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EXHIBIT 10.68
HYPOTHEC ON MOVABLE PROPERTY entered into this 14th day of
December, 2001
BETWEEN:
THE BANK OF NOVA SCOTIA, with the
Branch located at 44 King Street
West, Toronto, Ontario, M5H 1H1
(the "Bank")
The Bank's notice of address has
been registered in the Register
of Personal and Movable Real
Rights under the number:
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AND
PRIMES DE LUXE INC., with its
head office located at 909 Boul.
Pierre-Bertrand, Bureau 100,
Vanier, Quebec, G1M 3R9
(the "Grantor")
WHO AGREE AS FOLLOWS:
I HYPOTHEC
1. For good and valid consideration, the Grantor hereby grants
DELETE to the Bank a hypothec on and a security interest in the
INAPPICABLE following property (the "hypothecated property"), for a sum
DESCRIPTIONS of Fifty Million Dollars ($50,000,000), with interest at
(REFER LOAN the nominal rate of twenty per cent (20%) per annum from
MANUAL) the date hereof:
DESCRIPTION OF THE HYPOTHECATED PROPERTY
(a) All the Grantor's movable property, corporeal and
incorporeal, present and future, whenever situated.
SIGNATORIES AND
WITNESSES INITIAL (b) All the Grantor's inventory, present and future,
DELETIONS wherever situated.
(c) All the Grantor's debts, claims and rights of action,
present and future, regardless of where the debtors
of these debts, claims and rights of action are
located.
(d) All the Grantor's present and future equipment,
machinery, tools and office furniture, wherever
situated.
(e) Property described in the Schedule B.
2. The following property, to the extent that it is not
already included in the property described in paragraph 1
or in Schedule B, is also charged by the hypothec and
security interest constituted herein. The expression
"hypothecated property" thus also includes the following
property:
(a) the proceeds of any sale, lese or other disposition
of the property described in paragraph 1 or in
Schedule B, any debt resulting from such sale, lease
or other disposition, as well as any property
acquired to replace the hypothecated property (if
being understood that this clause
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shall not construed so as to permit the Grantor to
dispose of the hypothecated property in violation of
the provisions hereof);
(b) any insurance or expropriation indemnity payable in
respect of the hypothecated property;
(c) any rights attached to the hypothecated property, as
well as the fruits and revenues produced thereby;
(d) where the property described in paragraph 1 or in
Schedule B includes shares or securities, all shares
and securities issued in replacement of these shares
or securities;
(e) all deeds, documents, registers, invoices and books
of account evidencing the hypothecated property or
relating thereto.
II OBLIGATIONS SECURED
This hypothec and security interest are granted to secure:
(a) all the obligations of the Grantor to the Bank
arising from credit facilities granted by the Bank to
Regal Greetings & Gifts Corporation in the amount of
Fifty Million Dollars ($50,000,000) as well as from
any renewal or replacement of same and all increases
or other amendments thereto. The credit facilities
have been and will be availed of in the manner agreed
upon between the Grantor and the Bank; and
(b) all obligations of the Grantor to the Bank arising
from one or more guarantees executed in favour of the
Bank, as well as from any guarantee(s), renewing,
amending or replacing same, whereby the Grantor has
guaranteed to and in favour of the Bank the payment
and fulfillment of all obligations and indebtedness
of Regal Greetings & Gifts Corporation present and
future, direct and indirect, up to the amount, if
any, specified in the guarantee(s); and
(c) all other present and future, direct and indirect,
obligations of the Grantor to the Bank.
DECLARATIONS
The Grantor declares and warrants the following:
1. The Grantor owns the hypothecated property free and
clear of all rights, hypothecs and security interests
other than those which have been disclosed by the
Grantor to the Bank in writing.
2. The hypothecated property will be kept at the
locations in the Province of Quebec, specified in
section "A" of the attached Schedule A.
3. The hypothecated property which is not situated in
the Province of Quebec is described in section "B" of
the attached Schedule A.
4. The hypothecated property is not intended to be used
in more than one province or country, except for the
property described in section "C" of the attached
Schedule A.
5. The Grantor's head office (or his/her domicile, if
the Grantor is an individual) is located at the
following address:
909 Boul. Pierre-Bertrand, Bureau 100, Vanier,
Quebec, G1M 3R9
IV COVENANTS
1. The Grantor will inform the Bank without delay of any
change to the Grantor's name or to the content of the
declarations made in Article III.
2. The Grantor will pay when due all duties, fees, taxes
and charges relating to the hypothecated property, as
well as any debt which could rank prior to the
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hypothec and security interest constituted herein. On
request, the Grantor shall furnish to the Bank
evidence that the payments contemplated by this
paragraph have been made.
3. The Grantor will insure the hypothecated property
with an insurer acceptable to the Bank and keep it
constantly insured for its full insurable value
against damage caused by theft, fire and all other
risks that a prudent administrator would insure the
property against. The Bank is hereby designated as
the beneficiary of the indemnities payable by virtue
of these policies and the Grantor shall cause such
designation to be inscribed in the policies. The
Grantor shall provide the Bank with a copy of each
policy and, at least thirty (30) days prior to the
expiration or cancellation of a policy, evidence of
its renewal or its replacement thereof.
4. The Grantor shall do any act and sign all documents
necessary for the hypothec and security interest
constituted herein to have full effect and be
constantly set up against third parties.
5. The Grantor shall protect, use and maintain the
hypothecated property and exercise its activities in
a manner to preserve its value. The Grantor shall
conform to the requirements of all laws and
regulations applicable to the carrying on of its
enterprise and to the holding of the hypothecated
property, including environmental laws and
regulations.
6. The Grantor shall keep all books and accounts that a
prudent administrator would keep with respect to the
hypothecated property and shall permit the Bank to
examine and obtain copies of same.
7. The Grantor shall keep the hypothecated property free
of all rights, hypothecs and security interests, save
those consented to in writing by the Bank.
8. The Grantor shall not dispose of the hypothecated
property or lease same, unless the Bank consents
thereto in writing. However, the Grantor may, if
there is no default herein, sell or lease its
inventory in the ordinary course of its business.
9. The Grantor shall not change the use, purpose or
nature of the hypothecated property or remove the
hypothecated property from its present location,
unless the Bank consents thereto in writing. If the
Grantor is a corporation, the Grantor shall not
amalgamate or merge with another entity or commence
winging-up proceedings, without the written consent
of the Bank.
10. The Grantor shall furnish to the Bank all information
that the Bank could reasonably require with respect
to the hypothecated property or to verify if the
Grantor is conforming to its covenants and
obligations contained herein. The Grantor shall
inform the Bank of any fact or event which could
adversely affect the value of the hypothecated
property or the financial condition of the Grantor.
11. The Grantor shall pay all costs related to this
hypothec, including the costs incurred to perfect the
rights of the Bank herein.
12. The Grantor shall reimburse the Bank for all costs
and charges incurred by the latter to exercise its
rights or to fulfill the obligations of the Grantor,
with interest at the prime lending rate of the Bank
plus 3% per annum. This hypothec and security
interest created herein shall also secure repayment
of these costs and charges as well as payment of
interest.
V RIGHTS OF THE BANK
1. The Bank may from time to time, at the Grantor's
expense, inspect the hypothecated property or have it
appraised. The Grantor shall permit the Bank to have
access to the premises where the hypothecated
property is located, as well as to the Grantor's
place of business. The Grantor shall also permit the
Bank to examine all books of account and documents
relating to the hypothecated property and obtain
copies thereof.
2. The Bank may, without being bound to do so, fulfill
any or all the obligations of the Grantor herein.
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3. The Grantor may collect all claims, debts and rights
forming part of the hypothecated property as long as
the Bank has not withdrawn its authorization to do
so. The Grantor shall however remit all sums
collected to the Bank unless the Bank authorizes the
Grantor to keep such sums. If the Bank withdraws this
authorization, it may then collect debts, claims and
rights of action. It shall then be entitled to a
reasonable commission for this collection, which may
be deducted from any sum collected.
4. Where the hypothecated property includes shares or
securities, the Bank or its nominee may, without
being bound to do so, have itself registered as the
holder of these shares and securities and exercise
any right attached thereto, including any right to
vote and any right of conversion or redemption.
5. In the event that the Bank has the possession of the
hypothecated property, it shall have no obligation to
maintain the use for which the hypothecated property
is normally destined or to make it productive onto
continue its use or operation.
6. The Grantor constitutes the Bank its irrevocable
attorney, with power of substitution, in order to do
any act and to sign any document necessary or useful
to the exercise of the rights conferred on the Bank
under this deed.
7. The rights conferred on the Bank under this article V
may be exercised by the Bank before or after default
by the Grantor under the terms of this deed.
VI DEFAULTS AND RECOURSES
1. The Grantor shall be in default in each and every one
of the following events:
(a) If any or all of the obligations secured under
this deed are not paid when due;
(b) If any of the declarations made in article III is
erroneous;
(c) If the Grantor does not fulfill any one of its
obligations herein;
(d) If the Grantor is in default under any other
contract or agreement with the Bank or any other
creditor, or under any other hypothec or security
agreement affecting the hypothecated property;
(e) If the Grantor ceases to carry on its business,
becomes insolvent or bankrupt; or
(f) If any or all of the hypothecated property is
seized or is subject to a legal procedure or a
taking of possession by a creditor, a receiver or
any other person performing similar functions.
2. If the Grantor is in default, the Bank may terminate
any obligation it may have to grant credit or make
advances to the Grantor and it may also declare due
all obligations of the Grantor which are not yet due.
If the Grantor is in default, the Bank may also
exercise all recourses conferred on it by law and may
realize its hypothec and security interest, notably
by exercising the hypothecary rights provided in the
Civil Code of Quebec.
3. In order to realize its hypothec and security
interest, the Bank may use, at the expense of the
Grantor, the premises where the hypothecated property
is situated, as well as any other property of the
Grantor. Where the hypothecated property includes
debts, claims or rights of action, the Bank may
compromise or transact with the debtors of these
debts or rights of action and may grant releases and
discharges thereto. Where the hypothecated property
includes inventory, the Bank may complete the
manufacture of such inventory and do all things
necessary or useful to its sale.
VII GENERAL PROVISIONS
1. The prime lending rate of the Bank is a variable per
annum reference rate of Interest (as announced and
adjusted by the Bank from time to time) for Canadian
dollar loans made by the Bank in Canada.
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2. The hypothec and security interest created herein are
in addition to and not in substitution for any other
hypothec or security held by the Bank.
3. This hypothec and security interest are a continuing
security and shall continue to exist notwithstanding
the payment from time to time, in whole or in part,
of any of the obligations secured by this deed.
4. In each of the events provided in paragraph 1 of
article VI, the Grantor shall be in default by the
mere lapse of time, without the necessity of any
notice or demand.
5. If several persons are designated as "Grantor", each
such person shall be individually and collectively
(that is jointly and severally) liable to the Bank
for the fulfillment of the obligations provided in
this deed.
6. Any sum collected by the Bank in the exercise of its
rights provided herein or by law may be kept by the
Bank, as hypothecated property, or may be applied to
the payment of the obligations secured by this deed,
whether due or not. The Bank shall have the choice of
how any such sum will be applied.
7. The exercise by the Bank of any recourse under this
deed shall not preclude the Bank from exercising any
other recourse provided herein or by law. All the
recourses of the Bank are cumulative and not
alternative. The non-exercise by the Bank of any of
its recourses shall not constitute a renunciation of
the exercise of such recourse at a later date. The
Bank may exercise its recourses herein without being
required to exercise its recourses against the
Grantor or against any other person liable for the
payment of the obligations secured by this deed or to
realize any other security held for the payment of
the secured obligations.
8. The Bank shall be bound only to exercise reasonable
care in the exercise of its rights and fulfillment of
its obligations and, in any event, it shall only be
liable for its intentional fault or gross negligence.
9. The Bank may delegate to another person the exercise
of its rights or the accomplishment of its
obligations resulting herefrom. In such a case, the
Bank may provide to this person any information it
may have concerning the Grantor or the hypothecated
property.
10. The rights conferred on the Bank herein shall benefit
any successor of the Bank, including any entity
resulting from the amalgamation of the Bank with any
other entity.
11. If any provision hereof is determined to be void or
unenforceable in whole or in part, it shall be deemed
not to affect or impair any other provision hereof.
12. Any notice to the Grantor may be given at the address
indicated below or any other address indicated in
writing by the Grantor to the Bank.
13. This deed shall be governed and interpreted by the
law in force in the Province of Quebec.
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14. The parties hereto have expressly agreed that this
deed be executed in the English language. Les parties
ont expressement convenu que la presente convention
soit redigee en anglais.
SIGNED AT TORONTO, ONTARIO
on the day, month and year firstly above written.
Grantor: PRIMES DE LUXE INC.
Per:
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Witness Authorized Signing Officer
909 Boul. Pierre-Bertrand, Bureau
100, Vanier, Quebec, G1M 3R9
The Bank of Nova Scotia
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Authorized Signing Officer
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SCHEDULE A TO THE HYPOTHEC ON MOVABLE PROPERTY DATED
December 14, 2001
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BETWEEN THE BANK OF NOVA SCOTIA AND THE UNDERSIGNED GRANTOR
A - Description and location of hypothecated property in the Province of Quebec:
All locations and all assets of Grantor located in the Province of Quebec.
B - Description and location of the hypothecated property not situated in the
Province of Quebec:
All locations and all assets of Grantor in Canada.
C - Description of the hypothecated property intended to be used in more than
one province or country:
This schedule forms an integral part of the Hypothec on Movable Property.
PRIMES DE LUXE INC.
Per:
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Witness Authorized Signing Officer
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Witness Signature
The Bank of Nova Scotia
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Authorized Signing Officer
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SCHEDULE B TO THE HYPOTHEC ON MOVABLE PROPERTY DATED
December 14, 2001
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BETWEEN THE BANK OF NOVA SCOTIA AND THE UNDERSIGNED GRANTOR
Description of property for article 1 Hypothec, paragraph 1 (e):
All present and after acquired personal property.
This schedule forms an integral part of the Hypothec on Movable Property.
PRIMES DE LUXE INC.
Per:
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Witness Authorized Signing Officer
The Bank of Nova Scotia
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Authorized Signing Officer