Exhibit 4.12
ON THIS fourth (4th) day of February, TWO THOUSAND AND THREE (2003)
BEFORE MTRE. CATHERINE BOLDUC, the undersigned Notary for the Province of
Quebec, practicing in the City of Montreal.
APPEARED:
3351611 CANADA INC., a corporation existing under the laws of Canada, having its
registered office at 300 Viger Avenue, Montreal, Quebec, H2X 2W4, herein acting
and represented by Claudine Tremblay, its Assistant Secretary, duly authorized
pursuant to a resolution of its board of directors dated the thirtieth (30th)
day of January, two thousand and three (2003), a certified copy or duplicate of
which is annexed hereto after having been acknowledged as true and signed for
identification by the said representative with and in the presence of the
undersigned Notary,
hereinafter called the "GRANTOR"
AND:
BANK OF AMERICA, N.A., a Schedule III Bank governed by the BANK ACT (Canada),
having an office at 200 Front Street West, Suite 2700, Toronto, Ontario M5V 3L2,
herein acting (i) for its own benefit as a lender, and as agent for the other
present and future lenders, under the Credit Agreement as hereinafter defined
(the "LENDERS"), and (ii) as the "FONDE DE POUVOIR" of, or person holding the
power of attorney for, the Debentureholders (as hereinafter defined) pursuant to
Article 2692 of the CIVIL CODE OF QUEBEC (the "CIVIL CODE"), herein acting and
represented by Robert Campbell, its mandatary, duly authorized as he so
declares, having a notice of address in the list of addresses included in the
register of personal and movable real rights (the "RPMRR") under the number
022824, and any successor thereto in such capacities
hereinafter called the "AGENT"
WHEREAS the Grantor will be party to a guarantee agreement to be dated as of or
around February 7, 2003 among the Grantor, the other Guarantors party thereto
and the Agent (the "GUARANTEE"), securing the due and punctual payment of all
present and future debts and liabilities, and the performance of all obligations
of every nature, absolute or contingent, direct, indirect or otherwise, in any
currency, now or at any time and from time to time hereafter due or owing by Sun
Media Corporation to the Agent and each Lender arising under or in connection
with the Credit Documents as defined in a credit agreement dated as of February
7, 2003 among Sun Media Corporation, as Borrower, the financial institutions
named on the signature pages thereto, as Lenders, and the Agent, as
Administrative Agent (as same
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may subsequently be amended, amended and restated, modified, supplemented or
replaced from time to time, the "CREDIT AGREEMENT");
WHEREAS, to secure its obligations under the Guarantee, the Grantor will issue
and execute a Debenture or series of Debentures to be dated on or about February
7, 2003 (as amended, restated, renewed, re-issued, supplemented or modified from
time to time, the "DEBENTURES") in favour of the holders, from time to time, of
the Debentures (the "DEBENTUREHOLDERS"), payable on demand in the principal
amount of Six Hundred Million Dollars ($600,000,000) in lawful currency of
Canada;
WHEREAS, pursuant to Section 10.12 of the Credit Agreement, the Agent is
conferred the legal status of FONDE DE POUVOIR of all present and future Lenders
and the Debentureholders under Article 2692 of the Civil Code; and
WHEREAS, in order to secure the punctual payment and performance of the
Grantor's obligations to the Debentureholders pursuant to the Debentures, the
Grantor has agreed to execute and deliver the present Deed of Movable Hypothec
(hereinafter called "THIS DEED") in favour of the Agent;
NOW, THEREFORE, THIS DEED WITNESSETH:
1. HYPOTHEC
As security for the Secured Obligations, as defined in Article 5, the
Grantor hereby hypothecates and, to the extent necessary or useful, particularly
but without limitation with respect to incorporeal property, property located
outside of the Province of Quebec or property used in more than one
jurisdiction, creates a security interest in (the hypothec and the security
interest are hereinafter collectively called the "HYPOTHEC") the Charged
Property (as defined in Article 2) in favour of the Agent for a principal amount
of SIX HUNDRED MILLION DOLLARS ($600,000,000) plus an additional amount equal to
twenty percent (20%) thereof to secure unpaid interest not otherwise secured and
all costs, accessories and incidental expenses, the whole with interest from the
date of this Deed at the rate of TWENTY-FIVE percent (25%) per annum, calculated
daily and compounded monthly, with interest on overdue interest calculated at
the same rate and in the same manner.
The Hypothec shall have effect whether or not the monies thereby
ultimately secured shall be received by the Borrower before or after or at the
same time as the issue of any of the Debentures intended to be thereby secured
or any part thereof, or before, after or upon the date of the execution of this
Deed. The Hypothec shall be valid and shall subsist notwithstanding that the
Debentures, or any of them, may not have been issued at the date hereof and
shall be valid and shall secure all obligations of the Grantor under any
Debentures hereafter issued, including any Debentures issued in replacement or
exchange of any of the Debentures, in whole or in part.
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2. DESCRIPTION OF CHARGED PROPERTY
The property charged by the Hypothec (the "CHARGED PROPERTY") consists
of the universality of all of the Grantor's movable property, present and
future, corporeal and incorporeal, of whatsoever nature or kind and wherever
situate, including without limitation:
2.1 INVENTORY
The universality of property consisting of:
All inventory of every nature and kind of the Grantor whether in its
possession, in transit or held on its behalf, including raw materials,
work in process, finished goods (whether manufactured or transformed by
the Grantor or by others), all packaging materials, all property of the
Grantor held, possessed or detained by a third party under a lease,
loan, deposit, licence, franchise, or other agreement entered into with
or on behalf of the Grantor, all property evidenced by bill of lading,
all mineral substances, hydrocarbons and other products of the soil, as
well as all fruits thereof from the time of their extraction, and all
other similar property, whether corporeal or incorporeal (hereinafter
called the "INVENTORY").
Property forming part of the Inventory which is conditionally alienated
by the Grantor (for example, by way of an instalment or conditional
sales contract) shall remain charged with the Hypothec until title is
transferred to the acquirer. If the ownership of any Inventory reverts
to the Grantor pursuant to the resolution or resiliation of any
agreement or otherwise it shall also be subject to the Hypothec.
2.2 CLAIMS AND OTHER MOVABLE PROPERTY
The universality of property consisting of:
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(a) CLAIMS
All of the Grantor's claims of every nature and kind, whether
or not such claims: (A) are certain, liquid or exigible; (B)
are litigious; (C) have previously been or are to be invoiced;
(D) constitute book debts; or (E) are evidenced by any title,
bill of exchange or draft, negotiable or otherwise; and
specifically including: (i) indemnities payable to the Grantor
under any contract of insurance of property, of persons, or of
liability insurance, and (ii) the Grantor's rights in the
credit balance of accounts held for its benefit either by the
Agent (subject to the Agent's compensation rights) or by any
financial institution or other person;
(b) CONTRACT RIGHTS AND RIGHTS OF ACTION
All of the Grantor's rights under contracts with third persons
as well as all of the Grantor's rights of action against third
persons, provided that if, in respect of any contractual right
of which the hypothecation is contemplated hereby, there
exists a provision in the contract creating such right to the
effect that such right cannot be assigned, leased,
hypothecated or otherwise charged without the prior consent or
approval of another party to such contract or any other
person, such right shall not be charged by the Hypothec until
such consent or approval is given;
(c) ACCESSORIES
The hypothecs, security, suretyships and accessories to the
claims and rights described above and other rights relating
thereto (including, without limitation, the rights of the
Grantor in its capacity as seller of any property, whether
Inventory or not, under an instalment or conditional sale,
where the claims are the result of such sale);
hereinafter collectively called the "CLAIMS" and individually a
"CLAIM". No right or Claim shall be excluded from the Charged Property
merely because: (i) the debtor thereof is domiciled outside the
Province of Quebec; or (ii) the debtor thereof is an affiliate (as such
term is defined in the CANADA BUSINESS CORPORATIONS ACT) of the Grantor
(regardless of the law of the jurisdiction of its incorporation); or
(iii) such right or Claim is not related to the operation of an
enterprise.
2.3 INTELLECTUAL PROPERTY AND RIGHTS
The universality of property consisting of all intellectual property
rights of the Grantor of every nature whatsoever, including without
limitation all copyrights, trademarks, trade names and patents,
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whether or not registered, and in particular, without limiting the
generality of the foregoing, the intellectual property rights described
in Schedule I below.
2.4 SECURITIES
The universality of property consisting of all securities of the
Grantor (including without limitation shares, options, rights,
warrants, derivative products such as swap agreements, foreign exchange
futures contracts and others (to the extent not already charged under
subsection 2.2 (b)), units, bonds and similar instruments) and any
instrument which would constitute a "security" within the meaning of
the SECURITIES ACT (Quebec) issued or to be issued in favour of the
Grantor (the "SECURITIES").
2.5 EQUIPMENT AND ROAD VEHICLES
The universality of the Grantor's equipment, office furniture, tools,
machinery and rolling stock (including road vehicles of whatsoever
nature and kind).
2.6 NON-INVENTORY INSTALMENT OR CONDITIONAL SALES
The universality of all movable property not constituting Inventory
which is owned by the Grantor and contemplated by an instalment or
conditional sale referred to in subsection 2.2 (c) hereof.
2.7 OTHER PROPERTY
All other movable property of the Grantor not specifically enumerated
hereunder, including all permits, licences, approvals, authorizations,
certificates, rulings, quotas, subsidies, immunities, privileges and
benefits, held or enjoyed by the Grantor insofar as they do not
constitute Claims and are susceptible of hypothecation, together with
all of the goodwill of the Grantor.
2.8 ACCESSORIES, PROCEEDS, REINVESTMENT, REPURCHASE
The universality of property consisting of the proceeds, fruits and
revenues of the Charged Property, including (by way of example and
without limitation) trade-ins, equipment, cash, bank accounts, notes,
negotiable instruments, bills, commercial paper, Securities, monies,
goods, contract rights, compensation for expropriation and any other
movable property, corporeal or incorporeal, received when any Charged
Property is sold, exchanged, collected or otherwise disposed of.
In any case in which the Charged Property includes a universality, any
Charged Property which is acquired, transformed or
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manufactured after the date of this Deed shall be charged by the
Hypothec, whether or not:
(a) such Charged Property has been acquired in replacement of other
Charged Property which may have been alienated by the Grantor in
the ordinary course of business;
(b) such property results from a transformation, mixture or
combination of any Charged Property; or
(c) in the case of Securities, they have been issued pursuant to a
purchase, redemption, conversion, cancellation or any other
transformation of the Securities originally comprised in the
Charged Property,
and without the Agent being required to register or re-register any
notice whatsoever, the object of the Hypothec being a universality of
present and future property.
3. HYPOTHEC ON CLAIMS - ADDITIONAL PROVISIONS
3.1 RECOVERY
Upon and following an Event of Default (as defined below) which
subsists, the Agent may collect all Claims and may exercise all rights
regarding Claims which are available to it. In particular, but without
limitation, the Agent may grant or refuse any consent which may be
required from the Grantor as owner of such Claims, and shall not, in
the exercise of such right, be required to notify or obtain the consent
of the Grantor, nor shall it be under any obligation to establish that
the Grantor has refused or neglected to exercise such rights.
3.2 AUTHORIZATION TO RECOVER
The Agent hereby authorizes the Grantor to collect all Claims. Upon and
following an Event of Default (as defined below) which subsists, such
authorization may be revoked at any time by the Agent immediately upon
notice to the Grantor and the debtor(s) of the Claims in question and
the Agent shall then be free to itself collect any and all Claims. The
Agent may further grant delays, take or abandon any Securities or any
security, transact with debtors of the Claims, make compromises, grant
releases and generally deal in its discretion with matters concerning
all Claims, without the intervention or consent of the Grantor. If,
after such authorization is revoked, any amounts payable on account of
Claims are paid to the Grantor, it shall receive same as mandatary of,
and shall promptly return same to, the Agent, without any demand being
required.
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Subject to the provisions of the Credit Agreement, without limiting the
generality of the foregoing paragraph, the Agent confirms that until
such authorization has been withdrawn, the Grantor may, in the normal
course of business and provided that no Event of Default (as defined
below) has occurred and subsists, give waivers, discharges and releases
in respect of security granted in its favour securing any Claims and
hereby expressly authorizes the Grantor to confirm, on the behalf and
in the name of the Agent, the Agent's consent to such waivers, releases
and discharges to the extent and when such confirmation should prove
necessary for purposes of effecting cancellations of registrations of
any such security in the RPMRR.
3.3 ASSIGNMENT OF CLAIMS SUBJECT TO THE FINANCIAL ADMINISTRATION ACT
As security for the Secured Obligations, the Grantor hereby assigns
absolutely to the Agent all its present and future Claims which are
subject to Sections 67 and 68 of the FINANCIAL ADMINISTRATION ACT
(Canada) and the provisions of the ACT RESPECTING THE MINISTERE DU
REVENU (Quebec). The Agent may, at any time, after the occurrence of an
Event of Default (as defined below) which subsists, fulfil any
formalities required by law to make this assignment enforceable. Claims
assigned in accordance with the provisions of this section shall be
deemed to constitute Charged Property.
4. HYPOTHEC ON SECURITIES - ADDITIONAL PROVISIONS
The Grantor hereby authorizes the Agent, after the occurrence of an Event of
Default (as defined below) which subsists, to transfer any Securities or any
part thereof into its own name or that of its nominee(s) so that the Agent or
its nominee(s) may appear as the sole registered owner thereof, in which case:
(a) all voting rights and any other right attached to the Securities
shall be exercised by or on behalf of the Agent; and
(b) the Agent shall be entitled to receive all revenues, dividends
and capital distributions and shall be free either to hold them
as Charged Property or to apply them in reduction of the Secured
Obligations.
The Agent may, in its discretion, give the Grantor a proxy, revocable
at any time, authorizing it to exercise all voting rights and any other rights
attached to the Securities or any of them.
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5. SECURED OBLIGATIONS
The Grantor hereby acknowledges that the obligations of the Grantor
towards the Debentureholders under the Debentures are to be secured by the
Hypothec. The Grantor acknowledges that the Debentures will constitute titles of
indebtedness as such term is used in Article 2692 of the Civil Code.
In this Deed, the term "SECURED OBLIGATIONS" means (i) the due payment
of the principal of, and the interest on (including interest on amounts in
default), the Debentures and all other moneys from time to time owing under the
Debentures or hereunder, and (ii) the performance of all obligations of the
Grantor hereunder.
The Grantor shall be deemed to have once again obligated itself to
perform any future obligation forming part of the Secured Obligations in
accordance with the provisions of Article 2797 of the Civil Code.
If, following an Event of Default (as defined below), the proceeds of
realization of the Charged Property are not sufficient to satisfy all Secured
Obligations, the Grantor acknowledges and agrees that the Grantor shall continue
to be liable for any remaining Secured Obligations and the Agent shall remain
entitled to full payment thereof.
6. REPRESENTATIONS AND WARRANTIES
The Grantor hereby reaffirms and renews the representations and
warranties made on its behalf by the Borrower in the Credit Agreement (which
representations and warranties are hereby deemed to have been made by the
Grantor and to be and remain in effect at all times, except where qualified in
the Credit Agreement as being made as at a particular date), and hereby
represents and warrants the following:
6.1 DOMICILE
The domicile of the Grantor is located in the Province of Quebec.
7. COVENANTS
The Grantor reiterates the covenants made on its behalf by the Borrower
in the Credit Agreement and in addition hereby covenants and agrees as follows:
7.1 PAYMENT OF LEGAL FEES AND OTHER EXPENSES
The Grantor shall, subject to any limitations stipulated in the Credit
Agreement:
(a) pay all costs and expenses related to the negotiation, drafting
and implementation of this Deed as well as any amendments,
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renunciations, consents or examinations pertaining hereto,
including title examinations, and to the exercise of all rights
created hereby, as well as all costs and expenses incurred to set
up the rights of the Agent against third persons, and all
discharge fees. Such costs and expenses shall include all fees
and expenses of consultants, mandataries or legal counsel
retained in case of default, as well as administrative fees; and
(b) reimburse the Agent for all costs and expenses incurred by it for
the purpose of carrying out the Grantor's obligations or of
exercising its rights,
provided, however, that the obligations arising from this Section 7.1
shall not exceed twenty per cent (20%) of the principal amount of the
Hypothec.
8. EVENT OF DEFAULT; ACCELERATION
The Grantor shall be in default hereunder upon (i) the failure of the
Grantor, upon the occurrence and continuance of an Event of Default as defined
in the Credit Agreement, to duly pay to the Agent or its order, on demand, all
moneys from time to time owing under the Debentures, such failure constituting
an "EVENT OF DEFAULT" hereunder. Upon the occurrence of an Event of Default, the
Agent may request the immediate payment of all of the Secured Obligations, and
may exercise all of the recourses to which it may be entitled in case of default
under law or hereunder, including its hypothecary rights.
9. AGENT'S RECOURSES UPON DEFAULT
9.1 SURRENDER
The Grantor undertakes, immediately upon receipt of a prior notice
within the meaning of the Civil Code, to voluntarily surrender the
Charged Property to the Agent.
9.2 COMPLETION OF CHARGED PROPERTY AND USE OF GRANTOR'S PREMISES
The Agent may use the Charged Property and the Agent may, for that
purpose, to the extent that the Agent determines that it may be
beneficial or profitable to its realization of the Charged Property,
acquire other property. Any expenses incurred by the Agent in
connection with the foregoing shall be borne by the Grantor and shall
form part of the Secured Obligations. Notwithstanding the foregoing,
the Agent shall not be bound to continue to exploit the Grantor's
enterprise, to make any productive use of the Charged Property, or to
maintain the Charged Property in operating condition.
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9.3 ADDITIONAL RIGHTS
In order to protect or to realize upon the Charged Property, the Agent
shall be free, at the Grantor's expense, to do any or all of the
following:
(a) alienate or dispose of any Charged Property which may be
obsolete, may perish or is likely to depreciate rapidly;
(b) perform any of the Grantor's obligations;
(c) exercise any right attached to the Charged Property;
(d) acquire the Charged Property.
The Agent shall not be bound to exercise the same hypothecary rights
against all of the Charged Property, and may exercise different rights
against different types of Charged Property or even against different
elements of the Charged Property which form part of the same
universality.
9.4 GOOD FAITH
The Agent shall exercise its rights in good faith, in a reasonable
manner, taking into account all circumstances, in order to attempt to
reduce the obligations of the Grantor to the Agent.
9.5 RELATIONS WITH THE GRANTOR AND OTHERS
The Agent may grant extensions of time and other indulgences, take and
give up security, accept compositions, grant releases and discharges
and otherwise deal with the Grantor, with other parties and with the
Charged Property as the Agent may see fit without diminishing the
liability of the Grantor and without prejudice to the Agent's rights
pursuant to this Deed.
9.6 NO SECURITY BY AGENT
The Agent shall not be bound to make an inventory, to take out
insurance or to furnish any security of any nature whatsoever.
9.7 SPECIAL PROVISIONS - SALE OF CHARGED PROPERTY
In selling any of the Charged Property, the Agent may conduct sales on
the Grantor's premises or elsewhere and shall have the right to use the
Grantor's premises without charge for such sales for such time as the
Agent may see fit. The Grantor shall, at the request of the Agent,
assemble the Charged Property and make same available to the Agent at
any place designated by the Agent which, in the opinion of the Agent,
is reasonably convenient to the Agent and the Grantor.
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9.8 SPECIAL PROVISIONS - TAKING IN PAYMENT
If the Agent elects to exercise its right to take in payment and the
Grantor requires that the Agent instead sell the Charged Property on
which such right is exercised, the Grantor hereby acknowledges that the
Agent shall not be bound to abandon its action in taking in payment
unless, prior to the expiry of the time period allocated for surrender,
the Agent:
(a) has been granted security satisfactory to it to ensure that the
proceeds of sale of the Charged Property will be sufficient to
enable the Agent to be paid in full;
(b) has been reimbursed for all costs and expenses incurred in
connection with this Deed, including all fees of consultants and
legal counsel; and
(c) has been advanced the necessary sums for the sale of the Charged
Property.
The Grantor further acknowledges that the Agent alone is entitled to
select the type of sale it may wish to conduct or have conducted.
9.9 SALE BY THE AGENT
Where the Agent sells the Charged Property itself, it shall not be
required to obtain any prior valuation by a third party. The Agent may
elect to sell the Charged Property with legal warranty given by the
Grantor or with a complete or partial exclusion of such warranty.
9.10 APPLICATION OF PROCEEDS
Subject only to any applicable provisions of the Civil Code which are
of public order, all monies collected or received by the Agent pursuant
to or in exercise of any right it possesses with respect to Charged
Property shall be applied on account of the Secured Obligations in such
manner as the Agent deems best or, at the option of the Agent, may be
held unappropriated in a collateral account or released to the Grantor,
all without prejudice to the liability of the Grantor or the rights of
the Agent hereunder, and any surplus shall be accounted for as required
by law.
9.11 PROTECTION OF AGENT
Notwithstanding any applicable provision of law to the contrary, in the
context of any realization of the whole of any part of the Charged
Property:
(a) the Agent may act on the opinion or advice of or information
obtained from any advocate, appraiser, evaluator, auditor,
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engineer, surveyor, broker, auctioneer or other expert, whether
obtained by the Agent, the Grantor or otherwise, and the Agent
shall not be responsible for any loss whatsoever occasioned by
acting or not acting thereon, as the case may be, save in the
event of its intentional or gross fault, and it may employ any
third party assistance as may be necessary for the performance of
its duties and may reasonably and adequately compensate such
agents and attorneys for all such information or such legal or
other advice or assistance as aforesaid;
(b) the Agent may appoint, designate or employ as its sub-agents any
attorneys, bankers, receivers, advocates, agents, officers or
other persons and any national firm of independent chartered
accountants of recognized standing in order to act for and in the
name of the Agent in any realization of the whole or any part of
the Charged Property and such sub-agent:
(i) shall only be authorized to act under the terms of demands,
requests or instructions issued or made by the Agent in
respect of any procedure, act, power, right, matter or thing
relating to or granted under the terms of its mandate; and
(ii) may be replaced by any person which the Agent shall have
accepted,
it being expressly understood, however, that the Agent shall not be in
any way responsible for the misconduct of any such sub-agent so
appointed or for any loss whatsoever resulting from such misconduct or
any failing of any such sub-agent, save in the event of its intentional
or gross fault, and the Agent shall not be bound to supervise the
actions of any such sub-agent.
10. ISSUE OF DEBENTURES
10.1 PRINCIPAL AMOUNT
The Debentures which may be created and issued under this Deed are limited to a
principal amount of Six Hundred Million Dollars ($600,000,000) in lawful money
of Canada, and may be created and issued for such amounts and on such terms as
the directors of the Grantor may determine.
10.2 FORM OF DEBENTURES
The Debentures shall be substantially in the following form:
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"DEMAND DEBENTURE
- - , 2003 CDN $600,000,000
The undersigned, 3351611 Canada Inc., a corporation existing under the laws of
Canada (the "CORPORATION"), for value received, hereby promises to pay to the
order of Bank of America, N.A. ("BA"), for its own benefit and on behalf and for
the benefit, and as holder of an irrevocable power of attorney ("FONDE DE
POUVOIR") under Article 2692 of the Civil Code of Quebec, of each of the other
present and future Lenders (BA in the aforesaid capacities, the "AGENT") party
to the Credit Agreement (as defined below), ON DEMAND, at such address or
addresses as the Agent may designate at any time and from time to time by notice
in writing to the Corporation, upon presentation and surrender thereat of this
Debenture, the sum of SIX HUNDRED MILLION DOLLARS ($600,000,000) in lawful money
of Canada, and to pay interest thereon, before as well as after maturity and
both before and after default, from the date of this Debenture, at the same
place, in like money at a rate of TWENTY-FIVE PER CENT (25%) per annum from the
date hereof, together with interest on overdue interest (computed monthly) at
the same rate from its due date to the date of payment. This Debenture (a) is
issued pursuant to the provisions of the Credit Agreement, (b) is secured by a
deed of hypothec made by the Corporation in favour of the Agent and governed by
the laws of the Province of Quebec, and (c) is governed by the laws of the
Province of Quebec.
Notwithstanding the fact that this Debenture is stated to be payable on demand,
payment of this Debenture may not be demanded until the occurrence of an Event
of Default (as defined in the Credit Agreement) which is continuing and which
has not been waived in accordance with the terms of the Credit Agreement.
Furthermore, notwithstanding the fact that this Debenture is in the amount of
$600,000,000 and bears interest at the rate of 25% per annum, the Corporation
shall not have any obligation, at any time, to make payment under this Debenture
for any amount in excess of its indebtedness under the Credit Documents then
outstanding.
"CREDIT AGREEMENT" means that certain credit agreement dated as of February 7,
2003 among the Sun Media Corporation, as Borrower, the financial institutions
named on the signature pages thereto, as Lenders, and Bank of America, N.A., as
Administrative Agent, as same may subsequently be amended, amended and restated,
modified, supplemented or replaced from time to time.
Capitalized terms not otherwise defined in this Debenture have the meaning
ascribed thereto in the Credit Agreement.
This Debenture may be transferred by the Agent only to a successor agent
appointed under and in accordance with the provisions of the Credit Agreement.
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3351611 CANADA INC.
Per:
--------------------------------------------
Name:
Title: "
10.3 PAYMENT OF DEBENTURES
The Debentures shall bear the date of their issuance and shall be payable at the
place indicated therein or at any other place subsequently designated by the
Agent. The Debentures shall bear interest from the date of their issuance, both
before and after maturity, at the rate of TWENTY-FIVE per cent (25%) per annum.
The principal and interest of the Debentures shall be payable on demand, with
interest on overdue interest at the aforementioned rate.
10.4 SIGNATURE
The Debentures may be signed by any officer or director of the Grantor or any
other person designated by the directors of the Grantor.
10.5 VALIDITY
The execution of the Debentures by the Grantor shall constitute conclusive
evidence that the Debentures have been issued hereunder but shall not be
construed as a representation or warranty by the Agent as to the validity of
this Deed, the security constituted hereby or the Debentures, and the Agent
shall in no way be liable for the use made of the Debentures or the proceeds
thereof. So long as Debentures are outstanding, the Grantor shall not issue
additional debentures without the Agent's prior written consent.
10.6 HYPOTHECATION OR ASSIGNMENT
The Debentures may be hypothecated, pledged or assigned by the Grantor as
security for any indebtedness or any other obligations, direct or indirect,
present or future, of the Grantor or any other person, or may be sold or
otherwise alienated. In the event of such hypothecation, pledge, assignment,
sale or other alienation, the extinction of the underlying indebtedness or
obligation shall not constitute payment of the Debentures.
10.7 RANK
All Debentures shall rank equally and shall be equally and rateably secured by
the Hypothec.
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10.8 REGISTER
The Agent shall cause to be kept at its office located at its address indicated
on the first page of this Deed (or at such other address as the Agent may
indicate in a notice to the Debentureholders), or at its attorney's office, a
register in which shall be entered the name and address of each of the
Debentureholders. No transfer of Debentures shall be valid unless made on such
register and upon compliance with such reasonable requirements as the Agent may
prescribe. The registered holder of a Debenture shall be deemed to be the owner
thereof for all purposes of this Deed.
10.9 REPLACEMENT CERTIFICATE
Upon request from a Debentureholder and subject to such reasonable requirements
as the Agent may prescribe, including an appropriate indemnity by such
Debentureholder to the Grantor, the Grantor shall issue and deliver a new
Debenture certificate in place of a Debenture certificate requiring replacement
by reason of such certificate having been lost, mutilated or destroyed or for
any other reason.
11. POWERS OF DEBENTUREHOLDERS
11.1 POWERS OF DEBENTUREHOLDERS
Subject to the provisions of the Credit Agreement, the Debentureholders shall
have the following powers exercisable from time to time by Debentureholders'
Instrument:
(a) to agree, subject to the Grantor's consent, to any modification,
abrogation, alteration, compromise or arrangement of the rights
of the Debentureholders and/or the Agent against the Grantor or
against its undertaking, property and assets or any part thereof
under and in respect of this Deed, whether such rights arise
under this Deed or the Debentures or otherwise;
(b) to direct or authorize the Agent to exercise any power, right,
remedy or authority given to it by this Deed in any manner
specified in such Debentureholders' Instrument or to refrain from
exercising any such power, right, remedy or authority;
(c) to waive and direct the Agent to waive any Event of Default on
the part of the Grantor either unconditionally or upon any
conditions specified in such Debentureholders' Instrument,
whether or not the security under this Deed shall have become
enforceable by reason of such Event of Default;
(d) to appoint a committee to consult with the Agent and to delegate
to such committee (subject to such limitations, if any, as may be
prescribed in the Debentureholders' Instrument) the power to give
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to the Agent any or all of the directions or authorizations which
the Debentureholders could give under the two immediately
foregoing subsections. The Debentureholders' Instrument making
such appointment may provide for payment of the expenses and
disbursements of and compensation to such committee. Such
committee shall consist of one or more persons as shall be
prescribed in the Debentureholders' Instrument appointing it, and
the members need not themselves be Debentureholders. Every such
committee may elect its chairman and may make regulations
respecting the quorum for and the calling of its meetings, the
filling of vacancies occurring in its number, the manner in which
it may act and its procedure generally; and
(e) to authorize the Grantor to sell or otherwise dispose of its
undertakings, property or assets or any part of parts thereof and
to instruct the Agent to release the same free from the Hypothec,
all upon such terms and conditions as may be specified in such
Debentureholders' Instrument.
11.2 DEFINITION OF DEBENTUREHOLDERS' INSTRUMENT
The term "DEBENTUREHOLDERS' INSTRUMENT" means a document signed in one
or more counterparts by the holder or holders of not less than one
hundred percent (100%) of the principal amount of the Debentures
outstanding at any time, setting out the exercise of any of the powers
granted to the Debentureholders by this Article or requesting the Agent
to take or to refrain from taking some act, action or proceeding
specified therein, or setting out any other authorization or direction,
which by the terms hereof may be given by a Debentureholders'
Instrument. Any Debentureholder may execute any such instrument in
person or by agent or attorney duly authorized in writing.
11.3 BINDING EFFECT OF DEBENTUREHOLDERS' INSTRUMENT
Any power exercised by a Debentureholders' Instrument as provided in
this Article shall be binding upon the Debentureholders and each of
them, and the Agent (subject to the provisions of its indemnity herein
contained) shall be bound to give effect thereto accordingly.
12. THE AGENT
12.1 FONDE DE POUVOIR
The Agent shall hold the Hypothec for the benefit of the
Debentureholders and shall act as their agent in the exercise of the
rights conferred hereunder. The Agent shall be considered a "FONDE
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DE POUVOIR" of the Debentureholders within the meaning of Article 2692
of the Civil Code. The Agent may perform any act necessary to the
fulfilment of its duties.
12.2 HABENDUM
The Agent shall have and hold the Hypothec and all rights hereby
conferred unto the Agent for the equal benefit and security of all the
Debentureholders without any preference or priority of any of said
Debentures over any others thereof, by reason of priority at the time
of issue or negotiation thereof, or otherwise however, and subject to
the conditions, provisions, covenants and stipulations herein
expressed.
12.3 ACKNOWLEDGEMENT AND WAIVER
Any person who becomes a Debentureholder shall benefit from the
provisions hereof and the appointment of the Agent as agent for the
Debentureholders and, upon becoming a Debentureholder, irrevocably
authorizes the Agent to perform its functions as described herein. Each
holder of a Debenture, by its acceptance thereof (a) acknowledges that
the first issue of a Debenture has been or may be purchased from the
Borrower by the Agent, by underwriting, purchase, subscription or
otherwise and (b) waives any right it may have under Section 32 of the
ACT RESPECTING THE SPECIAL POWERS OF LEGAL PERSONS (Quebec).
12.4 PRODUCTION OF DEBENTURES UPON PAYMENT
The Agent shall have the right at the time it makes any payment
required hereunder to demand of the person claiming such payment the
production of the actual Debenture under which such payment is claimed,
and shall cause to be endorsed on the same a memorandum of the amount
so paid and the date of payment, but the Agent may at its discretion
dispense with such production and endorsement in any special case, upon
such indemnity being given as it shall deem sufficient.
12.5 LIABILITY OF AGENT
The Agent shall only be accountable for reasonable diligence in the
exercise of its functions under this Deed and shall not be liable for
material injuries resulting from its fault, unless such fault is gross
or intentional. The Agent shall not be responsible for any loss
occasioned by its taking possession of the Charged Property or
enforcing the terms of this Deed, nor for any neglect, failure or delay
in exercising or enforcing any of its rights and recourses, nor for any
act, default or misconduct of any agent, broker, officer, employee or
other party acting for or on behalf of the Agent, save in the event of
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its own intentional or gross fault. The Agent shall be accountable only
for such monies as it shall actually receive.
12.6 PERFORMANCE BY AGENT
The Agent shall be free to perform any of the Grantor's liabilities
under this Deed upon the occurrence of an Event of Default which
subsists and may then immediately request payment by the Grantor of any
reasonable expense incurred in doing so.
12.7 PROTECTION OF PERSONS DEALING WITH THE AGENT
No person dealing with the Agent or its representatives shall be
concerned to inquire whether the security created under this Deed has
become enforceable, or whether the powers which the Agent is purporting
to exercise have become exercisable, or whether any money remains due
upon the security of this Deed or the Debentures, or as to the
necessity or expediency of the stipulations and conditions subject to
which any sale shall be made, or otherwise as to the propriety or
regularity of any sale or of any other dealing by the Agent with the
Charged Property pursuant to the terms of any applicable law or this
Deed or to see to the application of any money paid to the Agent and,
in the absence of fraud on the part of such person, such dealing shall
be deemed, so far as regards the safety and protection of such persons,
to be within the powers conferred under this Deed and to be valid and
effectual accordingly.
12.8 POSSESSION OR PRODUCTION OF DEBENTURES NOT REQUIRED
All rights of action under this Deed may be enforced by the Agent
without the possession of any of the Debentures or the production
thereof at the trial or in other proceedings relevant thereto.
12.9 EXCLUSIVE RIGHT TO ACT
No Debentureholder may exercise individually any rights conferred on
the Agent (unless the Agent is also the sole Debentureholder).
12.10 ABSOLUTE DISCRETION OF AGENT
The Agent, except as otherwise provided in this Deed shall, as regards
all the powers, authorities and discretions vested in it, have absolute
and uncontrolled discretion as to the exercise thereof, whether in
relation to the manner or as to the mode and time for the exercise
thereof, and in the absence of fraud, it shall be in no way responsible
for any loss, costs, damages or inconvenience that may result from the
exercise or non-exercise thereof, save in the event of its own
intentional or gross fault.
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12.11 NO LIABILITY FOR TITLE DEFECTS
The Agent shall not be liable for or by reason of any failure or defect
of title to or any priority, prior claim, hypothec, servitude, or other
charge upon the Charged Property, or for or by reason of the statements
of facts or recitals contained in this Deed or in the Debentures, or be
required to verify the same; but all such statements and recitals are
and shall be deemed to have been made by the Grantor only, and it shall
not be the duty of the Agent, and nothing contained in this Deed shall
in any way impose any obligation upon the Agent, to see to the
registration or filing or renewal of this Deed or any other deed or
writing relating to the Charged Property or any part thereof, or to any
other property of the Grantor, or to procure any additional hypothec or
other additional security instrument or further assurance, or to do any
other act for the continuance of the Hypothec, or for giving notice of
the existence of the Hypothec, or for extending or supplementing the
same or to insure or keep insured, against loss or damage by fire or
otherwise, the Charged Property or any part thereof or to keep itself
informed or advised as to the payment by the Grantor of any taxes or
assessments or premiums of insurance or other payments which the
Grantor should make.
12.12 AGENT MAY VOTE IN BANKRUPTCY
In the event of the Grantor making an authorized assignment or a
custodian, trustee or liquidator in respect of the Grantor's property
being appointed under any bankruptcy, insolvency, liquidation or
reorganization law of any jurisdiction, the Agent, if directed to do so
by a Debentureholders' Instrument, may file and prove a claim, value
security and vote and act at all meetings of creditors and otherwise in
such proceedings as so directed.
12.13 INSTRUCTIONS OF DEBENTUREHOLDERS
The Agent shall be obliged to act and shall act and be fully protected
in acting upon the instructions, requests or directions set forth in a
Debentureholders' Instrument in connection with any proceeding, act,
power, right, matter or thing relating to or conferred by right or to
be done under this Deed, provided however that the Agent shall not be
so protected in the event of its intentional or gross fault.
12.14 ACCESS TO RECORDS
If requested by the Debentureholders in a Debentureholders' Instrument,
the Agent shall be obliged to give to those so requesting or to their
officers or authorized agents, free access to and communication of the
Agents's records relating to these presents and all matters connected
therewith.
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12.15 RELIANCE ON COUNSEL
The Agent may execute any of the powers imposed or conferred upon it
under this Deed, and perform any duties required of it, by or through
attorneys or agents and, in relation to this Deed, may act on the
opinion or advice of or information obtained from any lawyer, valuer,
surveyor, broker, auctioneer, or other expert, whether obtained by the
Agent or by the Grantor or otherwise, and shall not be responsible for
any loss occasioned by acting or not acting thereon, save in the event
of its own intentional or gross fault, and shall be entitled to take
legal or other advice and employ such assistance as may be necessary to
the proper discharge of its duties, and to pay proper and reasonable
compensation to such agents and attorneys for all such legal and other
advice or assistance as aforesaid.
12.16 APPOINTMENT OF MANDATARIES
The Agent may for the execution of the duties and powers conferred upon
it under this Deed appoint or employ attorneys, bankers, receivers,
lawyers, mandataries or other persons, but the Agent shall not be
responsible to the Debentureholders for any misconduct on the part of
any such attorney, banker, receiver, lawyer, mandatary or other person
appointed by it under this Deed, or bound to supervise the proceedings
of any such other appointee, the whole save as provided in section
9.11(b).
12.17 AGENT AS MANDATARY
The Agent is hereby designated as the irrevocable mandatary of the
Grantor with full powers of substitution for the purposes of carrying
out, upon the occurrence of an Event of Default which subsists, any and
all acts and executing any and all deeds, proxies or other documents
which the Agent may deem useful in order to exercise its rights or
which the Grantor neglects or refuses to execute or to carry out, it
being expressly understood that such mandate of the Agent or any
substitute is not governed by articles 2138 to 2148 of the Civil Code,
the Grantor expressly renouncing to the benefit of each and every one
of the aforementioned articles.
12.18 NOT RESPONSIBLE FOR SUBSCRIPTION MONEYS
The Agent shall not be responsible for the moneys subscribed by
applicants for or purchasers of the Debentures or be bound to see to
the application thereof.
12.19 DELEGATION BY AGENT
The Agent shall be free to delegate to any person or persons, and as
long as all the Debentures at any time outstanding hereunder are held
by one Person, may delegate to such Debentureholder, the exercise of
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its rights, actions or the performance of any covenant resulting from
this Deed or applicable law; in such case, the Agent shall supply such
person with any information it holds relating to the Grantor or to the
Charged Property, and the Agent shall not be in any way responsible to
the Debentureholders for any loss incurred by the misconduct or default
of any such delegate or as a result of such delegation.
12.20 INVESTMENT OF CHARGED PROPERTY
The Agent shall be free to invest any monies or instruments received or
held by it pursuant hereto or to deposit same in a non-interest bearing
account without having to comply with any provisions of the Civil Code
concerning the investment of the property of others.
12.21 COMPENSATION AND SET-OFF
Without limiting any other right of the Agent, including without
limitation its rights under Section 12.09 of the Credit Agreement,
whenever Secured Obligations are due and payable or the Agent has the
right to declare Secured Obligations to be immediately due and payable
(whether or not it has so declared), the Agent may, in its sole
discretion but subject to the provisions of the Credit Agreement,
compensate and set off against any Secured Obligations any and all
amounts then owed to the Grantor by the Lenders or the Agent in any
capacity, whether or not due, and the Agent shall be deemed to have
exercised such right to compensate and set off immediately at the time
of making its decision to do so even though any charge therefor is made
or entered on the Agent's records subsequent thereto.
12.22 EXTENSIONS
The Agent may grant extensions of time and other indulgences, take and
give up security, accept compositions, grant releases and discharges
and otherwise deal with the Grantor, with other parties and with the
Charged Property as the Agent may see fit without prejudice to the
liability of the Grantor or to the Agent's rights pursuant to this
Deed.
12.23 RECOURSES CUMULATIVE
The rights and recourses of the Agent pursuant to this Deed are
cumulative and do not exclude any other rights and recourses which the
Agent might have. No omission or delay on the part of the Agent in the
exercise of any right shall have the effect of operating as a waiver of
such right. The partial or sole exercise of a right or power will not
prevent the Agent from exercising thereafter any other right or power.
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12.24 BENEFIT OF DEED
The rights hereby conferred upon the Agent shall benefit all of its
successors, including any entity resulting from the merger of the Agent
with any other person or persons, and any entity that succeeds the
Agent as administrative agent under the Credit Agreement.
13. MISCELLANEOUS
13.1 HYPOTHEC CONSTITUTES ADDITIONAL SECURITY
The Hypothec is in addition to and not in substitution or replacement
for any other hypothec or security held by the Agent.
13.2 CONTINUING SECURITY
The Hypothec shall be a continuing security which shall remain in full
force and effect notwithstanding the payment, from time to time, of the
whole or of any part of the Secured Obligations, and shall remain in
full force until the execution and delivery of a release by the Agent.
13.3 INTERPRETATION
The Preamble hereto forms an integral part hereof. Capitalized terms
used herein that are not defined in this Deed have the respective
meanings ascribed thereto in the Credit Agreement.
13.4 SEVERABILITY
Any provision of this Deed which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be of no effect to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
13.5 AMENDMENT
No term or provision of this Deed may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the
party against whom the enforcement of the change, waiver, discharge or
termination is sought.
13.6 NOTICE
Any notice to the Grantor shall be given to the Grantor at its address
set forth hereinabove, in accordance with the applicable provisions of
the Credit Agreement.
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13.7 INCONSISTENCY
In the event of any contradiction or inconsistency between the
provisions of this Deed and those of the Credit Agreement, the
provisions of the latter shall prevail to the extent of such
contradiction or inconsistency.
13.8 GOVERNING LAW
This Deed shall be governed by and construed in accordance with the
laws of the Province of Quebec and the laws of Canada applicable
therein.
13.9 UNDERSTANDING OF GRANTOR
The Grantor hereby acknowledges having read this Deed and having
received adequate explanations as to the nature and scope of its
provisions and as to the obligations deriving therefrom.
13.10 LANGUAGE
The parties acknowledge that they have required that this Deed, as well
as all documents, notices and legal proceedings executed, given or
instituted pursuant or relating directly or indirectly hereto, be drawn
up in English. Les parties reconnaissent avoir exige la redaction en
anglais de cet acte, ainsi que de tous documents executes, avis donnes
et procedures judiciaires intentees a la suite de ou relativement a
icelui, que ce soit directement ou indirectement.
SCHEDULE I
None.
WHEREOF ACTE:
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DONE AND PASSED at Montreal, on the date first hereinabove mentioned and of
record in the office of the undersigned Notary under the number one thousand
twenty-five (1025).
AND after the Grantor and the Agent each declared that it had taken cognizance
of these presents and had exempted the said Notary from reading them or causing
same to be read, the said duly authorized representatives of the Grantor and the
Agent have signed in the presence of the undersigned Notary.
3351611 CANADA INC.
/s/ Claudine Tremblay
------------------------------------------------
PER:
BANK OF AMERICA, N.A., in its
aforementioned capacities
/s/ [illegible]
------------------------------------------------
PER:
/s/ Catherine Bolduc
------------------------------------------------
CATHERINE BOLDUC, NOTARY
A true copy of the original hereof
remaining of record in my office
/s/ CATHERINE BOLDUC
--------------------