EXHIBIT 10.10
SUN MEDIA (TORONTO) CORPORATION
12.25% Convertible Obligation ("Cancap") due November 28, 2008
CDN $350,000,000 November 28, 2002
FOR VALUE RECEIVED, the undersigned, SUN MEDIA (TORONTO) CORPORATION, a
company continued and existing under the COMPANY ACT (British Columbia) (the
"ISSUER"), hereby promises to pay to SUN MEDIA CORPORATION, a company
organized and existing under the COMPANY ACT (British Columbia), or its
assigns (in each case, the "HOLDER"), the sum of 350,000,000 Canadian Dollars
(the "FACE AMOUNT") on November 28, 2008, with interests ("COUPON PAYMENTS")
on the unpaid balance thereof at the rate of 12.25% per annum from the date
hereof. The Coupon Payments shall be payable (subject to Section 2(b) hereof)
semi-annually on January 14 and July 14 of each year (the first Coupon
Payment, which shall be of $5,520,890.41 and payable on January 14, 2003, and
the last Coupon Payment which shall be of $16,092,808.22 and payable November
28, 2008), until the Face Amount hereof shall become due and payable.
This 12.25% Convertible Obligation due November 28, 2008 (together with
any security issued upon transfer or exchange of or in substitution for this
Convertible Obligation, in each case, the "CANCAP") is an obligation of the
Issuer. The Holder of the Cancap will be deemed, by its acceptance of such
Cancap, to have agreed to all of the provisions thereof.
1. DEFINITIONS. The following are definitions which apply to the
Cancap:
"CREDIT FACILITY" means the amended and restated credit agreement dated as of
April 1, 2000, as amended from time to time, between the Issuer (as
borrower), the financial institutions identified therein (as lenders), Royal
Bank of Canada (as administrative agent) and Credit Suisse First Boston
Canada (as documentation agent).
"CONVERSION PRICE" means the fair market value per share (as defined
hereinafter) at the time of a conversion pursuant to Section 6 hereof, as
determined in good faith by the Board of Directors of the Issuer;
"SHARE PAYMENT PRICE" means the fair market value per Share at the time of a
share payment pursuant to Section 2(c) hereof, as determined in good faith
by the Board of Directors of the Issuer; and
"SHARES" means fully-paid and non-assessable common shares of the capital
stock of the Issuer or its successor, and "SHARE" means one (1) such share.
2. (a) CASH PAYMENT. Subject to Sections 2(c) and 6(a), payments with
respect to the Cancap shall be made in lawful money of Canada. Payments due
and payable on the Cancap shall be made, without the presentment or surrender
of any Cancap, by wire transfer or such other method, and at such
address in Canada (the "PLACE OF PAYMENT"), as shall be specified by the
Holder in a notice given at any time and from time to time to the Issuer.
(b) PAYMENT DEFERRAL OPTION. The Issuer may elect to defer, at any
time and from time to time, Coupon Payments on the Cancap by extending the
Coupon Payment period on the Cancap for a period (each such period, an
"EXTENSION PERIOD") of up to twelve (12) consecutive semi-annual periods;
provided, however, that no Extension period may extend beyond November 28,
2008.
(c) SHARE PAYMENT OPTION. The Issuer may at any time, at its
option, elect to satisfy its obligation to pay deferred semi-annual and the
final Coupon Payment amounts by issuing and delivering to the Holder, for
each portion of $1,000 of Coupon Payment owed under the Cancap, the number of
Shares obtained by dividing $1,000 by the Share Payment Price.
3. OPTIONAL REDEMPTION. The Cancap is redeemable at the option of the
Issuer, in whole at any time or in part from time to time, at a redemption
price equal to the then outstanding Face Amount (or portion thereof called
for redemption, as the case may be), together, in each case, with accrued and
unpaid Coupon Payments, if any, to the redemption date.
In order to effect an optional redemption, the Issuer shall provide to
the Holder a notice of redemption of at least one (1) business day. On and
after any redemption date, Coupon Payments will cease to accrue on the Cancap
or portion thereof called for redemption.
4. MANDATORY REDEMPTION. (a) The occurrence of any of the following
shall constitute a "MANDATORY REDEMPTION EVENT":
(1) any failure to pay the Face Amount of the Cancap when due and
payable (whether at maturity or a date fixed for redemption or by declaration
or otherwise);
(2) any failure to pay any Coupon Payment on the Cancap when due
and payable, which failure continues for a period of thirty (30) days;
(3) any failure to perform any other obligation under the Cancap,
which failure continues for more than thirty (30) days after receipt by the
Issuer of a notice from the Holder describing such failure in reasonable
detail;
(4) the Issuer (i) 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, reorganisation or arrangement or
any other petition in bankruptcy or for liquidation or to take advantage of
any bankruptcy, insolvency, 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
any substantial part of its assets or (v) takes corporate action for the
purpose of the foregoing; or
(5) a court or other governmental authority of competent
jurisdiction enters an order (i) appointing a custodian, receiver, trustee or
other officer with similar powers with respect to the issuer or any
substantial part of its assets, (ii) for relief or approving a petition for
relief, reorganization or any other petition in bankruptcy or for liquidation
of the issuer or to take advantage of any bankruptcy, insolvency,
reorganization, moratorium, or other similar law of any jurisdiction or (iii)
for the dissolution, winding-up or liquidation of the Issuer, or any such
petition shall be filed against the Issuer and not be dismissed within ninety
(90) days.
(b) The Cancap is not redeemable at the option of the Holder upon any
Mandatory Redemption Event prior to May 15, 2007. From and after May 15,
2007, the Cancap is not redeemable at the option of the Holder upon any
Mandatory Redemption Event unless (i) no amounts are outstanding under the
Credit Facility, (ii) the administrative agent under the Credit Facility has
already demanded payment of amounts owing under the Credit Facility, or (iii)
if amounts are outstanding under the Credit Facility, not less than ninety
(90) days' advance notice of the Mandatory Redemption Event has been given to
the administrative agent under the Credit Facility. Subject to the foregoing,
if any Mandatory Redemption Event has occurred and is continuing, the Holder
may, by written notice to the Issuer, declare the Cancap to be immediately
due and payable to the holder. In any such case, the Cancap will mature, and
all amounts payable with respect thereto shall become immediately due and
payable, without presentment, demand, protest or further notice, all of which
are hereby waived.
(c) At any time after the Cancap has been declared immediately due and
payable, the Holder may, by notice to the Issuer, rescind such declaration
and its consequences; PROVIDED THAT (i) no judgment or decree shall have been
entered for the payment of the Cancap by reason of such declaration, (ii) the
Issuer shall have paid all amounts then due and payable (other than by virtue
of such declaration) with respect to the Cancap, and (iii) all non-monetary
Mandatory Redemption Events, if any, shall have been waived by the holder of
shall have been cured.
5. RANKING. The obligations of the Issuer under the Cancap are subordinated
in right of payment to the prior payment in full of all existing and future
indebtedness of the Issuer. The holders of all other indebtedness of the
Issuer will be entitled to receive payment in full of all amounts due on or
in respect of all other indebtedness of the Issuer before the Holder is
entitled to receive or retain payment of any kind on the Cancap.
6. CONVERTIBILITY. (a) By giving a notice (a "CONVERSION NOTICE") to the
Holder at any time prior to the close of business on November 27, 2008 or the
business day immediately preceding the date of a redemption, as the case may
be, the Issuer may elect to convert all or any part of the unpaid Face Amount
and accrued and unpaid Coupon Payments into Shares at the Conversion Price,
the number of which Shares shall be determined by dividing the amount to be
so converted by the
Conversion Price. Until the Issuer converts any unpaid Face Amount and
accrued and unpaid Coupon Payments to Shares, the Holder shall have under
this Section 6 none of the rights or obligations of a shareholder of the
Issuer.
(b) RESERVED SHARES; REGISTRATION, LISTING, ETC. The Issuer shall reserve
(if at any time its articles limit the number of authorized Shares) and at
all times keep available, solely for the purpose of delivery upon conversion
of the Cancap as provided in this Section 6, such number of Shares as would
then be deliverable at the Conversion Price upon the conversion of the
Cancap, which Shares would then be deliverable at the Conversion Price upon
the conversion of the Cancap, which Shares would be upon delivery duly and
validly issued and fully paid and non-assessable. If any such Shares require
registration with or approval of any governmental authority under any
applicable law or listing upon any national securities exchange before such
shares maybe issued and delivered upon conversion, the Issuer shall use its
best efforts to cause such Share to be duly registered, approved and listed,
as the case may be.
(c) CONVERSION PROCEDURE. Each Conversion Notice shall specify (a) the
unpaid Face Amount of the Cancap, (b) accrued and unpaid Coupon Payments
payable theron, (c) the Conversion Price and (d) the number of Shares to be
issued and delivered upon conversion. The Issuer shall, within the (10) days
of sending any Conversion Notice (or at such later time as to which the
Issuer and the Holder may agree) deliver to the Holder at the Place of
Payment, against surrender of the Cancap owned by the Holder, (i) at the
Issuer's expense (including any stamp taxes or similar governmental charges),
the appropriate number of duly and validly issued and fully paid and
non-assessable Shares and one (1) or more stock certificates therefor (in
such number and registered in such names as the Holder may direct, provided
that if Shares are to be registered in the name of a person other than the
Holder, the Holder shall take all steps necessary to ensure that such
registration and any transfer resulting therefrom does not breach any
applicable provision of securities law or stock exchange rule) and (ii) to
the extent of any unpaid Face Amount of the Cancap after giving effect to
such conversion (and at the Issuer's expense), one (1) Cancap (registered in
such name as the Holder may direct) in substantially the form, and in
aggregate face amount equal to the such unpaid Face Amount of, such
surrendered Cancap. Each new Cancap shall be dated the date to which the
Coupon Payment shall have been paid on such surrendered Cancap and future
Coupon Payments shall accrue from such date.
7. MISCELLANEOUS.
(a) NOTICES. Except as specifically provided elsewhere herein, notices and
other communications required or permitted to be given hereunder will be
effective when in writing and delivered by hand, mail, recognized overnight
courier or telecopier, addressed as follows or to such other addresses as
shall be specified by notice:
(1) If to the Issuer:
Sun Media (Toronto) Corporation
000, Xxxx Xxxxxx Xxxx
Toronto (Ontario) M5A 3X5
Attention: Treasurer
Telecopier Number: (000) 000-0000
(2) If to the Holder:
Sun Media Corporation
000, Xxxx Xxxxxx Xxxx
Xxxxxxx (Xxxxxxx) M5A 3X5
Attention: Vice President, Finance and chief financial officer
Telecopier Number: (000) 000-0000
(b) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the Province of Quebec and the laws of Canada
applicable therein.
(c) SUCCESSORS AND ASSIGNS. The respective rights and obligations of the
Issuer and of the Holder hereunder shall be binding upon and inure to the
benefit of their respective successors and assigns, PROVIDED THAT the Holder
hereunder may only assign the totality of the unpaid balance of the Face
Amount hereof at the time of an assignment.
Without restricting the foregoing, the Issuer and the Holder acknowledge
and agree that the Cancap shall be binding upon, and be an obligation of, any
corposation with which the Issuer may amalgamate.
(d) SEVERABILITY. Any provision of the Cancap that is held invalid, illegal
or unenforceable in any jurisdiction shall not affect the validity, legality
or enforceability of the other provisions of the Cancap in such jurisdiction
or any provision of the Cancap in any other jurisdiction. The Issuer and the
holder shall endeavour in good-faith negotiations to replace any invalid,
illegal or unenforceable provisions with valid, legal and enforceable
provisions, as the case may be, the economic effect of which shall, taken
together with the other provisions of the Cancap, come as close as possible
to the economic effects the parties intended by the Cancap and the
transactions contemplated thereby.
(e) COUNTERPARTS. The Cancap and any instrument or other document executed
in connection therewith may be executed in any number of counterparts, each
of which shall be original but all of which together shall constitute one (1)
instrument or other document, as the case may be.
(f) LOSS. In the event the Cancap is misplaced, lost or stolen, the Issuer
shall upon demand, issue and deliver, without cost, to the Holder a new
Cancap identical to this one, as replacement thereof.
IN WITNESS WHEREOF, each of the undersigned has caused its duly authorized
representative to execute this Agreement as of the date first written above.
ISSUER
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SUN MEDIA (TORONTO) CORPORATION
By:
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Name: Xxx-Xxx Xxx
Title: Vice President, Corporate Controller
HOLDER
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SUN MEDIA CORPORATION
By:
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Name: Xxxxxx Xxxxxxxxx
Title: President & Chief Executive Officer
