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EXHIBIT 4.26
SUN MEDIA CORPORATION
10.5% Convertible Obligation ("CANCAP") due January 14,
2020
CDN $255,000,000
January 14, 2005
FOR VALUE RECEIVED, the undersigned, SUN MEDIA CORPORATION, a
company
continued and existing under
the COMPANY ACT (British Columbia) (the "ISSUER") ,
hereby promises to pay to
QUEBECOR MEDIA INC., a company organized and existing
under the COMPANIES ACT
(Quebec), or its assigns (in each case, the "HOLDER"),
the sum of 255,000,000
Canadian Dollars (the "FACE AMOUNT") on January 14,
2020,
with interests ("COUPON
PAYMENTS") on the unpaid balance thereof at the rate of
10.5% 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 $13,277,465.75 and payable on
July 14, 2005, and the last
Coupon Payment which shall be of $13,497,534.25 and
payable on January 14, 2020),
until the Face Amount hereof shall become due and
payable.
This 10.5% Convertible Obligation due January 14, 2020 (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
credit agreement dated as of February 7, 2003, as
amended from time to time,
between the Issuer (as borrower), the financial
institutions identified
therein (as lenders), Bank of America, N.A. (as
administrative agent) and
Banc of America Securities LLC and Credit Suisse First
Boston (as joint lead
arrangers and joint book-runners).
"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
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"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 January 14, 2020.
(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 oth
