Exhibit 4.9
DEED OF MOVABLE HYPOTHEC WITH DELIVERY granted in Montreal as of this 7th day of
February, 2003
BY: SUN MEDIA CORPORATION, a corporation continued and existing
under the laws of British Columbia (hereinafter called the
"GRANTOR")
IN FAVOUR OF: BANK OF AMERICA, N.A., a Schedule III Bank governed by the
BANK ACT (Canada), acting for itself and as Agent and
solidary creditor for each of the Lenders as defined in the
Credit Agreement hereinafter described (the "CREDITOR")
WHEREAS pursuant to Schedule 5 to the 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 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, the
"CREDIT AGREEMENT"), the Grantor is to execute an agreement pledging the shares
of the Companies (as hereinafter defined) to the Creditor;
WHEREAS pursuant to subsection 10.01(5) of the Credit Agreement the
Creditor and each Lender are conferred the legal status of solidary creditors of
the Borrower and each Guarantor in respect of all amounts, liabilities and other
obligations owed by the Borrower and each Guarantor to each of them under the
Credit Agreement and under the other Credit Documents, the whole in accordance
with Article 1541 of the CIVIL CODE OF QUEBEC (the "CIVIL CODE");
WHEREAS pursuant to subsection 10.04 of the Credit Agreement the
Creditor has been granted the authority to hold any and all Security under the
Credit Agreement;
WHEREAS the Grantor has agreed to grant the Creditor a movable hypothec
with delivery on certain property, in order to secure the performance of its
obligations to the Creditor and the other Lenders under the Credit Documents to
which it is a party;
NOW THEREFORE, THE PARTIES HERETO HAVE AGREED AS FOLLOWS:
1. INTERPRETATION
Capitalized terms used herein and not otherwise defined shall have the
respective meanings ascribed thereto in the Credit Agreement.
2. HYPOTHEC
As security for the Secured Obligations, as defined in Section 5, the Grantor
hereby hypothecates (the hypothec created hereby being hereinafter called the
"HYPOTHEC") the Charged Property (as defined in Section 3) in favour of the
Creditor, for a principal amount of $600,000,000, plus an
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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.
3. DESCRIPTION OF CHARGED PROPERTY
The property charged by the Hypothec consists of the following securities (the
"SECURITIES") held by the Creditor or a third Person:
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NUMBER OF SHARES, BONDS, OR OTHER DESCRIPTION OF THE SECURITIES AND NAMES OF DEBTORS APPEARING
INSTRUMENTS ON THE INSTRUMENTS OR NOTES
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1 common share in the share capital of 3661458 Canada Inc.
("3661458") registered in the name of the Grantor and
evidenced by certificate C-1
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100 common shares in the share capital of 3661458 registered in
the name of the Grantor and evidenced by certificate C-2
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201 common shares in the share capital of 3351611 Canada Inc.
(together with 3661458, the "COMPANIES") registered in the
name of the Grantor and evidenced by certificate C-10
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1,500,000 Class "A" preferred shares in the share capital of 3351611
registered in the name of the Grantor and evidenced by
certificate PA-13
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together with the following present and future property, without
limiting the charges, hypothecs and rights arising by operation of law:
(a) renewals, replacements and substitutions of, and additions to, the
Securities, whether arising out of a purchase, redemption, conversion,
cancellation or any other transformation of the Securities;
(b) the proceeds, fruits and revenues of the Securities, including (by
way of example and without limitation) cash, bank accounts, notes,
negotiable instruments, bills, commercial paper, securities, monies,
goods, contract rights, and any other movable property, corporeal or
incorporeal, received when any of the Securities is sold, exchanged,
collected or otherwise disposed of;
(c) any right pertaining to the Securities; and
(d) any other property delivered at any time to the Creditor,
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(collectively the "CHARGED PROPERTY").
4. ADDITIONAL PROVISIONS
4.1. TRANSFER INTO CREDITOR'S NAME
The Grantor authorizes the Creditor, at any time following an Event of
Default, to transfer any Charged Property or any part thereof into its
own name or that of its nominee(s) in its capacity of hypothecary
creditor so that the Creditor or its nominee(s) may appear as the sole
registered owner thereof.
4.2. VOTING, ETC.
Until the occurrence of an Event of Default which has not been waived,
the Grantor shall be entitled to vote any and all Securities and to
give consents, waivers, or ratifications in respect thereof, provided
that no vote shall be cast or any consent, waiver, or ratification
given or any action taken which would violate or be inconsistent with
any of the terms of the Credit Agreement or this Deed or any other
instrument or agreement relating to the Secured Obligations or which
would have the effect of materially impairing the position and
interests of the Creditor. All such rights of the Grantor to vote and
give consents, waivers and ratifications shall cease in case an Event
of Default shall occur which has not been waived, whereupon the
Creditor shall be entitled, without limiting its other rights and
remedies hereunder, to vote all or any part of the Securities whether
or not transferred into the Creditor's name and give all consents,
waivers and ratifications in respect of the Securities and otherwise
act with respect thereto as though it were the outright owner thereof.
4.3. DIVIDENDS AND OTHER DISTRIBUTIONS
Subject to the applicable provisions of the Credit Agreement, if any,
and so long as an Event of Default has not occurred which has not been
waived, the Grantor may collect all cash dividends payable in respect
of the Securities, provided that all cash dividends payable in respect
of the Securities which are determined by the Creditor, in its absolute
discretion, to represent in whole or in part an extraordinary,
liquidating or other distribution in return of capital, shall be paid
to the Creditor and retained by it as part of the Charged Property.
4.4. STANDARD OF CARE
The Creditor shall have no obligation to protest any of the Charged
Property, to take any steps to interrupt prescription, to protect the
Charged Property against any depreciation or reduction in value, to
make any productive use of the Charged Property, or to protect the
Grantor against any loss relating in any way to the Charged Property.
In addition, the Creditor shall not be obliged to vote with respect to
any of the Charged Property in connection with any subscription,
conversion or other right relating to the Charged
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Property, or any other matters or proceedings relating to the Charged
Property, except where the Creditor is specifically requested in
writing to do so and is provided with an indemnity and security which
the Creditor considers sufficient, acting reasonably, together with
payment of a reasonable fee to be established by the Creditor.
Without prejudice to its other rights hereunder, the Creditor may, at
its discretion, comply with all provisions of law with which the holder
of any securities comprised within the Charged Property from time to
time is required to comply.
5. SECURED OBLIGATIONS
The Hypothec shall secure the performance by the Grantor of its
obligations to the Creditor and the other Lenders under the Credit
Documents to which it is a party, including without limitation this
Deed (all such obligations, as from time to time heretofore or
hereafter amended, supplemented, amended and restated or otherwise
modified from time to time, are collectively referred to herein as the
"SECURED OBLIGATIONS").
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 the proceeds of realization of the Charged Property following an
Event of Default 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 Creditor shall
remain entitled to full payment thereof.
6. REPRESENTATIONS AND WARRANTIES
The Grantor hereby reaffirms and renews the representations and
warranties made by the Grantor in the Credit Agreement and in addition
hereby represents and warrants as follows:
6.1. SHAREHOLDERS' AGREEMENT - SECURITIES
There exists no shareholders' agreement in connection with the
Securities. There exists no restriction in the articles or other
constating documents of each of the Companies regarding the assignment
or transfer of the Securities which has not been complied with or
waived, nor any restrictions contained in any other contract or
undertaking which is binding upon the Grantor save and except the
required consent of the Board of Directors of each of the Companies
with respect to the transfer of the Securities.
7. COVENANTS
The Grantor reiterates the covenants made in the Credit Agreement by
the Grantor and in addition hereby covenants and agrees as follows:
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7.1. DELIVERY
It shall remit to the Creditor, or a Person designated by the Creditor,
concurrently with the signature hereof, all of the Securities and shall
immediately so remit any Charged Property which comes into the
possession of the Grantor, together with any power of attorney,
document and confirmation that the Creditor may reasonably request in
order to transfer the Charged Property, at any time following an Event
of Default which has not been waived, into the name of the Creditor or
its nominee. The Grantor agrees that Heenan Blaikie LLP may hold the
Securities on behalf of the Creditor.
7.2. PAYMENT OF LEGAL FEES AND OTHER EXPENSES
Subject to any limitations contained in the Credit Agreement, it shall:
(a) pay all costs and expenses related to the exercise of all rights
created hereby. Such costs and expenses shall include all reasonable
fees and expenses of consultants, mandataries or legal counsel retained
in case of default; and
(b) reimburse the Creditor 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 7.2
shall not exceed 20% of the principal amount of the Hypothec.
7.3. RANK OF HYPOTHEC
The Hypothec shall always create a first ranking hypothec on the
Charged Property.
8. EVENTS OF DEFAULT
The Grantor shall be in default hereunder upon the occurrence and
continuance of an Event of Default as defined in the Credit Agreement
(any such occurrence being referred to herein as an "EVENT OF
DEFAULT").
9. CREDITOR'S RECOURSES UPON AN EVENT OF DEFAULT
9.1. SURRENDER
The Grantor shall be deemed to have voluntarily surrendered the Charged
Property to the Creditor if it has not opposed the Creditor's recourse
within 20 days of its receipt from the Creditor of a prior notice of
the exercise of hypothecary rights.
9.2. ADDITIONAL RIGHTS
In order to protect or to realize upon the Charged Property, the
Creditor shall be free, at the Grantor's expense, at any time following
an Event of Default which has not been waived, to do any or all of the
following:
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(a) alienate or dispose of any Charged Property which may 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 Creditor 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 are of the same type.
9.3. GOOD FAITH
The Creditor 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 Creditor.
9.4. RELATIONS WITH THE GRANTOR AND OTHERS
The Creditor 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 Persons and
with the Charged Property as the Creditor may see fit without
diminishing the liability of the Grantor and without prejudice to the
Creditor's rights pursuant to this Deed.
9.5. NO SECURITY BY CREDITOR
The Creditor shall not be bound to make an inventory, to take out
insurance or to furnish any security of any nature whatsoever.
9.6. SPECIAL PROVISIONS - TAKING IN PAYMENT
If the Creditor elects to exercise its right to take in payment and the
Grantor requires that the Creditor instead sell the Charged Property on
which such right is exercised, the Grantor hereby acknowledges that the
Creditor 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 Creditor:
(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 Creditor 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
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(c) has been advanced the necessary sums for the sale of the Charged
Property.
The Grantor further acknowledges that, subject to the rights of the
other Lenders, the Creditor alone is entitled to select the type of
sale it may wish to conduct or have conducted.
9.7. SALE BY THE CREDITOR
Where the Creditor sells the Charged Property itself, it shall not be
required to obtain any prior valuation by a third party. The Creditor
may elect to sell the Charged Property with legal warranty given by the
Grantor or with a complete or partial exclusion of such warranty.
10. MISCELLANEOUS
10.1. HYPOTHEC CONSTITUTES ADDITIONAL SECURITY
The Hypothec created hereby is in addition to and not in substitution
or replacement for any other hypothec or security held by the Creditor.
10.2. INVESTMENT OF CHARGED PROPERTY
The Creditor shall be free to invest any monies or instruments received
or held by it in pursuance of this Deed 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.
10.3. RECOURSES CUMULATIVE
The rights and recourses of the Creditor under this Deed are cumulative
and do not exclude any other rights and recourses which the Creditor
might have. No omission or delay on the part of the Creditor 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 Creditor from exercising thereafter any other right or
power.
10.4. 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.
10.5. AMENDMENT
No amendment to this Deed will be valid or binding unless set forth in
writing and duly executed by the Grantor and the Creditor, duly
authorized by the Lenders in accordance
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with the provisions of the Credit Agreement. Any waiver of any breach
of any provision of this Deed will not be effective or binding unless
made in writing and signed by the Creditor, duly authorized by the
Lenders in accordance with the provisions of the Credit Agreement and,
unless otherwise provided in the written waiver, will be limited to the
specific breach waived.
10.6. DELEGATION
The Creditor shall be free to delegate to any Person or Persons the
exercise of its rights or the performance of any covenant resulting
from this Deed or law; in such case, the Creditor may supply such
Person with any information it holds relating to the Grantor or the
Charged Property.
10.7. PERFORMANCE BY CREDITOR
At any time following the occurrence of an Event of Default which has
not been waived, the Creditor shall be free to perform any of the
Grantor's obligations under this Deed. It may then request immediate
payment of any expense incurred in doing so, including interest at the
Canadian Prime Rate plus the applicable margin set forth in the Credit
Agreement.
10.8. CREDITOR AS MANDATARY
The Creditor is hereby designated, effective upon the occurrence of an
Event of Default and while same subsists, as the irrevocable mandatary
of the Grantor with full powers of substitution for the purposes of
Section 10.7 or for the purpose of carrying out any and all acts and
executing any and all deeds, proxies or other documents which the
Creditor may deem useful in order to exercise its rights or which the
Grantor neglects or refuses to execute or to carry out.
10.9. LIABILITY OF CREDITOR
The Creditor shall not be liable for material injuries resulting from
its fault, unless such fault is gross or intentional. The Creditor
shall not be responsible for any loss occasioned by its taking
possession of 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, mandatary, broker, officer, employee or other Person acting for
or on behalf of the Creditor. The Creditor shall be accountable only
for such monies as it shall actually receive. The liability of the
Creditor or any third party appointed to hold the Charged Property
shall be limited to exercising in regard to the Charged Property the
same degree of care which such Person gives to similar property held at
the same location.
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10.10. BENEFIT OF DEED
The rights hereby conferred upon the Creditor shall benefit all of its
successors, including any entity resulting from the merger of the
Creditor with any other Person or Persons, and any entity that succeeds
the Creditor as administrative agent under the Credit Agreement.
10.11. NOTICE
Any notice to the Grantor or the Creditor shall be delivered in the
manner set forth in the Credit Agreement.
10.12. 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.
10.13. 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.
10.14. LANGUAGE
The parties acknowledge that they have required that the present 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 du present 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.
[signature page follows]
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SIGNED as of the date and at the place first hereinabove mentioned.
SUN MEDIA CORPORATION
Per: /s/ CLAUDINE TREMBLAY
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ACCEPTED AND AGREED AS OF THE 7TH DAY OF FEBRUARY, 2003.
BANK OF AMERICA, N.A.,
in its aforementioned capacities
Per: /s/ [ILLEGIBLE]
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