yet outstanding, any outstanding request for such Type of Advance shall be cancelled and the Type of Advance requested therein shall not be made; and (c) if any Advance is already outstanding at any time when the right of the Borrower to select that Type of Advance is suspended, in addition to its rights under Section 4.2, the Borrower shall, by written notice to the Lender given within three Business Days of the date of the notification, elect to (i) prepay within (A) seven Business Days of the date of such written notice to the Lender such Advance (in the case of Outstanding Principal Obligations in respect of any BA Advance, discounted for the period to the maturity of the Bankers' Acceptances outstanding in respect of such BA Advance at the Canada Treasury Bill Rate for such discount calculation period in effect on the date of such prepayment), but should it do so the Borrower shall pay to the Lender all interest accrued to the date of such prepayment on the Advances so prepaid and on demand all such amounts as are required to compensate the Lender for (A) any Compensating Amount payable pursuant to Section 6.2, and (B) any additional amounts payable pursuant to Section 11.7, or (ii) convert, immediately, or in the case of a LIBOR Loan, effective the last day of the then current LIBOR Period applicable thereto (or on such earlier date as may be required to comply with any applicable Legal Requirement), or in the case of a BA Advance, on the maturity date of the outstanding Bankers' Acceptances in respect of such BA Advance (or on such earlier date as may be required to comply with any applicable Legal Requirement), such outstanding Advance to another Type of Advance which the Borrower is then entitled to select, failing which such outstanding Advance shall be converted, at the sole discretion of the Lender, to another Type of Advance which the Borrower is then entitled to select as of the date specified above for conversion of such outstanding Advance by the Borrower or, if the Borrower is not then entitled to select any other Type of Advance, the Borrower shall immediately prepay such Advance as above provided. If the provisions of this Section 6.1 apply or prepayment is made of any Advance, the Lender and the Borrower shall negotiate in good faith with a view to providing alternative funding arrangements for the Borrower in a similar amount (or the equivalent thereof in another currency) and on similar terms to the amount affected or prepaid to the extent reasonably practicable, provided that such alternative funding arrangements shall not be, in the reasonable judgment of the Lender, materially disadvantageous to the Lender. SECTION 6.2 ADDITIONAL PAYMENTS. If subsequent to the date hereof (a) any change in applicable Legal Requirements or any change in the interpretation or application thereof by any Governmental Authority; or (b) compliance by the Lender with any guideline, direction, request or requirement with which it 35. is customary for the Lender to comply (whether or not having the force of law) of any Governmental Authority shall have the effect of: (a) increasing the cost to the Lender (which it would not otherwise have incurred) of continuing to provide or maintain the Credit Facility (including, without limitation, the costs of maintaining any reserve or special deposit or similar requirements with respect to this Agreement, or with respect to its obligations hereunder or thereunder), other than an increased cost resulting from a generally applicable higher rate of tax imposed on the overall net income or capital of the Lender; (b) imposing on the Lender or expecting there to be maintained by the Lender any additional reserve, special deposit or similar requirement or any additional capital adequacy or additional capital requirement (including, without limiting the generality of the foregoing, under any Capital Adequacy Guideline or any other requirement which affects the Lender's allocation of capital resources to its obligations) in respect of the Lender's obligations hereunder; (c) reducing any amount paid or payable to the Lender under this Agreement in any amount which is material; (d) causing the Lender to make any payment or to forego any return, on a basis calculated by reference to any amount received or receivable by the Lender under this Agreement; or (e) directly or indirectly reducing the effective return to the Lender under this Agreement or on the Lender's overall capital as a result of entering into this Agreement or as a result of any of the transactions or obligations contemplated by this Agreement (other than a reduction resulting from a generally applicable higher rate of tax imposed on the net income or capital of the Lender) received or receivable by the Lender under this Agreement; the Borrower shall, subject to the terms and conditions hereof, pay such amount (the "Compensating Amount") as may be necessary to compensate the Lender for and will indemnify the Lender against any such additional cost, reduction, payment or foregone return. The payment by the Borrower of such Compensating Amount is not, and shall not be deemed to be or construed as, a repayment on account of any Outstanding Principal Obligations. The Lender shall, forthwith after the Lender becoming aware of the occurrence of an event entitling the Lender to the payment of a Compensating Amount and the Lender determining to claim such Compensating Amount (which determination the Lender shall make without undue delay), give notice to the Borrower of the Compensating Amount claimed with details of the events giving rise thereto and shall at that time or within twenty (20) days thereafter provide to the Borrower a certificate setting out in reasonable detail a compilation of the Compensating Amount claimed (and where appropriate the Lender's reasonable allocation to its Advances hereunder of Compensating Amounts with respect to the aggregate of such similar credits granted by the Lender affected by such event) or, if the Lender is then unable to 36. determine the Compensating Amount or the method of compilation thereof an estimate of such Compensating Amount and/or the method or the basis on which the Lender estimates the calculation will be made which estimate will be confirmed or adjusted by the aforesaid certificate. The certificate of the Lender with respect to the Compensating Amount shall be conclusive evidence of the amount thereof, absent manifest error. The Borrower shall within thirty (30) days of receipt of such notice from the Lender pay to the Lender the Compensating Amount (or the estimated Compensating Amount) claimed but, if the Compensating Amount claimed and paid is greater or lesser than the Compensating Amount as finally determined, the Lender or the Borrower, as the case may be, shall pay to the other the amount required to adjust the payment to the Compensating Amount required to be paid. The obligation to pay such a Compensating Amount for subsequent periods will continue, subject as herein provided, until the earlier of the payment in full of the Obligations owed to the Lender and the lapse or cessation of the event giving rise to the Compensating Amount. SECTION 6.3 PREPAYMENT AND CONVERSION. In addition to the Borrower's rights under Section 4.2, if any notification of a Compensating Amount is given under Section 6.2 in respect of any Advance, then the Borrower may, by written notice to the Lender given within thirty Business Days next following the date of the notification, elect to prepay such Advances (in the case of Outstanding Principal Obligations in respect of any BA Advance, discounted for the period to the maturity of the Bankers' Acceptances outstanding in respect of such BA Advance at the Canada Treasury Bill Rate for such discount calculation period in effect on the date of such prepayment) or to convert all such Advances to any other Type of Advance, but should it do so the Borrower shall pay to the Lender all interest accrued to the date of such prepayment on the Advances so prepaid and on demand all such amounts as are required to compensate the Lender for (a) any Compensating Amount payable pursuant to Section 6.2, and (b) any additional amounts payable pursuant to Section 11.7. SECTION 6.4 MITIGATION. If the provisions of Section 6.1 become applicable or any Compensating Amount becomes payable pursuant to Section 6.2, the Lender shall use its reasonable efforts (subject to any legal and regulatory restrictions) to avoid the necessity of invoking the provisions of Section 6.1 or to avoid the need for paying, or to reduce, such additional Compensating Amount, including changing the jurisdiction of its applicable lending office; provided that the taking of any such action would not, in the reasonable judgment of the Lender, be materially disadvantageous to the Lender. SECTION 6.5 MANDATORY PREPAYMENT. In the event that the provisions of Section 6.1 become applicable or any Compensating Amount becomes payable to the Lender pursuant to Section 6.2, the Borrower may, at its own expense and in its sole discretion terminate the Commitment of the Lender and prepay all Outstanding Principal Obligations to the Lender (in the case of Outstanding Principal 37. Obligations in respect of any BA Advance, discounted for the period to the maturity of the Bankers' Acceptances outstanding in respect of such BA Advance at the Canada Treasury Bill Rate for such discount calculation period in effect on the date of such prepayment); provided that (a) the Borrower shall have paid to the Lender (i) the Outstanding Principal Obligations in respect of (in the case of Outstanding Principal Obligations in respect of any BA Advance, discounted as above provided) and interest accrued to the date of such payment on the Advances made by the Lender hereunder, (ii) any Compensating Amount payable pursuant to Section 6.2, (iii) any additional amounts payable pursuant to Section 11.7, (iv) Standby Fees accrued to the date of suspension of all Types of Advances pursuant to Section 6.1 or the date of such payment, whichever is earlier, and (v) all other amounts (excluding Standby Fees) owed to the Lender hereunder, and (b) such termination of the Commitment of the Lender and prepayment of Advances is not prohibited by any Legal Requirement. ARTICLE 7 CONDITIONS PRECEDENT TO LENDING SECTION 7.1 CONDITIONS PRECEDENT TO INITIAL ADVANCE. The obligation of the Lender to make its initial Advance under the Credit Facility is subject to the fulfillment to the Lender's satisfaction, prior to or at the Closing, of the following conditions precedent, provided that such condition precedent, being for the sole benefit of the Lender, may be unilaterally waived by it in whole or in part at any time on or before the date of the initial Advance: (a) the Company Guarantee shall have been duly executed and delivered by the Company; (b) each of the Company Credit Facility and the Company Bridge Facility shall have been terminated, all obligations of the Company under or in respect of each of the Company Credit Facility and the Company Bridge Facility shall have been paid and satisfied in full and the Lender shall have been released by the Company from any liability thereunder pursuant to a full and final release in form and substance reasonably satisfactory to the Lender and its counsel; (c) the 2006 Note Purchase Agreement, providing for the issue and sale by the Borrower of $75,000,000 aggregate principal amount of the 2006 Notes shall have been duly executed and delivered by the Borrower and the Purchasers listed in Schedule A to the 2006 Note Purchase Agreement, which 2006 Note Purchase Agreement, among other things, allows for the Credit Facility, provides for covenants and agreements substantially the same as those contained herein and in the Company Guarantee and is in form and substance reasonably satisfactory to the Lender, and the 2006 Note Purchase Agreement shall be in full force and effect. The Lender shall have received a copy of the 2006 Note Purchase Agreement and all instruments, documents and agreements delivered at the closing thereof; 38. (d) The Company, the Borrower and the holders of the 2003 Notes shall have duly executed and delivered the Amended and Restated 2003 Note Purchase Agreement, which among other things, provides for the Borrower to assume the obligations of the Company under the 2003 Notes, allows for the Credit Facility and the issue and sale of the 2006 Notes pursuant to the 2006 Note Purchase Agreement and provides for covenants and agreements substantially the same as those contained herein and in the Company Guarantee, in form and substance reasonably satisfactory to the Lender, and such amendment shall be in full force and effect. The Lender shall have received a copy of such Amended and Restated 2003 Note Purchase Agreement and all instruments, documents and agreements delivered at the closing thereof; (e) the representations and warranties of the Borrower in this Agreement and the representations and warranties of the Company in the Company Guarantee shall be correct when made and at the time of the Closing; (f) the Borrower and the Company shall have performed and complied with all agreements and conditions contained in this Agreement and the Company Guarantee required to be performed or complied with by it prior to or at the Closing, and after giving effect to the issue and sale of the 2006 Notes (and the application of the proceeds thereof as contemplated by Section 5.7 of the 2006 Note Purchase Agreement), no Default or Event of Default shall have occurred and be continuing. Neither the Company nor any Subsidiary shall have entered into any transaction since March 31, 2004 that would have been prohibited by Section 9.2 hereof had such Section applied since such date; (g) each of the Borrower and the Company shall have delivered to the Lender a certificate of a Senior Officer of the Borrower, dated the date of the Closing, certifying that the conditions specified in Sections 7.1(e), 7.1(f) and 7.1(n) have been fulfilled; (h) the General Partner shall have delivered to the Lender a certificate certifying as to the resolutions attached thereto and other partnership proceedings taken by the Borrower or corporate proceedings taken by the General Partner relating to the authorization, execution and delivery of this Agreement and the Company shall have delivered to the Lender a certificate certifying as to the resolutions attached thereto and other corporate proceedings relating to the authorization, execution and delivery of the Company Guarantee; (i) the Lender having received opinions in form and substance satisfactory to the Lender, dated the Closing Date, (i) from Katten Muchin Rosenman LLP, counsel for the Company, the General Partner and the Borrower, covering the matters set forth in Schedule 7.1(i) and covering such other matters incident to the transactions contemplated hereby as the Lender or its counsel may reasonably request (and the Borrower hereby instructs such counsel to deliver such opinion to the Lender), (ii) from W. Kirk James, Vice President and Secretary to the Company covering the matters set forth in Schedule 7.1(i) and covering such 39. other matters incident to the transactions contemplated hereby as the Lender or its counsel may reasonably request, and (iii) from Blake, Cassels & Graydon LLP, Canadian counsel for the Company, covering the matters set forth in Schedule 7.1(i) and covering such other matters incident to the transactions contemplated hereby as the Lender or its counsel may reasonably request; (j) on the date of the Closing, the Credit Facility and any Advance thereunder shall (i) be permitted by the laws and regulations of each jurisdiction to which the Lender is subject, without recourse to provisions permitting limited investments without restriction as to the character of the particular investment, (ii) not violate any applicable law or regulation (including, without limitation, Regulation T, U or X of the Board of Governors of the Federal Reserve System) (iii) not subject the Lender to any tax, penalty or liability under or pursuant to any applicable law or regulation, and (iv) not cause the Company or any Subsidiary to be in violation of any covenants or other restrictions or provisions in any agreements, instruments or other documents to which the Company or such Subsidiary is subject. If requested by the Lender, the Lender shall have received a certificate of a Senior Officer of the Borrower certifying as to such matters of fact as the Borrower may reasonably specify to enable the Borrower to determine whether the Credit Facility and any Advance thereunder is so permitted, including, without limitation, calculations demonstrating compliance with the covenants set forth in the 2006 Note Purchase Agreement, the Amended and Restated 2003 Note Purchase Agreement and the Subordinated Debentures after giving effect to the Credit Facility and any Advance thereunder; (k) the Borrower shall have consummated the sale of the entire principal amount of the Notes scheduled to be sold on the Closing Date pursuant to the Note Purchase Agreement; (l) each holder of a Subordinated Debenture shall have duly executed and delivered to the Lender a confirmation, acknowledged by the Company, which confirms that the Obligations and the Company Guarantee constitute Permitted Senior Indebtedness under such Subordinated Debenture, and each such confirmation shall be in full force and effect; (m) without limiting the provisions of Section 11.6, the Borrower shall have paid on or before the Closing any fees due and payable to the Lender with respect to the Credit Facility on or before the Closing and the reasonable fees, charges and disbursements of the Lender's counsel to the extent reflected in a statement of such counsel rendered to the Borrower at least three Business Days prior to the Closing; (n) the Company and its Subsidiaries shall have completed the Reorganization; (o) except as specified in Schedule 7.1(n), neither the Company nor the Borrower shall have changed its jurisdiction of incorporation or organization or been a party to any merger or consolidation and shall not have succeeded to all or any 40. substantial part of the liabilities of any other entity, at any time following the date of the most recent financial statements referred to in Schedule 5.1(e) of the Company Guarantee; and (p) all corporate, partnership and other proceedings in connection with the transactions contemplated by this Agreement and all documents and instruments incident to such transactions shall be satisfactory to the Lender and its counsel, and the Lender and its counsel shall have received all such counterpart originals or certified or other copies of such documents as the Lender or its counsel may reasonably request. SECTION 7.2 CONDITIONS PRECEDENT TO EACH ADVANCE. The obligation of the Lender to make any Advance (including the initial Advance) under the Credit Facility is subject to the fulfilment of each of the following conditions precedent to the reasonable satisfaction of the Lender (provided that each such condition precedent, being for the sole benefit of the Lender, may be unilaterally waived by it in whole or in part at any time either generally or with respect to any particular Advance): (a) the Lender shall have received from the Borrower a duly completed Advance Request in accordance with the provisions of this Agreement in that regard; (b) the representations and warranties set forth herein and in any other Loan Document shall be true and correct in all material respects, both on the date of such Advance Request and on the requested date of Advance; (c) the Borrower shall have observed and performed in all material respects all covenants set forth herein and in any other Loan Document; (d) no Default or Event of Default shall have occurred and be continuing or will result from giving effect to such Advance Request; (e) the making of the requested Advance shall not be prohibited by any Legal Requirement. The submission by the Borrower of an Advance Request shall be deemed to constitute a representation and warranty by the Borrower that the conditions precedent to the making of the Advance requested thereby set forth in this Article 7 have been satisfied in full. ARTICLE 8 REPRESENTATIONS AND WARRANTIES SECTION 8.1 REPRESENTATIONS AND WARRANTIES BY THE BORROWER. The Borrower represents and warrants to the Lender, acknowledging that the Lender is relying thereon without independent inquiry in entering into this Agreement and making Advances from time to time hereunder, that: 41. (a) ORGANIZATION, POWER AND AUTHORITY. The Borrower is a limited partnership duly organized and validly existing the laws of Delaware, and is duly qualified as a foreign limited partnership 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. The General Partner is the sole general partner of the Borrower. The General Partner is a corporation duly organized and validly existing under the laws of the Province of Ontario and is duly qualified as a foreign corporation and 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, be reasonably expected to have a Material Adverse Effect. The Borrower has the limited partnership 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 Agreement and to perform the provisions hereof. The General Partner has the corporate power and authority to own or hold under lease the properties it purports to own or hold under lease, to transact on the business it transacts and proposes to transact and to execute and deliver this Agreement on behalf of the Borrower. (b) AUTHORIZATION, ETC. This Agreement has been duly authorized by all necessary limited partnership action on the part of the Borrower, and this Agreement constitutes a legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with its terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). The execution and delivery of this Agreement by the General Partner on behalf of the Borrower have been duly authorized by all necessary corporate action on the part of the General Partner. (c) COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC. The execution, delivery and performance by the Borrower of this Agreement , and the execution and delivery of this Agreement by the General Partner on behalf of the Borrower, will not (i) 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, the partnership agreement of the Borrower, the corporate charter of the General Partner, partnership agreement, operating agreement, corporate charter or by-laws of the Company or any Subsidiary 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, (ii) 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 (iii) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to the Company or any Subsidiary. (d) GOVERNMENTAL AUTHORIZATION, 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 Borrower of this Agreement or the execution or delivery of this Agreement by the General Partner on behalf of the Borrower, other than those 42. consents, approvals or authorizations obtained and those registrations, filings or declarations made on or before the Closing Date. (e) COMPLIANCE WITH ERISA. The execution and delivery of this Agreement and the incurrence of the Obligations hereunder 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; (f) USE OF PROCEEDS, MARGIN REGULATIONS. The Borrower will apply the proceeds of any Advances hereunder for general partnership purposes. No part of the proceeds from any Advances hereunder will be used, directly or indirectly, for the purpose of buying or carrying any margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System (12 CFR 221), or for the purpose of buying or carrying or trading in any securities under such circumstances as to involve the Borrower in a violation of Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a violation of Regulation T of said Board (12 CFR 220). As used in this Section, the terms "margin stock" and "purpose of buying or carrying" shall have the meanings assigned to them in said Regulation U. Margin stock does not constitute more than 25% of the value of the consolidated assets of the Borrower and its Subsidiaries and the Borrower does not have any present intention that margin stock will constitute more than 25% of the value of such assets. (g) FOREIGN ASSETS CONTROL REGULATIONS, ETC. Neither the incurrence of Obligations by the Borrower hereunder nor its use of the proceeds any Advances hereunder will 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. (h) STATUS UNDER CERTAIN STATUTES. Neither the General Partner nor the Borrower 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. (i) OBLIGATIONS RANK PARI PASSU. The Obligations rank at least pari passu in right of payment with all other Senior Debt (actual or contingent) of the Borrower. SECTION 8.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and warranties herein set forth or contained in any certificates or documents delivered to the Lender pursuant hereto shall survive the execution and delivery hereof and any Advance hereunder and any investigation at any time made by or on behalf of the Lender. The representations and warranties shall be deemed to be continuing and repeated by the Borrower upon each Drawdown Date, and all references to the Closing Date contained in such representations and warranties shall be deemed to refer to such Drawdown Date. 43. ARTICLE 9 COVENANTS OF THE BORROWER SECTION 9.1 AFFIRMATIVE COVENANTS. The Borrower covenants that, so long as any Obligations remain outstanding and unpaid or any Commitment of the Lender shall continue to exist: (a) COMPLIANCE WITH COMPANY GUARANTEE AFFIRMATIVE COVENANTS. The Borrower will, and will cause each of its Subsidiaries to, comply with each provision of Section 3.1 of the Company Guarantee, mutatis mutandis. (b) OBLIGATIONS TO RANK PARI PASSU. The Obligations shall rank at least pari passu with all other present and future unsecured Senior Debt (actual or contingent) of the Borrower which is not expressed to be subordinate or junior in rank to any other unsecured Senior Debt of the Borrower. (c) PAYMENT OF OBLIGATIONS TO LENDER. The Borrower will duly and punctually pay to the Lender all amounts payable by the Borrower hereunder as and when the same become due. (d) CONFLICT WITH OTHER INSTRUMENTS. The Borrower will ensure that at all times and from time to time the execution and delivery by it of each of the Loan Documents to which it is a party, the performance by it of its obligations thereunder and the compliance by it with the terms, conditions and provisions thereof will not (i) 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 Borrower 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 Borrower or any Subsidiary is bound or by which the Borrower or any Subsidiary or any of their respective properties may be bound or affected, (ii) 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 Borrower or any Subsidiary or (iii) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to the Borrower or any Subsidiary. (e) ENFORCEABILITY. The Borrower will ensure that at all times and from time to time the execution and delivery of each of the Loan Documents by it and the performance by it of its obligations thereunder will be, upon the execution and delivery thereof, duly authorized by all necessary corporate action; that all consents, approvals, orders, authorizations, licenses, exemptions or designations of or by any Governmental Authority or other Person required in connection with the execution, delivery and performance by it of any such documents have been obtained; and that all registrations, qualifications, designations, declarations or filings with any Governmental Authority necessary to enable or empower it to enter into and to perform its obligations under any such documents have been obtained and continue in full force and effect as required for such purpose; and that any and all Loan Documents to which it is a party have been duly executed and delivered by it and that each will constitute its legal, valid and binding obligation enforceable in accordance with its terms, subject only to bankruptcy, insolvency, arrangement and other laws affecting the enforcement of creditors' rights generally (other than 44. those pertaining to settlements, fraudulent conveyances, assignments and preferences) and the availability, in the discretion of a court of competent jurisdiction, of equitable remedies. (F) CURE DEFECTS. The Borrower will promptly cure or cause to be cured, or cause its Subsidiaries to cure or cause to be cured, any defects in the execution, delivery, validity or enforceability of any of the Loan Documents or any of the other agreements, instruments or documents contemplated thereby or executed pursuant hereto or thereto and at its expense, execute and deliver or cause to be executed and delivered all such agreements, instruments and other documents and make all necessary filings and recordings as the Lender may consider reasonably necessary or desirable for the foregoing purposes; (G) DISTRIBUTIONS. Subject to compliance with applicable Legal Requirements, the Borrower will cause such of its Subsidiaries to declare and pay to the Borrower or to such Subsidiary's holding body corporate such dividends and other distributions as may be required to provide sufficient funds to the Borrower to duly and punctually pay to the Lender all amounts payable by the Borrower hereunder as and when the same become due. (H) FINANCIAL AND BUSINESS INFORMATION. The Borrower shall deliver to the Lender: (i) promptly, and in any event within five Business Days after a Responsible Officer of the Borrower 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 10.1(g), a written notice specifying the nature and period of existence thereof and what action the Borrower is taking or proposes to take with respect thereto; (ii) promptly, and in any event within 30 days of receipt thereof, copies of any notice to the Borrower 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; and (iii) with reasonable promptness, such other data and information relating to the business, operations, affairs, financial condition, assets or properties of the Borrower or relating to the ability of the Borrower to perform its obligations hereunder as from time to time may be reasonably requested by the Lender. (I) OFFICER'S CERTIFICATE. The Borrower shall cause each set of financial statements delivered to the Lender pursuant to Section 3.1(a)(i) or Section 3.1(a)(ii) of the Company Guarantee to be accompanied by a certificate of a Senior Financial Officer of the Company setting forth: (i) the information (including detailed calculations) required in order to establish whether the Borrower was in compliance with the requirements of Section 9.2(a) through Section 9.2(n) hereof, inclusive, whether the Amortization Date shall have occurred and that no Event of Default described in Section 10.1(d) hereof was in existence, during the quarterly or annual period covered by the statements 45. then being furnished (including with respect to each such Section or determination, where applicable, the calculations of the maximum or minimum amount, ratio or percentage, as the case may be, permissible under the terms of such Section or determination and the calculation of the amount, ratio or percentage then in existence); and (ii) a statement that such officer has reviewed the relevant terms hereof and has made, or caused to be made, under his or her supervision, a review of the transactions and conditions of the Company and its Subsidiaries from the beginning of the quarterly or annual period covered by the statements then being furnished to the date of the certificate and that such review shall not have disclosed the existence during such period of any condition or event that constitutes a Default or an Event of Default or, if any such condition or event existed or exists (including, without limitation, any such event or condition resulting from the failure of the Company or any Subsidiary to comply with any Environmental Law), specifying the nature and period of existence thereof and what action the Company shall have taken or proposes to take with respect thereto. (j) INSPECTION. The Borrower shall permit, and shall cause the Company and its Subsidiaries to permit, the representatives of the Lender: (i) if no Default or Event of Default then exists, at the expense of the Lender and upon reasonable prior notice to the Company, to visit the principal executive office of the Company, to discuss the affairs, finances and accounts of the Company and its Subsidiaries with the Company's officers and (with the consent of the Company, which consent the Borrower will not permit to be unreasonably withheld) its independent chartered accountants, and (with the consent of the Company, which consent the Borrower will not permit to be unreasonably withheld) to visit the other offices and properties of the Company and each Subsidiary, all at such reasonable times during business hours and as often as may be reasonably requested in writing; and (ii) if a Default or Event of Default then exists, at the expense of the Borrower to visit and inspect any of the offices or properties of the Company or any Subsidiary, to examine all their respective books of account, records, reports and other papers, to make copies and extracts therefrom, and to discuss their respective affairs, finances and accounts with their respective officers and independent chartered accountants (and by this provision the Borrower authorizes said accountants to discuss the affairs, finances and accounts of the Borrower and its Subsidiaries), all at such times and as often as may be requested. (k) FURTHER ASSURANCES. The Borrower will at its cost and expense, upon request of the Lender, duly execute and deliver, or cause to be duly executed and delivered, to the Lender all such further agreements, instruments, documents and other assurances and do and cause to be done all such further acts and things as may be necessary or desirable in the reasonable opinion 46. of the Lender to carry out more effectually the provisions and purposes of this Agreement or any of the other Loan Documents. (l) FOREIGN QUALIFICATION. Within 10 Business Days of Closing, the Borrower shall have become qualified to do business in the State of its principal office as a foreign limited partnership and shall have delivered to the Lender a certificate of good standing from the Secretary of State of such State evidencing such foreign qualification. SECTION 9.2 NEGATIVE COVENANTS. From and after the Closing Date and so long as any Obligations remain outstanding and unpaid or any Commitment of the Lender shall continue to exist: (a) LIMITATION ON SUBSIDIARY DEBT. The Borrower will not, at any time, permit any Subsidiary to, directly or indirectly, create, incur, assume, guarantee, have outstanding, or otherwise become or remain directly or indirectly liable with respect to any Debt other than: (i) Debt of a Subsidiary outstanding on the date of this Agreement so long as the aggregate principal amount of all Debt outstanding under this clause (i), together with the outstanding principal of all Debt secured by Liens permitted under Section 9.2(c)(vi), does not exceed U.S.$ 15,000,000 at any time, and any extension, renewal or refunding of any Debt permitted under this clause (i), provided that (A) the principal amount thereof is not increased in connection with such extension, renewal or refunding and (B) no Default or Event of Default shall exist at the time of such extension, renewal or refunding; (ii) Debt of a Subsidiary owed to the Borrower or a Wholly-Owned Subsidiary; (iii) Debt of a Subsidiary outstanding at the time such Subsidiary becomes a Subsidiary (such time referred to hereinafter as the "Acquisition Date"), provided that (A) such Debt shall not have been incurred in contemplation of such Subsidiary becoming a Subsidiary and (B) immediately after such Subsidiary becomes a Subsidiary no Default or Event of Default shall exist, and any extension, renewal or refunding of such Debt, provided, that (x) the principal amount thereof is not increased in connection with such extension, renewal or refunding (y) no Default or Event of Default shall exist at the time of such extension, renewal or refunding, and (z) such extended, renewed or refunded Debt is not outstanding beyond the time provided to in clause (C) of this clause (iii), and (C) all of such Debt of any such Subsidiary, and any extension, renewal or refunding of such Debt of any such Subsidiary, not secured by Liens permitted under Section 9.2(c) is, on or before the date which is 12 months after the Acquisition Date with respect to such Subsidiary, either (1) assumed by the Company or the Borrower, and such Subsidiary is released of all obligations thereunder, or (ii) refinanced with Debt permitted to be issued and outstanding under this Agreement other than pursuant to this clause (iii); 47. (iv) Debt of a Subsidiary (other than the Borrower) in addition to that otherwise permitted by the provisions of this Section 9.2(a); provided that on the date such Subsidiary incurs or otherwise becomes liable with respect to any such additional Debt and immediately after giving effect thereto and to the concurrent retirement of any other Debt (A) no Default or Event of Default (including, without limitation, under Section 10.1(d) hereof) shall exist, and (B) such Debt can be incurred within the applicable limitations provided in Section 9.2(b); and (v) Debt of the Borrower in addition to that otherwise permitted by the provisions of this Section 9.2(a); provided that on the date the Borrower incurs or otherwise becomes liable with respect to any such additional Debt and immediately after giving effect thereto and to the concurrent retirement of any other Debt no Default or Event of Default shall exist (including, without limitation, under Section 10.1(d) hereof). (b) LIMITATION ON PRIORITY DEBT. The Borrower will not, at any time, permit Priority Debt to exceed, or suffer Priority Debt to exist in excess of, 10% of Consolidated Total Capitalization, provided that the Borrower will not, and will not permit the Company or any Subsidiary to, directly or indirectly create, incur, assume or permit to exist (upon the happening of a contingency or otherwise) at any time any Designated Debt that constitutes any such Priority Debt unless (i) the Obligations and the Company Guarantee are secured and guaranteed equally and ratably with such Designated Debt pursuant to documentation (including amendments to this Agreement and the Company Guarantee) in form and substance satisfactory to the Lender, and (ii) the holders of such Designated Debt shall have entered into an intercreditor agreement with the Lender that is in form and substance satisfactory to the Lender. (c) LIMITATION ON LIENS. The Borrower will not, and will not permit the Company or any Subsidiary to, directly or indirectly create, incur, assume or permit to exist (upon the happening of a contingency or otherwise) any Lien on or with respect to any property or asset (including, without limitation, any document or instrument in respect of goods or accounts receivable) of the Company or any such Subsidiary, whether now owned or held or hereafter acquired, or any income or profits therefrom or assign or otherwise convey any right to receive income or profits, except: (i) Liens for taxes, assessments or other governmental charges or levies which are not yet due and payable or the payment of which is not at the time required by Section 3.1(e) of the Company Guarantee; (ii) statutory Liens of landlords, undetermined or inchoate Liens and other Liens imposed by law such as Liens of carriers, warehousemen, mechanics, materialmen and other similar Liens, in each case, incurred in the ordinary course of business for sums not yet due and payable or the payment of which is not at the time required by Section 3.1(e) of the Company Guarantee; (iii) Liens (other than any Lien imposed by ERISA, the Income Tax Act (Canada), the Pension Benefits Standards Act, 1985 (Canada) and all other applicable Canadian 48. Federal and provincial statutes or regulations governing pension plans) incurred or deposits made in the ordinary course of business (A) in connection with workers' compensation, unemployment insurance, other types of social security or retirement benefits or insurance regulatory requirements or (B) to secure (or to obtain letters of credit that secure) the performance of tenders, statutory obligations, surety bonds, appeal bonds, bids, leases (other than Capital Leases), performance bonds, purchase, construction or sales contracts and other similar obligations, in each case not incurred or made in connection with the borrowing of money, the obtaining of advances or credit or the payment of the deferred purchase price of property; (iv) any attachment or judgment Lien, unless the judgment it secures shall not, within 60 days after the entry thereof, have been discharged or execution thereof stayed pending appeal, or shall not have been discharged within 60 days after the expiration of any such stay; (v) Liens on property or assets of a Subsidiary securing Debt owing to the Company or to a Wholly-Owned Subsidiary; (vi) Liens set forth on Schedule 9.2(c) existing on the Closing Date securing Debt not exceeding in the aggregate principal amount U.S.$ 15,000,000; (vii) leases or subleases granted to others, easements, rights-of-way, restrictions and other similar charges or encumbrances or minor survey exceptions, in each case incidental to, and not interfering with, the ordinary conduct of the business of the Company or any of its Subsidiaries, provided that such Liens do not, in the aggregate, materially detract from the value of such property; (viii) any Lien created to secure all or any part of the purchase price, or to secure Debt incurred or assumed to pay all or any part of the purchase price or cost of construction, of property (or any improvement thereon) acquired or constructed by the Company or a Subsidiary after the date of the Closing, provided that (A) any such Lien shall extend solely to the item or items of such property (or improvement thereon) so acquired or constructed and, if required by the terms of the instrument originally creating such Lien, other property (or improvement thereon) which is an improvement to or is acquired for specific use in connection with such acquired or constructed property (or improvement thereon) or which is real property being improved by such acquired or constructed property (or improvement thereon), (B) the principal amount of the Debt secured by any such Lien shall at no time exceed an amount equal to the lesser of (i) the cost to the Company or such Subsidiary of the property 49. (or improvement thereon) so acquired or constructed and (ii) the Fair Market Value (as determined in good faith by one or more officers of the Company to whom authority to enter into the subject transaction has been delegated by the board of directors of the Company) of such property (or improvement thereon) at the time of such acquisition or construction, (C) any such Lien shall be created contemporaneously with, or within 12 months after, the acquisition or construction of such property, and (D) at the time of the incurrence of the Debt secured by such Liens and after giving effect thereto, no Default or Event of Default (including, without limitation, under Section 10.1(d) hereof) shall exist; (ix) any Lien existing on property of a Person immediately prior to its being consolidated with or merged into the Company or a Subsidiary or its becoming a Subsidiary, or any Lien existing on any property acquired by the Company or any Subsidiary at the time such property is so acquired (whether or not the Debt secured thereby shall have been assumed), provided that (A) no such Lien shall have been created or assumed in contemplation of such consolidation or merger or such Person's becoming a Subsidiary or such acquisition of property, (B) each such Lien shall extend solely to the item or items of property so acquired and, if required by the terms of the instrument originally creating such Lien, other property which is an improvement to or is acquired for specific use in connection with such acquired property and (C) the aggregate amount of all Debt secured by such Liens shall not cause an Event of Default under Section 10.1(d); (x) any Lien renewing, extending or refunding any Lien permitted by paragraphs (vi), (viii) or (ix) of this Section 9.2(c), provided that (A) the principal amount of Debt secured by such Lien immediately prior to such extension, renewal or refunding is not increased or the maturity thereof reduced, (B) such Lien is not extended to any other property and (C) immediately after such extension, renewal or refunding no Default or Event of Default would exist; (xi) reservations, conditions, limitations and exceptions contained in or implied by statute in the original disposition from the Crown and grants made by the Crown of interests so reserved or excepted; and (xii) other Liens not otherwise permitted by paragraphs (i) through (xi), inclusive, of this Section 9.2(c), provided that the Debt secured by such Liens shall be permitted by the limitation set forth in Section 9.2(b) at the time that the Lien securing such Debt is created and, at the time of and after giving effect to the incurrence of such Debt, no Default or Event of Default (including, without limitation, under Section 10.1(d)) shall exist. 50. Any Person that becomes a Subsidiary after the date of the Closing shall, for all purposes of this Section 9.2(c), be deemed to have created or incurred, at the time it becomes a Subsidiary, all outstanding Liens of such Person immediately after it becomes a Subsidiary, and any Person extending, renewing or refunding any Debt secured by any Lien shall be deemed to have incurred such Lien at the time of such extension, renewal or refunding. (d) MERGER, CONSOLIDATION, ETC. The Borrower will not, and will not permit the Company or any Subsidiary to, consolidate with or merge with any other corporation or convey, transfer or lease substantially all of its assets in a single transaction or series of transactions to any Person (except that a Subsidiary of the Company (other than the Borrower) may (x) consolidate, merge or amalgamate with, or convey, transfer or lease substantially all of its assets in a single transaction or series of transactions to, the Company or a Wholly-Owned Subsidiary of the Company, as applicable, and (y) convey, transfer or lease all of its assets in compliance with the provisions of Section 9.2(e) or 9.2(f)), nor will the Borrower suffer any such consolidation, amalgamation, merger, conveyance, transfer or lease to occur, provided that the foregoing restriction does not apply to : (i) the consolidation, amalgamation or merger of the Company with, or the conveyance, transfer or lease of substantially all of the assets of the Company in a single transaction or series of transactions to, any Person so long as: (A) the successor formed by such consolidation or amalgamation or the survivor of such merger or the Person that acquires by conveyance, transfer or lease substantially all of the assets of the Company as an entirety, as the case may be (the "Successor Entity"), shall be a solvent corporation organized and existing under the laws of the United States or any State thereof (including the District of Columbia) or Canada or any Province thereof; (B) if the Company is not the Successor Entity, (1) the Successor Entity shall have executed and delivered to the Lender its assumption of the due and punctual performance and observance of each covenant and condition of the Company Guarantee (pursuant to such agreements and instruments as shall be reasonably satisfactory to the Lender) and (2) the Successor Entity shall have caused to be delivered to the Lender an opinion of counsel of United States or Canadian national standing (and not an employee of the Company) or other counsel reasonably satisfactory to the Lender, to the effect that all agreements or instruments effecting such assumption are enforceable in accordance with their terms and comply with the terms hereof; and (C) immediately after giving effect to such transaction, no Default or Event of Default would exist. No such conveyance, transfer or lease of substantially all of the assets of the Company shall have the effect of releasing the Company or any Successor Entity from its liability under this Agreement. 51. (ii) the consolidation, amalgamation or merger of the Borrower with, or the conveyance, transfer or lease of substantially all of the assets of the Borrower in a single transaction or series of transactions to, any Wholly-Owned Subsidiary so long as: (A) the successor formed by such consolidation or amalgamation or the survivor of such merger or the Wholly-Owned Subsidiary that acquires by conveyance, transfer or lease substantially all of the assets of the Borrower, as the case may be, as an entirety, as the case may be (the "Successor Subsidiary"), shall be a solvent corporation organized and existing under the laws of the United States or any State thereof (including the District of Columbia); (B) if the Borrower is not the Successor Subsidiary, (1) the Successor Subsidiary shall have executed and delivered to the Lender its assumption of the due and punctual performance and observance of each covenant and condition of this Agreement (pursuant to such agreements and instruments as shall be reasonably satisfactory to the Lender) and (2) the Successor Subsidiary shall have caused to be delivered to the Lender an opinion of counsel of United States national standing (and not an employee of the Company or the Borrower) or other counsel reasonably satisfactory to the Lender, to the effect that all agreements or instruments effecting such assumption are enforceable in accordance with their terms and comply with the terms hereof; and (C) immediately after giving effect to such transaction, no Default or Event of Default would exist. No such conveyance, transfer or lease of substantially all of the assets of the Borrower shall have the effect of releasing the Borrower or any Successor Subsidiary from its liability under this Agreement. (e) SALE OF ASSETS, ETC. Except as permitted under Section 9.2(d), Section 9.2(f) and Section 9.2(g), the Borrower will not, and will not permit the Company or any Subsidiary to, make any Asset Disposition, nor will the Borrower permit any Asset Disposition to occur, unless: (i) in the good faith opinion of the Company, the Asset Disposition is in exchange for consideration having a Fair Market Value at least equal to that of the property exchanged and is in the best interest of the Borrower, the Company or such Subsidiary; (ii) immediately after giving effect to the Asset Disposition, no Default or Event of Default would exist; and (iii) subject to the following paragraph, immediately after giving effect to the Asset Disposition the Disposition Value of all property that was the subject of any Asset 52. Disposition occurring in the immediately preceding period of 12 consecutive months would not exceed 15% of Consolidated Total Assets as of the end of the then most recently ended fiscal quarter of the Company. If the Net Proceeds Amount for any Transfer is applied to a Debt Prepayment Application or a Property Reinvestment Application, in either case, within 12 months after such Transfer, then such Transfer, only for the purpose of determining compliance with subsection (iii) of this Section 9.2(e) as of a date on or after the Net Proceeds Amount is so applied, shall be deemed not to be an Asset Disposition. (f) SALE-AND-LEASEBACKS. The Borrower will not, and will not permit the Company or any Subsidiary to, enter into any Sale-and-Leaseback Transaction with respect to any property more than 180 days following the acquisition or occupancy of such property by the Borrower, the Company or such Subsidiary, whichever is later, nor will the Borrower suffer any such Sale and Leaseback Transaction to occur, unless: (i) the term of the lease in respect of such Sale-and-Leaseback Transaction, including all renewal terms, shall not exceed three years; (ii) such Sale-and-Leaseback Transaction constitutes a sale by a Subsidiary to the Company or by the Company to a Wholly-Owned Subsidiary; (iii) the Net Proceeds Amount received by the Borrower, the Company or such Subsidiary in respect of such Sale-and-Leaseback Transaction is applied within 12 months of the consummation thereof to a Debt Prepayment Application or a Property Reinvestment Application, provided that such Sale-and-Leaseback Transaction satisfies the requirements of Section 9.2(e); or (iv) immediately after giving effect thereto, the aggregate amount of Priority Debt does not exceed 10% of Consolidated Total Capitalization determined at such time and no Default or Event of Default would exist. (g) DISPOSAL OF OWNERSHIP OF A SUBSIDIARY. The Borrower will not, and will not permit the Company or any Subsidiary to, sell or otherwise dispose of any Subsidiary Shares, nor will the Borrower, or will the Borrower permit any Subsidiary to issue, sell or otherwise dispose of any shares of its own share capital, nor will the Borrower suffer any such sale, disposition or issuance to occur, provided that the foregoing restrictions do not apply to: (i) the issue of directors' qualifying shares by any Subsidiary; (ii) any such Transfer of Subsidiary Shares constituting a Transfer described in clause (a) of the definition of "Asset Disposition"; and (iii) the Transfer of the Subsidiary Shares of a Subsidiary of the Company owned by the Company and its other Subsidiaries; provided that such Transfer satisfies the requirements of Section 9.2(e). 53. (h) NATURE OF BUSINESS. The Borrower 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 Closing Date. (i) TRANSACTIONS WITH AFFILIATES. The Borrower 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 Borrower's or such Subsidiary's business and upon fair and reasonable terms no less favourable to the Borrower or such Subsidiary than would be obtainable in a comparable arm's-length transaction with a Person not an Affiliate. (j) SALES OF RECEIVABLES. The Borrower covenants that it will not, and will not permit the Company or any Subsidiary to, discount, pledge or sell (with or without recourse) any of its accounts or notes receivable, nor will the Borrower suffer any such discount, pledge or sale to occur. (k) MOST FAVOURED LENDER STATUS. The Borrower 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 Borrower or such Subsidiary has offered to make an amendment to this Agreement, in form and substance satisfactory to the Lender, to add to or amend this Agreement to contain such Additional Covenants or Additional Defaults; provided, however, in the event that the Borrower 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 Lender, this Agreement shall, without any further action on the part of the Company, the Borrower or the Lender, be deemed to be amended automatically to include each Additional Covenant and each Additional Default contained in such agreement. The Borrower 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 Lender) an amendment to this Agreement in form and substance satisfactory to the Lender evidencing the amendments of this 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 9.2(k), but shall merely be for the convenience of the parties hereto. (l) HOSTILE AQUISITION. The Borrower will not engage in, or permit the Company or any Subsidiary to engage in, any Hostile Acquisition, whether alone or in concert with any other Person or Persons. (m) RESTRICTED PAYMENTS. The Borrower will not: 54. (i) declare or pay any dividends or distributions, either in cash or property, on or in respect of any of its Equity Interests of any class (except dividends or other distributions payable solely in Equity Interests of the Borrower); (ii) directly or indirectly, or through any Subsidiary or through any Affiliate of the Borrower, purchase, redeem or retire any of its Equity Interests of any class or any warrants, rights or options to purchase or acquire any of its Equity Interests (other than in exchange for or out of the net cash proceeds to the Borrower from the substantially concurrent issue or sale of Equity Interests of the Borrower or warrants, rights or options to purchase or acquire any of its Equity Interests); or (iii) make any other payment or distribution, either directly or indirectly or through any Subsidiary, in respect of its Equity Interests, (such declarations or payments of dividends, purchases, redemptions or retirements of Equity Interests and warrants, rights or options and all such other payments or distributions being herein collectively called "Restricted Payments"), if immediately prior to or immediately after giving effect to any such Restricted Payment, a Default or Event of Default would exist. (n) LIMITATIONS ON RESTRICTIVE AGREEMENTS. The Borrower will not, and will not permit any Subsidiary to, enter into, or suffer to exist, any agreement with any Person which, directly or indirectly, prohibits or limits the ability of any Subsidiary to (i) pay dividends or make other distributions to the Borrower or prepay any Debt owed to the Borrower, or (ii) transfer any of its properties or assets to the Borrower (other than with respect to assets subject to Liens permitted by Section 9.2(c)). (o) FINANCIAL YEAR. The Borrower will not change its fiscal year, or permit the Company or any Material Subsidiary to change their respective fiscal years to other than December 31 or to have a fiscal year that does not end on December 31 of each calendar year. ARTICLE 10 ACCELERATION SECTION 10.1 EVENTS OF DEFAULT. If any one or more of the following events (each an "Event of Default") shall occur and be continuing then the Lender may, (i) terminate the Lender's obligations to make any further Advance under the Credit Facility, and (ii) (at the same time or at any time after such termination) declare the Obligations to be immediately due and payable, provided that should any Event of Default specified in Sections 10.1(h) or 10.1(i) occur then the Obligations shall, to the extent permitted by applicable law, be and become immediately due and payable without any declaration or other act on the part of the Lender: (a) the Borrower makes default in the payment on the due date thereof of any amount payable by it hereunder on account of the Outstanding Principal Obligations under the Credit Facility; 55. (b) the Borrower makes default in the payment when due of any amount payable by it hereunder on account of interest, fees, costs, expenses or other amounts payable by it hereunder, and such default shall continue for three Business Days after notice of such default being given to the Borrower by the Lender; (c) (i) the Company defaults in the performance of or compliance with any term contained in (A) Section 4.1(d) of the Company Guarantee with respect to any provision in Section 9.2(a) or 9.2(b) of this Agreement, inclusive, or (B) Section 4.1(a) through 4.1(c) of the Company Guarantee, inclusive, or Section 4.1(d) of the Company Guarantee with respect to any provision in Section 9.2(c) through 9.2(o) of this Agreement, inclusive, and, in the case of this clause (B), such default is not remedied within 10 Business Days after the earlier of (1) a Responsible Officer of the Company obtaining actual knowledge of such default and (2) the Company receiving written notice of such default from the Lender (any such written notice to be identified as a "notice of default" and to refer specifically to clause (B) of this paragraph (c)(i)), or (ii) the Borrower defaults in the performance of or compliance with any term contained in (A) 9.2(a) or 9.2(b) of this Agreement, inclusive, or (B) Section 9.2(c) through 9.2(o) of this Agreement, inclusive, and, in the case of this clause (B), such default is not remedied within 10 Business Days after the earlier of (i) a Responsible Officer of the Company or the Borrower obtaining actual knowledge of such default and (ii) the Company or Borrower receiving written notice of such default from the Lender (any such written notice to be identified as a "notice of default" and to refer specifically to clause (B) of this paragraph (c)(ii); (d) any of the following shall occur: (i) Consolidated Net Worth shall at any time be less than the sum of (a) U.S.$325,000,000, plus (b) an aggregate amount equal to 25% of Consolidated Net Income (but, in each case, only if a positive number) for each completed fiscal quarter of the Company beginning with the fiscal quarter ended March 31, 2005; (ii) Consolidated Debt shall at any time exceed 45% of Consolidated Total Capitalization; or (iii) the Minimum Interest Coverage Ratio at any time is less than 3.0 to 1.0; (e) the Company defaults in the performance of or compliance with any term of the Company Guarantee (other than those referred to in paragraph (c)(i) of this Section 10.1 or Section 4.1(d) of the Company Guarantee as it relates to Section 10.1(d)) or the Borrower defaults in the performance of or compliance with any term contained herein (other than those referred to in paragraphs (a), (b), (c)(ii) or (d) of this Section 10.1) and such default is not remedied within 30 days after the earlier of (i) a Responsible Officer of the Company or the Borrower obtaining actual knowledge of such default and (ii) the Company or the Borrower receiving written notice of such default from the Lender (any such written notice to be identified as a "notice of default" and to refer specifically to this paragraph (e) of Section 10.1); (f) any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in the Company Guarantee or in any writing furnished in 56. connection with the transactions contemplated by the Company Guarantee, this Agreement or such writing proves to have been false or incorrect in any material respect on the date as of which made or any representation or warranty made in writing by or on behalf of the Borrower or by any officer of the Borrower in this Agreement or in any writing furnished in connection with the transactions contemplated hereby or thereby proves to have been false or incorrect in any material respect on the date as of which made; (g) (i) the Company, the Borrower or any other Subsidiary of the Company is in default (as principal or as guarantor or other surety) in the payment of any principal of or premium or make-whole amount or interest on any Debt that is outstanding in an aggregate principal amount of at least U.S.$5,000,000 beyond any period of grace provided with respect thereto, or (ii) the Company, the Borrower or any other Subsidiary of the Company is in default in the performance of or compliance with any term of any evidence of any Debt in an aggregate outstanding principal amount of at least U.S.$5,000,000 or of any mortgage, indenture or other agreement relating thereto or any other condition exists, and as a consequence of such default or condition such Debt has become, or has been declared, due and payable before its stated maturity or before its regularly scheduled dates of payment and such declaration has not been annulled or rescinded, or (iii) as a consequence of the occurrence or continuation of any event or condition (other than the passage of time or the right of the holder of Debt to convert such Debt into equity interests), the Company, the Borrower or any other Subsidiary of the Company has become obligated to purchase or repay Debt before its regular maturity or before its regularly scheduled dates of payment in an aggregate outstanding principal amount of at least U.S.$5,000,000; (h) the Company, the Borrower or any Material Subsidiary (i) is generally not paying, or admits in writing its inability to pay, its debts as they become due, (ii) files, or consents by answer or otherwise to the filing against it of, a petition for relief or reorganization or arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency, amalgamation, reorganization, moratorium or other similar law of any jurisdiction, (iii) makes an assignment for the benefit of its creditors, (iv) consents to the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, (v) is adjudicated as insolvent or to be liquidated or (vi) takes action for the purpose of any of the foregoing; (i) a court or governmental authority of competent jurisdiction enters an order appointing, without consent by the Company, the Borrower or any of its Material Subsidiaries, a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, or constituting an order for relief or approving a petition for relief or reorganization or any other petition in bankruptcy or for liquidation or to take advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering the amalgamation, dissolution, winding-up or liquidation of the Company, the Borrower or any Material Subsidiary, or any such petition shall be filed against the Company, the Borrower or any Material Subsidiary and such petition shall not be dismissed within 60 days; (j) a final judgment or judgments for the payment of money resulting in liability (exclusive of amounts fully covered by valid and collectible insurance in respect thereof), aggregating in excess of U.S.$5,000,000 are rendered against one or more of the Company, the Borrower and the other Subsidiaries of the Company and which judgments are not, within 60 57. days after entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within 60 days after the expiration of such stay; (k) the Company Guarantee or any provision in the Company Guarantee shall at any time for any reason be terminated or cease to be valid and binding on the Company, or shall be declared to be null and void, or the validity or enforceability thereof shall be contested by the Company, or the Company shall deny that the Company has any further liability or obligation under the Company Guarantee; (l) the Company shall at any time cease to own, directly or indirectly, 100% of all outstanding partnership interests of the Borrower; (m) if (i) any Plan shall fail to satisfy the minimum funding standards of ERISA or the Code for any plan year or part thereof or a waiver of such standards or extension of any amortization period is sought or granted under Section 412 of the Code, (ii) a notice of intent to terminate any Plan shall have been or is reasonably expected to be filed with the PBGC or the PBGC shall have instituted proceedings under ERISA Section 4042 to terminate or appoint a trustee to administer any Plan or the PBGC shall have notified the Company or any ERISA Affiliate that a Plan may become a subject of any such proceedings, (iii) the aggregate "amount of unfunded benefit liabilities" (within the meaning of Section 4001(a)(18) of ERISA) under all Plans, determined in accordance with Title IV of ERISA, shall exceed U.S.$5,000,000, (iv) the Company or any ERISA Affiliate shall have incurred or is reasonably expected to incur 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, (v) the Company or any ERISA Affiliate withdraws from any Multiemployer Plan or (vi) the Company or any ERISA Affiliate establishes or amends any employee welfare benefit plan that provides post-employment welfare benefits in a manner that would increase the liability of the Company or any ERISA Affiliate thereunder; and any such event or events described in clauses (i) through (vi) above, either individually or together with any other such event or events, could reasonably be expected to have a Material Adverse Effect. As used in Section 10.1(m), the terms "employee benefit plan" and "employee welfare benefit plan" shall have the respective meanings assigned to such terms in Section 3 of ERISA; (n) without limiting the generality of paragraph (i) of this Section 10.1, any Governmental Authority shall take control of the Company, the Borrower or any of its Material Subsidiaries, or shall take control of the properties of any such Person or any Material properties; (o) the Lender's rights and entitlement to be paid the Obligations hereunder shall cease to rank at least pari passu in right of payment with all other Senior Debt (actual or contingent) of the Borrower; (p) a Material Adverse Effect shall occur; (q) there is any adverse qualification to any of the financial statements of the Company, the Borrower or any of its Material Subsidiaries by their respective auditors; or (r) this Agreement shall cease to be in full force and effect and to constitute a legal, valid and binding obligation of any of the parties signatory thereto enforceable against such parties in accordance with its terms, subject to bankruptcy, insolvency, arrangement and other 58. laws affecting the enforcement of creditors' rights generally (other than those pertaining to settlements, fraudulent conveyances, assignments and preferences) and the availability, in the discretion of a court of competent jurisdiction, of equitable remedies. SECTION 10.2 REMEDIES UPON DEFAULT. Upon the occurrence of an Event of Default and acceleration of the maturity of the Obligations owed to the Lender hereunder, the Lender may commence such litigation or proceedings as it may deem expedient, all without any additional notice, presentation, demand, protest, notice of dishonour, including entering into of possession of any of the property or assets of the Borrower, or any other action, notice of all of which the Borrower hereby expressly waives. For greater certainty, and subject to any curative provisions specified herein, the Borrower will be considered to be in default of its obligations hereunder by the mere lapse of time provided herein for performing such obligations, without any requirement of further notice or other act of the Lender unless a notice is specifically required under this Agreement. The rights and remedies of the Lender hereunder are cumulative and are in addition to and not in substitution for any other rights or remedies provided by law. Nothing contained herein or in any Loan Documents now or hereafter held by the Lender with respect to the Obligations of the Borrower to the Lender, or any part thereof, nor any act or omission of the Lender with respect to such Loan Documents, shall in any way prejudice or affect the rights, remedies and powers of the Lender with respect to any other such Loan Documents. SECTION 10.3 RIGHT OF SET-OFF. Upon the occurrence of an Event of Default and the acceleration of the maturity of the Obligations owed to the Lender hereunder, the Lender is hereby authorized by the Borrower at any time and from time to time and shall to the fullest extent permitted by law, set off, appropriate and apply any and all deposits (general or special, time or demand, matured or unmatured, provisional or final) at any time held and other Debt at any time owing to or for the credit or the account of the Borrower against any and all of the Obligations of the Borrower now or hereafter existing hereunder. The Lender shall promptly notify the Borrower in advance of any such set-off and application made by the Lender, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Lender under this Section 10.3 are in addition to all other rights and remedies (including, without limitation, other rights of set-off) which the Lender may have. SECTION 10.4 CURRENCY CONVERSION AFTER MATURITY. At any time following the occurrence of an Event of Default and the acceleration of the maturity of the Obligations owed to the Lender hereunder, the Lender shall be entitled to convert, with two (2) Business Days' prior notice to the Borrower, any and all then unpaid and outstanding LIBOR Loans or U.S. Base Rate Loans or any of them to Prime Rate Loans. Any such conversion shall be calculated so that the resulting Prime Rate Loans shall be the Canadian Dollar Equivalent on the date of conversion of the amount of United States Dollars so converted. Any accrued and unpaid interest denominated in United States Dollars at the time of any such conversion shall be similarly converted to Canadian Dollars, and such Prime Rate Loans and accrued and unpaid interest thereon shall thereafter bear interest in accordance with Section 3.1. 59. SECTION 10.5 JUDGMENT CURRENCY. The obligation of the Borrower to make payments on any Obligations to the Lender hereunder in any currency (the "first currency") shall not be discharged or satisfied by any tender or recovery pursuant to any judgment expressed in or converted into any other currency (the "second currency") except to the extent to which such tender or recovery shall result in the effective receipt by the Lender of the full amount of the first currency payable, and accordingly the primary obligation of the Borrower shall be enforceable as an alternative or additional cause of action for the purpose of recovery in the second currency of the amount (if any) by which such effective receipt shall fall short of the full amount of the first currency payable and shall not be affected by a judgment being obtained for any other sum due hereunder. ARTICLE 11 GENERAL SECTION 11.1 EVIDENCE OF DEBT. The Obligations of the Borrower hereunder, in respect of or in connection with the Advances under the Credit Facility made from time to time by the Lender or otherwise, shall, absent manifest error, be conclusively evidenced by the records of the Lender. SECTION 11.2 ADDITIONAL EXPENSES. If during the continuation of an Event of Default the Borrower should fail to observe or perform any covenant or agreement to be observed or performed by the Borrower hereunder the Lender may but shall not be obliged to perform or cause to be performed the same for which purpose the Borrower hereby appoints the Lender to be the lawful attorney of the Borrower, and all reasonable expenses incurred or payments made by the Lender in so doing shall be paid by the Borrower to the Lender forthwith upon demand and any such unpaid amount shall bear interest, both before and after judgment, at the Past Due Rate, calculated daily and compounded monthly in arrears and payable on demand, and the Borrower hereby indemnifies the Lender against any loss incurred by the Lender in that regard. SECTION 11.3 INVALIDITY OF ANY PROVISIONS. Any provision of this Agreement or any of the other Loan Documents which is prohibited by the laws of any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition without invalidating the remaining terms and provisions hereof or thereof and no such invalidity shall affect the obligation of the Borrower to pay the Obligations in full. The rate of interest chargeable or collectable on overdue instalments of interest shall not exceed the maximum rate permitted by applicable law. SECTION 11.4 AMENDMENTS, WAIVERS, ETC. No amendment, modification or waiver of any provision of, and no waiver of the strict observance, performance or compliance by the Borrower with any term, covenant, condition or agreement contained in this Agreement and no indulgence granted by the Lender or 60. consent to any departure by the Borrower therefrom, shall in any event be effective unless it shall be in writing and signed by the Lender (and the Borrower in the case of amendments or modifications or waivers by the Borrower), and then such amendment, modification, waiver or consent shall be effective only in the specific instance and for the specific purpose for which it is given. Notwithstanding the foregoing, no failure to exercise and no delay in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege under this Agreement preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The remedies herein provided are cumulative and not exclusive of any other rights or remedies available at or provided by law. SECTION 11.5 NOTICES, ETC. All notices and other communications provided for hereunder shall, except as otherwise permitted hereunder, be in writing personally delivered by messenger or courier or facsimile or telecopy transmission, if (a) to the Borrower, to it at: Hub International Limited Partnership 55 East Jackson Boulevard Chicago, Illinois, 60604 Telecopy: (877-402-6606 for the attention of: Marianne Paine Chief Legal Officer with a copy to: Hub International Limited 55 East Jackson Boulevard Chicago, Illinois, 60604 Telecopy: (877-402-6606 for the attention of: Marianne Paine Chief Legal Officer (b) to the Lender, to it at: Bank of Montreal 4th Floor 1 First Canadian Place Toronto, Ontario M5X 1H3 Telecopy: (416)-359-7796 for the attention of: Vice President, Loan Products Group 61. or to such other address or facsimile or telecopy number as any party hereto may from time to time designate to the other parties hereto in such manner. All such notices and communications shall be effective, and deemed to be received by the intended recipient, on the date delivered or transmitted, if delivered or transmitted before 3:00 p.m. (Toronto, Ontario time) on a Business Day, or, in any other case, on the first Business Day following the date delivered or transmitted. SECTION 11.6 COSTS AND EXPENSES. The Borrower shall pay to the Lender, on demand all reasonable out of pocket costs and expenses (including, without limitation, all reasonable legal fees and disbursements) incurred by the Lender in connection with this Agreement, the other Loan Documents and the Credit Facility including, without limitation, (a) the negotiation, preparation, execution, delivery and interpretation, both prior and subsequent to the Closing Date, of this Agreement and the other Loan Documents or any agreement or instrument contemplated hereby or thereby; (b) the performance by the Lender of its obligations and duties under this Agreement and the other Loan Documents; (c) advice of counsel with respect to the interpretation of the Credit Facility, the Loan Documents or any transaction contemplated thereunder; (d) the enforcement of any of the Loan Documents or the enforcement or preservation of rights under and the refinancing, renegotiation or restructuring of the Credit Facility under this Agreement or the other Loan Documents or the bringing of any action, suit or proceeding with respect to the enforcement of any of the Loan Documents or any such right or seeking any remedy which may be available to the Lender at law or in equity; and (e) any amendments, waivers or consents requested by the Borrower pursuant to the provisions hereof or any other Loan Document. The Borrower shall supply all statements, reports, certificates, opinions, appraisals and other documents or information required to be furnished to the Lender pursuant to this Agreement without cost to the Lender. SECTION 11.7 INDEMNIFICATION. (a) The Borrower agrees to indemnify the Lender and its directors, officers and employees from and against any and all Claims and Losses of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Lender or the directors, officers or employees of the Lender, arising by reason of any action (including any action referred to herein) or inaction or omission to do any act legally required of the Borrower pursuant to the Loan Documents. (b) The Borrower shall pay to the Lender on demand any amounts required to compensate the Lender for any Loss suffered or incurred by the Lender as a result of (i) any payment being made (due to acceleration of the maturity of any Advance pursuant to Article 10, a mandatory or optional prepayment of principal or otherwise) in respect of any Bankers' Acceptance other than on the maturity date of such Bankers' Acceptance or in respect of a LIBOR Loan other than on the last day of the related LIBOR Period; (ii) the failure of the Borrower to give any notice in the manner and at the times required by this Agreement; (iii) the failure of the Borrower to effect an Advance in the manner and at the time specified in any Advance Request; or (iv) the failure of the Borrower to make a payment or a mandatory 62. repayment in the manner at the time specified in this Agreement or any notice given by the Borrower to the Lender in accordance with this Agreement. A certificate as to the amount of any such Loss, providing reasonable detail of the calculation of such Loss and submitted in good faith by the Lender to the Borrower shall be conclusive and binding for all purposes, absent manifest error. (c) The provisions of this Section 11.7 shall survive the termination of this Agreement and the repayment of all Obligations. The Borrower acknowledges that neither its obligation to indemnify, nor any actual indemnification by it, of the Lender or any other indemnified party hereunder in respect of such Person's Losses for the legal fees and expenses of such Person's counsel shall in any way affect the confidentiality or privilege relating to any information communicated by such Person to its counsel. SECTION 11.8 TAXES. (a) Any and all payments to the Lender by the Borrower hereunder (or under any of the other Loan Documents) shall be made free and clear of and without deduction or withholding for any and all present and future Taxes, imposed by any Governmental Authority including, without limitation, any Taxes which arise from the execution, delivery or registration of, or otherwise with respect to, this Agreement or any of the other Loan Documents, unless such Taxes are required by law or the administration thereof to be deducted or withheld. If the Borrower shall be required by law or the administration thereof to deduct or withhold any such Taxes from or in respect of any amount payable hereunder, (i) the amount payable shall be increased as may be necessary so that after making all required deductions or withholdings (including deductions or withholdings applicable to additional amounts paid under this paragraph), the Lender receives an amount equal to the amount it would have received if no such deduction or withholding had been made; provided, however, that the Borrower shall not be required to pay any additional amounts unless the Lender has timely provided a duly completed Internal Revenue Service Form W-8ECI or its successor form; (ii) the Borrower shall make such deductions or withholdings; and (iii) the Borrower shall pay forthwith the full amount deducted or withheld to the relevant taxation or other authority in accordance with applicable law. (b) The Borrower agrees to indemnify the Lender for the full amount of Taxes not deducted or withheld and paid by the Borrower in accordance with Section 11.8 (a) to the relevant taxation or other authority and any Taxes imposed by any jurisdiction on amounts payable by the Borrower under this Section 11.8, paid by the Lender and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not any such Taxes were correctly or legally asserted. Payment under this indemnification shall be made within fifteen days from the date the Lender makes written demand therefor. A certificate as to the amount of such Taxes, providing reasonable details of the calculation thereof, and evidence of payment thereof submitted to the Borrower by the Lender shall be conclusive evidence of the amount due from the Borrower to the Lender absent manifest error. (c) The Borrower shall furnish to the Lender the original or a certified copy of a receipt evidencing any payment of Taxes made by the Borrower, as soon as such receipt becomes available (or if such original or certified tax receipt is not available, such other evidence 63. of payment as may be acceptable to the Lender), together with such other documentary evidence with respect to such payments as may be reasonably requested from time to time by the Lender. (d) If the provisions of Section 11.8(a) or 11.8(b) require the Borrower to deduct or withhold and pay Taxes to any relevant taxation or other authority or to pay any additional amounts thereunder, the Lender shall use its reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to avoid the necessity of invoking such provisions of this Section 11.8, or to reduce the amounts payable thereunder, including changing the jurisdiction of its applicable lending office and providing any documentation that would eliminate or reduce the Tax liability; provided that the taking of any such action would not, in the reasonable judgment of the Lender, be disadvantageous to the Lender. (e) For the avoidance of doubt, nothing herein shall (i) restrict the right of the Lender to arrange its tax affairs as it shall deem appropriate or (ii) require the Lender to disclose any information regarding its tax affairs or computations to the Borrower or any other Person other than as shall be necessary to permit the Borrower to determine whether the payment of any indemnity amount would be required to be made pursuant to the provisions of this Section 11.8, provided, however, that the Lender shall not be obligated to disclose any of its tax returns to the Borrower or any other Person. (f) The provisions of this Section 11.8 shall survive the termination of this Agreement and the repayment of all Obligations. SECTION 11.9 CALCULATIONS. Except as otherwise provided herein, the financial statements and returns to be furnished to the Lender pursuant to this Agreement shall be made and prepared in accordance with GAAP consistently applied throughout the periods involved (except as set forth in the notes thereto or as otherwise disclosed in writing by the Borrower to the Lender). SECTION 11.10 ASSIGNMENTS AND PARTICIPATIONS. (a) The Borrower shall not be entitled to assign its rights and obligations hereunder or any interest herein without the prior consent of the Lender. (b) Subject to the provisions of this Agreement, the Lender may grant participations to one or more Persons in or respect of all or any part of the Lender's Commitment and the Obligations owed to the Lender, but in any such event the participant shall not have any rights under this Agreement or the other Loan Documents in respect of its participation and shall only have, as against the Lender, those rights and remedies in respect of such participation as are set forth in the agreement or agreements made between the Lender and such participant relating thereto. (c) The Lender may at any time, subject, prior to the occurrence of an Event of Default and other than in respect to an assignment by a Lender to one of its Affiliates, to the consent of the Borrower (such consent not to be unreasonably withheld or delayed), assign all or part of the Lender's Commitment and the Obligations then owed to the Lender to one or more Persons (each of which is hereinafter in this Section called the "Assignee Lender") in 64. consideration of the agreement of each such Assignee Lender to advance or hold that percentage of the Lender's Commitment or Obligations owed to the Lender as corresponds with the percentage thereof so assigned to such Assignee (hereinafter called the "Assignee Lender's Commitment" and the "Assignee Lender's Commitment Percentage", respectively). The Assignee Lender or a participant granted a participation pursuant to Section 11.10 (b) (including any Assignee Lender or participant that is an Affiliate of the Lender) shall not be entitled to receive any greater payment under Section 11.8 than the Lender would have been entitled to receive with respect to the interest assigned to such Assignee Lender or participation granted to such participant, unless the Borrower consents to the assignment of such interest to such Assignee Lender or the grant of such participation to such participant. (d) If the Lender proposes to make any such assignment to a potential Assignee Lender, the Lender shall provide to the Borrower or procure the provision to the Borrower of any material information about such potential Assignee Lender which is generally available in order to assist the Borrower in complying with any applicable laws, treaties and regulations relating to the lending by such potential Assignee Lender and to determine whether to give any required consent by the Borrower under clause (c) above. (e) If the Lender assigns all or any part of its Commitment hereunder to an Assignee Lender as provided above, all references in this Agreement to the Lender shall thereafter be construed as references to the Lender and such Assignee Lender to the extent of their respective Commitments and, if such Assignee Lender is not an Affiliate of the Lender the Borrower shall thereafter look only to such Assignee Lender (and not to the Lender) in respect of that proportion of such Lender's Commitment as corresponds to such Assignee Lenders' Commitment therein and accordingly the Lender's obligation to provide Advances in accordance with its Commitment hereunder shall be reduced correspondingly and such Assignee Lender shall assume a Commitment equivalent to such reduction in the Lender's Commitment. (f) The Lender may disclose to a potential participant or potential Assignee Lender (provided that such potential participant or Assignee Lender has been approved by the Borrower, such approval not to be unreasonably withheld) such information concerning or pertaining to the Obligations of the Borrower and its Subsidiaries as is known to the Lender, and may in addition express to any such Person any opinion it may have with respect to any matter, provided such potential participant or potential Assignee Lender covenants in favour of the Borrower and the Lender to only use such information in connection with its evaluation as to whether to take any such participation or assignment and, should it do so, in connection therewith, and to maintain the confidential nature of all such information. SECTION 11.11 GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with, the laws of the Province of Ontario and the laws of Canada applicable therein. SECTION 11.12 CONSENT TO JURISDICTION. The Borrower hereby irrevocably submits to the non-exclusive jurisdiction of the Courts of the Province of Ontario in respect of any action, suit or proceeding arising out of or 65. relating to this Agreement and the other Loan Documents and the Credit Facility hereby extended and hereby irrevocably agrees that all Claims in respect of any such action, suit or proceeding may be heard and determined in any such Ontario Court. The Borrower hereby irrevocably waives, to the fullest extent it and they may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding. The Borrower agrees that a final judgment in any such suit, action or proceeding shall be conclusive and may be enforced in another jurisdiction by suit on the judgment or in any other manner provided by law. Nothing in this Section 11.12 shall affect the right of the Lender to bring any suit, action or proceeding against the Borrower or its assets in the courts of any other jurisdiction. SECTION 11.13 BINDING EFFECT. This Agreement shall be binding upon and enure to the benefit of the parties hereto and their respective successors and permitted assigns. SECTION 11.14 INTEREST SAVINGS CLAUSE. Nothing contained in this Agreement or in any promissory notes made by the Borrower to the Lender or in any of the other Loan Documents shall be construed to permit the Lender to receive at any time interest, fees or other charges in excess of the amounts which the Lender is legally entitled to charge and receive under any law to which such interest, fees or charges are subject. In no contingency or event whatsoever shall the compensation payable to the Lender by the Borrower, howsoever characterized or computed, hereunder or under any other agreement or instrument evidencing or relating to the Obligations of the Borrower to the Lender hereunder, exceed the highest rate permissible under any law to which such compensation is subject. There is no intention that the Lender shall contract for, charge or receive compensation in excess of the highest lawful rate, and, in the event it should be determined that any excess has been charged or received, then, ipso facto, such rate shall be reduced to the highest lawful rate so that no amounts shall be charged which are in excess thereof; and the Lender shall apply such excess against the Obligations of the Borrower to the Lender then outstanding and, to the extent of any amounts remaining thereafter, refund such excess to the Borrower. SECTION 11.15 ENTIRE AGREEMENT. This Agreement, including the Schedules hereto, constitutes the entire agreement between the Borrower and the Lender and supersedes all prior agreements, whether oral or written, between the Borrower and the Lender in respect of the Credit Facility extended hereby. SECTION 11.16 COUNTERPARTS. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute one and the same instrument. [Signature page follows.] 66. IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. HUB INTERNATIONAL LIMITED PARTNERSHIP, by its general partner, HUB INTERNATIONAL PARTNERS LIMITED Per: /s/ W. Kirk James ----------------------------------- Authorized Signatory Per: ----------------------------------- Authorized Signatory BANK OF MONTREAL Per: /s/ ----------------------------------- Authorized Signing Officer SCHEDULE 1 FORM OF ADVANCE REQUEST [Date of Request] Bank of Montreal 4th Floor 1 First Canadian Place Toronto, Ontario M5X 1H3 Attention: Vice President, Loan Products Group Telecopy: (416)-359-7796 Dear Sirs: ADVANCE REQUEST The undersigned refers to the credit agreement (the "Credit Agreement") dated as of the 4th day of April, 2006, between Hub International Limited Partnership, as Borrower, and Bank of Montreal, as Lender thereunder. All capitalized terms used herein shall have the respective meanings attributed thereto in the Credit Agreement. The undersigned hereby requests, in accordance with Article 2 of the Credit Agreement, the following Advance: Requested Advance: Type _________________________________________________________________ (specify Type of Advance) Amount _______________________________________________________________ If BA Advance requested, maturity date of Bankers' Acceptances ________________________________ If LIBOR Loan requested, requested LIBOR Period _______________________________________________ Proposed Business Day of such Advance: _______________________________ Day/Month/Year 2. If requested Advance required for conversion of outstanding Advances identify Type, Outstanding Principal Amount and dates of outstanding Advances to be converted _____________________________________________ ______________________________________________________________________ The undersigned hereby confirms that the Advance requested hereby complies with the requirements of the Credit Agreement, that this Advance Request is executed on behalf of the Borrower by representatives of the Borrower duly authorized in that behalf and that no Default or Event of Default has occurred and is continuing or will result from giving effect to the Advance requested hereby. HUB INTERNATIONAL LIMITED PARTNERSHIP, by its general partner, HUB INTERNATIONAL PARTNERS LIMITED By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- SCHEDULE 2 FORM OF COMPANY GUARANTEE SCHEDULE 7.1(I) FORMS OF OPINIONS FORM OF OPINION OF U. S. COUNSEL TO THE COMPANY, THE GENERAL PARTNER AND THE BORROWER April 4, 2006 Bank of Montreal First Canadian Place Toronto, Ontario M5X 1A1 Ladies and Gentlemen: We have acted as United States counsel to Hub International Limited, a Canadian corporation (the "Company"), Hub International Limited Partnership, a Delaware limited partnership (the "Issuer"), and Hub International Partners Limited, an Ontario corporation (the "General Partner"), in connection with the Credit Agreement, made as of the date hereof, between the Bank of Montreal (the "Bank") and the Issuer (the "Agreement"). The obligations of Issuer under the Agreement are unconditionally guarantied by the Company pursuant to that certain Guarantee dated April 4, 2006 (the "Company Guaranty") entered into by the Company in favor of and for the benefit of the Bank. The Company and the Issuer are hereafter referred to as the "Credit Parties". In such capacity, we have examined the Agreement and the Company Guaranty, (together, the "Transaction Documents") and the originals, or copies identified to our satisfaction, of such corporate records of the Company, partnership records of the Issuer, certificates of public officials, certificates of officers of the Company and the Issuer and other persons, and such other documents, agreements and instruments as we have deemed necessary as a basis for the opinions hereinafter expressed. In our examinations, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity with the originals of all documents submitted to us as copies. In rendering our opinions, we have relied as to factual matters, to the extent we deem proper, upon the representations and warranties of the Company and the Issuer contained in or made pursuant to the Agreement, certificates of officers of the Company, the Issuer and certificates of public officials (which we have assumed are accurate on the date hereof). Our opinions expressed below are limited to the laws of the State of New York the federal laws of the United States, and the Revised Uniform Limited Partnership Act of Delaware ("RULPA") and we do not express any opinion herein concerning any other law. Insofar as our opinions set forth in subparagraph (vi) below assume due authorization, execution and delivery of the Company Guaranty under the federal laws of Canada applicable thereto, we understand that such matters are covered in the opinion of 2. W. Kirk James, Vice President and Secretary of the Company furnished to the Bank today in accordance with the provisions of the Agreement. We have also assumed that: (i) The Bank has valid legal existence; (ii) The Bank has sufficient legal power and capacity to enter into and perform its obligations under the Transaction Documents and that the Transaction Documents have been duly and validly authorized, executed and delivered by the Bank and constitute the legal, valid and binding obligations of the Bank, enforceable against the Bank in accordance with their respective terms; (iii) The Bank has complied with all legal requirements pertaining to its status as such status affects the transaction contemplated by the Transaction Documents or relates to its rights to enforce the Transaction Documents against the Credit Parties; (iv) There has not been any mutual mistake of fact or misunderstanding, fraud, duress or undue influence in connection with the transaction contemplated by the Transaction Documents; (v) The conduct of the Bank complies with any test of good faith, fair dealing and conscionability required by law applicable to it in connection with the Transaction Documents and the transactions contemplated thereby; Based upon the foregoing, and subject to the qualifications set forth below, we are of the opinion that: (i) The Issuer is a limited partnership, duly organized and validly existing under the laws of the State of Delaware, has the limited partnership power and the limited partnership authority to execute and perform the Agreement, incur the debt to be evidenced thereby and to conduct the activities in which it is now engaged. The General Partner is the sole general partner of the Issuer. (ii) The Agreement has been duly authorized by all necessary limited partnership action on the part of the Issuer and has been duly executed and delivered by the Issuer. (iii) No consent, approval, authorization, order, registration or qualification of or with any United States federal or New York State court or governmental agency or body is required in connection with the execution and delivery by (i) the Issuer or the General Partner on behalf of the Issuer of, and the performance by the Issuer of its obligations under, the Agreement and (ii) the Company of, and the performance by the Company of its obligations under, the Company Guaranty. 3. (iv) The execution, delivery and performance by (i) the Issuer and the General Partner on behalf of the Issuer of the Agreement and (ii) the Company of the Company Guaranty will not, in either case, result in the contravention of any statute, regulation or order of any "Governmental Authority," as such term is defined in the Agreement, of the United States of America or the State of New York. (v) The use of the proceeds of the Advances (as defined in the Agreement) as contemplated by the Agreement will not result in any violation of Regulation T, U or X of the board of Governors of the Federal Reserve System (12 C.F.R., Chapter II, as amended). (vi) The Issuer is not, and after giving effect to the application of the Advances as described in the Agreement, will not be, required to register as an "investment company," as such term is defined in the Investment Company Act of 1940. (vii) If the Company Guaranty is sought to be enforced against the Company or the Agreement is sought to be enforced against the Borrower or the General Partner in any action or proceeding in the State of New York in accordance with laws applicable thereto as chosen by the parties, namely the laws of the Province of Ontario, the courts of competent jurisdiction of the State of New York (A) would recognize the choice of laws provided that such choice of laws is bona fide (in the sense that it was not made with a view to avoiding the consequences of the law of any other jurisdiction) and is not contrary to public policy, as such term is understood under the laws of the State of New York and (B) would apply the laws of the Province of Ontario in any such action or proceeding, upon appropriate evidence as to such laws being adduced, provided that none of the provisions of the Company Guaranty or the Agreement or of the laws of the Province of Ontario, are contrary to public policy, as such term is understood under the laws of the State of New York. Subject to the following sentence, any action or proceeding with respect to the Agreement or the Company Guaranty may be brought against the Company, the Issuer or the General Partner in a court of competent jurisdiction in the State of New York. A court in the State of New York may, however, reserve to itself an inherent power to decline to hear an action if it is contrary to public policy, as such term is understood under the laws of the State of New York, for it to do so, or if it is not the proper forum to hear such action, or if concurrent proceedings are being brought elsewhere. To the best of our knowledge, none of the provisions of the Agreement or the Company Guaranty is contrary to the public policy of the State of New York. (viii) The laws of the State of New York permit an action to be brought before a court of competent jurisdiction in the State of New York (a "New York Court") on a final and conclusive judgment in personam of a court of the Province of Ontario or a Canadian federal court sitting therein (a "Foreign Court") that is not impeachable as void or voidable or otherwise ineffective under applicable United States federal or state law and for a sum certain if: (A) the Foreign Court rendering such judgment had jurisdiction over the judgment debtor, as recognized by a New York Court; (B) such judgment was not obtained by fraud or in a manner contrary to natural justice or other rule of law, whether equitable, legal or statutory, and the enforcement thereof would not be inconsistent with 4. public policy, as such term is understood under the laws of the State of New York and the federal laws of United States of America; (C) the enforcement of such judgment does not constitute, directly or indirectly, the enforcement of foreign revenue, expropriatory or penal laws; and (D) the action to enforce such judgment is commenced within the applicable limitation period. The opinions set forth below are subject to the following qualifications, limitations and assumptions: (i) The effects of bankruptcy, insolvency, fraudulent transfer and conveyance, reorganization, receivership, moratorium and other similar laws (including judicially developed doctrines with respect to such laws) affecting the rights and remedies of creditors generally; (ii) The effects of general principles of equity, whether applied by a court of law or equity, with respect to the performance and enforcement of the Transaction Documents; (iii) Applicable state and federal laws, court decisions and constitutional requirements which may limit or render unenforceable certain of the rights and remedies purportedly available to the Bank under the Transaction Documents. It is our opinion, however, that none of the foregoing laws, decisions or requirements will materially interfere with the practical realization of the benefits intended to be provided by the Transaction Documents, although such realization may be delayed and rendered more costly as a result of the invalidity or enforceability of such provisions; (iv) We express no opinion as to the effect of any antitrust and unfair competition laws and regulations, or pension and employment benefit laws and regulations; (v) We express no opinion as to any provisions in the Transaction Documents that waive statutory rights to receive notice or to be allowed to cure defaults, or that purport to establish particular notice periods or actions as reasonable or particular determinations as conclusive or final and binding, or commit the same to the discretion of any person; (vi) Any limitations under applicable laws, judicial decisions and considerations of public policy which relate to indemnification, exculpation and contribution provisions; (vii) We express no opinion as to provisions of the Transaction Documents to the effect that rights or remedies are not inclusive, that every right or remedy is cumulative and may be exercised in addition to or with any other right or remedy, that election of a particular remedy or remedies does not preclude recourse to one or more other remedies or that failure to exercise or delay in exercising rights or remedies will not operate as a waiver of any such rights or remedies; 5. (viii) We express no opinion as to provisions in the Transaction Documents waiving vaguely or broadly stated rights or unknown future rights; (ix) We express no opinion as to the enforceability of any provisions in the Transaction Documents imposing increased interest rates and/or late payment charges upon delinquency in payment or default to the extent such provisions are a penalty; (x) We express no opinion as to the enforceability of any provisions in the Transaction Documents appointing one party as an attorney-in-fact for an adverse party, or purporting to make a power-of-appointment irrevocable unless, in either case, it is coupled with an interest; and (xi) We express no opinion as to the enforceability of any provisions in the Transaction Documents relating to forum selection, restricting access to courts, waiving the right to trial by jury, waiving service of process or waiving the right to objection to venue on the basis of inconvenient forum. We further express no opinion with respect to any questions of conflict of laws, or any provisions in the Transaction Documents that purport to (a) require that the Transaction Documents may not be amended, except in writing, (b) require the disregarding of any course of dealing between parties, and (c) provide for the enforceability of any Transaction Document, in whole or in part, if any material term or provision thereof is determined to be unenforceable or invalid or provide for the validity or enforceability of such invalid or unenforceable provision in any other jurisdiction. To the extent that our opinion herein is rendered as to RULPA, we call to your attention that we are not admitted to practice, and have not consulted with counsel admitted to practice, in the state of Delaware. We have based such opinion solely upon our examination of RULPA, as reported in standard, unofficial compilations. We express no opinion herein concerning any statutes, ordinances, administrative decisions, rules or regulations of any county, town, municipality or special political subdivision (whether created or enabled through legislative action at the federal, state or regional level). This opinion letter is given as of the date hereof and we assume no obligation to advise you of changes that may hereafter be brought to our attention. 6. This opinion is being furnished to the Bank solely for the Bank's benefit and the benefit of their successors and permitted assigns, and is not to be used, circulated, quoted or otherwise referred to for any other purpose, provided that a copy of this opinion may be provided to any regulatory agency having authority over the Bank. No one other than the Bank and its successors and assigns is entitled to rely upon this opinion letter. Very truly yours, KATTEN MUCHIN ROSENMAN LLP By: ------------------------------------ A Partner FORM OF OPINION OF THE VICE PRESIDENT AND SECRETARY OF THE COMPANY [Closing Date] Bank of Montreal 4th Floor 1 First Canadian Place Toronto, Ontario M5X 1H3 Ladies and Gentlemen: Credit Agreement dated April 4, 2006 between Hub International Limited Partnership and Bank of Montreal and the Guarantee with respect thereto by Hub International Limited I am a Vice President and the Secretary of Hub International Limited, a Canadian corporation (the "Company"). Prior to holding these offices, I was the Chief Legal Officer of the Company. This letter is being delivered to you in accordance with Section 7.1(i) of a Credit Agreement dated April 4, 2006 (the "Credit Agreement") by and among Hub International Limited Partnership, a Delaware Limited Partnership (the "Borrower") and Bank of Montreal (the "Lender"). The obligations of the Borrower under the Credit Agreement are unconditionally guarantied by the Company pursuant to that certain Guarantee dated April 4, 2006 (the "Company Guarantee") entered into by the Company in favor of and for the benefit of the Lender. All capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Credit Agreement. In such capacity, I have examined copies of the Credit Agreement, the Company Guarantee (together, the "Transaction Documents") and the originals, or copies identified to my satisfaction, of such corporate records of the Company, partnership records of the Borrower, certificates of public officials, certificates of officers of the Company, the Borrower and other persons, and such other agreements and documents as I have deemed necessary as a basis for the opinions hereinafter expressed. In my examination, I have assumed the genuineness of all signatures other than those on behalf of the Company, Hub International Partners Limited (the "General Partner") and the Borrower, the authenticity of all documents submitted to me as originals and the conformity with the originals of all documents submitted to me as copies. In rendering my opinions, I have relied as to factual matters, to the extent I deem proper, upon the representations and warranties of the Company contained in or made pursuant to the Company 2. Guarantee, Borrower contained in or made pursuant to the Credit Agreement, certificates of officers of the Company and the Borrower and certificates of public officials (which I have assumed are accurate on the date hereof). Subject to the last sentence of this paragraph, the opinions expressed below are limited to the laws of the Province of Ontario and the federal laws of Canada applicable therein and I do not express any opinion herein concerning any other law. My opinions are rendered only with respect to the laws, and the rules, regulations, policies and orders thereunder, which are currently in effect. In addition, I do not express any opinion herein concerning the securities laws of the Province of Ontario or the rules, regulations, policies and orders thereunder. [Matters addressed in the opinions below not relating to the laws of the Province of Ontario and the federal laws of Canada, are provided by me on behalf of the Company, the General Partner and the Borrower as a Vice President and the Secretary of the Company and not in a personal capacity, and are based on my knowledge as a Vice President and the Secretary of the Company, certificates of officers of the Company and the Borrower and certificates of public officials.] Based upon the foregoing and subject to the assumptions, qualifications and exceptions set forth herein, I am of the opinion that: 1. The Company is a corporation, duly incorporated and validly existing under the laws of Canada, has the corporate power and the corporate authority to execute and perform the Company Guarantee and has the full corporate power and the corporate authority to conduct the activities in which it is now engaged and is duly licensed or qualified and is in good standing in each jurisdiction in which the character of the properties owned or leased by it or the nature of the business transacted by it makes such licensing or qualification necessary. The General Partner is a corporation, duly organized and validly existing under the laws of Province of Ontario, has the corporate power and the corporate authority to execute the Credit Agreement on behalf of the Borrower and to cause the Borrower to incur the debt thereunder and has full corporate power and corporate authority to conduct the activities in which it is now engaged and is in good standing in each jurisdiction in which the character of the properties owned or leased by it or the nature of the business transacted by it makes such licensing or qualification necessary. 2. Each Material Subsidiary (as such term is defined in Schedule A to this letter and a list of which is set forth on such Schedule) is an entity duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, has the full corporate power and the corporate authority to conduct the activities in which it is now engaged and is duly licensed or qualified and is in good standing in each jurisdiction in which the character of the properties owned or leased by it or the nature of the business transacted by it makes such licensing or qualification necessary. All of the issued and outstanding equity interests of each Material Subsidiary have been duly issued and are fully paid and non assessable. 3. The Company Guarantee has been duly authorized by all necessary corporate action on the part of the Company and has been duly executed and delivered by the Company and the Company Guarantee constitutes a legal, valid and binding obligation of the Company enforceable in accordance with its terms. The execution by the General Partner of the Credit Agreement on behalf of the Borrower has been duly authorized by all necessary corporate action 3. on behalf of the General Partner and the Credit Agreement has been duly executed and delivered by the General Partner on behalf of the Borrower and the Credit Agreement constitutes a legal, valid and binding obligation of each of the General Partner and the Borrower enforceable against each of them in accordance with its terms. 4. The execution, delivery and performance by the Borrower and the General Partner of the Credit Agreement and by the Company of the Company Guarantee do not 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 Material 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 Material Subsidiary is bound or by which the Company or any Material Subsidiary or any of their respective properties may be bound or affected. 6. Except as described in Item 3 of the Company's Form 10-K for the period ending December 31, 2005 filed with the United States Securities and Exchange Commission on March 13, 2006, there are no actions, suits or other proceedings pending or, to my knowledge after due inquiry, threatened against or affecting the Company or any Material Subsidiary or any property of the Company or any Material Subsidiary in any court or before any arbitrator of any kind or any governmental authority that, if adversely determined, could reasonably be expected to materially and adversely affect the Borrower's or the General Partner's ability to perform its obligations under the Credit Agreement, the Company's ability to perform its obligations under the Company Guarantee or the validity or enforceability of the Credit Agreement or the Company Guarantee. [The enforceability opinions set forth in paragraph 3 above are subject to the qualification that (a) enforcement is subject to the effect of any applicable bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and subject to the effect of general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing (regardless of whether enforcement is considered in a proceeding in equity or at law) and (b) any rights to indemnity and contribution under the Credit Agreement may be limited by securities laws and public policy considerations underlying such laws.] This letter is furnished solely for the benefit of the Lender and its successors and permitted assigns and is not to be relied upon by any other person or entity without my prior written consent. Very truly yours, ---------------------------------------- W. Kirk James Vice President and Secretary FORM OF OPINION OF CANADIAN COUNSEL TO HUB INTERNATIONAL LIMITED AND HUB INTERNATIONAL PARTNERS LIMITED [Closing Date] Bank of Montreal 4th Floor 1 First Canadian Place Toronto, Ontario M5X 1H3 Ladies and Gentlemen: Credit Agreement dated April 4, 2006 between Hub International Limited Partnership and Bank of Montreal and the Guarantee with respect thereto by Hub International Limited We have acted as counsel to Hub International Limited, a Canadian corporation (the "Corporation"), in connection with the execution and delivery today by Hub International Limited Partnership, a limited partnership organized under the laws of the State of Delaware (the "Borrower") of the Credit Agreement dated as of April 4, 2006 between the Borrower and Bank of Montreal ("BMO"). We have also acted as counsel to Hub International Partners Limited (the "General Partner"), an Ontario corporation and the general partner of the Borrower. This opinion is being furnished to you pursuant to Section 7.1(i) of the Credit Agreement. The obligations of the Borrower under the Credit Agreement are unconditionally guarantied by the Corporation pursuant to that certain Guarantee dated April 4, 2006 (the "Corporation Guarantee") by the Corporation in favour of BMO. Capitalized terms used herein and not otherwise defined shall have the respective meanings ascribed thereto in the Credit Agreement. We have examined originals or copies, certified or otherwise identified to our satisfaction, of such documents, certificates and corporate records and such other materials as we have considered necessary or appropriate for the purposes of this opinion, including an executed copy of the Credit Agreement and the Corporation Guarantee (each being a "Document" and, collectively, the "Documents"). In our examination of the foregoing documents, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity to the originals thereof of all documents submitted to us as certified or conformed copies, telecopies or photocopies. We have also examined such certificates of public officials and such other certificates, documents and corporate and other records as we have considered necessary as a basis for or relevant to the opinions hereinafter expressed. We have assumed that: 2. (a) Each of the Corporation and the General Partner is incorporated and existing under the corporate laws applicable to it. (b) The Corporation has the corporate power and capacity to execute, deliver and perform its obligations under the Corporation Guarantee. (c) The General Partner has the corporate power and capacity to execute, deliver and perform its obligations under the Credit Agreement. (d) The Corporation has taken all necessary corporate action to authorize the execution, delivery and performance by it of the Corporation Guarantee, and the Corporation has duly executed and delivered the Corporation Guarantee. (e) The General Partner has taken all necessary corporate action to authorize the execution, delivery and performance by it of the Credit Agreement on behalf of the Borrower, and the General Partner has duly executed and delivered the Credit Agreement on behalf of the Borrower. (f) The execution, delivery and performance of the Corporation Guarantee by the Corporation does not breach or result in a default under the articles or by-laws of the Corporation or any unanimous shareholders agreement applicable thereto. (g) The Borrower is a limited partnership each member of which is and will be at all times when the Credit Agreement and the Corporation Guarantee are outstanding a corporation resident in Canada and the Corporation is a corporation resident in Canada within the meaning of the Income Tax Act (Canada). (h) The execution, delivery and performance of the Credit Agreement by the General Partner on behalf of the Borrower does not breach or result in a default under the articles or by-laws of the General Partner, any unanimous shareholders agreement applicable thereto, or the partnership agreement of the Borrower. (i) All necessary partnership action has been taken to authorize the execution, delivery and performance of the Credit Agreement by the Borrower. (j) If any obligation under the Corporation Guarantee is required to be performed in any jurisdiction outside of Ontario, the performance of that obligation will not be illegal under the laws of that jurisdiction. (k) The Documents constitute legal, valid and binding obligations of the Corporation and the Borrower, as applicable, enforceable against them in accordance with their terms. Based upon the foregoing and subject to the assumptions, qualifications, limitations and exceptions set forth herein, we are of the opinion that: 1. The execution, delivery and performance by the Corporation of the Corporation Guarantee, and the execution and delivery by the General Partner on behalf of the Corporation of 3. the Credit Agreement, will not contravene any law, statute or regulation of Canada or the Province of Ontario to which the Corporation or the General Partner is subject. 2. No approval, consent or withholding of objection on the part of, or filing, registration or qualification with, any federal or provincial commission, board or regulatory authority of the Province of Ontario or of Canada is required in connection with (a) the execution and delivery of the Corporation Guarantee by the Corporation or the performance of the transactions contemplated thereby, or (b) the execution and delivery of the Credit Agreement by the General Partner on behalf of the Corporation. 3. No income taxes will be required to be withheld by the Borrower or the Corporation under the Income Tax Act (Canada), or under the income tax laws of the Province of Ontario, in connection with any payment under the Credit Agreement or Corporation Guarantee by the Borrower or the Corporation to a branch of Bank of Montreal in the United States of America. 4. Each of the Corporation and the General Partner is subject to the relevant civil and commercial law of Ontario with respect to its obligations under the Company Guarantee or the Credit Agreement, respectively and neither the Company or the General Partner nor its assets has the benefit of any right of immunity, whether sovereign immunity or otherwise, from any action, suit, proceeding or execution in respect of its obligations under the Company Guarantee or the Credit Agreement, as applicable. 5. No stamp, registration, documentary or other similar tax, duty or fee is payable under Canadian federal law or the laws of the Province of Ontario in connection with the execution and delivery of the Company Guarantee by the Company or the execution and delivery of the Credit Agreement by the General Partner on behalf of the Borrower. 6. To ensure the admissibility into evidence, no notarization of the Documents, and no registration or filing with or notice to, any governmental agency or authority of the Province of Ontario or Canada is required. The foregoing opinions are subject to the following assumptions, qualifications, limitations and exceptions: We express no opinion as to the enforceability of the Documents. Our opinions expressed above are limited to the laws of the Province of Ontario and the laws of Canada applicable therein. Our opinions are rendered only with respect to the laws, and the rules, regulations, policies and orders thereunder, which are currently in effect. This letter is furnished by us solely for your benefit and the benefit of your successors and permitted assigns in connection with the transactions referred to in the Documents and may not be relied upon by any other Person. Very truly yours, SCHEDULE 7.1(N) REORGANIZATION EXISTING FINANCING STRUCTURE Hub International Limited ("HIL"), has borrowed (a) US$65 million from the Bank of Montreal ("BMO") under a US$75 million revolving credit facility (the "HIL-BMO Facility") and (b) US$65 million from holders of fixed-rate senior notes (the "Senior Notes"). Under a master swap agreement with BMO, HIL entered into a fixed-to-floating interest rate swap (the "Swap") with respect to the Senior Notes with BMO as the Swap counterparty. Using funds from various internal and external sources, HIL capitalized certain offshore financing subsidiaries, including Hub (Luxembourg) S.a.r.l., Hub (Gibraltar) Limited, and Hub Hungary Liquidity Management Limited Liability Company (collectively, the "Offshore Subsidiaries"). With the funds received from HIL and its own earnings, Hub Hungary made loans (the "HOC Loans") to Hub U.S. Holdings Inc. ("Hub U.S."), a Delaware corporation wholly owned by HIL and the parent corporation of HIL's U.S. operations, and several Hub U.S. subsidiaries. NEW STRUCTURE HIL proposes to replace the existing financing structure using the Offshore Subsidiaries with the financing structure as outlined below. Under the new structure, the following entities, among others (collectively, the "Tower Entities") will be established: (a) a U.S. limited partnership (the "Partnership") that will be indirectly wholly owned by HIL, (b) an Ontario corporation to serve as the one-percent general partner of the Partnership, (c) a U.S. limited liability company (the "LLC") and (d) a U.S. limited liability company to act as the LLC's manager. The Tower Entities will replace the existing financing structure using the Offshore Subsidiaries. The Partnership will assume the obligations of HIL under the Senior Notes and the Swap. HIL will guarantee such obligations. The Partnership will borrow US$75 million under a loan agreement with Prudential (the "Prudential Loan"). HIL will guarantee the Prudential Loan. The Partnership will enter into a new credit facility with a BMO U.S. branch with availability of US$75 million. The Partnership will immediately borrows US$55 million under such Facility. HIL will guarantee the Partnership's obligations under such Facility. SCHEDULE 9.2(C) EXISTING LIENS
USD$ USD$ CURRENT CONSOL Terms PORTION TOTAL HUB ----- --------- --------- --- LOANS: 21074 Uns Tech (JW), $7875MO 5.35% 4/15/07 150,196 202,070 Mountain Secured 21075 ind Tech (RL), $7875MO 5.35% 4/15/07 150,196 202,070 Mountain Secured 21076 Montana (JW) $3,377MO 5.35% 6/15/07 19,167 29,140 Mountain Secured 21077 Montana (KOC) $3,377MO S.35% 6/15/07 38,333 58,281 Mountain Secured 21078 Montana (RL) $3,377MO 5,35% 6/15/07 19,167 29,140 Mountain Secured 21046 Ned Miller Agcy, $2,658MO, 5%, 12/15/07 29,543 60,597 Southwest Secured 21047 Ned Miller Inc. $6,578MO, 5%, 12/15/07 73,106 149,953 Southwest Secured 21048 Gillet $10,170MO, 6%, 11/1/07 111,855 168,073 Southwest Secured 21061 Jenkins & Co, $8,817MO, 6%, 10/15/06 85,798 85,798 Southwest Secured 21068 STG Corp, $9,03MO, 6%, 8/15/06 73,558 73,558 Southwest Secured 21079 GE Capital $300K Qtr inc Var% 12/30/07 1,200,000 2,300,000 Southwest Secured 21073 AIWC, $21,769MO, 4.35%, 5/15/08 239,950 598,220 Southwest Secured --------- --------- 22999 Total Loans 2,190,869 3,956,900 CAPITAL LEASES: 23025 O&Y Enterprises $347.63,MO 3,254 4,707 MGAs Secured 23010 Heller Finl, $2,247,MO, 8incl .67%,10/06 19,514 19,514 Midwest Secured Office Furniture 23011 Heller Finl, $8,882,MO, incl 8.67%,10/06 77,123 77,123 Midwest Secured Office Furniture 23029 Steelcase, $9,458,MO, incl 6.062%,10/06 83,064 83,064 Midwest Secured Office Furniture 23041 Dell Finl, $12354 MO, incl 9.83% 05/06 1,084 1,084 Southwest Secured --------- --------- 23999 Capital Leases ========= =========
EX-99.3 4 o30946exv99w3.txt EX-99.3 Exhibit 99.3 HUB INTERNATIONAL LIMITED GUARANTEE DATED AS OF APRIL 4, 2006 - IN FAVOUR OF - BANK OF MONTREAL ---------- IN RESPECT OF THE CREDIT AGREEMENT DATED AS OF APRIL 4, 2006 BETWEEN HUB INTERNATIONAL LIMITED PARTNERSHIP, AS BORROWER, AND BANK OF MONTREAL, AS LENDER ---------- TABLE OF CONTENTS ARTICLE I INTERPRETATION Section 1.1. Defined Terms............................................... 1 Section 1.2. Credit Agreement Defined Terms.............................. 3 Section 1.3. Computation of Time Periods................................. 3 Section 1.4. Accounting Terms............................................ 3 Section 1.5. Headings.................................................... 4 Section 1.6. Construction of Terms....................................... 4 Section 1.7. Currency.................................................... 4 Section 1.8. Time........................................................ 4 ARTICLE II GUARANTEE AND INDEMNITY Section 2.1 Guarantee................................................... 4 Section 2.2 Company's Obligations Absolute.............................. 7 Section 2.3 Waiver...................................................... 8 Section 2.4 Obligations Unimpaired...................................... 9 Section 2.5 Subrogation................................................. 9 Section 2.6 Reinstatement............................................... 11 ARTICLE III AFFIRMATIVE COVENANTS OF THE GUARANTOR Section 3.1 Affirmative Covenants....................................... 11 ARTICLE IV NEGATIVE COVENANTS OF THE GUARANTOR Section 4.1 Negative Covenants.......................................... 17 ARTICLE V REPRESENTATIONS AND WARRANTIES Section 5.1 Representations and Warranties by the Company............... 18 Section 5.2 Survival of Representations and Warranties.................. 25

ii. ARTICLE VI GENERAL Section 6.1 Evidence of Obligations..................................... 25 Section 6.2 Remedies Cumulative......................................... 25 Section 6.3 Right of Set-Off............................................ 25 Section 6.4 Judgment Currency........................................... 26 Section 6.5 Invalidity of any Provisions................................ 26 Section 6.6 Amendments, Waivers, etc.................................... 26 Section 6.7 Notices, etc................................................ 26 Section 6.8 Costs and Expenses.......................................... 27 Section 6.9 Taxes....................................................... 28 Section 6.10 Calculations................................................ 29 Section 6.11 Assignments and Participations.............................. 29 Section 6.12 Governing Law............................................... 30 Section 6.13 Consent to Jurisdiction..................................... 30 Section 6.14 Binding Effect.............................................. 30 Section 6.15 Counterparts................................................ 30

Schedule 5.1(c) Disclosure Materials Schedule 5.1(d) Subsidiaries of the Company and Ownership of Subsidiary Shares Schedule 5.1(e) Financial Statements HUB INTERNATIONAL LIMITED GUARANTEE THIS GUARANTEE is entered into as of April 4, 2006 by HUB INTERNATIONAL LIMITED, a Canadian corporation, in favour of and for the benefit of the Lender (as defined below). WHEREAS pursuant to the terms and conditions of the Credit Agreement dated as of April 4, 2006 (as may be amended, supplemented, modified or restated from time to time, the "CREDIT AGREEMENT") between the Lender and Hub International Limited Partnership (the "BORROWER"), the Lender has agreed to establish a credit facility in favour of the Borrower (the "CREDIT FACILITY"); AND WHEREAS as a condition precedent to establishing the Credit Facility, the Lender requested that Hub International Limited guarantee performance by the Borrower of its obligations under the Credit Agreement; NOW THEREFORE THIS GUARANTEE WITNESSES that for value received, to satisfy one of the conditions precedent to establishing the Credit Facility, to induce the Lender to make Advances under the Credit Facility and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Hub International Limited hereby covenants and agrees as follows: ARTICLE I INTERPRETATION SECTION 1.1 DEFINED TERMS. Unless the context otherwise requires, the following capitalized terms shall have the following respective meanings in this Guarantee: "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; "BORROWER" shall have the meaning given in the recitals hereto. "COMPANY" shall mean Hub International Limited, a Canadian corporation and any Successor Entity; "CREDIT AGREEMENT" shall have the meaning given in the recitals hereto. -2- "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; "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; "GOVERNMENTAL AUTHORITY" shall mean (a) the government of (i) the United States of America, Canada or any State or Province or other political subdivision thereof, or (ii) 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 OBLIGATIONS" has the meaning ascribed thereto in Section 2.1; "GUARANTEE" shall mean this Guarantee, 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); "LENDER" means Bank of Montreal, and any permitted assignee thereof in accordance with Section 6.11, and their respective successors and permitted assigns; -3- "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 Guarantee or the ability of the Borrower to perform its obligations under the Credit Agreement, or (c) the validity or enforceability of this Guarantee, the Credit Agreement or any Guaranteed Obligations; "MULTIEMPLOYER PLAN" shall mean any Plan that is a "multiemployer plan" (as such term is defined in Section 4001(a)(3) of ERISA); "OBLIGATIONS" means, at any time, all then outstanding liabilities, obligations and indebtedness of the Company, whether joint or several, primary or secondary, matured or contingent, due or to become due, to the Lender under this Guarantee; "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; and "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. SECTION 1.2. CREDIT AGREEMENT DEFINED TERMS. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed thereto in the Credit Agreement. SECTION 1.3. COMPUTATION OF TIME PERIODS. In this Guarantee, in the computation of periods of time from a specified date to a later specified date, unless otherwise expressly stated the word "FROM" means "FROM AND INCLUDING" and the words "TO" and "UNTIL" each mean "TO BUT EXCLUDING". SECTION 1.4. ACCOUNTING TERMS. Each accounting term, including all defined terms, used in this Guarantee shall be construed in accordance with GAAP and in accordance with the auditing and accounting recommendations and guidelines issued from time to time by the Canadian Institute of Chartered -4- Accountants, as amended from time to time, unless something in the subject matter or the context otherwise is inconsistent therewith. SECTION 1.5. HEADINGS. The inclusion of headings and a table of contents in this Guarantee is intended for convenience of reference only and shall not affect in any way the construction or interpretation hereof. SECTION 1.6. CONSTRUCTION OF TERMS. The words "HEREOF", "HEREIN" and "HEREUNDER" and words of similar import when used in this Guarantee shall refer to this Guarantee as a whole and not to any particular provision of this Guarantee. Words importing the singular shall include the plural and vice versa, words importing gender shall include all genders, and words importing natural persons shall include all Persons. Any defined term used in the singular preceded by "any" or "each" shall be taken to indicate any number of the members of the relevant class. Unless otherwise specified, any reference in this Guarantee to any statute will include all regulations made thereunder or in connection therewith from time to time, and will include such statute as the same may be amended, supplemented or replaced from time to time. As used herein, "INCLUDING" means in each case "INCLUDING WITHOUT LIMITATION" and shall not be construed to limit any statement or reference that it follows to the specific or similar items or matters following it. SECTION 1.7. CURRENCY. Unless otherwise expressly stated, any reference herein to any sum of money herein shall be construed as a reference to U.S. Dollars. Whenever any limitation herein is expressed in U.S. Dollars the limitation shall apply and include the Canadian Dollar Equivalent thereof and the equivalent thereof in all other currencies. Whenever any limitation herein is expressed in Canadian Dollars the limitation shall apply and include the U.S. Dollar Equivalent thereof and the equivalent thereof in all other currencies. Any amount denominated in another currency required herein to be expressed at any time in Canadian Dollars or U.S. Dollars shall be so expressed as the Canadian Dollar Equivalent or the U.S. Dollar Equivalent, as the case may be, at such time of such amount. SECTION 1.8. TIME. Unless otherwise expressly stated, any reference herein to time shall be construed as a reference to local time in Toronto, Ontario, Canada, and time is and shall be construed to be of the essence. ARTICLE II GUARANTEE AND INDEMNITY SECTION 2.1 GUARANTEE AND INDEMNITY (a) The Company hereby unconditionally and irrevocably guarantees in favour of the Lender, all present and future indebtedness, liabilities and obligations, direct or -5- indirect, absolute or contingent, now or at any time and from time to time hereafter due or owing to the Lender by the Borrower under the Credit Agreement or any of the other Loan Documents, including: (i) the due and punctual payment in full of the Outstanding Principal Obligations and interest on the Outstanding Principal Obligations (including interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding), and any fees or other amounts due, or which may become due, under the terms and provisions of the Credit Agreement 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); (ii) the due and punctual payment and performance in full of all reimbursement and indemnity obligations of the Borrower to the Lender with respect to any bankers' acceptances issued or accepted by the Lender for the Borrower's account; and (iii) the due and punctual performance and observance by the Borrower of all of the terms, covenants, conditions, agreements, undertakings and obligations on the part of the Borrower to be performed or observed under the Credit Agreement in accordance with the terms thereof, as amended, waived, or varied in accordance with the terms thereof, (all such obligations described above in this Section 2.1(a) being herein collectively called the "GUARANTEED OBLIGATIONS"). (b) The guarantee provided in Section 2.1(a): (i) is a continuing guarantee and shall guarantee the Guaranteed Obligations and any ultimate balance thereof, notwithstanding that the Borrower may from time to time satisfy the Guaranteed Obligations in whole or in part and thereafter incur further Guaranteed Obligations; and (ii) is an absolute, present and continuing guarantee of payment, performance or observance and not of collectibility and is in no way conditional or contingent upon any attempt to collect from the Borrower or any other guarantor of any of the Guaranteed Obligations or upon any other action, occurrence or circumstance whatsoever. In the event that the Borrower shall fail in any manner whatsoever to perform or observe any of the Guaranteed Obligations when the same shall be required to be paid, performed or observed, the Company will itself duly and punctually pay, perform and observe, or cause to be duly and punctually paid, performed and observed, the Guaranteed Obligations, without demand, presentment, protest or notice of any kind. For greater certainty, it shall not be a condition to the accrual -6- of the obligation of the Company hereunder to pay, perform or observe any of the Guaranteed Obligations (or to cause the same to be paid, performed or observed) that the Lender shall have first made any request of or demand upon or give any notice to the Company or to the Borrower or have initiated any action or proceeding against the Company or the Borrower and the Lender may proceed to enforce the obligations of the Company under this Section 2.1 without first pursuing or exhausting any right or remedy which it may have against the Borrower or any other Person. Each default in payment of the Outstanding Principal Obligations or interest thereon or in the payment, performance or observance of any other Guaranteed Obligation shall give rise to a separate cause of action hereunder and separate suits may be brought hereunder as each cause of action arises. (c) In addition to the guarantee provided in Section 2.1(a), and as a separate and distinct obligation, the Company hereby agrees to indemnify and save harmless the Lender and its directors, officers and employees, forthwith on demand by the Lender, from and against any and all direct and indirect claims, demands, losses, damages, liabilities, charges, obligations, payments, costs and expenses of any nature or kind (including legal fees and disbursements), howsoever or whenever arising, which the Lender or its directors, officers and employees may incur or be subject to as a consequence, direct or indirect, of: (i) the failure of the Borrower to pay and satisfy the Guaranteed Obligations in full; (ii) any breach by the Company or the Borrower of any warranty, covenant, term or condition in, or the occurrence of any default under, this Guarantee or the Credit Agreement, together with all expenses resulting from the compromise or defence of any claims or liabilities arising as a result of any such breach or default; (iii) any Guaranteed Obligations or the Credit Agreement or any agreement creating or relating to any or all Guaranteed Obligations in any way being or becoming for any reason whatsoever, in whole or in part, void, voidable, ultra vires, illegal, invalid, ineffective or otherwise unenforceable or released or discharged by operation of law or otherwise; or (iv) any legal action commenced to challenge the validity or enforceability of this Guarantee, the Credit Agreement or any Guaranteed Obligations, provided that any payment actually made by the Company to the Lender under Section 2.1(a) shall reduce the liability of the Company under this Section 2.1(c) by the same amount. The Company acknowledges that neither its obligation to indemnify, nor any actual indemnification by it, of the Lender or any other indemnified party hereunder in respect of such Person's Losses for the legal fees and expenses of such Person's counsel shall in any way affect the confidentiality -7- or privilege relating to any information communicated by such Person to its counsel. The provisions of this Section 2.1(c) shall survive the termination of this Guarantee, the termination or expiration of the Commitment and the payment or performance of all Guaranteed Obligations. SECTION 2.2 COMPANY'S OBLIGATIONS ABSOLUTE. The obligations of the Company under this Guarantee shall be primary, absolute, irrevocable and unconditional, irrespective of the genuineness, validity, regularity or enforceability of the Guaranteed Obligations or of the Credit Agreement, shall not be subject to any counterclaim, setoff, deduction or defence based upon any claim the Company may have against the Borrower or the Lender or otherwise, and this Guarantee and the obligations of the Company hereunder shall remain in full force and effect without regard to, and shall not be released, discharged, impaired or in any way affected by, any circumstance or condition whatsoever, including: (a) any amendment, modification of or supplement to the Credit Agreement or any Guaranteed Obligations (except that the obligations of the Company hereunder shall apply to the Credit Agreement or the Guaranteed Obligations 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 any Guaranteed Obligations; (b) any waiver, consent, extension, modification or renewal of, or indulgence or any action or inaction under or with respect to, or substitutions for, the Credit Agreement or any Guaranteed Obligations; (c) any failure or omission to enforce any right, power or remedy with respect to the Credit Agreement or any Guaranteed Obligations or any agreement relating thereto or any security for the Credit Agreement or any Guaranteed Obligations; (d) any release, surrender, compromise, settlement, waiver, subordination or modification, with or without consideration, of security for the Credit Agreement or any Guaranteed Obligations, any other guarantees with respect to the Credit Agreement or any Guaranteed Obligations, or any other obligation of any Person with respect to the Credit Agreement or any Guaranteed Obligations; (e) the genuineness, enforceability, regularity or validity of the Credit Agreement or any Guaranteed Obligations or the genuineness, enforceability, regularity or validity of any agreement or instrument relating thereto or with respect to any security for the Credit Agreement or any Guaranteed Obligations, any other guarantees with respect to the Credit Agreement or any Guaranteed Obligations, or any other obligation of any Person with respect to the Credit Agreement or any Guaranteed Obligations; (f) any bankruptcy, insolvency, reorganization, readjustment, composition, liquidation or similar proceeding with respect to the Borrower or its property or the occurrence of any Default or Event of Default; -8- (g) 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; (h) any change in the name, objects, capital structure or constitution of the Borrower or the Company; (i) any failure on the part of the Borrower for any reason to comply with or perform any of the terms of any other agreement with the Company; (j) any application of any monies against such part of the Guaranteed Obligations and change of any such application in whole or in part at any time and from time to time as the Lender sees fit; or (k) any other circumstance which might otherwise constitute a legal or equitable discharge or defence of a guarantor, all whether or not the Company shall have had notice or knowledge of any act or omission referred to in the foregoing clauses (a) through (k) of this Section 2.2. It is agreed that the Company's obligations hereunder are several and independent of any other guarantees, indemnities or security interests or other obligations at any time in effect with respect to the Guaranteed Obligations or any part thereof and that the Company's obligations hereunder may be enforced regardless of the existence, validity, enforcement or non-enforcement of any such other guarantees, indemnities or security interests or other obligations and no loss of or in respect of any other guarantees, indemnities or security interests or other obligations received by the Lender from any other Persons in respect of the Guaranteed Obligations, whether occasioned through the fault of any of the Lender or otherwise, shall in any way discharge or diminish the obligations of the Company. The Company covenants that its obligations hereunder will not be discharged except by indefeasible payment or performance 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 Borrower in the payment of any amounts due under the Guaranteed Obligations or the Credit 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 the Lender against the Company, including, without limitation, presentment to or demand for payment from the Borrower or the Company with respect to any Guaranteed Obligation, notice to the Borrower or the Company of default or protest for nonpayment or dishonor and the filing of claims with a court in the event of the bankruptcy of the Borrower; -9- (c) any right to the enforcement, assertion or exercise by the Lender of any right, power or remedy conferred in this Guarantee, the Credit Agreement or the Guaranteed Obligations; (d) any requirement of diligence on the part of the Lender; 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 Lender, 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 Guaranteed Obligations or the Credit Agreement or any other instrument referred to therein; (b) to take and hold security for the payment of the Guaranteed Obligations, for the performance of this Guarantee 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 Lender in its sole discretion may determine; (d) to obtain additional or substitute guarantors; (e) to exercise or refrain from exercising any rights against the Company and others; and (f) to apply as the Lender sees fit any sums, by whomsoever paid or however realized, to the payment of the Outstanding Principal Obligations and interest on the Outstanding Principal Obligations and any other Guaranteed Obligations. The Company waives any right to require the Lender to proceed against any additional or substitute guarantors or to pursue or exhaust any security provided by the Borrower, the Company or any other Person or to pursue any other remedy available to the Lender. SECTION 2.5 SUBROGATION. (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 Guarantee, by any payment made hereunder or any performance 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 or guarantee for any Guaranteed Obligations or this Guarantee unless and until all -10- of the obligations, undertakings or conditions to be performed or observed by the Borrower pursuant to the Guaranteed Obligations and the Credit Agreement at the time of the Company's exercise of any such right shall have been performed, observed or paid in full, provided that any right of subrogation acquired by the Company under this Guarantee, by any payment made hereunder or any performance hereunder or otherwise, shall be no greater than the rights held by the Lender and the Company hereby waives any benefit of any security or guarantee for any Guaranteed Obligations or this Guarantee and authorizes the Lender, subject to applicable Legal Requirements, to take any action or exercise any remedy, or refrain from taking any action or exercising any remedy, with respect thereto, which the Lender in its sole discretion shall determine, without notice to the Company. (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 (i) any rights of subrogation which it may at any time otherwise have as a result of this Guarantee (whether statutory or otherwise) to the claims of the Lender against the Borrower 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 Guarantee; (ii) any right to enforce any other remedy which the Lender now has or may hereafter have against any Other Party, any other guarantor of all or any part of the Guaranteed Obligations; and (iii) 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. (c) The Company hereby subordinates the payment of all Debt and other obligations of the Borrower or any Other Party owing to the Company, whether now existing or hereafter arising, including all rights and claims described in Sections 2.5(a) and (b) hereof, to the indefeasible payment or performance in full of all Guaranteed Obligations and, subject to the application of Section 2.5(b) hereof to the fullest extent permitted by applicable Legal Requirements, in the case of the liquidation, dissolution, winding-up, insolvency or bankruptcy of the Borrower (whether voluntary or involuntary) or in the event that the Borrower shall make an arrangement or composition with its creditors, the Lender shall have the right to rank in priority to the Company for the full claims of the Lender in respect of Guaranteed Obligations not then indefeasibly paid or performed in full until the claims of the Lender have been indefeasibly paid or performed in full all without prejudice to the claims of the Lender against the Company hereunder. If the Lender so requests, any such Debt or other obligations owing to the Company shall be enforced and performance received by the Company as trustee for the Lender and the proceeds thereof shall be paid over to the Lender to be credited and applied upon the Guaranteed Obligations, whether matured or unmatured, as may be directed by the Lender, but without reducing or affecting in any manner the liability of the Company under this Guarantee. -11- (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 Lender and shall be paid over to the Lender, 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 Lender. The Company acknowledges that it will receive benefits from the financing arrangements contemplated by the Credit Agreement and that the waiver set forth in this paragraph is knowingly made in contemplation of such benefits. SECTION 2.6 REINSTATEMENT. This Guarantee 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 the Lender in respect of any of the Guaranteed Obligations is rescinded or must otherwise be restored or returned by the Lender upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower, or upon or as a result of the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to the Borrower 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 any Guaranteed Obligations shall at any time have occurred and be continuing and such acceleration shall at such time be prevented or the right of the Lender to receive any payment in respect of any of the Guaranteed Obligations shall at such time be delayed or otherwise affected by reason of a case or proceeding under a bankruptcy or insolvency law, for purposes of this Guarantee and the Company's obligations hereunder, the maturity of such Guaranteed Obligations shall be deemed to have been accelerated with the same effect as if the Lender had accelerated the same in accordance with the terms of the Credit Agreement, and the Company shall forthwith pay such accelerated Guaranteed Obligations and any other amounts guaranteed hereunder. ARTICLE III AFFIRMATIVE COVENANTS OF THE GUARANTOR SECTION 3.1 AFFIRMATIVE COVENANTS. From and after the Closing Date and so long as any Obligations remain outstanding and unpaid or the Commitment shall continue to exist: (a) Financial and Business Information. The Company shall deliver to the Lender: (i) 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: A. a consolidated balance sheet of the Company and its Subsidiaries as at the end of such quarter, and -12- B. 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)(i); (ii) within 120 days after the end of each fiscal year of the Company, duplicate copies of, A. a consolidated balance sheet of the Company and its Subsidiaries, as at the end of such year, and B. 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(a)(ii); -13- (iii) promptly upon their becoming available, one copy of (A) each financial statement, report, notice or proxy statement sent by the Company or any Subsidiary to public securities holders generally, and (B) each regular or periodic report, each registration statement that has become effective (without exhibits except as expressly requested by the Lender), 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; (iv) promptly, and in any event within five Business Days after a Responsible Officer of the Borrower 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 10.1(g) of the Credit 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; (v) promptly, and in any event within ten days after a Responsible Officer of the Borrower 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: A. 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(a)(v)(A); or B. 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 C. 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 -14- 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; (vi) 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; (vii) 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 Borrower to perform its obligations under the Credit Agreement as from time to time may be reasonably requested by the Lender. 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 Lender as provided in Section 9.1(j)(ii) of the Credit Agreement. (b) 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. (c) 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 -15- customary in the case of entities of established reputations engaged in the same or a similar business and similarly situated. (d) 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. (e) 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. (f) Corporate Existence, etc. The Company will at all times preserve and keep in full force and effect its corporate existence. Subject to Sections 9.2(d), 9.2(e) and 9.2(g) of the Credit 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. (g) Payment of Obligations to Lender. The Company will duly and punctually pay to the Lender all amounts payable by the Company hereunder as and when the same become due. (h) Enforceability. The Company will ensure that at all times and from time to time the execution and delivery of each of the Loan Documents by it and the -16- performance by it of its obligations thereunder will be, upon the execution and delivery thereof, duly authorized by all necessary corporate action; that all consents, approvals, orders, authorizations, licenses, exemptions or designations of or by any Governmental Authority or other Person required in connection with the execution, delivery and performance by it of any such documents have been obtained; and that all registrations, qualifications, designations, declarations or filings with any Governmental Authority necessary to enable or empower it to enter into and to perform its obligations under any such documents have been obtained and continue in full force and effect as required for such purpose; and that any and all Loan Documents to which it is a party have been duly executed and delivered by it and that each will constitute its legal, valid and binding obligation enforceable in accordance with its terms, subject only to bankruptcy, insolvency, arrangement and other laws affecting the enforcement of creditors' rights generally and the availability, in the discretion of a court of competent jurisdiction, of equitable remedies. (i) Keeping of Books. The Company will keep, and cause each of its Subsidiaries to keep, financial books and records systems in accordance with Generally Accepted Accounting Principles and all applicable Legal Requirements, and in such books and records make full and correct entries of all financial transactions, Assets, liabilities, shareholders equity and business of the Company and each of its Subsidiaries in accordance with Generally Accepted Accounting Principles. (j) Cure Defects. The Company will promptly cure or cause to be cured any defects in the execution, delivery, validity or enforceability of any of the Loan Documents or any of the other agreements, instruments or documents contemplated thereby or executed pursuant hereto or thereto and at its expense, execute and deliver or cause to be executed and delivered all such agreements, instruments and other documents and make all necessary filings and recordings as the Lender may consider reasonably necessary or desirable for the foregoing purposes. (k) Obligations to Rank Pari Passu. The Obligations of the Company under this Guarantee are and at all times shall rank at least pari passu in right of payment with all other present and future unsecured Senior Debt (actual or contingent) of the Company. (l) Further Assurances. The Company will, at its cost and expense, upon request of the Lender, duly execute and deliver, or cause to be duly executed and delivered, to the Lender all such further agreements, instruments, documents and other assurances and do and cause to be done all such further acts and things as may be necessary or desirable in the reasonable opinion of the Lender to carry out more effectually the provisions and purposes of this Guarantee or any of the other Loan Documents. -17- ARTICLE IV NEGATIVE COVENANTS OF THE GUARANTOR SECTION 4.1 NEGATIVE COVENANTS. From and after the Closing Date and so long as any Obligations remain outstanding and unpaid or any Commitment shall continue to exist: (a) 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 Closing Date. (b) 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 favourable to the Company or such Subsidiary than would be obtainable in a comparable arm's-length transaction with a Person not an Affiliate. (c) 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 to this Guarantee and the Credit Agreement, in form and substance satisfactory to the Lender, to add to or amend this Guarantee and the Credit 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 Lender, this Guarantee and the Credit Agreement shall, without any further action on the part of the Company, the Borrower or the Lender, 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 Lender) an amendment to this Guarantee and the Credit Agreement in form and substance satisfactory to the Lender evidencing the amendments of this Guarantee and the Credit 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 -18- such amendment as provided for in this Section 4.1(c), but shall merely be for the convenience of the parties hereto. (d) Defaults under Credit 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 Credit 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 Borrower, in order to enable the Borrower to cause the Company and its Subsidiaries to comply with the provisions of Articles 9 and 10 of the Credit Agreement. ARTICLE V REPRESENTATIONS AND WARRANTIES SECTION 5.1 REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company represents and warrants to the Lender as follows, and acknowledges that the Lender is relying thereon without independent inquiry in entering into the Credit Agreement and making any Advance under the Credit Agreement: (a) 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 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 Guarantee and to perform the provisions hereof. (b) Authorization, Etc. This Guarantee has been duly authorized by all necessary corporate action on the part of the Company, and this Guarantee 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). (c) Disclosure. Except as disclosed in Schedule 5.1(c), this Guarantee, the documents, certificates or other writings delivered to the Purchasers by or on behalf of the Company or the Borrower in connection with the transactions contemplated by the Credit Agreement and the financial statements listed in Schedule 5.1(e), 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 -19- therein not misleading in light of the circumstances under which they were made. Except as expressly described in Schedule 5.1(c), or in one of the documents, certificates or other writings identified therein, or in the financial statements listed in Schedule 5.1(e), 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 the Lender by or on behalf of the Company specifically for use in connection with the transactions contemplated hereby. (d) Organization and Ownership of Shares of Subsidiaries; Affiliates. (i) Schedule 5.1(d) contains (except as noted therein) complete and correct lists (1) of the Company's Material Subsidiaries, showing, as to each Material 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 Material Subsidiaries, and (3) of the Company's directors and senior officers. (ii) All of the outstanding share capital or similar equity interests of each Subsidiary shown in Schedule 5.1(d) 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 5.1(d)). (iii) Each Subsidiary identified in Schedule 5.1(d) 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 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. (iv) No Subsidiary is a party to, or otherwise subject to any legal restriction or any agreement (other than the Credit Agreement, the agreements listed on Schedule 5.1(d) 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 -20- 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. (e) Financial Statements. The Company has delivered to each Purchaser copies of the financial statements of the Company and its Subsidiaries listed on Schedule 5.1(e). 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). (f) Compliance with Laws, Other Instruments, Etc. The execution, delivery and performance by the Company of this Guarantee 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. (g) 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 Guarantee 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. (h) Litigation; Observance of Agreements, Statutes and Orders. (i) Except as disclosed in the financial statements described in Schedule 5.1(e), 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 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. -21- (ii) 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. (i) 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. (j) 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 5.1(e) 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 Guarantee. 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. (k) Licenses, Permits, Etc. Except as disclosed in the financial statements described in Schedule 5.1(e), -22- (i) 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; (ii) 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 (iii) 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. (l) Compliance with ERISA. (i) 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. (ii) 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. -23- (iii) 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. (iv) 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. (v) 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. (vi) The execution and delivery of this Guarantee 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. (m) Existing Debt; Future Liens. (i) Except as described therein, the financial statements described in Schedule 5.1(e) 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. (ii) Except as disclosed in the financial statements described in Schedule 5.1(e), neither the Company nor any Subsidiary has agreed or consented to cause or permit in the future (upon the happening of a contingency or -24- otherwise) any of its property, whether now owned or hereafter acquired, to be subject to a Lien not permitted by Section 9.2(c) of the Credit Agreement. (n) Foreign Assets Control Regulations, Etc. The Company's execution, delivery and performance of this Guarantee and the consummation of the Reorganization will not 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. (o) 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. (p) 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: (i) 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; (ii) 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 (iii) 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. (q) Guarantee Ranks Pari Passu. The obligations of the Company under this Guarantee rank at least pari passu in right of payment with all other Senior Debt -25- (actual or contingent) of the Company, including, without limitation, all Senior Debt of the Company described in Schedule 5.1(m). (r) Permitted Senior Indebtedness. The obligations of the Company under this Guarantee constitute Permitted Senior Indebtedness, as defined in the Subordinated Debentures. SECTION 5.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and warranties herein set forth or contained in any certificates or documents delivered to the Lender pursuant hereto shall survive the execution and delivery of the Guarantee and the execution and delivery of the Credit Agreement and the making or conversion of any Advance under the Credit Agreement and any investigation at any time made by or on behalf of the Lender. All statements contained in any certificate or other instrument delivered by or on behalf of the Company pursuant to this Guarantee shall be deemed representations and warranties of the Company under this Guarantee. The representations and warranties shall be deemed to be repeated by the Company upon each Drawdown Date (except as otherwise stated by the Borrower in the related Advance Request), and all references to the Closing Date contained in such representations and warranties shall be deemed to refer to each Drawdown Date. ARTICLE VI GENERAL SECTION 6.1 EVIDENCE OF OBLIGATIONS. The Obligations of the Company hereunder shall, absent manifest error, be prima facie evidenced by the records of the Lender. SECTION 6.2 REMEDIES CUMULATIVE. The rights and remedies of the Lender hereunder are cumulative and are in addition to and not in substitution for any other rights or remedies provided by law. Nothing contained herein or in any Loan Documents now or hereafter held by the Lender with respect to the Obligations of the Company to the Lender, or any part thereof, nor any act or omission of the Lender with respect to such Loan Documents, shall in any way prejudice or affect the rights, remedies and powers of the Lender with respect to any other such Loan Documents. SECTION 6.3 RIGHT OF SET-OFF. Upon the occurrence and during the continuance of an Event of Default, the Lender is hereby authorized by the Company at any time and from time to time and may to the fullest extent permitted by law, set off, appropriate and apply any and all deposits (general or special, time or demand, matured or unmatured, provisional or final) at any time held and other indebtedness at any time owing to or for the credit or the account of the Company (other than as trustee) against any and all of the Obligations of the Company now or hereafter existing hereunder. The Lender shall promptly notify the Company after any such set-off and application made by the Lender, provided that the failure to give such notice shall not affect the validity of -26- such set-off and application. The rights of the Lender under this Section 6.3 are in addition to all other rights and remedies (including, without limitation, other rights of set-off) which the Lender may have. SECTION 6.4 JUDGMENT CURRENCY. The obligation of the Company to make payments on any Obligations to the Lender hereunder in any currency (the "FIRST CURRENCY") shall not be discharged or satisfied by any tender or recovery pursuant to any judgment expressed in or converted into any other currency (the "SECOND CURRENCY") except to the extent to which such tender or recovery shall result in the effective receipt by the Lender of the full amount of the first currency payable, and accordingly the primary obligation of the Company shall be enforceable as an alternative or additional cause of action for the purpose of recovery in the second currency of the amount (if any) by which such effective receipt shall fall short of the full amount of the first currency payable and shall not be affected by a judgment being obtained for any other sum due hereunder. SECTION 6.5 INVALIDITY OF ANY PROVISIONS. Any provision of this Guarantee which is prohibited by the laws of any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition without invalidating the remaining terms and provisions hereof or thereof and no such invalidity shall affect the obligation of the Company to pay the Obligations in full. The rate of interest chargeable or collectable on overdue instalments of interest shall not exceed the maximum rate permitted by applicable law. SECTION 6.6 AMENDMENTS, WAIVERS, ETC. No amendment, modification or waiver of any provision of, and no waiver of the strict observance, performance or compliance by the Company with any term, covenant, condition or agreement contained in this Guarantee and no indulgence granted by the Lender or consent to any departure by the Company therefrom, shall in any event be effective unless it shall be in writing and signed by the Lender (and the Company in the case of amendments or modifications or waivers by the Company), and then such amendment, modification, waiver or consent shall be effective only in the specific instance and for the specific purpose for which it is given. Notwithstanding the foregoing, no failure to exercise and no delay in exercising any right, power or privilege under this Guarantee shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege under this Guarantee preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The remedies herein provided are cumulative and not exclusive of any other rights or remedies available at or provided by law. SECTION 6.7 NOTICES, ETC. All notices and other communications provided for hereunder shall, except as otherwise permitted hereunder, be in writing personally delivered by messenger or courier or facsimile or telecopy transmission, if (a) to the Company, to it at: -27- Hub International Limited 55 East Jackson Boulevard Chicago, Illinois, 60604 Telecopy: (877)-402-6606 for the attention of: Marianne Paine Chief Legal Officer (b) to the Lender, to it at: Bank of Montreal 4th Floor, 1 First Canadian Place Toronto, Ontario M5X 1H3 Telecopy: (416)-359-7796 for the attention of: Vice President, Loan Products Group or to such other address or facsimile or telecopy number as any party hereto may from time to time designate to the other parties hereto in such manner. All such notices and communications shall be effective, and deemed to be received by the intended recipient, on the date delivered or transmitted, if delivered or transmitted before 3:00 p.m. (Toronto, Ontario time) on a Business Day, or, in any other case, on the first Business Day following the date delivered or transmitted. A copy of any notice or communication sent by facsimile or telecopy transmission shall also be delivered personally by messenger or courier as aforesaid but such notice or communication shall be effective, and deemed to be received by the intended recipient, on the date it is sent by facsimile or telecopy transmission, if so transmitted before 3:00 p.m. (Toronto, Ontario time) on a Business Day, or, in any other case, on the first Business Day following the date it is so transmitted. SECTION 6.8 COSTS AND EXPENSES. Except to the extent actually reimbursed to the Lender pursuant to the Credit Agreement, the Company shall pay to the Lender, on demand all reasonable out of pocket costs and expenses (including, without limitation, all reasonable legal fees and disbursements) incurred by the Lender in connection with this Guarantee, the other Loan Documents, the Credit Facility, the transactions contemplated hereby and any amendments, waivers or consents under or in respect of this Guarantee (whether or not such amendment, waiver or consent becomes effective), including, without limitation, (a) the negotiation, preparation, execution, delivery and interpretation, both prior and subsequent to the Closing Date, of this Guarantee and the other Loan Documents or any agreement or instrument contemplated hereby or thereby; (b) the performance by the Lender of its obligations and duties under the Credit Agreement and the -28- other Loan Documents; (c) advice of counsel with respect to the interpretation of this Guarantee, the Credit Facility, the Loan Documents or any transaction contemplated thereunder; (d) the enforcement of this Guarantee or any of the Loan Documents or the enforcement or preservation of rights under and the refinancing, renegotiation or restructuring of the Credit Facility under the Credit Agreement or the other Loan Documents or the bringing of any action, suit or proceeding with respect to the enforcement of any of the Loan Documents or any such right or seeking any remedy which may be available to the Lender at law or in equity; (e) the reasonable costs and expenses incurred in enforcing or defending (or determining whether or how to enforce or defend) any rights under this Guarantee or in responding to any subpoena or other legal process or informal investigative demand issued in connection with this Guarantee, or by reason of being the Lender; (f) 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 Credit Agreement; and (g) any amendments, waivers or consents requested by the Company pursuant to the provisions hereof or any other Loan Document. The Company shall supply all statements, reports, certificates, opinions, appraisals and other documents or information required to be furnished to the Lender pursuant to this Agreement without cost to the Lender. The Company will pay, and will save the Lender harmless from, all claims in respect of any fees, costs or expenses, if any, of brokers and finders. The provisions of this Section 6.8 shall survive the termination of this Guarantee, the termination or expiration of the Commitment and the payment or performance of all Guaranteed Obligations. SECTION 6.9 TAXES. (a) Any and all payments to the Lender by the Company hereunder (or under any of the other Loan Documents) shall be made free and clear of and without deduction or withholding for any and all present and future Taxes, imposed by any Governmental Authority including, without limitation, any Taxes which arise from the execution, delivery or registration of, or otherwise with respect to, this Guarantee or any of the other Loan Documents, unless such Taxes are required by law or the administration thereof to be deducted or withheld. If the Company shall be required by law or the administration thereof to deduct or withhold any such Taxes from or in respect of any amount payable hereunder, (i) the amount payable shall be increased as may be necessary so that after making all required deductions or withholdings (including deductions or withholdings applicable to additional amounts paid under this paragraph), the Lender receives an amount equal to the amount it would have received if no such deduction or withholding had been made; (ii) the Company shall make such deductions or withholdings; and (iii) the Company shall pay forthwith the full amount deducted or withheld to the relevant taxation or other authority in accordance with applicable law. (b) The Company agrees to indemnify the Lender for the full amount of Taxes not deducted or withheld and paid by the Borrower in accordance with Section 6.9(a) to the relevant taxation or other authority and any Taxes imposed by any jurisdiction on amounts payable by the Borrower under this Section 6.9, paid by the Lender and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not any such Taxes were correctly or -29- legally asserted. Payment under this indemnification shall be made within fifteen days from the date the Lender makes written demand therefor. A certificate as to the amount of such Taxes, providing reasonable details of the calculation thereof, and evidence of payment thereof submitted to the Company by the Lender shall be conclusive evidence of the amount due from the Company to the Lender absent manifest error. (c) The Company shall furnish to the Lender the original or a certified copy of a receipt evidencing any payment of Taxes made by the Company, as soon as such receipt becomes available (or if such original or certified tax receipt is not available, such other evidence of payment as may be acceptable to the Lender), together with such other documentary evidence with respect to such payments as may be reasonably requested from time to time by the Lender. (d) If the provisions of Section 6.9(a) or 6.9(b) require the Company to deduct or withhold and pay Taxes to any relevant taxation or other authority or to pay any additional amounts thereunder, the Lender shall use its reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to avoid the necessity of invoking such provisions of this Section 6.9, or to reduce the amounts payable thereunder, including changing the jurisdiction of its applicable lending office; provided that the taking of any such action would not, in the reasonable judgment of the Lender, be disadvantageous to the Lender. (e) For the avoidance of doubt, nothing herein shall (i) restrict the right of the Lender to arrange its tax affairs as it shall deem appropriate or (ii) require the Lender 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 indemnity amount would be required to be made pursuant to the provisions of this Section 6.9, provided, however, that the Lender shall not be obligated to disclose any of its tax returns to the Company or any other Person. (f) The provisions of this Section 6.9 shall survive the termination of this Guarantee, the termination or expiration of the Commitment and the payment or performance of all Guaranteed Obligations. SECTION 6.10 CALCULATIONS. Except as otherwise provided herein, the financial statements and returns to be furnished to the Lender pursuant to this Guarantee shall be made and prepared in accordance with GAAP consistently applied throughout the periods involved (except as set forth in the notes thereto or as otherwise disclosed in writing by the Company to the Lender). SECTION 6.11 ASSIGNMENTS AND PARTICIPATIONS. (a) The Company shall not be entitled to assign its rights and obligations hereunder or any interest herein without the prior consent of the Lender. -30- (b) The Lender, may, on and after the occurrence of an Event of Default or in connection with an assignment by the Lender in accordance with Section 11.10 of the Credit Agreement, without the prior consent of the Company but on notice to the Company, and, in any other case, with the prior consent of the Borrower, sell, assign or grant a participation in all or part of the Lender's rights hereunder or any interest herein. (c) The Lender may on and after the occurrence of an Event of Default or in connection with an assignment by the Lender in accordance with Section 11.10 of the Credit Agreement, without the prior consent of the Company but on notice to the Company, and, in any other case, with the prior consent of the Borrower, disclose to a potential participant or potential assignee such information concerning or pertaining to the Obligations of the Company and its Subsidiaries as is known to the Lender, and may in addition express to any such Person any opinion it may have with respect to any matter, provided such potential participant or potential assignee covenants in favour of the Company and the Lender to only use such information in connection with its evaluation as to whether to take any such participation or assignment and, should it do so, in connection therewith, and to strictly maintain the confidential nature of all such information. SECTION 6.12 GOVERNING LAW. This Guarantee shall be governed by, and construed in accordance with, the laws of the Province of Ontario and the laws of Canada applicable therein. SECTION 6.13 CONSENT TO JURISDICTION. The Company hereby irrevocably submits to the non-exclusive jurisdiction of the Courts of the Province of Ontario in respect of any action, suit or proceeding arising out of or relating to this Guarantee and hereby irrevocably agrees that all Claims in respect of any such action, suit or proceeding may be heard and determined in any such Ontario Court. The Company hereby irrevocably waives, to the fullest extent it and they may effectively do so, the defence of an inconvenient forum to the maintenance of such action or proceeding. The Company agrees that a final judgment in any such suit, action or proceeding shall be conclusive and may be enforced in another jurisdiction by suit on the judgment or in any other manner provided by law. Nothing in this Section 6.13 shall affect the right of the Lender to bring any suit, action or proceeding against the Borrower or its assets in the courts of any other jurisdiction. SECTION 6.14 BINDING EFFECT. This Guarantee shall be binding upon and enure to the benefit of the parties hereto and their respective successors and permitted assigns. SECTION 6.15 COUNTERPARTS. This Guarantee may be executed in counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute one and the same instrument. For all -31- purposes of this Guarantee and all other documents and agreements contemplated hereby, the signature of any party hereto or thereto, evidenced by a facsimile showing such signature or other electronically transmitted version of such signature, shall constitute conclusive proof for all purposes of the signature of such person to such documents and agreements, to the same extent in all respects as a copy of such documents and agreements showing the original signature of such party. [Signature page follows.] -32- IN WITNESS WHEREOF the parties hereto have caused this Guarantee to be executed by their respective officers thereunto duly authorized, as of the date first above written. HUB INTERNATIONAL LIMITED Per: /s/ W. Kirk James ----------------------------------- Authorized Signatory Per: ----------------------------------- Authorized Signatory BANK OF MONTREAL Per: /s/ ----------------------------------- Authorized Signing Officer SCHEDULE 5.1(C) DISCLOSURE MATERIALS None SCHEDULE 5.1(D) SUBSIDIARIES OF THE COMPANY AND OWNERSHIP OF SUBSIDIARY SHARES (See Attached) SCHEDULE 5.1(E) FINANCIAL STATEMENTS Annual Consolidated Financial Statements of HUB International Limited and its Subsidiaries for the fiscal year ended December 31, 2005 EX-99.4 5 o30946exv99w4.txt EX-99.4 Exhibit 99.4 ================================================================================ HUB INTERNATIONAL LIMITED PARTNERSHIP U.S.$75,000,000 6.43% Senior Notes due April 4, 2016 ---------- NOTE PURCHASE AGREEMENT ---------- Dated as of April 4, 2006 ================================================================================ TABLE OF CONTENTS (Not a part of the Agreement)
PAGE ---- SECTION 1. AUTHORIZATION OF NOTES........................................ 1 SECTION 2. SALE AND PURCHASE OF NOTES.................................... 1 SECTION 3. CLOSING....................................................... 1 SECTION 4. CONDITIONS TO CLOSING......................................... 2 Section 4.1. Guaranty Agreement..................................... 2 Section 4.2. Termination of Existing Credit Agreement and Bridge loan Credit Agreement; New Credit Agreement............ 2 Section 4.3. Amended and Restated 2003 Note Purchase Agreement...... 2 Section 4.4. Representations and Warranties......................... 3 Section 4.5. Performance; No Default................................ 3 Section 4.6. Compliance Certificates................................ 3 Section 4.7. Opinions of Counsel.................................... 3 Section 4.8. Purchase Permitted by Applicable Law, Other Agreements Etc.................................................... 3 Section 4.9. Related Transactions................................... 4 Section 4.10. Confirmation under Subordinated Debentures............. 4 Section 4.11. Review of Insurance Broker Litigation and Investigations......................................... 4 Section 4.12. Payment of Special Counsel Fees........................ 4 Section 4.13. Private Placement Numbers.............................. 4 Section 4.14. Reorganization; Changes in Corporate Structure......... 4 Section 4.15. Structuring Fee........................................ 5 Section 4.16. Funding Instructions................................... 5 Section 4.17. Proceedings and Documents.............................. 5 SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE ISSUER.................. 5 Section 5.1. Organization; Power and Authority...................... 5 Section 5.2. Authorization, Etc..................................... 5 Section 5.3. Compliance with Laws, Other Instruments, Etc........... 6 Section 5.4. Governmental Authorizations, Etc....................... 6 Section 5.5. Compliance with ERISA.................................. 6 Section 5.6. Private Offering by the Issuer......................... 6 Section 5.7. Use of Proceeds; Margin Regulations.................... 7 Section 5.8. Foreign Assets Control Regulations, Etc................ 7 Section 5.9. Status under Certain Statutes.......................... 7 Section 5.10. Notes Rank Pari Passu.................................. 7 SECTION 6. REPRESENTATIONS OF THE PURCHASERS............................. 7 Section 6.1. Purchase for Investment................................ 7 Section 6.2. Source of Funds........................................ 8 SECTION 7. INFORMATION AS TO ISSUER...................................... 9
-i- TABLE OF CONTENTS (continued)
PAGE ---- Section 7.1. Financial and Business Information..................... 9 Section 7.2. Officer's Certificate.................................. 9 Section 7.3. Inspection............................................. 10 SECTION 8. PREPAYMENT OF THE NOTES....................................... 10 Section 8.1. Required Prepayments................................... 10 Section 8.2. Optional Prepayments with Make-Whole Amount............ 11 Section 8.3. Allocation of Partial Prepayments...................... 11 Section 8.4. Maturity; Surrender, Etc............................... 11 Section 8.5. Purchase of Notes...................................... 12 Section 8.6. Make-Whole Amount for Notes............................ 12 Section 8.7. Offer to Prepay Notes in the Event of a Debt Prepayment Application............................................ 13 Section 8.8. Payments Free and Clear of Taxes....................... 14 SECTION 9. AFFIRMATIVE COVENANTS......................................... 16 Section 9.1. Compliance with Company Guaranty Affirmative Covenants. 16 Section 9.2. Notes to Rank Pari Passu............................... 16 Section 9.2. Foreign Qualification.................................. 16 SECTION 10. NEGATIVE COVENANTS........................................... 16 Section 10.1. Limitation on Subsidiary Debt.......................... 16 Section 10.2. Limitation on Priority Debt............................ 17 Section 10.3. Limitation on Liens.................................... 17 Section 10.4. Merger, Consolidation, Etc............................. 20 Section 10.5. Sale of Assets, Etc.................................... 21 Section 10.6. Sale-and-Leasebacks.................................... 22 Section 10.7. Disposal of Ownership of a Subsidiary.................. 22 Section 10.8. Nature of Business..................................... 23 Section 10.9. Transactions with Affiliates........................... 23 Section 10.10. Sales of Receivables................................... 23 Section 10.11. Most Favored Lender Status............................. 23 Section 10.12. Restricted Payments.................................... 24 Section 10.13. Limitations on Restrictive Agreements.................. 24 SECTION 11. EVENTS OF DEFAULT............................................ 24 SECTION 12. REMEDIES ON DEFAULT, ETC..................................... 27 Section 12.1. Acceleration........................................... 27 Section 12.2. Other Remedies......................................... 28 Section 12.3. Rescission............................................. 28 Section 12.4. No Waivers or Election of Remedies, Expenses, Etc...... 28
-ii- TABLE OF CONTENTS (continued)
PAGE ---- SECTION 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES................ 29 Section 13.1. Registration of Notes.................................. 29 Section 13.2. Transfer and Exchange of Notes......................... 29 Section 13.3. Replacement of Notes................................... 29 SECTION 14. PAYMENTS ON NOTES............................................ 30 Section 14.1. Place of Payment....................................... 30 Section 14.2. Home Office Payment.................................... 30 SECTION 15. EXPENSES, ETC................................................ 30 Section 15.1. Transaction Expenses................................... 30 Section 15.2. Survival............................................... 31 SECTION 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.................................................... 31 SECTION 17. AMENDMENT AND WAIVER......................................... 31 Section 17.1. Requirements........................................... 31 Section 17.2. Solicitation of Holders of Notes....................... 31 Section 17.3. Binding Effect, Etc.................................... 32 Section 17.4. Notes Held by Company, Etc............................. 32 SECTION 18. NOTICES...................................................... 32 SECTION 19. REPRODUCTION OF DOCUMENTS.................................... 33 SECTION 20. CONFIDENTIAL INFORMATION..................................... 33 SECTION 21. SUBSTITUTION OF PURCHASER.................................... 34 SECTION 22. SUBMISSION TO JURISDICTION, NORMAL RATES, ETC................ 35 Section 22.1. Submission to Jurisdiction............................. 35 Section 22.2. Normal Rates........................................... 35 SECTION 23. MISCELLANEOUS................................................ 35 Section 23.1. Successors and Assigns................................. 35 Section 23.2. Payments Due on Non-Business Days...................... 35 Section 23.3. Severability........................................... 36 Section 23.4. Construction........................................... 36 Section 23.5. Counterparts........................................... 36 Section 23.6. Currency............................................... 36 Section 23.7. Governing Law.......................................... 36
-iii- ATTACHMENTS TO THE NOTE PURCHASE AGREEMENT: SCHEDULE A -- Information Relating to Purchasers SCHEDULE B -- Defined Terms SCHEDULE 4.14 -- Reorganization SCHEDULE 10.4 -- Existing Liens EXHIBIT 1 -- Form of 6.43% Senior Note due April 4, 2016 Exhibit 4.1 -- Form of Guaranty Agreement EXHIBIT 4.7(a) -- Form of Opinion of Counsel for the General Partner, the Company and the Issuer EXHIBIT 4.7(b) -- Form of Opinion of Vice President and Secretary of the Company EXHIBIT 4.7(c) -- Form of Opinion of Canadian Counsel to the Company EXHIBIT 4.7(d) -- Form of Opinion of Special Counsel for the Purchasers -iv- HUB INTERNATIONAL LIMITED PARTNERSHIP 55 East Jackson Boulevard Chicago, Illinois, 60604 6.43% Senior Notes due April 4, 2016 Dated as of April 4, 2006 TO THE PURCHASERS LISTED IN THE ATTACHED SCHEDULE A: Ladies and Gentlemen: Hub International Limited Partnership, a limited partnership organized under the laws of Delaware (the "Issuer"), agrees with the purchasers listed in the attached Schedule A (the "Purchasers") as follows: SECTION 1. AUTHORIZATION OF NOTES. The Issuer will authorize the issue and sale of U.S.$75,000,000 aggregate principal amount of its 6.43% Senior Notes due April 4, 2016 (the "Notes," such term to include any such notes issued in substitution therefor pursuant to Section 13 of this Agreement). The Notes shall be substantially in the form set out in Exhibit 1, with such changes thereto, if any, as may be approved by the Purchasers and the Issuer. The Notes will be unconditionally guaranteed by Hub International Limited, a Canadian corporation (herein called the "Company"), the owner, either directly or indirectly through one or more Wholly-Owned Subsidiaries, of all of the outstanding partnership interests of the Issuer. Certain capitalized terms used in this Agreement are defined in Schedule B; references to a "Schedule" or an "Exhibit" are, unless otherwise specified, to a Schedule or an Exhibit attached to this Agreement. SECTION 2. SALE AND PURCHASE OF NOTES. Subject to the terms and conditions of this Agreement, the Issuer will issue and sell to each Purchaser and each Purchaser will purchase from the Issuer, at the Closing provided for in Section 3, Notes in the principal amount specified opposite such Purchaser's name in Schedule A at the purchase price of 100% of the principal amount thereof. Each Purchaser's obligations hereunder are several and not joint, and no Purchaser shall have any obligation or liability to any Person for the performance or nonperformance by any other Purchaser hereunder. SECTION 3. CLOSING. The sale and purchase of the Notes to be purchased by each Purchaser shall occur at the offices of Schiff Hardin LLP, 6600 Sears Tower, Chicago, Illinois 60606, at 10:00 a.m., Chicago time, at a closing (the "Closing") on April 4, 2006. At the Closing, the Issuer will deliver to each Purchaser the Notes to be purchased by such Purchaser in the form of a single Note (or such greater number of Notes in denominations of at least U.S.$100,000 as such Purchaser may request) dated the date of the Closing and registered in such Purchaser's name (or in the name of such Purchaser's nominee), against delivery by such Purchaser to the Issuer or its order of immediately available funds in the amount of the purchase price therefor by wire transfer of immediately available funds. If at the Closing the Issuer shall fail to tender such Notes to any Purchaser as provided above in this Section 3, or any of the conditions specified in Section 4 shall not have been fulfilled to any Purchaser's satisfaction, such Purchaser shall, at its election, be relieved of all further obligations under this Agreement, without thereby waiving any rights such Purchaser may have by reason of such failure or such nonfulfillment. SECTION 4. CONDITIONS TO CLOSING. The obligation of each Purchaser to purchase and pay for the Notes to be sold to such Purchaser at the Closing is subject to the fulfillment to such Purchaser's satisfaction, prior to or at the Closing, of the following conditions: Section 4.1. Guaranty Agreement. The Company shall have executed and delivered a Guaranty Agreement in the form of Exhibit 4.1 hereto (as the same may be amended, modified or supplemented from time to time in accordance with the provisions thereof, the "Company Guaranty"). Section 4.2. Termination of Existing Credit Agreement and Bridge loan Credit Agreement; New Credit Agreement. The Company and the Bank shall have terminated the Existing Credit Agreement and the Bridge Loan Credit Agreement. The Issuer and the Bank shall have duly executed and delivered a Credit Agreement providing for a loan facility to the Issuer of between $50,000,000 and $75,000,000 (as amended from time to time, the "Credit Agreement"), which, among other things, allows for the issuance of the Notes and provide for covenants and agreements substantially the same as those contained herein and in the Company Guaranty, in form and substance reasonably satisfactory to such Purchaser, and the Credit Agreement shall be in full force and effect. Such Purchaser shall have received a copy of the Credit Agreement and all instruments, documents and agreements delivered at the closing thereof. Section 4.3. Amended and Restated 2003 Note Purchase Agreement. The Company, the Issuer and the holders of the 2003 Notes shall have duly executed and delivered the Amended and Restated 2003 Note Purchase Agreement, which among other things, provides for the Issuer to assume the obligations of the Company under the 2003 Notes, allows for the issuance of the Notes and provides for covenants and agreements substantially the same as those contained herein and in the Company Guaranty, in form and substance reasonably satisfactory to such Purchaser, and such amendment shall be in full force and effect. Such Purchaser shall have received a copy of such amendment and all instruments, documents and agreements delivered at the closing thereof. -2- Section 4.4. Representations and Warranties. The representations and warranties of the Issuer in this Agreement and the representations and warranties of the Company in the Company Guaranty shall be correct when made and at the time of the Closing. Section 4.5. Performance; No Default. The Issuer and the Company shall have performed and complied with all agreements and conditions contained in this Agreement and the Company Guaranty required to be performed or complied with by it prior to or at the Closing, and after giving effect to the issue and sale of the Notes (and the application of the proceeds thereof as contemplated by Section 5.7), no Default or Event of Default shall have occurred and be continuing. Neither the Company nor any Subsidiary shall have entered into any transaction since March 31, 2004 that would have been prohibited by Section 10 hereof had such Section applied since such date. Section 4.6. Compliance Certificates. (a) Officer's Certificates. Each of the Company and the Issuer shall have delivered to such Purchaser an Officer's Certificate, dated the date of the Closing, certifying that the conditions specified in Sections 4.4, 4.5 and 4.14 have been fulfilled. (b) Secretary's Certificates. The General Partner shall have delivered to such Purchaser a certificate certifying as to the resolutions attached thereto and other partnership proceedings taken by the Issuer or corporate proceedings taken by the General Partner relating to the authorization, execution and delivery of the Notes and this Agreement and the Company shall have delivered to such Purchaser a certificate certifying as to the resolutions attached thereto and other corporate proceedings relating to the authorization, execution and delivery of the Company Guaranty. Section 4.7. Opinions of Counsel. Such Purchaser shall have received opinions in form and substance satisfactory to such Purchaser, dated the date of the Closing (a) from Katten Muchin Rosenman LLP, counsel for the Company, the General Partner and the Issuer, covering the matters set forth in Exhibit 4.7(a) and covering such other matters incident to the transactions contemplated hereby as such Purchaser or special counsel to the Purchasers may reasonably request (and the Issuer hereby instructs such counsel to deliver such opinion to such Purchaser), (b) from W. Kirk James, Vice President and Secretary of the Company, covering the matters set forth in Exhibit 4.7(b) and covering such other matters incident to the transactions contemplated hereby as such Purchaser or special counsel to the Purchasers may reasonably request, (c) from Blake, Cassels & Graydon LLP, Canadian counsel for the Company, covering the matters set forth in Exhibit 4.7(c) and covering such other matters incident to the transactions contemplated hereby as such Purchaser or special counsel to the Purchasers may reasonably request and (d) from Schiff Hardin LLP, the Purchasers' special counsel in connection with such transactions, covering the matters set forth in Exhibit 4.7(d) and such other matters incident to such transactions as such Purchaser may reasonably request. Section 4.8. Purchase Permitted by Applicable Law, Other Agreements Etc. On the date of the Closing, each purchase of Notes shall (a) be permitted by the laws and regulations of each jurisdiction to which such Purchaser is subject, without recourse to provisions (such as Section 1405(a)(8) of the New York Insurance Law) permitting limited investments by insurance -3- companies without restriction as to the character of the particular investment, (b) not violate any applicable law or regulation (including, without limitation, Regulation T, U or X of the Board of Governors of the Federal Reserve System) (c) not subject any Purchaser to any tax, penalty or liability under or pursuant to any applicable law or regulation and (d) not cause the Company or any Subsidiary to be in violation of any covenants or other restrictions or provisions in any agreements, instruments or other documents to which the Company or such Subsidiary is subject. If requested by any Purchaser, such Purchaser shall have received an Officer's Certificate of the Issuer certifying as to such matters of fact as such Purchaser may reasonably specify to enable such Purchaser to determine whether such purchase is so permitted, including, without limitation, calculations demonstrating compliance with the covenants set forth in the Credit Agreement, the Amended and Restated 2003 Note Purchase Agreement and the Subordinated Debentures after giving effect to the issuance of the Notes. Section 4.9. Related Transactions. The Issuer shall have consummated the sale of the entire principal amount of the Notes scheduled to be sold on the date of the Closing pursuant to this Agreement. Section 4.10. Confirmation under Subordinated Debentures. Each holder of a Subordinated Debenture shall have duly executed and delivered to such Purchaser a confirmation, acknowledged by the Company, which confirms that the Notes and the Company Guaranty constitute Permitted Senior Indebtedness under such Subordinated Debenture, and such confirmation shall be in full force and effect. Section 4.11. Review of Insurance Broker Litigation and Investigations. Such Purchaser shall have completed a review of matters with respect to any litigation or investigation involving the Company or any of its Subsidiaries and such Purchaser shall be satisfied in all respects with the results of such review. Section 4.12. Payment of Special Counsel Fees. Without limiting the provisions of Section 15.1, the Issuer shall have paid on or before the Closing the reasonable fees, charges and disbursements of the Purchasers' special counsel referred to in Section 4.7(d) to the extent reflected in a statement of such counsel rendered to the Issuer at least three Business Days prior to the Closing. Section 4.13. Private Placement Numbers. A Private Placement Number issued by Standard & Poor's CUSIP Service Bureau (in cooperation with the Securities Valuation Office of the National Association of Insurance Commissioners) shall have been obtained for the Notes. Section 4.14. Reorganization; Changes in Corporate Structure. (a) The Company and its Subsidiaries shall have completed the reorganization described on Schedule 4.14 hereto (the "Reorganization"). (b) Except as specified in Schedule 4.14, neither the Company nor the Issuer shall have changed its jurisdiction of incorporation or organization or been a party to any merger or consolidation and shall not have succeeded to all or any substantial part of the liabilities of any other entity, at any time following the date of the most recent financial statements referred to in Schedule 5.5 of the Company Guaranty. -4- Section 4.15. Structuring Fee. The Issuer shall have paid to such Purchaser, by wire transfer of immediately available funds, such Purchaser's ratable portion (in proportion to the aggregate principal amount of the Notes to be purchased by such Purchaser) of a structuring fee relating to the borrowing hereunder in the aggregate amount, for all Purchasers, of U.S.$50,000. Section 4.16. Funding Instructions. At least three Business Days prior to the date of the Closing, such Purchaser shall have received written instructions executed by an authorized financial officer of the Issuer directing the manner of the payment of funds and setting forth (a) the name of the transferee bank, (b) such transferee bank's ABA number, (c) the account name and number into which the purchase price for the Notes is to be deposited and (d) the name and telephone number of the account representative responsible for verifying receipt of such funds. Section 4.17. Proceedings and Documents. All corporate, partnership and other proceedings in connection with the transactions contemplated by this Agreement and all documents and instruments incident to such transactions shall be satisfactory to such Purchaser and special counsel to the Purchasers, and such Purchaser and special counsel to the Purchasers shall have received all such counterpart originals or certified or other copies of such documents as such Purchaser or special counsel to the Purchasers may reasonably request. SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE ISSUER. The Issuer represents and warrants to each Purchaser that: Section 5.1. Organization; Power and Authority. The Issuer is a limited partnership duly organized and validly existing under the laws of Delaware, and is duly qualified as a foreign limited partnership 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. The General Partner is the sole general partner of the Issuer. The General Partner is a corporation duly organized and validly existing under the laws of the Province of Ontario and is duly qualified as a foreign corporation and 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, be reasonably expected to have a Material Adverse Effect. The Issuer has the limited partnership 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 Agreement and the Notes and to perform the provisions hereof and thereof. The General Partner has the corporate power and authority to own or hold under lease the properties it purports to own or hold under lease, to transact on the business it transacts and proposes to transact and to execute and deliver this Agreement and the Notes on behalf of the Issuer. Section 5.2. Authorization, Etc. This Agreement and the Notes have been duly authorized by all necessary limited partnership action on the part of the Issuer, and this Agreement constitutes, and upon execution and delivery thereof each Note will constitute, a legal, valid and binding obligation of the Issuer enforceable against the Issuer 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 -5- generally and (b) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). The execution and delivery of this Agreement and the Notes by the General Partner on behalf of the Issuer have been duly authorized by all necessary corporate action on the part of the General Partner. Section 5.3. Compliance with Laws, Other Instruments, Etc. The execution, delivery and performance by the Issuer of this Agreement and the Notes, and the execution and delivery of this Agreement and the Notes by the General Partner on behalf of the Issuer, 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, the partnership agreement of the Issuer, the corporate charter of the General Partner, partnership agreement, operating agreement, corporate charter or by-laws of the Company or any Subsidiary 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 5.4. 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 Issuer of this Agreement or the Notes or the execution or delivery of this Agreement or the Notes by the General Partner on behalf of the Issuer, other than those consents, approvals or authorizations obtained and those registrations, filings or declarations made on or before the date of the Closing. Section 5.5. Compliance with ERISA. The execution and delivery of this Agreement and the issuance and sale of the Notes hereunder 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 Issuer in the first sentence of this Section 5.5 is made in reliance upon and subject to the accuracy of each Purchaser's representation in Section 6.2 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 Section 6.2 is made. Section 5.6. Private Offering by the Issuer. Neither the General Partner, the Issuer 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 General Partner, the Issuer 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. -6- Section 5.7. Use of Proceeds; Margin Regulations. The Issuer will apply the proceeds of the sale of the Notes for general partnership purposes. No part of the proceeds from the sale of the Notes hereunder will be used, directly or indirectly, for the purpose of buying or carrying any margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System (12 CFR 221), or for the purpose of buying or carrying or trading in any securities under such circumstances as to involve the Issuer in a violation of Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a violation of Regulation T of said Board (12 CFR 220). As used in this Section, the terms "margin stock" and "purpose of buying or carrying" shall have the meanings assigned to them in said Regulation U. Margin stock does not constitute more than 25% of the value of the consolidated assets of the Issuer and its Subsidiaries and the Issuer does not have any present intention that margin stock will constitute more than 25% of the value of such assets. As used in this Section, the terms "margin stock" and "purpose of buying or carrying" shall have the meanings assigned to them in said Regulation U. Section 5.8. Foreign Assets Control Regulations, Etc. Neither the sale of the Notes by the Issuer hereunder nor its use of the proceeds thereof will 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 5.9. Status under Certain Statutes. Neither the General Partner nor the Issuer 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 5.10. Notes Rank Pari Passu. The obligations of the Issuer under this Agreement and the Notes rank at least pari passu in right of payment with all other Senior Debt (actual or contingent) of the Issuer. SECTION 6. REPRESENTATIONS OF THE PURCHASERS. Section 6.1. Purchase for Investment. (a) Each Purchaser represents that it is an Institutional Accredited Investor. Each Purchaser further represents that it is purchasing the Notes for its own account or for one or more separate accounts maintained by such Purchaser or for the account of one or more pension or trust funds and not with a view to the distribution thereof, provided that the disposition of such Purchaser's or such pension or trust funds' property shall at all times be within such Purchaser's or such pension or trust funds' control. Each Purchaser understands that the Notes have not been registered under the Securities Act or securities laws of any other applicable jurisdiction and may be resold only if registered pursuant to the provisions of the Securities Act or if an exemption from registration is available, except under circumstances where neither such registration nor such an exemption is required by law, and that the Issuer is not required to register the Notes. (b) Each Purchaser acknowledges that the Notes are not qualified for distribution or resale in Canada and further represents and warrants and agrees that: (a) such Purchaser is not a Canadian resident nor acting for the account or benefit of a Canadian resident; (b) the Notes were not offered to such Purchaser in Canada; (c) at the time of agreeing to purchase the Notes such -7- Purchaser was and is outside of Canada; and (d) such Purchaser will not trade its Notes to any Canadian resident or in Canada unless permitted under and traded in compliance with applicable securities laws of the provinces and territories of Canada. Section 6.2. Source of Funds. Each Purchaser represents that at least one of the following statements is an accurate representation as to each source of funds (a "Source") to be used by it to pay the purchase price of the Notes to be purchased by it hereunder: (a) the Source is an "insurance company general account" within the meaning of Department of Labor Prohibited Transaction Exemption ("PTE") 95-60 (issued July 12, 1995), as amended, and there is no employee benefit plan, treating as a single plan, all plans maintained by the same employer or employee organization, with respect to which the amount of the general account reserves and liabilities for all contracts held by or on behalf of such plan, exceeds 10% of the total reserves and liabilities of such general account (exclusive of separate account liabilities) plus surplus, as set forth in the National Association of Insurance Commissioner's Annual Statement for such Purchaser filed with such Purchaser's state of domicile; or (b) the Source is either (1) an insurance company pooled separate account, within the meaning of PTE 90-1 (issued January 29, 1990), as amended, or (2) a bank collective investment fund, within the meaning of PTE 91-38 (issued July 12, 1991) and, except as such Purchaser has disclosed to the Issuer in writing pursuant to this paragraph (b) prior to the date of the Closing, no employee benefit plan or group of plans maintained by the same employer or employee organization beneficially owns more than 10% of all assets allocated to such pooled separate account or collective investment fund; or (c) the Source constitutes assets of an "investment fund" (within the meaning of Part V of the QPAM Exemption) managed by a "qualified professional asset manager" or "QPAM" (within the meaning of Part V of the QPAM Exemption), no employee benefit plan's assets that are included in such investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of Section V(c)(1) of the QPAM Exemption) of such employer or by the same employee organization and managed by such QPAM, exceed 20% of the total client assets managed by such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a Person controlling or controlled by the QPAM (applying the definition of "control" in Section V(e) of the QPAM Exemption) owns a 5% or more interest in the Issuer and (1) the identity of such QPAM and (2) the names of all employee benefit plans whose assets are included in such investment fund have been disclosed to the Issuer in writing pursuant to this paragraph (c); or (d) the Source is a governmental plan; or (e) the Source is one or more employee benefit plans, or a separate account or trust fund comprised of one or more employee benefit plans, each of which has been -8- identified to the Issuer in writing pursuant to this paragraph (e) prior to the date of the Closing; or (f) the Source does not include assets of any employee benefit plan, other than a plan exempt from the coverage of ERISA; or (g) the Source constitutes assets of a "plan(s)" (within the meaning of Section IV of PTE 96-23 (the "INHAM Exemption")) managed by an "in-house asset manager" or "INHAM" (within the meaning of Part IV of the INHAM Exemption), the conditions of Part I(a), (g) and (h) of the INHAM Exemption are satisfied, neither the INHAM nor a person controlling or controlled by the INHAM (applying the definition of "control" in Section IV(h) of the INHAM Exemption) owns a 5% or more interest in the Company and (a) the identity of such INHAM and (b) the name(s) of the employee benefit plan(s) whose assets constitute the Source have been disclosed to the Company in writing pursuant to this clause (g). As used in this Section 6.2, the terms "employee benefit plan," "governmental plan," "party in interest" and "separate account" shall have the respective meanings assigned to such terms in Section 3 of ERISA. SECTION 7. INFORMATION AS TO ISSUER. Section 7.1. Financial and Business Information. The Issuer shall deliver to each holder that is an Institutional Investor: (a) Notice of Default or Event of Default -- promptly, and in any event within five Business Days after a Responsible Officer of the Issuer 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(f), a written notice specifying the nature and period of existence thereof and what action the Issuer is taking or proposes to take with respect thereto; (b) Notices from Governmental Authority -- promptly, and in any event within 30 days of receipt thereof, copies of any notice to the Issuer 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; (c) Requested Information -- with reasonable promptness, such other data and information relating to the business, operations, affairs, financial condition, assets or properties of the Issuer or relating to the ability of the Issuer to perform its obligations hereunder and under the Notes as from time to time may be reasonably requested by any such holder of Notes. Section 7.2. Officer's Certificate. The Issuer shall cause each set of financial statements delivered to a holder pursuant to Section 3.1(a) or Section 3.1(b) of the Guaranty Agreement to be accompanied by a certificate of a Senior Financial Officer of the Company setting forth: -9- (a) Covenant Compliance -- the information (including detailed calculations) required in order to establish whether the Issuer was in compliance with the requirements of Section 10.1 through Section 10.8 hereof, inclusive, and that no Event of Default described in Section 11(d) hereof was in existence, during the quarterly or annual period covered by the statements then being furnished (including with respect to each such Section, where applicable, the calculations of the maximum or minimum amount, ratio or percentage, as the case may be, permissible under the terms of such Section and the calculation of the amount, ratio or percentage then in existence); and (b) Event of Default -- a statement that such officer has reviewed the relevant terms hereof and has made, or caused to be made, under his or her supervision, a review of the transactions and conditions of the Company and its Subsidiaries from the beginning of the quarterly or annual period covered by the statements then being furnished to the date of the certificate and that such review shall not have disclosed the existence during such period of any condition or event that constitutes a Default or an Event of Default or, if any such condition or event existed or exists (including, without limitation, any such event or condition resulting from the failure of the Company or any Subsidiary to comply with any Environmental Law), specifying the nature and period of existence thereof and what action the Company shall have taken or proposes to take with respect thereto. Section 7.3. Inspection. The Issuer shall permit, and shall cause the Company and its Subsidiaries to permit, the representatives of each holder that is an Institutional Investor: (a) No Default -- if no Default or Event of Default then exists, at the expense of such holder and upon reasonable prior notice to the Company, to visit the principal executive office of the Company, to discuss the affairs, finances and accounts of the Company and its Subsidiaries with the Company's officers and (with the consent of the Company, which consent the Issuer will not permit to be unreasonably withheld) its independent chartered accountants, and (with the consent of the Company, which consent the Issuer will not permit to be unreasonably withheld) to visit the other offices and properties of the Company and each Subsidiary, all at such reasonable times during business hours and as often as may be reasonably requested in writing; and (b) Default -- if a Default or Event of Default then exists, at the expense of the Issuer to visit and inspect any of the offices or properties of the Company or any Subsidiary, to examine all their respective books of account, records, reports and other papers, to make copies and extracts therefrom, and to discuss their respective affairs, finances and accounts with their respective officers and independent chartered accountants (and by this provision the Issuer authorizes said accountants to discuss the affairs, finances and accounts of the Issuer and its Subsidiaries), all at such times and as often as may be requested. SECTION 8. PREPAYMENT OF THE NOTES. Section 8.1. Required Prepayments. On April 4 of each year, beginning April 4, 2011 through and including April 4, 2015, the Issuer will pay U.S.$12,500,000 in principal amount (or -10- such lesser principal amount as shall then be outstanding) of the Notes at par and without payment of the Make-Whole Amount or any premium, together with interest accrued thereon. The entire principal amount of the Notes shall become due and payable on April 4, 2016. In the case of each required prepayment of the Notes pursuant to this Section 8.1, the principal amount of the Notes to be prepaid shall be allocated among all of the Notes to be prepaid at the time outstanding in proportion, as nearly as practical, to the respective unpaid principal amounts thereof. Any partial prepayment of the Notes pursuant to Section 8.2 shall be applied in satisfaction of the required payments of principal thereof (including the required payment of principal due upon the maturity thereof) in the inverse order of their scheduled due dates. Any purchase of the Notes permitted by Section 8.5 hereof or Section 4.4 of the Company Guaranty or prepayment of the Notes accepted under Section 8.7 shall be applied in accordance with Section 8.3 to reduce the principal amount of each required prepayment of the Notes becoming due under Section 8.1 on and after the date of such prepayment or purchase in the same proportion as the aggregate unpaid principal amount of the Notes is reduced as a result of such prepayment or purchase. Section 8.2. Optional Prepayments with Make-Whole Amount. The Issuer may, at its option, upon notice as provided below, prepay at any time all, or from time to time any part of, the Notes in an amount not less than U.S.$1,000,000 of the aggregate principal amount of the Notes then outstanding in the case of a partial prepayment, at 100% of the principal amount so prepaid, plus the Make-Whole Amount, if any, determined for the prepayment date with respect to such principal amount. The Issuer will give each holder of Notes written notice of each optional prepayment under this Section 8.2 not less than 30 days and not more than 60 days prior to the date fixed for such prepayment. Each such notice shall specify such date, the aggregate principal amount of the Notes to be prepaid on such date, the principal amount of each Note held by such holder to be prepaid (determined in accordance with Section 8.3), and the interest to be paid on the prepayment date with respect to such principal amount being prepaid, and shall be accompanied by a certificate of a Senior Financial Officer of the Issuer as to the estimated Make-Whole Amount due in connection with such prepayment (calculated as if the date of such notice were the date of the prepayment), setting forth the details of such computation. Two Business Days prior to such prepayment, the Issuer shall deliver to each holder of Notes a certificate of a Senior Financial Officer of the Issuer specifying the calculation of such Make-Whole Amount as of the specified prepayment date. Section 8.3. Allocation of Partial Prepayments. In the case of each partial prepayment of the Notes pursuant to Section 8.2, the principal amount of the Notes to be prepaid shall be allocated among all of the Notes at the time outstanding in proportion, as nearly as practicable, to the respective unpaid principal amounts thereof not theretofore called for prepayment. Purchases permitted by Section 8.5 hereof or Section 4.4 of the Company Guaranty and prepayments under Section 8.7 shall be applied only to the Notes of the holders who are participating in such prepayment or purchase. Section 8.4. Maturity; Surrender, Etc. In the case of each prepayment of Notes pursuant to this Section 8, the principal amount of each Note to be prepaid shall mature and become due and payable on the date fixed for such prepayment, together with interest on such -11- principal amount accrued to such date and the applicable Make-Whole Amount, if any. From and after such date, unless the Issuer shall fail to pay such principal amount when so due and payable, together with the interest and the applicable Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall cease to accrue. Any Note paid or prepaid in full shall be surrendered to the Issuer and cancelled and shall not be reissued, and no Note shall be issued in lieu of any prepaid principal amount of any Note. Section 8.5. Purchase of Notes. The Issuer will not, and will not permit any Subsidiary of the Issuer to, purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of the outstanding Notes except (a) upon the payment or prepayment of the Notes in accordance with the terms of this Agreement and the Notes or (b) pursuant to an offer to purchase made by the Issuer or such 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 Issuer 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. The Issuer will promptly cancel all Notes acquired by it, the Company or any Subsidiary pursuant to any payment, prepayment or purchase of Notes pursuant to any provision of this Agreement or the Company Guaranty and no Notes may be issued in substitution or exchange for any such Notes. Section 8.6. Make-Whole Amount for Notes. The term "Make-Whole Amount" shall mean, with respect to any Note, an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled Payments with respect to the Called Principal of such Note over the amount of such Called Principal, provided that the Make-Whole Amount may in no event be less than zero. For the purposes of determining the Make-Whole Amount, the following terms have the following meanings: "Called Principal" shall mean, with respect to any Note, the principal of such Note that is to be prepaid pursuant to Section 8.2 or has become or is declared to be immediately due and payable pursuant to Section 12.1, as the context requires. "Discounted Value" shall mean, with respect to the Called Principal of any Note, the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from their respective scheduled due dates to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and at a discount factor (applied on the same periodic basis as that on which interest on the Notes is payable) equal to the Reinvestment Yield with respect to such Called Principal. "Reinvestment Yield" shall mean, with respect to the Called Principal of any Note, 0.50% over the yield to maturity implied by (a) the yields reported, as of 10:00 a.m. (New York, New York time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on the display designated as "Page PX1" on the Bloomberg Financial Markets Services Screen (or such other display as may replace Page -12- PX1 on the Bloomberg Financial Markets Services Screen) for actively traded U.S. Treasury securities having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date, or (b) if such yields are not reported as of such time or the yields reported as of such time are not ascertainable, the Treasury Constant Maturity Series Yields reported, for the latest day for which such yields have been so reported as of the second Business Day preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (519) (or any comparable successor publication) for actively traded U.S. Treasury securities having a constant maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date. Such implied yield will be determined, if necessary, by (1) converting U.S. Treasury bill quotations to bond-equivalent yields in accordance with accepted financial practice and (2) interpolating linearly between (i) the actively traded U.S. Treasury security with the maturity closest to and greater than the Remaining Average Life and (ii) the actively traded U.S. Treasury security with the maturity closest to and less than the Remaining Average Life. "Remaining Average Life" shall mean, with respect to any Called Principal, the number of years (calculated to the nearest one-twelfth year) obtained by dividing (a) such Called Principal into (b) the sum of the products obtained by multiplying (1) the principal component of each Remaining Scheduled Payment with respect to such Called Principal by (2) the number of years (calculated to the nearest one-twelfth year) that will elapse between the Settlement Date with respect to such Called Principal and the scheduled due date of such Remaining Scheduled Payment. "Remaining Scheduled Payments" shall mean, with respect to the Called Principal of any Note all payments, of such Called Principal and interest thereon that would be due after the Settlement Date with respect to such Called Principal if no payment of such Called Principal were made prior to its scheduled due date, provided that if such Settlement Date is not a date on which interest payments are due to be made under the terms of the Note, then the amount of the next succeeding scheduled interest payment will be reduced by the amount of interest accrued to such Settlement Date and required to be paid on such Settlement Date pursuant to Section 8.2 or 12.1. "Settlement Date" shall mean, with respect to the Called Principal of any Note, the date on which such Called Principal is to be prepaid pursuant to Section 8.2 or has become or is declared to be immediately due and payable pursuant to Section 12.1, as the context requires. Section 8.7. Offer to Prepay Notes in the Event of a Debt Prepayment Application. (a) Notice of Debt Prepayment Application; Offer to Prepay. At least 30 days prior to the consummation of a Debt Prepayment Application, the Issuer shall have given to each holder of the Notes written notice of such impending Debt Prepayment Application. Such notice shall contain and constitute an offer to prepay the Notes as described in Section 8.7(c) and shall be accompanied by the certificate described in Section 8.7(e). -13- (b) Offer to Prepay. The offer to prepay Notes contemplated by Section 8.7(a) upon the occurrence of a Debt Prepayment Application shall be an offer to prepay, in accordance with and subject to this Section 8.7, the Notes held by the holders thereof (in this case only, "holder" in respect of any Note registered in the name of a nominee for a disclosed beneficial owner shall mean such beneficial owner) on a date specified in such offer (the "Offer Prepayment Date") which date shall be not less than 30 days and not more than 60 days after the date of such offer, in an aggregate amount equal to the product of (1) the aggregate amount of such Debt Prepayment Application multiplied by (2) the ratio of the aggregate outstanding principal amount of the Notes to the aggregate outstanding principal amount of Senior Funded Debt of the Issuer and its Subsidiaries (other than Senior Funded Debt owing to the Company, any of its Subsidiaries or any Affiliates). (c) Acceptance; Rejection. A holder of Notes may accept an offer to prepay made to such holder pursuant to this Section 8.7 by causing a notice of such acceptance or rejection to be delivered to the Issuer prior to the Offer Prepayment Date. A failure by a holder of Notes to so respond to an offer to prepay shall be deemed to constitute a rejection of such offer by such holder. (d) Prepayment. Prepayment of the Notes to be prepaid pursuant to this Section 8.7 shall be in the amount set forth in Section 8.7(b), together with interest on such Notes accrued to the date of prepayment. The prepayment pursuant to an offer to prepay any Notes shall be made on the Offer Prepayment Date for such offer. (e) Officer's Certificate. Each offer to prepay Notes pursuant to this Section 8.7 shall be accompanied by a certificate, executed by a Responsible Officer of the Issuer and dated the date of such offer, specifying (i) the Offer Prepayment Date for such offer, (ii) that such offer is made pursuant to Section 8.7, (iii) the principal amount of each Note offered to be prepaid, (iv) the interest that would be due on each Note offered to be prepaid, accrued to the Offer Prepayment Date for such offer, (v) whether or not the conditions of this Section 8.7 have been fulfilled by the Issuer, and (vi) in reasonable detail, the nature and date Asset Disposition (as defined in the Company Guaranty) giving rise to such offer and the Net Proceeds Amount (as defined in the Company Guaranty) received in connection therewith. Section 8.8. Payments Free and Clear of Taxes. (a) The Issuer, for the benefit of the holders, agrees that in the event payments, if any, made by the Issuer hereunder or in respect of the Notes 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 Issuer 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 Agreement or the Notes after imposition of any such Relevant Tax shall be not less than the amounts specified in this 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 Issuer shall not be obliged to pay such -14- 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 members of the Issuer or 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 Issuer) 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 Issuer 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 such Forms or instructions shall not be in the English language, an English translation thereof); and provided further that in no event shall the Issuer 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 Issuer 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 Issuer of any Relevant Tax in respect of any payment under the Notes or this Agreement, the Issuer 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 of payment 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. -15- (c) If the Issuer has made a payment to or on account of any holder of a Note pursuant to Section 8.9(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 or credit 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 Issuer (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 Issuer. 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 Issuer or any other Person other than as shall be necessary to permit the Issuer to determine whether the payment of any Tax Indemnity Amount would be required to be made pursuant to the provisions of this Section 8.9; provided, however, no holder shall be obligated to disclose any of its tax returns to the Issuer or any other Person. SECTION 9. AFFIRMATIVE COVENANTS. The Issuer covenants that, so long as any of the Notes are outstanding: Section 9.1. Compliance with Company Guaranty Affirmative Covenants. The Issuer will, and will cause each of its Subsidiaries to, comply with each provision of Section 3 of the Company Guaranty, mutatis mutandis. Section 9.2. Notes to Rank Pari Passu. The Notes and all other obligations of the Issuer under this Agreement shall rank at least pari passu with all other present and future unsecured Senior Debt (actual or contingent) of the Issuer which is not expressed to be subordinate or junior in rank to any other unsecured Senior Debt of the Issuer. Section 9.2. Foreign Qualification. Within 10 Business Days of Closing, the Issuer shall have become qualified to do business in the State of its principal office as a foreign limited partnership and shall have delivered to each holder of the Notes a certificate of good standing from the Secretary of State of such State evidencing such foreign qualification. SECTION 10. NEGATIVE COVENANTS. The Issuer covenants that, so long as any of the Notes are outstanding: Section 10.1. Limitation on Subsidiary Debt. The Issuer will not, at any time, permit any Subsidiary to, directly or indirectly, create, incur, assume, guarantee, have outstanding, or otherwise become or remain directly or indirectly liable with respect to any Debt, nor will the Issuer suffer any Subsidiary to have any Debt, other than: (a) Debt of a Subsidiary outstanding on the date of this Agreement so long as the aggregate principal amount of all Debt outstanding under this clause (a), together with the outstanding principal of all Debt secured by Liens permitted under Section 10.3(f), -16- does not exceed U.S.$15,000,000 at any time, and any extension, renewal or refunding of any Debt permitted under this clause (a), provided that (1) the principal amount thereof is not increased in connection with such extension, renewal or refunding and (2) no Default or Event of Default shall exist at the time of such extension, renewal or refunding; (b) Debt of a Subsidiary owed to the Company or a Wholly-Owned Subsidiary; (c) Debt of a Subsidiary outstanding at the time such Subsidiary becomes a Subsidiary (such time referred to hereinafter as the "Acquisition Date"), provided that (1) such Debt shall not have been incurred in contemplation of such Subsidiary becoming a Subsidiary, (2) immediately after such Subsidiary becomes a Subsidiary no Default or Event of Default shall exist, and any extension, renewal or refunding of such Debt, provided, that (i) the principal amount thereof is not increased in connection with such extension, renewal or refunding, (ii) no Default or Event of Default shall exist at the time of such extension, renewal or refunding and (iii) such extended, renewed or refunded Debt is not outstanding beyond the time provided to in clause (3) of this clause (c)], and (3) all of such Debt of any such Subsidiary, and any extension, renewal or refunding of such Debt of any such Subsidiary, not secured by Liens permitted under Section 10.3 is, on or before the date which is 12 months after the Acquisition Date with respect to such Subsidiary, either (i) assumed by the Company or the Issuer, and such Subsidiary is released of all obligations thereunder, or (ii) refinanced with Debt permitted to be issued and outstanding under this Agreement other than pursuant to this clause (c); (d) Debt of a Subsidiary (other than the Issuer) in addition to that otherwise permitted by the provisions of this Section 10.1; provided that on the date such Subsidiary incurs or otherwise becomes liable with respect to any such additional Debt and immediately after giving effect thereto and to the concurrent retirement of any other Debt (1) no Default or Event of Default (including, without limitation, under Section 11(d) hereof) shall exist, and (2) such Debt can be incurred within the applicable limitations provided in Section 10.2; and (e) Debt of the Issuer in addition to that otherwise permitted by the provisions of this Section 10.1; provided that on the date the Issuer incurs or otherwise becomes liable with respect to any such additional Debt and immediately after giving effect thereto and to the concurrent retirement of any other Debt no Default or Event of Default shall exist (including, without limitation, under Section 11(d) hereof). Section 10.2. Limitation on Priority Debt. The Issuer will not, at any time, permit Priority Debt to exceed, or suffer Priority Debt to exist in excess of, 10% of Consolidated Total Capitalization, provided that at no time shall any such Priority Debt constitute Designated Debt unless (x) the Notes and the Company Guaranty are secured and guaranteed equally and ratably with such Designated Debt pursuant to documentation (including amendments to this Agreement and the Company Guaranty) in form and substance satisfactory to the Required Holder(s), and (y) the holders of such Designated Debt shall have entered into an intercreditor agreement with the holders that is in form and substance satisfactory to the Required Holder(s). -17- Section 10.3. Limitation on Liens. The Issuer will not, and will not permit the Company or any Subsidiary to, directly or indirectly create, incur, assume or permit to exist (upon the happening of a contingency or otherwise), nor will the Issuer suffer to exist, any Lien on or with respect to any property or asset (including, without limitation, any document or instrument in respect of goods or accounts receivable) of the Company or any such Subsidiary, whether now owned or held or hereafter acquired, or any income or profits therefrom or assign or otherwise convey any right to receive income or profits, except: (a) Liens for taxes, assessments or other governmental charges or levies which are not yet due and payable or the payment of which is not at the time required by Section 3.5 of the Company Guaranty; (b) statutory Liens of landlords, undetermined or inchoate Liens and other Liens imposed by law such as Liens of carriers, warehousemen, mechanics, materialmen and other similar Liens, in each case, incurred in the ordinary course of business for sums not yet due and payable or the payment of which is not at the time required by Section 3.5 of the Company Guaranty; (c) Liens (other than any Lien imposed by ERISA, the Income Tax Act (Canada), the Pension Benefits Standards Act, 1985 (Canada) and all other applicable Canadian Federal and provincial statutes or regulations governing pension plans) incurred or deposits made in the ordinary course of business (1) in connection with workers' compensation, unemployment insurance, other types of social security or retirement benefits or insurance regulatory requirements or (2) to secure (or to obtain letters of credit that secure) the performance of tenders, statutory obligations, surety bonds, appeal bonds, bids, leases (other than Capital Leases), performance bonds, purchase, construction or sales contracts and other similar obligations, in each case not incurred or made in connection with the borrowing of money, the obtaining of advances or credit or the payment of the deferred purchase price of property; (d) any attachment or judgment Lien, unless the judgment it secures shall not, within 60 days after the entry thereof, have been discharged or execution thereof stayed pending appeal, or shall not have been discharged within 60 days after the expiration of any such stay; (e) Liens on property or assets of a Subsidiary securing Debt owing to the Company or to a Wholly-Owned Subsidiary; (f) Liens set forth on Schedule 10.4 existing on the date of the Closing securing Debt not exceeding in the aggregate principal amount U.S.$15,000,000; (g) leases or subleases granted to others, easements, rights-of-way, restrictions and other similar charges or encumbrances or minor survey exceptions, in each case incidental to, and not interfering with, the ordinary conduct of the business of the Company or any of its Subsidiaries, provided that such Liens do not, in the aggregate, materially detract from the value of such property; -18- (h) any Lien created to secure all or any part of the purchase price, or to secure Debt incurred or assumed to pay all or any part of the purchase price or cost of construction, of property (or any improvement thereon) acquired or constructed by the Company or a Subsidiary after the date of the Closing, provided that (1) any such Lien shall extend solely to the item or items of such property (or improvement thereon) so acquired or constructed and, if required by the terms of the instrument originally creating such Lien, other property (or improvement thereon) which is an improvement to or is acquired for specific use in connection with such acquired or constructed property (or improvement thereon) or which is real property being improved by such acquired or constructed property (or improvement thereon), (2) the principal amount of the Debt secured by any such Lien shall at no time exceed an amount equal to the lesser of (i) the cost to the Company or such Subsidiary of the property (or improvement thereon) so acquired or constructed and (ii) the Fair Market Value (as determined in good faith by one or more officers of the Company to whom authority to enter into the subject transaction has been delegated by the board of directors of the Company) of such property (or improvement thereon) at the time of such acquisition or construction, (3) any such Lien shall be created contemporaneously with, or within 12 months after, the acquisition or construction of such property, and (4) at the time of the incurrence of the Debt secured by such Liens and after giving effect thereto, no Default or Event of Default (including, without limitation, under Section 11(d) hereof) shall exist; (i) any Lien existing on property of a Person immediately prior to its being consolidated with or merged into the Company or a Subsidiary or its becoming a Subsidiary, or any Lien existing on any property acquired by the Company or any Subsidiary at the time such property is so acquired (whether or not the Debt secured thereby shall have been assumed), provided that (1) no such Lien shall have been created or assumed in contemplation of such consolidation or merger or such Person's becoming a Subsidiary or such acquisition of property, (2) each such Lien shall extend solely to the item or items of property so acquired and, if required by the terms of the instrument originally creating such Lien, other property which is an improvement to or is acquired for specific use in connection with such acquired property and (3) the aggregate amount of all Debt secured by such Liens shall not cause an Event of Default under Section 11(d) hereof; (j) any Lien renewing, extending or refunding any Lien permitted by paragraphs (f), (h) or (i) of this Section 10.3, provided that (1) the principal amount of Debt secured by such Lien immediately prior to such extension, renewal or refunding is not increased or the maturity thereof reduced, (2) such Lien is not extended to any other property and (3) immediately after such extension, renewal or refunding no Default or Event of Default would exist; -19- (k) reservations, conditions, limitations and exceptions contained in or implied by statute in the original disposition from the Crown and grants made by the Crown of interests so reserved or excepted; and (l) other Liens not otherwise permitted by paragraphs (a) through (k), inclusive, of this Section 10.3, provided that the Debt secured by such Liens shall be permitted by the limitation set forth in Section 10.2 at the time that the Lien securing such Debt is created and, at the time of and after giving effect to the incurrence of such Debt, no Default or Event of Default (including, without limitation, under Section 11(d) hereof) shall exist. Any Person that becomes a Subsidiary after the date of the Closing shall, for all purposes of this Section 10.3, be deemed to have created or incurred, at the time it becomes a Subsidiary, all outstanding Liens of such Person immediately after it becomes a Subsidiary, and any Person extending, renewing or refunding any Debt secured by any Lien shall be deemed to have incurred such Lien at the time of such extension, renewal or refunding. Section 10.4. Merger, Consolidation, Etc. The Issuer will not, and will not permit the Company or any Subsidiary to, consolidate with or merge with any other corporation or convey, transfer or lease substantially all of its assets in a single transaction or series of transactions to any Person (except that a Subsidiary of the Company (other than the Issuer) may (x) consolidate, merge or amalgamate with, or convey, transfer or lease substantially all of its assets in a single transaction or series of transactions to, the Company or a Wholly-Owned Subsidiary of the Company, as applicable, and (y) convey, transfer or lease all of its assets in compliance with the provisions of Section 10.5 or 10.6), nor will the Issuer suffer any such consolidation, amalgamation, merger, conveyance, transfer or lease to occur, provided that the foregoing restrictions do not apply to: (a) the consolidation, amalgamation or merger of the Company with, or the conveyance, transfer or lease of substantially all of the assets of the Company in a single transaction or series of transactions to, any Person, so long as: (1) the successor formed by such consolidation or amalgamation or the survivor of such merger or the Person that acquires by conveyance, transfer or lease substantially all of the assets of the Company as an entirety, as the case may be (the "Successor Entity"), shall be a solvent legal entity organized and existing under the laws of the United States or any State thereof (including the District of Columbia) or Canada or any Province thereof; (2) if the Company is not the Successor Entity, (1) the Successor Entity shall have executed and delivered to each holder its assumption of the due and punctual performance and observance of each covenant and condition of the Company Guaranty (pursuant to such agreements and instruments as shall be reasonably satisfactory to the Required Holders) and (2) the Successor Entity shall have caused to be delivered to each holder an opinion of counsel of United States or Canadian national standing (and not an employee of the Company) or other counsel reasonably satisfactory to the Required Holders, to the effect that all -20- agreements or instruments effecting such assumption are enforceable in accordance with their terms and comply with the terms hereof; and (3) immediately after giving effect to such transaction, no Default or Event of Default would exist. No such conveyance, transfer or lease of substantially all of the assets of the Company shall have the effect of releasing the Company or any Successor Entity from its liability under the Company Guaranty; and (b) the consolidation, amalgamation or merger of the Issuer with, or the conveyance, transfer or lease of substantially all of the assets of the Issuer in a single transaction or series of transactions to, any Wholly-Owned Subsidiary, so long as: (1) the successor formed by such consolidation or amalgamation or the survivor of such merger or the Wholly-Owned Subsidiary that acquires by conveyance, transfer or lease substantially all of the assets of the Issuer, as the case may be, as an entirety, as the case may be (the "Successor Subsidiary"), shall be a solvent corporation organized and existing under the laws of the United States or any State thereof (including the District of Columbia); (2) if the Issuer is not the Successor Subsidiary, (1) the Successor Subsidiary shall have executed and delivered to each holder its assumption of the due and punctual performance and observance of each covenant and condition of this Agreement and the Notes (pursuant to such agreements and instruments as shall be reasonably satisfactory to the Required Holders) and (2) the Successor Subsidiary shall have caused to be delivered to each holder an opinion of counsel of United States national standing (and not an employee of the Company or the Issuer) or other counsel reasonably satisfactory to the Required Holders, to the effect that all agreements or instruments effecting such assumption are enforceable in accordance with their terms and comply with the terms hereof; and (3) immediately after giving effect to such transaction, no Default or Event of Default would exist. No such conveyance, transfer or lease of substantially all of the assets of the Issuer shall have the effect of releasing the Issuer or any Successor Subsidiary from its liability under this Agreement or the Notes. Section 10.5. Sale of Assets, Etc. Except as permitted under Section 10.4, Section 10.6 and Section 10.7, the Issuer will not, and will not permit the Company or any Subsidiary to, make any Asset Disposition, nor will the Issuer permit any Asset Disposition to occur, unless: (a) in the good faith opinion of the Company, the Asset Disposition is in exchange for consideration having a Fair Market Value at least equal to that of the property exchanged and is in the best interest of the Issuer, the Company or such Subsidiary; -21- (b) immediately after giving effect to the Asset Disposition, no Default or Event of Default would exist; and (c) subject to the following paragraph, immediately after giving effect to the Asset Disposition the Disposition Value of all property that was the subject of any Asset Disposition occurring in the immediately preceding period of 12 consecutive months would not exceed 15% of Consolidated Total Assets as of the end of the then most recently ended fiscal quarter of the Company. If the Net Proceeds Amount for any Transfer is applied to a Debt Prepayment Application or a Property Reinvestment Application, in either case, within 12 months after such Transfer, then such Transfer, only for the purpose of determining compliance with subsection (c) of this Section 10.5 as of a date on or after the Net Proceeds Amount is so applied, shall be deemed not to be an Asset Disposition, provided that, in connection with any such Debt Prepayment Application, the Issuer complies with Section 8.7. Notwithstanding the preceding sentence, the Company shall not be permitted to apply the Net Proceeds Amount for any Transfer to a Debt Prepayment Application if, as a result thereof, the Company will have prepaid more than 25% of the original principal amount of the Notes within five years from the date of the Closing. Section 10.6. Sale-and-Leasebacks. The Issuer will not, and will not permit the Company or any Subsidiary to, enter into any Sale-and-Leaseback Transaction with respect to any property more than 180 days following the acquisition or occupancy of such property by the Issuer, the Company or such Subsidiary, whichever is later, nor will the Issuer suffer any such Sale and Leaseback Transaction to occur, unless: (a) the term of the lease in respect of such Sale-and-Leaseback Transaction, including all renewal terms, shall not exceed three years; (b) such Sale-and-Leaseback Transaction constitutes a sale by a Subsidiary to the Company or by the Company to a Wholly-Owned Subsidiary; (c) the Net Proceeds Amount received by the Issuer, the Company or such Subsidiary in respect of such Sale-and-Leaseback Transaction is applied within 12 months of the consummation thereof to a Debt Prepayment Application or a Property Reinvestment Application, provided that such Sale-and-Leaseback Transaction satisfies the requirements of Section 10.5 including, without limitation, the requirement that, in connection with any Debt Prepayment Application of the Net Proceeds Amount from any such Sale-and-Leaseback Transaction, the Issuer comply with Section 8.7; or (d) immediately after giving effect thereto, the aggregate amount of Priority Debt does not exceed 10% of Consolidated Total Capitalization determined at such time and no Default or Event of Default would exist. Section 10.7. Disposal of Ownership of a Subsidiary. The Issuer will not, and will not permit the Company or any Subsidiary to, sell or otherwise dispose of any Subsidiary Shares, nor will the Issuer, or will the Issuer permit any Subsidiary to, issue, sell or otherwise dispose of any shares of its own share capital, nor will the Issuer suffer any such sale, disposition or issuance to occur, provided that the foregoing restrictions do not apply to: -22- (a) the issue of directors' qualifying shares by any Subsidiary; (b) any Transfer of Subsidiary Shares constituting a Transfer described in clause (a) of the definition of "Asset Disposition"; and (c) the Transfer of the Subsidiary Shares of a Subsidiary of the Company owned by the Company and its other Subsidiaries; provided that such Transfer satisfies the requirements of Section 10.5 including, without limitation, the requirement that, in connection with any Debt Prepayment Application of the Net Proceeds Amount from any such Transfer, the Issuer comply with Section 8.7. Section 10.8. Nature of Business. The Issuer 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 10.9. Transactions with Affiliates. The Issuer 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 Issuer's or such Subsidiary's business and upon fair and reasonable terms no less favorable to the Issuer or such Subsidiary than would be obtainable in a comparable arm's-length transaction with a Person not an Affiliate. Section 10.10. Sales of Receivables. The Issuer covenants that it will not, and will not permit the Company or any Subsidiary to, discount, pledge or sell (with or without recourse) any of its accounts or notes receivable, nor will the Issuer suffer any such discount, pledge or sale to occur. Section 10.11. Most Favored Lender Status. The Issuer 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 Issuer or such Subsidiary has offered to make an amendment to this Agreement, in form and substance satisfactory to the Required Holder(s), to add to or amend this Agreement to contain such Additional Covenants or Additional Defaults; provided, however, in the event that the Issuer 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 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 Issuer 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 Agreement in form and substance satisfactory to the Required Holder(s) evidencing the amendments of this Agreement to include such Additional -23- 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 10.11, but shall merely be for the convenience of the parties hereto. Section 10.12. Restricted Payments. (a) The Issuer covenants that it will not: (i) Declare or pay any dividends or distributions, either in cash or property, on or in respect of any of its Equity Interests of any class (except dividends or other distributions payable solely in Equity Interests of the Issuer); (ii) Directly or indirectly, or through any Subsidiary or through any Affiliate of the Issuer, purchase, redeem or retire any of its Equity Interests of any class or any warrants, rights or options to purchase or acquire any of its Equity Interests (other than in exchange for or out of the net cash proceeds to the Issuer from the substantially concurrent issue or sale of Equity Interests of the Issuer or warrants, rights or options to purchase or acquire any of its Equity Interests); or (iii) Make any other payment or distribution, either directly or indirectly or through any Subsidiary, in respect of its Equity Interests; (such declarations or payments of dividends, purchases, redemptions or retirements of Equity Interests and warrants, rights or options and all such other payments or distributions being herein collectively called "Restricted Payments"), if immediately prior to or immediately after giving effect to any such Restricted Payment, a Default or Event of Default would exist. Section 10.13. Limitations on Restrictive Agreements. The Issuer covenants that it will not, and will not permit any Subsidiary to, enter into, or suffer to exist, any agreement with any Person which, directly or indirectly, prohibits or limits the ability of any Subsidiary to (a) pay dividends or make other distributions to the Issuer or prepay any Debt owed to the Issuer or (b) transfer any of its properties or assets to the Issuer (other than with respect to assets subject to Liens permitted by Section 10.3). SECTION 11. EVENTS OF DEFAULT. An "Event of Default" shall exist if any of the following conditions or events shall occur and be continuing: (a) the Issuer defaults in the payment of any principal or Make-Whole Amount, if any, on any Note when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration or otherwise; or (b) the Issuer defaults in the payment of any interest on any Note or the Issuer defaults in the payment of any Tax Indemnity Amount under Section 8.8, in either case for more than five Business Days after the same becomes due and payable; or (c) (I) the Company defaults in the performance of or compliance with any term contained in (1) Section 4.5 of the Company Guaranty with respect to any provision in Section 10.1 or 10.2 of this Agreement, inclusive, or (2) Section 4.1 through 4.4 of the -24- Company Guaranty, inclusive, or Section 4.5 of the Company Guaranty with respect to any provision in Section 10.3 through 10.13 of this Agreement, inclusive, and, in the case of this clause (2), such default is not remedied within 10 Business Days after the earlier of (i) a Responsible Officer of the Company obtaining actual knowledge of such default and (ii) the Company receiving written notice of such default from any holder of a Note (any such written notice to be identified as a "notice of default" and to refer specifically to clause (2) of this paragraph (c)(I)), or (II) the Issuer defaults in the performance of or compliance with any term contained in (1) Section 8.7 or Section 10.1 through 10.2, inclusive, or (2) Section 10.3 through 10.13, inclusive, and, in the case of this clause (2), such default is not remedied within 10 Business Days after the earlier of (i) a Responsible Officer of the Company or the Issuer obtaining actual knowledge of such default and (ii) the Company or Issuer receiving written notice of such default from any holder of a Note (any such written notice to be identified as a "notice of default" and to refer specifically to clause (2) of this paragraph (c)(II); or (d) Any of the following shall occur: (1) Consolidated Net Worth shall at any time be less than the sum of (a) U.S.$325,000,000, plus (b) an aggregate amount equal to 25% of Consolidated Net Income (but, in each case, only if a positive number) for each completed fiscal quarter of the Company beginning with the fiscal quarter ended March 31, 2005; or (2) Consolidated Debt shall at any time exceed 45% of Consolidated Total Capitalization; or (3) The Minimum Interest Coverage Ratio at any time is less than 3.0 to 1.0; or (e) the Company defaults in the performance of or compliance with any term of the Company Guaranty (other than those referred to in paragraph (c)(I) of this Section 11 or Section 4.5 of the Company Guaranty as it relates to Section 11(d)) or the Issuer defaults in the performance of or compliance with any term contained herein (other than those referred to in paragraphs (a), (b), (c)(II) or (d) of this Section 11) and such default is not remedied within 30 days after the earlier of (1) a Responsible Officer of the Company or the Issuer obtaining actual knowledge of such default and (2) the Company or the Issuer receiving written notice of such default from any holder of a Note (any such written notice to be identified as a "notice of default" and to refer specifically to this paragraph (e) of Section 11); or (f) any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in the Company Guaranty or in any writing furnished in connection with the transactions contemplated by the Company Guaranty, this Agreement or such writing proves to have been false or incorrect in any material respect on the date as of which made or any representation or warranty made in writing by or on behalf of the Issuer or by any officer of the Issuer in this Agreement or in any writing furnished in connection with the transactions contemplated hereby or thereby -25- proves to have been false or incorrect in any material respect on the date as of which made; or (g) (1) the Company, the Issuer or any other Subsidiary of the Company is in default (as principal or as guarantor or other surety) in the payment of any principal of or premium or make-whole amount or interest on any Debt that is outstanding in an aggregate principal amount of at least U.S.$5,000,000 beyond any period of grace provided with respect thereto, or (2) the Company, the Issuer or any other Subsidiary of the Company is in default in the performance of or compliance with any term of any evidence of any Debt in an aggregate outstanding principal amount of at least U.S.$5,000,000 or of any mortgage, indenture or other agreement relating thereto or any other condition exists, and as a consequence of such default or condition such Debt has become, or has been declared, due and payable before its stated maturity or before its regularly scheduled dates of payment and such declaration has not been annulled or rescinded, or (3) as a consequence of the occurrence or continuation of any event or condition (other than the passage of time or the right of the holder of Debt to convert such Debt into equity interests), the Company, the Issuer or any other Subsidiary of the Company has become obligated to purchase or repay Debt before its regular maturity or before its regularly scheduled dates of payment in an aggregate outstanding principal amount of at least U.S.$5,000,000; or (h) the Company, the Issuer or any Material Subsidiary (1) is generally not paying, or admits in writing its inability to pay, its debts as they become due, (2) files, or consents by answer or otherwise to the filing against it of, a petition for relief or reorganization or arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency, amalgamation, reorganization, moratorium or other similar law of any jurisdiction, (3) makes an assignment for the benefit of its creditors, (4) consents to the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, (5) is adjudicated as insolvent or to be liquidated or (6) takes action for the purpose of any of the foregoing; or (i) a court or governmental authority of competent jurisdiction enters an order appointing, without consent by the Company, the Issuer or any of its Material Subsidiaries, a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, or constituting an order for relief or approving a petition for relief or reorganization or any other petition in bankruptcy or for liquidation or to take advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering the amalgamation, dissolution, winding-up or liquidation of the Company, the Issuer or any Material Subsidiary, or any such petition shall be filed against the Company, the Issuer or any Material Subsidiary and such petition shall not be dismissed within 60 days; or (j) a final judgment or judgments for the payment of money resulting in liability (exclusive of amounts fully covered by valid and collectible insurance in respect thereof), aggregating in excess of U.S.$5,000,000 are rendered against one or more of the Company, the Issuer and the other Subsidiaries of the Company and which judgments are -26- not, within 60 days after entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within 60 days after the expiration of such stay; or (k) the Company Guaranty or any provision in the Company Guaranty shall at any time for any reason be terminated or cease to be valid and binding on the Company, or shall be declared to be null and void, or the validity or enforceability thereof shall be contested by the Company, or the Company shall deny that the Company has any further liability or obligation under the Company Guaranty; or (l) the Company shall at any time cease to own, directly or indirectly, 100% of all outstanding partnership interests of the Issuer; or (m) if (1) any Plan shall fail to satisfy the minimum funding standards of ERISA or the Code for any plan year or part thereof or a waiver of such standards or extension of any amortization period is sought or granted under Section 412 of the Code, (2) a notice of intent to terminate any Plan shall have been or is reasonably expected to be filed with the PBGC or the PBGC shall have instituted proceedings under ERISA Section 4042 to terminate or appoint a trustee to administer any Plan or the PBGC shall have notified the Company or any ERISA Affiliate that a Plan may become a subject of any such proceedings, (3) the aggregate "amount of unfunded benefit liabilities" (within the meaning of Section 4001(a)(18) of ERISA) under all Plans, determined in accordance with Title IV of ERISA, shall exceed U.S.$5,000,000, (4) the Company or any ERISA Affiliate shall have incurred or is reasonably expected to incur 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, (5) the Company or any ERISA Affiliate withdraws from any Multiemployer Plan or (6) the Company or any ERISA Affiliate establishes or amends any employee welfare benefit plan that provides post-employment welfare benefits in a manner that would increase the liability of the Company or any ERISA Affiliate thereunder; and any such event or events described in clauses (1) through (6) above, either individually or together with any other such event or events, could reasonably be expected to have a Material Adverse Effect. As used in Section 11(m), the terms "employee benefit plan" and "employee welfare benefit plan" shall have the respective meanings assigned to such terms in Section 3 of ERISA. SECTION 12. REMEDIES ON DEFAULT, ETC. Section 12.1. Acceleration. (a) If an Event of Default with respect to the Issuer or the Company described in paragraph (h) or (i) of Section 11 (other than an Event of Default described in clause (1) of paragraph (h) or described in clause (6) of paragraph (h) by virtue of the fact that such clause encompasses clause (1) of paragraph (h)) has occurred, all the Notes then outstanding shall automatically become immediately due and payable. (b) If any other Event of Default has occurred and is continuing, any holder or holders of not less than 51% in principal amount of the Notes at the time outstanding may at any time at its or their option, by notice or notices to the Issuer, declare all the Notes then outstanding to be immediately due and payable. -27- (c) If any Event of Default described in paragraph (a) or (b) of Section 11 has occurred and is continuing, any holder or holders of Notes at the time outstanding affected by such Event of Default may at any time, at its or their option, by notice or notices to the Issuer, declare all the Notes held by it or them to be immediately due and payable. Upon any Note becoming due and payable under this Section 12.1, whether automatically or by declaration, such Note will forthwith mature and the entire unpaid principal amount of such Note, plus (1) all accrued and unpaid interest thereon and (2) the Make-Whole Amount, if any, determined in respect of such principal amount (to the full extent permitted by applicable law), shall all be immediately due and payable, in each and every case without presentment, demand, protest or further notice, all of which are hereby waived. The Issuer acknowledges, and the parties hereto agree, that each holder has the right to maintain its investment in the Notes free from repayment by the Issuer (except as herein specifically provided for), and that the provision for payment of a Make-Whole Amount by the Issuer if the Notes are prepaid or are accelerated as a result of an Event of Default, is intended to provide compensation for the deprivation of such right under such circumstances. Section 12.2. Other Remedies. If any Default or Event of Default has occurred and is continuing, and irrespective of whether any Notes have become or have been declared immediately due and payable under Section 12.1, the holder of any Note at the time outstanding may proceed to protect and enforce the rights of such holder by an action at law, suit in equity or other appropriate proceeding, whether for the specific performance of any agreement contained herein or in any Note, or for an injunction against a violation of any of the terms hereof or thereof, or in aid of the exercise of any power granted hereby or thereby or by law or otherwise. Section 12.3. Rescission. At any time after any Notes have been declared due and payable pursuant to clause (b) or (c) of Section 12.1, the holders of not less than 51% in principal amount of the Notes then outstanding, by written notice to the Issuer, may rescind and annul any such declaration and its consequences if (a) the Issuer has paid all overdue interest on the Notes, all principal of and Make-Whole Amount, if any, on any Notes that are due and payable and are unpaid other than by reason of such declaration, and all interest on such overdue principal and Make-Whole Amount, if any, and (to the extent permitted by applicable law) any such overdue interest in respect of the Notes at the Default Rate, (b) all Events of Default and Defaults, other than non-payment of amounts that have become due solely by reason of such declaration, have been cured or have been waived pursuant to Section 17 and (c) no judgment or decree has been entered for the payment of any monies due pursuant hereto or to the Notes. No rescission and annulment under this Section 12.3 will extend to or affect any subsequent Event of Default or Default or impair any right consequent thereon. Section 12.4. No Waivers or Election of Remedies, Expenses, Etc. No course of dealing and no delay on the part of any holder in exercising any right, power or remedy shall operate as a waiver thereof or otherwise prejudice such holder's rights, powers or remedies. No right, power or remedy conferred by this Agreement or by any Note upon any holder shall be exclusive of any other right, power or remedy referred to herein or therein or now or hereafter available at law, in equity, by statute or otherwise. Without limiting the obligations of the Issuer under Section 15, the Issuer will pay to each holder on demand such further amount as shall be sufficient to cover all costs and expenses of such holder incurred in any enforcement or collection under this -28- Section 12, including, without limitation, reasonable attorneys' fees, expenses and disbursements. SECTION 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES. Section 13.1. Registration of Notes. The Issuer shall keep at its principal executive office a register for the registration and registration of transfers of Notes. The name and address of each holder of one or more Notes, each transfer thereof and the name and address of each transferee of one or more Notes shall be registered in such register. Prior to due presentment for registration of transfer, the Person in whose name any Note shall be registered shall be deemed and treated as the owner and holder thereof for all purposes hereof, and the Issuer shall not be affected by any notice or knowledge to the contrary. The Issuer shall give to any holder that is an Institutional Investor promptly upon request therefor, a complete and correct copy of the names and addresses of all registered holders of Notes. Section 13.2. Transfer and Exchange of Notes. Upon surrender of any Note at the principal executive office of the Issuer for registration of transfer or exchange (and in the case of a surrender for registration of transfer, duly endorsed or accompanied by a written instrument of transfer duly executed by the holder of such Note or its attorney duly authorized in writing and accompanied by the address for notices of each transferee of such Note or part thereof), the Issuer shall execute and deliver, at the Issuer's expense (except as provided below), one or more new Notes of the same series (as requested by the holder thereof) evidencing the same indebtedness in exchange therefor, in an aggregate principal amount equal to the unpaid principal amount of the surrendered Note. Each such new Note shall be payable to such Person as such holder may request and shall be substantially in the form of the Note originally issued hereunder. Each such new Note shall be dated and bear interest from the date to which interest shall have been paid on the surrendered Note or dated the date of the surrendered Note if no interest shall have been paid thereon. The Issuer may require payment of a sum sufficient to cover any stamp tax or governmental charge imposed in respect of any such transfer of Notes. Notes shall not be transferred in denominations of less than U.S.$100,000, provided that if necessary to enable the registration of transfer by a holder of its entire holding of Notes of a series one Note of such series may be in a denomination of less than U.S.$100,000. Any transferee, by its acceptance of a Note registered in its name (or the name of its nominee), shall be deemed to have made the representation set forth in Section 6.2. Section 13.3. Replacement of Notes. Upon receipt by the Issuer of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Note (which evidence shall be, in the case of an Institutional Investor, notice from such Institutional Investor of such ownership and such loss, theft, destruction or mutilation), and (a) in the case of loss, theft or destruction, of indemnity reasonably satisfactory to it (provided that if the holder of such Note is, or is a nominee for, an original Purchaser or another holder with a minimum net worth of at least U.S.$50,000,000, such Person's own unsecured agreement of indemnity shall be deemed to be satisfactory), or (b) in the case of mutilation, upon surrender and cancellation thereof, -29- the Issuer at its own expense shall execute and deliver, in lieu thereof, a new Note of the same series, dated and bearing interest from the date to which interest shall have been paid on such lost, stolen, destroyed or mutilated Note or dated the date of such lost, stolen, destroyed or mutilated Note if no interest shall have been paid thereon. SECTION 14. PAYMENTS ON NOTES. Section 14.1. Place of Payment. Subject to Section 14.2, payments of principal, Make-Whole Amount, if any, and interest becoming due and payable on the Notes shall be made in New York, New York at the principal office of JPMorgan Chase Bank in such jurisdiction. The Issuer may at any time, by notice to each holder, change the place of payment of the Notes so long as such place of payment shall be either the principal office of the Issuer in such jurisdiction or the principal office of a bank or trust company in such jurisdiction. Section14.2. Home Office Payment. So long as any Purchaser or its nominee shall be the holder of any Note, and notwithstanding anything contained in Section 14.1 or in such Note to the contrary, the Issuer will pay all sums becoming due on such Note for principal, Make-Whole Amount, if any, and interest by the method and at the address specified for such purpose for such Purchaser on Schedule A hereto or by such other method or at such other address as such Purchaser shall have from time to time specified to the Issuer in writing for such purpose, without the presentation or surrender of such Note or the making of any notation thereon, except that upon written request of the Issuer made concurrently with or reasonably promptly after payment or prepayment in full of any Note, such Purchaser shall surrender such Note for cancellation, reasonably promptly after any such request, to the Issuer at its principal executive office or at the place of payment most recently designated by the Issuer pursuant to Section 14.1. Prior to any sale or other disposition of any Note held by any Purchaser or its nominee such Person will, at such Person's election, either endorse thereon the amount of principal paid thereon and the last date to which interest has been paid thereon or surrender such Note to the Issuer in exchange for a new Note or Notes pursuant to Section 13.2. Each holder, by its acceptance of a Note, will be deemed to have agreed to be bound by and entitled to the benefits of this Section 14.2 as though it were a party to this Agreement. SECTION 15. EXPENSES, ETC. Section 15.1. Transaction Expenses. Whether or not the transactions contemplated hereby are consummated, the Issuer 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 Agreement, the Notes or the Company 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 Agreement, the Notes or the Company Guaranty or in responding to any subpoena or other legal process or informal investigative demand issued in connection with this Agreement, the Notes or the Company Guaranty, or by reason of being a holder of any Note, and (b) the reasonable costs and expenses, including reasonable financial advisors' fees, incurred in connection with the insolvency or bankruptcy of the Company, the Issuer or any other Subsidiary of the Company or in connection -30- with any work-out or restructuring of the transactions contemplated hereby, by the Notes and by the Company Guaranty. The Issuer will pay, and will save each Purchaser and each other holder of a Note 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 15.2. Survival. The obligations of the Issuer under this Section 15 will survive the payment or transfer of any Note, the enforcement, amendment or waiver of any provision of this Agreement, the Notes or the Company Guaranty, and the termination of this Agreement. SECTION 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT. All representations and warranties contained herein shall survive the execution and delivery of this Agreement and the Notes, the purchase or transfer by any Purchaser or subsequent holder of any such Note or portion thereof or interest therein and the payment of any Note, and may be relied upon by any subsequent holder of a Note, regardless of any investigation made at any time by or on behalf of any Purchaser or any subsequent holder of a Note. All statements contained in any certificate or other instrument delivered by or on behalf of the Issuer pursuant to this Agreement shall be deemed representations and warranties of the Issuer under this Agreement. Subject to the preceding sentence, this Agreement and the Notes embody the entire agreement and understanding between the Purchasers and the Issuer and supersede all prior agreements and understandings relating to the subject matter hereof. SECTION 17. AMENDMENT AND WAIVER. Section 17.1. Requirements. This Agreement and the Notes 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 Issuer (except amendments which occur pursuant to Section 4.3 of the Company Guaranty and Section 10.11 hereof) as set forth and any holder or holders of not less than 51% in principal amount of Notes at the time outstanding, except that (a) no amendment or waiver of any of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term (as it is used in any such Section), will be effective as to any holder of Notes unless consented to by such holder in writing, and (b) no such amendment or waiver may, without the written consent of the holder of each Note at the time outstanding affected thereby, (1) subject to the provisions of Section 12 relating to acceleration or rescission, change the amount or time of any prepayment or payment of principal of, or reduce the rate or change the time of payment or method of computation of interest or of the Make-Whole Amount on, the Notes, (2) change the percentage of the principal amount of the Notes the holders of which are required to consent to any such amendment or waiver, or (3) amend any of Sections 8, 11(a), 11(b), 12, 17 or 20 hereof. Section 17.2. Solicitation of Holders of Notes. (a) Solicitation. The Issuer will provide each holder of the Notes (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 or of the Notes. The Issuer will deliver executed or true and correct copies of each -31- amendment, waiver or consent effected pursuant to the provisions of this Section 17 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. (b) Payment. The Issuer 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 of Notes as consideration for or as an inducement to the entering into by such holder of Notes of any waiver or amendment of any of the terms and provisions hereof, or of the Notes unless such remuneration is concurrently paid, or security is concurrently granted, on the same terms, ratably to each holder of Notes then outstanding 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 17 by a holder of Notes 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 of Notes 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 17.3. Binding Effect, Etc. Any amendment or waiver consented to as provided in this Section 17 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 Issuer 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 Issuer 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 Agreement" and references thereto shall mean this Agreement as it may from time to time be amended or supplemented. Section 17.4. 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 Agreement or the Notes, 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, the Issuer, any other Subsidiaries of the Company or any Affiliates of the Company shall be deemed not to be outstanding. SECTION 18. 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 -32- 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 this Agreement, or at such other address as such Purchaser or its nominee shall have specified to the Issuer 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 Issuer in writing, or (3) if to the Issuer, to the Issuer at its address set forth at the beginning hereof to the attention of Marianne Paine, Chief Legal Officer, with a copy to Hub International Limited, 55 East Jackson Boulevard, Chicago, Illinois, 60604, Attention: Marianne Paine, Chief Legal Officer, or at such other address as the Issuer shall have specified to the holder of each Note in writing. Notices under this Section 18 will be deemed given only when actually received. SECTION 19. REPRODUCTION OF DOCUMENTS. This Agreement 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 of the Notes, 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. The Issuer agrees and stipulates that, 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 19 shall not prohibit the Issuer 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 20. CONFIDENTIAL INFORMATION. For the purposes of this Section 20, "Confidential Information" means information delivered to any Purchaser by or on behalf of the Company or any Subsidiary in connection with the transactions contemplated by or otherwise pursuant to this Agreement that is proprietary in nature and that was clearly marked or labeled or otherwise adequately identified when received by such Purchaser as being confidential information of the Company or such Subsidiary, provided that such term does not include information that (a) was publicly known or otherwise known to such Purchaser prior to the time of such disclosure, (b) subsequently becomes publicly known through no act or omission by such Purchaser or any Person acting on such Purchaser's behalf, (c) otherwise becomes known to such Purchaser other than through disclosure by the Company or any Subsidiary or (d) constitutes financial statements delivered to such Purchaser -33- under Section 7.1 or Section 3.1 of the Company Guaranty that are otherwise publicly available. Each Purchaser will maintain the confidentiality of such Confidential Information in accordance with procedures adopted by such Purchaser in good faith to protect confidential information of third parties delivered to such Purchaser, provided that such Purchaser may deliver or disclose Confidential Information to (1) such Purchaser's directors, trustees, officers, employees, agents, attorneys and affiliates (to the extent such disclosure reasonably relates to the administration of the investment represented by such Purchaser's Notes), (2) such Purchaser's financial advisors and other professional advisors who agree to hold confidential the Confidential Information substantially in accordance with the terms of this Section 20, (3) any other holder of any Note, (4) any Institutional Investor to which such Purchaser sells or offers to sell such Note or any part thereof or any participation therein (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by the provisions of this Section 20), (5) any Person from which such Purchaser offers to purchase any security of the Issuer or the Company (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by the provisions of this Section 20), (6) any Federal, provincial or state regulatory authority having jurisdiction over such Purchaser, (7) the National Association of Insurance Commissioners or any similar organization, or any nationally recognized rating agency that requires access to information about such Purchaser's investment portfolio or (8) any other Person to which such delivery or disclosure may be necessary or appropriate (i) to effect compliance with any law, rule, regulation or order applicable to such Purchaser, (ii) in response to any subpoena or other legal process, (iii) in connection with any litigation to which such Purchaser is a party or (iv) if an Event of Default has occurred and is continuing, to the extent such Purchaser may reasonably determine such delivery and disclosure to be necessary or appropriate in the enforcement or for the protection of the rights and remedies under such Purchaser's Notes and this Agreement. Notwithstanding anything to the contrary in this Section 20, the Issuer agrees that the holders shall not have any obligation to maintain as confidential any information with respect to the "tax treatment" and "tax structure" (in each case, within the meaning of Treasury Regulation Section 1.6011-4) of the transactions contemplated in this Agreement, the Notes and the Company Guaranty and all materials of any kind (including opinions or other tax analyses) that are provided to the holders relating to such tax treatment and tax structure. Each holder of a Note, by its acceptance of a Note, will be deemed to have agreed to be bound by and to be entitled to the benefits of this Section 20 as though it were a party to this Agreement. On reasonable request by the Issuer in connection with the delivery to any holder of a Note of information required to be delivered to such holder under this Agreement or requested by such holder (other than a holder that is a party to this Agreement or its nominee), such holder will enter into an agreement with the Issuer embodying the provisions of this Section 20. SECTION 21. SUBSTITUTION OF PURCHASER. Each Purchaser shall have the right to substitute any one of such Purchaser's Affiliates as the purchaser of the Notes that such Purchaser has agreed to purchase hereunder, by written notice to the Issuer, which notice shall be signed by both such Purchaser and such Affiliate, shall contain such Affiliate's agreement to be bound by this Agreement and shall contain a confirmation by such Affiliate of the accuracy with respect to it of the representations set forth in Section 6. Upon receipt of such notice, wherever the word "Purchaser" is used in this Agreement (other than in this Section 21), such word shall be deemed to refer to such Affiliate in lieu of such Purchaser. If such Affiliate is so substituted as a purchaser hereunder and such -34- Affiliate thereafter transfers to such Purchaser all of the Notes then held by such Affiliate, upon receipt by the Issuer of notice of such transfer, wherever the word "Purchaser" is used in this Agreement (other than in this Section 21), such word shall no longer be deemed to refer to such Affiliate, but shall refer to such Purchaser, and such Purchaser shall have all the rights of an original holder of the Notes under this Agreement. SECTION 22. SUBMISSION TO JURISDICTION, NORMAL RATES, ETC. Section 22.1. Submission to Jurisdiction. The Issuer 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 Agreement or the Notes may be litigated in such courts, and the Issuer 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 Issuer hereby irrevocably appoints, with respect to any suit or proceeding that may be initiated hereunder or under the Notes, Hub International Northeast, Inc. as the Issuer'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 General Counsel at its office located at 55 East Jackson Boulevard, Chicago, Illinois, 60604 or at such other address of Hub International Northeast, Inc. located in the State of New York, as may be designated by the Issuer by notice to each holder of Notes 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 Issuer. Nothing contained in this Section 22.1 shall affect the right of any holder of Notes 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 Issuer or to enforce a judgment obtained in the courts of any other jurisdiction. Section 22.2. Normal Rates. The principle of deemed reinvestment of interest shall not apply to any interest calculation under this Agreement or the Notes. All interest payments to be made hereunder shall be paid without allowance or deduction for deemed reinvestment or otherwise, before and after demand, default and judgment. The rates of interest specified in this Agreement and the Notes are intended to be nominal rates and not effective rates and any interest calculated hereunder shall be calculated using the nominal rate method and not the effective rate method of calculation. SECTION 23. MISCELLANEOUS. Section 23.1. Successors and Assigns. All covenants and other agreements contained in this Agreement 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 23.2. Payments Due on Non-Business Days. Anything in this Agreement or the Notes 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 -35- succeeding Business Day without including the additional days elapsed in the computation of the interest payable on such next succeeding Business Day. Section 23.3. Severability. Any provision of this Agreement 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 23.4. 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 Agreement, the same shall be done in accordance with GAAP, to the extent applicable, except where such principles are inconsistent with the requirements of this Agreement. Section 23.5. Counterparts. This Agreement 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 23.6. Currency. All moneys referred to in this Agreement and the Notes shall mean money which at the time is lawful money of the United States of America. Section 23.7. Governing Law. This Agreement 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. * * * * * -36- The execution hereof by the Purchasers shall constitute a contract among the Issuer and the Purchasers for the uses and purposes hereinabove set forth. Very truly yours, HUB INTERNATIONAL LIMITED PARTNERSHIP By: HUB International Partners Limited, its general partner By: /s/ W. Kirk James ------------------------------------ Name: W. Kirk James Title: VP and Secretary The foregoing is hereby agreed to as of the date thereof. THE PRUDENTIAL INSURANCE COMPANY OF AMERICA By: /s/ ----------------------------- Vice President PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY By: /s/ ----------------------------- Vice President GIBRALTAR LIFE INSURANCE CO., LTD. By: Prudential Investment Management (Japan), Inc., as Investment Manager By: Prudential Investment Management, Inc., as Sub-Adviser By: /s/ ----------------------------- Vice President RGA REINSURANCE COMPANY By: Prudential Private Placement Investors, L.P. (as Investment Advisor) By: Prudential Private Placement Investors, Inc. (as its General Partner) By: /s/ ----------------------------- Vice President UNITED OF OMAHA LIFE INSURANCE COMPANY By: Prudential Private Placement Investors, L.P. (as Investment Advisor) By: Prudential Private Placement Investors, Inc. (as its General Partner) By: /s/ ----------------------------- Vice President -2- INFORMATION RELATING TO PURCHASERS
AGGREGATE PRINCIPAL AMOUNT OF NOTES TO BE NOTE PURCHASED DENOMINATION(S) -------------- -------------- THE PRUDENTIAL INSURANCE COMPANY OF AMERICA $53,875,000.00 $29,050,000.00 $20,050,000.00 (1) All payments on account of Notes held by $ 4,775,000.00 such purchaser shall be made by wire transfer of immediately available funds for credit to: Account Name: Prudential Managed Portfolio Account No.: P86188 (please do not include spaces) (in the case of payments on account of the Note originally issued in the principal amount of $29,050,000.00 Account Name: The Prudential - Privest Portfolio Account No.: P86189 (please do not include spaces) (in the case of payments on account of the Note originally issued in the principal amount of $20,050,000.00 Account Name: Privest Plus Account No.: P86288 (please do not include spaces) (in the case of payments on account of the Note originally issued in the principal amount of $4,775,000.00 JPMorgan Chase Bank New York, NY ABA No.: 021-000-021 Each such wire transfer shall set forth the name of the Company, a reference to "6.43% Senior Notes due April 4, 2016, Security No. INV10757, PPN _____" and the due date and application (as among principal, interest and Make-Whole Amount) of the payment being made.
SCHEDULE A (to Note Purchase Agreement) (2) Address for all notices relating to payments: The Prudential Insurance Company of America c/o Investment Operations Group Gateway Center Two, 10th Floor 100 Mulberry Street Newark, NJ 07102-4077 Attention: Manager, Billings and Collections (3) Address for all other communications and notices: The Prudential Insurance Company of America c/o Prudential Capital Group Two Prudential Plaza 180 North Stetson, Suite 5600 Chicago, IL 60601-6716 Attention: Managing Director (4) Recipient of telephonic prepayment notices: Manager, Trade Management Group Telephone: (973) 367-3141 Facsimile: (888) 889-3832 (5) Address for Delivery of Notes: Send physical security by nationwide overnight delivery service to: Prudential Capital Group Two Prudential Plaza 180 North Stetson, Suite 5600 Chicago, IL 60601-6716 Attention: Wiley S. Adams Telephone: (312) 540-4204 (6) Tax Identification No.: 22-1211670

A-2
AGGREGATE PRINCIPAL AMOUNT OF NOTES TO BE NOTE PURCHASED DENOMINATION(S) -------------- -------------- PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY $ 1,400,000.00 $ 1,400,000.00 (1) All payments on account of Notes held by such purchaser shall be made by wire transfer of immediately available funds for credit to: JPMorgan Chase Bank New York, NY ABA No.: 021-000-021 Account No.: P86202 (please do not include spaces) Account Name: Pruco Life of New Jersey Private Placement Each such wire transfer shall set forth the name of the Company, a reference to "6.43% Senior Notes due April 4, 2016, Security No. INV10757, PPN _____", and the due date and application (as among principal, interest and Make-Whole Amount) of the payment being made. (2) Address for all notices relating to payments: Pruco Life Insurance Company of New Jersey c/o The Prudential Insurance Company of America c/o Investment Operations Group Gateway Center Two, 10th Floor 100 Mulberry Street Newark, NJ 07102-4077 Attention: Manager, Billings and Collections (3) Address for all other communications and notices: Pruco Life Insurance Company of New Jersey c/o Prudential Capital Group Two Prudential Plaza 180 North Stetson, Suite 5600 Chicago, IL 60601-6716
A-3 Attention: Managing Director (4) Recipient of telephonic prepayment notices: Manager, Trade Management Group Telephone: (973) 367-3141 Facsimile: (888) 889-3832 (5) Address for Delivery of Notes: Send physical security by nationwide overnight delivery service to: Prudential Capital Group Two Prudential Plaza 180 North Stetson, Suite 5600 Chicago, IL 60601-6716 Attention: Wiley S. Adams Telephone: (312) 540-4204 (6) Tax Identification No.: 22-2426091

A-4
AGGREGATE PRINCIPAL AMOUNT OF NOTES NOTE TO BE PURCHASED DENOMINATION(S) --------------- --------------- GIBRALTAR LIFE INSURANCE CO., LTD. $7,050,000.00 $7,050,000.00 (1) All principal, interest and Make-Whole Amount payments on account of Notes held by such purchaser shall be made by wire transfer of immediately available funds for credit to: JPMorgan Chase Bank New York, NY ABA No.: 021-000-021 Account No.: P86246 (please do not include spaces) Account Name: Gibraltar Private Each such wire transfer shall set forth the name of the Company, a reference to "6.43% Senior Notes due April 4, 2016, Security No. INV10757, PPN _____" and the due date and application (as among principal, interest and Make-Whole Amount) of the payment being made. (2) All payments, other than principal, interest or Make-Whole Amount, on account of Notes held by such purchaser shall be made by wire transfer of immediately available funds for credit to: JPMorgan Chase Bank New York, NY ABA No. 021-000-021 Account No. 304199036 Account Name: Prudential International Insurance Service Company Each such wire transfer shall set forth the name of the Company, a reference to "6.43% Senior Notes due April 4, 2016, Security No. INV10757, PPN _____" and the due date and application (e.g., type of fee) of the payment being made. (3) Address for all notices relating to payments:
A-5 The Gibraltar Life Insurance Co., Ltd. 2-13-10, Nagatacho Chiyoda-ku, Tokyo 100-8953, Japan Telephone: 81-3-5501-6680 Facsimile: 81-3-5501-6432 E-mail: yoshiki.saito@gib-life.co.jp Attention: Yoshiki Saito, Vice President of Investment Operations Team (4) Address for all other communications and notices: Prudential Private Placement Investors, L.P. c/o Prudential Capital Group Two Prudential Plaza 180 North Stetson, Suite 5600 Chicago, IL 60601-6716 Attention: Managing Director (5) Address for Delivery of Notes: Send physical security by nationwide overnight delivery service to: Prudential Capital Group Two Prudential Plaza 180 North Stetson, Suite 5600 Chicago, IL 60601-6716 Attention: Wiley S. Adams Telephone: (312) 540-4204 (6) Tax Identification No.: 98-0408643

A-6
AGGREGATE PRINCIPAL AMOUNT OF NOTES NOTE TO BE PURCHASED DENOMINATION(S) --------------- --------------- RGA REINSURANCE COMPANY $6,635,000.00 $6,635,000.00 Notes/Certificates to be registered in the name of: HARE & CO. (1) All payments on account of Notes held by such purchaser shall be made by wire transfer of immediately available funds for credit to: Bank of New York ABA No.: 021-000-018 BNF Account No. IOC566 Credit to: Hare & Co Each such wire transfer shall set forth the name of the Company, a reference to "6.43% Senior Notes due April 4, 2016, PPN ____" and the due date and application (as among principal, interest and Make-Whole Amount) of the payment being made. (2) All notices of payments and written confirmations of such wire transfers: RGA Reinsurance Company Attn: Banking Dept. 1370 Timberlake Manor Parkway Chesterfield, MO 63017-6039 (3) Address for all other communications and notices: Prudential Private Placement Investors, L.P. c/o Prudential Capital Group Two Prudential Plaza 180 North Stetson, Suite 5600 Chicago, IL 60601-6716 Attention: Managing Director (4) Address for Delivery of Notes:
A-7 (a) Send physical security by nationwide overnight delivery service to: Bank of New York Securities Department One Wall Street 3rd Floor - "A" New York, NY 10286 Attention: Lucille Del Terzo Telephone: (718) 315-3543 Facsimile: (718) 623-7572 or (718) 623-7575 E-mail: ldelterzo@bankofny.com Please include in the cover letter accompanying the Notes a reference to the Purchaser (RGA Private Placement Prudential Financial Account No. 128863). (b) Send copy by nationwide overnight delivery service to: Prudential Capital Group Gateway Center 4 100 Mulberry, 7th Floor Newark, NJ 07102 Attention: Trade Management, Manager Telephone: (973) 367-3141 (5) Tax Identification No.: 43-1235868

A-8
AGGREGATE PRINCIPAL AMOUNT OF NOTES NOTE TO BE PURCHASED DENOMINATION(S) --------------- --------------- UNITED OF OMAHA LIFE INSURANCE COMPANY $6,040,000.00 $6,040,000.00 (1) All principal, interest and Make-Whole Amount payments on account of Notes held by such purchaser shall be made by wire transfer of immediately available funds for credit to: JPMorgan Chase Bank ABA No. 021-000-021 Private Income Processing For Credit to account: 900-9000200 For further credit to Account Name: United of Omaha Life Insurance Company For further credit to Account Number: G09588 Each such wire transfer shall set forth the name of the Company, a reference to "6.43% Senior Notes due April 4, 2016, PPN ___" and the due date and application (as among principal, interest and Make-Whole Amount) of the payment being made. (2) All payments, other than principal, interest or Make-Whole Amount, on account of Notes held by such purchaser shall be made by wire transfer of immediately available funds for credit to: JPMorgan Chase Bank ABA No. 021-000-021 Account No. G09588 Account Name: United of Omaha Life Insurance Co. Each such wire transfer shall set forth the name of the Company, a reference to "6.43% Senior Notes due April 4, 2016, PPN ___" and the due date and application (e.g., type of fee) of the payment being made. (3) Address for all notices relating to payments:
A-9 JPMorgan Chase Bank 14201 Dallas Parkway - 13th Floor Dallas, TX 75254-2917 Attn: Income Processing - G. Ruiz a/c: G09588 (4) Address for all other communications and notices: Prudential Private Placement Investors, L.P. c/o Prudential Capital Group Two Prudential Plaza 180 North Stetson, Suite 5600 Chicago, IL 60601-6716 Attention: Managing Director (5) Address for Delivery of Notes: (a) Send physical security by nationwide overnight delivery service to: JPMorgan Chase Bank 4 New York Plaza Ground Floor Receive Window New York, NY 10004 Please include in the cover letter accompanying the Notes a reference to the Purchaser's account number (United of Omaha Life Insurance Company; Account Number: G09588). (b) Send copy by nationwide overnight delivery service to: Prudential Capital Group Gateway Center 4 100 Mulberry, 7th Floor Newark, NJ 07102 Attention: Trade Management, Manager Telephone: (973) 367-3141 (6) Tax Identification No.: 47-0322111

A-10 DEFINED TERMS Capitalized terms used herein and not otherwise defined shall have the meanings given in the Company Guaranty. As used herein, the following terms have the respective meanings set forth below or set forth in the Section hereof following such term: "Affiliate" shall mean, at any time, and with respect to any Person, (a) any other Person that at such time directly or indirectly through one or more intermediaries Controls, or is Controlled by, or is under common Control with, such first Person, and (b) in the case of the Company or any Subsidiary, any Person beneficially owning or holding, directly or indirectly, 10% or more of any class of voting or equity interests of the Company or any Subsidiary or any corporation of which the Company and its Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly, 10% or more of any class of voting or equity interests; provided that "Affiliate," in relation to the Company, shall not include any Subsidiary. As used in this definition, "Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. Unless otherwise clearly stated, any reference to an "Affiliate" is a reference to an Affiliate of the Company. "Additional Covenant" shall mean any affirmative or negative covenant or similar restriction applicable to the Company or any Subsidiary (regardless of whether such provision is labeled or otherwise characterized as a covenant) the subject matter of which either (i) is similar to that of any covenant in Section 9 or 10 of this Agreement, or related definitions in Schedule B to this Agreement, or Section 3 or 4 of the Company Guaranty, or related definitions in Section 1 of the Company Guaranty, but contains one or more percentages, amounts or formulas that is more restrictive than those set forth herein or more beneficial to any holder of any Designated Debt (and such covenant or similar restriction shall be deemed an Additional Covenant only to the extent that it is more restrictive or more beneficial) or (ii) is different from the subject matter of any covenants in Section 9 or 10 of this Agreement or Section 3 or 4 of the Company Guaranty, or related definitions in Schedule B to this Agreement or the related definitions in Section 1 of the Company Guaranty. Notwithstanding the foregoing, the provisions set forth in Section 1008 of each of the Subordinated Debentures as in effect on the date hereof shall not constitute Additional Covenants. "Additional Default" shall mean any provision for the benefit of any holder of any Designated Debt to accelerate (with the passage of time or giving of notice or both) the maturity thereof or otherwise requires any Company or any Subsidiary to purchase the Debt under such Designated Debt prior to the stated maturity thereof and which either (i) is similar to any Default or Event of Default contained in Section 11 of this Agreement, or related definitions in Schedule B to this Agreement or Section 1 of the Company Guaranty, but contains one or more percentages, amounts or formulas that is more restrictive or has a shorter grace period than those set forth therein or is more beneficial to any holder of any Designated Debt (and such provision shall be deemed an Additional Default only to the extent that it is more restrictive, has a shorter grace period or is more beneficial) or (ii) is different from the subject matter of any Default or Event of Default contained in Section 11 of this Agreement, or related definitions in Schedule B to this Agreement or Section 1 of the Company Guaranty. SCHEDULE B (to Note Purchase Agreement) "Amended and Restated 2003 Note Purchase Agreement" shall mean that certain Amended and Restated Note Purchase Agreement dated as of April 4, 2006 by and among the Issuer and the holders of the 2003 Notes. "Asset Disposition" shall mean any Transfer except: (a) any (1) Transfer from a Subsidiary to the Company or a Wholly-Owned Subsidiary; and (2) Transfer from the Company to a Wholly-Owned Subsidiary; so long as immediately before and immediately after the consummation of any such Transfer and after giving effect thereto, no Default or Event of Default shall exist; and (b) any Transfer made in the ordinary course of business and involving only property that is either (1) inventory held for sale or (2) equipment, fixtures, supplies or materials no longer required in the operation of the business of the Company or any of its Subsidiaries or that is obsolete. "Attributable Debt" shall mean, as to any particular lease relating to a Sale-and-Leaseback Transaction not permitted under clause (a), (b) or (c) of Section 10.6, the present value of all Lease Rentals required to be paid by the Company or any Subsidiary under such lease during the remaining term thereof (determined in accordance with generally accepted financial practice using a discount factor equal to the interest rate implicit in such lease if known or, if not known, of 10% per annum). "Bank" shall mean Bank of Montreal. "Bridge Loan Credit Agreement" shall mean that certain Non-Revolving Credit Agreement, dated as of March 30, 2006, by and among the Company and the Bank. "Business Day" shall mean (a) for the purposes of Section 8.6 only, any day other than a Saturday, a Sunday or a day on which commercial banks in New York, New York are required or authorized to be closed, and (b) for the purposes of any other provision of this Agreement, any day other than a Saturday, a Sunday or a day on which commercial banks in Chicago, Illinois or New York, New York, are required or authorized to be closed. "Capital Lease" shall mean, at any time, a lease with respect to which the lessee is required concurrently to recognize the acquisition of an asset and the incurrence of a liability in accordance with GAAP. "Capital Lease Obligation" shall mean, with respect to any Person and a Capital Lease, the amount of the obligation of such Person as the lessee under such Capital Lease which would, in accordance with GAAP, appear as a liability on a balance sheet of such Person. B-2 "Closing" is defined in Section 3. "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations promulgated thereunder from time to time. "Company" shall have the meaning given in the introductory paragraph. "Company Guaranty" has the meaning given in Section 4.1. "Confidential Information" is defined in Section 20. "Consolidated Debt" shall mean, as of any date of determination, the total of all Debt of the Company and its Subsidiaries outstanding on such date, after eliminating all offsetting debits and credits between the Company and its Subsidiaries and all other items required to be eliminated in the course of the preparation of consolidated financial statements of the Company and its Subsidiaries in accordance with GAAP. "Consolidated Net Income" shall mean, with reference to any period, the net income (or loss) of the Company and its Subsidiaries for such period (taken as a cumulative whole), as determined in accordance with GAAP, after eliminating all offsetting debits and credits between the Company and its Subsidiaries and all other items required to be eliminated in the course of the preparation of consolidated financial statements of the Company and its Subsidiaries in accordance with GAAP, but excluding, in any event, any extraordinary gains or losses determined in accordance with GAAP. "Consolidated Net Worth" shall mean, as of any date of determination thereof, (a) the sum of (1) the par value (or value stated on the books of the corporation) of the share capital (but excluding treasury shares and share capital subscribed and unissued) of the Company and its Subsidiaries plus (2) the amount of the paid-in capital and retained earnings of the Company and its Subsidiaries, in each case as such amounts would be shown on a consolidated balance sheet of the Company and its Subsidiaries as of such time prepared in accordance with GAAP, minus (b) to the extent included in clause (a) above, all amounts properly attributable to minority interests, if any, in the shares and surplus of Subsidiaries. "Consolidated Total Assets" shall mean, as of any date of determination, the total assets of the Company and its Subsidiaries that would be shown as assets on a consolidated balance sheet of the Company and its Subsidiaries as of such time prepared in accordance with GAAP, after eliminating all amounts properly attributable to minority interests, if any, in the shares and surplus of Subsidiaries. "Consolidated Total Capitalization" shall mean, as of any date of determination, the sum of Consolidated Debt and Consolidated Net Worth. "Credit Agreement" shall have the meaning given in Section 4.2. B-3 "Crown" shall mean the Crown in Right of Canada or of any Province or Territory thereof. "Debt" shall mean, with respect to any Person, without duplication, (a) its liabilities for borrowed money; (b) its liabilities for the deferred purchase price of property acquired by such Person (excluding accounts payable arising in the ordinary course of business but including, without limitation, all liabilities created or arising under any conditional sale or other title retention agreement with respect to any such property); (c) its Capital Lease Obligations; (d) all liabilities for borrowed money secured by any Lien with respect to any property owned by such Person (whether or not it has assumed or otherwise become liable for such liabilities); (e) the principal or lease balance outstanding under Synthetic Leases; (f) its income-put option liabilities; and (g) any Guarantee of such Person with respect to liabilities of a type described in any of clauses (a) through (f) hereof; provided, that Debt shall not include Guarantees of bank loans to officers of the Company the proceeds of which are used to purchase shares of the Company, in an aggregate principal amount not to exceed $12,000,000 at any one time outstanding. Debt of any Person shall include all obligations of such Person of the character described in clauses (a) through (g) to the extent such Person remains legally liable in respect thereof notwithstanding that any such obligation is deemed to be extinguished under GAAP. "Debt Prepayment Application" shall mean, with respect to any Transfer of property, the application by the Issuer or its Subsidiaries of cash in an amount equal to the Net Proceeds Amount with respect to such Transfer to pay Senior Funded Debt of the Issuer or any Subsidiary of the Issuer (other than Senior Funded Debt owing to the Company, any of its Subsidiaries or any Affiliates and Senior Funded Debt in respect of any revolving credit or similar facility providing the Issuer or any of its Subsidiaries with the right to obtain loans or other extensions of credit from time to time, except to the extent that in connection with such payment of Senior Funded Debt the availability under such revolving credit or similar facility is permanently reduced by an amount not less than the amount of such proceeds applied to the payment of such Senior Funded Debt). "Default" shall mean an event or condition the occurrence or existence of which would, with the lapse of time or the giving of notice or both, become an Event of Default. "Default Rate" shall mean, with respect to the Notes, that rate of interest that is the greater of (1) 2% per annum above the rate of interest stated in clause (a) of the first paragraph of B-4 the Notes or (2) 2% over the rate of interest publicly announced by JPMorgan Chase Bank in New York City as its "base" or "prime" rate. "Designated Debt" shall mean (1) any Debt of the Company or any Subsidiary issued or outstanding under any agreement if the aggregate outstanding principal amount of the Debt issued or outstanding under such agreement, together with the aggregate amount of any undrawn commitments to provide loans or financial accommodations to the Company or any Subsidiary under such agreement, exceeds U.S.$10,000,000, and (2) any Debt of the Company or any Subsidiary issued or outstanding under one or more agreements if the aggregate outstanding principal amount of the Debt issued or outstanding under all such agreements, together with the aggregate amount of any undrawn commitments to provide loans or financial accommodations to the Company or any Subsidiary under all such agreements, exceeds U.S.$25,000,000. For the avoidance of doubt, all Debt of the Company and its Subsidiaries under the Credit Agreement or any other primary working capital facility, the 2003 Notes and the Subordinated Debentures shall be deemed Designated Debt. "Disposition Value" shall mean with respect to any property (a) in the case of property that does not constitute Subsidiary Shares, the book value thereof, valued at the time of such disposition in good faith by the Company, and (b) in the case of property that constitutes Subsidiary Shares, an amount equal to that percentage of book value of the assets of the Subsidiary that issued such shares as is equal to the percentage that the book value of such Subsidiary Shares represents of the book value of all of the outstanding share capital of such Subsidiary (assuming, in making such calculations, that all securities convertible into such share capital are so converted and giving full effect to all transactions that would occur or be required in connection with such conversion) determined at the time of the disposition thereof, in good faith by the Company. "EBITDA" shall mean, with respect to any period, the sum of (a) Consolidated Net Income for such period, plus (b) to the extent deducted in the determination of Consolidated Net Income for such period, (1) all Interest Charges during such period, (2) all depreciation and amortization expenses during such period, (3) all Federal, state and provincial income taxes during such period and (4) other non-cash expenses during such period, minus (c) to the extent included in the determination of Consolidated Net Income for such period, gains from the sale of capital assets and investments and other income-put option liabilities, all as determined in accordance with GAAP consistently applied. "Equity Interests" means in the case of a corporation, shares of capital stock of any class or series, including warrants, rights, participating interests or options to purchase or otherwise acquire any class or series of capital stock or securities exchangeable for or convertible into any class or series of capital stock, and in the case of any other Person or entity shall mean any class or series of partnership interests (including, without limitation, any general or limited partnership interests), units, membership interests or like interests constituting equity, and in the case of each of the foregoing, any part or portion thereof or participation in any of the foregoing. B-5 "Event of Default" is defined in Section 11. "Existing Credit Agreement" shall mean that certain Amended and Restated Credit Agreement, dated as of April 23, 2004, by and among the Company and the Bank, as amended from time to time in accordance with the terms hereof. "Fair Market Value" shall mean, as of any date of determination thereof and with respect to any property, the sale value of such property that would be realized in an arm's-length sale at such time between an informed and willing buyer and an informed and willing seller (neither being under a compulsion to buy or sell). "Forms" is defined in Section 8.8(a)(4). "Funded Debt" means, with respect to any Person, all Debt of such Person which by its terms or by the terms of any instrument or agreement relating thereto matures, or which is otherwise payable or unpaid, one year or more from, or is directly or indirectly renewable or extendible at the option of the obligor in respect thereof to a date one year or more (including, without limitation, an option of such obligor under a revolving credit or similar agreement obligating the lender or lenders to extend credit over a period of one year or more) from, the date of any determination thereof. "GAAP" shall mean generally accepted accounting principles as in effect from time to time as now or hereafter established by the Canadian Institute of Chartered Accountants or any successor thereto. "General Partner" shall mean Hub International Partners Limited, an Ontario corporation. "Guarantee" shall mean, with respect to any Person, any obligation (except the endorsement in the ordinary course of business of negotiable instruments for deposit or collection) of such Person guaranteeing or in effect guaranteeing any Debt, dividend or other obligation of any other Person in any manner, whether directly or indirectly, including, without limitation, obligations incurred through an agreement, contingent or otherwise, by such Person: (a) to purchase such Debt or obligation or any property constituting security therefor; (b) to advance or supply funds (1) for the purchase or payment of such Debt or obligation, or (2) to maintain any working capital or other balance sheet condition or any income statement condition of any other Person or otherwise to advance or make available funds for the purchase or payment of such Debt or obligation; (c) to lease properties or to purchase properties or services primarily for the purpose of assuring the owner of such Debt or obligation of the ability of any other Person to make payment of the Debt or obligation; or (d) otherwise to assure the owner of such Debt or obligation against loss in respect thereof. B-6 In any computation of the Debt or other liabilities of the obligor under any Guarantee, the Debt or other obligations that are the subject of such Guarantee shall be assumed to be direct obligations of such obligor. "holder" shall mean, with respect to any Note, the Person in whose name such Note is registered in the register maintained by the Issuer pursuant to Section 13.1. "Institutional Accredited Investor" shall mean an "accredited investor" within the meaning of the 501(a)(1), (2), (3) or (7) under the Securities Act. "Institutional Investor" shall mean (a) any original purchaser of a Note, (b) any holder of more than U.S.$2,000,000 of the aggregate principal amount of the Notes then outstanding, and (c) any bank, trust company, savings and loan association or other financial institution, any pension plan, any investment company, any insurance company, any broker or dealer, or any other similar financial institution or entity, regardless of legal form. "Interest Charges" shall mean, with respect to any period, the sum (without duplication) of the following (in each case, eliminating all offsetting debits and credits between the Company and its Subsidiaries and all other items required to be eliminated in the course of the preparation of consolidated financial statements of the Company and its Subsidiaries in accordance with GAAP): (a) all interest in respect of Debt of the Company and its Subsidiaries (including imputed interest on Capital Lease Obligations) deducted in determining Consolidated Net Income for such period, and (b) all debt discount and expense amortized or required to be amortized in the determination of Consolidated Net Income for such period. "Issuer" shall have the meaning given in the introductory paragraph. "Lease Rentals" shall mean, with respect to any period, the sum of all fixed payments (including as such all payments which the lessee is obligated to make to the lessor on termination of the lease or surrender of the property) payable by the Company or a Subsidiary, as lessee or sublessee under a lease of property, but shall be exclusive of any amounts required to be paid by the Company or a Subsidiary (whether or not designated as rents or additional rents) on account of maintenance, repairs, insurance, taxes and similar charges. Fixed rents under any so-called "percentage leases" shall be computed solely on the basis of the minimum rents, if any, required to be paid by the lessee regardless of sales volume or gross revenues. "Lien" shall mean, with respect to any Person, any mortgage, lien, pledge, charge, security interest or other encumbrance, or any interest or title of any vendor, lessor, lender or other secured party to or of such Person under any conditional sale or other title retention agreement or Capital Lease, upon or with respect to any property or asset of such Person (including in the case of shares, shareholder agreements, voting trust agreements and all similar arrangements). "Make-Whole Amount" shall have the meaning set forth in Section 8.6 with respect to the Notes. "Material Subsidiary" shall mean, at any time, any Subsidiary that accounts for more than (a) 5% of Consolidated Total Assets determined as of the immediately preceding fiscal B-7 quarter or (b) 5% of consolidated revenue of the Company and its Subsidiaries determined as of the immediately preceding fiscal year. "Minimum Interest Coverage Ratio" shall mean, as of the date of any determination thereof, the ratio of (a) EBITDA for the period consisting of the immediately preceding four consecutive fiscal quarters of the Company ending on, or most recently ended prior to, such date to (b) Interest Charges for such period. "Net Proceeds Amount" shall mean, with respect to any Transfer of any Property by any Person, an amount equal to the difference of (a) the aggregate amount of the consideration (valued at the Fair Market Value of such consideration at the time of the consummation of such Transfer) received by such Person in respect of such Transfer, minus (b) all ordinary and reasonable out-of-pocket costs and expenses actually incurred by such Person in connection with such Transfer. "Notes" is defined in Section 1. "Officer's Certificate" shall mean a certificate of a Senior Financial Officer or of any other officer of the Issuer or the Company, as applicable, whose responsibilities extend to the subject matter of such certificate. "PTE" is defined in Section 6.2(a). "Person" shall mean an individual, partnership, corporation, limited liability company, association, trust, unincorporated organization, or a government or agency or political subdivision thereof. "Priority Debt" shall mean, without duplication, the sum of (a) Debt of the Company and its Subsidiaries secured by Liens other than Liens permitted by paragraphs (a) through (k), inclusive, of Section 10.3, (b) Debt of Subsidiaries (including, without limitation, any Guarantee by any Subsidiary of any Debt of the Company or any other Subsidiary) other than (1) Debt of the Issuer and (2) Debt of other Subsidiaries permitted by paragraphs (a) through (c), inclusive, of Section 10.1, and (c) Attributable Debt of the Company and its Subsidiaries relating to Sale-and-Leaseback Transactions other than Sale-and-Leaseback Transactions permitted by paragraphs (a) through (c), inclusive, of Section 10.6. "property" or "properties" shall mean, unless otherwise specifically limited, real or personal property of any kind, tangible or intangible, choate or inchoate. "Property Reinvestment Application" shall mean, with respect to any Transfer of property, the application of an amount equal to the Net Proceeds Amount with respect to such Transfer to the acquisition by the Issuer or any Subsidiary of operating assets of the Issuer or any Subsidiary of the Issuer to be used in the principal business of such Person. "Purchasers" is defined in the Preamble. B-8 "QPAM Exemption" shall mean Prohibited Transaction Class Exemption 84-14 issued by the United States Department of Labor. "Relevant Tax" is defined in Section 8.8. "Reorganization" is defined in Section 4.14. "Required Holders" shall mean, at any time, the holders of more than 50% in aggregate principal amount of the Notes at the time outstanding (exclusive of Notes then owned by the Company or any of its Subsidiaries or Affiliates). "Resident Country" is defined in Section 8.8. "Responsible Officer" shall mean any Senior Financial Officer and any other officer of the Company or the Issuer, as applicable, with responsibility for the administration of the relevant portion of this Agreement. "Restricted Payment" shall have the meaning given in Section 10.12. "Sale-and-Leaseback Transaction" means a transaction or series of transactions pursuant to which the Company or any Subsidiary shall sell or transfer to any Person (other than the Company or a Wholly-Owned Subsidiary) any property, whether now owned or hereafter acquired, and, as part of the same transaction or series of transactions, the Company or any Subsidiary shall rent or lease as lessee (other than pursuant to a Capital Lease), or similarly acquire the right to possession or use of, such property or one or more properties which it intends to use for the same purpose or purposes as such property. "Securities Act" shall mean the Securities Act of 1933, as amended from time to time. "Senior Debt" in respect of any Person, shall mean, as of the date of any determination thereof, all Debt of such Person other than Subordinated Debt. "Senior Financial Officer" shall mean the chief financial officer, principal accounting officer, treasurer or comptroller of the Company or the Issuer, as applicable. "Senior Funded Debt" in respect of any Person, shall mean, as of the date of any determination thereof, all Funded Debt of such Person other than Subordinated Funded Debt. "Source" is defined in Section 6.2. "Subordinated Debentures" shall mean, collectively, that certain 8.5% Convertible Subordinated Debenture due June 28, 2007 of the Company in favor of Odyssey Reinsurance Corporation in the original principal amount of U.S.$17,500,000 and that certain 8.5% Convertible Subordinated Debenture due June 28, 2007 of the Company in favor of United States Fire Insurance Company in the original principal amount of U.S.$17,500,000. "Subordinated Debt" in respect of any Person, shall mean, as of the date of any determination thereof, all unsecured Debt of such Person which shall contain or have applicable B-9 thereto subordination provisions providing for the subordination thereof to other Debt of such Person. For the avoidance of doubt, all Debt of the Company or any Subsidiary under the Subordinated Debentures shall be deemed Subordinated Debt of the Company or such Subsidiary. "Subordinated Funded Debt" in respect of any Person, shall mean, as of the date of any determination thereof, all unsecured Funded Debt of such Person which shall contain or have applicable thereto subordination provisions providing for the subordination thereof to other Funded Debt of such Person. "Subsidiary" shall mean, as to any Person, any corporation, association or other business entity in which such Person or one or more of its Subsidiaries or such Person and one or more of its Subsidiaries owns sufficient equity or voting interests to enable it or them (as a group) ordinarily, in the absence of contingencies, to elect a majority of the directors (or Persons performing similar functions) of such entity, and any partnership or joint venture if more than a 50% interest in the profits or capital thereof is owned by such Person or one or more of its Subsidiaries or such Person and one or more of its Subsidiaries (unless such partnership can and does ordinarily take major business actions without the prior approval of such Person or one or more of its Subsidiaries). Unless otherwise clearly stated, any reference to a "Subsidiary" is a reference to a Subsidiary of the Company and the Issuer is included as a Subsidiary of the Company. "Subsidiary Shares" shall mean, with respect to any Person, the shares (or any options or warrants to purchase shares or other securities exchangeable for or convertible into shares) of any Subsidiary of such Person. "Successor Entity" is defined in Section 10.4(a). "Synthetic Lease" shall mean any synthetic lease, tax retention operating lease, off-balance sheet loan or similar off-balance sheet financing product, where such transaction is considered debt for borrowed money for tax purposes but is classified as an operating lease in accordance with GAAP. "Tax Indemnity Amounts" is defined in Section 8.8. "Taxing Jurisdiction" is defined in Section 8.8. "Transfer" shall mean, with respect to any Person, any transaction in which such Person sells, conveys, transfers or leases (as lessor) any of its property, including, without limitation, Subsidiary Shares. For purposes of determining the application of the Net Proceeds Amount in respect of any Transfer, the Company may designate any Transfer as one or more separate Transfers each yielding a separate Net Proceeds Amount. In any such case, (a) the Disposition Value of any property subject to each such separate Transfer and (b) the amount of Consolidated Total Assets attributable to any property subject to each such separate Transfer shall be determined by ratably allocating the aggregate Disposition Value of, and the aggregate Consolidated Total Assets attributable to, all property subject to all such separate Transfers to each such separate Transfer on a proportionate basis. B-10 "2003 Notes" shall mean, collectively, those certain 5.71% Series A Senior Notes of the Company due June 15, 2010 in the original aggregate principal amount of U.S.$10,000,000 and those certain 6.16% Series B Senior Notes of the Company due June 15, 2013 in the original aggregate principal amount of U.S.$55,000,000, each as amended and restated on the date hereof. "Wholly-Owned Subsidiary" shall mean any Subsidiary 100% of all of the equity interests (except directors' qualifying shares) and voting interests of which are owned by any one or more of the Company and the Company's other Wholly-Owned Subsidiaries. B-11 FORM OF NOTE The securities represented by this Note have not been registered under the Securities Act of 1933, as amended (the "Act"), or registered or qualified under any state, provincial or territorial securities laws. Such securities may not be sold, offered for sale, transferred, pledged or hypothecated in the absence of such registration or qualification or an exemption therefrom under the Act and any applicable state, provincial or territorial securities laws. The securities represented by this Note have not been qualified for distribution or resale in Canada and shall not be traded in Canada unless permitted under and traded in compliance with applicable securities laws of the provinces and territories of Canada HUB INTERNATIONAL LIMITED PARTNERSHIP 6.43% Senior Note due April 4, 2016 No. R-____ Date __________ $____________ PPN ___________ FOR VALUE RECEIVED, the undersigned, HUB INTERNATIONAL LIMITED PARTNERSHIP (herein called the "Issuer"), a limited partnership organized and existing under the laws of the State of Delaware, hereby promises to pay to ________________, or registered assigns, the principal sum of ________________ DOLLARS (or so much thereof as shall not have been prepaid) on April 4, 2016, with interest (computed on the basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance thereof at the rate of 6.43% per annum from the date hereof, payable quarterly, on the 4th day of each July, October, January and April in each year, commencing on July 4, 2006, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest and any overdue payment of any Make-Whole Amount (as defined in the Note Purchase Agreement referred to below), payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand), at a rate per annum from time to time equal to the greater of (1) 8.43% or (2) 2% over the rate of interest publicly announced by JPMorgan Chase Bank from time to time in New York City as its "base" or "prime" rate. Payments of principal of, interest on and any Make-Whole Amount with respect to this Note are to be made in lawful money of the United States of America at the principal office of JPMorgan Chase Bank in New York City or at such other place as the Issuer shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreement referred to below. This Note is one of a series of Senior Notes (herein called the "Notes") issued pursuant to the Note Purchase Agreement, dated as of April 4, 2006 (as from time to time amended, the "Note Purchase Agreement"), between the Issuer and the Purchasers named therein and is entitled to the benefits thereof. Each holder of this Note will be deemed, by its acceptance hereof, (i) to have agreed to the confidentiality provisions set forth in Section 20 of the Note EXHIBIT 4.1 (to Note Purchase Agreement) Purchase Agreement and (ii) to have made the representations set forth in Section 6 of the Note Purchase Agreement. This Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder's attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Issuer may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Issuer will not be affected by any notice to the contrary. This Note is subject to prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise. This Note is unconditionally guarantied pursuant to the Company Guaranty and the holder hereof is entitled to the benefits thereof. Reference is made to the Company Guaranty for a statement concerning the terms and conditions governing the guaranty of the obligations of the Issuer hereunder. If an Event of Default, as defined in the Note Purchase Agreement, occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Note Purchase Agreement. This Note shall be construed and enforced in accordance with, and the rights of the issuer and holder hereof 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. HUB INTERNATIONAL LIMITED PARTNERSHIP By: ------------------------------------ its General Partner By: -----------------------------------, Name: ---------------------------------- Title: --------------------------------- E-1(a)-2 FORM OF COMPANY GUARANTY (See attached) EXHIBIT 4.1 (to Note Purchase Agreement) FORM OF OPINION OF U.S. COUNSEL TO THE COMPANY, THE GENERAL PARTNER AND THE ISSUER April 4, 2006 To the Purchasers listed in Schedule A to the Purchase Agreement Hub International Limited Partnership 6.43% Senior Notes due April 4, 2016 Ladies and Gentlemen: We have acted as United States counsel to Hub International Limited, a Canadian corporation (the "Company"), Hub International Limited Partnership, a Delaware limited partnership (the "Issuer"), and Hub International Partners Limited, an Ontario corporation (the "General Partner"), in connection with the purchase, subject to the terms and conditions set forth in the Note Purchase Agreement (the "Purchase Agreement") dated April 4, 2006 between the Issuer and the several purchasers named in Schedule A to the Purchase Agreement (the "Purchasers"), by the Purchasers of US$75,000,000 aggregate principal amount of 6.43% Senior Notes due April 4, 2016 of the Issuer (the "Notes"). The Notes are unconditionally guarantied by the Company pursuant to that certain Guaranty Agreement dated April 4, 2006 (the "Company Guaranty") entered into by the Company in favor of and for the benefit of the holders of the Notes. In such capacity, we have examined the Purchase Agreement, the Company Guaranty, (together, the "Transaction Documents") specimens of the Notes and the originals, or copies identified to our satisfaction, of such corporate records of the Company, the partnership records of the Issuer, certificates of public officials, certificates of officers of the Company and the Issuer and other persons, and such other documents, agreements and instruments as we have deemed necessary as a basis for the opinions hereinafter expressed. In our examinations, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity with the originals of all documents submitted to us as copies. In rendering our opinions, we have relied as to factual matters, to the extent we deem proper, upon the representations and warranties of the Company the Issuer and the Purchasers contained in or made pursuant to the Purchase Agreement, certificates of officers of the Company, the Issuer and certificates of public officials (which we have assumed are accurate on the date hereof). Our opinions expressed below are limited to the laws of the State of New York and the federal laws of the United States, and he Revised Uniform Limited Partnership Act of Delaware ("RULPA") and we do not express any opinion herein concerning any other law. Insofar as our opinions set forth in subparagraph (vi) below assume due authorization, execution and delivery of the Company Guaranty under the federal laws of Canada applicable thereto, we understand that such matters are covered in the opinion of W. Kirk James, Vice President and Secretary of the Company furnished to the Purchasers today in accordance with the provisions of the Purchase Agreement. EXHIBIT 4.7(a) (to Note Purchase Agreement) Based upon the foregoing, and subject to the qualifications set forth below, we are of the opinion that: (i) The Issuer is a limited partnership, duly organized and validly existing under the laws of the State of Delaware, has the limited partnership power and the limited partnership authority to execute and perform the Purchase Agreement and to issue the Notes and incur the debt to be evidenced thereby and has the full limited partnership power and the limited partnership authority to conduct the activities in which it is now engaged and is duly licensed or qualified and is in good standing in each jurisdiction in which the character of the properties owned or leased by it or the nature of the business transacted by it makes such licensing or qualification necessary. The General Partner is the sole general partner of the Issuer. (ii) The Purchase Agreement has been duly authorized by all necessary limited partnership action on the part of the Issuer and has been duly executed and delivered by the Issuer. (iii) The Notes have been duly authorized by all necessary limited partnership action on the part of the Issuer and have been duly executed and delivered by the Issuer. (iv) The Purchase Agreement constitutes a legal, valid and binding agreement of the Issuer enforceable in accordance with its terms. (v) The Notes constitute the legal, valid and binding obligations of the Issuer enforceable in accordance with their terms. (vi) Assuming the due authorization, execution and delivery of the Company Guaranty by the Company under the federal laws of Canada applicable thereto, the Company Guaranty constitutes a legal, valid and binding agreement of the Company enforceable in accordance with its terms. (vii) No consent, approval, authorization, order, registration or qualification of or with any United States federal or New York State court or governmental agency or body is required in connection with the execution and delivery by (i) the Issuer or the General Partner on behalf of the Issuer of, and the performance by the Issuer of its obligations under, the Purchase Agreement and the Notes and (ii) the Company of, and the performance by the Company of its obligations under, the Company Guaranty. (viii) The issuance and sale of the Notes and the execution, delivery and performance by (i) the Issuer and the General Partner on behalf of the Issuer of the Purchase Agreement and the Notes and (ii) the Company of the Company Guaranty will not, in either case, result in the contravention of any statute, regulation or order of any "Governmental Authority," as such term is defined in the Purchase Agreement, of the United States of America or the State of New York. (ix) The issuance of the Notes and the use of the proceeds thereof as contemplated by the Purchase Agreement will not result in any violation of Regulation T, U or X of the board of Governors of the Federal Reserve System (12 C.F.R., Chapter II, as amended). E-4.7(a)-2 (x) No registration of the offer and sale of Notes to the Purchasers under the Securities Act of 1933, and no qualification of a trust indenture in respect of the Notes under the Trust Indenture Act of 1939, is required in connection with the offer, sale and delivery of the Notes under the circumstances contemplated by the Purchase Agreement. (xi) The Issuer is not, and after giving effect to the issue and sale of the Notes and the application of the proceeds thereof as described in the Purchase Agreement, will not be, required to register as an "investment company," as such term is defined in the Investment Company Act of 1940. The opinions set forth below are subject to the following qualifications, limitations and assumptions: (i) The effects of bankruptcy, insolvency, fraudulent transfer and conveyance, reorganization, receivership, moratorium and other similar laws (including judicially developed doctrines with respect to such laws) affecting the rights and remedies of creditors generally; (ii) The effects of general principles of equity, whether applied by a court of law or equity, with respect to the performance and enforcement of the Transaction Documents; (iii) Applicable state and federal laws, court decisions and constitutional requirements which may limit or render unenforceable certain of the rights and remedies purportedly available to the Lender under the Transaction Documents. It is our opinion, however, that none of the foregoing laws, decisions or requirements will materially interfere with the practical realization of the benefits intended to be provided by the Transaction Documents, although such realization may be delayed and rendered more costly as a result of the invalidity or enforceability of such provisions; (iv) We express no opinion as to the effect of any antitrust and unfair competition laws and regulations, or pension and employment benefit laws and regulations; (v) We express no opinion as to any provisions in the Transaction Documents that waive statutory rights to receive notice or to be allowed to cure defaults, or that purport to establish particular notice periods or actions as reasonable or particular determinations as conclusive or final and binding, or commit the same to the discretion of any person; (vi) Any limitations under applicable laws, judicial decisions and considerations of public policy which relate to indemnification, exculpation and contribution provisions; (vii) We express no opinion as to provisions of the Transaction Documents to the effect that rights or remedies are not inclusive, that every right or remedy is E-4.7(a)-3 cumulative and may be exercised in addition to or with any other right or remedy, that election of a particular remedy or remedies does not preclude recourse to one or more other remedies or that failure to exercise or delay in exercising rights or remedies will not operate as a waiver of any such rights or remedies; (viii) We express no opinion as to provisions in the Transaction Documents waiving vaguely or broadly stated rights or unknown future rights; (ix) We express no opinion as to the enforceability of any provisions in the Transaction Documents appointing one party as an attorney-in-fact for an adverse party, or purporting to make a power-of-appointment irrevocable unless it is coupled with an interest; and (x) We express no opinion as to the enforceability of any provisions in the Transaction Documents relating to restricting access to courts, waiving the right to trial by jury. We further express no opinion with respect to any questions of conflict of laws, or any provisions in the Transaction Documents that purport to (a) require that the Transaction Documents may not be amended, except in writing, (b) require the disregarding of any course of dealing between parties, and (c) provide for the enforceability of any Transaction Document, in whole or in part, if any material term or provision thereof is determined to be unenforceable or invalid or provide for the validity or enforceability of such invalid or unenforceable provision in any other jurisdiction. To the extent that our opinion herein is rendered as to RULPA, we call to your attention that we are not admitted to practice, and have not consulted with counsel admitted to practice, in the state of Delaware. We have based such opinion solely upon our examination of RULPA, as reported in standard, unofficial compilations. We express no opinion herein concerning any statutes, ordinances, administrative decisions, rules or regulations of any county, town, municipality or special political subdivision (whether created or enabled through legislative action at the federal, state or regional level). This opinion letter is given as of the date hereof and we assume no obligation to advise you of changes that may hereafter be brought to our attention. This opinion is being furnished to the Purchasers solely for the Purchasers' benefit and the benefit of their successors and permitted assigns in connection with their purchase of the Notes, and is not to be used, circulated, quoted or otherwise referred to for any other purpose, provided that a copy of this opinion may be provided to any regulatory agency having authority over you, including the National Association of Insurance Commissioners. Very truly yours, E-4.7(a)-4 FORM OF OPINION OF THE VICE PRESIDENT AND SECRETARY OF THE COMPANY April 4, 2006 TO THE PURCHASERS LISTED IN THE ATTACHED SCHEDULE "A" (the "Purchasers") Ladies and Gentlemen: RE: HUB INTERNATIONAL LIMITED PARTNERSHIP - ISSUE (THE "ISSUE") OF U.S.$75,000,000 PRINCIPAL AMOUNT OF 6.43% SENIOR NOTES DUE APRIL 4, 2016 (COLLECTIVELY, THE "NOTES") AND GUARANTY AGREEMENT WITH RESPECT THERETO BY HUB INTERNATIONAL LIMITED I am a Vice President and the Secretary of Hub International Limited, a Canadian corporation (the "Company"). Prior to holding these offices, I was the Chief Legal Officer of the Company. This letter is issued in connection with the purchase, subject to the terms and conditions set forth in the Note Purchase Agreement (the "Purchase Agreement") dated April_, 2006 between Hub International Limited Partnership, a Delaware limited partnership (the "Issuer"), and the several purchasers named in Schedule A to the Purchase Agreement (the "Purchasers"), by the Purchasers of US$75,000,000 aggregate principal amount of 6.43% Senior Notes due April 4, 2016 of the Issuer (the "Notes"). The Notes are unconditionally guarantied by the Company pursuant to that certain Guaranty Agreement dated April 4, 2006 (the "Company Guaranty") entered into by the Company in favor of and for the benefit of the holders of the Notes. In such capacity, I have examined the Purchase Agreement, the Notes, the Company Guaranty (together, the "Transaction Documents"), and the originals, or copies identified to my satisfaction, of such corporate records of the Company, partnership records of the Issuer, certificates of public officials, certificates of officers of the Company, the Issuer and other persons, and such other agreements and documents as I have deemed necessary as a basis for the opinions hereinafter expressed. In my examination, I have assumed the genuineness of all signatures other than those on behalf of the Company, the General Partner and the Issuer, the authenticity of all documents submitted to me as originals and the conformity with the originals of all documents submitted to me as copies. In rendering my opinions, I have relied as to factual matters, to the extent I deem proper, upon the representations and warranties of the Company, the Issuer and the Purchasers contained in or made pursuant to the Purchase Agreement, certificates of officers of the Company and the Issuer and certificates of public officials (which I have assumed are accurate on the date hereof). Subject to the last sentence of this paragraph, the opinions expressed below are limited to the laws of the Province of Ontario and the federal laws of Canada and I do not express any opinion herein concerning any other law. My opinions are rendered only with respect to the laws, and the rules, regulations, policies and orders thereunder, which are currently in effect. In EXHIBIT 4.7(b) (to Note Purchase Agreement) addition, I do not express any opinion herein concerning the securities laws of the Province of Ontario or the rules, regulations, policies and orders thereunder. Matters addressed in the opinions below not relating to the laws of the Province of Ontario and the federal laws of Canada are provided by me on behalf of the Company, the General Partner and the Issuer as a Vice President and the Secretary of the Company and not in a personal capacity, and are based on my knowledge as a Vice President and the Secretary of the Company, certificates of officers of the Company and the Issuer and certificates of public officials. Based upon the foregoing and subject to the assumptions, qualifications and exceptions set forth herein, I am of the opinion that: 1. The Company is a corporation, duly incorporated and validly existing under the laws of Canada, has the corporate power and the corporate authority to execute and perform the Company Guaranty and has the full corporate power and the corporate authority to conduct the activities in which it is now engaged and is duly licensed or qualified and is in good standing in each jurisdiction in which the character of the properties owned or leased by it or the nature of the business transacted by it makes such licensing or qualification necessary. Hub International Partners Limited is a corporation, duly organized and validly existing under the laws of Province of Ontario, has the corporate power and the corporate authority to execute the Purchase Agreement and the Notes on behalf of the Issuer and to cause the Issuer to issue the Notes and to incur the debt to be evidenced thereby and has full corporate power and corporate authority to conduct the activities in which it is now engaged and is in good standing in each jurisdiction in which the character of the properties owned or leased by it or the nature of the business transacted by it makes such licensing or qualification necessary. 2. Each Material Subsidiary (as such term is defined in Schedule A to this letter and a list of which is set forth on such Schedule ) is an entity duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, has the full corporate power and the corporate authority to conduct the activities in which it is now engaged and is duly licensed or qualified and is in good standing in each jurisdiction in which the character of the properties owned or leased by it or the nature of the business transacted by it makes such licensing or qualification necessary. All of the issued and outstanding equity interests of each Material Subsidiary have been duly issued and are fully paid and non-assessable. 3. The Company Guaranty has been duly authorized by all necessary corporate action on the part of the Company and has been duly executed and delivered by the Company. The execution by the General Partner of the Purchase Agreement on behalf of the Issuer has been duly authorized by all necessary corporate action on behalf of the General Partner and the Purchase Agreement has been duly executed and delivered by the General Partner on behalf of the Issuer. The execution of the Notes by the General Partner on behalf of the Issuer has been duly authorized by all necessary corporate action on the part of the General Partner and the Notes have been duly executed and delivered by the General Partner on behalf of the Issuer. 4. The issuance and sale of the Notes and the execution, delivery and performance by the Issuer of the Purchase Agreement and the Notes and by the Company of the Company Guaranty do not 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 Material Subsidiary under E-4.7(b)-2 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 Material Subsidiary is bound or by which the Company or any Material Subsidiary or any of their respective properties may be bound or affected. 5. Except as described in Item 3 of the Company's Form 10-K for the period ending December 31, 2005 filed with the United States Securities and Exchange Commission on March 13, 2006, there are no actions, suits or other proceedings pending or, to my knowledge after due inquiry, threatened against or affecting the Company or any Material Subsidiary or any property of the Company or any Material Subsidiary in any court or before any arbitrator of any kind or any governmental authority that, if adversely determined, could reasonably be expected to materially and adversely affect the Issuer's ability to perform its obligations under the Purchase Agreement or the Notes, the Company's ability to perform its obligations under the Company Guaranty or the validity or enforceability of the Purchase Agreement, the Notes or the Company Guaranty. This opinion is being furnished to the Purchasers in connection with their purchase of the Notes solely for the Purchasers' benefit and the benefit of their successors and permitted assigns, and is not to be used, circulated, quoted or otherwise referred to for any other purpose, provided that a copy of this opinion may be provided to any regulatory agency having authority over you, including the National Association of Insurance Commissioners. Very truly yours, ---------------------------------------- W. Kirk James Vice-President and Secretary E-4.7(b)-3 FORM OF OPINION OF CANADIAN COUNSEL TO THE ISSUER AND THE PARENT COMPANY April 4, 2006 TO THE PURCHASERS LISTED IN ATTACHED SCHEDULE A: Dear Sirs/Mesdames: RE: ISSUE (THE "ISSUE") OF U.S.$75,000,000 PRINCIPAL AMOUNT OF 6.43% SENIOR NOTES DUE APRIL 4, 2016 (COLLECTIVELY, THE "NOTES") AND GUARANTY AGREEMENT WITH RESPECT THERETO BY HUB INTERNATIONAL LIMITED We have acted as counsel to Hub International Limited, a Canadian corporation (the "Parent Company"), in connection with the issue and sale today by Hub International Limited Partnership, a limited partnership organized under the laws of the State of Delaware (the "Issuer") to you of the Notes pursuant to that certain note purchase agreement dated as of April 4, 2006 by and among the Issuer and each of the addressees hereto (the "Note Purchase Agreement"). We have also acted as counsel to Hub International Partners Limited (the "General Partner"), an Ontario corporation and the general partner of the Issuer. This opinion is being furnished to you pursuant to Section 4.7(c) of the Note Purchase Agreement. The Notes are unconditionally guarantied by the Parent Company pursuant to that certain Guaranty Agreement dated April 4, 2006 (the "Parent Company Guaranty") by the Parent Company in favor of the holders of the Notes. Capitalized terms used herein and not otherwise defined shall have the respective meanings ascribed thereto in the Note Purchase Agreement. We have examined originals or copies, certified or otherwise identified to our satisfaction, of such documents, certificates and corporate records and such other materials as we have considered necessary or appropriate for the purposes of this opinion, including (a) an executed copy of the Note Purchase Agreement, the Notes and the Parent Company Guaranty (each being a "Document" and, collectively, the "Documents"), and (b) a certificate of officers of the Parent Company and the Issuer as to certain factual matters. In our examination of the foregoing documents, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity to the originals thereof of all documents submitted to us as certified or conformed copies, telecopies or photocopies. We have also examined such certificates of public officials and such other certificates, documents and corporate and other records as we have considered necessary as a basis for or relevant to the opinions hereinafter expressed. We have assumed that: (a) Each of the Parent Company and the General Partner is incorporated and existing under the corporate laws applicable to it. EXHIBIT 4.7(c) (to Note Purchase Agreement) (b) The Parent Company has the corporate power and capacity to execute, deliver and perform its obligations under the Parent Company Guaranty. (c) The General Partner has the corporate power and capacity to execute, deliver and perform its obligations under the Note Purchase Agreement and the Notes. (d) The Parent Company has taken all necessary corporate action to authorize the execution, delivery and performance by it of the Parent Company Guaranty, and the Parent Company has duly executed and delivered the Parent Company Guaranty. (e) The General Partner has taken all necessary corporate action to authorize the execution, delivery and performance by it of the Note Purchase Agreement and the Notes on behalf of the Issuer, and the General Partner has duly executed and delivered the Note Purchase Agreement and the Notes on behalf of the Issuer. (f) The execution, delivery and performance of the Parent Company Guaranty by the Parent Company does not breach or result in a default under the articles or by-laws of the Parent Company or any unanimous shareholders agreement applicable thereto. (g) The Issuer is a limited partnership each member of which is and will be at all times when the Notes and the Parent Company Guaranty are outstanding a corporation resident in Canada and the Parent Company is a corporation resident in Canada within the meaning of the Income Tax Act (Canada). (h) The execution, delivery and performance of the Note Purchase Agreement and the Notes by the General Partner on behalf of the Issuer does not breach or result in a default under the articles or by-laws of the General Partner, any unanimous shareholders agreement applicable thereto, or the partnership agreement of the Issuer. (i) All necessary partnership action has been taken to authorize the execution, delivery and performance of the Note Purchase Agreement and the Notes by the Issuer. (j) If any obligation under the Documents is required to be performed in any jurisdiction outside of Ontario, the performance of that obligation will not be illegal under the laws of that jurisdiction. (k) The Documents constitute legal, valid and binding obligations of the Parent Company and the Issuer, as applicable, enforceable against them in accordance with their terms. (l) The representations and warranties made by the Purchasers in the Note Purchase Agreement are true and correct, and we are entitled to rely upon them. Based upon the foregoing and subject to the assumptions, qualifications, limitations and exceptions set forth herein, we are of the opinion that: 1. The execution, delivery and performance by the Parent Company of the Parent Company Guaranty, and the execution and delivery by the General Partner on behalf of the E-4.7(c)-2 Issuer of the Note Purchase Agreement and the Notes, will not contravene any law, statute or regulation of Canada or the Province of Ontario to which the Parent Company or the General Partner is subject. 2. No approval, consent or withholding of objection on the part of, or filing, registration or qualification with, any federal or provincial commission, board or regulatory authority of the Province of Ontario or of Canada is required in connection with (a) the execution and delivery of the Parent Company Guaranty by the Parent Company or the performance of the transactions contemplated thereby, or (b) the execution and delivery of the Note Purchase Agreement and the Notes by the General Partner on behalf of the Issuer. 3. No income taxes will be required to be withheld by the Issuer or the Parent Company under the Income Tax Act (Canada), or under the income tax laws of the Province of Ontario, in connection with any payment under the Notes or Parent Company Guaranty of the principal of, or the interest or premium, if any, on, the Notes by the Issuer or the Parent Company provided that at the time of such payment each member of the Issuer and the Parent Company deals at arm's length (within the meaning of the Income Tax Act (Canada)) with you. Moreover, provided that you are neither a resident nor deemed to be a resident of Canada for purposes of the Income Tax Act (Canada) and you neither use or hold nor are deemed or determined by or for purposes of the Income Tax Act (Canada) to use or hold the Notes or the Parent Company Guaranty in or in the course of carrying on a business in Canada, no other income or capital gains tax is payable under the Income Tax Act (Canada) or under the income tax laws of the Province of Ontario in respect of the Notes or the Parent Company Guaranty merely as a consequence of receiving interest or premium payable thereon. Neither the holding of the Notes or the Parent Company Guaranty nor the receipt of any payment pursuant thereto will, in and of itself, constitute the carrying on a business in Canada under the Income Tax Act (Canada). 4. In the event that the Parent Company Guaranty is sought to be enforced against the Parent Company or the Note Purchase Agreement or the Notes are sought to be enforced against the General Partner (by virtue of it being the general partner of the Issuer) in any action or proceeding in the Province of Ontario in accordance with laws applicable thereto as chosen by the parties, namely the laws of the State of New York ("New York Law"), the courts of competent jurisdiction of the Province of Ontario (the "Ontario Courts") (i) would recognize the choice of laws provided that such choice of laws is bona fide (in the sense that it was not made with a view to avoiding the consequences of the law of any other jurisdiction) and is not contrary to public policy, as such term is understood under the laws of the Province of Ontario ("Ontario Law"), (ii) would apply New York Law in any such action or proceeding, upon appropriate evidence as to such laws being adduced, provided that none of the provisions of the Documents or of New York Law, are contrary to public policy, as such term is understood under Ontario Law ("Ontario Public Policy"), (iii) would apply Ontario Law that under Ontario Law would be characterized as procedural, (iv) would apply provisions of Ontario Law that have overriding effect, as interpreted under Ontario Law, and (v) would not apply New York Law that under Ontario Law would be characterized as revenue, expropriatory, penal or other public law. Subject to the following sentence, any action or proceeding with respect to the Documents may be brought against the Parent Company or the General Partner, as applicable, in an Ontario E-4.7(c)-3 Court. An Ontario Court may, however, reserve to itself an inherent power to decline to hear an action if it is contrary to public policy, as such term is understood under Ontario Law, for it to do so, or if it is not the proper forum to hear such action, or if concurrent proceedings are being brought elsewhere. Assuming that the same meaning would be given to the terms used in the Documents under New York Law as under Ontario Law, to the best of our knowledge none of the provisions of the Documents would violate Ontario Public Policy or be subject to provisions of Ontario Law that have overriding effect. 5. Ontario Law and the federal laws of Canada applicable therein permit an action to be brought before an Ontario Court on a final and conclusive judgment in personam of a court of a state of the United States of America or a federal court sitting therein (a "Foreign Court") that is subsisting and unsatisfied and not impeachable as void or voidable or otherwise ineffective under applicable United States federal or state law and for a sum certain if: (A) the Foreign Court rendering such judgment had jurisdiction over the judgment debtor, as recognized by an Ontario Court; (B) such judgment was not obtained by fraud or in a manner contrary to natural justice or other rule of law, whether equitable, legal or statutory, and the enforcement thereof would not be inconsistent with public policy, as such term is understood under Ontario Law and the federal laws of Canada applicable therein or contrary to any order made by the Attorney General of Canada under the Foreign Extraterritorial Measures Act (Canada) or by the Competition Tribunal under the Competition Act (Canada); (C) the enforcement of such judgment does not constitute, directly or indirectly, the enforcement of foreign revenue, expropriatory or penal laws; and (D) the action to enforce such judgment is commenced within the applicable limitation period. 6. The submission by the Parent Company and the Issuer to the non-exclusive jurisdiction of the courts of the State of New York sitting in the Borough of Manhattan and the federal courts of the United States of America for the Southern District of New York, contained in Section 12 of the Parent Company Guaranty and Section 22 of the Note Purchase Agreement, respectively, would be recognized and given effect by the Ontario Courts as a valid submission to the jurisdiction of such courts, provided that the provisions of the Parent Company Guaranty or the Note Purchase Agreement respecting service of process on the Parent Company or the Issuer, as the case may be, are duly complied with. 7. Each of the Parent Company and the General Partner is subject to the relevant civil and commercial law of Ontario with respect to its obligations under the Parent Company Guaranty or the Note Purchase Agreement and the Notes, respectively, and neither the Parent Company or the General Partner nor its assets has the benefit of any right of immunity, whether sovereign immunity or otherwise, from any action, suit, proceeding or execution in respect of its obligations under the Parent Company Guaranty or the Note Purchase Agreement and the Notes, as applicable. 8. No stamp, registration, documentary or other similar tax, duty or fee is payable under Canadian federal law or Ontario Law in connection with the execution and delivery of the Parent Company Guaranty by the Parent Company or the execution and delivery of the Note Purchase Agreement and the Notes by the General Partner on behalf of the Issuer. E-4.7(c)-4 9. To ensure the admissibility into evidence, no notarization of the Documents, and no registration or filing with or notice to, any governmental agency or authority of the Province of Ontario or Canada is required. The foregoing opinions are subject to the following assumptions, qualifications, limitations and exceptions: (a) the enforcement of any Document may be limited by any applicable bankruptcy, insolvency, winding-up, reorganization, arrangement, moratorium or other laws affecting creditors' rights generally; (b) the enforcement of the Documents will be subject to the Limitations Act, 2002 (Ontario) and we express no opinion as to whether a court may find a provision of any Document to be unenforceable as an attempt to vary or exclude a limitation period under that Act; (c) the enforcement of any Document may be limited by general principles of equity and the obligation to act in a reasonable manner, and no opinion is expressed regarding the availability of any equitable remedy (including those of specific performance and injunction) which remedies are only available in the discretion of a court of competent jurisdiction; (d) any requirement in any of the Documents that interest be paid at a higher rate after than before default may not be enforceable; (e) no opinion is expressed as to compliance with the Personal Information Protection and Electronic Documents Act (Canada) or any other applicable privacy laws; (f) pursuant to the Currency Act (Canada), a judgment by an Ontario court must be awarded in Canadian currency and that such judgment may be based on a rate of exchange in existence on a day other than the day of payment; and (g) we express no opinion as to the enforceability of the Documents. Our opinions expressed above are limited to Ontario Law and the laws of Canada applicable therein. Our opinions are rendered only with respect to the laws, and the rules, regulations, policies and orders thereunder, which are currently in effect. In connection with the opinions given in paragraph 3 above, we are relying on our understanding of the current administrative policies and assessing practices of the Canada Revenue Agency (the "CRA") made publicly available prior to the date hereof, including the long-standing administrative policy of the CRA that the exemption from Canadian withholding tax contained in paragraph 212(1)(b)(vii) of the Income Tax Act (Canada) can be applicable to debt of a partnership where each of the partners is a corporation resident in Canada for purposes of the Income Tax Act (Canada). We express no opinion as to whether, absent such long-standing administrative policy, payments under the Notes and the Parent Company Guaranty would be subject to withholding tax under the Income Tax Act (Canada). E-4.7(c)-5 This letter is furnished by us solely for your benefit and the benefit of your successors and permitted assigns in connection with the transactions referred to in the Documents and may not be relied upon by any other Person. Very truly yours E-4.7(c)-6 FORM OF OPINION OF SPECIAL COUNSEL TO THE PURCHASERS The closing opinion of Schiff Hardin LLP, special counsel to the Purchasers, called for by Section 4.7(d) of the Agreement, shall be dated the date of the Closing and addressed to the Purchasers, shall be satisfactory in form and substance to the Purchasers and shall be to the effect that: 1. The Agreement and the Notes being delivered on the date hereof constitute the legal, valid and binding contracts of the Issuer, enforceable against the Issuer in accordance with its terms. The Guaranty Agreement constitutes the legal, valid and binding contract of the Company, enforceable against the Company in accordance with its terms. 2. The issuance, sale and delivery of the Notes being delivered on the date hereof under the circumstances contemplated by this Agreement do not, under existing law, require the registration of such Notes under the Securities Act or the qualification of an indenture under the Trust Indenture Act of 1939, as amended. The opinion of Schiff Hardin LLP shall also state that the opinions of Katten Muchin Rosenman LLP, W. Kirk James and Blake, Cassels & Graydon LLP are satisfactory in scope and form to Schiff Hardin LLP and that, in their opinion, the Purchasers are justified in relying thereon. The opinion of Schiff Hardin LLP is limited to the laws of the State of New York, the general business corporation law of the State of Delaware and the Federal laws of the United States. With respect to matters of fact upon which such opinion is based, Schiff Hardin LLP may rely on appropriate certificates of public officials and officers of the Company and the Issuer and upon representations of the Company, the Issuer and the Purchasers delivered in connection with the issuance and sale of the Notes. EXHIBIT 4.7(d) (to Note Purchase Agreement) SCHEDULE 4.14 Reorganization EXISTING FINANCING STRUCTURE Hub International Limited ("HIL"), has borrowed (a) US$65 million from the Bank of Montreal ("BMO") under a US$75 million revolving credit facility (the "HIL-BMO Facility") and (b) US$65 million from holders of fixed-rate senior notes (the "Senior Notes"). Under a master swap agreement with BMO, HIL entered into a fixed-to-floating interest rate swap (the "Swap") with respect to the Senior Notes with BMO as the Swap counterparty. Using funds from various internal and external sources, HIL capitalized certain offshore financing subsidiaries, including Hub (Luxembourg) S.a.r.l., Hub (Gibraltar) Limited, and Hub Hungary Liquidity Management Limited Liability Company (collectively, the "Offshore Subsidiaries"). With the funds received from HIL and its own earnings, Hub Hungary made loans (the "HOC Loans") to Hub U.S. Holdings Inc. ("Hub U.S."), a Delaware corporation wholly owned by HIL and the parent corporation of HIL's U.S. operations, and several Hub U.S. subsidiaries. NEW STRUCTURE HIL proposes to replace the existing financing structure using the Offshore Subsidiaries with the financing structure as outlined below. Under the new structure, the following entities, among others (collectively, the "Tower Entities") will be established: (a) a U.S. limited partnership (the "Partnership") that will be indirectly wholly owned by HIL, (b) an Ontario corporation to serve as the one-percent general partner of the Partnership, (c) a U.S. limited liability company (the "LLC") and (d) a U.S. limited liability company to act as the LLC's manager. The Tower Entities will replace the existing financing structure using the Offshore Subsidiaries. The Partnership will assume the obligations of HIL under the Senior Notes and the Swap. HIL will guarantee such obligations. The Partnership will borrow US$75 million under a loan agreement with Prudential (the "Prudential Loan"). HIL will guarantee the Prudential Loan. The Partnership will enter into a new credit facility with a BMO U.S. branch with availability of US$75 million. The Partnership will immediately borrows US$55 million under such Facility. HIL will guarantee the Partnership's obligations under such Facility. In addition, HIL and the Tower Entities shall have completed all of the steps numbers 1 through 34 in that certain Tower Transaction Plan delivered to the Purchasers by HIL and dated as of April 3, 2006. SCHEDULE 4.14 (to Note Purchase Agreement) SCHEDULE 10.4 Existing Liens
USD $ USD $ CURRENT CONSOL Terms PORTION TOTAL HUB ----- --------- --------- --- LOANS: 21074 Uns Tech (JW), $7875MO 5.35% 4/15/07 150,196 202,070 Mountain Secured 21075 ind Tech (RL), $7875MO 5.35% 4/15/07 150,196 202,070 Mountain Secured 21076 Montana (JW) $3,377MO 5.35% 6/15/07 19,167 29,140 Mountain Secured 21077 Montana (KOC) $3.377MO 5.35% 6/15/07 38,333 58,281 Mountain Secured 21078 Montana (RL) $3,377MO 5,35% 6/15/07 19,167 29,140 Mountain Secured 21046 Ned Miller Agcy, $2,658MO, 5%, 12/15/07 29,543 60,597 Southwest Secured 21047 Ned Miller Inc, $6,57BMO, 5%, 12/15/07 73,106 149,953 Southwest Secured 21048 Gillet, $10,170MO, 6%, 11/1/07 111,855 168,073 Southwest Secured 21061 Jenkins & Co, $8,817MO, 6%, 10/15/06 85,798 85,798 Southwest Secured 21068 STG Corp, $9,03MO, 6%, 8/15/06 73,558 73,558 Southwest Secured 21079 GE Capital $300K Qtr inc Var% 12/30/07 1,200,000 2,300,000 Southwest Secured 21073 AIWC, $21,769MO, 4.35%, 5/15/08 239,950 598,220 Southwest Secured --------- --------- 22999 Total Loans 2,190,869 3,956,900 CAPITAL LEASES: 23025 O&Y Enterprises $347.63,MO 3,254 4,707 MGAs Secured 23010 Heller Finl, $2,247,MO, 8incl .67%,10/06 19,514 19,514 Midwest Secured Office Furniture 23011 Heller Finl, $8,882,MO, incl 8.67%,10/06 77,123 77,123 Midwest Secured Office Furniture 23029 Steelcase, $9,458,MO, incl 6.062%,10/06 83,064 83,064 Midwest Secured Office Furniture 23041 Dell Finl, $12354 MO, incl 9.83% 05/06 1,084 1,084 Southwest Secured --------- --------- 23999 Capital Leases ========= =========
SCHEDULE 10.4 (to Note Purchase Agreement) EX-99.5 6 o30946exv99w5.txt EX-99.5 Exhibit 99.5 ================================================================================ HUB INTERNATIONAL LIMITED ---------- GUARANTY AGREEMENT relating to U.S.$75,000,000 6.43% Senior Notes of Hub International Limited Partnership due April 4, 2016 ---------- Dated as of April 4, 2006 ================================================================================ TABLE OF CONTENTS (Not a part of the Agreement)
PAGE ---- 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
-i- TABLE OF CONTENTS (continued)
PAGE ---- 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
-ii- 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 -iii- 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. -2- "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 -3- 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 -4- 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. -5- (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: -6- (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); -7- (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; -8- (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. -9- 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 -10- 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 -11- 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 -12- 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 -13- 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; -14- (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. -15- (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 -16- 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. -17- 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 -18- 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 -19- 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. -20- (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 -21- 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 -22- 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. -23- 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. * * * * * -24- 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 -25- 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) EX-99.6 7 o30946exv99w6.txt EX-99.6 Exhibit 99.6 ================================================================================ HUB INTERNATIONAL LIMITED PARTNERSHIP 5.71% Amended and Restated Series A Senior Notes due April 4, 2011 6.16% Amended and Restated Series B Senior Notes due June 15, 2013 ---------- AMENDED AND RESTATED NOTE PURCHASE AGREEMENT ---------- Dated as of April 4, 2006 ================================================================================ TABLE OF CONTENTS
SECTION HEADING PAGE - ------- ------- ---- SECTION 1. BACKGROUND; AMENDMENT AND RESTATEMENT OF EXISTING NOTE PURCHASE AGREEMENTS AND EXISTING NOTES; AND EFFECTIVE DATE............ 1 Section 1.1. Background............................................. 1 Section 1.2. Amendment and Restatement of Existing Note Purchase Agreements.......................................... 1 Section 1.3. Amendment and Restatement of Existing Notes............ 2 Section 1.4. Agreement and Consent of the Noteholders............... 2 Section 1.5. Defined Terms, Etc..................................... 2 Section 1.6. Several Obligations.................................... 2 Section 1.7. Effect of Amendment and Restatement.................... 2 Section 1.8. Effective Date......................................... 2 Section 1.9. Survival of Payment Obligations........................ 3 SECTION 2. [INTENTIONALLY OMITTED]....................................... 3 SECTION 3. [INTENTIONALLY OMITTED]....................................... 3 SECTION 4. CONDITIONS TO EFFECTIVE DATE.................................. 3 Section 4.1. Guaranty Agreement..................................... 4 Section 4.2. Termination of Existing Credit Agreement and Bridge Loan Credit Agreement; New Credit Agreement......... 4 Section 4.3. 2006 Note Agreement.................................... 4 Section 4.4. Representations and Warranties......................... 4 Section 4.5. Performance; No Default................................ 4 Section 4.6. Compliance Certificates................................ 4 Section 4.7. Opinions of Counsel.................................... 5 Section 4.8. Purchase Permitted by Applicable Law, Other Agreements Etc................................................. 5 Section 4.9. Related Transactions................................... 5 Section 4.10. Confirmation under Subordinated Debentures............. 6 Section 4.11. Review of Insurance Broker Litigation and Investigations...................................... 6 Section 4.12. Payment of Special Counsel Fees........................ 6 Section 4.13. Private Placement Numbers.............................. 6 Section 4.14. Reorganization; Changes in Corporate Structure......... 6 Section 4.15. Amendment Fee.......................................... 6 Section 4.16. Proceedings and Documents.............................. 6 Section 4.17. Payment of Outstanding Interest Under the Existing Notes............................................... 7 SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE ISSUER.................. 7
-i- Section 5.1. Organization; Power and Authority...................... 7 Section 5.2. Authorization, Etc..................................... 7 Section 5.3. Compliance with Laws, Other Instruments, Etc........... 7 Section 5.4. Governmental Authorizations, Etc....................... 8 Section 5.5. Compliance with ERISA.................................. 8 Section 5.6. Private Offering by the Issuer......................... 8 Section 5.7. Use of Proceeds; Margin Regulations.................... 8 Section 5.8. Foreign Assets Control Regulations, Etc................ 9 Section 5.9. Status under Certain Statutes.......................... 9 Section 5.10. Notes Rank Pari Passu.................................. 9 SECTION 6. REPRESENTATIONS OF THE NOTEHOLDERS............................ 9 Section 6.1. Purchase for Investment................................ 9 Section 6.2. Source of Funds........................................ 9 SECTION 7. INFORMATION AS TO ISSUER...................................... 11 Section 7.1. Financial and Business Information..................... 11 Section 7.2. Officer's Certificate.................................. 11 Section 7.3. Inspection............................................. 12 SECTION 8. PREPAYMENT OF THE NOTES....................................... 12 Section 8.1. Required Prepayments................................... 12 Section 8.2. Optional Prepayments with Make-Whole Amount............ 13 Section 8.3. Allocation of Partial Prepayments...................... 13 Section 8.4. Maturity; Surrender, Etc............................... 14 Section 8.5. Purchase of Notes...................................... 14 Section 8.6. Make-Whole Amount for Notes............................ 14 Section 8.7. Offer to Prepay Notes in the Event of a Debt Prepayment Application......................................... 16 Section 8.8. Payments Free and Clear of Taxes....................... 16 SECTION 9. AFFIRMATIVE COVENANTS......................................... 18 Section 9.1. Compliance with Parent Company Guaranty Affirmative Covenants........................................... 18 Section 9.2. Notes to Rank Pari Passu............................... 18 SECTION 10. NEGATIVE COVENANTS........................................... 18 Section 10.1. Limitation on Subsidiary Debt.......................... 19 Section 10.2. Limitation on Priority Debt............................ 20 Section 10.3. Limitation on Liens.................................... 20 Section 10.4. Merger, Consolidation, Etc............................. 22 Section 10.5. Sale of Assets, Etc.................................... 24 Section 10.6. Sale-and-Leasebacks.................................... 24 Section 10.7. Disposal of Ownership of a Subsidiary.................. 25

-ii- Section 10.8. Nature of Business..................................... 25 Section 10.9. Transactions with Affiliates........................... 25 Section 10.10. Sales of Receivables................................... 26 Section 10.11. Most Favored Lender Status............................. 26 Section 10.12. Restricted Payments.................................... 26 Section 10.13. Limitations on Restrictive Agreements.................. 27 SECTION 11. EVENTS OF DEFAULT............................................ 27 SECTION 12. REMEDIES ON DEFAULT, ETC..................................... 30 Section 12.1. Acceleration........................................... 30 Section 12.2. Other Remedies......................................... 31 Section 12.3. Rescission............................................. 31 Section 12.4. No Waivers or Election of Remedies, Expenses, Etc...... 31 SECTION 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES................ 31 Section 13.1. Registration of Notes.................................. 31 Section 13.2. Transfer and Exchange of Notes......................... 32 Section 13.3. Replacement of Notes................................... 32 SECTION 14. PAYMENTS ON NOTES............................................ 32 Section 14.1. Place of Payment....................................... 32 Section 14.2. Home Office Payment.................................... 33 SECTION 15. EXPENSES, ETC................................................ 33 Section 15.1. Transaction Expenses................................... 33 Section 15.2. Survival............................................... 33 SECTION 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT............................................................. 34 SECTION 17. AMENDMENT AND WAIVER......................................... 34 Section 17.1. Requirements........................................... 34 Section 17.2. Solicitation of Holders of Notes....................... 35 Section 17.3. Binding Effect, Etc.................................... 35 Section 17.4. Notes Held by Parent Company, Etc...................... 35 SECTION 18. NOTICES...................................................... 35 SECTION 19. REPRODUCTION OF DOCUMENTS.................................... 36 SECTION 20. CONFIDENTIAL INFORMATION..................................... 36

-iii- SECTION 21. SUBSTITUTION OF NOTEHOLDER................................... 37 SECTION 22. SUBMISSION TO JURISDICTION, NORMAL RATES, ETC................ 38 Section 22.1. Submission to Jurisdiction............................. 38 Section 22.2. Normal Rates........................................... 38 SECTION 23. MISCELLANEOUS................................................ 38 Section 23.1. Successors and Assigns................................. 38 Section 23.2. Payments Due on Non-Business Days...................... 39 Section 23.3. Severability........................................... 39 Section 23.4. Construction........................................... 39 Section 23.5. Counterparts........................................... 39 Section 23.6. Currency............................................... 39 Section 23.7. Governing Law.......................................... 39

-iv- ATTACHMENTS TO THE NOTE PURCHASE AGREEMENT: SCHEDULE A -- Information Relating to Noteholders SCHEDULE B -- Defined Terms SCHEDULE 4.14 -- Reorganization SCHEDULE 10.4 -- Existing Liens EXHIBIT 1 -- Form of 5.71% Amended and Restated Series A Senior Note due April 4, 2011 EXHIBIT 2 -- Form of 6.16% Amended and Restated Series B Senior Note due June 15, 2013 EXHIBIT 4.1 -- Form of Guaranty Agreement EXHIBIT 4.7(a) -- Form of Opinion of Counsel for the General Partner, the Parent Company and the Issuer EXHIBIT 4.7(b) -- Form of Opinion of Vice President and Secretary of the Parent Company EXHIBIT 4.7(c) -- Form of Opinion of Canadian Counsel to the Parent Company EXHIBIT 4.7(d) -- Form of Opinion of Special Counsel for the Noteholders -v- HUB INTERNATIONAL LIMITED PARTNERSHIP 55 East Jackson Boulevard Chicago, Illinois 60604 AMENDED AND RESTATED NOTE AGREEMENT 5.71% Amended and Restated Series A Senior Notes due April 4, 2011 6.16% Amended and Restated Series B Senior Notes due June 15, 2013 Dated as of April 4, 2006 TO THE NOTEHOLDERS LISTED IN THE ATTACHED SCHEDULE A: Ladies and Gentlemen: Hub International Limited Partnership, a limited partnership organized under the laws of Delaware (the "Issuer"), agrees with the each Noteholder listed on the attached SCHEDULE A (the "Noteholders") as follows: SECTION 1. BACKGROUND; AMENDMENT AND RESTATEMENT OF EXISTING NOTE PURCHASE AGREEMENTS AND EXISTING NOTES; AND EFFECTIVE DATE. Section 1.1. Background. Reference is made to those certain Note Agreements, each dated as of June 1, 2003 (the "Existing Note Purchase Agreements"), between Hub International Limited, a Canadian corporation (herein called the "Parent Company"), and, respectively, each Noteholder listed in SCHEDULE A thereto, under and pursuant to which the Parent Company issued its 5.71% Series A Senior Notes due June 15, 2010 in the aggregate principal amount of $10,000,000 (the "Series A Notes") and its 6.16% Series B Senior Notes due June 15, 2013 in the aggregate principal amount of $55,000,000 (the "Series B Notes"; said Series B Notes together with the Series A Notes being hereinafter collectively referred to as the "Existing Notes"). Each of the Noteholders and the Issuer now desire to amend and restate the Existing Note Purchase Agreements and the Existing Notes in their entirety and to cause the Parent Company to enter into a Guaranty Agreement pursuant to which the Parent Company will unconditionally guarantee payment in full of the Notes (as defined in SECTION 1.3). In order to effectuate and reflect the foregoing in the most expeditious manner, to facilitate dealings with respect to the Existing Notes and the Existing Note Purchase Agreements and to permit the reorganization and restructuring more fully described in SCHEDULE 4.14 hereto, the parties hereto have agreed to amend and restate each of the Existing Notes and the Existing Note Purchase Agreements. Section 1.2. Amendment and Restatement of Existing Note Purchase Agreements. Effective the Effective Date (as hereinafter defined), the Issuer, by its execution of this Agreement, hereby agrees and consents to the amendment and restatement in their entirety of all of the Existing Note Purchase Agreements by and into this Agreement. Section 1.3. Amendment and Restatement of Existing Notes. The Issuer, by its execution of this Agreement, hereby agrees and consents to the amendment and restatement of the Existing Notes in their entirety to be substantially in the form of EXHIBITS 1 and 2 hereto. The Existing Notes, as so amended and restated, shall be hereinafter referred to, individually, as a "Note" and, collectively, as the "Notes," and shall include each Note delivered pursuant to any provision of this Agreement and each Note delivered in substitution or exchange for any such Note pursuant to any such provision. The Issuer has duly authorized the execution and delivery to each Noteholder of its respective Notes, each of which Notes shall (a) be substituted in the place of the Existing Notes, (b) be dated and bear interest from the date hereof, (c) have the terms herein and therein provided, and (d) be substantially in the form set out in EXHIBITS 1 or 2, as the case may be, with such changes therefrom, if any, as may be approved by the Noteholders and the Issuer. Section 1.4. Agreement and Consent of the Noteholders. The Noteholders are, collectively, the holders of one hundred percent (100%) of the aggregate principal amount of the Existing Notes. Subject to the satisfaction of the conditions precedent set forth in SECTION 4, the Noteholders, by their execution of this Agreement, hereby agree and consent to: (a) the amendment and restatement in their entirety of all of the Existing Note Purchase Agreements by and into this Agreement, (b) the amendment and restatement in their entirety of each of the Existing Notes by the exchange for a Note substantially in the form of EXHIBIT 1 or 2 hereto, as applicable, and in an equal outstanding principal amount therefore and (c) the execution and delivery of the Parent Guaranty by the Parent Company. Section 1.5. Defined Terms, Etc. Certain capitalized terms used in this Agreement are defined in SCHEDULE A hereto; references to a "SCHEDULE" or an "EXHIBIT" are, unless otherwise specified, to a SCHEDULE or an EXHIBIT attached to this Agreement; and references to a "SECTION" are, unless otherwise specified, to a SECTION of this Agreement. Section 1.6. Several Obligations. The obligations of each Noteholder hereunder are several and not joint obligations, and no Noteholder shall have any obligation or liability to any Person for the performance or nonperformance by any other Noteholder hereunder. Section 1.7. Effect of Amendment and Restatement. Each of the Noteholders and the Issuer agree that (a) the amendment and restatement of the Existing Notes and the exchange of the Existing Notes for the Notes hereunder shall not constitute a prepayment of the Existing Notes, and (b) no Make-Whole Amount or other premium is payable as a result of the amendment and restatement of the Existing Note Purchase Agreements or the Existing Notes as contemplated hereby. Section 1.8. Effective Date. On April 4, 2006, or such other Business Day thereafter as may be mutually agreed upon by the Issuer and the Noteholders (the "Effective Date"), the Issuer shall execute and deliver to the Noteholders at the offices of Chapman and Cutler LLP, 111 West Monroe Street, Chicago, Illinois 60603, at 10:00 A.M. Chicago time, or at such other -2- place agreed to by the parties, one or more Notes (as set forth below each Noteholder's name on SCHEDULE A), registered in the name specified on SCHEDULE A, in the denomination or denominations specified on SCHEDULE A and of the series specified in SCHEDULE A, in replacement of the Existing Notes held by each Noteholder (or such Noteholder's nominee), in the respective principal amounts and of the series, as more particularly set forth below its name on SCHEDULE A. Contemporaneously with the receipt by each Noteholder of such Notes, the Existing Notes held by such Noteholder shall be deemed to be cancelled and amended and restated by the Notes (regardless of whether such Noteholder shall have delivered to the Parent Company for cancellation the Existing Notes held by it). Each Noteholder agrees to use commercially reasonable efforts to deliver the Existing Notes held by it to the Parent Company in connection with the foregoing replacement and cancellation. All amounts owing under, and evidenced by, the Existing Notes as of the Effective Date shall continue to be outstanding under, and shall from and after the Effective Date be evidenced by, the Notes, and shall be governed by the terms of this Agreement. It is the intention of the parties hereto that the amendment and restatement of the Existing Notes by the Issuer and the execution, delivery and full effectiveness of this Agreement by the Issuer be simultaneous. Existing Notes delivered to the Parent Company pursuant to the terms of this Agreement shall be marked "Cancelled/Amended and Restated by New Notes" by the Parent Company. If on the Effective Date the Issuer shall fail to tender the Notes to any Noteholder as provided in this SECTION 1.8, or any of the conditions specified in SECTION 4 shall not have been fulfilled to any Noteholder's reasonable satisfaction, such Noteholder shall, at such Noteholder's election, be relieved of all further obligations under this Agreement, without thereby waiving any rights such Noteholder may have under the Existing Note Purchase Agreements, the Existing Notes or otherwise by reason of such failure or such nonfulfillment. Section 1.9. Survival of Payment Obligations. All payment obligations of the Parent Company under the Existing Note Purchase Agreements (including, without limitation, (i) reimbursement obligations in respect of costs, expenses and fees of or incurred by the holders of the Existing Notes and (ii) obligations to pay unpaid accrued interest on the Existing Notes accruing from the date of the last full payment of interest thereon to and including the Effective Date, which interest payment shall be made by the Parent Company on the Effective Date), other than the obligation to pay the principal of and interest and Make-Whole Amount on the Existing Notes (which obligations, after the Effective Date, shall be evidenced by the Notes) shall survive the amendment and restatement of the Existing Note Purchase Agreements and the Existing Notes (and the cancellation thereof) as the obligations of the Issuer. SECTION 2. [INTENTIONALLY OMITTED. SECTION 3. [INTENTIONALLY OMITTED]. SECTION 4. CONDITIONS TO EFFECTIVE DATE. The effectiveness of this Agreement shall be subject to the fulfillment to each Noteholder's satisfaction, prior to or on the Effective Date, of the following conditions: -3- Section 4.1. Guaranty Agreement. The Parent Company shall have executed and delivered a Guaranty Agreement in the form of EXHIBIT 4.1 hereto (as the same may be amended, modified or supplemented from time to time in accordance with the provisions thereof, the "Parent Company Guaranty"). Section 4.2. Termination of Existing Credit Agreement and Bridge Loan Credit Agreement; New Credit Agreement. The Parent Company and the Bank shall have terminated the Existing Credit Agreement and the Bridge Loan Credit Agreement. The Issuer and the Bank shall have duly executed and delivered a Credit Agreement providing for a loan facility to the Issuer of between $50,000,000 and $75,000,000 (as amended from time to time, the "Credit Agreement"), which, among other things, allows for the amendment and restatement of the Existing Notes and the Existing Note Purchase Agreements and the issuance of the 2006 Notes and provides for covenants and agreements substantially the same as those contained herein and in the Parent Company Guaranty, in form and substance reasonably satisfactory to each Noteholder, and the Credit Agreement shall be in full force and effect. Each Noteholder shall have received a copy of the Credit Agreement and all instruments, documents and agreements delivered at the closing thereof. Section 4.3. 2006 Note Agreement. The Issuer and the purchasers of the 2006 Notes shall have duly executed and delivered the 2006 Note Purchase Agreement, which among other things, provides for the issuance of the 2006 Notes and for covenants and agreements substantially the same as those contained herein and in the Parent Company Guaranty, in form and substance reasonably satisfactory to each Noteholder, and the 2006 Note Purchase Agreement and the 2006 Guaranty Agreement shall be in full force and effect. Each Noteholder shall have received a copy of the 2006 Note Purchase Agreement and the 2006 Guaranty Agreement and all instruments, documents and agreements delivered at the closing thereof. Section 4.4. Representations and Warranties. The representations and warranties of the Issuer in this Agreement and the representations and warranties of the Parent Company in the Parent Company Guaranty shall be correct when made and on the Effective Date. Section 4.5. Performance; No Default. The Issuer and the Parent Company shall have performed and complied with all agreements and conditions contained in this Agreement and the Parent Company Guaranty required to be performed or complied with by it prior to or on the Effective Date, and after giving effect to the amendment and restatement of the Existing Note Purchase Agreements and the Existing Notes and the exchange thereof for the Notes and the issue and sale of the 2006 Notes (and the application of the proceeds thereof), no Default or Event of Default shall have occurred and be continuing. Neither the Parent Company nor any Subsidiary shall have entered into any transaction since March 31, 2004 that would have been prohibited by Section 10 hereof had such Section applied since such date. Section 4.6. Compliance Certificates. (a) Officer's Certificates. Each of the Parent Company and the Issuer shall have delivered to each Noteholder an Officer's Certificate, dated the Effective Date, certifying that the conditions specified in SECTIONS 4.4, 4.5 and 4.14 have been fulfilled. -4- (b) Secretary's Certificates. The General Partner shall have delivered to each Noteholder a certificate certifying as to the resolutions attached thereto and other partnership proceedings taken by the Issuer or corporate proceedings taken by the General Partner relating to the authorization, execution and delivery of the Notes and this Agreement and the Parent Company shall have delivered to each Noteholder a certificate certifying as to the resolutions attached thereto and other corporate proceedings relating to the authorization, execution and delivery of the Parent Company Guaranty. Section 4.7. Opinions of Counsel. Each Noteholder shall have received opinions in form and substance satisfactory to each Noteholder, dated the Effective Date (a) from Katten Muchin Rosenman LLP, counsel for the Parent Company, the General Partner and the Issuer, covering the matters set forth in EXHIBIT 4.7(A) and covering such other matters incident to the transactions contemplated hereby as each Noteholder or special counsel to the Noteholders may reasonably request (and the Issuer hereby instructs such counsel to deliver such opinion to each Noteholder), (b) from W. Kirk James, Vice President and Secretary of the Parent Company covering the matters set forth in EXHIBIT 4.7(B) and covering such other matters incident to the transactions contemplated hereby as such Noteholder or special counsel to the Noteholders may reasonably request, (c) from Blake, Cassels & Graydon LLP, Canadian counsel for the Parent Company, the General Partner and the Issuer covering the matters set forth in EXHIBIT 4.7(C) and covering such other matters incident to the transactions contemplated hereby as such Noteholder or special counsel to the Noteholders may reasonably request and (d) from Chapman and Cutler LLP, the Noteholders' special counsel in connection with such transactions, covering the matters set forth in EXHIBIT 4.7(D) and such other matters incident to such transactions as each Noteholder may reasonably request. Section 4.8. Purchase Permitted by Applicable Law, Other Agreements Etc. On the Effective Date, the issuance and delivery of the Notes in exchange for the Existing Notes shall (a) be permitted by the laws and regulations of each jurisdiction to which each Noteholder is subject, without recourse to provisions (such as Section 1405(a)(8) of the New York Insurance Law) permitting limited investments by insurance companies without restriction as to the character of the particular investment, (b) not violate any applicable law or regulation (including, without limitation, Regulation T, U or X of the Board of Governors of the Federal Reserve System) (c) not subject any Noteholder to any tax, penalty or liability under or pursuant to any applicable law or regulation and (d) not cause the Parent Company or any Subsidiary to be in violation of any covenants or other restrictions or provisions in any agreements, instruments or other documents to which the Parent Company or such Subsidiary is subject. If requested by any Noteholder, each Noteholder shall have received an Officer's Certificate of the Issuer certifying as to such matters of fact as each Noteholder may reasonably specify to enable each Noteholder to determine whether the issuance and delivery of the Notes in exchange for the Existing Notes is so permitted, including, without limitation, calculations demonstrating compliance with the covenants set forth in the Credit Agreement, this Agreement and the Subordinated Debentures after giving effect to the issuance of the Notes in exchange for the Existing Notes. Section 4.9. Related Transactions. The Issuer and the Parent Company shall have completed the exchange of the Notes for the Existing Notes pursuant to this Agreement. -5- Section 4.10. Confirmation under Subordinated Debentures. Each holder of a Subordinated Debenture shall have duly executed and delivered to each Noteholder a confirmation, acknowledged by the Parent Company, which confirms that the Notes and the Parent Company Guaranty constitute Permitted Senior Indebtedness under such Subordinated Debenture, and such confirmation shall be in full force and effect. Section 4.11. Review of Insurance Broker Litigation and Investigations. Each Noteholder shall have completed a review of matters with respect to any litigation or investigation involving the Parent Company or any of its Subsidiaries and each Noteholder shall be satisfied in all respects with the results of such review. Section 4.12. Payment of Special Counsel Fees. Without limiting the provisions of SECTION 15.1, the Issuer shall have paid on or before the Effective Date the reasonable fees, charges and disbursements of the Noteholders' special counsel referred to in SECTION 4.7(D) to the extent reflected in a statement of such counsel rendered to the Issuer at least three Business Days prior to the Effective Date. Section 4.13. Private Placement Numbers. A Private Placement Number issued by Standard & Poor's CUSIP Service Bureau (in cooperation with the Securities Valuation Office of the National Association of Insurance Commissioners) shall have been obtained for each series of the Notes. Section 4.14. Reorganization; Changes in Corporate Structure. (a) The Parent Company and its Subsidiaries shall have completed the reorganization described on SCHEDULE 4.14 hereto (the "Reorganization"). (b) Except as specified in SCHEDULE 4.14, neither the Parent Company nor the Issuer shall have changed its jurisdiction of incorporation or organization or been a party to any merger or consolidation and shall not have succeeded to all or any substantial part of the liabilities of any other entity, at any time following the date of the most recent financial statements referred to in Schedule 5.5 of the Parent Company Guaranty. Section 4.15. Amendment Fee. The Issuer shall have paid (i) to such Noteholder, by wire transfer of immediately available funds, each Noteholder's ratable portion (in proportion to the aggregate principal amount of the Notes held by it) of an amendment fee for all Noteholders in the aggregate amount of U.S.$325,000 and (ii) to Metropolitan Life Insurance Company by wire transfer of immediately available funds, an amendment fee in the aggregate amount of $9,400. Section 4.16. Proceedings and Documents. All corporate, partnership and other proceedings in connection with the transactions contemplated by this Agreement and all documents and instruments incident to such transactions shall be satisfactory to each Noteholder and special counsel to the Noteholders, and each Noteholder and special counsel to the Noteholders shall have received all such counterpart originals or certified or other copies of such documents as each Noteholder or special counsel to the Noteholders may reasonably request. -6- Section 4.17. Payment of Outstanding Interest Under the Existing Notes. The Parent Company shall have paid to the Noteholders on or before the Effective Date unpaid interest which shall have accrued on the Existing Notes from the last full payment of interest on such Existing Notes to and including the Effective Date. SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE ISSUER. The Issuer represents and warrants to each Noteholder that: Section 5.1. Organization; Power and Authority. The Issuer is a limited partnership duly organized and validly existing under the laws of Delaware, and is duly qualified as a foreign limited partnership 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. The General Partner is the sole general partner of the Issuer. The General Partner is a corporation duly organized and validly existing under the laws of the Province of Ontario and is duly qualified as a foreign corporation and 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, be reasonably expected to have a Material Adverse Effect. The Issuer has the limited partnership 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 Agreement and the Notes and to perform the provisions hereof and thereof. The General Partner has the corporate power and authority to own or hold under lease the properties it purports to own or hold under lease, to transact on the business it transacts and proposes to transact and to execute and deliver this Agreement and the Notes on behalf of the Issuer. Section 5.2. Authorization, Etc. This Agreement and the Notes have been duly authorized by all necessary limited partnership action on the part of the Issuer, and this Agreement constitutes, and upon execution and delivery thereof each Note will constitute, a legal, valid and binding obligation of the Issuer enforceable against the Issuer 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). The execution and delivery of this Agreement and the Notes by the General Partner on behalf of the Issuer have been duly authorized by all necessary corporate action on the part of the General Partner. Section 5.3. Compliance with Laws, Other Instruments, Etc. The execution, delivery and performance by the Issuer of this Agreement and the Notes, and the execution and delivery of this Agreement and the Notes by the General Partner on behalf of the Issuer, 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 Parent Company or any Subsidiary under, any indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, the partnership agreement of the Issuer, the corporate charter of the General Partner, limited partnership agreement, operating agreement, corporate charter or by-laws of the Parent Company or any -7- Subsidiary or any other Material agreement or instrument to which the Parent Company or any Subsidiary is bound or by which the Parent 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 Parent Company or any Subsidiary or (c) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to the Parent Company or any Subsidiary. Section 5.4. 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 Issuer of this Agreement or the Notes or the execution or delivery of this Agreement or the Notes by the General Partner on behalf of the Issuer, other than those consents, approvals or authorizations obtained and those registrations, filings or declarations made on or before the Effective Date. Section 5.5. Compliance with ERISA. The execution and delivery of this Agreement and the issuance and delivery of the Notes hereunder in exchange for the Existing Notes 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 Issuer in the first sentence of this SECTION 5.5 is made in reliance upon and subject to the accuracy of each Noteholder's representation in SECTION 6.2 as to the sources of the funds used to pay the purchase price of the Existing Notes and used to hold the Notes acquired hereunder in exchange for the Existing Notes. Section 5.6. Private Offering by the Issuer. Neither the General Partner, the Issuer 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 Noteholders, in exchange for the Existing Notes. Neither the General Partner, the Issuer nor anyone acting on its behalf has taken, or will take, any action that would subject the issuance or delivery of the Notes to the registration requirements of Section 5 of the Securities Act. Section 5.7. Use of Proceeds; Margin Regulations. No part of the proceeds from the sale of the 2006 Notes will be used, directly or indirectly, for the purpose of buying or carrying any margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System (12 CFR 221), or for the purpose of buying or carrying or trading in any securities under such circumstances as to involve the Issuer in a violation of Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a violation of Regulation T of said Board (12 CFR 220). As used in this Section, the terms "margin stock" and "purpose of buying or carrying" shall have the meanings assigned to them in said Regulation U. Margin stock does not constitute more than 25% of the value of the consolidated assets of the Issuer and its Subsidiaries and the Issuer does not have any present intention that margin stock will constitute more than 25% of the value of such assets. As used in this Section, the terms "margin stock" and "purpose of buying or carrying" shall have the meanings assigned to them in said Regulation U. -8- Section 5.8. Foreign Assets Control Regulations, Etc. The delivery of the Notes by the Issuer hereunder in exchange for the Existing Notes will not 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 5.9. Status under Certain Statutes. Neither the General Partner nor the Issuer 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 5.10. Notes Rank Pari Passu. The obligations of the Issuer under this Agreement and the Notes rank at least pari passu in right of payment with all other Senior Debt (actual or contingent) of the Issuer. SECTION 6. REPRESENTATIONS OF THE NOTEHOLDERS. Section 6.1. Purchase for Investment. (a) Each Noteholder represents that it is an Institutional Accredited Investor. Each Noteholder further represents that it is acquiring the Notes in exchange for the Existing Notes for its own account or for one or more separate accounts maintained by such Noteholder or for the account of one or more pension or trust funds and not with a view to the distribution thereof, provided that the disposition of such Noteholder's or such pension or trust funds' property shall at all times be within such Noteholder's or such pension or trust funds' control. Each Noteholder understands that the Notes have not been registered under the Securities Act or securities laws of any other applicable jurisdiction and may be resold only if registered pursuant to the provisions of the Securities Act or if an exemption from registration is available, except under circumstances where neither such registration nor such an exemption is required by law, and that the Issuer is not required to register the Notes. (b) Each Noteholder acknowledges that the Notes are not qualified for distribution or resale in Canada and further represents and warrants and agrees that: (a) such Noteholder is not a Canadian resident nor acting for the account or benefit of a Canadian resident; (b) the Notes were not offered to such Noteholder in Canada; (c) at the time of agreeing to purchase the Notes such Noteholder was and is outside of Canada; and (d) such Noteholder will not trade its Notes to any Canadian resident or in Canada unless permitted under and traded in compliance with applicable securities laws of the provinces and territories of Canada. Section 6.2. Source of Funds. Each Noteholder represents that at least one of the following statements is an accurate representation as to each source of funds (a "Source") which was used to acquire the Existing Notes and which remains used to hold the Notes to be acquired hereunder in exchange for the Existing Notes: (a) the Source is an "insurance company general account" within the meaning of Department of Labor Prohibited Transaction Exemption ("PTE") 95-60 (issued July 12, 1995), as amnded by PTE 2002-13 (issued March 1, 2002) and there is no employee benefit plan, treating as a single plan, all plans maintained by the same -9- employer or employee organization, with respect to which the amount of the general account reserves and liabilities for all contracts held by or on behalf of such plan, exceeds 10% of the total reserves and liabilities of such general account (exclusive of separate account liabilities) plus surplus, as set forth in the National Association of Insurance Commissioner's Annual Statement for such Noteholder filed with such Noteholder's state of domicile; or (b) the Source is either (1) an insurance company pooled separate account, within the meaning of PTE 90-1 (issued January 29, 1990), or (2) a bank collective investment fund, within the meaning of PTE 91-38 (issued July 12, 1991), as amended by PTE 2002-13 (issued March 1, 2002) and, except as such Noteholder has disclosed to the Issuer in writing pursuant to this paragraph (b) prior to the Effective Date, no employee benefit plan or group of plans maintained by the same employer or employee organization beneficially owns more than 10% of all assets allocated to such pooled separate account or collective investment fund; or (c) the Source constitutes assets of an "investment fund" (within the meaning of Part V of the QPAM Exemption) managed by a "qualified professional asset manager" or "QPAM" (within the meaning of Part V of the QPAM Exemption), no employee benefit plan's assets that are included in such investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of Section V(c)(1) of the QPAM Exemption) of such employer or by the same employee organization and managed by such QPAM, exceed 20% of the total client assets managed by such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a Person controlling or controlled by the QPAM (applying the definition of "control" in Section V(e) of the QPAM Exemption) owns a 5% or more interest in the Issuer and (1) the identity of such QPAM and (2) the names of all employee benefit plans whose assets are included in such investment fund have been disclosed to the Issuer in writing pursuant to this paragraph (c); or (d) the Source is a governmental plan; or (e) the Source is one or more employee benefit plans, or a separate account or trust fund comprised of one or more employee benefit plans, each of which has been identified to the Issuer in writing pursuant to this paragraph (e) prior to the Effective Date; or (f) the Source does not include assets of any employee benefit plan, other than a plan exempt from the coverage of ERISA. As used in this SECTION 6.2, the terms "employee benefit plan," "governmental plan," "party in interest" and "separate account" shall have the respective meanings assigned to such terms in Section 3 of ERISA. -10- SECTION 7. INFORMATION AS TO ISSUER. Section 7.1. Financial and Business Information. The Issuer shall deliver to each holder that is an Institutional Investor: (a) Notice of Default or Event of Default -- promptly, and in any event within five Business Days after a Responsible Officer of the Issuer 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(f), a written notice specifying the nature and period of existence thereof and what action the Issuer is taking or proposes to take with respect thereto; (b) Notices from Governmental Authority -- promptly, and in any event within 30 days of receipt thereof, copies of any notice to the Issuer 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; (c) Requested Information -- with reasonable promptness, such other data and information relating to the business, operations, affairs, financial condition, assets or properties of the Issuer or relating to the ability of the Issuer to perform its obligations hereunder and under the Notes as from time to time may be reasonably requested by any such holder of Notes. Section 7.2. Officer's Certificate. The Issuer shall cause each set of financial statements delivered to a holder pursuant to Section 3.1(a) or Section 3.1(b) of the Guaranty Agreement to be accompanied by a certificate of a Senior Financial Officer of the Parent Company setting forth: (a) Covenant Compliance -- the information (including detailed calculations) required in order to establish whether the Issuer was in compliance with the requirements of SECTION 10.1 through SECTION 10.8 hereof, inclusive, and that no Event of Default described in SECTION 11(D) hereof was in existence, during the quarterly or annual period covered by the statements then being furnished (including with respect to each such Section, where applicable, the calculations of the maximum or minimum amount, ratio or percentage, as the case may be, permissible under the terms of such Section and the calculation of the amount, ratio or percentage then in existence); and (b) Event of Default -- a statement that such officer has reviewed the relevant terms hereof and has made, or caused to be made, under his or her supervision, a review of the transactions and conditions of the Parent Company and its Subsidiaries from the beginning of the quarterly or annual period covered by the statements then being furnished to the date of the certificate and that such review shall not have disclosed the existence during such period of any condition or event that constitutes a Default or an Event of Default or, if any such condition or event existed or exists (including, without limitation, any such event or condition resulting from the failure of the Parent Company -11- or any Subsidiary to comply with any Environmental Law), specifying the nature and period of existence thereof and what action the Parent Company shall have taken or proposes to take with respect thereto. Section 7.3. Inspection. The Issuer shall permit, and shall cause the Parent Company and its Subsidiaries to permit, the representatives of each holder that is an Institutional Investor: (a) No Default -- if no Default or Event of Default then exists, at the expense of such holder and upon reasonable prior notice to the Parent Company, to visit the principal executive office of the Parent Company, to discuss the affairs, finances and accounts of the Parent Company and its Subsidiaries with the Parent Company's officers and (with the consent of the Parent Company, which consent the Issuer will not permit to be unreasonably withheld) its independent chartered accountants, and (with the consent of the Parent Company, which consent the Issuer will not permit to be unreasonably withheld) to visit the other offices and properties of the Parent Company and each Subsidiary, all at such reasonable times during business hours and as often as may be reasonably requested in writing; and (b) Default -- if a Default or Event of Default then exists, at the expense of the Issuer to visit and inspect any of the offices or properties of the Parent Company or any Subsidiary, to examine all their respective books of account, records, reports and other papers, to make copies and extracts therefrom, and to discuss their respective affairs, finances and accounts with their respective officers and independent chartered accountants (and by this provision the Issuer authorizes said accountants to discuss the affairs, finances and accounts of the Issuer and its Subsidiaries), all at such times and as often as may be requested. Section 8. PREPAYMENT OF THE NOTES. Section 8.1. Required Prepayments. (a) On June 15, 2006, the Company will prepay U.S.$2,500,000 in principal amount (or such lesser principal amount as shall then be outstanding) of the Series A Notes at par and without payment of the Make-Whole Amount or any premium, together with interest accrued thereon. The entire principal amount of the Series A Notes shall become due and payable on April 4, 2011. (b) The Company will prepay the Series B Notes in the amounts and on the dates set forth below, in each case at par and without payment of the Make-Whole Amount or any premium, together with interest accrued thereon:
PREPAYMENT AMOUNT PREPAYMENT DATE - ----------------- --------------- ~~$ 4,583,333 June 15, 2008 $ 4,583,333 June 15, 2009~~
-12- ~~$ 4,583,333 June 15, 2010 $19,250,001 June 15, 2011 $11,000,000 June 15, 2012 $11,000,000 June 15, 2013~~

In the case of each required prepayment of the Notes pursuant to paragraph (a) or (b) of this SECTION 8.1, the principal amount of the Notes of the series to be prepaid shall be allocated among all of the Notes of such series to be prepaid at the time outstanding in proportion, as nearly as practical, to the respective unpaid principal amounts thereof. Any partial prepayment of the Notes pursuant to SECTION 8.2 shall be applied in satisfaction of the required payments of principal thereof (including the required payment of principal due upon the maturity thereof) in the inverse order of their scheduled due dates. Any purchase of the Notes permitted by SECTION 8.5 hereof or Section 4.4 of the Parent Company Guaranty or prepayment of the Notes accepted under SECTION 8.7 shall be applied in accordance with SECTION 8.3 to reduce the principal amount of each required prepayment of the Notes becoming due under SECTION 8.1 on and after the date of such prepayment or purchase in the same proportion as the aggregate unpaid principal amount of the Notes is reduced as a result of such prepayment or purchase. Section 8.2. Optional Prepayments with Make-Whole Amount. The Issuer may, at its option, upon notice as provided below, prepay at any time all, or from time to time any part of, the Notes in an amount not less than U.S.$1,000,000 of the aggregate principal amount of the Notes then outstanding in the case of a partial prepayment, at 100% of the principal amount so prepaid, plus the Make-Whole Amount, if any, determined for the prepayment date with respect to such principal amount. The Issuer will give each holder of Notes written notice of each optional prepayment under this SECTION 8.2 not less than 30 days and not more than 60 days prior to the date fixed for such prepayment. Each such notice shall specify such date, the aggregate principal amount of the Notes to be prepaid on such date, the principal amount of each Note held by such holder to be prepaid (determined in accordance with SECTION 8.3), and the interest to be paid on the prepayment date with respect to such principal amount being prepaid, and shall be accompanied by a certificate of a Senior Financial Officer of the Issuer as to the estimated Make-Whole Amount due in connection with such prepayment (calculated as if the date of such notice were the date of the prepayment), setting forth the details of such computation. Two Business Days prior to such prepayment, the Issuer shall deliver to each holder of Notes a certificate of a Senior Financial Officer of the Issuer specifying the calculation of such Make-Whole Amount as of the specified prepayment date. Section 8.3. Allocation of Partial Prepayments. In the case of each partial prepayment of the Notes pursuant to SECTION 8.2, the principal amount of the Notes to be prepaid shall be allocated among all of the Notes at the time outstanding in proportion, as nearly as practicable, to the respective unpaid principal amounts thereof not theretofore called for prepayment. Purchases permitted by SECTION 8.5 hereof or Section 4.4 of the Parent Company Guaranty and -13- prepayments under SECTION 8.7 shall be applied only to the Notes of the holders who are participating in such prepayment or purchase. Section 8.4. Maturity; Surrender, Etc. In the case of each prepayment of Notes pursuant to this SECTION 8, the principal amount of each Note to be prepaid shall mature and become due and payable on the date fixed for such prepayment, together with interest on such principal amount accrued to such date and the applicable Make-Whole Amount, if any. From and after such date, unless the Issuer shall fail to pay such principal amount when so due and payable, together with the interest and the applicable Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall cease to accrue. Any Note paid or prepaid in full shall be surrendered to the Issuer and cancelled and shall not be reissued, and no Note shall be issued in lieu of any prepaid principal amount of any Note. Section 8.5. Purchase of Notes. The Issuer will not, and will not permit the Parent Company or any Subsidiary of the Parent Company to, purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of the outstanding Notes except (a) upon the payment or prepayment of the Notes in accordance with the terms of this Agreement and the Notes or (b) pursuant to an offer to purchase made by the Issuer or such 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 Issuer 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. The Issuer will promptly cancel all Notes acquired by it, the Parent Company or any Subsidiary pursuant to any payment, prepayment or purchase of Notes pursuant to any provision of this Agreement or the Parent Company Guaranty and no Notes may be issued in substitution or exchange for any such Notes. Section 8.6. Make-Whole Amount for Notes. The term "Make-Whole Amount" shall mean, with respect to any Note, an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled Payments with respect to the Called Principal of such Note over the amount of such Called Principal, provided that the Make-Whole Amount may in no event be less than zero. For the purposes of determining the Make-Whole Amount, the following terms have the following meanings: "Called Principal" shall mean, with respect to any Note, the principal of such Note that is to be prepaid pursuant to SECTION 8.2 or has become or is declared to be immediately due and payable pursuant to SECTION 12.1, as the context requires. "Discounted Value" shall mean, with respect to the Called Principal of any Note, the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from their respective scheduled due dates to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and -14- at a discount factor (applied on the same periodic basis as that on which interest on the Notes is payable) equal to the Reinvestment Yield with respect to such Called Principal. "Reinvestment Yield" shall mean, with respect to the Called Principal of any Note, 0.50% over the yield to maturity implied by (a) the yields reported, as of 10:00 a.m. (New York, New York time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on the display designated as "Page PX1" on the Bloomberg Financial Markets Services Screen (or such other display as may replace Page PX1 on the Bloomberg Financial Markets Services Screen) for actively traded U.S. Treasury securities having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date, or (b) if such yields are not reported as of such time or the yields reported as of such time are not ascertainable, the Treasury Constant Maturity Series Yields reported, for the latest day for which such yields have been so reported as of the second Business Day preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (519) (or any comparable successor publication) for actively traded U.S. Treasury securities having a constant maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date. Such implied yield will be determined, if necessary, by (1) converting U.S. Treasury bill quotations to bond-equivalent yields in accordance with accepted financial practice and (2) interpolating linearly between (i) the actively traded U.S. Treasury security with the maturity closest to and greater than the Remaining Average Life and (ii) the actively traded U.S. Treasury security with the maturity closest to and less than the Remaining Average Life. "Remaining Average Life" shall mean, with respect to any Called Principal, the number of years (calculated to the nearest one-twelfth year) obtained by dividing (a) such Called Principal into (b) the sum of the products obtained by multiplying (1) the principal component of each Remaining Scheduled Payment with respect to such Called Principal by (2) the number of years (calculated to the nearest one-twelfth year) that will elapse between the Settlement Date with respect to such Called Principal and the scheduled due date of such Remaining Scheduled Payment. "Remaining Scheduled Payments" shall mean, with respect to the Called Principal of any Note all payments, of such Called Principal and interest thereon that would be due after the Settlement Date with respect to such Called Principal if no payment of such Called Principal were made prior to its scheduled due date, provided that if such Settlement Date is not a date on which interest payments are due to be made under the terms of the Note, then the amount of the next succeeding scheduled interest payment will be reduced by the amount of interest accrued to such Settlement Date and required to be paid on such Settlement Date pursuant to SECTION 8.2 or 12.1. "Settlement Date" shall mean, with respect to the Called Principal of any Note, the date on which such Called Principal is to be prepaid pursuant to SECTION 8.2 or has become or is declared to be immediately due and payable pursuant to SECTION 12.1, as the context requires. -15- Section 8.7. Offer to Prepay Notes in the Event of a Debt Prepayment Application. (a) Notice of Debt Prepayment Application; Offer to Prepay. At least 30 days prior to the consummation of a Debt Prepayment Application, the Issuer shall have given to each holder of the Notes written notice of such impending Debt Prepayment Application. Such notice shall contain and constitute an offer to prepay the Notes as described in SECTION 8.7(C) and shall be accompanied by the certificate described in SECTION 8.7(E). (b) Offer to Prepay. The offer to prepay Notes contemplated by SECTION 8.7(A) upon the occurrence of a Debt Prepayment Application shall be an offer to prepay, in accordance with and subject to this SECTION 8.7, the Notes held by the holders thereof (in this case only, "holder" in respect of any Note registered in the name of a nominee for a disclosed beneficial owner shall mean such beneficial owner) on a date specified in such offer (the "Offer Prepayment Date") which date shall be not less than 30 days and not more than 60 days after the date of such offer, in an aggregate amount equal to the product of (1) the aggregate amount of such Debt Prepayment Application multiplied by (2) the ratio of the aggregate outstanding principal amount of the Notes to the aggregate outstanding principal amount of Senior Funded Debt of the Issuer and its Subsidiaries (other than Senior Funded Debt owing to the Parent Company, any of its Subsidiaries or any Affiliates). (c) Acceptance; Rejection. A holder of Notes may accept or reject an offer to prepay made to such holder pursuant to this SECTION 8.7 by causing a notice of such acceptance or rejection to be delivered to the Issuer prior to the Offer Prepayment Date. A failure by a holder of Notes to so respond to an offer to prepay shall be deemed to constitute a rejection of such offer by such holder. (d) Prepayment. Prepayment of the Notes to be prepaid pursuant to this SECTION 8.7 shall be in the amount set forth in SECTION 8.7(B), together with interest on such Notes accrued to the date of prepayment. The prepayment pursuant to an offer to prepay any Notes shall be made on the Offer Prepayment Date for such offer. (e) Officer's Certificate. Each offer to prepay Notes pursuant to this SECTION 8.7 shall be accompanied by a certificate, executed by a Responsible Officer of the Issuer and dated the date of such offer, specifying (i) the Offer Prepayment Date for such offer, (ii) that such offer is made pursuant to SECTION 8.7, (iii) the principal amount of each Note offered to be prepaid, (iv) the interest that would be due on each Note offered to be prepaid, accrued to the Offer Prepayment Date for such offer, (v) whether or not the conditions of this SECTION 8.7 have been fulfilled by the Issuer, and (vi) in reasonable detail, the nature and date Asset Disposition (as defined in the Parent Company Guaranty) giving rise to such offer and the Net Proceeds Amount (as defined in the Parent Company Guaranty) received in connection therewith. Section 8.8. Payments Free and Clear of Taxes. (a) The Issuer, for the benefit of the holders, agrees that in the event payments, if any, made by the Issuer hereunder or in respect of the Notes 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 -16- 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 Issuer 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 Agreement or the Notes after imposition of any such Relevant Tax shall be not less than the amounts specified in this 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 Issuer 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 members of the Issuer or Parent 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 Issuer) 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 Issuer 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 such Forms or instructions shall not be in the English language, an English translation thereof); and provided further that in no event shall the Issuer 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 Noteholder is resident for tax purposes on the date of Closing in excess of the amounts that the Issuer 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 -17- 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 Issuer of any Relevant Tax in respect of any payment under the Notes or this Agreement, the Issuer 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 of payment 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 Issuer has made a payment to or on account of any holder of a Note pursuant to SECTION 8.9(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 or credit 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 Issuer (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 Issuer. 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 Issuer or any other Person other than as shall be necessary to permit the Issuer to determine whether the payment of any Tax Indemnity Amount would be required to be made pursuant to the provisions of this SECTION 8.9; provided, however, no holder shall be obligated to disclose any of its tax returns to the Issuer or any other Person. SECTION 9. AFFIRMATIVE COVENANTS. The Issuer covenants that, so long as any of the Notes are outstanding: Section 9.1. Compliance with Parent Company Guaranty Affirmative Covenants. The Issuer will, and will cause each of its Subsidiaries to, comply with each provision of Section 3 of the Parent Company Guaranty, mutatis mutandis. Section 9.2. Notes to Rank Pari Passu. The Notes and all other obligations of the Issuer under this Agreement shall rank at least pari passu with all other present and future unsecured Senior Debt (actual or contingent) of the Issuer which is not expressed to be subordinate or junior in rank to any other unsecured Senior Debt of the Issuer. SECTION 10. NEGATIVE COVENANTS. The Issuer covenants that, so long as any of the Notes are outstanding: -18- Section 10.1. Limitation on Subsidiary Debt. The Issuer will not, at any time, permit any Subsidiary to, directly or indirectly, create, incur, assume, guarantee, have outstanding, or otherwise become or remain directly or indirectly liable with respect to any Debt, nor will the Issuer suffer any Subsidiary to have any Debt, other than: (a) Debt of a Subsidiary outstanding on the date of this Agreement so long as the aggregate principal amount of all Debt outstanding under this clause (a), together with the outstanding principal of all Debt secured by Liens permitted under SECTION 10.3(F), does not exceed U.S.$15,000,000 at any time, and any extension, renewal or refunding of any Debt permitted under this clause (a), provided that (1) the principal amount thereof is not increased in connection with such extension, renewal or refunding and (2) no Default or Event of Default shall exist at the time of such extension, renewal or refunding; (b) Debt of a Subsidiary owed to the Parent Company or a Wholly-Owned Subsidiary; (c) Debt of a Subsidiary outstanding at the time such Subsidiary becomes a Subsidiary (such time referred to hereinafter as the "Acquisition Date"), provided that (1) such Debt shall not have been incurred in contemplation of such Subsidiary becoming a Subsidiary, (2) immediately after such Subsidiary becomes a Subsidiary no Default or Event of Default shall exist, and any extension, renewal or refunding of such Debt, provided, that (i) the principal amount thereof is not increased in connection with such extension, renewal or refunding, (ii) no Default or Event of Default shall exist at the time of such extension, renewal or refunding and (iii) such extended, renewed or refunded Debt is not outstanding beyond the time provided for in clause (3) of this clause (c), and (3) all of such Debt of any such Subsidiary, and any extension, renewal or refunding of such Debt of any such Subsidiary, not secured by Liens permitted under SECTION 10.3 is, on or before the date which is 12 months after the Acquisition Date with respect to such Subsidiary, either (i) assumed by the Parent Company or the Issuer, and such Subsidiary is released of all obligations thereunder, or (ii) refinanced with Debt permitted to be issued and outstanding under this Agreement other than pursuant to this clause (c); (d) Debt of a Subsidiary (other than the Issuer) in addition to that otherwise permitted by the provisions of this SECTION 10.1; provided that on the date such Subsidiary incurs or otherwise becomes liable with respect to any such additional Debt and immediately after giving effect thereto and to the concurrent retirement of any other Debt (1) no Default or Event of Default (including, without limitation, under SECTION 11(D) hereof) shall exist, and (2) such Debt can be incurred within the applicable limitations provided in SECTION 10.2; and (e) Debt of the Issuer in addition to that otherwise permitted by the provisions of this SECTION 10.1; provided that on the date the Issuer incurs or otherwise becomes liable with respect to any such additional Debt and immediately after giving effect thereto and to the concurrent retirement of any other Debt no Default or Event of Default shall exist (including, without limitation, under SECTION 11(D) hereof). -19- Section 10.2. Limitation on Priority Debt. The Issuer will not, at any time, permit Priority Debt to exceed, or suffer Priority Debt to exist in excess of, 10% of Consolidated Total Capitalization, provided that at no time shall any such Priority Debt constitute Designated Debt unless (x) the Notes and the Parent Company Guaranty are secured and guaranteed equally and ratably with such Designated Debt pursuant to documentation (including amendments to this Agreement and the Parent Company Guaranty) in form and substance satisfactory to the Required Holders, and (y) the holders of such Designated Debt shall have entered into an intercreditor agreement with the holders that is in form and substance satisfactory to the Required Holders. Section 10.3. Limitation on Liens. The Issuer will not, and will not permit the Parent Company or any Subsidiary to, directly or indirectly create, incur, assume or permit to exist (upon the happening of a contingency or otherwise), nor will the Issuer suffer to exist, any Lien on or with respect to any property or asset (including, without limitation, any document or instrument in respect of goods or accounts receivable) of the Parent Company or any such Subsidiary, whether now owned or held or hereafter acquired, or any income or profits therefrom or assign or otherwise convey any right to receive income or profits, except: (a) Liens for taxes, assessments or other governmental charges or levies which are not yet due and payable or the payment of which is not at the time required by Section 3.5 of the Parent Company Guaranty; (b) statutory Liens of landlords, undetermined or inchoate Liens and other Liens imposed by law such as Liens of carriers, warehousemen, mechanics, materialmen and other similar Liens, in each case, incurred in the ordinary course of business for sums not yet due and payable or the payment of which is not at the time required by Section 3.5 of the Parent Company Guaranty; (c) Liens (other than any Lien imposed by ERISA, the Income Tax Act (Canada), the Pension Benefits Standards Act, 1985 (Canada) and all other applicable Canadian Federal and provincial statutes or regulations governing pension plans) incurred or deposits made in the ordinary course of business (1) in connection with workers' compensation, unemployment insurance, other types of social security or retirement benefits or insurance regulatory requirements or (2) to secure (or to obtain letters of credit that secure) the performance of tenders, statutory obligations, surety bonds, appeal bonds, bids, leases (other than Capital Leases), performance bonds, purchase, construction or sales contracts and other similar obligations, in each case not incurred or made in connection with the borrowing of money, the obtaining of advances or credit or the payment of the deferred purchase price of property; (d) any attachment or judgment Lien, unless the judgment it secures shall not, within 60 days after the entry thereof, have been discharged or execution thereof stayed pending appeal, or shall not have been discharged within 60 days after the expiration of any such stay; -20- (e) Liens on property or assets of a Subsidiary securing Debt owing to the Parent Company or to a Wholly-Owned Subsidiary; (f) Liens set forth on SCHEDULE 10.4 existing on the Effective Date securing Debt not exceeding in the aggregate principal amount U.S.$15,000,000; (g) leases or subleases granted to others, easements, rights-of-way, restrictions and other similar charges or encumbrances or minor survey exceptions, in each case incidental to, and not interfering with, the ordinary conduct of the business of the Parent Company or any of its Subsidiaries, provided that such Liens do not, in the aggregate, materially detract from the value of such property; (h) any Lien created to secure all or any part of the purchase price, or to secure Debt incurred or assumed to pay all or any part of the purchase price or cost of construction, of property (or any improvement thereon) acquired or constructed by the Parent Company or a Subsidiary after the Effective Date, provided that (1) any such Lien shall extend solely to the item or items of such property (or improvement thereon) so acquired or constructed and, if required by the terms of the instrument originally creating such Lien, other property (or improvement thereon) which is an improvement to or is acquired for specific use in connection with such acquired or constructed property (or improvement thereon) or which is real property being improved by such acquired or constructed property (or improvement thereon), (2) the principal amount of the Debt secured by any such Lien shall at no time exceed an amount equal to the lesser of (i) the cost to the Parent Company or such Subsidiary of the property (or improvement thereon) so acquired or constructed and (ii) the Fair Market Value (as determined in good faith by one or more officers of the Parent Company to whom authority to enter into the subject transaction has been delegated by the board of directors of the Parent Company) of such property (or improvement thereon) at the time of such acquisition or construction, (3) any such Lien shall be created contemporaneously with, or within 12 months after, the acquisition or construction of such property, and (4) at the time of the incurrence of the Debt secured by such Liens and after giving effect thereto, no Default or Event of Default (including, without limitation, under SECTION 11(D) hereof) shall exist; (i) any Lien existing on property of a Person immediately prior to its being consolidated with or merged into the Parent Company or a Subsidiary or its becoming a Subsidiary, or any Lien existing on any property acquired by the Parent Company or any Subsidiary at the time such property is so acquired (whether or not the Debt secured thereby shall have been assumed), provided that (1) no such Lien shall have been created -21- or assumed in contemplation of such consolidation or merger or such Person's becoming a Subsidiary or such acquisition of property, (2) each such Lien shall extend solely to the item or items of property so acquired and, if required by the terms of the instrument originally creating such Lien, other property which is an improvement to or is acquired for specific use in connection with such acquired property and (3) the aggregate amount of all Debt secured by such Liens shall not cause an Event of Default under SECTION 11(D) hereof; (j) any Lien renewing, extending or refunding any Lien permitted by paragraphs (f), (h) or (i) of this SECTION 10.3, provided that (1) the principal amount of Debt secured by such Lien immediately prior to such extension, renewal or refunding is not increased or the maturity thereof reduced, (2) such Lien is not extended to any other property and (3) immediately after such extension, renewal or refunding no Default or Event of Default would exist; (k) reservations, conditions, limitations and exceptions contained in or implied by statute in the original disposition from the Crown and grants made by the Crown of interests so reserved or excepted; and (l) other Liens not otherwise permitted by paragraphs (a) through (k), inclusive, of this SECTION 10.3, provided that the Debt secured by such Liens shall be permitted by the limitation set forth in SECTION 10.2 at the time that the Lien securing such Debt is created and, at the time of and after giving effect to the incurrence of such Debt, no Default or Event of Default (including, without limitation, under SECTION 11(D) hereof) shall exist. Any Person that becomes a Subsidiary after the Effective Date shall, for all purposes of this SECTION 10.3, be deemed to have created or incurred, at the time it becomes a Subsidiary, all outstanding Liens of such Person immediately after it becomes a Subsidiary, and any Person extending, renewing or refunding any Debt secured by any Lien shall be deemed to have incurred such Lien at the time of such extension, renewal or refunding. Section 10.4. Merger, Consolidation, Etc. The Issuer will not, and will not permit the Parent Company or any Subsidiary to, consolidate with or merge with any other corporation or convey, transfer or lease substantially all of its assets in a single transaction or series of transactions to any Person (except that a Subsidiary of the Parent Company (other than the Issuer) may (x) consolidate, merge or amalgamate with, or convey, transfer or lease substantially all of its assets in a single transaction or series of transactions to, the Parent Company or a Wholly-Owned Subsidiary of the Parent Company, as applicable, and (y) convey, transfer or lease all of its assets in compliance with the provisions of SECTION 10.5 or 10.6), nor will the Issuer suffer any such consolidation, amalgamation, merger, conveyance, transfer or lease to occur, provided that the foregoing restrictions do not apply to: (a) the consolidation, amalgamation or merger of the Parent Company with, or the conveyance, transfer or lease of substantially all of the assets of the Parent Company in a single transaction or series of transactions to, any Person, so long as: -22- (1) the successor formed by such consolidation or amalgamation or the survivor of such merger or the Person that acquires by conveyance, transfer or lease substantially all of the assets of the Parent Company as an entirety, as the case may be (the "Successor Entity"), shall be a solvent legal entity organized and existing under the laws of the United States or any State thereof (including the District of Columbia) or Canada or any Province thereof; (2) if the Parent Company is not the Successor Entity, (1) the Successor Entity shall have executed and delivered to each holder its assumption of the due and punctual performance and observance of each covenant and condition of the Parent Company Guaranty (pursuant to such agreements and instruments as shall be reasonably satisfactory to the Required Holders) and (2) the Successor Entity shall have caused to be delivered to each holder an opinion of counsel of United States or Canadian national standing (and not an employee of the Parent Company) or other counsel reasonably satisfactory to the Required Holders, to the effect that all agreements or instruments effecting such assumption are enforceable in accordance with their terms and comply with the terms hereof; and (3) immediately after giving effect to such transaction, no Default or Event of Default would exist. No such conveyance, transfer or lease of substantially all of the assets of the Parent Company shall have the effect of releasing the Parent Company or any Successor Entity from its liability under the Parent Company Guaranty; and (b) the consolidation, amalgamation or merger of the Issuer with, or the conveyance, transfer or lease of substantially all of the assets of the Issuer in a single transaction or series of transactions to, any Wholly-Owned Subsidiary, so long as: (1) the successor formed by such consolidation or amalgamation or the survivor of such merger or the Wholly-Owned Subsidiary that acquires by conveyance, transfer or lease substantially all of the assets of the Issuer, as the case may be, as an entirety, as the case may be (the "Successor Subsidiary"), shall be a solvent corporation organized and existing under the laws of the United States or any State thereof (including the District of Columbia); (2) if the Issuer is not the Successor Subsidiary, (1) the Successor Subsidiary shall have executed and delivered to each holder its assumption of the due and punctual performance and observance of each covenant and condition of this Agreement and the Notes (pursuant to such agreements and instruments as shall be reasonably satisfactory to the Required Holders) and (2) the Successor Subsidiary shall have caused to be delivered to each holder an opinion of counsel of United States national standing (and not an employee of the Parent Company or the Issuer) or other counsel reasonably satisfactory to the Required Holders, to -23- the effect that all agreements or instruments effecting such assumption are enforceable in accordance with their terms and comply with the terms hereof; and (3) immediately after giving effect to such transaction, no Default or Event of Default would exist. No such conveyance, transfer or lease of substantially all of the assets of the Issuer shall have the effect of releasing the Issuer or any Successor Subsidiary from its liability under this Agreement or the Notes. Section 10.5. Sale of Assets, Etc. Except as permitted under SECTION 10.4, SECTION 10.6 and SECTION 10.7, the Issuer will not, and will not permit the Parent Company or any Subsidiary to, make any Asset Disposition, nor will the Issuer permit any Asset Disposition to occur, unless: (a) in the good faith opinion of the Parent Company, the Asset Disposition is in exchange for consideration having a Fair Market Value at least equal to that of the property exchanged and is in the best interest of the Issuer, the Parent Company or such Subsidiary; (b) immediately after giving effect to the Asset Disposition, no Default or Event of Default would exist; and (c) subject to the following paragraph, immediately after giving effect to the Asset Disposition the Disposition Value of all property that was the subject of any Asset Disposition occurring in the immediately preceding period of 12 consecutive months would not exceed 15% of Consolidated Total Assets as of the end of the then most recently ended fiscal quarter of the Parent Company. If the Net Proceeds Amount for any Transfer is applied to a Debt Prepayment Application or a Property Reinvestment Application, in either case, within 12 months after such Transfer, then such Transfer, only for the purpose of determining compliance with subsection (c) of this SECTION 10.5 as of a date on or after the Net Proceeds Amount is so applied, shall be deemed not to be an Asset Disposition, provided that, in connection with any such Debt Prepayment Application, the Issuer complies with SECTION 8.7. Notwithstanding the preceding sentence, the Company shall not be permitted to apply the Net Proceeds Amount for any Transfer to a Debt Prepayment Application if, as a result thereof, the Company will have prepaid more than 25% of the original principal amount of the Notes within five years from the date of the Closing. Section 10.6. Sale-and-Leasebacks. The Issuer will not, and will not permit the Parent Company or any Subsidiary to, enter into any Sale-and-Leaseback Transaction with respect to any property more than 180 days following the acquisition or occupancy of such property by the Issuer, the Parent Company or such Subsidiary, whichever is later, nor will the Issuer suffer any such Sale and Leaseback Transaction to occur, unless: -24- (a) the term of the lease in respect of such Sale-and-Leaseback Transaction, including all renewal terms, shall not exceed three years; (b) such Sale-and-Leaseback Transaction constitutes a sale by a Subsidiary to the Parent Company or by the Parent Company to a Wholly-Owned Subsidiary; (c) the Net Proceeds Amount received by the Issuer, the Parent Company or such Subsidiary in respect of such Sale-and-Leaseback Transaction is applied within 12 months of the consummation thereof to a Debt Prepayment Application or a Property Reinvestment Application, provided that such Sale-and-Leaseback Transaction satisfies the requirements of SECTION 10.5 including, without limitation, the requirement that, in connection with any Debt Prepayment Application of the Net Proceeds Amount from any such Sale-and-Leaseback Transaction, the Issuer comply with SECTION 8.7; or (d) immediately after giving effect thereto, the aggregate amount of Priority Debt does not exceed 10% of Consolidated Total Capitalization determined at such time and no Default or Event of Default would exist. Section 10.7. Disposal of Ownership of a Subsidiary. The Issuer will not, and will not permit the Parent Company or any Subsidiary to, sell or otherwise dispose of any Subsidiary Shares, nor will the Issuer, or will the Issuer permit any Subsidiary to, issue, sell or otherwise dispose of any shares of its own share capital, nor will the Issuer suffer any such sale, disposition or issuance to occur, provided that the foregoing restrictions do not apply to: (a) the issue of directors' qualifying shares by any Subsidiary; (b) any Transfer of Subsidiary Shares constituting a Transfer described in clause (a) of the definition of "Asset Disposition;" and (c) the Transfer of the Subsidiary Shares of a Subsidiary of the Parent Company owned by the Parent Company and its other Subsidiaries; provided that such Transfer satisfies the requirements of SECTION 10.5 including, without limitation, the requirement that, in connection with any Debt Prepayment Application of the Net Proceeds Amount from any such Transfer, the Issuer comply with SECTION 8.7. Section 10.8. Nature of Business. The Issuer 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 Parent 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 Parent Company and its Subsidiaries, taken as a whole, are engaged on the Effective Date. Section 10.9. Transactions with Affiliates. The Issuer 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 Parent Company or another Subsidiary), except in the ordinary course and pursuant to the reasonable -25- requirements of the Issuer's or such Subsidiary's business and upon fair and reasonable terms no less favorable to the Issuer or such Subsidiary than would be obtainable in a comparable arm's-length transaction with a Person not an Affiliate. Section 10.10. Sales of Receivables. The Issuer covenants that it will not, and will not permit the Parent Company or any Subsidiary to, discount, pledge or sell (with or without recourse) any of its accounts or notes receivable, nor will the Issuer suffer any such discount, pledge or sale to occur. Section 10.11. Most Favored Lender Status. The Issuer 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 Issuer or such Subsidiary has offered to make an amendment to this Agreement, in form and substance satisfactory to the Required Holders, to add to or amend this Agreement to contain such Additional Covenants or Additional Defaults; provided, however, in the event that the Issuer 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 Holders, this Agreement shall, without any further action on the part of the Parent 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 Issuer 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 Agreement in form and substance satisfactory to the Required Holders evidencing the amendments of this 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 10.11, but shall merely be for the convenience of the parties hereto. - Note: Parent Company would like to discuss this requirement. Section 10.12. Restricted Payments. (a) The Issuer will not: (i) Declare or pay any dividends or distributions, either in cash or property, on or in respect of any of its Equity Interests of any class (except dividends or other distributions payable solely in Equity Interests of the Issuer); (ii) Directly or indirectly, or through any Subsidiary or through any Affiliate of the Issuer, purchase, redeem or retire any of its Equity Interests of any class or any warrants, rights or options to purchase or acquire any of its Equity Interests (other than in exchange for or out of the net cash proceeds to the Issuer from the substantially concurrent issue or sale of Equity Interests of the Issuer or warrants, rights or options to purchase or acquire any of its Equity Interests); or (iii) Make any other payment or distribution, either directly or indirectly or through any Subsidiary, in respect of its Equity Interests; -26- (such declarations or payments of dividends, purchases, redemptions or retirements of Equity Interests and warrants, rights or options and all such other payments or distributions being herein collectively called "Restricted Payments"), if immediately prior to or immediately after giving effect to any such Restricted Payment, a Default or Event of Default would exist. Section 10.13. Limitations on Restrictive Agreements. The Issuer will not, and will not permit any Subsidiary to, enter into, or suffer to exist, any agreement with any Person which, directly or indirectly, prohibits or limits the ability of any Subsidiary to (a) pay dividends or make other distributions to the Issuer or prepay any Debt owed to the Issuer or (b) transfer any of its properties or assets to the Issuer (other than with respect to assets subject to Liens permitted by SECTION 10.3). SECTION 11. EVENTS OF DEFAULT. An "Event of Default" shall exist if any of the following conditions or events shall occur and be continuing: (a) the Issuer defaults in the payment of any principal or Make-Whole Amount, if any, on any Note when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration or otherwise; or (b) the Issuer defaults in the payment of any interest on any Note or the Issuer defaults in the payment of any Tax Indemnity Amount under SECTION 8.8, in either case for more than five Business Days after the same becomes due and payable; or (c) (I) the Parent Company defaults in the performance of or compliance with any term contained in (1) Section 4.5 of the Parent Company Guaranty with respect to any provision in SECTION 10.1 or 10.2 of this Agreement, inclusive, or (2) Section 4.1 through 4.4 of the Parent Company Guaranty, inclusive, or Section 4.5 of the Parent Company with respect to any provision in Section 10.3 through 10.13 of this Agreement, inclusive, and, in the case of this clause (2), such default is not remedied within 10 Business Days after the earlier of (i) a Responsible Officer of the Parent Company obtaining actual knowledge of such default and (ii) the Parent Company receiving written notice of such default from any holder of a Note (any such written notice to be identified as a "notice of default" and to refer specifically to clause (2) of this paragraph (c)(I)), or (II) the Issuer defaults in the performance of or compliance with any term contained in (1) SECTION 8.7 or SECTION 10.1 through 10.2, inclusive, or (2) SECTION 10.3 through 10.13, inclusive, and, in the case of this clause (2), such default is not remedied within 10 Business Days after the earlier of (i) a Responsible Officer of the Parent Company or the Issuer obtaining actual knowledge of such default and (ii) the Parent Company or Issuer receiving written notice of such default from any holder of a Note (any such written notice to be identified as a "notice of default" and to refer specifically to clause (2) of this paragraph (c)(II); or (d) Any of the following shall occur: -27- (1) Consolidated Net Worth shall at any time be less than the sum of (a) U.S.$325,000,000, plus (b) an aggregate amount equal to 25% of Consolidated Net Income (but, in each case, only if a positive number) for each completed fiscal quarter of the Parent Company beginning with the fiscal quarter ended March 31, 2005; or (2) Consolidated Debt shall at any time exceed 45% of Consolidated Total Capitalization; or (3) The Minimum Interest Coverage Ratio at any time is less than 3.0 to 1.0; or (e) the Parent Company defaults in the performance of or compliance with any term of the Parent Company Guaranty (other than those referred to in paragraph (c)(I) of this Section 11 or Section 4.5 of the Parent Company Guaranty as it relates to SECTION 11(D)) or the Issuer defaults in the performance of or compliance with any term contained herein (other than those referred to in paragraphs (a), (b), (c)(II) or (d) of this SECTION 11) and such default is not remedied within 30 days after the earlier of (1) a Responsible Officer of the Parent Company or the Issuer obtaining actual knowledge of such default and (2) the Parent Company or the Issuer receiving written notice of such default from any holder of a Note (any such written notice to be identified as a "notice of default" and to refer specifically to this paragraph (e) of SECTION 11); or (f) any representation or warranty made in writing by or on behalf of the Parent Company or by any officer of the Parent Company in the Parent Company Guaranty or in any writing furnished in connection with the transactions contemplated by the Parent Company Guaranty, this Agreement or such writing proves to have been false or incorrect in any material respect on the date as of which made or any representation or warranty made in writing by or on behalf of the Issuer or by any officer of the Issuer in this Agreement or in any writing furnished in connection with the transactions contemplated hereby or thereby proves to have been false or incorrect in any material respect on the date as of which made; or (g) (1) the Parent Company, the Issuer or any other Subsidiary of the Parent Company is in default (as principal or as guarantor or other surety) in the payment of any principal of or premium or make-whole amount or interest on any Debt that is outstanding in an aggregate principal amount of at least U.S.$5,000,000 beyond any period of grace provided with respect thereto, or (2) the Parent Company, the Issuer or any other Subsidiary of the Parent Company is in default in the performance of or compliance with any term of any evidence of any Debt in an aggregate outstanding principal amount of at least U.S.$5,000,000 or of any mortgage, indenture or other agreement relating thereto or any other condition exists, and as a consequence of such default or condition such Debt has become, or has been declared, due and payable before its stated maturity or before its regularly scheduled dates of payment and such declaration has not been annulled or rescinded, or (3) as a consequence of the occurrence or continuation of any event or condition (other than the passage of time or the right of the -28- holder of Debt to convert such Debt into equity interests), the Parent Company, the Issuer or any other Subsidiary of the Parent Company has become obligated to purchase or repay Debt before its regular maturity or before its regularly scheduled dates of payment in an aggregate outstanding principal amount of at least U.S.$5,000,000; or (h) the Parent Company, the Issuer or any Material Subsidiary (1) is generally not paying, or admits in writing its inability to pay, its debts as they become due, (2) files, or consents by answer or otherwise to the filing against it of, a petition for relief or reorganization or arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency, amalgamation, reorganization, moratorium or other similar law of any jurisdiction, (3) makes an assignment for the benefit of its creditors, (4) consents to the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, (5) is adjudicated as insolvent or to be liquidated or (6) takes action for the purpose of any of the foregoing; or (i) a court or governmental authority of competent jurisdiction enters an order appointing, without consent by the Parent Company, the Issuer or any of its Material Subsidiaries, a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, or constituting an order for relief or approving a petition for relief or reorganization or any other petition in bankruptcy or for liquidation or to take advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering the amalgamation, dissolution, winding-up or liquidation of the Parent Company, the Issuer or any Material Subsidiary, or any such petition shall be filed against the Parent Company, the Issuer or any Material Subsidiary and such petition shall not be dismissed within 60 days; or (j) a final judgment or judgments for the payment of money resulting in liability (exclusive of amounts fully covered by valid and collectible insurance in respect thereof), aggregating in excess of U.S.$5,000,000 are rendered against one or more of the Parent Company, the Issuer and the other Subsidiaries of the Parent Company and which judgments are not, within 60 days after entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within 60 days after the expiration of such stay; or (k) the Parent Company Guaranty or any provision in the Parent Company Guaranty shall at any time for any reason be terminated or cease to be valid and binding on the Parent Company, or shall be declared to be null and void, or the validity or enforceability thereof shall be contested by the Parent Company, or the Parent Company shall deny that the Parent Company has any further liability or obligation under the Parent Company Guaranty; or (l) the Parent Company shall at any time cease to own, directly or indirectly, 100% of all outstanding partnership interests of the Issuer; or (m) if (1) any Plan shall fail to satisfy the minimum funding standards of ERISA or the Code for any plan year or part thereof or a waiver of such standards or -29- extension of any amortization period is sought or granted under Section 412 of the Code, (2) a notice of intent to terminate any Plan shall have been or is reasonably expected to be filed with the PBGC or the PBGC shall have instituted proceedings under ERISA Section 4042 to terminate or appoint a trustee to administer any Plan or the PBGC shall have notified the Parent Company or any ERISA Affiliate that a Plan may become a subject of any such proceedings, (3) the aggregate "amount of unfunded benefit liabilities" (within the meaning of Section 4001(a)(18) of ERISA) under all Plans, determined in accordance with Title IV of ERISA, shall exceed U.S.$5,000,000, (4) the Parent Company or any ERISA Affiliate shall have incurred or is reasonably expected to incur 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, (5) the Parent Company or any ERISA Affiliate withdraws from any Multiemployer Plan or (6) the Parent Company or any ERISA Affiliate establishes or amends any employee welfare benefit plan that provides post-employment welfare benefits in a manner that would increase the liability of the Parent Company or any ERISA Affiliate thereunder; and any such event or events described in clauses (1) through (6) above, either individually or together with any other such event or events, could reasonably be expected to have a Material Adverse Effect. As used in Section 11(m), the terms "employee benefit plan" and "employee welfare benefit plan" shall have the respective meanings assigned to such terms in Section 3 of ERISA. SECTION 12. REMEDIES ON DEFAULT, ETC. Section 12.1. Acceleration. (a) If an Event of Default with respect to the Issuer or the Parent Company described in paragraph (h) or (i) of SECTION 11 (other than an Event of Default described in clause (1) of paragraph (h) or described in clause (6) of paragraph (h) by virtue of the fact that such clause encompasses clause (1) of paragraph (h)) has occurred, all the Notes then outstanding shall automatically become immediately due and payable. (b) If any other Event of Default has occurred and is continuing, any holder or holders of not less than 51% in principal amount of the Notes at the time outstanding may at any time at its or their option, by notice or notices to the Issuer, declare all the Notes then outstanding to be immediately due and payable. (c) If any Event of Default described in paragraph (a) or (b) of SECTION 11 has occurred and is continuing, any holder or holders of Notes at the time outstanding affected by such Event of Default may at any time, at its or their option, by notice or notices to the Issuer, declare all the Notes held by it or them to be immediately due and payable. Upon any Note becoming due and payable under this SECTION 12.1, whether automatically or by declaration, such Note will forthwith mature and the entire unpaid principal amount of such Note, plus (1) all accrued and unpaid interest thereon and (2) the Make-Whole Amount, if any, determined in respect of such principal amount (to the full extent permitted by applicable law), shall all be immediately due and payable, in each and every case without presentment, demand, protest or further notice, all of which are hereby waived. The Issuer acknowledges, and the parties hereto agree, that each holder has the right to maintain its investment in the Notes free from repayment by the Issuer (except as herein specifically provided -30- for), and that the provision for payment of a Make-Whole Amount by the Issuer if the Notes are prepaid or are accelerated as a result of an Event of Default, is intended to provide compensation for the deprivation of such right under such circumstances. Section 12.2. Other Remedies. If any Default or Event of Default has occurred and is continuing, and irrespective of whether any Notes have become or have been declared immediately due and payable under SECTION 12.1, the holder of any Note at the time outstanding may proceed to protect and enforce the rights of such holder by an action at law, suit in equity or other appropriate proceeding, whether for the specific performance of any agreement contained herein or in any Note, or for an injunction against a violation of any of the terms hereof or thereof, or in aid of the exercise of any power granted hereby or thereby or by law or otherwise. Section 12.3. Rescission. At any time after any Notes have been declared due and payable pursuant to clause (b) or (c) of SECTION 12.1, the holders of not less than 51% in principal amount of the Notes then outstanding, by written notice to the Issuer, may rescind and annul any such declaration and its consequences if (a) the Issuer has paid all overdue interest on the Notes, all principal of and Make-Whole Amount, if any, on any Notes that are due and payable and are unpaid other than by reason of such declaration, and all interest on such overdue principal and Make-Whole Amount, if any, and (to the extent permitted by applicable law) any such overdue interest in respect of the Notes at the Default Rate, (b) all Events of Default and Defaults, other than non-payment of amounts that have become due solely by reason of such declaration, have been cured or have been waived pursuant to SECTION 17 and (c) no judgment or decree has been entered for the payment of any monies due pursuant hereto or to the Notes. No rescission and annulment under this SECTION 12.3 will extend to or affect any subsequent Event of Default or Default or impair any right consequent thereon. Section 12.4. No Waivers or Election of Remedies, Expenses, Etc. No course of dealing and no delay on the part of any holder in exercising any right, power or remedy shall operate as a waiver thereof or otherwise prejudice such holder's rights, powers or remedies. No right, power or remedy conferred by this Agreement or by any Note upon any holder shall be exclusive of any other right, power or remedy referred to herein or therein or now or hereafter available at law, in equity, by statute or otherwise. Without limiting the obligations of the Issuer under SECTION 15, the Issuer will pay to each holder on demand such further amount as shall be sufficient to cover all costs and expenses of such holder incurred in any enforcement or collection under this SECTION 12, including, without limitation, reasonable attorneys' fees, expenses and disbursements. SECTION 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES. Section 13.1. Registration of Notes. The Issuer shall keep at its principal executive office a register for the registration and registration of transfers of Notes. The name and address of each holder of one or more Notes, each transfer thereof and the name and address of each transferee of one or more Notes shall be registered in such register. Prior to due presentment for registration of transfer, the Person in whose name any Note shall be registered shall be deemed and treated as the owner and holder thereof for all purposes hereof, and the Issuer shall not be affected by any notice or knowledge to the contrary. The Issuer shall give to any holder that is -31- an Institutional Investor promptly upon request therefor, a complete and correct copy of the names and addresses of all registered holders of Notes. Section 13.2. Transfer and Exchange of Notes. Upon surrender of any Note at the principal executive office of the Issuer for registration of transfer or exchange (and in the case of a surrender for registration of transfer, duly endorsed or accompanied by a written instrument of transfer duly executed by the holder of such Note or its attorney duly authorized in writing and accompanied by the address for notices of each transferee of such Note or part thereof), the Issuer shall execute and deliver, at the Issuer's expense (except as provided below), one or more new Notes of the same series (as requested by the holder thereof) evidencing the same indebtedness in exchange therefor, in an aggregate principal amount equal to the unpaid principal amount of the surrendered Note. Each such new Note shall be payable to such Person as such holder may request and shall be substantially in the form of the Note originally issued hereunder. Each such new Note shall be dated and bear interest from the date to which interest shall have been paid on the surrendered Note or dated the date of the surrendered Note if no interest shall have been paid thereon. The Issuer may require payment of a sum sufficient to cover any stamp tax or governmental charge imposed in respect of any such transfer of Notes. Notes shall not be transferred in denominations of less than U.S.$100,000, provided that if necessary to enable the registration of transfer by a holder of its entire holding of Notes of a series one Note of such series may be in a denomination of less than U.S.$100,000. Any transferee, by its acceptance of a Note registered in its name (or the name of its nominee), shall be deemed to have made the representation set forth in SECTION 6.2. Section 13.3. Replacement of Notes. Upon receipt by the Issuer of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Note (which evidence shall be, in the case of an Institutional Investor, notice from such Institutional Investor of such ownership and such loss, theft, destruction or mutilation), and (a) in the case of loss, theft or destruction, of indemnity reasonably satisfactory to it (provided that if the holder of such Note is, or is a nominee for, an original Noteholder or another holder with a minimum net worth of at least U.S.$50,000,000, such Person's own unsecured agreement of indemnity shall be deemed to be satisfactory), or (b) in the case of mutilation, upon surrender and cancellation thereof, the Issuer at its own expense shall execute and deliver, in lieu thereof, a new Note of the same series, dated and bearing interest from the date to which interest shall have been paid on such lost, stolen, destroyed or mutilated Note or dated the date of such lost, stolen, destroyed or mutilated Note if no interest shall have been paid thereon. SECTION 14. PAYMENTS ON NOTES. Section 14.1. Place of Payment. Subject to SECTION 14.2, payments of principal, Make-Whole Amount, if any, and interest becoming due and payable on the Notes shall be made in New York, New York at the principal office of JPMorgan Chase Bank in such jurisdiction. The -32- Issuer may at any time, by notice to each holder, change the place of payment of the Notes so long as such place of payment shall be either the principal office of the Issuer in such jurisdiction or the principal office of a bank or trust company in such jurisdiction. Section 14.2. Home Office Payment. So long as any Noteholder named on SCHEDULE A hereto or its nominee shall be the holder of any Note, and notwithstanding anything contained in SECTION 14.1 or in such Note to the contrary, the Issuer will pay all sums becoming due on such Note for principal, Make-Whole Amount, if any, and interest by the method and at the address specified for such purpose for such Noteholder on SCHEDULE A hereto or by such other method or at such other address as such Noteholder shall have from time to time specified to the Issuer in writing for such purpose, without the presentation or surrender of such Note or the making of any notation thereon, except that upon written request of the Issuer made concurrently with or reasonably promptly after payment or prepayment in full of any Note, such Noteholder shall surrender such Note for cancellation, reasonably promptly after any such request, to the Issuer at its principal executive office or at the place of payment most recently designated by the Issuer pursuant to SECTION 14.1. Prior to any sale or other disposition of any Note held by any Noteholder or its nominee such Person will, at such Person's election, either endorse thereon the amount of principal paid thereon and the last date to which interest has been paid thereon or surrender such Note to the Issuer in exchange for a new Note or Notes pursuant to SECTION 13.2. Each holder, by its acceptance of a Note, will be deemed to have agreed to be bound by and entitled to the benefits of this SECTION 14.2 as though it were a party to this Agreement. SECTION 15. EXPENSES, ETC. Section 15.1. Transaction Expenses. Whether or not the transactions contemplated hereby are consummated, the Issuer 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 Noteholder or holder in connection with such transactions and any amendments, waivers or consents under or in respect of this Agreement, the Notes or the Parent Company 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 Agreement, the Notes or the Parent Company Guaranty or in responding to any subpoena or other legal process or informal investigative demand issued in connection with this Agreement, the Notes or the Parent Company Guaranty, or by reason of being a holder of any Note, and (b) the reasonable costs and expenses, including reasonable financial advisors' fees, incurred in connection with the insolvency or bankruptcy of the Parent Company, the Issuer or any other Subsidiary of the Parent Company or in connection with any work-out or restructuring of the transactions contemplated hereby, by the Notes and by the Parent Company Guaranty. The Issuer will pay, and will save each Noteholder and each other holder of a Note 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 15.2. Survival. The obligations of the Issuer under this Section 15 will survive the payment or transfer of any Note, the enforcement, amendment or waiver of any provision of -33- this Agreement, the Notes or the Parent Company Guaranty, and the termination of this Agreement. SECTION 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT. All representations and warranties contained herein shall survive the execution and delivery of this Agreement and the Notes, the purchase or transfer by any Noteholder or subsequent holder of any such Note or portion thereof or interest therein and the payment of any Note, and may be relied upon by any subsequent holder of a Note, regardless of any investigation made at any time by or on behalf of any Noteholder or any subsequent holder of a Note. All statements contained in any certificate or other instrument delivered by or on behalf of the Issuer pursuant to this Agreement shall be deemed representations and warranties of the Issuer under this Agreement. Subject to the preceding sentence, this Agreement and the Notes embody the entire agreement and understanding between the Noteholders and the Issuer and supersede all prior agreements and understandings relating to the subject matter hereof. SECTION 17. AMENDMENT AND WAIVER. Section 17.1. Requirements. This Agreement, the Notes and the Parent Company 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 Issuer (except amendments which occur pursuant to Section 4.3 of the Parent Company Guaranty and Section 10.11 hereof) as set forth and any holder or holders of not less than 51% in principal amount of Notes at the time outstanding, except that (a) no amendment or waiver of any of the provisions of SECTION 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term (as it is used in any such Section), will be effective as to any holder of Notes unless consented to by such holder in writing, and (b) no such amendment or waiver may, without the written consent of the holder of each Note at the time outstanding affected thereby, (1) subject to the provisions of SECTION 12 relating to acceleration or rescission, change the amount or time of any prepayment or payment of principal of, or reduce the rate or change the time of payment or method of computation of interest or of the Make-Whole Amount on, the Notes, (2) change the percentage of the principal amount of the Notes the holders of which are required to consent to any such amendment or waiver, (3) amend any of SECTIONS 8, 11(A), 11(B), 12, 17 or 20 hereof, or (4) releasing the Parent Company from the Parent Company Guaranty or amend any of the terms and provisions of Section 2 thereof. -34- Section 17.2. Solicitation of Holders of Notes. (a) Solicitation. The Issuer will provide each holder of the Notes (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 or of the Notes. The Issuer will deliver executed or true and correct copies of each amendment, waiver or consent effected pursuant to the provisions of this SECTION 17 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. (b) Payment. The Issuer 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 of Notes as consideration for or as an inducement to the entering into by such holder of Notes of any waiver or amendment of any of the terms and provisions hereof, or of the Notes unless such remuneration is concurrently paid, or security is concurrently granted, on the same terms, ratably to each holder of Notes then outstanding even if such holder did not consent to such waiver or amendment. Section 17.3. Binding Effect, Etc. Any amendment or waiver consented to as provided in this SECTION 17 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 Issuer 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 Issuer 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 Agreement" and references thereto shall mean this Agreement as it may from time to time be amended or supplemented. Section 17.4. Notes Held by Parent 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 Agreement or the Notes, 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 Parent Company, the Issuer, any other Subsidiaries of the Parent Company or any Affiliates of the Parent Company shall be deemed not to be outstanding. SECTION 18. 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: -35- (1) if to a Noteholder or its nominee, to such Noteholder or its nominee at the address specified for such communications in SCHEDULE A to this Agreement, or at such other address as such Noteholder or its nominee shall have specified to the Issuer 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 Issuer in writing, or (3) if to the Issuer, to the Issuer at its address set forth at the beginning hereof to the attention of Marianne Paine, Chief Legal Officer, with a copy to Hub International Limited, 55 East Jackson Boulevard, Chicago, Illinois, 60604, Attention: Marianne Paine, Chief Legal Officer, or at such other address as the Issuer shall have specified to the holder of each Note in writing. Notices under this SECTION 18 will be deemed given only when actually received. SECTION 19. REPRODUCTION OF DOCUMENTS. This Agreement and all documents relating hereto, including, without limitation, (a) consents, waivers and modifications that may hereafter be executed, (b) documents received by each Noteholder on the Effective Date, and (c) financial statements, certificates and other information previously or hereafter furnished to any holder of the Notes, 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. The Issuer agrees and stipulates that, 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 19 shall not prohibit the Issuer 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 20. CONFIDENTIAL INFORMATION. For the purposes of this SECTION 20, "Confidential Information" means information delivered to any Noteholder by or on behalf of the Parent Company or any Subsidiary in connection with the transactions contemplated by or otherwise pursuant to this Agreement that is proprietary in nature and that was clearly marked or labeled or otherwise adequately identified when received by such Noteholder as being confidential information of the Parent Company or such Subsidiary, provided that such term does not include information that (a) was publicly known or otherwise known to such Noteholder prior to the time of such disclosure, (b) subsequently becomes publicly known through no act or omission by such Noteholder or any Person acting on such Noteholder's behalf, (c) otherwise becomes known to such Noteholder other than through disclosure by the Parent Company or any Subsidiary or (d) constitutes financial statements delivered to such Noteholder under Section 7.1 or Section 3.1 of the Parent -36- Company Guaranty that are otherwise publicly available. Each Noteholder will maintain the confidentiality of such Confidential Information in accordance with procedures adopted by such Noteholder in good faith to protect confidential information of third parties delivered to such Noteholder, provided that such Noteholder may deliver or disclose Confidential Information to (1) such Noteholder's directors, trustees, officers, employees, agents, attorneys and affiliates (to the extent such disclosure reasonably relates to the administration of the investment represented by such Noteholder's Notes), (2) such Noteholder's financial advisors and other professional advisors who agree to hold confidential the Confidential Information substantially in accordance with the terms of this SECTION 20, (3) any other holder of any Note, (4) any Institutional Investor to which such Noteholder sells or offers to sell such Note or any part thereof or any participation therein (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by the provisions of this SECTION 20), (5) any Person from which such Noteholder offers to purchase any security of the Issuer or the Parent Company (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by the provisions of this SECTION 20), (6) any Federal, provincial or state regulatory authority having jurisdiction over such Noteholder, (7) the National Association of Insurance Commissioners or any similar organization, or any nationally recognized rating agency that requires access to information about such Noteholder's investment portfolio or (8) any other Person to which such delivery or disclosure may be necessary or appropriate (i) to effect compliance with any law, rule, regulation or order applicable to such Noteholder, (ii) in response to any subpoena or other legal process, (iii) in connection with any litigation to which such Noteholder is a party or (iv) if an Event of Default has occurred and is continuing, to the extent such Noteholder may reasonably determine such delivery and disclosure to be necessary or appropriate in the enforcement or for the protection of the rights and remedies under such Noteholder's Notes and this Agreement. Notwithstanding anything to the contrary in this SECTION 20, the Issuer agrees that the holders shall not have any obligation to maintain as confidential any information with respect to the "tax treatment" and "tax structure" (in each case, within the meaning of Treasury Regulation Section 1.6011-4) of the transactions contemplated in this Agreement, the Notes and the Parent Company Guaranty and all materials of any kind (including opinions or other tax analyses) that are provided to the holders relating to such tax treatment and tax structure. Each holder of a Note, by its acceptance of a Note, will be deemed to have agreed to be bound by and to be entitled to the benefits of this SECTION 20 as though it were a party to this Agreement. On reasonable request by the Issuer in connection with the delivery to any holder of a Note of information required to be delivered to such holder under this Agreement or requested by such holder (other than a holder that is a party to this Agreement or its nominee), such holder will enter into an agreement with the Issuer embodying the provisions of this SECTION 20. SECTION 21. SUBSTITUTION OF NOTEHOLDER. Each Noteholder shall have the right to substitute any one of such Noteholder's Affiliates as the purchaser of the Notes that such Noteholder has agreed to purchase hereunder, by written notice to the Issuer, which notice shall be signed by both such Noteholder and such Affiliate, shall contain such Affiliate's agreement to be bound by this Agreement and shall contain a confirmation by such Affiliate of the accuracy with respect to it of the representations set forth in SECTION 6. Upon receipt of such notice, wherever the word "Noteholder" is used in this Agreement (other than in this SECTION 21), such word shall be deemed to refer to such Affiliate in -37- lieu of such Noteholder. If such Affiliate is so substituted as a noteholder hereunder and such Affiliate thereafter transfers to such Noteholder all of the Notes then held by such Affiliate, upon receipt by the Issuer of notice of such transfer, wherever the word "Noteholder" is used in this Agreement (other than in this SECTION 21), such word shall no longer be deemed to refer to such Affiliate, but shall refer to such Noteholder, and such Noteholder shall have all the rights of an original holder of the Notes under this Agreement. SECTION 22. SUBMISSION TO JURISDICTION, NORMAL RATES, ETC. Section 22.1. Submission to Jurisdiction. The Issuer 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 Agreement or the Notes may be litigated in such courts, and the Issuer 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 Issuer hereby irrevocably appoints, with respect to any suit or proceeding that may be initiated hereunder or under the Notes, Hub International Northeast, Inc. as the Issuer'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 Parent Company's General Counsel at its office located at 55 East Jackson Boulevard, Chicago, Illinois, 60604 or at such other address of Hub International Northeast, Inc. located in the State of New York, as may be designated by the Issuer by notice to each holder of Notes 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 Issuer. Nothing contained in this Section 22.1 shall affect the right of any holder of Notes 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 Issuer or to enforce a judgment obtained in the courts of any other jurisdiction. Section 22.2. Normal Rates. The principle of deemed reinvestment of interest shall not apply to any interest calculation under this Agreement or the Notes. All interest payments to be made hereunder shall be paid without allowance or deduction for deemed reinvestment or otherwise, before and after demand, default and judgment. The rates of interest specified in this Agreement and the Notes are intended to be nominal rates and not effective rates and any interest calculated hereunder shall be calculated using the nominal rate method and not the effective rate method of calculation. SECTION 23. MISCELLANEOUS. Section 23.1. Successors and Assigns. All covenants and other agreements contained in this Agreement 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. -38- Section 23.2. Payments Due on Non-Business Days. Anything in this Agreement or the Notes 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 23.3. Severability. Any provision of this Agreement 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 23.4. 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 Agreement, the same shall be done in accordance with GAAP, to the extent applicable, except where such principles are inconsistent with the requirements of this Agreement. Section 23.5. Counterparts. This Agreement 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 23.6. Currency. All moneys referred to in this Agreement and the Notes shall mean money which at the time is lawful money of the United States of America. Section 23.7. Governing Law. This Agreement 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. * * * * * -39- The execution hereof by the Noteholders shall constitute a contract among the Issuer and the Noteholders for the uses and purposes hereinabove set forth. Very truly yours, HUB INTERNATIONAL LIMITED PARTNERSHIP By: HUB International Partners Limited, its general partner By: /s/ Marianne D. Paine ----------------------------------- Name: Marianne D. Paine --------------------------------- Title: Vice President -------------------------------- -40- The foregoing is hereby agreed to as of the date thereof. MTL INSURANCE COMPANY By: Prudential Private Placement Investors, L.P. (as Investment Advisor) By: Prudential Private Placement Investors, Inc. (as its General Partner) By: /s/ ------------------------------------ Vice President PRUDENTIAL RETIREMENT INSURANCE AND ANNUITY COMPANY By: Prudential Investment Management, Inc., as investment manager By: /s/ ------------------------------------ Vice President -41- The foregoing is hereby agreed to as of the date thereof. PRIMERICA LIFE INSURANCE COMPANY By: Conning Asset Management Company. its Investment Manager By: /s/ David R. Miller ------------------------------------ Name: David R. Miller Title: Managing Director -42- The foregoing is hereby agreed to as of the date thereof. THE TRAVELERS INSURANCE COMPANY By: /s/ Judith A. Gulotta ------------------------------------ Name: Judith A. Gulotta Title: Vice President THE TRAVELERS LIFE AND ANNUITY COMPANY By: /s/ Judith A. Gulotta ------------------------------------ Name: Judith A. Gulotta Title: Vice President -43- The foregoing is hereby agreed to as of the date thereof. WEST AMERICAN INSURANCE COMPANY By: /s/ Paul Gerard ------------------------------------ Name: Paul Gerard Title: Senior Vice-President -44- The foregoing is hereby agreed to as of the date thereof. MINNESOTA LIFE INSURANCE COMPANY By Advantus Capital Management, Inc. By /s/ Thomas B. Houghton ------------------------------------- Name: Thomas B. Houghton Title: Vice President SECURITY NATIONAL LIFE INSURANCE COMPANY By: Advantus Capital Management, Inc. By /s/ Thomas B. Houghton ------------------------------------- Name: Thomas B. Houghton Title: Vice President FARM BUREAU LIFE INSURANCE COMPANY OF MICHIGAN By: Advantus Capital Management, Inc. By /s/ Thomas B. Houghton ------------------------------------- Name: Thomas B. Houghton Title: Vice President -45- FARM BUREAU MUTUAL INSURANCE COMPANY OF MICHIGAN By: Advantus Capital Management, Inc. By /s/ James F. Geiger --------------------------------- Name: James F. Geiger Title: Vice President FARM BUREAU GENERAL INSURANCE COMPANY OF MICHIGAN By: Advantus Capital Management, Inc. By /s/ James F. Geiger --------------------------------- Name: James F. Geiger Title: Vice President AMERICAN REPUBLIC INSURANCE COMPANY By: Advantus Capital Management, Inc. By /s/ James F. Geiger --------------------------------- Name: James F. Geiger Title: Vice President GREAT WESTERN INSURANCE COMPANY By: Advantus Capital Management, Inc. By /s/ James F. Geiger --------------------------------- Name: James F. Geiger Title: Vice President -46- AMERICAN FIDELITY ASSURANCE COMPANY By: Advantus Capital Management, Inc. By /s/ James F. Geiger --------------------------------- Name: James F. Geiger Title: Vice President -47- The foregoing is hereby agreed to as of the date thereof. CONNECTICUT GENERAL LIFE INSURANCE By /s/ Debra J. Height ------------------------------------- Name: Debra J. Height Title: Managing Director CIGNA LIFE INSURANCE COMPANY OF NEW YORK By /s/ Debra J. Height ------------------------------------- Name: Debra J. Height Title: Managing Director LIFE INSURANCE COMPANY OF NORTH AMERICA By /s/ Debra J. Height ------------------------------------- Name: Debra J. Height Title: Managing Director -48- The foregoing is hereby agreed to as of the date thereof. BENEFICIAL LIFE INSURANCE COMPANY By /s/ Robert R. Dalley ------------------------------------- Name: Robert R. Dalley Title: Sr, Vice President & Chief Financial Officer -49- INFORMATION RELATING TO NOTEHOLDERS
PRINCIPAL AMOUNT OF NAME AND ADDRESS OF NOTEHOLDER SERIES NOTES TO BE PURCHASED ------------------------------ ------ --------------------- ~~THE TRAVELERS INSURANCE COMPANY A $6,500,000 c/o Metropolitan Life Insurance Company 1 MetLife Plaza 27-01 Queens Plaza North Long Island City, New York 11101~~
Payments All payments on or in respect of the Notes to be by bank wire transfer of Federal or other immediately available funds (identifying each payment as "Hub International Limited, 5,71% Amended and Restated Series A Senior Notes due 2011, PPN 44333# AA 0, principal, interest or premium") to: Bank Name: The Chase Manhattan Bank, N.A. ABA Routing #: 021-000-021 Account No.: 910-2-587434 Account Name: The Travelers Insurance Company Ref: HUB International Notices All notices and other communications to be addressed: The Travelers Insurance Company c/o Metropolitan Life Insurance Company Investments, Private Placements P.O. Box 1902 10 Park Avenue Morristown, New Jersey 07962-1902 Attention: Director Facsimile: (973) 355-4250 With a copy OTHER THAN WITH RESPECT TO DELIVERIES OF FINANCIAL STATEMENTS to: The Travelers Insurance Company c/o Metropolitan Life Insurance Company P.O. Box 1902 10 Park Avenue Morristown, New Jersey 07962-1902 Attention: Chief Counsel-Securities Investments (PRIV) Facsimile: (973) 355-4338 SCHEDULE A (to Note Purchase Agreement) Name of Nominee in which Notes are to be issued: None Taxpayer I.D. Number: 06-0566090 (a Connecticut corporation) A-2
PRINCIPAL AMOUNT OF NAME AND ADDRESS OF NOTEHOLDER SERIES NOTES TO BE PURCHASED ------------------------------ ------ --------------------- THE TRAVELERS INSURANCE COMPANY -- A $600,000 SEPARATE ACCOUNT MGA c/o Metropolitan Life Insurance Company 1 MetLife Plaza 27-01 Queens Plaza North Long Island City, New York 11101
Payments All payments on or in respect of the Notes to be by bank wire transfer of Federal or other immediately available funds (identifying each payment as "Hub International Limited, 5.71% Amended and Restated Series A Senior Notes due 2011, PPN 44333# AA 0, principal, interest or premium") to: Bank Name: The Travelers Insurance Company-Consolidated Private ABA Routing #: 021-000-021 Account No.: 910-2-720464 Account Name: The Travelers Insurance Company Separate Account MGA Ref: HUB International Notices All notices and other communications to be addressed: The Travelers Insurance Company c/o Metropolitan Life Insurance Company Investments, Private Placements P.O. Box 1902 10 Park Avenue Morristown, New Jersey 07962-1902 Attention: Director Facsimile: (973) 355-4250 With a copy OTHER THAN WITH RESPECT TO DELIVERIES OF FINANCIAL STATEMENTS to: The Travelers Insurance Company c/o Metropolitan Life Insurance Company P.O. Box 1902 10 Park Avenue Morristown, New Jersey 07962-1902 Attention: Chief Counsel-Securities Investments (PRIV) Facsimile: (973) 355-4338 A-3 Name of Nominee in which Notes are to be issued: None Taxpayer I.D. Number: 06-0904249 (a Connecticut corporation) A-4
PRINCIPAL AMOUNT OF NAME AND ADDRESS OF NOTEHOLDER SERIES NOTES TO BE PURCHASED ------------------------------ ------ --------------------- THE TRAVELERS LIFE AND ANNUITY COMPANY A $1,700,000 SEPARATE ACCOUNT TLAC -- MGA c/o Metropolitan Life Insurance Company 1 MetLife Plaza 27-01 Queens Plaza North Long Island City, New York 11101
Payments All payments on or in respect of the Notes to be by bank wire transfer of Federal or other immediately available funds (identifying each payment as "Hub International Limited, 5,71% Amended and Restated Series A Senior Notes due 2011, PPN 44333# AA 0, principal, interest or premium") to: Bank Name: JP Morgan Chase Bank ABA Routing #: 021-000-021 Account No.: 910-739365 Account Name: The Travelers Separate Account TLAC -- MGA Ref: HUB International Notices All notices and other communications to be addressed: The Travelers Life and Annuity Company c/o Metropolitan Life Insurance Company Investments, Private Placements P.O. Box 1902 10 Park Avenue Morristown, New Jersey 07962-1902 Attention: Director Facsimile: (973) 355-4250 With a copy OTHER THAN WITH RESPECT TO DELIVERIES OF FINANCIAL STATEMENTS to: The Travelers Life and Annuity Company c/o Metropolitan Life Insurance Company P.O. Box 1902 10 Park Avenue Morristown, New Jersey 07962-1902 Attention: Chief Counsel-Securities Investments (PRIV) Facsimile: (973) 355-4338 A-5 Name of Nominee in which Notes are to be issued: None Taxpayer I.D. Number: 06-0904249 (a Connecticut corporation) A-6
PRINCIPAL AMOUNT OF NAME AND ADDRESS OF NOTEHOLDER SERIES NOTES TO BE PURCHASED ------------------------------ ------ --------------------- ~~THE TRAVELERS LIFE AND ANNUITY COMPANY A $600,000 c/o Metropolitan Life Insurance Company 1 MetlLife Plaza 27-01 Queens Plaza North Long Island City, New York 11101~~
Payments All payments on or in respect of the Notes to be by bank wire transfer of Federal or other immediately available funds (identifying each payment as "Hub International Limited, 5.71% Amended and Restated Series A Senior Notes due 2011, PPN 44333# AA 0, principal, interest or premium") to: Bank: JPMorgan Chase Bank ABA Routing #: 021-000-021 Account No.: 304-1-71778 Account Name: The Travelers Life and Annuity Company Ref: HUB International Notices All notices and other communications to be addressed: The Travelers Life and Annuity Company c/o Metropolitan Life Insurance Company Investments Private Placements P.O. Box 1902 10 Park Avenue Morristown, New Jersey 07962-1902 Attention: Director Facsimile: (973) 355-4250 With a copy OTHER THAN WITH RESPECT TO DELIVERIES OF FINANCIAL STATEMENTS to: The Travelers Life and Annuity Company c/o Metropolitan Life Insurance Company P.O. Box 1902 10 Park Avenue Morristown, New Jersey 07962-1902 Attention: Chief Counsel-Securities Investments (PRIV) Facsimile: (973) 355-4338 A-7 Name of Nominee in which Notes are to be issued: None Taxpayer I.D. Number: 06-0904249 (a Connecticut corporation) A-8
PRINCIPAL AMOUNT OF NAME AND ADDRESS OF NOTEHOLDER SERIES NOTES TO BEPURCHASED ------------------------------ ------ -------------------- ~~PRIMERICA LIFE INSURANCE COMPANY A $600,000 c/o Conning Asset Management Company One Financial Plaza, 13th Floor Hartford, Connecticut 06103~~
Payments All payments on or in respect of the Notes to be by bank wire transfer of Federal or other immediately available funds (identifying each payment as "Hub International Limited, 5.71% Amended and Restated Series A Senior Notes due 2011, PPN 44333# AA 0, principal, interest or premium") to: Primerica Life Insurance Company Account No. 910-2-790079 JPMorgan Chase Bank One Chase Manhattan Plaza New York, New York 10081 ABA No. 021000021 Notices All notices with respect to PAYMENT should be directed to: Primerica Life Insurance Company c/o Conning Asset Management Company One Financial Plaza, 13th Floor Hartford, CT 06103-2627 ATTN: John Scanlon / Pamela Levesque Facsimile: (860) 299-0161/(860) 299-0138 All OTHER communications (including original securities) should be directed to: Primerica Life Insurance Company C/o Conning Asset Management Company One Financial Plaza, 13th Floor Hartford, CT 06103-2627 ATTN: Vi R. Smalley, Esq. Facsimile: (860) 299-0054 Name of Nominee in which Notes are to be issued: None Taxpayer I.D. Number: 04-1590590 (a Massachusetts company) A-9
PRINCIPAL AMOUNT OF NAME AND ADDRESS OF NOTEHOLDER SERIES NOTES TO BE PURCHASED ------------------------------ ------ --------------------- CONNECTICUT GENERAL LIFE INSURANCE COMPANY B $3,400,000 CIG & Co. B $3,000,000 c/o CIGNA Retirement & Investment Services B $3,000,000 280 Trumbull Street B $1,000,000 Hartford, Connecticut 06103 B $1,100,000 Attention: Private and Alternative Investments, H16B B $1,000,000 Fax Number: (860) 534-7203
Payments All payments on or in respect of the Notes to be by Federal Funds Wire Transfer to: BNF=CIGNA Private Placements/AC=9009001802 ABA #021000021 OBI=Hub International, Limited, 6.16% Amended and Restated Series B Senior Notes due 2013, PPN 44333# AB 8; [due date and application (as among principal, premium and interest of the payment being made); contact name and phone.] Address for Notices Related to Payments: CIG & Co. c/o CIGNA Investments, Inc. Attention: Securities Processing H05P 280 Trumbull Street Hartford, Connecticut 06103 CIG & Co. c/o CIGNA Retirement & Investment Services Attention: Private and Alternative Investments, H16B 280 Trumbull Street Hartford, Connecticut 06103 Fax: 860-534-7203 A-10 with a copy to: J.P. Morgan Chase Bank Private Placement Servicing P.O. Box 1508 Bowling Green Station New York, New York 10081 Attention: CIGNA Private Placements Fax: 212-552-3107/1005 Address for All Other Notices: CIG & Co. c/o CIGNA Retirement & Investment Services Attention: Private and Alternative Investments, H16B 280 Trumbull Street Hartford, Connecticut 06103 Fax: 860-534-7203 Name of Nominee in which Notes are to be issued: CIG & Co. Taxpayer I.D. Number: 13-3574027 A-11
PRINCIPAL AMOUNT OF NAME AND ADDRESS OF NOTEHOLDER SERIES NOTES TO BE PURCHASED ------------------------------ ------ --------------------- CIGNA LIFE INSURANCE COMPANY OF NEW YORK B $3,000,000 CIG & Co. c/o CIGNA Retirement & Investment Services 280 Trumbull Street Hartford, Connecticut 06103 Attention: Private and Alternative Investments, H16B Fax Number: (860) 534-7203
Payments All payments on or in respect of the Notes to be by Federal Funds Wire Transfer to: BNF=CIGNA Private Placements/AC=9009001802 ABA #021000021 OBI=Hub International Limited, 6.16% Amended and Restated Series B Senior Notes due 2013, PPN 44333# AB 8; [due date and application (as among principal, premium and interest of the payment being made); contact name and phone.] Address for Notices Related to Payments: CIG & Co. c/o CIGNA Investments, Inc. Attention: Securities Processing H05P 280 Trumbull Street Hartford, Connecticut 06103 CIG & Co. c/o CIGNA Retirement & Investment Services Attention: Private and Alternative Investments, H16B 280 Trumbull Street Hartford, Connecticut 06103 Fax: 860-534-7203 A-12 with a copy to: J.P. Morgan Chase Bank Private Placement Servicing P. O. Box 1508 Bowling Green Station New York, New York 10081 Attention: CIGNA Private Placements Fax: 212-552-3107/1005 Address for All Other Notices: CIG & Co. c/o CIGNA Retirement & Investment Services Attention: Private and Alternative Investments, H16B 280 Trumbull Street Hartford, Connecticut 06103 Fax: 860-534-7203 Name of Nominee in which Notes are to be issued: CIG & Co. Taxpayer I.D. Number: 13-3574027 A-13
PRINCIPAL AMOUNT OF NAME AND ADDRESS OF NOTEHOLDER SERIES NOTES TO BE PURCHASED ------------------------------ ------ --------------------- LIFE INSURANCE COMPANY OF NORTH AMERICA B $3,400,000 CIG & Co. c/o CIGNA Retirement & Investment Services 280 Trumbull Street Hartford, Connecticut 06103 Attention: Private and Alternative Investments, H16B Fax Number: (860) 534-7203
Payments All payments on or in respect of the Notes to be by Federal Funds Wire Transfer to: BNF=CIGNA Private Placements/AC=9009001802 ABA #021000021 OBI=Hub International Limited, 6.16% Amended and Restated Series B Senior Notes due 2013, PPN 44333# AB 8; [due date and application (as among principal, premium and interest of the payment being made); contact name and phone.] Address for Notices Related to Payments: CIG & Co. c/o CIGNA Investments, Inc. Attention: Securities Processing H05P 280 Trumbull Street Hartford, Connecticut 06103 CIG & Co. c/o CIGNA Retirement & Investment Services Attention: Private and Alternative Investments, H16B 280 Trumbull Street Hartford, Connecticut 06103 Fax: 860-534-7203 with a copy to: J.P. Morgan Chase Bank Private Placement Servicing P.O. Box 1508 Bowling Green Station New York, New York 10081 Attention: CIGNA Private Placements Fax: 212-552-3107/1005 A-14 Address for All Other Notices: CIG & Co. c/o CIGNA Retirement & Investment Services Attention: Private and Alternative Investments, H16B 280 Trumbull Street Hartford, Connecticut 06103 Fax: 860-534-7203 Name of Nominee in which Notes are to be issued: CIG & Co. Taxpayer I.D. Number: 13-3574027 A-15
PRINCIPAL AMOUNT OF NAME AND ADDRESS OF NOTEHOLDER SERIES NOTES TO BE PURCHASED ------------------------------ ------ --------------------- ~~MINNESOTA LIFE INSURANCE COMPANY B $7,000,000 400 Robert Street North St. Paul, Minnesota 55101 Telefacsimile: (651) 223-5029 c/o Advantus Capital Management, Inc.~~
Payments All payments on or in respect of the Notes to be by bank wire transfer of Federal or other immediately available funds (identifying each payment as "Hub International Limited, 6.16% Amended and Restated Series B Senior Notes, due 2013, PPN 44333# AB 8, principal, interest or premium") to: Mellon Bank, Pittsburgh PA ABA#: 011001234 DDA#: 048771 Acct. Name: Minnesota Life Insurance Company Account #: ADFF0106002 Cost Code: 1167 Notices All notices and communications, including notices with respect to payments and written confirmation of each such payment, to be addressed as first provided above. Name of Nominee in which Notes are to be issued: None Taxpayer I.D. Number: 41-0417830 A-16
PRINCIPAL AMOUNT OF NAME AND ADDRESS OF NOTEHOLDER SERIES NOTES TO BE PURCHASED ------------------------------ ------ --------------------- PRUDENTIAL RETIREMENT INSURANCE AND B $1,200,000 ANNUITY COMPANY c/o Prudential Investment Management, Inc. Private Placement Trade Management PRIAC Administration Gateway Center Four, 7th Floor 100 Mulberry Street Newark, NJ 07102
Payments All payments on or in respect of the Notes to be by bank wire transfer of Federal or other immediately available funds (identifying each payment as "Hub International Limited, 6.16% Amended and Restated Series B Senior Notes, due 2013, PPN 44333# AB 8, principal, interest or premium") to: JPMorgan Chase ABA No. 021000021 Account Name: PRIAC - SA - Private Placement Fund - Priv - Privates Account No. P86353 (please do not include spaces) Notices Address for all notices relating to payments: Prudential Retirement Insurance and Annuity Company c/o Prudential Investment Management, Inc. Private Placement Trade Management PRIAC Administration Gateway Center Four, 7th Floor 100 Mulberry Street Newark, NJ 07102 Telephone: (973) 802-8107 Facsimile: (888) 889-3832 Address for all other communications and notices: Prudential Private Placement Investors, L.P. c/o Prudential Capital Group [Regional Office Address] Attention: Managing Director A-17 Name of Nominee in which Notes are to be issued: None Taxpayer I.D. Number: 06-1050034 A-18
PRINCIPAL AMOUNT OF NAME AND ADDRESS OF NOTEHOLDER SERIES NOTES TO BE PURCHASED ------------------------------ ------ --------------------- PRUDENTIAL RETIREMENT INSURANCE AND B $3,900,000 ANNUITY COMPANY $3,000,000 c/o Prudential Investment Management, Inc. $1,000,000 Private Placement Trade Management $1,000,000 PRIAC Administration $1,000,000 Gateway Center Four, 7th Floor 100 Mulberry Street Newark, NJ 07102
Payments All payments on or in respect of the Notes to be by bank wire transfer of Federal or other immediately available funds (identifying each payment as "Hub International Limited, 6.16% Amended and Restated Series B Senior Notes, due 2013, PPN 44333# AB 8, principal, interest or premium") to: JP Morgan Chase Bank New York, NY ABA No. 021000021 Account Name: PRIAC Account No. P86329 (please do not include spaces) in the case of payments on Account of the Note originally issued in the principal amount of $3,900,000.00 Account Name: PRIAC - SA - New York Carpenters - Privates Account No. P86337 (please do not include spaces) in the case of payments on Account of the Note originally issued in the principal amount of $3,000,000.00 Account Name: PRIAC - SA - Dewey Ballantine - Privates Account No. P86339 (please do not include spaces) in the case of payments on Account of the Note originally issued in the principal amount of $1,000,000.00 Account Name: PRIAC - SA - Fuji Stable Value Fund - Privates Account No. P86355 (please do not include spaces) in the case of payments on Account of the Note originally issued in the principal amount of $1,000,000.00 Account Name: PRIAC - SA - Health Care Services Corp - Privates Account No. P86341 (please do not include spaces) in the case of payments on Account of the Note originally issued in the principal amount of $1,000,000.00 A-19 Notices Address for all notices relating to payments: Prudential Retirement Insurance and Annuity Company c/o Prudential Investment Management, Inc. Private Placement Trade Management PRIAC Administration Gateway Center Four, 7th Floor 100 Mulberry Street Newark, NJ 07102 Telephone: (973) 802-8107 Facsimile: (888) 889-3832 Address for all other communications and notices: Prudential Retirement Insurance and Annuity Company c/o Prudential Capital Group Two Prudential Plaza 180 North Stetson, Suite 5600 Chicago, IL 60601-6716 Attention: Managing Director Name of Nominee in which Notes are to be issued: None Taxpayer I.D. Number: 06-1050034 A-20
PRINCIPAL AMOUNT OF NAME AND ADDRESS OF NOTEHOLDER SERIES NOTES TO BE PURCHASED - ------------------------------ ------ --------------------- ~~MTL INSURANCE COMPANY B $2,000,000 c/o Prudential Capital Group Two Prudential Plaza 180 North Stetson, Suite 5600 Chicago, IL 60601-6716 Attention: Managing Director~~
Payments All payments on or in respect of the Notes to be by bank wire transfer of Federal or other immediately available funds (identifying each payment as "Hub International Limited, 6.16% Amended and Restated Series B Senior Notes, due 2013, PPN 44333# AB 8, principal, interest or premium") to: The Northern Chgo/Trust ABA #071000152 Credit Wire Account #5186041000 FFC: 26-00621/MTL Insurance Company Attn: Income Collections Notices All notices of payments and written confirmations of such wire transfer: MTL Insurance Company 1200 Jorie Blvd. Oak Brook, IL 60522-9060 Attention: Margaret Culkeen Address for all other communications and notices: Prudential Private Placement Investors, L.P. c/o Prudential Capital Group Two Prudential Plaza 180 North Stetson, Suite 5600 Chicago, IL 60601-6716 Attention: Managing Director A-21 Name of Nominee in which Notes are to be issued: None Taxpayer I.D. Number: 36-1516780 A-22
PRINCIPAL AMOUNT OF NAME AND ADDRESS OF NOTEHOLDER SERIES NOTES TO BE PURCHASED ------------------------------ ------ --------------------- ~~SECURITY NATIONAL LIFE INSURANCE COMPANY B $500,000 400 Robert Street North c/o Advantus Capital Management, Inc. St. Paul, Minnesota 55101 Attn: Client Administrator~~
Payments All payments on or in respect of the Notes to be by bank wire transfer of Federal or other immediately available funds (identifying each payment as "Hub International. Limited, 6.16% Amended and Restated Series B Senior Notes, due 2013, PPN 44333# AB 8, principal, interest or premium") to: NORTHERN CHGO/TRUST ABA #071-000-152 Account #: 17-74574 Zions First National Bank For further credit to: Account Name: Security National Life Account #: 7794900A Notices All notices and communications, including notices with respect to payments and written confirmation of each such payment, to be addressed as first provided above. Name of Nominee in which Notes are to be issued: How & Co. Taxpayer I.D. Number: 36-2610791 A-23
PRINCIPAL AMOUNT OF NAME AND ADDRESS OF NOTEHOLDER SERIES NOTES TO BE PURCHASED ------------------------------ ------ --------------------- ~~FARM BUREAU LIFE INSURANCE COMPANY OF B $3,000,000 MICHIGAN c/o Advantus Capital Management, Inc. 400 Robert Street North St. Paul, Minnesota 55101 Attn: Client Administrator~~
Payments All payments on or in respect of the Notes to be by bank wire transfer of Federal or other immediately available funds (identifying each payment as "Hub International Limited, 6.16% Amended and Restated Series B Senior Notes, due 2013, PPN 44333# AB 8, principal, interest or premium") to: Comerica Bank Detroit, Michigan ABA #072-000-096 For credit to: Trust Operation-Fixed Income Unit Cost Center 98530 Account Number: 21585-98530 For further credit to: Farm Bureau Life Insurance Company of Michigan- Account Number: 011000312124 Notices All notices and communications, including notices with respect to payments and written confirmation of each such payment, to be addressed as first provided above. Name of Nominee in which Notes are to be issued: None Taxpayer I.D. Number: 38-6053670 A-24
PRINCIPAL AMOUNT OF NAME AND ADDRESS OF NOTEHOLDER SERIES NOTES TO BE PURCHASED ------------------------------ ------ --------------------- ~~FARM BUREAU MUTUAL INSURANCE COMPANY OF B $1,000,000 MICHIGAN c/o Advantus Capital Management, Inc. 400 Robert Street North St. Paul, Minnesota 55101 Attn: Client Administrator~~
Payments All payments on or in respect of the Notes to be by bank wire transfer of Federal or other immediately available funds (identifying each payment as "Hub International Limited, 6.16% Amended and Restated Series B Senior Notes, due 2013, PPN 44333# AB 88, principal, interest or premium") to: Comerica Bank Detroit, Michigan ABA #072-000-096 For credit to: Trust Operation-Fixed Income Unit Cost Center 98530 Account Number: 21585-98530 For further credit to: Farm Bureau Mutual Insurance Company of Michigan- Account Number: 011000312132 Notices All notices and communications, including notices with respect to payments and written confirmation of each such payment, to be addressed as first provided above. Name of Nominee in which Notes are to be issued: None Taxpayer I.D. Number: 38-1316179 A-25
PRINCIPAL AMOUNT OF NAME AND ADDRESS OF NOTEHOLDER SERIES NOTES TO BE PURCHASED ------------------------------ ------ --------------------- ~~FARM BUREAU GENERAL INSURANCE COMPANY OF B $1,000,000 MICHIGAN c/o Advantus Capital Management, Inc. 400 Robert Street North St. Paul, Minnesota 55101 Attn: Client Administrator~~
Payments All payments on or in respect of the Notes to be by bank wire transfer of Federal or other immediately available funds (identifying each payment as "Hub International Limited, 6.16% Amended and Restated Series B Senior Notes, due 2013, PPN 44333# AB 8, principal, interest or premium") to: Comerica Bank Detroit, Michigan ABA #072-000-096 For credit to: Trust Operation-Fixed Income Unit Cost Center 98530 Account Number: 21585-98530 For further credit to: Farm Bureau General Insurance Company of Michigan- Account Number: 011000312140 Notices All notices and communications, including notices with respect to payments and written confirmation of each such payment, to be addressed as first provided above. Name of Nominee in which Notes are to be issued: None Taxpayer I.D. Number: 38-6056228 A-26
NAME AND ADDRESS OF NOTEHOLDER SERIES PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED ------------------------------ ------ ----------------------------------------- ~~AMERICAN REPUBLIC INSURANCE COMPANY B $1,500,000 c/o Advantus Capital Management, Inc. 400 Robert Street North St. Paul, Minnesota 55101 Attn: Client Administrator~~
Payments All payments on or in respect of the Notes to be by bank wire transfer of Federal or other immediately available funds (identifying each payment as "Hub International Limited, 6.16% Amended and Restated Series B Senior Notes, due 2013, PPN 44333# AB 8, principal, interest or premium") to: Wells Fargo Bank, N.A. ABA #121000248 BNFA=0000840245 (include all 10 digits) BNF=Trust Wire Clearing FFC Attn: Income Collections, a/c #20983400 For further credit to: American Republic Insurance Co. Account Number: 20983400 Notices All notices and communications, including notices with respect to payments and written confirmation of each such payment, to be addressed as first provided above. Name of Nominee in which Notes are to be issued: Wells Fargo Bank N.A. as custodian for American Republic Insurance Company Taxpayer I.D. Number: 42-0113630 A-27
NAME AND ADDRESS OF NOTEHOLDER SERIES PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED ------------------------------ ------ ----------------------------------------- ~~GREAT WESTERN INSURANCE COMPANY B $1,000,000 c/o Advantus Capital Management, Inc. 400 Robert Street North St. Paul, Minnesota 55101 Attn: Kay Rasmussen, A9-4538~~
Payments All payments on or in respect of the Notes to be by bank wire transfer of Federal or other immediately available funds (identifying each payment as "Hub International Limited, 6.16% Amended and Restated Series B Senior Notes, due 2013, PPN 44333# AB 8, principal, interest or premium") to: JP Morgan Chase ABA Number: 021000021 DDA: 930-4-019012 Sub Account: 035-00202 Attn: Richard D'Angelo Phone #: 904-218-1683 For Credit to: Merrill Lynch Pierce Fenner & Smith, Inc. Account # 00810935 Reference Account Number: 70G-13700 Reference Name: Great Western Insurance Company Contact: Steve Kelly (201) 557-1213 Notices All notices and communications, including notices with respect to payments and written confirmation of each such payment, to be addressed as first provided above. Name of Nominee in which Notes are to be issued: Merrill Lynch for Great Western Insurance Company Taxpayer I.D. Number: 87-0395954 A-28
NAME AND ADDRESS OF NOTEHOLDER SERIES PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED ------------------------------ ------ ----------------------------------------- ~~AMERICAN FIDELITY ASSURANCE COMPANY B $2,000,000 c/o Advantus Capital Management, Inc. 400 Robert Street North St. Paul, Minnesota 55101 Attn: Client Administrator~~
Payments All payments on or in respect of the Notes to be by bank wire transfer of Federal or other immediately available funds (identifying each payment as "Hub International Limited, 6.16% Amended and Restated Series B Senior Notes, due 2013, PPN 44333# AB 8, principal, interest or premium") to: First Fidelity Bank ABA #103002691 Account Name: InvesTrust Account Number: 1040120179 For Further Ref: American Fidelity Assurance Company Account Number: 52010414 For credit to: InvesTrust Account Number: 1040120179 Attn: Tina Swaim & Ron Mitchell Notices All notices and communications, including notices with respect to payments and written confirmation of each such payment, to be addressed as first provided above. Name of Nominee in which Notes are to be issued: FFB Registration Taxpayer I.D. Number: 73-0714500 A-29
NAME AND ADDRESS OF NOTEHOLDER SERIES PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED ------------------------------ ------ ----------------------------------------- ~~BENEFICIAL LIFE INSURANCE COMPANY B $3,000,000 36 South State, 25th Floor Salt Lake City, Utah 84136 Attn: Doug Hancock~~
Fax: (801) 531-3314 Payments All payments on or in respect of the Notes to be by bank wire transfer of Federal or other immediately available funds (identifying each payment as "Hub International Limited, 6.16% Amended and Restated Series B Senior Notes, due 2013, PPN 44333# AB 8, principal, interest or premium") to: JPMorgan Chase ABA #021000021 A/C # 544755102 FFC: Zions First National Bank G70990 Notices Address for Notices Related to Payments: Beneficial Life Insurance Co. 36 South State, 25th Floor Salt Lake City, Utah 84136 Attn: Sterling Russell Fax: (801) 531-3339 Address for All Other Notices: Beneficial Life Insurance Co. 36 South State, 25th Floor Salt Lake City, Utah 84136 Attn: Sterling Russell Fax: (801) 531-3339 Name of Nominee in which Notes are to be issued: TFINN Taxpayer I.D. Number: 87-0115120 A-30
NAME AND ADDRESS OF NOTEHOLDER SERIES PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED ------------------------------ ------ ----------------------------------------- ~~WEST AMERICAN INSURANCE COMPANY B $3,000,000 c/o The Ohio Casualty Group 9450 Seward Road Fairfield, Ohio 45014 Telefacsimile: (513) 682-5227~~
Payments All payments on or in respect of the Notes to be by bank wire transfer of Federal or other immediately available funds (identifying each payment as "Hub International Limited, 6.16% Amended and Restated Series B Senior Notes, due 2013, PPN 44333# AB 8, principal, interest or premium") to: Cash Wires Income Payments CHASE NYC/CUST ABA #021 000 021 A/C #900-9-000200 Attn: Income Collection FAO: A/C #G06426 A/C West American Insurance Company Other Wires CHASE NYC/CUST ABA #021 000 021 A/C #900-9-000150 Attn: Mary Danens FAO: A/C #G06426 A/C West American Insurance Company Notices All notices and communications with respect to payment and written confirmation of each such payment to be addressed to: The Ohio Casualty Group Mary Beth Cadle, Portfolio Manager 9450 Seward Road Fairfield, Ohio 45014 Phone: (513) 603-2887 Fax: (513) 682-5227 Name of Nominee in which Notes are to be issued: Cudd & Co. Taxpayer I.D. Number: 31-0624491 A-31 DEFINED TERMS Capitalized terms used herein and not otherwise defined shall have the meanings given in the Parent Company Guaranty. As used herein, the following terms have the respective meanings set forth below or set forth in the Section hereof following such term: "Acquisition Date" is defined in SECTION 10.1(C). "Affiliate" shall mean, at any time, and with respect to any Person, (a) any other Person that at such time directly or indirectly through one or more intermediaries Controls, or is Controlled by, or is under common Control with, such first Person, and (b) in the case of the Parent Company or any Subsidiary, any Person beneficially owning or holding, directly or indirectly, 10% or more of any class of voting or equity interests of the Parent Company or any Subsidiary or any corporation of which the Parent Company and its Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly, 10% or more of any class of voting or equity interests; provided that "Affiliate," in relation to the Parent Company, shall not include any Subsidiary. As used in this definition, "Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. Unless otherwise clearly stated, any reference to an "Affiliate" is a reference to an Affiliate of the Parent Company. "Additional Covenant" shall mean any affirmative or negative covenant or similar restriction applicable to the Parent Company or any Subsidiary (regardless of whether such provision is labeled or otherwise characterized as a covenant) the subject matter of which either (a) is similar to that of any covenant in SECTION 9 or 10 of this Agreement, or related definitions in SCHEDULE B to this Agreement, or Section 3 or 4 of the Parent Company Guaranty, or related definitions in Section 1 of the Parent Company Guaranty, but contains one or more percentages, amounts or formulas that is more restrictive than those set forth herein or more beneficial to any holder of any Designated Debt (and such covenant or similar restriction shall be deemed an Additional Covenant only to the extent that it is more restrictive or more beneficial) or (b) is different from the subject matter of any covenants in SECTION 9 or 10 of this Agreement or Section 3 or 4 of the Parent Company Guaranty, or related definitions in SCHEDULE B to this Agreement or the related definitions in Section 1 of the Parent Company Guaranty. Notwithstanding the foregoing, the provisions set forth in SECTION 1008 of each of the Subordinated Debentures as in effect on the date hereof shall not constitute Additional Covenants. "Additional Default" shall mean any provision for the benefit of any holder of any Designated Debt to accelerate (with the passage of time or giving of notice or both) the maturity thereof or otherwise requires any Parent Company or any Subsidiary to purchase the Debt under such Designated Debt prior to the stated maturity thereof and which either (a) is similar to any Default or Event of Default contained in SECTION 11 of this Agreement, or related definitions in SCHEDULE B to this Agreement or Section 1 of the Parent Company Guaranty, but contains one or more percentages, amounts or formulas that is more restrictive or has a shorter grace period than those set forth therein or is more beneficial to any holder of any Designated Debt (and such provision shall be deemed an Additional Default only to the extent that it is more restrictive, has SCHEDULE B (to Note Purchase Agreement) a shorter grace period or is more beneficial) or (b) is different from the subject matter of any Default or Event of Default contained in SECTION 11 of this Agreement, or related definitions in SCHEDULE B to this Agreement or Section 1 of the Parent Company Guaranty. "Asset Disposition" shall mean any Transfer except: (a) any (1) Transfer from a Subsidiary to the Parent Company or a Wholly-Owned Subsidiary; and (2) Transfer from the Parent Company to a Wholly-Owned Subsidiary; so long as immediately before and immediately after the consummation of any such Transfer and after giving effect thereto, no Default or Event of Default shall exist; and (b) any Transfer made in the ordinary course of business and involving only property that is either (1) inventory held for sale or (2) equipment, fixtures, supplies or materials no longer required in the operation of the business of the Parent Company or any of its Subsidiaries or that is obsolete. "Attributable Debt" shall mean, as to any particular lease relating to a Sale-and-Leaseback Transaction not permitted under clause (a), (b) or (c) of SECTION 10.6, the present value of all Lease Rentals required to be paid by the Parent Company or any Subsidiary under such lease during the remaining term thereof (determined in accordance with generally accepted financial practice using a discount factor equal to the interest rate implicit in such lease if known or, if not known, of 10% per annum). "Bank" shall mean Bank of Montreal. "Bridge Loan Credit Agreement" shall mean that certain Non-Revolving Credit Agreement, dated as of March 30, 2006, by and between the Parent Company and the Bank. "Business Day" shall mean (a) for the purposes of SECTION 8.6 only, any day other than a Saturday, a Sunday or a day on which commercial banks in New York, New York are required or authorized to be closed, and (b) for the purposes of any other provision of this Agreement, any day other than a Saturday, a Sunday or a day on which commercial banks in Chicago, Illinois or New York, New York, are required or authorized to be closed. "Capital Lease" shall mean, at any time, a lease with respect to which the lessee is required concurrently to recognize the acquisition of an asset and the incurrence of a liability in accordance with GAAP. "Capital Lease Obligation" shall mean, with respect to any Person and a Capital Lease, the amount of the obligation of such Person as the lessee under such Capital Lease which would, in accordance with GAAP, appear as a liability on a balance sheet of such Person. B-2 "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations promulgated thereunder from time to time. "Confidential Information" is defined in SECTION 20. "Consolidated Debt" shall mean, as of any date of determination, the total of all Debt of the Parent Company and its Subsidiaries outstanding on such date, after eliminating all offsetting debits and credits between the Parent Company and its Subsidiaries and all other items required to be eliminated in the course of the preparation of consolidated financial statements of the Parent Company and its Subsidiaries in accordance with GAAP. "Consolidated Net Income" shall mean, with reference to any period, the net income (or loss) of the Parent Company and its Subsidiaries for such period (taken as a cumulative whole), as determined in accordance with GAAP, after eliminating all offsetting debits and credits between the Parent Company and its Subsidiaries and all other items required to be eliminated in the course of the preparation of consolidated financial statements of the Parent Company and its Subsidiaries in accordance with GAAP, but excluding, in any event, any extraordinary gains or losses determined in accordance with GAAP. "Consolidated Net Worth" shall mean, as of any date of determination thereof, (a) the sum of (1) the par value (or value stated on the books of the corporation) of the share capital (but excluding treasury shares and share capital subscribed and unissued) of the Parent Company and its Subsidiaries plus (2) the amount of the paid-in capital and retained earnings of the Parent Company and its Subsidiaries, in each case as such amounts would be shown on a consolidated balance sheet of the Parent Company and its Subsidiaries as of such time prepared in accordance with GAAP, minus (b) to the extent included in clause (a) above, all amounts properly attributable to minority interests, if any, in the shares and surplus of Subsidiaries. "Consolidated Total Assets" shall mean, as of any date of determination, the total assets of the Parent Company and its Subsidiaries that would be shown as assets on a consolidated balance sheet of the Parent Company and its Subsidiaries as of such time prepared in accordance with GAAP, after eliminating all amounts properly attributable to minority interests, if any, in the shares and surplus of Subsidiaries. "Consolidated Total Capitalization" shall mean, as of any date of determination, the sum of Consolidated Debt and Consolidated Net Worth. "Credit Agreement" shall have the meaning given in SECTION 4.2. "Crown" shall mean the Crown in Right of Canada or of any Province or Territory thereof. "Debt" shall mean, with respect to any Person, without duplication, B-3 (a) its liabilities for borrowed money; (b) its liabilities for the deferred purchase price of property acquired by such Person (excluding accounts payable arising in the ordinary course of business but including, without limitation, all liabilities created or arising under any conditional sale or other title retention agreement with respect to any such property); (c) its Capital Lease Obligations; (d) all liabilities for borrowed money secured by any Lien with respect to any property owned by such Person (whether or not it has assumed or otherwise become liable for such liabilities); (e) the principal or lease balance outstanding under Synthetic Leases; (f) its income-put option liabilities; and (g) any Guarantee of such Person with respect to liabilities of a type described in any of clauses (a) through (f) hereof; provided, that Debt shall not include Guarantees of bank loans to officers of the Parent Company the proceeds of which are used to purchase shares of the Parent Company, in an aggregate principal amount not to exceed $12,000,000 at any one time outstanding. Debt of any Person shall include all obligations of such Person of the character described in clauses (a) through (g) to the extent such Person remains legally liable in respect thereof notwithstanding that any such obligation is deemed to be extinguished under GAAP. "Debt Prepayment Application" shall mean, with respect to any Transfer of property, the application by the Issuer or its Subsidiaries of cash in an amount equal to the Net Proceeds Amount with respect to such Transfer to pay Senior Funded Debt of the Issuer or any Subsidiary of the Issuer (other than Senior Funded Debt owing to the Parent Company, any of its Subsidiaries or any Affiliates and Senior Funded Debt in respect of any revolving credit or similar facility providing the Issuer or any of its Subsidiaries with the right to obtain loans or other extensions of credit from time to time, except to the extent that in connection with such payment of Senior Funded Debt the availability under such revolving credit or similar facility is permanently reduced by an amount not less than the amount of such proceeds applied to the payment of such Senior Funded Debt). "Default" shall mean an event or condition the occurrence or existence of which would, with the lapse of time or the giving of notice or both, become an Event of Default. "Default Rate" shall mean, with respect to the Notes, that rate of interest that is the greater of (a) 2% per annum above the rate of interest stated in clause (a) of the first paragraph of the Notes or (b) 2% over the rate of interest publicly announced by JPMorgan Chase Bank in New York City as its "base" or "prime" rate. B-4 "Designated Debt" shall mean (a) any Debt of the Parent Company or any Subsidiary issued or outstanding under any agreement if the aggregate outstanding principal amount of the Debt issued or outstanding under such agreement, together with the aggregate amount of any undrawn commitments to provide loans or financial accommodations to the Parent Company or any Subsidiary under such agreement, exceeds U.S.$10,000,000, and (b) any Debt of the Parent Company or any Subsidiary issued or outstanding under one or more agreements if the aggregate outstanding principal amount of the Debt issued or outstanding under all such agreements, together with the aggregate amount of any undrawn commitments to provide loans or financial accommodations to the Parent Company or any Subsidiary under all such agreements, exceeds U.S.$25,000,000. For the avoidance of doubt, all Debt of the Parent Company and its Subsidiaries under the Credit Agreement or any other primary working capital facility, the 2003 Notes and the Subordinated Debentures shall be deemed Designated Debt. "Disposition Value" shall mean with respect to any property (a) in the case of property that does not constitute Subsidiary Shares, the book value thereof, valued at the time of such disposition in good faith by the Parent Company, and (b) in the case of property that constitutes Subsidiary Shares, an amount equal to that percentage of book value of the assets of the Subsidiary that issued such shares as is equal to the percentage that the book value of such Subsidiary Shares represents of the book value of all of the outstanding share capital of such Subsidiary (assuming, in making such calculations, that all securities convertible into such share capital are so converted and giving full effect to all transactions that would occur or be required in connection with such conversion) determined at the time of the disposition thereof, in good faith by the Parent Company. "EBITDA" shall mean, with respect to any period, the sum of (a) Consolidated Net Income for such period, plus (b) to the extent deducted in the determination of Consolidated Net Income for such period, (1) all Interest Charges during such period, (2) all depreciation and amortization expenses during such period, (3) all Federal, state and provincial income taxes during such period and (4) other non-cash expenses during such period, minus (c) to the extent included in the determination of Consolidated Net Income for such period, gains from the sale of capital assets and investments and other income-put option liabilities, all as determined in accordance with GAAP consistently applied. "Effective Date" is defined in SECTION 1.8. "Environmental Law" is defined in the Parent Company Guaranty. "Equity Interests" means in the case of a corporation, shares of capital stock of any class or series, including warrants, rights, participating interests or options to purchase or otherwise acquire any class or series of capital stock or securities exchangeable for or convertible into any class or series of capital stock, and in the case of any other Person or entity shall mean any class or series of partnership interests (including, without limitation, any general or limited partnership B-5 interests), units, membership interests or like interests constituting equity, and in the case of each of the foregoing, any part or portion thereof or participation in any of the foregoing. "Event of Default" is defined in SECTION 11. "Existing Credit Agreement" shall mean that certain Amended and Restated Credit Agreement, dated as of April 23, 2004, by and among the Parent Company and the Bank, as amended from time to time in accordance with the terms hereof. "Existing Note Purchase Agreements" is defined in SECTION 1.1. "Existing Notes" is defined in SECTION 1.1. "Fair Market Value" shall mean, as of any date of determination thereof and with respect to any property, the sale value of such property that would be realized in an arm's-length sale at such time between an informed and willing buyer and an informed and willing seller (neither being under a compulsion to buy or sell). "Forms" is defined in SECTION 8.8(A)(4). "Funded Debt" means, with respect to any Person, all Debt of such Person which by its terms or by the terms of any instrument or agreement relating thereto matures, or which is otherwise payable or unpaid, one year or more from, or is directly or indirectly renewable or extendible at the option of the obligor in respect thereof to a date one year or more (including, without limitation, an option of such obligor under a revolving credit or similar agreement obligating the lender or lenders to extend credit over a period of one year or more) from, the date of any determination thereof. "GAAP" shall mean generally accepted accounting principles as in effect from time to time as now or hereafter established by the Canadian Institute of Chartered Accountants or any successor thereto. "General Partner" shall mean HUB International Partners Limited, an Ontario corporation. "Guarantee" shall mean, with respect to any Person, any obligation (except the endorsement in the ordinary course of business of negotiable instruments for deposit or collection) of such Person guaranteeing or in effect guaranteeing any Debt, dividend or other obligation of any other Person in any manner, whether directly or indirectly, including, without limitation, obligations incurred through an agreement, contingent or otherwise, by such Person: (a) to purchase such Debt or obligation or any property constituting security therefor; (b) to advance or supply funds (1) for the purchase or payment of such Debt or obligation, or (2) to maintain any working capital or other balance sheet condition or B-6 any income statement condition of any other Person or otherwise to advance or make available funds for the purchase or payment of such Debt or obligation; (c) to lease properties or to purchase properties or services primarily for the purpose of assuring the owner of such Debt or obligation of the ability of any other Person to make payment of the Debt or obligation; or (d) otherwise to assure the owner of such Debt or obligation against loss in respect thereof. In any computation of the Debt or other liabilities of the obligor under any Guarantee, the Debt or other obligations that are the subject of such Guarantee shall be assumed to be direct obligations of such obligor. "holder" shall mean, with respect to any Note, the Person in whose name such Note is registered in the register maintained by the Issuer pursuant to SECTION 13.1. "Institutional Accredited Investor" shall mean an "accredited investor" within the meaning of the 501(a)(1), (2), (3) or (7) under the Securities Act. "Institutional Investor" shall mean (a) any Noteholder named on SCHEDULE A hereto, (b) any holder of more than U.S.$2,000,000 of the aggregate principal amount of the Notes then outstanding, and (c) any bank, trust company, savings and loan association or other financial institution, any pension plan, any investment company, any insurance company, any broker or dealer, or any other similar financial institution or entity, regardless of legal form. "Interest Charges" shall mean, with respect to any period, the sum (without duplication) of the following (in each case, eliminating all offsetting debits and credits between the Parent Company and its Subsidiaries and all other items required to be eliminated in the course of the preparation of consolidated financial statements of the Parent Company and its Subsidiaries in accordance with GAAP): (a) all interest in respect of Debt of the Parent Company and its Subsidiaries (including imputed interest on Capital Lease Obligations) deducted in determining Consolidated Net Income for such period, and (b) all debt discount and expense amortized or required to be amortized in the determination of Consolidated Net Income for such period. "Issuer" shall mean Hub International Limited Partnership, a limited partnership organized under the laws of Delaware, and any Successor Subsidiary. "Lease Rentals" shall mean, with respect to any period, the sum of all fixed payments (including as such all payments which the lessee is obligated to make to the lessor on termination of the lease or surrender of the property) payable by the Parent Company or a Subsidiary, as lessee or sublessee under a lease of property, but shall be exclusive of any amounts required to be paid by the Parent Company or a Subsidiary (whether or not designated as rents or additional rents) on account of maintenance, repairs, insurance, taxes and similar charges. Fixed rents under any so-called "percentage leases" shall be computed solely on the basis of the minimum rents, if any, required to be paid by the lessee regardless of sales volume or gross revenues. B-7 "Lien" shall mean, with respect to any Person, any mortgage, lien, pledge, charge, security interest or other encumbrance, or any interest or title of any vendor, lessor, lender or other secured party to or of such Person under any conditional sale or other title retention agreement or Capital Lease, upon or with respect to any property or asset of such Person (including in the case of shares, shareholder agreements, voting trust agreements and all similar arrangements). "Make-Whole Amount" is defined in SECTION 8.6. "Material Subsidiary" shall mean, at any time, any Subsidiary that accounts for more than (a) 5% of Consolidated Total Assets determined as of the immediately preceding fiscal quarter or (b) 5% of consolidated revenue of the Parent Company and its Subsidiaries determined as of the immediately preceding fiscal year. "Minimum Interest Coverage Ratio" shall mean, as of the date of any determination thereof, the ratio of (a) EBITDA for the period consisting of the immediately preceding four consecutive fiscal quarters of the Parent Company ending on, or most recently ended prior to, such date to (b) Interest Charges for such period. "Net Proceeds Amount" shall mean, with respect to any Transfer of any Property by any Person, an amount equal to the difference of (a) the aggregate amount of the consideration (valued at the Fair Market Value of such consideration at the time of the consummation of such Transfer) received by such Person in respect of such Transfer, minus (b) all ordinary and reasonable out-of-pocket costs and expenses actually incurred by such Person in connection with such Transfer. "Notes" is defined in SECTION 1.3. "Noteholders" is defined in the Preamble. "Offer Prepayment Date" is defined in SECTION 8.7(B). "Officer's Certificate" shall mean a certificate of a Senior Financial Officer, general partner or of any other officer of the Issuer or the Parent Company, as applicable, whose responsibilities extend to the subject matter of such certificate. "Parent Company" shall have the meaning given in the introductory paragraph. "Parent Company Guaranty" is defined in SECTION 4.1. "PTE" is defined in SECTION 6.2(A). B-8 "Person" shall mean an individual, partnership, corporation, limited liability company, association, trust, unincorporated organization, or a government or agency or political subdivision thereof. "Priority Debt" shall mean, without duplication, the sum of (a) Debt of the Parent Company and its Subsidiaries secured by Liens other than Liens permitted by paragraphs (a) through (k), inclusive, of SECTION 10.3, (b) Debt of Subsidiaries (including, without limitation, any Guarantee by any Subsidiary of any Debt of the Parent Company or any other Subsidiary) other than (1) Debt of the Issuer and (2) Debt of other Subsidiaries permitted by paragraphs (a) through (c), inclusive, of SECTION 10.1, and (c) Attributable Debt of the Parent Company and its Subsidiaries relating to Sale-and-Leaseback Transactions other than Sale-and-Leaseback Transactions permitted by paragraphs (a) through (c), inclusive, of SECTION 10.6. "property" or "properties" shall mean, unless otherwise specifically limited, real or personal property of any kind, tangible or intangible, choate or inchoate. "Property Reinvestment Application" shall mean, with respect to any Transfer of property, the application of an amount equal to the Net Proceeds Amount with respect to such Transfer to the acquisition by the Issuer or any Subsidiary of operating assets of the Issuer or any Subsidiary of the Issuer to be used in the principal business of such Person. "QPAM Exemption" shall mean Prohibited Transaction Class Exemption 84-14 issued by the United States Department of Labor. "Relevant Tax" is defined in SECTION 8.8. "Reorganization" is defined in SECTION 4.14. "Required Holders" shall mean, at any time, the holders of more than 50% in aggregate principal amount of the Notes at the time outstanding (exclusive of Notes then owned by the Parent Company or any of its Subsidiaries or Affiliates). "Resident Country" is defined in SECTION 8.8. "Responsible Officer" shall mean any Senior Financial Officer and any other officer of the Parent Company or the Issuer, as applicable, with responsibility for the administration of the relevant portion of this Agreement. "Restricted Payments" is defined in SECTION 10.12. "Sale-and-Leaseback Transaction" means a transaction or series of transactions pursuant to which the Parent Company or any Subsidiary shall sell or transfer to any Person (other than the Parent Company or a Wholly-Owned Subsidiary) any property, whether now owned or hereafter acquired, and, as part of the same transaction or series of transactions, the Parent Company or any Subsidiary shall rent or lease as lessee (other than pursuant to a Capital Lease), B-9 or similarly acquire the right to possession or use of, such property or one or more properties which it intends to use for the same purpose or purposes as such property. "Securities Act" shall mean the Securities Act of 1933, as amended from time to time. "Senior Debt" in respect of any Person, shall mean, as of the date of any determination thereof, all Debt of such Person other than Subordinated Debt. "Senior Financial Officer" shall mean the chief financial officer, principal accounting officer, treasurer or comptroller of the Parent Company or the Issuer, as applicable. "Senior Funded Debt" in respect of any Person, shall mean, as of the date of any determination thereof, all Funded Debt of such Person other than Subordinated Funded Debt. "Series A Notes" is defined in SECTION 1.1. "Series B Notes" is defined in SECTION 1.1. "Source" is defined in SECTION 6.2. "Subordinated Debentures" shall mean, collectively, that certain 8.5% Convertible Subordinated Debenture due June 28, 2007 of the Parent Company in favor of Odyssey Reinsurance Corporation in the original principal amount of U.S.$17,500,000 and that certain 8.5% Convertible Subordinated Debenture due June 28, 2007 of the Parent Company in favor of United States Fire Insurance Company in the original principal amount of U.S.$17,500,000. "Subordinated Debt" in respect of any Person, shall mean, as of the date of any determination thereof, all unsecured Debt of such Person which shall contain or have applicable thereto subordination provisions providing for the subordination thereof to other Debt of such Person. For the avoidance of doubt, all Debt of the Parent Company or any Subsidiary under the Subordinated Debentures shall be deemed Subordinated Debt of the Parent Company or such Subsidiary. "Subordinated Funded Debt" in respect of any Person, shall mean, as of the date of any determination thereof, all unsecured Funded Debt of such Person which shall contain or have applicable thereto subordination provisions providing for the subordination thereof to other Funded Debt of such Person. "Subsidiary" shall mean, as to any Person, any corporation, association or other business entity in which such Person or one or more of its Subsidiaries or such Person and one or more of its Subsidiaries owns sufficient equity or voting interests to enable it or them (as a group) ordinarily, in the absence of contingencies, to elect a majority of the directors (or Persons performing similar functions) of such entity, and any partnership or joint venture if more than a 50% interest in the profits or capital thereof is owned by such Person or one or more of its Subsidiaries or such Person and one or more of its Subsidiaries (unless such partnership can and does ordinarily take major business actions without the prior approval of such Person or one or B-10 more of its Subsidiaries). Unless otherwise clearly stated, any reference to a "Subsidiary" is a reference to a Subsidiary of the Parent Company and the Issuer is included as a Subsidiary of the Parent Company. "Subsidiary Shares" shall mean, with respect to any Person, the shares (or any options or warrants to purchase shares or other securities exchangeable for or convertible into shares) of any Subsidiary of such Person. "Successor Entity" is defined in SECTION 10.4(A). "Synthetic Lease" shall mean any synthetic lease, tax retention operating lease, off-balance sheet loan or similar off-balance sheet financing product, where such transaction is considered debt for borrowed money for tax purposes but is classified as an operating lease in accordance with GAAP. "Tax Indemnity Amounts" is defined in SECTION 8.8. "Taxing Jurisdiction" is defined in SECTION 8.8. "Transfer" shall mean, with respect to any Person, any transaction in which such Person sells, conveys, transfers or leases (as lessor) any of its property, including, without limitation, Subsidiary Shares. For purposes of determining the application of the Net Proceeds Amount in respect of any Transfer, the Parent Company may designate any Transfer as one or more separate Transfers each yielding a separate Net Proceeds Amount. In any such case, (a) the Disposition Value of any property subject to each such separate Transfer and (b) the amount of Consolidated Total Assets attributable to any property subject to each such separate Transfer shall be determined by ratably allocating the aggregate Disposition Value of, and the aggregate Consolidated Total Assets attributable to, all property subject to all such separate Transfers to each such separate Transfer on a proportionate basis. "2006 Guaranty Agreement" shall mean that certain Guaranty Agreement dated as of April 4, 2006 by the Parent Company in favor and for the benefit of the noteholders named therein. "2006 Note Purchase Agreement" shall mean that certain Note Purchase Agreement dated as of April 4, 2006 by and among the Issuer and the noteholders named therein pursuant to which such noteholders purchase the 2006 Notes. "2006 Notes" shall mean, collectively, those 6.43% Senior Notes due April 4, 2016 of the Issuer in the original aggregate principal amount of U.S. $75,000,000. "Wholly-Owned Subsidiary" shall mean any Subsidiary 100% of all of the equity interests (except directors' qualifying shares) and voting interests of which are owned by any one or more of the Parent Company and the Parent Company's other Wholly-Owned Subsidiaries. B-11 REORGANIZATION EXISTING FINANCING STRUCTURE Hub International Limited ("HIL"), has borrowed (a) US$65 million from the Bank of Montreal ("BMO") under a US$75 million revolving credit facility (the "HIL-BMO Facility") and (b) US$65 million from holders of fixed-rate senior notes (the "Senior Notes"). Under a master swap agreement with BMO, HIL entered into a fixed-to-floating interest rate swap (the "Swap") with respect to the Senior Notes with BMO as the Swap counterparty. Using funds from various internal and external sources, HIL capitalized certain offshore financing subsidiaries, including Hub (Luxembourg) S.a.r.l., Hub (Gibraltar) Limited, and Hub Hungary Liquidity Management Limited Liability Company (collectively, the "Offshore Subsidiaries"). With the funds received from HIL and its own earnings, Hub Hungary made loans (the "HOC Loans") to Hub U.S. Holdings Inc. ("Hub U.S."), a Delaware corporation wholly owned by HIL and the parent corporation of HIL's U.S. operations, and several Hub U.S. subsidiaries. NEW STRUCTURE HIL proposes to replace the existing financing structure using the Offshore Subsidiaries with the financing structure as outlined below. Under the new structure, the following entities, among others (collectively, the "Tower Entities") will be established: (a) a U.S. limited partnership (the "Partnership") that will be indirectly wholly owned by HIL, (b) an Ontario corporation to serve as the one-percent general partner of the Partnership, (c) a U.S. limited liability company (the "LLC") and (d) a U.S. limited liability company to act as the LLC's manager. The Tower Entities will replace the existing financing structure using the Offshore Subsidiaries. The Partnership will assume the obligations of HIL under the Senior Notes and the Swap. HIL will guarantee such obligations. The Partnership will borrow US$75 million under a loan agreement with Prudential (the "Prudential Loan"). HIL will guarantee the Prudential Loan. The Partnership will enter into a new credit facility with a BMO U.S. branch with availability of US$75 million. The Partnership will immediately borrows US$55 million under such Facility. HIL will guarantee the Partnership's obligations under such Facility. SCHEDULE 4.14 (to Note Purchase Agreement) EXISTING LIENS
USD $ USD $ CURRENT CONSOL Terms PORTION TOTAL HUB ----- --------- --------- --- LOANS: 21074 Uns Tech (JW), $7875MO 5.35% 4/15/07 150,196 202,070 Mountain Secured 21075 Ind Tech (RL), $7875MO 5.35% 4/15/07 150,196 202,070 Mountain Secured 21076 Montana (JW) $3,377MO 5.35% 6/15/07 19,167 29,140 Mountain Secured 21077 Montana (KOC) $3.377MO 5.35% 6/15/07 38,333 58,281 Mountain Secured 21078 Montana (RL) $3,377MO 5.35% 6/15/07 19,167 29,140 Mountain Secured 21046 Ned Miller Agcy, $2,658MO, 5%, 12/15/07 29,543 60,597 Southwest Secured 21047 Ned Miller Inc, $6,57BMO, 5%, 12/15/07 73,106 149,953 Southwest Secured 21048 Gillet, $10,170MO, 6%, 11/1/07 111,855 168,073 Southwest Secured 21061 Jenkins & Co, $8,817MO, 6%, 10/15/06 85,798 85,798 Southwest Secured 21068 STG Corp, $9.03MO, 6%, 8/15/06 73,558 73,558 Southwest Secured 21079 GE Capital $300K Qtr Inc Var% 12/30/07 1,200,000 2,300,000 Southwest Secured 21073 AIWC, $21,769MO, 4.35%, 5/15/08 239,950 598,220 Southwest Secured --------- --------- 22999 Total Loans 2,190,869 3,956,900 CAPITAL LEASES: 23025 O&Y Enterprises $347.63, MO 3,254 4,707 MGAs Secured 23010 Heller Finl, $2,247, MO, Bind, 67%, 10/06 19,514 19,514 Midwest Secured Office Furniture 23011 Heller Finl, $8,882, MO, Incl 8.67%,10/06 77,123 77,123 Midwest Secured Office Furniture 23029 Steelcase, $9,458, MO, Incl 6.062%, l10/06 83,064 83,064 Midwest Secured Office Furniture 23041 Dell Finl, $12354 MO, Incl 9.83%, 05/06 1,084 1,084 Southwest Secured --------- --------- 23999 Capital Leases ========= =========
SCHEDULE 10.4 (to Note Purchase Agreement) FORM OF SERIES A NOTE The securities represented by this Note have not been registered under the Securities Act of 1933, as amended (the "Act"), or registered or qualified under any state, provincial or territorial securities laws. Such securities may not be sold, offered for sale, transferred, pledged or hypothecated in the absence of such registration or qualification or an exemption therefrom under the Act and any applicable state, provincial or territorial securities laws. The securities represented by this Note have not been qualified for distribution or resale in Canada and shall not be traded in Canada unless permitted under and traded in compliance with applicable securities laws of the provinces and territories of Canada. HUB INTERNATIONAL LIMITED PARTNERSHIP 5.71% Amended and Restated Series A Senior Note due April 4, 2011 No. R-____ Date __________ $____________ PPN 44333# AA 0 For Value Received, the undersigned, Hub International Limited Partnership (herein called the "Issuer"), a limited partnership organized and existing under the laws of the State of Delaware, hereby promises to pay to ________________, or registered assigns, the principal sum of ________________ Dollars (or so much thereof as shall not have been prepaid) on April 4, 2011, with interest (computed on the basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance thereof at the rate of 5.71% per annum from the date hereof, payable semiannually, on the 15th day of each June and December in each year, commencing on June 15, 2006, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest and any overdue payment of any Make-Whole Amount (as defined in the Note Purchase Agreement referred to below), payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand), at a rate per annum from time to time equal to the greater of (1) 7.71% or (2) 2% over the rate of interest publicly announced by JPMorgan Chase Bank from time to time in New York City as its "base" or "prime" rate. Payments of principal of, interest on and any Make-Whole Amount with respect to this Note are to be made in lawful money of the United States of America at the principal office of JPMorgan Chase Bank in New York City or at such other place as the Issuer shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreement referred to below. This Note is one of a series of Senior Notes (herein called the "Notes") issued pursuant to the Note Purchase Agreement, dated as of April 4, 2006 (as from time to time amended, the "Note Purchase Agreement"), between the Issuer and the Noteholders named therein and is entitled to the benefits thereof. Each holder of this Note will be deemed, by its acceptance hereof, (i) to have agreed to the confidentiality provisions set forth in SECTION 20 of the Note EXHIBIT 1 (to Note Purchase Agreement) Purchase Agreement and (ii) to have made the representations set forth in SECTION 6 of the Note Purchase Agreement. This Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder's attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Issuer may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Issuer will not be affected by any notice to the contrary. The Issuer will make required prepayments of principal on the Note on the dates and in the amounts specified in the Note Purchase Agreement. This Note is also subject to prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise. This Note is unconditionally guarantied pursuant to the Parent Company Guaranty and the holder hereof is entitled to the benefits thereof. Reference is made to the Parent Company Guaranty for a statement concerning the terms and conditions governing the guaranty of the obligations of the Issuer hereunder. If an Event of Default, as defined in the Note Purchase Agreement, occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Note Purchase Agreement. This Note shall be construed and enforced in accordance with, and the rights of the issuer and holder hereof 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. HUB INTERNATIONAL LIMITED PARTNERSHIP By: HUB International Partners Limited, its General Partner By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- E-1-2 FORM OF SERIES B NOTE The securities represented by this Note have not been registered under the Securities Act of 1933, as amended (the "Act"), or registered or qualified under any state, provincial or territorial securities laws. Such securities may not be sold, offered for sale, transferred, pledged or hypothecated in the absence of such registration or qualification or an exemption therefrom under the Act and any applicable state, provincial or territorial securities laws. The securities represented by this Note have not been qualified for distribution or resale in Canada and shall not be traded in Canada unless permitted under and traded in compliance with applicable securities laws of the provinces and territories of Canada. HUB INTERNATIONAL LIMITED PARTNERSHIP 6.16% Amended and Restated Series B Senior Note due June 15, 2013 No. R-____ Date __________ $____________ PPN 44333# AB 8 For Value Received, the undersigned, Hub International Limited Partnership (herein called the "Issuer"), a limited partnership organized and existing under the laws of the State of Delaware, hereby promises to pay to ________________, or registered assigns, the principal sum of ________________ Dollars (or so much thereof as shall not have been prepaid) on June 15, 2013, with interest (computed on the basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance thereof at the rate of 6.16% per annum from the date hereof, payable semiannually, on the 15th day of each June and December in each year, commencing on June 15, 2006, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest and any overdue payment of any Make-Whole Amount (as defined in the Note Purchase Agreement referred to below), payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand), at a rate per annum from time to time equal to the greater of (1) 8.16% or (2) 2% over the rate of interest publicly announced by JPMorgan Chase Bank from time to time in New York City as its "base" or "prime" rate. Payments of principal of, interest on and any Make-Whole Amount with respect to this Note are to be made in lawful money of the United States of America at the principal office of JPMorgan Chase Bank in New York City or at such other place as the Issuer shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreement referred to below. This Note is one of a series of Senior Notes (herein called the "Notes") issued pursuant to the Note Purchase Agreement, dated as of April 4, 2006 (as from time to time amended, the "Note Purchase Agreement"), between the Issuer and the Noteholders named therein and is entitled to the benefits thereof. Each holder of this Note will be deemed, by its acceptance hereof, (i) to have agreed to the confidentiality provisions set forth in SECTION 20 of the Note EXHIBIT 2 (to Note Purchase Agreement) Purchase Agreement and (ii) to have made the representations set forth in SECTION 6 of the Note Purchase Agreement. This Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder's attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Issuer may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Issuer will not be affected by any notice to the contrary. The Issuer will make required prepayments of principal on the Note on the dates and in the amounts specified in the Note Purchase Agreement. This Note is subject to prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise. This Note is unconditionally guarantied pursuant to the Parent Company Guaranty and the holder hereof is entitled to the benefits thereof. Reference is made to the Parent Company Guaranty for a statement concerning the terms and conditions governing the guaranty of the obligations of the Issuer hereunder. If an Event of Default, as defined in the Note Purchase Agreement, occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Note Purchase Agreement. This Note shall be construed and enforced in accordance with, and the rights of the issuer and holder hereof 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. HUB INTERNATIONAL LIMITED PARTNERSHIP By: HUB International Partners Limited, its General Partner By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- E-2-2 FORM OF PARENT COMPANY GUARANTY (See attached) EXHIBIT 4.1 (to Note Purchase Agreement) FORM OF OPINION OF U. S. COUNSEL TO THE PARENT COMPANY, THE GENERAL PARTNER AND THE ISSUER [Effective Date] To the Noteholders listed in SCHEDULE A to the Purchase Agreement Hub International Limited Partnership 5.71% Amended and Restated Series A Senior Notes due April 4, 2011 and 6.16% Amended and Restated Series B Senior Notes due June 15, 2013 Ladies and Gentlemen: We have acted as United States counsel to Hub International Limited, a Canadian corporation (the "Parent Company"), Hub International Limited Partnership, a Delaware limited partnership (the "Issuer"), and HUB International Partners Limited, an Ontario corporation (the "General Partner"), in connection with the purchase, subject to the terms and conditions set forth in the Note Purchase Agreement (the "Purchase Agreement") dated as of April 4, 2006 between the Issuer and the several noteholders named in SCHEDULE A to the Purchase Agreement (the "Noteholders"), by the Noteholders of (i) US$10,000,000 aggregate principal amount of 5.71% Amended and Restated Series A Senior Notes due April 4, 2011 and (ii) US$55,000,000 aggregate principal amount of 6.16% Amended and Restated Series B Senior Notes due June 15, 2013 of the Issuer (collectively, the "Notes"). The Notes are unconditionally guarantied by the Parent Company pursuant to that certain Guaranty Agreement dated as of April 4, 2006 (the "Parent Company Guaranty") entered into by the Parent Company in favor of and for the benefit of the holders of the Notes. In such capacity, we have examined the Purchase Agreement, the Parent Company Guaranty (together, the "Transaction Documents"), specimens of the Notes and the originals, or copies identified to our satisfaction, of such corporate records of the Parent Company, the partnership records of the Issuer, certificates of public officials, certificates of officers of the Parent Company and the Issuer and other persons, and such other documents, agreements and instruments as we have deemed necessary as a basis for the opinions hereinafter expressed. In our examinations, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity with the originals of all documents submitted to us as copies. In rendering our opinions, we have relied as to factual matters, to the extent we deem proper, upon the representations and warranties of the Parent Company, the General Partner, the Issuer and the Noteholders contained in or made pursuant to the Purchase EXHIBIT 4.7(a) (to Note Purchase Agreement) Agreement, certificates of officers of the Parent Company, the Issuer and certificates of public officials (which we have assumed are accurate on the date hereof). Our opinions expressed below are limited to the laws of the State of New York and the federal laws of the United States, and the Revised Uniform Limited Partnership Act of Delaware "RULPA") and we do not express any opinion herein concerning any other law. Insofar as our opinions set forth in subparagraph (vi) below assume due authorization, execution and delivery of the Parent Company Guaranty under the federal laws of Canada applicable thereto, we understand that such matters are covered in the opinion of W. Kirk James, Vice President and Secretary of the Parent Company furnished to the Noteholders today in accordance with the provisions of the Purchase Agreement. Based upon the foregoing, and subject to the qualifications set forth below, we are of the opinion that: (i) The Issuer is a limited partnership, duly organized and validly existing under the laws of the State of Delaware, has the limited partnership power and the limited partnership authority to execute and perform the Purchase Agreement and to issue the Notes and incur the debt to be evidenced thereby and has the full limited partnership power and the limited partnership authority to conduct the activities in which it is now engaged and is duly licensed or qualified and is in good standing in each jurisdiction in which the character of the properties owned or leased by it or the nature of the business transacted by it makes such licensing or qualification necessary. The General Partner is the sole general partner of the Issuer. (ii) The Purchase Agreement has been duly authorized by all necessary limited partnership action on the part of the Issuer and has been duly executed and delivered by the Issuer. (iii) The Notes have been duly authorized by all necessary limited partnership action on the part of the Issuer and have been duly executed and delivered by the Issuer. (iv) The Purchase Agreement constitutes a legal, valid and binding agreement of the Issuer enforceable in accordance with its terms. (v) The Notes constitute the legal, valid and binding obligations of the Issuer enforceable in accordance with their terms. (vi) Assuming the due authorization, execution and delivery of the Parent Company Guaranty by the Parent Company under the federal laws of Canada applicable thereto, the Parent Company Guaranty constitutes a legal, valid and binding agreement of the Parent Company enforceable in accordance with its terms. (vii) No consent, approval, authorization, order, registration or qualification of or with any United States federal or New York State court or governmental agency or body is required in connection with the execution and delivery by (i) the Issuer or the General Partner on behalf of the Issuer of, and the performance by the Issuer of its obligations under, the Purchase Agreement E-4.7(a)-2 and the Notes and (ii) the Parent Company of, and the performance by the Parent Company of its obligations under, the Parent Company Guaranty. (viii) The issuance and sale of the Notes and the execution, delivery and performance by (i) the Issuer and the General Partner on behalf of the Issuer of the Purchase Agreement and the Notes and (ii) the Parent Company of the Parent Company Guaranty will not, in either case, result in the contravention of any statute, regulation or order of any "Governmental Authority," as such term is defined in the Purchase Agreement, of the United States of America or the State of New York. (ix) The issuance of the Notes and the use of the proceeds thereof as contemplated by the Purchase Agreement will not result in any violation of Regulation T, U or X of the board of Governors of the Federal Reserve System (12 C.F.R., Chapter II, as amended). (x) No registration of the offer and sale of Notes to the Noteholders under the Securities Act of 1933, and no qualification of a trust indenture in respect of the Notes under the Trust Indenture Act of 1939, is required in connection with the offer, sale and delivery of the Notes under the circumstances contemplated by the Purchase Agreement. (xi) The Issuer is not, and after giving effect to the issue and sale of the Notes and the application of the proceeds thereof as described in the Purchase Agreement, will not be, required to register as an "investment company," as such term is defined in the Investment Company Act of 1940. The opinions set forth below are subject to the following qualifications, limitations and assumptions: (i) The opinions set forth in subparagraphs (i) and (ii) above are subject to the qualification that (a) enforcement is subject to the effect of any applicable bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and subject to the effects of bankruptcy, insolvency, fraudulent transfer and conveyance, reorganization, receivership, moratorium and other similar laws (including judicially developed doctrines with respect to such laws) affecting the rights and remedies of creditors generally; (ii) The effects of general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing (regardless of whether enforcement is considered in a proceeding in equity or at law) and (b) any rights to indemnity and contribution under the Purchase Agreement may be limited by federal and state securities laws and public policy considerations underlying such laws, whether applied by a court of law or equity, with respect to the performance and enforcement of the Transaction Documents; (iii) Applicable state and federal laws, court decisions and constitutional requirements which may limit or render unenforceable certain of the rights and remedies purportedly available to the Noteholder under the Transaction Documents. It is our opinion, however, that none of the E-4.7(a)-3 foregoing laws, decisions or requirements will materially interfere with the practical realization of the benefits intended to be provided by the Transaction Documents, although such realization may be delayed and rendered more costly as a result of the invalidity or enforceability of such provisions; (iv) We express no opinion as to the effect of any antitrust and unfair competition laws and regulations, or pension and employment benefit laws and regulations; (v) We express no opinion as to any provisions in the Transaction Documents that waive statutory rights to receive notice or to be allowed to cure defaults, or that purport to establish particular notice periods or actions as reasonable or particular determinations as conclusive or final and binding, or commit the same to the discretion of any person; (vi) Any limitations under applicable laws, judicial decisions and considerations of public policy which relate to indemnification, exculpation and contribution provisions; (vii) We express no opinion as to provisions of the Transaction Documents to the effect that rights or remedies are not inclusive, that every right or remedy is cumulative and may be exercised in addition to or with any other right or remedy, that election of a particular remedy or remedies does not preclude recourse to one or more other remedies or that failure to exercise or delay in exercising rights or remedies will not operate as a waiver of any such rights or remedies; (viii) We express no opinion as to provisions in the Transaction Documents waiving vaguely or broadly stated rights or unknown future rights; (ix) We express no opinion as to the enforceability of any provisions in the Transaction Documents appointing one party as an attorney-in-fact for an adverse party, or purporting to make a power-of-appointment irrevocable unless it is coupled with an interest; and (x) We express no opinion as to the enforceability of any provisions in the Transaction Documents relating to restricting access to courts, waiving the right to trial by jury. We further express no opinion with respect to any questions of conflict of laws, or any provisions in the Transaction Documents that purport to (a) require that the Transaction Documents may not be amended, except in writing, (b) require the disregarding of any course of dealing between parties, and (c) provide for the enforceability of any Transaction Document, in whole or in part, if any material term or provision thereof is determined to be unenforceable or invalid or provide for the validity or enforceability of such invalid or unenforceable provision in any other jurisdiction. To the extent that our opinion herein is rendered as to RULPA, we call to your attention that we are not admitted to practice, and have not consulted with counsel admitted to practice, in the state of Delaware. We have based such opinion solely upon our examination of RULPA, as reported in standard, unofficial compilations. We express no opinion herein concerning any statutes, ordinances, administrative decisions, rules or regulations of any county, town, municipality or special political subdivision (whether created or enabled through legislative action at the federal, state or regional level). This E-4.7(a)-4 opinion letter is given as of the date hereof and we assume no obligation to advise you of changes that may hereafter be brought to our attention. This opinion is being furnished to the Noteholders solely for the Noteholders' benefit and the benefit of their successors and permitted assigns in connection with their purchase of the Notes, and is not to be used, circulated, quoted or otherwise referred to for any other purpose, provided that a copy of this opinion may be provided to any regulatory agency having authority over you, including the National Association of Insurance Commissioners. Very truly yours, E-4.7(a)-5 FORM OF OPINION OF THE CHIEF LEGAL COUNSEL TO THE PARENT COMPANY, THE GENERAL PARTNER AND THE ISSUER April 4, 2006 TO THE NOTEHOLDERS LISTED IN THE ATTACHED SCHEDULE "A" (the "Noteholders") Ladies and Gentlemen: Re: Hub International Limited Partnership - Issue (the "Issue") of U.S.$10,000,000 Principal Amount of 5.71% Amended and Restated Series A Senior Notes Due April 4, 2011 and U.S.$55,000,000 Principal Amount of 6.16% Amended and Restated Series B Senior Notes Due June 15, 2013 (collectively, the "Notes") and Guaranty Agreement with respect thereto by Hub International Limited I am a Vice President and the Secretary of Hub International Limited, a Canadian corporation (the "Company"). Prior to holding these offices, I was the Chief Legal Officer of the Company. This letter is issued in connection with the execution and delivery, subject to the terms and conditions set forth in the Note Purchase Agreement (the "Purchase Agreement") dated April 4, 2006 between Hub International Limited Partnership, a Delaware limited partnership (the "Issuer"), and the several noteholders named in Schedule A to the Purchase Agreement (the "Noteholders"), of US$10,000,000 aggregate principal amount of 5.71% Amended and Restated Senior Notes due April 4, 2011 of the Issuer and U.S.$55,000,000 aggregate principal amount of 6.16% Senior Notes due June 15, 2013 of the Issuer (collectively, the "Notes"). The Notes are unconditionally guarantied by the Company pursuant to that certain Guaranty Agreement dated April 4, 2006 (the "Company Guaranty") entered into by the Company in favor of and for the benefit of the holders of the Notes. In such capacity, I have examined the Purchase Agreement, the Notes, the Company Guaranty (together, the "Transaction Documents"), and the originals, or copies identified to my satisfaction, of such corporate records of the Company, partnership records of the Issuer, certificates of public officials, certificates of officers of the Company, the Issuer and other persons, and such other agreements and documents as I have deemed necessary as a basis for the opinions hereinafter expressed. In my examination, I have assumed the genuineness of all signatures other than those on behalf of the Company, the General Partner and the Issuer, the authenticity of all documents submitted to me as originals and the conformity with the originals of all documents submitted to me as copies. In rendering my opinions, I have relied as to factual matters, to the extent I deem proper, upon the representations and warranties of the Company, the Issuer and the Noteholders contained in or made pursuant to the Purchase Agreement, EXHIBIT 4.7(b) (to Note Purchase Agreement) certificates of officers of the Company and the Issuer and certificates of public officials (which I have assumed are accurate on the date hereof). Subject to the last sentence of this paragraph, the opinions expressed below are limited to the laws of the Province of Ontario and the federal laws of Canada and I do not express any opinion herein concerning any other law. My opinions are rendered only with respect to the laws, and the rules, regulations, policies and orders thereunder, which are currently in effect. In addition, I do not express any opinion herein concerning the securities laws of the Province of Ontario or the rules, regulations, policies and orders thereunder. Matters addressed in the opinions below not relating to the laws of the Province of Ontario and the federal laws of Canada are provided by me on behalf of the Company, the General Partner and the Issuer as a Vice President and the Secretary of the Company and not in a personal capacity, and are based on my knowledge as a Vice President and the Secretary of the Company, certificates of officers of the Company and the Issuer and certificates of public officials. Based upon the foregoing and subject to the assumptions, qualifications and exceptions set forth herein, I am of the opinion that: 1. The Company is a corporation, duly incorporated and validly existing under the laws of Canada, has the corporate power and the corporate authority to execute and perform the Company Guaranty and has the full corporate power and the corporate authority to conduct the activities in which it is now engaged and is duly licensed or qualified and is in good standing in each jurisdiction in which the character of the properties owned or leased by it or the nature of the business transacted by it makes such licensing or qualification necessary. Hub International Partners Limited is a corporation, duly organized and validly existing under the laws of Province of Ontario, has the corporate power and the corporate authority to execute the Purchase Agreement and the Notes on behalf of the Issuer and to cause the Issuer to issue the Notes and to incur the debt to be evidenced thereby and has full corporate power and corporate authority to conduct the activities in which it is now engaged and is in good standing in each jurisdiction in which the character of the properties owned or leased by it or the nature of the business transacted by it makes such licensing or qualification necessary. 2. Each Material Subsidiary (as such term is defined in Schedule A to this letter and a list of which is set forth on such Schedule ) is an entity duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, has the full corporate power and the corporate authority to conduct the activities in which it is now engaged and is duly licensed or qualified and is in good standing in each jurisdiction in which the character of the properties owned or leased by it or the nature of the business transacted by it makes such licensing or qualification necessary. All of the issued and outstanding equity interests of each Material Subsidiary have been duly issued and are fully paid and non-assessable. 3. The Company Guaranty has been duly authorized by all necessary corporate action on the part of the Company and has been duly executed and delivered by the Company. The execution by the General Partner of the Purchase Agreement on behalf of the Issuer has been duly authorized by all necessary corporate action on behalf of the General Partner and the Purchase Agreement has been duly executed and delivered by the General Partner on behalf of E-4.7(b)-2 the Issuer. The execution of the Notes by the General Partner on behalf of the Issuer has been duly authorized by all necessary corporate action on the part of the General Partner and the Notes have been duly executed and delivered by the General Partner on behalf of the Issuer. 4. The issuance and sale of the Notes and the execution, delivery and performance by the Issuer of the Purchase Agreement and the Notes and by the Company of the Company Guaranty do not 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 Material 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 Material Subsidiary is bound or by which the Company or any Material Subsidiary or any of their respective properties may be bound or affected. 5. Except as described in Item 3 of the Company's Form 10-K for the period ending December 31, 2005 filed with the United States Securities and Exchange Commission on March 13, 2006, there are no actions, suits or other proceedings pending or, to my knowledge after due inquiry, threatened against or affecting the Company or any Material Subsidiary or any property of the Company or any Material Subsidiary in any court or before any arbitrator of any kind or any governmental authority that, if adversely determined, could reasonably be expected to materially and adversely affect the Issuer's ability to perform its obligations under the Purchase Agreement or the Notes, the Company's ability to perform its obligations under the Company Guaranty or the validity or enforceability of the Purchase Agreement, the Notes or the Company Guaranty. This opinion is being furnished to the Noteholders in connection with the execution and delivery of the Notes solely for the Noteholders' benefit and the benefit of their successors and permitted assigns, and is not to be used, circulated, quoted or otherwise referred to for any other purpose, provided that a copy of this opinion may be provided to any regulatory agency having authority over you, including the National Association of Insurance Commissioners. Very truly yours, W. Kirk James Vice-President and Secretary E-4.7(b)-3 FORM OF OPINION OF CANADIAN COUNSEL TO THE PARENT COMPANY April 4, 2006 TO THE NOTEHOLDERS LISTED IN ATTACHED SCHEDULE A: Dear Sirs/Mesdames: Re: Issue (the "Issue") of U.S.$10,000,000 Principal Amount of 5.71% Amended and Restated Series A Senior Notes Due April 4, 2011 and U.S. $55,000,000 Principal Amount of 6.16% Amended and Restated Series B Senior Notes Due June 15, 2013 (collectively, the "Notes") and Guaranty Agreement with respect thereto by HUB International Limited We have acted as counsel to Hub International Limited, a Canadian corporation (the "Parent Company"), in connection with the issue and sale today by Hub International Limited Partnership, a limited partnership organized under the laws of the State of Delaware (the "Issuer") to you of the Notes pursuant to that certain note purchase agreement dated as of April 4, 2006 by and among the Issuer and each of the addressees hereto (the "Note Purchase Agreement"). We have also acted as counsel to Hub International Partners Limited (the "General Partner"), an Ontario corporation and the general partner of the Issuer. This opinion is being furnished to you pursuant to Section 4.7(c) of the Note Purchase Agreement. The Notes are unconditionally guarantied by the Parent Company pursuant to that certain Guaranty Agreement dated April 4, 2006 (the "Parent Company Guaranty") by the Parent Company in favor of the holders of the Notes. Capitalized terms used herein and not otherwise defined shall have the respective meanings ascribed thereto in the Note Purchase Agreement. We have examined originals or copies, certified or otherwise identified to our satisfaction, of such documents, certificates and corporate records and such other materials as we have considered necessary or appropriate for the purposes of this opinion, including (a) an executed copy of the Note Purchase Agreement, the Notes and the Parent Company Guaranty (each being a "Document" and, collectively, the "Documents"), and (b) a certificate of officers of the Parent Company and the Issuer as to certain factual matters. In our examination of the foregoing documents, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity to the originals thereof of all documents submitted to us as certified or conformed copies, telecopies or photocopies. EXHIBIT 4.7(c) (to Note Purchase Agreement) We have also examined such certificates of public officials and such other certificates, documents and corporate and other records as we have considered necessary as a basis for or relevant to the opinions hereinafter expressed. We have assumed that: (a) Each of the Parent Company and the General Partner is incorporated and existing under the corporate laws applicable to it. (b) The Parent Company has the corporate power and capacity to execute, deliver and perform its obligations under the Parent Company Guaranty. (c) The General Partner has the corporate power and capacity to execute, deliver and perform its obligations under the Note Purchase Agreement and the Notes. (d) The Parent Company has taken all necessary corporate action to authorize the execution, delivery and performance by it of the Parent Company Guaranty, and the Parent Company has duly executed and delivered the Parent Company Guaranty. (e) The General Partner has taken all necessary corporate action to authorize the execution, delivery and performance by it of the Note Purchase Agreement and the Notes on behalf of the Issuer, and the General Partner has duly executed and delivered the Note Purchase Agreement and the Notes on behalf of the Issuer. (f) The execution, delivery and performance of the Parent Company Guaranty by the Parent Company does not breach or result in a default under the articles or by-laws of the Parent Company or any unanimous shareholders agreement applicable thereto. (g) The Issuer is a limited partnership each member of which is and will be at all times when the Notes and the Parent Company Guaranty are outstanding a corporation resident in Canada and the Parent Company is a corporation resident in Canada within the meaning of the Income Tax Act (Canada). (h) The execution, delivery and performance of the Note Purchase Agreement and the Notes by the General Partner on behalf of the Issuer does not breach or result in a default under the articles or by-laws of the General Partner, any unanimous shareholders agreement applicable thereto, or the partnership agreement of the Issuer. (i) All necessary partnership action has been taken to authorize the execution, delivery and performance of the Note Purchase Agreement and the Notes by the Issuer. (j) If any obligation under the Documents is required to be performed in any jurisdiction outside of Ontario, the performance of that obligation will not be illegal under the laws of that jurisdiction. E-4.7(c)-2 (k) The Documents constitute legal, valid and binding obligations of the Parent Company and the Issuer, as applicable, enforceable against them in accordance with their terms. (l) The representations and warranties made by the Noteholders in the Note Purchase Agreement are true and correct, and we are entitled to rely upon them. Based upon the foregoing and subject to the assumptions, qualifications, limitations and exceptions set forth herein, we are of the opinion that: 1. The execution, delivery and performance by the Parent Company of the Parent Company Guaranty, and the execution and delivery by the General Partner on behalf of the Issuer of the Note Purchase Agreement and the Notes, will not contravene any law, statute or regulation of Canada or the Province of Ontario to which the Parent Company or the General Partner is subject. 2. No approval, consent or withholding of objection on the part of, or filing, registration or qualification with, any federal or provincial commission, board or regulatory authority of the Province of Ontario or of Canada is required in connection with (a) the execution and delivery of the Parent Company Guaranty by the Parent Company or the performance of the transactions contemplated thereby, or (b) the execution and delivery of the Note Purchase Agreement and the Notes by the General Partner on behalf of the Issuer. 3. No income taxes will be required to be withheld by the Issuer or the Parent Company under the Income Tax Act (Canada), or under the income tax laws of the Province of Ontario, in connection with any payment under the Notes or Parent Company Guaranty of the principal of, or the interest or premium, if any, on, the Notes by the Issuer or the Parent Company provided that at the time of such payment each member of the Issuer and the Parent Company deals at arm's length (within the meaning of the Income Tax Act (Canada)) with you. Moreover, provided that you are neither a resident nor deemed to be a resident of Canada for purposes of the Income Tax Act (Canada) and you neither use or hold nor are deemed or determined by or for purposes of the Income Tax Act (Canada) to use or hold the Notes or the Parent Company Guaranty in or in the course of carrying on a business in Canada, no other income or capital gains tax is payable under the Income Tax Act (Canada) or under the income tax laws of the Province of Ontario in respect of the Notes or the Parent Company Guaranty merely as a consequence of receiving interest or premium payable thereon. Neither the holding of the Notes or the Parent Company Guaranty nor the receipt of any payment pursuant thereto will, in and of itself, constitute the carrying on a business in Canada under the Income Tax Act (Canada). 4. In the event that the Parent Company Guaranty is sought to be enforced against the Parent Company or the Note Purchase Agreement or the Notes are sought to be enforced against the General Partner (by virtue of it being the general partner of the Issuer) in any action or proceeding in the Province of Ontario in accordance with laws applicable thereto as chosen by the parties, namely the laws of the State of New York ("New York Law"), the courts of competent jurisdiction of the Province of Ontario (the "Ontario Courts") (i) would recognize the E-4.7(c)-3 choice of laws provided that such choice of laws is bona fide (in the sense that it was not made with a view to avoiding the consequences of the law of any other jurisdiction) and is not contrary to public policy, as such term is understood under the laws of the Province of Ontario ("Ontario Law"), (ii) would apply New York Law in any such action or proceeding, upon appropriate evidence as to such laws being adduced, provided that none of the provisions of the Documents or of New York Law, are contrary to public policy, as such term is understood under Ontario Law ("Ontario Public Policy"), (iii) would apply Ontario Law that under Ontario Law would be characterized as procedural, (iv) would apply provisions of Ontario Law that have overriding effect, as interpreted under Ontario Law, and (v) would not apply New York Law that under Ontario Law would be characterized as revenue, expropriatory, penal or other public law. Subject to the following sentence, any action or proceeding with respect to the Documents may be brought against the Parent Company or the General Partner, as applicable, in an Ontario Court. An Ontario Court may, however, reserve to itself an inherent power to decline to hear an action if it is contrary to public policy, as such term is understood under Ontario Law, for it to do so, or if it is not the proper forum to hear such action, or if concurrent proceedings are being brought elsewhere. Assuming that the same meaning would be given to the terms used in the Documents under New York Law as under Ontario Law, to the best of our knowledge none of the provisions of the Documents would violate Ontario Public Policy or be subject to provisions of Ontario Law that have overriding effect. 5. Ontario Law and the federal laws of Canada applicable therein permit an action to be brought before an Ontario Court on a final and conclusive judgment in personam of a court of a state of the United States of America or a federal court sitting therein (a "Foreign Court") that is subsisting and unsatisfied and not impeachable as void or voidable or otherwise ineffective under applicable United States federal or state law and for a sum certain if: (A) the Foreign Court rendering such judgment had jurisdiction over the judgment debtor, as recognized by an Ontario Court; (B) such judgment was not obtained by fraud or in a manner contrary to natural justice or other rule of law, whether equitable, legal or statutory, and the enforcement thereof would not be inconsistent with public policy, as such term is understood under Ontario Law and the federal laws of Canada applicable therein or contrary to any order made by the Attorney General of Canada under the Foreign Extraterritorial Measures Act (Canada) or by the Competition Tribunal under the Competition Act (Canada); (C) the enforcement of such judgment does not constitute, directly or indirectly, the enforcement of foreign revenue, expropriatory or penal laws; and (D) the action to enforce such judgment is commenced within the applicable limitation period. 6. The submission by the Parent Company and the Issuer to the non-exclusive jurisdiction of the courts of the State of New York sitting in the Borough of Manhattan and the federal courts of the United States of America for the Southern District of New York, contained in Section 12 of the Parent Company Guaranty and Section 22 of the Note Purchase Agreement, respectively, would be recognized and given effect by the Ontario Courts as a valid submission to the jurisdiction of such courts, provided that the provisions of the Parent Company Guaranty or the Note Purchase Agreement respecting service of process on the Parent Company or the Issuer, as the case may be, are duly complied with. E-4.7(c)-4 7. Each of the Parent Company and the General Partner is subject to the relevant civil and commercial law of Ontario with respect to its obligations under the Parent Company Guaranty or the Note Purchase Agreement and the Notes, respectively, and neither the Parent Company or the General Partner nor its assets has the benefit of any right of immunity, whether sovereign immunity or otherwise, from any action, suit, proceeding or execution in respect of its obligations under the Parent Company Guaranty or the Note Purchase Agreement and the Notes, as applicable. 8. No stamp, registration, documentary or other similar tax, duty or fee is payable under Canadian federal law or Ontario Law in connection with the execution and delivery of the Parent Company Guaranty by the Parent Company or the execution and delivery of the Note Purchase Agreement and the Notes by the General Partner on behalf of the Issuer. 9. To ensure the admissibility into evidence, no notarization of the Documents, and no registration or filing with or notice to, any governmental agency or authority of the Province of Ontario or Canada is required. The foregoing opinions are subject to the following assumptions, qualifications, limitations and exceptions: (a) the enforcement of any Document may be limited by any applicable bankruptcy, insolvency, winding-up, reorganization, arrangement, moratorium or other laws affecting creditors' rights generally; (b) the enforcement of the Documents will be subject to the Limitations Act, 2002 (Ontario) and we express no opinion as to whether a court may find a provision of any Document to be unenforceable as an attempt to vary or exclude a limitation period under that Act; (c) the enforcement of any Document may be limited by general principles of equity and the obligation to act in a reasonable manner, and no opinion is expressed regarding the availability of any equitable remedy (including those of specific performance and injunction) which remedies are only available in the discretion of a court of competent jurisdiction; (d) any requirement in any of the Documents that interest be paid at a higher rate after than before default may not be enforceable; (e) no opinion is expressed as to compliance with the Personal Information Protection and Electronic Documents Act (Canada) or any other applicable privacy laws; (f) pursuant to the Currency Act (Canada), a judgment by an Ontario court must be awarded in Canadian currency and that such judgment may be based on a rate of exchange in existence on a day other than the day of payment; and E-4.7(c)-5 (g) we express no opinion as to the enforceability of the Documents. Our opinions expressed above are limited to Ontario Law and the laws of Canada applicable therein. Our opinions are rendered only with respect to the laws, and the rules, regulations, policies and orders thereunder, which are currently in effect. In connection with the opinions given in paragraph 3 above, we are relying on our understanding of the current administrative policies and assessing practices of the Canada Revenue Agency (the "CRA") made publicly available prior to the date hereof, including the long-standing administrative policy of the CRA that the exemption from Canadian withholding tax contained in paragraph 212(1)(b)(vii) of the Income Tax Act (Canada) can be applicable to debt of a partnership where each of the partners is a corporation resident in Canada for purposes of the Income Tax Act (Canada). We express no opinion as to whether, absent such long-standing administrative policy, payments under the Notes and the Parent Company Guaranty would be subject to withholding tax under the Income Tax Act (Canada). This letter is furnished by us solely for your benefit and the benefit of your successors and permitted assigns in connection with the transactions referred to in the Documents and may not be relied upon by any other Person. Very truly yours, E-4.7(c)-6 FORM OF OPINION OF SPECIAL COUNSEL TO THE NOTEHOLDERS The closing opinion of Chapman and Cutler LLP, special counsel to the Noteholders, called for by SECTION 4.7(D) of the Agreement, shall be dated the date of the Effective Date and addressed to the Noteholders, shall be satisfactory in form and substance to the Noteholders and shall be to the effect that: 1. The Agreement and the Notes being delivered on the date hereof constitute the legal, valid and binding contracts of the Issuer, enforceable against the Issuer in accordance with its terms. The Guaranty Agreement constitutes the legal, valid and binding contract of the Parent Company, enforceable against the Parent Company in accordance with its terms. 2. The issuance, sale and delivery of the Notes being delivered on the date hereof under the circumstances contemplated by this Agreement do not, under existing law, require the registration of such Notes under the Securities Act or the qualification of an indenture under the Trust Indenture Act of 1939, as amended. The opinion of Chapman and Cutler LLP shall also state that the opinions of Katten Muchin Rosenman LLP, W. Kirk James and Blake, Cassels & Graydon LLP are satisfactory in scope and form to Chapman and Cutler LLP and that, in their opinion, the Noteholders are justified in relying thereon. The opinion of Chapman and Cutler LLP is limited to the laws of the State of New York, the general business corporation law of the State of Delaware and the Federal laws of the United States. With respect to matters of fact upon which such opinion is based, Chapman and Cutler LLP may rely on appropriate certificates of public officials and officers of the Parent Company and the Issuer and upon representations of the Parent Company, the Issuer and the Noteholders delivered in connection with the issuance and sale of the Notes. EXHIBIT 4.7(d) (to Note Purchase Agreement) EX-99.7 8 o30946exv99w7.txt EX-99.7 Exhibit 99.7 ================================================================================ HUB INTERNATIONAL LIMITED GUARANTY AGREEMENT relating to 5.71% Amended and Restated Series A Senior Notes due April 4, 2011 6.16% Amended and Restated Series B Senior Notes due June 15, 2013 of HUB INTERNATIONAL LIMITED PARTNERSHIP Dated as of April 4, 2006 ================================================================================ TABLE OF CONTENTS (Not a part of the Agreement)
SECTION HEADING PAGE - ------- ------- ---- SECTION 1. DEFINITIONS................................................... 1 SECTION 2. GUARANTY...................................................... 4 Section 2.1. Guarantee of Payment and Performance of Obligations..... 4 Section 2.2. Obligations Absolute.................................... 5 Section 2.3. Waiver.................................................. 5 Section 2.4. Obligations Unimpaired.................................. 6 Section 2.5. Subrogation; Subordination.............................. 6 Section 2.6. Reinstatement of Guaranty............................... 7 SECTION 3. AFFIRMATIVE COVENANTS......................................... 7 Section 3.1. Financial and Business Information...................... 7 Section 3.2. Compliance with Law..................................... 10 Section 3.3. Insurance............................................... 10 Section 3.4. Maintenance of Properties............................... 10 Section 3.5. Payment of Taxes and Claims............................. 11 Section 3.6. Corporate Existence, Etc................................ 11 Section 3.7. Notes to Rank Pari Passu................................ 11 SECTION 4. NEGATIVE COVENANTS............................................ 11 Section 4.1. Nature of Business...................................... 11 Section 4.2. Transactions with Affiliates............................ 12 Section 4.3. Most Favored Lender Status.............................. 12 Section 4.4. Purchase of Notes....................................... 12 Section 4.5. Defaults under Amended and Restated Note Purchase Agreements.............................................. 13 SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE PARENT COMPANY.......... 13 Section 5.1. Organization; Power and Authority....................... 13 Section 5.2. Authorization, Etc...................................... 13 Section 5.3. Disclosure.............................................. 13 Section 5.4. Organization and Ownership of Shares of Subsidiaries.... 14 Section 5.5. Financial Statements.................................... 14 Section 5.6. Compliance with Laws, Other Instruments, Etc............ 14 Section 5.7. Governmental Authorizations, Etc........................ 15 Section 5.8. Litigation; Observance of Agreements, Statutes and Orders.................................................. 15 Section 5.9. Taxes................................................... 15 Section 5.10. Title to Property; Leases............................... 16
-i- Section 5.11. Licenses, Permits, Etc.................................. 16 Section 5.12. Compliance with ERISA................................... 16 Section 5.13. Private Offering by the Parent Company.................. 17 Section 5.14. [Intentionally Omitted]................................. 18 Section 5.15. Existing Debt; Future Liens............................. 18 Section 5.16. Foreign Assets Control Regulations, Etc................. 18 Section 5.17. Status under Certain Statutes........................... 18 Section 5.18. Environmental Matters................................... 18 Section 5.19. Guaranty Ranks Pari Passu............................... 19 Section 5.20. Permitted Senior Indebtedness........................... 19 SECTION 6. PAYMENTS FREE AND CLEAR OF TAXES.............................. 19 SECTION 7. EXPENSES, ETC................................................. 21 Section 7.1. Transaction Expenses.................................... 21 Section 7.2. Survival................................................ 21 SECTION 8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT..................................................... 22 SECTION 9. AMENDMENT AND WAIVER.......................................... 22 Section 9.1. Requirements............................................ 22 Section 9.2. Solicitation of Holders of Notes........................ 22 Section 9.3. Binding Effect, Etc..................................... 22 Section 9.4. Notes Held by Parent Company, Etc....................... 23 SECTION 10. NOTICES...................................................... 23 SECTION 11. REPRODUCTION OF DOCUMENTS.................................... 23 SECTION 12. SUBMISSION TO JURISDICTION, JUDGMENTS, ETC................... 24 Section 12.1. Submission to Jurisdiction.............................. 24 Section 12.2. Judgments............................................... 24 SECTION 13. MISCELLANEOUS................................................ 25 Section 13.1. Successors and Assigns.................................. 25 Section 13.2. Payments Due on Non-Business Days....................... 25 Section 13.3. Severability............................................ 25 Section 13.4. Construction............................................ 25 Section 13.5. Counterparts............................................ 25 Section 13.6. Currency................................................ 25 Section 13.7. Governing Law........................................... 25

-ii- ~~Section 13.8. Opinions................................................ 26~~

Attachments to the Guaranty Agreement: SCHEDULE 5.3 -- Disclosure Materials SCHEDULE 5.4 -- Subsidiaries of the Parent Company and Ownership of Subsidiary Shares SCHEDULE 5.5 -- Financial Statements -iii- GUARANTY AGREEMENT This GUARANTY AGREEMENT (this "Guaranty") is entered into as of April 4, 2006 by HUB INTERNATIONAL LIMITED, a Canadian corporation (the "Parent Company"), in favor of and for the benefit of the Noteholders (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 those certain Amended and Restated Note Purchase Agreements, each dated as of April 4, 2006 (as further amended, restated or otherwise modified, the "Amended and Restated Note Purchase Agreements"), with the persons named in the Schedule A thereto (together with their respective successors and assigns, the "Noteholders") under which the 5.71% Series A Senior Notes due June 15, 2010 in the aggregate principal amount of $10,000,000 (the "Existing Series A Notes") and the 6.16% Series B Senior Notes due June 15, 2013 in the aggregate principal amount of $55,000,000 (the "Existing Series B Notes"; said Existing Series B Notes, together with the Existing Series A Notes, being hereinafter collectively referred to as the "Existing Notes") of the Parent Company which were issued pursuant to the Note Purchase Agreements dated as of June 1, 2003 (the "Existing Note Agreement") will be exchanged for the 5.71% Amended and Restated Series A Senior Notes due April 4 2011 in the aggregate principal amount of $10,000,000 (the "Amended and Restated Series A Notes") and the 6.16% Amended and Restated Series B Senior Notes due June 15, 2013 in the aggregate principal amount of $55,000,000 (the "Amended and Restated Series B Notes"; said Amended and Restated Series B Notes, together with the Amended and Restated Series A Notes, being hereinafter collectively referred to as the "Notes") of the Issuer; WHEREAS, as a condition precedent to their willingness to permit the Parent Company to surrender its Existing Notes in exchange for the Notes of the Issuer, the Noteholders have required, among other things, that the Parent Company execute this Guaranty for the benefit of the Noteholders. NOW THEREFORE, for value received, to satisfy one of the conditions precedent to surrender of the Existing Notes of the Parent Company in exchange for the Notes of the Issuer, 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 Parent Company agrees as follows: SECTION 1. DEFINITIONS. Capitalized terms used herein and not otherwise defined have the meanings given in the Amended and Restated Note Purchase Agreements. As used herein, the following terms have the respective meanings set forth below or set forth in the Section hereof following such term: "Amended and Restated Note Purchase Agreements" shall have the meaning given in the recitals hereto. "Amended and Restated Series A Notes" shall have the meaning given in the recitals hereto. "Amended and Restated Series B Notes" shall have the meaning given in the recitals hereto. "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. "Environmental Laws" shall mean any and all Canadian or U.S. 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. "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 Parent Company under Section 414 of the Code. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Existing Note Agreements" shall have the meaning given in the recitals hereto. "Existing Notes" shall have the meaning given in the recitals hereto. "Existing Series A Notes" shall have the meaning given in the recitals hereto. "Existing Series B Notes" shall have the meaning given in the recitals hereto. "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- (2) any jurisdiction in which the Parent Company or any Subsidiary conducts all or any part of its business, or which asserts jurisdiction over any properties of the Parent Company or any Subsidiary, or (b) any entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, any such government. "Guaranteed Obligations" 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 Parent 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 Parent Company and its Subsidiaries taken as a whole, or (b) the ability of the Parent Company to perform its obligations under this Guaranty or the ability of the Issuer to perform its obligations under the Amended and Restated Note Purchase Agreements and the Notes, or (c) the validity or enforceability of this Guaranty, the Amended and Restated Note Purchase Agreements or the Notes. "Multiemployer Plan" shall mean any Plan that is a "multiemployer plan" (as such term is defined in Section 4001(a)(3) of ERISA). "Noteholders" shall have the meaning given in the recitals hereto. "Notes" shall have the meaning given in the recitals hereto. "Parent Company" shall mean Hub International Limited, a Canadian corporation and any Successor Entity. "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. -3- "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 Parent Company or any ERISA Affiliate or with respect to which the Parent Company or any ERISA Affiliate could reasonably be expected to have any liability. "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 Parent Company hereby irrevocably, unconditionally and jointly and severally guarantees to each Noteholder 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 Amended and Restated Note Purchase Agreements 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 Parent Company agrees to pay the same when due to the Noteholders entitled thereto, without demand, presentment, protest or notice of any kind, in lawful money of the United States of America, at the place for payment specified in the Notes and the Amended and Restated Note Purchase Agreements. 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 Parent Company hereby agrees that the Notes issued in connection with the Amended and Restated Note Purchase Agreements may make reference to this Guaranty. The Parent Company hereby agrees to pay and to indemnify and save each Noteholder harmless from and against any damage, loss, cost or expense (including attorneys' fees) which such Noteholder may incur or be subject to as a consequence, direct or indirect, of (i) any breach -4- by the Parent 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 Amended and Restated Note Purchase Agreements, 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 Amended and Restated Note Purchase Agreements. Section 2.2. Obligations Absolute. The obligations of the Parent Company hereunder shall be primary, absolute, irrevocable and unconditional, irrespective of the validity, regularity or enforceability of the Notes or of the Amended and Restated Note Purchase Agreements, shall not be subject to any counterclaim, setoff, deduction or defense based upon any claim the Parent Company may have against the Issuer or any Noteholder 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 Parent Company shall have any knowledge or notice thereof), including, without limitation: (a) any amendment, modification of or supplement to the Amended and Restated Note Purchase Agreements or the Notes (except that the obligations of the Parent Company hereunder shall apply to the Amended and Restated Note Purchase Agreements 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 Amended and Restated Note Purchase Agreements; (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 Parent 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 Parent 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 Parent Company; or (f) any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. The Parent 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 Parent 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 Amended and Restated Note Purchase Agreements, 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 Noteholder against the Parent Company, including, without limitation, presentment to or demand for payment from the Issuer or the Parent Company with respect to any Note, notice to the Issuer or the Parent Company of default or protest for nonpayment or dishonor and the filing of claims with a court in the event of the bankruptcy of the Issuer; (c) any right to the enforcement, assertion or exercise by any Noteholder of any right, power or remedy conferred in this Guaranty, the Amended and Restated Note Purchase Agreements or the Notes; (d) any requirement or diligence on the part of any Noteholder; and (e) any other act or omission or thing or delay to do any other act or thing which might in any -5- manner or to any extent vary the risk of the Parent Company or which might otherwise operate as a discharge of the Parent Company. Section 2.4. Obligations Unimpaired. The Parent Company authorizes the Noteholders, without notice or demand to the Parent 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 Amended and Restated Note Purchase Agreements 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 Debt 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 Noteholders 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 Parent 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 Parent Company waives any right to require the Noteholders to proceed against any additional or substitute endorsers or guarantors or to pursue or exhaust any security provided by the Issuer, the Parent Company or any other person or to pursue any other remedy available to such Noteholders. Section 2.5. Subrogation; Subordination. (a) Subject to the final sentence of Section 2.5(c) hereof, the Parent 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 Amended and Restated Note Purchase Agreements at the time of the Parent 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 Parent 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 Noteholders 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 Noteholders 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. (c) The Parent Company hereby subordinates the payment of all Debt and other obligations of the Issuer or any Other Party owing to the Parent Company, whether now existing -6- 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 Holders so request, any such Debt or other obligations shall be enforced and performance received by the Parent Company as trustee for the Noteholders and the proceeds thereof shall be paid over to the Noteholders to be credited and applied upon the Guaranteed Obligations, whether matured or unmatured, as may be directed by Required Holders, but without reducing or affecting in any manner the liability of the Parent Company under this Guaranty. (d) If any amount or other payment is made to or accepted by the Parent Company in violation of the preceding Sections 2.5(a), (b) or (c), such amount shall be deemed to have been paid to the Parent Company for the benefit of, and held in trust for the benefit of, the Noteholders and shall be paid over to the Noteholders, 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 Holders. The Parent Company acknowledges that it will receive benefits from the exchange of the Existing Notes for the Notes and the reorganization of the Parent Company and its Subsidiaries contemplated by the Amended and Restated Note Purchase Agreements 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 Noteholder 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 Noteholder 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 Noteholder 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 Parent Company's obligations hereunder, the maturity of such principal amount shall be deemed to have been accelerated with the same effect as if the Noteholders had accelerated the same in accordance with the terms of the Amended and Restated Note Purchase Agreements, and the Parent 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 Parent Company covenants that so long as any of the Notes are outstanding: Section 3.1. Financial and Business Information. The Parent Company shall deliver to each Noteholder that is an Institutional Investor: -7- (a) Quarterly Statements -- within 60 days after the end of each quarterly fiscal period in each fiscal year of the Parent Company (other than the last quarterly fiscal period of each such fiscal year), duplicate copies of: (1) a consolidated balance sheet of the Parent Company and its Subsidiaries as at the end of such quarter, and (2) consolidated statements of earnings, retained earnings and cash flows of the Parent 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 Parent 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 Parent 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 Parent Company, duplicate copies of, (1) a consolidated balance sheet of the Parent Company and its Subsidiaries, as at the end of such year, and (2) consolidated statements of earnings, retained earnings and cash flows of the Parent 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 Parent Company's Annual Report on Form 10-K for such fiscal year (together with the Parent 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); -8- (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 Parent 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 a Noteholder), and each final prospectus and all amendments thereto filed by the Parent 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 Parent 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 Parent 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 Amended and Restated Note Purchase Agreements, a written notice specifying the nature and period of existence thereof and what action the Parent 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 Parent Company becoming aware of any of the following, a written notice setting forth the nature thereof and the action, if any, that the Parent 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 Parent 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 Parent 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 Parent Company or any ERISA Affiliate pursuant to Title I or IV of ERISA or such penalty or excise tax provisions, if -9- 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; (f) Notices from Governmental Authority -- promptly, and in any event within 30 days of receipt thereof, copies of any notice to the Parent 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 Parent Company or any of its Subsidiaries or relating to the ability of the Parent Company to perform its obligations hereunder or the Issuer to perform its obligations under the Amended and Restated Note Purchase Agreements or the Notes as from time to time may be reasonably requested by any Noteholder. The Parent Company authorizes its independent chartered accountants to discuss the affairs, finances and accounts of the Parent Company and its Subsidiaries with the representatives of the Noteholders as provided in Section 7.3(b) of the Amended and Restated Note Purchase Agreements. Section 3.2. Compliance with Law. The Parent 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 Parent 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 Parent Company will, and will cause each of its Subsidiaries to, maintain, with insurers reasonably determined by the Parent 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 Parent 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, -10- provided that this Section shall not prevent the Parent 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 Parent Company has concluded that such discontinuance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Section 3.5. Payment of Taxes and Claims. The Parent 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 Parent Company or any Subsidiary, provided that neither the Parent 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 Parent Company or such Subsidiary on a timely basis in good faith and in appropriate proceedings, and the Parent Company or a Subsidiary has established adequate reserves therefor in accordance with GAAP on the books of the Parent 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 Parent 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 Amended and Restated Note Purchase Agreements, the Parent 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 Parent Company or another Subsidiary) and all rights and franchises of the Parent Company and its Subsidiaries unless, in the good faith judgment of the Parent 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 3.7. Notes to Rank Pari Passu. The obligations of the Parent Company under this Guaranty are and at all times shall rank at least pari passu in right of payment with all other present and future unsecured Senior Debt (actual or contingent) of the Parent Company. SECTION 4. NEGATIVE COVENANTS. The Parent Company covenants that so long as any of the Notes are outstanding: Section 4.1. Nature of Business. The Parent 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 Parent 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 Parent Company and its Subsidiaries, taken as a whole, are engaged on the Effective Date. -11- Section 4.2. Transactions with Affiliates. The Parent 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 Parent Company or another Subsidiary), except in the ordinary course and pursuant to the reasonable requirements of the Parent Company's or such Subsidiary's business and upon fair and reasonable terms no less favorable to the Parent 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 Parent 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 Parent Company or such Subsidiary has offered to make an amendment to this Guaranty and the Amended and Restated Note Purchase Agreements, in form and substance satisfactory to the Required Holders, to add to or amend this Guaranty and the Amended and Restated Note Purchase Agreements to contain such Additional Covenants or Additional Defaults; provided, however, in the event that the Parent 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 Holders, this Guaranty and the Amended and Restated Note Purchase Agreements shall, without any further action on the part of the Parent Company, the Issuer or any of the Noteholders, be deemed to be amended automatically to include each Additional Covenant and each Additional Default contained in such agreement. The Parent 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 Noteholders) an amendment to this Guaranty and the Amended and Restated Note Purchase Agreements in form and substance satisfactory to the Required Holders evidencing the amendments of this Guaranty and the Amended and Restated Note Purchase Agreements 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 Parent 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 Parent Company or a Subsidiary pro rata to the Noteholders of all Notes at the time outstanding upon the same terms and conditions. Any such offer shall provide each Noteholder 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 Noteholders of more than 25% of the principal amount of the Notes then outstanding accept such offer, the Parent Company shall, or shall cause such Subsidiary to, promptly notify the remaining Noteholders of such fact and the expiration date for the acceptance by Noteholders of Notes of such offer shall be extended by the number of days necessary to give each such remaining Noteholder at least 10 Business Days from its receipt of such notice to accept such offer. -12- Section 4.5. Defaults under Amended and Restated Note Purchase Agreements. The Parent 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 Amended and Restated Note Purchase Agreements. Without limiting the generality of the foregoing, the Parent 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 Parent Company and its Subsidiaries to comply with the provisions of Sections 7, 9, 10 and 11 of the Amended and Restated Note Purchase Agreements. SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE PARENT COMPANY. The Parent Company represents and warrants to each Noteholder that: Section 5.1. Organization; Power and Authority. The Parent 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 Effect. The Parent 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 Parent Company, and this Guaranty constitutes, a legal, valid and binding obligation of the Parent Company enforceable against the Parent 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 Noteholders by or on behalf of the Parent Company or the Issuer in connection with the transactions contemplated by the Amended and Restated Note Purchase Agreements 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 Parent 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 Parent 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 Noteholder by or on -13- behalf of the Parent Company specifically for use in connection with the transactions contemplated hereby. Section 5.4. Organization and Ownership of Shares of Subsidiaries. (a) Schedule 5.4 contains (except as noted therein) complete and correct lists (1) of the Parent 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 Parent Company and each other Subsidiary and, as of the Effective Date, whether such Subsidiary is a Material Subsidiary, (2) of the Parent Company's Affiliates, other than Subsidiaries, and (3) of the Parent 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 Parent Company and its Subsidiaries have been validly issued, are fully paid and nonassessable and are owned by the Parent 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 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 Amended and Restated Note Purchase Agreements, 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 Parent 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 Parent Company has delivered to each Noteholder copies of the financial statements of the Parent 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 Parent 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 Parent 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 -14- result in the creation of any Lien in respect of any property of the Parent 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 Parent Company or any Subsidiary is bound or by which the Parent 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 Parent Company or any Subsidiary or (c) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to the Parent 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 Parent 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 Effective Date. 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 Parent Company, threatened against or affecting the Parent Company or any Subsidiary or any property of the Parent Company or any Subsidiary in any court or 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 Parent 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 Parent 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 Parent Company or a Subsidiary, as the case may be, has established adequate reserves in accordance with GAAP. The Parent 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 Parent 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 Parent Company and its Subsidiaries have been determined by the Canadian Customs and -15- 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 Parent 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 Parent 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 Parent 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 Parent 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 Parent 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; (b) to the best knowledge of the Parent Company, no product of the Parent 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 Parent Company, there is no Material violation by any Person of any right of the Parent 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 Parent Company or any of its Subsidiaries. Section 5.12. Compliance with ERISA. (a) All Canadian pension plans of the Parent 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 Parent 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 -16- reasonably be expected to result in a Material Adverse Effect. Neither the Parent 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 Parent Company or any ERISA Affiliate, or in the imposition of any Lien on any of the rights, properties or assets of the Parent 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 Parent 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. (e) The expected post-retirement benefit obligation (determined as of the last day of the Parent 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 Parent 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 Parent Company in the first sentence of this Section 5.12(f) is made in reliance upon and subject to the accuracy of each Noteholder's representation in Section 6.2 of the Amended and Restated Note Purchase Agreements. Section 5.13. Private Offering by the Parent Company. Neither the Parent 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 Noteholders 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 Parent 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. -17- Section 5.14. [Intentionally Omitted]. Section 5.15. Existing Debt; Future Liens. (a) Except as described therein, the financial statements described therein, the financial statements described in Schedule 5.5 set forth a complete and correct list of all outstanding Debt of the Parent 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 Parent Company or its Subsidiaries. Neither the Parent 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 Parent Company or such Subsidiary and no event or condition exists with respect to any Debt of the Parent 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 Parent 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 Parent Company's execution, delivery and performance of this Guaranty and the consummation of the Reorganization will not 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 Parent 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 Parent 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 Parent 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 Noteholder in writing: (a) neither the Parent 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; -18- (b) neither the Parent 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 Parent 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 Parent Company under this Guaranty rank at least pari passu in right of payment with all other Senior Debt (actual or contingent) of the Parent Company, including, without limitation, all Senior Debt of the Parent Company described in Schedule 5.15. Section 5.20. Permitted Senior Indebtedness. The obligations of the Parent Company under this Guaranty constitute Permitted Senior Indebtedness, as defined in the Subordinated Debentures. SECTION 6. PAYMENTS FREE AND CLEAR OF TAXES. (a) The Parent Company, for the benefit of the holders of the Notes, agrees that in the event payments, if any, made by the Parent Company hereunder to any holder of the Notes are subject to any present or future tax, duty, assessment, impost, levy, withholding or other similar charge (a "Relevant Tax") imposed upon such Noteholder 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 Noteholder by the country in which such Noteholder 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 Parent Company will pay to such Noteholder such additional amounts ("Tax Indemnity Amounts") as may be necessary in order that the net amounts paid to such Noteholder pursuant to the terms of this Guaranty after imposition of any such Relevant Tax shall be not less than the amounts specified in the Amended and Restated Note Purchase Agreements 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 Parent 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 Noteholder 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 Noteholder not dealt with the Parent Company on a non-arm's length basis (within the meaning of the Income Tax Act (Canada)) in connection with any such payment; or -19- (3) had such Noteholder 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 Noteholder (following a written request by the Parent 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 Noteholder 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 Noteholder, provided that such Noteholder 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 Parent Company no later than 45 days after receipt by such Noteholder of such written request (which written request shall be accompanied by a copy of such Forms and all applicable instructions and, if any such Forms or instructions shall not be in the English language, an English translation thereof); and provided further that in no event shall the Parent 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 Noteholder 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 Parent Company of any Relevant Tax in respect of any payment under this Guaranty, the Parent 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 of the Notes), 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 Parent Company has made a payment to or on account of any holder of a Note pursuant to Section 6(a) above and such Noteholder, in such Noteholder'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 Noteholder shall, as soon as practicable after receiving a written request therefor from the Parent 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 Parent Company. -20- For the avoidance of doubt, nothing herein shall (a) restrict the right of any holder of the Notes to arrange its tax affairs as it shall deem appropriate or (b) require any holder of the Notes to disclose any information regarding its tax affairs or computations to the Parent Company or any other Person other than as shall be necessary to permit the Parent 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 of the Notes shall be obligated to disclose any of its tax returns to the Parent Company or any other Person. SECTION 7. EXPENSES, ETC. Section 7.1. Transaction Expenses. Whether or not the transactions contemplated hereby are consummated, the Parent 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 holder of the Notes in connection with such transactions and any amendments, waivers or consents under or in respect of this Guaranty or the Amended and Restated Note Purchase Agreements (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 informal investigative demand issued in connection with this Guaranty, or by reason of being a Noteholder, and (b) the reasonable costs and expenses, including reasonable financial advisors' fees, incurred in connection with the insolvency or bankruptcy of the Parent Company or any Subsidiary or in connection with any work-out or restructuring of the transactions contemplated hereby and by the Notes or the Amended and Restated Note Purchase Agreements. The Parent Company will pay, and will save each holder of the Notes 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 Parent 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 Amended and Restated Note Purchase Agreements or the Notes, and the termination of this Guaranty. -21- 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 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 Noteholder, regardless of any investigation made at any time by or on behalf of any subsequent Noteholder. All statements contained in any certificate or other instrument delivered by or on behalf of the Parent Company pursuant to this Guaranty shall be deemed representations and warranties of the Parent Company under this Guaranty. Subject to the preceding sentence, this Guaranty embodies the entire agreement and understanding between the holders of the Notes and the Parent 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 Parent Company (except amendments which occur pursuant to Section 4.3 hereof) and any Noteholder or Noteholders 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 2, 6 or 9 hereof. Section 9.2. Solicitation of Holders of Notes. (a) Solicitation. The Parent Company will provide each holder of the Notes (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 Noteholder 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 Parent 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. (b) Payment. The Parent 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 Noteholder as consideration for or as an inducement to the entering into by such Noteholder 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 Noteholder even if such Noteholder did not consent to such waiver or amendment. 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 Parent Company without regard to whether such Note has been marked to indicate such amendment or waiver. No such amendment -22- 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 Parent 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 Parent Company, Etc. Solely for the purpose of determining whether the Noteholders 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 Noteholders of a specified percentage of the aggregate principal amount of Notes then outstanding, Notes directly or indirectly owned by the Parent 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 Noteholder as of the Effective Date or its nominee, to such Noteholder or its nominee at the address specified for such communications in Schedule A to the Amended and Restated Note Purchase Agreements, or at such other address as such Noteholder or its nominee shall have specified to the Parent Company in writing, (2) if to any other holder of any Note, to such Noteholder at such address as such other holder shall have specified to the Parent Company in writing, or (3) if to the Parent 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 Parent 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 Noteholder on the Effective Date, and (c) financial statements, certificates and other information previously or hereafter furnished to any holder of the Notes, may be reproduced by such Noteholder by any photographic, photostatic, microfilm, microcard, miniature photographic or other similar process and such Noteholder may destroy any original document so reproduced. -23- 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 Noteholder 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 Parent 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 Parent 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 Parent 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 Parent Company hereby irrevocably appoints, with respect to any suit or proceeding that may be initiated hereunder, Hub International Northeast, Inc. as the Parent 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 Parent 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 Parent Company by notice to each Noteholder 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 Parent Company. Nothing contained in this Section 12.1 shall affect the right of any holder of the Notes 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 Parent Company or to enforce a judgment obtained in the courts of any other jurisdiction. Section 12.2. Judgments. Any payment made by the Parent Company to any holder of the Notes or for the account of any such Noteholder in respect of any amount payable by the Parent 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 Parent 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 Parent 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. -24- 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. 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. -25- Section 13.8. Opinions. The Parent Company hereby instructs the counsel named in clauses (a) and (c) of Section 4.7 of the Amended and Restated Note Purchase Agreements to deliver to the Noteholders the opinions described therein. * * * * * -26- IN WITNESS WHEREOF, this Guaranty has been duly executed by the Parent Company as of the date first set forth above. Very truly yours, HUB INTERNATIONAL LIMITED By: /s/ Marianne D. Paine ------------------------------------ Name: Marianne D. Paine ---------------------------------- Title: Chief Legal Officer --------------------------------- -27- DISCLOSURE MATERIALS None. SCHEDULE 5.3 (to Guaranty Agreement) SUBSIDIARIES OF THE PARENT COMPANY AND OWNERSHIP OF SUBSIDIARY SHARES (FLOW CHART) ILLEGIBLE SCHEDULE 5.4 (to Guaranty Agreement) 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) EX-99.8 9 o30946exv99w8.txt EX-99.8 Exhibit 99.8 (MULTICURRENCY--CROSS BORDER) ISDA(R) INTERNATIONAL SWAPS AND DERIVATIVES ASSOCIATION, INC. MASTER AGREEMENT dated as of April 4, 2006 HUB INTERNATIONAL LIMITED PARTNERSHIP and BANK OF MONTREAL have entered and/or anticipate entering into one or more transactions (each a "Transaction") that are or will be governed by this Master Agreement, which includes the schedule (the "Schedule"), and the documents and other confirming evidence (each a "Confirmation") exchanged between the parties confirming those Transactions. Accordingly, the parties agree as follows:-- 1. INTERPRETATION (a) DEFINITIONS. The terms defined in Section 14 and in the Schedule will have the meanings therein specified for the purpose of this Master Agreement. (b) INCONSISTENCY. In the event of any inconsistency between the provisions of the Schedule and the other provisions of this Master Agreement, the Schedule will prevail. In the event of any inconsistency between the provisions of any Confirmation and this Master Agreement (including the Schedule), such Confirmation will prevail for the purpose of the relevant Transaction. (c) SINGLE AGREEMENT. All Transactions are entered into in reliance on the fact that this Master Agreement and all Confirmations form a single agreement between the parties (collectively referred to as this "Agreement"), and the parties would not otherwise enter into any Transactions. 2. OBLIGATIONS (a) GENERAL CONDITIONS. (i) Each party will make each payment or delivery specified in each Confirmation to be made by it, subject to the other provisions of this Agreement. (ii) Payments under this Agreement will be made on the due date for value on that date in the place of the account specified in the relevant Confirmation or otherwise pursuant to this Agreement, in freely transferable funds and in the manner customary for payments in the required currency. Where settlement is by delivery (that is, other than by payment), such delivery will be made for receipt on the due date in the manner customary for the relevant obligation unless otherwise specified in the relevant Confirmation or elsewhere in this Agreement. (iii) Each obligation of each party under Section 2(a)(i) is subject to (1) the condition precedent that no Event of Default or Potential Event of Default with respect to the other party has occurred and is continuing, (2) the condition precedent that no Early Termination Date in respect of the relevant Transaction has occurred or been effectively designated and (3) each other applicable condition precedent specified in this Agreement. (b) CHANGE OF ACCOUNT. Either party may change its account for receiving a payment or delivery by giving notice Copyright (C) 1992 by International Swaps and Derivatives Association, Inc. to the other party at least five Local Business Days prior to the scheduled date for the payment or delivery to which such change applies unless such other party gives timely notice of a reasonable objection to such change. (c) NETTING. If on any date amounts would otherwise be payable:-- (i) in the same currency; and (ii) in respect of the same Transaction, by each party to the other, then, on such date, each party's obligation to make payment of any such amount will be automatically satisfied and discharged and, if the aggregate amount that would otherwise have been payable by one party exceeds the aggregate amount that would otherwise have been payable by the other party, replaced by an obligation upon the party by whom the larger aggregate amount would have been payable to pay to the other party the excess of the larger aggregate amount over the smaller aggregate amount. The parties may elect in respect of two or more Transactions that a net amount will be determined in respect of all amounts payable on the same date in the same currency in respect of such Transactions, regardless of whether such amounts are payable in respect of the same Transaction. The election may be made in the Schedule or a Confirmation by specifying that subparagraph (ii) above will not apply to the Transactions identified as being subject to the election, together with the starting date (in which case subparagraph (ii) above will not, or will cease to, apply to such Transactions from such date). This election may be made separately for different groups of Transactions and will apply separately to each pairing of Offices through which the parties make and receive payments or deliveries. (d) DEDUCTION OR WITHHOLDING FOR TAX. (i) GROSS-UP. All payments under this Agreement will be made without any deduction or withholding for or on account of any Tax unless such deduction or withholding is required by any applicable law, as modified by the practice of any relevant governmental revenue authority, then in effect. If a party is so required to deduct or withhold, then that party ("X") will:-- (1) promptly notify the other party ("Y") of such requirement; (2) pay to the relevant authorities the full amount required to be deducted or withheld (including the full amount required to be deducted or withheld from any additional amount paid by X to Y under this Section 2(d)) promptly upon the earlier of determining that such deduction or withholding is required or receiving notice that such amount has been assessed against Y; (3) promptly forward to Y an official receipt (or a certified copy), or other documentation reasonably acceptable to Y, evidencing such payment to such authorities; and (4) if such Tax is an Indemnifiable Tax, pay to Y, in addition to the payment to which Y is otherwise entitled under this Agreement, such additional amount as is necessary to ensure that the net amount actually received by Y (free and clear of Indemnifiable Taxes, whether assessed against X or Y) will equal the full amount Y would have received had no such deduction or withholding been required. However, X will not be required to pay any additional amount to Y to the extent that it would not be required to be paid but for:-- (A) the failure by Y to comply with or perform any agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d); or (B) the failure of a representation made by Y pursuant to Section 3(f) to be accurate and true unless such failure would not have occurred but for (I) any action taken by a taxing authority, or brought in a court of competent jurisdiction, on or after the date on which a Copyright (C) 1992 by International Swaps and Derivatives Association, Inc. -2- Transaction is entered into (regardless of whether such action is taken or brought with respect to a party to this Agreement) or (II) a Change in Tax Law. (ii) LIABILITY. If:-- (1) X is required by any applicable law, as modified by the practice of any relevant governmental revenue authority, to make any deduction or withholding in respect of which X would not be required to pay an additional amount to Y under Section 2(d)(i)(4); (2) X does not so deduct or withhold; and (3) a liability resulting from such Tax is assessed directly against X, then, except to the extent Y has satisfied or then satisfies the liability resulting from such Tax, Y will promptly pay to X the amount of such liability (including any related liability for interest, but including any related liability for penalties only if Y has failed to comply with or perform any agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d)). (e) DEFAULT INTEREST; OTHER AMOUNTS. Prior to the occurrence or effective designation of an Early Termination Date in respect of the relevant Transaction, a party that defaults in the performance of any payment obligation will, to the extent permitted by law and subject to Section 6(c), be required to pay interest (before as well as after judgment) on the overdue amount to the other party on demand in the same currency as such overdue amount, for the period from (and including) the original due date for payment to (but excluding) the date of actual payment, at the Default Rate. Such interest will be calculated on the basis of daily compounding and the actual number of days elapsed. If, prior to the occurrence or effective designation of an Early Termination Date in respect of the relevant Transaction, a party defaults in the performance of any obligation required to be settled by delivery, it will compensate the other party on demand if and to the extent provided for in the relevant Confirmation or elsewhere in this Agreement. 3. REPRESENTATIONS Each party represents to the other party (which representations will be deemed to be repeated by each party on each date on which a Transaction is entered into and, in the case of the representations in Section 3(f), at all times until the termination of this Agreement) that:-- (a) BASIC REPRESENTATIONS. (i) STATUS. It is duly organized and validly existing under the laws of the jurisdiction of its organization or incorporation and, if relevant under such laws, in good standing; (ii) POWERS. It has the power to execute this Agreement and any other documentation relating to this Agreement to which it is a party, to deliver this Agreement and any other documentation relating to this Agreement that it is required by this Agreement to deliver and to perform its obligations under this Agreement and any obligations it has under any Credit Support Document to which it is a party and has taken all necessary action to authorize such execution, delivery and performance; (iii) NO VIOLATION OR CONFLICT. Such execution, delivery and performance do not violate or conflict with any law applicable to it, any provision of its constitutional documents, any order or judgment of any court or other agency of government applicable to it or any of its assets or any contractual restriction binding on or affecting it or any of its assets; (iv) CONSENTS. All governmental and other consents that are required to have been obtained by it with respect to this Agreement or any Credit Support Document to which it is a party have been obtained and are in full force and effect and all conditions of any such consents have been complied with; and Copyright (C) 1992 by International Swaps and Derivatives Association, Inc. -3- (v) OBLIGATIONS BINDING. Its obligations under this Agreement and any Credit Support Document to which it is a party constitute its legal, valid and binding obligations, enforceable in accordance with their respective terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors' rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)). (b) ABSENCE OF CERTAIN EVENTS. No Event of Default or Potential Event of Default or, to its knowledge, Termination Event with respect to it has occurred and is continuing and no such event or circumstance would occur as a result of its entering into or performing its obligations under this Agreement or any Credit Support Document to which it is a party. (c) ABSENCE OF LITIGATION. There is not pending or, to its knowledge, threatened against it or any of its Affiliates any action, suit or proceeding at law or in equity or before any court, tribunal, governmental body, agency or official or any arbitrator that is likely to affect the legality, validity or enforceability against it of this Agreement or any Credit Support Document to which it is a party or its ability to perform its obligations under this Agreement or such Credit Support Document. (d) ACCURACY OF SPECIFIED INFORMATION. All applicable information that is furnished in writing by or on behalf of it to the other party and is identified for the purpose of this Section 3(d) in the Schedule is, as of the date of the information, true, accurate and complete in every material respect. (e) PAYER TAX REPRESENTATION. Each representation specified in the Schedule as being made by it for the purpose of this Section 3(e) is accurate and true. (f) PAYEE TAX REPRESENTATIONS. Each representation specified in the Schedule as being made by it for the purpose of this Section 3(f) is accurate and true. 4. AGREEMENTS Each party agrees with the other that, so long as either party has or may have any obligation under this Agreement or under any Credit Support Document to which it is a party:-- (a) FURNISH SPECIFIED INFORMATION. It will deliver to the other party or, in certain cases under subparagraph (iii) below, to such government or taxing authority as the other party reasonably directs:-- (i) any forms, documents or certificates relating to taxation specified in the Schedule or any Confirmation; (ii) any other documents specified in the Schedule or any Confirmation; and (iii) upon reasonable demand by such other party, any form or document that may be required or reasonably requested in writing in order to allow such other party or its Credit Support Provider to make a payment under this Agreement or any applicable Credit Support Document without any deduction or withholding for or on account of any Tax or with such deduction or withholding at a reduced rate (so long as the completion, execution or submission of such form or document would not materially prejudice the legal or commercial position of the party in receipt of such demand), with any such form or document to be accurate and completed in a manner reasonably satisfactory to such other party and to be executed and to be delivered with any reasonably required certification, in each case by the date specified in the Schedule or such Confirmation or, if none is specified. as soon as reasonably practicable. Copyright (C) 1992 by International Swaps and Derivatives Association, Inc. -4- (b) MAINTAIN AUTHORIZATIONS. It will use all reasonable efforts to maintain in full force and effect all consents of any governmental or other authority that are required to be obtained by it with respect to this Agreement or any Credit Support Document to which it is a party and will use all reasonable efforts to obtain any that may become necessary in the future. (c) COMPLY WITH LAWS. It will comply in all material respects with all applicable laws and orders to which it may be subject if failure so to comply would materially impair its ability to perform its obligations under this Agreement or any Credit Support Document to which it is a party. (d) TAX AGREEMENT. It will give notice of any failure of a representation made by it under Section 3(f) to be accurate and true promptly upon learning of such failure. (e) PAYMENT OF STAMP TAX. Subject to Section 11, it will pay any Stamp Tax levied or imposed upon it or in respect of its execution or performance of this Agreement by a jurisdiction in which it is incorporated, organized, managed and controlled, or considered to have its seat, or in which a branch or office through which it is acting for the purpose of this Agreement is located ("Stamp Tax Jurisdiction") and will indemnify the other party against any Stamp Tax levied or imposed upon the other party or in respect of the other party's execution or performance of this Agreement by any such Stamp Tax Jurisdiction which is not also a Stamp Tax Jurisdiction with respect to the other party. 5. EVENTS OF DEFAULT AND TERMINATION EVENTS (a) EVENTS OF DEFAULT. The occurrence at any time with respect to a party or, if applicable, any Credit Support Provider of such party or any Specified Entity of such party of any of the following events constitutes an event of default (an "Event of Default") with respect to such party:-- (i) FAILURE TO PAY OR DELIVER. Failure by the party to make, when due, any payment under this Agreement or delivery under Section 2(a)(i) or 2(e) required to be made by it if such failure is not remedied on or before the third Local Business Day after notice of such failure is given to the party; (ii) BREACH OF AGREEMENT. Failure by the party to comply with or perform any agreement or obligation (other than an obligation to make any payment under this Agreement or delivery under Section 2(a)(i) or 2(e) or to give notice of a Termination Event or any agreement or obligation under Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied with or performed by the party in accordance with this Agreement if such failure is not remedied on or before the thirtieth day after notice of such failure is given to the party; (iii) CREDIT SUPPORT DEFAULT. (1) Failure by the party or any Credit Support Provider of such party to comply with or perform any agreement or obligation to be complied with or performed by it in accordance with any Credit Support Document if such failure is continuing after any applicable grace period has elapsed; (2) the expiration or termination of such Credit Support Document or the failing or ceasing of such Credit Support Document to be in full force and effect for the purpose of this Agreement (in either case other than in accordance with its terms) prior to the satisfaction of all obligations of such party under each Transaction to which such Credit Support Document relates without the written consent of the other party; or (3) the party or such Credit Support Provider disaffirms, disclaims, repudiates or rejects, in whole or in part, or challenges the validity of, such Credit Support Document; (iv) MISREPRESENTATION. A representation (other than a representation under Section 3(e) or (f)) made or repeated or deemed to have been made or repeated by the party or any Credit Support Provider of such party in this Agreement or any Credit Support Document proves to have been incorrect or misleading in any material Copyright (C) 1992 by International Swaps and Derivatives Association, Inc. -5- respect when made or repeated or deemed to have been made or repeated; (v) DEFAULT UNDER SPECIFIED TRANSACTION. The party, any Credit Support Provider of such party or any applicable Specified Entity of such party (1) defaults under a Specified Transaction and, after giving effect to any applicable notice requirement or grace period, there occurs a liquidation of, an acceleration of obligations under, or an early termination of, that Specified Transaction, (2) defaults, after giving effect to any applicable notice requirement or grace period, in making any payment or delivery due on the last payment, delivery or exchange date of, or any payment on early termination of, a Specified Transaction (or such default continues for at least three Local Business Days if there is no applicable notice requirement or grace period) or (3) disaffirms, disclaims, repudiates or rejects, in whole or in part, a Specified Transaction (or such action is taken by any person or entity appointed or empowered to operate it or act on its behalf); (vi) CROSS DEFAULT. If "Cross Default" is specified in the Schedule as applying to the party, the occurrence or existence of (1) a default, event of default or other similar condition or event (however described) in respect of such party, any Credit Support Provider of such party or any applicable Specified Entity of such party under one or more agreements or instruments relating to Specified Indebtedness of any of them (individually or collectively) in an aggregate amount of not less than the applicable Threshold Amount (as specified in the Schedule) which has resulted in such Specified Indebtedness becoming, or becoming capable at such time of being declared, due and payable under such agreements or instruments, before it would otherwise have been due and payable or (2) a default by such party, such Credit Support Provider or such Specified Entity (individually or collectively) in making one or more payments on the due date thereof in an aggregate amount of not less than the applicable Threshold Amount under such agreements or instruments (after giving effect to any applicable notice requirement or grace period); (vii) BANKRUPTCY. The party, any Credit Support Provider of such party or any applicable Specified Entity of such party:-- (1) is dissolved (other than pursuant to a consolidation, amalgamation or merger); (2) becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due; (3) makes a general assignment, arrangement or composition with or for the benefit of its creditors; (4) institutes or has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors' rights, or a petition is presented for its winding-up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition (A) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation or (B) is not dismissed, discharged, stayed or restrained in each case within 30 days of the institution or presentation thereof; (5) has a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger); (6) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets; (7) has a secured party take possession of all or substantially all its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within 30 days thereafter; (8) causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in clauses (1) to (7) (inclusive); or (9) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts; or (viii) MERGER WITHOUT ASSUMPTION. The party or any Credit Support Provider of such party consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its assets to, another entity and, at the time of such consolidation, amalgamation, merger or transfer:-- Copyright (C) 1992 by International Swaps and Derivatives Association, Inc. -6- (1) the resulting, surviving or transferee entity fails to assume all the obligations of such party or such Credit Support Provider under this Agreement or any Credit Support Document to which it or its predecessor was a party by operation of law or pursuant to an agreement reasonably satisfactory to the other party to this Agreement; or (2) the benefits of any Credit Support Document fail to extend (without the consent of the other party) to the performance by such resulting, surviving or transferee entity of its obligations under this Agreement. (b) TERMINATION EVENTS. The occurrence at any time with respect to a party or, if applicable, any Credit Support Provider of such party or any Specified Entity of such party of any event specified below constitutes an Illegality if the event is specified in (i) below, a Tax Event if the event is specified in (ii) below or a Tax Event Upon Merger if the event is specified in (iii) below, and, if specified to be applicable, a Credit Event Upon Merger if the event is specified pursuant to (iv) below or an Additional Termination Event if the event is specified pursuant to (v) below:-- (i) ILLEGALITY. Due to the adoption of, or any change in, any applicable law after the date on which a Transaction is entered into, or due to the promulgation of, or any change in, the interpretation by any court, tribunal or regulatory authority with competent jurisdiction of any applicable law after such date, it becomes unlawful (other than as a result of a breach by the party of Section 4(b)) for such party (which will be the Affected Party):-- (1) to perform any absolute or contingent obligation to make a payment or delivery or to receive a payment or delivery in respect of such Transaction or to comply with any other material provision of this Agreement relating to such Transaction; or (2) to perform, or for any Credit Support Provider of such party to perform, any contingent or other obligation which the party (or such Credit Support Provider) has under any Credit Support Document relating to such Transaction; (ii) TAX EVENT. Due to (x) any action taken by a taxing authority, or brought in a court of competent jurisdiction, on or after the date on which a Transaction is entered into (regardless of whether such action is taken or brought with respect to a party to this Agreement) or (y) a Change in Tax Law, the party (which will be the Affected Party) will, or there is a substantial likelihood that it will, on the next succeeding Scheduled Payment Date (1) be required to pay to the other party an additional amount in respect of an Indemnifiable Tax under Section 2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii) or 6(e)) or (2) receive a payment from which an amount is required to be deducted or withheld for or on account of a Tax (except in respect of interest under Section 2(e), 6(d)(ii) or 6(e)) and no additional amount is required to be paid in respect of such Tax under Section 2(d)(i)(4) (other than by reason of Section 2(d)(i)(4)(A) or (B)); (iii) TAX EVENT UPON MERGER. The party (the "Burdened Party") on the next succeeding Scheduled Payment Date will either (1) be required to pay an additional amount in respect of an Indemnifiable Tax under Section 2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii) or 6(e)) or (2) receive a payment from which an amount has been deducted or withheld for or on account of any Indemnifiable Tax in respect of which the other party is not required to pay an additional amount (other than by reason of Section 2(d)(i)(4)(A) or (B)), in either case as a result of a party consolidating or amalgamating with, or merging with or into, or transferring all or substantially all its assets to, another entity (which will be the Affected Party) where such action does not constitute an event described in Section 5(a)(viii); (iv) CREDIT EVENT UPON MERGER. If "Credit Event Upon Merger" is specified in the Schedule as applying to the party, such party ("X"), any Credit Support Provider of X or any applicable Specified Entity of X consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its assets to, another entity and such action does not constitute an event described in Section 5(a)(viii) but the creditworthiness of the resulting, surviving or transferee entity is materially weaker than that of X, such Credit Copyright (C) 1992 by International Swaps and Derivatives Association, Inc. -7- Support Provider or such Specified Entity, as the case may be, immediately prior to such action (and, in such event, X or its successor or transferee, as appropriate, will be the Affected Party); or (v) ADDITIONAL TERMINATION EVENT. If any "Additional Termination Event" is specified in the Schedule or any Confirmation as applying, the occurrence of such event (and, in such event, the Affected Party or Affected Parties shall be as specified for such Additional Termination Event in the Schedule or such Confirmation). (c) EVENT OF DEFAULT AND ILLEGALITY. If an event or circumstance which would otherwise constitute or give rise to an Event of Default also constitutes an Illegality, it will be treated as an Illegality and will not constitute an Event of Default. 6. EARLY TERMINATION (a) RIGHT TO TERMINATE FOLLOWING EVENT OF DEFAULT. If at any time an Event of Default with respect to a party (the "Defaulting Party") has occurred and is then continuing, the other party (the "Non-defaulting Party") may, by not more than 20 days notice to the Defaulting Party specifying the relevant Event of Default, designate a day not earlier than the day such notice is effective as an Early Termination Date in respect of all outstanding Transactions. If, however, "Automatic Early Termination" is specified in the Schedule as applying to a party, then an Early Termination Date in respect of all outstanding Transactions will occur immediately upon the occurrence with respect to such party of an Event of Default specified in Section 5(a)(vii)(1), (3), (5), (6) or, to the extent analogous thereto, (8), and as of the time immediately preceding the institution of the relevant proceeding or the presentation of the relevant petition upon the occurrence with respect to such party of an Event of Default specified in Section 5(a)(vii)(4) or, to the extent analogous thereto, (8). (b) RIGHT TO TERMINATE FOLLOWING TERMINATION EVENT. (i) NOTICE. If a Termination Event occurs, an Affected Party will, promptly upon becoming aware of it, notify the other party, specifying the nature of that Termination Event and each Affected Transaction and will also give such other information about that Termination Event as the other party may reasonably require. (ii) TRANSFER TO AVOID TERMINATION EVENT. If either an Illegality under Section 5(b)(i)(1) or a Tax Event occurs and there is only one Affected Party, or if a Tax Event Upon Merger occurs and the Burdened Party is the Affected Party, the Affected Party will, as a condition to its right to designate an Early Termination Date under Section 6(b)(iv), use all reasonable efforts (which will not require such party to incur a loss, excluding immaterial, incidental expenses) to transfer within 20 days after it gives notice under Section 6(b)(i) all its rights and obligations under this Agreement in respect of the Affected Transactions to another of its Offices or Affiliates so that such Termination Event ceases to exist. If the Affected Party is not able to make such a transfer it will give notice to the other party to that effect within such 20 day period, whereupon the other party may effect such a transfer within 30 days after the notice is given under Section 6(b)(i). Any such transfer by a party under this Section 6(b)(ii) will be subject to and conditional upon the prior written consent of the other party, which consent will not be withheld if such other party's policies in effect at such time would permit it to enter into transactions with the transferee on the terms proposed. (iii) TWO AFFECTED PARTIES. If an Illegality under Section 5(b)(i)(1) or a Tax Event occurs and there are two Affected Parties, each party will use all reasonable efforts to reach agreement within 30 days after notice thereof is given under Section 6(b)(i) on action to avoid that Termination Event. (iv) RIGHT TO TERMINATE. If:-- (1) a transfer under Section 6(b)(ii) or an agreement under Section 6(b)(iii), as the case may be, has not been effected with respect to all Affected Transactions within 30 days after an Affected Party Copyright (C) 1992 by International Swaps and Derivatives Association, Inc. -8- gives notice under Section 6(b)(i); or (2) an Illegality under Section 5(b)(i)(2), a Credit Event Upon Merger or an Additional Termination Event occurs, or a Tax Event Upon Merger occurs and the Burdened Party is not the Affected Party, either party in the case of an Illegality, the Burdened Party in the case of a Tax Event Upon Merger, any Affected Party in the case of a Tax Event or an Additional Termination Event if there is more than one Affected Party, or the party which is not the Affected Party in the case of a Credit Event Upon Merger or an Additional Termination Event if there is only one Affected Party may, by not more than 20 days notice to the other party and provided that the relevant Termination Event is then continuing, designate a day not earlier than the day such notice is effective as an Early Termination Date in respect of all Affected Transactions. (c) EFFECT OF DESIGNATION. (i) If notice designating an Early Termination Date is given under Section 6(a) or (b), the Early Termination Date will occur on the date so designated, whether or not the relevant Event of Default or Termination Event is then continuing. (ii) Upon the occurrence or effective designation of an Early Termination Date, no further payments or deliveries under Section 2(a)(i) or 2(e) in respect of the Terminated Transactions will be required to be made, but without prejudice to the other provisions of this Agreement. The amount, if any, payable in respect of an Early Termination Date shall be determined pursuant to Section 6(e). (d) CALCULATIONS. (i) STATEMENT. On or as soon as reasonably practicable following the occurrence of an Early Termination Date, each party will make the calculations on its part, if any, contemplated by Section 6(e) and will provide to the other party a statement (1) showing, in reasonable detail, such calculations (including all relevant quotations and specifying any amount payable under Section 6(e)) and (2) giving details of the relevant account to which any amount payable to it is to be paid. In the absence of written confirmation from the source of a quotation obtained in determining a Market Quotation, the records of the party obtaining such quotation will be conclusive evidence of the existence and accuracy of such quotation. (ii) PAYMENT DATE. An amount calculated as being due in respect of any Early Termination Date under Section 6(e) will be payable on the day that notice of the amount payable is effective (in the case of an Early Termination Date which is designated or occurs as a result of an Event of Default) and on the day which is two Local Business Days after the day on which notice of the amount payable is effective (in the case of an Early Termination Date which is designated as a result of a Termination Event). Such amount will be paid together with (to the extent permitted under applicable law) interest thereon (before as well as after judgment) in the Termination Currency, from (and including) the relevant Early Termination Date to (but excluding) the date such amount is paid, at the Applicable Rate. Such interest will be calculated on the basis of daily compounding and the actual number of days elapsed. (e) PAYMENTS ON EARLY TERMINATION. If an Early Termination Date occurs, the following provisions shall apply based on the parties' election in the Schedule of a payment measure, either "Market Quotation" or "Loss," and a payment method, either the "First Method" or the "Second Method." If the parties fail to designate a payment measure or payment method in the Schedule, it will be deemed that "Market Quotation" or the "Second Method," as the case may be, shall apply. The amount, if any, payable in respect of an Early Termination Date and determined pursuant to this Section will be subject to any Set-off. (i) EVENTS OF DEFAULT. If the Early Termination Date results from an Event of Default:-- Copyright (C) 1992 by International Swaps and Derivatives Association, Inc. -9- (1) First Method and Market Quotation. If the First Method and Market Quotation apply, the Defaulting Party will pay to the Non-defaulting Party the excess, if a positive number, of (A) the sum of the Settlement Amount (determined by the Non-defaulting Party) in respect of the Terminated Transactions and the Termination Currency Equivalent of the Unpaid Amounts owing to the Non-defaulting Party over (B) the Termination Currency Equivalent of the Unpaid Amounts owing to the Defaulting Party. (2) First Method and Loss. If the First Method and Loss apply, the Defaulting Party will pay to the Non-defaulting Party, if a positive number, the Non-defaulting Party's Loss in respect of this Agreement. (3) Second Method and Market Quotation. If the Second Method and Market Quotation apply, an amount will be payable equal to (A) the sum of the Settlement Amount (determined by the Non-defaulting Party) in respect of the Terminated Transactions and the Termination Currency Equivalent of the Unpaid Amounts owing to the Non-defaulting Party less (B) the Termination Currency Equivalent of the Unpaid Amounts owing to the Defaulting Party. If that amount is a positive number, the Defaulting Party will pay it to the Non-defaulting Party; if it is a negative number, the Non-defaulting Party will pay the absolute value of that amount to the Defaulting Party. (4) Second Method and Loss. If the Second Method and Loss apply, an amount will be payable equal to the Non-defaulting Party's Loss in respect of this Agreement. If that amount is a positive number, the Defaulting Party will pay it to the Non-defaulting Party; if it is a negative number, the Non-defaulting Party will pay the absolute value of that amount to the Defaulting Party. (ii) TERMINATION EVENTS. If the Early Termination Date results from a Termination Event:-- (1) One Affected Party. If there is one Affected Party, the amount payable will be determined in accordance with Section 6(e)(i)(3), if Market Quotation applies, or Section 6(e)(i)(4), if Loss applies, except that, in either case, references to the Defaulting Party and to the Non-defaulting Party will be deemed to be references to the Affected Party and the party which is not the Affected Party, respectively, and, if Loss applies and fewer than all the Transactions are being terminated, Loss shall be calculated in respect of all Terminated Transactions. (2) Two Affected Parties. If there are two Affected Parties:-- (A) if Market Quotation applies, each party will determine a Settlement Amount in respect of the Terminated Transactions, and an amount will be payable equal to (I) the sum of (a) one-half of the difference between the Settlement Amount of the party with the higher Settlement Amount ("X") and the Settlement Amount of the party with the lower Settlement Amount ("Y") and (b) the Termination Currency Equivalent of the Unpaid Amounts owing to X less (II) the Termination Currency Equivalent of the Unpaid Amounts owing to Y; and (B) if Loss applies, each party will determine its Loss in respect of this Agreement (or, if fewer than all the Transactions are being terminated, in respect of all Terminated Transactions) and an amount will be payable equal to one-half of the difference between the Loss of the party with the higher Loss ("X") and the Loss of the party with the lower Loss ("Y"). If the amount payable is a positive number, Y will pay it to X; if it is a negative number, X will pay the absolute value of that amount to Y. (iii) ADJUSTMENT FOR BANKRUPTCY. In circumstances where an Early Termination Date occurs because "Automatic Early Termination" applies in respect of a party, the amount determined under this Section 6(e) Copyright (C) 1992 by International Swaps and Derivatives Association, Inc. -10- will be subject to such adjustments as are appropriate and permitted by law to reflect any payments or deliveries made by one party to the other under this Agreement (and retained by such other party) during the period from the relevant Early Termination Date to the date for payment determined under Section 6(d)(ii). (iv) PRE-ESTIMATE. The parties agree that if Market Quotation applies an amount recoverable under this Section 6(e) is a reasonable pre-estimate of loss and not a penalty. Such amount is payable for the loss of bargain and the loss of protection against future risks and except as otherwise provided in this Agreement neither party will be entitled to recover any additional damages as a consequence of such losses. 7. TRANSFER Subject to Section 6(b)(ii), neither this Agreement nor any interest or obligation in or under this Agreement may be transferred (whether by way of security or otherwise) by either party without the prior written consent of the other party, except that:-- (a) a party may make such a transfer of this Agreement pursuant to a consolidation or amalgamation with, or merger with or into, or transfer of all or substantially all its assets to, another entity (but without prejudice to any other right or remedy under this Agreement); and (b) a party may make such a transfer of all or any part of its interest in any amount payable to it from a Defaulting Party under Section 6(e). Any purported transfer that is not in compliance with this Section will be void. 8. CONTRACTUAL CURRENCY (a) PAYMENT IN THE CONTRACTUAL CURRENCY. Each payment under this Agreement will be made in the relevant currency specified in this Agreement for that payment (the "Contractual Currency"). To the extent permitted by applicable law, any obligation to make payments under this Agreement in the Contractual Currency will not be discharged or satisfied by any tender in any currency other than the Contractual Currency, except to the extent such tender results in the actual receipt by the party to which payment is owed, acting in a reasonable manner and in good faith in converting the currency so tendered into the Contractual Currency, of the full amount in the Contractual Currency of all amounts payable in respect of this Agreement. If for any reason the amount in the Contractual Currency so received falls short of the amount in the Contractual Currency payable in respect of this Agreement, the party required to make the payment will, to the extent permitted by applicable law, immediately pay such additional amount in the Contractual Currency as may be necessary to compensate for the shortfall. If for any reason the amount in the Contractual Currency so received exceeds the amount in the Contractual Currency payable in respect of this Agreement, the party receiving the payment will refund promptly the amount of such excess. (b) JUDGMENTS. To the extent permitted by applicable law, if any judgment or order expressed in a currency other than the Contractual Currency is rendered (i) for the payment of any amount owing in respect of this Agreement, (ii) for the payment of any amount relating to any early termination in respect of this Agreement or (iii) in respect of a judgment or order of another court for the payment of any amount described in (i) or (ii) above, the party seeking recovery, after recovery in full of the aggregate amount to which such party is entitled pursuant to the judgment or order, will be entitled to receive immediately from the other party the amount of any shortfall of the Contractual Currency received by such party as a consequence of sums paid in such other currency and will refund promptly to the other party any excess of the Contractual Currency received by such party as a consequence of sums paid in such other currency if such shortfall or such excess arises or results from any variation between the rate of exchange at which the Contractual Currency is converted into the currency of the judgment or order for the purposes of such judgment or order and the rate of exchange at which such party is able, acting in a reasonable manner and in good faith in converting the currency received into the Contractual Currency, to purchase the Contractual Currency with the amount of the currency of the judgment or order actually received by such party. The term "rate of exchange" includes, without limitation, any premiums and costs of exchange payable in connection with the purchase of or conversion into the Contractual Currency. Copyright (C) 1992 by International Swaps and Derivatives Association, Inc. -11- (c) SEPARATE INDEMNITIES. To the extent permitted by applicable law, these indemnities constitute separate and independent obligations from the other obligations in this Agreement, will be enforceable as separate and independent causes of action, will apply notwithstanding any indulgence granted by the party to which any payment is owed and will not be affected by judgment being obtained or claim or proof being made for any other sums payable in respect of this Agreement. (d) EVIDENCE OF LOSS. For the purpose of this Section 8, it will be sufficient for a party to demonstrate that it would have suffered a loss had an actual exchange or purchase been made. 9. MISCELLANEOUS (a) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and understanding of the parties with respect to its subject matter and supersedes all oral communication and prior writings with respect thereto. (b) AMENDMENTS. No amendment, modification or waiver in respect of this Agreement will be effective unless in writing (including a writing evidenced by a facsimile transmission) and executed by each of the parties or confirmed by an exchange of telexes or electronic messages on an electronic messaging system. (c) SURVIVAL OF OBLIGATIONS. Without prejudice to Sections 2(a)(iii) and 6(c)(ii), the obligations of the parties under this Agreement will survive the termination of any Transaction. (d) REMEDIES CUMULATIVE. Except as provided in this Agreement, the rights, powers, remedies and privileges provided in this Agreement are cumulative and not exclusive of any rights, powers, remedies and privileges provided by law. (e) COUNTERPARTS AND CONFIRMATIONS. (i) This Agreement (and each amendment, modification and waiver in respect of it) may be executed and delivered in counterparts (including by facsimile transmission), each of which will be deemed an original. (ii) The parties intend that they are legally bound by the terms of each Transaction from the moment they agree to those terms (whether orally or otherwise). A Confirmation shall be entered into as soon as practicable and may be executed and delivered in counterparts (including by facsimile transmission) or be created by an exchange of telexes or by an exchange of electronic messages on an electronic messaging system, which in each case will be sufficient for all purposes to evidence a binding supplement to this Agreement. The parties will specify therein or through another effective means that any such counterpart, telex or electronic message constitutes a Confirmation. (f) NO WAIVER OF RIGHTS. A failure or delay in exercising any right, power or privilege in respect of this Agreement will not be presumed to operate as a waiver, and a single or partial exercise of any right, power or privilege will not be presumed to preclude any subsequent or further exercise, of that right, power or privilege or the exercise of any other right, power or privilege. (g) HEADINGS. The headings used in this Agreement are for convenience of reference only and are not to affect the construction of or to be taken into consideration in interpreting this Agreement. 10. OFFICES; MULTIBRANCH PARTIES (a) If Section 10(a) is specified in the Schedule as applying, each party that enters into a Transaction through an Office other than its head or home office represents to the other party that, notwithstanding the place of booking office or jurisdiction of incorporation or organization of such party, the obligations of such party are the same as if it had entered into the Transaction through its head or home office. This representation will be deemed to be repeated by such Copyright (C) 1992 by International Swaps and Derivatives Association, Inc. -12- party on each date on which a Transaction is entered into. (b) Neither party may change the Office through which it makes and receives payments or deliveries for the purpose of a Transaction without the prior written consent of the other party. (c) If a party is specified as a Multibranch Party in the Schedule, such Multibranch Party may make and receive payments or deliveries under any Transaction through any Office listed in the Schedule, and the Office through which it makes and receives payments or deliveries with respect to a Transaction will be specified in the relevant Confirmation. 11. EXPENSES A Defaulting Party will, on demand, indemnify and hold harmless the other party for and against all reasonable out-of-pocket expenses, including legal fees and Stamp Tax, incurred by such other party by reason of the enforcement and protection of its rights under this Agreement or any Credit Support Document to which the Defaulting Party is a party or by reason of the early termination of any Transaction, including, but not limited to, costs of collection. 12. NOTICES (a) EFFECTIVENESS. Any notice or other communication in respect of this Agreement may be given in any manner set forth below (except that a notice or other communication under Section 5 or 6 may not be given by facsimile transmission or electronic messaging system) to the address or number or in accordance with the electronic messaging system details provided (see the Schedule) and will be deemed effective as indicated:-- (i) if in writing and delivered in person or by courier, on the date it is delivered; (ii) if sent by telex, on the date the recipient's answerback is received; (iii) if sent by facsimile transmission, on the date that transmission is received by a responsible employee of the recipient in legible form (it being agreed that the burden of proving receipt will be on the sender and will not be met by a transmission report generated by the sender's facsimile machine); (iv) if sent by certified or registered mail (airmail, if overseas) or the equivalent (return receipt requested), on the date that mail is delivered or its delivery is attempted; or (v) if sent by electronic messaging system, on the date that electronic message is received, unless the date of that delivery (or attempted delivery) or that receipt, as applicable, is not a Local Business Day or that communication is delivered (or attempted) or received, as applicable, after the close of business on a Local Business Day, in which case that communication shall be deemed given and effective on the first following day that is a Local Business Day. (b) CHANGE OF ADDRESSES. Either party may by notice to the other change the address, telex or facsimile number or electronic messaging system details at which notices or other communications are to be given to it. 13. GOVERNING LAW AND JURISDICTION (a) GOVERNING LAW. This Agreement will be governed by and construed in accordance with the law specified in the Schedule. (b) JURISDICTION. With respect to any suit, action or proceedings relating to this Agreement ("Proceedings"), each party irrevocably:-- (i) submits to the jurisdiction of the English courts, if this Agreement is expressed to be governed by English law, or to the non-exclusive jurisdiction of the courts of the State of New York and the United States Copyright (C) 1992 by International Swaps and Derivatives Association, Inc. -13- District Court located in the Borough of Manhattan in New York City, if this Agreement is expressed to be governed by the laws of the State of New York; and (ii) waives any objection which it may have at any time to the laying of venue of any Proceedings brought in any such court, waives any claim that such Proceedings have been brought in an inconvenient forum and further waives the right to object, with respect to such Proceedings, that such court does not have any jurisdiction over such party. Nothing in this Agreement precludes either party from bringing Proceedings in any other jurisdiction (outside, if this Agreement is expressed to be governed by English law, the Contracting States, as defined in Section 1(3) of the Civil Jurisdiction and Judgments Act 1982 or any modification, extension or re-enactment thereof for the time being in force) nor will the bringing of Proceedings in any one or more jurisdictions preclude the bringing of Proceedings in any other jurisdiction. (c) SERVICE OF PROCESS. Each party irrevocably appoints the Process Agent (if any) specified opposite its name in the Schedule to receive, for it and on its behalf, service of process in any Proceedings. If for any reason any party's Process Agent is unable to act as such, such party will promptly notify the other party and within 30 days appoint a substitute process agent acceptable to the other party. The parties irrevocably consent to service of process given in the manner provided for notices in Section 12. Nothing in this Agreement will affect the right of either party to serve process in any other manner permitted by law. (d) WAIVER OF IMMUNITIES. Each party irrevocably waives, to the fullest extent permitted by applicable law, with respect to itself and its revenues and assets (irrespective of their use or intended use), all immunity on the grounds of sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any court, (iii) relief by way of injunction, order for specific performance or for recovery of property, (iv) attachment of its assets (whether before or after judgment) and (v) execution or enforcement of any judgment to which it or its revenues or assets might otherwise be entitled in any Proceedings in the courts of any jurisdiction and irrevocably agrees, to the extent permitted by applicable law, that it will not claim any such immunity in any Proceedings. 14. DEFINITIONS As used in this Agreement:-- "ADDITIONAL TERMINATION EVENT" has the meaning specified in Section 5(b). "AFFECTED PARTY" has the meaning specified in Section 5(b). "AFFECTED TRANSACTIONS" means (a) with respect to any Termination Event consisting of an Illegality, Tax Event or Tax Event Upon Merger, all Transactions affected by the occurrence of such Termination Event and (b) with respect to any other Termination Event, all Transactions. "AFFILIATE" means, subject to the Schedule, in relation to any person, any entity controlled, directly or indirectly, by the person, any entity that controls, directly or indirectly, the person or any entity directly or indirectly under common control with the person. For this purpose, "control" of any entity or person means ownership of a majority of the voting power of the entity or person. "APPLICABLE RATE" means:-- (a) in respect of obligations payable or deliverable (or which would have been but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate; (b) in respect of an obligation to pay an amount under Section 6(e) of either party from and after the date (determined in accordance with Section 6(d)(ii)) on which that amount is payable, the Default Rate; Copyright (C) 1992 by International Swaps and Derivatives Association, Inc. -14- (c) is respect of all other obligations payable or deliverable (or which would have been but for Section 2(a)(iii)) by a Non-defaulting Party, the Non-default Rate; and (d) in all other cases, the Termination Rate. "BURDENED PARTY" has the meaning specified in Section 5(b). "CHANGE IN TAX LAW" means the enactment, promulgation, execution or ratification of, or any change in or amendment to, any law (or in the application or official interpretation of any law) that occurs on or after the date on which the relevant Transaction is entered into. "CONSENT" includes a consent, approval, action, authorization, exemption, notice, filing, registration or exchange control consent. "CREDIT EVENT UPON MERGER" has the meaning specified in Section 5(b). "CREDIT SUPPORT DOCUMENT" means any agreement or instrument that is specified as such in this Agreement. "CREDIT SUPPORT PROVIDER" has the meaning specified in the Schedule. "DEFAULT RATE" means a rate per annum equal to the cost (without proof or evidence of any actual cost) to the relevant payee (as certified by it) if it were to fund or of funding the relevant amount plus 1% per annum. "DEFAULTING PARTY" has the meaning specified in Section 6(a). "EARLY TERMINATION DATE" means the date determined in accordance with Section 6(a) or 6(b)(iv). "EVENT OF DEFAULT" has the meaning specified in Section 5(a) and, if applicable, in the Schedule. "ILLEGALITY" has the meaning specified in Section 5(b). "INDEMNIFIABLE TAX" means any Tax other than a Tax that would not be imposed in respect of a payment under this Agreement but for a present or former connection between the jurisdiction of the government or taxation authority imposing such Tax and the recipient of such payment or a person related to such recipient (including, without limitation, a connection arising from such recipient or related person being or having been a citizen or resident of such jurisdiction, or being or having been organized, present or engaged in a trade or business in such jurisdiction, or having or having had a permanent establishment or fixed place of business in such jurisdiction, but excluding a connection arising solely from such recipient or related person having executed, delivered, performed its obligations or received a payment under, or enforced, this Agreement or a Credit Support Document). "LAW" includes any treaty, law, rule or regulation (as modified, in the case of tax matters, by the practice of any relevant governmental revenue authority) and "LAWFUL" and "UNLAWFUL" will be construed accordingly. "LOCAL BUSINESS DAY" means, subject to the Schedule, a day on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) (a) in relation to any obligation under Section 2(a)(i), in the place(s) specified in the relevant Confirmation or, if not so specified, as otherwise agreed by the parties in writing or determined pursuant to provisions contained, or incorporated by reference, in this Agreement, (b) in relation to any other payment, in the place where the relevant account is located and, if different, in the principal financial centre, if any, of the currency of such payment, (c) in relation to any notice or other communication, including notice contemplated under Section 5(a)(i), in the city specified in the address for notice provided by the recipient and, in the case of a notice contemplated by Section 2(b), in the place where the relevant new account is to be located and (d) in relation to Section 5(a)(v)(2), in the relevant locations for performance with respect to such Specified Transaction. Copyright (C) 1992 by International Swaps and Derivatives Association, Inc. -15- "LOSS" means, with respect to this Agreement or one or more Terminated Transactions, as the case may be, and a party, the Termination Currency Equivalent of an amount that party reasonably determines in good faith to be its total losses and costs (or gain, in which case expressed as a negative number) in connection with this Agreement or that Terminated Transaction or group of Terminated Transactions, as the case may be, including any loss of bargain, cost of funding or, at the election of such party but without duplication, loss or cost incurred as a result of its terminating, liquidating, obtaining or reestablishing any hedge or related trading position (or any gain resulting from any of them). Loss includes losses and costs (or gains) in respect of any payment or delivery required to have been made (assuming satisfaction of each applicable condition precedent) on or before the relevant Early Termination Date and not made, except, so as to avoid duplication, if Section 6(e)(i)(1) or (3) or 6(e)(ii)(2)(A) applies. Loss does not include a party's legal fees and out-of-pocket expenses referred to under Section 11. A party will determine its Loss as of the relevant Early Termination Date or, if that is not reasonably practicable, as of the earliest date thereafter as is reasonably practicable. A party may (but need not) determine its Loss by reference to quotations of relevant rates or prices from one or more leading dealers in the relevant markets. "MARKET QUOTATION" means, with respect to one or more Terminated Transactions and a party making the determination, an amount determined on the basis of quotations from Reference Market-makers. Each quotation will be for an amount, if any, that would be paid to such party (expressed as a negative number) or by such party (expressed as a positive number) in consideration of an agreement between such party (taking into account any existing Credit Support Document with respect to the obligations of such party) and the quoting Reference Market-maker to enter into a transaction (the "Replacement Transaction") that would have the effect of preserving for such party the economic equivalent of any payment or delivery (whether the underlying obligation was absolute or contingent and assuming the satisfaction of each applicable condition precedent) by the parties under Section 2(a)(i) in respect of such Terminated Transaction or group of Terminated Transactions that would, but for the occurrence of the relevant Early Termination Date, have been required after that date. For this purpose, Unpaid Amounts in respect of the Terminated Transaction or group of Terminated Transactions are to be excluded but, without limitation, any payment or delivery that would, but for the relevant Early Termination Date, have been required (assuming satisfaction of each applicable condition precedent) after that Early Termination Date is to be included. The Replacement Transaction would be subject to such documentation as such party and the Reference Market-maker may, in good faith, agree. The party making the determination (or its agent) will request each Reference Market-maker to provide its quotation to the extent reasonably practicable as of the same day and time (without regard to different time zones) on or as soon as reasonably practicable after the relevant Early Termination Date. The day and time as of which those quotations are to be obtained will be selected in good faith by the party obliged to make a determination under Section 6(e), and, if each party is so obliged, after consultation with the other. If more than three quotations are provided, the Market Quotation will be the arithmetic mean of the quotations, without regard to the quotations having the highest and lowest values. If exactly three such quotations are provided, the Market Quotation will be the quotation remaining after disregarding the highest and lowest quotations. For this purpose, if more than one quotation has the same highest value or lowest value, then one of such quotations shall be disregarded. If fewer than three quotations are provided, it will be deemed that the Market Quotation in respect of such Terminated Transaction or group of Terminated Transactions cannot be determined. "NON-DEFAULT RATE" means a rate per annum equal to the cost (without proof or evidence of any actual cost) to the Non-defaulting Party (as certified by it) if it were to fund the relevant amount. "NON-DEFAULTING PARTY" has the meaning specified in Section 6(a). "OFFICE" means a branch or office of a party, which may be such party's head or home office. "POTENTIAL EVENT OF DEFAULT" means any event which, with the giving of notice or the lapse of time or both, would constitute an Event of Default. "REFERENCE MARKET-MAKERS" means four leading dealers in the relevant market selected by the party determining a Market Quotation in good faith (a) from among dealers of the highest credit standing which satisfy all the criteria that such party applies generally at the time in deciding whether to offer or to make an extension of credit and (b) to the extent practicable, from among such dealers having an office in the same city. Copyright (C) 1992 by International Swaps and Derivatives Association, Inc. -16- "RELEVANT JURISDICTION" means, with respect to a party, the jurisdictions (a) in which the party is incorporated organized, managed and controlled or considered to have its seat, (b) where an Office through which the party is acting for purposes of this Agreement is located, (c) in which the party executes this Agreement and (d) in relation to any payment, from or through which such payment is made. "SCHEDULED PAYMENT DATE" means a date on which a payment or delivery is to be made under Section 2(a)(i) with respect to a Transaction. "SET-OFF" means set-off, offset, combination of accounts, right of retention or withholding or similar right or requirement to which the payer of an amount under Section 6 is entitled or subject (whether arising under this Agreement, another contract, applicable law or otherwise) that is exercised by, or imposed on, such payer. "SETTLEMENT AMOUNT" means, with respect to a party and any Early Termination Date, the sum of:-- (a) the Termination Currency Equivalent of the Market Quotations (whether positive or negative) for each Terminated Transaction or group of Terminated Transactions for which a Market Quotation is determined; and (b) such party's Loss (whether positive or negative and without reference to any Unpaid Amounts) for each Terminated Transaction or group of Terminated Transactions for which a Market Quotation cannot be determined or would not (in the reasonable belief of the party making the determination) produce a commercially reasonable result. "SPECIFIED ENTITY" has the meaning specified in the Schedule. "SPECIFIED INDEBTEDNESS" means, subject to the Schedule, any obligation (whether present or future, contingent or otherwise, as principal or surety or otherwise) in respect of borrowed money. "SPECIFIED TRANSACTION" means, subject to the Schedule, (a) any transaction (including an agreement with respect thereto) now existing or hereafter entered into between one party to this Agreement (or any Credit Support Provider of such party or any applicable Specified Entity of such party) and the other party to this Agreement (or any Credit Support Provider of such other party or any applicable Specified Entity of such other party) which is a rate swap transaction, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of these transactions), (b) any combination of these transactions and (c) any other transaction identified as a Specified Transaction in this Agreement or the relevant confirmation. "STAMP TAX" means any stamp, registration, documentation or similar tax. "TAX" means any present or future tax, levy, impost, duty, charge, assessment or fee of any nature (including interest, penalties and additions thereto) that is imposed by any government or other taxing authority in respect of any payment under this Agreement other than a stamp, registration, documentation or similar tax. "TAX EVENT" has the meaning specified in Section 5(b). "TAX EVENT UPON MERGER" has the meaning specified in Section 5(b). "TERMINATED TRANSACTIONS" means with respect to any Early Termination Date (a) if resulting from a Termination Event, all Affected Transactions and (b) if resulting from an Event of Default, all Transactions (in either case) in effect immediately before the effectiveness of the notice designating that Early Termination Date (or, if "Automatic Early Termination" applies, immediately before that Early Termination Date). "TERMINATION CURRENCY" has the meaning specified in the Schedule. Copyright (C) 1992 by International Swaps and Derivatives Association, Inc. -17- "TERMINATION CURRENCY EQUIVALENT" means, in respect of any amount denominated in the Termination Currency, such Termination Currency amount and, in respect of any amount denominated in a currency other than the Termination Currency (the "Other Currency"), the amount in the Termination Currency determined by the party making the relevant determination as being required to purchase such amount of such Other Currency as at the relevant Early Termination Date, or, if the relevant Market Quotation or Loss (as the case may be), is determined as of a later date, that later date, with the Termination Currency at the rate equal to the spot exchange rate of the foreign exchange agent (selected as provided below) for the purchase of such Other Currency with the Termination Currency at or about 11:00 a.m. (in the city in which such foreign exchange agent is located) on such date as would be customary for the determination of such a rate for the purchase of such Other Currency for value on the relevant Early Termination Date or that later date. The foreign exchange agent will, if only one party is obliged to make a determination under Section 6(e), be selected in good faith by that party and otherwise will be agreed by the parties. "TERMINATION EVENT" means an Illegality, a Tax Event or a Tax Event Upon Merger or, if specified to be applicable, a Credit Event Upon Merger or an Additional Termination Event. "TERMINATION RATE" means a rate per annum equal to the arithmetic mean of the cost (without proof or evidence of any actual cost) to each party (as certified by such party) if it were to fund or of funding such amounts. "UNPAID AMOUNTS" owing to any party means, with respect to an Early Termination Date, the aggregate of (a) in respect of all Terminated Transactions, the amounts that became payable (or that would have become payable but for Section 2(a)(iii)) to such party under Section 2(a)(i) on or prior to such Early Termination Date and which remain unpaid as at such Early Termination Date and (b) in respect of each Terminated Transaction, for each obligation under Section 2(a)(i) which was (or would have been but for Section 2(a)(iii)) required to be settled by delivery to such party on or prior to such Early Termination Date and which has not been so settled as at such Early Termination Date, an amount equal to the fair market value of that which was (or would have been) required to be delivered as of the originally scheduled date for delivery, in each case together with (to the extent permitted under applicable law) interest, in the currency of such amounts, from (and including) the date such amounts or obligations were or would have been required to have been paid or performed to (but excluding) such Early Termination Date, at the Applicable Rate. Such amounts of interest will be calculated on the basis of daily compounding and the actual number of days elapsed. The fair market value of any obligation referred to in clause (b) above shall be reasonably determined by the party obliged to make the determination under Section 6(e) or, if each party is so obliged, it shall be the average of the Termination Currency Equivalents of the fair market values reasonably determined by both parties. IN WITNESS WHEREOF the parties have executed this document on the respective dates specified below with effect from the date specified on the first page of this document. HUB INTERNATIONAL LIMITED PARTNERSHIP BANK OF MONTREAL By HUB INTERNATIONAL PARTNERS LIMITED, Its General Partner By: /s/ R. J. Mailloux ------------------------------------ Title: Senior Manager Documentation By: /s/ W. Kirk James --------------------------------- Authorized Signatory Copyright (C) 1992 by International Swaps and Derivatives Association, Inc. -18- EX-99.9 10 o30946exv99w9.txt EX-99.9 Exhibit 99.9 TRANSFER, ASSIGNMENT AND ASSUMPTION AGREEMENT dated as of April 4, 2006 among: BANK OF MONTREAL (the "REMAINING PARTY"), HUB INTERNATIONAL LIMITED (the "TRANSFEROR") and HUB INTERNATIONAL LIMITED PARTNERSHIP (the "TRANSFEREE"). The Transferor and the Remaining Party have entered into one or more Transactions as identified in the attached Annex A (each an "OLD TRANSACTION"), each evidenced by a Confirmation (an "OLD CONFIRMATION") subject to an ISDA Master Agreement dated as of July 15, 2003 (the "OLD AGREEMENT"). The Transferor and the Remaining Party wish to keep the Old Agreement in effect. The Remaining Party and the Transferee have entered into an ISDA Master Agreement (the "NEW AGREEMENT") dated as of April 4, 2006. With effect from and including the date of this Agreement specified above (the "ASSIGNMENT DATE") the Transferor wishes to transfer to the Transferee, and the Transferee wishes to accept the transfer of and to assume, all the rights, liabilities, duties and obligations of the Transferor under and in respect of each Old Transaction, with the effect that, as more particularly described below, the Remaining Party becomes the obligor under the Old Confirmation. The Old Transaction so assumed and amended pursuant to Section 2(b) of this Agreement is referred to in this Agreement as the "New Transaction". The Remaining Party wishes to accept the Transferee as its sole counterparty with respect to the New Transactions. The Transferor and the Remaining Party wish to have released and discharged, as a result and to the extent of the transfer described above, their respective obligations under and in respect of the Old Transactions. Accordingly, the parties agree as follows: 1. DEFINITIONS. Terms defined in the ISDA Master Agreement (Multicurrency-Cross Border) as published in 1992 by the International Swaps and Derivatives Association, Inc., (the "1992 ISDA MASTER AGREEMENT") are used herein as so defined, unless otherwise provided herein. 2. TRANSFER, RELEASE, DISCHARGE AND UNDERTAKINGS. With effect from and including the Assignment Date and in consideration of the mutual representations, warranties and covenants contained in this Agreement and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged by each of the parties): (a) the Remaining Party and the Transferor are each released and discharged from further obligations to each other with respect to each Old Transaction and their respective rights against each other thereunder are cancelled, provided that such release and discharge shall not affect any rights, liabilities or obligations of the Remaining Party or the Transferor with respect to payments or other obligations due and payable or due to be performed on or prior to the Assignment Date, and all such payments and obligations shall be paid or performed by the Remaining Party or the Transferor in accordance with the terms of the Old Transaction, as amended pursuant to Section 2(b) of this Agreement; 2 (b) in respect of each New Transaction, the Remaining Party and the Transferee each undertake liabilities and obligations towards the other and acquire rights against each other identical in their terms to each corresponding Old Transaction except that: (i) Schedule I to the Old Confirmation in respect of the Old Transaction with initial USD Fixed Amount of USD 10,000,000 shall be deemed to be replaced as of the Assignment Date with the Schedule I attached hereto as Annex B, the June 15, 2010 Termination Date set out in such Old Confirmation shall be deemed as of the Assignment Date to be replaced with a April 4, 2011 Termination Date and the April 4, 2011 Termination Date shall be deemed from and after the Assignment Date to be a Fixed Rate Payer Payment Date and a Floating Rate Payer Payment Date, and (ii) Schedule I to the Old Confirmation in respect of the Old Transaction with initial USD Fixed Amount of USD 55,000,000 shall be deemed to be replaced as of the Assignment Date with the Schedule I attached hereto as Annex C, and, for the avoidance of doubt, as if the Transferee were the Transferor and with the Remaining Party remaining the Remaining Party, save for any rights, liabilities or obligations of the Remaining Party or the Transferor with respect to payments or other obligations due and payable or due to be performed on or prior to the Assignment Date; and (c) each New Transaction shall be governed by and form part of the New Agreement and the relevant Old Confirmation (which, in conjunction and as amended pursuant to Section 2(b) of this Agreement and as otherwise deemed modified to be consistent with this Agreement, shall be deemed to be a Confirmation between the Remaining Party and the Transferee), and the offices of the Remaining Party and the Transferee for purposes of each New Transaction shall be as specified in the New Agreement and the office of the Transferor for purposes of the Old Transaction shall have been as specified in the Old Agreement. 3. REPRESENTATIONS AND WARRANTIES. On the date of this Agreement: (a) Each of the parties makes to each of the other parties those representations and warranties set forth in Section 3(a) of the 1992 ISDA Master Agreement with references in such Section to "this Agreement" or "any Credit Support Document" being deemed references to this Agreement alone. (b) The Remaining Party and the Transferor each makes to the other, and the Remaining Party and the Transferee each makes to the other, the representation set forth in Section 3(b) of the 1992 ISDA Master Agreement, in each case with respect to the Old Agreement or the New Agreement, as the case may be, and taking into account the parties entering into and performing their obligations under this Agreement. (c) Each of the Transferor and the Remaining Party represents and warrants to each other and to the Transferee that: (i) it has made no prior transfer (whether by way of security or otherwise) of the Old Agreement or any interest or obligation in or under the Old Agreement or in respect of any Old Transaction; and (ii) as of the Assignment Date, all obligations of the Transferor and the Remaining Party under each Old Transaction required to be performed on or before the Assignment Date have been fulfilled. 3 4. COUNTERPARTS. This Agreement (and each amendment, modification and waiver in respect of it) may be executed and delivered in counterparts (including by facsimile transmission), each of which will be deemed an original. 5. AMENDMENTS. No amendment, modification or waiver in respect of this Agreement will be effective unless in writing (including a writing evidenced by a facsimile transmission) and executed by each of the parties or confirmed by an exchange of telexes or electronic messages on an electronic messaging system. 6. (a) GOVERNING LAW. This Agreement will be governed by and construed in accordance with the laws of the State of New York without reference to the conflict of laws provisions thereof. (b) JURISDICTION. The terms of Section 13(b) of the 1992 ISDA Master Agreement shall apply to this Agreement with references in such Section to "this Agreement" being deemed references to this Agreement alone. IN WITNESS WHEREOF the parties have executed this Agreement on the Assignment Date with effect from and including the Assignment Date. BANK OF MONTREAL HUB INTERNATIONAL LIMITED By: /s/ R. J. Mailloux By: /s/ W. Kirk James --------------------------------- ------------------------------------ Name: R. J. Mailloux Name: W. Kirk James Title: Senior Manager Documentation ---------------------------------- Date: Title: Vice President ------------------------------- --------------------------------- Date: April 4, 2006 ---------------------------------- HUB INTERNATIONAL LIMITED PARTNERSHIP, by its general partner, HUB INTERNATIONAL PARTNERS LIMITED By: /s/ W. Kirk James --------------------------------- Name: W. Kirk James ------------------------------- Title: Authorized Signatory ------------------------------ Date: April 4, 2006 ------------------------------- ANNEX A Old Transactions Transactions evidenced by the Old Confirmations forming part of this Annex A ANNEX B SCHEDULE I CASHFLOW SCHEDULE: BANK OF MONTREAL 396363:460803 SIDE 1 BANK OF MONTREAL PAYS USD FIXED TO HUB INTERNATIONAL LIMITED PARTNERSHIP
PERIOD BEG. PERIOD END DAYS PAYMENT DATE NATIONAL AMOUNT FIXED RATE % - ----------- ----------- ---- ------------ --------------- ------------ 15 Jun 2003 15 Dec 2003 180 15 Dec 2003 10,000,000.00 5.71 15 Dec 2003 15 Jun 2004 180 15 Jun 2004 10,000,000.00 5.71 15 Jun 2004 15 Dec 2004 180 15 Dec 2004 10,000,000.00 5.71 15 Dec 2004 15 Jun 2005 180 15 Jun 2005 10,000,000.00 5.71 15 Jun 2005 15 Dec 2005 180 15 Dec 2005 10,000,000.00 5.71 15 Dec 2005 15 Jun 2006 180 15 Jun 2006 10,000,000.00 5.71 15 Jun 2006 15 Dec 2006 180 15 Dec 2006 7,500,000 5.71 15 Dec 2006 15 Jun 2007 180 15 Jun 2007 7,500,000 5.71 15 Jun 2007 15 Dec 2007 180 17 Dec 2007 7,500,000 5.71 15 Dec 2007 15 Jun 2008 180 16 Jun 2008 7,500,000 5.71 15 Jun 2008 15 Dec 2008 180 15 Dec 2008 7,500,000 5.71 15 Dec 2008 15 Jun 2009 180 15 Jun 2009 7,500,000 5.71 15 Jun 2009 15 Dec 2009 180 15 Dec 2009 7,500,000 5.71 15 Dec 2009 15 Jun 2010 180 15 Jun 2010 7,500,000 5.71 15 Jun 2010 15 Dec 2010 180 15 Dec 2010 7,500,000 5.71 15 Dec 2010 4 Apr 2011 109 4 Apr 2011 7,500,000 5.71
SIDE 2 HUB INTERNATIONAL LIMITED PARTNERSHIP PAYS USD 3 MONTH LIBOR T3750 TO BANK OF MONTREAL
CALC. DATE PERIOD BEG. PERIOD END DAYS PAYMENT DATE NATIONAL AMOUNT ---------- ----------- ---------- ---- ------------ --------------- 12 Jun 2003 16 Jun 2003 15 Sep 2003 91 10,000,000.00 11 Sep 2003 15 Sep 2003 15 Dec 2003 91 15 Dec 2003 10,000,000.00 11 Dec 2003 15 Dec 2003 15 Mar 2004 91 10,000,000.00 11 Mar 2004 15 Mar 2004 15 Jun 2004 92 15 Jun 2004 10,000,000.00 11 Jun 2004 15 Jun 2004 15 Sep 2004 92 10,000,000.00 13 Sep 2004 15 Sep 2004 15 Dec 2004 91 15 Dec 2004 10,000,000.00 13 Dec 2004 15 Dec 2004 15 Mar 2005 90 10,000,000.00 11 Mar 2005 15 Mar 2005 15 Jun 2005 92 15 Jun 2005 10,000,000.00 13 Jun 2005 15 Jun 2005 15 Sep 2005 92 10,000,000.00 13 Sep 2005 15 Sep 2005 15 Dec 2005 91 15 Dec 2005 10,000,000.00 13 Dec 2005 15 Dec 2005 15 Mar 2006 90 10,000,000.00 13 Mar 2006 15 Mar 2006 15 Jun 2006 92 15 Jun 2006 10,000,000.00 13 Jun 2006 15 Jun 2006 15 Sep 2006 92 7,500,000 13 Sep 2006 15 Sep 2006 15 Dec 2006 91 15 Dec 2006 7,500,000 13 Dec 2006 15 Dec 2006 15 Mar 2007 90 7,500,000 13 Mar 2007 15 Mar 2007 15 Jun 2007 92 15 Jun 2007 7,500,000 13 Jun 2007 15 Jun 2007 17 Sep 2007 94 7,500,000 13 Sep 2007 17 Sep 2007 17 Dec 2007 91 17 Dec 2007 7,500,000 13 Dec 2007 17 Dec 2007 17 Mar 2008 91 7,500,000 13 Mar 2008 17 Mar 2008 16 Jun 2008 91 16 Jun 2008 7,500,000 12 Jun 2008 16 Jun 2008 15 Sep 2008 91 7,500,000 11 Sep 2008 15 Sep 2008 15 Dec 2008 91 15 Dec 2008 7,500,000 11 Dec 2008 15 Dec 2008 16 Mar 2009 91 7,500,000 12 Mar 2009 16 Mar 2009 15 Jun 2009 91 15 Jun 2009 7,500,000 11 Jun 2009 15 Jun 2009 15 Sep 2009 92 7,500,000 11 Sep 2009 15 Sep 2009 15 Dec 2009 91 15 Dec 2009 7,500,000 11 Dec 2009 15 Dec 2009 15 Mar 2010 90 7,500,000 11 Mar 2010 15 Mar 2010 15 Jun 2010 92 15 Jun 2010 7,500,000 11 Jun 2010 15 Jun 2010 15 Sep 2010 92 7,500,000 13 Sep 2010 15 Sep 2010 15 Dec 2010 91 15 Dec 2010 7,500,000 13 Dec 2010 15 Dec 2010 15 Mar 2011 90 7,500,000 11 Mar 2011 15 Mar 2011 4 Apr 2011 20 4 Apr 2011 7,500,000
ANNEX C SCHEDULE I CASHFLOW SCHEDULE: BANK OF MONTREAL 396359:460798 SIDE 1 BANK OF MONTREAL PAYS USD FIXED TO HUB INTERNATIONAL LIMITED PARTNERSHIP
PERIOD BEG PERIOD END DAYS PAYMENT DATE NOTIONAL AMOUNT FIXED RATE % - ---------- ----------- ---- ------------ --------------- ------------ 15 Jun 2003 15 Dec 2003 180 15 Dec 2003 55,000,000.00 6.16 15 Dec 2003 15 Jun 2004 180 15 Jun 2004 55,000,000.00 6.16 15 Jun 2004 15 Dec 2004 180 15 Dec 2004 55,000,000.00 6.16 15 Dec 2004 15 Jun 2005 180 15 Jun 2005 55,000,000.00 6.16 15 Jun 2005 15 Dec 2005 180 15 Dec 2005 55,000,000.00 6.16 15 Dec 2005 15 Jun 2006 180 15 Jun 2006 55,000,000.00 6.16 15 Jun 2006 15 Dec 2006 180 15 Dec 2006 55,000,000.00 6.16 15 Dec 2006 15 Jun 2007 180 15 Jun 2007 55,000,000.00 6.16 15 Jun 2007 15 Dec 2007 180 17 Dec 2007 55,000,000.00 6.16 15 Dec 2007 15 Jun 2008 180 16 Jun 2008 55,000,000.00 6.16 15 Jun 2008 15 Dec 2008 180 15 Dec 2008 50,416,667.00 6.16 15 Dec 2008 15 Jun 2009 180 15 Jun 2009 50,416,667.00 6.16 15 Jun 2009 15 Dec 2009 180 15 Dec 2009 45,833,334.00 6.16 15 Dec 2009 15 Jun 2010 180 15 Jun 2010 45,833,334.00 6.16 15 Jun 2010 15 Dec 2010 180 15 Dec 2010 41,250,001.00 6.16 15 Dec 2010 15 Jun 2011 180 15 Jun 2011 41,250,001.00 6.16 15 Jun 2011 15 Dec 2011 180 15 Dec 2011 22,000,000.00 6.16 15 Dec 2011 15 Jun 2012 180 15 Jun 2012 22,000,000.00 6.16 15 Jun 2012 15 Dec 2012 180 17 Dec 2012 11,000,000.00 6.16 15 Dec 2012 15 Jun 2013 180 17 Jun 2013 11,000,000.00 6.16
SIDE 2 HUB INTERNATIONAL LIMITED PARTNERSHIP PAY USD 3 MONTH LIBOR T3750 TO BANK OF MONTREAL
CALC. DATE PERIOD BEG. PERIOD END DAYS PAYMENT DATE NOTIONAL AMOUNT - ---------- ----------- ----------- ---- ------------ --------------- 12 Jun 2003 16 Jun 2003 15 Sep 2003 91 55,000,000.00 11 Sep 2003 15 Sep 2003 15 Dec 2003 91 15 Dec 2003 55,000,000.00 11 Dec 2003 15 Dec 2003 15 Mar 2004 91 55,000,000.00 11 Mar 2004 15 Mar 2004 15 Jun 2004 92 15 Jun 2004 55,000,000.00 11 Jun 2004 15 Jun 2004 15 Sep 2004 92 55,000,000.00 13 Sep 2004 15 Sep 2004 15 Dec 2004 91 15 Dec 2004 55,000,000.00 13 Dec 2004 15 Dec 2004 15 Mar 2005 90 55,000,000.00 11 Mar 2005 15 Mar 2005 15 Jun 2005 92 15 Jun 2005 55,000,000.00 13 Jun 2005 13 Jun 2005 15 Sep 2005 92 55,000,000.00 13 Sep 2005 15 Sep 2005 15 Dec 2005 91 15 Dec 2005 55,000,000.00 13 Dec 2005 15 Dec 2005 15 Mar 2006 90 55,000,000.00 13 Mar 2006 15 Mar 2006 15 Jun 2006 92 15 Jun 2006 55,000,000.00 13 Jun 2006 15 Jun 2006 15 Sep 2006 92 55,000,000.00 13 Sep 2006 15 Sep 2006 15 Dec 2006 91 15 Dec 2006 55,000,000.00 13 Dec 2006 15 Dec 2006 15 Mar 2007 90 55,000,000.00 13 Mar 2007 15 Mar 2007 15 Jun 2007 92 15 Jun 2007 55,000,000.00 13 Jun 2007 15 Jun 2007 17 Sep 2007 94 55,000,000.00 13 Sep 2007 17 Sep 2007 17 Dec 2007 91 17 Dec 2007 55,000,000.00 13 Dec 2007 17 Dec 2007 17 Mar 2008 91 55,000,000.00 13 Mar 2008 17 Mar 2008 16 Jun 2008 91 16 Jun 2008 55,000,000.00 12 Jun 2008 16 Jun 2008 15 Sep 2008 91 50,416,667.00 11 Sep 2008 15 Sep 2008 15 Dec 2008 91 15 Dec 2008 50,416,667.00 11 Dec 2008 15 Dec 2008 16 Mar 2009 91 50,416,667.00 12 Mar 2009 16 Mar 2009 15 Jun 2009 91 15 Jun 2009 50,416,667.00 11 Jun 2009 15 Jun 2009 15 Sep 2009 92 45,833,334.00 11 Sep 2009 15 Sep 2009 15 Dec 2009 91 15 Dec 2009 45,833,334.00 11 Dec 2009 15 Dec 2009 15 Mar 2010 90 45,833,334.00 11 Mar 2010 15 Mar 2010 15 Jun 2010 92 15 Jun 2010 45,833,334.00 11 Jun 2010 15 Jun 2010 15 Sep 2010 92 41,250,001.00 13 Sep 2010 15 Sep 2010 15 Dec 2010 91 15 Dec 2010 41,250,001.00 13 Dec 2010 15 Dec 2010 15 Mar 2011 90 41,250,001.00 11 Mar 2011 15 Mar 2011 15 Jun 2011 92 15 Jun 2011 41,250,001.00 13 Jun 2011 15 Jun 2011 15 Sep 2011 92 22,000,000.00 13 Sep 2011 15 Sep 2011 15 Dec 2011 91 15 Dec 2011 22,000,000.00 13 Dec 2011 15 Dec 2011 15 Mar 2012 91 22,000,000.00 13 Mar 2012 15 Mar 2012 15 Jun 2012 92 15 Jun 2012 22,000,000.00 13 Jun 2012 15 Jun 2012 17 Sep 2012 94 11,000,000.00 13 Sep 2012 17 Sep 2012 17 Dec 2012 91 17 Dec 2012 11,000,000.00 13 Dec 2012 17 Dec 2012 15 Mar 2013 88 11,000,000.00 13 Mar 2013 15 Mar 2013 15 Jun 2013 92 17 Jun 2013 11,000,000.00
EX-99.10 11 o30946exv99w10.txt EX-99.10 Exhibit 99.10 (MULTICURRENCY - CROSS BORDER) ISDA SCHEDULE TO THE MASTER AGREEMENT dated as of April 4, 2006 between HUB INTERNATIONAL LIMITED PARTNERSHIP ("Party A") AND BANK OF MONTREAL ("Party B") PART 1 TERMINATION PROVISIONS (a) "SPECIFIED ENTITY" means in relation to Party A for the purpose of:- Section 5(a)(v), the General Partner and all Affiliates Section 5(a)(vi), the General Partner and all Affiliates Section 5(a)(vii), the General Partner and all Affiliates Section 5(b)(iv), the General Partner and all Affiliates and in relation to Party B for the purpose of:- Section 5(a)(v), Not Applicable Section 5(a)(vi), Not Applicable Section 5(a)(vii), Not Applicable Section 5(b)(iv), Not Applicable (b) "SPECIFIED TRANSACTION" will have the meaning specified in Section 14 of this Agreement. (c) The "CROSS DEFAULT" provisions of Section 5(a)(vi) will apply to Party A and Party B. "SPECIFIED INDEBTEDNESS" will have the meaning specified in Section 14, provided that it will also include any obligation (whether present or future, contingent or otherwise, as principal or surety or otherwise) in respect of any Derivative Transaction and will not include (i) indebtedness in respect of deposits received or (ii) any payment not made because of an intervening change in law making such payment illegal, Force Majeure or act of state, provided that the party had available sufficient funds to make such payment at the time of non-payment. "THRESHOLD AMOUNT" shall have the meaning set forth below; for purposes of "THRESHOLD AMOUNT", "EQUITY" means the stockholders' equity including retained earnings, total partnership capital, net assets, or total capital and reserves, as the case may be, of the Party or its Credit Support Provider. "THRESHOLD AMOUNT" means in relation to Party A or any Credit Support Provider of Party A, (i) zero with respect to Specified Indebtedness to Party B or any Affiliate of Party B and (ii) USD 100,000 with respect to other Specified Indebtedness. "THRESHOLD AMOUNT" means, with respect to Party B, 2% of the Equity of Party B. (d) The "CREDIT EVENT UPON MERGER" provisions of Section 5(b)(iv) will apply to Party A and Party B. (e) The "AUTOMATIC EARLY TERMINATION" provisions of Section 6(a) will not apply to Party A and will not apply to Party B. (f) PAYMENTS ON EARLY TERMINATION. For the purpose of Section 6(e) of this Agreement:- (i) Market Quotation will apply. (ii) The Second Method will apply. (g) "TERMINATION CURRENCY" means Canadian Dollars. (h) ADDITIONAL TERMINATION EVENT will apply. The following shall constitute an Additional Termination Event as to which Party A shall be the Affected Party: (i) if the Notes (as defined in the Private Placement Memorandum) issued under the Private Placement Memorandum dated June 10, 2003, as amended and restated pursuant to the Amended and Restated Note Purchase Agreement dated April 4, 2006 between Party A and the holders of the Notes, are cancelled or prepaid on the part of Party A; (ii) The General Partner is terminated or removed as the general partner of Party A without the prior or simultaneous due appointment of a successor general partner, acceptable to Party B in its sole discretion. PART 2 TAX REPRESENTATIONS (a) PAYER REPRESENTATION. For the purpose of Section 3(e) of this Agreement, Party A and Party B will each make the following representation:- It is not required by any applicable law, as modified by the practice of any relevant governmental revenue authority, of any Relevant Jurisdiction to make any deduction or withholding for or on account of any Tax from any payment (other than interest under Section 2(e), 6(d)(ii) or 6(e) of this Agreement) to be made by it to the other party under this Agreement. In making this representation, it may rely on:- (i) the accuracy of any representations made by the other party pursuant to Section 3(f) of this Agreement; (ii) the satisfaction of the agreement contained in Section 4(a)(i) or 4(a)(iii) of this Agreement and the accuracy and effectiveness of any document provided by the other party pursuant to Section 4(a)(i) or 4(a)(iii) of this Agreement; and (iii) the satisfaction of the agreement of the other party contained in Section 4(d) of this Agreement; provided that it shall not be a breach of this representation where reliance is placed on clause (ii) and the other party does not deliver a form or document under Section 4(a)(iii) by reason of material prejudice to its legal or commercial position. 20 (b) PAYEE REPRESENTATIONS. For the purpose of Section 3(f) of this Agreement, Party A and Party B make the representations specified below, if any:- (i) The following representation will apply to Party A: It is fully eligible for the benefits of the "Business Profits" or "Industrial and Commercial Profits" provision, as the case may be, the "Interest" provision or the "Other Income" provision (if any) of the Specified Treaty with respect to any payment described in such provisions and received or to be received by it in connection with this Agreement and no such payment is attributable to a trade or business carried on by it through a permanent establishment in the Specified Jurisdiction. "Specified Treaty" means with respect to Party A as Payee, the income tax convention between Canada and the United States of America. "Specified Jurisdiction" means, with respect to Party A as Payee, Canada. (ii) The following representation will not apply to Party A and will apply to Party B when Party B is acting through its Chicago office:- Each payment received or to be received by it in connection with this Agreement will be effectively connected with its conduct of a trade or business in the United States of America. (iii) The following representation will apply to Party A and will not apply to Party B:- It has been duly created or organized under the laws of the United States of America or of any State of the United States of America, and it is validly existing under those laws. 21 PART 3 AGREEMENT TO DELIVER DOCUMENTS For the purpose of Sections 4(a)(i) and (ii) of this Agreement, each party agrees to deliver the following documents, as applicable: (a) Each party shall, as soon as practicable after demand, deliver to the other Party any form or document reasonably requested by the other party, including without limitation, any form or document required to enable such other party to make payments hereunder without withholding for or on account of Taxes or with such withholding at a reduced rate. Without limiting the generality of the foregoing:
PARTY REQUIRED TO COVERED BY SECTION 3(D) DELIVER DOCUMENT FORM/DOCUMENT/CERTIFICATE DATE BY WHICH TO BE DELIVERED REPRESENTATION - ----------------- ------------------------- ----------------------------- ----------------------- Party A Form W-9 Upon execution of this Yes Agreement Party B Form W-8-ECI, with respect to Transactions Upon execution of this Yes entered into by Party B's Chicago Office Agreement
Other documents to be delivered by each party concurrently with the execution and delivery of this Agreement are:
PARTY REQUIRED TO DELIVER FORM/DOCUMENT/ DATE BY WHICH COVERED BY SECTION 3(D) DOCUMENT CERTIFICATE TO BE DELIVERED REPRESENTATION -------------- -------------- --------------- ----------------------- Party A & B Incumbency Certificate Execution and delivery Yes of Agreement Party A and Party B Resolution or other Upon execution of this Agreement, Yes documents evidencing the and if requested, each authority of the party Confirmation entering into this Agreement and the persons acting on behalf of such party. Party A Partnership Agreement, Upon execution of this Agreement Yes certified to be in force unamended as of the date hereof Party A Credit Support Document Upon execution of this Agreement Yes listed in Part 4(f) of this Schedule
22 Party A Legal Opinions Execution and delivery No in Substantially of Agreement the form appended as Exhibits IA, IB and IC Party A Legal Opinions concerning Upon execution of this Agreement No Party A's Credit Support Provider, substantially in the form of Exhibits IIA and IIB

PART 4 MISCELLANEOUS (a) ADDRESSES FOR NOTICES. For the purpose of Section 12(a) of this Agreement:- ADDRESS(ES) FOR NOTICES OR COMMUNICATIONS TO PARTY A:- Address: Hub International Limited Partnership c/o Hub International Limited 55 East Jackson Boulevard, Chicago, Illinois, 60604 Attention: Marianne Paine, Chief Legal Counsel Facsimile: (877-402-6606 ADDRESS(ES) FOR NOTICES OR COMMUNICATIONS TO PARTY B:- With respect to Transactions: Address: Bank of Montreal 130 Adelaide Street West, Suite 500 Toronto, Ontario M5H 4E1 Canada Attention: Manager, Confirmations Facsimile: (416) 867-4778/6827 Telephone: (416) 867-7173 Any other notice sent to Party B (including without limitation, any notice in connection with Section 5, 6 or 9(b)) shall be copied to the following address: 23 Address: Bank of Montreal IBG Documentation, 24th Floor First Canadian Place Toronto, Ontario M5X 1A1 Canada Attention: Senior Manager, Documentation Telephone: (416) 867-4178 (b) PROCESS AGENT. For purposes of Section 13(c) of this Agreement:- Party A appoints as its Process Agent: Hub International Northeast, Inc., 1065 Avenue of the Americas, New York, New York, 10018, to the attention of its General Counsel, with a copy to Hub International Limited's Chief Legal Counsel at 55 East Jackson Boulevard, Chicago, Illinois, 60604. Party B appoints as its Process Agent: its Office at 3 Times Square, New York, N.Y. 10036. (c) OFFICES. The provisions of Section 10(a) will apply to this Agreement. (d) MULTIBRANCH PARTY. For the purpose of Section 10(c) of this Agreement:- Party A is not a Multibranch Party. Party B is a Multibranch Party and, for purposes of this Agreement and each Transaction entered into pursuant hereto, may act through its Chicago Office. (e) CALCULATION AGENT. The Calculation Agent is Party B, unless otherwise specified in a Confirmation in relation to the relevant Transaction. (f) CREDIT SUPPORT DOCUMENT(S). With respect to Party A, means the Guarantee from Hub International Limited for the obligations of Party A under this Agreement. (g) CREDIT SUPPORT PROVIDER. With respect to Party A, means Hub International Limited. (h) GOVERNING LAW. This Agreement will be governed by and construed in accordance with the laws of the State of New York (without reference to choice of law doctrine). (i) NETTING OF PAYMENTS. Subparagraph (ii) of Section 2(c) shall apply to all Transactions. (j) "AFFILIATE" will have the meaning specified in Section 14 of this Agreement. PART 5 OTHER PROVISIONS (a) 2000 ISDA DEFINITIONS. The provisions of the 2000 ISDA Definitions (the "Definitions"), published by the International Swaps and Derivatives Association, Inc., are incorporated by reference in, and will be deemed to be part of, this Agreement and each Confirmation as if set forth in full in this Agreement or in such Confirmation, without regard to any revision or subsequent edition thereof. In the event of any inconsistency between the provisions of this Agreement and the Definitions, this Agreement will prevail. In the event of any inconsistency between the provisions of any Confirmation and this Agreement or the Definitions, such Confirmation will prevail for the purpose of the relevant transaction. 24 (b) ILLEGALITY OR FORCE MAJEURE. As contemplated by Section 6 of this Agreement, while neither party shall be obligated to violate any applicable law by reason of Section 6 or this Part 5(b), each party shall retain its right to payment pursuant to Section 6(e) if the other party does not perform because of Illegality or Force Majeure. (c) SET-OFF. Any amount (the "Early Termination Amount") payable to one party (the "Payee") by the other party (the "Payer") under Section 6(e), in circumstances where there is a Defaulting Party or one Affected Party in the case where a Termination Event under Section 5(b)(iv) or 5(b)(v) has occurred, will, at the option of the party ("X") other than the Defaulting Party or the Affected Party (and without prior notice to the Defaulting Party or the Affected Party), be reduced by its set-off against any amount(s) (the "Other Agreement Amount") payable (whether at such time or in the future or upon the occurrence of a contingency) by the Payee to the Payer (irrespective of the currency, place of payment or booking office of the obligation) under any other agreement(s) between the Payee and the Payer or instrument(s) or undertaking(s) issued or executed by one party to, or in favour of, the other party (and the Other Agreement Amount will be discharged promptly and in all respects to the extent it is so set-off). X will give notice to the other party of any set-off effected under this Section. For this purpose, either the Early Termination Amount or the Other Agreement Amount (or the relevant portion of such amounts) may be converted by X into the currency in which the other is denominated at the rate of exchange at which such party would be able, acting in a reasonable manner and in good faith, to purchase the relevant amount of such currency. If an obligation is unascertained, X may in good faith estimate that obligation and set-off in respect of the estimate, subject to the relevant party accounting to the other when the obligation is ascertained. Nothing in this Section shall be effective to create a charge or other security interest. This Section shall be without prejudice and in addition to any right of set-off, combination of accounts, lien or other right to which any party is at any time otherwise entitled (whether by operation of law, contract or otherwise). (d) CONDITIONS TO CERTAIN PAYMENTS. Notwithstanding the provision of Section 6(e)(i)(3) and (4), as applicable, if the amount referred to therein is a positive number, the Defaulting Party will pay such amount to the Non-defaulting Party, and if the amount referred to therein is a negative number, except to the extent set out below, the Non-defaulting Party shall have no obligation to pay any amount thereunder to the Defaulting Party unless and until the conditions set forth in (i) and (ii) below have been satisfied, at which time there shall arise an obligation of the Non-defaulting Party to pay to the Defaulting Party an amount equal to the absolute value of such negative number less any and all amounts which the Defaulting Party may be obligated to pay under Section 11 (the "Conditional Payment Amount"): (i) the Non-defaulting Party shall have received confirmation satisfactory to it in its sole discretion (which may include an unqualified opinion of its counsel) that (x) no further payments or deliveries under Section 2(a)(i) or 2(e) in respect of Terminated Transactions will be required to be made in accordance with Section 6(c)(ii) and (y) each Specified Transaction shall have terminated pursuant to its specified termination date or through the exercise by a party of a right to terminate and all obligations owing under each such Specified Transaction shall have been fully and finally performed; (ii) all obligations (contingent or absolute, matured or unmatured) of the Defaulting Party and any Affiliate of the Defaulting Party to make any payment or delivery to the Non-defaulting Party or any Affiliate of the Non-defaulting Party shall have been fully and finally performed; 25 provided that if the Conditional Payment Amount exceeds the aggregate amount of the obligations owing to the Non-defaulting Party and Affiliates of the Non-defaulting Party by the Defaulting Party and Affiliates of the Defaulting Party (including without limitation all obligations owing under each Specified Transaction), the Non-defaulting Party shall pay the amount of the excess to the Defaulting Party. (e) RELATIONSHIP BETWEEN THE PARTIES. Each party will be deemed to represent to the other party on the date on which it enters into a Transaction that (absent a written agreement between the parties that expressly imposes affirmative obligations to the contrary for that Transaction): (i) NON-RELIANCE. It is acting for its own account, and it has made its own independent decision to enter into that Transaction and as to whether that Transaction is appropriate or proper for it based upon its own judgment and upon advice from such advisors as it has deemed necessary. It is not relying on any communication (written or oral) of the other Party as investment advice or as a recommendation to enter into that Transaction; it being understood that information and explanations related to the terms and conditions of a Transaction shall not be considered investment advice or a recommendation to enter into that Transaction. No communication (written or oral) received from the other party shall be deemed to be an assurance or guarantee as to the expected results of that Transaction. (ii) ASSESSMENT AND UNDERSTANDING. It is capable of assessing the merits of and understanding (on its own behalf or through independent professional advice), and understands and accepts the terms, conditions and risks of that Transaction. It is also capable of assuming, and assumes, the risks of that Transaction. (iii) STATUS OF PARTIES. The other party is not acting as a fiduciary for or an advisor to it in respect of that Transaction. (f) TELEPHONE RECORDING. Each party (i) consents to the recording of telephone conversations of trading and marketing personnel of the parties in connection with this Agreement or any potential or actual Transaction hereunder; (ii) agrees to obtain any necessary consent of and give notice of such recording to its trading and marketing personnel; and (iii) agrees that such recordings may be submitted in evidence in any proceeding relating to this Agreement, subject to applicable rules of discovery and evidence. (g) ADDITIONAL DEFINITIONS. The following definition shall be added to Section 14 in its appropriate alphabetical place: "DERIVATIVE TRANSACTION" means (a) any transaction which is a rate swap transaction, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of these transactions) and (b) any combination of these transactions. "FORCE MAJEURE" is a natural or man-made disaster, armed conflict, riot, civil disturbance, or similar event that materially disrupts transportation or communication facilities in the relevant city where the party is to make payment, or otherwise prevents the personnel of the party from performing their duties in connection with such payment, and is beyond the control of the party. "GENERAL PARTNER" means Hub International Partners Limited, a corporation incorporated under the laws of the Province of Ontario, in its capacity as general partner of Party A, and its successors and assigns. 26 "LIMITED PARTNERSHIP AGREEMENT" means, with respect to Party A, the limited partnership agreement between the General Partner and the limited partners of Party A dated as of , as amended, supplemented, restated or replaced from time to time. "PARTNERSHIP DOCUMENTATION" means, with respect to Party A, the Limited Partnership Agreement, as any such agreement or document has been amended, supplemented or replaced from time to time, together with any schedules, exhibits, supplements and attachments thereto and the documents incorporated by reference therein. (h) WAIVER OF JURY TRIAL: EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, ANY CREDIT SUPPORT DOCUMENT OR ANY TRANSACTION. EACH PARTY ACKNOWLEDGES THAT IT AND THE OTHER PARTY HAVE ENTERED INTO THIS AGREEMENT AND ANY CREDIT SUPPORT DOCUMENT, AS APPLICABLE, IN RELIANCE ON, AMONG OTHER THINGS, THE MUTUAL WAIVERS IN THIS SECTION. (i) RIGHT TO TERMINATE. Either party (the "Terminating Party") may, provided that no Event of Default or Potential Event of Default exists with respect to that party, elect to terminate any Transaction under this Agreement on the fourth (4th) anniversary of the Effective Date of such Transaction or every four (4) years thereafter, (the "Optional Termination Date"), by providing at least thirty (30) days prior notice to the other party (the "Other Party"). Notice may be provided by telephone but is to be followed up with a written notice to be received by the Other Party prior to the Optional Termination Date. In the event the Terminating Party elects to terminate a Transaction pursuant to the foregoing, the Terminating Party shall at or prior to 2:00 p.m. Toronto time on the Optional Termination Date, determine the amount payable in respect of the terminated Transaction (the "Market Value") by making the calculations required by Section 6(e)(i) of the Agreement as if the Optional Termination Date were an Early Termination Date designated as a result of the occurrence of an Event of Default with respect to the Terminating Party and the parties had specified Loss and the Second Method for that purpose. The Market Value will be paid by the relevant party on the second Business Day following the Optional Termination Date. [NOTE TO DRAFT: CONSIDER WHETHER ANY AMENDMENT TO THIS PARAGRAPH IS REQUIRED TO REFLECT AMENDED AND RESTATED MATURITY DATE AND REPAYMENT PROVISIONS OF THE NOTES.] If there is a dispute between the parties as to the calculation of the Market Value, (a) the parties will consult with each other in an attempt to resolve the dispute; and (b) if the parties fail to resolve the dispute prior to 3:00 p.m. Toronto time on the Optional Termination Date, then Bank of Montreal shall recalculate the Market Value by making calculations required by Section 6(e)(i) of the Agreement as if the Optional Termination Date were an Early Termination Date designated as a result of the occurrence of an Event of Default with respect to the Terminating Party and the parties had specified Market Quotation and the Second Method for that purpose. Promptly following a resolution pursuant to this paragraph, the Market Value will be paid by the relevant party on the second Business Day following the Optional Termination Date. Upon payment of such sum as provided herein, the obligations of both parties with respect to this Transaction shall be discharged in full. (j) COMMODITY EXCHANGE ACT. Each party represents to the other party on and as of the date hereof and on each date on which a Transaction is entered into among them that: 27 (i) such party is an "eligible contract participant" as defined in the U.S. Commodity Exchange Act, as amended (the "CEA"). (ii) neither this Agreement nor any Transaction has been executed or traded on a "trading facility" as such term is defined in the CEA; and (iii) the terms of this Agreement and each Transaction have been subject to individual negotiation. (k) BANKRUPTCY CODE. The parties hereto agree that each Transaction and this Agreement are a "swap agreement" for purposes of 11 U.S.C. Section 101(53B) and this Agreement is a "master agreement" for purposes of 11 U.S.C. Section 101(53B), or any successor provision. (l) LIMITED PARTNERSHIP PROVISIONS. The parties acknowledge and agree that, for the purposes of Section 3 of the Agreement, the representations made by Party A herein, shall be made by Party A on its own behalf and on behalf of its General Partner. For greater certainty however, and without duplication, Section 3 of this Agreement is hereby supplemented by adding the following further representations on the part of Party A, which representations will be deemed to be repeated on the date of each Transaction: (i) Party A represents to Party B (which representation will be deemed to be repeated by Party A at all times until the termination of this Agreement) that it is a limited partnership created under the laws of the State of Delaware, its only general partner is Hub International Partners Limited, a corporation incorporated under the laws of the Province of Ontario, the general partner is in good standing under the laws of the Province of Ontario and there are no other general partners of the partnership. (ii) The Partnership Agreement between the General Partner and the limited partners of Party A is in full force and effect. (iii) The General Partner has the power, authority and capacity to enter into this Agreement, to execute and deliver this Agreement on behalf of Party A, and to perform its obligations under the Partnership Agreement, this Agreement and any Credit Support Document to which Party A is a party, and has taken all necessary action to authorize such execution, delivery and performance. HUB INTERNATIONAL LIMITED PARTNERSHIP BANK OF MONTREAL BY HUB INTERNATIONAL PARTNERS LIMITED ITS GENERAL PARTNER By: /s/ W. Kirk James By: /s/ R. J. Mailloux --------------------------------- ------------------------------------ Name: W. Kirk James Name: R. J. Mailloux ------------------------------- ---------------------------------- Title: Authorized Signatory Title: Senior Manager Documentation ------------------------------ --------------------------------- Date: April 4, 2006 Date: ------------------------------- ---------------------------------- 28 EXHIBIT IA [Letterhead of Counterparty's U.S. Counsel] [Date] Bank of Montreal First Canadian Place Toronto, Ontario M5X 1A1 Dear Sirs: This opinion is furnished to you in connection with the ISDA Master Agreement dated as of April 4, 2006 (the "Agreement") between Hub International Limited Partnership (the "Counterparty") and Bank of Montreal (the "Bank"). Terms defined in the Agreement and used but not defined herein have the meanings given to them in the Agreement. We have acted as counsel to the Counterparty and Hub International Partners Limited (the "General Partner") in connection with the execution and delivery of the Agreement. We have examined the Agreement, the constating documents of the Counterparty, including the partnership agreement dated between the Counterparty and the General Partner (the "Partnership Agreement") and such other documents as we have deemed necessary or appropriate for purposes of the opinions expressed herein. We have also made such investigations and considered such questions of law as we have considered necessary for the purpose of rendering this opinion. In such examination we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity to original documents of all documents submitted to us as copies, certified or otherwise. We express no opinion with respect to the laws of any jurisdiction other than the laws of the States of Delaware and New York and the laws of the United States applicable therein. Insofar as our opinion relating to the General Partner set forth in paragraphs 4, 5, 6 and 7 below assume due authorization, execution and delivery of the Agreement by the General Partner under the laws of the Province of Ontario and the federal laws of Canada applicable therein, we understand that such matters are covered in the opinion of Canadian counsel to the Counterparty and the General Partner delivered to you today. Based on the foregoing we are of the opinion that: 1. The Counterparty is a limited partnership duly organized and validly existing under the laws of the State of Delaware and has full power and authority to perform its obligations under the Partnership Agreement and the Agreement. 2. The General Partner is the sole general partner of the Counterparty. 3. The performance of the Agreement by the Counterparty has been duly authorized by the Counterparty. 4. The General Partner has executed and delivered the Agreement on behalf of the Counterparty. 29 5. The performance, execution and delivery of the Agreement will not conflict with or result in a breach of the constitutive documentation of the Counterparty, including, without limitation, the Partnership Agreement, or any indenture, agreement or other document or instrument to which the Counterparty or the General Partner is a party or by which either the Counterparty or the General Partner is bound or any order of any court or any law or regulation applicable to the Counterparty or the General Partner. 6. All consents, authorizations, appropriations, and approvals requisite for the Counterparty's and the General Partner's performance of the Agreement and the due execution and delivery of the Agreement by the General Partner by or on behalf of the Counterparty have been duly obtained and remain in full force and effect and no action by, and no notice to or filing with any legislature, government, governmental authority or regulatory body is required for such execution, delivery, or performance. 7. The Agreement is a legal, valid, and binding obligation of the Counterparty and the General Partner, enforceable against each of them in accordance with its terms subject to the qualifications that the enforceability of the Agreement may be limited by bankruptcy, insolvency and other similar laws of general application affecting the enforcement of creditors' rights generally. This opinion is provided solely for your benefit and is not to be relied upon for any purpose other than in respect of the Agreement or by any other person. Yours very truly, 30 EXHIBIT IB [Letterhead of Counterparty's External Canadian Counsel] [Date] Bank of Montreal First Canadian Place Toronto, Ontario M5X 1A1 Dear Sirs: This opinion is furnished to you in connection with the ISDA Master Agreement dated as of April 4, 2006 (the "Agreement") between Hub International Limited Partnership (the "Counterparty") and Bank of Montreal (the "Bank"). Terms defined in the Agreement and used but not defined herein have the meanings given to them in the Agreement. We have acted as Canadian counsel to the Counterparty and Hub International Partners Limited (the "General Partner") in connection with the execution and delivery of the Agreement. We have examined the Agreement. We have also made such investigations and considered such questions of law as we have considered necessary for the purpose of rendering this opinion. In such examination we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity to original documents of all documents submitted to us as copies, certified or otherwise. We express no opinion with respect to the laws of any jurisdiction other than the laws of the Province of Ontario and the federal laws of Canada applicable therein. Based on the foregoing we are of the opinion that: 1. The performance, execution and delivery of the Agreement will not conflict with or result in a breach of any law or regulation applicable to the Counterparty or the General Partner. 2. All consents, authorizations, appropriations, and approvals from any government, governmental authority or regulatory body requisite for the Counterparty's and the General Partner's performance of the Agreement and the due execution and delivery of the Agreement by the General Partner by or on behalf of the Counterparty have been duly obtained and remain in full force and effect and no action by, and no notice to or filing with any legislature, government, governmental authority or regulatory body is required for such execution, delivery, or performance. This opinion is provided solely for your benefit and is not to be relied upon for any purpose other than in respect of the Agreement or by any other person. Yours very truly, 31 EXHIBIT IC [Letterhead of Counterparty's Internal Canadian Counsel] [Date] Bank of Montreal First Canadian Place Toronto, Ontario M5X 1A1 Dear Sirs: This opinion is furnished to you in connection with the ISDA Master Agreement dated as of April 4, 2006 (the "Agreement") between Hub International Limited Partnership (the "Counterparty") and Bank of Montreal (the "Bank"). Terms defined in the Agreement and used but not defined herein have the meanings given to them in the Agreement. We have acted as Canadian counsel to the Counterparty and Hub International Partners Limited (the "General Partner") in connection with the execution and delivery of the Agreement. We have examined the Agreement, the constating documents of the Counterparty and the General Partner, including the partnership agreement dated between the Counterparty and the General Partner (the "Partnership Agreement") and such other documents as we have deemed necessary or appropriate for purposes of the opinions expressed herein. We have also made such investigations and considered such questions of law as we have considered necessary for the purpose of rendering this opinion. In such examination we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity to original documents of all documents submitted to us as copies, certified or otherwise. We express no opinion with respect to the laws of any jurisdiction other than the laws of the Province of Ontario and the federal laws of Canada applicable therein. Based on the foregoing we are of the opinion that: 3. The General Partner is a corporation duly organized and validly existing under the laws of the Province of Ontario and has full power and authority to perform its obligations under the Partnership Agreement and under the Agreement and to execute and deliver the Agreement by or on behalf of the Counterparty (in its capacity as the general partner of the Counterparty). 4. The performance of the Agreement by the General Partner and the execution and delivery of the Agreement by the General Partner by or on behalf of the Counterparty have been duly authorized by all necessary action on the part of the General Partner. 5. The General Partner has executed and delivered the Agreement on behalf of the Counterparty. 32 6. The performance, execution and delivery of the Agreement will not conflict with or result in a breach of the constitutive documentation of the General Partner, including, without limitation, the Partnership Agreement, or any indenture, agreement or other document or instrument to which the Counterparty or the General Partner is a party or by which either the Counterparty or the General Partner is bound or any order of any court applicable to the Counterparty or the General Partner. 7. All consents, authorizations, appropriations, and approvals (other than from any government, governmental authority or regulatory body) requisite for the Counterparty's and the General Partner's performance of the Agreement and the due execution and delivery of the Agreement by the General Partner by or on behalf of the Counterparty have been duly obtained and remain in full force and effect. This opinion is provided solely for your benefit and is not to be relied upon for any purpose other than in respect of the Agreement or by any other person. Yours very truly, 33 EXHIBIT IIA Letterhead of Credit Support Provider's External Canadian Counsel Date Bank of Montreal First Canadian Place Toronto, Ontario M5X 1A1 Dear Sirs: This opinion is furnished to you in connection with the ISDA Master Agreement dated as of April 4, 2006 (the "Agreement") between Hub International Limited Partnership ("Counterparty") and Bank of Montreal (the "Bank"), in respect of which Hub International Limited (the "Credit Support Provider") has provided credit support in the form of a Guarantee dated April 4, 2006 (the "Credit Support Document") covering the obligations of the Counterparty. Terms defined in the Agreement and used but not defined herein have the meanings given to them in the Agreement. We have acted as Canadian counsel to the Credit Support Provider in connection with the execution and delivery of the Credit Support Document. We have examined the Agreement and the Credit Support Document. We have also made such investigations and considered such questions of law as we have considered necessary for the purpose of rendering this opinion. In such examination we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity to original documents of all documents submitted to us as copies, certified or otherwise. We express no opinion with respect to the laws of any jurisdiction other than the laws of the Province of Ontario and the laws of Canada applicable therein. Based on the foregoing we are of the opinion that: 1. The execution and delivery of the Credit Support Document and the performance by the Credit Support Provider of its obligations thereunder do not conflict with, or result in a breach of any law or regulation affecting the Credit Support Provider. 2. No action by, notice to or filing with, or consent, authorization or approval of, any governmental authority or regulatory body is required in connection with the Credit Support Provider's execution, delivery and performance of the Credit Support Document. This opinion is provided solely for your benefit and is not to be relied upon for any purpose other than in respect of the Agreement or by any other person. Yours very truly, 34 EXHIBIT IIB Letterhead of Credit Support Provider's Internal Canadian Counsel Date Bank of Montreal First Canadian Place Toronto, Ontario M5X 1A1 Dear Sirs: This opinion is furnished to you in connection with the ISDA Master Agreement dated as of April 4, 2006 (the "Agreement") between Hub International Limited Partnership ("Counterparty") and Bank of Montreal (the "Bank"), in respect of which Hub International Limited (the "Credit Support Provider") has provided credit support in the form of a Guarantee dated April 4, 2006 (the "Credit Support Document") covering the obligations of the Counterparty. Terms defined in the Agreement and used but not defined herein have the meanings given to them in the Agreement. We have acted as Canadian counsel to the Credit Support Provider in connection with the execution and delivery of the Credit Support Document. We have examined the Agreement, the Credit Support Document, the Credit Support Provider's constating documents and such other documents as we have deemed necessary or appropriate for purposes of the opinions expressed herein. We have also made such investigations and considered such questions of law as we have considered necessary for the purpose of rendering this opinion. In such examination we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity to original documents of all documents submitted to us as copies, certified or otherwise. We express no opinion with respect to the laws of any jurisdiction other than the laws of the Province of Ontario and the laws of Canada applicable therein. Based on the foregoing we are of the opinion that: 1. The Credit Support Provider has been duly organized incorporated and is validly existing and in good standing under the laws of the Province of Ontario. 2. The execution and delivery of the Credit Support Document and the performance by the Credit Support Provider of its obligations thereunder have been duly authorized by the Credit Support Provider, are within the corporate power of the Credit Support Provider and do not conflict with, or result in a breach of, (i) the constating documents of the Credit Support Provider, or (iii) any agreement, decree, order, judgment, injunction or other instrument binding on or affecting the Credit Support Provider. 3. The Credit Support Document has been duly authorized, executed and delivered by the Credit Support Provider to the Bank. 6. The Credit Support Document constitutes a legal, valid and binding obligation of the Credit Support Provider enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, and other similar laws and equitable principles of general application affecting the rights of 35 creditors, or limiting the availability of specific performance, injunctive relief or any other equitable remedy. This opinion is provided solely for your benefit and is not to be relied upon for any purpose other than in respect of the Agreement or by any other person. Yours very truly, 36 ~~-----END PRIVACY-ENHANCED MESSAGE-----~~