Exhibit 10.3
Dated August 19, 2008
 
TRUST INDENTURE
between
HOLLINGER CANADIAN PUBLISHING
HOLDINGS CO.
- and -
ARB LIMITED
 

 

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TRUST INDENTURE
     THIS INDENTURE made as of the 19th day of August, 2008
AMONG:
HOLLINGER CANADIAN PUBLISHING HOLDINGS CO., a company incorporated under the
laws of Nova Scotia
(the “Settlor”)
     - and -
ARB LIMITED, a company incorporated under the laws of Ontario
(the “Trustee”)
WHEREAS:
     A. Sun-Times Media Group, Inc. (“STMG”), formerly known as Hollinger
International Inc., is a corporation incorporated under the laws of Delaware;
     B. The Settlor is a direct and indirect wholly-owned subsidiary of STMG;
     C. A special committee established by the Board of STMG resolved on
June 10, 2008 to create the Trust (as hereinafter defined);
     D. STMG and the Settlor entered into an agreement dated August 19, 2008
whereby the Settlor, for the consideration as provided thereunder, agreed to
establish the Trust;
     E. The Trustee is a company controlled and operated by Mr. Claude Thomson;
     E. By agreement in writing of all of the shareholders of the Settlor, the
Settlor has been directed to enter into and to carry into effect its obligations
under this Indenture, and an officer or director of the Settlor has been
authorized to execute this Indenture on behalf of the Settlor and to execute any
other documents and take any other steps as may be necessary to enable the
Settlor to carry into effect and to perform its obligations under this
Indenture; and
     F. The Settlor has paid to the Trustee the sum of $10 million to establish
a trust fund for the defence of and payment of Liability Claims (as hereinafter
defined) to be administered by the Trustee in accordance with the terms of this
Indenture.
     NOW THERFORE it is agreed and declared as follows:

 

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ARTICLE 1
INTERPRETATION
1.1 Definitions
     Where used in this Indenture, the following expressions shall have the
following respective meanings:

  (a)   “Actions” means the following actions commenced in the Ontario Superior
Court of Justice: Black v. Breeden et al., Court File No. 04-CV-26370CM1; Black
v. Breeden et al., Court File No. 04-CV-265298CM1; Black v. Breeden et al.,
Court File No. 04-CV-265299CM2; Black v. Breeden et al., Court File
No. 04-CV-270773CM1; Black v. Breeden et al., Court File No. 04-CV-276761CM2;
and Black v. Breeden et al., Court File No. 05-CV-285535PD2.     (b)  
“Beneficiaries” has the meaning ascribed to it in Section 2.5.     (c)  
“Capital” means the sum of $10 million in cash or equivalents paid by the
Settlor to the Trustee to establish the Trust, or such lesser amount held by the
Trustee from time to time following the payment of a Liability Claim or
Liability Claims from the said sum, to or on behalf of a Beneficiary, and any
property into which the said sum or sum remaining from time to time may be
converted, and for greater certainty, does not mean interest on the said sum,
dividends or capital accretions thereon.     (d)   “Fund” means the sum of
$10 million in cash or cash equivalents paid by the Settlor to the Trustee,
together with interest and other revenues generated thereby and any further
contributions hereafter made thereto and any property into which all of the
foregoing may be converted.     (e)   “Liability Claim” means any costs,
charges, damages, awards, settlements, liabilities, fines, penalties, statutory
obligations, professional fees (including retainers paid in advance of the
delivery of professional services), insurance deductibles and other expenses of
whatever nature or for which the Beneficiaries, or any of them, may become
personally liable as a result of the Actions, or as a result of a claim or other
proceeding brought by a Beneficiary against the Trustee for the purpose of
enforcing entitlement under the terms of this Indenture.     (f)   “Termination
Date” has the meaning defined in Section 5.1.     (g)   “Trust” has the meaning
defined in Section 2.1.     (h)   “Trustee’s Expenses” has the meaning defined
in Section 3.1.

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ARTICLE 2
CREATION OF THE TRUST
2.1 Declaration of the Trust
     The Trustee acknowledges receipt of the Capital from the Settlor and agrees
to hold it, any other property which may be transferred or assigned to the
Trustee by the Settlor and any interest or other income or other property from
time to time forming part of the Fund, upon the trusts and subject to the powers
and provisions contained in this Indenture (the “Trust”).
2.2 Irrevocable Trust
     The Trust is intended and is hereby declared to be irrevocable. Prior to
the Termination Date defined in Section 5.1, no part of the Capital from the
Fund shall be paid or loaned or applied to or for the benefit of the Settlor, in
any manner or circumstance whatsoever, other than pursuant to an order of a
Court of competent jurisdiction or in accordance with an amendment to this
Indenture made under Section 4.4.
2.3 Name
     The name of the Trust shall be the STMG Trust.
2.4 Purpose of Trust
     The purpose of the Trust is to provide for the payment to, or on behalf of,
the Beneficiaries of Liability Claims in circumstances when STMG is either
unable or unwilling to do so, any such payment to be a distribution of Capital
to the Beneficiary in respect of its capital interest in the Trust.
2.5 Beneficiaries
     The Capital beneficiaries of the Trust (collectively, the “Beneficiaries”)
are the following directors, officers, consultants and advisors, and former
directors, officers, consultants and advisors of STMG and their respective
successors, assigns and heirs:

  (a)   Richard C. Breeden     (b)   Richard C. Breeden & Co.     (c)   Gordon
A. Paris     (d)   James R. Thompson     (e)   Richard D. Burt     (f)   Graham
W. Savage     (g)   Raymond G.H. Seitz

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  (h)   Paul B. Healy     (i)   Shmuel Meitar     (j)   Henry A. Kissinger; and

     the income and residual capital beneficiary of the Trust is the Settlor.
     Subject to Article 3, the Trustee shall pay from the Capital an amount with
respect to a Liability Claim directly to, or to the order of, the relevant
Beneficiary or Beneficiaries or, if applicable, his or her legal representative,
as the case may be.
2.6 Trust Not to Constitute Insurance
     The Trust does not constitute insurance.
ARTICLE 3
PAYMENT OF TRUSTEE’S EXPENSES AND OF CLAIMS
3.1 Payment of Trustee’s Expenses
     The Trustee is authorized to pay all expenses of the Trust, including any
reasonable fees, expenses and disbursements of the Trustee and his professional
advisors, and taxes related to the Trust (collectively, the “Trustee’s
Expenses”) out of the Fund.
3.2 Receipt and Analysis of Claims
     A Beneficiary shall request the payment of a Liability Claim from the
Trustee, providing the amount and details of the Liability Claim or potential
Liability Claim and the circumstances in which it arose in writing.
     The Trustee may require, in support of any such request, any supporting
information the Trustee considers relevant, acting reasonably. Such supporting
information may include confirmation from STMG that it is unable or unwilling to
satisfy the Liability Claim.
     The Trustee is authorized to obtain from such advisors as it, in its
discretion considers advisable, such additional advice and analysis as the
Trustee considers to be reasonably necessary in making a determination as to any
of the matters set out above. The Trustee is entitled to reimbursement from the
Fund for such expenses as it may incur acting reasonably in these regards.
Receipt by the Trustee of information as to a Liability Claim or potential
Liability Claim in accordance with this Section 3.2 in no way commits the
Trustee to pay the Liability Claim or potential Liability Claim from the Fund.
3.3 Payment of Claims
     Prior to the Termination Date (or thereafter, in the case of Liability
Claims made to the Trustee that are outstanding on the Termination Date), after
analysis in accordance with Section

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3.2, the Trustee shall pay any Liability Claim out of the Capital. The Trustee
shall deliver to the Settlor and STMG notice of any payments to be made to a
Beneficiary at least three (3) business days prior to making such payment.
     Notwithstanding the foregoing, the Trustee may delay payment in whole or in
part of any Liability Claim, pending a determination of the adequacy of the
Capital to pay Liability Claims.
     In administering the Trust, the Trustee may consider each Liability Claim
as it arises and shall have no obligation to maintain an even hand among the
Beneficiaries entitled to make claims for distribution of Capital hereunder.
     Nothing in this Indenture shall require the Trustee to make any payment if
it believes it may result in a claim against the Trustee personally.
     In no event will the Trustee pay any amount of a Liability Claim unless it
is satisfied, acting reasonably, that STMG is unable or unwilling to satisfy the
Liability Claim.
     In no event will the total amount paid hereunder in respect of Liability
Claims exceed $10 million.
3.4 No Liability for Insufficient Funds
     Except as provided in Section 4.1, the Trustee shall not be liable to any
person (including any Beneficiary or the Settlor) in the event that the Capital
is insufficient to pay in full or in part any Liability Claim under this
Indenture. Furthermore, the Trustee shall have no obligation to seek or demand
any further monies from the Settlor or any other person.
3.5 Notice of Amounts in the Fund
     The Trustee shall, not less frequently than quarterly, provide notice to
the Settlor of the then current amount of the Capital and the Fund.
3.6 Payment of Income and Amounts in Excess of Capital
     The Trustee shall, as soon as possible after December 31 of each year prior
to the Termination Date, pay all amounts in excess of the Capital, net of
Trustee’s Expenses, to the Settlor in its capacity as the income beneficiary,
for its own use absolutely.
ARTICLE 4
CONCERNING THE TRUSTEE
4.1 Limitation of Liability
     The Trustee shall have no personal liability to any other person arising
from contractual relationships or commitments of the Trustee and is authorized
to require that any such contractual relationship or commitment shall include a
provision confirmatory of this sentence. The Trustee shall incur no liability to
the Settlor or Beneficiaries or any other person with respect to the performance
of the responsibilities of the Trustee hereunder except for damages that may

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be caused by the deliberate or willful misconduct of the Trustee. The Trustee is
hereby indemnified and saved harmless by the Settlor and the Trust from and
against all claims, losses, damages, costs, penalties, fines and expenses
(including Trustee’s Expenses) arising from or relating to this Indenture or as
a result of the Trustee performing its responsibilities and duties hereunder or
its compliance with any direction, instruction, certificate, advice, notice,
opinion or other document delivered to the Trustee pursuant to this Indenture
other than as attributable to deliberate or willful misconduct of the Trustee.
The Trustee is authorized to establish a reasonable reserve from the Fund to pay
for the Trustee’s Expenses and any amounts that may be or become payable to the
Trustee under this Section 4.1.
4.2 Release of Liability
     The Trustee may rely conclusively upon any instruction, direction,
certificate, advice, notice, opinion or other document believed by it to be
genuine or to have been signed and presented by the proper party or parties and
the truth of the statements and the correctness of the opinions expressed
therein and shall be under no liability with respect to any action reasonably
taken or omitted to be taken in accordance with such instruction, direction,
certificate, advice, notice, opinion or other document.
4.3 Fees and Expenses
     The Trustee is authorized to pay all Trustee’s Expenses from the Fund. The
Trustee shall be responsible for ensuring that all applicable taxes relating to
the Trust and the Fund are paid from the Fund when due. The Trustee shall be
entitled to an initial fee of $15,000 payable upon entering into this Indenture.
Thereafter and up to the Termination Date, the Trustee will be compensated at a
rate of $650 per hour, and in all events each year shall be entitled to a
remuneration of not less than $10,000.
4.4 Amendments
     No one (other than a court of competent jurisdiction) has the authority to
amend this Indenture. No such amendment shall affect any rights or obligations
that have previously arisen or been incurred in consequence of the performance
by the Trustee of its duties and responsibilities hereunder.
4.5 Termination of Trustee’s Appointment
     In the event that:

  (a)   any Trustee that is not an individual:

  (i)   resigns;     (ii)   enters into liquidation, whether compulsory or
voluntary (not being merely a voluntary liquidation for the purposes of
amalgamation or reconstruction);

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  (iii)   has a receiver or a receiver-manager appointed with respect to its
affairs;     (iv)   becomes subject to any bankruptcy laws;     (v)   ceases to
be a resident of Canada within the meaning of the Income Tax Act (Canada);    
(vi)   and is ARB Limited, Claude Thomson no longer, directly or indirectly,
beneficially owns or exercises control or direction over securities of the
Trustee carrying votes which, if exercised, would entitle Claude Thomson to
elect a majority of the directors of the Trustee,

  (b)   any Trustee, being an individual:

  (i)   dies;     (ii)   refuses or becomes unable to act or to continue to act
or becomes incapable of managing property. For the purposes of Section
4.5(b)(ii), a Trustee shall be deemed to be unable to act or to continue to act
as a Trustee of the Trust if such Trustee is under a legal disability or if two
(2) medical doctors licensed to practice in Canada notify the remaining or
successor Trustee or Trustees of the Trust, then acting, that illness or
physical or mental disability have rendered such a Trustee unable to give prompt
and intelligent consideration to financial affairs;     (iii)   resigns as a
Trustee;     (iv)   is declared bankrupt, insolvent, or mentally incapable of
managing property;     (v)   ceases to be a resident of Canada within the
meaning of the Income Tax Act (Canada); or     (vi)   becomes a citizen of the
United States of America or becomes a resident of the United States of America
within the meaning of the Internal Revenue Code (U.S.);

such Trustee shall, immediately upon the happening of such event, cease to be a
Trustee hereof. The resignation by a Trustee shall be made by an instrument in
writing and shall be effective from the date seven (7) days, or such earlier
time as the Settlor may choose, after the notice of such resignation has been
delivered to the Settlor and the remaining Trustee or Trustees, as the case may
be, if any. The Trustee shall co-operate reasonably in effecting the transition
to the successor Trustee, who will be the Trustee for all purposes hereunder as
at and from the date determined in accordance with the provisions of this
Section.

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4.6 Additional and Replacement Trustees

  (a)   The Trustee may at any time, by an instrument in writing, appoint an
additional or replacement Trustee or Trustees hereunder and without requiring
any confirmation from any court or tribunal whatsoever.     (b)   Where a
Trustee’s appointment is terminated pursuant to Section 4.5, the remaining
Trustee or Trustees, as the case may be, or the Settlor, if there is no Trustee,
or the Court, may, by instrument in writing, appoint some person to replace such
Trustee, if no replacement Trustee has been appointed previously pursuant to
Section 4.6(a).     (c)   Any person appointed pursuant to Section 4.6 of this
Indenture shall, upon acceptance of such appointment, be vested with the Fund
and with all the trusts, powers, authorities, duties and obligations herein
contained, along with the continuing Trustee or Trustees, if any, without
further assignment, transfer or conveyance of any kind or any order of any court
or tribunal whatsoever as if such person or trust company were an original party
to this Indenture.     (d)   All instruments in writing relating to the
appointment of replacement or additional Trustees shall be attached to this
Indenture and shall be sufficient evidence of the facts to which such
instruments relate.

4.7 Majority Decisions
     Where there are more than two (2) Trustees, all decisions in connection
with the administration of the Trust may be made by a majority of the Trustees
and shall be binding upon all persons concerned.
4.8 General
     In addition to all other powers conferred upon it by other provisions
hereof or by any statute or general rule of law and notwithstanding any
restriction imposed upon it by statute or general rule of law, the Trustee shall
have the power and authority in the discretion of the Trustee at any time to
administer the Fund in whatever manner the Trustee may determine and to take any
action in connection with the Fund and to exercise any rights, powers and
privileges that may exist or arise in connection with the Fund to the same
extent and as fully as an individual could if he or she were the sole and
beneficial owner of the Fund. Without limiting the generality of the foregoing,
the Trustee shall have the following powers, authorities and discretion:

  (a)   to invest the funds from time to time constituting the Fund in fully
marketable securities, having terms to maturity not exceeding 180 days and
consisting of:

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  (i)   obligations issued or guaranteed as to principal and interest by the
Government of Canada or any province thereof or any agency of the Government of
Canada or any province thereof; or     (ii)   obligations issued or guaranteed
by Canadian chartered banks listed in Schedule I to the Bank Act (Canada)
(including certificates of deposit and bankers’ acceptances);

and to hold any part of the Fund in the form of cash or demand deposit, whether
or not income producing. For greater certainty, the Trustee shall not be
required to adhere to all or any particular portion of the investment criteria
or diversification requirements set out in the Trustee Act, R.S.O. 1990, c. T.23
as amended from time to time;

  (b)   to borrow such monies on such terms as the Trustee in the sole
discretion of the Trustee deems advisable;     (c)   to make any agreement with
any other person or corporation, which agreement shall be binding upon the
Trustee and all persons concerned without the consent of a Beneficiary;     (d)
  to join in or take any action in connection with any investment or asset held
by the Trustee as part of the Fund or to which it may be entitled in connection
herewith and to exercise any rights, powers and privileges that at any time may
exist or arise in connection with such investment or asset; and     (e)   to
take, institute, maintain or defend any action or other proceeding that may be
necessary or advisable in the opinion of the Trustee for the preservation or
protection of or realization upon any property forming part of the Fund, and to
make application to any Court of competent jurisdiction for the interpretation
hereof or for directions as to the carrying out of its duties hereunder.

Notwithstanding the foregoing and anything else in this Indenture, the Trustee
may invest the funds constituting the Fund only in securities that are
denominate in Canadian dollars.
4.9 Financial Matters
     The Trustee shall:

  (a)   keep such books, records and accounts as are necessary and appropriate
to document the assets of the Fund and the transactions of the Trustee;     (b)
  to the extent required by law, prepare and file tax returns or other
applicable filings or reports in connection with the Trust;

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  (c)   open, operate and maintain a segregated account for the Trust and shall
deposit all assets comprising the Fund in such account and any cheques drawn
upon any account and all other instructions, as applicable, shall be signed by
the Trustee; and     (d)   within ten (10) days of (i) prior to the Termination
Date, each of June 30 and December 31 and (ii) the Termination Date, provide the
Settlor with details as to the financial status of the Trust, including payments
in respect of any Liability Claims, the amount of Capital, the interest,
dividends or capital accretions on the Capital and any Trustee Expenses. 

4.10 Professional Advisers
     The Trustee may at any time in the administration of the Trust engage
solicitors, accountants, investment advisers and custodians or other
professionals or advisers, including an administrator, as the Trustee in its
discretion shall deem necessary and may pay from the Fund all reasonable fees
and expenses in connection therewith. The Trustee may act upon the advice or
opinion of and information obtained from any such advisers and the Trustee shall
not be responsible, answerable or accountable for any loss, depreciation or
damage occasioned to the Fund by its acting or not acting in accordance
therewith.
4.11 Application to Court
     The Settlor or the Trustee may apply to a court at any time and from time
to time for advice and direction in connection with any aspect of this Indenture
and the administration of the Trust, and, in the case of the Trustee, the
performance of any of its duties and responsibilities hereunder, including
without limitation the appointment of additional or replacement Trustees.
4.12 Certificate of Incumbency
     The Settlor shall deliver to the Trustee from time to time as appropriate a
certificate of incumbency which certifies the incumbency and signatures of the
officers of the Settlor who have the authority to execute documents contemplated
under this Indenture on behalf of the Settlor. The Trustee shall be entitled to
rely on such certificate as to the matters certified therein and absent manifest
irregularity in the manner of execution of any document deliverable under this
Indenture, the Trustee shall have no obligation to verify the authenticity of
any signatures on any document.
4.13 Performance of Trust Duties
     At all times up to the Termination Date, while ARB Limited is the Trustee,
it shall ensure that its duties are performed by Mr. Claude Thomson. If the
Trustee is replaced pursuant to Article 4 of this Indenture, the Settlor shall
be entitled to similarly require a specific individual employee, officer,
director, or shareholder of the successor Trustee to perform its duties.

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ARTICLE 5
TERMINATION OF THE TRUST
5.1 Termination Date
     The Trust created by this Indenture shall terminate upon the earliest to
occur of:

  (a)   a date determined by the Trustee if the Trustee in his sole discretion
determines that there are no further Liability Claims that could arise,     (b)
  a date determined by the Trustee if the Trustee in his sole discretion
determines that Capital has been fully expended to pay Liability Claims, and    
(c)   a date that is twenty-one years after the death of the last survivor of
all of the lineal descendents of His Majesty King George V who are alive on the
date hereof,

the earliest of which dates shall be referred to as the “Termination Date”.
5.2 Consequences of Termination
     Upon the termination of the Trust in accordance with Section 5.1, the
Trustee shall deliver the Fund then remaining, if any, on the Termination Date,
to the Settlor for its own use absolutely; but may withhold a reasonable reserve
for the Trustee’s Expenses, other outstanding or potential commitments of the
Trust and obligations of the Trustee, including any amounts that may be or
become payable to the Trustee pursuant to Section 4.1.
ARTICLE 6
REIMBURSEMENT OF TRUST FUNDS
6.1 Obligation to Pursue Costs
     Notwithstanding any other term of this Indenture, the Trustee shall not
make disbursements of any part of the Capital to any Beneficiary for any
Liability Claim unless and until such Beneficiary agrees, in form and substance
satisfactory to the Trustee, that such Beneficiary shall diligently pursue and
prosecute all costs (or has already done so) available to him or it in respect
of the Liability Claim and to comply with Article 6.2 of this Indenture.
6.2 Reimbursement of Trust Funds
     In the event that a Beneficiary receives payment from any source in respect
of a Liability Claim already paid by the Trustee to the Beneficiary pursuant to
this Indenture (whether or not such payment was received as a result of steps
taken pursuant to Section 6.1), such amounts shall be reimbursed to the Trustee
and any amounts so received by the Trustee shall form part of the Capital and
shall thereafter be subject to all terms and conditions hereof.

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ARTICLE 7
OTHER MATTERS
7.1 No Effect on Other Rights
     The rights of each Beneficiary under applicable law shall in no way be
affected or diminished by any provision of this Indenture or of any action taken
pursuant hereto.
7.2 Governing Law
     This Indenture shall be governed and construed in accordance with the laws
of the Province of Ontario and laws of Canada applicable therein. Any proceeding
with respect to the Trust shall be brought in the Ontario Superior Court of
Justice (Commercial List) unless otherwise agreed in advance in writing by the
Trustee.
7.3 Enurement
     This Indenture shall be binding upon and enure to the benefit of the
parties hereto and their respective successors and assigns.
7.4 Notice
     Any notice or other communications required or permitted to be given or
made hereunder shall be in writing and shall be delivered in person during
normal business hours, or telecopied, to the address and telecopy number set
forth below:

         
 
  (a)   If to the Settlor or STMG:
 
       
 
      350 North Orleans Street
 
      10th Floor,
 
      Chicago, IL, 60654, USA
 
       
 
      Attention: Jim McDonough
 
      Fax: (312) 321-0629
 
       
 
  (b)   If to the Trustee:
 
       
 
      ARB Limited
 
      Suite 3600, Toronto Dominion Bank Tower
 
      Box 20, Toronto-Dominion Centre
 
      Toronto, ON M5K 1N6
 
       
 
      Attention: Claude Thomson
 
      Fax: 416 364-7813

     Any notice or other communication so given or made shall be deemed to have
been given or made on the same day, if delivered, and on the next business day,
if telecopied. Any party may

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from time to time change its address for notice by notice to the other parties
given in the manner specified above.
7.5 Currency
     All references to currency in this Indenture are to Canadian dollars,
unless otherwise specified.
7.6 Counterparts
     This Agreement may be executed in counterparts and delivered by electronic
mail or facsimile in the manner provided for notice to other parties under this
Agreement and the counterparts taken together shall constitute the entire
agreement as of the date first above written.
     IN WITNESS WHEREOF the parties have executed this Indenture.

                  HOLLINGER CANADIAN PUBLISHING         HOLDINGS CO.    
 
                William G. Barker III              
 
  Name:   William G. Barker    
 
  Title:   Vice President    
 
                ARB LIMITED    
 
                Claude Thompson              
 
  Name:   Claude Thompson    
 
  Title:   President    

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