Exhibit 4.6
RMI/HI SUPPORT AGREEMENT
THIS AGREEMENT is dated as of March 10, 2003
BETWEEN:
RAVELSTON MANAGEMENT INC., a corporation incorporated under the laws
of Ontario
("RMI")
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XXXXXXXXX INC., a corporation incorporated under the laws of Canada
("HI")
RECITALS:
A. HI and RMI have entered into an indenture dated as of March 10, 2003 (the
"Indenture") with Wachovia Trust Company, National Association, as trustee
(the "Trustee"), which provides for the issue by HI of senior secured
notes (the "Notes").
B. The Ravelston Corporation Limited ("Ravelston") is the holder, directly or
indirectly, of 78.2% of the issued and outstanding retractable common
shares of HI. RMI is a wholly-owned direct subsidiary of Ravelston. RMI
has entered into a guarantee of the Notes (the "Guarantee").
C. RMI wishes to provide support to HI in connection with the Notes.
NOW THEREFORE, in consideration of the mutual promises herein contained
and other good and valuable consideration, the parties hereto agree as follows:
1. Definitions. For the purposes of this Agreement:
"AGREEMENT" means this agreement as it may be amended, supplemented,
restated or replaced from time to time; the expressions "hereof",
"herein", "hereto", "hereunder", "hereby" and similar expressions refer to
this Agreement as a whole and not to any particular article, section,
schedule or other portion hereof.
"CAPITAL STOCK" has the meaning assigned to such term in the Indenture.
"DIVIDEND OFFSET AMOUNT" means the excess of any Net Dividend Amount
received by HI and NBI in the relevant fiscal year over U.S.$4,650,000.
"FLOOR AMOUNT" means U.S.$14,000,000 in each fiscal year, less (i) the
aggregate amount of management fees paid in cash by HII and its
subsidiaries directly to HI or to its Wholly-Owned Restricted Subsidiaries
in such fiscal year, and (ii) any Dividend Offset Amount in such fiscal
year. With respect to any period that is less than a fiscal
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year, the Floor Amount shall be calculated pro rata by reference to the
number of days in such period, computed on the basis of a 360-day year of
twelve 30-day months.
"GAAP" means generally accepted accounting principles in Canada,
consistently applied, which are in effect on the date of the Indenture.
"HII" means Xxxxxxxxx International Inc.
"NBI" means 504468 N.B. Inc.
"NEGATIVE NET CASH FLOW" means, for any period, the amount by which:
(a) Net Income (Loss) plus, without duplication, (i) the amount of all
non-cash items reducing Net Income (Loss), (ii) all amounts deducted
in the calculation of Net Income (Loss) on account of depreciation
and amortization, and (iii) all taxes provided for in the
calculation of Net Income (Loss), less, without duplication, (iv)
any non-cash items increasing Net Income (Loss), (v) all taxes paid
in cash during such period, (vi) all capital expenditures made in
cash during such period, and (vii) all dividends (excluding
dividends on HI's retractable common shares) made during such
period; all calculated in accordance with GAAP as of the last day of
any period, is less than
(b) zero.
"NET DIVIDEND AMOUNT" means the net cash dividend amount received by HI
and NBI in the relevant fiscal year on the Class A common shares and Class
B common shares of HII held by them (including, without limitation, any
such shares pledged as security for the Notes), after deducting (i) any
withholding taxes or income taxes paid or payable in cash by HI or NBI in
respect of such dividends, and (ii) any dividends received by HI or NBI on
such number of shares of HII held by HI or NBI that corresponds to the
number of Class A common shares of HII into which the Series II preferred
shares of HI are exchangeable.
"NET INCOME (LOSS)" of the Company means, for any period, the
unconsolidated net income (or loss (and treating a loss as a negative
number)) of the Company for such period, adjusted by excluding, without
duplication, to the extent included in calculating such net income (or
loss), (i) all extraordinary gains and losses, (ii) the net income (or
loss) of any Person acquired during the specified period attributable to
any period prior to the date of such acquisition, (iii) any gain or loss
realized upon the termination of any employee pension benefit plan, (iv)
aggregate gains and losses (less all fees and expenses relating thereto)
in respect of dispositions of assets other than in the ordinary course of
business (provided that any sale of Capital Stock of HII for cash would be
considered a disposition in the ordinary course of business), (v) any gain
from the collection of proceeds of life insurance policies, and (vi) any
gain or loss arising from the acquisition of any securities of the
Company, or the extinguishment, under GAAP, of any Indebtedness of the
Company.
"QUALIFIED CAPITAL STOCK" has the meaning assigned to such term in the
Indenture.
"RCL REPAYMENT AMOUNT" means, for any period, any permanent repayment in
cash of the principal amount of debt owing by Ravelston under the
promissory note made by
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Ravelston as borrower in favour of HI as lender dated March 10, 2003
received by HI during such period.
"SUBORDINATED DEBT" means unsecured debt expressly subordinated in right
of payment to the Notes.
"WHOLLY-OWNED RESTRICTED SUBSIDIARIES" has the meaning attributed to such
term in the Indenture.
2. Annual Support Amount. Each fiscal year, RMI will contribute to HI an
amount (the "Annual Support Amount") equal to (i) the greater of (A)
Negative Net Cash Flow for that fiscal year and (B) the Floor Amount, less
(ii) any RCL Repayment Amount made during that fiscal year. The Annual
Support Amount shall be contributed by RMI to HI as either (i)
subscription for Qualified Capital Stock, (ii) contributions to capital in
respect of Capital Stock of HI already issued and without the issuance of
additional Capital Stock of HI to RMI, or (iii) Subordinated Debt, as
determined by RMI and HI.
3. Payment of Annual Support Amount. The Annual Support Amount shall be paid
by RMI to HI as follows:
(a) for the first three quarters of each fiscal year, an amount equal to
(i) the Negative Net Cash Flow for the preceding quarter, less (ii)
any RCL Repayment Amount for that preceding quarter, shall be paid
by RMI to HI within 45 days of the end of each such quarter; and
(b) for the last quarter of each fiscal year, an amount equal to
(i) the greater of (A) the Negative Net Cash Flow for the fiscal
year and (B) the Floor Amount,
(ii) less any RCL Repayment Amount made during the fiscal year,
(iii) less the aggregate amount paid during the fiscal year pursuant
to section 3(a) hereof,
shall be paid by RMI to HI (or, if negative, paid by HI to RMI, if
permitted by the Indenture) no later than 90 days after the end of
such fiscal year.
For greater certainty, partial payments of the Annual Support Amount may
be made by RMI from time to time before the dates specified in this
section. Such partial payments shall be credited towards the amounts due
in this section. With respect to any period that is less than a fiscal
quarter or a fiscal year, the Annual Support Amount to be paid by RMI to
HI for such period shall be calculated pro rata by reference to the number
of days in such period, computed on the basis of a 360-day year of twelve
30-day months.
4. Reports.
(a) HI shall:
(i) for each of the first three quarters of each fiscal year,
calculate the Net Income (Loss), the Negative Net Cash Flow
and the amounts to be paid
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by RMI pursuant to section 3(a) hereof for the preceding
fiscal quarter and, within 45 days after the end of such
quarter, deliver to RMI and the Trustee (A) a report for such
quarter setting out these amounts, and (B) a review on such
report by HI's independent auditors; and
(ii) for the last quarter of each fiscal year, calculate the Net
Income (Loss), the Negative Net Cash Flow and the amount to be
paid by RMI pursuant to section 3(b) hereof for the preceding
fiscal year and, within 90 days after the end of such quarter,
deliver to RMI and the Trustee (A) a report for such fiscal
year setting out these amounts, and (B) an audit of such
report by HI's independent auditors,
(each such report, a "Delivered Report"). The amounts set out in
each Delivered Report will be deemed to be the settled amounts for
purposes of the payments required hereby until such time as
determined otherwise pursuant to section 4(c) or (d). Any payments
or adjustments to payments previously made required by a resolution
under section 4(c) or an award or determination of an Auditor under
section 4(d) will be made forthwith after the resolution, award or
determination (as applicable).
(b) For each Delivered Report, if RMI notifies HI that it agrees with
the Delivered Report within 10 days after receiving it or fails to
deliver notice to HI of its disagreement with the Delivered Report
within that 10-day period, the Delivered Report will be conclusive
and binding on HI and RMI will be deemed to have agreed to it, in
the first case, on the date HI receives the notice and, in the
second case, on that 10th day.
(c) If RMI notifies HI of RMI's disagreement with a Delivered Report
within the 10-day period provided for in section 4(b), then HI and
RMI will attempt, in good faith, to resolve their differences with
respect to it within 20 days after delivery of the Delivered Report
to RMI. Any disagreement over a Delivered Report not resolved by HI
and RMI within that 20-day period will be resolved as set out in
section 4(d). HI shall provide the Trustee with a copy of any notice
of disagreement received from RMI.
(d) Any dispute relating to a Delivered Report not resolved within 20
days after delivery of the Delivered Report to RMI will be
determined by arbitration under the Arbitration Act, 1991 (Ontario)
(the "ARBITRATION ACT") by a partner of a major accounting firm in
Ontario (the "AUDITOR") who is independent of HI and RMI and agreed
to by HI and RMI or appointed by a judge of the Superior Court of
Justice of Ontario, on application of HI or RMI, on notice to the
other. The application of section 7(2) of the Arbitration Act is
expressly excluded. Subject to section 44 of the Arbitration Act,
any award or determination of the Auditor will be final and binding
on the parties and there will be no appeal on any ground. Any
hearing in the course of the determination will be held in Toronto,
Ontario in the English language. All matters relating to the
arbitration will be kept confidential to the full extent permitted
by law. Despite section 28(1) of the Arbitration Act, the Auditor
will not, without the written consent of HI and RMI, retain any
expert. The Auditor shall have power to award costs of the
arbitration (including fees of the Auditor) to the losing party on a
substantial indemnity basis.
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5. Termination. This Agreement shall terminate upon repayment in full of the
Notes and termination or release of the Guarantee.
6. Waiver. RMI hereby waives any failure or delay on the part of another
party in asserting or enforcing any rights or in making any claims or
demands hereunder.
7. Modification, Amendment and Termination. This Agreement may be modified,
amended or terminated only by the written agreement of all parties hereto.
8. Third Party Beneficiary. The parties hereto agree and acknowledge that the
Trustee is a third party beneficiary of this Agreement (except for the
second sentence of section 2 hereof) and is entering into the Indenture in
reliance, among other things, upon this Agreement. The Trustee shall be
entitled to enforce against any party hereto any term or provision of this
Agreement (except the second sentence of section 2 hereof).
9. Successor. The Agreement herein set forth shall be binding upon, and enure
to the benefit of RMI and HI and their respective successors and permitted
assigns.
10. Assignment. The benefits of this Agreement may not be assigned without the
express written consent of RMI and HI, other than a pledge of this
Agreement by HI in favour of the Trustee as security for HI's obligations
under the Indenture. In the event that (i) an Event of Default (as defined
in the Indenture) has occurred and is continuing, and (ii) the Trustee has
given prior written notice to RMI and HI, RMI shall pay all amounts
payable by RMI to HI hereunder directly to the Trustee for the benefit of
the holders of the Notes for such time as such Event of Default shall
continue.
11. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE
OF NEW YORK.
DATED as of the date first set out above.
RAVELSTON MANAGEMENT
INC.
By: /s/ Xxxxx X. Xxxxxxxx
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Name: Xxxxx X. Xxxxxxxx
Title:
XXXXXXXXX INC.
By: /s/ Xxxxx X. Xxxxxxxx
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Name: Xxxxx X. Xxxxxxxx
Title:
