EXHIBIT 4.4
SUBORDINATION AGREEMENT
This SUBORDINATION AGREEMENT is dated as of February 7, 2003 (the "Agreement").
To: National City Bank, for itself and as trustee under the Indenture referred
to below for the holders of the Securities (the "Trustee")
Sun Media Corporation, a British Columbia company (the "Obligor"), as
obligor under the convertible obligations dated as of July 9, 2001 and November
28, 2002 in the principal amount of Cdn$1,600,000,000 and Cdn$350,000,000,
respectively, made by the Obligor in favour of Quebecor Media Inc. (the
"Subordinated Notes"), and Quebecor Media Inc., as holder (the "Holder") of the
Subordinated Notes, for ten dollars and other good and valuable consideration
received by each of the Obligor and the Holder from the Trustee and by each of
the Obligor and the Holder from the other, agree as follows:
1. INTERPRETATION.
(a) "CASH, PROPERTY OR SECURITIES". "Cash, Property or Securities" shall
not be deemed to include securities of the Obligor or any other Person provided
for by a plan of reorganization or readjustment, the payment of which is
subordinated at least to the extent provided herein with respect to the
Subordinated Notes, to the payment of all Senior Indebtedness which may at the
time be outstanding; provided, however, that (i) all Senior Indebtedness is
assumed by the new Person, if any, resulting from any such reorganization or
readjustment, and (ii) the rights of the holders of the Senior Indebtedness are
not, without the consent of such holders, altered by such reorganization or
readjustment.
(b) "PAYMENT IN FULL". "payment in full", with respect to Senior
Indebtedness, means the receipt on an irrevocable basis of cash in an amount
equal to the unpaid principal amount of the Senior Indebtedness and premium, if
any, and interest and any special interest thereon to the date of such payment,
together with all other amounts owing with respect to such Senior Indebtedness.
(c) "SENIOR INDEBTEDNESS". "Senior Indebtedness" means, at any date all
indebtedness (including, without limitation, any and all amounts of principal,
interest, special interest, additional amounts, premium, fees, penalties,
indemnities and "post-petition interest" in bankruptcy and any reimbursement of
expenses) under (1) the Indenture, including, without limitation, the "Notes,"
the "Subsidiary Guarantees," the "Exchange Notes," the "Additional Notes" and
any "Guarantee" of the Exchange Notes or the Additional Notes (in each case, as
defined in the Indenture) and (2) the Credit Agreement, dated as of February 7,
2003, among the Obligor, the financial institutions identified as lenders
therein, Banc of America Securities LLC, as joint lead arranger, Bank of
America, N.A., as administrative agent, and Credit Suisse First Boston
Corporation, as joint lead arranger and syndication agent.
2. AGREEMENT ENTERED INTO PURSUANT TO INDENTURE. The Obligor and the
Holder are entering into this Agreement pursuant to the provisions of the
Indenture, dated as of February 7, 2003 (the "Indenture"; capitalized terms used
herein without definition having the meanings set forth therein) among the
Obligor, the Subsidiary Guarantors and the Trustee. Pursuant to the Indenture,
the Obligor has issued and the Subsidiary Guarantors have guaranteed,
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US$205,000,000 aggregate principal amount of the Obligor's 7 5/8% Senior Notes
due 2013 (the "Securities").
3. SUBORDINATION. The indebtedness represented by the Subordinated
Notes shall be subordinated as follows:
(a) AGREEMENT TO SUBORDINATE. The Obligor, for itself and its successors
and assigns, and the Holder agree, that the indebtedness evidenced by the
Subordinated Notes (including, without limitation, principal, interest, premium,
fees, penalties, indemnities and "post-petition interest" in bankruptcy and any
reimbursement of expenses) is subordinate and junior in right of payment, to the
extent and in the manner provided in this Section 3, to the prior payment in
full of all Senior Indebtedness. The provisions of this Section 3 are for the
benefit of the Trustee acting on behalf of the holders from time to time of
Senior Indebtedness, and such holders are hereby made obligees hereunder to the
same extent as if their names were written herein as such, and they
(collectively or singly) may proceed to enforce such provisions.
(b) LIQUIDATION, DISSOLUTION OR BANKRUPTCY.
(i) Upon any distribution of assets of the Obligor to creditors or
upon a liquidation or dissolution or winding-up of the Obligor or
in a bankruptcy, arrangement, liquidation, reorganization,
insolvency, receivership or similar case or proceeding relating to
the Obligor or its property or other marshalling of assets of the
Obligor:
(A) the holders of Senior Indebtedness shall be entitled to
receive payment in full of all Senior Indebtedness before the
Holder shall be entitled to receive any payment of principal
of or interest on, or any other amount owing in respect of,
the Subordinated Notes;
(B) until payment in full of all Senior Indebtedness, any
distribution of assets of the Obligor of any kind or
character to which the Holder would be entitled but for this
Section 3 is hereby assigned to the holders of Senior
Indebtedness absolutely and shall be paid by the Obligor or
by any receiver, trustee in bankruptcy, liquidating trustee,
agents or other Persons making such payment or distribution
to the Trustee on behalf of the holders of Senior
Indebtedness, as their interests may appear; and
(C) in the event that, notwithstanding the foregoing, any payment
or distribution of assets of the Obligor of any kind or
character, whether in Cash, Property or Securities, shall be
received by the Holder before all Senior Indebtedness is paid
in full, such payment or distribution shall be held in trust
for the benefit of and shall be paid over to the Trustee on
behalf of the holders of Senior Indebtedness, as their
interests may appear, for application to the payment of all
Senior Indebtedness until all Senior Indebtedness shall have
been paid in full after giving effect to any concurrent
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payment or distribution to the holders of Senior Indebtedness
in respect of such Senior Indebtedness.
(ii) If (A) a bankruptcy, reorganization, insolvency, receivership or
similar proceeding relating to the Obligor or its property (a
"Reorganization Proceeding") is commenced and is continuing and
(B) the Holder does not file proper claims or proofs of claim in
the form required in a Reorganization Proceeding prior to 45 days
before the expiration of the time to file such claims, then (1)
upon the request of the Trustee, the Holder shall file such
claims and proofs of claim in respect of the Subordinated Notes
and execute and deliver such powers of attorney, assignments and
proofs of claim or proxies as may be directed by the Trustee to
enable it to exercise in the sole discretion of the Trustee any
and all voting rights attributable to the Subordinated Notes
which are capable of being voted (whether by meeting, written
resolution or otherwise) in a Reorganization Proceeding and
enforce any and all claims upon or in respect of the Subordinated
Notes and to collect and receive any and all payments or
distributions which may be payable or deliverable at any time
upon or in respect of the Subordinated Notes, and (2) whether or
not the Trustee shall take the action described in clause (1)
above, the Trustee shall nevertheless be deemed to have such
powers of attorney as may be necessary to enable the Trustee to
exercise such voting rights, file appropriate claims and proofs
of claim and otherwise exercise the powers described above for
and on behalf of the Holder.
(c) SUBROGATION. After all Senior Indebtedness is paid in full and until
the Subordinated Notes are paid in full, the Holder shall be subrogated to the
rights of the holders of Senior Indebtedness. For purposes of this Section 3(c),
a distribution made under this Section 3 to holders of Senior Indebtedness which
otherwise would have been made to the Holder, or a payment made by the Holder to
holders of Senior Indebtedness in respect of a turnover obligation under this
Section 3, is not, as between the Obligor and such holder, a payment by the
Obligor on Senior Indebtedness.
(d) RELATIVE RIGHTS. This Section 3 defines the relative rights of the
Holder and the holders of Senior Indebtedness. Nothing in this Section 3 shall:
(i) impair, as between the Obligor and the Holder, the obligation of
the Obligor, which is absolute and unconditional, to pay the
principal of and interest on the Subordinated Notes in accordance
with their terms; or
(ii) affect the relative rights of the Holder and creditors of the
Obligor other than the holders of Senior Indebtedness; or
(iii) affect the relative rights of the holders of Senior Indebtedness
among themselves; or
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(iv) prevent the Holder from exercising its available remedies upon a
default, subject to the rights of the holders of Senior
Indebtedness to receive cash, property or other assets otherwise
payable to the Holder.
(e) SUBORDINATION MAY NOT BE IMPAIRED.
(i) No right of any holder of Senior Indebtedness to enforce the
subordination of indebtedness evidenced by the Subordinated Notes
shall in any way be prejudiced or impaired by any act or failure
to act by the Obligor or by any such holder or the Trustee, or by
any non-compliance by the Obligor with the terms, provisions or
covenants herein, regardless of any knowledge thereof which any
such holder or the Trustee may have or be otherwise charged with.
Neither the subordination of the Subordinated Notes as herein
provided nor the rights of the holders of Senior Indebtedness
with respect hereto shall be affected by any extension, renewal
or modification of the terms, or the granting of any security in
respect of, any Senior Indebtedness or any exercise or
non-exercise of any right, power or remedy with respect thereto.
(ii) The Holder agrees that all indebtedness evidenced by the
Subordinated Notes will be unsecured by any Lien upon or with
respect to any property of the Obligor.
(iii) The Holder agrees not to exercise any offset or counterclaim or
similar right in respect of the indebtedness evidenced by the
Subordinated Notes except to the extent payment of such
indebtedness is permitted and will not assign or otherwise
dispose of the Subordinated Notes or the indebtedness which it
evidences unless the assignee or acquiror, as the case may be,
agrees to be bound by the terms of this Agreement.
(f) HOLDER ENTITLED TO RELY. Upon any payment or distribution pursuant to
this Section 3, the Holder shall be entitled to rely (i) upon any order or
decree of a court of competent jurisdiction in which any proceedings of the
nature referred to in Section 3(b) are pending, (ii) upon a certificate if the
liquidating trustee or agent or other person in such proceedings making such
payment or distribution to the Holder or its representative, if any, or (iii)
upon a certificate of the Trustee or any representative (if any) of the holders
of Senior Indebtedness for the purpose of ascertaining the persons entitled to
participate in such payment or distribution, the holders of the Senior
Indebtedness and other indebtedness of the Obligor, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Section 3.
4. ENFORCEABILITY. Each of the Obligor and the Holder represents and
warrants that this Agreement has been duly authorized, executed and delivered by
each of the Obligor and the Holder and constitutes a valid and legally binding
obligation of each of the Obligor and the Holder, enforceable in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles; and on the date
hereof, the Holder
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shall deliver an opinion or opinions of counsel to such effect to the
Trustee for the benefit of the holders of the Securities.
5. MISCELLANEOUS.
(a) Until payment in full of all the Senior Indebtedness, the Obligor and
the Holder agree that no amendment shall be made to either of the Subordinated
Notes which would affect the rights of the holders of the Senior Indebtedness
hereunder.
(b) This Agreement may not be amended or modified in any respect, nor may
any of the terms or provisions hereof be waived, except by an instrument signed
by the Obligor, the Holder and the Trustee.
(c) This Agreement shall be binding upon each of the parties hereto and
their respective successors and assigns and shall inure to the benefit of the
Trustee and each and every holder of Senior Indebtedness and their respective
successors and assigns.
(d) This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
(e) The Holder and the Obligor each hereby irrevocably agrees that any
suits, actions or proceedings arising out of or in connection with this
Agreement may be brought in any state or federal court sitting in The City of
New York or any court in the Province of Quebec and submits and attorns to the
non-exclusive jurisdiction of each such court.
(f) The Holder and the Obligor will whenever and as often as reasonably
requested to do so by the Trustee, do, execute, acknowledge and deliver any and
all such other and further acts, assignments, transfers and any instruments of
further assurance, approvals and consents as are necessary or proper in order to
give complete effect to this Agreement.
(g) Each of the Holder and the Obligor irrevocably appoints CT Corporation
System, as its authorized agent in the State of New York upon which process may
be served in any such suit or proceedings, and agrees that service of process
upon such agent, and written notice of said service to CT Corporation System, by
the person serving the same to the addresses listed below, shall be deemed in
every respect effective service of process upon the Holder or the Obligor, as
applicable, in any such suit or proceeding.
If to the Obligor:
Sun Media Corporation
000 Xxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx X0X 0XX
Xxxxxx
If to the Holder:
Quebecor Media Inc.
000 Xxxxx-Xxxxxxx Xxxxxx
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Xxxxxxxx, Xxxxxx X0X 0X0
Xxxxxx
Each of the Holder and the Obligor further agrees to take any and all
action as may be necessary to maintain such designation and appointment of such
agent in full force and effect for a period of ten years from the date of this
Agreement.
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IN WITNESS WHEREOF, the Obligor and the Holder each have caused this
Agreement to be duly executed.
SUN MEDIA CORPORATION
By: /s/ Kin-Man Xxx
---------------------------------------
Name: Kin-Man Xxx
Title: Vice President, Corporate
Controller
SUBORDINATION AGREEMENT SIGNATURE PAGE
QUEBECOR MEDIA INC.
By: /s/ Louis Saint-Arnaud
---------------------------------------
Name: Louis Saint-Arnaud
Title: Vice-president, Affaires
juridiques et Secretaire
By: /s/ Xxxxxxxx Xxxxxxxx
--------------------------------------
Name: Xxxxxxxx Xxxxxxxx
Title: Directeur, Secretariat
corporatif et Secretaire
adjoint
SUBORDINATION AGREEMENT SIGNATURE PAGE
Acknowledged and agreed to
as of the date set forth above
NATIONAL CITY BANK
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President
SUBORDINATION AGREEMENT SIGNATURE PAGE
