EXHIBIT 10.10
SUBORDINATION AGREEMENT
This SUBORDINATION AGREEMENT is dated as of January 16, 2004 (the
"Agreement").
To: Xxxxx Fargo Bank Minnesota, N.A., for itself and as trustee under the
Indenture referred to below for the holders of the Notes (the "Trustee")
Videotron (1998) ltee (the "Obligor"), as obligor under a subordinated loan
agreement dated as of January 16, 2004 entered into by the Obligor and Quebecor
Media Inc. in respect of a subordinated loan in the principal amount of
CDN$1,100,000,000 (the "Subordinated Security"), and Quebecor Media Inc., as
holder (the "Holder") of the Subordinated Security, for ten dollars and other
good and valuable consideration received by each of the Obligor and the Holder
from the Trustee and any other Representative 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 Security, 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) "Representative" means the agent (including an administrative agent),
trustee or representative of holders of Senior Indebtedness.
(d) "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) any Credit Facilities (as defined in the
Indenture) of Videotron ltee ("Videotron").
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 October 8, 2003 (the "Indenture"; capitalized terms used herein
without definition having the meanings set forth therein) among Videotron, the
Subsidiary Guarantors and the Trustee. Pursuant to the Indenture, Videotron has
issued and the Subsidiary Guarantors have guaranteed, 6 7/8% Senior Notes due
January 15, 2014 of Videotron.
3. SUBORDINATION. The indebtedness or obligation represented by the
Subordinated Security 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 or obligation evidenced
by the Subordinated Security (including, without limitation, principal,
interest, premium, redemption or retraction amount, dividend, 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 and/or other Representative 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 any amount owing in respect
of the Subordinated Security (including, without limitation,
principal, interest, premium, redemption or retraction amount, or
dividend);
(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 absolutely to the holders of Senior Indebtedness
(equally and ratably among the holders of Senior Indebtedness) 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 and/or other
Representative 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 and/or other Representative
on behalf of the holders of Senior Indebtedness (equally and
ratably among 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 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 Security
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 Security 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 Security 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 Security, 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) 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 make the
payments required by the Subordinated Security in accordance with
its 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
(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.
(d) Subordination May Not Be Impaired.
(i) No right of any holder of Senior Indebtedness to enforce the
subordination of indebtedness or obligation evidenced by the
Subordinated Security 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 Security 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 or obligation evidenced by
the Subordinated Security 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 or obligation
evidenced by the Subordinated Security except to the extent
payment of such indebtedness or obligation is permitted and will
not assign or otherwise dispose of the Subordinated Security or
the indebtedness or obligation which it evidences unless the
assignee or acquiror, as the case may be, agrees to be bound by
the terms of this Agreement.
(e) 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 of 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 and/or other 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 that, in
the case of a Subordinated Security made or issued by Videotron or a Subsidiary
Guarantor, on the date hereof, the Holder shall deliver an opinion or opinions
of counsel to such effect to the Trustee for the benefit of the holders of the
Senior Indebtedness under the Indenture.
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 the Subordinated Security
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 and/or other Representative (if any).
(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/or other Representative (if any) 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 and/or other Representative (if any), 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:
Xxxxxxx Xxxxxxxxxx
Vice President, Control
Videotron (1998) ltee
000 Xxxxx Xxxxxx Xxxx
Xxxxxxxx, Xxxxxx X0X 0X0
Tel.: 000.000.0000
Fax: 000.000.0000
If to the Holder:
Xxxx X'Xxxxx
Vice President and Treasurer
Quebecor Media Inc.
000 Xxxxx Xxxxxx Xxxx
Xxxxxxxx, Xxxxxx X0X 0X0
Tel.: 000.000.0000
Fax: 000.000.0000
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 so long as any Notes or Exchange Notes (including any
Additional Notes) remain outstanding.
IN WITNESS WHEREOF, the Obligor and the Holder each have caused this
Agreement to be duly executed.
VIDEOTRON (1998) LTEE
By: /s/ XXXXXXX XXXXXXXXXX
----------------------------------------------
Name: Xxxxxxx Xxxxxxxxxx
Title: Vice President, Control
QUEBECOR MEDIA INC.
By: /s/ XXXX X'XXXXX
----------------------------------------------
Name: Xxxx X'Xxxxx
Title: Vice President and Treasurer
