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Exhibit 10.74
12/12/01-2
ASSIGNMENT OF SHARES:
REGAL GREETINGS & GIFTS CORPORATION
THIS AGREEMENT made as of the 14th day of December, 2001
BETWEEN:
RGG ACQUISITION INC.
(hereinafter called the "SHAREHOLDER")
OF THE FIRST PART
AND:
THE BANK OF NOVA SCOTIA
(hereinafter called the "LENDER")
OF THE SECOND PART
WITNESSETH THAT in consideration of the premises and One Dollar
($1.00) of lawful money of Canada, and other good and valuable consideration,
and in consideration of the Lender advancing certain loans to the Borrower the
receipt and sufficiency of which is hereby acknowledged by the Borrower, the
parties hereto hereby agree as follows:
ARTICLE 1.00 - DEFINITIONS
1.1 For the purposes of this Agreement, the following words and expressions
shall have the meaning indicated:
(a) "BORROWER" means Regal Greetings & Gifts Corporation;
(b) "CORPORATION" means Regal Greetings & Gifts Corporation;
(c) "DEFAULT" means any failure to complete payment of the
Indebtedness, as and when required by the terms of the Credit
Agreement or this Agreement or failure to undertake and complete
any of the Obligations, as and when required by the terms of the
Credit Agreement or this Agreement;
(d) "GUARANTOR" means Primes de Luxe Inc. and MDC Regal Inc.;
(e) "INDEBTEDNESS" means the obligation of the Borrower pursuant to
the Credit Agreement;
(fF) "CREDIT AGREEMENT" means the letter of commitment between the
Borrower and the Lender, dated December 5, 2001, as it may be
amended or restated from time to time;
(g) "PLEDGED SHARES" means all of the shares in the capital of the
Corporation, now
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owned or hereafter acquired by the Shareholder;
(h) "TERMINATION" has the meaning set out in Article 4.00 of this
Agreement.
ARTICLE 2.00 - SECURITY INTEREST
2.1 The Shareholder hereby mortgages, pledges, assigns, charges and grants a
security interest in the Pledged Shares to the Lender, as a general and
continuing security for the payment of the Indebtedness and the satisfaction of
all covenants and agreements of the Borrower, pursuant to the Credit Agreement,
and under the terms of this Agreement (collectively the "OBLIGATIONS").
2.2 For valuable consideration the Shareholder guarantees payment to the
Lender of the indebtedness of Borrower pursuant to the Credit Agreement. The
Shareholder agrees that all or any part of the indebtedness may be renewed or
extended and indulgences may be granted to Borrower, at any time, without
discharging the Shareholder's obligations under this Agreement. The Shareholder
agrees that this Guarantee is not released, discharged, waived or amended by any
amendment to, or restatement of, the Credit Agreement, including any increase in
the indebtedness of Borrower, or change in payment terms, interest rate, fees,
costs or penalties. The Shareholder also agrees that the Lender may modify the
Credit Agreement and the Shareholder's obligations under this Guarantee may
change as a result. None of these things will in any way affect the Lender's
rights or remedies pursuant to this Guarantee or the liability of the
Shareholder under this Guarantee, even if the risk to the Shareholder is
increased by any of these actions.
This Guarantee will not be discharged or otherwise affected by any
change in the legal or business nature, capacity or status of Borrower or the
Shareholder. There are no representations, collateral agreements or conditions
with respect to this Guarantee affecting the Shareholder's liability under this
Guarantee. The liability of the Shareholder will not be limited or reduced as a
result of the termination, invalidity or unenforceability of any security or
right of the Lender against Borrower or any other person, including other
assignors, for any reason.
This Guarantee is unconditional. The Shareholder's obligations are
independent of Borrower's obligations and the Lender may demand payment from the
Shareholder, and realize on the security constituted by this Agreement, even if
the Lender does not demand or proceed against Borrower, or any other assignor,
or any other party, perfect any security interest, proceed against any security
or pursue any other remedy. The Lender may release or add other assignors
without releasing the Shareholder. The Shareholder waives any right of
subrogation.
The Shareholder will pay the indebtedness, to the extent guaranteed, to
the Lender on demand, provided that notwithstanding anything in this Agreement
or in the Credit Agreement to the contrary, the obligation of the Shareholder to
pay shall, at its sole option, be limited to permitting the Lender to exercise
its security interests in the Pledged Shares. For greater certainty, in no event
shall the Shareholder be obligated to pay cash to the Lender and its obligation
shall be limited solely to its interest in the Pledged Shares. The Lender may
demand payment of the entire indebtedness, or any part, without releasing the
Shareholder from its obligations under this Guarantee. Demand for payment will
be effective when written notice is delivered or mailed to the Shareholder.
2.3 The Shareholder shall deliver the original share certificates
representing the Pledged shares to the Lender and the Lender shall hold the
Pledged Shares upon the terms and conditions in this Agreement. Each of the
Shareholders shall deliver the respective original share certificates for
Pledged Shares, and shall, as and when further shares are acquired, whether
using the credit facility of the Lender, or otherwise, deliver such further
original share certificates to the Lender, from time to time, failure to do so
constituting default of the credit arrangements with the Lender.
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2.4 Upon delivery of such further original share certificates, the Lender is
appointed the attorney of the Shareholder, for the purposes of endorsing the
information as to the additional pledged shares on SCHEDULE "A" hereto, the
endorsement of the Lender, together with the delivery and holding of the
original share certificates, whether directly by the Lender or through trustee,
constituting evidence of the additional, specific, pledge of such shares.
Provided that it is acknowledged that the grant of security interest herein
shall include all interest of the Shareholder in and to shares of the
Corporation, whether the original share certificate is delivered or otherwise,
and whether the share certificate is identified and endorsed in SCHEDULE "A" or
otherwise.
2.5 The Shareholder shall also deliver to the Lender, upon the terms and
conditions in this Agreement, dated, signed resolutions and share transfer forms
in accordance with the provisions of the BUSINESS CORPORATIONS ACT (Ontario),
consenting to the transfer of shares to the Lender.
2.6 The Shareholder does hereby irrevocably appoint the Lender as its true
and lawful attorney for it and in its name, for all purposes of this Agreement.
This power of attorney is given pursuant to the POWERS OF ATTORNEY ACT
(Ontario).
ARTICLE 3.00 - ESCROW PROVISIONS
3.1 The Pledged Shares shall be held by the Lender as security until such
time as the Lender shall be required to release them at such time when the
Borrower shall have no further obligation to the Lender under the Credit
Agreement.
3.2 The Lender shall be required to release the Pledged Shares at such times
and in accordance with such terms and conditions, as are set out in Article 4.00
of this Agreement.
3.3 Until transferred to the name of the Lender, the Pledged Shares shall
remain registered in the name of the Shareholder and be held by the Lender as
provided for in this Agreement. The Shareholder shall be entitled to exercise
all voting rights attaching to the Pledged Shares with respect to any act or
course of action to be taken by the Corporation and to receive for its own
account any dividends to be paid thereon, provided that such, if taken, would
not result in the breach of any covenant, agreement, warranty, representation or
the non-fulfillment of any condition or covenant or the inaccuracy of any
statement of fact contained herein or in any agreement given pursuant to the
Credit Agreement.
ARTICLE 4.00 - TERMINATION
4.1 Upon the occurrence of an Event of Default, which the Lender does
not waive or the Borrower remedy as required and within the time periods
provided therefor, the Lender shall either:
(a) retain the Pledged Shares for its own use and to its own account
and in connection therewith require the Shareholders to complete
the transfer of the Pledged Shares in the books and records of the
Corporation, provided that in the event of such retention, the
provisions of section 4.2 hereunder shall be applicable, and
provided further that the Pledged Shares so held shall be valued
as at the date of the occurrence of an Event of Default by an
independent business valuator mutually acceptable to the parties
hereunder, in accordance with the usual business valuation
procedures, and the amount so determined shall be deemed to be
applied so as to reduce the indebtedness by that amount, provided
that any dispute as to the amounts so determined shall be
submitted to arbitration in accordance with the provisions of
section 6.6 hereunder; or
(b) proceed to sell the Pledged Shares, in a commercially reasonable
manner, and shall
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so advise the Shareholders and require the Shareholders to
properly deliver and transfer the Pledged Shares as required
pursuant to the provisions of the purchase agreement pursuant to
which such sale is completed, and in connection with such sale,
the Shareholders shall be entitled to bid or submit a written
offer, as appropriate, and if accepted by the Lender, the
provisions of section 4.2(b) hereunder shall apply. In the event
of a sale of the Pledged Shares, the Lender shall apply the
proceeds as provided in the Credit Agreement.
4.2 (a) In the event that the Lender determines to retain the Pledged
Shares and in connection therewith to complete the transfer of the
Pledged Shares on the books and records of the Corporation to its
name, then the Shareholders shall have the right on fifteen (15)
days' notice to redeem the Pledged Shares by providing to the
Lender repayment in full of the Indebtedness then outstanding,
together with interest due and accrued thereon.
(b) In the event of redemption pursuant to the provisions of the
immediately preceding section, or the Lender completing any sale
of the Pledged Shares to the Shareholders, then the Lender shall
immediately upon payment as required, deliver over the Pledged
Shares to the Shareholders free and clear of any encumbrances or
liens and shall further provide to the Shareholders such
discharges or assignments, as reasonably required, together with
such releases as may be reasonably required in relation to the
obligations of the Shareholders, and shall execute such further
and other assurances as may be required to properly complete any
necessary conveyance or re-conveyance to the Shareholders.
ARTICLE 5.00 - COVENANTS
5.1 The Shareholder covenants and agrees with the Lender as follows:
(a) that it is the beneficial owner of all the Pledged Shares and that
it has good right and authority to assign, pledge, hypothecate and
charge the Pledged Shares to the Lender as herein provided, and
that the Pledged Shares are free and clear of any other lien,
mortgage, pledge, charge or encumbrance of any nature or kind
whatsoever;
(b) on the date hereof, the Pledged Shares comprise one hundred
percent (100%) of the voting shares of the Corporation;
(c) that all the Pledged Shares are outstanding as fully paid and
non-assessable;
(d) that in the event the Lender shall have made demand for payment
upon the Borrower in respect of an event of default in accordance
with the obligations of the Borrower to the Lender pursuant to the
provisions of the Credit Agreement or the security given pursuant
thereto, or to have made demand on either the Borrower or the
Guarantor and the Borrower or the Guarantor shall have failed to
remedy the same as permitted pursuant to the said obligations (the
"EVENT OF DEFAULT") the Lender shall be entitled to exercise all
rights and powers and to perform all acts of ownership in respect
of the Pledged Shares to the same extent as if it were the
absolute owner thereof and without limiting the generality of the
foregoing, the Lender shall be entitled from time to time to sell
at public or private sale or otherwise realize upon all or any of
the Pledged Shares for such price in money or other consideration
and upon such terms and conditions as the Lender may deem best,
the whole, without advertisement or notice to the Shareholders;
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(e) that the Lender may compound, compromise, grant extensions, take
and give up securities, accept compositions, grant releases and
discharges and otherwise deal with the Corporation and others as
it sees fit, without prejudice to any of its rights hereunder, but
without recourse in any way to the Shareholders;
(f) that the assignment, pledge, hypothecation and charge provided for
herein is in addition to and not in substitution for any other
security held by the Lender and shall not operate as a merger of
any contract, debt, or suspend the fulfillment of or affect the
rights, remedies or powers of the Lender or any securities held by
the Lender for the fulfillment thereof; and
(g) that the Lender is hereby absolutely released from all
responsibility for any depreciation in or loss of value of the
Pledged Shares.
ARTICLE 6.00 - GENERAL
6.1 The security is in addition to and not in substitution for any other
security now or hereafter held by the Lender in relation to the Indebtedness.
6.2 The Pledged Shares shall not operate by way of merger of the Indebtedness
or any indebtedness or liability of any other person or persons to the Lender
and no judgment recovered by the Lender shall operate by way of merger of or in
any way affect the security of the Pledged Shares which is in addition to and
not in substitution for any other security now or hereafter held by the Lender.
6.3 This Agreement shall be construed and enforced in accordance with the
laws in effect in the Province of Ontario. The parties hereto submit to the
jurisdiction of the courts in the Province of Ontario and agree to appear in
such courts in respect of any matter which may be raised in relation to the
interpretation or enforcement of the provisions of this Agreement and agree to
be bound by the decision thereof.
6.4 Any demand or notice to be given by any party hereto to any other party
shall be in writing and may be given by personal delivery or except during any
period when postal service is interrupted, by prepaid registered mail or by
telex, telecopy or by other means of instantaneous transmission that produces a
permanent copy ("OTHER COMMUNICATION") addressed as follows:
(a) to the Borrower at: 7035 Ordan Drive
Mississauga, Ontario, L5T 1T1
(b) to the Primes de Luxe Inc. at:
(c) to the Lender at: The Bank of Nova Scotia
Scotia Plaza, 40 King Street West
Toronto, Ontario, M5H 1H1
and if given by registered mail shall be deemed to have been received by the
party to whom it was addressed on the date falling four business days following
the date upon which it has been deposited in the post office with postage and
cost of registration prepaid and if personally delivered to an adult during
normal business hours, when so delivered and if given by other communication the
third business hour after transmission and confirmation of receipt. Provided
that any of the above-named parties may change the address designated from time
to time, by notice in writing to
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the other party hereto.
6.6 If any dispute occurs among the parties hereto with respect to any matter
which cannot be resolved by the provisions hereof or by agreement of the
parties, the matter in dispute shall be resolved by arbitration. Any party to
the dispute may at any time require arbitration by giving written notice thereof
to the other parties hereto setting out in reasonable detail the issue in
dispute. The dispute shall be determined by a single arbitrator. If the parties
can agree upon an arbitrator within ten (10) days from the receipt of a notice
then such party shall act as arbitrator, failing which an arbitrator shall be
appointed by a judge of the Ontario Court (General Division) upon the
application of any of the parties and the said judge shall appoint such
arbitrator as he so desires. The arbitration shall proceed in accordance with
the provisions of the ARBITRATIONS ACT (Ontario). The decision arrived at by the
arbitrator shall be final and binding and no appeal shall lie therefrom.
6.7 This Agreement shall be binding upon and enure to the benefit of and be
enforceable by the parties hereto and their respective, executors,
administrators, successors and assigns and shall be read with such changes of
gender and number required by the context.
6.8 This Agreement shall be subject to compliance with those provisions of
the PERSONAL PROPERTY SECURITY Act (Ontario) which can not be waived, altered or
superseded by agreement.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of
the date, month and year first above-written.
RGG ACQUISITION INC. THE BANK OF NOVA SCOTIA
Per: Per:
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[Authorized Signing Officer] [Authorized Signing Officer]
Per: Per:
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[Authorized Signing Officer] [Authorized Signing Officer]